S-4

As filed the Securities and Exchange Commission on January 28, 2020.

Registration No. 333-      ​

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM S-4

REGISTRATION STATEMENT

UNDER THE SECURITIES ACT OF 1933

PROFESSIONAL HOLDING CORP.

(Name of Registrant as specified in its charter)

Florida
(State or other jurisdiction of
incorporation or organization) 6021
(Primary Standard Industrial
Classification Code) 46-5144312
(I.R.S. Employer
Identification Number)

396 Alhambra Circle, Suite 255
Coral Gables, Florida 33134
(786) 483-1757

(Address and telephone number of principal executive offices)

Daniel R. Sheehan
Chairman and Chief Executive Officer
Professional Holding Corp.
5100 PGA Boulevard, Suite 101
Palm Beach Gardens, Florida 33418
(561) 868-1275
(Name, address and telephone number of agent for service)

With copies to:

John P. Greeley, Esquire
Smith Mackinnon, PA
255 South Orange Avenue
Suite 1200
Orlando, Florida 32801
Phone: (407) 843-7300
Facsimile: (407) 843-2448 Javier J. Holtz
Marquis Bancorp, Inc.
355 Alhambra Circle
Suite 125
Coral Gables, Florida 33134
Phone: (305) 443-2922
Facsimile: (305) 774-9937 Matthew M. Guest, Esquire
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Phone: (212) 403-1000
Facsimile: (212) 403-2000

Approximate date of commencement of the proposed sale of the securities to the public:
As soon as practicable after this Registration Statement has become effective.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of  “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  ☐ Accelerated filer  ☐ Non-accelerated filer  ☐ Smaller reporting company  ☒
Emerging growth company  ☒​

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 14e-4(i) (Cross-Border Issuer Tender Offer)  ☐

Exchange Act Rule 14d-1(d) (Cross-Border Third-party Tender Offer)  ☐

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered	Amount to Be Registered	Proposed Maximum Offering Price Per Unit		Proposed Maximum Aggregate Offering Price			Amount of Registration Fee
Class A common stock, par value $0.01 per share	5,287,956 shares(1)	​	N/A	​	$	74,789,821(2)	​	$	9,707.72(3)

(1)

Represents the maximum number of shares of Class A common stock, par value $0.01 per share, of Professional Holding Corp. (“Professional Class A common stock”) estimated to be issuable upon consummation of the transaction described herein.

(2)

Pursuant to Rule 457(f)(2) promulgated under the Securities Act and solely for the purpose of calculating the registration fee, the proposed aggregate maximum offering price is equal to the product of  (x) $17.04, the book value per share of common stock, par value $5.00 per share, of Marquis Bancorp, Inc. (“Marquis common stock”) as of December 31, 2019 and (y) 4,389,074, the estimated maximum number of shares of Marquis common stock that may be exchanged for the merger consideration.

(3)

Computed in accordance with Rules 457(f) of the Securities Act solely for the purpose of calculating the registration fee and based upon a rate of  $129.80 per $1,000,000 of the proposed maximum aggregate offering price.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this joint proxy statement/prospectus is not complete and may be changed. A registration statement relating to the securities described in this joint proxy statement/​prospectus has been filed with the U.S. Securities and Exchange Commission. These securities may not be issued until the registration statement is effective. This joint proxy statement/​prospectus does not constitute an offer to sell or the solicitation of offers to buy these securities in any jurisdiction where the offer or sale is not permitted.

PRELIMINARY — SUBJECT TO COMPLETION DATED JANUARY 28, 2020

PROFESSIONAL HOLDING CORP.	MARQUIS BANCORP, INC.​

To the Shareholders of Professional Holding Corp. and Marquis Bancorp, Inc.:

We are pleased to report that the boards of directors of Professional Holding Corp. (“Professional”) and Marquis Bancorp, Inc. (“Marquis”) have entered into a definitive merger agreement that provides for the combination of the two companies. Under the merger agreement, Marquis will merge with and into Professional, with Professional as the surviving company in the merger. We cannot complete the merger transaction without your approval. Holders of shares of Professional Class A common stock will vote to approve the issuance of Professional Class A common stock in connection with the merger pursuant to the requirements of the Nasdaq Listing Rules at a special meeting of shareholders to be held on [           ]. Holders of shares of Marquis common stock will vote to approve the merger agreement at a special meeting of shareholders to be held on [           ]. This document, which serves as a joint proxy statement for the special meetings of Professional and Marquis shareholders and as a prospectus for the shares of Class A common stock, par value $0.01 per share, of Professional (the “Professional Class A common stock”) to be issued in the merger to Marquis shareholders, gives you detailed information about the special meetings and the merger.

Under the terms of the merger agreement, each share of Marquis common stock issued and outstanding immediately prior to the effective time of the merger (other than dissenting shares and certain shares held by Professional, Marquis or their wholly owned subsidiaries) will be converted into the right to receive 1.2048 shares of Professional Class A common stock, subject to cash in lieu of fractional shares.

The value of the shares of Professional Class A common stock to be issued in the merger will fluctuate between now and the closing date of the merger, including as a result of the completion of Professional’s previously announced initial public offering, the consummation of which is a condition to each party’s obligation to consummate the merger. Based on a price of  $18.25 per share of Professional Class A common stock, which represents the valuation of Professional’s December 2018 capital raise, the merger consideration represented approximately $21.99 for each share of Marquis common stock. We encourage you to obtain current market quotations for Professional Class A common stock before you vote. Professional has applied to list its Class A common stock on the Nasdaq Global Market under the symbol “PFHD.”

Based on the current number of shares of Marquis common stock outstanding, Professional currently expects to issue approximately 4.1 million shares upon completion of the merger. However, an increase or decrease in the number of outstanding shares of Marquis common stock prior to completion of the merger could cause the actual number of shares issued upon completion of the merger to change.

Marquis shareholders have appraisal rights under Florida state law entitling them to obtain payment in cash for the fair value of their shares, provided they comply with each of the requirements under Florida law, including not voting in favor of the merger agreement and providing notice to Marquis. For more information regarding appraisal rights, please see “The Merger — Appraisal Rights for Marquis Shareholders” beginning on page 107.

Your vote is very important. To ensure your representation at the Professional or Marquis special meeting, as applicable, please complete and return the enclosed proxy card. Whether or not you expect to attend the Professional or Marquis special meeting, as applicable, please vote promptly. Submitting a proxy now will not prevent you from being able to vote in person at the applicable special meeting. If you do not vote your shares of Class A common stock, it will have the same effect as voting “AGAINST” the merger.

Each of the Marquis and Professional boards of directors has adopted and approved the merger agreement and the transactions contemplated by the merger agreement and recommends that its respective shareholders vote “FOR” approval of the merger agreement and the issuance of Professional Class A common stock to be issued in the merger, respectively, and “FOR” the approval of the other proposals described in this joint proxy statement/prospectus.

You should read this entire joint proxy statement/prospectus, including the appendices and the documents incorporated herein by reference, carefully because it contains important information about the special meetings and the merger. In particular, you should read carefully the information set forth under “Risk Factors” beginning on page 44 for a discussion of the risks you should consider in evaluating the proposed merger and how it will affect you.

On behalf of the Professional and Marquis boards of directors, thank you for your prompt attention to this important matter.

Sincerely,

Daniel R. Sheehan
Chairman and Chief Executive Officer
Professional Holding Corp. Javier J. Holtz
Chairman and Chief Executive Officer
Marquis Bancorp, Inc.

The shares of Professional Class A common stock to be issued in the merger are not savings or deposit accounts or other obligations of any bank or nonbank subsidiary of either Professional or Marquis, and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.

Neither the Securities and Exchange Commission, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Florida Office of Financial Regulation, nor any state securities commission or any other bank regulatory agency has approved or disapproved the securities to be issued in the merger or determined the adequacy or accuracy of this joint proxy statement/prospectus. Any representation to the contrary is a criminal offense.

This joint proxy statement/prospectus is dated [           ], 2020, and is being first mailed to Professional and Marquis shareholders on or about [           ], 2020.

PROFESSIONAL HOLDING CORP.
396 Alhambra Circle, Suite 255
Coral Gables, Florida 33134
(786) 483-1757

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON [      ]

NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of Professional Holding Corp. (“Professional”) will be held at the main office of Professional at 396 Alhambra Circle, Suite 255, Coral Gables, Florida 33134 on [      ], at [      ] local time, for the following purposes:

1.   Approval of Share Issuance.   To approve the issuance of Professional Class A common stock in connection with the Agreement and Plan of Merger, dated as of August 9, 2019 (as it may be amended from time to time, the “merger agreement”), by and between Professional and Marquis Bancorp, Inc. (“Marquis”), providing for the merger of Marquis with and into Professional (“Professional share issuance proposal”). A copy of the merger agreement is attached to this joint proxy statement/prospectus as Annex A.

2.   Adjourn or Postpone the Special Meeting.   To consider and vote upon a proposal of the Professional board of directors to adjourn or postpone the Professional special meeting, if necessary or appropriate, to permit further solicitation of proxies if there are not sufficient votes at the time of the Professional special meeting to approve the Professional share issuance proposal (“Professional adjournment proposal”).

The Professional board of directors has set [      ] as the record date for the Professional special meeting. Only shareholders of record at the close of business on [      ] are entitled to notice of, and to vote at, the Professional special meeting.

Assuming a quorum is present, approval of each of the Professional share issuance proposal and the Professional adjournment proposal requires the affirmative vote of the holders of a majority of the votes cast on such proposal at the Professional special meeting. Professional will transact no other business at the Professional special meeting, except for business properly brought before the Professional special meeting or any adjournment or postponement thereof.

Professional shareholders must approve the Professional share issuance proposal in order for the merger to occur. If Professional shareholders fail to approve the Professional share issuance proposal, the merger will not occur. The joint proxy statement/prospectus accompanying this notice explains the merger agreement and the transactions contemplated thereby, as well as the proposals to be considered at the Professional special meeting. Please review the joint proxy statement/prospectus carefully.

Your vote is very important. You are cordially invited to attend the Professional special meeting in person. To ensure your representation at the Professional special meeting, please vote, sign, date and return the enclosed proxy card in the self-addressed envelope as promptly as possible, even if you plan to attend the Professional special meeting. No additional postage is required if mailed within the United States. If you choose to attend the Professional special meeting, then you may vote your shares in person, even if you have previously signed and returned your proxy card. If you hold your Professional shares through a bank, broker or other nominee (commonly referred to as held in “street name”), then you must direct your bank, broker or other nominee to vote in accordance with the instructions you have received from them. You may revoke your proxy at any time prior to the Professional special meeting as specified in the accompanying joint proxy statement/prospectus.

The Professional board of directors has unanimously approved and adopted the merger agreement and the transactions contemplated thereby, and has determined that the merger agreement and the transactions contemplated thereby are fair to, and in the best interest of, Professional and its shareholders. The Professional board of directors unanimously recommends that Professional shareholders vote “FOR” the Professional share issuance proposal and “FOR” the Professional adjournment proposal.

By Order of the Board of Directors

Daniel R. Sheehan

Daniel R. Sheehan
Chairman and Chief Executive Officer
Professional Holding Corp.

[           ], 2020

YOUR VOTE IS VERY IMPORTANT

WHETHER OR NOT YOU PLAN TO ATTEND THE PROFESSIONAL SPECIAL MEETING, PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED FORM OF PROXY AND RETURN IT IN THE ENCLOSED RETURN ENVELOPE IN ORDER TO ENSURE THAT YOUR SHARES WILL BE REPRESENTED AT THE PROFESSIONAL SPECIAL MEETING. THE PROFESSIONAL SHARE ISSUANCE PROPOSAL WILL BE APPROVED IF A MAJORITY OF THE VOTES CAST ON THE PROFESSIONAL SHARE ISSUANCE PROPOSAL AT THE PROFESSIONAL SPECIAL MEETING ARE VOTED IN FAVOR OF THE PROPOSAL. YOU CAN FIND INSTRUCTIONS FOR VOTING ON THE ENCLOSED PROXY CARD. IF YOU HAVE QUESTIONS ABOUT THE PROPOSALS OR ABOUT VOTING YOUR SHARES, PLEASE CALL PROFESSIONAL AT (786) 483-1757.

MARQUIS BANCORP, INC.
355 Alhambra Circle, Suite 125
Coral Gables, Florida 33134
(305) 443-2922

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON [      ]

NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of Marquis Bancorp, Inc. (“Marquis”) will be held at the La Gorce Country Club, 5685 Alton Road, Miami Beach, Florida 33140 on [      ], at [      ] local time, for the following purposes:

1.   Approve Agreement and Plan of Merger.   To consider and vote upon a proposal to approve the Agreement and Plan of Merger, dated as of August 9, 2019 (as it may be amended from time to time, the “merger agreement”), by and between Marquis and Professional Holding Corp. (“Professional”), pursuant to which Marquis will merge with and into Professional, with Professional as the surviving company in the merger (“Marquis merger proposal”). A copy of the merger agreement is attached to this joint proxy statement/prospectus as Annex A.

2.   Adjourn or Postpone the Special Meeting.   To consider and vote upon a proposal of the Marquis board of directors to adjourn or postpone the Marquis special meeting, if necessary or appropriate, to permit further solicitation of proxies if there are not sufficient votes at the time of the Marquis special meeting to approve the Marquis merger proposal (“Marquis adjournment proposal”).

The Marquis board of directors has set [      ] as the record date for the Marquis special meeting. Only shareholders of record at the close of business on [      ]are entitled to notice of, and to vote at, the Marquis special meeting.

Holders of Marquis common stock who comply with the provisions of Florida law relating to appraisal rights applicable to the merger are entitled to assert appraisal rights under the Florida appraisal rights law, a copy of which is attached as Annex D to this joint proxy statement/prospectus.

The affirmative vote of the holders of at least a majority of the outstanding shares of Marquis common stock entitled to vote thereon is required to approve the Marquis merger proposal. Assuming a quorum is present, approval of the Marquis adjournment proposal requires the affirmative vote of a majority of the votes cast on such proposal at the Marquis special meeting. Marquis will transact no other business at the Marquis special meeting, except for business properly brought before the Marquis special meeting or any adjournment or postponement thereof.

Marquis shareholders must approve the Marquis merger proposal in order for the merger to occur. If Marquis shareholders fail to approve the Marquis merger proposal, the merger will not occur. The joint proxy statement/prospectus accompanying this notice explains the merger agreement and the transactions contemplated thereby, as well as the proposals to be considered at the Marquis special meeting.

Your vote is very important. You are cordially invited to attend the Marquis special meeting in person. To ensure your representation at the Marquis special meeting, please vote, sign, date and return the enclosed proxy card in the self-addressed envelope as promptly as possible, even if you plan to attend the Marquis special meeting. No additional postage is required if mailed within the United States. If you choose to attend the Marquis special meeting, then you may vote your shares in person, even if you have previously signed and returned your proxy card. If you hold your Marquis shares through a bank, broker or other nominee (commonly referred to as held in “street name”), then you must direct your bank, broker or other nominee to vote in accordance with the instructions you have received from them. You may revoke your proxy at any time prior to the Marquis special meeting as specified in the accompanying joint proxy statement/prospectus.

The Marquis board of directors has unanimously approved and adopted the merger agreement and the transactions contemplated thereby and has determined that the merger agreement and the transactions contemplated thereby are fair to, and in the best interest of, Marquis and its shareholders. The Marquis board of directors unanimously recommends that Marquis shareholders vote “FOR” the Marquis merger proposal and “FOR” the Marquis adjournment proposal.

By Order of the Board of Directors

Javier J. Holtz

Javier J. Holtz
Chairman and Chief Executive Officer
Marquis Bancorp, Inc.

[           ], 2020

YOUR VOTE IS VERY IMPORTANT

WHETHER OR NOT YOU PLAN TO ATTEND THE MARQUIS SPECIAL MEETING, PLEASE COMPLETE, DATE, AND SIGN THE ENCLOSED FORM OF PROXY AND RETURN IT IN THE ENCLOSED RETURN ENVELOPE IN ORDER TO ENSURE THAT YOUR SHARES WILL BE REPRESENTED AT THE MARQUIS SPECIAL MEETING. THE AFFIRMATIVE VOTE OF HOLDERS OF AT LEAST A MAJORITY OF THE OUTSTANDING SHARES OF MARQUIS COMMON STOCK ENTITLED TO VOTE IS REQUIRED FOR APPROVAL OF THE MERGER AGREEMENT. YOU CAN FIND INSTRUCTIONS FOR VOTING ON THE ENCLOSED PROXY CARD. IF YOU HAVE QUESTIONS ABOUT THE PROPOSALS OR ABOUT VOTING YOUR SHARES, PLEASE CALL MARQUIS AT (305) 443-2922.

WHERE YOU CAN FIND MORE INFORMATION

No information regarding Professional or Marquis has been incorporated by reference into this joint proxy statement/prospectus.

Professional

Professional does not currently have a class of securities registered under Section 12 of the Securities Exchange Act of 1934 (the “Exchange Act”), is not currently subject to the reporting requirements of Section 13(a) or 15(d) of the Exchange Act, and accordingly does not currently file documents and reports with the Securities and Exchange Commission (“SEC”) pursuant to such sections. Upon the consummation of Professional’s initial public offering, Professional expects that its Class A common stock will be registered under Section 12 of the Exchange Act, and Professional will thereafter file annual, quarterly and special reports, joint proxy statements and other business and financial information with the SEC. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, which can be accessed at http://www.sec.gov. You will also be able to obtain these documents, free of charge, from Professional by accessing Professional’s website at www.myprobank.com. Copies can also be obtained, free of charge, by directing a written request to:

Professional Holding Corp.
396 Alhambra Circle, Suite 255
Coral Gables, Florida 33134
Attention: Corporate Secretary
Phone: (786) 483-1757

Professional has filed a Registration Statement on Form S-4 to register with the SEC the shares of Professional Class A common stock to be issued pursuant to the merger. This joint proxy statement/​prospectus is a part of that Registration Statement on Form S-4. As permitted by SEC rules, this joint proxy statement/prospectus does not contain all of the information included in the Registration Statement on Form S-4 or in the exhibits or schedules to the Registration Statement on Form S-4. The Registration Statement on Form S-4, including any amendments, schedules and exhibits, is available, free of charge, by accessing the websites of the SEC and Professional or upon written request to Professional at the address set forth above.

Statements contained in this joint proxy statement/prospectus as to the contents of any contract or other documents referred to in this joint proxy statement/prospectus are not necessarily complete. In each case, you should refer to the copy of the applicable contract or other document filed as an exhibit to the Registration Statement on Form S-4.

To obtain timely delivery of these documents, you must request them no later than [           ], 2020 in order to receive them before the special meeting of Professional shareholders.

Marquis

Marquis does not have a class of securities registered under Section 12 of the Exchange Act, is not subject to the reporting requirements of Section 13(a) or 15(d) of the Exchange Act, and accordingly does not file documents and reports with the SEC.

If you have any questions concerning the merger or this joint proxy statement/prospectus, would like additional copies of this joint proxy statement/prospectus or need help voting your shares of Marquis common stock, please contact Marquis at:

Marquis Bancorp, Inc.
355 Alhambra Circle, Suite 125
Coral Gables, Florida 33134
Attention: Chairman and Chief Executive Officer
Phone: (305) 443-2922

To obtain timely delivery of these documents, you must request them no later than [           ], 2020 in order to receive them before the special meeting of Marquis shareholders.

i

You should rely only on the information contained in this joint proxy statement/prospectus. No one has been authorized to give any information or make any representation about the merger or Marquis or Professional that differs from, or adds to, the information in this joint proxy statement/prospectus or in documents that are publicly filed with the SEC. Therefore, if anyone does give you different or additional information, you should not rely on it. You should not assume that the information contained in this joint proxy statement/prospectus is accurate as of any date other than the date of this joint proxy statement/prospectus, and neither the mailing of this joint proxy statement/prospectus to Marquis shareholders or Professional shareholders nor the issuance of Professional Class A common stock or the payment of cash in lieu of fractional shares by Professional in the merger shall create any implication to the contrary.

This joint proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction. Except where the context otherwise indicates, Professional supplied all information contained in this joint proxy statement/prospectus relating to Professional, and Marquis supplied all information contained in this joint proxy statement/prospectus relating to Marquis.

ii

MARKET AND INDUSTRY DATA

This joint proxy statement/prospectus includes government, industry and trade association data, forecasts and information that Professional and Marquis have prepared based, in part, upon data, forecasts and information obtained from independent trade associations, industry publications and surveys, government agencies and other information available to us, which information may be specific to particular markets or geographic locations. Statements as to market position are based on market data currently available to Professional and Marquis. Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable. Although Professional and Marquis believe these sources are reliable, Professional and Marquis have not independently verified the information. Some data is also based on Professional’s and Marquis’s good faith estimates, which are derived from management’s knowledge of the industry and independent sources. Professional and Marquis believe their internal research is reliable, even though such research has not been verified by any independent sources. While Professional and Marquis are not aware of any misstatements regarding industry data presented herein, Professional’s and Marquis’s estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under the heading “Risk Factors” in this joint proxy statement/prospectus. Forward-looking information obtained from these sources is subject to the same qualifications and the additional uncertainties regarding the other forward-looking statements in this joint proxy statement/prospectus.

IMPLICATIONS OF BEING AN EMERGING GROWTH COMPANY

As a company with less than $1.07 billion in total annual gross revenue during its last fiscal year, Professional qualifies as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of reduced reporting requirements and is relieved of certain other significant requirements that are otherwise generally applicable to public companies. As an emerging growth company:

•

Professional is permitted to present only two years of audited financial statements, in addition to any required interim financial statements, and only two years of related discussion in “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Professional”;

•

Professional is exempt from the requirement to obtain an attestation from its auditors on management’s assessment of Professional’s internal control over financial reporting under the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act;

•

Professional will be permitted an extended transition period for complying with new or revised accounting standards affecting public companies and such new or revised accounting standards will not be applicable to Professional until such time as they are applicable to private companies;

•

Professional is permitted to provide reduced disclosure regarding its executive compensation arrangements pursuant to the rules applicable to smaller reporting companies, which means Professional does not have to include a compensation discussion and analysis and certain other disclosures regarding its executive compensation arrangements; and

•

Professional is not required to hold non-binding shareholder advisory votes on executive compensation or golden parachute arrangements.

Professional may take advantage of some or all of these provisions for up to five years or such earlier time as Professional ceases to qualify as an emerging growth company, which will occur if Professional has more than $1.07 billion in total annual gross revenue, if Professional issues more than $1.0 billion of non-convertible debt in a three-year period, or if the market value of Professional’s common stock (including the Professional Class A common stock and Class B common stock) held by non-affiliates exceeds $700.0 million as of any June 30, in which case Professional would no longer be an emerging growth company as of the following December 31.

iii

Professional has taken advantage of certain reduced reporting obligations in this joint proxy statement/​prospectus. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you hold securities. In addition, Professional expects to take advantage of certain of the reduced reporting and other requirements of the JOBS Act with respect to the periodic reports it will file with the SEC and proxy statements that Professional uses to solicit proxies from its shareholders.

iv

TABLE OF CONTENTS

​	Page
QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETINGS	​	1
SUMMARY	​	7
Information Regarding Professional and Marquis	​	7
The Merger and the Merger Agreement	​	7
Closing and Effective Time of the Merger	​	8
Merger Consideration	​	8
Exchange of Stock Certificates	​	8
Material U.S. Federal Income Tax Consequences of the Merger	​	8
Appraisal Rights	​	9
Recommendation of the Marquis Board of Directors	​	9
Opinion of Marquis’s Financial Advisor	​	9
Recommendation of the Professional Board of Directors	​	9
Opinion of Professional’s Financial Advisor	​	10
Interests of Marquis Directors and Executive Officers in the Merger	​	10
Treatment of Marquis Equity Awards	​	11
Regulatory Approvals	​	11
Conditions to Completion of the Merger	​	11
Agreement Not to Solicit Other Offers	​	12
Termination	​	13
Termination Fee	​	13
Nasdaq Listing	​	14
Accounting Treatment	​	14
Professional Special Meeting	​	14
Marquis Special Meeting	​	15
Required Shareholder Votes	​	15
No Restrictions on Resales	​	15
Comparison of Shareholders’ Rights	​	15
Risk Factors	​	15
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF PROFESSIONAL	​	26
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF MARQUIS	​	29
UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL INFORMATION	​	35
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL INFORMATION	​	39
HISTORICAL AND UNAUDITED PRO FORMA PER SHARE DATA	​	42
RISK FACTORS	​	44
Risks Related to the Merger	​	44
Risks Related to the Regulation of Our Industry	​	61
Risks Related to Ownership of our Class A Common Stock	​	65

v

​	Page
CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION	​	72
INFORMATION ABOUT THE PROFESSIONAL SPECIAL MEETING	​	75
INFORMATION ABOUT THE MARQUIS SPECIAL MEETING	​	79
THE MERGER	​	83
Background of the Merger	​	83
Recommendation of the Marquis Board of Directors and Reasons for the Merger	​	86
Recommendation of the Professional Board of Directors and Reasons for the Merger	​	89
Certain Unaudited Prospective Financial Information	​	90
Opinion of Marquis’s Financial Advisor	​	92
Opinion of Professional’s Financial Advisor	​	99
Accounting Treatment	​	106
Regulatory Approvals	​	106
Appraisal Rights for Marquis Shareholders	​	107
Board of Directors and Management of Professional Following the Merger	​	110
Interests of Marquis Directors and Executive Officers in the Merger	​	110
THE MERGER AGREEMENT	​	113
The Merger	​	113
Closing and Effective Time of the Merger	​	113
Merger Consideration	​	113
Exchange of Stock Certificates	​	114
Treatment of Marquis Equity Awards	​	115
Conduct of Business Pending the Merger	​	115
Regulatory Matters	​	118
Nasdaq Listing	​	119
Employee Matters	​	119
Indemnification and Directors’ and Officers’ Insurance	​	120
Agreement Not to Solicit Other Offers	​	120
Representations and Warranties	​	122
Conditions to Completion of the Merger	​	124
Assumption of Marquis Subordinated Notes	​	124
Termination	​	125
Termination Fee	​	125
Waiver; Amendment	​	126
Expenses	​	126
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER	​	127
BUSINESS OF PROFESSIONAL	​	129
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF PROFESSIONAL	​	146
MANAGEMENT OF PROFESSIONAL	​	183
EXECUTIVE COMPENSATION	​	193

vi

​	Page
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS	​	209
PRINCIPAL STOCKHOLDERS OF PROFESSIONAL	​	213
BUSINESS OF MARQUIS	​	216
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF MARQUIS	​	232
PRINCIPAL STOCKHOLDERS OF MARQUIS	​	266
DESCRIPTION OF PROFESSIONAL’S CAPITAL STOCK	​	268
General	​	268
Common Stock	​	268
Preferred Stock	​	269
Anti-Takeover Effects of Provisions of Professional’s Articles of Incorporation, Bylaws and Florida Law	​	270
Limitation of Liability and Indemnification	​	272
Exclusive Forum for Certain Shareholder Proceedings	​	273
Listing	​	274
Transfer agent and registrar	​	274
SUPERVISION AND REGULATION	​	275
COMPARISON OF SHAREHOLDERS’ RIGHTS	​	288
LEGAL MATTERS	​	294
EXPERTS	​	294
SHAREHOLDER PROPOSALS	​	295

APPENDICES:

Agreement and Plan of Merger dated as of August 9, 2019, by and between Professional
Holding Corp. and Marquis Bancorp, Inc.

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QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETINGS

The following are answers to certain questions that you may have regarding the special meetings. The parties urge you to read carefully the remainder of this document because the information in this section may not provide all the information that might be important to you in determining how to vote. Additional important information is also contained in the annexes to this document.

Q:

What am I being asked to vote on and why is this approval necessary?

A:

Marquis shareholders are being asked to vote to approve the Agreement and Plan of Merger, dated as of August 9, 2019 (as it may be amended from time to time, the “merger agreement”), entered into between Professional Holding Corp. (“Professional”) and Marquis Bancorp, Inc. (“Marquis”). Pursuant to the merger agreement, Marquis will be merged with and into Professional, with Professional being the surviving company (the “merger”). Immediately following the merger, Marquis’s wholly owned bank subsidiary, Marquis Bank, will be merged with and into Professional’s wholly owned bank subsidiary, Professional Bank, with Professional Bank being the surviving subsidiary bank of Professional (the “bank merger”).

Professional shareholders are being asked to vote to approve the issuance of Professional Class A common stock in connection with the merger pursuant to the merger agreement (the “Professional share issuance”), as required under applicable Nasdaq Listing Rules.

In order to complete the merger, each party needs not only the approval of its respective shareholders, but the approval of both of these mergers by the applicable banking regulators.

This document constitutes both a joint proxy statement of Professional and Marquis and a prospectus of Professional. It is a joint proxy statement because each of the board of directors of Professional and Marquis is soliciting proxies using this document from their respective shareholders. It is a prospectus because Professional, in connection with the merger, is offering shares of its Class A common stock in exchange for outstanding shares of Marquis common stock in the merger.

Q:

Why do Professional and Marquis want to merge?

A:

We believe the combination of Professional and Marquis will create one of the leading community banking franchises in the state of Florida. Each of the Professional and Marquis boards of directors has determined that the merger agreement and the transactions contemplated thereby are fair to, and in the best interest of, its respective shareholders, and unanimously recommends that its shareholders vote for their respective proposals. You should review the reasons for the merger described in greater detail under “The Merger — Recommendation of the Marquis Board of Directors and Reasons for the Merger” and “The Merger — Recommendation of the Professional Board of Directors and Reasons for the Merger.”

Q:

What will Marquis shareholders receive in the merger?

A:

Under the terms of the merger agreement, Marquis shareholders will be entitled to receive 1.2048 shares of Professional Class A common stock (the “exchange ratio” and together with cash in lieu of fractional shares as discussed below, the “merger consideration”) for each share of Marquis common stock, except for dissenting shares and shares of Marquis common stock owned by Marquis, Professional or their wholly owned subsidiaries (other than (i) shares held in trust accounts, managed accounts, mutual funds and the like, or otherwise held in a fiduciary or agency capacity, that are beneficially owned by third parties and (ii) shares held, directly or indirectly, by Marquis or Professional in respect of a debt previously contracted), they hold immediately prior to the effective time of the merger (which we refer to as the “effective time”). Professional will not issue any fractional shares of Professional Class A common stock in the merger. Instead, for each fractional share of Professional Class A common stock that would otherwise be issued, Professional will pay cash in an amount equal to the fraction of a share of Professional Class A common stock which the holder would otherwise be entitled to receive multiplied by the market value of Professional Class A common stock as agreed by the parties prior to the effective time. No interest will be paid or accrue on cash payable to holders in lieu of fractional shares.

Q:

Will the value of the merger consideration change between the date of this document and the time the merger is completed?

A:

Yes. Although the number of shares of Professional Class A common stock that each Marquis shareholder will receive in the merger is fixed, the value of the merger consideration will fluctuate between the date of this document and the completion of the merger based upon the market value for Professional Class A common stock. Any fluctuation in the market price of Professional Class A common stock after the date of this document will change the value of the shares of Professional Class A common stock that Marquis shareholders will receive. Therefore, at the time of the Marquis special meeting, holders of Marquis common stock will not know the market value of the consideration to be received by holders of Marquis common stock at the effective time of the merger.

Marquis shareholders should obtain current sale prices for the Professional Class A common stock. Professional Class A common stock is currently quoted on the OTC Pink Sheets, but has experienced very limited trading volume in the over-the-counter market. As a result, there has been no significant public market for Professional Class A common stock historically and an active trading market for the Professional Class A common stock may not develop or be sustained after Professional’s initial public offering. In connection with its initial public offering, Professional has applied to list its Class A common stock on the Nasdaq Global Market under the symbol “PFHD. Following the initial public offering, Marquis shareholders may obtain current sale prices through the Nasdaq Global Market.

Q:

What will happen to Marquis equity awards in the merger?

A:

At the effective time of the merger, each stock option to purchase shares of Marquis common stock granted under a Marquis equity plan that is outstanding as of immediately prior to the effective time, whether vested or unvested, will be converted into an option to acquire the number of shares of Professional Class A common stock (rounded down to the nearest whole share) determined by multiplying (i) the number of shares of Marquis common stock subject to such Marquis stock option immediately prior to the effective time by (ii) the exchange ratio, at an exercise price per share of Professional Class A common stock (rounded up to the nearest whole cent) equal to (x) the exercise price per share of Marquis common stock subject to such Marquis stock option divided by (y) the exchange ratio. Such converted stock options will be generally subject to substantially the same terms and conditions (including vesting) as were applicable prior to the effective time, subject to certain exceptions as described in the section entitled “The Merger Agreement — Treatment of Marquis Equity Awards” beginning on page 115.

Q:

What are the conditions to completion of the merger?

A:

The obligations of Professional and Marquis to complete the merger are subject to the satisfaction or waiver of certain closing conditions contained in the merger agreement, including the receipt of required regulatory approvals, tax opinions, approval of the Marquis merger proposal by Marquis shareholders, approval of the Professional share issuance proposal by Professional shareholders and the consummation of Professional’s initial public offering. For further information, please see the section entitled “The Merger Agreement — Conditions to Completion of the Merger” beginning on page 124.

Q:

When will the merger be completed?

A:

Professional and Marquis are working to complete the merger as soon as possible. They expect the merger to be completed when all of the conditions to completion contained in the merger agreement are satisfied or waived, including regulatory and shareholder approvals, and other customary closing conditions. While Professional and Marquis currently expect the merger to be completed during the first quarter of 2020, because fulfillment of some of the conditions to completion of the merger is not entirely within either party’s control, neither Professional nor Marquis can assure you that the merger will be completed within such time period or at all.

Q:

Who can vote at the special meetings of shareholders?

A:

Professional Special Meeting.   Holders of shares of Professional Class A common stock at the close of business on [   ], which is the date that the Professional board of directors has fixed as the record date for the Professional special meeting, are entitled to vote at the Professional special meeting.

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Marquis Special Meeting.   Holders of record of Marquis common stock at the close of business on [•], which is the date that the Marquis board of directors has fixed as the record date for the Marquis special meeting, are entitled to vote at the Marquis special meeting.

Q:

What constitutes a quorum and what vote is required to approve the respective proposals?

A:

The presence at the Professional and Marquis special meetings, in person or represented by proxy, of the holders of a majority of the outstanding shares of Professional and Marquis common stock entitled to vote at its respective special meeting will constitute a quorum for the transaction of business. Abstentions, if any, will be included in determining the number of shares present at the meeting for the purpose of determining the presence of a quorum; however, broker non-votes will not be included.

Assuming the presence of a quorum at each special meeting, approval of the Marquis merger proposal requires the affirmative vote of the holders of a majority of the shares of Marquis common stock outstanding and entitled to vote on the record date, and the approval of the Professional share issuance proposal requires the affirmative vote of a majority of the votes cast on the proposal. Shareholders will have one vote for each share of Professional or Marquis voting common stock owned by them.

Q:

Do the Professional and Marquis boards of directors support the merger?

A:

Yes. The Professional and Marquis boards of directors have unanimously determined that the merger agreement and the transactions contemplated thereby are fair to, and in the best interest of, its respective shareholders and recommends that shareholders vote for approval of their respective proposals. As described elsewhere in this document, the directors of Professional and Marquis have each agreed to vote their shares of Professional Class A common stock and Marquis common stock, respectively, for the approval of their company’s respective proposals, subject to the terms of their respective voting agreements.

Q:

What do I need to do now?

A:

After carefully reading and considering the information contained in this document, please vote your shares as soon as possible so that your shares will be represented at your respective company’s special meeting. Please follow the instructions set forth on the proxy card or on the voting instruction form provided by the record holder if your shares are held in the name of your broker, bank or nominee.

Q:

How do I vote?

A:

If you are a shareholder of record of Professional as of the record date, you may submit your proxy before the Professional special meeting in one of the following ways:

•

Complete, sign, date and return the enclosed proxy card in the enclosed postage-paid envelope, or

•

You may also cast your vote in person at the Professional special meeting.

If your shares are held in “street name” through a broker, bank or other nominee, that institution will send you separate instructions describing the procedure for voting your shares. “Street name” shareholders who wish to vote at the meeting will need to obtain a proxy form from their broker, bank or other nominee.

If you are a shareholder of record of Marquis as of the record date, you may submit your proxy before the Marquis special meeting in one of the following ways:

•

Complete, sign, date and return the enclosed proxy card in the enclosed postage-paid envelop, or

•

You may also cast your vote in person at the Marquis special meeting.

If your shares are held in “street name” through a broker, bank or other nominee, that institution will send you separate instructions describing the procedure for voting your shares. “Street name” shareholders who wish to vote at the meeting will need to obtain a proxy form from their broker, bank or other nominee.

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Q:

When and where is the special meeting of Professional shareholders?

A:

The Professional special meeting will take place on [•], at [•], local time, at the main office of Professional at 396 Alhambra Circle, Suite 255, Coral Gables, Florida 33134. Subject to space availability, all Professional shareholders as of the record date, or their duly appointed proxies, may attend the Professional special meeting. Since seating is limited, admission to the meeting will be on a first-come, first-served basis. Registration and seating will begin at [•], local time.

Q:

When and where is the special meeting of Marquis shareholders?

A:

The Marquis special meeting will take place on [•], at [•], local time, at the La Gorce Country Club, 5685 Alton Road, Miami Beach, Florida 33140. Subject to space availability, all Marquis shareholders as of the Marquis record date, or their duly appointed proxies, may attend the Marquis special meeting. Since seating is limited, admission to the meeting will be on a first-come, first-served basis. Registration and seating will begin at [•], local time.

Q:

If my shares are held in “street name” by my broker, bank or other nominee, will my broker, bank or other nominee vote my shares for me?

A:

No. If your shares are held in “street name” in a stock brokerage account or by a bank or other nominee, you must provide the record holder of your shares with instructions on how to vote your shares. Please follow the voting instructions provided by your broker, bank or other nominee. Please note that you may not vote shares held in “street name” by returning a proxy card directly to Professional or Marquis or by voting in person at your respective company’s special meeting unless you provide a “legal proxy,” which you must obtain from your broker, bank or other nominee.

Q:

What if I do not vote or I abstain?

A:

For purposes of each of the Professional special meeting and the Marquis special meeting, an abstention occurs when a shareholder attends the applicable special meeting, either in person or represented by proxy, but abstains from voting.

For the Professional share issuance proposal and the Professional adjournment proposal, if a Professional shareholder present in person at the Professional special meeting abstains from voting, or responds by proxy with an “abstain” vote, it will have no effect on the vote count for such proposal. If a Professional shareholder is not present in person at the Professional special meeting and does not respond by proxy, it will have no effect on the vote count for such proposal.

For the Marquis merger proposal, if a Marquis shareholder present in person at the Marquis special meeting abstains from voting, or responds by proxy with an “abstain” vote, it will have the same effect as a vote cast “AGAINST” such proposal. If a Marquis shareholder is not present in person at the Marquis special meeting and does not respond by proxy, it will have the same effect as a vote cast “AGAINST” such proposal.

For the Marquis adjournment proposal, if a Marquis shareholder present in person at the Marquis special meeting abstains from voting, or responds by proxy with an “abstain” vote, it will have no effect on the vote count for such proposal. If a Marquis shareholder is not present in person at the Marquis special meeting and does not respond by proxy, it will have no effect on the vote count for such proposal.

Q:

What will happen if I return my proxy or voting instruction card without indicating how to vote?

A:

If you sign and return your proxy or voting instruction card without indicating how to vote on any particular proposal, the shares represented by your proxy will be voted as recommended by your company’s board of directors.

Q:

Can I change my vote after I have mailed my signed proxy card?

A:

Yes. There are four ways in which you may revoke your proxy and change your vote prior to the applicable special meeting. First, you may send a written notice to the Corporate Secretary of Professional or Marquis, as the case may be, stating that you would like to revoke your proxy. Second, you may complete and submit a new proxy card. Third, if you voted by telephone or the Internet, you

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may log onto the Internet website specified on your proxy card in the same manner you would to submit your proxy electronically or by calling the telephone number specified on your proxy card, in each case if you are eligible to do so and following the instructions on the proxy card. Fourth, you may attend the special meeting of Professional or Marquis shareholders, as the case may be, and vote in person. Simply attending the applicable special meeting, however, will not revoke your proxy.

If you choose any of the first three methods, you must take the described action such that the notice, Internet or telephone vote or proxy card, as applicable, is received no later than the beginning of the applicable special meeting.

If your shares are held in an account at a broker, bank or other nominee, you should contact your broker, bank or other nominee to change your vote.

Q:

Do I need identification to attend the Professional or Marquis special meeting in person?

A:

Yes. Please bring proper identification, together with proof that you are a record owner of Professional Class A common stock or Marquis common stock, as the case may be. If your shares are held in street name, please bring acceptable proof of ownership, such as a letter from your broker or an account statement showing that you beneficially owned shares of Professional Class A common stock or Marquis common stock, as applicable, on the record date.

Q:

Can Marquis shareholders exercise dissenters’ rights in connection with the merger?

A:

Yes. If a Marquis shareholder wants to exercise appraisal rights and receive the fair value of shares of Marquis common stock in cash instead of the merger consideration, then you must file a written objection with Marquis prior to the special meeting stating, among other things, that you will exercise your right to dissent if the merger is completed. Also, you may not vote in favor of the merger agreement and must follow other procedures, both before and after the special meeting, as set forth in Annex D to this joint proxy statement/prospectus. Note that if you return a signed proxy card without voting instructions or with instructions to vote “FOR” the merger agreement, then your shares will automatically be voted in favor of the merger agreement and you will lose all appraisal rights available under Florida law. A summary of these provisions can be found under “The Merger — Appraisal Rights for Marquis Shareholders” beginning on page 107. Due to the complexity of the procedures for exercising the right to seek appraisal, Marquis shareholders who are considering exercising such rights are encouraged to seek the advice of legal counsel. Failure to strictly comply with the applicable Florida law provisions will result in the loss of the right of appraisal.

Q:

What are the U.S. federal income tax consequences of the merger to Marquis shareholders?

A:

It is intended that the merger qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”). It is a condition to the completion of the merger that Professional and Marquis receive written opinions from their respective advisors to the effect that the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. Accordingly, a U.S. holder (as defined under “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 127) of Marquis common stock generally will not recognize gain or loss for U.S. federal income tax purposes upon the exchange of shares of Marquis common stock for shares of Professional Class A common stock pursuant to the merger, except with respect to cash received instead of fractional shares of Professional Class A common stock. For further information, see “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 127.

All holders of Marquis common stock should consult their own tax advisors for a full understanding of the particular tax consequences of the merger to them.

Q:

What happens if the merger is not completed?

A:

If the merger is not completed, Marquis shareholders will not receive any consideration for their shares of Marquis common stock in connection with the merger. Instead, Marquis will remain an independent company. In addition, if the merger agreement is terminated in certain circumstances, Marquis or Professional may be required to pay the other party a fee with respect to such termination. See “The Merger Agreement — Termination of the Merger Agreement” and “The Merger Agreement — Termination Fee” beginning on pages 125 and 125, respectively.

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Q:

Should Marquis shareholders send in their Marquis stock certificates now?

A:

No. Marquis shareholders SHOULD NOT send in any stock certificates now. After the merger is completed, you will receive separate written instructions explaining how you should exchange your Marquis stock certificates.

Q:

What should I do if I receive more than one set of voting materials?

A:

Professional shareholders and Marquis shareholders may receive more than one set of voting materials, including multiple copies of this document and multiple proxy cards or voting instruction cards. For example, if you hold shares of Professional and/or Marquis common stock in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold such shares. If you are a holder of record of Professional Class A common stock or Marquis common stock and your shares are registered in more than one name, you will receive one or more separate proxy cards or voting instruction cards for each company. Please complete, sign, date and return each proxy card and voting instruction card that you receive or otherwise follow the voting instructions set forth in this document to ensure that you vote every share of Professional Class A common stock and/or Marquis common stock that you own.

Q:

Whom should I call with questions or to obtain additional copies of this joint proxy statement/prospectus?

A:

If you are a Professional shareholder and have any questions about the proxy materials or if you need assistance submitting your proxy or voting your shares or need additional copies of this document or the enclosed proxy card, you should contact Professional at 396 Alhambra Circle, Suite 255, Coral Gables, Florida 33134, telephone: (786) 483-1757.

If you are a Marquis shareholder and have any questions about the proxy materials or if you need assistance submitting your proxy or voting your shares or need additional copies of this document or the enclosed proxy card, you should contact Marquis at 355 Alhambra Circle, Suite 125, Coral Gables, Florida 33134, telephone: (305) 443-2922, Attn: Chairman and Chief Executive Officer.

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SUMMARY

The following summary highlights selected information from this joint proxy statement/prospectus. It does not contain all of the information that is important to you. Each item in this summary refers to the page where that subject is discussed in more detail. You should carefully read the entire joint proxy statement/prospectus and the other documents to which we refer to understand fully the merger. See “Where You Can Find More Information” on how to obtain copies of those documents. In addition, the merger agreement is attached as Annex A to this joint proxy statement/prospectus. Professional and Marquis encourage you to read the merger agreement because it is the legal document that governs the merger.

Unless the context otherwise requires throughout this document, “Professional” refers to Professional Holding Corp., “Marquis” refers to Marquis Bancorp, Inc. and “we,” and “our” refer collectively to Professional and Marquis. The parties refer to the proposed merger of Marquis with and into Professional as the “merger,” the merger of Marquis Bank with and into Professional Bank as the “bank merger,” and the Agreement and Plan of Merger dated as of August 9, 2019, by and between Professional and Marquis, as it may be amended from time to time, as the “merger agreement.”

Information Regarding Professional and Marquis

Professional Holding Corp.
396 Alhambra Circle, Suite 255
Coral Gables, Florida 33134
(786) 483-1757

Professional is a financial holding company incorporated in 2014 and headquartered in Coral Gables, Florida. Professional operates primarily through its wholly owned subsidiary, Professional Bank, a Florida state-chartered bank, which commenced operations in 2008. Professional focuses on providing creative, relationship-driven commercial banking products and services designed to meet the needs of its clients. Professional’s clients are small to medium sized businesses, the owners and operators of these businesses, and other professionals, entrepreneurs and high net worth individuals. Professional currently conducts its banking operations from five branches and four loan production offices located exclusively in the Miami-Fort Lauderdale-West Palm Beach or Miami-Dade metropolitan statistical area, which encompasses three rapidly growing counties in Florida: Miami-Dade, Broward, and Palm Beach counties. As of September 30, 2019, Professional had total assets of  $963.2 million, total net loans of  $764.7 million, total deposits of  $823.1 million and total shareholders’ equity of  $78.0 million.

Marquis Bancorp, Inc.
355 Alhambra Circle, Suite 125
Coral Gables, Florida 33134
(305)443-2922

Marquis, a Florida corporation incorporated in 2016, is a bank holding company under the Bank Holding Company Act of 1956, as amended, for Marquis Bank, a Florida-chartered non-member bank, and is subject to the supervision and regulation of the Federal Reserve Board and Florida Office of Financial Regulation. Marquis conducts all of its material business operations through Marquis Bank, its primary asset. Marquis Bank is a full-service commercial bank and commenced operations in 2007. Marquis Bank is headquartered in Coral Gables, Florida and has branches in Aventura and Fort Lauderdale, Florida. At September 30, 2019, Marquis had total consolidated assets of approximately $676.8 million, total consolidated deposits of approximately $557.4 million, total consolidated net loans of approximately $560.0 million, and total consolidated shareholders’ equity of approximately $56.4 million.

The Merger and the Merger Agreement (see pages 83 and 113)

The terms and conditions of the merger are contained in the merger agreement, a copy of which is included as Annex A to this joint proxy statement/prospectus and is incorporated by reference herein. You should read the merger agreement carefully and in its entirety, as it is the legal document governing the merger.

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Subject to the terms and conditions of the merger agreement, in the merger, Marquis will merge with and into Professional, with Professional as the surviving company in the merger. Immediately following the merger, Marquis’s wholly owned bank subsidiary, Marquis Bank, will be merged with and into Professional’s wholly owned bank subsidiary, Professional Bank, with Professional Bank being the surviving subsidiary bank of Professional.

Closing and Effective Time of the Merger (see page 113)

The closing date is currently expected to occur in the first quarter of 2020. In connection with the merger, Professional will file articles of merger with the Secretary of State of the State of Florida. The merger will become effective at such time as the articles of merger are filed or such other time as may be specified in the articles of merger. Neither Professional nor Marquis can predict, however, the actual date on which the merger will be completed because it is subject to factors beyond each company’s control, including whether or when the required regulatory approvals and the parties’ respective shareholders’ approvals will be received.

Merger Consideration (see page 113)

Under the terms of the merger agreement, Marquis shareholders will be entitled to receive 1.2048 shares of Professional Class A common stock (the “exchange ratio” and together with cash in lieu of fractional shares as discussed below, the “merger consideration”) for each share of Marquis common stock, except for dissenting shares and shares of Marquis common stock owned by Marquis, Professional or their wholly owned subsidiaries (other than (i) shares held in trust accounts, managed accounts, mutual funds and the like, or otherwise held in a fiduciary or agency capacity, that are beneficially owned by third parties and (ii) shares held, directly or indirectly, by Marquis or Professional in respect of a debt previously contracted), they hold immediately prior to the effective time of the merger (which we refer to as the “effective time”). Professional will not issue any fractional shares of Professional Class A common stock in the merger. Instead, for each fractional share of Professional Class A common stock that would otherwise be issued, Professional will pay cash in an amount equal to the fraction of a share of Professional Class A common stock which the holder would otherwise be entitled to receive multiplied by the market value of Professional Class A common stock as agreed by the parties prior to the effective time. No interest will be paid or accrue on cash payable to holders in lieu of fractional shares.

The value of the shares of Professional Class A common stock to be issued in the merger will fluctuate between now and the closing date of the merger. Based on a price of  $18.25 per share of Professional Class A common stock, which represents the valuation of Professional’s December 2018 capital raise, the merger consideration represented approximately $21.99 for each share of Marquis common stock. Marquis shareholders should obtain current sale prices for the Professional Class A common stock. Professional intends to apply to list its Class A common stock on the Nasdaq Global Market under the symbol “PFHD.”

Exchange of Stock Certificates (see page 114)

Promptly after the effective time of the merger, Professional’s exchange agent, Computershare Limited, will mail to each holder of record of Marquis common stock that is converted into the right to receive the merger consideration a letter of transmittal and instructions for the surrender of the holder’s Marquis stock certificate(s) for the merger consideration (including cash in lieu of any fractional Professional shares) and any dividends or distributions to which such holder is entitled to pursuant to the merger agreement.

Please do not send in your certificate until you receive these instructions.

Material U.S. Federal Income Tax Consequences of the Merger (see page 127)

It is intended that the merger qualify as a “reorganization” within the meaning of Section 368(a) of the Code. It is a condition to the completion of the merger that Professional and Marquis receive written opinions from their respective advisors to the effect that the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. Accordingly, a U.S. holder of Marquis common stock generally will not recognize gain or loss for U.S. federal income tax purposes upon the exchange of shares of Marquis

8

common stock for shares of Professional Class A common stock pursuant to the merger, except with respect to cash received instead of fractional shares of Professional Class A common stock. For further information, see “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 127.

All holders of Marquis common stock should consult their own tax advisors for a full understanding of the particular tax consequences of the merger to them.

Appraisal Rights (see page 107 and Annex D)

Under Florida law, Marquis shareholders have the right to dissent from the merger and receive a cash payment equal to the fair value of their shares of Marquis common stock instead of receiving the merger consideration. To exercise appraisal rights, Marquis shareholders must strictly follow the procedures established by Sections 607.1301 through 607.1340 of the Florida Business Corporation Act (the “FBCA”), which include filing a written objection with Marquis prior to the Marquis special meeting stating, among other things, that the shareholder will exercise his or her right to dissent if the merger is completed, and not voting for approval of the merger agreement. A shareholder’s failure to vote against the merger agreement will not constitute a waiver of such shareholder’s dissenters’ rights.

Recommendation of the Marquis Board of Directors (see page 86)

After careful consideration, the Marquis board of directors recommends that Marquis shareholders vote “FOR” the approval of the merger agreement and the approval of the other proposals described in this document. Each of the directors of Marquis has entered into a voting agreement with Professional, pursuant to which each has agreed to vote “FOR” the approval of the merger agreement and any other matter required to be approved by the shareholders of Marquis to facilitate the transactions contemplated by the merger agreement, subject to the terms of the voting agreements.

For more information regarding the voting agreements, please see the section entitled “Information About the Marquis Special Meeting — Shares Subject to Voting Agreements; Shares Held by Directors and Executive Officers.”

For a more complete description of Marquis’s reasons for the merger and the recommendations of the Marquis board of directors, please see the section entitled “The Merger — Recommendation of the Marquis Board of Directors and Reasons for the Merger” beginning on page 86.

Opinion of Marquis’s Financial Advisor (see page 92 and Annex B)

Janney Montgomery Scott, LLC (“Janney”) was engaged by the board of directors of Marquis to act as financial advisor and to render a fairness opinion for the board of directors of Marquis in connection with a potential business combination with Professional. Janney delivered to the board of directors of Marquis its opinion dated August 12, 2019 that, based upon and subject to the various considerations set forth in its written opinion, the merger consideration to be paid to the shareholders of Marquis is fair to the shareholders of Marquis from a financial point of view. In requesting Janney’s advice and opinion, no limitations were imposed by Marquis with respect to the investigations made or procedures followed by it in rendering this opinion.

The full text of the opinion of Janney, which describes the procedures followed, assumptions made, matters considered and limitations on the review undertaken, are attached hereto as Annex B. Shareholders of Marquis should read these opinions in their entirety. Janney’s opinion speaks only as of August 12, 2019, the date of the opinion.

For further information, please see the section entitled “The Merger — Opinion of Marquis’s Financial Advisor” beginning on page 92.

Recommendation of the Professional Board of Directors (see page 89)

After careful consideration, the Professional board of directors recommends that Professional shareholders vote “FOR” the approval of the Professional share issuance proposal and the approval of the other proposals described in this document. Each of the directors of Professional has entered into a voting

9

agreement with Marquis, pursuant to which each has agreed to vote “FOR” the Professional share issuance proposal and any other matter required to be approved by the shareholders of Professional to facilitate the transactions contemplated by the merger agreement, subject to the terms of the voting agreements.

For more information regarding the voting agreements, please see the section entitled “Information About the Professional Special Meeting — Shares Subject to Voting Agreements; Shares Held by Directors and Executive Officers.”

For a more complete description of Professional’s reasons for the merger and the recommendations of the Professional board of directors, please see the section entitled “The Merger — Recommendation of the Professional Board of Directors and Reasons for the Merger” beginning on page 89.

Opinion of Professional’s Financial Advisor (see page 99 and Annex C)

Professional engaged Stephens Inc. (“Stephens”) to render financial advisory and investment banking services to Professional, including an opinion to the Professional board of directors as to the fairness, from a financial point of view, to Professional, of the Exchange Ratio in the proposed acquisition of Marquis. Professional selected Stephens because, among other factors, Stephens is a nationally recognized investment banking firm with substantial experience in transactions similar to the merger. As part of its investment banking business, Stephens is continually engaged in the valuation of financial services businesses and their securities in connection with mergers and acquisitions.

On August 9, 2019, Stephens rendered its oral opinion, which was subsequently confirmed by delivery of a written opinion to the board dated August 9, 2019, as to the fairness, as of such date, from a financial point of view, to Professional, of the Exchange Ratio, based upon and subject to the qualifications, assumptions and other matters considered in connection with the preparation of its opinion.

The full text of the written opinion of Stephens is attached as Annex C to this document. The summary of the opinion of Stephens set forth in this document is qualified in its entirety by reference to the full text of such written opinion. Holders of Professional common stock are urged to read this opinion in its entirety.

For further information, please see the section entitled “The Merger — Opinion of Professional’s Financial Advisor” beginning on page 99.

Interests of Marquis Directors and Executive Officers in the Merger (see page 110)

Certain of the directors and executive officers of Marquis may have interests in the merger that may be different from, or in addition to, those of Marquis’s shareholders generally. The Marquis board of directors was aware of and considered these potential interests, among other matters, in evaluating, negotiating and approving the merger agreement and the transactions contemplated thereby. See the section entitled “The Merger — Interests of Marquis Directors and Executive Officers in the Merger” beginning on page 110 for a more detailed description of these interests. These interests may include the following, among others:

•

The merger agreement provides that at the effective time of the merger, each stock option to purchase shares of Marquis common stock granted under a Marquis equity plan that is outstanding as of immediately prior to the effective time, whether vested or unvested, will be converted into an option of substantially equivalent value to purchase shares of Professional Class A common stock, which converted stock options will be subject to substantially the same terms and conditions as were applicable immediately prior to the effective time, subject to certain exceptions, including accelerated vesting in the case of Marquis non-employee directors and to certain protections in the event of a termination without “cause” during the first year following the effective time;

•

Javier Holtz (Chairman, Chief Executive Officer and Chief Credit Officer of Marquis) and Miriam Lopez (President and Chief Lending Officer of Marquis) have entered into restrictive covenant and voting agreements providing for, among other things, certain payments in connection with the closing of the merger, subject to the executive officer’s compliance with restrictive covenants;

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•

Philip Gassman (Executive Vice President and Managing Director of Professional & Executive Banking of Marquis) and David DiMuro (Executive Vice President and Senior Lending Officer of Marquis) have entered into letter agreements providing for, among other things, payments and benefits and continued employment with the combined company following the effective time of the merger;

•

Filip G. Feller (Executive Vice President and Chief Financial Officer of Marquis) has entered into a letter agreement providing for, among other things, an estimated severance payment if an employment role is not offered to him following the closing of the merger and a success bonus if he remains actively employed through the final banking system conversion;

•

Jarret L. Gross, a member of the Marquis board of directors, will be entitled to a one-time cash payment from Marquis upon the effective time of the merger in recognition of the services he provided to facilitate the transaction; and

•

Marquis’ directors and executive officers will be entitled to indemnification by Professional with respect to claims arising from matters occurring at or prior to the effective time of the merger and to coverage under a directors’ and officers’ liability insurance policy of Professional for six years after the effective time of the merger.

Treatment of Marquis Equity Awards (see page 115)

At the effective time of the merger, each stock option to purchase shares of Marquis common stock granted under a Marquis equity plan that is outstanding as of immediately prior to the effective time, whether vested or unvested, will be converted into an option to acquire the number of shares of Professional Class A common stock (rounded down to the nearest whole share) determined by multiplying (i) the number of shares of Marquis common stock subject to such Marquis stock option immediately prior to the effective time by (ii) the exchange ratio, at an exercise price per share of Professional Class A common stock (rounded up to the nearest whole cent) equal to (x) the exercise price per share of Marquis common stock subject to such Marquis stock option divided by (y) the exchange ratio. Such converted stock options will be generally subject to substantially the same terms and conditions (including vesting) as were applicable prior to the effective time, subject to certain exceptions as described in the section entitled “The Merger Agreement — Treatment of Marquis Equity Awards” beginning on page 115.

Regulatory Approvals (see page 106)

Completion of the merger and the bank merger are subject to various regulatory approvals, including approvals from the Board of Governors of the Federal Reserve System (the “Federal Reserve”) and the Florida Office of Financial Regulation (the “OFR”). Notifications and/or applications requesting approvals for the merger or for the bank merger may also be submitted to other federal and state regulatory authorities and self-regulatory organizations. The parties have filed notices and applications to obtain the necessary regulatory approvals of the Federal Reserve and the OFR. As of December 10, 2019, Professional, Marquis and/or their respective subsidiaries have received all required regulatory approvals from the Federal Reserve and the OFR. The regulatory approvals to which the completion of the merger and bank merger are subject are described in more detail under the section entitled “The Merger — Regulatory Approvals.”

Conditions to Completion of the Merger (see page 124)

The completion of the merger depends on a number of conditions being satisfied or, where permitted, waived, including:

•

the approval of the merger agreement by Marquis shareholders;

•

the approval of the Professional share issuance by Professional shareholders;

•

the authorization for listing on the Nasdaq Global Market of the shares of Professional Class A common stock to be issued in the merger, subject to official notice of issuance;

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•

the effectiveness of the Registration Statement on Form S-4, of which this joint proxy statement/​prospectus is a part, under the Securities Act of 1933, as amended (the “Securities Act”), and no order suspending such effectiveness having been issued or threatened;

•

the absence of any order, injunction or decree issued by any court or agency of competent jurisdiction or other law preventing or making illegal the consummation of the merger, the bank merger or the other transactions contemplated by the merger agreement;

•

all regulatory approvals from the Federal Reserve and any other regulatory approval required to consummate the merger, the failure of which to obtain would reasonably be expected to have a material adverse effect on the combined company, shall have been received and remain in full force and effect and all statutory waiting periods shall have expired, and no such approval shall have resulted in the imposition of any materially burdensome regulatory condition as discussed elsewhere in this document;

•

the accuracy of the other party’s representations and warranties in the merger agreement on the date of the merger agreement and as of the effective time of the merger (or such other date specified in the merger agreement) other than, in most cases, inaccuracies that would not reasonably be expected to have a material adverse effect on such party;

•

performance in all material respects by the other party of its respective obligations under the merger agreement;

•

the absence of any material adverse effect on the other party;

•

the maintenance by each of the parties of certain minimum adjusted shareholders’ equity amounts;

•

receipt by each party of an opinion of its tax advisor as to the tax-free nature of the merger; and

•

in the case of Marquis, the closing of an underwritten public offering of Professional Class A common stock pursuant to an effective registration statement under the Securities Act on Form S-1 or any similar or successor form.

No assurance is given as to when, or if, the conditions to the merger will be satisfied or waived, or that the merger will be completed in a timely manner or at all.

Agreement Not to Solicit Other Offers (see page 120)

Under the terms of the merger agreement, Marquis has agreed not to initiate, solicit, knowingly encourage or knowingly facilitate inquiries or proposals with respect to, or provide any confidential or nonpublic information or data concerning its and its subsidiaries’ business, properties or assets to, or have any discussion with any person relating to, any acquisition proposal. However, the merger agreement provides that at any time prior to the approval of the merger agreement by the Marquis shareholders, if Marquis receives an unsolicited acquisition proposal that the Marquis board of directors determines in good faith constitutes or is reasonably likely to result in a superior proposal, then Marquis may: (1) negotiate and enter into a confidentiality agreement with the third party making the acquisition proposal with terms and conditions no less favorable in the aggregate to Marquis than the confidentiality agreement entered into by Marquis and Professional prior to the execution of the merger agreement; (2) furnish confidential information regarding Marquis to the third party making the acquisition proposal pursuant to such confidentiality agreement; and (3) negotiate with the third party making the acquisition proposal regarding such proposal, if the Marquis board of directors determines in good faith (following consultation with counsel) that failure to take such actions would or would reasonably be expected to cause the Marquis board of directors to breach its fiduciary duties under applicable law. Marquis must advise Professional in writing within 24 hours following receipt of any acquisition proposal and the substance thereof and must keep Professional apprised of any related developments, discussions and negotiations on a reasonably current basis.

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Termination (see page 125)

The merger agreement may be terminated at any time prior to the effective time of the merger, whether before or after the approval of the merger agreement by Marquis shareholders or the approval of the Professional share issuance by the Professional shareholders:

•

by mutual written consent of Professional and Marquis by a written instrument authorized by the boards of directors of Professional and Marquis;

•

by either Professional or Marquis, if  (1) a regulatory or other governmental authority that must grant a requisite regulatory approval has denied approval of the merger or the bank merger and such denial has become final and non-appealable (provided that the denial is not attributable to the failure of the party seeking to terminate the merger agreement to perform any covenant in the merger agreement required to be performed prior to the effective time of the merger) or (2) a regulatory or other governmental authority has issued a final, non-appealable order, injunction or decree permanently enjoining or otherwise prohibiting or making illegal the completion of the merger or the bank merger;

•

by either Professional or Marquis, if the merger has not been completed by August 9, 2020, unless the failure to complete the merger by such date is due to the failure of the party seeking to terminate the merger agreement to perform or observe the covenants and agreements of such party set forth in the merger agreement;

•

by either Professional or Marquis, if there is a breach by the other party of any representation, warranty, covenant or other agreement set forth in the merger agreement, that would, individually or in the aggregate, if occurring or continuing on the closing date, result in the failure to satisfy the closing conditions of the party seeking termination and such breach is not cured within 20 business days following written notice to the breaching party or by its nature or timing cannot be cured within that time period (provided that the terminating party is not then in material breach of any representation, warranty, covenant or other agreement contained in the merger agreement);

•

by Professional, if  (1) the Marquis board of directors fails to recommend that the Marquis shareholders approve the merger agreement or withdraws or modifies, in a manner adverse to Professional, such recommendation or makes, or causes to be made, any third party or public communication proposing or announcing an intention to withdraw or modify, in any manner adverse to Professional, such recommendation (referred to as a “change in recommendation”), or (2) Marquis materially breaches the provisions of the merger agreement relating to third party acquisition proposals;

•

by Professional, if the Marquis shareholders fail to approve the merger agreement at a duly held meeting of the shareholders or at an adjournment or postponement thereof;

•

by Marquis, if the Professional board of directors fails to recommend that Professional shareholders approve the Professional share issuance in connection with the merger or withdraws or modifies, in a manner adverse to Marquis, such recommendation or makes or causes to be made any third party or public communication proposing or announcing an intention to withdraw or modify in any manner adverse to Marquis such recommendation; and

•

by Marquis, if the Professional shareholders fail to approve the Professional share issuance in connection with the merger at a duly held meeting of the shareholders or at an adjournment or postponement thereof.

Termination Fee (see page 125)

Marquis must pay Professional a termination fee of  $4 million:

•

if the merger agreement is terminated by Professional because the Marquis board of directors did not recommend that the Marquis shareholders approve the merger agreement or made a change in recommendation, or because Marquis materially breached the provisions of the merger agreement relating to third party acquisition proposals; or

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•

if the merger agreement is terminated by Professional because the Marquis shareholders failed to approve the merger agreement and, if prior to the Marquis special meeting, there is a publicly announced and not publicly withdrawn acquisition proposal and, within 12 months of such termination, Marquis or any of its significant subsidiaries enters into a definitive agreement with respect to an acquisition proposal or completes an acquisition proposal.

Professional must pay Marquis a termination fee of  $4 million:

•

if the merger agreement is terminated by Marquis because the Professional board of directors did not recommend that the Professional shareholders approve the Professional share issuance in connection with the merger or withdraws or modifies, in a manner adverse to Marquis, such recommendation or makes or causes to be made any third party or public communication proposing or announcing an intention to withdraw or modify in any manner adverse to Marquis such recommendation; or

•

if the merger agreement is terminated by Marquis following a material breach by Professional of its obligations with respect to obtaining regulatory approvals for consummation of the merger (excluding any delay in or failure to launch or complete an initial public offering of Professional Class A common stock, due to market conditions, SEC review or comments, or other factors outside the control of Professional, or a failure to comply with the provisions therein that provide for a specific filing deadline with respect to applications or filings with governmental entities).

Except in the case of a willful and material breach of the merger agreement, the payment of the termination fee will fully discharge the party paying such fee from any losses that may be suffered by the other party arising out of the termination of the merger agreement.

Nasdaq Listing (see page 119)

Professional will use its reasonable best efforts to cause the shares of Professional Class A common stock to be issued to the holders of Marquis common stock in the merger to be authorized for listing on the Nasdaq Global Market, subject to official notice of issuance, prior to the effective time of the merger.

Accounting Treatment (see page 106)

Professional will account for the merger under the acquisition method of accounting for business combinations under accounting principles generally accepted in the United States of America.

Professional Special Meeting (see page 75)

The special meeting of Professional shareholders will be held on [           ], at [      ], local time, at the main office of Professional at 396 Alhambra Circle, Suite 255, Coral Gables, Florida 33134. At the special meeting, Professional shareholders will be asked to vote on:

•

the proposal to approve the issuance of Professional Class A common stock in connection with the merger; and

•

the Professional adjournment proposal.

Holders of Professional Class A common stock as of the close of business on the [           ] record date are entitled to notice of and to vote at the Professional special meeting. As of the record date, there were an aggregate of  [      ] shares of Professional Class A common stock outstanding and entitled to vote held by approximately [      ] holders of record. Each Professional shareholder can cast one vote for each share of Professional Class A common stock owned on the record date.

As of the record date, directors and executive officers of Professional and their affiliates owned and were entitled to vote [      ] shares of Professional Class A common stock, representing approximately [      ]% of the shares of Professional Class A common stock outstanding and entitled to vote on that date. As of the record date, neither Marquis nor any of its directors or executive officers owned or had the right to vote any of the outstanding shares of Professional Class A common stock.

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Marquis Special Meeting (see page 79)

The special meeting of Marquis shareholders will be held on [           ], at [      ], local time, at the La Gorce Country Club, 5685 Alton Road, Miami Beach, Florida 33140. At the special meeting, Marquis shareholders will be asked to vote on:

•

the proposal to approve the merger agreement; and

•

the Marquis adjournment proposal.

Holders of Marquis common stock as of the close of business on the [           ] record date can vote at the Marquis special meeting. As of the record date, there were an aggregate of  [      ] shares of Marquis common stock outstanding and entitled to notice and to vote held by approximately [      ] holders of record. Each Marquis shareholder can cast one vote for each share of Marquis voting common stock owned on the record date.

As of the record, date, directors and executive officers of Marquis and their affiliates owned and were entitled to vote 767,514 shares of Marquis common stock, representing approximately 22.5% of the shares of Marquis common stock outstanding and entitled to vote on that date. As of the record date, neither Professional nor any of its directors or executive officers owned or had the right to vote any of the outstanding shares of Marquis common stock.

Required Shareholder Votes (see pages 65 and 68)

In order to approve the merger agreement, the holders of at least a majority of the outstanding shares of Marquis common stock entitled to vote at the Marquis special meeting must vote in favor of the merger agreement. In order to approve the Professional share issuance in connection with the merger, a majority of the votes cast on the Professional share issuance proposal at the Professional special meeting must be voted in favor of the proposal.

No Restrictions on Resales (see page 101)

All shares of Professional Class A common stock received by Marquis shareholders in the merger will be freely tradable, except that shares of Professional received by persons who become affiliates of Professional for purposes of Rule 144 under the Securities Act may be resold by them only in transactions permitted by Rule 144, or as otherwise permitted under the Securities Act.

Comparison of Shareholders’ Rights (see page 288)

The rights of Marquis shareholders who continue as Professional shareholders after the merger will be governed by the certificate of incorporation and bylaws of Professional rather than the certificate of incorporation and bylaws of Marquis. For more information, please see the section entitled “Comparison of Shareholders’ Rights” beginning on page 288.

Risk Factors (see page 44)

Before voting at the Professional or Marquis special meeting, you should carefully consider all of the information contained in this joint proxy statement/prospectus, including the risk factors set forth in the section entitled “Risk Factors” beginning on page 44.

Recent Developments

Share Repurchase

On September 5, 2019, Professional repurchased 200,000 shares of its Class A common stock at a price of $17.50 per share, for an aggregate purchase price of  $3,500,000 from one of Professional’s largest shareholders, De Linea CV. This repurchase was a result of an unsolicited offer by De Linea CV to Professional to repurchase these shares. Under the terms of the merger agreement with Marquis, Professional was required to obtain Marquis’s consent to consummate this repurchase, which Professional obtained.

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Professional Holding Corp. Secured Revolving Line of Credit

On December 19, 2019, Professional entered into a new $10.0 million secured revolving line of credit with Valley National Bank, N.A. Amounts drawn under this line of credit will bear interest at the Prime Rate, as announced by The Wall Street Journal from time to time as its prime rate, and Professional’s obligations under this line of credit are secured by all of the issued and outstanding shares of capital stock of Professional Bank, which Professional has pledged as security. Outstanding principal and interest under the line of credit is payable at maturity on December 19, 2020. As of December 31, 2019, approximately $10.0 million was drawn under this line of credit, the proceeds of which were primarily used to provide additional capital to Professional Bank to support continued growth and also to cover expenses incurred in connection with entering into the line of credit. Professional expects to use a portion of the net proceeds from its initial public offering to repay all or a portion of the outstanding principal and accrued interest under this line of credit.

Recent Financial Developments

The following financial and related data contain selected preliminary unaudited financial information regarding Professional’s and Marquis’s performance and financial position as of and for the periods indicated. The selected consolidated financial data as of and for the year ended December 31, 2018 is derived from Professional’s and Marquis’s audited consolidated financial statements, which are included elsewhere in this proxy statement/prospectus. Professional’s and Marquis’s audited consolidated financial statements as of and for the year ended December 31, 2019 are not yet available. The financial information included below for the year ended December 31, 2019 has not been audited and Professional’s or Marquis’s independent public accounting firm has not performed any procedures with respect to such financial data and does not express an opinion or give any other form of assurance with respect to such data. Under generally accepted accounting principles, or “GAAP,” Professional and Marquis are required to assess certain information that may come to Professional’s or Marquis’s attention, respectively, that may constitute one or more subsequent events, which may either need to be considered in the presentation of the audited consolidated financial statements as of and for the year ended December 31, 2019 or disclosed in the notes thereto (or both). As a result, subsequent information may cause a change in certain accounting estimates and other financial information, including estimates and financial information related to Professional’s or Marquis’s allowance for loan losses, fair values, and income taxes.

Professional and Marquis have prepared the financial data for the year ended December 31, 2019 on the same basis as the audited financial statements and have included all adjustments, consisting of normal and recurring adjustments, that Professional or Marquis, as applicable, consider necessary for a fair presentation of the financial condition and operating results for the unaudited periods.

Highlights of Professional’s and Marquis’s results of operations and financial condition as of and for the year and three months ended December 31, 2019 are provided below.

Professional Holding Corp. 2019 Results of Operations

•

Net income of  $2.3 million for 2019, which represented an increase of  $230 thousand, or 10.9%, compared to 2018.

•

Net interest income of  $28.0 million for 2019, which represented an increase of  $6.1 million, or 28.0%, compared to 2018, primarily due to balance sheet growth.

•

Provision for loan losses was $0.9 million for 2019, which represented a decrease of approximately $288 thousand, or 25.0%, compared to 2018.

•

Noninterest income totaled $2.8 million for 2019, which represented an increase of  $0.9 million, or 49.8%, compared to 2018, primarily due to increased swap referral fees.

•

Noninterest expense of  $27.0 million, which represented an increase of  $7.1 million, or 35.9%, compared to 2018, primarily due to increased salary, benefit, and occupancy expense due to Professional’s recent expansion and additional expenses related to Professional’s proposed acquisition of Marquis, FDICIA compliance and this offering

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Net Income

Net income was $2.3 million for the year ended December 31, 2019, which represented an increase of $230 thousand, or 10.9%, compared to $2.1 million for the year ended December 31, 2018. Net income during 2019 was positively affected by increased net interest income of  $6.1 million, a decreased provision for loan losses of  $0.3 million, and a $0.9 million increase in noninterest income, partially offset by a $7.1 million increase in noninterest expense. Net income for the three months ended December 31, 2019 increased $202 thousand, or 25.7%, compared to the three months ended December 31, 2018. Net income during the fourth quarter of 2019 was positively affected by increased net interest income of  $1.1 million, a decreased provision for loan losses of  $0.3 million, and increased noninterest income of  $0.1 million, partially offset by a $1.3 million increase in noninterest expense.

Net Interest Income

Interest income increased $11.5 million while interest expense increased $5.3 million, resulting in a net interest income increase of  $6.1 million for the year ended December 31, 2019 compared to 2018. The increase in interest income in 2019 compared to 2018 was primarily due to loan growth and slightly increased average yields on loans in Professional’s portfolio. Interest expense also increased, but by a lower dollar amount compared to the increase in interest income, due to an increase in total deposits, and was partially offset by decreased interest rates paid on deposit products as a result of Federal Reserve rate cuts during the second half of 2019. For the year ended December 31, 2019, Professional’s yield on average earning assets was 4.67% and Professional’s cost of average interest-bearing liabilities was 1.78%. For the year ended December 31, 2019, Professional’s yield on average loans was 5.15% and Professional’s cost of average interest-bearing deposits was 1.73%.

Interest income increased $2.3 million while interest expense increased $1.2 million, primarily due to deposit growth, resulting in an increase in net interest income of approximately $1.1 million for the three months ended December 31, 2019 compared to the three months ended December 31, 2018. The increase in interest income during the fourth quarter of 2019 compared to the same period in 2018 was primarily due to loan growth.

Provision for Loan Losses

The provision for loan losses was $0.9 million for the year ended December 31, 2019, a decrease of $288 thousand from $1.2 million for the year ended December 31, 2018. The provision for loan losses was $0.1 million for the fourth quarter of 2019, compared to $0.4 million during the fourth quarter of 2018. Professional’s allowance for loan losses was $6.5 million, or 0.83% of loans, at December 31, 2019, compared to $6.4 million, or 0.84% of loans, at September 30, 2019 and $5.7 million, or 0.94% of loans, at December 31, 2018.

Noninterest Income

Noninterest income for the year ended December 31, 2019 was $2.8 million, an increase of $0.9 million, or 49.8%, compared to noninterest income of  $1.9 million for the year ended December 31, 2018. The increase in noninterest income during 2019 was primarily due to increased swap referral fees of $0.8 million and increased loan sale proceeds of  $0.1 million compared to 2018.

Noninterest income for the three months ended December 31, 2019 was $0.7 million, an increase of $0.1 million, or 22.5%, compared to noninterest income of  $0.6 million for the three months ended December 31, 2018. The increase in noninterest income during the three months ended December 31, 2019 was primarily due to an increase in proceeds from loan sales of  $62 thousand, as well as an increase of $58 thousand from bank-owned life insurance, compared to the three months ended December 31, 2018.

Noninterest Expense

Noninterest expense was $27.0 million for the year ended December 31, 2019, an increase of $7.1 million, or 35.9%, compared to $19.9 million for the year ended December 31, 2018. The increase in noninterest expense was primarily due to an increase in salary and benefit expense of  $5.0 million due to

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hiring 19 additional employees during 2019 and, to a lesser extent, increases in occupancy and equipment expense of  $0.8 million due to the expansion of Professional’s branch and loan production office locations and opening Professional’s Digital Innovation Center in Cleveland, Ohio. Noninterest expense during 2019 was also impacted by an increase in professional services expense of  $0.6 million, $0.5 million of which was incurred in connection with Professional’s proposed acquisition of Marquis, FDICIA compliance required when we exceeded $1.0 billion in assets and Professional’s initial public offering.

Noninterest expense was $6.9 million for the three months ended December 31, 2019, an increase of $1.3 million, or 22.2%, compared to $5.7 million for the three months ended December 31, 2018. The increase in noninterest expense was primarily due to an increase in salary and benefit expense of $779.2 thousand due the addition of 19 employees during 2019 and, to a lesser extent, increases in occupancy and equipment expense of  $0.3 million due to the expansion of Professional’s branch and loan production office locations and opening Professional’s Digital Innovation Center in Cleveland, Ohio. Noninterest expense was also impacted by an increase in professional services expense of  $0.1 million, due to FDICIA compliance expense required when we exceeded $1.0 billion in assets and additional audit fees related to Professional’s initial public offering.

Marquis Bancorp, Inc. 2019 Results of Operations

Net Income

Net income was $7.1 million for the year ended December 31, 2019, an increase of  $0.3 million, or 3.9%, compared to $6.8 million for the year ended December 31, 2018. Net income for 2019 was positively affected by an increase in interest income of  $3.9 million, a decreased provision for loan losses of $1.0 million, and an increase in noninterest income of  $0.2 million, partially offset by an increase in interest expense of  $3.1 million and an increase in noninterest expense of  $1.5 million.

Net income for the three months ended December 31, 2019 decreased $0.3 million, or 16.5%, to $1.6 million compared to $1.9 million in the three months ended December 31, 2018. Net income for the fourth quarter of 2019 was negatively impacted by a $0.4 million reduction in net interest income, a $0.4 million increase in noninterest expense and a $0.1 million reduction in noninterest income, partially offset by a $0.6 million reduction in the provision for loan losses, compared to the fourth quarter of 2018.

Net Interest Income

During 2019, interest income increased $3.9 million while interest expense increased $3.1 million, resulting in net interest income of  $21.9 million, an increase in net interest income of approximately $0.7 million, for the year ended December 31, 2019 compared to the prior year. The increase in interest income was primarily due to greater commercial real estate and commercial loan interest income of approximately $2.5 million and $0.5 million, respectively, and greater investment income of  $0.1 million. The increase in interest expense was primarily due to greater certificate of deposits, wholesale funding and money market of  $1.6 million, $0.9 million and $0.7 million, respectively, from greater average balances for each.

Interest income was flat at $7.8 million while interest expense increased $0.4 million, resulting in a decrease in net interest income of approximately $0.4 million for the three months ended December 31, 2019 compared to the three months ended December 31, 2018. Interest income for the three months ended December 31, 2019 was flat primarily due to net loan payoffs and line reductions of  $18.1 million during the quarter, compared to $17.4 million of net new loan and line advances for the same period of 2018. Interest expense for the three months ended December 31, 2019 increased by $0.4 million, primarily due to greater average interest bearing deposit balances of  $38.0 million offset by less wholesale funding of $20.7 million, compared to greater average interest bearing deposit balances of  $5.0 million offset by less wholesale deposits of  $2.2 million, for the three months ended December 31, 2018.

Provision for Loan Losses

Marquis’s provision for loan losses was $0.2 million for the year ended December 31, 2019, a decrease of $1.0 million from $1.1 million for the year ended December 31, 2018. Marquis had a negative provision for loan losses of  $0.2 million for the fourth quarter of 2019, a decrease of  $0.6 million compared to a

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provision for loan losses of  $0.4 million for the fourth quarter of 2018. Marquis’s allowance for loan losses was $5.1 million, or 0.93% of loans, at December 31, 2019, compared to $5.3 million, or 0.94% of loans, at September 30, 2019 and $4.9 million, or 0.87% of loans, at December 31, 2018.

Noninterest Income

Noninterest income for the year ended December 31, 2019 was $1.4 million, a $0.1 million or 14.6% increase compared to noninterest income of  $1.3 million for the year ended December 31, 2018. The increase in noninterest income was primarily due to $0.06 million gains from the sales of SBA loans and, to a lesser extent, greater deposit account service charges of  $0.05 million.

Noninterest income for the three months ended December 31, 2019 was $0.3 million, a decrease of approximately $0.1 million, or 30.0%, compared to noninterest income of  $0.4 million for the three months ended December 31, 2018. The decrease in noninterest income for the quarter was primarily due to lower gains from sales of SBA loans of  $0.1 million compared to the three months ended December 31, 2018.

Noninterest Expense

Noninterest expense was $13.8 million for the year ended December 31, 2019, an increase of $1.5 million, or 12.0%, compared to $12.3 million for the year ended December 31, 2018. The increase in noninterest expense was primarily due to increased employee salary and benefits expense of approximately $0.6 million and increased professional fees of approximately $0.6 million related to the proposed acquisition of Marquis by Professional.

Noninterest expense was $3.7 million for the three months ended December 31, 2019, an increase of $0.4 million, or 12.8%, compared to $3.3 million for the three months ended December 31, 2018. The increase in noninterest expense for the quarter was primarily due to increased professional fees of approximately $0.4 million related to the proposed acquisition of Marquis by Professional.

Professional Holding Corp. Financial Condition

Total assets were $1.053 billion at December 31, 2019, compared to $963.2 million and $729.6 million at September 30, 2019 and December 31, 2018, respectively. The primary driver of the increase in total assets year-over-year was an increase in loans of approximately $183.7 million and an increase in cash and due from banks of approximately $107.1 million. The increase in total assets during the three months ended December 31, 2019 compared to the same period in 2018 was primarily due to increased interest-bearing deposits held at other banks of  $65.3 million and a $20.5 million increase in loans. Professional had nonperforming assets of  $2.6 million and $4.7 million as of December 31, 2019 and September 30, 2019, respectively, representing approximately 0.25% and 0.49% of total assets, respectively. Professional did not have any nonperforming assets as of December 31, 2018.

Total liabilities were $973.7 million at December 31, 2019, compared to $885.2 million and $649.9 million at September 30, 2019 and December 31, 2018, respectively. The primary driver of the year-over-year change in total liabilities was a $289.6 million increase in total deposits, an increase of approximately $10.0 million in current liabilities due to the drawdown on Professional’s revolving line of credit with Valley National Bank, N.A., and a $15.0 million increase in FHLB advances. The increase in total liabilities for the three months ended December 31, 2019 was primarily due to a $69.8 million increase in total deposits, an increase of approximately $10.0 million in current liabilities due to the drawdown on Professional’s revolving line of credit with Valley National Bank, N.A., and a $5.0 million increase in FHLB advances. As of December 31, 2019, noninterest-bearing deposits were $184.2 million, or approximately 20.6% of total deposits.

Total shareholders’ equity at December 31, 2019 was $79.3 million, compared to $78.0 million and $79.7 million at September 30, 2019 and December 31, 2018, respectively. The year-over-year decrease in total shareholders’ equity was primarily due to a $4.0 million increase to treasury stock due to the repurchase of shares previously issued, partially offset by net income of  $2.3 million and an $867 thousand increase in additional paid in capital. Total shareholders’ equity increased $1.3 million during the three

19

months ended December 31, 2019 primarily due to $1.0 million of net income and a $352 thousand increase to additional paid in capital. As of December 31, 2019, the book value of Professional Class A common stock was $13.52 per share, compared to $13.58 and $13.45 as of September 30, 2019 and December 31, 2018, respectively.

Marquis Financial Condition

Total assets were $646.0 million at December 31, 2019, compared to $676.8 million at September 30, 2019 and $662.3 million at December 31, 2018. The primary driver of the decrease in assets year-over-year was a decrease in loans of  $8.8 million and a decrease in cash and due from banks of  $1.6 million. The decrease in assets during the fourth quarter of 2019 was primarily due to a decrease in loans of $17.4 million and a decrease in cash and due from banks of  $15.8 million. Marquis had nonperforming assets of  $0.1 million, $1.8 million, and $2.1 million as of December 31, 2019, September 30, 2019, and December 31, 2018, respectively, representing approximately 0.02%, 0.27%, and 0.32% of total assets, respectively.

Total liabilities were $587.7 million at December 31, 2019, compared to $620.4 million at September 30, 2019 and $611.5 million at December 31, 2018. The primary driver of the year-over-year change in total liabilities was a $25.0 million decrease in FHLB advances. The decrease in total liabilities during the fourth quarter of 2019 was primarily due to a $52.0 million decline in deposits as a result of lower noninterest bearing demand deposits of  $20.8 million and lower wholesale deposits of  $34.6 million, partially offset by greater NOW and certificates of deposit of  $5.1 million.

Total shareholders’ equity at December 31, 2019 was $58.3 million, an increase of  $7.5 million from $50.8 million at December 31, 2018. The increase in total shareholders’ equity was primarily due to net income of  $7.1 million, a $0.8 million increase in additional paid-in-capital, and a $0.3 million increase to accumulated other comprehensive income reflective of shifts in fair value of investment securities available-for-sale, offset by dividends paid to shareholders of  $0.8 million. The increase to additional paid-in-capital was largely due to stock compensation expense incurred during the year on stock option grants awarded, vesting, and options exercised during 2019. Total shareholders’ equity increased $1.9 million to $58.3 million at December 31, 2019, from $56.4 million at September 30, 2019, primarily due to $1.6 million of net income and $0.2 million of additional paid-in-capital for the three months ended December 31, 2019.

20

Professional Holding Corp. Recent Financial Data (unaudited)

​

At or For the Three Months Ended December 31,

At or For the Year Ended December 31,

(Dollars in thousands, except per share data)

2019

2018

2019

2018

Balance Sheet Data

​

​

​

​

​

​

​

​

​

​

​

​

Cash and due from banks

​

$

171,980

​

$

64,842

​

$

171,980

​

$

64,842

Federal funds sold

​

​

26,970

​

​

22,041

​

​

26,970

​

​

22,041

Investment securities

​

​

28,655

​

​

20,786

​

​

28,655

​

​

20,786

Loans, net

​

​

785,167

​

​

601,480

​

​

785,167

​

​

601,480

Total assets

​

​

1,053,047

​

​

729,625

​

​

1,053,047

​

​

729,625

Total deposits

​

​

892,873

​

​

603,302

​

​

892,873

​

​

603,302

FHLB advances

​

​

55,000

​

​

40,000

​

​

55,000

​

​

40,000

Total liabilities

​

​

973,745

​

​

649,944

​

​

973,745

​

​

649,944

Total shareholders’ equity

​

​

79,302

​

​

79,681

​

​

79,302

​

​

79,681

Tangible common equity(1)

​

​

79,302

​

​

79,681

​

​

79,302

​

​

79,681

Income Statement Data

​

​

​

​

​

​

​

​

​

​

​

​

Total interest income

​

$

10,610

​

$

8,308

​

$

39,210

​

$

27,750

Total interest expense

​

​

3,172

​

​

2,002

​

​

11,167

​

​

5,837

Net interest income

​

​

7,438

​

​

6,306

​

​

28,043

​

​

21,913

Provision for loan losses

​

​

100

​

​

360

​

​

862

​

​

1,150

Total noninterest income

​

​

681

​

​

556

​

​

2,808

​

​

1,874

Total noninterest expense

​

​

6,909

​

​

5,656

​

​

26,997

​

​

19,862

Income before taxes

​

​

1,110

​

​

846

​

​

2,992

​

​

2,775

Income tax expense

​

​

122

​

​

60

​

​

656

​

​

669

Net income

​

​

988

​

​

786

​

​

2,336

​

​

2,106

Selected Professional Performance Ratios

​

​

​

​

​

​

​

​

​

​

​

​

Return on average assets (ROAA)

​

​

0.39%

​

​

0.43%

​

​

0.26%

​

​

0.33%

Return on average equity (ROAE)

​

​

5.03%

​

​

4.81%

​

​

2.94%

​

​

3.52%

Return on average tangible common equity (ROATCE)

​

​

5.03%

​

​

4.81%

​

​

2.94%

​

​

3.52%

Net interest margin

​

​

3.08%

​

​

3.62%

​

​

3.34%

​

​

3.60%

Noninterest income / average assets

​

​

0.27%

​

​

0.31%

​

​

0.32%

​

​

0.29%

Noninterest expense / average assets

​

​

2.70%

​

​

3.11%

​

​

3.04%

​

​

3.10%

Net operating income / average assets

​

​

2.91%

​

​

3.46%

​

​

3.15%

​

​

3.42%

Efficiency Ratio

​

​

85.10%

​

​

82.42%

​

​

87.51%

​

​

83.50%

Per Share Data

​

​

​

​

​

​

​

​

​

​

​

​

Common stock issued and outstanding

​

​

5,867,446

​

​

5,923,884

​

​

5,867,446

​

​

5,923,884

Basic weighted average shares outstanding

​

​

5,755,707

​

​

5,186,806

​

​

5,850,816

​

​

4,910,402

Diluted weighted average shares outstanding

​

​

5,793,494

​

​

5,406,306

​

​

5,888,607

​

​

5,129,314

Basic earnings per share

​

$

0.17

​

$

0.15

​

$

0.40

​

$

0.43

Diluted earnings per share

​

​

0.17

​

​

0.15

​

​

0.40

​

​

0.41

Book value per share

​

​

13.52

​

​

13.45

​

​

13.52

​

​

13.45

Tangible book value per share(1)

​

​

13.52

​

​

13.45

​

​

13.52

​

​

13.45

21

​

At or For the Three Months Ended December 31,

At or For the Year Ended December 31,

(Dollars in thousands, except per share data)

2019

2018

2019

2018

Asset Quality Ratios

​

​

​

​

​

​

​

​

​

​

​

​

Nonperforming assets ($)

​

$

2,646

​

$

—

​

$

2,646

​

$

—

Nonperforming assets / assets

​

​

0.25%

​

​

0.00%

​

​

0.25%

​

​

0.00%

Nonperforming loans / loans

​

​

0.34%

​

​

0.00%

​

​

0.34%

​

​

0.00%

Net charge-offs (recoveries) to average loans

​

​

0.00%

​

​

0.00%

​

​

0.00%

​

​

0.00%

Allowance for loan losses / total loans

​

​

0.83%

​

​

0.94%

​

​

0.83%

​

​

0.94%

Allowance for loan losses / nonperforming loans

​

​

247.46%

​

​

N/A

​

​

247.46%

​

​

N/A

Professional Capital Ratios

​

​

​

​

​

​

​

​

​

​

​

​

Tier 1 leverage ratio

​

​

7.8%

​

​

11.0%

​

​

7.8%

​

​

11.0%

Common equity tier 1 capital ratio

​

​

10.6%

​

​

15.7%

​

​

10.6%

​

​

15.7%

Tier 1 risk-based capital ratio

​

​

10.6%

​

​

15.7%

​

​

10.6%

​

​

15.7%

Total risk-based capital ratio

​

​

11.6%

​

​

16.9%

​

​

11.6%

​

​

16.9%

Tangible common equity / tangible assets(1)

​

​

7.5%

​

​

10.9%

​

​

7.5%

​

​

10.9%

Bank Capital Ratios

​

​

​

​

​

​

​

​

​

​

​

​

Tier 1 leverage ratio

​

​

8.7%

​

​

8.6%

​

​

8.7%

​

​

8.6%

Common equity tier 1 capital ratio

​

​

11.8%

​

​

12.3%

​

​

11.8%

​

​

12.3%

Tier 1 risk-based capital ratio

​

​

11.8%

​

​

12.3%

​

​

11.8%

​

​

12.3%

Total risk-based capital ratio

​

​

12.8%

​

​

13.4%

​

​

12.8%

​

​

13.4%

Tangible common equity / tangible assets(1)

​

​

8.4%

​

​

8.5%

​

​

8.4%

​

​

8.5%

(1)

This is a non-GAAP financial measure. Please see below for reconciliation to the most comparable GAAP number.

22

Marquis Bancorp, Inc. Recent Financial Data (unaudited)

​

At or For the Three Months Ended December 31,

At or For the Year Ended December 31,

(Dollars in thousands, except per share data)

2019

2018

2019

2018

Balance Sheet Data

​

​

​

​

​

​

​

​

​

​

​

​

Cash and due from banks

​

$

65,000

​

$

66,628

​

$

65,000

​

$

66,628

Federal funds sold

​

​

—

​

​

—

​

​

—

​

​

—

Investment Securities

​

​

30,615

​

​

33,520

​

​

30,615

​

​

33,520

Loans, net

​

​

542,568

​

​

551,364

​

​

542,568

​

​

551,364

Total assets

​

​

645,971

​

​

662,324

​

​

645,971

​

​

662,324

Total deposits

​

​

525,935

​

​

524,231

​

​

525,935

​

​

524,231

FHLB advances

​

​

50,000

​

​

75,000

​

​

50,000

​

​

75,000

Total liabilities

​

​

587,701

​

​

611,519

​

​

587,701

​

​

611,519

Total shareholders’ equity

​

​

58,269

​

​

50,805

​

​

58,269

​

​

50,805

Tangible common equity(1)

​

​

58,269

​

​

50,805

​

​

58,269

​

​

50,805

Income Statement Data

​

​

​

​

​

​

​

​

​

​

​

​

Total interest income

​

$

7,807

​

$

7,802

​

$

32,123

​

$

28,240

Total interest expense

​

​

2,553

​

​

2,182

​

​

10,217

​

​

7,073

Net interest income

​

​

5,254

​

​

5,620

​

​

21,906

​

​

21,167

Provision for loan losses

​

​

(216)

​

​

437

​

​

151

​

​

1,149

Total noninterest income

​

​

299

​

​

427

​

​

1,440

​

​

1,257

Total noninterest expense

​

​

3,690

​

​

3,271

​

​

13,811

​

​

12,326

Income before taxes

​

​

2,079

​

​

2,339

​

​

9,384

​

​

8,949

Income tax expense

​

​

464

​

​

405

​

​

2,308

​

​

2,141

Net income

​

​

1,615

​

​

1,934

​

​

7,076

​

​

6,808

Selected Marquis Performance Ratios

​

​

​

​

​

​

​

​

​

​

​

​

Return on average assets (ROAA)

​

​

0.93%

​

​

1.22%

​

​

1.06%

​

​

1.13%

Return on average equity (ROAE)

​

​

11.11%

​

​

15.40%

​

​

12.88%

​

​

14.48%

Return on average tangible common equity (ROATCE)

​

​

11.11%

​

​

15.40%

​

​

12.88%

​

​

14.48%

Net interest margin

​

​

3.11%

​

​

3.64%

​

​

3.38%

​

​

3.60%

Noninterest income / average assets

​

​

0.17%

​

​

0.27%

​

​

0.22%

​

​

0.21%

Noninterest expense / average assets

​

​

2.12%

​

​

2.06%

​

​

2.07%

​

​

2.05%

Net operating income /average assets

​

​

0.93%

​

​

1.22%

​

​

1.06%

​

​

1.13%

Efficiency Ratio

​

​

66.45%

​

​

54.09%

​

​

59.16%

​

​

54.97%

Per Share Data

​

​

​

​

​

​

​

​

​

​

​

​

Common stock issued and outstanding

​

​

3,419,188

​

​

3,411,946

​

​

3,419,188

​

​

3,411,946

Basic weighted average shares outstanding

​

​

3,419,188

​

​

3,411,946

​

​

3,417,344

​

​

3,407,680

Diluted weighted average shares outstanding

​

​

3,818,561

​

​

3,539,558

​

​

3,802,754

​

​

3,562,681

Basic earnings per share

​

$

0.47

​

$

0.57

​

$

2.07

​

$

2.00

Diluted earnings per share

​

$

0.42

​

$

0.55

​

$

1.86

​

$

1.91

Book value per share

​

$

17.04

​

$

14.89

​

$

17.04

​

$

14.89

Tangible book value per share(1)

​

$

17.04

​

$

14.89

​

$

17.04

​

$

14.89

23

​

At or For the Three Months Ended December 31,

At or For the Year Ended December 31,

(Dollars in thousands, except per share data)

2019

2018

2019

2018

Asset Quality Ratios

​

​

​

​

​

​

​

​

​

​

​

​

Nonperforming assets ($)

​

$

110

​

$

2,112

​

$

110

​

$

2,112

Nonperforming assets / assets

​

​

0.02%

​

​

0.32%

​

​

0.02%

​

​

0.32%

Nonperforming loans / loans

​

​

0.02%

​

​

0.07%

​

​

0.02%

​

​

0.07%

Net charge-offs (recoveries) to average loans

​

​

0.00%

​

​

0.09%

​

​

(0.01%)

​

​

0.09%

Allowance for loan losses / total loans

​

​

0.93%

​

​

0.87%

​

​

0.93%

​

​

0.87%

Allowance for loan losses / nonperforming loans

​

​

4,616.36%

​

​

1,203.71%

​

​

4,616.36%

​

​

1,203.71%

Marquis Capital Ratios

​

​

​

​

​

​

​

​

​

​

​

​

Tier 1 leverage ratio

​

​

8.4%

​

​

8.1%

​

​

8.4%

​

​

8.1%

Common equity tier 1 capital ratio

​

​

10.2%

​

​

8.9%

​

​

10.2%

​

​

8.9%

Tier 1 risk-based capital ratio

​

​

10.2%

​

​

8.9%

​

​

10.2%

​

​

8.9%

Total risk-based capital ratio

​

​

12.9%

​

​

11.5%

​

​

12.9%

​

​

11.5%

Tangible common equity / tangible assets(1)

​

​

9.0%

​

​

7.7%

​

​

9.0%

​

​

7.7%

Marquis Bank Capital Ratios

​

​

​

​

​

​

​

​

​

​

​

​

Tier 1 leverage ratio

​

​

9.8%

​

​

9.5%

​

​

9.8%

​

​

9.5%

Common equity tier 1 capital ratio

​

​

11.8%

​

​

10.5%

​

​

11.8%

​

​

10.5%

Tier 1 risk-based capital ratio

​

​

11.8%

​

​

10.5%

​

​

11.8%

​

​

10.5%

Total risk-based capital ratio

​

​

12.8%

​

​

11.4%

​

​

12.8%

​

​

11.4%

Tangible common equity / tangible assets(1)

​

​

10.4%

​

​

9.0%

​

​

10.4%

​

​

9.0%

(1)

This is a non-GAAP financial measure. Please see below for reconciliation to the most comparable GAAP number.

Non-GAAP Financial Measures

Some of the financial data included above are not measures of financial performance recognized by GAAP. These non-GAAP financial measures are “tangible common equity,” “tangible common equity to tangible assets” and “tangible book value per share.” We believe that these non-GAAP financial measures provide useful information to management and investors that is supplementary to Professional’s financial condition, results of operations and cash flows computed in accordance with GAAP. We have defined these terms, and the way that we use them, beginning on page 31 of this joint proxy statement/prospectus. Although we believe these non-GAAP financial measures provide a greater understanding of Professional’s business and the business of Marquis, these measures are not necessarily comparable to similar measures that may be presented by other companies. The tables below provide a reconciliation of the measures to the closest GAAP financial measures.

Professional Holding Corp. Non-GAAP Reconciliation

​

At or For the Quarter Ended December 31,

At or For the Year Ended December 31,

(Dollars in thousands, except per share data)

2019

2018

2019

2018

Tangible Common Equity

​

​

​

​

​

​

​

​

​

​

​

​

Total shareholders’ equity

​

$

79,302

​

$

79,681

​

$

79,302

​

$

79,681

Less: intangible assets

​

​

—

​

​

—

​

​

—

​

​

—

Tangible common equity

​

​

79,302

​

​

79,681

​

​

79,302

​

​

79,681

24

​

At or For the Quarter Ended December 31,

At or For the Year Ended December 31,

(Dollars in thousands, except per share data)

2019

2018

2019

2018

Tangible Common Equity to Tangible Assets

​

​

​

​

​

​

​

​

​

​

​

​

Total assets

​

$

1,053,047

​

$

729,625

​

$

1,053,047

​

$

729,625

Less: intangible assets

​

​

—

​

​

—

​

​

—

​

​

—

Tangible assets

​

$

1,053,047

​

$

729,625

​

$

1,053,047

​

$

729,625

Tangible common equity to tangible assets

​

​

8.4%

​

​

8.5%

​

​

8.4%

​

​

8.5%

Tangible Book Value Per Share

​

​

​

​

​

​

​

​

​

​

​

​

Total shareholders’ equity

​

$

79,302

​

$

79,681

​

$

79,302

​

$

79,681

Less: intangible assets

​

​

—

​

​

—

​

​

—

​

​

—

Tangible common equity

​

$

79,302

​

$

79,681

​

$

79,302

​

$

79,681

Divide by shares of common stock outstanding

​

​

5,867,446

​

​

5,923,884

​

​

5,867,446

​

​

5,923,884

Tangible book value per share

​

$

13.52

​

$

13.45

​

$

13.52

​

$

13.45

Marquis Bancorp, Inc. Non-GAAP Reconciliation

​	At or For the Quarter Ended December 31,						At or For the Year Ended December 31,
(Dollars in thousands, except per share data)	2019			2018			2019			2018
Tangible Common Equity	​			​			​			​
Total shareholders’ equity	​	$	58,269	​	$	50,805	​	$	58,269	​	$	50,805
Less: intangible assets	​	​	—	​	​	—	​	​	—	​	​	—
Tangible common equity	​	$	58,269	​	$	50,805	​	$	58,269	​	$	50,805
Tangible Common Equity to Tangible Assets	​	​	​	​	​	​	​	​	​	​	​	​
Total assets	​	$	645,971	​	$	662,324	​	$	645,971	​	$	662,324
Less: intangible assets	​	​	—	​	​	—	​	​	—	​	​	—
Tangible assets	​	$	645,971	​	$	662,324	​	$	645,971	​	$	662,324
Tangible common equity to tangible assets	​	​	9.0%	​	​	7.7%	​	​	9.0%	​	​	7.7%
Tangible Book Value Per Share	​	​	​	​	​	​	​	​	​	​	​	​
Total shareholders’ equity	​	$	58,269	​	$	50,805	​	$	58,269	​	$	50,805
Less: intangible assets	​	​	—	​	​	—	​	​	—	​	​	—
Tangible common equity	​	$	58,269	​	$	50,805	​	$	58,269	​	$	50,805
Divide by shares of common stock outstanding	​	​	3,419,188	​	​	3,411,946	​	​	3,419,188	​	​	3,411,946
Tangible book value per share	​	$	17.04	​	$	14.89	​	$	17.04	​	$	14.89

25

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF PROFESSIONAL

The tables below summarize Professional’s financial information for the periods indicated. Professional’s financial information for the years ended December 31, 2018 and 2017 was derived from its audited financial statements included elsewhere in this joint proxy statement/prospectus. Professional’s financial information for the year ended December 31, 2016 was derived from its audited financial statements which are not included in this joint proxy statement/prospectus. Professional’s financial information as of September 30, 2019 and 2018 and for the nine-month periods ended September 30, 2019 and 2018 was derived from its unaudited financial statements included elsewhere in this joint proxy statement/prospectus. The unaudited financial statements include, in the opinion of Professional’s management, all adjustments which are necessary for the fair presentation of the financial information set forth therein. You should read the following information together with the more detailed information contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Professional” and Professional’s financial statements and the accompanying notes. Professional’s historical results are not necessarily indicative of the results to be expected in any future period. Interim financial results are not necessarily indicative of results that may be expected for the full fiscal year.

(Dollars in thousands, except per share information)

As of and for the Nine Months Ended September 30,

As of and for the Years Ended December 31,

2019

2018

2018

2017

2016

Balance Sheet Data

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Cash and due from banks

​

$

104,097

​

$

55,344

​

$

64,842

​

$

20,836

​

$

6,553

Federal funds sold

​

​

26,398

​

​

21,127

​

​

22,041

​

​

16,290

​

​

10,167

Investment Securities

​

​

29,435

​

​

21,447

​

​

20,786

​

​

27,036

​

​

31,176

Loans, net

​

​

764,663

​

​

587,564

​

​

601,480

​

​

465,587

​

​

320,650

Total assets

​

​

963,193

​

​

705,480

​

​

729,625

​

​

547,021

​

​

385,184

Total deposits

​

​

823,065

​

​

603,561

​

​

603,302

​

​

459,174

​

​

323,922

FHLB advances

​

​

50,000

​

​

40,000

​

​

40,000

​

​

25,000

​

​

20,000

Total liabilities

​

​

885,221

​

​

646,629

​

​

649,944

​

​

489,429

​

​

348,278

Total shareholders’ equity

​

​

77,972

​

​

58,851

​

​

79,681

​

​

57,592

​

​

36,906

Tangible common equity(2)

​

​

77,972

​

​

58,851

​

​

79,681

​

​

57,592

​

​

36,906

Income Statement Data

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Total interest income

​

$

28,600

​

$

19,442

​

$

27,750

​

$

18,857

​

$

14,265

Total interest expense

​

​

7,995

​

​

3,835

​

​

5,837

​

​

2,869

​

​

2,122

Net interest income

​

​

20,605

​

​

15,607

​

​

21,913

​

​

15,988

​

​

12,143

Provision for loan losses

​

​

762

​

​

790

​

​

1,150

​

​

991

​

​

1,065

Total noninterest income

​

​

2,127

​

​

1,318

​

​

1,874

​

​

1,786

​

​

1,369

Total noninterest expense

​

​

20,088

​

​

14,206

​

​

19,862

​

​

13,125

​

​

10,573

Income before taxes

​

​

1,882

​

​

1,929

​

​

2,775

​

​

3,658

​

​

1,874

Income tax expense

​

​

534

​

​

609

​

​

669

​

​

1,844

​

​

743

Net income

​

​

1,348

​

​

1,320

​

​

2,106

​

​

1,814

​

​

1,131

Composition of Loan Portfolio

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Commercial real estate

​

$

262,761

​

$

175,358

​

$

191,930

​

$

156,720

​

$

116,208

Residential real estate

​

​

349,306

​

​

300,284

​

​

311,404

​

​

224,246

​

​

140,160

Commercial

​

​

114,003

​

​

95,569

​

​

83,276

​

​

59,065

​

​

37,873

Construction and development

​

​

37,925

​

​

18,496

​

​

17,608

​

​

28,272

​

​

29,036

Consumer and other loans

​

​

7,900

​

​

3,594

​

​

3,244

​

​

1,755

​

​

1,025

Deposits

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

NOW Accounts

​

$

37,297

​

$

25,996

​

$

25,088

​

$

19,515

​

$

12,087

Money market accounts

​

​

475,670

​

​

346,416

​

​

352,002

​

​

260,850

​

​

146,829

Savings accounts

​

​

10,188

​

​

2,392

​

​

2,389

​

​

2,660

​

​

2,343

Certificates of deposit

​

​

111,983

​

​

84,821

​

​

93,578

​

​

75,302

​

​

98,901

Noninterest-bearing deposits

​

​

187,927

​

​

143,936

​

​

130,245

​

​

100,847

​

​

63,762

26

(Dollars in thousands, except per share information)

As of and for the Nine Months Ended September 30,

As of and for the Years Ended December 31,

2019

2018

2018

2017

2016

Selected Professional Performance Ratios

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Return on average assets (ROAA)(1)

​

​

0.21%

​

​

0.29%

​

​

0.33%

​

​

0.39%

​

​

0.33%

Return on average equity (ROAE)(1)

​

​

2.25%

​

​

3.04%

​

​

3.52%

​

​

3.30%

​

​

3.15%

Return on average tangible common equity (ROATCE)(1)(2)

​

​

2.25%

​

​

3.04%

​

​

3.52%

​

​

3.30%

​

​

3.15%

Net interest margin(3)

​

​

3.43%

​

​

3.59%

​

​

3.60%

​

​

3.68%

​

​

3.59%

Noninterest income / average assets

​

​

0.34%

​

​

0.29%

​

​

0.29%

​

​

0.39%

​

​

0.38%

Noninterest expense / average assets

​

​

3.17%

​

​

3.09%

​

​

3.10%

​

​

2.85%

​

​

2.95%

Net operating income / average assets

​

​

3.25%

​

​

3.40%

​

​

3.42%

​

​

3.47%

​

​

3.37%

Efficiency ratio(4)

​

​

88.37%

​

​

83.94%

​

​

83.50%

​

​

73.84%

​

​

78.25%

Per Share Data(6)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Common stock issued and outstanding

​

​

5,740,486

​

​

4,818,267

​

​

5,923,884

​

​

4,818,267

​

​

3,513,478

Basic weighted average shares outstanding

​

​

5,882,519

​

​

4,818,267

​

​

4,910,402

​

​

4,705,865

​

​

3,510,365

Diluted weighted average shares outstanding

​

​

6,085,397

​

​

5,036,983

​

​

5,129,314

​

​

4,913,707

​

​

3,708,461

Basic earnings per share

​

$

0.23

​

$

0.27

​

$

0.43

​

$

0.39

​

$

0.32

Diluted earnings per share

​

​

0.22

​

​

0.26

​

​

0.41

​

​

0.37

​

​

0.30

Book value per share

​

​

13.58

​

​

12.21

​

​

13.45

​

​

11.95

​

​

10.50

Tangible book value per share(2)

​

​

13.58

​

​

12.21

​

​

13.45

​

​

11.95

​

​

10.50

Asset Quality Ratios

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Nonperforming assets ($)

​

$

4,730

​

$

—

​

$

—

​

$

—

​

$

—

Nonperforming assets / assets

​

​

0.49%

​

​

0.00%

​

​

0.00%

​

​

0.00%

​

​

0.00%

Nonperforming loans(5) / loans

​

​

0.62%

​

​

0.00%

​

​

0.00%

​

​

0.00%

​

​

0.00%

Net charge-offs (recoveries) to average loans

​

​

0.00%

​

​

0.00%

​

​

0.00%

​

​

0.00%

​

​

0.00%

Allowance for loan losses / total loans

​

​

0.84%

​

​

0.90%

​

​

0.94%

​

​

0.96%

​

​

1.09%

Allowance for loan losses / nonperforming loans(7)

​

​

136.34%

​

​

N/A

​

​

N/A

​

​

N/A

​

​

N/A

Professional Capital Ratios

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Tier 1 leverage ratio

​

​

8.4%

​

​

8.8%

​

​

11.0%

​

​

11.3%

​

​

9.8%

Common equity tier 1 capital ratio

​

​

11.5%

​

​

11.8%

​

​

15.7%

​

​

14.1%

​

​

12.0%

Tier 1 risk-based capital ratio

​

​

11.5%

​

​

11.8%

​

​

15.7%

​

​

14.1%

​

​

12.0%

Total risk-based capital ratio

​

​

12.5%

​

​

12.9%

​

​

16.9%

​

​

15.2%

​

​

13.2%

Tangible common equity / tangible assets(2)

​

​

8.1%

​

​

8.4%

​

​

10.9%

​

​

10.5%

​

​

9.6%

Bank Capital Ratios

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Tier 1 leverage ratio

​

​

8.3%

​

​

8.5%

​

​

8.6%

​

​

8.7%

​

​

8.8%

Common equity tier 1 capital ratio

​

​

11.3%

​

​

11.5%

​

​

12.3%

​

​

10.8%

​

​

10.7%

Tier 1 risk-based capital ratio

​

​

11.3%

​

​

11.5%

​

​

12.3%

​

​

10.8%

​

​

10.7%

Total risk-based capital ratio

​

​

12.4%

​

​

12.6%

​

​

13.4%

​

​

12.0%

​

​

12.0%

Tangible common equity / tangible assets(2)

​

​

8.0%

​

​

8.2%

​

​

8.5%

​

​

8.1%

​

​

8.5%

(1)

September 30, 2019 and 2018 data has been annualized.

27

(2)

This is a non-GAAP financial measure. Please see the section entitled “GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures” for a reconciliation to the most comparable GAAP number.

(3)

Net interest margin is a ratio calculated as net interest income divided by average interest earning assets for the same period.

(4)

Efficiency ratio is calculated by dividing (i) noninterest expense by (ii) net interest income plus noninterest income for the same period.

(5)

Includes non-accrual loans and loans 90 days and more past due.

(6)

Includes issued and outstanding shares of Professional Class A common stock and Professional Class B common stock.

(7)

Not applicable as of certain dates due to no nonperforming loans as of such dates.

28

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF MARQUIS

The tables below summarize Marquis’s financial information for the periods indicated. Marquis’s financial information for the years ended December 31, 2018 and 2017 was derived from its audited financial statements included elsewhere in this joint proxy statement/prospectus. Marquis’s financial information for the year ended December 31, 2016 was derived from its audited financial statements which are not included in this joint proxy statement/prospectus. Marquis’s financial information as of September 30, 2019 and 2018 and for the nine-month periods ended September 30, 2019 and 2018 from its unaudited financial statements included elsewhere in this joint proxy statement/prospectus. The unaudited financial statements include, in the opinion of Marquis’s management, all adjustments which are necessary for the fair presentation of the financial information set forth therein. You should read the following information together with the more detailed information contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Marquis” and Marquis’s financial statements and the accompanying notes. Marquis’s historical results are not necessarily indicative of the results to be expected in any future period. Interim financial results are not necessarily indicative of results that may be expected for the full fiscal year.

(Dollars in thousands, except per share information)

As of and for the Nine Months Ended September 30,

As of and for the Years Ended December 31,

2019

2018

2018

2017

2016

Balance Sheet Data

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Cash and due from banks

​

$

80,790

​

$

66,487

​

$

66,628

​

$

56,016

​

$

48,616

Federal funds sold

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Investment securities

​

​

27,668

​

​

35,035

​

​

33,520

​

​

18,264

​

​

15,003

Loans, net

​

​

559,975

​

​

533,967

​

​

551,364

​

​

458,869

​

​

361,036

Total assets

​

​

676,819

​

​

643,570

​

​

662,324

​

​

539,184

​

​

432,813

Total deposits

​

​

577,906

​

​

522,960

​

​

524,231

​

​

443,965

​

​

347,127

FHLB advances

​

​

30,000

​

​

60,000

​

​

75,000

​

​

39,000

​

​

36,000

Total liabilities

​

​

620,375

​

​

595,169

​

​

611,519

​

​

496,037

​

​

394,211

Total shareholders’ equity

​

​

56,444

​

​

48,401

​

​

50,805

​

​

43,147

​

​

38,601

Tangible common equity(2)

​

​

56,444

​

​

48,401

​

​

50,805

​

​

43,147

​

​

38,601

Income Statement Data

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Total interest income

​

$

24,317

​

$

20,438

​

$

28,240

​

$

21,303

​

$

16,765

Total interest expense

​

​

7,664

​

​

4,891

​

​

7,073

​

​

4,012

​

​

2,625

Net interest income

​

​

16,653

​

​

15,546

​

​

21,167

​

​

17,292

​

​

14,140

Provision for loan losses

​

​

367

​

​

712

​

​

1,149

​

​

921

​

​

640

Total noninterest income

​

​

1,140

​

​

830

​

​

1,257

​

​

1,309

​

​

1,168

Total noninterest expense

​

​

10,121

​

​

9,054

​

​

12,326

​

​

10,637

​

​

8,975

Income before taxes

​

​

7,305

​

​

6,611

​

​

8,949

​

​

7,042

​

​

5,693

Income tax expense

​

​

1,844

​

​

1,737

​

​

2,141

​

​

3,080

​

​

2,214

Net income

​

​

5,461

​

​

4,874

​

​

6,808

​

​

3,963

​

​

3,479

Composition of Loan Portfolio

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Commercial real estate

​

$

404,087

​

$

372,252

​

$

384,697

​

$

298,677

​

$

240,623

Residential real estate

​

​

64,985

​

​

66,022

​

​

69,568

​

​

72,006

​

​

60,500

Commercial

​

​

72,902

​

​

75,563

​

​

80,172

​

​

61,661

​

​

46,408

Construction and development

​

​

18,713

​

​

22,129

​

​

18,747

​

​

28,629

​

​

13,932

Consumer and other loans

​

​

4,882

​

​

3,180

​

​

3,408

​

​

2,210

​

​

3,061

Deposits

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

NOW accounts

​

$

17,654

​

$

19,401

​

$

15,196

​

$

14,330

​

$

10,100

Money market accounts

​

​

166,184

​

​

131,331

​

​

105,969

​

​

156,768

​

​

117,716

Savings accounts

​

​

3,549

​

​

4,611

​

​

3,751

​

​

3,067

​

​

2,810

Certificates of deposit

​

​

243,211

​

​

248,199

​

​

282,321

​

​

163,000

​

​

123,711

Noninterest-bearing deposits

​

​

147,308

​

​

119,419

​

​

116,995

​

​

106,800

​

​

92,790

29

(Dollars in thousands, except per share information)

As of and for the Nine Months Ended September 30,

As of and for the Years Ended December 31,

2019

2018

2018

2017

2016

Selected Marquis Performance Ratios

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Return on average assets (ROAA)(1)

​

​

1.11%

​

​

1.10%

​

​

1.13%

​

​

0.81%

​

​

0.86%

Return on average equity (ROAE)(1)

​

​

13.53%

​

​

14.15%

​

​

14.38%

​

​

9.58%

​

​

9.13%

Return on average tangible common equity (ROATCE)(1)(2)

​

​

13.53%

​

​

14.15%

​

​

14.38%

​

​

9.58%

​

​

9.13%

Net interest margin(3)(4)

​

​

3.48%

​

​

3.60%

​

​

3.60%

​

​

3.64%

​

​

3.59%

Noninterest income / average assets

​

​

0.23%

​

​

0.19%

​

​

0.21%

​

​

0.27%

​

​

0.29%

Noninterest expense / average assets

​

​

2.05%

​

​

2.04%

​

​

2.05%

​

​

2.18%

​

​

2.22%

Net operating income / average assets

​

​

1.11%

​

​

1.10%

​

​

1.13%

​

​

0.81%

​

​

0.86%

Efficiency ratio(5)

​

​

56.88%

​

​

55.28%

​

​

54.97%

​

​

57.19%

​

​

58.63%

Per Share Data

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Common stock issued and outstanding

​

​

3,419,188

​

​

3,411,946

​

​

3,411,946

​

​

3,394,690

​

​

3,376,759

Basic weighted average shares outstanding

​

​

3,416,730

​

​

3,406,258

​

​

3,407,680

​

​

3,390,525

​

​

3,410,566

Diluted weighted average shares outstanding

​

​

3,811,038

​

​

3,556,299

​

​

3,562,681

​

​

3,462,587

​

​

3,507,127

Basic earnings per share

​

$

1.60

​

$

1.43

​

$

2.00

​

$

1.17

​

$

1.02

Diluted earnings per share

​

​

1.43

​

​

1.37

​

​

1.91

​

​

1.14

​

​

0.99

Book value per share

​

​

16.51

​

​

14.19

​

​

14.89

​

​

12.71

​

​

11.43

Tangible book value per share(2)

​

​

16.51

​

​

14.19

​

​

14.89

​

​

12.71

​

​

11.43

Asset Quality Ratios

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Nonperforming assets ($)

​

$

1,818

​

$

2,404

​

$

2,112

​

$

2,406

​

$

—

Nonperforming assets / assets

​

​

0.27%

​

​

0.37%

​

​

0.32%

​

​

0.45%

​

​

—

Nonperforming loans / loans

​

​

0.02%

​

​

0.45%

​

​

0.07%

​

​

0.51%

​

​

—

Net charge-offs (recoveries) to average loans

​

​

(0.01)%

​

​

0.00%

​

​

0.09%

​

​

0.08%

​

​

0.00%

Allowance for loan losses / total loans

​

​

0.94%

​

​

0.91%

​

​

0.87%

​

​

0.91%

​

​

0.99%

Allowance for loan losses / nonperforming loans

​

​

4,812.73%

​

​

204.41%

​

​

1,203.71%

​

​

174.52%

​

​

N/A

Marquis Capital Ratios

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Tier 1 leverage ratio

​

​

8.4%

​

​

7.9%

​

​

8.1%

​

​

8.2%

​

​

9.4%

Common equity tier 1 capital ratio

​

​

9.7%

​

​

8.9%

​

​

8.9%

​

​

9.2%

​

​

10.6%

Tier 1 risk-based capital ratio

​

​

9.7%

​

​

8.9%

​

​

8.9%

​

​

9.2%

​

​

10.6%

Total risk-based capital ratio

​

​

12.3%

​

​

11.6%

​

​

11.5%

​

​

12.2%

​

​

14.2%

Tangible common equity / tangible assets(2)

​

​

8.3%

​

​

7.5%

​

​

7.7%

​

​

8.0%

​

​

8.9%

30

(Dollars in thousands, except per share information)	As of and for the Nine Months Ended September 30,				As of and for the Years Ended December 31,
	2019		2018		2018		2017		2016
Marquis Bank Capital Ratios	​	​	​	​	​	​	​	​	​	​
Tier 1 leverage ratio	​	9.7%	​	9.4%	​	9.5%	​	9.7%	​	11.1%
Common equity tier 1 capital ratio	​	11.2%	​	10.6%	​	10.5%	​	10.8%	​	12.7%
Tier 1 risk-based capital ratio	​	11.2%	​	10.6%	​	10.5%	​	10.8%	​	12.7%
Total risk-based capital ratio	​	12.2%	​	11.5%	​	11.4%	​	11.8%	​	13.7%
Tangible common equity / tangible assets(2)	​	9.6%	​	8.9%	​	9.0%	​	9.4%	​	10.8%

(1)

September 30, 2019 and 2018 data has been annualized.

(2)

This is a non-GAAP financial measure. Please see the section entitled “GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures” for a reconciliation to the most comparable GAAP number.

(3)

Net interest margin is a ratio calculated as net interest income divided by average interest earning assets for the same period.

(4)

Marquis’s net interest margin is presented at the bank level and excludes the impact of the interest expense paid on Marquis’s subordinated debt at the holding company level.

(5)

Efficiency ratio is calculated by dividing (i) noninterest expense by (ii) net interest income plus noninterest income for the same period.

(6)

Includes non-accrual loans and loans 90 days and more past due.

GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures

Professional’s accounting and reporting policies conform to U.S. generally accepted accounting principles(“GAAP”), and prevailing practices in the banking industry. However, Professional and Marquis also evaluate their respective performance based on certain additional financial measures discussed in this joint proxy statement/prospectus as being “non-GAAP financial measures.” A financial measure is classified as a non-GAAP financial measure if that financial measure excludes or includes amounts, or is subject to adjustments that have the effect of excluding or including amounts, that are not included or excluded, as the case may be, in the most directly comparable measure calculated and presented in accordance with GAAP in the applicable company’s statements of income, balance sheets or statements of cash flows. Non-GAAP financial measures do not include operating and other statistical measures or ratios that are calculated using exclusively financial measures presented in accordance with GAAP.

Professional and Marquis believe that these non-GAAP financial measures provide useful information to management and investors that is supplementary to their respective financial condition, results of operations and cash flows computed in accordance with GAAP. Professional’s and Marquis’s management uses the non-GAAP financial measures set forth below in its analysis of the respective company’s performance. However, non-GAAP financial measures have a number of limitations, are not necessarily comparable to GAAP measures and should not be considered in isolation or viewed as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Moreover, the manner in which Professional or Marquis calculates non-GAAP financial measures may differ from that of other companies reporting non-GAAP measures with similar names. You should understand how such other companies calculate their financial measures that may be similar or have names that are similar to the non-GAAP financial measures discussed herein when comparing such non-GAAP financial measures.

•

“Tangible common equity” is a non-GAAP financial measure defined as total shareholders’ equity, less intangible assets.

•

“Tangible assets” is a non-GAAP financial measure defined as total assets, less intangible assets.

31

•

“Tangible common equity / tangible assets” is a non-GAAP financial measure defined as tangible common equity divided by tangible assets.

•

“Return on average tangible common equity” is a non-GAAP financial measure defined as (i) net income divided by (ii) average shareholders’ equity, less average intangible assets.

•

“Tangible book value per share” is a non-GAAP financial measure defined as (i) total shareholders’ equity, less intangible assets, divided by (ii) shares of common stock outstanding.

The following unaudited reconciliation tables provide a more detailed analysis of these non-GAAP financial measures for Professional and Marquis. Although the tables below present tangible common equity, return on average tangible common equity, and tangible book value per share for Professional and Marquis, because neither Professional nor Marquis has any intangible assets, these measures are both equal to their most closely comparable GAAP amounts: total shareholders’ equity, return on average equity, and book value per share, respectively. However, Professional and Marquis believe these non-GAAP metrics are commonly used in the banking industry and present them in this joint proxy statement/prospectus for that reason.

Professional Holding Corp.

​	As of September 30,						As of December 31,
(Dollars in thousands, except per share data)	2019			2018			2018			2017			2016
Tangible Common Equity	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Total shareholders’ equity	​	$	77,972	​	$	58,851	​	$	79,681	​	$	57,592	​	$	36,906
Less: intangible assets	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—
Tangible common equity	​	$	77,972	​	$	58,851	​	$	79,681	​	$	57,592	​	$	36,906

Professional Holding Corp. Non-GAAP Reconciliation

​

At or For the Quarter Ended December 31,

At or For the Year Ended December 31,

(Dollars in thousands, except per share data)

2019

2018

2019

2018

Tangible Common Equity

​

​

​

​

​

​

​

​

​

​

​

​

Total shareholders’ equity

​

$

79,302

​

$

79,681

​

$

79,302

​

$

79,681

Less: intangible assets

​

​

—

​

​

—

​

​

—

​

​

—

Tangible common equity

​

​

79,302

​

​

79,681

​

​

79,302

​

​

79,681

​

Nine Months Ended September 30,

Years Ended December 31,

(Dollars in thousands, except per share data)

2019

2018

2018

2017

2016

Return on Average Tangible Common Equity

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Net income

​

$

1,348

​

$

1,320

​

$

2,106

​

$

1,814

​

$

1,131

Add: intangible asset amortization, net of taxes

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Net income excluding intangible amortization, as adjusted

​

​

1,348

​

​

1,320

​

​

2,106

​

​

1,814

​

​

1,131

Average total equity

​

​

79,790

​

​

57,989

​

​

59,835

​

​

55,016

​

​

35,880

Less: average intangible assets

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Divide by average tangible common equity

​

​

79,790

​

​

57,989

​

​

59,835

​

​

55,016

​

​

35,880

Return on average tangible common equity(1)

​

​

2.25%

​

​

3.04%

​

​

3.52%

​

​

3.30%

​

​

3.15%

32

​

As of September 30,

As of December 31,

(Dollars in thousands, except per share data)

2019

2018

2018

2017

2016

Tangible Book Value Per Share

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Total shareholders’ equity

​

$

77,972

​

$

58,851

​

$

79,681

​

$

57,592

​

$

36,906

Less: intangible assets

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Tangible common equity

​

​

77,972

​

​

58,851

​

​

79,681

​

​

57,592

​

​

36,906

Divide by shares of common stock outstanding

​

​

5,740,486

​

​

4,818,267

​

​

5,923,884

​

​

4,818,267

​

​

3,513,478

Tangible book value per share

​

$

13.58

​

$

12.21

​

$

13.45

​

$

11.95

​

$

10.50

Marquis Bancorp, Inc.

​	As of September 30,						As of December 31,
(Dollars in thousands, except per share data)	2019			2018			2018			2017			2016
Tangible Common Equity	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Total shareholders’ equity	​	$	56,444	​	$	48,401	​	$	50,805	​	$	43,147	​	$	38,601
Less: intangible assets	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—
Tangible common equity	​	$	56,444	​	$	48,401	​	$	50,805	​	$	43,147	​	$	38,601

​

Nine Months Ended September 30,

Years Ended December 31,

(Dollars in thousands, except per share data)

2019

2018

2018

2017

2016

Return on Average Tangible Common Equity

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Net income

​

$

5,461

​

$

4,874

​

$

6,808

​

$

3,963

​

$

3,479

Add: intangible asset amortization, net of taxes

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Net income excluding intangible amortization, as adjusted

​

​

5,461

​

​

4,874

​

​

6,808

​

​

3,963

​

​

3,479

Average total equity

​

​

53,982

​

​

46,071

​

​

47,018

​

​

41,321

​

​

38,038

Less: average intangible assets

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Divide by average tangible common equity

​

​

53,982

​

​

46,071

​

​

47,018

​

​

41,321

​

​

38,038

Return on average tangible common equity(1)

​

​

13.53%

​

​

14.15%

​

​

14.48%

​

​

9.59%

​

​

9.15%

​

As of September 30,

As of December 31,

(Dollars in thousands, except per share data)

2019

2018

2018

2017

2016

Tangible common equity / tangible assets

​

​

​

​

​

Total assets

​

$

676,819

​

$

643,570

​

$

662,324

​

$

539,184

​

$

432,813

Less: intangible assets

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Tangible assets

​

​

676,819

​

​

643,570

​

​

662,324

​

​

539,184

​

​

432,813

Tangible common equity / tangible assets

​

​

8.3%

​

​

7.5%

​

​

7.7%

​

​

8.0%

​

​

8.9%

33

​

As of September 30,

As of December 31,

(Dollars in thousands, except per share data)

2019

2018

2018

2017

2016

Tangible Book Value Per Share

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Total shareholders’ equity

​

$

56,444

​

$

48,401

​

$

50,805

​

$

43,147

​

$

38,601

Less: intangible assets

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Tangible common equity

​

​

56,444

​

​

48,401

​

​

50,805

​

​

43,147

​

​

38,601

Divide by shares of common stock outstanding

​

​

3,419,188

​

​

3,411,946

​

​

3,411,946

​

​

3,394,690

​

​

3,376,759

Tangible book value per share

​

$

16.51

​

$

14.19

​

$

14.89

​

$

12.71

​

$

11.43

(1)

September 30, 2019 and 2018 data has been annualized.

34

UNAUDITED PRO FORMA CONDENSED COMBINED
CONSOLIDATED FINANCIAL INFORMATION

The following is unaudited pro forma combined condensed financial information for Professional and Marquis, giving effect to the pending acquisition of Marquis. The unaudited pro forma combined condensed statement of financial condition as of September 30, 2019 is presented as if the pending acquisition of Marquis occurred as of that date. The unaudited pro forma combined condensed statements of operations for the nine months ended September 30, 2019 and the year ended December 31, 2018 are presented as if the pending acquisition of Marquis occurred on January 1, 2018. The unaudited pro forma combined condensed financial information is not intended to reflect the actual results that would have been achieved had the acquisition actually occurred on those dates.

The unaudited pro forma combined condensed financial information has been prepared using the acquisition method of accounting for business combinations under GAAP. Professional is the acquirer for accounting purposes in its pending acquisition of Marquis. The pro forma adjustments are preliminary, based on estimates, and are subject to change as more information becomes available and after final analyses of the fair values of both the tangible and intangible assets acquired and the liabilities assumed are completed. Accordingly, the final fair value adjustments may be materially different from those presented in the unaudited pro forma financial information.

Under the acquisition method of accounting, the assets and liabilities and any identifiable intangible assets being acquired are recorded at the respective fair values on the date the merger becomes effective. The fair values on the date the acquisition becomes effective represent management’s best estimates based on available information and facts and circumstances in existence on the date the merger becomes effective. There may be differences between these preliminary estimates of fair value and the final acquisition accounting, which differences could have a material impact on the accompanying unaudited pro forma combined condensed financial information and the combined company’s future results of operations and financial position. In addition, the value of the final merger consideration will be based on the closing price of Professional Class A common stock on the date the merger becomes effective. A per share price of $18.25, which represents the valuation of Professional’s December 2018 capital raise, was used for purposes of presenting the pro forma combined condensed financial information.

In connection with the plan to integrate the operations of Marquis, Professional anticipates that non-recurring charges, such as costs associated with systems implementation, severance and other costs related to exit or disposal activities, will be incurred. Professional also anticipates that it will incur merger-related costs subsequent to the closing of its pending acquisition of Marquis. These charges will affect Professional’s consolidated results of operations in the periods in which they are recorded. The unaudited pro forma combined condensed statements of operations do not include the effects of any non-recurring costs associated with any restructuring or integration activities resulting from the merger that had not been incurred as of September 30, 2019, as they are non-recurring in nature and not factually supportable at this time. The unaudited pro forma combined condensed statements of operations do not include any potential operating synergies or revenue enhancements that may be realized subsequent to the pending acquisition.

The unaudited pro forma combined condensed financial information is provided for illustrative purposes only. The unaudited pro forma combined condensed financial information is not necessarily, and should not be assumed to be, an indication of the results that would have been achieved had the transactions been completed as of the dates indicated or that may be achieved in the future. The preparation of the unaudited pro forma combined condensed financial information and related adjustments required management to make certain assumptions and estimates. The unaudited pro forma combined condensed financial information should be read in conjunction with and is qualified in its entirety by reference to Professional’s historical consolidated financial statements and related notes thereto, and Marquis’s historical financial statements and related notes thereto, in each case included in this joint proxy statement/prospectus. See “Cautionary Note Regarding Forward-Looking Information” for additional information regarding forward-looking statements contained in the unaudited pro forma combined condensed financial statements and notes thereto that are not historical facts, and which are based on current expectations, estimates and projections, which may be subject to risks or uncertainties.

35

PROFESSIONAL HOLDING CORP. AND MARQUIS BANCORP, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 2019

​

​

​

​

​

​

​

Merger Adjustments

(Dollars in thousands)

Professional Holding Corp.

Marquis Bancorp, Inc.

Debit

​

Credit

​

Pro Forma Combined

Assets

​

​

​

​

​

​

​

Cash and cash equivalents

​

$

130,495

​

$

80,790

​

​

​

​

$

5,604

a

​

$

205,681

Securities available for sale, at fair value

​

​

28,236

​

​

26,171

​

​

​

​

​

​

​

​

​

54,407

Securities held to maturity

​

​

224

​

​

1,498

​

​

​

​

​

5

b

​

​

1,717

Equity Securities

​

​

975

​

​

—

​

​

​

​

​

​

​

​

​

975

FRB and FHLB stock, at cost

​

​

4,783

​

​

1,871

​

​

​

​

​

​

​

​

​

6,654

Loans held for sale

​

​

1,333

​

​

—

​

​

​

​

​

​

​

​

​

1,333

Loans, net of unearned income

​

​

769,779

​

​

565,269

​

​

​

​

​

13,032

c

​

​

1,322,016

Less allowance for loan losses

​

​

(6,449)

​

​

(5,294)

​

5,294

c

​

​

​

​

​

​

(6,449)

Net loans

​

​

764,663

​

​

559,975

​

5,294

​

​

​

13,032

​

​

​

1,316,900

Premises and equipment (net)

​

​

3,999

​

​

1,000

​

​

​

​

​

​

​

​

​

4,999

Bank owned life insurance

​

​

16,728

​

​

—

​

​

​

​

​

​

​

​

​

16,728

Other real estate owned, net of valuation allowance

​

​

—

​

​

1,708

​

​

​

​

​

700

d

​

​

1,008

Core deposit intangible

​

​

—

​

​

—

​

5,654

e

​

​

​

​

​

​

5,654

Goodwill

​

​

—

​

​

—

​

36,259

f

​

​

​

​

​

​

36,259

Deferred tax asset, net

​

​

1,627

​

​

1,594

​

588

g

​

​

​

​

​

​

3,809

Other assets

​

​

11,463

​

​

2,212

​

2,518

h

​

​

​

​

​

​

16,193

Total assets

​

$

963,193

​

$

676,819

​

50,313

​

​

​

19,341

​

​

$

1,670,984

Liabilities

​

​

​

​

​

​

​

Non-interest-bearing demand deposits

​

​

187,927

​

​

147,308

​

​

​

​

​

​

​

​

​

335,235

Interest bearing deposits

​

​

635,138

​

​

430,598

​

​

​

​

​

​

​

​

​

1,065,736

Total deposits

​

​

823,065

​

​

577,906

​

​

​

​

​

​

​

​

​

1,400,971

Other borrowed funds

​

​

50,000

​

​

30,000

​

​

​

​

​

​

​

​

​

80,000

Subordinated debt, net of issuance costs

​

​

—

​

​

9,710

​

​

​

​

​

​

​

​

​

9,710

Other liabilities

​

​

12,156

​

​

2,759

​

​

​

​

​

2,518

h

​

​

17,433

Total liabilities

​

​

885,221

​

​

620,375

​

​

​

​

​

2,518

​

​

​

1,508,114

Shareholders’ equity

​

​

​

​

​

​

​

Common stock and surplus

​

​

72,572

​

​

36,096

​

36,096

i

​

​

84,898

i

​

​

157,470

Retained earnings

​

​

5,463

​

​

20,301

​

20,301

i

​

​

​

​

​

​

5,463

Accumulated other comprehensive income

​

​

(63)

​

​

47

​

47

b

​

​

​

​

​

​

(63)

Total shareholders’ equity

​

​

77,972

​

​

56,444

​

56,444

​

​

​

84,898

​

​

​

162,870

Total liabilities and shareholders’ equity

​

$

963,193

​

$

676,819

​

56,444

​

​

​

87,416

​

​

$

1,670,984

See accompanying notes to the unaudited pro forma condensed combined consolidated financial statements.

36

PROFESSIONAL HOLDING CORP. AND MARQUIS BANCORP, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 2018

(Dollars in thousands)

Professional Holding Corp.

Marquis Bancorp, Inc.

Pro Forma Adjustments

​

Pro Forma Combined

Interest and dividend income

​

​

​

​

​

Interest and fees on loans

​

$

25,633

​

$

26,797

​

$

3,258

j

​

$

55,688

Interest income on securities and restricted stock

​

​

829

​

​

664

​

​

​

​

​

​

1,493

Other interest income

​

​

1,288

​

​

779

​

​

​

​

​

​

2,067

Total interest and dividend income

​

​

27,750

​

​

28,240

​

​

3,258

​

​

​

59,248

Interest expense

​

​

​

​

​

Interest expense on deposits

​

​

5,104

​

​

5,473

​

​

​

​

​

​

10,577

Other interest expense

​

​

733

​

​

1,600

​

​

​

​

​

​

2,333

Total interest expense

​

​

5,837

​

​

7,073

​

​

—

​

​

​

12,910

Net interest income

​

​

21,913

​

​

21,167

​

​

3,258

​

​

​

46,338

Provision for loan losses

​

​

1,150

​

​

1,149

​

​

​

​

​

​

2,299

Net interest income after provision for loan losses

​

​

20,763

​

​

20,018

​

​

3,258

​

​

​

44,039

Noninterest income

​

​

​

​

​

Service charges on deposit accounts

​

​

283

​

​

750

​

​

​

​

​

​

1,033

Income from Company owned life insurance

​

​

288

​

​

—

​

​

​

​

​

​

288

Gain on sale of loans, net of commissions

​

​

—

​

​

250

​

​

​

​

​

​

250

Other operating income

​

​

1,303

​

​

257

​

​

​

​

​

​

1,560

Total non-interest income

​

​

1,874

​

​

1,257

​

​

—

​

​

​

3,131

Noninterest expense

​

​

​

​

​

Salaries and employee benefits

​

​

13,538

​

​

7,320

​

​

​

​

​

​

20,858

Net occupancy and depreciation expense

​

​

1,872

​

​

1,335

​

​

​

​

​

​

3,207

Data processing

​

​

624

​

​

657

​

​

​

​

​

​

1,281

Marketing

​

​

430

​

​

193

​

​

​

​

​

​

623

Professional fees

​

​

693

​

​

415

​

​

​

​

​

​

1,108

Regulatory assessments

​

​

535

​

​

442

​

​

​

​

​

​

977

Amortization on intangibles

​

​

—

​

​

—

​

​

565

k

​

​

565

Other noninterest expense

​

​

2,170

​

​

1,964

​

​

​

​

​

​

4,134

Total non-interest expense

​

​

19,862

​

​

12,326

​

​

565

​

​

​

32,753

Net income before taxes

​

​

2,775

​

​

8,949

​

​

2,693

​

​

​

14,417

Income tax expenses (benefit)

​

​

669

​

​

2,141

​

​

681

l

​

​

3,491

Net income

​

$

2,106

​

$

6,808

​

$

2,012

​

​

$

10,926

Basic earnings per common share

​

$

0.43

​

$

2.00

​

​

​

​

​

$

1.21

Diluted earnings per common share

​

$

0.41

​

$

1.91

​

​

​

​

​

$

1.16

Weighted average common shares outstanding

​

​

4,910,401

​

​

3,407,680

​

​

697,893

m

​

​

9,015,974

Weighted average diluted common shares outstanding

​

​

5,129,314

​

​

3,562,681

​

​

729,637

m

​

​

9,421,632

See accompanying notes to the unaudited pro forma condensed combined consolidated financial statements.

37

PROFESSIONAL HOLDING CORP. AND MARQUIS BANCORP, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED STATEMENT OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019

(Dollars in thousands)

Professional Holding Corp.

Marquis Bancorp, Inc.

Pro Forma Adjustments

​

Pro Forma Combined

Interest and dividend income

​

​

​

​

​

Interest and fees on loans

​

$

26,289

​

$

22,849

​

$

2,444

j

​

$

51,582

Interest income on securities and restricted stock

​

​

504

​

​

609

​

​

​

​

​

​

1,113

Other interest income

​

​

1,807

​

​

859

​

​

​

​

​

​

2,666

Total interest and dividend income

​

​

28,600

​

​

24,317

​

​

2,444

​

​

​

55,361

Interest expense

​

​

​

​

​

Interest expense on deposits

​

​

7,200

​

​

6,387

​

​

​

​

​

​

13,587

Other interest expense

​

​

795

​

​

1,277

​

​

​

​

​

​

2,072

Total interest expense

​

​

7,995

​

​

7,664

​

​

​

​

​

​

15,659

Net interest income

​

​

20,605

​

​

16,653

​

​

2,444

​

​

​

39,702

Provision for loan losses

​

​

762

​

​

367

​

​

​

​

​

​

1,129

Net interest income after provision for loan losses

​

​

19,843

​

​

16,286

​

​

2,444

​

​

​

38,573

Non-interest income

​

​

​

​

​

Service charges on deposit accounts

​

​

542

​

​

593

​

​

—

​

​

​

1,135

Income from Company owned life insurance

​

​

278

​

​

—

​

​

—

​

​

​

278

Gain on sale of mortgage loans, net of commissions

​

​

—

​

​

312

​

​

—

​

​

​

312

Other operating income

​

​

1,307

​

​

235

​

​

—

​

​

​

1,542

Total non-interest income

​

​

2,127

​

​

1,140

​

​

—

​

​

​

3,267

Non-interest expense

​

​

​

​

​

Salaries and employee benefits

​

​

13,534

​

​

6,155

​

​

​

​

​

​

19,689

Net occupancy and depreciation expense

​

​

1,824

​

​

1,111

​

​

​

​

​

​

2,935

Data processing

​

​

489

​

​

456

​

​

​

​

​

​

945

Marketing

​

​

400

​

​

96

​

​

​

​

​

​

496

Professional fees

​

​

1,106

​

​

516

​

​

​

​

​

​

1,622

Regulatory assessments

​

​

353

​

​

199

​

​

​

​

​

​

552

Amortization expense

​

​

—

​

​

—

​

​

424

k

​

​

424

Other non-interest expense

​

​

2,382

​

​

1,588

​

​

​

​

​

​

3,970

Total non-interest expense

​

​

20,088

​

​

10,121

​

​

424

l

​

​

30,633

Net income before taxes

​

​

1,882

​

​

7,305

​

​

2,020

​

​

​

11,207

Income tax expenses (benefit)

​

​

534

​

​

1,844

​

​

511

l

​

​

2,889

Net income

​

$

1,348

​

$

5,461

​

$

1,509

​

​

$

8,318

Basic earnings per common share

​

$

0.23

​

$

1.60

​

​

​

​

​

$

0.83

Diluted earnings per common share

​

$

0.22

​

$

1.43

​

​

​

​

​

$

0.78

Weighted average common shares outstanding

​

​

5,882,519

​

​

3,416,730

​

​

699,746

m

​

​

9,998,995

Weighted average diluted common shares outstanding

​

​

6,085,397

​

​

3,811,038

​

​

780,501

m

​

​

10,676,936

See accompanying notes to the unaudited pro forma condensed combined consolidated financial statements.

38

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
CONSOLIDATED FINANCIAL INFORMATION

Note A — Basis of Presentation

On August 9, 2019, Professional entered into a merger agreement with Marquis. The merger agreement provides that at the effective time of the merger, each outstanding share of Marquis common stock, except for dissenting shares and shares of Marquis common stock owned by Marquis, Professional or their wholly owned subsidiaries (other than (i) shares held in trust accounts, managed accounts, mutual funds and the like, or otherwise held in a fiduciary or agency capacity, that are beneficially owned by third parties and (ii) shares held, directly or indirectly, by Marquis or Professional in respect of a debt previously contracted), shall cease to be outstanding and shall be converted into and exchanged for the right to receive 1.2048 shares of Professional Class A common stock.

The unaudited pro forma condensed combined consolidated financial information of Professional’s financial condition and results of operations, including per share data, are presented after giving effect to the merger. The pro forma financial information assumes that the merger with Marquis was consummated on January 1, 2018 for purposes of the unaudited pro forma condensed combined consolidated statements of income and on September 30, 2019 for purposes of the unaudited pro forma condensed combined consolidated balance sheet and gives effect to the merger, for purposes of the unaudited pro forma condensed combined consolidated statement of income, as if it had been effective during the entire period presented.

The merger will be accounted for using the acquisition method of accounting; accordingly, the difference between the purchase price over the estimated fair value of the assets acquired (including identifiable intangible assets) and liabilities assumed will be recorded as goodwill.

The pro forma condensed combined consolidated financial information includes estimated adjustments to record the assets and liabilities of Marquis at their respective fair values and represents management’s estimates based on available information. The pro forma adjustments included herein may be revised as additional information becomes available and as additional analysis is performed. The final allocation of the purchase price will be determined within 12 months after the merger is completed and after completion of a final analysis to determine the fair values of Marquis’s tangible, and identifiable intangible, assets and liabilities as of the effective time of the merger.

Note B — Pro Forma Adjustments

The following pro forma adjustments have been reflected in the unaudited pro forma condensed combined consolidated financial information. All adjustments are based on current valuations, estimates, and assumptions. Subsequent to the completion of the merger, Professional will engage an independent third-party valuation firm to determine the fair value of the assets acquired and liabilities assumed which could significantly change the amount of the estimated fair values used in pro forma condensed combined consolidated financial information presented.

(a)

Represents the estimated $5.6 million after-tax impact of transaction-related expenses.

(b)

Marquis’s securities have been marked to current market value as of September 30, 2019, and accumulated other comprehensive income (“AOCI”) associated with the bond portfolio has been eliminated from capital.

(c)

Marquis’s $5.3 million Allowance for Loan and Lease Losses (“ALLL”) has been eliminated and replaced with an estimated fair value adjustment of  $13.0 million based on Professional’s review of the credit risks inherent in Marquis’s loan portfolio.

(d)

Represents a fair value adjustment of  $0.7 million to MBI’s other real estate owned as of September 30, 2019.

(e)

A $5.7 million Core Deposit Intangible (“CDI”) has been recorded on Marquis’s $282.7 million of transaction accounts. This estimate represents a 2.0% premium based on current market data for similar transactions. This intangible asset is expected to be amortized over 10 years using the straight line method.

 

39

(f)

Goodwill of  $36.3 million has been generated as a result of the total purchase price and the fair value of assets acquired exceeding the fair value of liabilities assumed. (See Note C).

(g)

A $0.6 million Deferred Tax Asset has been estimated based on 25.3% of the net impact of all market adjustments.

(h)

Adjustment to other assets and other liabilities of  $2.5 million is based on the assumption of Marquis Bank’s adoption of ASU 2016-02, Leases, which would create both a right of use asset and right of use liability based on Marquis Bank’s current long-term lease obligations.

(i)

Adjustments to the capital accounts reflect the exchange of Marquis’s existing 3,419,188 shares of common stock for 4,119,438 shares of Professional Class A common stock, valued at $18.25 per share, plus the conversion of Marquis’s 964,386 existing options into 1,161,892 Professional Class A common stock options, net of current weighted average exercise price of  $11.91 per Marquis option (or $9.89 per share of Professional Class A common stock after giving effect to the conversion of Marquis options based upon the 1.2048 exchange ratio).

(j)

Accretion of 25% of the $13.0 million loan mark over a four-year period.

(k)

Represents amortization of the CDI (see Note E).

(l)

Income tax expense (benefit) based on an effective tax rate of 25.3% and transaction related income and expense adjustments.

(m)

Adjustments to weighted outstanding shares outstanding and weighted average diluted shares outstanding were made based on the 1.2048:1 exchange ratio

Note C — Pro Forma Allocation of Purchase Price

The following table shows the unaudited pro forma allocation of the consideration paid for Marquis’s common equity to the acquired identifiable assets and liabilities assumed and the pro forma goodwill generated from the transaction:

Purchase Price	​		​
(Dollars in thousands)	​		​
Fair value of consideration	​	​	$	84,898
Total pro forma purchase price	​	​	​	84,898
Fair value of assets acquired	​		​
Cash and cash equivalents	$	75,186	​
Securities	​	27,664	​
Net loans	​	552,237	​
Premises and equipment (net)	​	1,000	​
Bank owned life insurance	​	—	​
Other real estate owned, net of valuation allowance	​	1,008	​
Core deposit intangibles, net	​	5,654	​
Deferred tax asset	​	588	​
Other assets	​	5,677	​
Total assets	​	669,014	​

 

40

Fair value of liabilities assumed	​	​
Deposits	577,906	​
Long-term borrowings	39,710	​
Other liabilities	2,759	​
Total liabilities	620,375	​
Net assets acquired	​	48,639
Preliminary pro forma goodwill	​	36,259

The following table depicts the sensitivity of the purchase price and resulting goodwill to changes in the price of Professional Class A common stock at a price of  $18.25 as of September 30, 2019.

​	Purchase Price			Estimated Goodwill			Equity
Up 20%	​	$	101,878	​	$	53,239	​	$	179,850
Up 10%	​	​	93,388	​	​	44,749	​	​	171,360
As presented in pro forma	​	​	84,898	​	​	36,259	​	​	162,870
Down 10%	​	​	76,408	​	​	27,769	​	​	154,380
Down 20%	​	​	67,918	​	​	19,280	​	​	145,896

 

41

HISTORICAL AND UNAUDITED PRO FORMA PER SHARE DATA

The following table shows per common share data regarding basic and diluted net income, book value and cash dividends per share for (1) Professional and Marquis on a historical basis, (2) Professional after giving effect to the merger, and (3) Marquis on a pro forma equivalent basis. The pro forma basic and diluted net income per share information was computed as if the merger had been completed on January 1, 2018. The pro forma book value per share information was computed as if the merger had been completed on the dates for which the book values were calculated. The pro forma dividends per share represent Professional’s historical dividends per share.

The Marquis pro forma equivalent per share amounts were calculated by multiplying the pro forma combined per share amounts by the exchange ratio of 1.2048 so that the per share amounts equate to the respective values for one share of Marquis common stock.

The following pro forma information has been derived from and should be read in conjunction with Professional’s consolidated financial statements and Marquis’s consolidated financial statements for the year ended December 31, 2018 and the nine-month period ended September 30, 2019, included elsewhere in this joint proxy statement/prospectus. This information is presented for illustrative purposes only. You should not place undue reliance on the pro forma combined or pro forma equivalent amounts as they are not necessarily indicative of the net income per share, book value per share, operating results or financial position that would have occurred if the merger had been completed as of the dates indicated, nor are they necessarily indicative of the future net income per share, book value per share, operating results or financial position of the combined company. The pro forma information, although helpful in illustrating the financial characteristics of Professional as the surviving company under one set of assumptions, does not reflect the benefits of expected cost savings, opportunities to earn additional revenue, the impact of restructuring and merger-related costs, or other factors that may result as a consequence of the merger and, accordingly, does not attempt to predict or suggest future results. The information below should be read in conjunction with “Unaudited Pro Forma Condensed Combined Consolidated Financial Information” beginning on page 35 and the historical financial statements and the notes thereto for Professional and Marquis, included elsewhere in this joint proxy statement/prospectus.

​	As of and for the nine months ended September 30, 2019			As of and for the year ended December 31, 2018
Professional Holding Corp. Historical	​			​
Net income per common share, basic	​	$	0.23	​	$	0.43
Net income per common share, diluted	​	​	0.22	​	​	0.41
Book value per common share, basic	​	​	13.58	​	​	13.45
Tangible book value per share, basic(1)	​	​	13.58	​	​	13.45
Cash dividends declared per share	​	​	—	​	​	—
Marquis Bancorp, Inc. Historical	​			​
Net income per common share, basic	​	​	1.60	​	​	2.00
Net income per common share, diluted	​	​	1.43	​	​	1.91
Book value per common share, basic	​	​	16.51	​	​	14.89
Tangible book value per share, basic(1)	​	​	16.51	​	​	14.89
Cash dividends declared per share	​	​	0.22	​	​	—
Pro Forma Combined	​			​
Net income per common share, basic	​	​	0.83	​	​	1.21
Net income per common share, diluted	​	​	0.78	​	​	1.16
Book value per common share, basic	​	​	16.52	​	​	15.84
Tangible book value per share, basic	​	​	12.27	​	​	12.22
Cash dividends declared per share	​	​	—	​	​	—

 

42

​	As of and for the nine months ended September 30, 2019		As of and for the year ended December 31, 2018
Pro Forma Marquis Bancorp, Inc. Equivalent	​		​
Net income per common share, basic	​	1.00	​	1.46
Net income per common share, diluted	​	0.94	​	1.40
Book value per common share, basic	​	19.90	​	19.08
Tangible book value per share, basic	​	14.78	​	14.73
Cash dividends declared per share	​	—	​	—

(1)

This is a non-GAAP financial measure. Please see the section entitled “GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures” for a reconciliation to the most comparable GAAP number.

​	Actual
​	September 30, 2019		December 31, 2018
Professional End of Period Shares Outstanding	​	5,740,486	​	5,923,884
Marquis End of Period Shares Outstanding	​	3,419,188	​	3,411,946
Professional End of Period Diluted Shares Outstanding	​	5,921,719	​	6,118,667
Marquis End of Period Diluted Shares Outstanding	​	4,105,517	​	3,914,385

​	Pro Forma
Company End of Period Shares Outstanding	​	9,859,924	10,034,597
Company End of Period Diluted Shares Outstanding	​	10,868,046	10,834,718

 

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RISK FACTORS

In addition to general investment risks and the other information contained in this joint proxy statement/prospectus, including the matters addressed under the section “Cautionary Note Regarding Forward-Looking Information,” you should carefully consider the following risk factors in deciding how to vote for the proposals presented in this joint proxy statement/prospectus. You should also consider the other information in this joint proxy statement/prospectus. See “Where You Can Find More Information.”

Risks Related to the Merger

Because the market price of Professional Class A common stock may fluctuate, holders of Marquis common stock cannot be certain of the market value of the merger consideration they will receive.

Under the terms of the merger agreement, each share of Marquis common stock outstanding immediately prior to the effective time (excluding certain shares held by Marquis, Professional or their wholly-owned subsidiaries and dissenting shares described below) will be converted into the right to receive 1.2048 shares of Professional Class A common stock, subject to cash in lieu of fractional shares of Professional Class A common stock. This exchange ratio will not be adjusted for changes in the market price of either Professional Class A common stock or Marquis common stock and the merger agreement cannot be terminated due to a change in the price. Changes in the price of Professional Class A common stock prior to the merger will affect the value that holders of Marquis common stock will receive in the merger.

Stock price changes may result from a variety of factors, including the completion of Professional’s previously announced initial public offering, the consummation of which is a condition to each party’s obligation to consummate the merger, general market and economic conditions, changes in Marquis’s and Professional’s businesses, operations and prospects and regulatory considerations, among other things. Many of these factors are beyond Marquis’s and Professional’s control. Therefore, at the time of the Marquis special meeting, holders of Marquis common stock will not know the market value of the consideration to be received at the effective time. Holders of Marquis common stock should obtain current market quotations for shares of Professional Class A common stock.

The market price of Professional Class A common stock after the merger may be affected by factors different from those affecting the shares of Marquis or Professional currently.

In the merger, holders of Marquis common stock will become holders of Professional Class A common stock. Professional’s business differs from that of Marquis. Accordingly, the results of operations of the combined company and the market price of Professional Class A common stock after the completion of the merger may be affected by factors different from those currently affecting the independent results of operations of each of Professional and Marquis. For a discussion of the business and market of Professional and of some important factors to consider in connection with its business, please see “Business of Professional.” For a discussion of the business and market of Marquis and of some important factors to consider in connection with its business, please see “Business of Marquis.”

Professional and Marquis have not obtained updated fairness opinions from Stephens and Janney, respectively, reflecting changes in circumstances that may have occurred since the signing of the merger agreement.

Professional and Marquis have not obtained updated fairness opinions either as of the date of this joint proxy statement/prospectus or as of any other date subsequent to the dates of such opinions from Stephens and Janney, which are Professional’s and Marquis’s respective financial advisors. Changes in the operations and prospects of Professional or Marquis, general market and economic conditions and other factors which may be beyond the control of Professional and Marquis, and on which the fairness opinions were based, may have altered the value of Professional or Marquis or the prices of shares of Professional Class A common stock and shares of Marquis common stock as of the date of this joint proxy statement/​prospectus, or may alter such values and prices by the time the merger is completed. The opinions do not speak as of any date other than the dates of those opinions.

Combining the business and operations of Marquis with Professional may be more difficult, costly or time-consuming than expected, or could result in the loss of clients, and as a result, Professional may not be able to achieve the anticipated results from the merger.

The success of the merger will depend, in part, on the combined company’s ability to realize the estimated cost savings and other enhancements from combining Marquis’s business and operations with

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those of Professional. The combined company’s ability to realize these cost savings and enhancements will depend, in part, on its ability to successfully combine the business and operations of Marquis with those of Professional. If Professional’s or Marquis’s estimates are inaccurate or we the combined company is not able to successfully combine the companies, the anticipated cost savings and enhancements may not be realized fully or at all, or may take longer to realize than expected. It is possible that the integration process could result in the loss of key employees, the disruption of each company’s ongoing business, the diversion of management attention or inconsistencies in standards, controls, procedures and policies that adversely affect the combined company’s ability to maintain relationships with clients and employees or to achieve the anticipated benefits and cost savings of the merger. As with any combination of banking institutions, there also may be business disruptions that cause Professional or Marquis to lose clients or cause current clients to withdraw their deposits from Professional Bank or Marquis Bank. Integration efforts between the two companies will also divert management attention and resources. These integration matters could have an adverse effect on the combined company during this transition period and for an undetermined period after consummation of the merger.

The combined company may not be successful in overcoming these risks or other problems encountered in connection with other potential acquisitions or expansion activity. The combined company’s inability to overcome these risks could have an adverse effect on its ability to implement its business strategy and enhance shareholder value, which, in turn, could have a material adverse effect on the combined company’s business, financial condition or results of operations. Additionally, Professional expects that it will record approximately $36.3 million of goodwill in connection with the merger. See “Unaudited Pro Forma Combined Consolidated Condensed Financial Information — Note C.” The combined company’s financial condition and results of operation may be adversely affected if that goodwill is determined to be impaired.

There can be no assurance when or if Professional’s proposed acquisition of Marquis will be completed.

The merger agreement contains a number of conditions which must be fulfilled to complete the merger. If the conditions are not satisfied or waived, to the extent permitted by law, the merger will not occur or will be delayed and Professional and Marquis may lose some or all of the intended benefits of the merger. See “The Merger Agreement — Conditions to Completion of the Merger” beginning on page 124.

In addition, the merger agreement may be terminated in certain circumstances, including if the merger is not consummated on or before August 9, 2020. We cannot assure you that all of the conditions precedent in the merger agreement will be satisfied, or to the extent legally permissible, waived, or that the acquisition of Marquis will be completed.

The combined company expects to incur substantial expenses related to the merger.

The combined company expects to incur substantial expenses in connection with completing the merger and combining the business, operations, networks, systems, technologies, policies and procedures of Professional and those of Marquis. Although Professional and Marquis have assumed that a certain level of transaction and combination expenses would be incurred, there are a number of factors beyond their control that could affect the total amount or the timing of their combination expenses. Many of the expenses that will be incurred, by their nature, are difficult to estimate accurately at the present time. Due to these factors, the transaction and combination expenses associated with the merger could, particularly in the near term, exceed the savings that the combined company expects to achieve from the elimination of duplicative expenses and the realization of economies of scale and cost savings related to the combination of the businesses following the completion of the merger.

In addition, prior to completion of the merger, each of Marquis and Professional will incur or have incurred substantial expenses in connection with the negotiation and completion of the transactions contemplated by the merger agreement. In preparation for the consummation of the merger, the companies will also incur the additional costs and expenses of preparing and filing the registration statement of which this joint proxy statement/prospectus forms a part, printing and mailing a joint proxy statement/prospectus to solicit shareholder approval of the merger, and all filing and other fees expected to be paid to the SEC, bank regulatory authorities and other governmental agencies in connection with the proposed merger. If the merger is not completed, Professional and Marquis would have to recognize these expenses without realizing the anticipated benefits of the merger.

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Termination of the merger agreement could negatively impact Professional or Marquis.

If the merger agreement is terminated, there may be various consequences. For example, Professional’s or Marquis’s businesses may have been impacted adversely by the failure to pursue other beneficial opportunities due to the focus of management on the merger, without realizing any of the anticipated benefits of completing the merger. In addition, if the merger agreement is terminated and the Marquis board of directors seeks another merger or business combination, Marquis’s shareholders cannot be certain that Marquis will be able to find a party willing to offer equivalent or more attractive consideration than the consideration Professional has agreed to provide in the merger, or that such other merger or business combination will be completed. If the merger agreement is terminated under certain circumstances, either Professional or Marquis may be required to pay a termination fee of  $4 million to the other party. See “The Merger Agreement — Termination Fee” beginning on page 125.

The merger agreement contains provisions that may discourage other companies from trying to acquire Marquis for greater merger consideration.

The merger agreement contains provisions that may discourage a third-party from submitting an acquisition proposal to Marquis that might result in greater value to Marquis’s shareholders than the proposed merger with Professional or may result in a potential competing acquirer proposing to pay a lower per share price to acquire Marquis than it might otherwise have proposed to pay absent such provisions. These provisions include a general prohibition on Marquis from soliciting, or entering into discussions with any third-party regarding, any acquisition proposal or offers for competing transactions, subject to certain exceptions relating to the exercise of fiduciary duties by Marquis’s board of directors. In addition, Marquis may be required to pay Professional a termination fee upon termination of the merger agreement in certain circumstances involving acquisition proposals for competing transactions. See “The Merger Agreement — Termination” beginning on page 125 and “The Merger Agreement — Termination Fee” beginning on page 125.

Certain of Marquis’s directors and executive officers may have interests in the merger that may differ from the interests of holders of Marquis common stock.

Holders of Marquis common stock should be aware that some of Marquis’s directors and executive officers may have interests in the merger and have arrangements that are different from, or in addition to, those of holders of Marquis common stock generally. These interests and arrangements may create potential conflicts of interest. The Marquis board of directors was aware of these interests and considered these interests, among other matters, when making their decision to approve the merger agreement, and in recommending that holders of Marquis common stock vote to approve the merger agreement. For a more complete description of these interests, please see “The Merger — Interests of Marquis Directors and Executive Officers in the Merger” beginning on page 110.

Holders of Professional Class A common stock and Marquis common stock will have a reduced ownership and voting interest in the combined company after the merger and will exercise less influence over management.

Holders of Professional Class A common stock and Marquis common stock currently have the right to vote in the election of the board of directors and on other matters affecting Professional and Marquis, respectively. In the merger, each holder of Marquis common stock who receives shares of Professional Class A common stock will become a holder of Class A common stock of the combined company, with a percentage ownership of the combined company that is smaller than the holder’s percentage ownership of Marquis. Following the completion of the merger, the former holders of Marquis common stock are estimated to own approximately [•] percent ([•]%) of the outstanding shares of the combined company immediately after the merger ([•] percent ([•]%) if the underwriters in the initial public offering of Professional exercise in full their option to purchase additional shares from Professional) and current holders of Professional Class A common stock as a group are estimated to own approximately [•] percent ([•]%) of the outstanding shares of the combined company immediately after the merger ([•] percent ([•]%) if the underwriters in the initial public offering of Professional exercise in full their option to purchase additional shares from Professional). Because of this, holders of Marquis common stock may have less influence on the management and policies of the combined company than they now have on the management and policies of Marquis, and holders of Professional Class A common stock may have less

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influence on the management and policies of the combined company than they now have on the management and policies of Professional.

Shares of Professional Class A common stock to be received by Marquis shareholders as a result of the merger will have rights different from the shares of Marquis common stock.

Upon completion of the merger, the rights of former Marquis shareholders will be governed by the certificate of incorporation and bylaws of Professional. The rights associated with Marquis common stock are different from the rights associated with Professional Class A common stock, although both companies are organized under Florida law. Please see “Comparison of Shareholders’ Rights” beginning on page 288 for a discussion of the different rights associated with Professional Class A common stock.

Professional and Marquis will be subject to business uncertainties and contractual restrictions while the merger is pending.

Uncertainty about the effect of the merger on employees, customers, suppliers and vendors may have an adverse effect on the business, financial condition and results of operations of Professional and Marquis. These uncertainties may impair Professional’s or Marquis’s ability to attract, retain and motivate key personnel, depositors and borrowers pending the consummation of the merger, as such personnel, depositors and borrowers may experience uncertainty about their future roles following the consummation of the merger. Additionally, these uncertainties could cause customers (including depositors and borrowers), suppliers, vendors and others who deal with either company to seek to change existing business relationships with such company or fail to extend an existing relationship with such company. In addition, competitors may target each party’s existing customers by highlighting potential uncertainties and integration difficulties that may result from the merger.

Professional and Marquis have a small number of key personnel. The pursuit of the merger and the preparation for the integration may place a burden on each company’s management and internal resources. Any significant diversion of management attention away from ongoing business concerns and any difficulties encountered in the transition and integration process could have a material adverse effect on each company’s business, financial condition and results of operations.

In addition, the merger agreement restricts each party from taking certain actions without the other party’s consent while the merger is pending. These restrictions, subject to certain exceptions, include restrictions on either party’s ability to modify employment contracts, hire new executive officers, increase salaries more than in the ordinary course of business, sell, transfer mortgage or encumber property outside of the ordinary course of business, amend certain of our policies and organizational documents, make material changes to either party’s deposit mix, acquire assets or other properties and other restrictions. These restrictions may prevent either party from retaining employees or pursuing business opportunities that may arise prior to the completion of the merger and, therefore, could have a material adverse effect on either party’s business, financial condition and results of operations. Please see “The Merger Agreement — Conduct of Business Pending the Merger” beginning on page 115 for a description of the restrictive covenants applicable to Professional and Marquis.

The unaudited pro forma condensed combined financial information included in this document is illustrative only and the actual financial condition and results of operations after the merger may differ materially, and the projected financial information of Professional and Marquis included in this joint proxy statement/prospectus is inherently subject to uncertainties.

The unaudited pro forma condensed combined financial statements in this document are presented for illustrative purposes only. The unaudited pro forma condensed combined financial statements are not necessarily, and should not be assumed to be, an indication of the results that would have been achieved had the merger been completed as of the dates indicated or that may be achieved in the future. A final determination of the fair values of Marquis’s assets and liabilities, which cannot be made prior to the completion of the merger, will be based on the actual net tangible and intangible assets of Marquis that exist as of the date the merger becomes effective. Consequently, fair value adjustments and amounts preliminarily allocated to goodwill and identifiable intangibles could change significantly from those allocations used in the unaudited pro forma condensed combined financial statements presented herein and

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could result in a material change in amortization of acquired intangible assets. In addition, the value of the final merger consideration will be based on the closing price of Professional Class A common stock on the date the merger becomes effective. For more information, please see “Unaudited Pro Forma Condensed Combined Consolidated Financial Statements” beginning on page 35.

While the projected financial information of Professional and Marquis (the “management projections”) included in this joint proxy statement/prospectus is presented with numerical specificity, the management projections were based on numerous variables and assumptions that are inherently uncertain and may be beyond Professional management’s and Marquis management’s control. Further, given that the management projections cover multiple years, by their nature, they become subject to greater uncertainty with each successive year beyond their preparation. Important factors that may affect actual results and may result in such projections not being achieved include: the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement, the inability to complete the merger, or the failure to satisfy other conditions to completion of the merger, including that a regulatory authority may prohibit, delay or refuse to grant a required regulatory approval for the completion of the merger, and risks and uncertainties pertaining to Professional’s business and Marquis’s business, including the risks and uncertainties detailed in their respective public periodic filings with the SEC. In addition, the ability to achieve the management projections may depend on, in part, whether or not the strategic goals, objectives and targets are reached over the applicable period. The assumptions upon which the management projections were based necessarily involve judgments with respect to, among other things, future economic, competitive and regulatory conditions and financial market conditions and future business decisions that may not be realized and that are inherently subject to significant business, economic, competitive and regulatory uncertainties and contingencies, including, among other things, the inherent uncertainty of the business and economic conditions affecting the industry in which Professional and Marquis operate, and the risks and uncertainties described in “Cautionary Note Regarding Forward-Looking Information”, all of which are difficult or impossible to predict accurately and many of which are beyond Professional’s and Marquis’s control. The management projections also reflect assumptions by Professional and Marquis management that are subject to change and are susceptible to multiple interpretations and periodic revisions based on actual results, revised prospects for the Professional and Marquis businesses, changes in general business or economic conditions, or any other transaction or event that has occurred or that may occur and that was not anticipated when such projections were prepared. Accordingly, there can be no assurance that the management projections will be realized, and actual results may differ, and may differ materially, from those shown. For more information see “The Merger — Certain Unaudited Prospective Financial Information” beginning on page [90].

Risks Related to Professional’s Business

Unless the context requires otherwise, references in the remaining sections of this “Risk Factors” section of this joint proxy statement/prospectus to the “Company,” “we,” “us,” or “our” refer to Professional and its wholly owned subsidiaries on a consolidated basis, and references to the “Bank” refer to Professional Bank.

Our business operations and lending activities are concentrated in South Florida, and we are more sensitive to adverse changes in the local economy than our more geographically diversified competitors.

Unlike many of our larger competitors that maintain significant operations located outside of our market area, substantially all of our clients are concentrated in South Florida. In addition, we have a high concentration of loans secured by real estate located in South Florida. As of September 30, 2019, approximately $650.0 million, or 84.2%, of our loans, included real estate as a component of collateral. If our acquisition of Marquis was completed as of September 30, 2019, approximately $1.14 billion, or 85.1% of our loans, would have included real estate as a component of collateral on a pro forma basis. Additionally, approximately 92.5% of our real estate loans have real estate collateral located in South Florida. Therefore, our success depends upon the general economic conditions in this area, which may differ from the economic conditions in other areas of the U.S. or the U.S. generally.

Our real estate collateral provides an alternate source of repayment in the event of default by the borrower; however, the value of the collateral may decline during the time the credit is outstanding. The concentration of our loans in the South Florida area subjects us to risk that a downturn in the economy or

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recession in this area could result in a decrease in loan originations and increases in delinquencies and foreclosures, which would have a greater effect on us than if our lending were more geographically diversified. If we are required to liquidate the collateral securing a loan during a period of reduced real estate values to satisfy the debt, our earnings and capital could be adversely affected. Moreover, since a large portion of our portfolio is secured by properties located in South Florida, the occurrence of a natural disaster, such as a hurricane, or a man-made disaster could result in a decline in loan originations, a decline in the value or destruction of mortgaged properties and an increase in the risk of delinquencies, foreclosures or loss on loans originated by us. We may suffer further losses due to the decline in the value of the properties underlying our mortgage loans, which would have an adverse impact on our results of operations and financial condition.

As a result, our operations and profitability may be more adversely affected by a local economic downturn in South Florida than those of our more geographically diverse competitors. A downturn in the local economy generally may lead to loan losses that are not offset by operations in other markets; it may also reduce the ability of our clients to grow or maintain their deposits with us. For these reasons, any regional or local economic downturn that affects South Florida, or existing or prospective borrowers or depositors in South Florida, could have a material adverse effect on our business, financial condition and results of operations. From time to time, our Bank may provide financing to clients who live or have companies or properties located outside our core market. In such cases, we would face similar local market risk in those communities for these clients.

Our business and operations may be adversely affected in numerous and complex ways by weak economic conditions.

Our business and operations, which primarily consist of lending money to clients in the form of loans, borrowing money from clients in the form of deposits, and investing in securities, are sensitive to general business and economic conditions in the United States. In recent years there has been a gradual improvement in the U.S. economy as evidenced by a rebound in the housing market, lower unemployment and higher equity capital markets; however, economic growth has been uneven and opinions vary on the strength and direction of the economy. If the U.S. economy weakens, our growth and profitability from our lending, deposit and investment operations could be adversely affected. Uncertainty about the federal fiscal policymaking process, the medium- and long-term fiscal outlook of the federal government and future tax rates are concerns for U.S. businesses, consumers and investors. Uncertainties also have arisen regarding the potential for a reversal or renegotiation of international trade agreements and the impact such actions and other policies the current administration may have on economic and market conditions. Such market instability may hinder future U.S. economic growth, which could adversely affect our assets, business, cash flow, financial condition, liquidity, prospects and results of operations.

Natural disasters and severe weather events in Florida can have an adverse impact on our business, financial condition and operations.

Our operations and our client base are primarily located in South Florida. This region is vulnerable to natural disasters and severe weather events or acts of God, such as hurricanes or tropical storms, which can have an adverse impact on our business, financial condition and operations, cause widespread property damage and have the potential to significantly depress the local economies in which we operate. Future adverse weather events in Florida could potentially result in extensive and costly property damage to businesses and residences, depress the value of property serving as collateral for our loans, force the relocation of residents, and significantly disrupt economic activity in the region. For example, in September 2017, Hurricane Irma caused significant damage and disruption to local business operations.

We cannot predict the extent of damage that may result from such adverse weather events, which will depend on a variety of factors that are beyond our control, including, but not limited to, the severity and duration of the event, the timing and level of government responsiveness and the pace of economic recovery. In addition, the nature, frequency and severity of these adverse weather events and other natural disasters may be exacerbated by climate change. If a significant adverse weather event, or other natural disaster were to occur, it could have a materially adverse impact on our financial condition, results of operations and our business, as well as potentially increase our exposure to credit and liquidity risks.

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We face strong competition from financial services companies and other companies that offer banking services.

We operate in the highly competitive financial services industry and face significant competition for clients from financial institutions located both within and beyond our current market. We compete with commercial banks, savings banks, credit unions, mortgage banking firms, consumer finance companies, securities brokerage firms, insurance companies, money market funds, non-bank financial services companies and other community banks and super-regional and national financial institutions operating within or near the areas we serve. Certain competitors often are larger, operate in more markets and have far greater resources and are able to conduct more intensive and broader-based promotional efforts to reach both commercial and individual clients. In addition, as client preferences and expectations continue to evolve, technology has lowered barriers to entry and made it possible for banks to expand their geographic reach by providing services over the internet and for non-banks to offer products and services traditionally provided by banks, such as automatic transfer and automatic payment systems.

The banking industry is experiencing rapid changes in technology and, as a result, our future success will depend in part on our ability to address our clients’ needs by using technology. Client loyalty can be influenced by a competitor’s new products, especially offerings that could provide cost savings or a higher return to the client. Increased lending activity of competing banks has also led to increased competitive pressures on loan rates and terms for high quality credits. We may not be able to compete successfully with other financial institutions in our market, and we may have to pay higher interest rates to attract deposits and accept lower yields to attract loans, resulting in lower net interest margins and reduced profitability.

Moreover, many of our non-bank competitors are not subject to the same extensive regulations that govern our activities and may have greater flexibility in competing for business. We also face strong competition from credit unions, which are exempt from the payment of income taxes and, as a result, can frequently offer lower rates on loans or pay higher rates on deposits. The financial services industry could also become even more competitive as a result of legislative, regulatory and technological changes and continued consolidation. In addition, some of our current commercial banking clients may seek alternative banking sources as they develop needs for credit facilities larger than we may be able to accommodate. Our inability to compete successfully in the markets in which we operate could have an adverse effect on our business, financial condition, liquidity, prospects or results of operations.

We may not effectively execute on our expansion strategy, which may adversely affect our ability to maintain our historical growth and earnings trends.

We have grown rapidly over the last several years. Financial institutions that grow rapidly can experience significant difficulties as a result of rapid growth. Our primary expansion strategy focuses on organic growth, supplemented by acquisitions of banking teams or other financial institutions; however, we may not be able to successfully execute on these aspects of our expansion strategy, which may cause our future growth rate to decline below our recent historical levels, or may prevent us from growing at all. More specifically, we may not be able to generate sufficient new loans and deposits within acceptable risk and expense tolerances or obtain the personnel or funding necessary for additional growth. Various factors, such as economic conditions and competition with other financial institutions, may impede or restrict the growth of our operations. Further, we may be unable to attract and retain experienced bankers, which could adversely affect our growth. The success of our strategy also depends on our ability to manage our growth effectively, which in turn depends on a number of factors, including our ability to adapt our credit, operational, technology and governance infrastructure to accommodate expanded operations. Even if we are successful in continuing our growth, such growth may not offer the same levels of potential profitability, and we may not be successful in controlling costs and maintaining asset quality in the face of that growth. Accordingly, our inability to maintain growth or to effectively manage growth, could have an adverse effect on our business, financial condition and results of operations.

We may grow through mergers or acquisitions, a strategy which may not be successful or, if successful, may produce risks in successfully integrating and managing the merged companies or acquisitions and may dilute our shareholders.

As part of our growth strategy, we may pursue mergers and acquisitions of banks and non-bank financial services companies within or outside our principal market areas. We regularly seek to identify and explore specific acquisition opportunities as part of our ongoing business practices. On August 9, 2019, we

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entered into a definitive merger agreement to acquire Marquis and its wholly owned subsidiary, Marquis Bank, which is expected to close in early 2020, subject to required regulatory approvals, the closing of our initial public offering, the filing of an effective registration statement on Form S-4 with respect to the shares of our Class A common stock to be issued in the merger, and the satisfaction of other customary closing conditions. We may also explore other strategic opportunities both within and outside of our current market. We face significant competition from numerous other financial services institutions, many of which will have greater financial resources or more liquid securities than we do, when considering acquisition opportunities. Accordingly, attractive acquisition opportunities may not be available to us. There can be no assurance that we will be successful in identifying or completing any future acquisitions.

Mergers and acquisitions involve numerous risks, any of which could harm our business, including:

•

time, expense and difficulties in integrating the operations, management, products and services, technologies, existing contracts, accounting processes and personnel of the target and realizing the anticipated synergies of the combined businesses;

•

difficulties in supporting and transitioning clients of the target and disruption of our ongoing banking business;

•

diversion of financial and management resources from existing operations;

•

assumption of nonperforming loans;

•

the price we pay or other resources that we devote may exceed the value we realize, or the value we could have realized if we had allocated the purchase consideration or other resources to another opportunity;

•

entering new markets or areas in which we have limited or no experience;

•

potential loss of key personnel and clients from either our business or the target’s business;

•

assumption of unanticipated problems or liabilities of the target;

•

an inability to realize expected synergies or returns on investment;

•

covenants that may restrict our operations prior to closing;

•

the need to raise capital; and

•

inability to generate sufficient revenue to offset acquisition costs.

Mergers and acquisitions also frequently result in the recording of goodwill and other intangible assets, which are subject to potential impairments in the future and that could harm our financial results. In addition, if we finance acquisitions by issuing equity securities, our existing shareholders’ ownership may be diluted, which could negatively affect the market price of our common stock.

As a result, we may not achieve the anticipated benefits of any such merger or acquisition, and we may incur costs in excess of what we anticipate. Our failure to successfully evaluate and execute mergers, acquisitions or investments or otherwise adequately address these risks could materially harm our business, financial condition and results of operations.

Our continued pace of growth may require us to raise additional capital in the future to fund such growth, and the unavailability of additional capital on terms acceptable to us could adversely affect us or our growth.

After giving effect to our initial public offering, we believe that we will have sufficient capital to meet our capital needs for our current growth plans. However, we will continue to need capital to support our longer-term growth plans. If capital is not available on favorable terms when we need it, we will have to either issue additional shares of common stock or other securities on less than desirable terms or reduce our rate of growth until market conditions become more favorable. Either of such events could have a material adverse effect on our business, financial condition and results of operations.

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We may be unable to attract and retain highly qualified personnel, which could adversely and materially affect our competitive position.

Our future success depends on our ability to attract and retain our executive officers and other key employees. We may be unable to attract or retain qualified management and other key personnel in the future due to the intense competition for qualified personnel among companies in the financial services business and related businesses, particularly in the South Florida area in which we operate. Consequently, we could have difficulty attracting or retaining experienced personnel and may be required to spend significant time and expend significant financial resources in our employee recruitment and retention efforts. Many of the other financial services companies with which we compete for qualified personnel have greater financial and other resources and risk profiles different from ours. They also may provide more diverse opportunities and better chances for career advancement. Some of these characteristics may be more appealing to high quality candidates than that which we may offer. If we are unable to attract and retain the necessary personnel to accomplish our business objectives, we may have difficulty implementing our business strategy and achieving our business objectives.

We rely heavily on our executive management team, including our Chairman and Chief Executive Officer, Daniel R. Sheehan, and other key employees, and we could be adversely affected by the unexpected loss of their services.

We are led by an experienced core management team with substantial experience in the market we serve, and our operating strategy focuses on providing products and services through long-term relationship managers and maintaining good relationships between our largest clients and our senior management team. Accordingly, our success depends in large part on the performance of these key personnel, including our Chairman and Chief Executive Officer, Daniel R. Sheehan, as well as on our ability to attract, motivate and retain highly qualified senior and middle management. Competition for employees is intense and the process of locating key personnel with the combination of skills and attributes required to execute our business plan may be lengthy. If any of our executive officers or other key personnel leaves us, our financial condition and results of operations may suffer due to the loss of their skills, knowledge of our market, and years of industry experience and the difficulty of promptly finding qualified personnel to replace them. Additionally, our executive officers’ and key employees’ community involvement and diverse and extensive local business relationships are important to our success.

We may incur losses if we are unable to successfully manage interest rate risk.

Our profitability depends to a large extent on the Bank’s net interest income, which is the difference between income on interest earning assets, such as loans and investment securities, and expense on interest-bearing liabilities such as deposits and borrowings. Our net interest income may be reduced if: (i) more interest earning assets than interest-bearing liabilities reprice or mature during a time when interest rates are declining or (ii) more interest-bearing liabilities than interest earning assets reprice or mature during a time when interest rates are rising.

Changes in the difference between short-term and long-term interest rates may also harm our business, and we are unable to predict changes in market interest rates, which are affected by many factors beyond our control. We generally use short-term deposits to fund longer-term assets, such as loans. When interest rates change, assets and liabilities with shorter terms reprice more quickly than those with longer terms, which could have a material adverse effect on our net interest margin. If market interest rates rise rapidly, interest rate adjustment caps may also limit increases in the interest rates on adjustable rate loans, which could further reduce our net interest income. Additionally, continued price competition for deposits will adversely affect our net interest margin.

Additionally, interest rate increases often result in larger payment requirements for our borrowers with variable rate loans, which increases the potential for default and could result in a decrease in the demand for loans. At the same time, the marketability of the property securing a loan may be adversely affected by any reduced demand resulting from higher interest rates. An increase in interest rates that adversely affects the ability of borrowers to pay the principal or interest on loans may lead to an increase in nonperforming assets and a reversal of income previously recognized, which could have an adverse effect on our results of operations and cash flows. Further, when we place a loan on nonaccrual status, we reverse any accrued but

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unpaid interest receivable, which decreases interest income. At the same time, we continue to incur costs to fund the loan, which is reflected as interest expense, without any interest income to offset the associated funding expense. Thus, an increase in the amount of nonperforming assets would have an adverse impact on net interest income.

In a declining interest rate environment, there may be an increase in prepayments on loans as borrowers refinance their loans at lower rates. In addition, in a low interest rate environment, loan clients often pursue long-term fixed rate credits, which could adversely affect our earnings and net interest margin if rates later increase. If short-term interest rates remain at their historically low levels for a prolonged period and assuming longer-term interest rates fall further, we could experience net interest margin compression as our interest earning assets would continue to reprice downward while our interest-bearing liability rates could fail to decline in tandem. Such an occurrence would have an adverse effect on our net interest income and could have an adverse effect on our business, financial condition and results of operations.

Our allowance for loan losses may not be sufficient to absorb potential losses in our loan portfolio.

We maintain an allowance for loan losses that represents management’s judgment of probable losses and risks inherent in our loan portfolio. As of September 30, 2019, our allowance for loan losses totaled $6.4 million, which represented approximately 0.84% of our total loans held for investment. The level of the allowance reflects management’s continuing evaluation of general economic conditions, present political and regulatory conditions, diversification and seasoning of the loan portfolio, historic loss experience, identified credit problems, delinquency levels and adequacy of collateral. Determining the appropriate level of our allowance for loan losses is inherently subjective and requires management to make significant estimates of and assumptions regarding current credit risks and future trends, all of which may undergo material changes.

Inaccurate management assumptions, deterioration of economic conditions affecting borrowers, new information regarding existing loans, identification or deterioration of additional problem loans, acquisition of problem loans and other factors (including third-party review and analysis), both within and outside of our control, may require us to increase our allowance for loan losses. In addition, our regulators, as an integral part of their periodic examinations, review our methodology for calculating, and the adequacy of, our allowance for loan losses and may direct us to make additions to the allowance based on their judgments about information available to them at the time of their examination. Further, if actual charge-offs in future periods exceed the amounts allocated to our allowance for loan losses, we may need additional provisions for loan losses to restore the adequacy of our allowance for loan losses. Finally, the measure of our allowance for loan losses depends on the adoption and interpretation of accounting standards. The Financial Accounting Standards Board, or FASB, recently issued a new credit impairment model, the Current Expected Credit Loss, or CECL model, which is expected to become applicable to us on January 1, 2023 after the FASB elected to delay implementation for smaller reporting companies. CECL will require financial institutions to estimate and develop a provision for credit losses over the lifetime of the loan at origination, as opposed to reserving for incurred or probable losses up to the balance sheet date. Under the CECL model, credit deterioration would be reflected in the income statement in the period of origination or acquisition of a loan, with changes in expected credit losses due to further credit deterioration or improvement reflected in the periods in which the expectation changes. Accordingly, the CECL model could require financial institutions, like the Bank, to increase their allowances for loan losses. Moreover, the CECL model may create more volatility in our level of allowance for loan losses. If we are required to materially increase our level of allowance for loan losses for any reason, such increase could adversely affect our business, prospects, cash flow, liquidity, financial condition and results of operations.

We may not be able to manage our credit risk adequately, which could lead to unexpected losses.

Our primary business involves making loans to clients. The business of lending is inherently risky because the principal of or interest on the loan may not be repaid timely or at all or the value of any collateral supporting the loan may be insufficient to cover our outstanding exposure. These risks may be affected by the strength of the borrower’s business sector and local, regional and national market and economic conditions. Many of our loans are made to small to medium sized businesses that may be less able

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to withstand competitive, economic and financial pressures than larger borrowers. Our risk management practices, such as monitoring the concentration of our loans within specific industries, and our credit approval practices may not adequately reduce credit risk. Further, our credit administration personnel, policies and procedures may not adequately adapt to changes in economic or any other conditions affecting clients and the quality of the loan portfolio. A failure to effectively manage credit risk associated with our loan portfolio could lead to unexpected losses and have an adverse effect on our business, financial condition and results of operations.

Our commercial real estate and real estate construction loan portfolio exposes us to credit risks that may be greater than the risks related to other types of loans.

As of September 30, 2019, approximately $262.8 million, or 34.0%, of our loan portfolio was comprised of nonresidential real estate loans (including owner-occupied commercial real estate loans) and approximately $37.9 million, or 4.9%, of our total loans held for investment were construction and development loans. Further, as of September 30, 2019, our commercial real estate loans (excluding owner-occupied commercial real estate loans) totaled 185.3% and our construction loans totaled 45.1% of our total risk-based capital, respectively. These loans typically involve repayment that depends upon income generated, or expected to be generated, by the property securing the loan and may be adversely affected by changes in the economy or local market conditions. These loans expose a lender to the risk of having to liquidate the collateral securing these loans at times when there may be significant fluctuation of commercial real estate values. Unexpected deterioration in the credit quality of our commercial real estate loan portfolio could require us to increase our allowance for loan losses, which would reduce our profitability and could have an adverse effect on our business, financial condition, and results of operations.

Construction loans also involve risks because loan funds are secured by a project under construction, the value of which is uncertain prior to completion. It can be difficult to accurately evaluate the total funds required to complete a project, and construction lending often involves the disbursement of substantial funds with repayment dependent, in part, on the success of the ultimate project rather than the ability of a borrower or guarantor to repay the loan. If we are forced to foreclose on a project prior to completion, we may be unable to recover the entire unpaid portion of the loan. In addition, we may be required to fund additional amounts to complete a project, incur taxes, maintenance and compliance costs for a foreclosed property and may have to hold the property for an indeterminate period of time, any of which could adversely affect our business, prospects, cash flow, liquidity, financial condition and results of operations.

A portion of our loan portfolio is comprised of commercial loans secured by receivables, inventory, equipment or other commercial collateral, the deterioration in value of which could expose us to credit losses.

As of September 30, 2019, approximately $114.0 million, or 14.8%, of our total loans held for investment were commercial loans to businesses. In general, these loans are collateralized by general business assets, including, among other things, accounts receivable, inventory and equipment, and most are backed by a personal guaranty of the borrower or principal. These commercial loans are typically larger in amount than loans to individuals and, therefore, have the potential for larger losses on a single loan basis. Additionally, the repayment of commercial loans is subject to the ongoing business operations of the borrower. The collateral securing such loans generally includes movable property such as equipment and inventory, which may decline in value more rapidly than we anticipate, exposing us to increased credit risk. Significant adverse changes in the economy or local market conditions in which our commercial lending clients operate could cause rapid declines in loan collectability and the values associated with general business assets resulting in inadequate collateral coverage that may expose us to credit losses and could adversely affect our business, prospects, cash flow, liquidity, financial condition and results of operations.

Appraisals and other valuation techniques we use in evaluating and monitoring loans secured by real property may not accurately reflect the net value of the collateral.

In considering whether to make a loan secured by real property, we generally require an appraisal of the property; however, an appraisal is only an estimate of the value of the property at the time the appraisal is made and, as real estate values may change significantly in value in relatively short periods of time (especially in periods of heightened economic uncertainty), the appraisal may not accurately describe the

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net value of the real property collateral after the loan is made. As a result, we may not be able to recover the full amount of any remaining indebtedness when we foreclose on and sell the relevant property, which could have an adverse effect on our business, financial condition, and results of operations.

We engage in lending secured by real estate and may be forced to foreclose on the collateral and own the underlying real estate, subjecting us to the costs and potential risks associated with the ownership of real property, or consumer protection initiatives or changes in state or federal law may substantially raise the cost of foreclosure or prevent us from foreclosing at all.

Since we originate loans secured by real estate, we may have to foreclose on the collateral property to protect our investment and may thereafter own and operate such property, in which case we would be exposed to the risks inherent in the ownership of real estate. The amount that we, as a mortgagee, may realize after a foreclosure depends on factors outside of our control, including, but not limited to, general or local economic conditions, environmental cleanup liabilities, assessments, interest rates, real estate tax rates, operating expenses of the mortgaged properties, our ability to obtain and maintain adequate occupancy of the properties, zoning laws, governmental and regulatory rules, and natural disasters. Our inability to manage the amount of costs or size of the risks associated with the ownership of real estate, or write-downs in the value of other real estate owned, or OREO, could have an adverse effect on our business, financial condition, and results of operations.

Additionally, consumer protection initiatives or changes in state or federal law may substantially increase the time and expenses associated with the foreclosure process or prevent us from foreclosing at all. A number of states in recent years have either considered or adopted foreclosure reform laws that make it substantially more difficult and expensive for lenders to foreclose on properties in default. Additionally, federal regulators have prosecuted a number of mortgage servicing companies for alleged consumer law violations. If new state or federal laws or regulations are ultimately enacted that significantly raise the cost of foreclosure or raise outright barriers, they could have an adverse effect on our business, financial condition, and results of operations.

Our financial condition, earnings and asset quality could be adversely affected if we are required to repurchase loans originated for sale.

We originate residential mortgage loans for sale to secondary market investors, subject to contractually specified and limited recourse provisions. Because the loans are intended to be originated within investor guidelines, using designated automated underwriting and product-specific requirements as part of the loan application, the loans sold have a limited recourse provision. In general, we may be required to repurchase a previously sold mortgage loan or indemnify an investor if there is non-compliance with defined loan origination or documentation standards including fraud, negligence, material misstatement in the loan documents, or non-compliance with applicable law. In addition, we may have an obligation to repurchase a loan if the mortgagor has defaulted early in the loan term or return profits made should the loan prepay within a short period. The potential mortgagor early default repurchase period is up to approximately 12 months after sale of the loan to the investor. The recourse period for fraud, material misstatement, breach of representations and warranties, non-compliance with law or similar matters could be as long as the term of the loan. Mortgages subject to recourse are collateralized by single-family residential properties. From January 1, 2013 through September 30, 2019, we have not repurchased any loans due to default, fraud, breach of representations, material misstatement, legal non-compliance or early prepayment. Should such loan repurchases become a material issue, our earnings and asset quality could be adversely impacted, which could adversely impact business, financial condition, and results of operations.

A lack of liquidity could impair our ability to fund operations and adversely impact our business, financial condition and results of operations.

Liquidity is essential to our business. Liquidity risk is the potential that we will be unable to meet our obligations as they come due because of an inability to liquidate assets or obtain adequate funding. We rely on our ability to generate deposits and effectively manage the repayment and maturity schedules of our loans and investment securities, respectively, to provide adequate liquidity to fund our operations. If we are unable to raise funds through deposits, borrowings, sales of our investment securities, sales of loans or other sources, it could have a substantial negative effect on our liquidity and our ability to continue our growth strategy.

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Our most important source of funds is deposits. As of September 30, 2019, approximately $523.6 million, or 63.6%, of our total deposits were negotiable order of withdrawal, or NOW, savings, and money market accounts. Historically our savings, money market deposit and NOW accounts have been stable sources of funds. However, these deposits are subject to potentially dramatic fluctuations in availability or price due to factors that may be outside of our control, such as a loss of confidence by clients in us or the banking sector generally, client perceptions of our financial health and general reputation, increasing competitive pressures from other financial services firms for consumer or corporate client deposits, changes in interest rates and returns on other investment classes, any of which could result in significant outflows of deposits within short periods of time or significant changes in pricing necessary to maintain current client deposits or attract additional deposits, increasing our funding costs and reducing our net interest income and net income.

Additional liquidity may be provided by our ability to borrow from the Federal Home Loan Bank of Atlanta, or the FHLB, and the Federal Reserve Bank of Atlanta. As of September 30, 2019, we had $50 million of advances from the FHLB outstanding. We also may borrow funds from third-party lenders, such as other financial institutions. Our access to funding sources in amounts adequate to finance or capitalize our activities, or on terms that are acceptable to us, could be impaired by factors that affect us directly or the financial services industry or economy in general, such as disruptions in the financial markets or negative views and expectations about the prospects for the financial services industry. Our access to funding sources could also be affected by one or more adverse regulatory actions against us.

Any decline in available funding or cost of liquidity could adversely impact our ability to originate loans, invest in securities, meet our expenses or fulfill obligations such as repaying our borrowings or meeting deposit withdrawal demands, any of which could, in turn, have an adverse effect on our business, financial condition, and results of operations.

We have several large depositor relationships, the loss of which could force us to fund our business through more expensive and less stable sources.

As of September 30, 2019, our ten largest depositors accounted for approximately $164.3 million in deposits, or approximately 19.9% of our total deposits. Withdrawals of deposits by any one of our largest depositors could force us to rely more heavily on more expensive and less stable funding sources. Consequently, the occurrence of any of these events could have a material adverse effect on our business, financial condition and results of operations.

We may be subject to environmental liabilities in connection with the real properties we own and the foreclosure on real estate assets securing our loan portfolio.

In the course of our business, we may foreclose on and take title to real estate or otherwise be deemed to be in control of property that serves as collateral on loans we make. As a result, we could be subject to environmental liabilities with respect to those properties. We may be held liable to governmental entities or to third parties for property damage, personal injury, investigation and clean-up costs incurred by these parties in connection with environmental contamination, or we may be required to investigate or clean up hazardous or toxic substances or chemical releases at a property. The costs associated with investigation or remediation activities could be substantial. In addition, if we are the owner or former owner of a contaminated site, we may be subject to common law claims by third parties based on damages and costs resulting from environmental contamination emanating from the property.

The cost of removal or abatement may substantially exceed the value of the affected properties or the loans secured by those properties, we may not have adequate remedies against the prior owners or other responsible parties and we may not be able to resell the affected properties either before or after completion of any such removal or abatement procedures. Other actions we may take to minimize the impact of environmental liabilities may not fully insulate us from such liabilities. Furthermore, despite these actions on our part, the value of the property as collateral will generally be substantially reduced or we may elect not to foreclose on the property and, as a result, we may suffer a loss upon collection of the loan. Any significant environmental liabilities could have an adverse effect on our business, financial condition and results of operations.

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We could recognize losses on investment securities held in our securities portfolio, particularly if interest rates increase or economic and market conditions deteriorate.

While we generally invest a significant majority of our total assets in loans (our loan to asset ratio was 80.1% as of September 30, 2019), we also invest a portion of our total assets (3.06% as of September 30, 2019) in investment securities with the primary objectives of providing a source of liquidity, providing an appropriate return on funds invested, managing interest rate risk, meeting pledging requirements and meeting regulatory capital requirements. As of September 30, 2019, the fair value of our available for sale investment securities portfolio was $28.2 million, which included a net unrealized loss of approximately $84,000.

Factors beyond our control can significantly and adversely influence the fair value of securities in our portfolio. For example, fixed-rate securities are generally subject to decreases in market value when interest rates rise. Additional factors include, but are not limited to, rating agency downgrades of the securities, defaults by the issuer or individual borrowers with respect to the underlying securities and instability in the credit markets. Any of the foregoing factors could cause other-than-temporary impairment in future periods and result in realized and/or unrealized losses. The process for determining whether impairment is other-than-temporary usually requires difficult, subjective judgments about the future financial performance and liquidity of the issuer and any collateral underlying the security as well as the Company’s intent and ability to hold the security for a sufficient period of time to allow for any anticipated recovery in fair value in order to assess the probability of receiving all contractual principal and interest payments on the security. Because of changing economic and market conditions affecting interest rates, the financial condition of issuers of the securities and the performance of the underlying collateral, we may recognize realized and/or unrealized losses in future periods, which could have an adverse effect on our business, financial condition and results of operations.

As a new public company, we may not efficiently or effectively create an effective internal control environment, and any future failure to maintain effective internal control over financial reporting could impair the reliability of our financial statements, which in turn could harm our business, impair investor confidence in the accuracy and completeness of our financial reports and our access to the capital markets and cause the price of our Class A common stock to decline and subject us to regulatory penalties.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting and for evaluating and reporting on that system of internal control. Our internal control over financial reporting consists of a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. As a public company, we will be required to comply with the Sarbanes-Oxley Act and other rules that govern public companies, which we previously were not required to comply with as a private company. In particular, we will be required to certify our compliance with Section 404 of the Sarbanes-Oxley Act beginning with our second annual report on Form 10-K, which will require us to annually furnish a report by management on the effectiveness of our internal control over financial reporting. When evaluating our internal controls over financial reporting, we may identify material weaknesses that we may not be able to remediate in time to meet the applicable deadline imposed upon us for compliance with the requirements of Section 404 of the Sarbanes-Oxley Act.

In addition, if we fail to achieve and maintain the adequacy of our internal controls, as such standards are modified, supplemented, or amended from time to time, we may not be able to ensure that we will be able to conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act. We cannot be certain as to the timing of completion of our evaluation, testing, and any remediation actions or the impact of the same on our operations. If we are not able to implement the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner or with adequate compliance, our independent registered public accounting firm may issue an adverse opinion due to ineffective internal controls over financial reporting, and we may be subject to sanctions or investigations by regulatory authorities, such as the SEC. As a result, there could be a negative reaction in the financial markets due to a loss of confidence in the reliability of our financial statements. In addition, we may be required to incur costs in improving our internal control system and hiring additional personnel. Any such action could negatively affect our results of operations and cash flows and the price of our Class A common stock may decline.

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The accuracy of our financial statements and related disclosures could be affected if the judgments, assumptions or estimates used in our critical accounting policies are inaccurate.

The preparation of our financial statements and related disclosures in conformity with GAAP requires us to make judgments, assumptions and estimates that affect the amounts reported in our consolidated financial statements and accompanying notes. Our critical accounting policies, which are included in the section captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Professional” in this joint proxy statement/prospectus, describe those significant accounting policies and methods used in the preparation of our consolidated financial statements that we consider critical because they require judgments, assumptions and estimates that materially affect our consolidated financial statements and related disclosures. As a result, if future events or regulatory views concerning such analysis differ significantly from the judgments, assumptions and estimates in our critical accounting policies, those events or assumptions could have a material impact on our consolidated financial statements and related disclosures, in each case resulting in our need to revise or restate prior period financial statements, cause damage to our reputation and the price of our Class A common stock and adversely affect our business, prospects, cash flow, liquidity, financial condition and results of operations.

Changes in accounting standards or regulatory interpretations of existing standards could materially impact our financial statements and disclosures.

From time to time the FASB or the SEC may change the financial accounting and reporting standards that govern the preparation of our financial statements. These changes may subject us to new or changing accounting and reporting standards. In addition, the bodies that interpret the accounting standards (such as banking regulators or outside auditors) may change their interpretations or positions on how new or existing standards should be applied, which in many cases may be beyond our control, can be hard to predict and can materially impact how we record and report our financial condition and results of operations. In some cases, we could be required to apply a new or revised standard retrospectively, or apply an existing standard differently and retrospectively, in each case resulting in our needing to revise or restate prior period financial statements, which could materially change our financial statements and related disclosures, cause damage to our reputation, adversely impact our business, financial condition and results of operations, and the price of our Class A common stock.

Our management team depends on data and modeling in their decision-making and inaccurate data or modeling approaches could negatively impact our decision-making ability or possibly subject us to regulatory scrutiny in the future.

We rely heavily on statistical and quantitative models and other quantitative analyses for bank decision-making, and the use of such analyses is becoming increasingly widespread in our operations. Liquidity stress testing, interest rate sensitivity analysis, the identification of possible violations of anti-money laundering regulations are all examples of areas in which we are dependent on models and the data that underlies them. While we believe these quantitative techniques and approaches improve our decision-making, they also create the possibility that faulty data or flawed quantitative approaches could negatively impact our decision-making ability. Secondarily, because of the complexity inherent in these approaches, misunderstanding or misuse of their outputs could similarly result in poor decision-making and have a negative impact on our business, financial condition, and results of operations.

Our operations could be interrupted if our third-party service providers experience difficulty, terminate their services or fail to comply with banking regulations.

We outsource some of our operational activities and accordingly depend on relationships with third-party providers for services such as core systems support, informational website hosting, internet services, online account opening and other processing services. Our business depends on the successful and uninterrupted functioning of our information technology and telecommunications systems, many of which also depend on third party providers. The failure of these systems, a cybersecurity breach involving any of our third-party service providers or the termination or change in terms of a third-party software license or service agreement on which any of these systems is based could interrupt our operations. Because our information technology and telecommunications systems interface with and depend on third-party systems,

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we could experience service denials if demand for such services exceeds capacity or such third-party systems fail or experience interruptions. Replacing vendors or addressing other issues with our third-party service providers could entail significant delay, expense and disruption of service.

As a result, if these third-party service providers experience difficulties, are subject to cybersecurity breaches, or terminate their services, and we are unable to replace them with other service providers, particularly on a timely basis, our operations could be interrupted. If an interruption were to continue for a significant period of time, our business, financial condition and results of operations could be adversely affected. Even if we are able to replace third-party service providers, it may be at a higher cost to us, which could adversely affect our business, prospects, cash flow, liquidity, financial condition and results of operations.

Accordingly, our operations could be interrupted if any of our third-party service providers experience difficulty, are subject to cybersecurity breaches, terminate their services or fail to comply with banking regulations, which could adversely affect our business, financial condition and results of operations. In addition, our failure to adequately oversee the actions of our third-party service providers could result in regulatory actions against the Bank, which could adversely affect our business, prospects, cash flow, liquidity, financial condition and results of operations.

System failure or breaches of our network security could subject us to increased operating costs as well as litigation and other potential losses.

Our computer systems and network infrastructure could be vulnerable to hardware and cybersecurity issues. Our operations are dependent upon our ability to protect our hardware equipment against damage from fire, power loss, telecommunications failure or a similar catastrophic event. Threats to data security, including unauthorized access and cyber-attacks, rapidly emerge and change, exposing us to additional costs for protection or remediation and competing time constraints to secure our data in accordance with client expectations and statutory and regulatory requirements. We could also experience a breach by intentional or negligent conduct on the part of employees or other internal sources. Any damage or failure that causes an interruption in our operations could have an adverse effect on our financial condition and results of operations.

Our operations are also dependent upon our ability to protect our computer systems and network infrastructure, including our digital, mobile and internet banking activities, against damage from physical break-ins, cybersecurity breaches and other disruptive problems caused by the internet or other users. Such computer break-ins and other disruptions would jeopardize the security of sensitive data stored in and transmitted through our computer systems and network infrastructure, which may result in significant liability, damage our reputation and inhibit the use of our internet banking services by current and potential clients. We regularly add additional security measures to our computer systems and network infrastructure and implement procedures to mitigate the possibility of cybersecurity breaches, including firewalls and penetration testing. However, it is not feasible to defend against every risk being posed by changing technologies as well as criminals’ intent on committing cyber-crime, particularly given their increasing sophistication, and our security measures may not prevent a system breach.

Controls employed by our information technology department and third-party vendors could prove inadequate. We could also experience a breach by intentional or negligent conduct on the part of our employees or other internal sources, software bugs or other technical malfunctions, or other causes. As a result of any of these threats, our client accounts may become vulnerable to account takeover schemes or cyber-fraud. Our systems and those of our third-party vendors may also become vulnerable to damage or disruption due to circumstances beyond our or their control, such as from network failures, viruses and malware, power anomalies or outages, natural disasters and catastrophic events. A breach of our security or that of a third-party vendor that results in unauthorized access to our data could expose us to a disruption or challenges relating to our daily operations, as well as to data loss, litigation, damages, fines and penalties, significant increases in compliance costs and reputational damage, any of which could have an adverse effect on our business, financial condition and results of operations.

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We have a continuing need for technological change, and we may not have the resources to implement new technology effectively, or we may experience operational challenges when implementing new technology or technology needed to compete effectively with larger institutions may not be available to us on a cost-effective basis.

The financial services industry is undergoing rapid technological change, with frequent introductions of new technology-driven products and services. In addition to serving clients better, the effective use of technology increases efficiency and enables financial institutions to reduce costs. Our future success will depend, at least in part, upon our ability to address the needs of our clients by using technology to provide products and services that will satisfy client demands for convenience as well as to create additional efficiencies in our operations as we continue to grow and expand our products and service offerings. We hope to address these demands through, among other things, our Digital Innovation Center and digital banking platform. However, we may experience operational and other challenges as we implement these new technology enhancements or products, which could impair our ability to realize the anticipated benefits from such new technology or require us to incur significant costs to remedy any such challenges in a timely manner.

Many of our larger competitors have substantially greater resources to invest in technological improvements, and we may not be able to implement new technology-driven products and services timely, effectively or at all or be successful in marketing these products and services to our clients. Third parties upon whom we rely for our technology needs may not be able to develop on a cost-effective basis systems that will enable us to keep pace with such developments or we may, in order to remain competitive, be required to make significant capital expenditures, which may increase our overall expenses and have a material adverse effect on our net income. As a result, our competitors may be able to offer additional or superior products compared to those that we will be able to provide, which would put us at a competitive disadvantage. We may lose clients seeking new technology-driven products and services to the extent we are unable to provide such products and services. Accordingly, the ability to keep pace with technological change is important, and the failure to do so could adversely affect our business, prospects, cash flow, liquidity, financial condition and results of operations.

We are subject to certain operational risks, including, but not limited to, client, employee or third-party fraud and data processing system failures and errors.

Employee errors and employee or client misconduct could subject us to financial losses or regulatory sanctions and seriously harm our reputation. Misconduct by our employees could include hiding unauthorized activities from us, improper or unauthorized activities on behalf of our clients or improper use of confidential information. It is not always possible to prevent employee errors and misconduct, and the precautions we take to prevent and detect this activity may not be effective in all cases. Employee errors could also subject us to financial claims for negligence.

We have implemented a system of internal controls designed to mitigate operational risks, including data processing system failures and errors and client or employee fraud, as well as insurance coverage designed to protect us from material losses associated with these risks, including losses resulting from any associated business interruption. If our internal controls fail to prevent or detect an occurrence, or if any resulting loss is not insured or exceeds applicable insurance limits, it could adversely affect our business, prospects, cash flow, liquidity, financial condition and results of operations.

When we originate loans, we rely heavily upon information supplied by third parties, including the information contained in credit applications, property appraisals, title information, equipment pricing and valuation and employment and income documentation, in deciding which loans we will originate, as well as the terms of those loans. If any of the information upon which we rely is misrepresented, either fraudulently or inadvertently, and the misrepresentation is not detected prior to funding, the value of the loan may be significantly lower than expected, or we may fund a loan that we would not have funded or on terms that do not comply with our general underwriting standards. Whether a misrepresentation is made by the applicant, the borrower, one of our employees or another third party, we generally bear the risk of loss associated with the misrepresentation. A loan subject to a material misrepresentation is typically unsellable or subject to repurchase if it is sold prior to detection of the misrepresentation. The sources of the misrepresentations are often difficult to locate, and it is often difficult to recover any of the resulting monetary losses we may suffer, which could adversely affect our business, financial condition and results of operations.

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We are subject to claims and litigation pertaining to intellectual property.

Banking and other financial services companies, such as our Company, rely on technology companies and consultants to provide information technology products and services necessary to support their day-to-day operations. Technology companies frequently enter into litigation based on allegations of patent infringement or other violations of intellectual property rights. Competitors of our vendors, or other individuals or companies, may from time to time claim to hold intellectual property sold or assigned to us. Such claims may increase in the future as the financial services sector becomes more reliant on information technology vendors. The plaintiffs in these actions frequently seek injunctions and substantial damages.

Regardless of the scope or validity of such patents or other intellectual property rights, or the merits of any claims by potential or actual litigants, we may have to engage in protracted litigation. Such litigation is often expensive, time-consuming, disruptive to our operations, and distracting to management. If we are found to infringe on one or more patents or other intellectual property rights, we may be required to pay substantial damages or royalties to a third party. In certain cases, we may consider entering into licensing agreements for disputed intellectual property, although no assurance can be given that such licenses can be obtained on acceptable terms or that litigation will not occur. These licenses may also significantly increase our operating expenses. If legal matters related to intellectual property claims were resolved against us or settled, we could be required to make payments in amounts that could have an adverse effect on our business, financial condition and results of operations.

We may not be able to manage the risks associated with our anticipated growth and potential expansion through de novo branching.

Our business strategy entails evaluating potential strategic opportunities which includes potentially growing through de novo branching. De novo branching carries with it certain potential risks, including significant startup costs and anticipated initial operating losses; regulatory approval risk; an inability to secure the services of qualified senior management to operate the de novo banking location and successfully integrate and promote our corporate culture; poor market reception for de novo banking locations established in markets where we do not have a preexisting reputation; challenges posed by local economic conditions; challenges associated with securing attractive locations at a reasonable cost; and the additional strain on management resources and internal systems and controls. Failure to adequately manage the risks associated with our anticipated growth through de novo branching could have an adverse effect on our business, financial condition and results of operations.

Risks Related to the Regulation of Our Industry

We operate in a highly regulated environment, and the laws and regulations that govern our operations, corporate governance, executive compensation and accounting principles, or changes in them, or our failure to comply with them, could adversely affect us.

Banking is highly regulated under federal and state law. As such, we are subject to extensive regulation, supervision and legal requirements that govern almost all aspects of our operations. These laws and regulations are not intended to protect our shareholders. Rather, these laws and regulations are intended to protect clients, depositors, the Deposit Insurance Fund and the overall financial stability of the United States. These laws and regulations, among other matters, prescribe minimum capital requirements, impose limitations on the business activities in which we can engage, limit the dividends or distributions that the Bank may pay to the Company, restrict the ability of institutions to guarantee our debt and impose certain specific accounting requirements on us that may be more restrictive and may result in greater or earlier charges to earnings or reductions in our capital than GAAP would require. Compliance with laws and regulations can be difficult and costly, and changes to laws and regulations often impose additional operating costs. Our failure to comply with these laws and regulations, even if the failure follows good faith effort or reflects a difference in interpretation, could subject us to restrictions on our business activities, enforcement actions and fines and other penalties, any of which could adversely affect our results of operations, regulatory capital levels and the price of our securities. Further, any new laws, rules and regulations, such as were imposed under the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd Frank Act, could make compliance more difficult or expensive or otherwise adversely affect our business, prospects, cash flow, liquidity, financial condition and results of operations.

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Legislative and regulatory actions taken now or in the future may increase our costs and impact our business, governance structure, financial condition or results of operations.

Economic conditions that contributed to the financial crisis in 2008, particularly in the financial markets, resulted in government regulatory agencies and political bodies placing increased focus and scrutiny on the financial services industry. The Dodd-Frank Act, which was enacted in 2010 in response to the financial crisis, significantly changed the regulation of financial institutions and the financial services industry. The Dodd-Frank Act and the regulations thereunder have affected both large and small financial institutions. The Dodd-Frank Act, among other things, imposed new capital requirements on bank holding companies; changed the base for Federal Deposit Insurance Corporation, or FDIC, insurance assessments to a bank’s average consolidated total assets minus average tangible equity, rather than upon its deposit base; permanently raised the current standard deposit insurance limit to $250,000; and expanded the FDIC’s authority to raise insurance premiums. The Dodd-Frank Act established the Consumer Financial Protection Bureau, or CFPB, as an independent entity within the Federal Reserve, which has broad rulemaking, supervisory and enforcement authority over consumer financial products and services, including deposit products, residential mortgages, and home-equity loans, and contains provisions on residential mortgage-related matters that address steering incentives, determinations as to a borrower’s ability to repay, prepayment penalties and disclosures to borrowers. Although the applicability of certain elements of the Dodd-Frank Act is limited to institutions with more than $10 billion in assets, there can be no guarantee that such applicability will not be extended in the future or that regulators or other third parties will not seek to impose such requirements on institutions with less than $10 billion in assets, such as the Bank. Compliance with the Dodd-Frank Act and its implementing regulations has and may continue to result in additional operating and compliance costs that could have a material adverse effect on our business, financial condition, results of operations and growth prospects.

On May 24, 2018, President Trump signed into law the “Economic Growth, Regulatory Relief and Consumer Protection Act,” or the Regulatory Relief Act, which amends parts of the Dodd-Frank Act, as well as other laws that involve regulation of the financial industry. While the Regulatory Relief Act keeps in place fundamental aspects of the Dodd-Frank Act’s regulatory framework, it does change the regulatory framework for depository institutions with assets under $10 billion, such as the Bank, as well as easing some requirements for larger depository institutions. As more fully discussed under “Supervision and Regulation-Regulatory Relief Act,” the legislation includes a number of provisions which are favorable to bank holding companies, or BHCs, with total consolidated assets of less than $10 billion, such as the Company, and also makes changes to consumer mortgage and credit reporting regulations and to the authorities of the agencies that regulate the financial industry. Because a number of the provisions included in the Regulatory Relief Act require the federal banking agencies to undertake notice and comment rulemaking, it will likely take some time before these provisions are fully implemented.

Federal and state regulatory agencies frequently adopt changes to their regulations or change the manner in which existing regulations are applied. Regulatory or legislative changes to laws applicable to the financial industry, if enacted or adopted, may impact the profitability of our business activities, require more oversight or change certain of our business practices, including the ability to offer new products, obtain financing, attract deposits, make loans and achieve satisfactory interest spreads and could expose us to additional costs, including increased compliance costs. These changes also may require us to invest significant management attention and resources to make any necessary changes to operations to comply and could have an adverse effect on our business, financial condition and results of operations.

Federal banking agencies periodically conduct examinations of our business, including compliance with laws and regulations, and our failure to comply with any supervisory actions to which we are or become subject as a result of such examinations could adversely affect us.

As part of the bank regulatory process, the Federal Reserve and the OFR periodically conduct examinations of our business, including compliance with laws and regulations. If, as a result of an examination, one of these agencies were to determine that the financial condition, capital resources, asset quality, earnings prospects, management, liquidity, asset sensitivity, risk management or other aspects of any of our operations have become unsatisfactory, or that the Company, the Bank or their respective management were in violation of any law or regulation, it could take a number of different remedial actions

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as it deems appropriate. These actions include the power to enjoin “unsafe or unsound” practices, to require affirmative actions to correct any conditions resulting from any violation or practice, to issue an administrative order that can be judicially enforced, to direct an increase in our capital levels, to restrict our growth, to assess civil monetary penalties against us, the Bank or their respective officers or directors, to remove officers and directors and, if it is concluded that such conditions cannot be corrected or there is an imminent risk of loss to depositors, to terminate the Bank’s deposit insurance. If we become subject to such regulatory actions, our business, financial condition, results of operations and reputation could be adversely affected.

Financial institutions, such as the Bank, face a risk of noncompliance and enforcement action with the Bank Secrecy Act and other anti-money laundering statutes and regulations.

The Bank Secrecy Act, the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, or the USA PATRIOT Act, and other laws and regulations require financial institutions, among other duties, to institute and maintain an effective anti-money laundering program and file suspicious activity and currency transaction reports as appropriate. The Financial Crimes Enforcement Network, or FinCEN, established by the U.S. Department of the Treasury to administer the Bank Secrecy Act, is authorized to impose significant civil money penalties for violations of those requirements and has recently engaged in coordinated enforcement efforts with the individual federal banking regulators, as well as the U.S. Department of Justice, Drug Enforcement Administration and the Internal Revenue Service. Additionally, South Florida has been designated as a “High Intensity Financial Crime Area,” or HIFCA, by FinCEN and a “High Intensity Drug Trafficking Area,” or HIDTA, by the Office of National Drug Control Policy. The HIFCA program is intended to concentrate law enforcement efforts to combat money laundering efforts in higher-risk areas. The HIDTA designation makes it possible for local agencies to benefit from ongoing HIDTA-coordinated program initiatives that are working to reduce drug use. There is also increased scrutiny of compliance with the sanctions programs and rules administered and enforced by the Treasury Department’s Office of Foreign Assets Control.

In order to comply with regulations, guidelines and examination procedures in this area, we have dedicated significant resources to our anti-money laundering program, especially due to the regulatory focus on financial and other institutions located in South Florida. If our policies, procedures and systems are deemed deficient, we could be subject to liability, including fines and regulatory actions such as restrictions on our ability to pay dividends and the inability to obtain regulatory approvals to proceed with certain aspects of our business plans, including acquisitions and de novo branching.

We are subject to numerous laws and regulations of certain regulatory agencies, such as the CFPB, designed to protect consumers, including the Community Reinvestment Act, or CRA, and fair lending laws, and failure to comply with these laws could lead to a wide variety of sanctions.

The CRA directs all insured depository institutions to help meet the credit needs of the local communities in which they are located, including low- and moderate-income neighborhoods. Each institution is examined periodically by its primary federal regulator, which assesses the institution’s performance. The Equal Credit Opportunity Act, the Fair Housing Act and other fair lending laws and regulations impose nondiscriminatory lending requirements on financial institutions. The CFPB, the U.S. Department of Justice, the Federal Reserve and other federal agencies are responsible for enforcing these laws and regulations. The CFPB was created including the Federal Reserve, under the Dodd-Frank Act to centralize responsibility for consumer financial protection with broad rulemaking authority to administer and carry out the purposes and objectives of federal consumer financial laws with respect to all financial institutions that offer financial products and services to consumers. The CFPB is also authorized to prescribe rules applicable to any covered person or service provider, identifying and prohibiting acts or practices that are “unfair, deceptive, or abusive” in connection with any transaction with a consumer for a consumer financial product or service, or the offering of a consumer financial product. The ongoing broad rulemaking powers of the CFPB have potential to have a significant impact on the operations of financial institutions offering consumer financial products or services.

A successful regulatory challenge to our performance under the CRA, fair lending or consumer lending laws and regulations could result in a wide variety of sanctions, including damages and civil money

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penalties, injunctive relief, restrictions on mergers and acquisitions activity, restrictions on expansion, and restrictions on entering new business lines. Private parties may also have the ability to challenge an institution’s performance under fair lending laws in private class action litigation. Such actions could have an adverse effect on our business, financial condition and results of operations.

Increases in FDIC insurance premiums could adversely affect our earnings and results of operations.

The deposits of our bank are insured by the FDIC up to legal limits and, accordingly, subject it to the payment of FDIC deposit insurance assessments. In order to maintain a strong funding position and restore the reserve ratios of the Deposit Insurance Fund following the financial crisis, the FDIC increased deposit insurance assessment rates and charged special assessments to all FDIC-insured financial institutions. Although the FDIC has since reduced premiums for most FDIC-insured institutions of our size, increases in assessment rates or special assessments may occur in the future, especially if there are significant additional financial institution failures. Any future special assessments, increases in assessment rates or required prepayments in FDIC insurance premiums could reduce our profitability or limit our ability to pursue certain business opportunities, which could have a material adverse effect on our business, financial condition and results of operations.

The Federal Reserve may require us to commit capital resources to support the Bank.

The Federal Reserve requires a bank holding company to act as a source of financial and managerial strength to its subsidiary banks and to commit resources to support its subsidiary banks. Under the “source of strength” doctrine that was codified by the Dodd-Frank Act, the Federal Reserve may require a bank holding company to make capital injections into a troubled subsidiary bank at times when the bank holding company may not be inclined to do so and may charge the bank holding company with engaging in unsafe and unsound practices for failure to commit resources to such a subsidiary bank. Accordingly, we could be required to provide financial assistance to the Bank if it experiences financial distress.

A capital injection may be required at a time when our resources are limited, and we may be required to borrow the funds or raise capital to make the required capital injection. Any loan by a bank holding company to its subsidiary bank is subordinate in right of payment to deposits and certain other indebtedness of such subsidiary bank. In the event of a bank holding company’s bankruptcy, the bankruptcy trustee will assume any commitment by the holding company to a federal bank regulatory agency to maintain the capital of a subsidiary bank. Moreover, bankruptcy law provides that claims based on any such commitment will be entitled to a priority of payment over the claims of the holding company’s general unsecured creditors, including the holders of any note obligations. Thus, any borrowing by a bank holding company for the purpose of making a capital injection to a subsidiary bank often becomes more difficult and expensive relative to other corporate borrowings.

We could be adversely affected by the soundness of other financial institutions.

Financial services institutions are interrelated as a result of trading, clearing, counterparty or other relationships. We have exposure to many different industries and counterparties, and routinely execute transactions with counterparties in the financial services industry, including commercial banks, brokers and dealers, investment banks and other institutional clients. Many of these transactions expose us to credit risk in the event of a default by a counterparty or client. In addition, our credit risk may be exacerbated when our collateral cannot be foreclosed upon or is liquidated at prices not sufficient to recover the full amount of the credit or derivative exposure due. Any such losses could adversely affect our business, prospects, cash flow, liquidity, financial condition and results of operations.

Monetary policies and regulations of the Federal Reserve could adversely affect our business, financial condition and results of operations.

In addition to being affected by general economic conditions, our earnings and growth are affected by the policies of the Federal Reserve. An important function of the Federal Reserve is to regulate the U.S. money supply and credit conditions. Among the instruments used by the Federal Reserve to implement these objectives are open market purchases and sales of securities by the Federal Reserve, adjustments of

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both the discount rate and the federal funds rate and changes in reserve requirements against bank deposits. These instruments are used in varying combinations to influence overall economic growth and the distribution of credit, bank loans, investments and deposits. Their use also affects interest rates charged on loans or paid on deposits.

The monetary policies and regulations of the Federal Reserve have had a significant effect on the operating results of commercial banks in the past and are expected to continue to do so in the future. Although we cannot determine the effects of such policies on us at this time, such policies could adversely affect our business, prospects, cash flow, liquidity, financial condition and results of operations.

Risks Related to Ownership of our Class A Common Stock

There has been no substantial public market for our Class A common stock prior to the merger or our initial public offering and an active trading market for our Class A common stock may not develop after the merger or our initial public offering. As a result, you may be unable to resell your Class A common stock at or above the implied price of the shares received in the merger, or at all.

Our Class A common stock is currently quoted on the OTC Pink Sheets, but has experienced very limited trading volume in the over-the-counter market. As a result, there has been no significant public market for our Class A common stock historically and an active trading market for our Class A common stock may not develop or be sustained after the merger or our initial public offering. Also, the initial public offering price for our Class A common stock will be determined by negotiations between us and the underwriters and may bear no relationship to the market price for our Class A common stock after the merger or the initial public offering. A public trading market having the desired characteristics of depth, liquidity and orderliness depends upon the presence in the marketplace of willing buyers and sellers of our Class A common stock and their independent decisions, over which we have no control. Without an active, liquid trading market for our Class A common stock, shareholders may not be able to sell their shares at the volume, prices and times desired. Moreover, the lack of an established market could materially and adversely affect the value of our Class A common stock. The market price of our Class A common stock could decline significantly due to actual or anticipated issuances or sales of our Class A common stock in the future.

Our future ability to pay dividends is subject to restrictions.

Holders of our Class A common stock (as well as our Class B common stock) are only entitled to receive dividends when, as and if declared by our Board out of funds legally available for dividends. Moreover, our ability to declare and pay dividends to our shareholders is highly dependent upon the ability of the Bank to pay dividends to us, the payment of which is subject to laws and regulations governing banks and financial institutions.

We have not paid any cash dividends on our capital stock since inception and we do not plan to pay cash dividends in the foreseeable future. Any declaration and payment of dividends on our common stock in the future will depend on regulatory restrictions, our earnings and financial condition, our liquidity and capital requirements, the general economic climate, contractual restrictions, our ability to service any equity or debt obligations senior to our common stock and other factors deemed relevant by our Board. In addition, prior to the consummation of the merger, the terms of the merger agreement prohibit us from issuing dividends without the written consent of Marquis. Furthermore, consistent with our strategic plans, growth initiatives, capital availability, projected liquidity needs and other factors, we have made, and will continue to make, capital management decisions and policies that could adversely affect the amount of dividends, if any, paid to our shareholders.

Furthermore, the Federal Reserve has indicated that bank holding companies should carefully review their dividend policy in relation to the organization’s overall asset quality, current and prospective earnings and the level, composition and quality of capital. The guidance provides that we inform and consult with the Federal Reserve prior to declaring and paying a dividend that exceeds earnings for the period for which the dividend is being paid or that could result in an adverse change to our capital structure, which could impact our ability to pay dividends in the future.

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We expect to issue more Class A common stock in the future, including as a result of conversions of our Class B common stock from time to time and in connection with the consummation of the merger, which may dilute holders of Class A common stock.

Federal Reserve policy requires bank holding companies’ capital to be comprised predominantly of voting common stock. Our Class B common stock is non-voting common stock, therefore we expect future issuances of shares of our Company will be Class A common stock. These new issuances of Class A common stock, as well as their voting rights, may dilute the interests of the holders of our Class A common stock, and increase the market for, and liquidity of, our Class A common stock generally, as compared to the market for, and liquidity of, our Class B common stock. Historically, we have only issued Class B common stock in lieu of shares of our Class A common stock upon the request of certain larger shareholders seeking to avoid being regulated as bank holding companies based on their beneficial ownership of our voting common stock. We currently have 752,184 shares of Class B common stock issued and outstanding and we have entered into agreements with the holders of our Class B common stock that permit them to exchange all or a portion of their Class B common stock into an equal number of shares of Class A common stock under certain conditions from time to time. Thus, the issuance of Class A common stock upon exchange of our outstanding shares of Class B common stock could further dilute the voting power or price of our Class A common stock.

The market price of our Class A common stock may be subject to substantial fluctuations, which may make it difficult for you to sell your shares at the volume, prices and times desired.

The market price of our Class A common stock may be highly volatile, which may make it difficult for you to resell your shares at the volume, prices and times desired. There are many factors that may affect the market price and trading volume of our Class A common stock, including, without limitation, the risks discussed elsewhere in this “Risk Factors” section and:

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actual or anticipated fluctuations in our operating results, financial condition or asset quality;

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changes in economic or business conditions;

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the effects of, and changes in, trade, monetary and fiscal policies, including the interest rate policies of the Federal Reserve;

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publication of research reports about us, our competitors or the financial services industry generally, or changes in, or failure to meet, securities analysts’ estimates of our financial and operating performance, or lack of research reports by industry analysts or the cessation of coverage;

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operating and stock price performance of companies that investors deem comparable to us;

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additional or anticipated sales of our Class A common stock or Class B common stock or other securities by us or our existing shareholders;

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additions, departures or inability to retain of key personnel;

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perceptions and speculations in the marketplace regarding our competitors or us;

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price and volume fluctuations in the overall stock market from time to time;

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litigation involving us, our industry or both;

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investigations by regulators into our operations or those of our competitors;

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new laws or regulations or new interpretations of existing laws or regulations applicable to our business;

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changes in accounting standards, policies, guidelines, interpretations or principles;

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the financial projections we may provide to the public, any changes in those projections or our failure to meet those projections;

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actual or anticipated developments in our business, our competitors’ businesses or the competitive landscape generally;

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developments or disputes concerning our intellectual property or other proprietary rights;

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significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving our competitors or us;

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other economic, competitive, governmental, regulatory or technological factors affecting our operations, pricing, products and services; and

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other news, announcements or disclosures (whether by us or others) related to us, our competitors, our core market or the financial services industry.

The stock market and, in particular, the market for financial institution stocks have experienced substantial fluctuations in recent years, which in many cases have been unrelated to the operating performance and prospects of particular companies. In addition, significant fluctuations in the trading volume in our Class A common stock may cause significant price variations to occur. Increased market volatility may materially and adversely affect the market price of our Class A common stock, which could make it difficult to sell your shares at the volume, prices and times desired.

In addition, in the past, following periods of volatility in the overall market and the market price of a particular company’s securities, securities class action litigation has often been instituted against these companies. Such litigation, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources.

We are an “emerging growth company,” and the reduced reporting requirements applicable to emerging growth companies may make our Class A common stock less attractive to investors.

We are an “emerging growth company,” as defined in the JOBS Act. For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies but not to “emerging growth companies,” including, but not limited to:

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being permitted to provide only two years of audited financial statements, in addition to any required unaudited interim financial statements, with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure;

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not being required to comply with the auditor attestation requirements in the assessment of our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act;

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not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements;

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reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and

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exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

We will remain an emerging growth company until the earlier of  (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of our initial public offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock (including our Class A common stock and Class B common stock) that is held by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. Investors may find our common stock less attractive if we choose to rely on these exemptions. If some investors find our common stock less attractive as a result of any choices to reduce future disclosure, there may be a less active trading market for our common stock and the price of our common stock may be more volatile.

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Under the JOBS Act, emerging growth companies can also delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have elected to take advantage of this benefit and, as a result, our future financial statements may not be directly comparable to those of other public companies, including other financial institutions, which have implemented such new or revised accounting standards until we implement such new or revised accounting standards.

Substantial future sales of our Class A common stock in the public market, or the perception that these sales may occur, could cause the price of our Class A common stock to decline, even if our business is doing well.

Sales of our Class A common stock in the public market after our initial public offering, or the perception that these sales may occur, could cause the market price of our common stock to decline, even if our business is doing well. All Class A common stock sold in our initial public offering will be freely transferable without restriction or additional registration under the Securities Act of 1933, or the Securities Act. Substantially all of the remaining Class A common stock outstanding after the initial public offering will be available for sale upon the expiration of the 180-day lock-up period, subject to volume, notice and manner of sale restrictions as applicable to us under Rule 144 and Rule 701 under the Securities Act. Any or all of our Class A common stock may be released prior to expiration of the lock-up period at the discretion of the underwriter. To the extent these shares are released before the expiration of the lock-up period and sold into the market, the market price of our Class A common stock could decline.

Our executive officers, directors and principal shareholders will continue to have the ability to exert control over us and may exercise influence over matters subject to shareholder approval.

As of December 31, 2019, our directors and our executive officers, or NEOs, and their respective family members and affiliated entities beneficially owned an aggregate of 1,173,877 shares, or approximately 22.8% of our issued and outstanding Class A common stock and 54.7% of our Class B common stock. Following the completion of the merger, our directors and our executive officers and their respective family members and affiliated entities are expected to beneficially own approximately 14.2% of our outstanding Class A common stock (or 13.5% of our Class A common stock if the underwriters exercise in full their option to purchase additional shares from us). Consequently, our management and our Board may be able to significantly affect the outcomes of elections of directors and other matters submitted to a vote of our shareholders, such as mergers, the sale of substantially all of our assets and other extraordinary corporate matters. The interests of these insiders could conflict with the interests of our other shareholders, including you.

If securities or industry analysts do not publish research or publish unfavorable or inaccurate research about our business, our Class A common stock share price and trading volume could decline.

Activity in the trading market for our Class A common stock will depend, in part, on the research and reports that securities or industry analysts publish about us or our business. We may be unable to attract or sustain coverage by well-regarded securities and industry analysts. If either none or only a limited number of securities or industry analysts cover us or our business, or if these securities or industry analysts are not widely respected within the general investment community, the trading price for our Class A common stock would be materially and negatively impacted. In the event we obtain securities or industry analyst coverage, if one or more of the analysts who cover us or our business downgrade our Class A common stock or publish inaccurate or unfavorable research about us or our business, the price of our Class A common stock would likely decline, possibly substantially. If one or more of these analysts cease coverage of us or our business, or fail to publish reports on us or our business regularly, demand for our Class A common stock could decrease, which might cause the price of our Class A common stock and trading volume to decline, possibly substantially.

Public company requirements may strain our resources and divert management’s attention, which could adversely impact our ability to execute our strategy and harm operating results.

As a public company, we will be subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Act, the Nasdaq continued listing requirements and other applicable securities rules and regulations. Despite recent reforms made possible by the JOBS Act and other legislative and regulatory actions, compliance with these rules and regulations will nonetheless increase our legal and

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financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources, particularly after we are no longer an “emerging growth company.” The Exchange Act requires, among other things, that we file annual, quarterly, and current reports with respect to our business and operating results.

While the members of our Board and our executive officers have substantial experience relevant to our business, they have limited experience with operations as a public company upon which you can base your expectations of our future success or failure in complying with public company requirements. Our management may fail to comply with public company requirements, or may fail to do so effectively and efficiently, each would materially and adversely harm our ability to execute our strategy, and consequently, our operating results.

Furthermore, as a result of disclosure of information in this joint proxy statement/prospectus and in filings required of a public company, our business and financial condition will become more visible, which may result in threatened or actual litigation, including by competitors and other third parties. If these claims are successful, our business and operating results could be harmed, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of management and adversely affect our business, prospects, cash flow, liquidity, financial condition and results of operations.

Our new public company status and these new rules and regulations will make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of our Board, particularly to serve on the audit committee and compensation committee, and qualified executive officers.

Provisions in our governing documents and Florida law may have an anti-takeover effect and there are substitutional regulatory limitations on changes of control of bank holding companies.

Our corporate organizational documents and provisions of federal and state law to which we are subject contain certain provisions that could have an anti-takeover effect and may delay, make more difficult or prevent an attempted acquisition that you may favor or an attempted replacement of our Board or management.

Our articles of incorporation and our bylaws may have an anti-takeover effect and may delay, discourage or prevent an attempted acquisition or change of control or a replacement of our Board or management. Our governing documents include provisions that:

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empower our Board, without shareholder approval, to issue our preferred stock, the terms of which, including voting power, are to be set by our Board;

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divide our Board into three classes serving staggered three-year terms;

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provide that directors may be removed from office only for cause and only upon a 662∕3% vote of the shares of the Company then entitled to vote at an election for that director;

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prohibit shareholder action by written consent;

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require holders of at least 50% of all of the votes entitled to vote on any issue proposed to be considered at a special meeting to call a special meeting by submitting one or more written demands for the special meeting describing the purposes or purpose of such meeting;

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eliminate cumulative voting in elections of directors;

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provide that our Board has the exclusive authority to adopt or amend our Bylaws;

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require shareholders that wish to bring business before annual or special meetings of shareholders, or to nominate candidates for election as directors at our annual meeting of shareholders, to provide timely notice of their intent in writing; and

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enable our Board to increase, between annual meetings, the number of persons serving as directors and to fill the vacancies created as a result of the increase until the next meeting of shareholders by a majority vote of the directors present at a meeting of directors.

In addition, certain provisions of Florida law may delay, discourage or prevent an attempted acquisition or change in control. Furthermore, banking laws impose notice, approval, and ongoing regulatory requirements on any shareholder or other party that seeks to acquire direct or indirect “control” of an FDIC-insured depository institution or its holding company. These laws include the Bank Holding Company Act of 1956, as amended (the “BHC Act”), and the Change in Bank Control Act (the “CBCA”). These laws could delay or prevent an acquisition.

Furthermore, on April 19, 2019, our Articles of Incorporation were amended to include an exclusive forum provision. This provision provides that the state and federal courts in or for Miami-Dade County, Florida or Palm Beach County, Florida, will be the exclusive forums for (i) any action or proceeding asserting a claim for breach of a fiduciary duty owed by any current or former director, officer, employee, or agent of the Company to the Company or the Company’s shareholders; (ii) any derivative action or proceeding brought on behalf of the Company; (iii) any action or proceeding asserting a claim arising pursuant to any provision of the FBCA, or our Articles of Incorporation or Bylaws; or (iv) any action or proceeding asserting a claim governed by the internal affairs doctrine (not included in clauses (i) through (iii)); provided that if such state and federal courts lack personal or subject matter jurisdiction over an action, the sole and exclusive forum for such proceeding will be in another court located in Florida. Any person purchasing or otherwise acquiring any interest in our shares will be deemed to have notice of and have consented to the forum selection clause contained in our Articles of Incorporation.

This amendment was intended to reduce the risks and costs associated with multijurisdictional litigation and “forum shopping” by plaintiffs by limiting potential plaintiffs’ ability to initiate proceedings of the type described above in courts outside of Miami-Dade and Palm Beach Counties. However, this provision may limit the ability of a shareholder to bring lawsuits in the shareholder’s preferred venue or make it more difficult or expensive to litigate the foregoing matters. Alternatively, if a court were to find the exclusive forum provision to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in jurisdictions outside of Florida, which could have a material adverse effect on our business, financial condition, results of operations and growth prospects. The Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce duties or liabilities created by the Exchange Act. Federal courts have concurrent jurisdiction over all suits brought to enforce any duty or liability arising under the Securities Act. We note that there is uncertainty as to whether a court would enforce the exclusive forum provision with regard to a claim over which federal courts may have exclusive jurisdiction because investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder. Therefore, it is uncertain whether the exclusive forum provision would apply to claims under the Securities Act or Exchange Act. Although we believe this provision benefits us, it may have the effect of discouraging lawsuits against our directors and officers.

We are dependent upon the Bank for cash flow, and the Bank’s ability to make cash distributions is restricted.

Our primary asset is Professional Bank. We depend upon the Bank for cash distributions (through dividends on the Bank’s common stock) that we use to pay our operating expenses and satisfy our other financial obligations. Federal statutes, regulations and policies restrict the Bank’s ability to make cash distributions to us. These statutes and regulations require, among other things, that the Bank maintain certain levels of capital in order to pay a dividend. Further, the Bank’s regulators the ability to restrict the Bank’s payment of dividends by supervisory action. If the Bank is unable to pay dividends to us, we may not be able to satisfy our obligations or, if applicable, pay dividends on our common stock (including our Class A common stock and Class B common stock).

An investment in our Class A common stock is not an insured deposit and is subject to risk of loss.

Any shares of our Class A common stock you receive in the merger will not be a deposit or other obligation of the Bank and will not be insured or guaranteed by the FDIC or any other government agency. Your investment will be subject to investment risk, and you must be capable of bearing the potential loss of your entire investment.

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We may issue shares of preferred stock in the future, which could make it difficult for another company to acquire us or could otherwise adversely affect holders of our Class A common stock, which could depress the market price of our Class A common stock.

Our articles of incorporation authorize us to issue up to 10,000,000 shares of one or more series of preferred stock. Our Board will have the authority to determine the preferences, limitations and relative rights of shares of preferred stock and to fix the number of shares constituting any series and the designation of such series, without any further vote or action by our shareholders. Our preferred stock could be issued with voting, liquidation, dividend and other rights superior to the rights of our common stock. The potential issuance of preferred stock may delay or prevent a change in control of us, discouraging bids for our Class A common stock at a premium over the market price, and materially adversely affect the market price and the voting and other rights of the holders of our Class A common stock.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION

This joint proxy statement/prospectus, and the documents which are included in this joint proxy statement/prospectus, may contain forward-looking statements. These forward-looking statements include, but are not limited to: (i) statements about the benefits of the merger, including future financial and operating results and cost savings that may be realized from the merger; (ii) statements about our respective plans, objectives, expectations and intentions and other statements that are not historical facts; and (iii) other statements identified by words such as “anticipates,” “intends,” “believes,” “estimates,” “plans,” “seeks,” “projects,” “expects,” “may,” “will,” “would,” “could” or “should” or the negative versions of these terms or other comparable terminology. These forward-looking statements relating to Professional, Marquis or the combined company are based on current beliefs and expectations of Professional’s and Marquis’s management, and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the control of Professional and Marquis. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Accordingly, actual results may differ materially from those expressed in, or implied by, the forward-looking statements.

Some of the factors that may cause actual results or earnings to differ materially from those contemplated by the forward-looking statements include, but are not limited to, those discussed under “Risk Factors,” as well as the following:

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the merger may not be completed when expected because the requisite regulatory approvals for the merger, and/or the approval of the merger agreement by Marquis shareholders and approval of the Professional share issuance in connection with the merger by Professional’s shareholders, might not be obtained or other conditions to the completion of the merger set forth in the merger agreement might not be satisfied or waived;

•

the sale price for the Professional Class A common stock could decline before the completion of the merger, including as a result of the financial performance of Professional or Marquis, or more generally due to broader stock market movements and the performance of financial companies and peer group companies;

•

the expected cost savings, synergies and other financial benefits from the merger might not be realized within the expected time frames or at all as a result of, among other things, changes in general economic and market conditions, interest and exchange rates, monetary policy, laws and regulations and their enforcement, and the degree of competition in the markets in which Professional and Marquis operate;

•

Marquis’s business may not be integrated into Professional’s business successfully, or such integration may take longer to accomplish than expected;

•

operating costs, customer losses and business disruption following the merger, including adverse developments in relationships with employees, may be greater than expected;

•

management time and effort may be diverted to the resolution of merger-related issues;

•

deposit attrition, operating costs, customer losses, and business disruption following the merger, including adverse effects on relationships with employees, may be greater than expected;

•

termination of the merger agreement with Marquis, or failure to complete the merger, could negatively impact the Professional Class A common stock and the Marquis common stock and each company’s future business and financial results;

•

each company will be subject to business uncertainties and contractual restrictions while the merger is pending that could be harmful to its operations;

•

if the merger is not completed, we will have incurred substantial expenses and committed substantial time and resources without realizing the expected benefits of the merger;

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the strength of the United States economy in general and the strength of the local economies in which each company conducts operations;

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•

each company’s ability to successfully manage interest rate risk, credit risk, liquidity risk, and other risks inherent to their respective industries;

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the accuracy of each company’s financial statement estimates and assumptions, including the estimates used for loan loss reserve and deferred tax asset valuation allowance;

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increased competition and its effect on pricing of each company’s products and services as well as its margins;

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legislative or regulatory changes;

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each company’s ability to comply with the extensive laws and regulations to which they are subject, including the laws for each jurisdiction where we operate;

•

the limited quotation and trading activity of the Professional common stock and the Marquis common stock;

•

the concentration of ownership of the Professional common stock and the Marquis common stock;

•

fluctuations in the price of the Professional Class A common stock;

•

Professional Bank’s ability to make cash distributions to Professional and Professional’s ability to declare and pay dividends, the payment of which is subject to capital and other requirements;

•

changes in accounting principles, policies, practices or guidelines, including the effects of forthcoming CECL implementation;

•

the soundness of other financial institutions;

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the effects of each company’s lack of a diversified loan portfolio and concentration in the South Florida market, including the risks of geographic, depositor, and industry concentrations, including concentration in loans secured by real estate;

•

each company’s ability to fund and manage its growth, both organic growth as well as growth through other means, such as future acquisitions by the combined company;

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the frequency and magnitude of foreclosure of each company’s loans;

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changes in the securities and real estate markets;

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negative publicity and the impact on each company’s reputation;

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each company’s ability to attract and retain highly qualified personnel;

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technological changes;

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each company’s ability to manage operational risks, including, but not limited to, client, employee, or third-party fraud and security breaches, computer viruses, and data processing system failures and errors;

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changes in monetary and fiscal policies of the U.S. Government and the Federal Reserve;

•

inflation, interest rate, unemployment rate, market and monetary fluctuations;

•

the efficiency and effectiveness of each company’s internal control environment;

•

the ability of each company’s third-party service providers’ to continue providing services to it and its clients without interruption;

•

the effects of harsh weather conditions, including hurricanes, and man-made disasters;

•

the willingness of clients to accept third-party products and services rather than Professional’s or Marquis’s products and services and vice versa;

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changes in consumer spending and saving habits;

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growth and profitability of our noninterest income;

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•

anti-takeover provisions under federal and state law as well as Professional’s governing documents;

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other risks described from time to time in Professional’s filings with the SEC; and

•

each company’s ability to manage the risks involved in the foregoing.

Because these forward-looking statements are subject to assumptions and uncertainties, Professional’s, Marquis’s and the combined company’s actual results may differ materially from those expressed or implied by these forward-looking statements. You are cautioned not to place undue reliance on these statements, which speak only as of the date of this joint proxy statement/prospectus.

All subsequent written and oral forward-looking statements concerning the merger or other matters addressed in this joint proxy statement/prospectus, and attributable to Professional, Marquis or any person acting on their behalf, are expressly qualified in their entirety by the cautionary statements contained or referred to in this “Cautionary Note Regarding Forward-Looking Information.” Neither Professional nor Marquis undertake any obligation to update these forward-looking statements to reflect events or circumstances after the date of this joint proxy statement/prospectus or to reflect the occurrence of unanticipated events, unless obligated to do so under the federal securities laws.

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INFORMATION ABOUT THE PROFESSIONAL SPECIAL MEETING

This section contains information about the special meeting that Professional has called to allow Professional shareholders to vote on the Professional share issuance in connection with the merger. Professional is mailing this joint proxy statement/prospectus to you, as a Professional shareholder, on or about [      ], 2020. Together with this joint proxy statement/prospectus, Professional is also sending to you a notice of the special meeting of Professional shareholders and a form of proxy that the Professional board of directors is soliciting for use at the special meeting and at any adjournments or postponements of the special meeting.

Time, Date, and Place

The special meeting is scheduled to be on [           ], at [      ], local time, at the main office of Professional at 396 Alhambra Circle, Suite 255, Coral Gables, Florida 33134.

Matters to Be Considered at the Meeting

At the special meeting, Professional shareholders will be asked to consider and vote on:

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a proposal to approve the issuance of Professional Class A common stock in the merger (the “Professional share issuance proposal”);

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a proposal of the Professional board of directors to adjourn or postpone the Professional special meeting, if necessary or appropriate, to permit further solicitation of proxies if there are not sufficient votes at the time of the Professional special meeting to approve the Professional share issuance proposal (the “Professional adjournment proposal”); and

•

any other matters as may properly be brought before the Professional special meeting or any adjournment or postponement of the special meeting.

At this time, the Professional board of directors is unaware of any other matters that may be presented for action at the Professional special meeting. If any other matters are properly presented, however, and you have completed, signed and submitted your proxy, the person(s) named as proxy will have the authority to vote your shares in accordance with his or her judgment with respect to such matters. A copy of the merger agreement is included in this joint proxy statement/prospectus as Annex A, and we encourage you to read it carefully in its entirety.

Recommendation of the Professional Board of Directors

The Professional board of directors unanimously recommends that Professional shareholders vote “FOR” the Professional share issuance proposal and “FOR” the Professional adjournment proposal. See “The Merger — Recommendation of the Professional Board of Directors and Reasons for the Merger.”

Record Date and Quorum

[           ] has been fixed as the record date for the determination of Professional shareholders entitled to notice of, and to vote at, the special meeting and any adjournment or postponement thereof. At the close of business on the record date, there were [      ] shares of Professional common stock outstanding and entitled to vote at the special meeting, held by [      ] holders of record.

A quorum is necessary to transact business at the special meeting. The presence, in person or by proxy, of the holders of a majority of the outstanding shares of Professional Class A common stock entitled to vote at the special meeting is necessary to constitute a quorum. Shares of Professional Class A common stock represented at the special meeting but not voted, including shares that a shareholder abstains from voting will be counted for purposes of establishing a quorum. However, broker non-votes will not be included in establishing a quorum. Once a share of Professional Class A common stock is represented at the special meeting, it will be counted for the purpose of determining a quorum not only at the special meeting but also at any adjournment or postponement of the special meeting. In the event that a quorum is not present at the special meeting, it is expected that the special meeting will be adjourned or postponed.

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Required Vote

The Professional share issuance proposal and the Professional adjournment proposal will be approved if a majority of the votes cast on the applicable proposal are voted in favor of such proposal. For each proposal, you may vote “FOR,” “AGAINST” or “ABSTAIN.”

If you vote to “ABSTAIN” with respect to the Professional share issuance proposal or the Professional adjournment proposal, as applicable, or if you do not vote on such proposal, this will have no effect on the outcome of the vote on such proposal.

Each share of Professional Class A common stock you own as of the record date for the special meeting entitles you to one vote at the special meeting on all matters properly presented at the meeting.

How to Vote — Shareholders of Record

Voting in Person.   If you are a shareholder of record, you can vote in person by submitting a ballot at the special meeting. Nevertheless, we recommend that you vote by proxy as promptly as possible, even if you plan to attend the special meeting. This will ensure that your vote is received. If you attend the special meeting, you may vote by ballot, thereby canceling any proxy previously submitted.

Voting by Proxy.   Your proxy card includes instructions on how to vote by mailing in the proxy card. If you choose to vote by proxy, please mark each proxy card you receive, sign and date it, and promptly return it in the envelope enclosed with the proxy card. If you sign and return your proxy without instruction on how to vote your shares, your shares will be voted “FOR” the Professional share issuance proposal and “FOR” the Professional adjournment proposal. At this time, the Professional board of directors is unaware of any other matters that may be presented for action at the special meeting. If any other matters are properly presented, however, and you have signed and returned your proxy card, the person(s) named as proxy will have the authority to vote your shares in accordance with his or her judgment with respect to such matters.

How to Vote — Shares Held in “Street Name”

If you are a Professional shareholder and your shares are held in “street name” through a bank, broker or other holder of record, you must provide the record holder of your shares with instructions on how to vote your shares. Please follow the voting instructions provided by the bank or broker. You may not vote shares held in street name by returning a proxy card directly to Professional or by voting in person at the Professional special meeting unless you provide a “legal proxy,” which you must obtain from your broker, bank or other nominee. Further, brokers, banks or other nominees who hold shares of Professional Class A common stock on behalf of their customers may not give a proxy to Professional to vote those shares with respect to any of the proposals without specific instructions from their customers, as brokers, banks and other nominees do not have discretionary voting powers on these matters. Therefore, if you are a Professional shareholder and you do not instruct your broker, bank or other nominee on how to vote your shares, your broker, bank or other nominee may not vote your shares on the Professional share issuance or the Professional adjournment proposal, which broker non-votes will have no effect on the outcome of the vote on these proposals.

YOUR VOTE IS VERY IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING IN PERSON, PLEASE MARK, SIGN AND DATE THE ENCLOSED PROXY CARD AND PROMPTLY RETURN IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE. SHAREHOLDERS WHO ATTEND THE SPECIAL MEETING MAY REVOKE THEIR PROXIES BY VOTING IN PERSON.

Revocation of Proxies

You can revoke your proxy at any time before your shares are voted. If you are a shareholder of record, then you can revoke your proxy by:

•

submitting another valid proxy card bearing a later date;

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•

prior to the special meeting, by logging onto the Internet website specified on your proxy card in the same manner you would to submit your proxy electronically or by calling the telephone number specified on your proxy card, in each case if you are eligible to do so and following the instructions on the proxy card;

•

attending the special meeting and voting your shares in person; or

•

delivering prior to the special meeting a written notice of revocation to Professional’s Corporate Secretary at the following address: 396 Alhambra Circle, Suite 255, Coral Gables, Florida 33134.

If you choose to send a completed proxy card bearing a later date or a notice of revocation, the new proxy card or notice of revocation must be received before the beginning of the Professional special meeting. Attendance at the special meeting will not, in and of itself, constitute revocation of a proxy. If you hold your shares in street name with a bank, broker or other nominee, you must follow the directions you receive from your bank, broker or other nominee to change your vote. Your last vote will be the vote that is counted.

Shares Subject to Voting Agreements; Shares Held by Directors and Executive Officers

A total of  [      ] shares of Professional Class A common stock, representing approximately [      ]% of the outstanding shares of Professional Class A common stock entitled to vote at the special meeting, are subject to shareholder voting agreements between Marquis and each of Professional’s directors. Pursuant to his or her respective shareholder voting agreement, each director has agreed to, at any meeting of Professional shareholders, however called, or any adjournment thereof:

•

appear at such meeting or otherwise cause the shares of Professional Class A common stock held by such director to be counted as present for purposes of calculating a quorum; and

•

vote all shares of Professional Class A common stock beneficially owned by such director and which such director has the right to vote (i) in favor of the Professional share issuance proposal, (ii) against any action or agreement that would result in a breach of any covenant, representation or warranty or other obligation of Professional in the merger agreement and (iii) against any other action, agreement or transaction that is intended or could reasonably be expected to impede, interfere or be inconsistent with, delay, discourage or materially and adversely affect the consummation of the transactions contemplated by the merger agreement.

Pursuant to the shareholder voting agreement, each director has further agreed not to sell or otherwise dispose of any shares of Professional Class A common stock; provided, however, that transfers by will or operation of law, transfers subject to a pledge agreement and transfers in connection with estate and tax planning purposes are permitted, subject to the transferee being bound by the terms of the shareholder voting agreement, as are certain transfers in connection with the vesting, settlement or exercise of Professional stock options or restricted shares in order to pay taxes or the exercise price thereon and, in certain cases, in connection with Professional’s initial public offering of Class A common stock. The foregoing summary of the voting agreements entered into by Professional’s directors does not purport to be complete, and is qualified in its entirety by reference to the form of voting agreement attached as Exhibit B to the merger agreement, which is attached as Annex A to this document.

As of the record date, Professional’s directors and executive officers and their affiliates beneficially owned and were entitled to vote, in the aggregate, a total of  [      ] shares of Professional Class A common stock (excluding shares issuable upon the exercise of outstanding options), representing approximately [      ]% of the outstanding shares of Professional Class A common stock entitled to vote at the special meeting. For more information about the beneficial ownership of the Professional Class A common stock by each greater than 5% beneficial owner of Professional Class A common stock, each director and executive officer of Marquis and all Marquis directors and executive officers as a group, see “Principal Stockholders of Professional.”

Solicitation of Proxies

The proxy for the Professional special meeting is being solicited on behalf of the Professional board of directors. Professional will bear the entire cost of soliciting proxies from you. Professional will reimburse brokerage firms and other custodians, nominees and fiduciaries for reasonable expenses incurred by them in

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sending proxy materials to the beneficial owners of Professional Class A common stock. Proxies will be solicited principally by mail, but may also be solicited by the directors, officers, and other employees of Professional in person or by telephone, facsimile or other means of electronic communication. Directors, officers and employees will receive no compensation for these activities in addition to their regular compensation, but may be reimbursed for out-of-pocket expenses in connection with such solicitation.

Attending the Meeting

All holders of Professional Class A common stock, including shareholders of record and shareholders who hold their shares in street name through banks, brokers or other nominees, are cordially invited to attend the special meeting. Shareholders of record can vote in person at the special meeting. If you are not a shareholder of record and would like to vote in person at the special meeting, you must produce a proxy executed in your favor by the record holder of your shares. In addition, you must bring a form of personal photo identification with you in order to be admitted at the special meeting. We reserve the right to refuse admittance to anyone without proper proof of share ownership or without proper photo identification. The use of cameras, sound recording equipment, communications devices or any similar equipment during the special meeting is prohibited without Professional’s express written consent.

Questions and Additional Information

If you have more questions about the merger or how to submit your proxy or vote, or if you need additional copies of this joint proxy statement/prospectus or the enclosed proxy card or voting instructions, please contact Professional at:

Professional Holding Corp.
396 Alhambra Circle, Suite 255
Coral Gables, Florida 33134
Attention: Corporate Secretary
Phone: (786) 483-1757

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INFORMATION ABOUT THE MARQUIS SPECIAL MEETING

This section contains information about the special meeting that Marquis has called to allow Marquis shareholders to vote on the approval of the merger agreement. Marquis is mailing this proxy statement/​prospectus to you, as a Marquis shareholder, on or about [      ]. Together with this joint proxy statement/prospectus, Marquis is also sending to you a notice of the special meeting of Marquis shareholders and a form of proxy that the Marquis board of directors is soliciting for use at the special meeting and at any adjournments or postponements of the special meeting.

Time, Date, and Place

The special meeting is scheduled to be held on [           ], at [      ], local time, at the La Gorce Country Club, 5685 Alton Road, Miami Beach, Florida 33140.

Matters to be Considered at the Meeting

At the special meeting, Marquis shareholders will be asked to consider and vote on:

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a proposal to approve the merger agreement (the “Marquis merger proposal”);

•

a proposal of the Marquis board of directors to adjourn or postpone the Marquis special meeting, if necessary or appropriate, including to permit further solicitation of proxies if there are not sufficient votes at the time of the Marquis special meeting to approve the merger agreement (the “Marquis adjournment proposal”); and

•

any other matters as may properly be brought before the Marquis special meeting or any adjournment or postponement of the Marquis special meeting.

At this time, the Marquis board of directors is unaware of any other matters that may be presented for action at the Marquis special meeting. If any other matters are properly presented, however, and you have completed, signed and submitted your proxy, the person(s) named as proxy will have the authority to vote your shares in accordance with his or her judgment with respect to such matters. A copy of the merger agreement is included in this proxy statement/prospectus as Annex A, and we encourage you to read it carefully in its entirety.

Recommendation of the Marquis Board of Directors

The Marquis board of directors unanimously recommends that Marquis shareholders vote “FOR” the Marquis merger proposal and “FOR” the Marquis adjournment proposal. See “The Merger — Recommendation of the Marquis Board of Directors and Reasons for the Merger.”

Record Date and Quorum

[           ] has been fixed as the record date for the determination of Marquis shareholders entitled to notice of, and to vote at, the special meeting and any adjournment or postponement thereof. At the close of business on the record date, there were [      ] shares of Marquis common stock outstanding and entitled to vote at the special meeting, held by approximately [      ] holders of record.

A quorum is necessary to transact business at the special meeting. The presence, in person or by proxy, of the holders of a majority of the outstanding shares of Marquis common stock entitled to vote at the special meeting is necessary to constitute a quorum. Shares of Marquis common stock represented at the special meeting but not voted, including shares that a shareholder abstains from voting will be counted for purposes of establishing a quorum. However, broker non-votes will not be included in establishing a quorum. Once a share of Marquis common stock is represented at the special meeting, it will be counted for the purpose of determining a quorum not only at the special meeting but also at any adjournment or postponement of the special meeting. In the event that a quorum is not present at the special meeting, it is expected that the special meeting will be adjourned or postponed.

Required Vote

The affirmative vote of the holders of at least a majority of the outstanding shares of Marquis common stock entitled to vote at the special meeting is necessary to approve the Marquis merger proposal.

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If you vote to “ABSTAIN” with respect to the Marquis merger proposal or if you fail to vote on the Marquis merger proposal, or fail to instruct your bank or broker how to vote with respect to the Marquis merger proposal, this will have the same effect as voting “AGAINST” the Marquis merger proposal.

The Marquis adjournment proposal will be approved if a majority of the votes cast on the proposal are voted in favor of the proposal. If you vote to “ABSTAIN” with respect to the Marquis adjournment proposal or if you fail to vote on the Marquis adjournment proposal, or fail to instruct your bank or broker how to vote with respect to the Marquis adjournment proposal, this will have no effect on the outcome of the vote on the Marquis adjournment proposal.

Each share of Marquis voting common stock you own as of the record date for the special meeting entitles you to one vote at the special meeting on all matters properly presented at the meeting.

How to Vote — Shareholders of Record

Voting in Person.   If you are a shareholder of record, you can vote in person by submitting a ballot at the special meeting. Nevertheless, we recommend that you vote by proxy as promptly as possible, even if you plan to attend the special meeting. This will ensure that your vote is received. If you attend the special meeting, you may vote by ballot, thereby canceling any proxy previously submitted.

Voting by Proxy.   Your proxy card includes instructions on how to vote by mailing in the proxy card. If you choose to vote by proxy, please mark each proxy card you receive, sign and date it, and promptly return it in the envelope enclosed with the proxy card. If you sign and return your proxy without instruction on how to vote your shares, your shares will be voted “FOR” the Marquis merger proposal and “FOR” the Marquis adjournment proposal. At this time, the Marquis board of directors is unaware of any other matters that may be presented for action at the special meeting. If any other matters are properly presented, however, and you have signed and returned your proxy card, the person(s) named as proxy will have the authority to vote your shares in accordance with his or her judgment with respect to such matters. Please do not send in your Marquis stock certificates with your proxy card. If the merger is completed, then you will receive a separate letter of transmittal and instructions on how to surrender your Marquis stock certificates for the merger consideration.

How to Vote — Shares Held in “Street Name”

If you are a Marquis shareholder and your shares are held in “street name” through a bank, broker or other holder of record, you must provide the record holder of your shares with instructions on how to vote your shares. Please follow the voting instructions provided by the bank or broker. You may not vote shares held in street name by returning a proxy card directly to Marquis or by voting in person at the Marquis special meeting unless you provide a “legal proxy,” which you must obtain from your broker, bank or other nominee. Further, brokers, banks or other nominees who hold shares of Marquis common stock on behalf of their customers may not give a proxy to Marquis to vote those shares with respect to any of the proposals without specific instructions from their customers, as brokers, banks and other nominees do not have discretionary voting power on these matters. Therefore, if you are a Marquis shareholder and you do not instruct your broker, bank or other nominee on how to vote your shares:

•

your broker, bank or other nominee may not vote your shares on the Marquis merger proposal, which broker non-votes will have the same effect as a vote “AGAINST” this proposal; and

•

your broker, bank or other nominee may not vote your shares on the Marquis adjournment proposal, which broker non-votes will have no effect on the vote count for this proposal.

YOUR VOTE IS VERY IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING IN PERSON, PLEASE MARK, SIGN AND DATE THE ENCLOSED PROXY CARD AND PROMPTLY RETURN IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE. SHAREHOLDERS WHO ATTEND THE SPECIAL MEETING MAY REVOKE THEIR PROXIES BY VOTING IN PERSON.

Revocation of Proxies

You can revoke your proxy at any time before your shares are voted. If you are a shareholder of record, then you can revoke your proxy by:

•

submitting another valid proxy card bearing a later date;

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•

prior to the special meeting, by logging onto the Internet website specified on your proxy card in the same manner you would to submit your proxy electronically or by calling the telephone number specified on your proxy card, in each case if you are eligible to do so and following the instructions on the proxy card;

•

attending the special meeting and voting your shares in person; or

•

delivering prior to the special meeting a written notice of revocation to Marquis’s Chairman and Chief Executive Officer at the following address: 355 Alhambra Circle, Suite 125, Coral Gables, Florida 33134.

If you choose to send a completed proxy card bearing a later date or a notice of revocation, the new proxy card or notice of revocation must be received before the beginning of the Marquis special meeting. Attendance at the special meeting will not, in and of itself, constitute revocation of a proxy. If you hold your shares in street name with a bank, broker or other nominee, you must follow the directions you receive from your bank, broker or other nominee to change your vote. Your last vote will be the vote that is counted.

Shares Subject to Voting Agreements; Shares Held by Directors and Executive Officers

A total of 767,514 shares of Marquis common stock, representing approximately 22.5% of the outstanding shares of Marquis common stock entitled to vote at the special meeting, are subject to shareholder voting agreements between Professional and each of Marquis’s directors. Pursuant to his or her respective shareholder voting agreement, each director has agreed to, at any meeting of Marquis shareholders, however called, or any adjournment thereof:

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appear at such meeting or otherwise cause the shares of Marquis common stock held by such director to be counted as present for purposes of calculating a quorum; and

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vote all shares of Marquis common stock beneficially owned by such director and which such director has the right to vote (i) in favor of the approval of the merger agreement, (ii) against any action or agreement that would result in a breach of any covenant, representation or warranty or other obligation of Marquis in the merger agreement and (iii) against any acquisition proposal (as defined in “The Merger Agreement — Agreement Not to Solicit Other Offers”) or any other action, agreement or transaction that is intended or could reasonably be expected to impede, interfere or be inconsistent with, delay, discourage or materially and adversely affect the consummation of the transactions contemplated by the merger agreement.

Pursuant to the shareholder voting agreement, each director has further agreed not to sell or otherwise dispose of any shares of Marquis common stock; provided, however, that transfers by will or operation of law, transfers subject to a pledge agreement and transfers in connection with estate and tax planning purposes are permitted, subject to the transferee being bound by the terms of the shareholder voting agreement, as are certain transfers in connection with the vesting, settlement or exercise of Marquis stock options or restricted shares in order to pay taxes or the exercise price thereon. The foregoing summary of the voting agreements entered into by Marquis’s directors does not purport to be complete, and is qualified in its entirety by reference to the form of voting agreement attached as Exhibit A to the merger agreement, which is attached as Annex A to this document.

As of the record date, Marquis’s directors and executive officers and their affiliates beneficially owned and were entitled to vote, in the aggregate, a total of 767,514 shares of Marquis common stock (excluding shares issuable upon the exercise of outstanding options), representing approximately 22.5% of the outstanding shares of Marquis common stock entitled to vote at the special meeting. For more information about the beneficial ownership of the Marquis common stock by each greater than 5% beneficial owner of Marquis common stock, each director and executive officer of Marquis and all Marquis directors and executive officers as a group, see “Principal Stockholders of Marquis.”

Solicitation of Proxies

The proxy for the Marquis special meeting is being solicited on behalf of the Marquis board of directors. Marquis will bear the entire cost of soliciting proxies from you. Marquis will reimburse brokerage firms and other custodians, nominees and fiduciaries for reasonable expenses incurred by them in sending

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proxy materials to the beneficial owners of Marquis common stock. Proxies will be solicited principally by mail, but may also be solicited by the directors, officers, and other employees of Marquis in person or by telephone, facsimile or other means of electronic communication. Directors, officers and employees will receive no compensation for these activities in addition to their regular compensation, but may be reimbursed for out-of-pocket expenses in connection with such solicitation.

Attending the Meeting

All holders of Marquis common stock, including shareholders of record and shareholders who hold their shares in street name through banks, brokers or other nominees, are cordially invited to attend the special meeting. Shareholders of record can vote in person at the special meeting. If you are not a shareholder of record and would like to vote in person at the special meeting, you must produce a legal proxy executed in your favor by the record holder of your shares. In addition, you must bring a form of personal photo identification with you in order to be admitted at the special meeting. We reserve the right to refuse admittance to anyone without proper proof of share ownership or without proper photo identification. The use of cameras, sound recording equipment, communications devices or any similar equipment during the special meeting is prohibited without Marquis’s express written consent.

Questions and Additional Information

If you have more questions about the merger or how to submit your proxy or vote, or if you need additional copies of this proxy statement/prospectus or the enclosed proxy card or voting instructions, please contact Marquis at:

Marquis Bancorp, Inc.
355 Alhambra Circle, Suite 125
Coral Gables, Florida 33134
Attention: Chairman and Chief Executive Officer
Phone: (305) 443-2922

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THE MERGER

Background of the Merger

Over the past several years, as part of their respective ongoing consideration and evaluation of long-term prospects and strategies, each of Marquis’s and Professional’s board of directors and senior management have regularly assessed strategic alternatives for maximizing shareholder value, including as to growth opportunities and operational efficiencies with the objective to enhance profitability and prospects. The strategic discussions have focused on, among other things, the business environment facing financial institutions generally and Marquis and Professional, respectively, in particular, as well as conditions and ongoing consolidation in the financial services industry. In contemplating their respective strategic objectives, the boards of directors of Marquis and Professional found it important to consider potential merger opportunities to maximize shareholder value while at the same time continuing to provide quality products and services to their respective local communities and customers.

On February 14, 2018, a representative of Hovde Group, LLC (“Hovde”) met with Marquis’s board of directors to review Marquis’s strategic options and conditions and developments in the banking industry.

On September 6, 2018, a Hovde representative met with the Marquis board and provided an additional overview of Marquis’s strategic options and suggested that the time may be appropriate for Marquis to have conversations with other parties regarding who may have an interest in pursuing a merger transaction with Marquis. The Marquis board also interviewed another investment banking firm with substantial experience in the banking industry.

On September 20, 2018, the Marquis board of directors interviewed several law firms, including Smith Mackinnon, PA, to represent Marquis in any potential merger transaction. On October 3, 2018, Marquis retained Smith Mackinnon, PA to provide such assistance to Marquis.

On October 9, 2018, Marquis entered into an engagement letter with Hovde to explore the possible merger or sale of Marquis. During the remainder of 2018, an internet virtual data room was established for potential interested parties. Following discussions with financial and legal advisors, a determination was made to consider marketing Marquis to potential interested parties using year-end financial information.

In late January and early February 2019, Hovde contacted 28 parties who might have an interest in acquiring Marquis, with five parties expressing an interest and signing nondisclosure agreements.

In the remainder of February and through early March, 2019, initial due diligence was conducted by the five parties, and a number of meetings were held between the parties.

On March 12, 2019, three indications of interest were received (one was oral) from financial institutions, with a range of  $20.01 to $24.52 per share of Marquis common stock. One of the potential acquirers (“Financial Institution A”) indicated a price in the range of  $23.61 to $24.52 per share of Marquis common stock.

On March 14, 2019, Hovde reviewed the indications of interest with the Marquis board. After discussion regarding the indications of interest and each of the potential acquirers, including Financial Institution A, and the general economic trends and conditions facing Marquis and the potential acquirers, there was not a consensus as to whether there was an interest in pursuing any of the potential transactions.

On March 15, 2019, Hovde contacted Daniel R. Sheehan, the Chairman and Chief Executive Officer of Professional, at the instruction of the Marquis board to discuss a possible combination transaction with Marquis. Mr. Sheehan expressed an interest and Professional commenced reviewing information to formulate what a potential transaction could look like for the parties.

Between March 15 and March 19, 2019, Mr. Sheehan held discussions with members of the board of directors and senior management of Professional, who expressed support for pursuing a potential transaction with Marquis using stock consideration.

On March 19, 2019, Professional submitted a letter of intent with respect to a potential merger transaction which would result in pro forma ownership by Marquis shareholders of approximately 41% of the outstanding shares of the resulting company.

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On March 21, 2019, Hovde reviewed the Professional letter of intent and potential merger transaction with the Marquis board. After discussion regarding Professional’s letter of intent, as well as the other potential transactions for which Marquis had received indications of interest, and other potential strategic alternatives, competitive market conditions in the banking industry and the market for acquisitions generally, the Marquis board decided not to pursue a transaction at that time and asked Hovde to advise all interested parties, including Professional, of the board’s determination. A representative of Hovde then contacted a representative of Profession to communicate the Marquis board’s determination.

In April and May, 2019, senior management of Professional held discussions with members of the board of directors of Professional regarding potential continued interest in pursuing a transaction with Marquis and the strategic benefits and considerations of such a transaction in the context of a potential initial public offering of Professional Class A common stock. The directors were supportive of senior management continuing to pursue a transaction, including by submitting a new letter of intent to Marquis. Professional also engaged Stephens Inc. to act as financial advisor and Wachtell, Lipton, Rosen & Katz (“Wachtell Lipton”) to act as legal advisor in connection with the potential transaction.

On May 31, 2019, Professional submitted a written indication of interest to Marquis showing a merger transaction which would result in the Marquis shareholders having approximately 43% pro forma ownership of the resulting entity.

On June 4, 2019, Hovde presented an analysis of the revised Professional proposal to the Marquis board. Among other things, the analysis highlighted the benefits of doing a tax-free stock exchange and that the implied value of the stock in a combination transaction was higher than any of the other indications of interest received. Following Hovde’s presentation and further discussion among the Marquis board and advisors, a majority of the Marquis board determined that the interest from Professional was worth further exploration and authorized certain outside Marquis directors to negotiate a letter of intent with respect to the potential transaction.

On June 10, 2019, Professional and Marquis signed a letter of intent which provided for a merger transaction which would result in the Marquis shareholders having approximately 43% pro forma ownership of the resulting entity.

On June 14, 2019, Professional and Marquis signed a mutual nondisclosure agreement with an initial mutual 30-day non-exclusivity period which would be followed by a 30-day exclusivity period.

On June 25, 2019, the Marquis board of directors formed a special committee (the “Marquis Special Committee”) to continue discussions with Professional regarding the negotiation of definitive transaction agreements to be brought back to the full Marquis board for consideration. The Marquis Special Committee consisted of Norman S. Edelcup, Philip J. Feldman, Jarret L. Gross, Jeffrey M. Perlow, and Hillel Shohet, each an outside director of Marquis and Marquis Bank.

In June and July, the parties conducted formal due diligence, credit review and management meetings, and additional discussions were held between the Marquis Special Committee and Professional representatives concerning the negotiation of definitive transaction agreements. During this period, Marquis and Professional each retained the services of third parties to perform due diligence reviews of the other’s organization, including with respect to credit and operations.

On July 3, 2019, Smith Mackinnon, PA sent a draft of the definitive merger agreement to Wachtell Lipton, Professional’s outside counsel.

During the course of discussions regarding the draft merger agreement, representatives of Professional and Marquis also discussed their expectation that each party’s directors would enter into customary voting agreements agreeing to vote their shares of Professional Class A common stock and Marquis common stock, respectively, in favor of the merger agreement and the transactions contemplated thereby. Also during this period, Professional’s senior management and advisors and the Marquis Special Committee regularly updated their respective boards of directors on the status of negotiations.

On July 14, 2019, Wachtell Lipton sent revised drafts of the definitive transaction agreements to Smith Mackinnon, PA.

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Also on July 14, 2019, Financial Institution A submitted an indication of interest for the acquisition of Marquis with a suggested cash price range of  $24.06 to $24.97 per share of Marquis common stock. During the remainder of July 2019, Marquis retained the services of an additional law firm, K&L Gates, to guide the board as it relates to their fiduciary obligations and to assist it in review of the proposal from Financial Institution A while Marquis was in the exclusivity period with Professional. Thereafter, Financial Institution A was told by Marquis that Marquis was unable to entertain a proposal at that time. There were no further discussions between Financial Institution A and Marquis.

Between July and early August, 2019, representatives of Marquis and Professional continued to negotiate and finalize the definitive transaction agreements, including the merger agreement, voting agreements for directors of Professional and voting and non-disclosure and non-competition agreements for directors and certain executives of Marquis.

On August 6, 2019, Marquis’s board met the third party firms which were retained to provide a due diligence review of Professional and its operations to receive an overview of their results.

On August 8, 2019, the boards of directors of Marquis and Marquis Bank held a special meeting with representatives of Janney Montgomery Scott, LLC (“Janney”), Hovde, and legal counsel, who each participated in the meeting. The directors reviewed with their advisors the terms of the merger agreement and the merger, and other relevant information. At the meeting, the Janney representatives reviewed with the Marquis board Janney’s financial analysis summarized below under “— Opinion of Marquis’s Financial Advisor” and delivered to the Marquis Board the written opinion of Janney, which is attached to this joint proxy statement/prospectus as Annex B, that, based upon and subject to the various considerations set forth in such opinion, the merger consideration to be paid to the shareholders of Marquis is fair to the shareholders of Marquis from a financial point of view. In addition, legal counsel reviewed with the directors of Marquis and Marquis Bank the most recent drafts of the proposed merger agreement and related transaction documents, and the legal standards applicable to the Marquis board’s decisions and actions with respect to the proposed transaction. Janney and Hovde representatives also discussed with the Marquis board the potential benefits of all stock consideration in a fixed exchange ratio, including the fact that Marquis shareholders would share in any operational synergies following the transaction and would benefit from any appreciation in Professional’s stock price prior to the completion of the merger. Following a discussion of these matters and other factors listed under “— Recommendation of the Marquis Board of Directors and Reasons for the Merger” below, the boards of directors of Marquis and Marquis Bank concluded that the merger and the merger of Marquis Bank with and into Professional Bank were fair to and in the best interest of Marquis and its shareholders and unanimously approved and adopted the merger agreement and the transactions contemplated thereby, and recommended that Marquis’s shareholders approve the merger agreement.

On August 9, 2019, the boards of directors of Professional and Professional Bank held a special telephonic meeting to review the terms of the proposed merger and the related proposed transaction documents, including the merger agreement. Members of Professional’s management team and representatives from Stephens and Wachtell Lipton were also in attendance. At the meeting, representatives from Stephens reviewed with the Professional board Stephens’s financial analysis summarized below under “— Opinion of Professional’s Financial Advisor” and delivered to the Professional board the oral opinion of Stephens, which was later confirmed and writing and which written opinion is attached to this joint proxy statement/prospectus as Annex C, that, as of such date, the exchange ratio is fair from a financial point of view to Professional, based upon and subject to the qualifications, assumptions and other matters set forth in such opinion. In addition, Wachtell Lipton reviewed with the directors of Professional and Professional Bank the most recent drafts of the proposed merger agreement and related transaction documents, and the legal standards applicable to the Professional board’s decisions and actions with respect to the proposed transaction. After considering the proposed terms of the merger agreement and related transaction documents and the various presentations of its financial and legal advisors, and taking into consideration the matters discussed at such meeting and the factors described under “— Recommendation of the Professional Board of Directors and Reasons for the Merger” below, the boards of directors of Professional and Professional Bank concluded that the merger and the merger of Marquis Bank with and

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into Professional Bank were fair to and in the best interest of Professional and its shareholders and unanimously approved and adopted the merger agreement and the transactions contemplated thereby, and recommended that Professional’s shareholders approve the issuance of Professional Class A common stock in connection with the merger.

On August 9, 2019, the parties executed the merger agreement and related transaction agreements.

Recommendation of the Marquis Board of Directors and Reasons for the Merger

After careful consideration, Marquis’s board of directors, at a meeting held on August 8, 2019, determined that the merger agreement is in the best interests of Marquis and its shareholders. Accordingly, Marquis’ board of directors adopted and approved the merger agreement and the merger and the other transactions contemplated by the merger agreement and recommends that Marquis shareholders vote “FOR” the approval of the merger agreement. In reaching its decision to adopt and approve the merger agreement and the merger and the other transactions contemplated by the merger agreement, and to recommend that its shareholders approve the merger agreement, the Marquis board of directors consulted with its financial and legal advisors, and considered a number of factors, including the following material factors:

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each of Marquis’s, Professional’s and the combined company’s business, operations, financial condition, asset quality, earnings and prospects. In reviewing these factors, the Marquis board of directors considered its view that Professional’s geographic footprint, business and operations complement those of Marquis and that the merger would result in a combined company with diversified revenue sources, a well-balanced loan portfolio and an attractive funding base, as evidenced by a significant portion of core deposit funding;

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its understanding of the current and prospective environment in which Marquis and Professional operate, including national and local economic conditions, the interest rate environment, increasing operating costs resulting from regulatory initiatives and compliance mandates, the competitive environment for financial institutions generally, and the likely effect of these factors on Marquis both with and without the proposed transaction;

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a comparison of the terms of the proposed merger with comparable transactions;

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information concerning the business, financial condition, results of operations and prospects of Marquis and Professional;

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its understanding of the business, operations, financial condition, earnings and future prospects of Marquis;

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the results that Marquis could expect to achieve operating independently, and the likely risks and benefits to Marquis shareholders of that course of action, as compared to the value of the merger consideration to be received from Professional and the business combination;

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its view that the size of the institution and related economies of scale was becoming increasingly important to continued success in the current financial services environment, including the increased expenses of regulatory compliance, and that a merger with Professional could provide those economies of scale, increase efficiencies of operations and enhance customer products and services;

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the challenges of cost-effectively delivering state-of-the-art banking products and services on a competitive basis while shouldering an increased regulatory compliance burden;

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the complementary strengths of Marquis and Professional, and its belief that Professional’s branch, broad product offerings and larger market presence could facilitate accelerated growth in Marquis’s businesses;

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it belief that Professional’s financial strength would result in a combined company that would be well positioned to serve Marquis’s customers and communities and allow the combined company to grow on a larger geographic platform;

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the risks and challenges inherent in pursuing a growth strategy for Marquis in the absence of a transaction like the merger, and the opportunity to achieve a scale of operations that might not be achievable by Marquis for several years in the absence of the merger, if any;

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its belief that the number of potential acquirers interested in smaller institutions like Marquis, with total assets less than $750 million and limited geographic markets, has diminished and may diminish even further over time;

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the complementary nature of the credit cultures of the two companies, which management believes should facilitate integration and implementation of the transaction;

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management’s expectation that the combined company will have a strong capital position upon completion of the transaction;

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the board’s belief that the combined enterprise would benefit from Professional’s ability to take advantage of economies of scale and grow in the current economic environment, making Professional an attractive partner for Marquis;

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its belief that the transaction is likely to provide substantial value to Marquis’ shareholders;

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the fact that appraisal rights are available to Marquis shareholders;

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the opportunity to expand relationships with Marquis’s existing customer base through the increased lending capacity afforded by the combined company;

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the mutual understanding that Marquis and Professional share similar operating cultures, core values and approaches to servicing their respective markets, and the mutual respect to the two management teams;

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the opinion of Janney, Marquis’s financial advisor, delivered to Marquis’s board of directors, to the effect that, as of the date of such opinion, and subject to the procedures followed, assumptions made, matters considered, and qualifications and limitations on the review undertaken by Janney as set forth in such opinion, the merger consideration to be received by the holders of Marquis common stock pursuant to the merger agreement is fair, from a financial point of view, to the Marquis shareholders, as more fully described below in the section entitled “The Merger — Opinion of Marquis’s Financial Advisor”;

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the financial and other terms of the merger agreement, the expected tax treatment and deal protection provisions, including the ability of Marquis’s board of directors, under certain circumstances, to withdraw or materially adversely modify its recommendation to Marquis shareholders, each of which it reviewed with its outside financial and legal advisors;

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the fact that the merger consideration will consist of shares of Professional common stock, which would allow Marquis shareholders to participate in a significant portion of the future performance of the combined Marquis and Professional business and synergies resulting from the merger, and the value to Marquis shareholders represented by that consideration; and

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the benefits of increased liquidity that Marquis shareholders would have as shareholders of Professional.

Marquis’s board of directors also considered potential risks and potentially negative factors concerning the merger in connection with its deliberations of the proposed transaction, including the following material factors:

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that the merger consideration will be paid through the issuance of a fixed number of shares of Professional common stock and any decrease in the market price of Professional common stock will result in a reduction in the aggregate merger consideration to be received by Marquis shareholders at the time of the completing of the merger;

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the need to obtain Marquis shareholder approval, as well as the requisite regulatory approvals, to complete the merger and the risk that those or other conditions would not be satisfied or received in a timely manner and without the imposition of unacceptable conditions;

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•

the possibility that the merger might not close and the negative impact that could have on Marquis’s reputation and earnings, trading price of Marquis stock, ability to attract and retain key personnel and relationships with key constituencies, including employees and customers;

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the interests of Marquis’s directors and executive officers in the merger, in addition to their interests as shareholders generally, including the financial interests that are the result of compensation arrangements with Marquis Bank, the manner in which such interests would be affected by the merger, as well as the new agreements that certain of these individuals have entered into with Professional in connection with the merger;

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Marquis’s inability to accurately predict the future operating results and earnings potential of Professional;

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the potential displacement of Marquis’s employees, including members of management, and the adverse anticipated effect on those employees;

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the requirement that Marquis conduct its business in the ordinary course and the other restrictions on the conduct of Marquis’s business prior to the completion of the merger, which may delay or prevent Marquis from undertaking strategic or other business opportunities that may arise pending completion of the merger;

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that certain terms of the merger agreement prohibit Marquis from soliciting, and limit its ability to respond to, proposals for alternative transactions;

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the risk that the terms of the merger agreement relating to the payment of a termination fee under specified circumstances could have the effect of discouraging other parties that might be interested in a transaction with Marquis from proposing such a transaction;

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the risk that potential benefits and synergies sought in the merger may not be realized or may not be realized within the expected time period, and the risks associated with the integration of Marquis’s business, operations and workforce with those of Professional, including the execution risk of data system conversion and the possible negative effect on customer relationships;

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the merger-related costs;

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the voting and support agreement, under which certain shareholders have agreed to, subject to certain conditions, vote in favor of the merger and merger agreement, could discourage other parties that may be interested in a transaction with Marquis;

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the potential risk of diverting management attention and resources from the operation of the business of Marquis and towards completion of the merger and integration of operations; and

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the possibility of litigation in connection with the merger.

The foregoing discussion of the factors considered by the Marquis board of directors is not intended to be exhaustive, but, rather, includes the material factors considered by the Marquis board of directors. In reaching its decision to adopt and approve the merger agreement and the merger and the other transactions contemplated by the merger agreement, the Marquis board of directors did not quantify or assign any relative weights to the factors considered, and individual directors may have given different weights to different factors. The Marquis board of directors considered all these factors as a whole, including discussions with, and questioning of, Marquis’s management and Marquis’s financial and legal advisors, and overall considered the factors to be favorable to, and to support, its determination.

For the reasons set forth above, the Marquis board of directors has unanimously adopted and approved the merger agreement and the transactions contemplated thereby and recommends that you vote “FOR” the Marquis merger proposal and “FOR” the Marquis adjournment proposal.

Each of the directors of Marquis has entered into a voting agreement with Professional, pursuant to which they have agreed to vote in favor of the Marquis merger proposal and the other proposals to be voted on at the Marquis special meeting (subject to certain exceptions). For more information regarding the voting agreements, please see the section entitled. “Summary — Marquis Special Meeting” and “Information About the Marquis Special Meeting — Shares Subject to Voting Agreements; Shares Held by Directors and Executive Officers.”

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It should be noted that this explanation of Marquis’ board of directors’ reasoning and certain of the information presented in this section forward-looking in nature and, therefore, should be read in light of the factors discussed under the heading “Cautionary Note Regard Forward-Looking Information” on page 72 of this joint proxy statement/prospectus.

Recommendation of the Professional Board of Directors and Reasons for the Merger

In reaching its decision to adopt and approve the merger agreement, the merger and the other transactions contemplated by the merger agreement, and to recommend that its shareholders approve the merger agreement, the Professional board of directors evaluated the merger agreement, the merger and the other transactions contemplated by the merger agreement in consultation with Professional management, as well as Professional’s financial and legal advisors, and considered a number of factors, including the following material factors:

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each of Professional’s, Marquis’s and the combined company’s business, operations, financial condition, asset quality, earnings and prospects. In reviewing these factors, the Professional board of directors considered Marquis’s financial condition and asset quality, that Marquis’s business and operations complement those of Professional, and that the merger and the other transactions contemplated by the merger agreement would result in a combined company with a larger market presence and more diversified balance sheet, revenue streams and overall business mix in the 10 South Florida markets the combined company will operate in compared to Professional on a stand-alone basis;

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the Professional board of directors’ belief that Marquis’s earnings and prospects, and the synergies potentially available in the proposed merger, would create the opportunity for the combined company to have superior future earnings and prospects compared to Professional’s earnings and prospects on a stand-alone basis;

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the belief that, on a pro forma basis giving effect to the merger, the combined entity would be the fourth largest community bank (based on assets) in Southern Florida and the twelfth largest community bank (based on assets) in Florida;

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the belief that Marquis and Professional share a compatible community banking model;

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the complementary nature of the products, customers and markets of the two companies, which Professional believes should provide the opportunity to mitigate risks and increase potential returns;

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the expanded possibilities for growth that would be available to the combined company, given its larger size, asset base, capital and footprint;

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that Professional shareholders would own approximately 57% of the outstanding shares of common stock of the combined company immediately following the merger (based upon 6,170,279 shares of Professional common stock outstanding on a fully diluted basis as of August 9, 2019);

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the provisions of the merger agreement setting forth the corporate governance of the combined company, including that the combined company’s board of directors would be comprised of eight legacy Professional directors and up to five legacy Marquis directors and that the combined company would retain retaining the Professional Bank name with continued headquarters in Coral Gables, each of which the Professional board of directors believes enhances the likelihood that the strategic benefits that Professional expects to achieve as a result of the merger will be realized;

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the financial and other terms of the merger agreement and the restrictions on the ability of the Marquis board of directors to entertain third party acquisition proposals to acquire Marquis, including providing for payment by Marquis to Professional of a termination fee if the merger agreement is terminated under certain circumstances;

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Professional management’s expectation that Professional will retain its strong capital position and asset quality upon completion of the merger;

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•

the written opinion of Stephens, Professional’s financial advisor, to the Professional board of directors, to the effect that, as of August 9, 2019, the exchange ratio is fair from a financial point of view to Professional, based upon and subject to the qualifications, assumptions and other matters set forth in such opinion, as more fully described below in the section entitled “— Opinion of Professional’s Financial Advisor”; and

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its expectation that the required regulatory approvals could be obtained in a timely fashion.

Professional’s board of directors also considered potential risks relating to the merger including the following:

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Professional may not realize all of the anticipated benefits of the merger, including cost savings, maintenance of existing customer and employee relationships, and minimal disruption in the integration of the Marquis operations with Professional;

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the regulatory and other approvals required in connection with the merger and the bank merger and the risk that such regulatory approvals will not be received in a timely manner or at all or may impose unacceptable conditions;

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the substantial costs that Professional will incur in connection with the merger even if it is not consummated;

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the diversion of management attention and resources from the operation of Professional’s business towards the completion of the merger;

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pursuing a merger transaction with Marquis could preclude other expansion opportunities during the pendency of the merger transaction; and

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the other risks described under the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Information”.

This discussion of the information and factors considered by the Professional board of directors includes the material factors considered by the Professional board of directors, but it is not intended to be exhaustive and may not include all the factors considered by the Professional board of directors. In view of the wide variety of factors considered, and the complexity of these matters, the Professional board of directors did not quantify or assign any relative or specific weights to the various factors that it considered in reaching its determination to adopt and approve the merger agreement, the merger and the other transactions contemplated by the merger agreement. Rather, the Professional board of directors viewed its position and recommendation as being based on the totality of the information presented to and factors considered by it, including discussions with, and questioning of, Professional’s management and Professional’s financial and legal advisors. In addition, individual members of the Professional board of directors may have given differing weights to different factors. It should be noted that this explanation of the reasoning of the Professional board of directors and certain information presented in this section is forward-looking in nature and, therefore, that information should be read in light of the factors discussed in the section entitled “Cautionary Statement Regarding Forward-Looking Information”.

Each of the directors of Professional has entered into a voting agreement with Marquis, pursuant to which they have agreed to vote in favor of the Professional share issuance proposal and the other proposals to be voted on at the Professional special meeting. For more information regarding the voting agreements, please see the section entitled “Information About the Professional Special Meeting — Shares Subject to Voting Agreements; Shares Held by Directors and Executive Officers” beginning on page 77.

For the reasons set forth above, the Professional board of directors unanimously recommends that the holders of Professional Class A common stock vote “FOR” the Professional share issuance proposal.

Certain Unaudited Prospective Financial Information

Professional and Marquis do not, as a matter of course, publicly disclose forecasts or internal projections as to their respective future performance, earnings or other results due to, among other reasons, the inherent uncertainty of the underlying assumptions and estimates.

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However, in connection with the merger, Professional’s senior management and Marquis’s senior management prepared or approved for use certain unaudited prospective financial information which was provided to and considered by Stephens and Janney for the purpose of performing financial analyses in connection with their respective fairness opinions, as described in this joint proxy statement/prospectus under “— Opinion of Professional’s Financial Advisor” beginning on page 99 and “— Opinion of Marquis’s Financial Advisor” beginning on page 92. We refer to this information collectively as the “prospective financial information”.

The prospective financial information was not prepared for the purpose of, or with a view toward, public disclosure or with a view toward complying with the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information, published guidelines of the SEC regarding forward-looking statements or GAAP. A summary of certain significant elements of this information is set forth below, and is included in this joint proxy statement/​prospectus solely for the purpose of providing holders of Professional Class A common stock and holders of Marquis common stock access to certain nonpublic information made available to Professional’s and Marquis’s financial advisors for the purpose of performing financial analyses in connection with their respective fairness opinions.

Although presented with numeric specificity, the prospective financial information reflects numerous estimates and assumptions made by Professional’s senior management or Marquis’s senior management, as applicable, at the time such prospective financial information was prepared or approved for use by the financial advisors and represents Professional senior management’s or Marquis senior management’s respective evaluation of Professional’s expected future financial performance on a stand-alone basis, without reference to the merger, and Marquis’s expected future financial performance on a stand-alone basis, without reference to the merger. These and the other estimates and assumptions underlying the prospective financial information involve judgments with respect to, among other things, economic, competitive, regulatory and financial market conditions and future business decisions that may not be realized and that are inherently subject to significant business, economic, competitive and regulatory uncertainties and contingencies, including, among other things, the inherent uncertainty of the business and economic conditions affecting the industry in which Professional and Marquis operate and the risks and uncertainties described under “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Information” in this joint proxy statement/prospectus, all of which are difficult to predict and many of which are outside the control of Professional and Marquis and will be beyond the control of the combined company. There can be no assurance that the underlying assumptions would prove to be accurate or that the projected results would be realized, and actual results could differ materially from those reflected in the prospective financial information, whether or not the merger is completed. Further, these assumptions do not include all potential actions that the senior management of Professional or Marquis could or might have taken during these time periods. The inclusion in this joint proxy statement/prospectus of the unaudited prospective financial information below should not be regarded as an indication that Professional, Marquis or their respective boards of directors or financial advisors considered, or now consider, this prospective financial information to be material information to any holders of Professional Class A common stock or holders of Marquis common stock, as the case may be, particularly in light of the inherent risks and uncertainties associated with such prospective financial information. The prospective financial information is not fact and should not be relied upon as being necessarily indicative of actual future results. The prospective financial information also reflects numerous variables, expectations and assumptions available at the time it was prepared as to certain business decisions that are subject to change and do not take into account any circumstances or events occurring after the date they were prepared. No assurances can be given that if the prospective financial information and the underlying assumptions had been prepared as of the date of this joint proxy statement/prospectus, similar assumptions would be used. In addition, the prospective financial information may not reflect the manner in which the combined company would operate after the merger.

The prospective financial information included in this document has been prepared by, and is the responsibility of, management of Professional and Marquis. Crowe LLP (Professional’s and Marquis’s independent registered public accounting firm) has not audited, reviewed, examined, compiled nor applied agreed upon procedures with respect to the prospective financial information and, accordingly, Crowe LLP has not expressed any opinion or given any other form of assurance with respect thereto and assumes no

91

responsibility for the prospective financial information. The reports of the independent registered public accounting firm incorporated by reference in this joint proxy statement/prospectus relate to the historical financial information of Professional and Marquis, respectively. Such reports do not extend to the prospective financial information and should not be read to do so. No independent registered public accounting firm has examined, compiled or otherwise performed any procedures with respect to the prospective financial information and, accordingly, no independent registered public accounting firm has expressed any opinion or given any other form of assurance with respect thereto and no independent registered public accounting firm assumes any responsibility for the prospective financial information.

Professional Prospective Financial Information.   The following prospective financial information used by Stephens and Janney, respectively, in performing their financial analyses with respect to Professional on a stand-alone basis, was provided to Stephens and Janney by Professional management and approved by Professional for use by Stephens and Janney: (1) estimated diluted earnings per share for Professional of $0.53, $1.04, $1.68, $1.96 and $2.28 for the years ending December 31, 2020, 2021, 2022, 2023 and 2024, respectively; (2) estimated net income for Professional of  $1.5 million, $5.3 million, $10.5 million, $16.9 million, $19.7 million and $22.9 million for the years ending December 31, 2019, 2020, 2021, 2022, 2023 and 2024, respectively; and (3) estimated total assets for Professional of  $1.0 billion, $1.3 billion, $1.7 billion, $1.9 billion, $2.2 billion and $2.5 billion as of December 31, 2019, 2020, 2021, 2022, 2023 and 2024, respectively.

Marquis Prospective Financial Information.   The following prospective financial information used by Stephens and Janney, respectively, in performing their financial analyses with respect to Marquis on a stand-alone basis, was provided to Stephens and Janney by Marquis management and approved by Marquis for use by Stephens and Janney: (1) estimated diluted earnings per share for Marquis of  $1.58, $1.75, $1.92, $2.11, $2.38 and $2.64 for the years ending December 31, 2019, 2020, 2021, 2022, 2023 and 2024, respectively; (2) estimated net income for Marquis of  $6.9 million, $7.7 million, $8.4 million, $9.2 million, $10.4 million and $11.6 million for the years ending December 31, 2019, 2020, 2021, 2022, 2023 and 2024, respectively; and (3) estimated total assets for Professional of  $737.4 million, $795.1 million, $878.6 million, $987.8 million, $1.1 billion and $1.2 billion as of December 31, 2019, 2020, 2021, 2022, 2023 and 2024, respectively.

General

The prospective financial information was prepared separately using, in some cases, different assumptions, and the different estimates are not intended to be added together. Adding the prospective financial information together for the two companies is not intended to represent the results the combined company will achieve if the merger is completed and is not intended to represent forecasted financial information for the combined company if the merger is completed.

By including in this joint proxy statement/prospectus a summary of the prospective financial information, neither Professional, Marquis nor any of their respective representatives has made or makes any representation to any person regarding the ultimate performance of Professional or Marquis compared to the information contained in the prospective financial information. Neither Professional, Marquis nor, after completion of the merger, the combined company, undertakes any obligation to update or otherwise revise the prospective financial information or financial information to reflect circumstances existing since their preparation or to reflect the occurrence of subsequent or unanticipated events, even in the event that any or all of the underlying assumptions are shown to be in error, or to reflect changes in general economic or industry conditions.

The prospective financial information summarized in this section is not being included in this joint proxy statement/prospectus in order to induce any holder of Professional Class A common stock to vote in favor of the Professional stock issuance proposal or any of the other proposals to be voted on at the Professional special meeting or to induce any holder of Marquis common stock to vote in favor of the Marquis merger proposal or any of the other proposals to be voted on at the Marquis special meeting.

Opinion of Marquis’s Financial Advisor

Janney Montgomery Scott, LLC (“Janney”) was engaged by the board of directors of Marquis by letter dated July 26, 2019 to act as financial advisor and to render a fairness opinion for the board of

92

directors of Marquis in connection with a potential business combination with Professional. Janney Montgomery Scott, LLC delivered to the board of directors of Marquis its opinion dated August 12th, 2019 that, based upon and subject to the various considerations set forth in its written opinion, the merger consideration to be paid to the shareholders of Marquis is fair to the shareholders of Marquis from a financial point of view. In requesting Janney’s advice and opinion, no limitations were imposed by Marquis with respect to the investigations made or procedures followed by it in rendering this opinion. The full text of the opinion of Janney, which describes the procedures followed, assumptions made, matters considered and limitations on the review undertaken, are attached hereto as Annex B. Shareholders of Marquis should read these opinions in their entirety. Janney’s opinion speaks only as of August 12, 2019, the date of the opinion.

Janney is a nationally recognized investment banking firm and, as part of its investment banking business, it values financial institutions in connection with mergers and acquisitions, private placements and for other purposes. As a specialist in securities of financial institutions, Janney has experience in, and knowledge of, banks, thrifts and bank and thrift holding companies. Marquis’s board of directors selected Janney to act as its financial advisor in connection with the merger on the basis of the firm’s reputation and expertise in transactions such as the merger.

Marquis paid Janney $100,000 for the rendering of its fairness opinion. For its services as a financial advisor to Marquis’s board of directors in connection with the merger, Hovde will receive a fee of 1% of the aggregate merger consideration (i.e., the value of the Professional common stock to be received by Marquis shareholders plus the value attributable to outstanding stock options) less $100,000. Further, Marquis has agreed to indemnify Janney against any claims or liabilities arising out of Janney’s engagement by Marquis. As part of its investment banking business, Janney is routinely engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, competitive bidding, secondary distributions of listed and unlisted securities, private placements and valuations for estate, corporate and other purposes. As specialists in the securities of banking companies, we have experience and knowledge of, the valuation of banking institutions. This opinion has been reviewed by Janney’s compliance officer and fairness committee consistent and with internal policy. Janney has not had a material relationship with or received compensation from Marquis or Professional during the prior two years.

The following is a summary of the analyses performed by Janney in connection with its fairness opinion. Certain analyses were confirmed in a presentation to the board of directors of Marquis by Janney. The summary set forth below does not purport to be a complete description of either the analyses performed by Janney in rendering its opinion or the presentation delivered by Janney to the board of directors of Marquis, but it does summarize all of the material analyses performed and presented by Janney.

The preparation of a fairness opinion involves various determinations as to the most appropriate and relevant methods of financial analyses and the application of those methods to the particular circumstances. In arriving at its opinion, Janney did not attribute any particular weight to any analysis or factor considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. Janney may have given various analyses more or less weight than other analyses. Accordingly, Janney believes that its analyses and the following summary must be considered as a whole and that selecting portions of its analyses, without considering all factors, could create an incomplete view of the process underlying the analyses set forth in its report to the board of directors of Marquis and its fairness opinion.

In performing its analyses, Janney made numerous assumptions with respect to industry performance, general business and economic conditions and other matters, many of which are beyond the control of Marquis or Professional. The analyses performed by Janney are not necessarily indicative of actual value or actual future results, which may be significantly more or less favorable than suggested by such analyses. Such analyses were prepared solely as part of Janney’s analysis of the fairness of the merger consideration, from a financial point of view, to Marquis shareholders. The analyses do not purport to be an appraisal or to reflect the prices at which a company might actually be sold or the prices at which any securities may trade at the present time or at any time in the future. Janney’s opinion does not address the relative merits of the merger as compared to any other business combination in which Marquis might engage. In addition, as described above, Janney’s opinion was one of many factors taken into consideration by the board of directors of Marquis in making its determination to approve the merger agreement.

93

During the course of its engagement and as a basis for arriving at its opinion, Janney reviewed and analyzed material bearing upon financial and operating conditions of MBI and PHC and material prepared in connection with the merger, including, among other things, the following:

•

reviewed the merger agreement;

•

reviewed certain historical, publicly available business and financial information concerning Marquis and Professional;

•

held discussions with representatives of the senior management of Marquis for the purpose of reviewing future prospects of the potential pro forma institution related to the respective businesses, earnings, assets, liabilities and the amount of and timing of cost savings expected to be achieved as a result of the merger;

•

reviewed the terms of recent merger and acquisition transactions, to the extent publicly available, involving banks, thrifts and bank and thrift holding companies that we considered relevant;

•

reviewed the current and historical financial results of Marquis and Professional;

•

performed a comparison of certain Marquis and Professional operating and trading information with other similar publicly traded companies; and

•

performed such other analyses and considered such other factors as we have deemed appropriate.

Janney also took into account its assessment of general economic, market and financial conditions and its experience in other transactions as well as its knowledge of the banking industry and its general experience in securities valuation.

In performing its review, Janney has assumed and relied upon, without independent verification, the accuracy and completeness of the financial and other information and representations that was contained in the financials and other materials available from public sources, or that was provided to it by Marquis and Professional, or their respective representatives. Further, Janney relied upon Professional management as to the reasonableness and achievability of certain assumptions pertaining to (i) estimates and assumptions of long term growth and earnings projections as provided to Janney by management and representatives of Professional (the “Professional Prospective Financial Information”), (ii) estimates and assumptions of long term growth and earnings projections as provided to Janney by management and representatives of Marquis (the “Marquis Prospective Financial Information”) (iii) projected balance sheet and capital position of Professional and Marquis, (iv) assumptions regarding the initial public offering of Professional’s stock and (v) estimates regarding certain pro forma financial effects of the transaction on Professional. Janney further relied on the assurances of the management of Marquis and Professional that they were not aware of any facts or circumstances that would make any of such information inaccurate or misleading.

Janney is not an expert in the evaluation of loan and lease portfolios for purposes of assessing the adequacy of the allowances for losses with respect thereto and has assumed that such allowances for Marquis and Professional are in the aggregate adequate to cover such losses. Janney was not retained to and did not conduct a physical inspection of any of the properties or facilities of Marquis and Professional. In addition, Janney has not reviewed individual credit files nor has it made an independent evaluation or appraisal of the assets and liabilities of Marquis or Professional or any of their respective subsidiaries and Janney was not furnished with any such evaluations or appraisals.

In preparing its analyses, Janney relied upon the Marquis Prospective Financial Information as provided by and approved for use by Marquis management. MBI earnings were also adjusted for the impact of projected balance sheet decisions as provided by representatives of MBI and PHC. Additionally, Janney relied upon the Professional Prospective Financial Information as provided by and approved for use by Professional management, along with assumptions regarding the initial public offering of Professional’s stock and estimates regarding certain pro forma financial effects of the transaction on Professional, as confirmed by the representatives of senior management of Professional and Marquis.

94

Janney also received and relied upon in its pro forma analyses assumptions relating to transaction costs, purchase accounting, cost savings, core deposit intangible assets, among other assumptions, as provided by representatives of Marquis and Professional. Janney expressed no opinion as to such information or the assumptions on which such information was based.

Janney assumed that there had been no material change in the respective assets, financial condition, results of operations, business or prospects of Marquis or Professional since the date of the most recent financial data made available to Janney. Janney also assumed in all respects material to its analysis Marquis and Professional would remain as going concerns for all periods relevant to its analyses.

Summary of Proposed Merger Consideration and Implied Transaction Metrics.   Janney reviewed the financial terms of the proposed transaction. Based upon Professional’s August 5, 2019 closing stock price of $18.50, and based upon the Marquis’s 3,419,088 shares of common stock outstanding, Janney calculated an aggregate implied transaction value of approximately $86.28 million, or a transaction price per share of $22.29. Based upon financial information for Marquis as or for the last twelve months (“LTM”) ended June 30, 2019, unless otherwise noted, Janney calculated the following implied transaction metrics:

Transaction Price / LTM Net Income(1):	12.3x
Transaction Price / 2019E Net Income(2):	11.8x
Transaction Price / Tangible Book Value Per Share(3):	158.0%
Tangible Book Premium/Core Deposits(4):	10.3%
Transaction Price / Total Assets(5):	12.7%

(1)

based upon Marquis LTM Net Income of  $6,998 thousand

(2)

based upon estimated 2019E Net Income of  $7,285 thousand

(3)

based upon Marquis tangible common equity of  $54.6 million as of 6/30/2019

(4)

based upon Marquis core deposits of  $396.9 million as of 6/30/2019

(5)

based upon Marquis total assets of  $680.3 million as of 6/30/2019

Stock Trading History.   Janney also reviewed the recent trading activity of Professional stock over the 30, 60, and 90 trading day periods ended August 5, 2019. In this analysis, Janney analyzed the volume weighted average trading price of Professional stock over the defined periods, among other trading metrics. Janney observed that over the 30, 60, and 90 day periods, Professional stock traded between $17.15 and $18.65 at all times.

Comparable Company Analyses.   Janney used publicly available information to compare selected financial information for Professional with a group of financial institutions selected by Janney for the Professional standalone Peer Group. The Professional Peer Group consisted of the following companies:

Berkshire Bancorp Inc.	Blackhawk Bancorp Inc.
River Financial Corp	Union Bank
Private Bancorp of America Inc	GrandSouth Bancorporation
Embassy Bancorp Inc.	Solvay Bank Corp.
ENB Financial Corp	Westbury Bancorp Inc.
First Miami Bancorp Inc.	Northway Financial Inc.
Bank of Southern California NA	Kish Bancorp Inc.
Security Federal Corp.	Two Rivers Financial Grp Inc.
BNCCORP, INC.	Katahdin Bankshares Corp.
Juniata Valley Financial Corp.	Town and Country Finl Corp
Empire Bancorp Inc.	BancAffiliated Inc.
South Atlantic Bancshares Inc.	Uwharrie Capital Corp

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The analysis compared selected financial information for Professional standalone with the corresponding publicly available data for the Professional standalone Peer Group as of or for the twelve months ended June 30, 2019 (unless otherwise noted), with pricing data as of August 2, 2019. The table below sets forth the data for Professional and the high, low, median and mean data for the Professional standalone Peer Group.

Professional Standalone Comparable Company Analysis

​

Professional

Professional Peer Group Median

Professional Peer Group Mean

Professional Peer Group High

Professional Peer Group Low

Market Capitalization ($M)

​

$

65

​

$

92

​

$

97

​

$

190

​

$

35

Price/Tangible Book Value

​

​

149.3%

​

​

114.2%

​

​

123.9%

​

​

191.9%

​

​

98.5%

Price/MRQ EPS

​

​

32.2x

​

​

12.3x

​

​

15.0x

​

​

33.7x

​

​

7.9x

Dividend Yield

​

​

0.0%

​

​

1.4%

​

​

1.7%

​

​

4.4%

​

​

0.0%

Weekly Volume

​

​

0.2%

​

​

0.1%

​

​

0.1%

​

​

0.5%

​

​

0.0%

Insider Ownership

​

​

19.4%

​

​

15.1%

​

​

22.0%

​

​

99.7%

​

​

0.0%

Institutional Ownership

​

​

N/A

​

​

3.4%

​

​

4.1%

​

​

12.1%

​

​

0.0%

Last Twelve Months Return

​

​

2.5%

​

​

-1.1%

​

​

1.1%

​

​

33.3%

​

​

-15.7%

Total Assets ($M)

​

$

890

​

$

855

​

$

882

​

$

1,132

​

$

655

Total Loans ($M)

​

$

723

​

$

624

​

$

621

​

$

968

​

$

371.5

Tangible Common Equity/Tangible Assets

​

​

8.3%

​

​

9.0%

​

​

9.6%

​

​

21.0%

​

​

5.4%

NPAs/Assets

​

​

0.16%

​

​

0.30%

​

​

0.39%

​

​

0.91%

​

​

0.00%

Last Twelve Months ROAA

​

​

0.41%

​

​

0.87%

​

​

0.80%

​

​

0.99%

​

​

0.35%

Last Twelve Months ROAE

​

​

4.93%

​

​

8.75%

​

​

8.44%

​

​

12.04%

​

​

2.86%

Note: Financial data for the institutions in the Professional Peer Group is not pro forma for any publicly announced and pending transactions.

Janney used publicly available information to perform a similar analysis for Professional pro forma and a group of financial institutions as selected by Janney for the Professional Pro Forma Peer Group. The Professional Pro Forma Peer Group consisted of holding companies, banks and thrifts as defined in Janney’s Research Group’s reports published on Professional Pro Forma. The Professional Pro Forma Peer Group consisted of the following companies:

American National Banksahres	Reliant Bancorp Inc.
Red River Bancshares Inc.	ACNB Corp.
Spirit of Texas Bancshares, Inc.	PCB Bancorp
Bridgewater Bancshares Inc.	Orrstown Financial Services
CapStar Financial Holdings Inc.	Unity Bancorp Inc.
Central Valley Community Bancorp	FS Bancorp Inc.
BayCom Corp.	First Bank
BankFinancial Corp.	First Northwest Bancorp
Pacific Mercantile Bancorp	First Financial Northwest Inc.

The analysis compared financial information for Professional pro forma with the corresponding publicly available data for the Professional Pro Forma Peer Group as of or for the twelve months ended June 30, 2019 (unless otherwise noted) with pricing data as of August 2, 2019. The table below sets forth the data for Professional and the high, low, median and mean data for the Professional Pro Forma Peer Group.

96

Professional Pro Forma Comparable Company Analysis

​

Professional

Professional Peer Group Median

Professional Peer Group Mean

Professional Peer Group High

Professional Peer Group Low

Market Capitalization ($M)

​

$

261

​

$

257

​

$

254

​

$

397

​

$

144

Price/Tangible Book Value

​

​

136.8%

​

​

134.4%

​

​

137.6%

​

​

181.4%

​

​

99.0%

Price/MRQ EPS

​

​

16.5x

​

​

13.1x

​

​

17.6x

​

​

64.3x

​

​

9.8x

Dividend Yield

​

​

0.0%

​

​

1.5%

​

​

1.9%

​

​

3.1%

​

​

0.7%

Weekly Volume

​

​

N/A

​

​

0.9%

​

​

1.0%

​

​

1.6%

​

​

0.5%

Insider Ownership

​

​

N/A

​

​

9.4%

​

​

13.0%

​

​

34.8%

​

​

2.9%

Institutional Ownership

​

​

N/A

​

​

35.0%

​

​

37.0%

​

​

64.7%

​

​

1.3%

Last Twelve Months Return

​

​

N/A

​

​

-13.1%

​

​

-11.0%

​

​

10.1%

​

​

-24.4%

Total Assets ($M)

​

$

1,665

​

$

1,749

​

$

1,775

​

$

2,418

​

$

1,258

Total Loans ($M)

​

$

1,274

​

$

1,353

​

$

1,351

​

$

1,839

​

$

886

Tangible Common Equity/ Tangible Assets

​

​

11.7%

​

​

10.6%

​

​

10.7%

​

​

14.03%

​

​

8.10%

NPAs/Assets

​

​

0.15%

​

​

0.23%

​

​

0.28%

​

​

0.84%

​

​

0.07%

Last Twelve Months ROAA

​

​

0.90%

​

​

0.98%

​

​

1.10%

​

​

1.74%

​

​

0.56%

Last Twelve Months ROAE

​

​

6.92%

​

​

8.40%

​

​

9.55%

​

​

16.53%

​

​

4.82%

Note: Financial data for the institutions in the Professional Pro Forma Peer Group is not pro forma for any publicly announced and pending transactions.

Contribution Analysis.   Janney prepared a contribution analysis demonstrating percentage contributions of: total assets, total loans, total deposits, tangible common equity and projected net income for 2020 and 2021 for both Professional and Marquis to the combined company on a pro forma basis and compared such contribution results to the per share and total merger consideration to be received by Marquis shareholders. For projected net income, Janney relied upon the Marquis Prospective Financial Information and the Professional Prospective Financial Information as provided and confirmed by management of Marquis and Professional.

​	Marquis Contribution to Professional
Total assets	​	42%
Total loans	​	44%
Total deposits	​	43%
Total tangible common equity	​	30%
2020 Est. Stand-Alone Net Income	​	62%
2021 Est. Stand-Alone Net Income	​	47%
Marquis Pro Forma Ownership	​	43%

Analysis of Selected Merger Transactions.   Janney reviewed a group of selected merger and acquisition transactions, or the Comparable Transactions group. The Comparable Transactions group consisted of selected nationwide holding company, bank and thrift merger of peers transactions with disclosed deal value and target total assets between $250 million and $10.0 billion announced between January 1, 2016 and August 5, 2019, excluding mergers of equals transactions and transactions where less

97

than 100% of the stock was acquired. The Comparable Transactions group was composed of the following transactions:

Buyer	Target
ChoiceOne Financial Services	County Bank Corp.
Delmar Bancorp	Virginia Partners Bank
Veritex Holdings Inc.	Green Bancorp Inc.
Riverview Financial Corp.	CBT Financial Corp.
Southern National Bncp of VA	Eastern Virginia Bankshares
Little Bank Inc.	Union Banc Corp.
Bay Banks of Virginia Inc.	Virginia BanCorp Inc.
Access National Corp.	Middleburg Financial Corp.
Standard Financial Corp.	Allegheny Valley Bancorp Inc.
Sunflower Financial Inc.	Strategic Growth Bancorp Inc.
Chemical Financial Corp.	Talmer Bancorp Inc.

Janney reviewed the following transaction metrics: transaction price to last-twelve-months earnings per share, transaction price to estimated earnings per share, transaction price to tangible book value per share and tangible book premium to core deposits. Janney also reviewed the following target financials: total assets, non-performing assets to assets, tangible common equity to tangible assets and last-twelve-months return on average assets. Janney compared the indicated transaction multiples and target financials for the merger to the high, low, mean and median multiples of the Comparable Transactions group.

​

Marquis/​ Professional

Precedent Transactions Median

Precedent Transactions Mean

Precedent Transactions High

Precedent Transactions Low

Deal Value ($M)

​

$

86.3

​

$

89.0

​

$

282.5

​

$

1,117.8

​

$

30.7

Transaction price/Tangible book value per share:

​

​

158.0%

​

​

135.4%

​

​

148.8%

​

​

249.9%

​

​

90.0%

Transaction price/Earnings per share

​

​

11.2x

​

​

15.2x

​

​

16.0x

​

​

21.0x

​

​

10.9x

Transaction price/Total assets

​

​

12.7%

​

​

13.2%

​

​

14.0%

​

​

22.8%

​

​

9.8%

Core deposit premium

​

​

10.3%

​

​

4.9%

​

​

5.8%

​

​

15.2%

​

​

(1.8)%

Target Total Assets ($M)

​

$

680.3

​

$

616.6

​

$

1,668.3

​

$

6,595.9

​

$

299.5

Target NPAs/Assets

​

​

0.27%

​

​

1.34%

​

​

1.28%

​

​

1.81%

​

​

0.01%

Target TCE/TA

​

​

9.31%

​

​

9.42%

​

​

9.27%

​

​

10.99%

​

​

7.36%

Target LTM ROAA

​

​

1.19%

​

​

0.66%

​

​

0.60%

​

​

1.13%

​

​

(0.77)%

Net Present Value Analyses.   Janney performed an analysis that estimated the net present value per share of Marquis common stock assuming Marquis performed in accordance with estimates based upon historical performance. To approximate the terminal value of a share of Marquis common stock at December 31, 2023, Janney applied price to 2023 earnings multiples ranging from 10.0x to 14.0x and multiples of December 31, 2023 tangible book value ranging from 130% to 170%. The terminal values were then discounted to present values using discount rates ranging from 11.0% to 15.0%. The discount rates selected by Janney were intended to reflect different assumptions regarding required rates of return of holders or prospective buyers of Marquis common stock. The analysis and the underlying assumptions yielded a range of values per share of Marquis common stock of  $20.02 to $29.99 when applying multiples of earnings and $19.59 to $31.28 when applying multiples of tangible book value.

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P/B Multiples

Discount Rate	1.30x			1.40x			1.50x			1.60x			1.70x
11.0%	​	$	23.34	​	$	25.00	​	$	26.66	​	$	28.33	​	$	29.99
12.0%	​	$	22.45	​	$	24.04	​	$	25.64	​	$	27.24	​	$	28.84
13.0%	​	$	21.60	​	$	23.13	​	$	24.67	​	$	26.20	​	$	27.74
14.0%	​	$	20.79	​	$	22.27	​	$	23.74	​	$	25.22	​	$	26.69
15.0%	​	$	20.02	​	$	21.44	​	$	22.86	​	$	24.28	​	$	25.69

P/E Multiples

Discount Rate	10.0x			11.0x			12.0x			13.0x			14.0x
11.0%	​	$	22.83	​	$	24.94	​	$	27.06	​	$	29.17	​	$	31.28
12.0%	​	$	21.96	​	$	23.99	​	$	26.02	​	$	28.05	​	$	30.08
13.0%	​	$	21.13	​	$	23.08	​	$	25.03	​	$	26.98	​	$	28.93
14.0%	​	$	20.34	​	$	22.22	​	$	24.09	​	$	25.96	​	$	27.84
15.0%	​	$	19.59	​	$	21.39	​	$	23.19	​	$	24.99	​	$	26.79

In connection with its analyses, Janney considered and discussed with Marquis’s board of directors how the present value analyses would be affected by changes in the underlying assumptions. Janney noted that the net present value analysis is a widely used valuation methodology, but the results of such methodology are highly dependent upon the numerous assumptions that must be made, and the results thereof are not necessarily indicative of actual values or future results.

Pro Forma Merger Analysis.   Janney performed a pro forma merger analysis that combined projected income statement and balance sheet information of Marquis and Professional. Janney analyzed the estimated financial impact of the merger on certain projected financial results for Marquis and Professional and financial forecasts and projections relating to the earnings of Marquis and Professional, which were derived by Janney from publicly available consensus estimates, and pro forma assumptions (including, without limitation, purchase accounting adjustments, cost savings and related expenses), which, in the case of Marquis and Professional were derived by Janney from publicly available information. This analysis indicated that the merger could be accretive to Professional estimated EPS in 2020 and have a 1.7 year payback period for Professional with minimal dilution at closing to estimated tangible book value per share (6.4% dilutive to Professional tangible book value per share). For all of the above analysis, the actual results achieved by Professional following the merger may vary from the projected results, and the variations may be material.

Opinion of Professional’s Financial Advisor

Professional engaged Stephens Inc. (“Stephens”) to render financial advisory and investment banking services to Professional, including an opinion to the Professional board of directors as to the fairness, from a financial point of view, to Professional, of the exchange ratio in the proposed acquisition of Marquis. Professional selected Stephens because, among other factors, Stephens is a nationally recognized investment banking firm with substantial experience in transactions similar to the merger. As part of its investment banking business, Stephens is continually engaged in the valuation of financial services businesses and their securities in connection with mergers and acquisitions.

As part of Stephens’ engagement, representatives of Stephens participated in Professional’s board of directors meeting held telephonically on August 9, 2019 and rendered its oral opinion, which was subsequently confirmed by delivery of a written opinion to the board dated August 9, 2019, as to the fairness, as of such date, from a financial point of view, to Professional, of the exchange ratio, based upon and subject to the qualifications, assumptions and other matters considered in connection with the preparation of its opinion.

The full text of the written opinion of Stephens is attached as Annex C to this document. The summary of the opinion of Stephens set forth in this document is qualified in its entirety by reference to the full text of such written opinion. Holders of Professional common stock are urged to read this opinion in its entirety.

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Stephens provided its opinion for the information of the Professional board of directors (solely in its capacity as such) in connection with, and for purposes of, its consideration of the acquisition and its opinion only addresses whether the exchange ratio in the transaction pursuant to the merger agreement was fair, from a financial point of view to Professional. The opinion of Stephens does not address any other term or aspect of the merger agreement or the acquisition contemplated thereby. The Stephens opinion does not constitute a recommendation to the Professional board or to any holder of Professional common stock as to how the board, such stockholder or any other person should vote or otherwise act with respect to the acquisition or any other matter. Stephens does not express any opinion as to the likely trading range of Professional common stock following the merger, which may vary depending on numerous factors that could impact the price of securities or the operations, financial condition or prospects of Professional at that time.

In connection with its review of the proposed acquisition and the preparation of its opinion, Stephens, among other things:

•

analyzed certain publicly available financial statements and reports regarding Professional and Marquis;

•

analyzed the audited financial statements and certain management reports regarding Professional and Marquis;

•

analyzed certain internal financial statements and other financial and operating data concerning Professional and Marquis prepared by management of Professional and Marquis, respectively;

•

compared the financial performance of Professional with that of certain publicly-traded companies and their securities that we deemed relevant to its analysis of the merger;

•

analyzed the Exchange Ratio relative to each company’s contribution to the pro forma entity using both June 30, 2019 financials and projections provided by Professional management;

•

analyzed, on a pro forma basis, the effect of the merger on the balance sheet, capitalization ratios, earnings and tangible book value both in the aggregate and, where applicable, on a per share basis of Professional;

•

reviewed the most recent draft of the merger agreement and related documents provided to us by Professional;

•

discussed with management of Professional the operations of and future business prospects for Professional and Marquis and the anticipated financial consequences of the merger to Professional;

•

assisted in Professional’s deliberations regarding the material terms of the merger and negotiations with Marquis; and

•

performed such other analyses and provided such other services as Stephens deemed appropriate.

Stephens relied on the accuracy and completeness of the information and financial data provided to it by Professional and Marquis and of the other information reviewed by it in connection with the preparation of its opinion, and its opinion is based upon such information. Stephens has not assumed any responsibility for independent verification of the accuracy or completeness of any of such information or financial data. The management of Professional assured Stephens that they were not aware of any relevant information that has been omitted or remains undisclosed to Stephens. Stephens has not assumed any responsibility for making or undertaking an independent evaluation or appraisal of any of the assets or liabilities of Professional or of Marquis, and Stephens was not been furnished with any such evaluations or appraisals; nor did Stephens evaluate the solvency or fair value of Professional or of Marquis under any laws relating to bankruptcy, insolvency or similar matters. Stephens has not received or reviewed any individual credit files nor did Stephens make an evaluation of the adequacy of the allowance for loan losses of Professional or Marquis. Stephens has not assumed any obligation to conduct any physical inspection of the properties or facilities of Professional or Marquis. Stephens has further relied, with the consent of Professional, upon Professional management as to the reasonableness and achievability of: (i) certain estimates and assumptions from Professional’s management on the long term growth and profitability

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projections for both Professional and Marquis that were provided to Stephens by such management, (ii) the projected balance sheet and capital data of Professional and Marquis, (iii) assumptions regarding the initial public offering (“IPO”) of Professional’s stock and (iv) the estimates regarding certain pro forma financial effects of the transaction on Professional (and the assumptions and bases therefor, including but not limited to cost savings and related expenses expected to result from the transaction) that were prepared by Professional management and provided to and discussed with Stephens by such management. Stephens has assumed, with the consent of Professional, that all such information is consistent with, or was otherwise reasonably prepared on a basis reflecting, the best currently available estimates and judgments of such management and that the forecasts, estimates and projected data reflected in such information will be realized in the amounts and in the time periods currently estimated. Stephens has also assumed that the representations and warranties contained in the merger agreement and all related documents are true, correct and complete in all material respects. In formulating its opinion, Stephens did not consider, and its opinion did not address, the fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of Professional, or such class of persons, in connection with the merger transaction relative to the compensation to the public shareholders of Professional. Stephens was not requested to opine as to, and its opinion did not express an opinion as to or otherwise address, among other things: (1) the fairness of the transaction to the holders of any class of securities, creditors or other constituencies of Professional, or to any other party, except and only to the extent expressly set forth in the last sentence of its opinion; or (2) the fairness of the transaction to any one class or group of Professional’s or any other party’s security holders or other constituents vis-à-vis any other class or group of Professional’s or such other party’s security holders or other constituents.

Material Financial Analyses.   The following summarizes the material financial analyses reviewed by Stephens with the Professional board of directors at its meeting on August 9, 2019, which material was considered by Stephens in rendering its opinion. No company used in the analyses described below is identical or directly comparable to Professional or Marquis. For purposes of the financial analyses described below, Stephens utilized the Exchange Ratio of 1.2048x and an assumed price of  $18.25 per share of Professional based on Professional’s most recent capital raise in December 2018. Stephens’ analysis also assumes that Professional would increase the size of its contemplated IPO as a result of and to support this merger.

Contribution Analysis.   Stephens compared certain historical and projected financial information for Professional and Marquis relative to the exchange ratio. Based on this analysis, Professional’s average contribution to the transaction equaled 41.0% for an implied exchange ratio of 3.1766x and Professional’s median contribution to the transaction equaled 38.9% for an implied exchange ratio of 2.7356x. The analysis is illustrated below:

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(1)

Based on treasury method assuming a Professional stock price of  $18.25.

(2)

Pro forma ownership excludes the impact of the IPO.

Selected Public Companies Analysis.   Using publicly available information, Stephens compared the financial performance and financial condition of Professional and Marquis to 23 selected banks and thrifts headquartered in the United States that were traded on NASDAQ with total assets between $500 million and $1.5 billion, LTM Core ROAA greater than 0.25%, NPAs / Assets less than 5%, TCE / TA less than 12%, and available consensus analyst estimates for 2019 and 2020. Stephens also reviewed the market performance of the selected companies. The selected companies were as follows:

•

FVCBankcorp, Inc.

•

Bank of Commerce Holdings

•

Community Bankers Trust Corporation

•

Pacific Mercantile Bancorp

•

Mackinac Financial Corporation

•

CB Financial Services, Inc.

•

First Financial Northwest, Inc.

•

Middlefield Banc Corp.

•

Malvern Bancorp, Inc.

•

Capital Bancorp, Inc.

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•

First Savings Financial Group

•

First Western Financial, Inc.

•

MainStreet Bancshares, Inc.

•

Riverview Bancorp, Inc.

•

Two River Bancorp

•

Salisbury Bancorp, Inc.

•

First Community Corporation

•

Provident Financial Holdings, Inc.

•

Meridian Corporation

•

Coastal Financial Corporation

•

Eagle Bancorp Montana, Inc.

•

Guaranty Federal Bancshares, Inc.

•

American River Bankshares

To perform this analysis, Stephens used last twelve months (“LTM”) profitability data and other financial information as of June 30, 2019 and market price information as of August 6, 2019. Stephens also used 2019 and 2020 EPS estimates of the selected companies taken from consensus estimates. Stephens’ analysis showed the financial performance and condition of Professional, Marquis and the selected companies. In addition, Stephens’ analysis also showed certain market performance metrics for the selected companies. The results of this analysis are illustrated below:

​

Professional

Marquis

75th Percentile

Median

25th Percentile

Total Assets ($M)

​

$

890.4

​

$

680.3

​

$

1,301.4

​

$

1,190.5

​

$

1,100.4

TCE / TA

​

​

8.3%

​

​

9.3%

​

​

10.7%

​

​

10.0%

​

​

9.2%

NPAs / Assets

​

​

0.16%

​

​

0.27%

​

​

1.10%

​

​

0.73%

​

​

0.52%

LTM Core ROAA

​

​

0.41%

​

​

1.19%

​

​

1.18%

​

​

1.05%

​

​

0.88%

LTM Core ROAE

​

​

4.9%

​

​

12.8%

​

​

10.9%

​

​

10.1%

​

​

8.6%

Market Capitalization ($M)

​

​

—

​

​

—

​

$

171.3

​

$

145.0

​

$

114.7

Price / TBV

​

​

—

​

​

—

​

​

134.0%

​

​

122.5%

​

​

115.9%

Price / 2019 EPS

​

​

—

​

​

—

​

​

13.8x

​

​

11.8x

​

​

10.9x

Price / 2020 EPS

​

​

—

​

​

—

​

​

12.4x

​

​

11.0x

​

​

9.9x

YTD Stock Performance

​

​

—

​

​

—

​

​

7.7%

​

​

3.1%

​

​

-3.3%

Additionally, using publicly available information, Stephens compared the financial performance and financial condition of Professional and Marquis to 4 selected banks and thrifts headquartered in Florida that were traded on NASDAQ or OTCQX with total assets between $500 million and $7.0 billion and 30-day average trading volume greater than 1,000 shares. Stephens also reviewed the market performance of the selected companies. The selected companies were as follows:

•

Seacoast Banking Corporation of Florida

•

Capital City Bank Group, Inc.

•

FineMark Holdings, Inc.

•

TGR Financial, Inc.

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To perform this analysis, Stephens used LTM profitability data and other financial information as of June 30, 2019 and market price information as of August 6, 2019. Stephens’ analysis showed the financial performance and condition of Professional, Marquis and the selected companies. In addition, Stephens’ analysis also showed certain market performance metrics for the selected companies. The results of this analysis are illustrated below:

​

Professional

Marquis

75th Percentile

Median

25th Percentile

Total Assets ($M)

​

$

890.4

​

$

680.3

​

$

3,969.5

​

$

2,507.8

​

$

1,868.0

TCE / TA

​

​

8.3%

​

​

9.3%

​

​

9.5%

​

​

8.8%

​

​

8.4%

NPAs / Assets

​

​

0.16%

​

​

0.27%

​

​

0.74%

​

​

0.37%

​

​

0.03%

LTM Core ROAA

​

​

0.41%

​

​

1.19%

​

​

1.22%

​

​

1.05%

​

​

0.89%

LTM Core ROAE

​

​

4.9%

​

​

12.8%

​

​

11.4%

​

​

10.0%

​

​

8.9%

Market Capitalization ($M)

​

​

—

​

​

—

​

$

622.8

​

$

315.1

​

$

218.3

Price / TBV

​

​

—

​

​

—

​

​

177.8%

​

​

163.6%

​

​

146.5%

Price / 2019 EPS

​

​

—

​

​

—

​

​

13.8x

​

​

13.6x

​

​

13.3x

Price / 2020 EPS

​

​

—

​

​

—

​

​

13.8x

​

​

13.2x

​

​

12.7x

YTD Stock Performance

​

​

—

​

​

—

​

​

5.3%

​

​

0.0%

​

​

-6.7%

Discounted Cash Flow Analysis.   Stephens performed a discounted cash flow analysis to estimate a range of values for Professional and Marquis and then calculated an implied exchange ratio based on the values. In this analysis, Stephens used financial forecasts and projections relating to the earnings and assets of both companies prepared, and provided to Stephens, by Professional management, and assumed discount rates ranging from 11.15% to 14.15%. The ranges of values were derived by adding (i) the present value of the estimated free cash flows that each company could generate over the period from June 30, 2019 to December 31, 2024 as a standalone company, and (ii) the present value of each company’s implied terminal value at the end of such period. Stephens assumed that each company would maintain a tangible common equity to tangible assets ratio of 10.00% and would retain sufficient earnings to maintain that level. In calculating the terminal value of each company, Stephens applied a 12.0x – 16.0x multiple to estimated 2024 earnings. This discounted cash flow analysis resulted in a range of implied values per share of Professional common stock of approximately $11.21 to $18.12 and a range of implied values per share of Marquis common stock of approximately $11.89 to $20.19. These values for both Professional and Marquis were used to calculate an implied exchange ratio and compared to the Exchange Ratio of 1.2048x negotiated by the two parties.

​	Price Per Share						Implied Exchange Ratio		1.2048x vs. Implied
​	PHC			MBI
PHC High, MBI High	​	$	18.12	​	$	20.19	​	1.1140x	​	8.20%
PHC Midpoint, MBI Midpoint	​	$	14.44	​	$	15.78	​	1.0923x	​	10.30%
PHC Low, MBI Low	​	$	11.21	​	$	11.89	​	1.0605x	​	13.60%
PHC High, MBI Low	​	$	18.12	​	$	11.89	​	0.6560x	​	83.70%
PHC Low, MBI High	​	$	11.21	​	$	20.19	​	1.8009x	​	-33.10%

The discounted cash flow analysis is a widely used valuation methodology, but the results of such methodology are highly dependent on the assumptions that must be made, including asset and earnings growth rates, terminal values, capital levels, and discount rates. The analysis did not purport to be indicative of the actual values or expected values of Professional or Marquis. For all of the above, the actual results may vary from the projected results, and the variations may be material.

Pro Forma Financial Impact Analysis.   Stephens performed a pro forma financial impact analysis that combined projected income statement and balance sheet information of Professional and Marquis assuming a closing date of the transaction of December 31, 2019. Stephens also assumed that the IPO of Professional’s stock was completed simultaneous with the closing of this transaction. This analysis indicated the merger to be accretive to Professional’s estimated EPS for 2020 through 2024 and dilutive to

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Professional’s estimated tangible book value per share for approximately 1.6 years from the closing of the transaction. Furthermore, the analysis indicated that, pro forma for the proposed merger, each of Professional’s Tangible Common Equity to Tangible Assets ratio, Leverage Ratio, Tier 1 Risk-Based Capital Ratio and Total Risk-Based Capital Ratio as of December 31, 2019 would be higher at the completion of this transaction.

Additional Considerations.   The preparation of a fairness opinion is a complex process and is not susceptible to a partial analysis or summary description. Stephens believes that its analyses must be considered as a whole and that selecting portions of its analyses, without considering the analyses taken as a whole, would create an incomplete view of the process underlying its opinion. In addition, Stephens considered the results of all such analyses and did not assign relative weights to any of the analyses, but rather made qualitative judgements as to significance and relevance of each analysis and factor, so the results from any particular analysis described above should not be taken to be the view of Stephens.

In performing its analyses, Stephens made numerous assumptions with respect to industry performance, general business, economic and regulatory conditions and other matters, many of which are beyond the control of Professional. The analyses performed by Stephens are not necessarily indicative of actual values, trading values or actual future results which might be achieved, all of which may be significantly more or less favorable than suggested by such analyses. Such analyses were provided to the Professional board of directors (solely in its capacity as such) and were prepared solely as part of the analysis of Stephens of the fairness, from a financial point of view, to Professional, of the exchange ratio pursuant to the merger agreement. The analyses do not purport to be appraisals or to reflect the prices at which companies may actually be sold, and such estimates are inherently subject to uncertainty. The opinion of Stephens was one of many factors taken into account by the Professional board in making its determination to approve the acquisition. Neither Stephens’ opinion nor the analyses described above should be viewed as determinative of the Professional board of directors’ or Professional management’s views with respect to Professional, Marquis or the acquisition. Stephens provided advice to Professional with respect to the proposed transaction. Stephens did not, however, recommend any specific exchange ratio to the Professional board or that any specific exchange ratio constituted the only appropriate exchange ratio for the transaction. Professional placed no limits on the scope of the analysis performed, or opinion expressed, by Stephens.

The Stephens opinion was necessarily based upon market, economic, and other circumstances and conditions existing and can be evaluated on, and on the information made available to Stephens as of August 9, 2019. It should be understood that subsequent developments may affect the opinion of Stephens and that Stephens does not have any obligation to update, revise or reaffirm its opinion. Stephens has assumed that the transaction will be consummated on the terms of the latest draft of the merger agreement provided to it, without material waiver or modification. Stephens has also assumed that in the course of obtaining the necessary regulatory, lending or other consents or approvals (contractual or otherwise) for the transaction, no restrictions, including any divestiture requirements or amendments or modifications, will be imposed that would have a material adverse effect on the contemplated benefits of the transaction to the shareholders of Professional.

Professional has agreed to pay Stephens a fee of  $500,000 for advisory services in connection with the acquisition upon the closing of the transaction. For services rendered in connection with the delivery of its opinion, Professional paid Stephens a fee of  $100,000 upon delivery of its opinion, which is credited toward the $500,000 fee payable to Stephens at the closing of the transaction. Professional has also agreed to reimburse Stephens for its expenses incurred in connection with its services, including the fees and expenses of its counsel, and will indemnify Stephens against certain liabilities arising out of its engagement.

Stephens is actively involved in the investment banking business and regularly undertakes the valuation of investment securities in connection with public offerings, private placements, business combinations and similar transactions. Stephens is familiar with Professional, and an affiliate of Stephens, in which individual investment banking professionals who served on the team providing financial advisory services to Professional in connection with the Transaction have a minority beneficial interest, made an approximately $5,000,000 investment in the common stock of Professional in 2018. Stephens has been mandated to serve as an underwriter in Professional’s planned IPO and may provide investment banking or financial advisory

105

services to Professional in the future, for which Stephens may receive compensation. Except as described above, Professional has paid Stephens no other fees or commissions for other services during the last two years. Marquis has not paid Stephens fees or commissions for investment banking services during the last two years.

Accounting Treatment

In accordance with current accounting guidance, the merger will be accounted for as a business combination using the acquisition method of accounting. As a result, the recorded assets and liabilities of Professional will be carried forward at their recorded amounts, the historical operating results will be unchanged for the prior periods being reported on and the assets and liabilities of Marquis will be adjusted to fair value at the date of the merger. In addition, all identified intangible assets will be recorded at fair value and included as part of the net assets acquired. To the extent that the purchase price exceeds the fair value of the net assets including identified intangible assets of Marquis on the date the merger is completed, such amount will be reported as goodwill. In accordance with current accounting guidance, goodwill will not be amortized but will be evaluated for impairment annually. Identified finite life intangible assets will be amortized over their estimated lives. Further, the acquisition method of accounting will result in the operating results of Marquis being included in the operating results of Professional beginning from the date of completion of the merger.

Regulatory Approvals

Completion of the merger and the bank merger are subject to the receipt of all approvals (and such approvals having remained in full force and effect) required to complete the transactions contemplated by the merger agreement from the Federal Reserve, the FDIC and the OFR, and the expiration of any applicable statutory waiting periods. As of December 10, 2019, Professional, Marquis and/or their respective subsidiaries have received all required regulatory approvals from the Federal Reserve and the OFR.

Federal Reserve.   Certain of the transactions contemplated by the merger agreement are subject to approval by the Federal Reserve pursuant to section 3 of the BHC Act. In considering the approval of a transaction such as the conversion to a bank holding company and the merger, the BHC Act, requires the Federal Reserve to review: (1) the competitive impact of the transaction, (2) the financial condition and future prospects, including capital positions and managerial resources, (3) the convenience and needs of the communities to be served and the record of the insured depository institution subsidiaries of the bank holding companies under the CRA, (4) the effectiveness of the companies and the depository institutions concerned in combating money-laundering activities, and (5) the extent to which the proposal would result in greater or more concentrated risks to the stability of the U.S. banking or financial system. In connection with its review, the Federal Reserve provides an opportunity for public comment on the application and is authorized to hold a public meeting or other proceeding if they determine that such meeting or other proceeding would be appropriate.

Under the CRA, the Federal Reserve must take into account the record of performance of the companies and the depository institutions concerned in meeting the credit needs of the entire community, including low- and moderate-income neighborhoods, served by such companies and depository institutions. Depository institutions are periodically examined for compliance with the CRA by their primary federal supervisor and are assigned ratings. In evaluating the record of performance of an institution in meeting the credit needs of the entire community served by the institution, the Federal Reserve considers the institution’s record of compliance with the CRA, including the most recent rating assigned by its primary federal supervisor. As of their last respective CRA examinations, each of Professional Bank and Marquis Bank was rated “Satisfactory” with respect to CRA compliance.

The applicable federal statute (the “Bank Merger Act”) also mandates that the prior approval of the Federal Reserve, the primary federal regulator of the resulting bank, is required to merge Marquis Bank with and into Professional Bank. In evaluating an application filed under the Bank Merger Act, the Federal Reserve generally considers: (1) the competitive impact of the transaction, (2) financial and managerial resources of the banks party to the bank merger or mergers, (3) the convenience and needs of the community to be served and the record of the banks under the CRA, including their CRA ratings, (4) the

106

banks’ effectiveness in combating money-laundering activities and (5) the extent to which the bank merger or mergers would result in greater or more concentrated risks to the stability of the U.S. banking or financial system. In connection with its review, the Federal Reserve provides an opportunity for public comment on the application and is authorized to hold a public meeting or other proceeding if they determine it to be appropriate.

Professional and Professional Bank received the required prior approvals from the Federal Reserve on November 12, 2019 and all statutory waiting periods related to these approvals have expired.

OFR.   Certain of the transactions contemplated by the merger agreement are subject to approval by the Florida OFR pursuant to Sections 655.412 and 658.43 of the Florida Statutes. In evaluating a merger application under these sections, the OFR will review a proposed merger to determine whether (1) the resulting bank meets all the requirements of state law as to the formation of a new state bank (other than with respect to establishing branches), (2) the merger agreement provides an adequate capital structure, including surplus, of the resulting bank in relation to its activities which are to continue or are to be undertaken, and also in relation to its deposit liabilities, (3) the valuation is fair and (4) the merger is not contrary to the public interest.

Professional and Professional Bank received the required prior approvals from the OFR on December 10, 2019.

Appraisal Rights for Marquis Shareholders

Holders of Marquis common stock as of the record date are entitled to appraisal rights under the FBCA. Pursuant to Section 607.1302 of the FBCA, a Marquis shareholder who does not wish to accept the consideration to be received pursuant to the terms of the merger agreement may dissent from the merger and elect to receive the fair value of his or her shares of Marquis common stock immediately prior to the date of the Marquis special meeting to vote on the proposal to approve the merger agreement, excluding any appreciation or depreciation in anticipation of the merger unless exclusion would be inequitable.

In order to exercise appraisal rights, a dissenting Marquis shareholder must strictly comply with the statutory procedures of Sections 607.1301 through 607.1340 of the FBCA, which are summarized below. A copy of the full text of those Sections is included as Annex D to this joint proxy statement/prospectus. Marquis shareholders are urged to read Annex D in its entirety and to consult with their legal advisors. Each Marquis shareholder who desires to assert his or her appraisal rights is cautioned that failure on his or her part to adhere strictly to the requirements of Florida law in any regard will cause a forfeiture of any appraisal rights.

Procedures for Exercising Dissenters’ Rights of Appraisal.   The following summary of Florida law is qualified in its entirety by reference to the full text of the applicable provisions of the FBCA, a copy of which is included as Annex D to this joint proxy statement/prospectus.

A dissenting shareholder, who desires to exercise his or her appraisal rights, must file with Marquis, prior to the taking of the vote on the merger, a written notice of intent to demand payment for his or her shares if the merger is effectuated. A vote against the merger agreement will not alone be deemed to be the written notice of intent to demand payment and will not be deemed to satisfy the notice requirements under the FBCA. A dissenting shareholder need not vote against the merger agreement, but cannot vote, or allow any nominee who holds such shares for the dissenting shareholder to vote, any of his or her shares of Marquis common stock in favor of the merger agreement. A vote in favor of the merger agreement will constitute a waiver of the shareholder’s appraisal rights. A shareholder’s failure to vote against the merger agreement will not constitute a waiver of such shareholder’s dissenters’ rights. Such written notification should be delivered either in person or by mail (certified mail, return receipt requested, being the recommended form of transmittal) to:

Marquis Bancorp, Inc.
355 Alhambra Circle, Suite 125
Coral Gables, Florida 33134
Attention: Chairman and Chief Executive Officer

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All such notices must be signed in the same manner as the shares are registered on the books of Marquis. If a Marquis shareholder has not provided written notice of intent to demand fair value before the vote on the proposal to approve the merger agreement is taken at the special meeting, then the Marquis shareholder will be deemed to have waived his or her appraisal rights.

Within 10 days after the completion of the merger, Professional must provide to each Marquis shareholder who filed a notice of intent to demand payment for his or her shares a written appraisal notice and an election form that specifies, among other things:

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the date of the completion of the merger;

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Professional’s estimate of the fair value of the shares of Marquis common stock;

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where to return the completed appraisal election form and the shareholder’s stock certificates and the date by which each must be received by Professional or its agent, which date with respect to the receipt of the appraisal election form may not be fewer than 40, nor more than 60, days after the date Professional sent the appraisal election form to the shareholder (and shall state that the shareholder shall have waived the right to demand appraisal with respect to the shares unless such form is received by Professional by such specified date) and which with respect to the return of stock certificates must not be earlier than the date for receiving the appraisal election form;

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that, if requested in writing, Professional will provide to the shareholder so requesting, within 10 days after the date set for receipt by Professional of the appraisal election form, the number of shareholders who return the forms by such date and the total number of shares owned by them; and

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the date by which a notice from the Marquis shareholder of his or her desire to withdraw his or her appraisal election must be received by Professional, which date must be within 20 days after the date set for receipt by Professional of the appraisal election form from the Marquis shareholder.

The form must also contain Professional’s offer to pay to the Marquis shareholder the amount that it has estimated as the fair value of the shares of Marquis common stock, and request certain information from the Marquis shareholder, including:

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the shareholder’s name and address;

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the number of shares as to which the shareholder is asserting appraisal rights;

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that the shareholder did not vote for the merger;

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whether the shareholder accepts the offer of Professional to pay its estimate of the fair value of the shares of Marquis common stock to the shareholder; and

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if the shareholder does not accept the offer of Professional, the shareholder’s estimated fair value of the shares of Marquis common stock and a demand for payment of the shareholder’s estimated value plus interest.

A dissenting shareholder must execute and submit the certificate(s) representing his or her shares and the appraisal election form, and in the case of certificated shares deposit the shareholder’s certificates, by the specified date. Any dissenting shareholder failing to return a properly completed appraisal election form and his or her stock certificates within the period stated in the form will lose his or her appraisal rights and be bound by the terms of the merger agreement. Upon returning the appraisal election form, a dissenting shareholder will be entitled only to payment pursuant to the procedure set forth in the applicable sections of the FBCA and will not be entitled to vote or to exercise any other rights of a shareholder, unless the dissenting shareholder withdraws his or her demand for appraisal within the time period specified in the appraisal election form.

A dissenting shareholder who has delivered the appraisal election form and his or her Marquis common stock certificates may decline to exercise appraisal rights and withdraw from the appraisal process by giving written notice to Professional within the time period specified in the appraisal election form.

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Thereafter, a dissenting shareholder may not withdraw from the appraisal process without the written consent of Professional. Upon such withdrawal, the right of the dissenting shareholder to be paid the fair value of his or her shares will cease, and he or she will be reinstated as a shareholder and will be entitled to receive the merger consideration.

If the dissenting shareholder accepts the offer of Professional in the appraisal election form to pay Professional’s estimate of the fair value of the shares of Marquis common stock, payment for the shares of the dissenting shareholder is to be made within 90 days after the receipt of the appraisal election form by Professional or its agent. Upon payment of the agreed value, the dissenting shareholder will cease to have any right to receive any further consideration with respect to such shares.

A shareholder must demand appraisal rights with respect to all of the shares registered in his or her name, except that a record shareholder may assert appraisal rights as to fewer than all of the shares registered in the record shareholder’s name but which are owned by a beneficial shareholder or a voting trust beneficial owner, if the record shareholder objects with respect to all shares owned by the beneficial shareholder or voting trust beneficial owner . A record shareholder must notify Marquis in writing of the name and address of each beneficial shareholder on whose behalf appraisal rights are being asserted. A beneficial shareholder and a voting trust beneficial owner may assert appraisal rights as to any shares held on behalf of the beneficial shareholder only if the beneficial shareholder submits to Marquis the record shareholder’s written consent to the assertion of such rights before the date specified in the appraisal election form, and does so with respect to all shares that are beneficially owned by the beneficial shareholder or voting trust beneficial owner.

A shareholder who is dissatisfied with Professional’s estimate of the fair value of the shares of Marquis common stock must notify Professional of the shareholder’s estimate of the fair value of the shares and demand payment of that estimate plus accrued interest in the appraisal election form within the time period specified in the form. A shareholder who fails to notify Professional in writing of the shareholder’s demand to be paid its stated estimate of the fair value of the shares plus accrued interest within the required time period waives the right to demand payment and will be entitled only to the payment offered by Professional in the appraisal election form.

Section 607.1330 of the FBCA addresses what should occur if a dissenting shareholder fails to accept the offer of Professional to pay the value of the shares as estimated by Professional, and Professional fails to comply with the demand of the dissenting shareholder to pay the value of the shares as estimated by the dissenting shareholder, plus accrued interest.

If a dissenting shareholder refuses to accept the offer of Professional to pay the value of the shares as estimated by Professional, and Professional fails to comply with the demand of the dissenting shareholder to pay the value of the shares as estimated by the dissenting shareholder, plus accrued interest, then within 60 days after receipt of a written demand from any dissenting shareholder, Professional shall, or at its election at any time within such period of 60 days may, file an action in any court of competent jurisdiction in the county in Florida where the registered office of Professional, maintained pursuant to Florida law, is located requesting that the fair value of such shares be determined by the court.

If Professional fails to institute a proceeding within the above-prescribed period, any dissenting shareholder may do so in the name of Professional. All dissenting shareholders whose demands remain unsettled shall be made parties to the proceeding as in an action against their shares and a copy of the initial pleading will be served on each dissenting shareholder as provided by law. The shareholders demanding appraisal rights are entitled to the same discovery rights as parties in other civil proceedings. There shall be no right to a jury trial.

Professional is required to pay each dissenting shareholder the amount found to be due within 10 days after final determination of the proceedings, plus accrued interest. Upon payment of the judgment, the dissenting shareholder ceases to have any right to receive any further consideration with respect to such shares other than any amounts ordered to be paid for court costs and attorneys’ fees under Section 607.1331 of the FBCA.

Section 607.1331 of the FBCA provides that the costs of a court appraisal proceeding, including reasonable compensation for, and expenses of, appraisers appointed by the court, will be determined by the court and assessed against Professional, except that the court may assess costs against all or some of the

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dissenting shareholders, in amounts the court finds equitable, to the extent that the court finds such shareholders acted arbitrarily, vexatiously or not in good faith with respect to their appraisal rights. The court also may assess the fees and expenses of counsel and experts for the respective parties, in amounts the court finds equitable, against: (i) Professional and in favor of any or all dissenting shareholders if the court finds Professional did not substantially comply with the notification provisions set forth in Sections 607.1320 and 607.1322 of the FBCA; or (ii) either Professional or a dissenting shareholder, in favor of any other party, if the court finds that the party against whom the fees and expenses are assessed acted arbitrarily, vexatiously, or not in good faith with respect to the appraisal rights. If the court in an appraisal proceeding finds that the services of counsel for any dissenting shareholder were of substantial benefit to other dissenting shareholders, and that the fees for those services should not be assessed against Professional, the court may award to such counsel reasonable fees to be paid out of the amounts awarded the dissenting shareholders who were benefited. To the extent that Professional fails to make a required payment when a dissenting shareholder accepts Professional’s offer to pay the value of the shares as estimated by Professional, the dissenting shareholder may sue directly for the amount owed and, to the extent successful, shall be entitled to recover from Professional all costs and expenses of the suit, including attorneys’ fees.

A shareholder entitled to appraisal rights may not challenge a completed corporate action for which appraisal rights are available unless such corporate action was either:

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not authorized and approved in accordance with the applicable provisions of Florida law; or

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procured as a result of fraud, material representation, or an omission of a material fact necessary to make statements made, in light of the circumstances in which they were made, not misleading.

Also, nothing in the dissenters’ rights statutes operates to override or supersede the provisions of Florida law relating to conflict of interest transactions.

For a discussion of tax consequences with respect to dissenting shares, see “Material U.S. Federal Income Tax Consequences of the Merger.”

BECAUSE OF THE COMPLEXITY OF THE PROVISIONS OF FLORIDA LAW RELATING TO DISSENTERS’ APPRAISAL RIGHTS, SHAREHOLDERS WHO ARE CONSIDERING DISSENTING FROM THE MERGER ARE URGED TO CONSULT THEIR OWN LEGAL ADVISORS.

Board of Directors and Management of Professional Following the Merger

Pursuant to the merger agreement, the directors of Professional immediately following the effective time will consist of up to 13 directors, including the eight directors of Professional prior to the effective time and up to five of the Marquis directors to be mutually agreed by Marquis and Professional prior to the effective time, and such directors shall hold office until their respective successors are duly elected and qualified, or their earlier death, resignation or removal. The officers of the Professional immediately following the effective time will consist of the officers of Professional immediately prior to the effective time, and such officers shall hold office until their respective successors are duly elected and qualified, or their earlier death, resignation or removal. See also “Management of Professional.”

Interests of Marquis Directors and Executive Officers in the Merger

Certain of the directors and executive officers of Marquis may have interests in the merger that may be different from, or in addition to, those of Marquis’s shareholders generally. The Marquis board of directors was aware of and considered these potential interests, among other matters, in evaluating, negotiating and approving the merger agreement and the transactions contemplated thereby as well as in recommending to holders of shares of Marquis common stock that they vote to approve the merger agreement. These interests are described below.

Marquis’s executive officers for purposes of the discussion below are Javier Holtz (Chairman, Chief Executive Officer and Chief Credit Officer of Marquis), Miriam Lopez (President and Chief Lending Officer of Marquis), Filip Feller (Executive Vice President and Chief Financial Officer of Marquis), David DiMuro (Executive Vice President and Senior Lending Officer of Marquis), and Philip Gassman (Executive Vice President and Managing Director of Professional & Executive Banking of Marquis).

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Treatment of Marquis Stock Options

Certain of the directors and executive officers of Marquis hold stock options to purchase shares of Marquis common stock granted under a Marquis equity plan. Under the terms of the merger agreement, the options that are outstanding immediately prior to the effective time, whether vested or unvested, will be assumed by Professional and converted into options of substantially equivalent value to purchase shares of Professional Class A common stock, which converted stock options will be subject to substantially the same terms and conditions (including vesting) as were applicable immediately prior to the effective time, except that (i) no converted stock option held by an individual who was a Marquis or Marquis Bank director or employee immediately prior to the effective time will terminate because such individual is no longer a Marquis or Marquis Bank director or employee solely as a result of Marquis or Marquis Bank not being the surviving entity in the merger, (ii) any converted stock options held by a person who was a Marquis non-employee director immediately prior to the effective time will become fully vested at the effective time, and (iii) any converted stock option held by a Marquis or Marquis Bank employee whose employment is terminated by Professional other than for “cause” during the first year following the effective time will become fully vested, subject to execution of a release of claims against Professional. For additional information regarding the treatment of Marquis stock options in the merger, see the section entitled “The Merger Agreement — Treatment of Marquis Equity Awards” beginning on page 115.

Agreements with Executive Officers

Restrictive Covenant Agreements with Javier Holtz and Miriam Lopez

As a condition to Professional’s execution of the merger agreement, it required each of Mr. Holtz and Ms. Lopez to execute a restrictive covenant agreement with Professional that subjects the executive, subject to the closing of the merger, to a perpetual confidentiality covenant and three-year post-closing non-competition and customer and employee non-solicitation covenants. The agreements also require Mr. Holtz and Ms. Lopez to vote their shares of Marquis common stock in favor of the merger agreement, restrict any transfer of their shares prior to the effective time (subject to certain exceptions), and preclude them from soliciting alternative acquisition proposals in contravention of the merger agreement. In consideration for the foregoing, Professional has agreed to make a cash payment of  $1,140,000 to Mr. Holtz and $825,000 to Ms. Lopez, payable in three equal installments on each of the closing date (or as soon as reasonably practicable thereafter), the six-month anniversary of the closing date and the one-year anniversary of the closing date.

Letter Agreements with Other Executive Officers

Messrs. Gassman and DiMuro have entered into letter agreements with Professional Bank with respect to service as Executive Vice President, Private Banking Client Group (in the case of Mr. Gassman) and Executive Vice President, Private & Commercial Banking (in the case of Mr. DiMuro) with Professional Bank following the closing of the merger. The letter agreements provide, in material part, for an annual salary of  $250,000 (in the case of Mr. Gassman) and $215,000 (in the case of Mr. DiMuro), a monthly car allowance of  $500, a monthly cell phone allowance of  $150 and, within 30 days following the closing of the merger, a grant of Professional restricted stock with a fair market value of  $200,000 (in the case of Mr. Gassman) and $50,000 (in the case of Mr. DiMuro), with a four-year “cliff” vesting period, contingent upon the successful retention of a minimum of 90% of the executive’s client deposit portfolio as of the closing of the merger. In addition, Mr. DiMuro is eligible for (i) a one-time cash sign-on bonus of  $75,000, payable within 30 days of closing, which bonus must be repaid in full in the event Mr. DiMuro voluntarily terminates employment with Professional for any reason within two years following closing, and (ii) a cash bonus of  $25,000 in each of the first three years following closing, provided that Mr. DiMuro continues to maintain 90% of his client base in existence as of closing and subject to Mr. DiMuro’s continued employment. The employment of Messrs. Gassman and DiMuro with Professional Bank will be on an “at will” basis and may be terminated by either the executive or Professional Bank at any time and for any reason, with or without cause.

Mr. Feller has entered into a letter agreement with Professional Bank which provides for two weeks of base salary for each completed year of service, which would result in an estimated severance payment of $30,769.23 if an employment role is not offered to him following the closing of the merger and for the

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forfeiture of such severance benefit if a comparable position is offered to him by Professional Bank following the closing of the merger, or if he voluntarily resigns (other than as a result of being required to relocate to a distance of more than 35 miles from his principal place of business as of the closing of the merger), or if his employment is terminated for any reason by Professional Bank with cause prior to June 30, 2020. Additionally, Professional Bank will pay Mr. Feller a success bonus of  $55,000 if he remains actively employed with Professional Bank from the closing through the final banking system conversion (regardless of whether Mr. Feller is offered an employment role following the closing of the merger), which may include an additional testing and validation period of up to 30 days after the live conversion date. The success bonus would be paid in the first regular payroll following the end of the 30-day period following the final banking system conversion. The success bonus will not be payable if Mr. Feller voluntarily resigns, retires or is involuntarily terminated for cause prior to June 30, 2020. The letter agreement with Mr. Feller is not intended to be a contractually binding commitment, and Mr. Feller’s entitlements will be set forth in subsequent materials in the event Mr. Feller is not offered a role with the combined company following the closing of the merger.

Arrangements with Directors

Non-Competition and Non-Disclosure Agreements with Directors

As a condition to Professional’s execution of the merger agreement, including the vesting of Marquis options held by the directors contemplated thereunder (as described above), it required each of the directors of Marquis and Marquis Bank to execute a non-competition and non-disclosure agreement with Professional providing for a perpetual confidentiality covenant and two-year post-merger non-competition and customer and employee non-solicitation covenants.

Agreement with Jarret L. Gross

In addition, the board of directors of Marquis has agreed to the payment to Jarret L. Gross (a director of Marquis and Marquis Bank) of  $100,000 subject to and upon the closing of the merger in recognition of the services he provided to facilitate the transaction.

Indemnification and Directors’ and Officers’ Insurance

Professional has agreed, from and after the effective time of the merger, to indemnify the directors and executive officers of Marquis and Marquis Bank against all liability arising out of actions or omissions occurring on or prior to the effective date of the merger to the greatest extent authorized by the Marquis Articles of Incorporation and Bylaws and Florida law. In addition, Professional will provide coverage under a directors’ and officers’ liability insurance policy of Professional for six years after the effective time of the merger. For additional information, see “The Merger Agreement — Indemnification and Directors’ and Officers’ Insurance.”

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THE MERGER AGREEMENT

The following is a summary of the material provisions of the merger agreement. This summary is qualified in its entirety by reference to the merger agreement, a copy of which is included as Annex A to this joint proxy statement/prospectus and is incorporated herein by reference. You should read the merger agreement carefully and in its entirety, as it is the legal document governing the merger.

The Merger

The boards of directors of Professional and Marquis have each unanimously approved and adopted the merger agreement, which provides for the merger of Marquis with and into Professional, with Professional as the surviving company in the merger. Each share of Professional Class A common stock outstanding immediately prior to the effective time of the merger will remain outstanding as one share of Professional Class A common stock. Under the terms of the merger agreement, each share of Marquis common stock outstanding immediately prior to the effective time, excluding (1) shares held by Marquis or Professional (other than (a) shares of Marquis common stock held in trust accounts, managed accounts, mutual funds and the like, or otherwise held in a fiduciary or agency capacity, that are beneficially owned by third parties and (b) shares of Marquis common stock held, directly or indirectly, by Marquis or Professional in respect of a debt previously contracted), (2) shares held by their wholly-owned subsidiaries and (3) dissenting shares, will be converted into the right to receive 1.2048 shares of Professional Class A common stock, subject to cash in lieu of fractional shares of Professional Class A common stock.

All shares of Professional Class A common stock received by Marquis shareholders in the merger will be freely tradable, except that shares of Professional Class A common stock received by persons who become affiliates of Professional for purposes of Rule 144 under the Securities Act may be resold by them only in transactions permitted by Rule 144, or as otherwise permitted under the Securities Act.

The merger agreement also provides that, after the effective time of the merger and at or after the close of business on the closing date of the merger, Marquis Bank, a Florida state-chartered bank and wholly owned first-tier subsidiary of Marquis, will merge with and into Professional Bank, a Florida state- chartered bank and wholly owned first-tier subsidiary of Professional, with Professional Bank as the surviving bank of such merger (the “bank merger”). The terms and conditions of the bank merger are set forth in a separate merger agreement (the “bank merger agreement”), the form of which is attached as an exhibit to the merger agreement.

Closing and Effective Time of the Merger

Unless both Professional and Marquis agree to a later date, the closing of the merger will take place on the fourth business day after the satisfaction or waiver of the latest to occur of the closing conditions. Simultaneously with the closing of the merger, Professional will file articles of merger with the Department of State of the State of Florida. The merger will become effective at such time as the articles of merger are filed or such other time as may be specified in the articles of merger.

We currently expect that the merger will be completed in the first quarter of 2020, subject to the approval of the merger agreement and the issuance of Professional Class A common stock in the merger by Marquis and Professional shareholders, respectively, and other conditions. However, completion of the merger could be delayed if there is a delay in satisfying any other conditions to the merger. No assurance is made as to whether, or when, Professional and Marquis will complete the merger. See “— Conditions to Completion of the Merger.”

Merger Consideration

Under the terms of the merger agreement, each share of Marquis common stock outstanding immediately prior to the effective time of the merger, excluding (1) shares held by Marquis or Professional (other than (a) shares of Marquis common stock held in trust accounts, managed accounts, mutual funds and the like, or otherwise held in a fiduciary or agency capacity, that are beneficially owned by third parties and (b) shares of Marquis common stock held, directly or indirectly, by Marquis or Professional in respect of a debt previously contracted), (2) shares held by their wholly-owned subsidiaries and (3) dissenting

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shares, will be converted into the right to receive 1.2048 shares of Professional Class A common stock (the “exchange ratio” and together with cash in lieu of fractional shares as discussed below, the “merger consideration”), subject to cash in lieu of fractional shares of Professional Class A common stock.

No fractional shares of Professional Class A common stock will be issued in connection with the merger. Instead, for each fractional share of Professional Class A common stock that would otherwise be issued, Professional will pay cash in an amount equal to the fraction of a share of Professional Class A common stock which the holder would otherwise be entitled to receive multiplied by the market value of Professional Class A common stock as agreed by the parties prior to the effective time. No interest will be paid or accrue on cash payable to holders in lieu of fractional shares.

A Marquis shareholder also has the right to obtain the fair value of his or her shares of Marquis common stock in lieu of receiving the merger consideration by strictly following the appraisal procedures under the FBCA. Shares of Marquis common stock outstanding immediately prior to the effective time of the merger and which are held by a shareholder who does not vote to approve the merger agreement and who properly demands the fair value of such shares pursuant to, and who complies with, the appraisal procedures under the FBCA are referred to as “dissenting shares.” See “The Merger — Appraisal Rights for Marquis Shareholders.”

If Professional or Marquis changes the number of shares of Professional common stock or Marquis common stock outstanding prior to the effective time of the merger as a result of a stock split, stock combination, stock dividend or similar recapitalization with respect to the Professional common stock or Marquis common stock and the record date for such corporate action is prior to the effective time of the merger, then the merger consideration shall be proportionately adjusted as necessary to preserve the relative economic benefit to Professional and Marquis.

Based on a price of  $18.25 per share of Professional Class A common stock, which represents the valuation of Professional’s December 2018 capital raise, the merger consideration represented approximately $21.99 for each share of Marquis common stock.

The value of the shares of Professional Class A common stock to be issued to Marquis shareholders in the merger will fluctuate between now and the closing date of the merger. We make no assurances as to whether or when the merger will be completed, and you are advised to obtain current sale prices for the Professional Class A common stock.

Exchange of Stock Certificates

Prior to the effective time of the merger, Professional will appoint its transfer agent, Computershare Limited, pursuant to an agreement in a form reasonably acceptable to Marquis, to serve as the exchange agent. Promptly (and within five business days) after the effective time of the merger, the exchange agent will mail to each holder of record of Marqius common stock converted into the right to receive the merger consideration a letter of transmittal and instructions for the surrender of the holder’s Marquis stock certificate(s) for the merger consideration (including cash in lieu of any fractional Professional Class A shares) and any dividends or distributions to which such holder is entitled pursuant to the merger agreement. Marquis shareholders should not send in their stock certificates until they receive the letter of transmittal and instructions.

Upon surrender to the exchange agent of the certificate(s) representing his or her shares of Marquis common stock, accompanied by a properly completed letter of transmittal, a Marquis shareholder will be entitled to promptly receive after the effective time of the merger the merger consideration. Until surrendered, each such certificate will represent after the effective time of the merger, for all purposes, only the right to receive, without interest, the merger consideration and any dividends or distributions to which such holder is entitled pursuant to the merger agreement. Any holder of book-entry shares will not be required to deliver a certificate or an executed letter of transmittal to receive the merger consideration. Instead, a holder of book-entry shares will automatically at the effective time of the merger be entitled to receive the merger consideration, which will be paid as soon as practicable (and within three business days) by the exchange agent.

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No dividends or other distributions with respect to Professional Class A common stock after completion of the merger will be paid to the holder of any unsurrendered Marquis stock certificates with respect to the shares of Professional Class A common stock represented by those certificates until those certificates have been properly surrendered. Subject to applicable abandoned property, escheat or similar laws, following the proper surrender of any such previously unsurrendered Marquis stock certificate, or payment of the merger consideration in respect of book-entry shares, the holder of the certificate or book-entry shares will be entitled to receive, without interest: (i) the amount of unpaid dividends or other distributions with a record date after the effective time of the merger payable with respect to the whole shares of Professional Class A common stock represented by that certificate or book-entry shares; and (ii) at the appropriate payment date, the amount of dividends or other distributions payable with respect to shares of Professional Class A common stock represented by that certificate or book-entry shares with a record date after the effective time of the merger (but before the date on which the certificate is surrendered) and with a payment date subsequent to the issuance of the shares of Professional Class A common stock issuable in exchange for that certificate or book-entry shares.

Shares of Professional Class A common stock and cash in lieu of any fractional shares may be issued or paid in a name other than the name in which the surrendered Marquis stock certificate is registered if: (i) the certificate surrendered is properly endorsed or otherwise in a proper form for transfer; and (ii) the person requesting the payment or issuance pays any transfer or other similar taxes due or establishes to the satisfaction of Professional that such taxes have been paid or are not applicable.

After the effective time of the merger, there will be no transfers on the stock transfer books of Marquis other than to settle transfers of shares of Marquis common stock that occurred prior to the effective time. If, after the effective time of the merger, certificates for Marquis common stock are presented for transfer to the exchange agent, the certificates will be cancelled and exchanged for the merger consideration and any dividends or distributions to which such holder is entitled pursuant to the merger agreement.

In the event any Marquis stock certificate is lost, stolen or destroyed, in order to receive the merger consideration, the holder of that certificate must provide an affidavit of that fact and, if reasonably required by Professional or the exchange agent, post a bond in such amount as Profession determines is reasonably necessary to indemnify it against any claim that may be made against it with respect to that certificate.

Treatment of Marquis Equity Awards

At the effective time of the merger, each stock option to purchase shares of Marquis common stock granted under a Marquis equity plan that is outstanding as of immediately prior to the effective time, whether vested or unvested, will be converted into an option to acquire the number of shares of Professional Class A common stock (rounded down to the nearest whole share), determined by multiplying (i) the number of shares of Marquis common stock subject to such Marquis stock option immediately prior to the effective time by (ii) the exchange ratio, at an exercise price per share of Professional Class A common stock (rounded up to the nearest whole cent) equal to (x) the exercise price per share of Marquis common stock subject to such Marquis stock option divided by (y) the exchange ratio. Such converted stock options will be generally subject to substantially the same terms and conditions (including vesting) as were applicable prior to the effective time, except that (i) no converted stock option held by an individual who was a Marquis or Marquis Bank director or employee immediately prior to the effective time will terminate because such individual is no longer a Marquis or Marquis Bank director or employee solely as a result of Marquis or Marquis Bank not being the surviving entity in the merger, (ii) any converted stock options held by a person who was a Marquis non-employee director immediately prior to the effective time will become fully vested at the effective time, and (iii) any converted stock option held by a Marquis or Marquis Bank employee whose employment is terminated by Professional other than for “cause” during the one-year period following the effective time will become fully vested, subject to execution of a release of claims against Professional. In addition, at the effective time, all Marquis stock options held by Marquis non-employee directors will immediately vest and will not automatically terminate upon such non-employee director’s termination of service as a director of Marquis.

Conduct of Business Pending the Merger

Pursuant to the merger agreement, Marquis and Professional have agreed to certain restrictions on their activities until the effective time of the merger. In general, each party has agreed that, except as

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otherwise permitted by the merger agreement, or as required by applicable law or a governmental entity, or with the prior written consent of the other party, it will:

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conduct its business in the ordinary course consistent with past practice;

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use commercially reasonable best efforts to maintain and preserve intact its business organization and advantageous business relationships, including with its employees; and

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not take any action that is intended to or that would reasonably be expected to adversely affect or materially delay the ability of either party or its subsidiaries to obtain any necessary regulatory approvals or to timely consummate the transactions contemplated by the merger agreement.

Each party has further agreed that except as otherwise permitted by the merger agreement, as required by applicable laws or a governmental entity, or with the prior written consent of the other party (not to be unreasonably withheld, conditioned or delayed) it will not, and will not permit any of its subsidiaries to, do any of the following:

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issue, sell or otherwise permit to become outstanding, or authorize the creation of, any additional shares of its capital stock, other ownership interests or any rights to acquire stock or voting debt securities, other than issuances of shares of its common stock in respect of the exercise of its stock options outstanding on the date of the merger agreement in accordance with its terms as in effect on the date thereof;

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issue or repurchase any other capital securities, voting debt securities or other securities;

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make, declare, pay or set aside for payment any dividend or other distribution on its capital stock or other ownership interests (other than dividends from wholly owned subsidiaries to such party or to another wholly owned subsidiary of such party); or directly or indirectly adjust, split, combine, redeem, reclassify, purchase or otherwise acquire, any shares of its capital stock, other ownership interests or rights;

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subject to certain customary exceptions, (i) enter into, modify, amend, renew or terminate any employment, consulting, severance, change in control or similar agreement or arrangement with any director or executive officer, (ii) grant any salary or wage increase or increase any employee benefit (including incentive or bonus payments) other than (a) payment of normal individual increases in salary (not to exceed 5% per annum in the aggregate for all employees), (b) payment of accumulated but unused sick leave during a longer term illness period or pending commencement of disability benefits to rank and file employees, and (c) payment of severance, in each case, in the ordinary course of business consistent with past practice, or (iii) hire any new executive officers;

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subject to certain customary exceptions, enter into, establish, adopt, modify, amend, renew or terminate any employee benefit plan of such party or take any action to accelerate the vesting of compensation or benefits under any such plan;

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sell, transfer, mortgage or encumber any of its assets or properties, except in the ordinary course of business consistent with past practice, and in the case of a sale or transfer, at fair value, or sell or transfer any of its deposit liabilities;

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enter into, modify, amend or renew any data processing contract, service provider agreement or any lease, license or maintenance agreement relating to real or personal property or intellectual property, other than the renewal of an agreement that is necessary or advisable to operate its business in the ordinary course consistent with past practice, or to permit to lapse its rights in any material intellectual property;

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acquire all or any portion of the assets, business or properties of any person (other than pursuant to foreclosures or acquisitions of control in a bona fide fiduciary capacity or in satisfaction of debts contracted prior to the date of the merger agreement, in each case in the ordinary course of business consistent with past practice);

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sell or acquire any loans (excluding originations) or loan participations, except in the ordinary course of business consistent with past practice, or sell or acquire any servicing rights;

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•

amend its organizational documents or the organizational documents of any of its significant subsidiaries (or similar governing documents);

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implement or adopt any material change its accounting principles, practices or methods, except as may be required by accounting principles generally accepted in the United States or any governmental entity;

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enter into or terminate any material contract, or amend or modify in any material respect or renew any existing material contract other than the renewal of an agreement that is necessary or advisable to operate its business in the ordinary course consistent with past practice;

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settle any claim, action or proceeding outside the ordinary course of business consistent with past practice and involving an amount in excess of  $125,000, in the case of Marquis, or $500,000, in the case of Professional (in either case, excluding amounts paid or reimbursed under any insurance policy) and provided that no settlement shall be made if it creates an adverse precedent for other similar claims, which in the aggregate would reasonably be expected to be material to such party and its subsidiaries, taken as a whole;

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in the case of such party’s subsidiary bank, (i) voluntarily make any material changes in or to its deposit mix, (ii) materially increase or decrease the interest rate paid on its time deposits or on certificates of deposit, except in a manner pursuant to policies consistent with past practice and competitive factors in the marketplace or to be equivalent to interest rate offerings of the other party’s subsidiary bank, (iii) open any new branch or deposit taking facility or (iv) close or relocate any existing branch or other facility;

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(i) purchase any equity securities or purchase any debt securities, other than securities (A) rated “AA” or higher investment grade by either Standard and Poor’s Ratings Services or Moody’s Investors Service, (B) with a weighted average life of not more than five years and (C) otherwise in the ordinary course of business consistent with its current investment policy; (ii) enter into or acquire any derivatives contract or structured note except in the ordinary course of business consistent with past practice; or (iii) enter into any new, or modify, amend or extend the terms of any existing, contracts relating to the purchase or sale of financial or other futures, or any put or call option relating to cash, securities or commodities or any interest rate swap agreements or other agreements relating to the hedging of interest rate risk except in the ordinary course of business consistent with past practice;

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purchase any fixed assets (by installment purchase, capital lease, synthetic lease or otherwise) where the amount paid or committed is in excess of  $100,000 individually or $500,000 in the aggregate, in the case of Marquis, or $250,000 individually or $1,000,000 in the aggregate, in the case of Professional, in each case, except for emergency repairs or replacements;

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(i) make any material changes in its policies concerning loan underwriting or which classes of persons may approve loans or fail to comply with such policies as previously provided; (ii) make any loans or extensions of credit except in the ordinary course of business consistent with past practice, provided any individual fully unsecured loan or extension of credit in excess of 5% of such party’s legal lending limit as of the date of the merger agreement or any individual secured loan or extension of credit in excess of 50% of such party’s legal lending limit as of the date of the merger agreement in a single transaction or 75% of such party’s legal lending limit as of the date of the merger agreement to a single borrower shall require the prior written approval of the President or Chief Credit Officer or Credit Administrator of the other party’s subsidiary bank, which approval or rejection shall be given in writing within 2 business days after the loan package is delivered to such individual or shall be deemed approved; or, in the case of Marquis only (iii) make any loans or extensions of credit that, individually or in the aggregate, would cause the aggregate principal balance of Marquis’s commercial real estate loan portfolio to equal or exceed 105% of such aggregate principal balance as of June 30, 2019;

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except as required by applicable law or regulation or guidance or at the direction of a governmental entity, implement or adopt any material change its interest rate and other risk

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management policies, procedures and practices, fail to follow its existing policies or practices with respect to managing its exposure to interest rate and other risk or fail to use commercially reasonable means to avoid any material incurrence in its aggregate exposure to interest rate risk;

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incur any indebtedness for borrowed money other than in the ordinary course of business consistent with past practice with a term not in excess of one year, or incur, assume or become subject to, whether directly or by way of any guarantee or otherwise, any obligations or liabilities (absolute, accrued, contingent or otherwise) of any other person, other than the issuance of letters of credit in the ordinary course of business and in accordance with the restrictions specified in the merger agreement other than FHLB borrowings;

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develop market or implement any new lines of business;

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make, change or revoke any material tax election, file any materially amended tax return, enter into any tax closing agreement, or settle or agree to compromise any material liability with respect to disputed taxes, except in the ordinary course of business consistent with past practice;

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take any action or knowingly fail to take any action that could reasonably be expected to prevent the merger from qualifying as a reorganization within the meaning of the Code;

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take any action that is likely to materially impair or delay such party’s ability to perform any of its obligations under the merger agreement or such party’s subsidiary bank under the bank merger agreement; or

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agree or commit to do any of the foregoing.

Regulatory Matters

This joint proxy statement/prospectus forms part of a Registration Statement on Form S-4 which Professional has filed with the SEC. Each of Professional and Marquis have agreed to use its commercially reasonable best efforts to maintain the effectiveness of the Registration Statement for as long as necessary to complete the merger and the other transactions contemplated by the merger agreement.

Professional has agreed to use its commercially reasonable best efforts to obtain all necessary state securities law or “blue sky” permits and approvals required to carry out the transactions contemplated by the merger agreement, and Marquis has agreed to furnish all information concerning Marquis and the holders of Marquis common stock as may be reasonably requested in connection with any such action.

Professional and Marquis have agreed to cooperate with each other and use their respective reasonable best efforts to promptly prepare and file all necessary documentation, to effect all applications, notices, petitions and filings, to obtain as promptly as practicable all permits, consents, approvals and authorizations of all third parties and regulatory and governmental entities that are necessary or advisable to consummate the transactions contemplated by the merger agreement (including the merger and the bank merger) and to comply with the terms and conditions of all such permits, consents, approvals and authorizations.

Marquis and Professional have the right to review in advance and, to the extent practicable, each will consult the other on, in each case subject to applicable laws relating to the confidentiality of information, all the information relating to Marquis or Professional, as the case may be, and any of their respective subsidiaries, that appear in any filing made with, or written materials submitted to, any third party or any governmental entity in connection with the transactions contemplated by the merger agreement. In addition, Professional and Marquis will consult with each other with respect to the obtaining of all permits, consents, approvals and authorizations of all third parties and governmental entities necessary or advisable to consummate the transactions contemplated by the merger agreement, and each party will keep the other apprised of the status of matters relating to the completion of the merger. Professional and Marquis shall promptly deliver to each other copies of all filings, orders and material correspondence to and from all governmental entities in connection with the transactions contemplated by the merger agreement. Additionally, each of Professional and Marquis has agreed to furnish to the other, upon request, all information concerning itself, its subsidiaries, directors, officers and shareholders and such other matters as may be reasonably necessary or advisable in connection with this joint proxy statement/prospectus, the

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Registration Statement on Form S-4 or any other statement, filing, notice or application made by or on behalf of Professional, Marquis or any of their respective subsidiaries to any regulatory or governmental entity in connection with the merger, the bank merger of any or the other transactions contemplated by the merger agreement.

Each of Professional and Marquis will promptly advise the other upon receiving any communication from any regulatory or governmental entity the consent or approval of which is required for completion of the merger that causes such party to believe that there is a reasonable likelihood that any requisite regulatory approval will not be obtained or that the receipt of any such approval may be materially delayed.

In connection with seeking regulatory approval for the merger, Professional is not required to agree to any condition or restriction or to take any action that would have a material adverse effect on the combined company, taken as a whole, after giving effect to the merger (a “materially burdensome regulatory condition”).

Nasdaq Listing

Professional has agreed to use its reasonable best efforts to cause the shares of Professional Class A common stock to be issued to the holders of Marquis common stock in the merger to be authorized for listing on the Nasdaq Global Market, subject to official notice of issuance, prior to the effective time of the merger.

Employee Matters

From the effective time of the merger until the first anniversary thereof  (the “continuation period”), Professional must maintain employee benefit plans and compensation opportunities for employees who are employed by Marquis and its subsidiaries on the closing date of the merger (referred to as “covered employees”) that provide employee benefits and compensation opportunities during the portion of the continuation period that each such employee remains employed by Professional which, in the aggregate, are substantially comparable to the employee benefits and compensation opportunities that are available to similarly situated employees of Professional or its subsidiaries (except that no covered employee may participate in any closed or frozen plan of Professional or its subsidiaries). Professional will give the covered employees full credit for their prior service with Marquis and its subsidiaries for purposes of eligibility and vesting under any qualified or non-qualified employee benefit plan maintained by Professional in which covered employees may be eligible to participate and for all purposes under any defined contribution retirement plans, welfare benefit plans, vacation plans, severance plans and similar arrangements maintained by Professional. However, the foregoing service recognition will not apply (i) to the extent it would result in duplication of benefits for the same period of service, (ii) for purposes of benefit accruals under any defined benefit pension plan or (iii) for purposes of any benefit plan that provides retiree or post-termination welfare benefits.

With respect to any Professional health, dental, vision or other welfare plan in which any covered employee is eligible to participate following the closing date of the merger, Professional or its applicable subsidiary must (i) cause any pre-existing condition limitations or eligibility waiting periods under such plan to be waived with respect to the covered employee and his or her covered dependents to the extent the condition was, or would have been, covered under the Marquis benefit plan in which the covered employee participated immediately prior to the effective time of the merger, and (ii) recognize any health, dental, vision or other welfare expenses incurred by the covered employee or his or her covered dependents in the year that includes the closing date of the merger for purposes of any applicable co-payment, deductible or annual out-of-pocket expense requirements under such plans. In addition, Professional will assume all accrued and unused sick time for all continuing employees.

If, during the continuation period, any covered employee is terminated by Professional or its subsidiaries other than “for cause,” then Professional will pay severance to the covered employee, subject to such covered employee’s execution and non-revocation of a general release of claims in a form satisfactory to Professional, in an amount equal to two weeks of base salary for each 12 months of such covered employee’s prior employment with Marquis or Marquis Bank, with a minimum of four weeks and a maximum of 26 weeks.

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In addition, Professional and Marquis agreed following execution of the merger agreement to provide stay bonuses to certain Professional employees and continuing employees following the closing and to the compensation to be paid to each such employee following the closing, none of which are payable to Professional executive officers, and those which are payable to Marquis executive officers are as described in the section entitled “The Merger — Interests of Marquis Directors and Executive Officers in the Merger” beginning on page 110.

Indemnification and Directors’ and Officers’ Insurance

From and after the effective time of the merger, Professional must indemnify and defend the present and former directors, officers and employees of Marquis and its subsidiaries against all costs or expenses, damages or other liabilities incurred in connection with any claim, action, suit, proceeding or investigation arising out of actions or omissions of such persons in the course of performing their duties for Marquis occurring at or before the effective time of the merger (including the transactions contemplated by the merger agreement), to the greatest extent as such persons are indemnified or have the right to advancement of expenses pursuant to the organizational documents of Marquis or its subsidiaries, as applicable, and the FBCA.

For a period of six years after the effective time of the merger, Professional will provide director’s and officer’s liability insurance that serves to reimburse the present and former officers and directors of Marquis or its subsidiaries with respect to claims against them arising from facts or events occurring at or before the effective time of the merger (including the transactions contemplated by the merger agreement). The directors’ and officers’ liability insurance will contain at least the same coverage and amounts, and contain terms and conditions no less advantageous to the indemnified person as the coverage currently provided by Marquis; provided, however, that: (1) if Professional is unable to maintain or obtain the directors’ and officers’ liability insurance, then Professional will provide as much comparable insurance as is reasonably available; (2) officers and directors of Marquis or its subsidiaries may be required to make application and provide customary representations and warranties to the carrier of the insurance; and (3) in satisfaction of its obligations to provide the liability insurance, Professional may purchase, prior to but effective as of the effective time of the merger, tail insurance providing such coverage. In no event shall Professional be required to expend for the tail insurance a premium amount in excess of 300% of the annual premiums paid by Marquis for its directors’ and officers’ liability insurance in effect as of the date of the merger agreement. If the cost of the tail insurance exceeds such maximum premium for the tail insurance, then Professional will obtain tail insurance or a separate tail insurance policy with the greatest coverage available for a cost not exceeding such maximum premium.

Agreement Not to Solicit Other Offers

Marquis has agreed that, from the date of the merger agreement until the effective time of the merger or, if earlier, the termination of the merger agreement, it will not, and will cause its subsidiaries and their officers, directors, and employees not to: initiate, solicit, knowingly encourage or knowingly facilitate inquiries or proposals with respect to, or engage in any discussions or negotiations concerning, or provide any confidential or nonpublic information concerning its and its subsidiaries’ business, properties or assets (“Marquis confidential information”); to, or have any discussions with, any person relating to, any tender or exchange offer, proposal for a merger or consolidation or other business combination involving Marquis or any of its significant subsidiaries in which any third-party would acquire more than 20% of the voting power of Marquis or the surviving entity in such merger or business combination, or any proposal to acquire more than 20% of the voting power in, or more than 20% of the fair market value of the business, assets or deposits of, Marquis and its significant subsidiaries taken as a whole (an “acquisition proposal”).

However, the merger agreement provides that at any time prior to the approval of the merger agreement by the Marquis shareholders, if Marquis receives a bona fide, written acquisition proposal that did not result from a breach of Marquis’s non-solicitation obligations and that the Marquis board of directors determines in good faith constitutes or is reasonably likely to result in a superior proposal (as defined below), then Marquis may: (i) negotiate and enter into a confidentiality agreement with the third party making the acquisition proposal with terms and conditions no less favorable in the aggregate to Marquis than the confidentiality agreement entered into by Marquis and Professional prior to the execution

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of the merger agreement; (ii) furnish Marquis confidential information to the third party making the acquisition proposal pursuant to such confidentiality agreement, provided that Marquis provides Professional, prior to or substantially concurrently with the time such information is provided or made available to such person, any Marquis confidential information furnished to such other person that was not previously furnished to Professional; and (iii) negotiate with the third party making the acquisition proposal regarding such proposal, if the Marquis board of directors determines in good faith (following consultation with counsel) that failure to take such actions would or would be expected to cause the Marquis board of directors to breach its fiduciary duties under applicable law. Marquis must advise Professional in writing within 24 hours following receipt of any acquisition proposal and the substance thereof and must keep Professional reasonably apprised of any related developments, discussions and negotiations on a reasonably current basis.

A “superior proposal” means a written acquisition proposal that the Marquis board of directors concludes in good faith is more favorable from a financial point of view to the Marquis shareholders than the merger (after receiving the advice of its financial advisors, taking into account the likelihood and timing of consummation of such transaction on the terms set forth in such proposal and taking into account all legal, financial, regulatory and other aspects of such proposal and any other relevant factors permitted under applicable law); provided that for purposes of the definition of superior proposal all references to 20% in the definition of acquisition proposal are deemed to refer to 80%.

The merger agreement generally prohibits the Marquis board of directors from making a change in recommendation (i.e., from withdrawing or modifying in a manner adverse to Professional the recommendation of the Marquis board of directors set forth in this joint proxy statement/prospectus that the Marquis shareholders vote to approve the merger agreement, or from making or causing to be made any third party or public communication proposing or announcing an intention to withdraw or modify in a manner adverse to Professional such recommendation). At any time prior to the approval of the merger agreement by the Marquis shareholders, however, the Marquis board of directors may effect a change in recommendation in response to a superior proposal or an intervening event (defined below), in each case, if the Marquis board of directors concludes in good faith after consultation with outside legal advisors that the failure to take such action would reasonably be expected to cause the Marquis board of directors to breach its fiduciary duties under applicable law. The Marquis board of directors may not make a change in recommendation unless: (1) Marquis has given Professional at least 5 business days’ prior written notice of its intention to take such action and before making such change in recommendation; (2) if such change in recommendation is in response to a superior proposal, Marquis has negotiated in good faith with Professional during the notice period (to the extent Professional wishes to negotiate) to enable Professional to adjust the terms of the merger agreement so that such superior proposal no longer constitutes a superior proposal; (3) if such change in recommendation is in response to an intervening event, during such 5 business day period, if requested by Professional, Marquis shall engage in good faith negotiations with Professional to amend the merger agreement in such a manner that obviates the need for a change in recommendation as a result of the intervening event; and (iv) if such change in recommendation is in response to a superior proposal, the Marquis board of directors determines in good faith (after consultation with counsel) that such superior proposal has been made and has not been withdrawn and continues to be a superior proposal after taking into account all adjustments to the terms of the merger agreement that may be offered by Professional.

An “intervening event” means a material event or circumstance (other than an event or circumstance relating to an acquisition proposal, changes in general economic, political or financial conditions or markets or changes in GAAP, other applicable accounting rules or applicable law or, in any such case, changes in the interpretation thereof) that was not known to the Marquis board of directors on this date of the merger agreement (or if known, the material consequences of which are not known to or reasonably foreseeable by the Marquis board of directors as of the date of the merger agreement), which event or circumstance, or any material consequences thereof, become known to the Marquis board of directors prior to the approval of the merger agreement by the Marquis shareholders.

If the Marquis board of directors makes a change in recommendation, and the merger agreement is subsequently terminated, Marquis could be required to pay Professional a termination fee of  $4 million in cash. See “— Termination,” and “— Termination Fee.”

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Professional is also required to include in this joint proxy statement/prospectus its recommendation that Professional shareholders approve the issuance of Professional Class A common stock to be issued in the merger, unless including such recommendation would violate applicable law or be inconsistent with Professional board of directors’ fiduciary duties. If the Professional board of directors makes a change in recommendation, and the merger agreement is subsequently terminated, Professional could be required to pay Marquis a termination fee of  $4 million in cash. See “— Termination,” and “— Termination Fee.”

Representations and Warranties

The merger agreement contains generally customary representations and warranties of Professional and Marquis relating to their respective businesses. The representations and warranties of each of Professional and Marquis have been made solely for the benefit of the other party, and these representations and warranties should not be relied on by any other person. In addition, these representations and warranties:

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have been qualified by information set forth in confidential disclosure schedules in connection with signing the merger agreement — the information contained in these schedules modifies, qualifies and creates exceptions to the representations and warranties in the merger agreement;

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will not survive consummation of the merger;

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may be intended not as statements of fact, but rather as a way of allocating the risk to one of the parties to the merger agreement if those statements turn out to be inaccurate;

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are in some cases subject to a materiality standard described in the merger agreement which may differ from what may be viewed as material by an investor; and

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were made only as of the date of the merger agreement or such other date as is specified in the merger agreement.

The representations and warranties made by Professional and Marquis to each other primarily relate to:

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corporate organization, existence, power and authority;

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capitalization;

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ownership of subsidiaries;

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corporate authorization to enter into the merger agreement and to consummate the merger;

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absence of any breach of organizational documents, violation of law or breach of agreements as a result of the merger;

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regulatory approvals required in connection with the merger;

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reports filed with governmental entities;

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financial statements;

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absence of a material adverse effect on each party since December 31, 2016;

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compliance with laws and the absence of regulatory agreements;

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material contracts and the absence of defaults with respect to such material contracts;

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the inapplicability to the merger of state takeover laws;

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employee benefit plans;

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regulatory approvals;

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financial advisor opinions;

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accuracy of the information supplied by each party for inclusion or incorporation by reference in this joint proxy statement/prospectus;

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•

litigation;

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labor matters;

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environmental matters;

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loan matters;

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intellectual property;

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transactions with affiliates;

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derivative instruments and transactions;

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trust business and corporate fiduciary matters;

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taxes;

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Community Reinvestment Act compliance;

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maintenance of insurance policies;

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title to assets;

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investment portfolio;

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accuracy of books and records;

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absence of actions or omissions by present or former directors, officers, employees or agents that would give rise to a claim for indemnification; and

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fees paid to financial advisors.

Professional also has represented to Marquis that it will have sufficient cash and shares of Professional Class A common stock available for issuance to satisfy its obligations under the merger agreement and consummate the transactions contemplated by the merger agreement.

Certain of the representations and warranties of Marquis and Professional are qualified as to “materiality” or “material adverse effect.” For purposes of the merger agreement, the term “material adverse effect” means, with respect to Professional or Marquis, as the case may be, any event, circumstance, development, change or effect that, individually or in the aggregate, (1) is material and adverse to the business, financial condition or results of operations of such party and its subsidiaries taken as a whole; provided, however, that, with respect to this clause (1), a “material adverse effect” shall not be deemed to include any event, circumstance, development, change or effect resulting from (A) changes after the date of the merger agreement in GAAP or regulatory accounting requirements, (B) changes after the date of the merger agreement in laws, rules or regulations or interpretations of laws, rules or regulations by governmental entities of general applicability to companies in the industry in which such party and its subsidiaries operate, (C) changes after the date of the merger agreement in general economic or market conditions in the United States or any state or territory thereof, including changes in the credit markets, any downgrades in the credit markets, or adverse credit events resulting in deterioration in the credit markets or changes in prevailing interest rates, currency exchange rates, and price levels or trading volumes in the United States, and including changes to any previously correctly applied asset marks resulting therefrom, in each case generally affecting other companies in the industry in which such party and its subsidiaries operate, (D) the execution or public disclosure of the merger agreement or the transactions contemplated thereby or the consummation thereof, including the impacts thereof on relationships with customers and employees (provided that this clause (D) does not apply to any representation or warranty to the extent the purpose of such representation or warranty is to address, as applicable, the consequences resulting from the execution or public disclosure of the merger agreement or the transactions contemplated thereby or the consummation thereof) or (E) any action taken by such party with the other party’s written consent or any action taken by such party that is required by the merger agreement (other than pursuant to such party’s general obligation to operate in the ordinary course of business prior to the closing), except, with respect to clauses (A), (B) and (C), to the extent that the effects of such change are disproportionately adverse to the business, financial condition or results of operations of such party and its subsidiaries, taken as a whole, as

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compared to other companies in the industry in which such party and its subsidiaries operate (in which case only the incrementally disproportionate effect may be taken into account in determining whether there has been or may be a material adverse effect); or (2) prevents or materially impairs, or would be reasonably likely to prevent or materially impair, the ability of such party to timely consummate the transactions contemplated by the merger agreement or to perform its agreements or covenants thereunder.

Conditions to Completion of the Merger

Mutual Closing Conditions.   The obligations of Professional and Marquis to complete the merger are subject to the satisfaction of the following conditions:

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the approval of the merger agreement by Marquis shareholders and the approval of the Professional share issuance in connection with the merger by Professional shareholders;

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the authorization for listing on the Nasdaq Global Market of the shares of Professional Class A common stock to be issued in the merger, subject to official notice of issuance;

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the effectiveness of the Registration Statement on Form S-4, of which this joint proxy statement/​prospectus is a part, under the Securities Act, and the absence of a stop order suspending the effectiveness of the Registration Statement on Form S-4 or any proceeding initiated or threatened by the SEC for that purpose;

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the absence of any order, injunction or decree issued by any court or agency of competent jurisdiction or other law preventing or making illegal the consummation of the merger, the bank merger or the other transactions contemplated by the merger agreement;

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all regulatory approvals from the Federal Reserve and any other regulatory approval required to consummate the merger, the failure of which to obtain would reasonably be expected to have a material adverse effect on the combined company, shall have been received and remain in full force and effect and all statutory waiting periods shall have expired, and no such approval shall have resulted in the imposition of any materially burdensome regulatory condition;

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the accuracy of the other party’s respective representations and warranties in the merger agreement on the date of the merger agreement and as of the effective time of the merger (or such other date specified in the merger agreement), other than, in most cases, inaccuracies that individually or in the aggregate would not reasonably be expected to have a material adverse effect on such party;

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the performance in all material respects by the other party of its respective obligations under the merger agreement;

the absence of any event since the date of the merger agreement which is expected to have or result in a material adverse effect on the other party; and

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receipt by each party of an opinion of its tax advisor to the effect that the merger will qualify as a reorganization within the meaning of the Internal Revenue Code.

Additional Closing Condition for the Benefit of Marquis.   In addition to the mutual closing conditions, Marquis’s obligation to complete the merger is subject to the satisfaction or waiver of the condition that Professional shall have closed an underwritten public offering of Professional Class A common stock pursuant to an effective registration statement under the Securities Act on Form S-1 or any similar or successor form.

Assumption of Marquis Subordinated Notes

Upon the effective time, Professional will assume due and punctual payment of the principal of and any premium and interest on Marquis’s 7% Fixed-to-Floating Rate Subordinated Notes Due 2026 in the principal amount of  $10,000,000 according to their terms, and the due and punctual performance of all covenants and conditions on the part of Marquis to be performed or observed pursuant to the notes. Professional and Marquis have agreed to cooperate and use reasonable best efforts to sign and deliver any documents required to make the assumption effective as of the effective time.

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Termination

The merger agreement may be terminated at any time prior to the effective time of the merger, whether before or after the approval of the merger agreement by Marquis shareholders, as follows:

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by mutual written consent of Professional and Marquis in a written instrument authorized by the boards of directors of Professional and Marquis;

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by either Professional or Marquis, if  (1) any governmental entity that must grant a requisite regulatory approval has denied approval of the merger or the bank merger and such denial has become final and non-appealable (provided that the denial is not attributable to the failure of the party seeking to terminate the merger agreement to perform any covenant in the merger agreement required to be performed prior to the effective time of the merger) or (2) a regulatory or other governmental authority has issued a final, non-appealable order, injunction or decree permanently enjoining or otherwise prohibiting or making illegal the completion of the merger or the bank merger;

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by either Professional or Marquis, if the merger has not been completed by August 9, 2020, unless the failure to complete the merger by such date is due to the failure of the party seeking to terminate the merger agreement to perform or observe the covenants and agreements of such party set forth in the merger agreement;

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by either Professional or Marquis, if there is a breach by the other party of any representation, warranty, covenant or other agreement set forth in the merger agreement that would, individually or in the aggregate, if occurring or continuing on the closing date, result in the failure to satisfy the closing conditions of the party seeking termination and such breach is not cured within 20 business days following written notice to the breaching party or by its nature or timing cannot be cured within that time period (provided that the terminating party is not then in material breach of any representation, warranty, covenant or other agreement contained in the merger agreement);

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by Professional, if the Marquis board of directors fails to recommend that the Marquis shareholders approve the merger agreement or makes a change in recommendation, or if Marquis materially breaches the provisions of the merger agreement relating to third party acquisition proposals, as described under “— Agreement Not to Solicit Other Offers”;

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by Professional, if the Marquis shareholders fail to approve the merger agreement at a duly held meeting of such shareholders or at an adjournment or postponement thereof;

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by Marquis, if the Professional board of directors fails to recommend that Professional shareholders approve the Professional share issuance in connection with the merger or withdraws or modifies, in a manner adverse to Marquis, such recommendation or makes or causes to be made any third party or public communication proposing or announcing an intention to withdraw or modify in any manner adverse to Marquis such recommendation; and

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by Marquis, if the Professional shareholders fail to approve the Professional share issuance in connection with the merger at a duly held meeting of such shareholders or at an adjournment or postponement thereof.

Termination Fee

Marquis must pay Professional a termination fee of  $4 million:

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if the merger agreement is terminated by Professional because the Marquis board of directors did not recommend that the Marquis shareholders approve the merger agreement or made a change in recommendation, or because Marquis materially breached the provisions of the merger agreement relating to third party acquisition proposals, as described under “— Agreement Not to Solicit Other Offers”; and

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if the merger agreement is terminated by Professional because the Marquis shareholders failed to approve the merger agreement and, if prior to the Marquis special meeting, there is a publicly

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announced and not publicly withdrawn acquisition proposal and, within 12 months of such termination, Marquis or any of its significant subsidiaries enters into a definitive agreement with respect to an acquisition proposal or completes an acquisition proposal.

Professional must pay Marquis a termination fee of  $4 million:

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if the merger agreement is terminated by Marquis because the Professional board of directors did not recommend that the Professional shareholders approve the Professional share issuance in connection with the merger or withdraws or modifies, in a manner adverse to Marquis, such recommendation or makes or causes to be made any third party or public communication proposing or announcing an intention to withdraw or modify in any manner adverse to Marquis such recommendation; and

•

if the merger agreement is terminated by Marquis following a material breach by Professional of its obligations with respect to obtaining regulatory approvals for consummation of the merger (excluding any delay in or failure to launch or complete an initial public offering of Professional Class A common stock, due to market conditions, SEC review or comments, or other factors outside the control of Professional, or a failure to comply with the provisions therein that provide for a specific filing deadline with respect to applications or filings with governmental entities).

Except in the case of a willful and material breach of the merger agreement, the payment of the termination fee will fully discharge the party paying such fee from any losses that may be suffered by the other party arising out of the termination of the merger agreement.

Waiver; Amendment

The merger agreement may be amended by the parties, by action taken or authorized by their respective boards of directors, at any time before or after approval of the matters presented in connection with the merger by the Marquis or Professional shareholders, in writing signed on behalf of each of the parties, provided that after any approval of the transactions contemplated by the merger agreement by the Marquis or Professional shareholders, there may not be, without further approval of the Marquis or Professional shareholders, any amendment of the merger agreement that requires further approval under applicable law.

At any time prior to the effective time of the merger, the parties, by action taken or authorized by their respective boards of directors, may, to the extent legally allowed: (1) extend the time for the performance of any of the obligations or other acts of the other party; (2) waive any inaccuracies in the representations and warranties contained in the merger agreement on the part of the other party; or (3) waive compliance with any of the agreements or conditions contained in the merger agreement on the part of the other party. Any agreement on the part of a party to any extension or waiver must be in writing signed on behalf of such party. Any such extension or waiver or failure to insist on strict compliance with an obligation, covenant, agreement or condition will not operate as a waiver of any subsequent or other failure.

Expenses

Regardless of whether the merger is completed, all expenses incurred in connection with the merger, the bank merger, the merger agreement and other transactions contemplated thereby will be paid by the party incurring the expenses, except that Professional and Marquis will bear equally the costs and expenses of printing and mailing this joint proxy statement/prospectus and Professional has paid the filing fee for the Registration Statement on Form S-4 of which this joint proxy statement/prospectus is a part and will pay any other filings fees with the SEC in connection with the merger.

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MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER

This section describes the material U.S. federal income tax consequences of the merger to “U.S. holders” (as defined below) of Marquis common stock that exchange their Marquis common stock for Professional Class A common stock in the merger. The following discussion is based upon the Code, the U.S. Treasury regulations promulgated thereunder and judicial and administrative authorities, rulings and decisions, all as in effect as of the date of this joint proxy statement/prospectus. These authorities may change, possibly with retroactive effect, and any such change could affect the accuracy of the statements and conclusions set forth in this discussion. This discussion does not address any tax consequences arising under the unearned income Medicare contribution tax pursuant to the Health Care and Education Reconciliation Act of 2010, nor does it address any tax consequences arising under the laws of any state, local or foreign jurisdiction, or under any U.S. federal laws other than those pertaining to the income tax.

The following discussion applies only to U.S. holders who hold such shares as a capital asset within the meaning of Section 1221 of the Code (generally, property held for investment). Further, this discussion does not purport to consider all aspects of U.S. federal income taxation that might be relevant to U.S. holders in light of their particular circumstances and does not apply to U.S. holders subject to special treatment under the U.S. federal income tax laws (such as, for example, dealers or brokers in securities, commodities or foreign currencies, traders in securities that elect to apply a mark-to-market method of accounting, banks and certain other financial institutions, insurance companies, mutual funds, tax-exempt organizations, holders subject to the alternative minimum tax provisions of the Code, partnerships, S corporations or other pass-through entities or investors therein, regulated investment companies, real estate investment trusts, controlled foreign corporations, passive foreign investment companies, former citizens or residents of the United States, U.S. expatriates, holders whose functional currency is not the U.S. dollar, holders who hold Marquis common stock as part of a hedge, straddle, constructive sale or conversion transaction or other integrated investment, retirement plans, individual retirement accounts, or other tax-deferred accounts, holders who acquired Marquis common stock pursuant to the exercise of employee stock options, through a tax qualified retirement plan or otherwise as compensation, holders who exercise dissenters’ rights or holders who actually or constructively own more than 5% of Marquis common stock).

For purposes of this discussion, the term “U.S. holder” means a beneficial owner of Marquis common stock that is for U.S. federal income tax purposes (1) an individual citizen or resident of the United States, (2) a corporation, or entity treated as a corporation for U.S. federal income tax purposes, organized in or under the laws of the United States or any state thereof or the District of Columbia, (3) a trust if  (a) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (b) such trust has a valid election in effect to be treated as a U.S. person for U.S. federal income tax purposes or (4) an estate, the income of which is subject to U.S. federal income tax, regardless of its source.

If an entity or arrangement treated as a partnership for U.S. federal income tax purposes holds Marquis common stock, the tax treatment of a partner in such partnership generally will depend on the status of the partner and the activities of the partnership. Any entity treated as a partnership for U.S. federal income tax purposes that holds Marquis common stock, and any partners in such partnership, should consult their own independent tax advisors regarding the tax consequences of the merger to their specific circumstances.

Determining the actual tax consequences of the merger to you may be complex and will depend on your specific situation and on factors that are not within our control. You should consult your own independent tax advisor as to the specific tax consequences of the merger in your particular circumstances, including the applicability and effect of the alternative minimum tax and any state, local, foreign and other tax laws and of changes in those laws.

Tax Consequences of the Merger Generally

It is a condition to the obligation of Professional to complete the merger that Professional receive an opinion from Wachtell, Lipton, Rosen & Katz, dated as of the closing date of the merger, to the effect that the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. It is a condition to the obligation of Marquis to complete the merger that Marquis receive an opinion from Crowe

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LLP, dated as of the closing date of the merger, to the effect that the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. These opinions will be based on facts and representations contained in representation letters provided by Professional and Marquis and on customary factual assumptions. Neither of the opinions described above will be binding on the Internal Revenue Service (the “IRS”) or any court. Professional and Marquis have not sought and will not seek any ruling from the IRS regarding any matters relating to the merger, and as a result, there can be no assurance that the IRS will not assert, or that a court would not sustain, a position contrary to any of the conclusions set forth below. In addition, if any of the representations or assumptions upon which those opinions are based are inconsistent with the actual facts, the U.S. federal income tax consequences of the merger could be adversely affected.

Accordingly, and on the basis that the merger qualifies as a “reorganization” within the meaning of Section 368(a) of the Code, upon exchanging your Marquis common stock for Professional Class A common stock, you generally will not recognize gain or loss, except with respect to cash received instead of fractional Professional Class A common stock (as discussed below). The aggregate tax basis of the Professional Class A common stock that you receive in the merger (including any fractional shares deemed received and redeemed for cash as described below) will equal your aggregate adjusted tax basis in the Marquis common stock you surrender in the merger. Your holding period for the Professional Class A common stock that you receive in the merger (including any fractional share deemed received and redeemed for cash as described below) will include your holding period of the Marquis common stock that you surrender in the merger. If you acquired different blocks of Marquis common stock at different times or at different prices, the Professional Class A common stock you receive will be allocated pro rata to each block of Marquis common stock, and the basis and holding period of each block of Professional Class A common stock you receive will be determined on a block-for-block basis depending on the basis and holding period of the blocks of Marquis common stock exchanged for such block of Professional Class A common stock.

Cash Instead of Fractional Shares

If you receive cash instead of a fractional share of Professional Class A common stock, you will be treated as having received such fractional share of Professional Class A common stock pursuant to the merger and then as having sold such fractional share of Professional Class A common stock for cash. As a result, you generally will recognize gain or loss equal to the difference between the amount of cash received and the basis in your fractional share of Professional Class A common stock as set forth above. Such gain or loss generally will be capital gain or loss and will be long-term capital gain or loss if, as of the effective date of the merger, the holding period for such fractional share (including the holding period of Marquis common stock surrendered therefor) exceeds one year. Long-term capital gains of individuals are generally eligible for reduced rates of taxation. The deductibility of capital losses is subject to limitations.

Information Reporting and Backup Withholding

If you are a non-corporate Marquis shareholder, you may be subject, under certain circumstances, to information reporting and backup withholding (currently at a rate of 28%) on any cash payments you receive. You generally will not be subject to backup withholding, however, if you (1) furnish a correct taxpayer identification number, certify that you are not subject to backup withholding and otherwise comply with all the applicable requirements of the backup withholding rules; or (2) provide proof that you are otherwise exempt from backup withholding. Any amounts withheld under the backup withholding rules are not an additional tax and will generally be allowed as a refund or credit against your U.S. federal income tax liability, provided you timely furnish the required information to the IRS.

This discussion of certain material U.S. federal income tax consequences is not intended to be, and should not be construed as, tax advice. Marquis shareholders are urged to consult their independent tax advisors with respect to the application of U.S. federal income tax laws to their particular situations as well as any tax consequences arising under the U.S. federal estate or gift tax rules, or under the laws of any state, local, foreign or other taxing jurisdiction or under any applicable tax treaty.

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BUSINESS OF PROFESSIONAL

Unless the context requires otherwise, references in this “Business of Professional” section of this joint proxy statement/prospectus to the “Company,” “we,” “us,” or “our” refer to Professional and its wholly owned subsidiaries on a consolidated basis, and references to the “Bank” refer to Professional Bank.

Our Company

We are a financial holding company incorporated in 2014 and headquartered in Coral Gables, Florida. We operate primarily through our wholly owned subsidiary, Professional Bank, a Florida state-chartered bank, which commenced operations in 2008. In 2014, we effectuated a statutory share exchange pursuant to which Professional Holding Corp. became the bank holding company for Professional Bank. We focus on providing creative, relationship-driven commercial banking products and services designed to meet the needs of our clients. Our clients are small to medium sized businesses, the owners and operators of these businesses, and other professionals, entrepreneurs and high net worth individuals.

We believe that we have developed a reputation in our market for highly customized services and we continue to seek new ways to meet our clients’ financial needs. We offer a full line of deposit products, cash management services and commercial and residential loan programs, as well as online/digital and mobile banking capabilities. We firmly believe our clients place value on our local and timely decision-making, coupled with the high quality service that we provide. Approaching our clients’ challenges from a different point of view is at the heart of our culture, as our bankers are extremely familiar with our clients’ businesses, enabling us to more accurately assess risk, while developing mutually acceptable credit structures for the bank and its clients.

We currently conduct our banking operations from five branches and four loan production offices located exclusively in the Miami-Fort Lauderdale-West Palm Beach or Miami-Dade metropolitan statistical area, or MSA, which encompasses three rapidly growing counties in Florida: Miami-Dade, Broward, and Palm Beach counties. The banking industry in this market has experienced significant consolidation, with approximately 50% of banks being consolidated during the last 10 years, which has afforded us significant growth opportunities. Today, as measured by total assets, we are the sixth largest independent community bank headquartered in South Florida. As of September 30, 2019, we had total assets of  $963.2 million, total net loans of  $764.7 million, total deposits of  $823.1 million and total shareholders’ equity of $78.0 million.

On August 9, 2019, we entered into a definitive merger agreement to acquire Marquis and its wholly owned subsidiary, Marquis Bank, a Florida state-chartered bank. The acquisition of Marquis Bank will add three branches to our Miami-Dade MSA footprint, and on a pro forma basis would make us the 12th largest independent community bank in Florida and the fourth largest independent community bank in South Florida. Upon completion of this acquisition, which is subject to several customary closing conditions, including, among others, regulatory approval, both companies’ shareholder approval, the closing of our initial public offering, and the filing of an effective registration statement on Form S-4 with respect to the shares of our Class A common stock to be issued in the merger, the pro forma combined institution is expected to have approximately $1.6 billion in total assets, excluding purchase accounting adjustments, total net loans of  $1.3 billion and total deposits of  $1.4 billion as of September 30, 2019, excluding purchase accounting adjustments. We received regulatory approval for the proposed merger from the Board of Governors of the Federal Reserve System and the Florida Office of Financial Regulation on November 12, 2019 and December 10, 2019, respectively.

In late October 2019, we opened our Digital Innovation Center in Cleveland, Ohio to support our investments in technology and infrastructure and to continue enhancing our service offerings. It is staffed by former employees of national banking institutions and global consulting firms with experience in banking technology and growth strategies. We recently released our first Apple Watch app, a person-to-person, or P2P, payment service with immediate clearing capabilities that can be used with any other bank in the country. We plan to use our technology platform to create a comprehensive digital bank, including enabling the opening of online accounts through our website. We believe that our technology platform will allow us to compete with larger financial institutions by offering a cutting-edge digital client experience that can be specifically tailored to multiple demographics, while also continuing the customized concierge service that our clients have come to expect.

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We believe our investments in people, our platform and technology, as well as our ongoing efforts to attract talented banking professionals, will facilitate future growth and enhanced profitability. Our focus, culture, brand and reputation throughout our market enhance our ability to continue to grow organically, successfully recruit talented bankers and pursue opportunistic acquisitions throughout Florida in the future.

Our History and Growth

Professional Bank was founded in 2008 by a diverse group of entrepreneurs and banking professionals who lived and worked in our South Florida market. We set out to create a bank that is in sync with the local business community, employing properly incentivized and creative bankers who understand how to interact with sophisticated clients with complex banking needs. We began banking operations from a single branch in South Miami and have since expanded organically, opening four additional branches and four additional loan production offices in South Florida. Our expansion has largely been driven by our ability to recruit seasoned bankers and banking teams to our platform, while raising the necessary capital and adding the infrastructure to support these bankers. Important milestones in our operating history include the following:

2008	• Professional Bank raised $13.9 million in capital and commenced banking operations from a single branch in South Miami, FL. • Abel L. Iglesias joined the Bank as an Executive Vice President and Chief Lending Officer in April
2013	• Abel L. Iglesias joined the Bank as an Executive Vice President and Chief Lending Officer in April • Hired a team from a South Florida-based regional bank in May • Daniel R. Sheehan, one of our founders, appointed as Chairman of the Bank Board of Directors, or Bank Board, in September and, in connection with our Bank Board and management team, developed a growth and expansion strategy for the Bank • Ended the year with approximately $217 million in total assets
2014	• Opened our second branch in Coral Gables, FL in January, and relocated our headquarters • Completed a $3.3 million private placement in February • Effectuated a share exchange to form Professional Holding Corp., with Professional Bank as its wholly owned subsidiary. Daniel R. Sheehan named Chairman and CEO of Professional Holding Corp.
2015	• Reported total assets in excess of  $250 million as of March 31 • Completed a $15.0 million private placement in April
2016	• Hired a commercial and industrial, or C&I, banking team from a large national bank to establish our Palm Beach Gardens, FL loan production office in February • Established a SBA department with bankers from a large regional bank in February • Abel L. Iglesias assumed the role of President and Chief Executive Officer of the Bank following the unexpected passing of the Bank's then President and Chief Executive Officer in September • Completed a core system conversion to CSI enabling a foundation for greater technological flexibility

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2017	• Completed an $18.9 million private placement in February • Hired a private banking team from a large national bank to establish our loan production office in Boca Raton, FL in March • Opened a loan production office in Fort Lauderdale, FL in October • Converted our Palm Beach Gardens, FL loan production office to a full-service branch in November • Reported total assets in excess of  $500 million as of December 31
2018	• Hired a senior banker from a large national bank in February to establish a West Palm Beach, FL loan production office, which opened in April • Hired a new Chief Risk Officer and Chief Credit Officer • Hired a banking team from a large national bank in April for our Dadeland branch (which opened in 2019) • Hired senior bankers from a large Southeastern regional bank for our Palm Beach Gardens, FL branch in October • Hired a banking team from a large, Southeastern regional bank for our Fort Lauderdale, FL loan production office in October • Completed a $20.0 million private placement in December
2019	• Hired a private banking team from a large South Florida-based bank in January to establish our Doral, FL loan production office, which opened in July • Hired treasury management bankers from a large, Southeastern regional bank in the first quarter • Converted our existing loan production office in Boca Raton, FL into a full-service branch in May • Opened our fifth branch in Miami, FL (Dadeland) in May • Hired the former president of a South Florida-based community bank and a team from a large national bank in May to establish Wellington, FL loan production office, which opened in July • In preparation of our initial public offering to more accurately reflect his functional role, Daniel R. Sheehan assumed the title of Chief Executive Officer of the Bank in July with Abel L. Iglesias remaining as President and assuming the additional role of Chief Operating Officer of the Bank • Announced a pending merger with Marquis Bancorp, Inc. on August 12 • Reported total assets of  $963.2 million as of September 30 • Opened our Digital Innovation Center in Cleveland, OH on October 28

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The following chart illustrates our growth by location type (branch and loan production office) as well as employee headcount.

Location Growth by Type and Full Time Equivalent Employee Growth

Our expansion has led to strong balance sheet growth. Our total assets have increased from $302.0 million as of December 31, 2015 to $963.2 million as of September 30, 2019. On a pro forma basis, as of September 30, 2019, our pending acquisition of MBI would increase our total assets to approximately $1.6 billion, excluding purchase accounting adjustments. The following chart illustrates our compound annual growth rate, or CAGR.

Total Assets

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(1)

Excluding purchase accounting adjustments.

We believe we are well positioned to continue to grow organically, through opportunistic lift-outs of high-performing banking teams and acquisitions of other banks in both current and new markets. Although we have undertaken significant efforts to grow the size of our institution recently, this growth has come at a cost to our earnings performance due to an increase in noninterest expense over the same period. To illustrate, our noninterest expense increased 145.7% from $8.1 million for the 12 months ended December 31, 2015, to $19.9 million for the 12 months ended December 31, 2018, while our net interest income, one of the primary drivers of our earnings, increased 127.5% from $9.6 million for the 12 months ended December 31, 2015 to $21.9 million for the 12 months ended December 31, 2018. This has also resulted in an increasing trend in our efficiency ratio from 80.23% to 83.50% over the same period. During the first nine months of 2019, we have continued to experience similar trends with our noninterest expense, net interest income, and efficiency ratio, which were $20.1 million, $20.6 million, and 88.4%, respectively, for the nine months ended September 30, 2019. The increase in our noninterest expense since December 31, 2015 was primarily due to increases in salary and benefit expense due to increased employee headcount, largely due to our hiring of new production teams from other financial institutions, as well as increasing occupancy and equipment expense related to the opening of new branches and loan production offices as we expanded our footprint in South Florida. For additional detail related to these trends, see “Selected Historical Consolidated Financial Information of Professional.” We expect that our historic growth of bank teams and infrastructure will allow us to grow our net interest income and earnings without significant increase in our expenses leading to increased profitability in the future. However, there are no assurances that we can achieve increased profitability in the future.

Our Business Strategy

Our business strategy is comprised of the following components:

Organic Growth in Our Attractive Market.   Our organic growth strategy to date has primarily focused on gaining market share in the South Florida market. For several reasons, including a business friendly and low tax environment, strong population growth, and an unemployment rate that is currently below the national average, we believe our market provides abundant opportunities to continue to expand our client base, grow loans and deposits and gain overall market share. Our team of bankers has been an important factor contributing to our organic growth by both broadening our bandwidth with existing clients and expanding our client base. Our team has a track record of originating quality loans, evidenced by our relatively low level of nonperforming assets and credit losses since our strategic pivot in 2013, and durable deposit relationships through a variety of channels in our market while maintaining a premier client experience. The depth of our team’s market knowledge and long-term relationships in the South Florida market are the keys to our strong referral network.

As a result of consolidation in the banking industry in Florida, we believe that there are few locally-based banks that are dedicated to providing our level of sophistication and service to small to medium sized businesses, the owners and operators of these businesses as well as other professionals, entrepreneurs and high net worth individuals in our current and future markets. Since 2005 through the end of the third quarter of 2019, the number of Florida-based community banks has decreased from approximately 300 to 109.

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Florida Banking Market Overview

Note: Mergers include completed transactions only; New Charters include approved applications only

(1)

Source: FDIC Decisions on Bank Applications

(2)

Source: FDIC Failed Bank List

(3)

Source: S&P Global Market Intelligence. Include U.S. Bank, Savings Bank and Thrift completed, whole-entity transactions where the target was headquartered in the state of Florida and the completion date was between 1/1/2005 and 9/30/2019; Excludes acquisitions where the acquired bank was not consolidated into the acquiring financial institution.

(4)

Source: FDIC Statistics on Depository Institutions Report

This consolidation has allowed us to hire talented bankers in our market and we will continue to seek out such bankers and teams of bankers who prefer a local, independent, and agile platform to that of a more bureaucratic, regional financial institution. Our goal is to continue our growth to service increasingly larger and sophisticated clients, while remaining agile enough to be a superior, speed-based competitor in acquiring new clients. In an effort to keep our operating costs low while continuing to seek opportunities for growth, we have typically established new banking teams in lower cost loan production offices before committing to opening a more expensive full-service branch. By establishing banking teams in lower cost loan production offices, we are able to avoid long-term lease commitments, costly branch improvements and related costs until our new banking team has attracted a sufficient number of banking relationships and earning assets. Once the newly hired team achieves a certain financial scale, we evaluate the economics of opening a full-service branch. This strategy has allowed us to achieve significant growth while prudently managing our expansion costs and maintaining our strong credit quality.

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Current Locations	Date Loan Production Office (LPO) Opened	Date of Branch Opening / Conversion	Total Deposits as of September 30, 2019 (thousands)
South Miami	—	Aug. 2008	​	$	306,683
Coral Gables	—	Jan. 2014	​	$	227,958
Palm Beach Gardens	Feb. 2016	Nov. 2017	​	$	204,558
Boca Raton	Mar. 2017	May 2019	​	$	71,161
Fort Lauderdale LPO	Oct. 2017	—	​	​	—
West Palm Beach LPO	Apr. 2018	—	​	​	—
Dadeland	—	May 2019	​	$	12,705
Doral LPO	Jul. 2019	—	​	​	—
Wellington LPO	Jul. 2019	—	​	​	—

We believe both culture and brand are at the core of our messaging when attracting and retaining both bankers and clients. We believe continued consolidation throughout Florida will provide us with additional opportunities to grow in both our current footprint and beyond into other Florida metropolitan areas. To capitalize on these opportunities, we intend to (i) continue to evaluate lift-outs of high-performing banking teams (ii) leverage the relationships and contacts of our existing bankers to identify and target suitable business and individual clients, and (iii) develop comprehensive banking relationships with these businesses and individuals by delivering competitive banking products and services comparable to that of larger institutions while providing the superior client service expected of a smaller community bank.

Strategic Acquisitions.   We will continue to selectively evaluate acquisitions to complement our organic growth opportunities, and believe having a publicly traded common stock will improve our ability to compete for those acquisitions. We believe that many small to medium sized banking organizations in the larger Florida market face significant scale and operational challenges, regulatory pressure, management succession issues and shareholder liquidity needs which may make them potential acquisition targets. According to the FDIC, as of September 30, 2019, there were 92 banks and thrifts headquartered in Florida, each with total assets of less than $1.5 billion, collectively totaling approximately $32.5 billion in assets. Of those 92 institutions, 30 were headquartered in the Miami-Dade MSA with aggregate assets totaling approximately $13.3 billion. We believe that most of the other potential acquirors in our market are significantly larger banking institutions compared to us, which we believe makes us an attractive potential acquiror for many of these small to medium sized banking organizations in the Florida market. As a result, with the option of using publicly traded stock as currency, we believe we will have a distinct competitive advantage versus most of the larger competitors throughout Florida.

On August 9, 2019, we entered into a definitive merger agreement with Marquis. This acquisition fits into our business strategy of supplementing our organic growth with strategic acquisitions. Provided that we consummate our acquisition of Marquis, we will significantly increase our balance sheet size, add more talented bankers to our team and, we believe, immediately enhance our earnings and operating efficiency. As of September 30, 2019, on a pro forma basis, this acquisition would have increased our total assets to approximately $1.6 billion, excluding purchase accounting adjustments. Subject to regulatory approval, both companies’ shareholder approvals, the closing of our initial public offering, the filing of an effective registration statement on Form S-4 with respect to the shares of our Class A common stock to be issued in the merger, and other customary closing conditions, we expect this pending acquisition to close in early 2020. We received regulatory approval for the proposed merger from the Board of Governors of the Federal Reserve System and the Florida Office of Financial Regulation on November 12, 2019 and December 10, 2019, respectively. For additional discussion of the acquisition of Marquis, see the section of this joint proxy statement/prospectus captioned “Business of Professional — Recent Developments.”

Continue to Improve Operational Efficiency and Increase Profitability.   We are committed to enhancing our profitability, which historically has been impacted by our ambitious growth and investments in our platform. Between December 31, 2015 and September 30, 2019, our total assets increased from $302.0 million to $963.2 million. The growth in total assets was accompanied by a 238% increase in full-time employees and the expansion from two branch locations to nine banking locations. As a result of

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this rapid growth, our average return on average assets and our average efficiency ratio were 0.39% and 76.5%, respectively, for the four fiscal years ended December 31, 2015 to 2018. For the nine months ended September 30, 2019, our ROAA and efficiency ratio were 0.21% and 88.4%, respectively.

While our investments in personnel and infrastructure have limited our profitability in recent years, we believe we are positioned for continued balance sheet growth and higher profitability without significant additional capital investments. We have also created an operating platform, which is expected to improve our operating efficiencies in the areas of technology, data processing, regulatory compliance and human resources. Our Digital Innovation Center, which is tasked with collaborating with leading-edge financial technology, or fintech, firms, payment vendors, other financial firms and our core provider to develop or integrate best-in-class technology, will also help to improve our productivity, workflows, communication and efficiency, while enhancing our client experience and broadening our digital service offerings.

Furthermore, we believe that our acquisition of Marquis will further enhance our efficiency and profitability by improving our ability to achieve operational efficiencies and cost savings by integrating MBI’s operations into our existing operations, including branch locations, leveraging our ability to grow organically through offering our products and services to existing Marquis clients, and positioning us to benefit from increased credit portfolio diversity and lending capacity.

Our Competitive Strengths

We believe our competitive strengths include the following:

Experienced Leadership.   Our management team has significant banking experience in our market and the entrepreneurial drive to continue managing our expansion. Chairman and Chief Executive Officer, Daniel R. Sheehan, Bank President, Abel Iglesias, Chief Information/Digital Officer, Ryan Gorney, Chief Financial Officer, Mary Usategui, Chief Credit Officer, Robert Regolizio, and Chief Risk Officer, Luis Castillo, have spent the vast majority of their banking careers in the Florida market we serve. We believe that the reputational capital, social networks, market knowledge and relationships of these seasoned officers differentiates us from many of the financial institutions with which we compete.

•

Daniel R. Sheehan — Chairman and Chief Executive Officer of the Company and Bank. Mr. Sheehan was one of our founding shareholders. He has been Chairman of the Bank Board since September 2013 and Chairman of the Board and Chief Executive Officer of the Company since its inception in 2014. In 2019, Mr. Sheehan, who has over 20 years of banking experience, was also appointed by the Bank Board to serve as the Chief Executive Officer of the Bank, Mr. Sheehan also has extensive experience in institutional real estate investment throughout the United States while holding various positions at national real estate investment banks and financial intermediaries. He has significant experience in capital markets, structured finance, investment banking, community banking and shadow banking industries that has provided him with valuable strategic insight on capital flows and associated risk as well as transactional and execution experience.

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Abel L. Iglesias — President and Chief Operating Officer of the Bank.   Mr. Iglesias has nearly 40 years of banking experience and has served as the Bank’s President since 2016 and was additionally named as the Chief Operating Officer of the Bank in 2019. Between 2016 and 2019, Mr. Iglesias served as the Chief Executive Officer of the Bank. Prior to joining Professional Bank in 2013 as Executive Vice President and Chief Lending Officer, he served as President and Chief Executive Officer of JGB Bank, N.A., a Florida-based bank with total assets of approximately $516 million, until its sale in 2013 to Sabadell United Bank, N.A. Mr. Iglesias also previously served as the Senior Executive Vice-President of BankUnited, FSB between 2003 and 2009 where he oversaw the commercial, corporate, commercial real estate and small business banking areas and was directly responsible for the day-to-day management of the Commercial Banking division and its lending groups for Miami-Dade, Broward, and Palm Beach Counties. Mr. Iglesias was also recently appointed as a board member of the Federal Reserve Bank of Atlanta’s Miami Branch.

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Ryan L. Gorney — Chief Information Officer, Digital Officer of the Bank.   Mr. Gorney is an accomplished and proactive digital executive with a record of leading organizations through complex and strategic technological transformations, including several mergers and integrations.

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Prior to joining Professional Bank, he oversaw the digital strategy for KeyBank, a $135 billion financial services company headquartered in Cleveland, Ohio from 2014 to 2016. While at KeyBank, he focused on significantly reducing annual operational expenses while also increasing its digital presence. He was a senior manager at Ernst & Young LLP from 2012 to 2014 and an executive director between 2016 and 2018. Prior to his service at KeyBank and Ernst & Young, Mr. Gorney was a senior manager at Accenture from 2003 to 2012 where he focused on providing advisory services to some of the largest financial services companies across the globe.

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Mary Usategui — Executive Vice President and Chief Financial Officer of the Bank.    Ms. Usategui has over 15 years of banking experience and was elevated to the role of Chief Financial Officer in 2014 after having served as the Bank’s Controller since 2010. Prior to joining Professional Bank, she served in various roles with Grove Bank and Trust (formerly Coconut Grove Bank) in Miami from 2003 to 2010 leading up to her role as Senior Financial Officer. Ms. Usategui was also recently recognized by the South Florida Business Journal in 2019 as a Forty under 40 honoree.

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Robert Regolizio — Senior Vice President and Chief Credit Officer of the Bank.    Mr. Regolizio has nearly 30 years of experience in the banking industry and specifically in credit risk management. Mr. Regolizio joined the Company in 2018 to serve as the Bank’s Senior Vice President and Chief Risk Officer. Prior to joining the Bank, Mr. Regolizio served in a wide variety of roles in credit risk and senior credit management for several institutions, including as Chief Credit Officer for Gibraltar Private Bank & Trust and Capital Bank (formerly NAFH National Bank, which was formerly Turnberry Bank) and as Credit Policy Officer for BankUnited, FSB.

•

Luis Castillo — Executive Vice President and Chief Risk Officer of the Bank.   Mr. Castillo has a wealth of experience in enterprise risk management. Prior to joining the Bank as Executive Vice President and Chief Risk Officer in 2019, Mr. Castillo served as an Enterprise Risk Executive and Senior Vice President & Audit Director at Gibraltar Private Bank & Trust. Mr. Castillo also previously served as Audit Manager at Commercial Bank of Florida and as Internal Auditor at Ocean Bank, where he began his banking career in 1994.

Complementing our experienced management team, our Board of Directors, or Board, is comprised of highly experienced professionals, many of whom have significant experience as executives at or investors in other banking and financial services companies. In addition, five of our eight directors qualify as independent under the rules of the Nasdaq Stock Market. As of December 31, 2019, our executive officers and directors, beneficially owned 22.8% of our Class A common stock, 54.7% of our Class B common stock and 26.8% of our capital stock, collectively.

Below is a short summary of our Board members’ significant experience (excluding Mr. Sheehan and Mr. Iglesias, whose biographies appear above).

Rolando DiGasbarro

• Founder and principal of Windsor Investment Holdings • Former Investment Banker for Lehman Brothers • Director since 2014

Carlos M. Garcia

• Founder and CEO of BayBoston Managers LLC and Managing Partner of BayBoston Capital L.P. • Current member of the Financial Oversight and Management Board for Puerto Rico • Current Chairman of the Board of CFG Partners L.P. • Former interim President and CEO, COO and Senior Executive Vice President of Santander Bancorp; and former interim CEO, COO and President at Banco Santander Puerto Rico • Former President, CEO and Chairman at the Government Development Bank for Puerto Rico • Director since 2015

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Jon L. Gorney	• Former CIO of National City Corporation • Former Chairman and CEO of National Processing Company • Director since 2017
Herbert Martens	• Founder of Professional Bank • Managing Partner of Advent Associates, LLC • Former President and CEO for NatCity Investment & EVP Wealth Management — National City Corporation • Director since 2008
Dr. Lawrence Schimmel	• Founder of Professional Bank • Chief Medical Officer of Clinigence Holdings Co. • Former Chairman of MegaBank • Former CEO of Allied Health Group • Director since 2008
Anton V. Schutz	• Founder and Principal of Mendon Capital Advisors Corp. • Director since 2015

If our pending acquisition of Marquis is consummated, under the terms of the merger agreement, we have agreed to add up to five of Marquis’s directors to our Board and the Bank Board. We believe that adding experienced board members, with significant local relationships that we will be able to further leverage throughout our organization, enhances our Board and improves the prospects of the combined company.

In addition to our directors and executive management team, we believe we have strong management throughout each function of our organization. We are committed to talent development through training and promotion, which we believe will lead to the long-term continuity and tenure of our talented employees. We seek to hire people who not only have significant in-market experience and banking relationships, but also are proactive and behave and think like owners of the organization.

Strong Culture, Brand and Reputation in Our Attractive Market.   We have developed a reputation as an entrepreneurial, energetic, relationship-driven and technologically sophisticated bank in our market. The members of our management and banking teams have spent the vast majority of their careers as bankers in Florida. As a result of consolidation in the banking industry in Florida, we have been able to attract both clients and bankers who prefer a local, independent and agile platform to that of a more bureaucratic, regional financial institution. We believe that our strong culture, brand and market reputation have become and will remain a competitive advantage within our current and future markets and the core of our success in attracting and maintaining talented bankers and banking relationships. By capitalizing on the business and personal relationships of our management team and bankers and the increasing awareness of our capabilities and our brand, we believe that we are positioned for continued growth and increased profitability.

Growing Core Deposit Franchise.   Developing meaningful, primary deposit relationships with our clients is a key component of our growth strategy. We intend to continue to grow core deposits by cross-selling our products and services to our existing clients, benefitting from continued referrals generated from our current clients and from our bankers’ ability to generate banking relationships with new clients. We have an established incentive structure for our bankers to increase deposit relationships with our clients, generate fee income, and increase their outstanding loan portfolios, while maintaining strong credit quality. Our core deposits, which include all demand deposits, money market and savings accounts and time deposits under $250,000, but exclude all brokered deposits, represented approximately 94.5% of our total deposits as of September 30, 2019. As of September 30, 2019, our brokered deposits (classified based on regulatory reporting requirements) represented approximately 3.0% of our total deposits. Furthermore, our clients maintain significant noninterest-bearing deposits with us, which reduces our overall cost of funds. Noninterest-bearing deposits represented 22.8% of our total deposits as of September 30, 2019. Our strong deposit base serves as a major driver of our operating results, as we utilize our core deposit base primarily to fund our loan growth. Our total deposits grew from $209.4 million as of December 31, 2014 to

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$823.1 million as of September 30, 2019, for a CAGR of 33.4%, while our noninterest-bearing deposits grew from $47.4 million as of December 31, 2014 to $187.9 million as of September 30, 2019, for a CAGR of 33.6%. Noninterest-bearing deposits grew by approximately 59.0% annualized for the first nine months of 2019. We believe that our ability to grow core deposits is a distinguishing and valuable competitive advantage. Additionally, we believe our proposed acquisition of Marquis will provide additional opportunities for organic growth through our ability to offer our products and services to Marquis Bank’s clients.

Strong Credit Culture.   Our disciplined implementation of comprehensive policies and procedures for credit underwriting and administration has enabled us to maintain strong asset quality during our growth. Our total loans increased from $248.5 million as of December 31, 2015 to $771.9 million as of September 30, 2019, representing a CAGR of 35.3%. Over this period, we have experienced no cumulative net charge-offs. We manage the risk in the portfolio with what we believe to be prudent underwriting and proactive credit administration. Our credit philosophy is centered on maintaining a low basis in collateral, while avoiding concentrations of underlying collateral types that have demonstrated historical price volatility. We firmly believe this methodology leads to above average earnings durability and liquidity, as it is easier to liquidate low-leverage loans with easily understood underlying collateral. We employ the requirement of key-man insurance when appropriate, impose sensible debt and leverage covenants, and stress overall cash flow assumptions across the client’s business operations, to arrive at reasonable debt service and repayment assumptions. Our tiered underwriting structure includes progressive levels of individual loan authority, concurrent authority and committee approval. Our loan review function performs regular loan reviews and identifies early warning indicators to proactively monitor the loan portfolio. Pursuant to our credit policy, we undertake a comprehensive review of each borrower’s financial condition and capacity for repayment, a realistic assessment of collateral values, and assess other relevant risks in connection with each extension of credit. As part of our credit process, we analyze, among other things, current financial information on the borrower, guarantor (if any), and underlying collateral (if applicable based on loan type) to determine if such information supports our ultimate credit decision. For commercial real estate loans, we analyze operating cash flows and underlying collateral value, as well as the financial condition of the borrower’s applicable principals from whom we customarily request personal guaranties. For commercial loans, we analyze the borrower’s cash flows for both the underlying project and globally. For residential real estate loans, we analyze each borrower’s ability to repay as well as the value of the underlying collateral. For consumer loans, we obtain and review updated salary, credit history and cash flow information for the borrower. Current market and other conditions are also considered in our credit decisions. Following a comprehensive credit analysis, we determine the appropriate loan structure under the circumstances. For additional information regarding our credit policy and our policies and procedures thereunder, see “Management’s Discussion and Analysis and Analysis of Financial Condition and Results of Operations of Professional — Financial Condition — Loan Portfolio.” We intend to continue to emphasize and adhere to these procedures and controls as we grow our loan portfolio, which we believe have contributed to the absence of net charge-offs. From January 1, 2014, we have had cumulative charge-offs of  $14,000 and cumulative recoveries of  $27,000. Our nonperforming assets to total assets ratio was 0.49% and 0.00% as of September 30, 2019 and December 31, 2018, respectively, while our net charge-offs to average loans outstanding was 0.00% during the first nine months of 2019 and 0.00% from January 1, 2016 through December 31, 2018. Our weighted-average loan-to-value ratio for collateralized loans was 53.8% as of September 30, 2019.

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Gross Loans and Weighted LTV ($ in millions)

We expect that we will be able to continue our commitment to maintaining a strong credit culture with the combined institution following the closing of the proposed merger with Marquis. Based on our due diligence, we believe that Marquis shares a credit philosophy regarding credit that is similar and complementary to ours, such as Marquis’s focus on loan-to-value ratios, debt service coverage ratios, and practical and appropriate debt structures and covenants, among other things. This similarity is exhibited by, among other things, Marquis’s relatively low level of nonperforming assets, which represented 0.27% and 0.32% of MBI’s total assets as of September 30, 2019 and December 31, 2018, respectively, and net charge offs (recoveries) of  (0.01%) and 0.09% of average loans for the nine months ended as of September 30, 2019 and the year ended December 31, 2018, respectively.

Scalable Platform; Technology Innovation.   Since our inception, we have focused on establishing a strong and scalable banking platform to support our dynamic growth. Utilizing the substantial prior experience of our management team and employees, we believe that we have built a scalable corporate infrastructure, including technology and banking processes, capable of supporting future organic growth and acquisitions, such as our pending acquisition of Marquis, while improving our operational efficiencies. We believe that our strong capital and asset quality position will allow us to grow and that our scalable operating platform will allow us to manage that growth effectively, resulting in greater efficiency and improved profitability.

To capitalize on our scalable operating platform, we opened our Digital Innovation Center in Cleveland, Ohio in late October 2019, which is staffed by former employees of national banking institutions and global consulting firms with experience in banking technology and growth strategies. The technology team is focused on collaborating with leading-edge fintech firms, payment vendors, other financial firms and our core provider to develop, or integrate, best-in-class technology to improve our productivity, workflows, communication and efficiency, while enhancing our client experience and broadening our digital service offerings.

We believe our technological capabilities offer our clients a unique and convenient banking experience that many community banks of our size do not offer. For example, in 2019, the Bank released its first Apple Watch app, a P2P payment service, with immediate clearing capabilities that can be used with any other bank in the country. We plan to use our technology platform to create a comprehensive digital bank, including enabling the opening of online accounts through our website.

As we continue to expand and prepare for future technology needs, we have invested resources to meet the needs of an increasingly changing market where banking services are delivered digitally. We believe technology will be an important driver in maintaining and expanding client relationships in the future and will help us compete effectively for future loan and deposit growth.

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Our Market

The Miami-Dade MSA, which encompasses Miami-Dade, Broward, and Palm Beach counties, is among the most vibrant in the United States, characterized by a rapidly growing population, a high level of job growth, an affordable cost of living and a pro-growth business climate. The Miami-Dade MSA is one of the top MSAs in the Southeast as measured by both deposits and by population and is one of the largest business markets in Florida. According to S&P Global Market Intelligence estimates, Florida is the third most populous state in the United States and approximately 29% of the population of Florida resides in the Miami-Dade MSA. Florida continues to experience significant population and employment growth on a statewide basis, with the state’s population increasing from 12.9 million in 1990 to an estimated 21.8 million in 2020. Additionally, according to the Federal Reserve, Florida has the fourth largest contribution to gross domestic product (GDP) by state in the United States, equating to the 17th largest economy in the world. The Miami-Dade MSA has the 12th largest contribution to GDP by MSA in the United States according to the U.S. Bureau of Economic Analysis based on 2017 data, the most recent available. This continued growth of the Florida market, as well as the consolidation in the banking industry within the state provides us with exciting opportunities for growth.

A Leading Population Growth Center.   Based on the most recent estimate from the U.S. Census Bureau as of July 1, 2018, Florida is the third most populous state in the United States, behind only California and Texas, and its population is projected to grow by 6.6% from 2020 to 2025, according to S&P Global Market Intelligence estimates. The Miami-Dade MSA is the 7th largest metropolitan area in the nation by population as of July 1, 2018, based on data from the United States Census Bureau. Population in the market is projected to grow by 6.3% from 2020 to 2025, compared to 3.3% for the nation as a whole, according to S&P Global Market Intelligence estimates. We believe that changes in the federal tax code, including the limitation on state and local tax deductions, combined with the absence of a personal state income tax, has prompted people to migrate to the state. According to the U.S. Census Bureau, from July 1, 2017 to July 1, 2018, Florida had the highest level of net domestic migration of any state. The following table shows demographic information for our market and highlights Florida’s growth statistics compared to the United States as a whole.

Market Statistics

Market Area	Total Population 2020 (Estimated)		Change 2010 – 2020 (%)		Change 2020 – 2025 (%)		Median Household Income 2020 ($)		Projected Household Income Change 2020 – 2025 (%)		Unemployment Rate (%)
Miami-Dade County	​	2,834,352	​	13.5	​	6.3	​	53,537	​	12.1	​	3.9
Broward County	​	1,981,920	​	13.4	​	6.3	​	63,317	​	11.4	​	3.4
Palm Beach County	​	1,508,665	​	14.3	​	6.5	​	66,729	​	11.2	​	3.6
Miami-Dade MSA	​	6,324,937	​	13.7	​	6.3	​	60,197	​	11.5	​	3.5
Florida	​	21,794,397	​	15.9	​	6.6	​	58,586	​	11.6	​	3.3
United States	​	330,342,293	​	7.0	​	3.3	​	66,010	​	9.9	​	3.5

Source: S&P Global Market Intelligence & U.S. Bureau of Labor Statistics.

Attractive Business Climate Driving Robust Employment Growth.   The favorable business environment in Florida includes the business-friendly tax structure, no personal income tax and a reasonable cost of doing business. Florida serves as the corporate headquarters for nineteen Fortune 500 companies across various industries, and the Miami-Dade MSA specifically is home to eight Fortune 500 companies, including Office Depot, AutoNation and World Fuel Services. Other major companies with Latin American operations have established regional headquarters in the area as well, including American Airlines, Cannon, Cisco Systems, Hewlett-Packard, Hilton International, Microsoft, Nokia, Novartis, Visa International, and Western Union. STEM-related jobs (science, technology, engineering and mathematics) are also driving employment growth in the market. According to Business Facilities, the Miami-Dade MSA is tied for fifth nationally for growth in STEM jobs. Further, based on the most recent data (2018) from the International

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Trade Administration, the Miami-Dade MSA ranked ninth nationally among MSAs for export activity with approximately $35.7 billion in total exports, which accounted for approximately 66% of Florida’s goods exported in 2018. The Miami-Dade MSA is also home to over 40 higher education institutions serving over 300,000 students while also creating the need for numerous small to medium sized businesses to service the needs of the student population in the area.

Our primary clients are small to medium sized businesses, the owners and operators of these businesses, as well as other professionals, entrepreneurs, and high net worth individuals. Small to medium sized businesses are a vital part of the market we serve in Florida. In 2017, the Miami-Dade MSA was ranked number one on the Kauffman Index for Startup Activity. With approximately 2.5 million businesses that employ fewer than 500 people, representing approximately 99.8% of total businesses, Florida ranks third in the United States in the number of businesses employing fewer than 500 people, according to data from the U.S. Small Business Administration’s Office of Advocacy for 2018. The Miami-Dade MSA alone is considered home to over 80,000 small businesses with fewer than 100 employees.

We believe the Miami-Dade MSA is a desirable market for a wide range of industries. The following table shows the diversity of employment within Miami-Dade MSA.

Miami-Dade MSA Employment Industries

Source: U.S. Bureau of Labor Statistics.

Recent Developments

MBI Acquisition

On August 9, 2019, we entered into an Agreement and Plan of Merger, or merger agreement, with Marquis and its wholly owned subsidiary, Marquis Bank, a Florida state-chartered commercial bank, providing for the merger of Marquis with and into the Company and Marquis Bank with and into the Bank in an all-stock transaction, or merger, in which shareholders of Marquis will be entitled to receive 1.2048 shares of our Class A common stock for each share of Marquis common stock.

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We believe that the acquisition of Marquis will immediately enhance earnings and our operating efficiency while increasing our presence within our existing geographical footprint. Marquis Bank operates three full-service banking locations in Coral Gables, Aventura, and Fort Lauderdale, Florida, the first of which we anticipate will ultimately be consolidated with our existing Coral Gables branch.

As of September 30, 2019, Marquis had an aggregate of  $676.8 million of assets, $560.0 million of net loans, $577.9 million of total deposits and $56.4 million of total shareholders’ equity. At September 30, 2019, Marquis’s nonperforming assets (consisting of nonaccrual loans, troubled debt restructured loans, loans past due 90 days or more and still accruing interest and other real estate owned) were approximately $1.8 million, or 0.27% of total assets.

For the nine months ended September 30, 2019 and the year ended December 31, 2018, Marquis had earnings of  $5.5 million and $6.8 million, respectively. Marquis’s net interest margin for the nine months ended September 30, 2019 and year ended December 31, 2018 was 3.48% and 3.60%, respectively, its return on average equity was 13.53% and 14.38%, respectively, and its return on average assets was 1.11% and 1.13%, respectively. Marquis’s efficiency ratio for the nine months ended September 30, 2019 and the year ended December 31, 2018 was 56.9% and 55.0%, respectively. Due to the anticipated consolidation of Marquis Bank’s locations with ours along with other efficiencies, we expect that we will be able to achieve cost savings of approximately $5.0 million by the end of 2020 as a result of the merger, primarily due to an expected decrease in Marquis’s estimated salary and benefits expense of approximately $3.2 million, as well as an estimated savings of  $0.6 million of Marquis’s estimated amount non interest expense due to an expected decrease in Marquis’s director compensation and stock option expense. Marquis’s noninterest expense was $10.1 million and $12.3 million for the nine months ended September 30, 2019 and December 31, 2018, respectively.

Pursuant to the merger agreement, each of the 3,419,188 shares of Marquis’s common stock outstanding, other than shares with respect to which appraisal rights may be properly exercised, will be converted into the right to receive 1.2048 shares of our Class A common stock, with cash paid in lieu of any fractional shares. If the merger had been completed as of September 30, 2019, we expect that we would have issued approximately 4,119,438 shares of Class A common stock and no shares of our Class B common stock, assuming none of the Marquis shareholders exercised appraisal rights. In addition, all Marquis stock options granted and outstanding prior to the closing of the merger will be converted into an option to purchase shares of our Class A common stock based on the exchange ratio. In that event, former shareholders and optionholders of Marquis would own approximately 47.1% of our fully diluted shares outstanding after the consummation of the merger.

The merger is subject to conditions to closing, including the receipt of all required regulatory approvals the receipt of shareholder approval by both our shareholders and Marquis’s shareholders, the closing of our initial public offering, the filing and effectiveness of a registration statement on Form S-4 with respect to the shares of our Class A common stock to be issued in the merger, in which a joint proxy statement relating to the meetings of the shareholders of Marquis and our shareholders will be included, and other customary closing conditions. We received regulatory approval for the proposed merger from the Board of Governors of the Federal Reserve System and the Florida Office of Financial Regulation on November 12, 2019 and December 10, 2019, respectively. Substantially all of our directors and certain of Marquis’s directors have entered into voting agreements, covering approximately 35.2% of Marquis’s outstanding common stock as of September 30, 2019, pursuant to which each has agreed, subject to limited exceptions, to vote all of their shares of Marquis common stock and our Class A common stock over which they have voting power in favor of the merger. Certain non-employee directors of Marquis also entered into noncompetition and nondisclosure agreements, which generally restrict these non-employee directors from disclosing confidential information and undertaking activities competitive with those of the combined institution within Miami-Dade and Broward counties for a period of two years after the closing of the merger. If the conditions are not satisfied or waived, the merger will not occur or will be delayed and we may lose some or all of the intended benefits of the merger.

For additional discussion of the pending acquisition and for pro forma financial information related to the acquisition, see the sections of this joint proxy statement/prospectus captioned “Business of Professional —  Recent Developments” and “Unaudited Pro Forma Combined Condensed Financial Information.”

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Share Repurchase

On September 5, 2019, we repurchased 200,000 shares of our Class A common stock at a price of $17.50 per share, for an aggregate purchase price of  $3,500,000 from one of our largest shareholders, De Linea CV. This repurchase was a result of an unsolicited offer by De Linea CV to us to repurchase these shares. Under the terms of the merger agreement with Marquis, we were required to obtain Marquis’s consent to consummate this repurchase, which we obtained. De Linea CV entered into a lock-up agreement in connection with our initial public offering under which it agreed not to sell or otherwise transfer its remaining shares for a period of 180 days after the completion of our initial public offering, subject to certain limited exceptions, without the prior written approval of the representatives on behalf of the underwriters.

Professional Holding Corp. Secured Revolving Line of Credit

On December 19, 2019, we entered into a new $10.0 million secured revolving line of credit with Valley National Bank, N.A. Amounts drawn under this line of credit will bear interest at the Prime Rate, as announced by The Wall Street Journal from time to time as its prime rate, and our obligations under this line of credit are secured by all of the issued and outstanding shares of capital stock of Professional Bank, which we have pledged as security. Outstanding principal and interest under the line of credit is payable at maturity on December 19, 2020. As of December 31, 2019, approximately $10.0 million was drawn under this line of credit, the proceeds of which were primarily used to provide additional capital to Professional Bank to support continued growth and also to cover expenses incurred in connection with entering into the line of credit. We expect to use a portion of the net proceeds from our initial public offering to repay all or a portion of the outstanding principal and accrued interest under this line of credit.

Government Regulation

We must comply with state and federal banking laws and regulations that control virtually all aspects of our operations. These laws and regulations generally aim to protect our depositors, not necessarily our shareholders or our creditors. Any changes in applicable laws or regulations may materially affect our business and prospects. Proposed legislative or regulatory changes may also affect our operations. Please refer to “Supervision and Regulation” for a summary of some of the laws and regulations to which we are subject. Also note that references to applicable statutes and regulations are brief summaries, do not purport to be complete, and are qualified in their entirety by reference to such statutes and regulations.

Employees

As of September 30, 2019 we had 135 employees, all located in the United States. None of our employees are represented by a labor union or covered by a collective bargaining agreement. We consider our relationship with our employees to be good.

Facilities

Our headquarters is located in Coral Gables, Florida. We operate through four additional full-service bank branches located in South Miami, Miami, Palm Beach Gardens, and Boca Raton. We also have loan production offices located in Doral, Fort Lauderdale, Wellington and West Palm Beach. We lease each of our locations and believe that the leases are generally on terms consistent with prevailing market terms. The following table summarizes the details of our branch and loan production office locations.

Location	Street Address	City & State
Bank Branches	​	​
Coral Gables	396 Alhambra Circle, Suite 150	Coral Gables, FL
South Miami	1518 San Ignacio Avenue	Coral Gables, FL
Palm Beach Gardens	5100 PGA Boulevard, Suite 101	Palm Beach Gardens, FL
Boca Raton	980 N. Federal Highway, Suite 100	Boca Raton, FL
Dadeland	9150 South Dadeland Boulevard, Suite 104	Miami, FL

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Location	Street Address	City & State
Loan Production Offices	​	​
Doral	9690 NW 41 Street, Unit 1	Doral, FL
Fort Lauderdale	888 East Las Olas Boulevard, Suite 201	Fort Lauderdale, FL
West Palm Beach	625 North Flagler Drive, Suite 509	West Palm Beach, FL
Wellington	12008 South Shore Blvd, #108	Wellington, FL

Legal Proceedings

We are not currently subject to any material legal proceedings. We are from time to time subject to claims and litigation arising in the ordinary course of business. These claims and litigation may include, among other things, allegations of violation of banking and other applicable regulations, competition law, labor laws and consumer protection laws, as well as claims or litigation relating to intellectual property, securities, breach of contract and tort. We intend to defend ourselves vigorously against any pending or future claims and litigation.

At this time, in the opinion of management, the likelihood is remote that the impact of such proceedings, either individually or in the aggregate, would have a material adverse effect on our combined results of operations, financial condition or cash flows. However, one or more unfavorable outcomes in any claim or litigation against us could have a material adverse effect for the period in which they are resolved. In addition, regardless of their merits or their ultimate outcomes, such matters are costly, divert management’s attention and may materially adversely affect our reputation, even if resolved in our favor.

Seasonality

We do not believe our business to be seasonal in nature.

JOBS Act

We qualify as an “emerging growth company” pursuant to the provisions of the JOBS Act. For as long as we are an “emerging growth company,” we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, an extended transition period for complying with new or revised accounting standards affecting public companies, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, reduced disclosure obligations relating to the presentation of financial statements in Management’s Discussion and Analysis of Financial Condition and Results of Operations, exemptions from the requirements of holding advisory “say-on-pay” votes on executive compensation and shareholder advisory votes on golden parachute compensation. We have availed ourselves of the reduced reporting obligations in this joint proxy statement/​prospectus, and expect to continue to avail ourselves of the reduced reporting obligations available to “emerging growth companies” in future filings with the SEC.

Our Corporate Information

Our principal executive offices are located at 396 Alhambra Circle, Suite 255, Coral Gables, Florida 33134, and our telephone number is (786) 483-1757. Our website is www.myprobank.com. The information contained on or accessible from our website does not constitute a part of this joint proxy statement/prospectus and is not incorporated by reference herein.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS OF PROFESSIONAL

Unless the context requires otherwise, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Professional” section of this joint proxy statement/​prospectus to the “Company,” “we,” “us,” or “our” refer to Professional and its wholly owned subsidiaries on a consolidated basis, and references to the “Bank” refer to Professional Bank.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the accompanying notes and other financial information appearing elsewhere in this joint proxy statement/prospectus. To the extent that this discussion describes prior performance, the descriptions relate only to the periods listed, which may not be indicative of our future financial outcomes. In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ materially from management’s expectations. Factors that could cause such differences include, but are not limited to, those identified below, and those described in the sections titled “Cautionary Note Regarding Forward-Looking Information” and “Risk Factors” of this joint proxy statement/prospectus.

Overview

This section presents our financial condition and results of operations on a consolidated basis. However, we conduct all of our material business operations through our wholly owned bank subsidiary, Professional Bank, which we refer to as the Bank, and the discussion and analysis that follows primarily relates to activities conducted by the Bank. We currently conduct operations through our headquarters in Coral Gables, Florida, and our four other branches and four loan production offices located throughout South Florida. For more information about our business, see “Business of Professional.”

Our principal business is lending to and accepting deposits from small to medium sized businesses, the owners and operators of these businesses, as well as other professionals, entrepreneurs and high net worth individuals. We generate the majority of our revenue from interest earned on loans, investments and other interest earning assets, such as federal funds sold and interest earning deposits with other institutions; loan and deposit fees and service charges; and fees relating to the sale of mortgage loans, swap referrals and SBA loan originations. We incur interest expense on deposits and other borrowed funds, as well as operating expenses, such as salaries and employee benefits and occupancy expenses. For further information about our business, see “Business of Professional.”

Our management’s discussion and analysis is intended to provide the reader with information that will assist in understanding our business, results of operations, financial condition and financial statements; changes in certain key items in our financial statements from period to period; and the primary factors that we believe impact our financial results.

2019 Highlights

Highlights of our performance and financial condition as of and for the nine months ended September 30, 2019 and other key events that have occurred during 2019 are provided below. For highlights of our performance and financial condition as of and for the three and 12-month periods ended December 31, 2019 and 2018, see “Summary — Recent Financial Developments.”

Results of Operations

•

Net income of  $1.3 million, which represented an increase of  $28 thousand, or 2.1%, compared to the same period in 2018.

•

Net interest income of  $20.6 million, which represented an increase of  $5.0 million, or 32.0%, compared to the same period in 2018. This increase was primarily due to loan growth and slightly increased yields on loans, partially offset by an increase in total deposits, as well as increased rates paid on deposit products.

•

Provision for loan losses was $0.8 million, which represented a decrease of approximately $28 thousand, or 3.5%, compared to the same period in 2018.

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•

Noninterest income totaled $2.1 million, which represented an increase of  $0.8 million, or 61.4%, compared to the same period in 2018. This increase was primarily due to increased swap referral fees.

•

Noninterest expense of  $20.1 million, which represented an increase of  $5.9 million, or 41.4%, compared to the same period in 2018. This increase was primarily due to increased employee headcount, opening additional bank locations and preparations to open our Digital Innovation Center.

Financial Condition

•

Total assets increased to $963.2 million, which represented an increase of  $233.6 million, or 32.0%, compared to December 31, 2018. This increase was largely attributable to net loan growth of  $163.2 million.

•

Net loans increased to $764.7 million, an increase of  $163.2 million, or 27.1%, compared to December 31, 2018. We experienced growth across all loan categories, with the largest growth experienced in commercial real estate, residential, and construction and development.

•

Nonperforming assets totaled $4.7 million, which includes two loans being classified as nonperforming as well as two accruing loans over 90 days past due. There were no nonperforming assets as of December 31, 2018.

•

As of September 30, 2019, we were well-capitalized, with a total risk-based capital ratio of 12.5%, a tier 1 risk-based capital ratio of 11.5%, a common equity tier 1 capital ratio of 11.5%, and a leverage ratio of 8.4%. As of September 30, 2019, all of our regulatory capital ratios exceeded the thresholds to be well-capitalized under the applicable bank regulatory requirements.

Other Highlights

•

In January 2019, we hired a private banking team from a large South Florida-based bank to establish our Doral, FL loan production office, which opened in July 2019.

•

In May 2019, we converted our Boca Raton, FL loan production office into a full-service branch and we opened our fifth branch in Miami, FL (Dadeland).

•

In May 2019, we hired the former president of a South Florida-based community bank and a banking team from a large national bank to establish our Wellington, FL loan production office, which opened in July 2019.

•

In August 2019, we entered into a merger agreement to acquire Marquis Bancorp, Inc. and its wholly owned subsidiary, Marquis Bank, for shares of our Class A common stock.

•

In October 2019, we opened our Digital Innovation Center in Cleveland, OH.

•

On November 12, 2019 and December 10, 2019 we received approval for our planned merger with MBI from the Board of Governors of the Federal Reserve System and the Florida Office of Financial Regulation, respectively.

The Merger

On August 9, 2019, we entered into a definitive merger agreement to acquire Marquis and its wholly owned subsidiary, Marquis Bank, headquartered in Coral Gables, Florida. The acquisition of Marquis Bank will add three branches to our Miami-Dade MSA footprint, and on a pro forma basis would make us the 12th largest independent community bank based in Florida and the fourth largest independent community bank based in South Florida. Pursuant to the merger agreement, each share of Marquis common stock outstanding, other than shares with respect to which appraisal rights have been properly exercised, will be converted into the right to receive 1.2048 shares of our Class A common stock, with cash paid in lieu of any fractional shares. If the merger had been completed on September 30, 2019, we expect that we would have issued approximately 4,119,438 shares of our Class A common stock, assuming none of the Marquis shareholders exercised appraisal rights. In addition, all stock options of Marquis granted and

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outstanding prior to the merger will be converted into an option to purchase shares of Class A common stock based on the exchange ratio. Upon completion of this acquisition, which is subject to several customary closing conditions, including, among others, regulatory approval, both companies’ shareholder approvals, the closing of our initial public offering, and the filing of an effective registration statement on Form S-4 with respect to the shares of our Class A common stock to be issued in the merger, the pro forma combined institution is expected to have approximately $1.6 billion in total assets, excluding purchase accounting adjustments, total net loans of  $1.3 billion and total deposits of  $1.4 billion as of September 30, 2019, excluding purchase accounting adjustments. We received approval for the merger from the Federal Reserve and Florida Office of Financial Regulation on November 12, 2019 and December 10, 2019, respectively, and expect to consummate the acquisition in the first half of 2020.

Marquis Bancorp Inc.’s Financial Condition and Results of Operations.   As of September 30, 2019, MBI had total assets of  $676.8 million, net loans of  $560.0 million, total deposits of  $577.9 million and $56.4 million of shareholders’ equity. At September 30, 2019, Marquis’s nonperforming assets (consisting of nonaccrual loans, troubled debt restructured loans, loans past due 90 days or more and still accruing interest and other real estate owned) were approximately $1.8 million, or 0.27% of total assets.

For the nine months ended September 30, 2018 and the year ended December 31, 2018, Marquis had net income of  $5.5 million and $6.8 million, respectively. Marquis’s net interest margin for the nine months ended September 30, 2019 and year ended December 31, 2018 were 3.48% and 3.60%, respectively, and its return on average equity was 13.53% (annualized) and 14.38%, respectively. Its efficiency ratio for the nine months ended September 30, 2019 and the year ended December 31, 2018 was 56.88% and 54.97%, respectively.

At September 30, 2019, the Marquis loan portfolio consisted primarily of commercial real estate loans, residential real estate loans, commercial loans, and construction and development loans, as set forth below.

​	September 30, 2019
(Dollars in thousands)	Amount			Percent
Commercial real estate	​	$	404,087	​	71.4%
Residential real estate	​	​	64,985	​	11.5%
Commercial	​	​	72,902	​	12.9%
Construction and development	​	​	18,713	​	3.3%
Consumer and other loans	​	​	4,882	​	0.9%
Total loans	​	$	565,569	​	100.0%

Rationale for the Merger.   We believe our proposed acquisition of Marquis will support our current business and allow us to expand our presence in our existing market. Marquis’s operations will enhance our existing operations and enable us to add lenders and banking services in our existing market. We expect that our high-end service, technology platform and wide range of products and services will allow us to enhance relationships with Marquis’s existing clients, as well as expanding our platform for generating new relationships.

We believe a number of factors will position us for significant improvements in growth and earnings within Marquis’s franchise by:

•

enabling us to achieve operational efficiencies and potential cost savings through consolidating and integrating Marquis’s operations into our existing operations;

•

enhancing our ability to grow organically through offering our products and services to former Marquis clients;

•

the senior management and staff of Marquis will add important skills to the combined organization;

•

the combined institution will benefit from increased credit portfolio diversity and increased lending capacity;

148

•

provides an attractive opportunity to expand our market presence in Miami-Dade and Broward counties, which is within our existing market footprint;

•

our expectation that an “in-market” acquisition will result in greater client retention and smoother integration;

•

the merger is expected to accelerate our growth strategy and profitability targets; and

•

the complementary fit of Marquis’s business with ours, which our management believes will enable the combined institution to deliver improved services to clients to achieve stronger financial performance and enhance shareholder value.

As a result of the merger, we believe that we will be able to efficiently integrate Marquis’s operations, expand its business opportunities and enhance our profitability. We believe that other opportunities for strategic acquisitions exist in the State of Florida, both within and without our current market.

Results of Professional Holding Corp.’s Operations for the Nine Months Ended September 30, 2019 and 2018

Net Income

The following table sets forth the principal components of net income for the periods indicated.

​	Nine Months Ended September 30,
(Dollars in thousands)	2019			2018			Change
Interest income	​	$	28,600	​	$	19,442	​	47.1%
Interest expense	​	​	7,995	​	​	3,835	​	108.5%
Net Interest income	​	​	20,605	​	​	15,607	​	32.0%
Provision for loan losses	​	​	762	​	​	790	​	(3.5)%
Net interest income after provision	​	​	19,843	​	​	14,817	​	33.9%
Noninterest income	​	​	2,127	​	​	1,318	​	61.4%
Noninterest expense	​	​	20,088	​	​	14,206	​	41.4%
Income before income taxes	​	​	1,882	​	​	1,929	​	(2.4)%
Income tax expense	​	​	534	​	​	609	​	(12.3)%
Net income	​	$	1,348	​	$	1,320	​	2.1%

Net income for the nine months ended September 30, 2019 was $1.3 million, an increase of $28 thousand, or 2.1%, from net income for the nine months ended September 30, 2018 of  $1.3 million. Interest income increased $9.2 million while interest expense increased $4.2 million, resulting in a net interest income increase of  $5.0 million for the nine months ended September 30, 2019 compared to the same period in the prior year. The increase in our interest income was primarily due to growth and increased yield in our loan portfolio. Provision for loan losses decreased by $28 thousand for the nine months ended September 30, 2019 compared to the same period in the prior year due to the reclassification of unfunded provision reserves. Noninterest income increased $0.8 million and noninterest expense increased $5.9 million for the nine months ended September 30, 2019 compared to the same period in the prior year. The increase in noninterest expense for the nine months ended September 30, 2019 compared to the same period in the prior year was primarily a result of increased employee headcount, opening additional banking locations and opening our Digital Innovation Center in Cleveland, Ohio.

Net Interest Income and Net Interest Margin Analysis

We analyze our ability to maximize income generated from interest earning assets and control the interest expenses of our liabilities, measured as net interest income, through our net interest margin and net interest spread. Net interest income is the difference between the interest and fees earned on interest earning assets, such as loans and securities, and the interest expense paid on interest bearing liabilities, such as

149

deposits and borrowings, which are used to fund those assets. Net interest margin is a ratio calculated as annualized net interest income divided by average interest earning assets for the same period. Net interest spread is the difference between average interest rates earned on interest earning assets and average interest rates paid on interest-bearing liabilities.

Changes in market interest rates and the interest rates we earn on interest earning assets or pay on interest-bearing liabilities, as well as in the volume and types of interest earning assets, interest bearing and noninterest-bearing liabilities and shareholders’ equity, are usually the largest drivers of periodic changes in net interest income, net interest margin and net interest spread. Fluctuations in market interest rates are driven by many factors, including governmental monetary policies, inflation, deflation, macroeconomic developments, changes in unemployment rates, the money supply, political and international conditions and conditions in domestic and foreign financial markets. Periodic changes in the volume and types of loans in our loan portfolio are affected by, among other factors, the economic and competitive conditions in the Miami-Dade MSA, as well as developments affecting the real estate, technology, government services, hospitality and tourism and financial services sectors within the Miami-Dade MSA. Our ability to respond to changes in these factors by using effective asset-liability management techniques is critical to maintaining the stability of our net interest income and net interest margin as our primary sources of earnings.

The following table shows the average outstanding balance of each principal category of our assets, liabilities and shareholders’ equity, together with the average yields on our assets and the average costs of our 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 same period.

​

For the Nine Months Ended September 30,

​

2019

2018

(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-bearing deposits

​

$

64,727

​

$

1,131

​

2.33%

​

$

35,180

​

$

510

​

1.93%

Federal funds sold

​

​

24,487

​

​

459

​

2.50%

​

​

20,495

​

​

284

​

1.85%

Federal Reserve Bank stock, FHLB stock and other corporate stock

​

​

4,196

​

​

200

​

6.36%

​

​

3,086

​

​

155

​

6.70%

Investment securities

​

​

28,182

​

​

521

​

2.46%

​

​

25,051

​

​

478

​

2.54%

Loans(1)

​

​

678,571

​

​

26,289

​

5.17%

​

​

496,416

​

​

18,015

​

4.84%

Total interest earning assets

​

​

800,163

​

​

28,600

​

4.77%

​

​

580,228

​

​

19,442

​

4.47%

Noninterest earning assets

​

​

44,988

​

​

​

​

​

​

​

32,315

​

​

​

​

​

Total assets

​

​

845,151

​

​

​

​

​

​

​

612,543

​

​

​

​

​

Liabilities and shareholders’ equity

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Interest-bearing liabilities

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Interest-bearing deposits

​

​

547,245

​

​

7,200

​

1.75%

​

​

394,080

​

​

3,332

​

1.13%

Borrowed funds

​

​

45,058

​

​

795

​

2.35%

​

​

32,930

​

​

503

​

2.04%

Total interest-bearing liabilities

​

​

592,303

​

​

7,995

​

1.80%

​

​

427,010

​

​

3,835

​

1.20%

Noninterest-bearing liabilities

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Noninterest-bearing deposits

​

​

163,513

​

​

​

​

​

​

​

123,703

​

​

​

​

​

Other noninterest-bearing liabilities

​

​

9,545

​

​

​

​

​

​

​

3,841

​

​

​

​

​

Shareholders’ equity

​

​

79,790

​

​

​

​

​

​

​

57,989

​

​

​

​

​

Total liabilities and shareholders’ equity

​

$

845,151

​

​

​

​

​

​

$

612,543

​

​

​

​

​

Net interest spread(2)

​

​

​

​

​

​

​

2.97%

​

​

​

​

​

​

​

3.27%

Net interest income

​

​

​

​

$

20,605

​

​

​

​

​

​

$

15,607

​

​

Net interest margin(3)

​

​

​

​

​

​

​

3.43%

​

​

​

​

​

​

​

3.59%

(1)

Includes nonaccrual loans

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(2)

Net interest spread is the difference between interest rates earned on interest earning assets and interest rates 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  $583 and $329 for the nine months ended September 30, 2019 and 2018, respectively.

The following table presents information regarding the dollar amount of changes in interest income and interest expense for the periods indicated for each major component of interest earning assets and interest-bearing liabilities and distinguishes between the changes attributable to changes in volume and changes attributable to changes in interest rates. For purposes of this table, changes attributable to both rate and volume that cannot be segregated have been proportionately allocated to both volume and rate.

​	For the Nine Months Ended September 30, 2019 Compared to 2018
​	Change Due To						​
(Dollars in thousands)	Volume			Rate			Total
Interest income	​	​	​	​	​	​	​	​	​
Interest-bearing deposits	​	$	428	​	$	193	​	$	621
Federal funds sold	​	​	55	​	​	120	​	​	175
Federal Reserve Bank stock, Federal Home Loan Bank stock and other corporate stock	​	​	56	​	​	(11)	​	​	45
Investment securities	​	​	59	​	​	(16)	​	​	43
Loans	​	​	6,625	​	​	1,649	​	​	8,274
Total	​	$	7,224	​	$	1,934	​	$	9,158
Interest expense	​	​	​	​	​	​	​	​	​
Interest-bearing deposits	​	​	1,226	​	​	2,642	​	​	3,868
Borrowed funds	​	​	185	​	​	107	​	​	292
Total	​	$	1,411	​	$	2,749	​	$	4,160

Net interest income increased by $5.0 million to $20.6 million for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018. Our total interest income was impacted by an increase in interest earning assets, primarily due to organic growth in our loan portfolio, and two market rate increases between September 30, 2018 and September 30, 2019 due to increases in the federal funds target interest rate by the Federal Reserve. Average total interest earning assets were $800.2 million for the first nine months of 2019 compared with $580.2 million for the first nine months of 2018. The annualized yield on those interest earning assets increased 30 basis points from 4.47% for the first nine months of 2018 to 4.77% for the first nine months of 2019. However, due to the recent reduction in the federal funds target interest rate by the Federal Reserve in the second half of 2019, we expect our yield on interest earning assets to decline during the last quarter of 2019, which we expect will be partially offset by lower interest expense on our interest-bearing deposits. The increase in the average balance of interest earning assets was driven almost entirely by organic growth in our loan portfolio of  $177.1 million, representing an increase of 30.1%, to $764.7 million for the nine months ended September 30, 2019 compared to $587.6 million for the nine months ended September 30, 2018.

Average interest-bearing liabilities increased by $165.3 million, or 38.7%, from $427.0 million for the nine months ended September 30, 2018 to $592.3 million for the nine months ended September 30, 2019. The increase was primarily due to a $153.2 million increase in the average balance of interest-bearing deposits, or 38.9%. The increase in the average balance of interest-bearing deposits was primarily due to increases in certificates of deposit and money market accounts for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018, and, to a lesser extent, negotiable order of withdrawal accounts, or NOW accounts. The annualized average interest rate paid on average interest-bearing liabilities increased to 1.80% for the first nine months of 2019 compared to 1.20% for the

151

first nine months of 2018, while the annualized average interest rate paid on interest-bearing deposits increased 62 basis points to 1.75% and the annualized average interest rate paid on borrowed funds increased by 31 basis points to 2.35%. The increases in annualized average interest rates primarily reflected an increase in market interest rates due to increases in the federal funds target interest rate during the first half of 2019, partially offset by rate cuts during the third quarter of 2019. For the first nine months of 2019, our average other noninterest-bearing liabilities increased $5.7 million, or 148.5%, to $9.5 million from $3.8 million during the first nine months of 2018. Average noninterest-bearing deposits also increased $39.8 million, or 32.2%, from $123.7 million to $163.5 million for the same periods. For the first nine months of 2019, our annualized net interest margin was 3.43% and net interest spread was 2.97%. For the first nine months of 2018, annualized net interest margin was 3.59% and net interest spread was 3.27%. Our net interest margin was adversely affected by 0.16% during the first nine months of 2019, compared to the same period in 2018 because rates paid on our interest-bearing deposits, our primary funding source, increased faster than loan yields, which were adversely impacted due to falling yields on 10-year treasury notes, which significantly influences how banks price mortgage and other types of loans, as well as increasing competitive pricing pressures in the loan market. As a result of the recent reduction in the federal funds target interest rate as well as continued declines in the 10-year treasury yield, average rates earned on interest earning assets and average rates paid on our interest-bearing deposits both generally declined during the third quarter of 2019 compared to the first half of 2019.

Provision for Loan Losses

The provision for loan losses is a charge to income in order to bring our allowance for loan losses to a level deemed appropriate by management. For a description of the factors taken into account by our management in determining the allowance for loan losses see “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Professional — Allowance for Loan Losses.” Our provision for loan losses amounted to $0.76 million for the first nine months of 2019 and $0.79 million for the first nine months of 2018, the decrease was due to the reclassification of allowance to our unfunded commitments reserve. Our allowance for loan losses as a percentage of total loans was 0.84% at September 30, 2019 compared to 0.90% at September 30, 2018. We did not record any net charge-offs for the nine month periods ended September 30, 2019 or September 30, 2018.

Noninterest Income

Our 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. Noninterest income does not include loan origination fees to the extent they exceed the direct loan origination costs, which are generally recognized over the life of the related loan as an adjustment to yield using the interest method. The following table presents the major categories of noninterest income for the periods indicated.

​	Nine Months Ended September 30,
(Dollars in thousands)	2019			2018			Increase (Decrease)
Noninterest income	​	​	​	​	​	​	​	​
Deposit account service charges	​	$	542	​	$	437	​	24.0%
Mortgage banking revenue	​	​	201	​	​	144	​	39.6%
Gain (loss) on sale of securities	​	​	3	​	​	—	​	N/A
Swap referral fees	​	​	802	​	​	19	​	4,121.1%
SBA loan origination fees	​	​	79	​	​	296	(73.3)%
Other fees and charges	​	​	500	​	​	422	18.5%
Total noninterest income	​	$	2,127	​	$	1,318	​	61.4%

Noninterest income for the nine months ended September 30, 2019 was $2.1 million, a $0.8 million or 61.4% increase compared to noninterest income of  $1.3 million for the nine months ended September 30, 2018. The increase was primarily due to an increase in swap referral fees, of  $0.8 million, or 4,121.1%, during the first nine months of 2019 compared to $19,000 for the first nine months of 2018. We also

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experienced a slight increase in deposit account service charge fees, primarily due to organic deposit growth. The increases were partially offset by a decrease in SBA loan origination fees of  $0.2 million, or 73.3%, during the 2019 period compared to the 2018 period, which was primarily due to a decrease in loan demand during the first nine months of 2019 compared to 2018.

Noninterest Expense

Generally, noninterest expense is composed of all employee expenses and costs associated with operating our facilities, obtaining and retaining client relationships and providing banking services. The largest component of noninterest expense is salaries and employee benefits. Noninterest expense also includes operational expenses, such as occupancy and equipment expenses, professional fees, data processing expenses, advertising expenses, loan processing expenses and other general and administrative expenses, including FDIC assessments, communications, travel, meals, training, supplies and postage. The following table presents the major categories of noninterest expense for the periods indicated.

​	Nine Months Ended September 30,
(Dollars in thousands)	2019			2018			Increase (Decrease)
Noninterest expense	​	​	​	​	​	​	​	​
Salaries and employee benefits	​	$	13,534	​	$	9,331	​	45.0%
Occupancy and equipment	​	​	1,824	​	​	1,400	​	30.3%
Professional services	​	​	1,106	​	​	400	​	176.5%
Data processing	​	​	489	​	​	466	​	4.9%
Marketing	​	​	400	​	​	279	​	43.4%
Other	​	​	2,735	​	​	2,330	​	17.4%
Total noninterest expense	​	$	20,088	​	$	14,206	​	41.4%

Noninterest expense amounted to $20.1 million for the nine months ended September 30, 2019, an increase of  $5.9 million, or 41.4%, compared to $14.2 million for the nine months ended September 30, 2018. The increase was primarily due to an increase in salaries and benefits, from increased employee headcount and, to a lesser extent, increases in occupancy and equipment expense and professional services expense due to expansion of our branch and loan production office locations and opening our Digital Innovation Center in Cleveland, Ohio. Noninterest expense was also impacted by additional expenses in connection with our proposed acquisition of MBI and our initial public offering.

Income Tax Expense

Income tax expense was $0.5 million for the first nine months of 2019 compared to $0.6 million for the first nine months of 2018. Our effective tax rates for those periods were 28.4% and 31.6%, respectively.

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Results of Operations for the Years Ended December 31, 2018, 2017, and 2016

Net Income

The following table sets forth the principal components of net income for the periods indicated.

​	Years Ended December 31,								Years Ended December 31,
(Dollars in thousands)	2018			2017			Change		2017			2016			Change
Interest income	​	$	27,750	​	$	18,857	​	47.2%	​	$	18,857	​	$	14,265	​	32.2%
Interest expense	​	​	5,837	​	​	2,869	​	103.5%	​	​	2,869	​	​	2,122	​	35.2%
Net Interest income	​	​	21,913	​	​	15,988	​	37.1%	​	​	15,988	​	​	12,143	​	31.7%
Provision for loan losses	​	​	1,150	​	​	991	​	16.0%	​	​	991	​	​	1,065	​	(6.9)%
Net interest income after provision	​	​	20,763	​	​	14,997	​	38.4%	​	​	14,997	​	​	11,078	​	35.4%
Noninterest income	​	​	1,874	​	​	1,786	​	4.9%	​	​	1,786	​	​	1,369	​	30.5%
Noninterest expense	​	​	19,862	​	​	13,125	​	51.3%	​	​	13,125	​	​	10,573	​	24.1%
Income before income taxes	​	​	2,775	​	​	3,658	​	(24.1)%	​	​	3,658	​	​	1,874	​	95.2%
Income tax expense	​	​	669	​	​	1,844	​	(63.7)%	​	​	1,844	​	​	743	​	148.2%
Net income	​	$	2,106	​	$	1,814	​	16.1%	​	$	1,814	​	$	1,131	​	60.4%

Year ended December 31, 2018 compared to year ended December 31, 2017

Net income for the year ended December 31, 2018 was $2.1 million, an increase of  $0.3 million, or 16.1%, from net income for the year ended December 31, 2017 of  $1.8 million. This increase was due to an increase in interest income primarily related to growth in our loan portfolio and rising interest rates, which improved loan yields. This increase in interest income was partially offset by a $3.0 million increase in interest expense due to deposit growth and increased rates paid on our deposit products, as well as a $6.7 million increase in noninterest expense related to increased employee headcount, an increase in banking locations and additional salary and benefits expense in preparation to open our Digital Innovation Center. The $0.1 million increase in noninterest income was primarily due to increased mortgage banking revenues and increased account fees and service charges, partially offset by a reduction in SBA origination fees and other fees and charges. Income tax expense decreased $1.2 million for the year ended December 31, 2018 compared to the year ended December 31, 2017 due to the enactment of the Tax Act in December 2017, which reduced the corporate income tax rate. We also recognized a one-time charge in 2017 of approximately $0.7 million as a result of the revaluation of our deferred tax asset due to the change in the corporate tax rate.

Year ended December 31, 2017 compared to year ended December 31, 2016

Net income for the year ended December 31, 2017 increased $0.7 million, or 60.4%, to $1.8 million compared to $1.1 million for the year ended December 31, 2016. This increase was primarily driven by continued loan growth and an increase in noninterest income. Interest income increased $4.6 million and interest expense increased $0.7 million resulting in an increase to net interest income of  $3.9 million, or 31.7%, for the year ended December 31, 2017 as loan yields outpaced increases to rates paid on our deposit products. Noninterest income increased $0.4 million and noninterest expense increased $2.6 million. Noninterest income increased approximately $0.4 million, or 30.5%, primarily due to a $0.3 million increase in SBA origination fees, partially offset by a $0.1 million reduction in mortgage banking revenue. The increase in noninterest expense was primarily attributable to increased employee headcount and the opening of additional banking locations. Income tax expense increased $1.1 million for the year ended December 31, 2017 compared to the year ended December 31, 2016, primarily as a result of the one-time charge in 2017 of approximately $0.7 million as a result of the revaluation of our deferred tax asset due to the change in the corporate tax rates.

Net Interest Income and Net Interest Margin Analysis

The following table shows the average outstanding balance of each principal category of our assets, liabilities and shareholders’ equity, together with the average yields on our assets and the average costs of

154

our liabilities for the periods indicated. Such yields and costs are calculated by dividing income or expense by the average daily balances of the corresponding assets or liabilities for the same period.

​

For the Years Ended December 31,

​

2018

2017

2016

(Dollars in thousands)

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-bearing deposits

​

$

41,306

​

$

852

​

2.06%

​

$

10,190

​

$

112

​

1.10%

​

$

12,817

​

$

67

​

0.52%

Federal funds sold

​

​

20,736

​

​

414

​

2.00%

​

​

12,292

​

​

144

​

1.17%

​

​

8,935

​

​

50

​

0.56%

Federal Reserve Bank stock, FHLB stock and other corporate stock

​

​

3,232

​

​

214

​

6.62%

​

​

2,078

​

​

118

​

5.66%

​

​

1,856

​

​

99

​

5.34%

Investment securities

​

​

24,056

​

​

637

​

2.65%

​

​

29,398

​

​

626

​

2.13%

​

​

33,597

​

​

582

​

1.73%

Loans(1)

​

​

520,131

​

​

25,633

​

4.93%

​

​

380,285

​

​

17,857

​

4.70%

​

​

281,434

​

​

13,468

​

4.79%

Total interest earning assets

​

​

609,461

​

​

27,750

​

4.55%

​

​

434,243

​

​

18,857

​

4.34%

​

​

338,639

​

​

14,265

​

4.21%

Noninterest earning assets

​

​

32,182

​

​

​

​

​

​

​

26,275

​

​

​

​

​

​

​

19,745

​

​

​

​

​

Total assets

​

​

641,643

​

​

​

​

​

​

​

460,518

​

​

​

​

​

​

​

358,384

​

​

​

​

​

Liabilities and shareholders’ equity

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Interest-bearing liabilities

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Interest-bearing deposits

​

​

415,553

​

​

5,104

​

1.23%

​

​

293,560

​

​

2,634

​

0.90%

​

​

234,983

​

​

1,945

​

0.83%

Borrowed funds

​

​

34,713

​

​

733

​

2.11%

​

​

17,480

​

​

235

​

1.34%

​

​

16,965

​

​

177

​

1.04%

Total interest-bearing liabilities

​

​

450,266

​

​

5,837

​

1.30%

​

​

311,040

​

​

2,869

​

0.92%

​

​

251,948

​

​

2,122

​

0.84%

Noninterest-bearing liabilities

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Noninterest-bearing deposits

​

​

127,659

​

​

​

​

​

​

​

91,230

​

​

​

​

​

​

​

68,142

​

​

​

​

​

Other noninterest-bearing liabilities

​

​

3,883

​

​

​

​

​

​

​

3,232

​

​

​

​

​

​

​

2,414

​

​

​

​

​

Shareholders’ equity

​

​

59,835

​

​

​

​

​

​

​

55,016

​

​

​

​

​

​

​

35,880

​

​

​

​

​

Total liabilities and shareholders’ equity

​

$

641,643

​

​

​

​

​

​

$

460,518

​

​

​

​

​

​

$

358,384

​

​

​

​

​

Net interest spread(2)

​

​

​

​

​

​

​

3.25%

​

​

​

​

​

​

​

3.42%

​

​

​

​

​

​

​

3.37%

Net interest income

​

​

​

​

$

21,913

​

​

​

​

​

​

$

15,988

​

​

​

​

​

​

$

12,143

​

​

Net interest margin(3)

​

​

​

​

​

​

​

3.60%

​

​

​

​

​

​

​

3.68%

​

​

​

​

​

​

​

3.59%

(1)

Includes nonaccrual loans.

(2)

Net interest spread is the difference between interest rates earned on interest earning assets and interest rates 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  $568, $434, and $443 for the years ended December 31, 2018, 2017, and 2016, respectively.

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The following table presents information regarding the dollar amount of changes in interest income and interest expense for the periods indicated for each major component of interest earning assets and interest-bearing liabilities and distinguishes between the changes attributable to changes in volume and changes attributable to changes in interest rates. For purposes of this table, changes attributable to both rate and volume that cannot be segregated have been proportionately allocated to both volume and rate.

​

For the Years Ended December 31, 2018 Compared to 2017

For the Years Ended December 31, 2017 Compared to 2016

​

Change Due To

​

​

​

Change Due To

​

(Dollars in thousands)

Volume

Rate

Total

Volume

Rate

Total

Interest income

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Interest-bearing deposits

​

$

343

​

$

397

​

$

740

​

$

(14)

​

$

59

​

$

46

Federal funds sold

​

​

99

​

​

171

​

​

270

​

​

19

​

​

75

​

​

94

Federal Reserve Bank stock, Federal Home Loan Bank stock and other corporate stock

​

​

65

​

​

31

​

​

96

​

​

12

​

​

7

​

​

19

Investment securities

​

​

(114)

​

​

125

​

​

11

​

​

(73)

​

​

116

​

​

44

Loans

​

​

6,567

​

​

1,209

​

​

7,776

​

​

4,730

​

​

(341)

​

​

4,389

Total

​

$

6,960

​

$

1,933

​

$

8,893

​

$

4,675

​

$

(83)

​

$

4,592

Interest expense

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Interest-bearing deposits

​

​

1,095

​

​

1,375

​

​

2,470

​

​

485

​

​

205

​

​

690

Borrowed funds

​

​

232

​

​

266

​

​

498

​

​

5

​

​

53

​

​

58

Total

​

$

1,327

​

$

1,641

​

$

2,968

​

$

490

​

$

258

​

$

748

Year ended December 31, 2018 compared to year ended December 31, 2017

Net interest income increased by $5.9 million to $21.9 million, or 37.1%, for the year ended December 31, 2018. Our total interest income was positively impacted by an increase in interest earning assets and a slowly rising interest rate environment in 2018. Average total interest earning assets were $609.5 million in 2018 compared with $434.2 million in 2017, an increase of 40.4%. The yield on interest earning assets increased by 21 basis points from 4.34% in 2017 to 4.55% in 2018. The increase in the average balance of interest earning assets was driven primarily by organic growth in our loan portfolio. All loan categories increased in 2018, except construction and development, resulting in an increase in the average balance of the loan portfolio of  $139.8 million, or 36.8%, to $520.1 million for 2018 compared to $380.3 million for 2017 categories (see “Financial Condition — Loan Portfolio” in this section for further details about the changes in our loan portfolio). Average interest-bearing liabilities increased by $139.2 million from $311.0 million for the year ended December 31, 2017 to $450.3 million for the year ended December 31, 2018. The increase was due to an increase in the average balance of interest-bearing deposits of  $122.0 million, or 41.6%, and an increase in the average balance of borrowed funds of $17.2 million, or 98.6%. The increase in the average balance of interest-bearing deposits was primarily due to increases in other time deposits and money market accounts for the period ended December 31, 2018 compared to December 31, 2017, and, to a lesser extent, certificates of deposit and NOW accounts. We also experienced growth in our average noninterest-bearing deposits of  $36.4 million, or 39.9%. The increase in the average balance of borrowed funds was primarily caused by an increase in Federal Home Loan Bank, or FHLB, advances. The average rate paid on interest-bearing liabilities increased to 1.30% for 2018 compared to 0.92% for 2017 as the average rate paid on interest-bearing deposits and borrowed funds increased by 33 basis points and 77 basis points, respectively, during the same period. These increases reflected an increase in market interest rates in 2018. In 2018, our net interest margin was 3.60% and net interest spread was 3.25%. In 2017, net interest margin was 3.68% and net interest spread was 3.42%. These decreases in 2018 compared to 2017 were primarily due to increasing rates paid on our deposit products outpacing increases in loan yields in 2018.

Year ended December 31, 2017 compared to year ended December 31, 2016

Net interest income increased by $3.8 million to $16.0 million for the year ended December 31, 2017. The Company’s total interest income was impacted by an increase in interest earning assets and a slowly

156

rising interest rate environment in 2017. Average total interest earning assets were $434.2 million in 2017 compared with $338.6 million in 2016. The increase in the average balance of interest earning assets in 2017 was primarily driven by growth in our loan portfolio. The average balance of the loan portfolio increased $98.9 million, or 35.1%, to $380.3 million for 2017 compared to $281.4 million for 2016. All loan categories increased between December 31, 2016 and December 31, 2017 except construction and development, with the most significant increase in the residential and commercial real estate categories (See “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Professional — Loan Portfolio” in this section for further details about the changes in our loan portfolio). The yield on interest earning assets increased by 13 basis points from 4.21% in 2016 to 4.34% in 2017 primarily due to the increase in higher yielding commercial real estate loans in 2017. Average interest-bearing liabilities increased by $59.0 million from $252.0 million for the year ended December 31, 2016 to $311.0 million for the year ended December 31, 2017, for an increase of 23.4%. The increase was due to an increase in the average balance of interest-bearing deposits of  $58.6 million, or 24.9%. The average rate paid on interest-bearing liabilities increased by eight basis points in 2017 to 0.92% from 0.84% in 2016, which was primarily due to the increase in higher rate certificate of deposit accounts and other time deposit accounts. Average noninterest-bearing deposits also increased by approximately $23.1 million, or 33.9%, due to an increase in our demand deposit account balance. In 2017, our net interest margin was 3.68% and net interest spread was 3.42%, which compares favorably to the 2016 net interest margin of 3.59% and net interest spread of 3.37%. The increases to net interest income were primarily a result of the increased yield on our loan portfolio.

Provision for Loan Losses

Our provision for loan losses amounted to $1.2 million for 2018 and $1.0 million for 2017. The increase from 2017 to 2018 was primarily a result of the growth of our loan portfolio. The allowance for loan losses as a percentage of total loans was 0.94%, 0.96% and 1.09% for the years ended December 31, 2018, 2017, and 2016, respectively. Our provision for loan losses equaled $1.0 million for 2017 and $1.1 million for 2016. Although we experienced loan growth during 2017, our ratio of allowance for loan losses to gross loans exceeded our target, resulting in a slightly reduced provision in 2017.

Noninterest Income

Our 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. Noninterest income does not include loan origination fees to the extent they exceed the direct loan origination costs, which are generally recognized over the life of the related loan as an adjustment to yield using the interest method. The following table presents the major categories of noninterest income for the periods indicated.

​

Years Ended December 31,

Years Ended December 31,

(Dollars in thousands)

2018

2017

Increase (Decrease)

2017

2016

Increase (Decrease)

Noninterest income

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Deposit account service charges

​

$

283

​

$

194

​

45.9%

​

$

194

​

$

188

​

3.2%

Mortgage banking revenue

​

​

209

​

​

18

​

1,061.1%

​

​

18

​

​

86

​

(79.1)%

Gain (loss) on sale of securities

​

​

—

​

​

—

​

0.0%

​

​

—

​

​

—

​

0.0%

Swap referral fees

​

​

211

​

​

169

​

24.9%

​

​

169

​

​

63

​

168.3%

SBA origination fees

​

​

308

​

​

646

​

(52.3)%

​

​

646

​

​

368

​

75.5%

Other fees and charges

​

​

863

​

​

759

​

13.7%

​

​

759

​

​

664

​

14.3%

Total noninterest income

​

$

1,874

​

$

1,786

​

4.9%

​

$

1,786

​

$

1,369

​

30.5%

Year ended December 31, 2018 compared to year ended December 31, 2017

Noninterest income for 2018 was $1.9 million, a $0.1 million, or 5%, increase compared to noninterest income of  $1.8 million for 2017. The increase in 2018 was primarily due to increases in mortgage banking revenue and deposit account service charges, which increased $0.2 million, or 1061% (due to 2018 being the

157

first full year of our mortgage banking business), and $0.1 million, or 45.9%, respectively, partially offset by a $0.3 million, or 52.3%, decrease in SBA loan origination fees. The increase in deposit account service charges was due to deposit growth and the increase in mortgage banking revenue was due to the ramping up of our mortgage banking business in 2018 compared to 2017.

Year ended December 31, 2017 compared to year ended December 31, 2016

Noninterest income for 2017 was $1.8 million, a $0.4 million, or 30%, increase compared to noninterest income of  $1.4 million for 2016. The increase in 2017 was primarily due to a $0.3 million, or 75.5%, increase SBA loan origination fees in 2017 compared to 2016, a $0.1 million, or 14.3%, increase in other fees and charges a $0.1 million, or 168.3%, increase in swap referral fees. We commenced our mortgage banking business in 2017, although reported mortgage banking revenues decreased in 2017 compared to 2016 due to a one-time loan sale in 2016.

Noninterest Expense

Noninterest expense includes, among other things: (i) salaries and employee benefits; (ii) occupancy and equipment expense; (iii) professional fees; (iv) data processing fees; (v) advertising expense; (vi) loan processing expenses; and (vii) other general and administrative expenses, which include expenses associated with FDIC assessments, communications, travel, meals, training, supplies and postage. The following table presents the major categories of noninterest expense.

​

Years Ended December 31,

Years Ended December 31,

(Dollars in thousands)

2018

2017

Increase (Decrease)

2017

2016

Increase (Decrease)

Noninterest expense

​

​

​

​

​

​

Salaries and benefits

​

$

13,538

​

$

8,672

​

56%

​

$

8,672

​

$

6,290

​

38%

Occupancy and equipment

​

​

1,872

​

​

1,473

​

27%

​

​

1,473

​

​

1,167

​

26%

Professional services

​

​

693

​

​

396

​

75%

​

​

396

​

​

496

​

(20)%

Data processing

​

​

624

​

​

524

​

19%

​

​

524

​

​

983

​

(47)%

Marketing

​

​

430

​

​

180

​

139%

​

​

180

​

​

185

​

(3)%

Other

​

​

2,705

​

​

1,880

​

44%

​

​

1,880

​

​

1,452

​

29%

Total noninterest expense

​

$

19,862

​

$

13,125

​

51%

​

$

13,125

​

$

10,573

​

24%

Year ended December 31, 2018 compared to year ended December 31, 2017

Noninterest expense amounted to $19.9 million in 2018, an increase of  $6.7 million, or 51.3%, compared to $13.1 million for 2017. The increase in 2018 was primarily due to an increase in salary and benefits expense due to the increase in employee headcount (due to team lift-outs from other banks) and to a lesser extent increases in occupancy and equipment expense and professional services expense, which were primarily related to the increase in our branch and loan production office locations. We also experienced an increase of other noninterest expense of approximately $0.8 million, or 43.9%, which includes FDIC assessments (which increased due to deposit growth) and information technology expenses.

Year ended December 31, 2017 compared to year ended December 31, 2016

Noninterest expense amounted to $13.1 million in 2017, an increase of  $2.6 million, or 24.1%, compared to $10.6 million for 2016. The increase in 2017 was primarily due to an increase in salary and benefits expense due to the increase in employee headcount and, to a lesser extent, increases in occupancy and equipment expense, which were primarily related to the increase in our banking locations.

Income Tax Expense

The amount of income tax expense we incur is influenced by the amounts of our pre-tax income, and other nondeductible expenses. Deferred tax assets and liabilities are reflected at current income tax rates in effect for the period in which the deferred tax assets and liabilities are expected to be realized or settled. As

158

changes in tax laws or rates are enacted, such as the Tax Act, deferred tax assets and liabilities are adjusted through the provision for income taxes. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

Year ended December 31, 2018 compared to year ended December 31, 2017

Income tax expense was $0.7 million for 2018 and $1.8 million for 2017. Total income tax expense decreased $1.1 million in 2018 primarily as a result of the Tax Act, which included a number of changes to existing U.S. tax laws that impact us, most notably a reduction of the U.S. corporate income tax rate to 21% for tax years beginning after December 31, 2017. Also, as a result of the Tax Act, we recognized a one-time charge of approximately $0.7 million in 2017 as a result of the revaluation of our deferred tax asset, which also increased our tax expense in 2017. Our effective tax rates for 2018 and 2017 were 24.1% and 50.4%, respectively.

Year ended December 31, 2017 compared to year ended December 31, 2016

Income tax expense was $1.8 million for the year ended December 31, 2017 as compared to $0.7 million for the year ended December 31, 2016. Total income tax expense increased $1.1 million in 2017 primarily as a result of the $0.7 million charge related to the revaluation of our deferred tax asset in 2017 as a result of the Tax Act and, to a lesser extent, increased pre-tax income in 2017. Our effective tax rates for 2017, and 2016 were 50.4% and 39.6%, respectively.

Financial Condition

For the nine months ended September 30, 2019, our total assets increased $233.6 million, or 32.0%, to approximately $963.2 million. Net loans and interest-bearing deposits at other financial institutions increased due to our decision to maintain our excess liquidity in assets with a greater level of liquidity, such as deposits with other banks and fed funds sold, as opposed to investing our excess liquidity in less liquid investment securities, despite the prospect of slightly higher yields. This strategy provided us with greater liquidity to fund our growing loan pipeline. Shareholders’ equity decreased $1.7 million, or 2.1%, to $78.0 million at September 30, 2019 compared to December 31, 2018, primarily due to our repurchase of 200,000 shares of Class A common stock from De Linea CV for an aggregate purchase price of  $3.5 million. See “Certain Relationships and Related Party Transactions — Share Repurchase.”

For the year ended December 31, 2018, our total assets increased by $182.6 million, or 33.4%, from $547.0 million at December 31, 2017 to $729.6 million at December 31, 2018. Increases in net loans, interest-bearing deposits at other financial institutions, and federal funds sold were supported by increases in both noninterest-bearing and interest-bearing deposits, as well as FHLB advances. Shareholders’ equity increased $22.1 million, or 38.4%, to $79.7 million at December 31, 2018 compared to the prior year-end primarily due to proceeds from the closing of our 2018 private offering of approximately $20.0 million and net income for the year of  $2.1 million.

For the year ended December 31, 2017, our total assets increased by $161.8, or 42.3%, from $385.2 million at December 31, 2016 to $547.0 million at December 31, 2017. The increase was primarily driven by the organic growth in net loans of  $144.9 million and increases of  $8.2 million in interest-bearing deposits at other financial institutions and $6.1 million in federal funds sold. Asset growth was funded by a $135.3 million increase in total deposits and a $5.0 million increase in FHLB advances. Shareholders’ equity increased $20.7 million, or 56.1%, to $57.6 million at December 31, 2017 compared to the prior year-end due to proceeds from the closing of our 2017 private offering of approximately $18.9 million and net income for the year of  $1.8 million.

Interest-Bearing Deposits at Other Financial Institutions

Cash that is not immediately needed to fund loans by the Bank is invested in liquid assets that also earn interest, including deposits with other financial institutions. For the nine months ended September 30, 2019, interest-bearing deposits at other financial institutions increased $30.8 million, or 56.6%, to $85.2 million from $54.4 million at December 31, 2018. The increase was primarily due to our desire to maintain our excess liquidity in more liquid assets due to our significant loan growth and a continued robust demand for

159

loans. Interest-bearing deposits at other financial institutions increased from $11.8 million at December 31, 2017 to $54.4 million at December 31, 2018, or 360.0%, primarily as a result of closing a $20.0 million private offering of our common stock on December 18, 2018 and our preference to maintain excess liquidity in more liquid assets to fund our loan growth. Interest-bearing deposits at other financial institutions increased from $3.6 million at December 31, 2016 to $11.8 million at December 31, 2017, or 227.8%, primarily as a result of closing an $18.9 million private offering of our common stock on February 17, 2017, a portion of the net proceeds of which we deposited with other financial institutions. As we continue to grow, so do our liquidity needs.

Investment Securities

We use our securities portfolio to provide a secondary source of liquidity, achieve additional interest income through higher yields on funds invested (compared to other options, such as interest-bearing deposits at other banks or fed funds sold), manage interest rate risk, and meet both collateral and regulatory capital requirements.

Securities may be classified as either trading, held-to-maturity or available-for-sale. Trading securities (if any) are held principally for resale and recorded at their fair value with changes in fair value included in income. Held-to-maturity securities are those which the Company has the positive intent and ability to hold to maturity and are reported at amortized cost. Equity securities are carried at fair value, with changes in fair value reported in net income. Equity securities without readily determinable fair values are carried at cost, minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment. Available-for-sale securities consist of securities not classified as trading securities nor as held-to maturity securities. Unrealized holding gains and losses on available-for-sale securities are excluded from income and reported in comprehensive income or loss. Gains and losses on the sale of available-for- sale securities are recorded on the trade date and are determined using the specific-identification method. Premiums and discounts on securities available for sale are recognized in interest income using the interest method over the period to maturity.

Our investment portfolio increased by $8.6 million, or 41.6%, from $20.8 million at December 31, 2018, to $29.4 million at September 30, 2019 primarily due to the investment of a portion of the proceeds from our 2018 private offering into securities available for sale, although substantially more of these proceeds were invested in more liquid assets to provide more liquidity to fund our loan growth. To supplement interest income earned on our loan portfolio, we invest in high quality mortgage-backed securities, government agency bonds, corporate bonds and equity securities (including mutual funds).

Our investment portfolio decreased by $6.2 million, or 23.0%, from $27.0 million at December 31, 2017, to $20.8 million at December 31, 2018. Our investment portfolio decreased 13.5% from December 31, 2016 to December 31, 2017 from $31.2 million to $27.0 million, respectively. The primary reason for the decrease during both periods was due to our preference for more liquid assets to support our loan growth, as mentioned above.

The following tables summarize the contractual maturities and weighted-average yields of investment securities as of September 30, 2019 and the amortized cost and carrying value of those securities as of the indicated dates.

160

​

​

​

​

​

​

​

December 31,

​

September 30, 2019

2018

2017

2016

(Dollars in thousands)

Book Value

Fair Value

Book Value

Fair Value

Book Value

Fair Value

Book Value

Fair Value

Securities Available for Sale

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

U.S. Government-sponsored agencies

​

$

16,139

​

$

16,024

​

$

7,563

​

$

7,449

​

$

10,173

​

$

10,111

​

$

12,466

​

$

12,423

Mortgage-backed securities

​

​

5,688

​

​

5,628

​

​

6,533

​

​

6,308

​

​

7,827

​

​

7,626

​

​

9,597

​

​

9,370

U.S. Agency obligations

​

​

4,493

​

​

4,585

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Mutual funds

​

​

—

​

​

—

​

​

—

​

​

—

​

​

1,000

​

​

963

​

​

1,000

​

​

963

Corporate bonds

​

​

2,000

​

​

1,999

​

​

6,000

​

​

5,828

​

​

7,990

​

​

8,020

​

​

7,976

​

​

8,012

Total

​

$

28,320

​

$

28,236

​

$

20,096

​

$

19,585

​

$

26,990

​

$

26,720

​

$

31,039

​

$

30,768

Securities Held to Maturity

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Mortgage-backed securities

​

​

224

​

​

236

​

​

259

​

​

265

​

​

316

​

​

325

​

​

408

​

​

426

Total

​

$

224

​

$

236

​

$

259

​

$

265

​

$

316

​

$

325

​

$

408

​

$

426

Equity Securities

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Mutual Funds

​

​

975

​

​

975

​

​

942

​

​

942

​

​

—

​

​

—

​

​

—

​

​

—

Total

​

$

975

​

$

975

​

$

942

​

$

942

​

$

—

​

$

—

​

$

—

​

$

—

​

One Year or Less

More than One Year Through Five Years

More than Five Years Through 10 Years

More than 10 Years

Total

At September 30, 2019 (Dollars in thousands)

Book Value

Weighted Average Yield

Book Value

Weighted Average Yield

Book Value

Weighted Average Yield

Book Value

Weighted Average Yield

Book Value

Fair Value

Weighted Average Yield

Securities Available for Sale

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

U.S. Government- sponsored agencies

​

$

—

​

0.00%

​

$

319

​

2.96%

​

$

12,159

​

3.16%

​

$

3,661

​

3.71%

​

$

16,139

​

$

16,024

​

3.28%

Mortgage-backed securities

​

​

—

​

0.00%

​

​

—

​

0.00%

​

​

1,972

​

1.57%

​

​

3,716

​

2.11%

​

​

5,688

​

​

5,628

​

1.92%

U.S. Agency obligations

​

​

—

​

0.00%

​

​

3,489

​

2.65%

​

​

1,004

​

2.66%

​

​

​

​

—

​

​

4,493

​

​

4,585

​

2.65%

Corporate bonds

​

​

—

​

0.00%

​

​

2,000

​

3.48%

​

​

—

​

0.00%

​

​

—

​

0.00%

​

​

2,000

​

​

1,999

​

3.48%

Total

​

$

—

​

0.00%

​

$

5,808

​

2.95%

​

$

15,135

​

2.92%

​

$

7,377

​

2.91%

​

$

28,320

​

$

28,236

​

2.93%

Securities Held to Maturity

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Mortgage-backed securities

​

​

—

​

—

​

​

—

​

—

​

​

—

​

—

​

​

224

​

—

​

​

224

​

​

236

​

3.74%

Total

​

$

—

​

0.00%

​

$

—

​

0.00%

​

$

—

​

0.00%

​

$

224

​

3.74%

​

$

224

​

$

236

​

3.74%

Equity Securities

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Mutual Funds

​

​

975

​

2.34%

​

​

—

​

—

​

​

—

​

—

​

​

—

​

—

​

​

975

​

​

975

​

2.34%

Total

​

$

975

​

2.34%

​

$

—

​

0.00%

​

$

—

​

0.00%

​

$

—

​

—

​

$

975

​

$

975

​

2.34%

Loan Portfolio

Our primary source of income is derived from interest earned on loans. Our loan portfolio consists of loans secured by real estate as well as commercial business loans, construction and development and other consumer loans. Our loan clients primarily consist of small to medium sized businesses, the owners and operators of these businesses as well as other professionals, entrepreneurs and high net worth individuals. Our owner-occupied and investment commercial real estate loans, residential construction loans and commercial business loans provide us with higher risk-adjusted returns, shorter maturities and more sensitivity to interest rate fluctuations, and are complemented by our relatively lower risk residential real estate loans to individuals. Our lending activities are principally directed to our market area consisting of the Miami-Dade MSA. The following table summarizes and provides additional information about certain segments of our loan portfolio as of the dates indicated.

161

​

​

​

​

​

​

December 31,

​

September 30, 2019

2018

2017

2016

2015

2014

(Dollars in thousands)

Amount

Percent

Amount

Percent

Amount

Percent

Amount

Percent

Amount

Percent

Amount

Percent

Commercial real estate

​

$

262,761

​

34.0%

​

$

191,930

​

31.6%

​

$

156,720

​

33.3%

​

$

116,208

​

35.8%

​

$

84,679

​

34.1%

​

$

63,638

​

34.0%

Owner Occupied

​

​

106,918

​

—

​

​

98,610

​

—

​

​

71,944

​

—

​

​

51,509

​

—

​

​

25,744

​

—

​

​

15,629

​

—

Non-Owner Occupied

​

​

155,843

​

—

​

​

93,320

​

—

​

​

84,776

​

—

​

​

64,699

​

—

​

​

58,935

​

—

​

​

48,009

​

—

Residential real estate

​

​

349,306

​

45.3%

​

​

311,404

​

51.3%

​

​

224,246

​

47.7%

​

​

140,160

​

43.2%

​

​

110,870

​

44.6%

​

​

90,040

​

48.0%

Commercial

​

​

114,003

​

14.8%

​

​

83,276

​

13.7%

​

​

59,065

​

12.6%

​

​

37,873

​

11.7%

​

​

33,861

​

13.6%

​

​

23,640

​

12.6%

Construction and development

​

​

37,925

​

4.9%

​

​

17,608

​

2.9%

​

​

28,272

​

6.0%

​

​

29,036

​

9.0%

​

​

18,813

​

7.6%

​

​

9,427

​

5.0%

Consumer and other loans

​

​

7,900

​

1.0%

​

​

3,244

​

0.5%

​

​

1,755

​

0.4%

​

​

1,025

​

0.3%

​

​

271

​

0.1%

​

​

809

​

0.4%

Total loans

​

$

771,895

​

100.0%

​

$

607,462

​

100.0%

​

$

470,058

​

100.0%

​

$

324,302

​

100.0%

​

$

248,494

​

100.0%

​

$

187,554

​

100.0%

Unearned loan origination fees (costs), net

​

​

(783)

​

​

​

​

(297)

​

​

​

​

64

​

​

​

​

(120)

​

​

​

​

(11)

​

​

​

​

150

​

​

Allowance for loan losses

​

​

(6,449)

​

​

​

​

(5,685)

​

​

​

​

(4,535)

​

​

​

​

(3,532)

​

​

​

​

(2,457)

​

​

​

​

(1,875)

​

​

Loans, net

​

$

764,663

​

​

​

$

601,480

​

​

​

$

465,587

​

​

​

$

320,650

​

​

​

$

246,026

​

​

​

$

185,829

​

​

Commercial Real Estate Loans.   We originate both owner-occupied and non-owner-occupied commercial real estate loans. These loans may be more adversely affected by conditions in the real estate markets or in the general economy. Commercial real estate loans that are secured by owner-occupied commercial real estate and primarily collateralized by operating cash flows are also included in this category of loans. As of September 30, 2019, we had $106.9 million of owner-occupied commercial real estate loans and $155.8 million of investment commercial real estate loans, representing 40.7% and 59.3%, respectively, of our commercial real estate portfolio. As of September 30, 2019, the average loan balance of loans in our commercial real estate loan portfolio was approximately $1.1 million for owner-occupied and $2.0 million for non-owner-occupied. Commercial real estate loan terms are generally extended for 10 years or less and amortize generally over 25 years or less. Terms of 15 years are permitted where the loan is fully amortized over the term of the loan. The maximum loan to value is generally, 80% of the market value or purchase price, but may be as high as 90% for SBA 504 owner-occupied loans. Our credit policy also usually requires a minimum debt service coverage ratio of 1.20x. As of September 30, 2019, our weighted-average loan-to-value ratios for owner-occupied and non-owner-occupied commercial real estate were 54.5% and 50.3%, respectively and debt service coverage ratios were 2.46x and 1.51x, respectively. The interest rates on our commercial real estate loans have initial fixed rate terms that adjust typically at five years and we routinely charge an origination fee for our services. We generally require personal guarantees from the principal owners of the business, supported by a review of the principal owners’ personal financial statements and global debt service obligations. All commercial real estate loans with an outstanding balance of  $500,000 or more are reviewed at least annually. The properties securing the portfolio are located primarily throughout our market and are generally diverse in terms of type. This diversity helps reduce the exposure to adverse economic events that affect any single industry.

Construction and Development Loans.   The majority of our construction loans are offered within the Miami-Dade MSA to builders primarily for the construction of single-family homes and condominium and townhouse conversions or renovations and, to a lesser extent, to individuals. Our construction loans typically have terms of 12 to 18 months with the goal of transitioning the borrowers to permanent financing or re-underwriting and selling into the secondary market. According to our credit policy, the loan to value ratio may not exceed the lesser of 80% of the appraised value, as established by an independent appraisal, or 85% of costs for residential construction and 90% of costs for SBA 504 loans. As of September 30, 2019, our weighted average loan-to-value ratio on our construction, vacant land, and land development loans were 54.6%, 45.2% and 40.7%, respectively. All construction and development loans require an interest reserve account, which is sufficient to pay the loan through completion of the project. We conduct semi-annual stress testing of our construction loan portfolio and closely monitor underlying real estate conditions as well as our borrowers’ trends of sales valuations as compared to underwriting valuations as part of our ongoing risk management efforts. We also closely monitor our borrowers’ progress in construction buildout and strictly enforce our original underwriting guidelines for construction milestones and completion timelines.

162

​	As of September 30, 2019
(Dollars in thousands)	Amount			Percent
CRE and Construction & Development Loans, combined	​	​	​	​	​
1 – 4 Family Construction	​	$	17,668	​	5.9%
Assignment of Mortgage	​	​	9,085	​	3.0%
Auto (Car Lot/Auto Repair)	​	​	14,518	​	4.8%
Commercial Construction	​	​	8,746	​	2.9%
Educational Facility	​	​	15,095	​	5.0%
Hotel	​	​	6,702	​	2.2%
Land Development	​	​	5,612	​	1.9%
Mixed Use	​	​	18,431	​	6.1%
Multifamily	​	​	22,118	​	7.4%
Office	​	​	37,483	​	12.5%
Other / Special Use	​	​	31,211	​	10.4%
Religious Facility	​	​	4,700	​	1.6%
Retail	​	​	52,672	​	17.5%
Vacant Land	​	​	6,042	​	2.0%
Warehouse	​	​	50,603	​	16.8%
Total	​	$	300,686	​	100.0%

​	As of September 30, 2019
(Dollars in thousands)	Amount			Percent
CRE and Construction & Development Loans, combined	​	​	​	​	​
Broward	​	$	54,099	​	18.0%
Miami-Dade	​	​	156,075	​	51.9%
Palm Beach	​	​	59,823	​	19.9%
Other FL County	​	​	27,430	​	9.1%
Out of State	​	​	3,259	​	1.1%
Total	​	$	300,686	​	100.0%

As of September 30, 2019, non-owner occupied commercial real estate loans of  $155.8 million represented 185% of total risk-based capital and total construction and land development loans of $37.9 million represented 45% of total risk-based capital.

Residential Real Estate Loans.   We offer one-to-four family mortgage loans primarily on owner-occupied primary residences and, to a lesser extent, investor-owned residences, which make up approximately 20% of our residential loan portfolio. Our residential loans also include home equity lines of credit, which totaled approximately $23.4 million, or approximately 6.7% of our residential loan portfolio as of September 30, 2019. The average loan balance of closed-end residential loans in our residential portfolio was approximately $757,900 as of September 30, 2019. Our one-to-four family residential loans have a relatively small balance spread between many individual borrowers compared to our other loan categories. Our owner-occupied residential real estate loans usually have fixed rates for five or seven years and adjust on an annual basis after the initial term based on a typical maturity of 30 years. Upon the implementation of rules under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the origination, closing and servicing of the traditional residential loan products became much more complex, which led to increased cost of compliance and training. As a result, many banks exited the business, which created an opportunity for the banks that remained in the space. While the use of technology, and other related origination strategies have allowed non-bank originators to gain significant market share over the last several years, traditional banks that made investments in personnel and technology to comply with the new requirements have typically experienced loan growth. Unlike many of our competitors, we have been able to effectively compete in the residential loan market, while simultaneously doing the same in the commercial

163

loan market which has enabled us to establish a broader and deeper relationship with our borrowers. Additionally, by offering a full line of residential loan products, the owners of the many small to medium sized businesses that we lend to use us, instead of a competitor, for financing a personal residence. This greater bandwidth to the same market has been a significant contributor to our growth and market share in South Florida. The following chart shows our residential real estate portfolio by loan type and the weighted average loan-to-value ratio for each loan type.

​	As of September 30, 2019
(Dollars in thousands)	Amount			Percent		LTV (%)
Residential Real Estate	​	​	​	​	​	​	​
Primary Residences	​	$	253,102	​	72.4%	​	58.3%
Investor Owned Residences	​	​	71,498	​	20.5%	​	47.5%
HELOC	​	​	23,374	​	6.7%	​	49.3%
Loans Held for Sale	​	​	1,332	​	0.4%	​	0.0%
Total	​	$	349,306	​	100.0%	​	​

Commercial Loans.   In addition to our other loan products, we provide general commercial loans, including commercial lines of credit, working capital loans, term loans, equipment financing, letters of credit and other loan products, primarily in our market, and underwritten based on each borrower’s ability to service debt from income. These loans are primarily made based on the identified cash flows of the borrower, as determined based on a review of the client’s financial statements, and secondarily, on the underlying collateral provided by the borrower. The average loan balance of the loans in our commercial loan portfolio was $511,223 as of September 30, 2019. For commercial loans over $500,000, a global cash flow analysis is generally required, which forms the basis for the credit approval, “Global cash flow” is defined as a cash flow calculation which includes all income sources of all principals in the transaction as well as all debt payments, including the debt service associated with the proposed transaction. In general, a minimum 1.20x debt service coverage is preferred, but in no event may the debt service coverage ratio be less than 1.00x. As of September 30, 2019, the debt service coverage ratio for our commercial loan portfolio was approximately 2.8x, excluding approximately 8.1% of the commercial loan portfolio that is cash secured. Most commercial business loans are secured by a lien on general business assets including, among other things, available real estate, accounts receivable, promissory notes, inventory and equipment, and we generally obtain a personal guaranty from the borrower or other principal. The following chart shows our commercial loan portfolio by industry segment as of September 30, 2019.

​	As of September 30, 2019
(Dollars in thousands)	Amount			Percent
Commercial Loans	​	​	​	​	​
Business Products	​	$	1,150	​	1.0%
Business Services	​	​	12,692	​	11.1%
Communication	​	​	10,645	​	9.3%
Construction	​	​	11,332	​	10.0%
Finance	​	​	29,783	​	26.1%
Healthcare	​	​	4,041	​	3.5%
Services	​	​	12,436	​	10.9%
Technology	​	​	780	​	0.7%
Trade	​	​	30,871	​	27.1%
Transportation	​	​	173	​	0.2%
Utilities	​	​	100	​	0.1%
Total	​	$	114,003	​	100.0%

Consumer and Other Loans.   We offer consumer, or retail credit, to individuals for household, family, or other personal expenditures. Generally, these are either in the form of closed-end/installment credit loans

164

or open-end/revolving credit loans. Occasionally, we will make unsecured consumer loans to highly qualified clients in amounts up to $250,000 with up to three-year repayment terms.

The following chart illustrates our gross loans net of unearned income and weighted average loan-to-value ratio for our collateralized loan portfolio as of the end of the months indicated.

The repayment of loans is a source of additional liquidity for us. The following table details maturities and sensitivity to interest rate changes for our loan portfolio at September 30, 2019.

​	September 30, 2019
(Dollars in thousands)	Due in One Year or Less			Due in One to Five Years			Due After Five Years			Total
Commercial Real Estate	​	$	20,870	​	$	48,105	​	$	193,786	​	$	262,761
Residential Real Estate	​	​	38,638	​	​	39,422	​	​	271,246	​	​	349,306
Commercial	​	​	59,554	​	​	19,141	​	​	35,308	​	​	114,003
Construction and Development	​	​	18,481	​	​	4,680	​	​	14,764	​	​	37,925
Consumer and Other	​	​	3,964	​	​	2,223	​	​	1,713	​	​	7,900
Total loans	​	$	141,507	​	$	113,571	​	$	516,817	​	$	771,895
Amounts with fixed rates	​	$	67,826	​	$	93,612	​	$	488,877	​	$	650,315
Amounts with floating rates	​	$	73,681	​	$	19,959	​	$	27,940	​	$	121,580

Nonperforming Assets

Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Loans are placed on nonaccrual status when, in management’s opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory provisions. Loans may be placed on nonaccrual status regardless of whether or not such loans are considered past due. In general, we place loans on nonaccrual status when they become 90 days past due. We also place loans on nonaccrual status if they are less than 90 days past due if the collection of principal or interest is in doubt. When interest accrual is discontinued, all unpaid accrued interest is reversed from income. Interest income is subsequently recognized only to the extent cash payments are received in excess of principal due. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are, in management’s opinion, reasonably assured. Any loan which the Bank deems to be uncollectible, in whole or in part, is charged off to the extent of the anticipated loss. Loans that are past due for 180 days or more are charged

165

off unless the loan is well secured and in the process of collection. We currently have two loans that are 90 days or greater past due, but in accrual status. One of these loans is past due greater than 90 days due to the physical health of the borrower, but we expect to recover substantially all of the outstanding loan amount of this loan and it has not been placed in nonaccrual status. Payments on the other loan are currently restricted due to the borrower’s bankruptcy. The outstanding balance of that loan is approximately $728,000, but our total exposure is approximately $182,000 due to an SBA guaranty. The collateral for this loan is currently under contract by a third party purchaser with a non-refundable deposit and scheduled to close within the first quarter of 2020, at which time we expect to recover the full amount of this loan.

We believe our disciplined lending approach and focused management of nonperforming assets has resulted in sound asset quality and timely resolution of problem assets. We have several procedures in place to assist us in maintaining the overall quality of our loan portfolio, such as annual reviews of the underlying financial performance of all commercial loans in excess of  $500,000. We also engage in annual stress testing of the loan portfolio, and proactive collection and timely disposition of past due loans. Our bankers follow established underwriting guidelines, and we also monitor our delinquency levels for any negative trends. As a result, we have, in recent years, experienced a relatively low level of nonperforming assets. We had nonperforming assets of  $4.7 million as of September 30, 2019, or 0.49% of total assets, and we did not have any nonperforming assets as of December 31, 2018, 2017, or 2016. Occasionally, loans that we make will be impacted due to the occurrence of unforeseen events, which was a primary factor in the recent increase in our nonperforming assets relative to our historically low, near-zero levels. However, we believe that our low loan-to-value loan portfolio is well positioned to withstand these types of discrete events as they occur from time. There can be no assurance, however, that our loan portfolio will not become subject to increasing pressures from deteriorating borrower credit due to general economic conditions.

​	​	​	​	December 31,
(Dollars in thousands)	September 30, 2019			2018			2017			2016			2015			2014
Accruing loans 90 or more days past due	​	$	3,174	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—
Nonaccrual Loans	​			​			​			​			​			​
Commercial real estate	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—
Residential real estate	​	​	487	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—
Commercial	​	​	1,069	​	​	—	​	​	—	​	​	—	​	​	—	​	​	33
Construction and development	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—
Consumer and other loans	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—
Total nonperforming loans	​	$	4,730	​	$	—	​	$	—	​	$	—	​	$	—	​	$	33
Other real estate owned	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—
Total nonperforming assets	​	$	4,730	​	$	—	​	$	—	​	$	—	​	$	—	​	$	33
Restructured loans-nonaccrual	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—	​	$	33
Restructured loans-accruing	​	$	376	​	$	357	​	$	409	​	$	478	​	$	493	​	$	606
Ratio of nonperforming loans to total loans	​	​	0.62%	​	​	0.00%	​	​	0.00%	​	​	0.00%	​	​	0.00%	​	​	0.02%
Ratio of nonperforming assets to total assets	​	​	0.49%	​	​	0.00%	​	​	0.00%	​	​	0.00%	​	​	0.00%	​	​	0.02%

Credit Quality Indicators

We strive to manage and control credit risk in our loan portfolio by adhering to well-defined underwriting criteria and account administration standards established by our management team and approved by our Board. We employ a dedicated Chief Risk Officer and have established a Risk Committee at the Bank level which oversees, among other things, risks associated with our lending activities and enterprise risk management. Our written loan policies document underwriting standards, approval levels, exposure limits and other limits or standards that our management team and Board deem appropriate for an institution of our size and character. Loan portfolio diversification at the obligor, product and geographic levels are actively managed to mitigate concentration risk, to the extent possible. In addition, credit risk management includes an independent credit review process that assesses compliance with policies, risk rating standards and other critical credit information. In addition, we adhere to sound credit principles and evaluate our clients’ borrowing needs and capacity to repay, in conjunction with their

166

character and financial history. Our management team and Board place significant emphasis on balancing a healthy risk profile and sustainable growth. Specifically, our approach to lending seeks to balance the risks necessary to achieve our strategic goals while ensuring that our risks are appropriately managed and remain within our defined limits. We believe that our credit culture is a key factor in our relatively low levels of nonperforming loans and nonperforming assets compared to other institutions within our market.

We categorize loans into risk categories based on relevant information about the ability of borrowers to service their debt including: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. Generally, all credits greater than $500,000, other than residential real estate loans, are reviewed no less than annually to monitor and adjust, if necessary, the credit risk profile. Loans classified as “substandard” or “special mention” are reviewed quarterly for further evaluation to determine if they are appropriately classified and whether there is any impairment. Beyond the annual review, all loans are graded at initial issuance. In addition, during the renewal process of any loan, as well as if a loan becomes past due, we will determine the appropriate loan grade. Loans excluded from the review process above are generally classified as “pass” credits until: (a) they become past due; (b) management becomes aware of deterioration in the credit worthiness of the borrower; or (c) the client contacts us for a modification. In these circumstances, the loan is specifically evaluated for potential reclassification to special mention, substandard, doubtful, or even a charged-off status. We use the following definitions for risk ratings:

Pass.   A Pass loan’s primary source of loan repayment is satisfactory, with secondary sources very likely to be realized if necessary. The pass category includes the following:

•

Riskless:   Loans that are fully secured by liquid, properly margined collateral (listed stock, bonds, or other securities; savings accounts; certificates of deposit; loans or that portion thereof which are guaranteed by the U.S. Government or agencies backed by the “full faith and credit” thereof; loans secured by properly executed letters of credit from prime financial institutions).

•

High Quality Risk:   Loans to recognized national companies and well-seasoned companies that enjoy ready access to capital markets or to a range of financing alternatives. Borrower’s public debt offerings are accorded highest ratings by recognized rating agencies, e.g., Moody’s or Standard & Poor’s. Companies display sound financial conditions and consistent superior income performance. The borrower’s trends and those of the industry to which it belongs are positive.

•

Satisfactory Risk:   Loans to borrowers, reasonably well established, that display satisfactory financial conditions, operating results and excellent future potential. Capacity to service debt is amply demonstrated. Current financial strength, while financially adequate, may be deficient in a number of respects. Normal comfort levels are achieved through a closely monitored collateral position and/or the strength of outside guarantors.

•

Moderate Risk:   Loans to borrowers who are in non-compliance with periodic reporting requirements of the loan agreement, and any other credit file documentation deficiencies, which do not otherwise affect the borrower’s credit risk profile. This may include borrowers who fail to supply updated financial information that supports the adequacy of the primary source of repayment to service the Bank’s debt and prevents bank management to evaluate the borrower’s current debt service capacity. Existing loans will include those with consistent track records of timely loan payments, no material adverse changes to underlying collateral, and no material adverse changes to guarantor(s) financial capacity, evidenced by public record searches.

Special mention.   A Special Mention loan has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in the deterioration of the repayment prospects for the asset or our credit position at some future date. Special Mention loans are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification.

Substandard.   A Substandard loan is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified must have a well-defined weakness or weaknesses that jeopardizes the liquidation of the debt. They are characterized by the distinct possibility that we will sustain some loss if the deficiencies are not corrected.

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Doubtful.   A loan classified Doubtful has all the weaknesses inherent in one classified Substandard with the added characteristics that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loss.   A loan classified Loss is considered uncollectible and of such little value that continuance as a bankable asset is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may be affected in the future. Based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

(Dollars in thousands)

Pass

Special Mention

Substandard

Doubtful

Total

September 30, 2019

​

​

​

​

​

Commercial real estate

​

$

258,569

​

$

1,746

​

$

2,446

​

$

—

​

$

262,761

Residential real estate

​

​

348,549

​

​

757

​

​

—

​

​

—

​

​

349,306

Commercial

​

​

111,774

​

​

432

​

​

1,797

​

​

—

​

​

114,003

Construction and development

​

​

37,925

​

​

—

​

​

—

​

​

—

​

​

37,925

Consumer

​

​

7,900

​

​

—

​

​

—

​

​

—

​

​

7,900

Total

​

$

764,717

​

$

2,935

​

$

4,243

​

$

—

​

$

771,895

December 31, 2018

​

​

​

​

​

Commercial real estate

​

$

189,228

​

$

2,702

​

$

—

​

$

—

​

$

191,930

Residential real estate

​

​

311,013

​

​

391

​

​

—

​

​

—

​

​

311,404

Commercial

​

​

82,668

​

​

577

​

​

31

​

​

—

​

​

83,276

Construction and development

​

​

17,608

​

​

—

​

​

—

​

​

—

​

​

17,608

Consumer

​

​

3,244

​

​

—

​

​

—

​

​

—

​

​

3,244

Total

​

$

603,761

​

$

3,670

​

$

31

​

$

—

​

$

607,462

December 31, 2017

​

​

​

​

​

Commercial real estate

​

$

155,671

​

$

1,049

​

$

—

​

$

—

​

$

156,720

Residential real estate

​

​

224,246

​

​

—

​

​

—

​

​

—

​

​

224,246

Commercial

​

​

58,936

​

​

98

​

​

31

​

​

—

​

​

59,065

Construction and development

​

​

28,272

​

​

—

​

​

—

​

​

—

​

​

28,272

Consumer

​

​

1,755

​

​

—

​

​

—

​

​

—

​

​

1,755

Total

​

$

468,880

​

$

1,147

​

$

31

​

$

—

​

$

470,058

December 31, 2016

​

​

​

​

​

Commercial real estate

​

$

116,208

​

$

—

​

$

—

​

$

—

​

$

116,208

Residential real estate

​

​

139,931

​

​

229

​

​

—

​

​

—

​

​

140,160

Commercial

​

​

37,525

​

​

280

​

​

68

​

​

—

​

​

37,873

Construction and development

​

​

29,036

​

​

—

​

​

—

​

​

—

​

​

29,036

Consumer

​

​

1,025

​

​

—

​

​

—

​

​

—

​

​

1,025

Total

​

$

323,725

​

$

509

​

$

68

​

$

—

​

$

324,302

Allowance for Loan Losses

We believe that we maintain our allowance for loan losses at a level sufficient to provide for probable credit losses inherent in the loan portfolio as of the balance sheet date. Credit losses arise from the borrowers’ inability or unwillingness to repay, and from other risks inherent in the lending process including collateral risk, operations risk, concentration risk, and economic risk. We consider all of these risks of lending when assessing the adequacy of our allowance. The allowance for loan losses is established through a provision charged to expense. Loans are charged-off against the allowance when losses are probable and reasonably quantifiable. Our allowance for loan losses is based on management’s judgment of overall credit quality, which is a significant estimate based on a detailed analysis of the loan portfolio. Our allowance can and will change based on revisions to our assessment of our loan portfolio’s overall credit quality and other risk factors both internal and external to us.

168

We evaluate the adequacy of the allowance for loan losses on a quarterly basis. The allowance consists of two components. The first component consists of those amounts reserved for impaired loans. A loan is deemed impaired when, based on current information and events, it is probable that the Bank will not be able to collect all amounts due (principal and interest), according to the contractual terms of the loan agreement. Loans are monitored for potential impairment through our ongoing loan review procedures and portfolio analysis. Classified loans and past due loans over a specific dollar amount, and all troubled debt restructurings are individually evaluated for impairment.

The approach for assigning reserves for the impaired loans is determined by the dollar amount of the loan and loan type. Impairment measurement for loans over a specific dollar are determined on an individual loan basis with the amount reserved dependent on whether repayment of the loan is dependent on the liquidation of collateral or from some other source of repayment. If repayment is dependent on the sale of collateral, the reserve is equivalent to the recorded investment in the loan less the fair value of the collateral after estimated sales expenses. If repayment is not dependent on the sale of collateral, the reserve is equivalent to the recorded investment in the loan less the estimated cash flows discounted using the loan’s effective interest rate. The discounted value of the cash flows is based on the anticipated timing of the receipt of cash payments from the borrower. The reserve allocations for individually measured impaired loans are sensitive to the extent market conditions or the actual timing of cash receipts change. Impairment reserves for smaller-balance loans under a specific dollar amount are assigned on a pooled basis utilizing loss factors for impaired loans of a similar nature.

The second component is a general reserve on all loans other than those identified as impaired. General reserves are assigned to various homogenous loan pools, including commercial, commercial real estate, construction and development, residential real estate, and consumer. General reserves are assigned based on historical loan loss ratios determined by loan pool and internal risk ratings that are adjusted for various internal and external risk factors unique to each loan pool. The following table analyzes the activity in the allowance over the past five years and the nine-month periods ended September 30, 2019 and 2018.

​

Nine Months Ended September 30,

Year Ended December 31,

(Dollars in thousands)

2019

2018

2018

2017

2016

2015

2014

Balance at beginning of period

​

$

5,685

​

$

4,535

​

$

4,535

​

$

3,532

​

$

2,457

​

$

1,875

​

$

1,547

Charge-offs

​

​

​

​

​

​

​

Commercial real estate

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Residential real estate

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Commercial

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Construction and development

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Consumer and other

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

14

​

​

—

Total Charge-offs

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

14

​

​

—

Recoveries

​

​

​

​

​

​

​

Commercial real estate

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Residential real estate

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Commercial

​

​

—

​

​

—

​

​

—

​

​

12

​

​

11

​

​

2

​

​

—

Construction and development

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Consumer and other

​

​

2

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Total recoveries

​

​

2

​

​

—

​

​

—

​

​

12

​

​

11

​

​

2

​

​

—

Net charge-offs (recoveries)

​

​

(2)

​

​

—

​

​

—

​

​

(12)

​

​

(11)

​

​

12

​

​

—

Provision for loan losses

​

​

762

​

​

790

​

​

1,150

​

​

991

​

​

1,065

​

​

596

​

​

328

Balance at end of period

​

$

6,449

​

$

5,325

​

$

5,685

​

$

4,535

​

$

3,532

​

$

2,457

​

$

1,875

Ratio of net charge-offs to average loans

​

​

0.00%

​

​

0.00%

​

​

0.00%

​

​

0.00%

​

​

0.00%

​

​

0.01%

​

​

0.00%

169

​

Nine Months Ended September 30,

Year Ended December 31,

(Dollars in thousands)

2019

2018

2018

2017

2016

2015

2014

ALLL as a percentage of loans at end of period

​

0.84%

​

0.90%

​

0.94%

​

0.96%

​

1.09%

​

0.99%

​

1.00%

ALLL as a multiple of net charge-offs

​

N/A

​

N/A

​

N/A

​

N/A

​

N/A

​

206.9%

​

N/A

ALLL as a percentage of nonperforming loans

​

136.3%

​

N/A

​

N/A

​

N/A

​

N/A

​

N/A

​

N/A

We had recoveries of  $2,000 for the nine months ended September 30, 2019, and did not have any net charge-offs or recoveries for the nine months ended September 30, 2018 or the year ended December 31, 2018. Our allowance for loan losses was $6.4 million at September 30, 2019 compared to $5.7 million at December 31, 2018, an increase of 12.3%. The increase was primarily due to the growth of our loan portfolio. At September 30, 2019, our allowance for loan losses was 0.84% of total gross loans (net of overdrafts) and provided coverage of 136.3% of our nonperforming loans, compared to an allowance for loan losses to total gross loans (net of overdrafts) ratio of 0.94% as of December 31, 2018. We believe our allowance at September 30, 2019 was adequate to absorb potential losses inherent in our loan portfolio. Our allowance for loan losses totaled $5.7 million at December 31, 2018 compared to $4.5 million at December 31, 2017 and $3.5 million at December 31, 2016. The increases in our allowance for loan losses in 2018 and 2017 were due to growth in our loan portfolio. The slight decrease in the allowance for loan loss as a percentage of total gross loans in 2017 was primarily attributable to a favorable problem loan migration and improving risk factors within our loan portfolio. At December 31, 2018, our allowance for loan losses was 0.94% of total gross loans (net of overdrafts) compared to 0.96% and 1.09% at December 31, 2017 and 2016, respectively. We did not have any nonperforming loans at December 31, 2018, 2017, or 2016. The following table provides an allocation of the allowance for loan losses to specific loan types as of September 30, 2019 and 2018 and as of the end of the fiscal year for each of the past five years.

​	September 30, 2019					December 31, 2018					December 31, 2017					December 31, 2016					December 31, 2015					December 31, 2014
(Dollars in thousands)	Allowance			Percent		Allowance			Percent		Allowance			Percent		Allowance			Percent		Allowance			Percent		Allowance			Percent
Commercial real estate	​	$	1,788	​	27.7%	​	$	1,435	​	25.2%	​	$	1,275	​	28.1%	​	$	838	​	23.7%	​	$	730	​	29.7%	​	$	346	​	18.5%
Residential real estate	​	​	3,292	​	51.0%	​	​	1,822	​	32.0%	​	​	1,590	​	35.0%	​	​	1,281	​	36.3%	​	​	912	​	37.2%	​	​	1,075	​	57.3%
Commercial	​	​	1,036	​	16.1%	​	​	2,106	​	37.1%	​	​	1,170	​	25.8%	​	​	648	​	18.3%	​	​	534	​	21.7%	​	​	318	​	17.0%
Construction and development	​	​	255	​	4.0%	​	​	262	​	4.6%	​	​	452	​	10.0%	​	​	742	​	21.0%	​	​	266	​	10.8%	​	​	109	​	5.8%
Consumer and other	​	​	78	​	1.2%	​	​	60	​	1.1%	​	​	48	​	1.1%	​	​	23	​	0.7%	​	​	15	​	0.6%	​	​	27	​	1.4%
Total allowance for loan losses	​	$	6,449	​	100.0%	​	$	5,685	​	100.0%	​	$	4,535	​	100.0%	​	$	3,532	​	100.0%	​	$	2,457	​	100.0%	​	$	1,875	​	100.0%

At September 30, 2019, the recorded investment in impaired loans was $4.0 million, $1.1 million of which required a specific reserve of  $0.6 million, compared to a recorded investment in impaired loans of $0.3 million at December 31, 2018, which increase was due to one loan being placed in nonaccrual status in June, $0.4 million at December 31, 2017 and $0.5 million at December 31, 2016. None of the impaired loans at December 31, 2018, 2017, or 2016 required a specific reserve.

Impaired loans also include certain loans that were modified as troubled debt restructurings, or TDRs. At September 30, 2019, we had two loans amounting to $1.6 million that were considered to be TDRs, compared to two loans amounting to $1.1 million at December 31, 2018 and two loans totaling $0.4 million at December 31, 2017. We did not allocate any specific reserves to loans that have been modified as TDRs as of September 30, 2019 or December 31, 2018. Three loans amounting to $0.5 million were considered to be TDRs at December 31, 2016 and we did not allocate any specific reserves to these loans.

Deposits

Deposits are our primary source of funding. We offer a variety of deposit products including checking, NOW, savings, money market and time accounts all of which we actively market at competitive pricing. We generate deposits from our consumer and commercial clients through the efforts of our private bankers. We

170

supplement our deposits with wholesale funding sources such as Quickrate and brokered deposits. However, we do not significantly rely on wholesale funding sources, which are generally viewed as less stable compared to core deposits due to the relatively higher price elasticity of demand for deposits from wholesale sources. As of September 30, 2019 and December 31, 2018, these wholesale deposits represented 5.2% and 3.99%, respectively, of our total deposits.

Interest-bearing deposits increased $162.1 million, or 34.3%, from December 31, 2018 to September 30, 2019 primarily due to a $123.7 million increase in money market account balances and a $18.4 million increase in certificates of deposit. In order to fund our loan growth, all of our bankers are actively involved with our strategic efforts and are incentivized to grow core deposits. The average rate paid on interest-bearing deposits increased 52 basis points from 1.23% for the year ended December 31, 2018 to 1.75% for the nine months ended September 30, 2019. Rates paid on certificates of deposit increased 49 basis points, or 28.8%, over the same period. The increase in average rates paid on interest-bearing deposits and certificates of deposit was a result of a continued increase market rates of interest during the first half of 2019, as well as upward competitive pricing pressures, partially offset by rate cuts during the third quarter of 2019. As of September 30, 2019, we had approximately $24.4 million in brokered deposits, 3.0% of total, that were classified as brokered deposits, an increase of approximately $4.5 million, or 22.2% from December 31, 2018. We did not obtain these brokered deposits through a deposit listing agency, but rather through an existing relationship with the Bank. However, these deposits meet the regulatory definition of brokered deposits and are reported accordingly.

Interest-bearing deposits increased $114.7 million, or 31.7%, from December 31, 2017 to December 31, 2018. Certificates of deposit increased $18.3 million and money market accounts and NOW accounts increased $96.5 million. The average rate paid on interest-bearing deposits increased 33 basis points for the year ended December 31, 2018 compared to the year ended December 31, 2017. The average rate paid on certificates of deposit increased 42 basis points over the same period. The increase in average rates paid on interest-bearing deposits and certificates of deposit was a result of increasing market interest rates during 2018, as well as upward competitive pricing pressures. As of December 31, 2018, we had approximately $19.9 million in deposits, 3.2% of total, classified as brokered deposits, compared to no deposits classified as brokered deposits as of December 31, 2017 or 2016.

For the year ended December 31, 2017, interest-bearing deposits increased $98.2 million, or 37.7%, certificates of deposit decreased $23.6 million and money market accounts and NOW accounts increased $121.8 million compared to December 31, 2016. Average rates paid for deposits increased 7 basis points, or 8.4%, from the prior year primarily as a result of higher rates paid for money market accounts and large time deposits. The following table presents the average balances and average rates paid on deposits for the periods indicated.

​	For the Nine Months Ended September 30, 2019					For the Year Ended December 31
​						2018					2017					2016
(Dollars in thousands)	Average Balance			Average Rate		Average Balance			Average Rate		Average Balance			Average Rate		Average Balance			Average Rate
NOW accounts	​	$	30,680	​	0.37%	​	$	24,791	​	0.29%	​	$	14,473	​	0.23%	​	$	12,926	​	0.21%
Money market accounts	​	​	407,669	​	1.76%	​	​	304,772	​	1.18%	​	​	198,513	​	0.80%	​	​	137,005	​	0.65%
Savings accounts	​	​	7,999	​	1.38%	​	​	2,354	​	0.13%	​	​	2,234	​	0.10%	​	​	1,921	​	0.10%
Certificates of deposit	​	​	100,897	​	2.19%	​	​	83,636	​	1.70%	​	​	78,340	​	1.28%	​	​	83,131	​	1.23%
Total interest-bearing deposits	​	​	547,245	​	1.75%	​	​	415,553	​	1.23%	​	​	293,560	​	0.90%	​	​	234,983	​	0.83%
Noninterest-bearing deposits	​	​	163,513	​	0.00%	​	​	127,659	​	0.00%	​	​	91,230	​	0.00%	​	​	68,142	​	0.00%
Total deposits	​	$	710,758	​	1.35%	​	$	543,212	​	0.94%	​	$	384,790	​	0.68%	​	$	303,125	​	0.64%

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The following table presents the ending balances and percentage of total deposits for the periods indicated.

​	For the Nine Months Ended September 30, 2019					For the Year Ended December 31
​						2018					2017					2016
(Dollars in thousands)	Ending Balance			% of Total		Ending Balance			% of Total		Ending Balance			% of Total		Ending Balance			% of Total
NOW accounts	​	$	37,297	​	4.53%	​	$	25,088	​	4.16%	​	$	19,515	​	4.25%	​	$	12,087	​	3.73%
Money market accounts	​	​	475,670	​	57.79%	​	​	352,002	​	58.35%	​	​	260,850	​	56.81%	​	​	146,829	​	45.33%
Savings accounts	​	​	10,188	​	1.24%	​	​	2,389	​	0.40%	​	​	2,660	​	0.58%	​	​	2,343	​	0.72%
Certificates of deposit	​	​	111,983	​	13.61%	​	​	93,578	​	15.51%	​	​	75,302	​	16.40%	​	​	98,901	​	30.53%
Total interest-bearing deposits	​	​	635,138	​	77.17%	​	​	473,057	​	78.41%	​	​	358,327	​	78.04%	​	​	260,160	​	80.32%
Noninterest-bearing deposits	​	​	187,927	​	22.83%	​	​	130,245	​	21.59%	​	​	100,847	​	21.96%	​	​	63,762	​	19.68%
Total deposits	​	$	823,065	​	100.00%	​	$	603,302	​	100.00%	​	$	459,174	​	100.00%	​	$	323,922	​	100.00%

The following table presents the maturities of our certificates of deposit as of September 30, 2019.

(Dollars in thousands)	Three Months or Less			Over Three Through Six Months			Over Six Months Through 12 Months			Over 12 Months			Total
$100,000 or more	​	$	15,167	​	$	18,503	​	$	59,846	​	$	11,116	​	$	104,632
Less than $100,000	​	​	1,694	​	​	1,544	​	​	3,476	​	​	637	​	​	7,351
Total	​	$	16,861	​	$	20,047	​	$	63,322	​	$	11,753	​	$	111,983

Borrowings

We primarily use short-term and long-term borrowings to supplement deposits to fund our lending and investment activities.

FHLB Advances.   The FHLB allows us to borrow up to 25% of our assets on a blanket floating lien status collateralized by certain securities and loans. As of September 30, 2019, approximately $151.8 million in real estate loans were pledged as collateral for our FHLB borrowings. We utilize these borrowings to meet liquidity needs and to fund certain fixed rate loans in our portfolio. As of September 30, 2019, we had $50.0 million in outstanding advances and $57.6 million in additional available borrowing capacity from the FHLB based on the collateral that we have currently pledged. The following table sets forth certain information on our FHLB borrowings during the periods presented.

​	Nine Months Ended September 30, 2019			Years Ended December 31,
(Dollars in thousands)				2018			2017			2016
Amount outstanding at period-end	​	$	50,000	​	$	40,000	​	$	25,000	​	$	20,000
Weighted average interest rate at period-end	​	​	2.23%	​	​	2.27%	​	​	1.44%	​	​	1.02%
Maximum month-end balance during period	​	$	50,000	​	$	40,000	​	$	25,000	​	$	20,000
Average balance outstanding during period	​	​	45,055	​	​	34,712	​	​	17,479	​	​	16,965
Weighted average interest rate during period	​	​	2.33%	​	​	2.11%	​	​	1.34%	​	​	1.02%

Federal Reserve Bank of Atlanta.   The Federal Reserve Bank of Atlanta has an available borrower in custody arrangement which allows us to borrow on a collateralized basis. No advances were outstanding under this facility as of September 30, 2019.

Liquidity and Capital Resources

Capital Resources

Shareholders’ equity decreased $1.7 million for the nine months ended September 30, 2019 compared to the year ended December 31, 2018, primarily due to our repurchase of 200,000 shares of Class A common stock from De Linea CV for an aggregate purchase price of  $3.5 million. See “Certain

172

Relationships and Related Party Transactions — Stock Repurchase.” Net income resulted in an increase to retained earnings of  $1.3 million as of September 30, 2019. Shareholders’ equity increased $22.1 million for the year ended December 31, 2018 compared to the year ended December 31, 2017. Net income resulted in an increase to retained earnings of  $2.1 million as of December 31, 2018. Shares of common stock totaling 1,095,890 were issued upon the closing of our 2018 private offering, resulting in an increase to shareholders’ equity of approximately $20.0 million.

For the year ended December 31, 2017, shareholders’ equity increased $20.7 million, primarily as a result of shares issued in connection with our 2017 private offering and net income of  $1.8 million. Shares of common stock totaling 1,300,266 were issued upon the closing of our 2017 private offering, resulting in an increase to shareholders’ equity of approximately $18.9 million. During 2017, shares issued as compensation and stock-based compensation increased common stock and additional paid-in-capital in the aggregate by $39,000.

We are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a material effect on our financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, we must meet specific capital guidelines that involve quantitative measures of our assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy require us to maintain minimum ratios of common equity Tier 1, Tier 2, and total capital as a percentage of assets and off-balance sheet exposures, adjusted for risk weights ranging from 0% to 150%. We are also required to maintain capital at a minimum level based on quarterly average assets, which is known as the leverage ratio.

In July 2013, federal bank regulatory agencies issued a final rule that revised their risk-based capital requirements and the method for calculating risk-weighted assets to make them consistent with certain standards that were developed by Basel III and certain provisions of the Dodd-Frank Act. The final rule applies to all depository institutions and bank holding companies and savings and loan holding companies with total consolidated assets of more than $1 billion, which we refer to below as “covered” banking organizations. We were required to implement the new Basel III capital standards as of January 1, 2015 and January 1, 2018, respectively.

As of September 30, 2019, we were in compliance with all applicable regulatory capital requirements to which we were subject, and the Bank was classified as “well capitalized” for purposes of the prompt corrective action regulations. As we deploy our capital and continue to grow our operations, our regulatory capital levels may decrease depending on our level of earnings. However, we intend to monitor and control our growth in order to remain in compliance with all regulatory capital standards applicable to us. See “Supervision and Regulation — Capital Adequacy Guidelines” for additional discussion regarding the regulatory capital requirements applicable to the Company and the Bank.

The following table presents our regulatory capital ratios as of the dates indicated. The amounts presented exclude the capital conservation buffer. See “Supervision and Regulation — Professional Holding Corp. — Capital Regulations.”

​

Actual

Minimum for capital adequacy

Minimum to be well capitalized

(Dollars in thousands)

Amount

Ratio

Amount

Ratio

Amount

Ratio

September 30, 2019

​

​

​

​

​

​

Total risk-based capital ratio

​

​

​

​

​

​

Bank

​

$

84,082

​

12.4%

​

$

54,424

​

8.0%

​

$

68,030

​

10.0%

Company

​

​

85,091

​

12.5%

​

​

54,424

​

8.0%

​

​

N/A

​

N/A

Tier 1 risk-based capital ratio

​

​

​

​

​

​

Bank

​

​

77,026

​

11.3%

​

​

40,818

​

6.0%

​

​

54,424

​

8.0%

Company

​

​

78,036

​

11.5%

​

​

40,818

​

6.0%

​

​

N/A

​

N/A

173

​

Actual

Minimum for capital adequacy

Minimum to be well capitalized

(Dollars in thousands)

Amount

Ratio

Amount

Ratio

Amount

Ratio

Tier1 leverage ratio

​

​

​

​

​

​

Bank

​

​

77,026

​

8.3%

​

​

36,992

​

4.0%

​

​

46,240

​

5.0%

Company

​

​

78,036

​

8.4%

​

​

36,992

​

4.0%

​

​

N/A

​

N/A

Common equity tier 1 capital ratio

​

​

​

​

​

​

Bank

​

​

77,026

​

11.3%

​

​

30,614

​

4.5%

​

​

44,220

​

6.5%

Company

​

​

78,036

​

11.5%

​

​

30,614

​

4.5%

​

​

N/A

​

N/A

December 31, 2018

​

​

​

​

​

​

Total risk-based capital ratio

​

​

​

​

​

​

Bank

​

$

68,427

​

13.4%

​

$

40,731

​

8.0%

​

$

50,914

​

10.0%

Company

​

​

86,014

​

16.9%

​

​

40,731

​

8.0%

​

​

N/A

​

N/A

Tier 1 risk-based capital ratio

​

​

​

​

​

​

Bank

​

​

62,519

​

12.3%

​

​

30,549

​

6.0%

​

​

40,731

​

8.0%

Company

​

​

80,107

​

15.7%

​

​

30,549

​

6.0%

​

​

N/A

​

N/A

Tier1 leverage ratio

​

​

​

​

​

​

Bank

​

​

62,519

​

8.6%

​

​

29,129

​

4.0%

​

​

36,411

​

5.0%

Company

​

​

80,107

​

11.0%

​

​

29,129

​

4.0%

​

​

N/A

​

N/A

Common equity tier 1 capital ratio

​

​

​

​

​

​

Bank

​

​

62,539

​

12.3%

​

​

22,911

​

4.5%

​

​

33,094

​

6.5%

Company

​

​

80,107

​

15.7%

​

​

22,911

​

4.5%

​

​

N/A

​

N/A

December 31, 2017

​

​

​

​

​

​

Total risk-based capital ratio

​

​

​

​

​

​

Bank

​

$

49,234

​

12.0%

​

$

32,866

​

8.0%

​

$

41,083

​

10.0%

Company

​

​

62,649

​

15.2%

​

​

32,866

​

8.0%

​

​

N/A

​

N/A

Tier 1 risk-based capital ratio

​

​

​

​

​

​

Bank

​

​

44,476

​

10.8%

​

​

24,650

​

6.0%

​

​

32,866

​

8.0%

Company

​

​

57,892

​

14.1%

​

​

24,650

​

6.0%

​

​

N/A

​

N/A

Tier1 leverage ratio

​

​

​

​

​

​

Bank

​

​

44,476

​

8.7%

​

​

20,513

​

4.0%

​

​

25,641

​

5.0%

Company

​

​

57,892

​

11.3%

​

​

20,513

​

4.0%

​

​

N/A

​

N/A

Common equity tier 1 capital ratio

​

​

​

​

​

​

Bank

​

​

44,476

​

10.8%

​

​

18,487

​

4.5%

​

​

26,704

​

6.5%

Company

​

​

57,892

​

14.1%

​

​

18,487

​

4.5%

​

​

N/A

​

N/A

December 31, 2016

​

​

​

​

​

​

Total risk-based capital ratio

​

​

​

​

​

​

Bank

​

$

36,800

​

12.0%

​

$

24,628

​

8.0%

​

$

30,785

​

10.0%

Company

​

​

40,766

​

13.2%

​

​

24,628

​

8.0%

​

​

N/A

​

N/A

Tier 1 risk-based capital ratio

​

​

​

​

​

​

Bank

​

​

33,045

​

10.7%

​

​

18,471

​

6.0%

​

​

24,628

​

8.0%

Company

​

​

37,011

​

12.0%

​

​

18,471

​

6.0%

​

​

N/A

​

N/A

174

​

Actual

Minimum for capital adequacy

Minimum to be well capitalized

(Dollars in thousands)

Amount

Ratio

Amount

Ratio

Amount

Ratio

Tier1 leverage ratio

​

​

​

​

​

​

Bank

​

33,045

​

8.8%

​

15,036

​

4.0%

​

18,795

​

5.0%

Company

​

37,011

​

9.8%

​

15,036

​

4.0%

​

N/A

​

N/A

Common equity tier 1 capital ratio

​

​

​

​

​

​

Bank

​

33,045

​

10.7%

​

13,853

​

4.5%

​

20,011

​

6.5%

Company

​

37,011

​

12.0%

​

13,853

​

4.5%

​

N/A

​

N/A

Liquidity

In general terms, liquidity is a measurement of our ability to meet our cash needs. Our objective in managing our liquidity is to maintain our ability to fund loan commitments, purchase securities, accommodate deposit withdrawals or repay other liabilities in accordance with their terms, without an adverse impact on our current or future earnings. Our liquidity strategy is guided by policies that are formulated and monitored by our Asset Liability Management Committee, or ALCO, and senior management, including our Liquidity Contingency Policy, and which take into account the marketability of assets, the sources and stability of funding and the level of unfunded commitments. We regularly evaluate all of our various funding sources with an emphasis on accessibility, stability, reliability and cost-effectiveness. Our principal source of funding has been our clients’ deposits, supplemented by our short-term borrowings, primarily from FHLB borrowings. We believe that the cash generated from operations, our borrowing capacity and our access to capital resources are sufficient to meet our future operating capital and funding requirements.

At September 30, 2019, we had the ability to generate approximately $97.3 million in additional liquidity through all of our available resources beyond our overnight funds sold position. In addition to the primary borrowing outlets mentioned above, we also have the ability to generate liquidity by borrowing from the Federal Reserve Discount Window and through brokered deposits. We recognize the importance of maintaining liquidity and have developed a Contingent Liquidity Plan, which addresses various liquidity stress levels and our response and action based on the level of severity. We periodically test our credit facilities for access to the funds, but also understand that as the severity of the liquidity level increases, certain credit facilities may no longer be available. We conduct quarterly liquidity stress tests and the results are reported to our Asset-Liability Management Committee and our Board. We believe the liquidity available to us is sufficient to meet our ongoing needs.

We also view our investment portfolio as a liquidity source and have the option to pledge securities in our portfolio as collateral for borrowings or deposits, and/or sell selected securities. Our portfolio primarily consists of debt issued by the federal government and governmental agencies. The weighted-average maturity of our portfolio was 3.65 years and 4.43 years at September 30, 2019 and December 31, 2018, respectively, and had a net unrealized pre-tax loss of  $84,000 and $0.5 million, respectively, in our available for sale securities portfolio as of those dates.

Our average net overnight funds sold position (defined as funds sold plus interest-bearing deposits with other banks less funds purchased) was $24.5 million during the first nine months of 2019 compared to an average net overnight funds sold position of  $20.7 million for the 2018 full year period. As we have continued to experience high organic growth, we have preferred to maintain our excess liquidity in assets with greater liquidity, such as federal funds sold, as opposed to less liquid, but slightly higher yielding, assets, like investment securities.

We expect our capital expenditures over the next 12 months to be approximately $1.7 million, which will consist primarily of investments in fintech products and services related to the development of our Digital Innovation Center in Cleveland, Ohio, technology purchases for our new banking offices, business applications, information technology security needs as well as furniture, fixtures and equipment for our new banking offices. We expect that these capital expenditures will be funded with existing resources without impairing our ability to meet our ongoing obligations.

175

Inflation

The impact of inflation on the banking industry differs significantly from that of other industries in which a large portion of total resources are invested in fixed assets such as property, plant and equipment. Assets and liabilities of financial institutions are primarily all monetary in nature, and therefore are principally impacted by interest rates rather than changing prices. While the general level of inflation underlies most interest rates, interest rates react more to changes in the expected rate of inflation and to changes in monetary and fiscal policy.

Contractual Obligations

We have contractual obligations to make future payments on debt and lease agreements. While our liquidity monitoring and management consider both present and future demands for and sources of liquidity, the following table of contractual commitments focuses only on future obligations and summarizes our contractual obligations as of September 30, 2019.

(Dollars in thousands)	Due in One Year or Less			Due after One Through Three Years			Due After Three Through Five Years			Due After Five Years			Total
FHLB Advances	​	$	10,000	​	$	20,000	​	$	20,000	​	$	—	​	$	50,000
Certificates of deposit $100,000 or more	​	​	93,516	​	​	11,116	​	​	—	​	​	—	​	​	104,632
Certificates of deposit less than $100,000	​	​	6,714	​	​	637	​	​	—	​	​	—	​	​	7,351
Operating leases	​	​	1,060	​	​	2,147	​	​	2,138	​	​	2,217	​	​	7,562
Total	​	$	111,290	​	$	33,900	​	$	22,138	​	$	2,217	​	$	169,545

Off-Balance Sheet Items

In the normal course of business, we enter into various transactions that, in accordance with GAAP, are not included in our consolidated balance sheets. We enter into these transactions to meet the financing needs of our clients. These transactions include commitments to extend credit and issue letters of credit, which involve, to varying degrees, elements of credit risk and interest rate risk in excess of the amounts recognized in our consolidated balance sheets. Our exposure to credit loss is represented by the contractual amounts of these commitments. The same credit policies and procedures are used in making these commitments as for on-balance sheet instruments. We are not aware of any accounting loss to be incurred by funding these commitments, however we maintain an allowance for off-balance sheet credit risk which is recorded in other liabilities on the consolidated balance sheet.

Our commitments associated with outstanding letters of credit and commitments to extend credit expiring by period as of the date indicated are summarized below. Since commitments associated with letters of credit and commitments to extend credit may expire unused, the amounts shown do not necessarily reflect the actual future cash funding requirements.

​	As of September 30, 2019			As of December 31,
(Dollars in thousands)				2018			2017			2016
Unfunded lines of credit	​	$	184,360	​	$	106,866	​	$	75,791	​	$	74,536
Commitments to extend credit	​	​	22,604	​	​	30,599	​	​	42,809	​	​	44,802
Letters of credit	​	​	10,697	​	​	10,417	​	​	10,546	​	​	6,870
Total credit extension commitments	​	$	217,661	​	$	147,882	​	$	129,146	​	$	126,208

Unfunded lines of credit represent unused portions of credit facilities to our current borrowers that represent no change in credit risk in our portfolio. Lines of credit generally have variable interest rates. The maximum potential amount of future payments we could be required to make is represented by the contractual amount of the commitment, less the amount of any advances made.

Letters of credit are conditional commitments issued by us to guarantee the performance of a client to a third party. In the event of nonperformance by the client in accordance with the terms of the agreement with the third party, we would be required to fund the commitment. If the commitment is funded, we would

176

be entitled to seek recovery from the client from the underlying collateral, which can include commercial real estate, physical plant and property, inventory, receivables, cash or marketable securities.

Our policies generally require that letter of credit arrangements contain security and debt covenants similar to those contained in loan agreements and our credit risk associated with issuing letters of credit is similar to the credit risk involved in extending loan facilities to our clients. The effect on our revenue, expenses, cash flows, and liquidity of the unused portions of these letters of credit commitments and letters of credit cannot be precisely predicted because there is no guarantee that the lines of credit will be used.

Commitments to extend credit are agreements to lend funds to a client, as long as there is no violation of any condition established in the contract, for a specific purpose. Commitments generally have variable interest rates, fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being fully drawn, the total commitment amounts disclosed above do not necessarily represent future cash requirements. We evaluate each client’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if considered necessary by us, upon extension of credit is based on management’s credit evaluation of the client.

We enter into forward commitments for the delivery of mortgage loans in our current pipeline. Interest rate lock commitments are entered into in order to economically hedge the effect of changes in interest rates resulting from our commitments to fund the loans. These commitments to fund mortgage loans, to be sold into the secondary market, (interest rate lock commitments) and forward commitments for the future delivery of mortgage loans to third party investors are considered derivatives. We attempt to minimize our exposure to loss under credit commitments by subjecting them to the same credit approval and monitoring procedures as we do for on-balance sheet instruments.

Certain Performance Metrics

The following table shows the return on average assets (computed as net income divided by average total assets), return on average equity (computed as net income divided by average equity) and average equity to average assets ratios for the nine months ended September 30, 2019 and for the years ended December 31, 2018, 2017, and 2016.

​	Nine Months Ended September 30, 2019		Years Ended December 31,
​			2018		2017		2016
Return on Average Assets(1)	​	0.21%	​	0.33%	​	0.39%	​	0.33%
Return on Average Equity(1)	​	2.25%	​	3.52%	​	3.30%	​	3.15%
Average Equity to Average Assets	​	9.44%	​	9.33%	​	11.95%	​	10.01%

(1)

Annualized for the nine months ended September 30, 2019.

Market Risk and Interest Rate Sensitivity

Overview

Market risk arises from changes in interest rates, exchange rates, commodity prices, and equity prices. We have risk management policies designed to monitor and limit exposure to market risk and we do not participate in activities that give rise to significant market risk involving exchange rates, commodity prices, or equity prices. In asset and liability management activities, our policies are designed to minimize structural interest rate risk.

Interest Rate Risk Management

Our net income is largely dependent on net interest income. Net interest income is susceptible to interest rate risk to the degree that interest-bearing liabilities mature or reprice on a different basis than interest earning assets. When interest-bearing liabilities mature or reprice more quickly than interest earning assets in a given period, a significant increase in market rates of interest could adversely affect net interest income. Similarly, when interest earning assets mature or reprice more quickly than interest-bearing

177

liabilities, falling market interest rates could result in a decrease in net interest income. Net interest income is also affected by changes in the portion of interest earning assets that are funded by interest-bearing liabilities rather than by other sources of funds, such as noninterest-bearing deposits and shareholders’ equity.

We have established what we believe to be a comprehensive interest rate risk management policy, which is administered by ALCO. The policy establishes limits of risk, which are quantitative measures of the percentage change in net interest income (a measure of net interest income at risk) and the fair value of equity capital (a measure of economic value of equity, or EVE, at risk) resulting from a hypothetical change in interest rates for maturities from one day to 30 years. We measure the potential adverse impacts that changing interest rates may have on our short-term earnings, long-term value, and liquidity by employing simulation analysis through the use of computer modeling. The simulation model captures optionality factors such as call features and interest rate caps and floors imbedded in investment and loan portfolio contracts. As with any method of gauging interest rate risk, there are certain shortcomings inherent in the interest rate modeling methodology used by us. When interest rates change, actual movements in different categories of interest earning assets and interest-bearing liabilities, loan prepayments, and withdrawals of time and other deposits, may deviate significantly from assumptions used in the model. Finally, the methodology does not measure or reflect the impact that higher rates may have on adjustable-rate loan clients’ ability to service their debts, or the impact of rate changes on demand for loan and deposit products.

The balance sheet is subject to testing for interest rate shock possibilities to indicate the inherent interest rate risk. We prepare a current base case and several alternative interest rate simulations (-400, -300, -200, -100,+100, +200, +300 and +400 basis points (bps)), at least once per quarter, and report the analysis to ALCO and our Board. We augment our interest rate shock analysis with alternative interest rate scenarios on a quarterly basis that may include ramps, parallel shifts, and a flattening or steepening of the yield curve (non-parallel shift). In addition, more frequent forecasts may be produced when interest rates are particularly uncertain or when other business conditions so dictate.

Our goal is to structure the balance sheet so that net interest earnings at risk over a 12-month period and the economic value of equity at risk do not exceed policy guidelines at the various interest rate shock levels. We attempt to achieve this goal by balancing, within policy limits, the volume of floating-rate liabilities with a similar volume of floating-rate assets, by keeping the average maturity of fixed-rate asset and liability contracts reasonably matched, by managing the mix of our core deposits, and by adjusting our rates to market conditions on a continuing basis.

Analysis

The following table indicates that, for periods less than one year, rate-sensitive liabilities exceeded rate-sensitive assets, resulting in a slightly liability-sensitive position. For a bank with a liability-sensitive position, otherwise refered to as a negative gap, falling interest rates would generally be expected to have a positive effect on net interest income, and rising interest rates would generally be expected to have the opposite effect.

178

REPRICING GAP

September 30, 2019 (Dollars in thousands)

Within One Month

After One Month Through Three Months

After Three Months Through 12 Months

Within One Year

Greater than One Year or Nonsensitive

Total

Assets

​

​

​

​

​

​

Interest earning assets

​

​

​

​

​

​

Loans(1)

​

$

158,263

​

$

28,574

​

$

149,311

​

$

336,148

​

$

428,515

​

$

764,663

Securities

​

​

22,799

​

​

2,182

​

​

1,784

​

​

26,765

​

​

2,670

​

​

29,435

Interest-bearing deposits at other financial institutions(2)

​

​

90,010

​

​

—

​

​

—

​

​

90,010

​

​

—

​

​

90,010

Federal funds sold

​

​

26,398

​

​

—

​

​

—

​

​

26,398

​

​

—

​

​

26,398

Total interest earning assets

​

$

297,470

​

$

30,756

​

$

151,095

​

$

479,321

​

$

431,185

​

$

910,506

Liabilities

​

​

​

​

​

​

Interest-bearing liabilities

​

​

​

​

​

​

Interest-bearing deposits

​

$

311,145

​

$

9,214

​

$

41,457

​

$

361,816

​

$

161,339

​

$

523,155

Time deposits

​

​

26,865

​

​

9,552

​

​

63,813

​

​

100,230

​

​

11,753

​

​

111,983

Total interest-bearing deposits

​

​

338,010

​

​

18,766

​

​

105,270

​

​

462,046

​

​

173,092

​

​

635,138

Securities sold under agreements to repurchase

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

FHLB Advances

​

​

12,496

​

​

10,000

​

​

7,504

​

​

30,000

​

​

20,000

​

​

50,000

Other borrowed funds

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Total interest-bearing liabilities

​

$

350,506

​

$

28,766

​

$

112,774

​

$

492,046

​

$

193,092

​

$

685,138

Period gap

​

$

(53,036)

​

$

1,990

​

$

38,321

​

$

(12,725)

​

$

238,093

​

​

​

Cumulative gap

​

$

(53,036)

​

$

(51,046)

​

$

(12,725)

​

$

(12,725)

​

$

225,368

​

​

​

Ratio of cumulative gap to total earning assets

​

​

(17.83)%

​

​

(165.97)%

​

​

(8.42)%

​

​

(2.65)%

​

​

52.27%

​

​

​

Ratio of cumulative gap to cumulative total earning assets

​

​

(5.82)%

​

​

(5.61)%

​

​

(1.40)%

​

​

(1.40)%

​

​

24.75%

​

​

​

(1)

Includes loans held for resale

(2)

Includes FRB and FHLB stock, which has been historically redeemable at par.

179

CASH FLOW GAP

September 30, 2019 (Dollars in thousands)

Within One Month

After One Month Through Three Months

After Three Months Through 12 Months

Within One Year

Greater than One Year or Nonsensitive

Total

Assets

​

​

​

​

​

​

Interest earning assets

​

​

​

​

​

​

Loans(1)

​

$

28,315

​

$

30,636

​

$

144,402

​

$

203,353

​

$

561,310

​

$

764,663

Securities

​

​

1,811

​

​

1,012

​

​

3,220

​

​

6,043

​

​

23,392

​

​

29,435

Interest-bearing deposits at other financial institutions(2)

​

​

90,010

​

​

—

​

​

—

​

​

90,010

​

​

—

​

​

90,010

Federal funds sold

​

​

26,398

​

​

—

​

​

—

​

​

26,398

​

​

—

​

​

26,398

Total interest earning assets

​

$

146,534

​

$

31,648

​

$

147,622

​

$

325,804

​

$

584,702

​

$

910,506

Liabilities

​

​

​

​

​

​

Interest-bearing liabilities

​

​

​

​

​

​

Interest-bearing deposits

​

$

12,889

​

$

25,778

​

$

116,001

​

$

154,668

​

$

368,487

​

$

523,155

Time deposits

​

​

26,865

​

​

9,552

​

​

63,813

​

​

100,230

​

​

11,753

​

​

111,983

Total interest-bearing deposits

​

​

39,754

​

​

35,330

​

​

179,814

​

​

254,898

​

​

380,240

​

​

635,138

Securities sold under agreements to repurchase

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

FHLB Advances

​

​

3,263

​

​

11,525

​

​

14,434

​

​

29,222

​

​

20,778

​

​

50,000

Other borrowed funds

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Total interest-bearing liabilities

​

$

43,017

​

$

46,855

​

$

194,248

​

$

284,120

​

$

401,018

​

$

685,138

Period gap

​

$

103,517

​

$

(15,207)

​

$

(46,626)

​

$

41,684

​

$

183,684

​

​

​

Cumulative gap

​

$

103,517

​

$

88,310

​

$

41,684

​

$

41,684

​

$

225,368

​

​

​

Ratio of cumulative gap to total earning assets

​

​

70.64%

​

​

279.04%

​

​

28.24%

​

​

12.79%

​

​

38.54%

​

​

​

(1)

Includes loans held for sale

(2)

Includes FRB and FHLB stock, which has been historically redeemable at par.

Measures of net interest income at risk produced by simulation analysis are indicators of an institution’s short-term performance in alternative rate environments. These measures are typically based upon a relatively brief period, and do not necessarily indicate the long-term prospects or economic value of the institution.

The following table summarizes the results of our net interest income at risk analysis in simulating the change in net interest income and fair value of equity over a 12-month and 24-month horizon as of September 30, 2019, and December 31, 2018 and 2017.

Net Interest Income at Risk – 12 months

-400bps

-300bps

-200bps

-100bps

Flat

+100bps

+200bps

+300bps

+400bps

Policy Limit

​

(20.0)%

​

(15.0)%

​

(10.0)%

​

(5.0)%

​

N/A

​

10.0%

​

15.0%

​

20.0%

​

25.0%

September 30, 2019

​

2.4%

​

4.6%

​

3.78%

​

1.0%

​

N/A

​

(0.7)%

​

(1.4)%

​

(2.1)%

​

(3.1)%

December 31, 2018

​

(9.9)%

​

(6.6)%

​

(4.7)%

​

(1.6)%

​

N/A

​

0.6%

​

0.8%

​

1.0%

​

1.2%

December 31, 2017

​

(11.8)%

​

(8.2)%

​

(5.6)%

​

(4.3)%

​

N/A

​

(3.6)%

​

(7.0)%

​

(10.5)%

​

13.9%

Net Interest Income at Risk – 24 months

-400bps

-300bps

-200bps

-100bps

Flat

+100bps

+200bps

+300bps

+400bps

Policy Limit

​

(20.0)%

​

(15.0)%

​

(10.0)%

​

(5.0)%

​

N/A

​

10.0%

​

15.0%

​

20.0%

​

25.0%

September 30, 2019

​

(8.3)%

​

(4.5)%

​

(1.9)%

​

(2.6)%

​

N/A

​

2.1%

​

3.6%

​

4.8%

​

5.6%

December 31, 2018

​

(16.1)%

​

(12.0)%

​

(7.7)%

​

(2.7)%

​

N/A

​

1.3%

​

2.3%

​

3.1%

​

3.7%

December 31, 2017

​

(18.4)%

​

(13.7)%

​

(10.2)%

​

(6.2)%

​

N/A

​

5.0%

​

9.8%

​

14.7%

​

19.6%

180

Using an EVE, we analyze the risk to capital from the effects of various interest rate scenarios through a long-term discounted cash flow model. This measures the difference between the economic value of our assets and the economic value of our liabilities, which is an estimate of liquidation value. While this provides some value as a risk measurement tool, management believes net interest income at risk is more appropriate in accordance with the going concern principle.

The following table illustrates the results of our EVE analysis as of September 30, 2019 and December 31, 2018 and 2017.

Economic Value of Equity as of

-400bps

-300bps

-200bps

-100bps

Flat

+100bps

+200bps

+300bps

+400bps

Policy Limit

​

(30.0)%

​

(20.0)%

​

(15.0)%

​

(10.0)%

​

N/A

​

17.5%

​

22.5%

​

27.5%

​

37.5%

September 30, 2019

​

5.8%

​

6.8%

​

6.9%

​

3.5%

​

N/A

​

(3.9)%

​

(9.5)%

​

(15.4)%

​

(21.9)%

December 31, 2018

​

(5.3)%

​

(0.4)%

​

0.7%

​

0.6%

​

N/A

​

(3.7)%

​

(8.2)%

​

(13.2)%

​

(19.0)%

December 31, 2017

​

(4.2)%

​

(0.7)%

​

1.8%

​

(0.5)%

​

N/A

​

(2.6)%

​

(5.0)%

​

(7.2)%

​

(9.7)%

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with GAAP and with general practices within the financial services industry. Application of these principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under current circumstances. These assumptions form the basis for our judgments about the carrying values of assets and liabilities that are not readily available from independent, objective sources. We evaluate our estimates on an ongoing basis. Use of alternative assumptions may have resulted in significantly different estimates. Actual results may differ from these estimates.

We have identified the following accounting policies and estimates that, due to the difficult, subjective, or complex judgments and assumptions inherent in those policies and estimates and the potential sensitivity of the financial statements to those judgments and assumptions, are critical to an understanding of our financial condition and results of operations. We believe that the judgments, estimates and assumptions used in the preparation of the consolidated financial statements are appropriate.

Allowance for Loan Losses

The allowance for loan losses provides for known and inherent losses in the loan portfolio based upon management’s best assessment of the loan portfolio at each balance sheet date. It is maintained at a level estimated to be adequate to absorb potential losses through periodic charges to the provision for loan losses.

The allowance for loan losses consists of specific and general reserves. Specific reserves relate to loans classified as impaired. Loans are considered impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due in accordance with the contractual terms of the loan. Impaired loans include troubled debt restructurings, and performing and nonperforming loans. Impaired loans are reviewed individually and a specific allowance is allocated, if necessary, based on evaluation of either the fair value of the collateral underlying the loan or the present value of future cash flows calculated using the loan’s existing interest rate. General reserves relate to the remainder of the loan portfolio, including overdrawn deposit accounts, and are based on evaluation of a number of factors, such as current economic conditions, the quality and composition of the loan portfolio, loss history, and other relevant factors.

Our loans are generally secured by specific items of collateral including real property, consumer assets, and business assets. However, the ability of borrowers to honor their contractual repayment obligations is substantially dependent on changing economic conditions. Because of the uncertainties associated with economic conditions, collateral values, and future cash flows on impaired loans, it is reasonably possible that management’s estimate of loan losses in the loan portfolio and the amount of the allowance needed may change in the future. The determination of the allowance for loan losses is, in large part, based on estimates that are particularly susceptible to significant changes in the economic environment and market conditions. In situations where the repayment of a loan is dependent on the value of the underlying collateral, an independent appraisal of the collateral’s current market value is customarily obtained and used in the determination of the allowance for loan loss.

181

While management uses available information to recognize losses on loans, further reductions in the carrying amounts of loans may be necessary based on changes in economic conditions. Also regulatory agencies, as an integral part of their examination process, periodically review management’s assessments of the adequacy of the allowance for loan losses. Such agencies may require us to recognize additional losses based on their judgments about information available to them at the time of their examination.

Fair Value Measurements

Fair value is the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for an asset or liability in an orderly transaction between market participants at the measurement date. The degree of management judgment involved in determining the fair value of a financial instrument is dependent upon the availability of quoted market prices or observable market inputs. For financial instruments that are traded actively and have quoted market prices or observable market inputs, there is minimal subjectivity involved in measuring fair value. However, when quoted market prices or observable market inputs are not fully available, significant management judgment may be necessary to estimate fair value. In developing our fair value estimates, we maximize the use of observable inputs and minimize the use of unobservable inputs.

The fair value hierarchy defines Level 1 valuations as those based on quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 valuations include inputs based on quoted prices for similar assets or liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Level 3 valuations are based on at least one significant assumption not observable in the market, or significant management judgment or estimation, some of which may be internally developed.

Financial assets that are recorded at fair value on a recurring basis include investment securities available for sale, and loans held for sale.

Recent Accounting Pronouncements

The following provides a brief description of accounting standards that have been issued but are not yet adopted that could have a material effect on the our financial statements. Please also refer to the Notes to our consolidated financial statements included in this joint proxy statement/prospectus for a full description of recent accounting pronouncements, including the respective expected dates of adoption and anticipated effects on our results of operations and financial condition.

ASU 2016-13, Financial Instruments — Credit Loses (Topic 326)

In June 2016, FASB issued guidance to replace the incurred loss model with an expected loss model, which is referred to as the current expected credit loss, or CECL, model. The CECL model is applicable to the measurement of credit losses on financial assets measured at amortized cost, including loan receivables and held to maturity debt securities. It also applies to off-balance sheet credit exposures not accounted for as insurance (i.e. loan commitments, standby letters of credit, financial guarantees and other similar instruments). We anticipated that this ASU would be effective for us on January 1, 2021, but the FASB announced on October 16, 2019, a delay of the effective date of ASU 2016-13 for smaller reporting companies until January 1, 2023. We are in the process of evaluating and implementing changes to credit loss estimation models and related processes. Updates to business processes and the documentation of accounting policy decisions are ongoing. We may recognize an increase in the allowance for credit losses upon adoption, recorded as a one-time cumulative adjustment to retained earnings. However, the magnitude of the impact on our consolidated financial statements has not yet been determined. See “Supervision and Regulation — Current Expected Credit Losses.”

182

MANAGEMENT OF PROFESSIONAL

Unless the context requires otherwise, references in this “Management of Professional” section of this joint proxy statement/prospectus to the “Company,” “we,” “us,” or “our” refer to Professional and its wholly owned subsidiaries on a consolidated basis, and references to the “Bank” refer to Professional Bank.

The following table sets forth the name, age as of December 31, 2019, and position of the individuals who currently serve as executive officers and directors of the Company and Bank. The following also includes certain information regarding our directors’ and officers’ individual experience, qualifications, attributes and skills and brief statements of those aspects of our directors’ backgrounds that led us to conclude that they are qualified to serve as directors.

Name	Age	Position(s)
Executive Officers:	​	​
Daniel R. Sheehan	44	Chairman and Chief Executive Officer of the Company and Bank; Director of the Company and the Bank
Abel L. Iglesias	57	President and Chief Operating Officer of the Bank; Director of the Company and the Bank
Ryan L. Gorney	39	Chief Information and Digital Officer of the Bank
Mary Usategui	35	Executive Vice President and Chief Financial Officer of the Bank; Corporate Secretary of the Company
Non-Executive Directors:	​	​
Rolando DiGasbarro	50	Director of the Company and the Bank
Carlos M. Garcia	48	Director of the Company and the Bank
Jon L. Gorney	69	Director of the Company and the Bank
Herbert Martens, Jr.	67	Director of the Company and the Bank
Dr. Lawrence Schimmel, M.D.	71	Director of the Company and the Bank
Anton V. Schutz	55	Director of the Company and the Bank

General

Our Articles of Incorporation provide for a Board of Directors consisting of at least one person, with the exact number to be determined from time to time by our Board. Our Board is currently composed of eight members and is divided into three classes of directors serving staggered three-year terms. In 2015, we entered into a Letter Agreement with BayBoston Capital L.P., or BayBoston, as amended, giving BayBoston the right to designate one person as a director of both the Company and the Bank. Mr. Garcia currently serves as BayBoston’s designee. Additionally, in connection with our 2017 private offering of our Class A Common Stock and Class B Common Stock, we granted a board observer right to EJF Sidecar Fund, Series LLC — Series E.

If our pending acquisition of Marquis is consummated, under the terms of the merger agreement, we have agreed to add up to five of Marquis’s directors to our Board and the Bank Board. Our Board (and the Nominating and Governance Committee of the Board) plans to evaluate the prospective MBI director nominees using the same process that applies to the nomination and appointment of directors to our Board generally, as outlined in our Corporate Governance Guidelines and the Nominating and Governance Committee Charter.

Approximately one-third of our Board is elected by our shareholders at each annual shareholders’ meeting for a term of three years, and the elected directors hold office until their successors are elected or until each director’s earlier death, resignation or removal. Our Executive Officers are appointed annually by our Board and hold office until their successors are duly appointed and qualified or until their earlier death, resignation or removal.

183

Board of Directors

The classification of our Board, as well as certain information regarding our directors, is set forth below:

Board of Directors
Class I (Terms ending 2021)	Class II (Terms ending 2022)	Class III (Terms ending 2020)
Rolando DiGasbarro	Abel L. Iglesias	Jon L. Gorney
Carlos M. Garcia	Daniel R. Sheehan	Herbert Martens, Jr.
Dr. Lawrence Schimmel	​	Anton V. Schutz

Rolando DiGasbarro has served as a director of Professional Bank and the Company since 2014. Mr. DiGasbarro is the Principal and founder of Windsor Investment Holdings LLC, founded in 2003, where he oversees investments in numerous commercial and residential real estate projects throughout North America. Since 2013, Mr. DiGasbarro has been a part-owner of several car dealerships and a large specialty finance company. He also owns and operates several car dealerships and a large specialty finance company. Mr. DiGasbarro previously worked as an investment banker for Lehman Brothers Holdings, Inc. from 1996 until 2003. Mr. DiGasbarro received both his B.B.A. and M.B.A. from York University in Toronto, Canada. We believe Mr. DiGasbarro’s qualifications to sit on our Board include his extensive leadership, operational and management experience gained from the successful operation of his several businesses.

Carlos M. Garcia has served as a director of Professional Bank and the Company since 2015 and is the designee of BayBoston pursuant to its right to appoint a director under its letter agreement with the Company. He has over 25 years of experience in the financial services industry, in both the private and public sectors. He has served as the Chief Executive Officer of BayBoston Managers LLC since 2014 and the Managing Partner and Founder of the BayBoston family of funds since 2013. He worked for 14 years at Banco Santander serving in various positions, including managing a mid-sized bank, and as a senior ranking executive and board member of Santander Bank, N.A. and Santander Holdings USA, Inc. He was appointed by President Obama to the Financial Oversight and Management Board for Puerto Rico in 2016. He is the Chairman of CFG Partners and a member of the board of directors of Hyde Square Task Force and has served on its board since 2014. He graduated with a dual degree from the Wharton School and the College of Arts & Sciences at the University of Pennsylvania. We believe Mr. Garcia’s qualifications to sit on our Board include his leadership and management experience in both the public and private sectors as well his over 25 years of experience in the banking and financial services industry.

Jon L. Gorney has served as director of the Company and Bank since 2017. In addition to his Board seat, Mr. Gorney has also served as Chairman of the Bank’s IT & Operations Committee since 2017. Mr. Gorney’s career spans 37 years in the financial services industry, 35 of which were spent with National City Corporation, or National City. He held numerous roles at National City, including leading the Corporate Operations and Information Services organization for 18 years. In this capacity, Mr. Gorney’s responsibilities included providing corporate-wide leadership for all acquisitions and integrations and overseeing over 6,000 people with an operating budget of approximately $900 million. During his tenure, assets of National City grew substantially requiring significant re-engineering of the technology architecture, infrastructure, and application systems. Between 2004 and 2006, Mr. Gorney also served as Chairman and CEO of National Processing Company, or NPC, which was the second largest publicly traded merchant card processor in the United States, of which National City was a large majority shareholder. Mr. Gorney joined PNC Financial Services (NYSE: PNC) following its acquisition of National City in December 2008 and co-chaired the company-wide integration. Mr. Gorney was a member of the executive and management committees at both National City and PNC and he retired from PNC in June 2010. Mr. Gorney holds a Bachelor of Science degree in computer science from the University of Dayton. Ryan Gorney, the Chief Information Officer/Digital Officer of the Bank, is the son of Mr. Gorney. We believe Mr. Gorney’s extensive experience in the banking and financial services industry, as well as his specific knowledge and expertise in banking IT matters qualifies him to sit on our Board.

Abel L. Iglesias has served as a director of the Company and Bank and as Professional Bank’s President since 2016 and was additionally named as Chief Operating Officer of the Bank in 2019. Between

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2016 and 2019, Mr. Iglesias served as the Chief Executive Officer of the Bank. Mr. Iglesias has close to 40 years of banking experience. Prior to joining Professional Bank in 2013, he served as President and Chief Executive Officer of JGB Bank, N.A., a bank based in Florida with total assets of approximately $516 million, between 2009 and its sale in 2013 to Sabadell United Bank, N.A. Mr. Iglesias also previously served as the Senior Executive Vice-President of BankUnited, FSB between 2003 and 2009 where he oversaw the commercial, corporate, commercial real estate and small business banking areas and was directly responsible for the day-to-day management of the Commercial Banking division and its lending groups for Miami-Dade, Broward, and Palm Beach Counties. From 1998 through 2003, he served as the Executive Vice President and Chief Lending Officer for the South Florida region of Colonial Bank. Mr. Iglesias also worked for Eastern National Bank and the Bank of Miami where he began his banking career in 1980. Mr. Iglesias is a board member of the Federal Reserve Bank of Atlanta’s Miami Branch. Mr. Iglesias holds a Master of Business Administration degree from the University of Miami and a Bachelor of Professional Studies degree, magna cum laude, from Barry University. We believe Mr. Iglesias’s qualifications to sit on our Board include his more than three decades of banking experience, including several years of experience in the roles of President and Chief Executive Officer at JGB Bank, N.A.

Herbert Martens, Jr. has served as a director of Professional Bank since 2008 and as a director of the Company since its inception in 2014. Since 2006, Mr. Martens has served as Managing Partner of Advent Associates, LLC, a private investment entity. He has more than 30 years of banking and investment experience, most recently serving as President and Chief Executive Officer of National City Bank Florida, in Palm Beach Gardens, Florida until 2006. Prior to that time, he served in various positions, including as Chairman and Chief Executive Officer of NatCity Investments, Executive Vice President of National City’s wealth management businesses and President and Chief Executive Officer of Allegiant Mutual Funds. Mr. Martens also previously served as Executive Vice president of Prescott, Ball & Turben, Inc., an investment firm, and Chief Executive Officer of Raffensperger, Hughes, & Company, an investment banking and brokerage firm, President and founder of Reserve Capital Group. Mr. Martens received a B.S. in finance and an M.B.A. from the University of Virginia. We believe Mr. Martens’s extensive experience in banking and investment, including his prior executive experience with National City Bank, qualifies him to serve on our Board.

Anton V. Schutz has served as a director of Professional Bank and the Company since 2015. Mr. Schutz founded Mendon Capital Advisors Corp in 1996 with a long/short and event-driven investment strategy focused exclusively on investing in the financial services sector. Mr. Schutz is responsible for the definition and implementation of portfolio strategy for the fund. Mr. Schutz has been in the investment and risk management business since 1986, focusing on investment and portfolio management. Mr. Schutz served as a senior vice president at RBC Dain Rauscher in institutional sales trading in the financial institutions group. He also worked at Chase Manhattan Bank for 10 years from 1986 to 1996 where his responsibilities included structuring investment products utilizing hedge funds and the development and application of financial risk strategies. Mr. Schutz has also been the portfolio manager of the RMB Mendon Financial Services Fund since 1999 and the RMB Mendon Financial Long/Short Fund since it was launched in 2004. Mr. Schutz has been frequently interviewed regarding his expertise in the financial services sector. He has appeared regularly as a guest on CNBC and Bloomberg and has been quoted in The Wall Street Journal, Barrons, Financial Times, and similar publications. He graduated from Franklin and Marshall College and obtained his M.B.A. in finance from Fordham University. We believe Mr. Schutz’s extensive experience in finance and capital markets qualifies him to sit on our Board.

Dr. Lawrence Schimmel was the founding Chairman of Professional Bank and has served as a director of Professional Bank since 2008 and as a director of the Company since its inception in 2014. Dr. Schimmel has been an entrepreneur in the medical-related business field throughout most of his career. Presently, he serves on the board of directors as the Chief Medical Officer for Clinigence Holdings, Inc., doing business as Clinigence Health, a healthcare analytics company since April 2019. Dr. Schimmel has also served as Managing Partner of Allied Health Advisors, LLC from 2012 to 2015. In 1992, Dr. Schimmel co-founded Allied Health Group and Florida Specialty Networks, which grew into a national medical management business overseeing the payment of approximately $450 million in healthcare claims annually, and he served as President and Chief Executive Officer of each of these companies from their founding until 1998 when they were sold to Magellan Health Services. In 1984, Dr. Schimmel was the founding Chairman of Megabank and served on its board of directors until 1993. Subsequently, Dr. Schimmel served on the board

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of directors of Executive National Bank from 1994 until 1997. Most recently, Dr. Schimmel served as the Chief Medical Officer for QualMetrix from 2013 until March 2019 when it was acquired by Clinigence Health. In addition, Dr. Schimmel practiced general and vascular surgery in the Miami community for 17 years. Dr. Schimmel received his B.A. from Rutgers College and his M.D. from New Jersey College of Medicine. We believe that Mr. Schimmel’s qualifications to sit on our Board include his executive leadership and management experience, his prior bank board experience, and financial expertise gained from the successful operations of his own businesses.

Daniel R. Sheehan has served as a director of Professional Bank since its inception in 2008, Chairman of the Board of Professional Bank since September 2013, Chief Executive Officer of Professional Bank since 2019, and Chairman of the Board and Chief Executive Officer of the Company since its inception in 2014. From 2016 until 2019, Mr. Sheehan was a real estate investment banker with Walker & Dunlop, Inc. and held a similar position with Cohen Financial from 2005 through 2016. Following the execution of his employment agreement in May 2018, Mr. Sheehan began winding down his involvement in real estate investment banking to focus full time on the Company and the Bank. Mr. Sheehan started his career at Bear Stearns, and subsequently has been directly involved in the investment and deployment of over $10 billion of institutional real estate capital throughout the U.S. while holding various positions at national real estate investment banks and financial intermediaries. He has significant experience in capital markets, structured finance, investment banking, community banking and shadow banking industries that provided him with valuable strategic insight on capital flows and associated risk as well as transactional and execution experience. Mr. Sheehan received his Bachelor of Science in Business Administration from the University of Florida and his M.B.A. from the University of Miami. We believe Mr. Sheehan’s qualifications to sit on our Board include his more than 20 years of financial, credit and transactional experience.

Executive Officers

The following provides certain information about our non-director Executive Officers:

Ryan L. Gorney has served as Chief Information/Digital Officer of Professional Bank since 2018. Prior to joining Professional Bank, he led the digital strategy and execution for KeyBank, an approximately $135 billion financial services company headquartered in Cleveland, Ohio from 2014 to 2016. He was a senior manager at Ernst & Young LLP from 2012 to 2014 and an executive director between 2016 and 2018. Prior to his service at KeyBank and Ernst & Young, Mr. Gorney was a senior manager at Accenture from 2003 to 2012 where he focused on providing advisory services to some of the largest financial services companies across the globe. Mr. Gorney is the son Jon L. Gorney, a director of the Company. Mr. Gorney received his Bachelor of Science in Business Administration degree from the University of Dayton.

Mary Usategui has served as Executive Vice President and Chief Financial Officer of Professional Bank and as Corporate Secretary of the Company since April 2014. Ms. Usategui previously served as Vice President and Controller for Professional Bank from May 2010 until March 2014. Prior to joining Professional Bank, she served in various roles, including most recently as Senior Financial Officer with Grove Bank and Trust (formerly Coconut Grove Bank) in Miami, Florida from 2003 to 2010. In all, she has over 15 years of banking experience. Ms. Usategui has also served as a bank advisory board member for the AAA Scholarship Foundation since 2016. Ms. Usategui is a Florida-licensed Certified Public Accountant and received her Master of Accounting degree from the University of Miami and both her Master of Science in Finance degree and her Bachelor of Business Administration degree in Finance and International Business, from Florida International University.

Corporate Governance

Corporate Governance Guidelines.   We are committed to sound corporate governance principles, which are essential to running our business efficiently and maintaining our integrity in the marketplace. Our Board has adopted Corporate Governance Guidelines, which will become effective upon completion of our initial public offering and set forth the framework within which our Board, assisted by the committees of our Board, oversees the affairs of our organization. The Corporate Governance Guidelines address, among other things, the composition and functions of our Board, director independence, compensation of

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directors, management succession and review, committees of our Board and selection of new directors. Upon completion of our initial public offering, our Corporate Governance Guidelines will be available on our website at www.myprobank.com under the “Investor Relations” tab.

Director Qualifications.   We believe that our directors should have the highest professional and personal ethics and values. They should have broad experience at the policy-making level in business, government, or banking. They should be committed to enhancing shareholder value and should have sufficient time to carry out their duties and to provide insight and practical wisdom based on experience. Our Corporate Governance Guidelines restrict directors from serving on more than four other boards of public companies in addition to our Board. We believe their service on boards of other companies should be limited to a number that permits them, given their individual circumstances, to perform responsibly all director duties. When considering potential director candidates, our Board also considers the candidate’s character, judgment, diversity, skill set, specific business background and global or international experience in the context of our needs and those of our Board.

Director Independence.   Under the rules of the Nasdaq Stock Market, independent directors must comprise a majority of our Board within a specified period of time of our initial public offering. The rules of the Nasdaq Stock Market, as well as those of the SEC, impose several other requirements with respect to the independence of our directors. Our Board has evaluated the independence of its members based upon the rules of the Nasdaq Stock Market and the SEC. Applying these standards, our Board has affirmatively determined that Messrs. DiGasbarro, Garcia, Martens, Schimmel and Schutz are “independent directors” under the applicable rules. We have determined that Messrs. Sheehan, Iglesias and Gorney are not “independent directors” under the applicable rules. Our Board determined that Messrs. Sheehan and Iglesias do not qualify as independent directors because Mr. Sheehan is an executive officer of both the Company and the Bank and Mr. Iglesias is an executive officer of the Bank. Additionally, Mr. Gorney does not qualify as independent since his son, Ryan L. Gorney, is employed as Chief Information/Digital Officer at the Bank.

Director Age Limits.   Pursuant to our Corporate Governance Guidelines, directors may not stand for election after they reach the age of 72, unless, on the recommendation of the Nominating and Corporate Governance Committee, our Board waives this requirement as to a director on the basis that such waiver is in the best interests of the Company, in which case the basis for this waiver shall be disclosed in the proxy statement for the annual meeting of shareholders. A director elected to our Board prior to his or her 72nd birthday may continue to serve until the next annual shareholders meeting coincident with or next following his or her 72nd birthday, subject to the waiver process described in the preceding sentence. In addition, our Board believes that it is advisable that non-employee directors have a varied mix of tenures and will strive to maintain the average tenure of non-employee directors at a level less than 10 years. The Board believes this policy will help encourage a diversity of experience and viewpoints.

Leadership Structure.   Our Board does not have a policy regarding the separation of the roles of Chief Executive Officer and Chairman of our Board, as our Board believes that it is in the best interests of our shareholders to make that determination from time to time based on the position and direction of our Company and the membership of our Board.

Currently, Mr. Sheehan serves as Chairman of our Board and of the Bank and the Chief Executive Officer of the Company and Bank. We believe this structure is currently appropriate for us. We believe that having a combined Chairman and Chief Executive Officer role at the Company and Bank allows Mr. Sheehan to primarily focus on strategic aspects of our business while Mr. Iglesias, as the President of the Bank, is able to focus primarily on managing the day-to-day operations of the Bank.

Code of Ethics and Business Conduct.   Our Board has adopted a Code of Ethics and Business Conduct that will become effective upon the completion of our initial public offering, which applies to all of our directors, officers and employees. This code provides fundamental ethical principles to which these individuals are expected to adhere and will operate as a tool to help our directors, officers and employees understand the high ethical standards required for employment by, or association with, our Company. Our Code of Ethics and Business Conduct, upon the completion of our initial public offering, will be available on our website at www.myprobank.com under the “Investor Relations” tab. We expect that any amendments to our Code of Ethics and Business Conduct, or any waivers of its requirements, will be disclosed on our website, as well as by any other means required by Nasdaq Stock Market rules.

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Risk Management and Oversight.   Our Board oversees our risk management process, which is a company-wide approach to risk management that is carried out by our management. Our full Board determines the appropriate risk for us generally, assesses the specific risks faced by us, and reviews the steps taken by management to manage those risks. While our full Board maintains the ultimate oversight responsibility for the risk management process (including oversight of capital adequacy in relation to risk), its committees oversee risk within their respective areas of oversight. Additionally, the Bank Board has several committees, including a Credit Committee, Asset Liability Management Committee, Compliance Committee, IT and Operations Committee, and Risk Committee (which primarily focuses on the Bank’s enterprise risk management) to assist with risk management related to matters within the purview of each committee. Management regularly reports on applicable risks to the relevant committee or the full Board, both at the Bank and Company levels, as appropriate, with additional review or reporting on risks conducted as needed or as requested by our Board and its committees.

Board Committees

Our Board has established the following standing committees in connection with the discharge of its responsibilities: the Audit Committee, the Compensation Committee, the Nominating and Corporate Governance Committee and the Executive Committee. Our Board also may establish other committees as it deems appropriate, in accordance with applicable law and regulations and our corporate governance documents.

Audit Committee.   The members of our Audit Committee are Messrs. DiGasbarro (Chairman) and Martens and Dr. Schimmel. Our Board has evaluated the independence of each of the members of our Audit Committee and has affirmatively determined that (1) each of the members of our Audit Committee is an “independent director” under Nasdaq Stock Market rules, (2) each of the members satisfies the additional independence standards under applicable SEC rules for audit committee service, and (3) each of the members has the ability to read and understand fundamental financial statements. In addition, our Board has determined that Mr. DiGasbarro has the financial sophistication required by the rules of the Nasdaq Stock Market due to his experience and background and that he qualifies as a “audit committee financial expert” under the rules and regulations of the SEC.

The Audit Committee assists our Board in its oversight of the integrity of our financial statements, the management of our independent auditor that audits and reports on our consolidated financial statements, the performance of our internal audit function, the review of reports of bank regulatory agencies, monitoring management’s compliance with the recommendations contained in those reports and our compliance with legal and regulatory requirements related to our financial statements and reporting. Among other things, our Audit Committee has responsibility for:

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selecting and reviewing the performance of our independent auditor, setting the independent auditor’s compensation and approving, in advance, all audit services;

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pre-approving all permitted non-audit services to be performed by our independent auditor;

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reviewing reports from the independent auditor regarding its internal quality control procedures and any material issues raised by the most recent internal quality-control review or peer review or by governmental or professional authorities, and any steps taken to deal with such issues;

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reviewing the independence of our independent auditor and monitoring audit partner rotation and independent auditor rotation in accordance with applicable laws, rules and regulations;

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reviewing our policies and procedures, and keeping our independent auditor informed of, relationships and transactions with related parties and reviewing and discussing internally and with our independent auditor identification of, accounting for, and disclosure of such relationships and transactions;

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reviewing with our independent auditor (a) the auditor’s responsibilities under generally accepted auditing standards and the responsibilities of management in the audit process; (b) the overall audit strategy and the scope and timing of our annual audit; (c) any problems or difficulties encountered in the course of the audit work, and management’s response; (d) any questions, comments or suggestions the independent auditor may have relating to our internal controls,

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accounting practices and related procedures, and the independent auditor’s evaluation of the adequacy of the two-way communication between the independent auditor and the Audit Committee; (e) any significant risks identified during the independent auditor’ risk assessment procedures; and (f) when completed, the results, including significant findings, of the annual audit;

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resolving any disagreements between the independent auditor and management;

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reviewing with our independent auditor all critical accounting policies and practices to be used in the annual audit, alternative treatments of financial information within GAAP and the ramifications of such alternative treatment, and material written communications between our independent auditor and management;

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reviewing the procedures for implementing accepted recommendations made by our independent auditor;

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reviewing with our independent auditor and management the adequacy and effectiveness of our systems of internal controls, accounting practices, and disclosure controls and procedures and current accounting trends and developments, and take such action with respect thereto as may be deemed appropriate;

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reviewing with management and our independent auditor our annual and quarterly financial statements;

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reviewing and discussing with our independent auditor any other matters required to be discussed under PCAOB rules;

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recommending to our Board, based on review and discussion with the Company’s independent auditor, whether the financial statements should be included in our annual report on Form 10-K, and produce the audit committee report required to be included in our annual proxy statement;

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reviewing earnings press releases, as well as our policies with respect to earnings press releases, financial information and earnings guidance provided to analysts and rating agencies;

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reviewing compliance by our Chief Executive Officer and Chief Financial Officer with applicable certification requirements;

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discussing our policies with respect to risk assessment and risk management, and reviewing contingent liabilities and risks that may be material to us, and relevant major legislative and regulatory developments that could materially impact our contingent liabilities and risks;

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engaging in such review and discussion as appropriate regarding bank regulatory examination reports or other regulatory reports and filings and other legal, regulatory or other matters;

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developing and recommending to our Board for approval a code of conduct and ethics (and any changes thereto), monitoring compliance with such code, investigating any alleged violations of such code, enforce the provisions of such code;

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establishing and overseeing procedures for the confidential and anonymous receipt, retention and treatment of complaints regarding our accounting, internal controls and auditing matters, as well as for the confidential, anonymous submissions by our employees of concerns regarding questionable accounting or auditing matters;

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establishing policies for the hiring of employees and former employees of our independent auditor; and

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conducting an annual performance evaluation of the Audit Committee, annually reviewing the Audit Committee Charter, and recommending changes to our Board.

Our Audit Committee has adopted a written charter, which sets forth the committee’s duties and responsibilities. The charter of the Audit Committee will be available on our website at www.myprobank.com upon completion of our initial public offering.

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Compensation Committee.   The members of our Compensation Committee are Messrs. Martens (Chairman), Garcia and Schutz, and Dr. Schimmel. Our Board has evaluated the independence of each of the members of our Compensation Committee and has affirmatively determined that each of the members of our Compensation Committee meets the definition of an “independent director” under Nasdaq Stock Market rules.

Our Board has also determined that each of the members of the Compensation Committee qualifies as a “nonemployee director” within the meaning of Rule 16b-3 under the Exchange Act.

The Compensation Committee assists our Board in its oversight of our overall compensation structure, policies and programs and assessing whether such structure meets our corporate objectives. The Compensation Committee also reviews and oversees the compensation determinations of our NEOs as well as the administration of our compensation and benefit plans.

Among other things, our Compensation Committee has responsibility for:

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reviewing and approving our overall compensation philosophy and overseeing the administration of related compensation and benefit programs, policies and practices;

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reviewing and approving our peer companies and data sources for purposes of evaluating compensation competitiveness and establishing the appropriate competitive positioning of the levels and mix of compensation elements;

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annually reviewing and approving the corporate goals and objectives relevant to the compensation of the CEO, evaluating the CEO’s performance in light of these goals and objectives, and approving the CEO’s base salary, short-term incentive compensation, and long-term incentive compensation based on this evaluation;

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annually reviewing and approving the corporate goals and objectives relevant to the compensation of executive officers other than the CEO, evaluate each such executive officer’s performance in light of these goals and objectives and the CEO’s recommendations concerning such executive officers, and recommending that our Board approve each such executive officer’s base salary, short-term incentive compensation, and long-term incentive compensation based on this evaluation;

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annually evaluating director compensation and recommending to our Board the appropriate level of director compensation, including compensation for service as a member or chair of a Board committee;

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reviewing and recommending to our Board incentive compensation plans and equity-based plans for executive officers and other employees, and where appropriate or required, recommending that such plans be submitted for approval by our shareholders;

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administering our equity-based and other compensation plans in accordance with their terms, including granting equity and other awards under such plans;

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in connection with our proxy statement or annual report on Form 10-K, if we include a Compensation Discussion and Analysis, or CD&A, (a) reviewing and discussing with management such CD&A and any related executive compensation information, (b) recommending whether the CD&A and related executive compensation information should be included in the proxy statement or annual report on Form 10-K and, (c) to the extent required by applicable law or regulation, producing the compensation committee report on executive officer compensation;

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reviewing and recommending to our Board any employment agreements and any severance arrangements or plans for the CEO and other executive officers, including the ability to adopt, amend and terminate such agreements, arrangements or plans;

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determining stock ownership guidelines for directors, the CEO and other executive officers and monitor compliance with such guidelines;

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reviewing benefits, including retirement benefits, and perquisites of the CEO and other executive officers to determine whether such benefits and perquisites are reasonable, competitive, and consistent with our overall executive compensation program;

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reviewing our incentive compensation arrangements to determine whether they encourage excessive risk-taking, reviewing and discussing at least annually the relationship between risk management policies and practices and compensation, and evaluating compensation policies and practices that could mitigate any such risk;

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if required, reviewing and recommending to our Board for approval the frequency with which we will conduct a shareholder advisory vote on executive compensation, taking into account the results of the most recent vote on frequency of such votes (if such vote was held by the Company), and reviewing and approving the proposals regarding the shareholder advisory vote on executive compensation and the frequency of such vote to be included in the Company’s proxy statement;

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conducting an annual performance evaluation of the Compensation Committee, annually reviewing the Compensation Committee Charter, and recommend changes to our Board;

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performing such other duties and carrying out such other responsibilities as are consistent with the Compensation Committee Charter or are delegated by our Board.

Our Compensation Committee has adopted a written charter, which sets forth the committee’s duties and responsibilities. The charter of the Compensation Committee will be available on our website at www.myprobank.com upon completion of our initial public offering.

Nominating and Corporate Governance Committee.   The members of our Nominating and Corporate Governance Committee are Messrs. DiGasbarro, Garcia, and Martens and Dr. Schimmel. Our Board has evaluated the independence of each of the members of our Nominating and Corporate Governance Committee and has affirmatively determined that each of the members of our Nominating and Corporate Governance Committee meets the definition of an “independent director” under Nasdaq Stock Market rules.

The Nominating and Corporate Governance Committee assists our Board in its oversight of identifying and recommending persons to be nominated for election as directors and to fill any vacancies on the board of the Company and each of our subsidiaries, monitoring the composition and functioning of the standing committees of the board of the Company and each of our subsidiaries, developing, reviewing and monitoring the corporate governance policies and practices of the Company.

Among other things, our Nominating and Corporate Governance Committee is responsible for:

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determining the desired qualifications, qualities, skills, and other attributes of directors and develop, and recommend to our Board for its approval, criteria to be considered in selecting nominees for election as directors;

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identifying and evaluating individuals to be considered for election as directors, including individuals recommended by our shareholders;

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recommending to our Board the individuals to stand for election as directors at the annual meetings of shareholders or to fill any vacancies on our Board;

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overseeing and monitoring the development by management of an orientation program for new directors and a continuing education program for current directors;

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developing, recommending to our Board, and administering corporate governance guidelines and reviewing these guidelines at least annually and recommending any changes to our Board;

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overseeing our corporate governance documents, policies, practices and procedures and reviewing and recommending to our Board for approval any changes to such documents, policies, practices and procedures;

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developing a process for an annual evaluation of our Board and its committees and overseeing the conduct of each annual evaluation;

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reviewing our Board’s committee structure and composition and making recommendations to our Board regarding the designation of committees and appointment of directors to serve as members and the chair of each committee annually;

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overseeing the periodic assessment of our directors’ and officers’ liability and other insurance coverage for directors and officers;

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reviewing all shareholder proposals and, after consultation with other Board committees that may have expertise or responsibility for the subject matter of such proposals, recommending to our Board appropriate action on each such proposal; and

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performing such other duties and carrying out such other responsibilities as are consistent with the Nominating and Governance Committee Charter or are delegated by our Board.

Our Nominating and Corporate Governance Committee has adopted a written charter, which sets forth the committee’s duties and responsibilities. The charter of the Nominating and Corporate Governance Committee will be available on our website at www.myprobank.com upon completion of our initial public offering.

In carrying out its functions, the Nominating and Corporate Governance Committee develops, and recommends to the Board for its approval, qualification criteria for all potential nominees for election, including incumbent directors, Board nominees and shareholder nominees to be included in the Company’s future proxy statements.

The Nominating and Corporate Governance Committee also evaluates potential nominees for our Board to determine if they have any conflicts of interest that may interfere with their ability to serve as effective Board members and to determine whether they are “independent” in accordance with applicable SEC and Nasdaq Stock Market rules (to ensure that, at all times, at least a majority of our directors are independent). Although we do not have a separate diversity policy, the Nominating and Corporate Governance Committee may consider the diversity of the Company’s directors and nominees in terms of knowledge, experience, skills, expertise and other factors that may contribute to the effectiveness of our Board.

Prior to recommending an existing director for re-election to our Board, the Nominating and Corporate Governance Committee may consider and review the following attributes with respect to each sitting director:

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attendance and performance at meetings of our Board and the committees on which such director serves;

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length of service on our Board;

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experience, skills and contributions that the sitting director brings to our Board;

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independence and any conflicts of interest; and

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any significant change in the director’s status, including with respect to the attributes considered for initial membership our Board.

Executive Committee.   In the future, we expect to form an Executive Committee with authority to exercise all of the powers of our Board during the intervals between meetings of our Board, except as limited by the laws of the State of Florida, our Articles of Incorporation, our Bylaws and other applicable laws and regulations. We do not expect that the Executive Committee will operate under a written charter.

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EXECUTIVE COMPENSATION

Unless the context requires otherwise, references in this “Executive Compensation” section of this joint proxy statement/prospectus to the “Company,” “we,” “us,” or “our” refer to Professional and its wholly owned subsidiaries on a consolidated basis, and references to the “Bank” refer to Professional Bank.

Introduction

As an emerging growth company under the JOBS Act, we have opted to comply with the executive compensation disclosure rules applicable to “smaller reporting companies” as such term is defined in the rules promulgated under the Securities Act, which permit us to limit reporting of executive compensation to our principal executive officer and our two other most highly compensated executive officers, which are referred to as our “named executive officers”, or NEOs. This section provides an overview of our executive compensation program, including a narrative description of the material factors necessary to understand the information disclosed in the summary compensation table below. For 2019, our named executive officers, or NEOs, were:

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Daniel R. Sheehan, Chairman and Chief Executive Officer of the Company and the Bank;

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Abel L. Iglesias, President and Chief Operating Officer of the Bank; and

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Mary Usategui, Executive Vice President and Chief Financial Officer of the Bank.

Summary Compensation Table

The following table sets forth information concerning the total compensation awarded to, earned by or paid to the NEOs for the fiscal year ended December 31, 2018, calculated in accordance with SEC rules and regulations.

Name and Principal Position	Year		Salary			Bonus			Stock Awards			Other			Total
Daniel R. Sheehan Chairman and Chief Executive Officer	​	2019	​	$	400,000	​	$	100,000	​	$	665,000	​	$	58,900	​	$	1,223,900
Abel L. Iglesias President and Chief Operating Officer	​	2019	​	​	352,917	​	​	120,000	​	​	162,502	​	​	58,004	​	$	693,422
Ryan L. Gorney Chief Information/Digital Officer	​	2019	​	​	350,000	​	​	50,000	​	​	95,000	​	​	37,619	​	$	532,619

All Other Compensation

Name	Year		401(k) Match			Health Savings Account			Auto Allowance			Health & Welfare			Other(1)			Total
Daniel R. Sheehan	​	2019	​	$	16,462	​	$	—	​	$	6,000	​	$	36,437	​	$	—	​	$	58,900
Abel L. Iglesias	​	2019	​	​	14,883	​	​	—	​	​	8,500	​	​	32,221	​	​	2,400	​	$	58,004
Ryan L. Gorney	​	2019	​	​	7,593	​	​	—	​	​	—	​	​	30,026	​	​	—	​	$	37,619

(1)

Includes a monthly auto allowance and payments for cellular telephone and data services.

Narrative Discussion of Summary Compensation Table

General.   We have compensated our NEOs through a combination of base salary, cash bonuses, equity awards and other benefits, including certain perquisites. Each of our NEOs has substantial responsibilities in connection with our day-to-day operations.

Base Salary.   Our Compensation Committee reviews the base salaries of our NEOs and recommends that the Board approve each such executive officer’s base salary. In setting the base salary of each NEO for the period presented above, the Compensation Committee relied on market data provided by our human resources department and survey data from industry resources. In the future, the Compensation Committee may also retain one or more consultants (including compensation consultants), legal counsel or other

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advisors it deems necessary to assist in this process and on such terms as the Compensation Committee deems appropriate, but has not retained a consultant at this time. Salary levels are typically considered annually as part of our regularly scheduled performance review process and otherwise upon a promotion or other change in job duties or responsibilities.

Cash Bonuses.   Our NEOs are also eligible to receive an annual cash bonus as a percentage of base salary based on our achievement of various metrics. Annual incentive awards are intended to recognize and reward those NEOs who contribute meaningfully to our performance for the corresponding year. Our Board has discretion to determine whether and in what amounts any such bonuses will be paid in a given year.

Equity Awards.   The equity awards referred to in the table above relate to share appreciation rights units issued pursuant to our 2014 Share Appreciation Rights Plan, as amended, which, as described more fully below, allows the Compensation Committee to establish the terms and conditions of the awards, subject to the plan terms. SAR units are granted with a base price equal to the fair market value of our Class A Common Stock on the date of grant. The awards generally vest after five years of continuous service following the grant date or upon the occurrence of certain corporate events, such as a change in control. Unit appreciation payments are generally paid shortly after the occurrence of certain non-performance-related events in accordance with the 2014 Plan and unit agreement. For information regarding the vesting and exercisability of these SAR unit awards and other terms and conditions applicable to awards under this plan see “Executive Compensation — 2014 Share Appreciation Rights Plan.” In 2019, our Board and shareholders adopted the 2019 Equity Incentive Plan, or 2019 Plan. Under the 2019 Plan, the Compensation Committee has the power to grant incentive stock options, non-qualified stock options, stock appreciation rights, or SARs, restricted stock, restricted stock units, performance shares or share units, cash awards, or other equity-based awards, or any combination of the foregoing. The Compensation Committee may determine the terms and conditions of each award under the 2019 Plan. We believe these equity and equity-linked awards to our executive officers help align the interests of management and our shareholders as well as reward our executive officers for improved Company performance.

Professional Bank 401(k) Plan.   Our 401(k) Plan is designed to provide retirement benefits to all eligible full-time and part-time employees. The 401(k) Plan provides employees the opportunity to save for retirement on a tax-favored basis. Our NEOs may elect to participate in the 401(k) Plan on the same basis as all other employees. We match 100% of our employees’ contribution of the first 3% of salary and 50% of the next 2% of salary (for a total of a 4% match assuming a contribution by an employee of 5% of his or her salary).

Health and Welfare Benefits.   Our NEOs are eligible to participate in the same benefit plans designed for all of our full-time employees, including health, dental, vision, disability and basic group life insurance coverage. The purpose of our employee benefit plans is to help us attract and retain quality employees, including executives, by offering benefit plans similar to those typically offered by our competitors. We also include imputed income for service fees paid by the Bank related to bank-owned life insurance policies, and premiums for supplemental disability insurance and life insurance in the amounts reported in the table above.

Perquisites.   We provide our NEOs with a limited number of perquisites that we believe are reasonable and consistent with our overall compensation program to enable us to attract and retain superior employees for key positions. Our Compensation Committee periodically reviews the levels of perquisites and other personal benefits provided to NEOs. The perquisites received by our NEOs in 2019 included automobile allowances and reimbursement for mobile telephone and data services.

Effect of the Pending Merger with Marquis.   We are restricted in our ability to take certain actions, subject to certain exceptions, without the prior consent of Marquis under the terms of the merger agreement in connection with our proposed acquisition of Marquis, including but not limited to actions to issue additional shares of capital stock (other than in connection with the exercise of outstanding stock options, in the ordinary course of business consistent with past practice or as our Board determines to be appropriate in connection with our initial public offering); enter into, adopt, renew, modify, or terminate employment agreements or benefit plans for executive officers or directors; increase salary or employee

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benefits (including incentive or bonus payments) subject to certain exceptions; hire new executive officers (unless an executive officer position becomes vacant); or enter into, establish, adopt, modify, amend, renew or terminate any benefit plan or take any action to accelerate the vesting of benefits payable thereunder.

Agreements with Named Executive Officers

We, the Bank, or both we and the Bank have entered into employment agreements with our Chairman and Chief Executive Officer, Daniel R. Sheehan, the President and Chief Operating Officer of the Bank, Abel L. Iglesias, and our Chief Financial Officer, Mary Usategui, each of which is summarized below.

Employment Agreement with Daniel R. Sheehan

On May 2, 2018, the Company and the Bank entered into an employment agreement with Mr. Sheehan pursuant to which he serves as Chairman and Chief Executive Officer of the Company and as Chairman of the Bank. The employment agreement provides for an initial term of three years with renewals for an additional year each year thereafter, unless we or Mr. Sheehan provide written notice to the other of non-renewal no more than three months prior to the date on which the agreement is set to expire.

Annual Base Salary; Annual and Long-Term Incentive Compensation.   Under the employment agreement, Mr. Sheehan is entitled to an annual base salary of  $400,000 and has the opportunity to earn an annual bonus targeted at no less than 30% of his annual base salary on the last day of the applicable fiscal year (the actual amount of the bonus is determined by our Board or our Compensation Committee), which incentive bonus will be paid in cash on or prior to the January 15 immediately following the end of the prior fiscal year. The employment agreement provides that Mr. Sheehan will be granted, by January 15 of each year, equity awards. Each award granted in the form of stock options or restricted stock awards is to vest in four equal installments beginning on the last business day of each fiscal year following the fiscal year in which such award relates (subject to accelerated vesting upon a change in control and termination of employment without Cause or for Good Reason, in each case as defined in his employment agreement), and any SARs are to vest as determined by our Board or Compensation Committee at the time of each grant. Pursuant to the employment agreement, on January 1, 2019, we granted Mr. Sheehan 60,000 SARs. We also provide reimbursements to Mr. Sheehan for reasonable expenses incurred in connection with his employment, as well as an automobile allowance of  $500 per month, and he is eligible to receive benefits under any employee benefit plans made available by us to senior executives including, but not limited to, medical, disability, life insurance plans, and any other employee benefit plan or arrangement made available by the Bank in the future to its senior executives. We also provide Mr. Sheehan with supplemental disability and life insurance.

Payments upon Termination of Employment.   Mr. Sheehan’s employment agreement provides for compensation and benefits upon termination. Following Mr. Sheehan’s termination by us without Cause or Mr. Sheehan’s resignation for Good Reason, in each case as defined in his employment agreement, we are obligated to pay the following amounts to Mr. Sheehan:

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all accrued but unpaid base salary and unused vacation as of the date of termination, reimbursable expenses incurred by Mr. Sheehan up to and including the date of termination or resignation, and any earned or vested compensation or benefits to which Mr. Sheehan may be entitled as of the date of termination or resignation pursuant to the terms of any compensation or benefit plans, including any vested benefits under retirement plans;

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a separation allowance, payable in equal installments in accordance with our normal payroll practices over the 18-month period beginning immediately following the date of termination, equal to the product of  (i) one and one-half  (1.5) multiplied by (ii) the sum of  (A) his annual base salary as of immediately prior to the date of termination or resignation and (B) his target bonus, which shall be no less than 30% of the annual base salary on the last day of the applicable fiscal year, as of immediately prior to the date of termination or resignation (or, if none has been established, his target bonus in respect of the fiscal year completed prior to the date of termination or resignation);

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any earned but unpaid annual bonus for a prior completed fiscal year in a lump sum no later than 30 days following the date of termination or resignation (or any later date as may be required by Section 409A of the Internal Revenue Code); and

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prorated annual bonus with respect to the fiscal year in which the event of termination or resignation occurs for the portion of the fiscal year worked in a lump sum no later than 30 days following the date of termination or resignation (or any later date as may be required by Section 409A of the Internal Revenue Code).

For the purposes of Mr. Sheehan’s employment agreement, “Good Reason” means: (i) the assignment of duties, titles, status, offices and reporting requirements materially inconsistent with his positions, or the assignment or material diminution of authority, duties or responsibilities as contemplated in the employment agreement, except as a result of illness, disability, regulatory orders, or temporary suspensions due to a Board investigation; (ii) a change in reporting structure; (iii) a reduction in compensation or compensation opportunity; (iv) a change in work location by greater than 35 miles; (v) notice of nonrenewal of the employment agreement term; or (vi) a material breach of his agreement by the Company or Bank, in each case which is not cured within 30 days after notice of the same. For the purposes of Mr. Sheehan’s employment agreement, “Cause” means: (i) the willful failure to comply with obligations under the employment agreement or the material written policies of the Company or Bank or to perform the duties assigned; (ii) engaging in fraud, deceit, personal dishonesty, or breach of a fiduciary duty that has or would have adversely affected the business of the Company or Bank; (iii) violation of any law, regulation, or regulatory order; (iv) becoming subject to continuing intemperance in the use of alcohol or drugs that has or may adversely affects the business or reputation of the Company or Bank or reporting to work under the influence of alcohol or drugs; (v) filing a petition for bankruptcy, whether voluntarily or involuntarily; (vi) conviction or entering into a plea of guilty or plea of nolo contendere with respect to a felony or crime involving moral turpitude; (vii) engaging in unlawful harassment; (viii) engaging in activity that exposes the Company or Bank to criminal liability; or (ix) materially breaching the employment agreement.

In addition, we will pay and arrange for Mr. Sheehan to continue to participate, on substantially the same terms as immediately prior to the date of termination, in the medical, dental, vision, disability and life insurance programs provided in his employment agreement until the earlier of  (i) the end of the 18-month period beginning on the date of termination or resignation, or (ii) such time as the Mr. Sheehan is eligible to be covered by comparable benefit(s) of a subsequent employer. Also, Mr. Sheehan’s outstanding compensatory equity awards will fully vest, with the vesting of any performance-based awards to be determined based on the actual performance measured as of the latest practicable date prior to the date of termination of resignation. However, if Mr. Sheehan’s termination or resignation under the foregoing scenarios occurs within 12 months of a change in control, the separation allowance will be paid in a lump sum within 30 days following the date of termination or resignation to the extent permitted by Section 409A of the Internal Revenue Code.

If we terminate Mr. Sheehan for Cause, he resigns without Good Reason, or he separates from service as a result of the expiration of his employment agreement, Mr. Sheehan will be entitled to: (a) all accrued but unpaid base salary and unused vacation as of the date of termination, expenses incurred by Mr. Sheehan up to and including the date of termination, and any earned or vested compensation or benefits to which Mr. Sheehan may be entitled as of the date of termination pursuant to the terms of any compensation or benefit plans, including any vested benefits under retirement plans, payable within 30 days after his termination or resignation in the case of salary, unused vacation, and reimbursable expenses, and in the case of earned or vested compensation or benefits, in accordance with the terms of the applicable benefit plan; and (b) all of Mr. Sheehan’s equity awards (including SARs) that are outstanding and vested as of the termination date, including a pro rata portion of unvested awards subject to time-based vesting conditions at termination.

Following Mr. Sheehan’s termination as a result of his death or disability, we are obligated to pay the following amounts to him or his estate, as applicable: (a) all accrued but unpaid base salary and unused vacation as of the date of termination, reimbursable expenses incurred by Mr. Sheehan up to and including the date of termination, and any earned or vested compensation or benefits to which Mr. Sheehan may be entitled as of the date of termination pursuant to the terms of any compensation or benefit plans, including any vested benefits under retirement plans; (b) any earned but unpaid annual bonus for a prior completed calendar year in a lump sum no later than 30 days following the date of termination (or any later date as may be required by Section 409A of the Internal Revenue Code); and (c) prorated annual bonus with

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respect to the year in which the event of termination occurs for the portion of the calendar year worked in a lump sum no later than 30 days following the date of termination (or any later date as may be required by Section 409A of the Internal Revenue Code). Additionally, all vested equity awards outstanding as of the date of death or disability, including a pro rata portion of unvested awards subject to time-based vesting conditions at termination, will become fully vested and will be paid to Mr. Sheehan or his estate, as applicable.

The payment of the foregoing compensation and benefits upon termination is contingent upon Mr. Sheehan’s execution and delivery of a general release of all claims within 22 days after the date of termination or resignation.

In addition, Mr. Sheehan’s employment agreement contains customary provisions regarding the confidentiality of Company information he learns in carrying out his responsibilities, noncompetition with the Company for one year after the termination of his employment, and nonsolicitation of Company employees for 12 months following termination of employment.

The preceding description of Mr. Sheehan’s employment agreement is qualified in its entirety by reference to the text of the employment agreement, which is filed as Exhibit 10.1 to our registration statement on Form S-4 of which this joint proxy statement/prospectus forms a part.

Employment Agreement with Abel L. Iglesias

On July 16, 2019, the Bank entered into an employment agreement with Mr. Iglesias pursuant to which he serves as President and Chief Operating Officer of the Bank. The agreement provides for a term of three years.

Base Salary; Annual and Long-Term Incentive Compensation.   Under the agreement, Mr. Iglesias is entitled to an annual base salary of  $380,000 and is eligible to receive such incentive bonuses as may be authorized by the Bank Board from time to time. The Bank paid Mr. Iglesias a $40,000 signing bonus, which was paid 50% in cash and 50% in shares of restricted stock in the Company, which shall be valued at fair market value as defined in the Company’s 2019 Equity Incentive Plan. Mr. Iglesias is also entitled to participate in the Company’s 2014 Share Appreciation Rights Plan. The Bank also provides reimbursements to Mr. Iglesias for reasonable expenses incurred in connection with his employment, an automobile allowance of  $1,000 per month, and benefits including, but not limited to, medical, dental, disability, and life insurance as well as any other benefits generally provided to the other employees of the Bank, as the Bank Board will determine from time to time to offer.

Payments upon Termination of Employment.   Mr. Iglesias’ employment agreement provides for compensation and benefits upon termination. Following Mr. Iglesias’ termination by the Bank without Cause or Mr. Iglesias’ resignation for Good Reason, in each case as defined in his employment agreement, the Bank is obligated to pay Mr. Iglesias, for a period of six months after such termination or resignation, at the base annual salary rate stated in his employment agreement on the date of such termination or resignation (or, if greater, the highest annual salary rate in effect for Mr. Iglesias within the 36-month period prior to such termination or resignation less any amounts owed to the Bank by him).

Following Mr. Iglesias’ termination by the Bank for Cause or as a result of his death or disability, in each case as defined in his employment agreement, the Bank is obligated to pay Mr. Iglesias or his estate, as applicable, any salary, vacation, and bonus amounts accrued and unpaid at the date of termination (less any amounts owed to the Bank by Mr. Iglesias). Following Mr. Iglesias’ resignation for other than Good Reason, the Bank is obligated to pay Mr. Iglesias any salary, vacation, and bonus amounts that would have been accrued and unpaid through the end of the 30-day notice period Mr. Iglesias is required to provide the Bank of his intent to resign for other than Good Reason (less any amounts owed to the Bank by Mr. Iglesias).

For the purposes of Mr. Iglesias’s employment agreement, “Good Reason” means: (i) any material breach by the Company or Bank of any provision the employment agreement, or any significant reduction, without his prior written consent, in the duties, responsibilities, authority or title as an officer, except for any reduction in duties, responsibilities, authority or title due to illness or disability, an order from any regulatory authority having jurisdiction over the Company or Bank, temporary suspensions due to a Board

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investigation, the appointment of market presidents or other positions created by the Company or Bank, or Mr. Iglesias no longer serving as Chief Operating Officer of the Bank provided that he is appointed Chief Administrative Officer of the Bank on or about that time; or (ii) a change in work location by greater than 35 miles. For the purposes of Mr. Iglesias’s employment agreement. “Cause” means: (i) the failure to comply with obligations under the employment agreement or the material written policies of the Company or Bank, or to perform the duties assigned; (ii) engaging in fraud, deceit, personal dishonesty, or breach of a fiduciary duty that has or would have adversely affected the business of the Company or Bank; (iii) violation of any law, regulation, or regulatory order; (iv) becoming subject to continuing intemperance in the use of alcohol or drugs that adversely affects the business or reputation of the Company or Bank; (v) filing a petition for bankruptcy, whether voluntarily or involuntarily; (vi) conviction or entering into a plea of nolo contendere with respect to a felony or crime involving moral turpitude; (vii) engaging in unlawful harassment; (viii) engaging in activity that exposes the Company or Bank to criminal liability; or (ix) materially breaching the employment agreement.

If Mr. Iglesias’ termination or resignation occurs within the 12-month period following a change of control event (as defined in his employment agreement), the Bank is obligated to pay Mr. Iglesias, on the Bank’s regular payroll payment date next following the 30th day after the date of termination, an amount equal to one times the average base annual salary received by Mr. Iglesias during the three-year period prior to such termination.

In all cases, the payment of the foregoing amounts and benefits is contingent upon Mr. Iglesias’ execution and delivery of a general release of all claims within 22 days after the date of termination or resignation.

In addition, Mr. Iglesias’s employment agreement contains customary provisions regarding the confidentiality of Company information he learns in carrying out his responsibilities, noncompetition with the Company for one year after the termination of his employment, and nonsolicitation of Company employees for one year following termination of employment.

The preceding description of Mr. Iglesias’ employment agreement is qualified in its entirety by reference to the text of the employment agreement, which is filed as Exhibit 10.2 to our registration statement on Form S-4 of which this joint proxy statement/prospectus forms a part.

Employment Agreement with Ryan L. Gorney

On November 28, 2018, the Bank entered into an employment agreement with Mr. Gorney pursuant to which he serves as Chief Digital Officer and Chief Information Officer of the Bank. The employment agreement provides for an initial term of three years.

Annual Base Salary; Annual and Long-Term Incentive Compensation. Under the agreement, Mr. Gorney is entitled to an annual base salary of  $350,000 and is eligible to receive such incentive bonuses as may be authorized by the Bank board from time to time. Mr. Gorney will be entitled to participate in the Company’s 2014 Share Appreciation Rights Plan. The Bank also provides reimbursements to Mr. Gorney for reasonable expenses incurred in connection with his employment and benefits including, but not limited to, medical, health, disability, and life insurance as well as any other benefits generally provided to the other employees of the Bank, as the Bank Board will determine from time to time to offer.

Payments upon Termination of Employment.   Mr. Gorney’s employment agreement provides for compensation benefits upon termination. Following the Mr. Gorney’s termination by the Bank without Cause or Mr. Gorney’s resignation for Good Reason, in each case as defined in his employment agreement, the Bank will pay Mr. Gorney, for a period which is the longer of  (a) 12 months after such termination or resignation or (b) the remainder of the then term of his employment agreement (but, in either case, in no event beyond the date Mr. Gorney commences employment elsewhere), in accordance with the Bank’s payroll policies, his annual base salary as of immediately prior to such termination or resignation, less any amounts owed to the Bank by Mr. Gorney, with such payments to commence on the Bank’s regular payroll payment date next following the 30th day after the date of such termination or resignation (but retroactive to such date).

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Following Mr. Gorney’s termination by the Bank for Cause or as a result of his death or disability, in each case as defined in his employment agreement, the Bank is obligated to pay Mr. Gorney, or his estate, as applicable any salary, vacation, and bonus amounts accrued and unpaid at the date of such termination (less any amounts owed to the Bank by Mr. Gorney). If Mr. Gorney resigns for other than Good Reason, the Bank is obligated to pay to Mr. Gorney only any salary, vacation, and bonus amounts that would have been accrued and unpaid through the end of the ninety-day notice period Mr. Gorney is required to provide the Bank of his intent to resign for other than Good Reason (less any amounts owed to the Bank by Mr. Gorney).

If Mr. Gorney’s termination or resignation occurs within the 12-month period following a Change of Control event (as defined in his employment agreement), (i) the Bank will pay Mr. Gorney, on the Bank’s regular payroll payment date next following the 30th day after such termination or resignation, an amount equal to one times the average base annual salary received by Mr. Gorney during the three-year period prior to such termination or resignation, and (ii) the Bank, at its sole expense, will pay to maintain in full force and effect for the continued benefit of Mr. Gorney and his dependents, if any, or will pay for a period of one year after such termination or resignation, all benefits provided by the Bank in which Mr. Gorney and/or his dependents were participating immediately prior to such termination or resignation at the level in effect and upon substantially the same terms and conditions (including, without limitation, contributions required by Mr. Gorney for such benefits) as existed immediately prior to such termination or resignation (except to the extent that Mr. Gorney and/or his dependents may be ineligible for one or more such benefits under applicable plan terms).

For purposes of Mr. Gorney’s employment agreement, “Good reason” means any material breach by the Bank of any provision of the employment agreement, or any significant reduction, without his prior written consent, in the duties, responsibilities, authority or title as an officer of the Bank, except for any reduction in duties, responsibilities, authority or title due to (i) illness or disability, (ii) an order from any regulatory authority having jurisdiction over any of the Company or Bank, (iii) temporary suspension of duties, responsibilities, authority or title pending results of any Board commissioned investigation as to a potential Cause for termination of employment, or (iv) the appointment of other positions created by the Company or Bank. “Cause” means (i) the willful failure to comply with obligations under the employment agreement or the material written policies of the Company or Bank, or to perform the duties assigned; (ii) engaging in fraud, deceit, personal dishonesty, or breach of a fiduciary duty that has or would have adversely affected the business of the Company or Bank; (iii) violation of any banking law, regulation, or regulatory order or other agreement with any banking agency having jurisdiction over the Bank; (iv) engaging in habitual abuse of alcohol or controlled substance or reporting to work under the influence of alcohol or controlled substance; (v) filing a petition for bankruptcy, whether voluntarily or involuntarily; (vi) conviction or entering into a plea of nolo contendere with respect to a felony or crime involving moral turpitude; (vii) engaging in unlawful harassment of employees or customers; (viii) engaging in activity that exposes the Company or Bank to criminal liability; or (ix) materially breaching the employment agreement.

In all cases, the payment of the foregoing amounts and benefits is contingent upon Mr. Gorney’s execution and delivery of a general release of all claims within 22 days after the date of termination or resignation.

In addition, Mr. Gorney’s employment agreement contains customary provisions regarding the confidentiality of Company information he learns in carrying out his responsibilities, noncompetition with the Company for one year after the termination of his employment, and nonsolicitation of Company employees for one year following termination of employment.

The preceding description of Mr. Gorney’s employment agreement is qualified in its entirety by reference to the text of the employment agreement, which is filed as Exhibit 10.4 to our registration statement on Form S-4 of which this joint proxy statement/prospectus forms a part.

2012 Share Appreciation Rights Plan

General.   The 2012 Share Appreciation Rights Plan, or the 2012 Plan, was originally adopted by the Board of Directors of the Bank on December 18, 2012. The 2012 Plan was subsequently assumed by the Company upon its formation as the Bank’s holding company, but was subsequently replaced with the 2014

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Plan. As of December 31, 2019, there are no awards outstanding pursuant to the 2012 Plan and we do not intend to issue any additional awards under the 2012 Plan. The 2012 Plan will terminate on December 17, 2022. The 2012 Plan was designed to provide appropriate incentives to directors and to certain key employees who have been or will be given responsibility for the management or administration of the business affairs of the Company or the Bank; to provide for distinct plans for our Board and for management in order to maximize incentives offered while minimizing expenses; and to enable the Company to obtain and retain the services of the type of professional, technical and managerial employees considered essential to both the Company’s and the Bank’s long-range success.

Units Available for Awards.   The number of units available for award under the 2012 Plan was limited to 50% of the share options available under our original stock option plan, or 62,500 units.

Administration; Amendment.   The Compensation Committee administers the 2012 Plan. Among other powers, the Compensation Committee has full authority to interpret. enact, amend and rescind any rules and regulations relating to the 2012 Plan, to grant awards, and to determine the number of shares of our Class A Common Stock that will be subject to the awards. The decisions of the Compensation Committee under the 2012 Plan, in its sole and absolute discretion, will be conclusive and binding. The unit agreements under the 2012 Plan may be amended or modified by written agreement between the Company and Bank, on one hand, and the participant on the other hand.

Eligibility for Participation.   The 2012 Plan was available to employees or officers of the Bank. Subject to the provisions of the 2012 Plan, the Compensation Committee has the authority to determine the nature and amount of each award.

Unit Agreements; Vesting.   The Compensation Committee may grant units pursuant to a Unit Agreement to Participants. The Unit Agreement includes, among other things, the base price for each unit granted, which is no lower than the fair market value of the our Class A common stock on the date of grant. Subject to a one-year minimum vesting period, units vest, or partially vest depending on certain circumstances, upon the occurrence of a liquidity event, which is defined under the 2012 Plan as an event that triggers an exit opportunity for holders of common stock to liquidate their holdings through a reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, liquidation, dissolution, or sale, transfer, exchange or other disposition of all or substantially all of the assets of the Company, or exchange of common stock or other securities, issuance of warrants or other rights to purchase common stock or other securities, going public transaction or other similar corporate transaction or event that results in the ability of holders of common stock to receive a cash payment in exchange for their shares of common stock; provided, however, that the formation of a holding company is not be considered a Liquidity Event. An award expires if the participant is not an employee at the time of the liquidity event and any portion of an award to a participant which is not exercisable at termination of employment shall not thereafter become exercisable.

Unit Appreciation Payments; Noncompetition Requirement.   A unit appreciation payment for vested units under is generally payable in a lump sum following the date such units become vested upon the occurrence of a liquidity event and are exercised by the participant, provided that a participant may receive a unit appreciation payment upon the occurrence of a liquidity event within six months after the a participant’s termination without cause. The amount of the unit appreciation payment is determined based on the difference between the fair market value of the our Class A common stock on the date of exercise and the base price of the unit, provided that the fair market value is subject to a high water mark such that the fair market value shall never decrease below its highest level. All awards are subject to nullification if the participant breaches the one-year noncompetition obligation (or such shorter period as determined by the Compensation Committee and set forth in the applicable unit agreement), which generally restricts the participant’s ability to compete with us through service to another bank or financial institution or any entity that accepts deposits or makes loans (whether presently existing or subsequently established) that has an office located within 50 miles of any office of the Bank.

2014 Associate Stock Purchase Plan

General.   The 2014 Associate Stock Purchase Plan, or the ASPP, was effective on October 21, 2014 and will continue in effect for a term of 10 years unless earlier terminated. The purpose of the ASPP is to provide employees of the Company and its designated subsidiaries with an opportunity to purchase our

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Class A common stock of the Company through accumulated payroll deductions. We intend the ASPP to qualify as an “Employee Stock Purchase Plan” under Section 423 of the Internal Revenue Code. Under the ASPP, the Company will sell shares to participants at a price equal to 95% of the fair market value of the our Class A Common Stock on the enrollment or exercise date, whichever is lower. The Board believes that the ASPP encourages broader stock ownership by employees and thereby provides an incentive for employees to contribute to our profitability and success. The Board also believes that employees’ continuing economic interest, as shareholders, in the performance and success of the Company will enhance the entrepreneurial spirit of the Company, which can greatly contribute to our long-term growth and profitability.

Shares Subject to the ASPP Stock Plan.   Under the terms of the ASPP, the shares our Class A common stock are purchased by participants directly from the Company. The maximum number of shares available under the ASPP is 2,000,000 shares. However, the maximum number of shares available under the ASPP may be subject to adjustment in the case of a change in our capitalization. In the event of a merger or sale of substantially all of our assets, each option under the plan will be assumed or an equivalent option will be substituted.

Administration.   The ASPP is administered by the Compensation Committee, which has full and exclusive discretionary authority to construe, interpret, and apply the terms of the ASPP, to determine eligibility and to adjudicate all disputed claims filed under the ASPP. Every finding, decision, and determination made by the Compensation Committee shall, to the full extent permitted by law, be final and binding upon all parties.

Stock Purchase Rights.   All employees are be eligible to participate in the ASPP, with the exception of any employee who owns five percent or more of our Class A Common Stock and excluding our Chief Executive Officer, if he is considered a highly compensated employee, as defined in Section 414 of the Internal Revenue Code. Participating employees, on the enrollment date of each offering period, will be granted an option to purchase on the exercise date of such offering period (at the applicable purchase price) up to a number of shares of our Class A Common Stock determined by dividing such person’s payroll deductions accumulated prior to such exercise date and retained in the participant’s account as of the exercise date by the applicable purchase price; provided, in no event shall a participant be permitted to receive an option under the ASPP if such option will permit the participating employee’s rights to purchase stock under all employee stock purchase plans to accrue at a rate which exceeds $25,000 worth of stock for each calendar year.

All options are automatically exercised on the last date of the offering period, subject to certain limitations, and the maximum number of shares subject to such option will be purchased using the accumulated payroll deductions in the participant’s account. The payroll deductions are credited to the accounts maintained under the ASPP for each participant. No interest will be credited on contributions pending investment. No participant has the right to vote or direct the voting of shares until such option has been exercised.

Termination.   A participant’s enrollment in the ASPP may be terminated at any time prior to the last day of the offering period. Enrollment will also terminate upon termination of a participant’s employment by the Company and its subsidiaries. Upon termination of enrollment, cash amounts resulting from previous contributions will be repaid to the participant. A participant may reduce contributions to the ASPP for future offering periods without thereby terminating enrollment.

Amendment.   The Compensation Committee may, without further action by the our shareholders, amend the ASPP or condition or modify awards under the ASPP in response to changes in laws or regulations. The Compensation Committee has the right to terminate or modify the ASPP from time to time, without the approval of our shareholders, unless shareholder consent is required under Section 423 of the Internal Revenue Code or the Compensation Committee is materially amending the ASPP. No termination may, without the consent of the affected participant, adversely affect stock options previously granted, provided, that an offering period may be terminated by the Compensation Committee on any exercise date if the Compensation Committee determines that the termination of the ASPP is in the best interests of the Company and its shareholders.

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2014 Share Appreciation Rights Plan

General.   The 2014 Share Appreciation Rights Plan, or the 2014 Plan, was originally adopted by our Board on October 21, 2014 and terminates on October 21, 2024. The 2014 Plan was subsequently amended in 2016 and 2017. The 2014 Plan was designed to provide appropriate incentives to directors and to certain key employees who have been or will be given responsibility for the management or administration of the business affairs of the Company or the Bank; to provide for distinct plans for operating management in order to maximize incentives offered while minimizing expenses; and to enable the Company to obtain and retain the services of directors and the type of professional, technical and managerial employees considered essential to both the Company’s and the Bank’s long-range success.

Units Available for Awards.   We have limited the number of units available for award under the 2014 Plan to 1,200,000 units. The maximum number of units available under 2014 Plan and the awards granted under the 2014 Plan will also be subject to adjustment in the event of any stock dividends, stock splits, recapitalizations, reorganizations, mergers, consolidations, exchanges or other changes in capitalization.

Administration.   The Compensation Committee administers the 2014 Plan. Among other powers, the Compensation Committee has full and exclusive discretionary authority to construe, interpret and apply the terms of the 2014 Plan, to grant awards, to determine the number of shares of our Class A Common Stock that will be subject to the awards, and to adjudicate all disputed claims filed under the 2014 Plan. Every finding, decision and determination made by the Compensation Committee shall, to the full extent permitted by law, be final and binding upon all parties.

Eligibility for Participation.   The 2014 Plan is available to a director, and/or a select group of management or highly compensated employees who are in the regular employment of the Company, and who are expected to be primarily responsible for the management, growth or supervision of some or all of our business. The Compensation Committee determines who is a participant subject to this criteria. Subject to the provisions of the 2014 Plan, the Compensation Committee has the authority to determine the nature and amount of each award.

Unit Agreements; Vesting.   The Compensation Committee may grant units pursuant to a Unit Agreement to Participants designated by our Compensation Committee as someone who has already made or is in a position to make a significant contribution to the success of the Company. Grants of units under the 2014 Plan are made in consideration of the services to be rendered by the participant and are subject to the terms and conditions of the 2014 Plan and unit agreement. The 2014 Plan provides that units vest on the earlier of the following events: (i) completion of 1,825 full calendar days of continuous service with the Company from grant date; (ii) an involuntary separation from service without cause that occurs within the 180 day period preceding a liquidity event; (iii) upon disability or death of the participant (as defined in the 2014 Plan); or (iv) upon the occurrence of a liquidity event.

Unit Appreciation Payments; Noncompetition Requirement.   Each participant must elect in the Unit Agreement to receive payment of a unit appreciation payment under the 2014 Plan pursuant to either Option 1 or Option 2. A unit appreciation payment for vested units under Option 1 is generally made in a lump sum on the 90th day following the date such units become vested, provided that a participant may receive a unit appreciation payment under Option 1 upon the occurrence of a liquidity event within 180 days after the participant’s involuntary separation from service for any reason other than for cause, death or disability. A unit appreciation payment for vested units under Option 2 is generally made only upon the occurrence of a liquidity event and pursuant to the same terms and conditions of the liquidity event as holders of our Class A common stock, provided that a participant may receive a unit appreciation payment under Option 2 upon the occurrence of a liquidity event within 180 days after the participant’s involuntary separation from service for any reason other than for cause, death or disability. The amount of the unit appreciation payment under Option 1 is determined based on the difference between the fair market value of the our Class A common stock on the date of vesting and the base price of the unit. The amount of the unit appreciation payment under Option 2 is determined based on the difference between the price of the our Class A common stock as determined by the liquidity event and the base price of the unit. Unit appreciation payments may be paid either in cash or shares of our Class A common stock with cash for fractional shares and for the payment of withholding and payroll taxes, or in kind consideration as provided in the liquidity event with cash for fractional shares and for the payment of withholding and payroll taxes. at the discretion of the Compensation Committee.

202

All unit appreciation payments are subject to repayment by the participant if the participant breaches the noncompetition requirement, which generally restricts the participant’s ability to compete with the Company and Bank through service to another bank or financial institution or any entity that accepts deposits or makes loans (whether presently existing or subsequently established) that has an office located within 50 miles of any office of the Bank for 365 days following separation. If terminated for any reason other than involuntary separation without cause and the participant fails to comply with such noncompetition requirement, the participant will forfeit all vested units.

Amendment and Termination.   The Compensation Committee may, without further action by our Board and without receiving further consideration from the participants, amend the 2014 Plan or condition or modify awards under the 2014 Plan in response to changes in securities or other laws or rules, regulations or regulatory interpretations thereof applicable to the 2014 Plan or to comply with applicable self-regulatory organization rules or requirements. The Compensation Committee may also, at any time and from time to time, terminate or modify or amend the 2014 Plan in any respect, except that, without Board approval, the Compensation Committee may not materially amend the 2014 Plan.

2016 Amended and Restated Stock Option Plan

General.   The 2016 Amended and Restated Stock Option Plan, or the 2016 Plan, was originally adopted by the Bank Board and approved by the Bank’s shareholders in 2014. The 2016 Plan was subsequently assumed by the Company upon its formation as the Bank’s bank holding company and was amended and restated in 2016 to increase the number of shares of our Class A Common Stock that may be issued under the 2016 Plan from 205,000 to 265,000, which amendment was approved by our shareholders on April 19, 2016. The purpose of the 2016 Plan is to closely associate the interests of the key persons with the interests of the Company; to encourage the key persons to focus on the growth and development of the Company, as reflected in increased shareholder value; to maintain competitive compensation levels; and to provide an incentive for the key persons to maintain association or employment with the Company so that the Company may retain the services of the most highly qualified individuals in high level capacities.

Shares Available for Awards.   We may not issue in excess of the 265,000 shares of our issued and outstanding Class A Common Stock (unless there is a prospective reduction in outstanding common stock in which case any previously issued awards will remain valid and exercisable). The shares available under 2016 Plan and the awards granted under the 2016 Plan will be subject to adjustment in the event of any stock dividends, stock splits, recapitalizations, reorganizations, mergers, consolidations, exchanges or other changes in capitalization or in the event of any change in applicable laws or circumstances which results in or would result in any substantial dilution or enlargement of the rights granted to, or available for, participants or as otherwise determined by the Compensation Committee to be equitable.

Administration.   The Compensation Committee administers the 2016 Plan. Among other powers, the Compensation Committee has sole discretion to grant awards, make all determinations necessary or desirable for the administration of the 2016 Plan, interpret the 2016 Plan, grant awards, and to make all other determinations necessary or advisable for the implementation and administration of the 2016 Plan.

Eligibility for Participation.   The 2016 Plan is available to key persons (selected by the Compensation Committee) who have been selected as participants eligible to receive stock option awards.

Awards.   The Compensation Committee may grant stock options intended to qualify as incentive stock options, or ISOs, within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended or the Internal Revenue Code, or “nonqualified stock options,” or NQSOs, that are not intended to so qualify as ISOs, or any combination of ISOs and NQSOs. Each award will be reflected in an agreement between the Company and the relevant recipient and will be subject to the terms of the 2016 Plan, together with any other terms or conditions contained therein that are consistent with the 2016 Plan and that the Compensation Committee deems appropriate.

The Compensation Committee will determine the terms of each option, including the exercise price per share for stock options on the date of grant provided that the exercise price of any stock option granted under the 2016 Plan can never be less than the fair market value of the underlying shares of our Class A

203

Common Stock on the date of grant. The Compensation Committee may impose in an award agreement such limitations, restrictions and conditions upon any award as it deems appropriate, but each award agreement is subject to certain restrictions on transfer as required under the terms of the 2016 Plan.

Amendment and Termination.   The Compensation Committee may, without further action by the shareholders and without receiving further consideration from the participants, amend the 2016 Plan or condition or modify stock option awards under the 2016 Plan in response to changes in securities or other laws or rules, regulations or regulatory interpretations thereof applicable to the 2016 Plan or to comply with stock exchange rules or requirements. Additionally, the Compensation Committee may at any time and from time to time terminate or modify or amend the 2016 Plan in any respect, except that, without shareholder approval, the Compensation Committee may not materially amend the 2016 Plan, including, but not limited to, the following: (i) materially increase the number of shares of our Class A Common Stock to be issued under the 2016 Plan; (ii) materially increase benefits to participants, including any material change to (A) permit a re-pricing (or decrease in exercise price) of outstanding stock options, (B) reduce the price at which stock options may be offered, or (C) extend the duration of the 2016 Plan; (iii) materially expand the class of participants eligible to participate in the 2016 Plan; and (iv) expand the types of stock options or other awards provided under the 2016 Plan.

Acceleration Events.   If  (i) a change in control occurs and notwithstanding any vesting schedule provided for in the 2016 Plan (or any award agreement thereunder) or by the Compensation Committee with respect to an award of stock options under the 2016 Plan all stock options issued under the 2016 Plan will become immediately exercisable with respect to 100% of the shares subject to such stock options or (ii) an event occurs in the opinion of our Board is likely to lead to a change in control, whether or not a change of control actually occurs, our Board may direct the Compensation Committee to declare all of the options granted under the plan shall become immediately vested; provided, however, that, in each case, to the extent that accelerating the time an ISO may first be exercised would cause the $100,000 annual limitation for ISOs to be exceeded, such ISOs shall instead first become exercisable in so many of the next following years as is necessary to comply with such limitation. In addition, the vesting of option awards granted under the 2016 Plan may be accelerated if the participant’s employment or service to the Company terminates by reason of the participant’s death or disability.

2019 Equity Incentive Plan

General.   The 2019 Equity Incentive Plan, the 2019 Plan, was adopted by our Board on March 14, 2019 and approved by our shareholders on April 18, 2019. The 2019 Plan will terminate on March 14, 2029. The 2019 Plan was designed to enable us to attract and retain key employees, consultants and directors who will contribute to our long-term success, to provide incentives that align the interests of employees, consultants and directors with those of our shareholders, and to promote the success of our business.

Shares Available for Awards.   We have limited the aggregate number of shares of our Class A Common Stock to be awarded under the 2019 Plan to 300,000 shares. However, the number of shares available for issuance under the 2019 Plan will automatically increase (but not decrease) annually on the first day of each subsequent fiscal year such that the number of shares available under the 2019 Plan will equal 5% of our issued and outstanding shares as of each such date, provided that the maximum number of shares available for issuance in connection with ISOs will be limited to 300,000 and will not increase. The maximum number of shares available under 2019 Plan and the awards granted under the 2019 Plan will also be subject to adjustment, as determined by the Compensation Committee, in the event of any stock or extraordinary cash dividends, stock splits, recapitalizations, reorganizations, mergers, consolidations, combinations, exchanges or other changes in capitalization occurring after the grant date of any award.

Administration.   The 2019 Plan shall be administered by the Compensation Committee, or in our Board’s sole discretion, by our Board. Among other powers, the Compensation Committee has the authority to interpret the 2019 Plan and apply its provisions, promulgate, amend and rescind rules and regulation relating to the administration of the 2019 Plan, grant awards, and to determine the number of shares of our Class A Common Stock that will be subject to the awards.

Eligibility for Participation.   The 2019 Plan is available to all directors, employees and consultants or its affiliates and such other individuals designated by the Compensation Committee who are reasonably expected to become directors, employees and consultants after receipt of awards.

204

Types of Awards.   The Compensation Committee or our Board may grant various forms of incentive awards, including ISOs, NQSOs, SARs, restricted awards (including restricted stock and restricted stock units), performance share awards, cash awards, and other equity-based awards, or any combination of the foregoing. Each award will be reflected in an agreement between the Company and the relevant recipient and will be subject to the terms of the 2019 Plan.

Stock Options.   The Compensation Committee may grant stock options intended to qualify as ISOs within the meaning of Section 422 of the Code or NQSOs that are not intended to so qualify as ISOs, or any combination of ISOs and NQSOs. The Compensation Committee will determine the term of each stock option and the exercise price per share for stock options on the date of grant, provided that the exercise price of any stock option granted under the 2019 Plan can never be less than the fair market value of the underlying shares of our Class A Common Stock on the date of grant. The Compensation Committee may impose in an award agreement such restrictions on the shares deliverable upon exercise of a stock option as it deems appropriate, but each option is subject to certain restrictions on transfer as required under the terms of the 2019 Plan.

Unless otherwise provided in an award agreement or employment agreement or terminated for cause, if an optionholder’s continuous service terminates (other than for death or disability), the optionholder may exercise his or her option (to the extent such optionholder was able to exercise such option at the date of termination) for a period the earlier of  (i) three months following termination or (ii) the expiration of the option under the terms of the award agreement. If the optionholder’s continuous service terminates for death or disability, such person’s outstanding options may be exercised for a period the earlier of 12 months following such termination or the expiration of the term of the option under the terms of the award agreement.

Stock Appreciation Rights.   The Compensation Committee will determine the period when SARs vest and become exercisable, as well as the fair market value of the shares of our Class A Common Stock underlying the SARs on the date of grant and the date of exercise which shall be the closing price of a share of our Class A common stock after our Class A common stock is listed on the Nasdaq Global Market. The exercise price of any SAR that is intended to be an exempt stock right under Section 409A of the Internal Revenue Code can never be less than the fair market value of the underlying share of our Class A common stock on the date of grant. A SAR may only be exercised when the fair market value of the underlying share of our Class A common stock exceeds the fair market value of the shares on the grant date. Upon exercise of a SAR, the participant will receive an amount equal to the excess of the fair market value of the underlying shares on the date of exercise over the exercise price specified in the SAR. Payment of such amount may be made in the form of shares of Class A common stock (with or without restrictions as to substantial risk of forfeiture and transferability, as determined by the Compensation Committee), cash or a combination thereof, as determined by the Compensation Committee.

Restricted Stock.   An award of restricted stock involves the immediate transfer by the Company to the participant of a specific number of shares of our Class A common stock, which are subject to a risk of forfeiture and a restriction on transferability. This restriction will lapse following a stated period of time. The participant does not pay for the restricted stock and has all of the rights of a holder of a share of our Class A common stock (except for the restriction on transferability), including the right to vote and receive dividends unless otherwise determined by the Compensation Committee and set forth in the award agreement.

Restricted Stock Units.   An award of a restricted stock unit is similar to a restricted stock award, except that no shares are issued at the time of the grant, instead hypothetical Class A common stock units are credited to the accounts of participants. In addition, holders of restricted stock units will have no voting rights, but they may be entitled, if so determined by the Compensation Committee, to receive dividend equivalents. Upon the lapse of the restrictions related to a restricted stock unit, the participant is entitled to receive, without any payment to the Company, an amount of shares of our Class A common stock, or cash if explicitly stated in the award agreement, equal to the fair market value of the shares of our Class A common stock represented by the restricted stock unit on the date of exercise.

Performance Share Awards.   Performance share awards are evidenced by an award agreement and are usually earned by a participant depending on the extent to which certain performance goals are attained within the applicable performance period. The amount earned with respect to an award of performance

205

shares will usually be payable in our Class A common stock or share units. The Compensation Committee may, however, vary the composition of a performance share award and any conditions that may be required to be satisfied at its discretion.

Repricings and Substitutions of Awards.   The Compensation Committee may modify the purchase price or exercise price of any outstanding awards under the 2019 Plan, provided that if the modification effects a repricing, shareholder approval is required before the repricing is effective.

Amendment and Termination.   Our Board may, at any time and from time to time, amend or terminate the 2019 Plan without shareholder approval unless shareholder approval is required by any applicable laws, rules or regulations or requirements of a stock exchange. Our Compensation Committee may amend the terms of one or more awards without the consent of the participant unless such amendment would otherwise constitute an impairment of the rights under any award.

Change in Control.   The 2019 Plan contains a “double-trigger” change in control provision. Upon a change in control, options, stock appreciation rights, restricted stock and restricted stock units under the 2019 Plan subject to vesting will accelerate and become fully vested if the participant is terminated without cause or for good reason during the 12-month period following a change in control event. Performance share awards and cash awards will similarly be accelerated upon a change in control only if a participant is terminated without cause or for good reason within 12 months after a change in control event. In addition, upon a change in control, the Compensation Committee, with 10 days’ notice, may cancel any outstanding awards and pay to the holders thereof the value of such awards.

Potential Payments Upon Termination or Change in Control

If we experience a change in control, our named executive officers may be entitled to certain payments and other benefits under certain circumstances, such as the payment of a separation allowance and accelerated vesting of equity awards. The payment of these benefits is generally subject to the named executive officer’s execution of a customary general release in favor of the Company. For more information see “Executive Compensation — Agreements with Named Executive Officers,” “Executive Compensation —  2012 Share Appreciation Rights Plan,” “Executive Compensation — 2014 Share Appreciation Rights Plan, “ “Executive Compensation — 2016 Amended and Restated Stock Option Plan,” and “Executive Compensation — 2019 Equity Incentive Plan.”

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Outstanding Equity Awards at Fiscal Year-End

The following table sets forth information with respect to outstanding equity awards for each of our NEOs as of December 31, 2019.

​

Option Awards(1)

Share Appreciation Right Unit Awards(2)

Stock Awards

​

​

​

​

Name

Number of Securities Underlying Unexercised Option Awards Exercisable

Number of Securities Underlying Unexercised Option Awards Unexercisable

Option Exercise Price

Number of Securities Underlying Unexercised Units Exercisable

Number of Securities Underlying Unexercised Units Unexercisable

Base Price

Number of Shares That Have Not Vested

Market Value of Shares of Stock That Have Not Vested

Grant Date

Expiration Date

Daniel R. Sheehan

​

2,000

​

—

​

$

10.00

​

​

​

​

​

​

​

​

​

​

​

​

​

4/30/2010

​

4/30/2020

Daniel R. Sheehan

​

6,000

​

—

​

$

12.50

​

​

​

​

​

​

​

​

​

​

​

​

​

1/1/2013

​

1/1/2023

Daniel R. Sheehan

​

5,000

​

—

​

$

12.50

​

​

​

​

​

​

​

​

​

​

​

​

​

10/1/2013

​

10/1/2023

Daniel R. Sheehan

​

​

​

​

​

​

​

​

—

​

10,000

​

$

11.50

​

​

​

​

​

​

10/27/2014

​

N/A

Daniel R. Sheehan

​

5,000

​

—

​

$

13.00

​

​

​

​

​

​

​

​

​

​

​

​

​

12/31/2014

​

12/31/2021

Daniel R. Sheehan

​

​

​

​

​

​

​

​

—

​

40,000

​

$

11.50

​

​

​

​

​

​

12/31/2015

​

N/A

Daniel R. Sheehan

​

​

​

​

​

​

​

​

—

​

125,000

​

$

12.75

​

​

​

​

​

​

12/20/2016

​

N/A

Daniel R. Sheehan

​

​

​

​

​

​

​

​

—

​

75,000

​

$

15.00

​

​

​

​

​

​

12/31/2017

​

N/A

Daniel R. Sheehan

​

​

​

​

​

​

​

​

—

​

60,000

​

$

18.25

​

​

​

​

​

​

12/31/2018

​

N/A

Daniel R. Sheehan

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

35,000

​

$

665,000

​

12/31/2019

​

N/A

Abel L. Iglesias

​

​

​

​

​

​

​

​

—

​

12,000

​

$

12.50

​

​

​

​

​

​

3/1/2013

​

N/A

Abel L. Iglesias

​

​

​

​

​

​

​

​

—

​

5,000

​

$

11.50

​

​

​

​

​

​

12/31/2014

​

N/A

Abel L. Iglesias

​

​

​

​

​

​

​

​

—

​

20,000

​

$

11.50

​

​

​

​

​

​

12/31/2015

​

N/A

Abel L. Iglesias

​

​

​

​

​

​

​

​

—

​

15,000

​

$

12.75

​

​

​

​

​

​

11/15/2016

​

N/A

Abel L. Iglesias

​

​

​

​

​

​

​

​

—

​

25,000

​

$

15.00

​

​

​

​

​

​

12/31/2017

​

N/A

Abel L. Iglesias

​

​

​

​

​

​

​

​

—

​

27,500

​

$

18.25

​

​

​

​

​

​

12/31/2018

​

N/A

Abel L. Iglesias

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

1,096

​

$

20,000

​

7/15/2019

​

N/A

Abel L. Iglesias

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

7,500

​

$

142,500

​

12/31/2019

​

N/A

Ryan L. Gorney

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

5,000

​

$

95,000

​

12/31/2019

​

N/A

(1)

All option awards were fully earned and vested as of December 31, 2019.

(2)

Share Appreciation Rights vest upon the earlier of 1,825 calendar days of continuous service after the grant date or the occurrence of certain specified, nonperformance-related events, subject to an election by the recipient. Unit appreciation payments are paid at or shortly following certain specified, nonperformance-related events, such as a change in control of the Company, in accordance with the participant’s election. The Share Appreciation Rights do not expire and the Compensation Committee has discretion pay the unit appreciation payments in cash or stock. See “Executive Compensation — 2012 Share Appreciation Rights Plan” and “Executive Compensation — 2014 Share Appreciation Rights Plan.”

Director Compensation

The following table sets forth compensation paid or awarded to, or earned by, each of our directors (except for Messrs. Sheehan and Iglesias, whose compensation is disclosed under “Summary Compensation Table” above) during 2019.

Name	Fees earned or paid in cash			Stock Awards			Total Compensation
Rolando DiGasbarro(1)	​	$	24,000	​	$	10,000	​	$	34,000
Carlos M. Garcia(2)	​	​	24,000	​	​	10,000	​	​	34,000
Jon L. Gorney(3)	​	​	24,000	​	​	10,000	​	​	34,000
Herbert Martens, Jr.(4)	​	​	24,000	​	​	10,000	​	​	34,000
Dr. Lawrence Schimmel(5)	​	​	24,000	​	​	10,000	​	​	34,000
Anton V. Schutz(6)	​	​	24,000	​	​	10,000	​	​	34,000

207

(1)

Mr. DiGasbarro held an aggregate 2,500 options, 526 shares of restricted stock, and 27,500 share appreciation right units as of December 31, 2019.

(2)

Mr. Garcia held an aggregate of 526 shares of restricted stock and 27,500 share appreciation right units as of December 31, 2019.

(3)

Mr. Gorney held an aggregate of 526 shares of restricted stock and 25,000 share appreciation right units as of December 31, 2019.

(4)

Mr. Martens held an aggregate of 7,500 options, 526 shares of restricted stock, and an aggregate of 27,500 share appreciation right units as of December 31, 2019.

(5)

Dr. Schimmel held an aggregate of 9,500 options, 526 shares of restricted stock, and an aggregate of 27,500 share appreciation right units as of December 31, 2019.

(6)

Mr. Schutz held an aggregate of 526 shares of restricted stock and 25,000 share appreciation right units as of December 31, 2019.

Our non-employee directors received a cash fee of  $2,000 per month in consideration for their service on the Board of Directors of both the Company and the Bank and their respective committees during 2019. This cash fee will increase to $2,500 per month in 2020. Our directors are also entitled to participate in our equity incentive plans and each non-employee director received a $10,000 restricted stock award in 2019, which will vest in equal annual installments over a three-year vesting period. Travel reimbursements are made for those directors that travel more than 50 miles to attend Board or committee meetings. Directors are also entitled to the protection provided by the indemnification provisions in our Articles of Incorporation and Bylaws, as well as the articles of incorporation and bylaws of the Bank.

208

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Unless the context requires otherwise, references in this “Certain Relationships and Related Party Transactions” section of this joint proxy statement/prospectus to the “Company,” “we,” “us,” or “our” refer to Professional and its wholly owned subsidiaries on a consolidated basis, and references to the “Bank” refer to Professional Bank.

In addition to the compensation arrangements with directors and executive officers described in “Executive Compensation” above, the following is a description of transactions since January 1, 2016 to which we have been a party in which the amount involved exceeded or will exceed $120,000 or one percent of the average of the total assets at year-end for the last two completed fiscal years, and in which any of our directors (including nominees for election as directors), executive officers or beneficial holders of 5% or more of our voting securities, or their respective immediate family members or entities affiliated with them, had or will have a direct or indirect material interest.

Policies and Procedures Regarding Related Party Transactions

We have adopted written policies to comply with regulatory requirements and restrictions applicable to us, including Sections 23A and 23B of the Federal Reserve Act (which govern certain transactions by the Bank with its affiliates). Additionally, certain loan transactions are subject to the Federal Reserve’s Regulation O, which governs certain loans by the Bank to its executive officers, directors and principal shareholders.

In addition, our Board has adopted a written policy governing the approval of related party transactions that will comply with all applicable requirements of the SEC and the Nasdaq Stock Market concerning related party transactions. Under the terms of our related transaction policy, a related party transaction is a transaction, arrangement or relationship or a series of similar transactions, arrangements or relationships in which the amount involved exceeds $120,000 or exceeds one percent of the average of the total assets at year-end for the last two completed fiscal years. Related party transactions are transactions in which we or the Bank participate (whether or not we or the Bank are a direct party to the transaction), and in which a related party had, has or will have a direct or indirect material interest. Our related parties include our directors (including nominees for election as directors), executive officers, beneficial owners of 5% or more of our total equity and immediate family members of any of the foregoing.

Our related party transaction policy will be administered by our Audit Committee. This policy will require the Audit Committee to ensure that we maintain an ongoing review process for all related party transactions for potential conflicts of interest and require that our Audit Committee pre-approve any such transactions or, if for any reason pre-approval is not obtained, to review, ratify and approve or cause the termination of such transactions. Our Audit Committee shall consider all relevant facts and circumstances and shall approve or ratify only those transactions that are deemed to be in the best interests of the Company. Our Audit Committee shall take into account, among other factors it deems appropriate, whether the transaction was undertaken in the ordinary course of business or at arms-length terms, whether the transaction was initiated by us or the related person, the purpose of, and the potential benefits to us, the approximate dollar value of the transaction, particularly as it relates to the related person, the related person’s interest in the transaction and any other information regarding the related person transaction or the related person that would be material to investors in light of the circumstances. Related party transactions entered into, but not approved or ratified as required by our policy concerning related party transactions, will be subject to termination by us or the Bank, if so directed by our Audit Committee or our Board, taking into account all relevant facts and circumstances factors as deemed appropriate and relevant.

Ordinary Banking Relationships

Certain of our officers, directors and principal shareholders, as well as their immediate family members and affiliates, are clients of, or have or have entered into transactions with us in the ordinary course of business. These transactions include deposits, loans and other financial services-related transactions. Related party transactions are entered into in the ordinary course of business, on substantially the same terms, including interest rates and collateral (where applicable), as those prevailing at the time for comparable transactions with persons not related to us, and do not involve more than normal risk of

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collectability or present other features unfavorable to us. Any loans we originate with officers, directors or principal shareholders, as well as their immediate family members and affiliates, are approved by our Board in accordance with the Bank’s regulatory requirements.

As of September 30, 2019, our officers and directors as well as their immediate families and affiliated companies, as a group, were indebted directly and indirectly to us in the amount of  $4.4 million, while deposits from this group totaled $11.8 million as of such date. As of September 30, 2019, no related party loans were categorized as nonaccrual, past due, restructured or potential problem loans. We expect to continue to enter into transactions in the ordinary course of business on similar terms with our officers, directors and principal shareholders, as well as their immediate family members and affiliates.

Agreements with Certain Institutional Investors

On February 17, 2017 and December 18, 2018, we sold shares of our Class A common stock in exempt private securities offerings resulting in gross proceeds of  $18,853,857 and $19,999,993, respectively. Affiliates of Messrs. Garcia and Schutz purchased $2,098,107 and $4,703,815 of our Class A common stock, respectively, in the 2017 private offering. Messrs. Martens and Schutz, through their respective related persons, purchased $208,525 and $3,413,809 of our Class A common stock, respectively, in the 2018 private offering. Additionally, Messrs. Jon Gorney and Ryan Gorney and his wife together purchased $99,992 and $61,995 of our Class A common stock, respectively, in the 2018 private offering.

Additionally, in connection with the 2017 private offering, we entered into letter agreements and registration rights agreements with related persons of Messrs. Garcia (BayBoston) and Schutz (Mendon Capital QP LP, Mendon Capital Master Fund Ltd., and Iron Road Multi-Strategy Fund LP) and certain other institutional shareholders. These letter agreements, copies of which are included as Exhibits 10.17 through 10.24 to our Registration Statement on Form S-4 of which this joint proxy statement/prospectus forms a part, among other things, provide for certain rights which are described in more detail below. In connection with our initial public offering, each of BayBoston, EJF Sidecar Fund, Series LLC — Series E and the entities associated with RMB Capital Management (Iron Road Multi-Strategy Fund LP, Mendon Capital QP LP and Mendon Capital Master Fund Ltd.), or RMB Capital, who we refer to as the institutional investors, have agreed to waive their contractual preemptive and registration rights.

Board Representation and Observer Rights.    We have agreed to nominate one person designated by BayBoston to our Board and the Bank Board. The letter agreement providing for this right, dated April 1, 2015, as amended by the letter agreement, dated February 17, 2017, does not provide for termination terms with respect to this appointment right. Currently, Mr. Garcia serves on our Board as the representative of BayBoston.

In addition, in the letter agreement, dated February 17, 2017, we agreed to invite one person designated by EJF Sidecar Fund, Series LLC — Series E to attend all meetings of our Board and the Bank Board and receive copies of all notices, minutes, consents and other materials that we provide to our directors. These board observation rights will continue with respect to EJF Sidecar Fund, Series LLC —  Series E for so long as EJF Sidecar Fund, Series LLC — Series E, together with its affiliates, continues to hold 9.9% or more of our issued and outstanding Class A common stock on an as-converted basis.

Exchange of Class B Non-Voting Common Stock.    We gave the institutional investors the right to exchange shares of our Class B Common Stock for an equal number of our Class A common stock if (i) our Board approves the exchange and the exchange would not result in such institutional investor or its affiliates owning greater than 9.9% of our Class A common stock or (ii) upon the consummation of  (a) a transfer pursuant to a widely distributed public offering, (b) a transfer in which no transferee acquires greater than two percent of our Class A common stock, (c) a transfer to a person that beneficially owns greater than 50% of our issued and outstanding Class A common stock or (d) a transfer approved by the Federal Reserve.

Contractual Preemptive Rights.    Other than transactions involving a change of control, a stock split, dividend, and certain other circumstances, we gave each of these institutional investors the contractual right to purchase its pro rata share of any securities, options or debt that are convertible or exchangeable into our stock for the same price and on the same terms as such securities are offered to others. On the

210

consummation of a firm commitment underwritten public offering of our stock pursuant to a registration statement resulting in gross proceeds to us of at least $25 million, such contractual preemptive rights will terminate. We expect these contractual preemptive rights to terminate in connection with the closing of our initial public offering.

Registration Rights.   In connection with the 2017 private offering, we entered into individual Registration Rights Agreements, each dated February 17, 2017, with each of the institutional investors. The Registration Rights Agreements provide that, after February 17, 2021, each such investor may request one registration of our Class A common stock or shares of our Class A common stock issued upon the exchange of our Class B common stock purchased in our 2017 private offering or issued in any reorganization. We have agreed to use best efforts to cause the registration statement to be filed within 180 days after the date of the initial request by such institutional investor and cause such registration statement to be declared effective as soon as practical thereafter.

The Registration Rights Agreements also provide certain “piggyback” registration rights to the institutional investors for so long as such investors own shares of our Class A common stock or shares of our Class B common stock purchased in our 2017 private offering or issued with respect to a reorganization. Subject to certain limitations, in the event that we register any of our equity securities under the Securities Act (other than in connection with registration statements on Form S-4 or Form S-8), we must give notice to the institutional investors of our intention to file such registration statement and must include in the registration statement all registrable securities for which we have received a written request for inclusion.

We have agreed to pay all expenses in connection with the registration of our securities under the Registration Rights Agreements, including all registration, filing and qualification fees, printing expenses, fees and disbursements of counsel for the Company and expenses of any special audits of our financial statements incidental or required by the registration, but excluding any underwriters’ fees, discounts or commissions relating to the securities of such institutional investors. We have also agreed to indemnify such institutional investors and underwriters for any untrue statement or omission in documentation relating to the registration of such securities.

Voting Agreements

In connection with our proposed acquisition of Marquis, we entered into shareholder voting agreements with each of our directors, except Mr. Schutz who does not own any shares, and the entities affiliated with RMB Capital. Pursuant to the terms of each voting agreement, each signatory agreed to vote or direct the voting of the shares it is entitled to vote, (i) in favor of the issuance of our Class A common stock in connection with the proposed acquisition of Marquis and the other transactions contemplated by the merger agreement, (ii) against any action or agreement that would result in a breach of any covenant, representation or warranty or any other obligation or agreement contained in the merger agreement and (iii) against any action, agreement or transaction that is intended, or could reasonably be expected to impede, interfere or be inconsistent with, delay, postpone, discourage or materially and adversely affect consummation of the transaction, the issuance of stock in connection with the merger or the other transactions contemplated by the merger agreement or this voting agreement. Each of the directors (excluding Mr. Schutz) and RMB Capital, under the terms of their respective voting agreements, agreed not to directly or indirectly, sell, transfer, pledge, assign or otherwise dispose of, or enter into any contract option, commitment or other arrangement or understanding with respect to the sale, transfer, pledge, assignment or other disposition of, any of the shares over which he has control and has agreed not to interfere, in each director’s capacity as a shareholder, with or inhibit the timely consummation of the merger. Each voting agreement will terminate automatically upon the completion of the merger, termination of the merger agreement or upon agreement between the parties to each voting agreement.

Underwriting Agreement

In connection with our initial public offering, we propose to enter into an underwriting agreement with Stephens Inc. and Keefe, Bruyette & Woods, Inc., as representatives for the underwriters, a copy of which is filed as Exhibit 1.1 to our registration statement on Form S-1. As of December 31, 2019, Stephens Inc. beneficially owned greater than five percent of our Class A common stock.

211

Engagement of Stephens Inc.

We have engaged Stephens Inc., an underwriter in our initial public offering and an affiliate of Stephens Professional Holding LLC, which holds over 5% of our Class A common stock, as a financial advisor in connection with our proposed acquisition of Marquis. We have paid Stephens Inc. $100,000 to date in connection with this engagement and will pay Stephens Inc. an additional $400,000 if the closing of our acquisition of Marquis occurs, in addition to reasonable out-of-pocket expenses. We also agreed to indemnify Stephens Inc., its affiliates and agents in connection with its advisory services.

Familial Relationship

Ryan Gorney, the son of Jon L. Gorney, a director of the Company, was hired as the Executive Vice President and Chief Information Officer/Digital Officer of the Bank on November 28, 2018 and is entitled to an annual base salary of  $350,000, incentive bonuses (as determined by the Bank Board), medical, health, disability and life insurance as well as other benefits determined by the Bank Board from time to time, and other benefits as described in his employment agreement, a copy of which is filed as Exhibit 10.4 to our registration statement on Form S-4 of which this joint proxy statement/prospectus forms a part.

Indemnification Agreements

Our Bylaws provide that we shall indemnify our directors, officers, and employees, and may indemnify agents, in certain circumstances, from expenses (including attorneys’ fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred in connection with an action, suit or proceeding to which he or she is or was a party, or threatened to be made a party, by reason of his or her position with the Company or because he or she was serving at the request of the Company.

Additionally, we have entered into indemnification agreements with each of our directors that contractually obligate us to indemnify our directors to the fullest extent permitted under applicable law. These agreements generally require both the Company and Bank to indemnify each director if the director is, or is threatened to be made, a party to or a participant in any proceeding, other than a proceeding by or in the right of the Company or the Bank to procure a judgment in the favor of the Company or the Bank or a proceeding by a federal banking agency if the director acted in good faith and in a manner the director reasonably believed to be in, or not opposed to, the best interests of the Company or the Bank, as applicable, and, in the case of a criminal action or proceeding, had no reasonable cause to believe that the director’s conduct was unlawful. Each director is further required to be indemnified for all expenses reasonably incurred by the director or on behalf of the director if the director is, or is threatened to be made, a party to or a participant in any proceeding by or in the right of the Company or the Bank to procure a judgment in favor of the Company or the Bank, provided that the director acted in good faith and in a manner the indemnitee reasonably believed to be in, or not opposed to, the best interests of the Company or the Bank. Notwithstanding the foregoing, no indemnification is available to a director in respect of any claim, issue or matter as to which the director is finally adjudged by a court to be liable to the Company, the Bank, or both, as the case may be, unless and only to the extent that the court in which the proceeding was brought determines that, despite the adjudication of liability but in view of all the circumstances of the case, the director is fairly and reasonably entitled to indemnification for such expenses. The indemnification agreements also generally provide for indemnification of expenses in connection with certain specific scenarios, including proceedings by federal banking regulators, subject to certain customary exclusions. The indemnification agreements also obligate the Company and Bank to advance expenses to a director, subject to the director’s obligation to repay the advance if and to the extent it is determined that the director is not entitled to be indemnified by the Company or Bank.

Share Repurchase

On September 5, 2019, we repurchased 200,000 shares of our Class A common stock at a price of $17.50 per share, for an aggregate purchase price of  $3,500,000 from one of our largest shareholders, De Linea CV. This repurchase was a result of an unsolicited offer by De Linea CV to us to repurchase these shares. Under the terms of the merger agreement with Marquis, we were required to obtain Marquis’s consent to consummate this repurchase, which we obtained. The approximate dollar value of De Linea CV’s interest in the proposed transaction, without regard to profit or loss, is $3,500,000.

212

PRINCIPAL STOCKHOLDERS OF PROFESSIONAL

Unless the context requires otherwise, references in this “Principal Stockholders of Professional” section of this joint proxy statement/prospectus to the “Company,” “we,” “us,” or “our” refer to Professional and its wholly owned subsidiaries on a consolidated basis, and references to the “Bank” refer to Professional Bank.

The following table sets forth information as of December 31, 2019 regarding the beneficial ownership of our common stock by:

•

each person or group known by us to beneficially owns more than 5% of our outstanding shares of common stock;

•

each of our NEOs;

•

each of our directors; and

•

all of our current executive officers and directors as a group.

We have determined beneficial ownership in accordance with the rules of the SEC. These rules generally provide that a person is the beneficial owner of securities if such person has or shares the power to vote or direct the voting of securities, or to dispose or direct the disposition of securities, or has the right to acquire such powers within 60 days through (i) the exercise of any option, warrant or right, (ii) the conversion of a security, (iii) the power to revoke a trust, discretionary account or similar arrangement or (iv) the automatic termination of a trust, discretionary account or similar arrangement. For purposes of calculating each person’s percentage ownership, common stock issuable pursuant to stock options that are currently exercisable or will become exercisable within 60 days are included as outstanding and beneficially owned for that person or group, but are not deemed outstanding for the purposes of computing the percentage ownership of any other person. Except as disclosed in the footnotes to this table and subject to applicable community property laws, we believe that each person identified in the table has sole voting and investment power over all of the shares shown opposite such person’s name.

The percentage of beneficial ownership is based on 5,115,262 shares of our Class A common stock and 752,184 shares of our Class B common stock, in each case outstanding as of December 31, 2019, and [   ] shares of our Class A common stock and 752,184 shares of our Class B common stock outstanding after completion of our initial public offering. The table does not reflect any shares of our Class A common stock that may be purchased in our initial public offering by directors, executive officers or beneficial holders of more than 5% of our outstanding common stock.

Unless otherwise indicated in the table below, the address for each beneficial owner is c/o Professional Holding Corp., 396 Alhambra Circle, Suite 255, Coral Gables, Florida 33134.

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​

Class A Common Stock Beneficially Owned Prior to Our Initial Public Offering

Class B Common Stock Beneficially Owned Prior to Our Initial Public Offering

% of Total Voting Power before the Offering

Class A Common Stock Beneficially Owned After the Initial Public Offering

Name and Address of Beneficial Owner

Number

Percent of Class A

Number

Percent of Class B

Number

Percent (if option not exercised)

Percent (if option is exercised)

Pro Forma Percent(1)

5% or Greater Shareholders

​

​

​

​

​

​

​

​

​

BayBoston Capital L.P.(2)

​

423,416

​

8.3%

​

60,880

​

8.1%

​

8.3%

​

423,416

​

5.2%

​

4.9%

​

3.3%

1280 Center Street, Suite 2 Newton Center, MA 02459

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

EJF Capital, LLC(3)

​

499,981

​

9.8%

​

340,753

​

45.3%

​

9.8%

​

499,981

​

6.1%

​

5.8%

​

3.9%

2107 Wilson Blvd., Suite 240 Arlington, VA 22201

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Emerald Advisers, Inc.(4)

​

279,177

​

5.5%

​

—

​

*

​

5.5%

​

279,177

​

3.4%

​

3.2%

​

2.2%

3195 Oregon Pike Leola, PA 17540

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

RMB Capital Management, LLC(5)

​

499,981

​

9.8%

​

350,551

​

46.6%

​

9.8%

​

499,981

​

6.1%

​

5.8%

​

3.9%

115 S. La Salle St. Chicago, IL 60603

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Stephens Professional Holding LLC(6)

​

279,177

​

5.5%

​

—

​

*

​

5.5%

​

279,177

​

3.4%

​

3.2%

​

2.2%

111 Center Street Little Rock, AR 72201

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Named Executive Officers and Directors

​

​

​

​

​

​

​

​

​

Rolando DiGasbarro(7)

​

23,260

​

*

​

—

​

*

​

*

​

23,260

​

*

​

*

​

*

Carlos M. Garcia(8)

​

423,416

​

8.3%

​

60,880

​

8.1%

​

8.3%

​

423,416

​

5.2%

​

4.9%

​

3.3%

Jon L. Gorney(9)

​

6,005

​

*

​

—

​

*

​

*

​

6,005

​

*

​

*

​

*

Ryan L. Gorney(10)

​

8,103

​

*

​

—

​

*

​

*

​

8,103

​

*

​

*

​

*

Abel L. Iglesias(11)

​

9,406

​

*

​

—

​

*

​

*

​

9,406

​

*

​

*

​

*

Herbert Martens(12)

​

41,736

​

*

​

—

​

*

​

*

​

41,736

​

*

​

*

​

*

Dr. Lawrence Schimmel, M.D.(13)

​

57,794

​

1.1%

​

—

​

*

​

1.1%

​

57,794

​

*

​

*

​

*

Daniel R. Sheehan(14)

​

93,734

​

1.8%

​

—

​

*

​

1.8%

​

93,734

​

1.1%

​

1.1%

​

*

Anton V. Schutz(15)

​

500,507

​

9.8%

​

350,551

​

46.6%

​

9.8%

​

500,507

​

6.1%

​

5.7%

​

3.9%

All Directors and Executive Officers as a Group (10 Persons)

​

1,173,877

​

22.8%

​

411,431

​

54.7%

​

22.8%

​

1,173,887

​

14.2%

​

13.5%

​

9.1%

*

Less than 1%

(1)

Pro Forma Percent assumes the full exercise of the underwriters’ option and the issuance of approximately 4,119,438 shares of Class A Common Stock to MBI shareholders upon consummation of our proposed acquisition of MBI.

(2)

Pursuant to an agreement entered into in connection with our 2015 private offering, we agreed to permit BayBoston Capital L.P. to appoint one director to our Board and the Bank’s Board of Directors. Currently, Carlos M. Garcia is BayBoston Capital L.P.’s representative serving as a director on our Board and the Bank’s Board of Directors. Mr. Garcia also serves as a member of our Board’s Compensation Committee and Nominating and Governance Committee. Shares beneficially owned by BayBoston Capital L.P. are also reported as beneficially owned by Carlos M. Garcia.

(3)

Includes (i) 77,091 shares of Class A common stock and 100,169 shares of Class B common stock owned by EFJ Sidecar Fund Series LLC — Small Financial Equities Series and (ii) 422,890 shares of Class A common stock and 240,584 shares of Class B common stock owned by EFJ Sidecar Fund Series LLC — Series E for which EJF Capital, LLC has voting and investment power.

(4)

Includes 175,683 shares of Class A Common Stock held directly by Age & Co. for the benefit of Emerald Banking and Finance Fund, which may be deemed to be beneficially owned by Emerald Advisers, Inc.

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(5)

Includes (i) 264,900 shares of Class A Common Stock and 125,300 shares of Class B Common Stock beneficially owned by Mendon Capital Master Fund Ltd., (ii) 200,643 shares of our Class A Common Stock and 207,711 shares of our Class B Common Stock beneficially owned by Mendon Capital QP LP, (iii) 34,438 shares of our Class A Common Stock and 17,540 shares of Class B Common Stock beneficially owned by Iron Road Multi Strategy Fund LP, for which RMB Capital Management, LLC may be deemed to have shared voting and investment power, and (iv) 562 shares of restricted Class A Common Stock beneficially owned by Anton V. Schutz. Shares beneficially owned by RMB Capital Management, LLC are also reported as beneficially owned by Anton V. Schutz.

(6)

Stephens Professional Holding LLC is an affiliate of Stephens Inc., an underwriter of this offering.

(7)

Includes (i) 20,234 shares of Class A Common Stock owned jointly with his wife, (ii) 2,500 exercisable stock options and (iii) 562 shares of restricted Class A Common Stock.

(8)

Includes (i) 422,890 shares of Class A Common Stock and (ii) 60,880 shares of Class B Common Stock shares beneficially owned by BayBoston Capital L.P. for which Carlos M. Garcia shares voting and investment power. Shares beneficially owned by Carlos M. Garcia are also reported as beneficially owned by BayBoston Capital L.P. Also includes 562 shares of restricted Class A Common Stock.

(9)

Includes 562 shares of restricted Class A Common Stock.

(10)

Includes 562 shares of restricted Class A Common Stock.

(11)

Includes (i) 10 shares of Class A Common Stock owned directly, (ii) 5,596 shares of restricted Class A Common Stock, and (iii) 800 shares of Class A Common stock owned jointly with his spouse as tenants by the entirety.

(12)

Includes (i) 7,500 exercisable stock options, (ii) 33,710 shares of Class A Common Stock beneficially owned by the Herbert R. Martens Trust for which Herbert R. Martens serves as trustee, and (iii) 562 shares of restricted Class A Common Stock.

(13)

Includes (i) 9,500 exercisable stock options, (ii) 17,768 shares of Class A Common Stock owned jointly with his wife, (iii) 30,000 shares of Class A Common Stock owned by Millennium Trust Company, LLC for the benefit of Dr. Schimmel, and (iv) 562 shares of restricted Class A Common Stock.

(14)

Includes (i) 18,000 exercisable stock options, (ii) 40,734 shares of Class A Common Stock beneficially owned by Juno Invest, LLC for which Mr. Sheehan has sole voting and investment power, and (iii) 35,000 shares of restricted Class A Common Stock.

(15)

Includes (i) 499,981 shares of Class A Common Stock and (ii) 350,551 shares of Class B Common Stock beneficially owned by RMB Capital Management, LLC. Anton V. Schutz may be deemed to share voting and investment power over these shares. Shares beneficially owned by Anton V. Schutz are also reported as beneficially owned by RMB Capital Management, LLC. Also includes 562 shares of restricted Class A Common Stock.

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BUSINESS OF MARQUIS

About Marquis Bancorp, Inc.

Marquis Bancorp, Inc., a Florida corporation incorporated in 2016, is a bank holding company under the Bank Holding Company Act of 1956, as amended, for Marquis Bank, a Florida-chartered non-member bank, and is subject to the supervision and regulation of the Federal Reserve Board and Florida Office of Financial Regulation. Marquis conducts all of its material business operations through Marquis Bank, its primary asset. Marquis Bank is a full-service commercial bank, which commenced operations in 2007. Marquis Bank is headquartered in Coral Gables, Florida and also has branches in Aventura and Fort Lauderdale, Florida. At September 30, 2019, Marquis had total consolidated assets of approximately $676.8 million, total consolidated deposits of approximately $577.9 million, total consolidated net loans of approximately $560.0 million, and total consolidated shareholders’ equity of approximately $56.4 million.

The revenues of Marquis Bank are primarily derived from interest on, and fees received in connection with, real estate and other loans, interest and dividends from investment securities, and service charge income generated from demand accounts. The principal sources of funds for Marquis Bank’s lending activities are its deposits (primarily consumer deposits), loan repayments, and proceeds from investment securities. The principal expenses of Marquis Bank are the interest paid on deposits, and operating and general administrative expenses.

Marquis Bank focuses its commercial loan originations on small and mid-sized business. These loan relationships tend to also generate significant related deposits. Commercial underwriting is driven by cash flow analysis supported by collateral analysis and review. Commercial loan products include commercial real estate construction and term loans; working capital loans and lines of credit; demand, term and time loans; and equipment, inventory and accounts receivable financing. Marquis Bank offers a range of cash management services and deposit products to commercial customers. Online banking is currently available to commercial customers.

Marquis Bank’s retail banking activities emphasize consumer deposit and checking accounts. In addition to traditional products and services, Marquis Bank offers contemporary products and services, such as debit cards, internet banking and electronic bill payment services. Consumer loan products offered by Marquis Bank include home equity lines of credit, second mortgages, new and used auto loans, new and used boat loans, overdraft protection, and unsecured personal credit lines.

As is the case with many banking institutions, Marquis Bank’s operations are materially and significantly influenced by general economic conditions and by related monetary and fiscal policies of financial institution regulatory agencies, including the Federal Reserve and the FDIC. Deposit flows and costs of funds are influenced by interest rates on competing investments and general market forces. Lending activities are affected by the demand for financing of real estate and other types of loans, which in turn is affected by the interest rates at which such financing may be offered and other factors affecting local demand and availability of funds.

Historically, Marquis Bank’s market area has been served both by large banks headquartered out of state and a number of community banks offering a higher level of personal attention, recognition and service relative to the larger competitors. Marquis Bank faces strong competition in the attraction of deposits (the primary source of lendable funds) and in the origination of loans.

The following tables present certain financial and statistical information about the assets, liabilities and operations of Marquis. These tables should be read together with, and are qualified by reference to, the historical consolidated financial information contained in Marquis’s consolidated financial statements and related notes included elsewhere in this joint proxy statement/prospectus. The historical results of operations for Marquis included here and elsewhere in this joint proxy statement/prospectus are not necessarily indicative of future performance.

Net Income

The following table presents information regarding Marquis’s net income for the nine months ended September 30, 2019 and 2018 and for the years ended December 31, 2018, 2017, and 2016.

216

Net income for the nine months ended September 30, 2019 was $5.5 million, an increase of $0.6 million, or 12.0%, from net income of  $4.9 million for the nine months ended September 30, 2018. This increase was primarily due to an increase in interest income of  $3.9 million which was partially offset by an increase in interest expense of  $2.8 million, resulting in an increase to net interest income of  $1.1 million for the nine months ended September 30, 2019 compared to the same period in the prior year, as well as an increase in noninterest expense of  $1.1 million. The increase in Marquis’s interest income was primarily due to average earning assets increasing $63.0 million, or 10.9% (primarily average loans of  $55.1 million), with a greater average yield of 35 basis points or by 7.4%. The increase in Marquis’s interest expense was primarily due to greater average interest-bearing liabilities of  $48.4 million, or 11.4%, with a greater average yield of 63 basis points, or 40.9%. The increase in MBI’s noninterest expense was primarily due to an increase in salary and benefits expense.

Net income for the year ended December 31, 2018 was $6.8 million, an increase of  $2.9 million, or 71.8%, from net income of  $4.0 million for the year ended December 31, 2017. This increase was primarily due to an increase in interest income of  $6.9 million which was partially offset by an increase in interest expense of  $3.1 million, resulting in a net interest income increase of  $3.9 million for the 12 months ended December 31, 2018 compared to the same period in the prior year, as well as an increase in noninterest expense of  $1.7 million. The increase in Marquis’s interest income was primarily due to average earning assets increasing to $112.4 million, or by 23.7%, (primarily average loans of  $102.5 million), with a greater average yield of 32 basis points, or 7.2%. The increase in Marquis’s interest expense was primarily due to greater average interest-bearing liabilities of  $102.1 million, or by 31.1% with a greater average yield of 42 basis points, or 34.5%. The increase in Marquis’s noninterest expense was primarily due to an increase in salary and benefits expense.

Net income for the year ended December 31, 2017 was $4.0 million, an increase of  $0.5 million, or 14.1%, from net income of  $3.5 million for the year ended December 31, 2016 . This increase was primarily due to an increase in interest income of  $4.5 million which was partially offset by an increase in interest expense of  $1.4 million, resulting in a net interest income increase of  $3.2 million for the 12 months ended December 31, 2017 compared to the same period in the prior year, as well as an increase in noninterest expense of  $1.7 million. The increase in Marquis’s interest income was primarily due to greater average earning assets of  $81.3 million, or 20.7%, (primarily average loans of  $83.1 million), with a greater average yield of 23 basis points or by 5.3%. The increase in Marquis’s interest expense was primarily due to greater average interest-bearing liabilities of  $49.2 million, or 17.7% with a greater average yield of 28 basis points, or 29.9%. The increase in Marquis’s noninterest expense was primarily due to an increase in salary and benefits expense.

​	Nine Months Ended September 30,
(Dollars in thousands)	2019			2018			Change
Interest income	​	$	24,317	​	$	20,438	​	19.0%
Interest expense	​	​	7,664	​	​	4,891	​	56.7%
Net Interest income	​	​	16,653	​	​	15,546	​	7.1%
Provision for loan losses	​	​	367	​	​	712	​	(48.5)%
Net interest income after provision	​	​	16,286	​	​	14,834	​	9.8%
Noninterest income	​	​	1,140	​	​	830	​	37.3%
Noninterest expense	​	​	10,121	​	​	9,054	​	11.8%
Income before income taxes	​	​	7,305	​	​	6,611	​	10.5%
Income tax expense	​	​	1,844	​	​	1,737	​	6.2%
Net income	​	$	5,461	​	$	4,874	​	12.0%

217

​	Years Ended December 31,								Years Ended December 31,
(Dollars in thousands)	2018			2017			Change		2017			2016			Change
Interest income	​	$	28,240	​	$	21,303	​	32.6%	​	$	21,303	​	$	16,765	​	27.1%
Interest expense	​	​	7,073	​	​	4,012	​	76.3%	​	​	4,012	​	​	2,625	​	52.8%
Net Interest income	​	​	21,167	​	​	17,292	​	22.4%	​	​	17,292	​	​	14,140	​	22.3%
Provision for loan losses	​	​	1,149	​	​	921	​	24.7%	​	​	921	​	​	640	​	44.0%
Net interest income after provision	​	​	20,018	​	​	16,370	​	22.3%	​	​	16,370	​	​	13,500	​	21.3%
Noninterest income	​	​	1,257	​	​	1,309	​	(3.9)%	​	​	1,309	​	​	1,168	​	12.0%
Noninterest expense	​	​	12,326	​	​	10,637	​	15.9%	​	​	10,637	​	​	8,975	​	18.5%
Income before income taxes	​	​	8,949	​	​	7,042	​	27.1%	​	​	7,042	​	​	5,693	​	23.7%
Income tax expense	​	​	2,141	​	​	3,080	​	(30.5)%	​	​	3,080	​	​	2,214	​	39.1%
Net income	​	$	6,808	​	$	3,963	​	71.8%	​	$	3,963	​	$	3,479	​	13.9%
Preferred stock dividend declared	​	​	—	​	​	—	​	—	​	​	—	​	​	7	​	(100.0)%
Net income available to common shareholders	​	$	6,808	​	$	3,963	​	​	​	$	3,963	​	$	3,472	​	14.1%

Average Balances

The following table presents Marquis’s average balance sheet information, interest income, interest expense and the corresponding average yield earned and rates paid for the nine months ended September 30, 2019 and 2018 and for the years ended December 31, 2018, 2017, and 2016.

​

For the Nine Months Ended September 30,

​

2019

2018

(Dollars in thousands)

Average Outstanding Balance

Interest Income/​ Expense

Average Yield/Rate

Average Outstanding Balance

Interest Income/​ Expense

Average Yield/Rate

Assets

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Interest earning assets

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Interest-bearing deposits

​

$

49,179

​

$

859

​

2.34%

​

$

45,600

​

$

604

​

1.77%

Federal funds sold

​

​

—

​

​

—

​

0.00%

​

​

—

​

​

—

​

0.00%

Federal Reserve Bank stock, FHLB stock and other corporate stock

​

​

2,077

​

​

—

​

0.00%

​

​

2,246

​

​

—

​

0.00%

Investment securities

​

​

31,751

​

​

690

​

2.58%

​

​

27,280

​

​

454

​

2.25%

Loans

​

​

557,712

​

​

22,849

​

5.48%

​

​

502,582

​

​

19,380

​

5.16%

Total interest earning assets

​

​

640,719

​

​

24,317

​

5.08%

​

​

577,708

​

​

20,438

​

4.73%

Noninterest earning assets

​

​

18,720

​

​

—

​

​

​

​

14,737

​

​

—

​

​

Total assets

​

​

659,439

​

​

24,317

​

4.93%

​

​

592,445

​

​

20,438

​

4.61%

Liabilities and shareholders’ equity

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Interest-bearing liabilities

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Interest-bearing deposits

​

​

426,884

​

​

6,387

​

2.00%

​

​

372,229

​

​

3,758

​

1.35%

Borrowed funds

​

​

45,320

​

​

1,277

​

3.78%

​

​

51,616

​

​

1,133

​

2.94%

Total interest-bearing liabilities

​

​

472,204

​

​

7,664

​

2.17%

​

​

423,845

​

​

4,891

​

1.54%

Noninterest-bearing liabilities

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Noninterest-bearing deposits

​

​

130,521

​

​

​

​

​

​

​

119,955

​

​

​

​

​

Other noninterest-bearing liabilities

​

​

2,732

​

​

​

​

​

​

​

2,574

​

​

​

​

​

Shareholders’ equity

​

​

53,982

​

​

​

​

​

​

​

46,071

​

​

​

​

​

Total liabilities and shareholders’ equity

​

$

659,439

​

​

​

​

​

​

$

592,445

​

​

​

​

​

Net interest spread

​

​

​

​

​

​

​

2.91%

​

​

​

​

​

​

​

3.19%

Net interest income

​

​

​

​

$

16,653

​

​

​

​

​

​

$

15,547

​

​

Net interest margin

​

​

​

​

​

​

​

3.48%

​

​

​

​

​

​

​

3.60%

218

​

For the Years Ended December 31,

​

2018

2017

2016

(Dollars in thousands)

Average Outstanding Balance

Interest Income/​ Expense

Average Yield/Rate

Average Outstanding Balance

Interest Income/​ Expense

Average Yield/Rate

Average Outstanding Balance

Interest Income/​ Expense

Average Yield/Rate

Assets

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Interest earning assets

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Interest-bearing deposits

​

$

41,500

​

$

779

​

1.88%

​

$

44,238

​

$

483

​

1.09%

​

$

48,476

​

$

244

​

0.50%

Federal funds sold

​

​

—

​

​

—

​

0.00%

​

​

—

​

​

—

​

0.00%

​

​

315

​

​

—

​

0.00%

Federal Reserve Bank stock, FHLB stock and other corporate stock

​

​

2,274

​

​

—

​

0.00%

​

​

1,614

​

​

—

​

0.00%

​

​

1,282

​

​

—

​

0.00%

Investment securities

​

​

29,132

​

​

664

​

2.29%

​

​

17,122

​

​

299

​

1.77%

​

​

14,686

​

​

244

​

1.68%

Loans(1)

​

​

514,258

​

​

26,797

​

5.21%

​

​

411,801

​

​

20,521

​

4.98%

​

​

328,733

​

​

16,277

​

4.95%

Total interest earning assets

​

​

587,164

​

​

28,240

​

4.81%

​

​

474,774

​

​

21,303

​

4.49%

​

​

393,492

​

​

16,765

​

4.26%

Noninterest earning assets

​

​

15,069

​

​

—

​

​

​

​

12,825

​

​

—

​

​

​

​

11,027

​

​

—

​

​

Total assets

​

​

602,233

​

​

28,240

​

4.69%

​

​

487,599

​

​

21,303

​

4.37%

​

​

404,519

​

​

16,765

​

4.15%

Liabilities and shareholders’ equity

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Interest-bearing liabilities

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Interest-bearing deposits

​

​

378,111

​

​

5,473

​

1.45%

​

​

289,856

​

​

2,910

​

1.00%

​

​

254,967

​

​

2,315

​

0.91%

Borrowed funds

​

​

52,304

​

​

1,600

​

3.06%

​

​

38,289

​

​

1,101

​

2.88%

​

​

23,939

​

​

311

​

1.30%

Total interest-bearing liabilities

​

​

430,415

​

​

7,073

​

1.64%

​

​

328,145

​

​

4,012

​

1.22%

​

​

278,906

​

​

2,625

​

0.94%

Noninterest-bearing liabilities

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Noninterest-bearing deposits

​

​

122,571

​

​

​

​

​

​

​

116,049

​

​

​

​

​

​

​

85,944

​

​

​

​

​

Other noninterest-bearing liabilities

​

​

10,156

​

​

​

​

​

​

​

2,084

​

​

​

​

​

​

​

1,631

​

​

​

​

​

Shareholders’ equity

​

​

47,018

​

​

​

​

​

​

​

41,321

​

​

​

​

​

​

​

38,038

​

​

​

​

​

Total liabilities and shareholders’ equity

​

$

602,233

​

​

​

​

​

​

$

487,599

​

​

​

​

​

​

$

404,519

​

​

​

​

​

Net interest spread(2)

​

​

​

​

​

​

​

3.17%

​

​

​

​

​

​

​

3.27%

​

​

​

​

​

​

​

3.32%

Net interest income

​

​

​

​

$

21,167

​

​

​

​

​

​

$

17,292

​

​

​

​

​

​

$

14,140

​

​

Net interest margin(3)

​

​

​

​

​

​

​

3.60%

​

​

​

​

​

​

​

3.64%

​

​

​

​

​

​

​

3.59%

(1)

Includes nonaccrual loans.

(2)

Net interest spread is the difference between the average rate earned on interest earning assets and the average rate paid on interest-bearing liabilities.

(3)

Net interest margin is the ratio of net interest income divided by average interest earning assets.

Rate/Volume

The level of net interest income is affected primarily by variations in the volume and mix of assets and liabilities, as well as changes in interest rates. The following table shows the effect that these factors had on the interest earned from Marquis’s interest earning assets and interest incurred on our interest-bearing liabilities for the nine months ended September 30, 2019 and 2018 and for the years ended December 31, 2018, 2017, and 2016.

219

​	For the Nine Months Ended September 30, 2019 Compared to 2018
​	Change Due To						​	​	​
(Dollars in thousands)	Volume			Rate			Interest Variance
Interest income	​	​	​	​	​	​	​	​	​
Interest-bearing deposits	​	$	47	​	$	208	​	$	255
Federal funds sold	​	​	—	​	​	—	​	​	—
Federal Reserve Bank stock, Federal Home Loan Bank stock and other corporate stock	​	​	—	​	​	—	​	​	—
Investment securities	​	​	75	​	​	80	​	​	155
Loans	​	​	2,126	​	​	1,343	​	​	3,469
Total interest income	​	$	2,248	​	$	1,631	​	$	3,879
Interest expense	​	​	​	​	​	​	​	​	​
Interest-bearing deposits	​	​	552	​	​	2,077	​	​	2,629
Borrowed funds	​	​	(138)	​	​	282	​	​	144
Total interest expense	​	$	414	​	$	2,359	​	$	2,773
Net interest income	​	$	1,834	​			​

​

For the Years Ended December 31, 2018 Compared to 2017

For the Years Ended December 31, 2017 Compared to 2016

​

Change Due To

​

​

​

Change Due To

​

​

​

(Dollars in thousands)

Volume

Rate

Interest Variance

Volume

Rate

Interest Variance

Interest income

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Interest-bearing deposits

​

$

(30)

​

$

326

​

$

296

​

$

(21)

​

$

260

​

$

239

Federal funds sold

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Federal Reserve Bank stock, Federal Home Loan Bank stock and other corporate stock

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Investment securities

​

​

212

​

​

153

​

​

365

​

​

41

​

​

14

​

​

55

Loans

​

​

5,106

​

​

1,170

​

​

6,276

​

​

4,113

​

​

131

​

​

4,244

Total interest income

​

$

5,288

​

$

1,649

​

$

6,937

​

$

4,133

​

$

405

​

$

4,538

Interest expense

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Interest-bearing deposits

​

​

885

​

​

1,678

​

​

2,563

​

​

317

​

​

278

​

​

595

Borrowed funds

​

​

403

​

​

96

​

​

499

​

​

186

​

​

604

​

​

790

Total interest expense

​

$

1,288

​

$

1,774

​

$

3,062

​

$

503

​

$

882

​

$

1,385

Net interest income

​

$

4,000

​

​

​

​

​

​

​

$

3,630

​

​

​

​

​

​

Noninterest Income

The following table presents information regarding Marquis’s noninterest income for the nine months ended September 30, 2019 and 2018 and for the years ended December 31, 2018, 2017, and 2016.

​	Nine Months Ended September 30,
(Dollars in thousands)	2019			2018			Increase (Decrease)
Noninterest income	​	​	​	​	​	​	​	​	​
Deposit account service charges	​	$	593	​	$	554	​	$	39
Gain (loss) on sale of loans	​	​	312	​	​	116	​	​	196
Other fees and charges	​	​	235	​	​	161	​	​	74
Total noninterest income	​	$	1,140	​	$	831	​	$	309

220

​

Years Ended December 31,

Years Ended December 31,

(Dollars in thousands)

2018

2017

Increase (Decrease)

2017

2016

Increase (Decrease)

Noninterest income

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Deposit account service charges

​

$

750

​

$

615

​

$

136

​

$

615

​

$

408

​

$

207

Gain (loss) on sale of loans

​

​

250

​

​

527

​

​

(277)

​

​

527

​

​

626

​

​

(100)

Other fees and charges

​

​

257

​

​

167

​

​

89

​

​

167

​

​

134

​

​

34

Total noninterest income

​

$

1,257

​

$

1,309

​

$

(52)

​

$

1,309

​

$

1,168

​

$

141

Noninterest Expense

The following table presents information regarding Marquis’s noninterest expense for the nine months ended September 30, 2019 and 2018 and for the years ended December 31, 2018, 2017, and 2016.

​	Nine Months Ended September 30,
(Dollars in thousands)	2019			2018			Increase (Decrease)
Noninterest expense	​	​	​	​	​	​	​	​	​
Salaries and benefits	​	$	6,155	​	$	5,531	​	$	624
Occupancy and equipment	​	​	1,111	​	​	1,010	​	​	101
Professional services	​	​	516	​	​	337	​	​	179
Data Processing	​	​	456	​	​	403	​	​	53
Advertising	​	​	96	​	​	147	​	​	(51)
Other real estate owned expense	​	​	107	​	​	—	​	​	107
Regulatory assessments	​	​	199	​	​	342	​	​	(143)
Directors’ compensation	​	​	756	​	​	693	​	​	63
Other	​	​	725	​	​	591	​	​	134
Total noninterest expense	​	$	10,121	​	$	9,054	​	$	1,067

​

Years Ended December 31,

Years Ended December 31,

(Dollars in thousands)

2018

2017

Increase (Decrease)

2017

2016

Increase (Decrease)

Noninterest expense

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Salaries and benefits

​

$

7,320

​

$

6,275

​

$

1,045

​

$

6,275

​

$

5,259

​

$

1,016

Occupancy and equipment

​

​

1,335

​

​

1,110

​

​

225

​

​

1,110

​

​

1,150

​

​

(40)

Professional services

​

​

415

​

​

432

​

​

(17)

​

​

432

​

​

339

​

​

93

Data Processing

​

​

545

​

​

499

​

​

46

​

​

499

​

​

485

​

​

14

Advertising

​

​

193

​

​

138

​

​

55

​

​

138

​

​

112

​

​

27

Regulatory assessments

​

​

442

​

​

239

​

​

203

​

​

239

​

​

280

​

​

(40)

Directors’ compensation

​

​

930

​

​

738

​

​

192

​

​

738

​

​

429

​

​

308

Other

​

​

1,146

​

​

1,205

​

​

(59)

​

​

1,205

​

​

920

​

​

284

Total noninterest expense

​

$

12,326

​

$

10,637

​

$

1,689

​

$

10,637

​

$

8,975

​

$

1,662

221

Investment Securities

The following table shows the book value and weighted average yield on the investment securities in Marquis’s securities portfolio based on maturity as of September 30, 2019.

At September 30, 2019

One Year or Less

More than One Year Through Five Years

More than Five Years Through 10 Years

More than 10 Years

Total

(Dollars in thousands)

Book Value

Weighted Average Yield

Book Value

Weighted Average Yield

Book Value

Weighted Average Yield

Book Value

Weighted Average Yield

Book Value

Fair Value

Weighted Average Yield

Securities Available for Sale

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

U.S. Government-sponsored agencies

​

$

2,000

​

1.44%

​

$

7,000

​

2.66%

​

$

—

​

​

​

$

—

​

​

​

$

9,000

​

$

9,036

​

2.39%

Mortgage-backed securities

​

​

—

​

—

​

​

—

​

—

​

​

6,362

​

2.43%

​

​

5,430

​

1.52%

​

​

11,792

​

​

11,874

​

2.01%

U.S. Agency obligations

​

​

—

​

—

​

​

—

​

—

​

​

1,254

​

3.27%

​

​

2,013

​

2.30%

​

​

3,267

​

​

3,180

​

2.67%

State, county, and municipals

​

​

—

​

—

​

​

—

​

—

​

​

1,048

​

2.30%

​

​

—

​

—

​

​

1,048

​

​

1,075

​

2.30%

Corporate bonds

​

​

501

​

3.53%

​

​

499

​

3.29%

​

​

—

​

—

​

​

—

​

—

​

​

1,000

​

​

1,006

​

3.41%

Total

​

$

2,501

​

​

​

$

7,499

​

​

​

$

8,664

​

​

​

$

7,443

​

​

​

$

26,107

​

$

26,171

​

​

Securities Held to Maturity

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

U.S Treasury securities

​

​

—

​

—

​

$

201

​

1.80%

​

$

—

​

​

​

$

—

​

​

​

$

201

​

$

201

​

1.80%

U.S. Government-sponsored agencies

​

​

—

​

​

​

​

—

​

​

​

​

—

​

​

​

​

—

​

​

​

​

—

​

​

—

​

—

Mortgage-backed securities

​

​

3

​

5.43%

​

​

—

​

​

​

​

—

​

​

​

​

294

​

1.21%

​

​

297

​

​

292

​

1.25%

Foreign Sovereign (Israel)

​

​

—

​

​

​

​

1,000

​

2,68%

​

​

—

​

​

​

​

—

​

​

​

​

1,000

​

​

1,000

​

2.68%

Total

​

$

3

​

​

​

$

1,201

​

​

​

$

—

​

​

​

$

294

​

​

​

$

1,498

​

$

1,493

​

​

The following tables shows the book value of the investment securities in Marquis’s securities portfolio as of September 30, 2019 and December 31, 2018, 2017, and 2016.

​						December 31,
​	September 30, 2019					2018					2017					2016
(Dollars in thousands)	Book Value			Percent		Book Value			Percent		Book Value			Percent		Book Value			Percent
Securities Available for Sale
U.S. Government agencies	​	$	3,267	​	12.51%	​	$	4,182	​	12.96%	​	$	5,533	​	32.96%	​	$	5,477	​	40.80%
U.S. government-sponsored entities	​	​	20,792	​	79.64%	​	​	25,533	​	79.12%	​	​	8,692	​	51.78%	​	​	4,874	​	36.31%
State, county and municipal bonds	​	​	1,048	​	4.01%	​	​	1,054	​	3.27%	​	​	1,061	​	6.32%	​	​	1,068	​	7.96%
Corporate bonds	​	​	1,000	​	3.83%	​	​	1,501	​	4.65%	​	​	1,502	​	8.95%	​	​	2,004	​	14.93%
Total	​	$	26,107	​	100.00%	​	$	32,270	​	100.00%	​	$	16,788	​	100.00%	​	$	13,423	​	100.00%
Securities Held to Maturity
U.S. Treasuries	​	$	201	​	13.42%	​	$	200	​	12.91%	​	$	200	​	12.35%	​	$	200	​	11.74%
U.S. government-sponsored entities	​	​	297	​	19.83%	​	​	349	​	22.53%	​	​	420	​	25.93%	​	​	503	​	29.54%
Foreign sovereign (Israel)	​	​	1,000	​	66.76%	​	​	1,000	​	64.56%	​	​	1,000	​	61.73%	​	​	1,000	​	58.72%
Total	​	$	1,498	​	100.00%	​	$	1,549	​	100.00%	​	$	1,620	​	100.00%	​	$	1,703	​	100.00%

222

Loan Portfolio

The following table shows the composition of Marquis’s loan portfolio as of September 30, 2019 and December 31, 2018, 2017, 2016, 2015, and 2014.

​

​

​

​

​

​

December 31,

​

September 30, 2019

2018

2017

2016

2015

2014

(Dollars in thousands)

Amount

Percent

Amount

Percent

Amount

Percent

Amount

Percent

Amount

Percent

Amount

Percent

Commercial real estate

​

$

404,087

​

71.4%

​

$

384,697

​

69.1%

​

$

298,677

​

64.5%

​

$

240,623

​

66.0%

​

$

201,833

​

70.2%

​

$

132,386

​

64.8%

Owner Occupied

​

​

165,662

​

—

​

​

171,924

​

—

​

​

135,101

​

—

​

​

102,593

​

—

​

​

66,032

​

—

​

​

30,032

​

—

Non-Owner Occupied

​

​

238,425

​

—

​

​

212,773

​

—

​

​

163,576

​

—

​

​

138,030

​

—

​

​

135,801

​

—

​

​

102,354

​

—

Residential real estate

​

​

64,985

​

11.5%

​

​

69,568

​

12.5%

​

​

72,006

​

15.5%

​

​

60,500

​

16.6%

​

​

44,081

​

15.3%

​

​

41,154

​

20.2%

Commercial

​

​

72,902

​

12.9%

​

​

80,172

​

14.4%

​

​

61,661

​

13.3%

​

​

46,408

​

12.7%

​

​

38,170

​

13.3%

​

​

22,593

​

11.1%

Construction and development

​

​

18,713

​

3.3%

​

​

18,747

​

3.4%

​

​

28,629

​

6.2%

​

​

13,932

​

3.8%

​

​

400

​

0.1%

​

​

2,614

​

1.3%

Consumer and other loans

​

​

4,882

​

0.9%

​

​

3,408

​

0.6%

​

​

2,210

​

0.5%

​

​

3,061

​

0.8%

​

​

3,125

​

1.1%

​

​

5,457

​

2.7%

Total loans

​

$

565,569

​

100.0%

​

$

556,593

​

100.0%

​

$

463,183

​

100.0%

​

$

364,524

​

100.0%

​

$

287,609

​

100.0%

​

$

204,204

​

100.0%

Unearned loan origination fees (costs), net

​

​

(300)

​

​

​

​

(366)

​

​

​

​

(115)

​

​

​

​

136

​

​

​

​

(152)

​

​

​

​

(157)

​

​

Allowance for loan losses

​

​

(5,294)

​

​

​

​

(4,863)

​

​

​

​

(4,199)

​

​

​

​

(3,625)

​

​

​

​

(3,000)

​

​

​

​

(2,711)

​

​

Loans, net

​

$

559,975

​

​

​

$

551,364

​

​

​

$

458,869

​

​

​

$

361,035

​

​

​

$

284,457

​

​

​

$

201,336

​

​

The following tables below show the industry and geographic concentrations of Marquis’s commercial real estate and construction and development combined portfolios.

​	As of September 30, 2019
(Dollars in thousands)	Amount			Percent
CRE and Construction & Development Loans, combined	​	​	​	​	​
1 – 4 Family Construction	​	$	2,845	​	0.7%
Commercial 1 – 4 Family Residential	​	​	35,958	​	8.5%
Auto (Car Lot/Auto Repair)	​	​	1,025	​	.2%
Gas Station	​	​	51,817	​	12.3%
Commercial Construction	​	​	15,039	​	3.6%
Educational Facility	​	​	4,435	​	1.0%
Hotel	​	​	30,003	​	7.1%
Land Development	​	​	11,824	​	2.8%
Multifamily	​	​	19,270	​	4.6%
Office	​	​	50,632	​	12.0%
Other/Special Use	​	​	2,104	​	.5%
Religious Facility	​	​	5,084	​	1.2%
Retail	​	​	120,140	​	28.4%
Warehouse	​	​	72,624	​	17.2%
Total	​	$	422,800	​	100.0%

​	As of September 30, 2019
(Dollars in thousands)	Amount			Percent
CRE and Construction & Development Loans, combined	​	​	​	​	​
Broward	​	$	83,645	​	19.8%
Miami-Dade	​	​	265,508	​	62.8%
Palm Beach	​	​	21,642	​	5.1%
Other FL County	​	​	42,427	​	10.0%
Out of State	​	​	9,578	​	2.3%
Total	​	$	422,800	​	100.0%

223

As of September 30, 2019, approximately $165.7 million and $238.4 million of Marquis’s commercial real estate portfolio was owner-occupied and non-owner-occupied, respectively.

The following table shows the industry concentrations for Marquis’s commercial loan portfolio as of September 30, 2019.

​	As of September 30, 2019
(Dollars in thousands)	Amount			Percent
Commercial and Industrial Loans	​	​	​	​	​
Business Products	​	$	3,878	​	5.3%
Business Services	​	​	5,188	​	7.1%
Information	​	​	4,442	​	6.1%
Construction	​	​	1,525	​	2.1%
Finance	​	​	15,330	​	21.0%
Healthcare	​	​	4,239	​	5.8%
Real Estate	​	​	8,797	​	12.1%
Services	​	​	9,252	​	12.7%
Trade	​	​	19,187	​	26.3%
Transportation	​	​	1,064	​	1.5%
Total	​	$	72,902	​	100.0%

Loan Maturity

The table below shows amounts and maturities for Marquis’s loan portfolio by loan type as of September 30, 2019.

​	September 30, 2019
(Dollars in thousands)	Due in One Year or Less			Due in One to Five Years			Due After Five Years			Total
Commercial Real Estate	​	$	34,552	​	$	159,190	​	$	210,345	​	$	404,087
Residential Real Estate	​	​	9,002	​	​	41,972	​	​	14,011	​	​	64,985
Commercial	​	​	37,269	​	​	22,937	​	​	12,696	​	​	72,902
Construction and Development	​	​	6,591	​	​	12,122	​	​	—	​	​	18,713
Consumer and Other	​	​	1,336	​	​	885	​	​	2,661	​	​	4,882
Total loans	​	$	88,750	​	$	237,106	​	$	239,713	​	$	565,569
Amounts with fixed rates	​	$	25,120	​	$	148,367	​	$	55,399	​	$	228,886
Amounts with floating rates	​	$	63,630	​	$	88,739	​	$	184,314	​	$	336,683

224

Credit Quality

The table below shows Marquis’s classified loans by loan type as of September 30, 2019 and December 31, 2018, 2017, and 2016.

(Dollars in thousands)

Pass

Special Mention

Substandard

Doubtful

Total

September 30, 2019

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Commercial real estate

​

$

404,087

​

​

—

​

​

—

​

​

—

​

$

404,087

Residential real estate

​

​

64,875

​

​

—

​

​

110

​

​

—

​

​

64,985

Commercial

​

​

72,902

​

​

—

​

​

—

​

​

—

​

​

72,902

Construction and development

​

​

18,713

​

​

—

​

​

—

​

​

—

​

​

18,713

Consumer

​

​

4,882

​

​

—

​

​

—

​

​

—

​

​

4,882

Total

​

$

565,459

​

$

—

​

$

110

​

$

—

​

$

565,569

December 31, 2018

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Commercial real estate

​

$

384,697

​

​

—

​

​

—

​

​

—

​

$

384,697

Residential real estate

​

​

69,458

​

​

—

​

​

110

​

​

—

​

​

69,568

Commercial

​

​

80,172

​

​

—

​

​

—

​

​

—

​

​

80,172

Construction and development

​

​

18,747

​

​

—

​

​

—

​

​

—

​

​

18,747

Consumer

​

​

3,408

​

​

—

​

​

—

​

​

—

​

​

3,408

Total

​

$

556,482

​

$

—

​

$

110

​

$

—

​

$

556,592

December 31, 2017

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Commercial real estate

​

$

298,677

​

​

—

​

​

—

​

​

—

​

$

298,677

Residential real estate

​

​

69,906

​

​

—

​

​

2,100

​

​

—

​

​

72,006

Commercial

​

​

61,356

​

​

—

​

​

305

​

​

—

​

​

61,661

Construction and development

​

​

28,629

​

​

—

​

​

—

​

​

—

​

​

28,629

Consumer

​

​

2,210

​

​

—

​

​

—

​

​

—

​

​

2,210

Total

​

$

460,778

​

$

—

​

$

2,405

​

$

—

​

$

463,183

December 31, 2016

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Commercial real estate

​

$

240,623

​

​

—

​

​

—

​

​

—

​

$

240,623

Residential real estate

​

​

59,958

​

​

—

​

​

542

​

​

—

​

​

60,500

Commercial

​

​

41,695

​

​

4,713

​

​

—

​

​

—

​

​

46,408

Construction and development

​

​

13,932

​

​

—

​

​

—

​

​

—

​

​

13,932

Consumer

​

​

3,061

​

​

—

​

​

—

​

​

—

​

​

3,061

Total

​

$

359,269

​

$

4,713

​

$

542

​

$

—

​

$

364,524

225

Nonperforming Assets

The following table shows Marquis’s nonperforming assets as of September 30, 2019 and the years ended December 31, 2018, 2017, 2016, 2015, and 2014.

​	September 30, 2019			December 31,
(Dollars in thousands)				2018			2017			2016			2015			2014
Accruing loans 90 or more days past due	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—
Nonaccrual Loans
Commercial real estate	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Residential real estate	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—
Commercial	​	​	110	​	​	110	​	​	2,100	​	​	—	​	​	—	​	​	20
Construction and development	​	​	—	​	​	294	​	​	306	​	​	—	​	​	—	​	​	—
Consumer and other loans	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—
Total nonperforming loans	​	$	110	​	$	404	​	$	2,406	​	$	—	​	$	—	​	$	20
Other real estate owned	​	​	1,708	​	​	1,708	​	​	—	​	​	—	​	​	720	​	​	743
Total nonperforming assets	​	$	1,818	​	$	2,112	​	$	2,406	​	$	—	​	$	720	​	$	763
Restructured loans – nonaccrual	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—
Restructured loans – accruing	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—
Ratio of nonperforming loans to total loans	​	​	0.02%	​	​	0.07%	​	​	0.51%	​	​	0.00%	​	​	0.00%	​	​	0.01%
Ratio of nonperforming assets to total assets	​	​	0.27%	​	​	0.32%	​	​	0.45%	​	​	0.00%	​	​	0.21%	​	​	0.27%

Allowance for Loan Losses

The following table show changes in Marquis’s allowance for loan losses for the nine months ended September 30, 2019 and 2018 and for the years ended December 31, 2018, 2017, 2016, 2015, and 2014.

​

Nine Months Ended September 30,

Year Ended December 31,

(Dollars in thousands)

2019

2018

2018

2017

2016

2015

2014

Balance at beginning of period

​

$

4,863

​

$

4,199

​

$

4,199

​

$

3,625

​

$

3,000

​

$

2,711

​

$

2,541

Charge-offs

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Commercial real estate

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

48

Residential real estate

​

​

—

​

​

—

​

​

491

​

​

—

​

​

—

​

​

—

​

​

—

Commercial

​

​

—

​

​

—

​

​

—

​

​

310

​

​

—

​

​

—

​

​

—

Construction and development

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Consumer and other

​

​

—

​

​

—

​

​

—

​

​

41

​

​

16

​

​

9

​

​

—

Total Charge-offs

​

​

—

​

​

—

​

​

491

​

​

351

​

​

16

​

​

9

​

​

48

Recoveries

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Commercial real estate

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Residential real estate

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Commercial

​

​

60

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

14

Construction and development

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Consumer and other

​

​

4

​

​

3

​

​

6

​

​

3

​

​

1

​

​

—

​

​

—

Total recoveries

​

​

64

​

​

3

​

​

6

​

​

3

​

​

1

​

​

—

​

​

14

Net charge-offs (recoveries)

​

​

(64)

​

​

(3)

​

​

485

​

​

348

​

​

15

​

​

9

​

​

34

Provision for loan losses

​

​

367

​

​

712

​

​

1,149

​

​

922

​

​

640

​

​

298

​

​

204

Balance at end of period

​

$

5,294

​

$

4,914

​

$

4,863

​

$

4,199

​

$

3,625

​

$

3,000

​

$

2,711

Ratio of net charge-offs to average loans

​

​

(0.01)%

​

​

0.00%

​

​

0.09%

​

​

0.08%

​

​

0.00%

​

​

0.00%

​

​

0.02%

ALLL as a percentage of loans at end of period

​

​

0.94%

​

​

0.91%

​

​

0.87%

​

​

0.91%

​

​

0.99%

​

​

1.04%

​

​

1.33%

ALLL as a multiple of net charge-offs

​

​

(82.72)

​

​

(1,638.00)

​

​

10.03

​

​

12.07

​

​

241.67

​

​

333.33

​

​

79.74

ALLL as a percentage of nonperforming loans

​

​

4,812.73%

​

​

204.41%

​

​

1,203.71%

​

​

174.52%

​

​

N/A

​

​

N/A

​

​

13,555.00%

226

Allocation of ALLL

The following table shows Marquis’s allocation of Marquis’s allowance for loan losses as of September 30, 2019 and December 31, 2018, 2017, 2016, 2015, and 2014.

​	September 30, 2019					December 31, 2018					December 31, 2017					December 31, 2016					December 31, 2015					December 31, 2014
(Dollars in thousands)	Allowance			Percent		Allowance			Percent		Allowance			Percent		Allowance			Percent		Allowance			Percent		Allowance			Percent
Commercial real estate	​	$	3,577	​	65.57%	​	$	3,082	​	63.38%	​	$	2,758	​	65.68%	​	$	2,314	​	63.83%	​	$	2,009	​	66.97%	​	$	1,860	​	68.61%
Residential real estate	​	​	708	​	13.37%	​	​	687	​	14.13%	​	​	600	​	14.29%	​	​	652	​	17.99%	​	​	553	​	18.43%	​	​	572	​	21.10%
Commercial	​	​	758	​	14.32%	​	​	846	​	17.40%	​	​	568	​	13.53%	​	​	506	​	13.96%	​	​	412	​	13.73%	​	​	215	​	7.97%
Construction and development	​	​	192	​	3.63%	​	​	216	​	4.44%	​	​	236	​	5.62%	​	​	125	​	3.45%	​	​	3	​	0.10%	​	​	28	​	1.03%
Consumer and other	​	​	59	​	1.11%	​	​	32	​	0.66%	​	​	37	​	0.88%	​	​	28	​	0.77%	​	​	24	​	0.77%	​	​	35	​	1.29%
Total allowance for loan losses	​	$	5,294	​	100.00%	​	$	4,863	​	100.00%	​	$	4,199	​	100.00%	​	$	3,625	​	100.00%	​	$	3,001	​	100.00%	​	$	2,710	​	100.00%

Deposits

The following table shows Marquis’s average deposit balance by type for the nine months ended September 30, 2019 and 2018 and for the years ended December 31, 2018, 2017, and 2016. As of September 30, 2019, Marquis had total brokered deposits of  $45.0 million, 8.1% of total, of which $37.5 million, or 83.4%, were fully insured with a remaining maturity of one year or less.

​	For the Nine Months Ended September 30, 2019					For the Year Ended December 31
​						2018					2017					2016
(Dollars in thousands)	Average Balance			Average Rate		Average Balance			Average Rate		Average Balance			Average Rate		Average Balance			Average Rate
NOW accounts	​	$	19,583	​	0.05%	​	$	20,097	​	0.05%	​	$	14,342	​	0.05%	​	$	14,347	​	0.06%
Money market accounts	​	​	128,256	​	1.36%	​	​	138,225	​	0.98%	​	​	135,475	​	0.82%	​	​	116,650	​	0.76%
Savings accounts	​	​	3,801	​	0.20%	​	​	4,278	​	0.20%	​	​	2,859	​	0.20%	​	​	2,872	​	0.20%
Certificates of deposit	​	​	275,244	​	2.46%	​	​	215,511	​	1.90%	​	​	137,180	​	1.30%	​	​	121,071	​	1.17%
Total interest-bearing deposits	​	​	426,884	​	2.00%	​	​	378,111	​	1.45%	​	​	289,856	​	1.00%	​	​	254,941	​	0.91%
Noninterest-bearing deposits	​	​	130,521	​	0.00%	​	​	114,771	​	0.00%	​	​	110,976	​	0.00%	​	​	82,323	​	0.00%
Total deposits	​	$	557,405	​	1.53%	​	$	492,881	​	1.11%	​	$	400,832	​	0.73%	​	$	337,264	​	0.69%

Time Deposits

The following table shows the maturities of Marquis’s time deposits as of September 30, 2019.

(Dollars in thousands)	Three Months or Less			Over Three Through Six Months			Over Six Months Through 12 Months			Over 12 Months			Total
$100,000 or more	​	$	69,558	​	$	52,287	​	$	50,455	​	$	55,270	​	$	227,570
Less than $100,000	​	​	3,883	​	​	1,843	​	​	4,012	​	​	5,903	​	​	15,641
Total	​	$	73,441	​	$	54,130	​	$	54,467	​	$	61,173	​	$	243,211

227

FHLB Borrowings

The following table shows information related to Marquis’s FHLB borrowings as of and for the nine months ended September 30, 2019 and as of and for the years ended December 31, 2018, 2017, and 2016.

​	Nine Months Ended September 30, 2019			Years Ended December 31,
(Dollars in thousands)				2018			2017			2016
Amount outstanding at period-end	​	$	30,000	​	$	75,000	​	$	39,000	​	$	36,000
Weighted average interest rate at period-end	​	​	2.09%	​	​	2.63%	​	​	1.44%	​	​	0.87%
Maximum month-end balance during period	​	$	56,000	​	$	75,000	​	$	39,000	​	$	36,000
Average balance outstanding during period	​	$	35,630	​	$	42,663	​	$	28,674	​	$	22,213
Weighted average interest rate during period	​	​	2.65%	​	​	1.95%	​	​	1.11%	​	​	0.83%

Performance Ratios

The following table shows certain performance ratios of Marquis for the nine months ended September 30, 2019 and for the years ended December 31, 2018, 2017, and 2016.

​	Nine Months Ended September 30, 2019		Years Ended December 31,
​			2018		2017		2016
Return on Average Assets	​	1.11%	​	1.13%	​	0.81%	​	0.86%
Return on Average Equity	​	13.53%	​	14.35%	​	9.58%	​	9.13%
Average Equity to Average Assets	​	8.19%	​	7.81%	​	8.47%	​	9.40%

Capital Ratios

The following table shows the regulatory capital ratios for Marquis and Marquis Bank as of September 30, 2019 and December 31, 2018, 2017, and 2016. The amounts presented exclude the capital conservation buffer. See “Supervision and Regulation — Professional Holding Corp. — Capital Regulations.”

​

Actual

Minimum for capital adequacy

Minimum to be well capitalized

(Dollars in thousands)

Amount

Ratio

Amount

Ratio

Amount

Ratio

September 30, 2019

​

​

​

​

​

​

Total risk-based capital ratio

​

​

​

​

​

​

Marquis Bank

​

$

70,920

​

12.2%

​

$

46,619

​

8.0%

​

$

58,274

​

10.0%

Marquis

​

​

71,839

​

12.3%

​

​

N/A

​

N/A

​

​

N/A

​

N/A

Tier 1 risk-based capital ratio

​

​

​

​

​

​

Marquis Bank

​

​

65,188

​

11.2%

​

​

34,964

​

6.0%

​

​

46,619

​

8.0%

Marquis

​

​

56,397

​

9.7%

​

​

N/A

​

N/A

​

​

N/A

​

N/A

Tier 1 leverage ratio

​

​

​

​

​

​

Marquis Bank

​

​

65,188

​

9.7%

​

​

26,838

​

4.0%

​

​

33,548

​

5.0%

Marquis

​

​

56,397

​

8.4%

​

​

N/A

​

N/A

​

​

N/A

​

N/A

Common equity tier 1 capital ratio

​

​

​

​

​

​

Marquis Bank

​

​

65,188

​

11.2%

​

​

26,223

​

4.5%

​

​

37,878

​

6.5%

Marquis

​

​

56,397

​

9.7%

​

​

N/A

​

N/A

​

​

N/A

​

N/A

228

​

Actual

Minimum for capital adequacy

Minimum to be well capitalized

(Dollars in thousands)

Amount

Ratio

Amount

Ratio

Amount

Ratio

December 31, 2018

​

​

​

​

​

​

Total risk-based capital ratio

​

​

​

​

​

​

Marquis Bank

​

$

65,167

​

11.4%

​

$

45,768

​

8.0%

​

$

57,210

​

10.0%

Marquis

​

​

65,980

​

11.5%

​

​

N/A

​

N/A

​

​

N/A

​

N/A

Tier 1 risk-based capital ratio

​

​

​

​

​

​

Marquis Bank

​

​

59,885

​

10.5%

​

​

34,326

​

6.0%

​

$

45,768

​

8.0%

Marquis

​

​

51,028

​

8.9%

​

​

N/A

​

N/A

​

​

N/A

​

N/A

Tier 1 risk-based leverage ratio

​

​

​

​

​

​

Marquis Bank

​

​

59,885

​

9.5%

​

​

25,251

​

4.0%

​

​

31,564

​

5.0%

Marquis

​

​

51,028

​

8.1%

​

​

N/A

​

N/A

​

​

N/A

​

N/A

Common equity tier 1 capital ratio

​

​

​

​

​

​

Marquis Bank

​

​

59,885

​

10.5%

​

​

25,744

​

4.5%

​

​

37,186

​

6.5%

Marquis

​

​

51,028

​

8.9%

​

​

N/A

​

N/A

​

​

N/A

​

N/A

December 31, 2017

​

​

​

​

​

​

Total risk-based capital ratio

​

​

​

​

​

​

Marquis Bank

​

$

55,528

​

11.8%

​

$

37,620

​

8.0%

​

$

47,025

​

10.0%

Marquis

​

​

57,400

​

12.2%

​

​

N/A

​

N/A

​

​

N/A

​

N/A

Tier 1 risk-based capital ratio

​

​

​

​

​

​

Marquis Bank

​

​

50,995

​

10.8%

​

​

28,215

​

6.0%

​

​

37,620

​

8.0%

Marquis

​

​

43,254

​

9.2%

​

​

N/A

​

N/A

​

​

N/A

​

N/A

Tier 1 leverage ratio

​

​

​

​

​

​

Marquis Bank

​

​

50,995

​

9.7%

​

​

20,983

​

4.0%

​

​

26,229

​

5.0%

Marquis

​

​

43,254

​

8.2%

​

​

N/A

​

N/A

​

​

N/A

​

N/A

Common equity tier 1 capital ratio

​

​

​

​

​

​

Marquis Bank

​

​

50,995

​

10.8%

​

​

21,161

​

4.5%

​

​

30,566

​

6.5%

Marquis

​

​

43,254

​

9.2%

​

​

N/A

​

N/A

​

​

N/A

​

N/A

December 31, 2016

​

​

​

​

​

​

Total risk-based capital ratio

​

​

​

​

​

​

Marquis Bank

​

$

50,303

​

13.7%

​

$

29,410

​

8.0%

​

$

36,763

​

10.0%

Marquis

​

​

51,856

​

14.2%

​

​

N/A

​

N/A

​

​

N/A

​

N/A

Tier 1 risk-based capital ratio

​

​

​

​

​

​

Marquis Bank

​

​

46,678

​

12.7%

​

​

22,058

​

6.0%

​

​

29,410

​

8.0%

Marquis

​

​

38,678

​

10.6%

​

​

N/A

​

N/A

​

​

N/A

​

N/A

Tier 1 leverage ratio

​

​

​

​

​

​

Marquis Bank

​

​

46,678

​

11.1%

​

​

16,847

​

4.0%

​

​

21,059

​

5.0%

Marquis

​

​

38,678

​

9.4%

​

​

N/A

​

N/A

​

​

N/A

​

N/A

Common equity tier 1 capital ratio

​

​

​

​

​

​

Marquis Bank

​

​

46,678

​

12.7%

​

​

16,543

​

4.5%

​

​

23,896

​

6.5%

Marquis

​

​

38,678

​

10.6%

​

​

N/A

​

N/A

​

​

N/A

​

N/A

229

Contractual Obligations

The following table shows the timing of amounts due under Marquis’s contractual obligations as of September 30, 2019.

(Dollars in thousands)

Due in One Year or Less

Due after One Through Three Years

Due After Three Through Five Years

Due After Five Years

Total

FHLB Advances

​

$

30,000

​

$

—

​

$

—

​

$

—

​

$

30,000

Certificates of deposit $100,000 or more

​

​

172,300

​

​

54,411

​

​

859

​

​

—

​

​

227,570

Certificates of deposit less than $100,000

​

​

9,738

​

​

5,822

​

​

81

​

​

—

​

​

15,641

Operating leases

​

​

710

​

​

1,161

​

​

125

​

​

​

​

​

1,996

Subordinated Debt, net of issuance

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Total

​

$

212,748

​

$

61,394

​

$

1,065

​

$

—

​

$

275,207

Credit Commitments

The following table shows Marquis’s credit commitments as of September 30, 2019 and December 31, 2018, 2017, and 2016.

​	​	​	​	As of December 31,
(Dollars in thousands)	As of September 30, 2019			2018			2017			2016
Unfunded lines of credit	​	$	129,063	​	$	119,327	​	$	113,150	​	$	73,405
Commitments to extend credit	​	​	22,718	​	​	27,017	​	​	37,687	​	​	34,987
Letters of credit	​	​	2,010	​	​	1,502	​	​	2,568	​	​	4,076
Total credit extension commitments	​	$	153,791	​	$	147,845	​	$	153,405	​	$	112,468

Government Regulation

Like Professional, Marquis must comply with state and federal banking laws and regulations that control virtually all aspects of its operations. These laws and regulations generally aim to protect Marquis Bank’s depositors, not necessarily Marquis’s shareholders or Marquis’s creditors. Any changes in applicable laws or regulations may materially affect Marquis’s business and prospects. Proposed legislative or regulatory changes may also affect Marquis’s operations. Marquis and Marquis Bank are subject to the same laws and regulations described in the section captioned “Supervision and Regulation” as Professional and Professional Bank, respectively.

Merger Agreement

Under the terms of the merger agreement, prior to the consummation of the merger or earlier termination of the merger agreement, Marquis shall, and shall cause each of its subsidiaries to, (i) conduct its business in the ordinary course consistent with past practice, (ii) use commercially reasonable best efforts to maintain and preserve intact its business organization and advantageous business relationships, including with its employees, and (iii) take no action that is intended to or would reasonably be expected to adversely affect or materially delay any necessary regulatory approvals or to timely consummate the transactions contemplated. In addition, Marquis has agreed, under the terms of the merger agreement, prior to the consummation of the merger or the earlier termination of the merger agreement, to refrain from, without our prior written consent, taking certain actions to, including but not limited to, issue additional shares of capital stock (other than in connection with the exercise of outstanding stock options); declare or pay dividends to Marquis shareholders, repurchase shares of capital stock; enter into, adopt, renew, modify, or terminate employment agreements or benefit plans for executive officers or directors; dispose of assets in a manner inconsistent with past practices; make any acquisition of a third party; sell or acquire loans or loan participations (other than in the ordinary course of business consistent with past practice or to bring a loan

230

in compliance with legal lending limits); amend the organizational documents of those of its subsidiary; implement or adopt any material change in its accounting principles, practices or methods; enter into, renew or terminate any material contracts or materially amend such contracts; settle claims in excess of $125,000; make material changes in deposit taking, lending, investment, risk management, and other bank activities of Marquis Bank; make individual capital expenditures in excess of  $100,000 (or $500,000 in aggregate); incur indebtedness (other than in the ordinary course of business); enter into new lines of business; make, change, or revoke any material tax election; or take any action or knowingly fail to take any action that would jeopardize the tax-free nature of the proposed merger or that would materially impair or delay the consummation of the merger.

Employees

As of September 30, 2019, Marquis had 70 employees, all located in the United States. None of MBI’s employees are represented by a labor union or covered by a collective bargaining agreement. Marquis believes it has a positive relationship with its employees.

Facilities

Marquis’s headquarters is located in Coral Gables, Florida. Marquis operates through two additional full-service bank branches located in Aventura, Florida and Fort Lauderdale, Florida. Marquis leases each of its locations and believes that the leases are generally on terms consistent with prevailing market terms. The following table summarizes the details of Marquis’s branch office locations.

Location	Street Address	City & State
Coral Gables	355 Alhambra Circle, Suite 125	Coral Gables, FL
Aventura	19058 NE 29th Avenue	Aventura, FL
Fort Lauderdale	201 Southeast 12th Street	Fort Lauderdale, FL

Legal Proceedings

Marquis is not currently subject to any material legal proceedings. Marquis is, from time to time, subject to claims and litigation arising in the ordinary course of business. These claims and litigation may include, among other things, allegations of violations of banking and other applicable regulations, competition laws, labor laws and consumer protection laws, as well as claims or litigation relating to intellectual property, securities, breach of contract and tort. Marquis intends to defend itself vigorously against any pending or future claims and litigation.

At this time, in the opinion of Marquis’s management, the likelihood is remote that the impact of such proceedings, either individually or in the aggregate, would have a material adverse effect on Marquis’s combined results of operations, financial condition or cash flows. However, one or more unfavorable outcomes in any claim or litigation against Marquis (or us following the consummation of the merger) could have a material adverse effect for the period in which they are resolved. In addition, regardless of their merits or their ultimate outcomes, such matters are costly, divert management’s attention and may materially adversely affect Marquis’s reputation (or our reputation after the consummation of the merger), even if resolved in Marquis’s favor.

Seasonality

Marquis does not believe its business to be seasonal in nature.

231

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF MARQUIS

Unless the context requires otherwise, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Marquis” section of this joint proxy statement/prospectus to the “Company,” “we,” “us,” or “our” refer to Marquis and its wholly owned subsidiaries on a consolidated basis, and references to the “Bank” refer to Marquis Bank.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the accompanying notes and other financial information appearing elsewhere in this joint proxy statement/prospectus. To the extent that this discussion describes prior performance, the descriptions relate only to the periods listed, which may not be indicative of our future financial outcomes. In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ materially from management’s expectations. Factors that could cause such differences include, but are not limited to, those identified below, and those described in the sections titled “Cautionary Note Regarding Forward-Looking Information” and “Risk Factors” of this joint proxy statement/prospectus.

Overview

This section presents our financial condition and results of operations on a consolidated basis. However, we conduct all of our material business operations through our wholly owned bank subsidiary, Marquis Bank, which we refer to as the Bank, and the discussion and analysis that follows primarily relates to activities conducted by the Bank. We currently conduct operations through our headquarters in Coral Gables, Florida, and our three branches in, Coral Gables, Aventura and Ft. Lauderdale, Florida.

Our principal business is lending to and accepting deposits from small to medium sized businesses, the owners and operators of these businesses, as well as other professionals, entrepreneurs and high net worth individuals. We generate the majority of our revenue from interest earned on loans, investments and other interest earning assets, such as federal funds sold and interest earning deposits with other institutions; loan and deposit fees and service charges; and fees relating to the sale of SBA loan originations. We incur interest expense on deposits and other borrowed funds, as well as operating expenses, such as salaries and employee benefits and occupancy expenses.

Our management’s discussion and analysis is intended to provide the reader with information that will assist in understanding our business, results of operations, financial condition and financial statements; changes in certain key items in our financial statements from period to period; and the primary factors that we believe impact our financial results.

2019 Highlights

Highlights of our performance and financial condition as of and for the nine months ended September 30, 2019 and other key events that have occurred during 2019 are provided below.

Results of Operations

•

Net income of  $5.5 million, which represented an increase of  $0.6 million, or 12.0%, compared to the same period in 2018.

•

Net interest income of  $16.7 million, which represented an increase of  $1.1 million, or 7.1%, compared to the same period in 2018. This increase was primarily due to loan growth and slightly increased yields on loans, partially offset by an increase in total deposits, as well as increased rates paid on deposit products.

•

Provision for loan losses was $0.4 million, which represented a decrease of approximately $0.4 million, or 48.5%, compared to the same period in 2018.

•

Noninterest income totaled $1.1 million, which represented an increase of  $0.3 million, or 37.3%, compared to the same period in 2018. This increase was primarily due to increased gain on sale of SBA loans, deposit service charges, and Federal Home Loan Bank of Atlanta (“FHLB”) dividend income.

232

•

Noninterest expense of  $10.1 million, which represented an increase of  $1.1 million, or 11.8%, compared to the same period in 2018. This increase was primarily due to increased employee headcount, and expenses related to a full period of operating our Ft. Lauderdale branch that opened during the fourth quarter of 2018.

Financial Condition

•

Total assets increased to $676.8 million, which represented an increase of  $14.5 million, or 2.2%, compared to December 31, 2018. This increase was largely attributable to net loan growth of  $8.6 million.

•

Net loans increased to $560 million, an increase of  $8.6 million, or 1.6%, compared to December 31, 2018. Loan growth was primarily in commercial real estate loans.

•

Nonperforming assets totaled $1.8 million, which includes one other real estate owned (“OREO”) property with a book value of  $1.7 million and one loan in nonaccrual status with a book value of $0.1 million. The same nonperforming assets were outstanding at December 31, 2018. The OREO property was under contract at September 30, 2019, and closed on October 4, 2019 at no additional loss to the bank.

•

As of September 30, 2019, we were well-capitalized, with a total risk-based capital ratio of 12.3%, a tier 1 risk-based capital ratio of 9.7%, a common equity tier 1 capital ratio of 9.7%, and a leverage ratio of 8.4%. As of September 30, 2019, all of our regulatory capital ratios exceeded the thresholds to be well capitalized under the applicable bank regulatory requirements.

•

In August 2019, we entered into a merger agreement to be acquired by Professional Holding Corporation, for shares of their Class A Common Stock.

Results of Marquis Bancorp, Inc.’s Operations for the Nine Months Ended September 30, 2019 and 2018

Net Income

The following table sets forth the principal components of net income for the periods indicated.

​	Nine Months Ended September 30,						​	​
(Dollars in thousands)	2019			2018			Change
Interest income	​	$	24,317	​	$	20,438	​	19.0%
Interest expense	​	​	7,664	​	​	4,891	​	56.7%
Net Interest income	​	​	16,653	​	​	15,547	​	7.1%
Provision for loan losses	​	​	367	​	​	712	​	(48.5)%
Net interest income after provision	​	​	16,286	​	​	14,835	​	9.8%
Noninterest income	​	​	1,140	​	​	830	​	37.3%
Noninterest expense	​	​	10,121	​	​	9,054	​	11.8%
Income before income taxes	​	​	7,305	​	​	6,612	​	10.5%
Income tax expense	​	​	1,844	​	​	1,737	​	6.2%
Net income	​	$	5,461	​	$	4,875	​	12.0%

Net income for the nine months ended September 30, 2019 was $5.5 million, an increase of  $0.6 million, or 12%, from net income for the nine months ended September 30, 2018 of  $4.9 million. Interest income increased $3.9 million while interest expense increased $2.8 million, resulting in a net interest income increase of  $1.1 million for the nine months ended September 30, 2019 compared to the same period in the prior year. The increase in our interest income was primarily due to loan growth of  $26 million and higher loan yields. Provision for loan losses decreased by $0.4 million for the nine months ended September 30, 2019 compared to the same period in the prior year due to lower required reserves and mix of the portfolio. Noninterest income increased $0.3 million and noninterest expense increased $1.1 million

233

for the nine months ended September 30, 2019 compared to the same period in the prior year. The increase in noninterest expense for the nine months ended September 30, 2019 compared to the same period in the prior year was primarily a result of increased employee headcount, and a full period of expenses for the Ft. Lauderdale office during the fourth quarter of 2018.

Net Interest Income and Net Interest Margin Analysis

We analyze our ability to maximize income generated from interest earning assets and control the interest expenses of our liabilities, measured as net interest income, through our net interest margin and net interest spread. Net interest income is the difference between the interest and fees earned on interest earning assets, such as loans and securities, and the interest expense paid on interest bearing liabilities, such as deposits and borrowings, which are used to fund those assets. Net interest margin is a ratio calculated as annualized net interest income divided by average interest earning assets for the same period. Net interest spread is the difference between average interest rates earned on interest earning assets and average interest rates paid on interest-bearing liabilities.

Changes in market interest rates and the interest rates we earn on interest earning assets or pay on interest-bearing liabilities, as well as in the volume and types of interest earning assets, interest bearing and noninterest-bearing liabilities and shareholders’ equity, are usually the largest drivers of periodic changes in net interest income, net interest margin and net interest spread. Fluctuations in market interest rates are driven by many factors, including governmental monetary policies, inflation, deflation, macroeconomic developments, changes in unemployment rates, the money supply, political and international conditions and conditions in domestic and foreign financial markets. Periodic changes in the volume and types of loans in our loan portfolio are affected by, among other factors, the economic and competitive conditions in the Miami-Dade metropolitan area, as well as developments affecting the real estate, technology, government services, hospitality and tourism and financial services sectors within the Miami-Dade metropolitan area. Our ability to respond to changes in these factors by using effective asset-liability management techniques is critical to maintaining the stability of our net interest income and net interest margin as our primary sources of earnings.

The following table shows the average outstanding balance of each principal category of our assets, liabilities and shareholders’ equity, together with the average yields on our assets and the average costs of our 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 same period.

234

​

For the Nine Months Ended September 30,

​

2019

2018

(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-bearing deposits

​

$

49,179

​

$

859

​

2.34%

​

$

45,600

​

$

604

​

1.77%

Federal funds sold

​

​

—

​

​

—

​

0.00%

​

​

—

​

​

—

​

0.00%

Federal Reserve Bank stock, FHLB stock and other corporate stock

​

​

2,077

​

​

—

​

0.00%

​

​

2,246

​

​

—

​

0.00%

Investment securities

​

​

31,751

​

​

609

​

2.58%

​

​

27,280

​

​

454

​

2.25%

Loans(1)

​

​

557,712

​

​

22,849

​

5.48%

​

​

502,582

​

​

19,380

​

5.16%

Total interest earning assets

​

​

640,719

​

​

24,317

​

5.08%

​

​

577,708

​

​

20,438

​

4.73%

Noninterest earning assets

​

​

18,720

​

​

​

​

​

​

​

14,737

​

​

​

​

​

Total assets

​

​

659,439

​

​

​

​

​

​

​

592,445

​

​

​

​

​

Liabilities and shareholders’ equity

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Interest-bearing liabilities

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Interest-bearing deposits

​

​

426,884

​

​

6,387

​

2.00%

​

​

372,229

​

​

3,758

​

1.35%

Borrowed funds(5)

​

​

45,320

​

​

1,277

​

3.78%

​

​

51,616

​

​

1,133

​

2.94%

Total interest-bearing liabilities

​

​

472,204

​

​

7,664

​

2.17%

​

​

423,845

​

​

4,891

​

1.54%

Noninterest-bearing liabilities

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Noninterest-bearing deposits

​

​

130,521

​

​

​

​

​

​

​

119,955

​

​

​

​

​

Other noninterest-bearing liabilities

​

​

2,732

​

​

​

​

​

​

​

2,574

​

​

​

​

​

Shareholders’ equity

​

​

53,982

​

​

​

​

​

​

​

46,071

​

​

​

​

​

Total liabilities and shareholders’ equity

​

$

659,439

​

​

​

​

​

​

$

592,445

​

​

​

​

​

Net interest spread(2)

​

​

​

​

​

​

​

2.91%

​

​

​

​

​

​

​

3.19%

Net interest income

​

​

​

​

$

16,653

​

​

​

​

​

​

$

15,547

​

​

Net interest margin(3)

​

​

​

​

​

​

​

3.48%

​

​

​

​

​

​

​

3.60%

(1)

Includes nonaccrual loans

(2)

Net interest spread is the difference between interest rates earned on interest earning assets and interest rates 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  $331 and $143 for the nine months ended September 30, 2019 and 2018, respectively.

(5)

Borrowed funds includes subordinated notes payable, $10 million principal, 7% fixed rate until October 30, 2021, variable thereafter at LIBOR plus 576 basis points, final maturity October 30, 2026, can be redeemed by Marquis anytime on or after October 30, 2021.

235

The following table presents information regarding the dollar amount of changes in interest income and interest expense for the periods indicated for each major component of interest earning assets and interest-bearing liabilities and distinguishes between the changes attributable to changes in volume and changes attributable to changes in interest rates. For purposes of this table, changes attributable to both rate and volume that cannot be segregated have been proportionately allocated to both volume and rate.

​	For the Nine Months Ended September 30, 2019 Compared to 2018
​	Change Due To						​	​	​
(Dollars in thousands)	Volume			Rate			Total
Interest income	​	​	​	​	​	​	​	​	​
Interest-bearing deposits	​	$	47	​	$	208	​	$	255
Federal funds sold	​	​	—	​	​	—	​	​	—
Federal Reserve Bank stock, Federal Home Loan Bank stock and other corporate stock	​	​	—	​	​	—	​	​	—
Investment securities	​	​	75	​	​	80	​	​	155
Loans	​	​	2,126	​	​	1,343	​	​	3,469
Total	​	$	2,248	​	$	1,631	​	$	3,879
Interest expense	​	​	​	​	​	​	​	​	​
Interest-bearing deposits	​	​	552	​	​	2,077	​	​	2,629
Borrowed funds	​	​	(138)	​	​	282	​	​	144
Total	​	$	414	​	$	2,359	​	$	2,773

Net interest income increased by $1.1 million to $16.7 million for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018. Our total interest income was impacted by an increase in interest earning assets, primarily due to organic growth in our loan portfolio, and one market rate increase and two market rate reductions between September 30, 2018 and September 30, 2019 due to change in the federal funds rate by the Federal Reserve. Average total interest earning assets were $640.7 million for the first nine months of 2019 compared with $577.7 million for the first nine months of 2018. The annualized yield on those interest earning assets increased 35 basis points from 4.73% for the first nine months of 2018 to 5.08% for the first nine months of 2019. However, due to the recent reduction in the federal funds target interest rate by the Federal Reserve in July and September 2019, we expect our yield on interest earning assets to decline during the second half of 2019. The increase in the average balance of interest earning assets was driven almost entirely by organic growth in our loan portfolio of  $55 million, representing an increase of 11%, to $557.7 million for the nine months ended September 30, 2019 compared to $502.6 million for the nine months ended September 30, 2018.

Average interest-bearing liabilities increased by $48.4 million, or 11.4%, from $423.8 million for the nine months ended September 30, 2018 to $472.2 million for the nine months ended September 30, 2019. The increase was primarily due to a $54.7 million increase in the average balance of interest-bearing deposits, or 14.7%. The increase in the average balance of interest-bearing deposits was primarily due to increases in certificates of deposit and money market accounts for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018, and, to a lesser extent, negotiable order of withdrawal accounts, or NOW accounts. The annualized average interest rate paid on average interest-bearing liabilities increased to 2.17% for the first nine months of 2019 compared to 1.54% for the first nine months of 2018, while the annualized average interest rate paid on interest-bearing deposits increased 65 basis points to 2.00% and the annualized average interest rate paid on borrowed funds increased by 84 basis points to 3.78%. The increases in annualized average interest rates primarily reflected an increase in market interest rates due to changes in the federal funds target interest rate. Average noninterest-bearing deposits increased $10.6 million, or 8.8%, from $120 million to $130.5 million for the same periods. For the first nine months of 2019, our annualized net interest margin was 3.48% and net interest spread was 2.91%. For the first nine months of 2018, annualized net interest margin was 3.60% and net interest spread was 3.19%. Our net interest margin was adversely affected by 0.12% during the first nine months of 2019, compared to the same period in 2018 due to rates paid on our interest-bearing deposits, (our primary funding source) and increased cost of wholesale funding, rising faster than loan yields, adversely impacted by falling yields on 5 and10-year treasury notes, which significantly influences

236

how banks price their commercial and mortgage loans, increasing competitive pricing pressures in the local loan market. As a result of recent reductions in the federal funds target interest rate coupled with continued declines in the 5- and 10-year treasury yield, we expect average rates earned on interest earning assets and average rates paid on our interest-bearing deposits to both generally decline during the fourth quarter of 2019 compared to the first nine months of 2019.

Provision for Loan Losses

The provision for loan losses is a charge to income in order to bring our allowance for loan losses to a level deemed appropriate by management. For a description of the factors taken into account by our management in determining the allowance for loan losses see “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Marquis — Allowance for Loan Losses.” Our provision for loan losses amounted to $0.4 million for the first nine months of 2019 and $0.7 million for the first nine months of 2018, the decrease was due to the reclassification of allowance to our unfunded commitments reserve. Our allowance for loan losses as a percentage of total loans was 0.94% at September 30, 2019 compared to 0.91% at September 30, 2018. Net charge-offs for the nine month periods ended September 30, 2019 was a net recovery of  $64,000 and a net recovery of  $3,000 at September 30, 2018.

Noninterest Income

Our primary sources of recurring noninterest income are service charges on deposit accounts, gain on sale of SBA loans and other fees and charges. Noninterest income does not include loan origination fees to the extent they exceed the direct loan origination costs, which are generally recognized over the life of the related loan as an adjustment to yield using the interest method. The following table presents the major categories of noninterest income for the periods indicated.

​	Nine Months Ended September 30,
(Dollars in thousands)	2019			2018			Increase (Decrease)
Noninterest income	​	​	​	​	​	​	​	​
Deposit account service charges	​	$	593	​	$	554	​	7.0%
Mortgage banking revenue	​	​	—	​	​	—	​	—
Gain (loss) on sale of securities	​	​	—	​	​	—	​	—
Gain (loss) on sale of loans	​	​	312	​	​	116	​	169.0%
Other fees and charges	​	​	235	​	​	161	​	46.0%
Total noninterest income	​	$	1,140	​	$	831	​	37.2%

Noninterest income for the nine months ended September 30, 2019 was $1.1 million, a $0.3 million or 37% increase compared to noninterest income of  $0.8 million for the nine months ended September 30, 2018. The increase was primarily due to an increase in gain on sale of SBA loans of  $0.2 million, or 169%, during the first nine months of 2019 to $0.3 million compared to $0.1 million for the first nine months of 2018. We also experienced a slight increase in deposit account service charge fees, primarily due to account analysis fees from core deposit growth and an increase in loan prepayment fees of  $0.1 million, or 87%, during the 2019 period compared to the 2018 period. This is due to loans repaying as borrowers deleverage and refinance loans at lower rates.

237

Noninterest Expense

Generally, noninterest expense is composed of all employee expenses and costs associated with operating our facilities, obtaining and retaining client relationships and providing banking services. The largest component of noninterest expense is salaries and employee benefits. Noninterest expense also includes operational expenses, such as occupancy and equipment expenses, professional fees, data processing expenses, advertising expenses, loan processing expenses and other general and administrative expenses, including FDIC assessments, communications, travel, meals, training, supplies and postage. The following table presents the major categories of noninterest expense for the periods indicated.

​	Nine Months Ended September 30,
(Dollars in thousands)	2019			2018			Increase (Decrease)
Noninterest expense	​	​	​	​	​	​	​	​
Salaries and employee benefits	​	$	6,155	​	$	5,531	​	11.3%
Occupancy and equipment	​	​	1,111	​	​	1,010	​	10.0%
Professional services	​	​	516	​	​	337	​	53.1%
Data processing	​	​	456	​	​	403	​	13.2%
Advertising	​	​	96	​	​	147	​	(34.7)%
Other real estate owned expense	​	​	107	​	​	—	​	100%
Regulatory assessments	​	​	199	​	​	342	​	(41.8)%
Directors’ compensation	​	​	756	​	​	693	​	9.1%
Other	​	​	725	​	​	591	​	22.7%
Total noninterest expense	​	$	10,121	​	$	9,054	​	11.8%

Noninterest expense amounted to $10.1 million for the nine months ended September 30, 2019, an increase of  $1.1 million, or 12%, compared to $9.1 million for the nine months ended September 30, 2018. The increase was primarily due to an increase in salaries and benefits, primarily due to increased employee headcount and, to a lesser extent, increases in occupancy and equipment expense, professional services expense, and other overhead expenses.

Income Tax Expense

Income tax expense was $1.8 million for the first nine months of 2019 compared to $1.7 million for the first nine months of 2018. Our effective tax rates for those periods were 25.2% and 26.3%, respectively.

238

Results of Operations for the Years Ended December 31, 2018, 2017, and 2016

Net Income

The following table sets forth the principal components of net income for the periods indicated.

​	Years Ended December 31,								Years Ended December 31,
(Dollars in thousands)	2018			2017			Change		2017			2016			Change
Interest income	​	$	28,240	​	$	21,303	​	32.6%	​	$	21,303	​	$	16,765	​	27.1%
Interest expense	​	​	7,073	​	​	4,012	​	76.3%	​	​	4,012	​	​	2,625	​	52.8%
Net Interest income	​	​	21,167	​	​	17,292	​	22.4%	​	​	17,292	​	​	14,140	​	22.3%
Provision for loan losses	​	​	1,149	​	​	921	​	24.7%	​	​	921	​	​	640	​	44.0%
Net interest income after provision	​	​	20,018	​	​	16,371	​	22.3%	​	​	16,371	​	​	13,500	​	21.3%
Noninterest income	​	​	1,257	​	​	1,309	​	(3.9)%	​	​	1,309	​	​	1,168	​	12.0%
Noninterest expense	​	​	12,326	​	​	10,637	​	15.9%	​	​	10,637	​	​	8,975	​	18.5%
Income before income taxes	​	​	8,949	​	​	7,043	​	27.1%	​	​	7,043	​	​	5,693	​	23.7%
Income tax expense	​	​	2,141	​	​	3,080	​	(30.5)%	​	​	3,080	​	​	2,214	​	39.1%
Net income	​	$	6,808	​	$	3,963	​	71.8%	​	$	3,963	​	$	3,479	​	13.9%
Preferred stock dividend declared	​	​	—	​	​	—	​	—	​	​	—	​	​	7	​	(100.0)%
Net income available to common shareholders	​	$	6,808	​	$	3,963	​	71.8%	​	$	3,963	​	$	3,472	​	14.1%

Year ended December 31, 2018 compared to year ended December 31, 2017

Net income for the year ended December 31, 2018 was $6.8 million, an increase of  $2.8 million, or 71.8%, from net income for the year ended December 31, 2017 of  $4.0 million. This increase was due to an increase in interest income primarily related to growth in our loan portfolio and rising interest rates, which improved loan yields. This increase in interest income was partially offset by a $3.1 million increase in interest expense due to deposit and wholesale funding growth and increased rates paid on each. Provision for loan losses increased by $0.2 million due to loan growth.

Noninterest expenses rose primarily due to increased employee headcount, opening of our first branch in the Broward county market and continued investment in our infrastructure. The $0.1 million decline in noninterest income was primarily due to lower gain on sale of SBA loans offset by greater deposit service charges. Income tax expense decreased $0.9 million for the year ended December 31, 2018 compared to the year ended December 31, 2017 due to the enactment of the Tax Act in December 2017, which reduced the corporate income tax rate. We also recognized a one-time charge in 2017 of approximately $0.6 million as a result of the revaluation of our deferred tax asset due to the change in the corporate tax rate.

Year ended December 31, 2017 compared to year ended December 31, 2016

Net income for the year ended December 31, 2017 increased $0.5 million, or 14.1%, to $4 million compared to $3.5 million for the year ended December 31, 2016. This increase was primarily driven by continued loan growth of  $98 million or by 27% and an increase in noninterest income. Interest income increased $4.5 million and interest expense increased $1.4 million resulting in an increase to net interest income of  $3.2 million, or 22% for the year ended December 31, 2017. Noninterest income increased $0.1 million, or 12.1%, primarily due to a $0.2 million increase in deposit charges, partially offset by a $0.1 million reduction in gain on sale of SBA loans. The increase in noninterest expense was primarily due to greater investment in infrastructure improvements. Income tax expense increased $0.9 million for the year ended December 31, 2017 compared to the year ended December 31, 2016, primarily due to a one-time charge in 2017 of approximately $0.6 million as a result of the revaluation of our deferred tax asset due to the change in the corporate tax rates.

239

Net Interest Income and Net Interest Margin Analysis

The following table shows the average outstanding balance of each principal category of our assets, liabilities and shareholders’ equity, together with the average yields on our assets and the average costs of our liabilities for the periods indicated. Such yields and costs are calculated by dividing income or expense by the average daily balances of the corresponding assets or liabilities for the same period.

​

For the Years Ended December 31,

​

2018

2017

2016

(Dollars in thousands)

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-bearing deposits

​

$

41,500

​

$

779

​

1.88%

​

$

44,238

​

$

483

​

1.09%

​

$

48,476

​

$

244

​

0.50%

Federal funds sold

​

​

—

​

​

—

​

0.00%

​

​

—

​

​

—

​

0.00%

​

​

315

​

​

—

​

0.00%

Federal Reserve Bank stock, FHLB stock and other corporate stock

​

​

2,274

​

​

—

​

0.00%

​

​

1,614

​

​

—

​

0.00%

​

​

1,282

​

​

—

​

0.00%

Investment securities

​

​

29,132

​

​

664

​

2.29%

​

​

17,122

​

​

299

​

1.77%

​

​

14,686

​

​

244

​

1.68%

Loans(1)

​

​

514,258

​

​

26,797

​

5.21%

​

​

411,801

​

​

20,521

​

4.98%

​

​

328,733

​

​

16,277

​

4.95%

Total interest earning assets

​

​

587,164

​

​

28,240

​

4.81%

​

​

474,774

​

​

21,303

​

4.49%

​

​

393,492

​

​

16,765

​

4.26%

Noninterest earning assets

​

​

15,069

​

​

​

​

​

​

​

12,825

​

​

​

​

​

​

​

11,027

​

​

​

​

​

Total assets

​

​

602,233

​

​

​

​

​

​

​

487,599

​

​

​

​

​

​

​

404,519

​

​

​

​

​

Liabilities and shareholders’ equity

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Interest-bearing liabilities

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Interest-bearing deposits

​

​

378,111

​

​

5,473

​

1.45%

​

​

289,856

​

​

2,910

​

1.00%

​

​

254,967

​

​

2,315

​

0.91%

Borrowed funds(5)

​

​

52,304

​

​

1,600

​

3.06%

​

​

38,289

​

​

1,101

​

2.88%

​

​

23,939

​

​

311

​

1.30%

Total interest-bearing liabilities

​

​

430,415

​

​

7,073

​

1.64%

​

​

328,145

​

​

4,011

​

1.22%

​

​

278,906

​

​

2,625

​

0.94%

Noninterest-bearing liabilities

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Noninterest-bearing deposits

​

​

122,571

​

​

​

​

​

​

​

116,049

​

​

​

​

​

​

​

85,944

​

​

​

​

​

Other noninterest-bearing liabilities

​

​

2,229

​

​

​

​

​

​

​

2,084

​

​

​

​

​

​

​

1,631

​

​

​

​

​

Shareholders’ equity

​

​

47,018

​

​

​

​

​

​

​

41,321

​

​

​

​

​

​

​

38,038

​

​

​

​

​

Total liabilities and shareholders’ equity

​

$

602,233

​

​

​

​

​

​

$

487,599

​

​

​

​

​

​

$

404,519

​

​

​

​

​

Net interest spread(2)

​

​

​

​

​

​

​

3.17%

​

​

​

​

​

​

​

3.27%

​

​

​

​

​

​

​

3.32%

Net interest income

​

​

​

​

$

21,167

​

​

​

​

​

​

$

17,292

​

​

​

​

​

​

$

14,140

​

​

Net interest margin(3)

​

​

​

​

​

​

​

3.60%

​

​

​

​

​

​

​

3.64%

​

​

​

​

​

​

​

3.59%

(1)

Includes nonaccrual loans.

(2)

Net interest spread is the difference between interest rates earned on interest earning assets and interest rates 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  $214, $222, and $247 for the years ended December 31, 2018, 2017, and 2016, respectively.

(5)

Borrowed funds includes subordinated notes payable, $10 million principal, 7% fixed rate until October 30, 2021, variable thereafter at LIBOR plus 576 basis points, final maturity October 30, 2026, can be redeemed by Marquis anytime on or after October 30, 2021.

240

The following table presents information regarding the dollar amount of changes in interest income and interest expense for the periods indicated for each major component of interest earning assets and interest-bearing liabilities and distinguishes between the changes attributable to changes in volume and changes attributable to changes in interest rates. For purposes of this table, changes attributable to both rate and volume that cannot be segregated have been proportionately allocated to both volume and rate.

​

For the Years Ended December 31, 2018 Compared to 2017

For the Years Ended December 31, 2017 Compared to 2016

​

Change Due To

​

​

​

Change Due To

​

​

​

(Dollars in thousands)

Volume

Rate

Total

Volume

Rate

Total

Interest income

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Interest-bearing deposits

​

$

(30)

​

$

326

​

$

296

​

$

(21)

​

$

260

​

$

239

Federal funds sold

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Federal Reserve Bank stock, Federal Home Loan Bank stock and other corporate stock

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Investment securities

​

​

212

​

​

153

​

​

365

​

​

41

​

​

14

​

​

55

Loans

​

​

5,106

​

​

1,170

​

​

6,276

​

​

4,113

​

​

131

​

​

4,244

Total

​

$

5,288

​

$

1,649

​

$

6,937

​

$

4,133

​

$

405

​

$

4,538

Interest expense

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Interest-bearing deposits

​

​

885

​

​

1,678

​

​

2,563

​

​

317

​

​

278

​

​

595

Borrowed funds

​

​

403

​

​

96

​

​

499

​

​

186

​

​

604

​

​

790

Total

​

$

1,288

​

$

1,774

​

$

3,062

​

$

503

​

$

882

​

$

1,385

Year ended December 31, 2018 compared to year ended December 31, 2017

Net interest income increased by $3.9 million to $21.2 million, or 22.4%, for the year ended December 31, 2018. Our total interest income was positively impacted by an increase in interest earning assets and a rising interest rates. Average total interest earning assets were $587.2 million in 2018 compared with $474.8 million in 2017, an increase of 23.7%. The yield on interest earning assets increased by 32 basis points from 4.49% in 2017 to 4.81% in 2018. The increase in the average balance of interest earning assets was driven primarily by organic growth in our loan portfolio. All loan categories increased in 2018, except construction and development, resulting in an increase in the average balance of the loan portfolio of $102.5 million, or 24.9%, to $514.3 million for 2018 compared to $411.8 million for 2017 categories (see “Financial Condition — Loan Portfolio” in this section for further details about the changes in our loan portfolio). Average interest-bearing liabilities increased by $102.3 million from $328.1 million for the year ended December 31, 2017 to $430.4 million for the year ended December 31, 2018. The increase was due to an increase in the average balance of interest-bearing deposits of  $88.3 million, or 30.4%, and an increase in the average balance of borrowed funds of  $14 million, or 36.6%. The increase in the average balance of interest-bearing deposits was primarily due to increases in other time deposits and money market accounts for the period ended December 31, 2018 compared to December 31, 2017, and, to a lesser extent, certificates of deposit and NOW accounts. We also experienced growth in our average noninterest-bearing deposits of  $6.5 million, or 5.6%. The increase in the average balance of borrowed funds was primarily caused by an increase in FHLB, advances. The average rate paid on interest-bearing liabilities increased to 1.64% for 2018 compared to 1.22% for 2017 as the average rate paid on interest-bearing deposits and borrowed funds increased by 45 basis points and 18 basis points, respectively, during the same period. These increases reflected an increase in market interest rates in 2018. In 2018, our net interest margin was 3.60% and net interest spread was 3.17%. In 2017, net interest margin was 3.64% and net interest spread was 3.27%. These decreases in 2018 were primarily due to increasing rates paid on our deposit products outpacing increases in loan yields in 2018.

Year ended December 31, 2017 compared to year ended December 31, 2016

Net interest income increased by $3.2 million to $17.3 million for the year ended December 31, 2017. The Company’s total interest income was impacted by an increase in interest earning assets and a slowly

241

rising interest rate environment in 2017. Average total interest earning assets were $ 474.8 million in 2017 compared with $393.5 million in 2016. The increase in the average balance of interest earning assets in 2017 was primarily driven by growth in our loan portfolio. The average balance of the loan portfolio increased $83.1 million, or 25.3%, to $411.8 million for 2017 compared to $328.7 million for 2016. All loan categories increased between December 31, 2016 and December 31, 2017 with the most significant increase in the commercial real estate and construction and land development loan categories (See “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Marquis — Loan Portfolio” in this section for further details about the changes in our loan portfolio). The yield on interest earning assets increased by 23 basis points from 4.26% in 2016 to 4.49% in 2017 primarily due to the increase in higher yielding commercial real estate loans in 2017. Average interest-bearing liabilities increased by $49.2 million from $278.9 million for the year ended December 31, 2016 to $328.1 million for the year ended December 31, 2017, for an increase of 17.7%. The increase was due to an increase in the average balance of interest-bearing deposits of  $34.9 million, or 13.7%. The average rate paid on interest-bearing liabilities increased by 28 basis points in 2017 to 1.22% from 0.94% in 2016, which was primarily due to the increase in borrowed funds. Noninterest-bearing deposits also increased by approximately $30.1 million, or 35%, due to an increase in our demand deposit account balance. In 2017, our net interest margin was 3.64% and net interest spread was 3.27%, which compares favorably to the 2016 net interest margin of 3.59% and net interest spread of 3.32%. The increases to net interest income were primarily a result of the increased yield on our loan portfolio.

Provision for Loan Losses

Our provision for loan losses amounted to $1.1 million for 2018 and $0.9 million for 2017. The increase from 2017 to 2018 was primarily a result of the growth of our loan portfolio. The allowance for loan losses as a percentage of total loans was 0.87%, 0.91% and 0.99% for the years ended December 31, 2018, 2017, and 2016, respectively. Our provision for loan losses equaled $0.9 million for 2017 and $0.6 million for 2016.

Noninterest Income

Our primary sources of recurring noninterest income are service charges on deposit accounts, gain on sale of SBA loans, and other fees and charges. Noninterest income does not include loan origination fees to the extent they exceed the direct loan origination costs, which are generally recognized over the life of the related loan as an adjustment to yield using the interest method. The following table presents the major categories of noninterest income for the periods indicated.

​

Years Ended December 31,

Years Ended December 31,

(Dollars in thousands)

2018

2017

Increase (Decrease)

2017

2016

Increase (Decrease)

Noninterest income

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Deposit account service charges

​

$

750

​

$

615

​

22.0%

​

$

615

​

$

408

​

50.7%

Mortgage banking revenue

​

​

—

​

​

—

​

—

​

​

—

​

​

—

​

—

Gain (loss) on sale of securities

​

​

—

​

​

—

​

—

​

​

—

​

​

—

​

—

Gain (loss) on sale of loans

​

​

250

​

​

527

​

(52.6)%

​

​

527

​

​

626

​

(15.8)%

Other fees and charges

​

​

257

​

​

167

​

53.9%

​

​

167

​

​

134

​

24.6%

Total noninterest income

​

$

1,257

​

$

1,309

​

(4.0)%

​

$

1,309

​

$

1,168

​

12.1%

Year ended December 31, 2018 compared to year ended December 31, 2017

Noninterest income for 2018 was $1.3 million, a $0.1 million or 4% decline compared to noninterest income of  $1.3 million for 2017. The decline in 2018 was primarily due to lower gain on sale of SBA loans offset by greater

Year ended December 31, 2017 compared to year ended December 31, 2016

Noninterest income for 2017 was $1.3 million, a $0.1 million, or 12.1%, increase compared to noninterest income of  $1.2 million for 2016. The increase in 2017 was primarily due to a $0.2 million, or 50.7%, increase in deposit service charges offset by a decline in gain on sale of SBA loans.

242

Noninterest Expense

Noninterest expense includes, among other things: (i) salaries and employee benefits; (ii) occupancy and equipment expense; (iii) professional fees; (iv) data processing fees; (v) advertising expense; (vi) loan processing expenses; and (vii) other general and administrative expenses, which include expenses associated with FDIC assessments, communications, travel, meals, training, supplies and postage. The following table presents the major categories of noninterest expense.

​

Years Ended December 31,

Years Ended December 31,

(Dollars in thousands)

2018

2017

Increase (Decrease)

2017

2016

Increase (Decrease)

Noninterest expense

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Salaries and benefits

​

$

7,320

​

$

6,275

​

16.7%

​

$

6,275

​

$

5,259

​

19.3%

Occupancy and equipment

​

​

1,335

​

​

1,110

​

20.3%

​

​

1,110

​

​

1,150

​

(3.5)%

Professional services

​

​

415

​

​

432

​

(3.9)%

​

​

432

​

​

339

​

27.4%

Data processing

​

​

545

​

​

499

​

9.2%

​

​

499

​

​

485

​

2.9%

Advertising

​

​

193

​

​

138

​

39.9%

​

​

138

​

​

112

​

23.2%

Other real estate owned expense

​

​

—

​

​

—

​

—

​

​

—

​

​

—

​

—

Regulatory assessments

​

​

442

​

​

239

​

84.9%

​

​

239

​

​

280

​

(14.6)%

Directors’ compensation

​

​

930

​

​

738

​

26.1%

​

​

738

​

​

429

​

72.0%

Other

​

​

1,146

​

​

1,205

​

(4.9)%

​

​

1,205

​

​

920

​

31.2%

Total noninterest expense

​

$

12,326

​

$

10,636

​

15.9%

​

$

10,636

​

$

8,974

​

18.5%

Year ended December 31, 2018 compared to year ended December 31, 2017

Noninterest expense amounted to $12.3 million in 2018, an increase of  $1.7 million, or 15.9%, compared to $10.6 million for 2017. The increase in 2018 was primarily due to an increase in salary and benefits expense due to the increase in employee headcount, opening of our new Ft. Lauderdale location, and to a lesser extent increases in advertising and director compensation. We also experienced an increase of other noninterest expense of approximately $0.2 million, or 84.9%, which includes FDIC assessments (which increased due to deposit growth).

Year ended December 31, 2017 compared to year ended December 31, 2016

Noninterest expense amounted to $10.6 million in 2017, an increase of  $1.7 million, or 18.5%, compared to $9 million for 2016. The increase in 2017 was primarily due to higher salaries and benefits, professional services, and advertising expenses.

Income Tax Expense

The amount of income tax expense we incur is influenced by the amounts of our pre-tax income, and other nondeductible expenses. Deferred tax assets and liabilities are reflected at current income tax rates in effect for the period in which the deferred tax assets and liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, such as the Tax Act, deferred tax assets and liabilities are adjusted through the provision for income taxes. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

Year ended December 31, 2018 compared to year ended December 31, 2017

Income tax expense was $2.1 million for 2018 and $3.1 million for 2017. Total income tax expense decreased $0.9 million in 2018 primarily as a result of the Tax Act, which included a number of changes to existing U.S. tax laws that impact the Company, most notably a reduction of the U.S. corporate income tax rate to 21% for tax years beginning after December 31, 2017. Also, as a result of the Tax Act, we recognized a one-time charge of approximately $0.6 million in 2017 as a result of the revaluation of our deferred tax asset, which also increased our tax expense in 2017. Our effective tax rates for 2018 and 2017 were 23.9% and 43.7%, respectively.

243

Year ended December 31, 2017 compared to year ended December 31, 2016

Income tax expense was $3.1 million for the year ended December 31, 2017 as compared to $2.2 million for the year ended December 31, 2016. Total income tax expense increased $0.9 million in 2017 primarily as a result of the $0.6 million charge related to the revaluation of our deferred tax asset in 2017 as a result of the Tax Act and, to a lesser extent, increased pre-tax income in 2017. Our effective tax rates for 2017, and 2016 were 43.7% and 38.9%, respectively.

Financial Condition

For the nine months ended September 30, 2019, our total assets increased $14.5 million, or 2.2%, to approximately $676.8 million. Interest-bearing deposits at other financial institutions increased due to our decision to maintain our excess liquidity in assets with a greater level of liquidity, such as deposits with interest-bearing deposits, as opposed to investing excess liquidity in less liquid investment due to the thin spread between overnight and longer-term security rates. This strategy provided us with greater liquidity to fund loan growth. Shareholders’ equity increased $5.6 million, or 11.1%, to $56.4 million at September 30, 2019 compared to December 31, 2018, primarily due to our net income for the first nine months of 2019.

For the year ended December 31, 2018, our total assets increased by $123 million, or 22.8%, from $539.2 million at December 31, 2017 to $662.3 million at December 31, 2018. Increases in net loans, interest-bearing deposits at other financial institutions, and federal funds sold were supported by increases in both noninterest-bearing and interest-bearing deposits, as well as FHLB advances. Shareholders’ equity increased $7.7 million, or 17.7%, to $50.8 million at December 31, 2018 compared to the prior year-end primarily due to net income for the year of  $6.8 million.

For the year ended December 31, 2017, our total assets increased by $106.4, or 24.6%, from $432.8 million at December 31, 2016 to $539.2 million at December 31, 2017. The increase was primarily driven by organic growth in net loans of  $97.8 million and increases of  $2.9 million in interest-bearing deposits at other financial institutions. Asset growth was funded by a $96.8 million increase in total deposits and a $3.0 million increase in FHLB advances. Shareholders’ equity increased $4.6 million, or 11.8%, to $43.2 million at December 31, 2017 compared to the prior year-end primarily due to net income for the year of  $4.0 million.

Interest-Bearing Deposits at Other Financial Institutions

Cash that is not immediately needed to fund loans by the Bank is invested in liquid assets that also earn interest, including deposits with other financial institutions. For the nine months ended September 30, 2019, interest-bearing deposits at other financial institutions increased $17.3 million, or 34.7%, to $67.2 million from $49.9 million at December 31, 2018. The increase was primarily due to our decision to maintain our excess liquidity in overnight interest-bearing deposits, as opposed to investing in less liquid investments due to the thin spreads between overnight and longer-term security rates. This strategy provided us with greater liquidity to fund loan growth. Interest-bearing deposits at other financial institutions increased from $55.8 million at December 31, 2017 to $49.9 million at December 31, 2018, or 18.6%. The increase was primarily due to our decision to maintain our excess liquidity in overnight interest-bearing deposits, as opposed to investing in less liquid investments due to the thin spread between overnight and longer-term security rates. This strategy provided us with greater liquidity to fund loan growth.

Investment Securities

We use our securities portfolio to provide a secondary source of liquidity, achieve additional interest income through higher yields on funds invested (compared to other options, such as interest-bearing deposits at other banks or fed funds sold), manage interest rate risk, and meet both collateral and regulatory capital requirements.

Securities may be classified as either trading, held-to-maturity or available-for-sale. Trading securities (if any) are held principally for resale and recorded at their fair value with changes in fair value included in income. Held-to-maturity securities are those which the Corporation has the positive intent and ability to hold to maturity and are reported at amortized cost. Equity securities are carried at fair value, with changes in fair value reported in net income. Equity securities without readily determinable fair values are carried at

244

cost, minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment. Available-for-sale securities consist of securities not classified as trading securities nor as held-to maturity securities. Unrealized holding gains and losses on available-for-sale securities are excluded from income and reported in comprehensive income or loss. Gains and losses on the sale of available-for-sale securities are recorded on the trade date and are determined using the specific-identification method. Premiums and discounts on securities available for sale are recognized in interest income using the interest method over the period to maturity.

Our investment portfolio declined by $5.9 million, or 17.5%, from $33.5 million at December 31, 2018, to $27.7 million at September 30, 2019 primarily due to called or maturing securities not reinvested due to the thin spread between overnight and longer-term rates.

Our investment portfolio increased by $15.3 million, or 83.5%, from $18.3 million at December 31, 2017, to $33.5 million at December 31, 2018. Our investment portfolio increased by 21.7% from December 31, 2016 to December 31, 2017 from $15 million to $18.3 million, respectively. The primary reason for the increase was better rates to invest excess liquidity.

The following tables summarize the contractual maturities and weighted-average yields of investment securities as of September 30, 2019 and the amortized cost and carrying value of those securities as of the indicated dates.

​

​

​

​

​

​

​

December 31,

​

September 30, 2019

2018

2017

2016

(Dollars in thousands)

Book Value

Fair Value

Book Value

Fair Value

Book Value

Fair Value

Book Value

Fair Value

Securities Available for Sale

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

U.S. Government-sponsored agencies

​

$

9,000

​

$

9,036

​

$

15,683

​

$

15,618

​

$

4,999

​

$

4,952

​

$

3,499

​

$

3,485

Mortgage-backed securities

​

​

11,792

​

​

11,874

​

​

9,850

​

​

9,730

​

​

3,693

​

​

3,632

​

​

1,375

​

​

1,344

U.S. Agency obligations

​

​

3,267

​

​

3,180

​

​

4,182

​

​

4,075

​

​

5,533

​

​

5,482

​

​

5,477

​

​

5,428

State, county, and municipals

​

​

1,048

​

​

1,075

​

​

1,054

​

​

1,039

​

​

1,061

​

​

1,069

​

​

1,068

​

​

1,056

Corporate bonds

​

​

1,000

​

​

1,006

​

​

1,501

​

​

1,509

​

​

1,502

​

​

1,510

​

​

2,004

​

​

1,987

Total

​

$

26,107

​

$

26,171

​

$

32,270

​

$

31,971

​

$

16,788

​

$

16,645

​

$

13,423

​

$

13,300

Securities Held to Maturity

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

U.S. Treasury securities

​

​

201

​

​

201

​

​

200

​

​

199

​

​

199

​

​

198

​

​

200

​

​

200

Mortgage-backed securities

​

​

297

​

​

292

​

​

349

​

​

335

​

​

420

​

​

412

​

​

503

​

​

490

Foreign Sovereign (Israel)

​

​

1,000

​

​

1,000

​

​

1,000

​

​

1,000

​

​

1,000

​

​

1,000

​

​

1,000

​

​

1,000

Total

​

$

1,498

​

$

1,493

​

$

1,549

​

$

1,534

​

$

1,619

​

$

1,610

​

$

1,703

​

$

1,690

245

​

One Year or Less

More than One Year Through Five Years

More than Five Years Through 10 Years

More than 10 Years

Total

At September 30, 2019 (Dollars in thousands)

Book Value

Weighted Average Yield

Book Value

Weighted Average Yield

Book Value

Weighted Average Yield

Book Value

Weighted Average Yield

Book Value

Fair Value

Weighted Average Yield

Securities Available for Sale

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

U.S. Government-sponsored agencies

​

$

2,000

​

1.44%

​

$

7,000

​

2.66%

​

$

—

​

0.00%

​

$

—

​

0.00%

​

$

9,000

​

$

9,036

​

2.39%

Mortgage-backed securities

​

​

—

​

0.00%

​

​

—

​

0.00%

​

​

6,362

​

2.43%

​

​

5,430

​

1.52%

​

​

11,792

​

​

11,874

​

2.01%

U.S. Agency obligations

​

​

—

​

0.00%

​

​

—

​

0.00%

​

​

1,254

​

3.27%

​

​

2,013

​

2.30%

​

​

3,267

​

​

3,180

​

2.67%

State, county, and municipals

​

​

—

​

0.00%

​

​

—

​

0.00%

​

​

1,048

​

2.30%

​

​

—

​

0.00%

​

​

1,048

​

​

1,075

​

2.30%

Corporate bonds

​

​

501

​

3.53%

​

​

499

​

3.29%

​

​

—

​

0.00%

​

​

—

​

0.00%

​

​

1,000

​

​

1,006

​

3.41%

Total

​

$

2,501

​

1.86%

​

$

7,499

​

2.71%

​

$

8,664

​

2.53%

​

$

7,443

​

1.73%

​

$

26,107

​

$

26,171

​

2.29%

Securities Held to Maturity

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

U.S. Treasury securities

​

$

—

​

0.00%

​

$

201

​

1.80%

​

$

—

​

0.00%

​

$

—

​

0.00%

​

$

201

​

$

201

​

1.80%

Mortgage-backed securities

​

​

3

​

5.43%

​

​

—

​

0.00%

​

​

—

​

0.00%

​

​

294

​

1.21%

​

​

297

​

​

292

​

1.25%

Foreign Sovereign (Israel)

​

​

—

​

0.00%

​

​

1,000

​

2.68%

​

​

—

​

0.00%

​

​

—

​

0.00%

​

​

1,000

​

​

1,000

​

2.68%

Total

​

$

3

​

5.43%

​

$

1,201

​

2.53%

​

$

—

​

0.00%

​

$

294

​

1.21%

​

$

1,498

​

$

1,493

​

2.27%

Loan Portfolio

Our primary source of income is derived from interest earned on loans. Our loan portfolio consists of loans secured by real estate as well as commercial business loans, construction and development and other consumer loans. Our loan clients primarily consist of small to medium sized businesses, the owners and operators of these businesses as well as professionals, entrepreneurs and high net worth individuals. Our owner-occupied and investment commercial real estate loans, residential construction loans and commercial business loans provide us with higher risk-adjusted returns and are complemented by our residential real estate loans to individuals. Our lending activities are principally directed to our primary market consisting of the Miami-Dade metropolitan area. The following table summarizes and provides additional information about certain segments of our loan portfolio as of the dates indicated.

​

​

​

​

​

​

December 31,

​

September 30, 2019

2018

2017

2016

2015

2014

(Dollars in thousands)

Amount

Percent

Amount

Percent

Amount

Percent

Amount

Percent

Amount

Percent

Amount

Percent

Commercial real estate

​

$

404,087

​

71.4%

​

$

384,697

​

69.1%

​

$

298,677

​

64.5%

​

$

240,623

​

66.0%

​

$

201,833

​

70.2%

​

$

132,386

​

64.8%

Owner Occupied

​

​

165,662

​

—

​

​

171,924

​

—

​

​

135,101

​

—

​

​

102,593

​

—

​

​

66,032

​

—

​

​

30,032

​

—

Non-Owner Occupied

​

​

238,425

​

—

​

​

212,773

​

—

​

​

163,576

​

—

​

​

138,030

​

—

​

​

135,801

​

—

​

​

102,354

​

—

Residential real estate

​

​

64,985

​

11.5%

​

​

69,568

​

12.5%

​

​

72,006

​

15.5%

​

​

60,500

​

16.6%

​

​

44,081

​

15.3%

​

​

41,154

​

20.2%

Commercial

​

​

72,902

​

12.9%

​

​

80,172

​

14.4%

​

​

61,661

​

13.3%

​

​

46,408

​

12.7%

​

​

38,170

​

13.3%

​

​

22,593

​

11.1%

Construction and development

​

​

18,713

​

3.3%

​

​

18,747

​

3.4%

​

​

28,629

​

6.2%

​

​

13,932

​

3.8%

​

​

400

​

0.1%

​

​

2,614

​

1.3%

Consumer and other loans

​

​

4,882

​

0.9%

​

​

3,408

​

0.6%

​

​

2,210

​

0.5%

​

​

3,061

​

0.8%

​

​

3,125

​

1.1%

​

​

5,457

​

2.7%

Total loans

​

$

565,569

​

100.0%

​

$

556,593

​

100.0%

​

$

463,183

​

100.0%

​

$

364,524

​

100.0%

​

$

287,609

​

100.0%

​

$

204,204

​

100.0%

Unearned loan origination fees (costs), net

​

​

(300)

​

​

​

​

(366)

​

​

​

​

(115)

​

​

​

​

136

​

​

​

​

(152)

​

​

​

​

(157)

​

​

Allowance for loan losses

​

​

(5,294)

​

​

​

​

(4,863)

​

​

​

​

(4,199)

​

​

​

​

(3,625)

​

​

​

​

(3,000)

​

​

​

​

(2,711)

​

​

Loans, net

​

$

559,975

​

​

​

$

551,364

​

​

​

$

458,869

​

​

​

$

361,035

​

​

​

$

284,457

​

​

​

$

201,336

​

​

Commercial Real Estate Loans.   We originate both owner-occupied and non-owner-occupied commercial real estate loans. These loans may be more adversely affected by conditions in the real estate markets or in the general economy. Commercial real estate loans that are secured by owner-occupied commercial real estate and primarily rely on operating cash flows from the business for debt service are also included in this category of loans. As of September 30, 2019, we had $165.7 million of owner-occupied commercial real estate loans and $238.4 million of investment commercial real estate loans, representing

246

41% and 59%, respectively, of our commercial real estate portfolio. As of September 30, 2019, the average balance of an individual loan in our commercial real estate loan portfolio was $1.1 million for owner- occupied and $1.6 million for non-owner occupied. Commercial real estate loan terms are generally extended for 10 years or less and amortize generally over 25 years or less. The maximum loan to value is generally, 80% of the market value or purchase price, but may be as high as 90% for SBA 504 owner- occupied loans. Our credit policy also usually requires a minimum debt service coverage ratio of 1.25x. The interest rates on our commercial real estate loans have initial fixed rate terms that adjust typically at five years and we routinely charge an origination fee for our services. We generally require personal guarantees from the principal owners of the business, supported by a review of the principal owners’ personal financial statements and global debt service obligations. All commercial real estate loans with an outstanding balance of  $1 million or more are reviewed at least annually. The properties securing the portfolio are located primarily throughout our market and are generally diverse in terms of type. This diversity helps reduce the exposure to adverse economic events that affect any single industry.

Construction and Development Loans.   The majority of our construction loans are offered within the Miami-Dade metropolitan operating area. Our construction loans typically have terms of 12 to 18 months with the goal of transitioning the borrowers to permanent financing. According to our credit policy, the loan to value ratio may not exceed 70% of the appraised value, as established by an independent appraisal. All construction and development loans require an interest reserve account, which is sufficient to pay the loan through completion of the project. We also closely monitor our borrowers’ progress in construction buildout and strictly enforce our original underwriting guidelines for construction milestones and completion timelines.

​	As of September 30, 2019
(Dollars in thousands)	Amount			Percent
CRE and Construction & Development Loans, combined	​	​	​	​	​
1 – 4 Family Construction	​	$	2,845	​	0.7%
Commercial 1 – 4 Family Residential	​	​	35,958	​	8.5%
Auto (Car Lot/Auto Repair)	​	​	1,025	​	0.2%
Gas Station	​	​	51,817	​	12.3%
Commercial Construction	​	​	15,039	​	3.6%
Educational Facility	​	​	4,435	​	1.0%
Hotel	​	​	30,003	​	7.1%
Land Development	​	​	11,824	​	2.8%
Mixed Use	​	​	0	​	0.0%
Multifamily	​	​	19,270	​	4.6%
Office	​	​	50,632	​	12.0%
Other / Special Use	​	​	2,104	​	0.4%
Religious Facility	​	​	5,084	​	1.2%
Retail	​	​	120,140	​	28.4%
Vacant Land	​	​	0	​	0.0%
Warehouse	​	​	72,624	​	17.2%
Total	​	$	422,800	​	100.0%

247

​	As of September 30, 2019
(Dollars in thousands)	Amount			Percent
CRE and Construction & Development Loans, combined	​	​	​	​	​
Broward	​	$	83,645	​	19.8%
Miami-Dade	​	​	265,508	​	62.8%
Palm Beach	​	​	21,642	​	5.1%
Other FL County	​	​	42,427	​	10.0%
Out of State	​	​	9,578	​	2.3%
Total	​	$	422,800	​	100.0%

As of September 30, 2019, non-owner occupied commercial real estate loans of  $238.4 million represented 336% of total risk-based capital and total construction and land development loans of  $18.7 million represented 26% of total risk-based capital.

Residential Real Estate Loans.   We offer home equity lines of credit (HELOCs) primarily on owner-occupied primary residences and, to a lesser extent, loans to finance investor-owned residences. Total residential loans include home equity lines of credit, which totaled $65 million, or 11.5% of our loan portfolio.

Commercial Loans.   In addition to our other loan products, we provide general commercial loans, including commercial lines of credit, working capital loans, term loans, equipment financing, letters of credit and other loan products, primarily in our market, and underwritten based on each borrower’s ability to service debt from income. These loans are primarily made based on the identified cash flows of the borrower, as determined based on a review of the client’s financial statements, and secondarily, on the underlying collateral provided by the borrower. The average balance of the loans in our commercial loan portfolio was $72.9 million as of September 30, 2019. For commercial loans over $500,000, a global cash flow analysis is generally required, which forms the basis for the credit approval, “Global cash flow” is defined as a cash flow calculation which includes all income sources of all principals in the transaction as well as all debt payments, including the debt service associated with the proposed transaction. In general, a minimum debt service coverage is preferred, 1.25x. Most commercial business loans are secured by a lien on general business assets including, among other things, available real estate, accounts receivable, promissory notes, inventory and equipment, and we generally obtain a personal guaranty from the borrower or other principal. The following chart shows our commercial loan portfolio by industry segment as of September 30, 2019.

​	As of September 30, 2019
(Dollars in thousands)	Amount			Percent
Commercial Loans	​	​	​	​	​
Business Products	​	$	3,878	​	5.3%
Business Services	​	​	5,188	​	7.1%
Information	​	​	4,442	​	6.1%
Construction	​	​	1,525	​	2.1%
Finance	​	​	15,330	​	21.0%
Healthcare	​	​	4,239	​	5.8%
Services	​	​	9,252	​	12.7%
Trade	​	​	19,187	​	26.3%
Real Estate	​	​	8,797	​	12.1%
Transportation	​	​	1,064	​	1.5%
Total	​	$	72,902	​	100.0%

Consumer and Other Loans.   We offer consumer, or retail credit, to individuals for household, family, or other personal expenditures. Generally, these are either in the form of closed-end/installment credit loans or open-end/revolving credit loans

248

The repayment of loans is a source of additional liquidity for us. The following table details maturities and sensitivity to interest rate changes for our loan portfolio at September 30, 2019.

​	September 30, 2019
(Dollars in thousands)	Due in One Year or Less			Due in One to Five Years			Due After Five Years			Total
Commercial Real Estate	​	$	34,552	​	$	159,190	​	$	210,345	​	$	404,087
Residential Real Estate	​	​	9,002	​	​	41,972	​	​	14,011	​	​	64,985
Commercial	​	​	37,269	​	​	22,937	​	​	12,696	​	​	72,902
Construction and Development	​	​	6,591	​	​	12,122	​	​	—	​	​	18,713
Consumer and Other	​	​	1,336	​	​	885	​	​	2,661	​	​	4,882
Total loans	​	$	88,750	​	$	237,106	​	$	239,713	​	$	565,569
Amounts with fixed rates	​	$	25,120	​	$	148,367	​	$	55,399	​	$	228,886
Amounts with floating rates	​	$	63,630	​	$	88,739	​	$	184,314	​	$	336,683

Nonperforming Assets

Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Loans are placed on nonaccrual status when, in management’s opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory provisions. Loans may be placed on nonaccrual status regardless of whether or not such loans are considered past due. In general, we place loans on nonaccrual status when they become 90 days past due. We also place loans on nonaccrual status if they are less than 90 days past due if the collection of principal or interest is in doubt. When interest accrual is discontinued, all unpaid accrued interest is reversed from income. Interest income is subsequently recognized only to the extent cash payments are received in excess of principal due. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are, in management’s opinion, reasonably assured. Any loan which the Bank deems to be uncollectible, in whole or in part, is charged off to the extent of the anticipated loss. Loans that are past due for 180 days or more are charged off unless the loan is well secured and in the process of collection. As of September 30, 2019, we did not have any loans 90 days or greater past due that were in accrual status. We have one loan that is 90 days or greater past due, in nonaccrual status. The outstanding balance of the loan is $110,199, the total market value of the collateral is $319,165. We believe our disciplined lending approach and focused management of nonperforming assets has resulted in sound asset quality and timely resolution of problem assets. We have several procedures in place to assist us in maintaining the overall quality of our loan portfolio, such as annual reviews of the underlying financial performance of all commercial loans in excess of  $500,000. We also engage in stress testing of the loan portfolio twice per year, and proactive collection and timely disposition of past due loans. Our bankers follow established underwriting guidelines, and we also monitor our delinquency levels for any negative trends. As a result, we have experienced a relatively low level of nonperforming assets in recent history. We had nonperforming assets of  $1.8. million as of September 30, 2019, or 0.27% of total assets. Nonperforming assets as of December 31, 2018, 2017 and 2016, were $2.1 million, $2.4 million and $0, respectively. There can be no assurance, however, that our loan portfolio will not become subject to increasing pressures from deteriorating borrower credit due to general economic conditions.

249

​	September 30, 2019			December 31,
(Dollars in thousands)				2018			2017			2016			2015			2014
Nonaccrual Loans	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Commercial real estate	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—
Residential real estate	​	​	110	​	​	110	​	​	2,100	​	​	—	​	​	—	​	​	20
Commercial	​	​	—	​	​	294	​	​	306	​	​	—	​	​	—	​	​	—
Construction and development	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—
Consumer and other loans	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—
Accruing loans 90 or more days past due	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—
Total nonperforming loans	​	$	110	​	$	404	​	$	2,406	​	$	—	​	$	—	​	$	20
Other real estate owned	​	​	1,708	​	​	1,708	​	​	—	​	​	—	​	​	720	​	​	743
Total nonperforming assets	​	$	1,818	​	$	2,112	​	$	2,406	​	$	—	​	$	720	​	$	763
Restructured loans – nonaccrual	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—
Restructured loans – accruing	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—
Ratio of nonperforming loans to total loans	​	​	0.02%	​	​	0.07%	​	​	0.51%	​	​	0.00%	​	​	0.00%	​	​	0.01%
Ratio of nonperforming assets to total assets	​	​	0.27%	​	​	0.32%	​	​	0.45%	​	​	0.00%	​	​	0.21%	​	​	0.27%

Credit Quality Indicators

We strive to manage and control credit risk in our loan portfolio by adhering to well-defined underwriting criteria and account administration standards established by our management team and approved by our Board. Our written loan policies document underwriting standards, approval levels, exposure limits and other limits or standards that our management team and Board deem appropriate for an institution of our size and character. Loan portfolio diversification at the obligor, product and geographic levels are actively managed to mitigate concentration risk, to the extent possible. Credit risk management includes an independent credit review process that assesses compliance with policies, risk rating standards and other critical credit information. Additionally, we adhere to sound credit principles and evaluate our clients’ borrowing needs and capacity to repay, in conjunction with their character and history. Our management team and Board place significant emphasis on maintaining a healthy risk profile and sustainable growth. Our approach to lending seeks to balance the risks necessary to achieve our strategic goals while ensuring that our risks are appropriately managed and remain within our defined limits. We believe that our credit culture is a key factor in our relatively low levels of nonperforming loans and nonperforming assets compared to other institutions within our market.

We categorize loans into risk categories based on relevant information about the ability of borrowers to service their debt including: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. Generally, all credits, greater than $1,000,000 are reviewed no less than annually to monitor and adjust, if necessary, the credit risk profile. Loans classified as “substandard”, “special mention” or “pass/watch”, are reviewed quarterly for further evaluation to determine if they are appropriately classified and whether there is any impairment. Beyond the annual review, all loans are graded at initial issuance. In addition, during the renewal process of any loan, as well as if a loan becomes past due, we will determine the appropriate loan grade. Loans excluded from the review process above are generally classified as “pass” credits until: (a) they become past due; (b) management becomes aware of deterioration in the credit worthiness of the borrower; or (c) the client contacts us for a modification. In these circumstances, the loan is specifically evaluated for potential reclassification to special mention, substandard, doubtful, or even a charged-off status. We use the following definitions for risk ratings:

Pass.   A Pass loan’s primary source of loan repayment is satisfactory, with secondary sources very likely to be realized if necessary. The pass category includes the following:

•

Cash Secured:   Essentially risk free credits secured by cash on deposit at Marquis. Verification that an appropriate security interest has been executed and an appropriate hold has been placed against the deposit on the accounting system is essential to the assignment of this grade.

250

•

Liquid Margin Collateral:   Loans secured by liquid collateral with adequate margin of protection but subject to value fluctuations or control risks. This includes loans secured by cash or stand-by letters of credit at other highly accredited financial institutions, or pledged securities under Marquis control subject to price fluctuations.

•

Excellent:   Loans to well established companies with strong credit history, management and guarantor support analyzed on a global basis. Overall position provides for minimal credit risk. Credit would have a desirable purpose, satisfactory repayment program, and would be supported by low loan to value ratios on collateral assigned. Loan to value on developed real estate of less than 50%. Financial ratios would place borrower in the upper quartile of its RMA peer group. Unqualified audited financial statements provided with no loan exceptions to policy noted. Portion of loans subject to SBA guarantee could be included in this rating with portion not guaranteed subject to separate rating if split rating possible.

•

Good:   Loans that are considered satisfactory credit risks, having no identifiable risk of collection and conforming in all respects to Marquis Loan Policy. Loans in this category exhibit reasonable terms and purpose. Borrower provides reasonable cash flow and collateral protection is within loan policy. Credit has strong guarantor support. Leverage and liquidity are within RMA’s median.

•

Acceptable:   This is the minimal rating for new loans. Loans conform to Marquis Loan Policy but may exhibit exceptions approved by Loan Committee or authorized officer. Loans in this category exhibit a higher level of risk and require a greater degree of monitoring than a Risk Rating 4 loan. Loans in this category may exhibit lower quartile ratios when compared to the industry in RMA analysis and weaker guarantor support. A loan may be downgraded to this rating based on declining trends that are not expected to affect performance. DSC meets policy minimum for the specific type of loan. If a split rating is used on an SBA or other government partially guaranteed loan, the portion not guaranteed would be rated in this category.

•

Pass/Watch:   Loans may fall into this category after inception at a higher risk rating due to evidence of minor potential weaknesses or deterioration that is considered of a temporary nature. Loan officer is addressing corrective action but loan warrants monitoring by the Loan Review Committee on a monthly basis. The following factors may contribute to this rating:

•

Minor documentation exceptions that remain uncorrected after a reasonable period of time.

•

Lack of current financial information on the borrower or guarantors when associated with other indications of minor weakness.

•

Indication of temporary cash flow issues, slow payments, NSF or overdrawn deposit accounts.

•

Deterioration in collateral position when the customer is performing as agreed.

•

Cost overruns on construction financing delaying completion of construction project but funded by borrower.

•

Declining industry trends.

•

DSC falling below 1X with performance supported by guarantor with minor delays in payment.

•

Borrowing base loans that become over extended on temporary basis.

•

Other deterioration in minor weaknesses noted on a Risk Rating 5 loans that are correctable and being addressed by the loan officer.

This would be a temporary rating. A more severe rating would apply if the weaknesses noted are not corrected within a reasonable period of time. A corrective action plan addressing concerns would return the loan to an acceptable category when properly executed.

251

Special mention.   A Special Mention loan has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in the deterioration of the repayment prospects for the asset or our credit position at some future date. Special Mention loans are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification.

Substandard.   A Substandard loan is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified must have a well-defined weakness or weaknesses that jeopardizes the liquidation of the debt. They are characterized by the distinct possibility that we will sustain some loss if the deficiencies are not corrected.

Doubtful.   A loan classified Doubtful has all the weaknesses inherent in one classified Substandard with the added characteristics that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loss.   A loan classified Loss is considered uncollectible and of such little value that continuance as a bankable asset is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may be affected in the future. Based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

(Dollars in thousands)

Pass

Special Mention

Substandard

Doubtful

Total

September 30, 2019

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Commercial real estate

​

$

404,087

​

$

—

​

$

—

​

$

—

​

$

404,087

Residential real estate

​

​

64,875

​

​

—

​

​

110

​

​

—

​

​

64,985

Commercial

​

​

72,902

​

​

—

​

​

—

​

​

—

​

​

72,902

Construction and development

​

​

18,713

​

​

—

​

​

—

​

​

—

​

​

18,713

Consumer

​

​

4,882

​

​

—

​

​

—

​

​

—

​

​

4,882

Total

​

$

565,459

​

$

—

​

$

110

​

$

—

​

$

565,569

December 31, 2018

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Commercial real estate

​

$

384,697

​

$

—

​

$

—

​

$

—

​

$

384,697

Residential real estate

​

​

69,458

​

​

—

​

​

110

​

​

—

​

​

69,568

Commercial

​

​

80,172

​

​

—

​

​

—

​

​

—

​

​

80,172

Construction and development

​

​

18,747

​

​

—

​

​

—

​

​

—

​

​

18,747

Consumer

​

​

3,408

​

​

—

​

​

—

​

​

—

​

​

3,408

Total

​

$

556,482

​

$

—

​

$

110

​

$

—

​

$

556,592

December 31, 2017

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Commercial real estate

​

$

298,677

​

$

—

​

$

—

​

$

—

​

$

298,677

Residential real estate

​

​

69,906

​

​

—

​

​

2,100

​

​

—

​

​

72,006

Commercial

​

​

61,356

​

​

—

​

​

305

​

​

—

​

​

61,661

Construction and development

​

​

28,629

​

​

—

​

​

—

​

​

—

​

​

28,629

Consumer

​

​

2,210

​

​

—

​

​

—

​

​

—

​

​

2,210

Total

​

$

460,778

​

$

—

​

$

2,405

​

$

—

​

$

463,183

December 31, 2016

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Commercial real estate

​

$

240,623

​

$

—

​

$

—

​

$

—

​

$

240,623

Residential real estate

​

​

59,958

​

​

—

​

​

542

​

​

—

​

​

60,500

Commercial

​

​

41,6956

​

​

4,713

​

​

—

​

​

—

​

​

46,408

Construction and development

​

​

13,932

​

​

—

​

​

—

​

​

—

​

​

13,932

Consumer

​

​

3,061

​

​

—

​

​

—

​

​

—

​

​

3,061

Total

​

$

359,269

​

$

4,713

​

$

542

​

$

—

​

$

364,524

252

Allowance for Loan Losses

We believe that we maintain our allowance for loan losses at a level sufficient to provide for probable credit losses inherent in the loan portfolio as of the balance sheet date. Credit losses arise from the borrowers’ inability or unwillingness to repay, and from other risks inherent in the lending process including collateral risk, operations risk, concentration risk, and economic risk. We consider all of these risks of lending when assessing the adequacy of our allowance. The allowance for loan losses is established through a provision charged to expense. Loans are charged-off against the allowance when losses are probable and reasonably quantifiable. Our allowance for loan losses is based on management’s judgment of overall credit quality, which is a significant estimate based on a detailed analysis of the loan portfolio. Our allowance can and will change based on revisions to our assessment of our loan portfolio’s overall credit quality and other risk factors both internal and external to us.

We evaluate the adequacy of the allowance for loan losses on a quarterly basis. The allowance consists of two components. The first component consists of those amounts reserved for impaired loans. A loan is deemed impaired when, based on current information and events, it is probable that the Bank will not be able to collect all amounts due (principal and interest), according to the contractual terms of the loan agreement. Loans are monitored for potential impairment through our ongoing loan review procedures and portfolio analysis. Classified loans and past due loans over a specific dollar amount, and all troubled debt restructurings are individually evaluated for impairment.

The approach for assigning reserves for the impaired loans is determined by the dollar amount of the loan and loan type. Impairment measurement for loans over a specific dollar are determined on an individual loan basis with the amount reserved dependent on whether repayment of the loan is dependent on the liquidation of collateral or from some other source of repayment. If repayment is dependent on the sale of collateral, the reserve is equivalent to the recorded investment in the loan less the fair value of the collateral after estimated sales expenses. If repayment is not dependent on the sale of collateral, the reserve is equivalent to the recorded investment in the loan less the estimated cash flows discounted using the loan’s effective interest rate. The discounted value of the cash flows is based on the anticipated timing of the receipt of cash payments from the borrower. The reserve allocations for individually measured impaired loans are sensitive to the extent market conditions or the actual timing of cash receipts change. Impairment reserves for smaller-balance loans under a specific dollar amount are assigned on a pooled basis utilizing loss factors for impaired loans of a similar nature.

The second component is a general reserve on all loans other than those identified as impaired. General reserves are assigned to various homogenous loan pools, including commercial, commercial real estate, construction and development, residential real estate, and consumer. General reserves are assigned based on historical loan loss ratios determined by loan pool and internal risk ratings that are adjusted for various internal and external risk factors unique to each loan pool. The following table analyzes the activity in the allowance over the past five years and the nine-month periods ended September 30, 2019 and 2018.

253

​

Nine Months Ended September 30,

Year Ended December 31,

(Dollars in thousands)

2019

2018

2018

2017

2016

2015

2014

Balance at beginning of period

​

$

4,863

​

$

4,199

​

$

4,199

​

$

3,625

​

$

3,000

​

$

2,711

​

$

2,541

Charge-offs

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Commercial real estate

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

48

Residential real estate

​

​

—

​

​

—

​

​

491

​

​

—

​

​

—

​

​

—

​

​

—

Commercial

​

​

—

​

​

—

​

​

—

​

​

310

​

​

—

​

​

—

​

​

—

Construction and development

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Consumer and other

​

​

—

​

​

—

​

​

—

​

​

41

​

​

16

​

​

9

​

​

—

Total Charge-offs

​

​

—

​

​

—

​

​

491

​

​

351

​

​

16

​

​

9

​

​

48

Recoveries

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Commercial real estate

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Residential real estate

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Commercial

​

​

60

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

14

Construction and development

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Consumer and other

​

​

4

​

​

3

​

​

6

​

​

3

​

​

1

​

​

—

​

​

—

Total recoveries

​

​

64

​

​

3

​

​

6

​

​

3

​

​

1

​

​

—

​

​

14

Net charge-offs (recoveries)

​

​

(64)

​

​

(3)

​

​

485

​

​

348

​

​

15

​

​

9

​

​

34

Provision for loan losses

​

​

367

​

​

712

​

​

1,149

​

​

922

​

​

640

​

​

298

​

​

204

Balance at end of period

​

$

5,294

​

$

4,914

​

$

4,863

​

$

4,199

​

$

3,625

​

$

3,000

​

$

2,711

Ratio of net charge-offs to average loans

​

​

(0.01)%

​

​

0.00%

​

​

0.09%

​

​

0.08%

​

​

0.00%

​

​

0.00%

​

​

0.02%

ALLL as a percentage of loans at end of period

​

​

0.94%

​

​

0.91%

​

​

0.87%

​

​

0.91%

​

​

0.99%

​

​

1.04%

​

​

1.33%

ALLL as a multiple of net charge-offs

​

​

(82.72)

​

​

(1,638.00)

​

​

10.03

​

​

12.07

​

​

241.67

​

​

333.33

​

​

79.74

ALLL as a percentage of nonperforming loans

​

​

4812.73%

​

​

204.41%

​

​

1203.71%

​

​

174.52%

​

​

668.82%

​

​

N/A

​

​

13555.00%

We had recoveries of  $64,000 for the nine months ended September 30, 2019, compared to recoveries of  $3,000 for the nine months ended September 30, 2018, and net charge-offs of  $485,000 for the year ended December 31, 2018. At September 30, 2019, the allowance for loan losses of  $5.3 million was 0.94% of outstanding loans (net of overdrafts) and provided coverage of 4,812.7% of nonperforming loans. We had $110,000 of nonperforming loans outstanding as of September 30, 2018. At December 31, 2018, the allowance for loan losses of  $4.9 million was 0.87% of outstanding loans (net of overdrafts) compared to 0.91% and 0.99% at December 31, 2017 and 2016, respectively. We had $0.4 million, $2.4 million and $0 of nonperforming loans at December 31, 2018, 2017, and 2016. The following table provides an allocation of the allowance for loan losses to specific loan types as of September 30, 2019 and as of the end of the fiscal year for each of the past five years.

​	September 30, 2019					December 31, 2018					December 31, 2017					December 31, 2016					December 31, 2015					December 31, 2014
(Dollars in thousands)	Allowance			Percent		Allowance			Percent		Allowance			Percent		Allowance			Percent		Allowance			Percent		Allowance			Percent
Commercial real estate	​	$	3,577	​	67.57%	​	$	3,082	​	63.38%	​	$	2,758	​	65.68%	​	$	2,314	​	63.83%	​	$	2,009	​	66.97%	​	$	1,860	​	68.61%
Residential real estate	​	​	708	​	13.37%	​	​	687	​	14.13%	​	​	600	​	14.29%	​	​	652	​	17.99%	​	​	553	​	18.43%	​	​	572	​	21.10%
Commercial	​	​	758	​	14.32%	​	​	846	​	17.40%	​	​	568	​	13.53%	​	​	506	​	13.96%	​	​	412	​	13.73%	​	​	215	​	7.97%
Construction and development	​	​	192	​	3.63%	​	​	216	​	4.44%	​	​	236	​	5.62%	​	​	125	​	3.45%	​	​	3	​	0.10%	​	​	28	​	1.03%
Consumer and other	​	​	59	​	1.11%	​	​	32	​	0.66%	​	​	37	​	0.88%	​	​	28	​	0.77%	​	​	24	​	0.77%	​	​	35	​	1.29%
Total allowance for loan losses	​	$	5,294	​	100.0%	​	$	4,863	​	100.0%	​	$	4,199	​	100.0%	​	$	3,625	​	100.0%	​	$	3,001	​	100.0%	​	$	2,710	​	100.0%

254

At September 30, 2019, the recorded investment in impaired loans was $0.1 million, which did not require a specific reserve, compared to a recorded investment in impaired loans of  $0.4 million at December 31, 2018, which required a specific reserve of  $69,000. This loan was paid off as of September 30, 2019.

There were no loans modified as troubled debt restructurings at September 30, 2019, December 31, 2018, December 31, 2017 or December 31, 2016.

Our allowance for loan losses was $5.3 million at September 30, 2019 compared to $4.9 million at December 31, 2018, an increase of 8.9%. The increase was primarily due growth of our loan portfolio. The allowance for loan losses totaled $4.9 million at December 31, 2018 compared to $4.2 million at December 31, 2017 and $3.6 million at December 31, 2016. The increase for all years is due to growth in our loan portfolio. We believe our allowance at September 30, 2019 was adequate to absorb probable losses inherent in our loan portfolio.

Deposits

Deposits are our primary source of funding. We offer a variety of deposit products including checking, NOW, savings, money market and time accounts all of which we actively market at competitive pricing. We generate deposits from our clients on a relationship basis and through the efforts of our lenders. We supplement our deposits with wholesale funding sources such as Qwickrate, CDARS and brokered deposits. However, we do not significantly rely on wholesale funding sources, which are generally viewed as less stable compared to core deposits due to the relatively higher price elasticity of demand for deposits from wholesale sources. As of September 30, 2019 and December 31, 2018, these wholesale deposits represented 15.5% and 22.9%, respectively, of our total deposits. Reliance on these funds are declining as core deposits are rising.

Interest-bearing deposits increased $23.4 million, or 5.7%, from December 31, 2018 to September 30, 2019 primarily due to a $60.2 million increase in money market account balances offset by a decrease of $39.1 million in certificates of deposit. In order to fund our loan growth, all of our bankers are actively involved with our strategic efforts and are incentivized to grow core deposits. The average rate paid on interest-bearing deposits increased 55 basis points from 1.45% for the year ended December 31, 2018 to 2.00% for the nine months ended September 30, 2019. Rates paid on certificates of deposit increased 56 basis points, or 29.5%, over the same period. The increase in average rates paid on interest-bearing deposits and certificates of deposit was a result of a continued increase market rates of interest during the first nine months of 2019, as well as upward competitive pricing pressures. As of September 30, 2019, we had approximately $45.0 million in deposits that were classified as brokered deposits, a decrease of  $58.6 million, or 56.2% from December 31, 2018.

Interest-bearing deposits increased $70.1 million, or 20.8%, from December 31, 2017 to December 31, 2018. Certificates of deposit increased $119.3 million. Money market accounts and NOW accounts declined by $50.1 million. The average rate paid on interest-bearing deposits increased 45 basis points for the year ended December 31, 2018 compared to the year ended December 31, 2017. The average rate paid on certificates of deposit increased 60 basis points over the same period. The increase in average rates paid on interest-bearing deposits and certificates of deposit was a result of increasing market interest rates during 2018, and upward competitive pricing pressures. Brokered deposits increased by $64.2 million or by 160.3% to $104.2 million at December 31, 2018 from $40 million at December 31, 2017.

For the year ended December 31, 2017, interest-bearing deposits increased $82.8 million, or 32.6%, certificates of deposit increased $39.3 million or by 31.8% million and Money market accounts and NOW accounts increased $39.3 million compared to December 31, 2016. Average rates paid for interest-bearing deposits increased 9 basis points, or 10%, from the prior year. The following table presents the average balances and average rates paid on deposits for the periods indicated.

255

​	For the Nine Months Ended September 30, 2019					For the Year Ended December 31
​						2018					2017					2016
(Dollars in thousands)	Average Balance			Average Rate		Average Balance			Average Rate		Average Balance			Average Rate		Average Balance			Average Rate
NOW accounts	​	$	19,583	​	0.05%	​	$	20,097	​	0.05%	​	$	14,342	​	0.05%	​	$	14,348	​	0.06%
Money market accounts	​	​	128,256	​	1.36%	​	​	138,225	​	0.98%	​	​	135,475	​	0.82%	​	​	116,650	​	0.76%
Savings accounts	​	​	3,801	​	0.20%	​	​	4,278	​	0.20%	​	​	2,859	​	0.20%	​	​	2,872	​	0.20%
Certificates of deposit	​	​	275,244	​	2.46%	​	​	215,511	​	1.90%	​	​	137,180	​	1.30%	​	​	121,097	​	1.17%
Total interest-bearing deposits	​	​	426,884	​	2.00%	​	​	378,111	​	1.45%	​	​	289,856	​	1.00%	​	​	254,967	​	0.91%
Noninterest-bearing deposits	​	​	130,521	​	0.00%	​	​	122,571	​	0.00%	​	​	116,049	​	0.00%	​	​	85,944	​	0.00%
Total deposits	​	$	557,405	​	1.53%	​	$	500,682	​	1.09%	​	$	405,905	​	0.72%	​	$	340,911	​	0.68%

The following table presents the ending balances and percentage of total deposits for the periods indicated.

​	For the Nine Months Ended September 30, 2019					For the Year Ended December 31
​						2018					2017					2016
(Dollars in thousands)	Ending Balance			% of Total		Ending Balance			% of Total		Ending Balance			% of Total		Ending Balance			% of Total
NOW accounts	​	$	17,654	​	3.05%	​	$	15,196	​	2.90%	​	$	14,330	​	3.23%	​	$	10,100	​	2.91%
Money market accounts	​	​	166,184	​	28.76%	​	​	105,969	​	20.21%	​	​	156,768	​	35.31%	​	​	117,716	​	33.91%
Savings accounts	​	​	3,549	​	0.61%	​	​	3,751	​	0.72%	​	​	3,067	​	0.69%	​	​	2,810	​	0.81%
Certificates of deposit	​	​	243,211	​	42.08%	​	​	282,321	​	53.85%	​	​	163,000	​	36.71%	​	​	123,711	​	35.64%
Total interest-bearing deposits	​	​	430,598	​	74.50%	​	​	407,237	​	77.68%	​	​	337,165	​	75.94%	​	​	254,337	​	73.27%
Noninterest-bearing deposits	​	​	147,308	​	25.50%	​	​	116,995	​	22.32%	​	​	106,800	​	24.06%	​	​	92,790	​	26.73%
Total deposits	​	$	577,906	​	100.00%	​	$	524,232	​	100.00%	​	$	443,965	​	100.00%	​	$	347,127	​	100.00%

The following table presents the maturities of our certificates of deposit as of September 30, 2019.

(Dollars in thousands)	Three Months or Less			Over Three Through Nine Months			Over Nine Months Through 12 Months			Over 12 Months			Total
$100,000 or more	​	$	69,558	​	$	52,287	​	$	50,455	​	$	55,270	​	$	227,570
Less than $100,000	​	​	3,883	​	​	1,843	​	​	4,012	​	​	5,903	​	​	15,641
Total	​	$	73,441	​	$	54,130	​	$	54,467	​	$	61,173	​	$	243,211

Borrowings

We primarily use short-term and long-term borrowings to supplement deposits to fund our lending and investment activities.

FHLB Advances.   The FHLB allows us to borrow up to 25% of our assets on a blanket floating lien status collateralized by certain securities and loans. As of September 30, 2019, approximately $107.1 million in real estate loans were pledged as collateral for our FHLB borrowings. We utilize these borrowings to meet liquidity needs. As of September 30, 2019, we had $30.0 million in outstanding advances and $52.6 million in available borrowing capacity from the FHLB based on the collateral that we have currently pledged. The following table sets forth certain information on our FHLB borrowings during the periods presented.

​	Nine Months Ended September 30, 2019			Years Ended December 31,
(Dollars in thousands)				2018			2017			2016
Amount outstanding at period-end	​	$	30,000	​	$	75,000	​	$	39,000	​	$	36,000
Weighted average interest rate at period-end	​	​	2.09%	​	​	2.63%	​	​	1.44%	​	​	0.87%
Maximum month-end balance during period	​	$	56,000	​	$	75,000	​	$	39,000	​	$	36,000
Average balance outstanding during period	​	​	35,630	​	​	42,663	​	​	28,674	​	​	22,213
Weighted average interest rate during period	​	​	2.65%	​	​	1.95%	​	​	1.11%	​	​	0.83%

256

Federal Reserve Bank of Atlanta.   The Federal Reserve Bank of Atlanta has an available borrower in custody arrangement which allows us to borrow on a collateralized basis. No advances were outstanding under this facility as of September 30, 2019.

Liquidity and Capital Resources

Capital Resources

Shareholders’ equity increased $5.6 million for the nine months ended September 30, 2019 compared to the year ended December 31, 2018. Net income of  $5.4 million, offset by dividends paid to shareholders of  $0.8 million increased retained earnings. Option holders exercised 7,242 grants increasing shareholder equity by $0.6 million as of September 30, 2019. Shareholders’ equity increased $7.7 million for the year ended December 31, 2018 compared to the year ended December 31, 2017. Net income resulted in an increase to retained earnings of  $6.8 million as of December 31, 2018.

For the year ended December 31, 2017, shareholders’ equity increased $4.6 million, primarily from net income of  $3.9 million.

We are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a material effect on our financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, we must meet specific capital guidelines that involve quantitative measures of our assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy require us to maintain minimum ratios of common equity Tier 1, Tier 2, and total capital as a percentage of assets and off-balance sheet exposures, adjusted for risk weights ranging from 0% to 150%. We are also required to maintain capital at a minimum level based on quarterly average assets, which is known as the leverage ratio.

In July 2013, federal bank regulatory agencies issued a final rule that revised their risk-based capital requirements and the method for calculating risk-weighted assets to make them consistent with certain standards that were developed by Basel III and certain provisions of the Dodd-Frank Act. The final rule applies to all depository institutions and bank holding companies and savings and loan holding companies with total consolidated assets of more than $1 billion, which we refer to below as “covered” banking organizations. We were required to implement the new Basel III capital standards as of January 1, 2015 and January 1, 2018, respectively.

As of September 30, 2019, we were in compliance with all applicable regulatory capital requirements to which we were subject, and the Bank was classified as “well capitalized” for purposes of the prompt corrective action regulations. As we deploy our capital and continue to grow our operations, our regulatory capital levels may decrease depending on our level of earnings. However, we intend to monitor and control our growth in order to remain in compliance with all regulatory capital standards applicable to us. See “Supervision and Regulation — Capital Adequacy Guidelines” for additional discussion regarding the regulatory capital requirements applicable to the Company and the Bank.

257

The following table presents our regulatory capital ratios as of the dates indicated.

​

Actual

Minimum for capital adequacy

Minimum to be well capitalized

(Dollars in thousands)

Amount

Ratio

Amount

Ratio

Amount

Ratio

September 30, 2019

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Total capital ratio

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Bank

​

$

70,920

​

12.2%

​

$

46,619

​

8.0%

​

$

58,274

​

10.0%

Company

​

​

71,839

​

12.3%

​

​

N/A

​

N/A

​

​

N/A

​

N/A

Tier 1 capital ratio

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Bank

​

​

65,188

​

11.2%

​

​

34,964

​

6.0%

​

​

46,619

​

8.0%

Company

​

​

56,397

​

9.7%

​

​

N/A

​

N/A

​

​

N/A

​

N/A

Tier1 leverage ratio

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Bank

​

​

65,188

​

9.7%

​

​

26,838

​

4.0%

​

​

33,548

​

5.0%

Company

​

​

56,397

​

8.4%

​

​

N/A

​

N/A%

​

​

N/A

​

N/A

Common equity tier 1 capital ratio

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Bank

​

​

65,188

​

11.2%

​

​

26,223

​

4.5%

​

​

37,878

​

6.5%

Company

​

​

56,397

​

9.7%

​

​

N/A

​

N/A

​

​

N/A

​

N/A

December 31, 2018

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Total capital ratio

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Bank

​

$

65,167

​

11.4%

​

$

45,768

​

8.0%

​

$

57,210

​

10.0%

Company

​

​

65,980

​

11.5%

​

​

N/A

​

N/A

​

​

N/A

​

N/A

Tier 1 capital ratio

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Bank

​

​

59,885

​

10.5%

​

​

34,326

​

6.0%

​

​

45,768

​

8.0%

Company

​

​

51,028

​

8.9%

​

​

N/A

​

N/A

​

​

N/A

​

N/A

Tier1 leverage ratio

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Bank

​

​

59,885

​

9.5%

​

​

25,251

​

4.0%

​

​

31,564

​

5.0%

Company

​

​

51,028

​

8.1%

​

​

N/A

​

N/A

​

​

N/A

​

N/A

Common equity tier 1 capital ratio

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Bank

​

​

59,885

​

10.5%

​

​

25,744

​

4.5%

​

​

37,186

​

6.5%

Company

​

​

51,028

​

8.9%

​

​

N/A

​

N/A

​

​

N/A

​

N/A

December 31, 2017

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Total capital ratio

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Bank

​

$

55,528

​

11.8%

​

$

37,620

​

8.0%

​

$

47,025

​

10.0%

Company

​

​

57,400

​

12.2%

​

​

N/A

​

N/A

​

​

N/A

​

N/A

Tier 1 capital ratio

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Bank

​

​

50,995

​

10.8%

​

​

28,215

​

6.0%

​

​

37,620

​

8.0%

Company

​

​

43,254

​

9.2%

​

​

N/A

​

N/A

​

​

N/A

​

N/A

Tier1 leverage ratio

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Bank

​

​

50,995

​

9.7%

​

​

20,983

​

4.0%

​

​

26,229

​

5.0%

Company

​

​

43,254

​

8.2%

​

​

N/A

​

N/A

​

​

N/A

​

N/A

Common equity tier 1 capital ratio

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Bank

​

​

50,995

​

10.8%

​

​

21,161

​

4.5%

​

​

30,566

​

6.5%

Company

​

​

43,254

​

9.2%

​

​

N/A

​

N/A

​

​

N/A

​

N/A

December 31, 2016

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Total capital ratio

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Bank

​

$

50,303

​

13.7%

​

$

29,410

​

8.0%

​

$

36,763

​

10.0%

Company

​

​

51,856

​

14.2%

​

​

N/A

​

N/A

​

​

N/A

​

N/A

Tier 1 capital ratio

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Bank

​

​

46,678

​

12.7%

​

​

22,058

​

6.0%

​

​

29,410

​

8.0%

Company

​

​

38,678

​

10.6%

​

​

N/A

​

N/A

​

​

N/A

​

N/A

Tier1 leverage ratio

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Bank

​

​

46,678

​

11.1%

​

​

16,847

​

4.0%

​

​

21,059

​

5.0%

Company

​

​

38,678

​

9.4%

​

​

N/A

​

N/A

​

​

N/A

​

N/A

Common equity tier 1 capital ratio

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Bank

​

​

46,678

​

12.8%

​

​

16,543

​

4.5%

​

​

23,896

​

6.5%

Company

​

​

38,678

​

10.6%

​

​

N/A

​

N/A

​

​

N/A

​

N/A

258

Liquidity

In general terms, liquidity is a measurement of our ability to meet our cash needs. Our objective in managing our liquidity is to maintain our ability to fund loan commitments, purchase securities, accommodate deposit withdrawals or repay other liabilities in accordance with their terms, without an adverse impact on our current or future earnings. Our liquidity strategy is guided by policies that are formulated and monitored by our Asset Liability Management Committee, or ALCO, and senior management, including our Liquidity Contingency Policy, and which take into account the marketability of assets, the sources and stability of funding and the level of unfunded commitments. We regularly evaluate all of our various funding sources with an emphasis on accessibility, stability, reliability and cost-effectiveness. Our principal source of funding has been our clients’ deposits, supplemented by our short-term borrowings, primarily from FHLB borrowings. We believe that the cash generated from operations, our borrowing capacity and our access to capital resources are sufficient to meet our future operating capital and funding requirements.

At September 30, 2019, we had the ability to generate approximately $184.1 million in additional liquidity through all of our available resources beyond our overnight funds sold position. In addition to the primary borrowing outlets mentioned above, we also have the ability to generate liquidity by borrowing from the CDARS one-way buy market on an auction basis and through other brokered deposits. We recognize the importance of maintaining liquidity and have developed a Contingent Liquidity Plan, which addresses various liquidity stress levels and our response and action based on the level of severity. We periodically test our credit facilities for access to the funds, but also understand that as the severity of the liquidity level increases, certain credit facilities may no longer be available. We conduct quarterly liquidity stress tests and the results are reported to our Asset-Liability Management Committee and our Board. We believe the liquidity available to us is sufficient to meet our ongoing needs.

We also view our investment portfolio as a liquidity source and have the option to pledge securities in our portfolio as collateral for borrowings or deposits, and/or sell selected securities. Our portfolio primarily consists of debt issued by the federal government and governmental agencies. The weighted-average maturity of our portfolio was 3.24 years and 3.98 years at September 30, 2019 and December 31, 2018, respectively, and had a net unrealized pre-tax gain of  $59,000 and an after tax loss of  $0.3 million, respectively, in our available for sale securities portfolio as of those dates.

Our average net overnight funds sold position (defined as funds sold plus interest-bearing deposits with other banks less funds purchased) was $67.2 million during the first nine months of 2019 compared to an average net overnight funds sold position of  $49.9 million for the 2018 full year period. As we have continued to experience organic growth, we have preferred to maintain our excess liquidity in assets with greater liquidity, such as overnight interest-bearing deposits, as opposed to less liquid, but slightly higher yielding, assets, like investment securities.

Inflation

The impact of inflation on the banking industry differs significantly from that of other industries in which a large portion of total resources are invested in fixed assets such as property, plant and equipment. Assets and liabilities of financial institutions are virtually all monetary in nature, and therefore are primarily impacted by interest rates rather than changing prices. While the general level of inflation underlies most interest rates, interest rates react more to changes in the expected rate of inflation and to changes in monetary and fiscal policy.

Contractual Obligations

We have contractual obligations to make future payments on debt and lease agreements. While our liquidity monitoring and management consider both present and future demands for and sources of liquidity, the following table of contractual commitments focuses only on future obligations and summarizes our contractual obligations as of September 30, 2019.

259

(Dollars in thousands)	Due in One Year or Less			Due after One Through Three Years			Due After Three Through Five Years			Due After Five Years			Total
FHLB Advances	​	$	30,000	​	$	—	​	$	—	​	$	—	​	$	30,000
Certificates of deposit $100,000 or more	​	​	172,300	​	​	54,411	​	​	859	​	​	—	​	​	227,570
Certificates of deposit less than $100,000	​	​	9,738	​	​	5,822	​	​	81	​	​	—	​	​	15,641
Operating leases	​	​	710	​	​	1,161	​	​	125	​	​	—	​	​	1,996
Total	​	$	212,748	​	$	61,394	​	$	1,065	​	$	—	​	$	275,207

Off-Balance Sheet Items

In the normal course of business, we enter into various transactions that, in accordance with GAAP, are not included in our consolidated balance sheets. We enter into these transactions to meet the financing needs of our clients. These transactions include commitments to extend credit and issue letters of credit, which involve, to varying degrees, elements of credit risk and interest rate risk in excess of the amounts recognized in our consolidated balance sheets. Our exposure to credit loss is represented by the contractual amounts of these commitments. The same credit policies and procedures are used in making these commitments as for on-balance sheet instruments. We are not aware of any accounting loss to be incurred by funding these commitments, however we maintain an allowance for off-balance sheet credit risk which is recorded in other liabilities on the consolidated balance sheet.

Our commitments associated with outstanding letters of credit and commitments to extend credit expiring by period as of the date indicated are summarized below. Since commitments associated with letters of credit and commitments to extend credit may expire unused, the amounts shown do not necessarily reflect the actual future cash funding requirements.

​	As of September 30, 2019			As of December 31,
(Dollars in thousands)				2018			2017			2016
Unfunded lines of credit	​	$	129,063	​	$	119,327	​	$	113,150	​	$	73,405
Commitments to extend credit	​	​	22,718	​	​	27,017	​	​	37,687	​	​	34,987
Letters of credit	​	​	2,010	​	​	1,502	​	​	2,568	​	​	4,076
Total credit extension commitments	​	$	153,791	​	$	147,846	​	$	153,405	​	$	112,468

Unfunded lines of credit represent unused credit facilities to our current borrowers that represent no change in credit risk that exist in our portfolio. Letters of credit are conditional commitments issued by us to guarantee the performance of a client to a third party. Lines of credit generally have variable interest rates. In the event of nonperformance by the client in accordance with the terms of the agreement with the third party, we would be required to fund the commitment. The maximum potential amount of future payments we could be required to make is represented by the contractual amount of the commitment. If the commitment is funded, we would be entitled to seek recovery from the client from the underlying collateral, which can include commercial real estate, physical plant and property, inventory, receivables, cash or marketable securities. Our policies generally require that letter of credit arrangements contain security and debt covenants similar to those contained in loan agreements and our credit risk associated with issuing letters of credit is essentially the same as the risk involved in extending loan facilities to our clients.

We minimize our exposure to loss under letters of credit and credit commitments by subjecting them to the same credit approval and monitoring procedures as we do for on-balance sheet instruments. The effect on our revenue, expenses, cash flows and liquidity of the unused portions of these letters of credit commitments cannot be precisely predicted because there is no guarantee that the lines of credit will be used.

Commitments to extend credit are agreements to lend funds to a client, as long as there is no violation of any condition established in the contract, for a specific purpose. Commitments generally have variable interest rates, fixed expiration dates or other termination clauses and may require payment of a fee. Since

260

many of the commitments are expected to expire without being fully drawn, the total commitment amounts disclosed above do not necessarily represent future cash requirements. We evaluate each client’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if considered necessary by us, upon extension of credit is based on management’s credit evaluation of the client.

Certain Performance Metrics

The following table shows the return on average assets (computed as net income divided by average total assets), return on average equity (computed as net income divided by average equity) and average equity to average assets ratios for the nine months ended September 30, 2019 and for the years ended December 31, 2018, 2017, and 2016.

​	Nine Months Ended September 30, 2019		Years Ended December 31
(Dollars in thousands)			2018		2017		2016
Return on Average Assets(1)	​	1.11%	​	1.13%	​	0.81%	​	0.86%
Return on Average Equity(1)	​	13.53%	​	14.48%	​	9.59%	​	9.15%
Average Equity to Average Assets	​	8.19%	​	7.81%	​	8.47%	​	9.40%

(1)

Annualized for the nine months ended September 30, 2019.

Market Risk and Interest Rate Sensitivity

Overview

Market risk arises from changes in interest rates, exchange rates, commodity prices, and equity prices. We have risk management policies designed to monitor and limit exposure to market risk and we do not participate in activities that give rise to significant market risk involving exchange rates, commodity prices, or equity prices. In asset and liability management activities, our policies are designed to minimize structural interest rate risk.

Interest Rate Risk Management

Our net income is largely dependent on net interest income. Net interest income is susceptible to interest rate risk to the degree that interest-bearing liabilities mature or reprice on a different basis than interest earning assets. When interest-bearing liabilities mature or reprice more quickly than interest earning assets in a given period, a significant increase in market rates of interest could adversely affect net interest income. Similarly, when interest earning assets mature or reprice more quickly than interest-bearing liabilities, falling market interest rates could result in a decrease in net interest income. Net interest income is also affected by changes in the portion of interest earning assets that are funded by interest-bearing liabilities rather than by other sources of funds, such as noninterest-bearing deposits and shareholders’ equity.

We have established what we believe to be a comprehensive interest rate risk management policy, which is administered by ALCO. The policy establishes limits of risk, which are quantitative measures of the percentage change in net interest income (a measure of net interest income at risk) and the fair value of equity capital (a measure of economic value of equity (“EVE”) at risk) resulting from a hypothetical change in interest rates for maturities from one day to 30 years. We measure the potential adverse impacts that changing interest rates may have on our short-term earnings, long-term value, and liquidity by employing simulation analysis through the use of computer modeling. The simulation model captures optionality factors such as call features and interest rate caps and floors imbedded in investment and loan portfolio contracts. As with any method of gauging interest rate risk, there are certain shortcomings inherent in the interest rate modeling methodology used by us. When interest rates change, actual movements in different categories of interest earning assets and interest-bearing liabilities, loan prepayments, and withdrawals of time and other deposits, may deviate significantly from assumptions used in the model. Finally, the methodology does not measure or reflect the impact that higher rates may have on adjustable-rate loan clients’ ability to service their debts, or the impact of rate changes on demand for loan and deposit products.

261

The balance sheet is subject to testing for interest rate shock possibilities to indicate the inherent interest rate risk. We prepare a current base case and several alternative interest rate simulations (-400, -300, -200, -100, +100, +200, +300 and +400 basis points (bp)), at least once per quarter, and report the analysis to ALCO and our Board. We augment our interest rate shock analysis with alternative interest rate scenarios on a quarterly basis that may include ramps, parallel shifts, and a flattening or steepening of the yield curve (non-parallel shift). In addition, more frequent forecasts may be produced when interest rates are particularly uncertain or when other business conditions so dictate.

Our goal is to structure the balance sheet so that net interest earnings at risk over a 12-month period and the economic value of equity at risk do not exceed policy guidelines at the various interest rate shock levels. We attempt to achieve this goal by balancing, within policy limits, the volume of floating-rate liabilities with a similar volume of floating-rate assets, by keeping the average maturity of fixed-rate asset and liability contracts reasonably matched, by managing the mix of our core deposits, and by adjusting our rates to market conditions on a continuing basis.

Analysis

The following table indicates that, for periods less than one year, rate-sensitive liabilities exceeded rate-sensitive assets, resulting in a slightly liability-sensitive position. For a bank with a liability-sensitive position, or negative gap, falling interest rates would generally be expected to have a positive effect on net interest income, and rising interest rates would generally be expected to have the opposite effect.

REPRICING GAP

September 30, 2019 (Dollars in thousands)

Within One Month

After One Month Through Three Months

After Three Months Through 12 Months

Within One Year

Greater than One Year or Nonsensitive

Total

Assets

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Interest earning assets

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Loans(1)

​

$

184,853

​

$

19,118

​

$

89,477

​

$

293,448

​

$

266,527

​

$

559,975

Securities

​

​

3,386

​

​

2,597

​

​

9,093

​

​

15,076

​

​

12,593

​

​

27,669

Interest-bearing deposits at other financial institutions

​

​

67,235

​

​

—

​

​

—

​

​

67,235

​

​

—

​

​

67,235

Federal funds sold

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Total interest earning assets

​

$

255,474

​

$

21,715

​

$

98,570

​

$

375,759

​

$

279,120

​

$

654,879

Liabilities

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Interest-bearing liabilities

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Interest-bearing deposits

​

$

3,133

​

$

184,254

​

$

—

​

$

187,387

​

$

—

​

$

187,387

Time deposits

​

​

8,456

​

​

66,738

​

​

109,447

​

​

184,641

​

​

58,570

​

​

243,211

Total interest-bearing deposits

​

​

11,589

​

​

250,992

​

​

109,447

​

​

372,028

​

​

58,570

​

​

430,598

Securities sold under agreements to repurchase

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

FHLB Advances

​

​

—

​

​

10,000

​

​

20,000

​

​

—

​

​

—

​

​

30,000

Other borrowed funds

​

​

—

​

​

—

​

​

—

​

​

—

​

​

9,710

​

​

9,710

Total interest-bearing liabilities

​

$

11,589

​

$

260,992

​

$

129,447

​

$

402,028

​

$

68,280

​

$

470,308

Period gap

​

$

243,885

​

$

(239,277)

​

$

(30,877)

​

$

(26,269)

​

$

210,840

​

​

​

Cumulative gap

​

$

243,885

​

$

4,608

​

$

(26,269)

​

$

(26,269)

​

$

184,571

​

​

​

Ratio of cumulative gap to total earning assets

​

​

95.46%

​

​

21.22%

​

​

(26.65)%

​

​

(6.99)%

​

​

66.13%

​

​

​

Ratio of cumulative gap to cumulative total earning assets

​

​

95.46%

​

​

1.66%

​

​

(6.99)%

​

​

(6.99)%

​

​

28.18%

​

​

​

(1)

Includes loans held for resale

262

CASH FLOW GAP

September 30, 2019 (Dollars in thousands)

Within One Month

After One Month Through Three Months

After Three Months Through 12 Months

Within One Year

Greater than One Year or Nonsensitive

Total

Assets

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Interest earning assets

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Loans(1)

​

$

4,880

​

$

15,469

​

$

61,034

​

$

81,383

​

$

478,592

​

$

559,975

Securities

​

​

—

​

​

—

​

​

1,003

​

​

1,003

​

​

26,666

​

​

27,669

Interest-bearing deposits at other financial institutions

​

​

67,235

​

​

—

​

​

—

​

​

67,235

​

​

—

​

​

67,235

Federal funds sold

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Total interest earning assets

​

$

72,115

​

$

15,469

​

$

62,037

​

$

149,621

​

$

505,258

​

$

654,879

Liabilities

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Interest-bearing liabilities

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Interest-bearing deposits

​

$

187,387

​

$

—

​

$

—

​

$

187,387

​

$

—

​

$

187,387

Time deposits

​

​

7,330

​

​

66,110

​

​

103,533

​

​

176,973

​

​

66,238

​

​

243,211

Total interest-bearing deposits

​

​

194,717

​

​

66,110

​

​

103,533

​

​

364,360

​

​

66,238

​

​

430,598

Securities sold under agreements to repurchase

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

FHLB Advances

​

​

—

​

​

10,000

​

​

20,000

​

​

30,000

​

​

—

​

​

30,000

Other borrowed funds

​

​

—

​

​

—

​

​

—

​

​

—

​

​

9,710

​

​

9,710

Total interest-bearing liabilities

​

$

194,717

​

$

76,110

​

$

123,533

​

$

394,360

​

$

75,948

​

$

470,308

Period gap

​

$

(122,602)

​

$

(60,641)

​

$

(61,496)

​

$

(244,739)

​

$

429,310

​

​

​

Cumulative gap

​

$

(122,602)

​

$

(183,243)

​

$

(244,739)

​

$

(244,739)

​

$

184,571

​

​

​

Ratio of cumulative gap to total earning assets

​

​

(170.01)%

​

​

(1,184.58)%

​

​

(394.50)%

​

​

(163.57)%

​

​

36.53%

​

​

​

(1)

Includes loans held for sale

Measures of net interest income at risk produced by simulation analysis are indicators of an institution’s short-term performance in alternative rate environments. These measures are typically based upon a relatively brief period, and do not necessarily indicate the long-term prospects or economic value of the institution.

The following table summarizes the results of our net interest income at risk analysis in simulating the change in net interest income and fair value of equity over a 12-month and 24-month horizon as of September 30, 2019, and December 31, 2018 and 2017.

Net Interest Income at Risk – 12 months

-300bps

-200bps

-100bps

Flat

+100bps

+200bps

+300bps

+400bps

Policy Limit

​

(20.00)%

​

(15.00)%

​

(10.00)%

​

N/A

​

10.00%

​

15.00%

​

30.00%

​

40.00%

September 30, 2019

​

(15.15)%

​

(14.22)%

​

(5.97)%

​

N/A

​

5.31%

​

10.41%

​

15.40%

​

20.54%

December 31, 2018

​

(18.65)%

​

(13.45)%

​

(4.79)%

​

N/A

​

3.26%

​

6.29%

​

9.22%

​

12.35%

December 31, 2017

​

(13.44)%

​

(12.05)%

​

(7.31)%

​

N/A

​

6.69%

​

13.24%

​

19.58%

​

26.02%

Net Interest Income at Risk – 24 months

-300bps

-200bps

-100bps

Flat

+100bps

+200bps

+300bps

+400bps

Policy Limit

​

(20.00)%

​

(15.00)%

​

(10.00)%

​

N/A

​

10.00%

​

15.00%

​

30.00%

​

40.00%

September 30, 2019

​

(17.40)%

​

(16.13)%

​

(5.89)%

​

N/A

​

4.74%

​

9.09%

​

13.19%

​

17.75%

December 31, 2018

​

(19.37)%

​

(12.48)%

​

(1.86)%

​

N/A

​

(0.63)%

​

(1.48)%

​

(2.73)%

​

(3.76)%

December 31, 2017

​

(16.13)%

​

(13.72)%

​

(6.96)%

​

N/A

​

5.82%

​

11.35%

​

16.48%

​

22.05%

263

Using an economic value of equity, or EVE, approach, we analyze the risk to capital from the effects of various interest rate scenarios through a long-term discounted cash flow model. This measures the difference between the economic value of our assets and the economic value of our liabilities, which is an estimate of our liquidation value. While this provides some value as a risk measurement tool, management believes net interest income at risk is more appropriate in accordance with the going concern principle.

The following table illustrates the results of our EVE analysis as of September 30, 2019 and December 31, 2018 and 2017.

Economic Value of Equity as of

-300bps

-200bps

-100bps

Flat

+100bps

+200bps

+300bps

+400bps

Policy Limit

​

(35.0)%

​

(30.0)%

​

(15.0)%

​

N/A

​

15.00%

​

30.00%

​

35.00%

​

35.00%

September 30, 2019

​

(15.27)%

​

(13.99)%

​

(8.23)%

​

N/A

​

3.96%

​

5.88%

​

5.12%

​

2.72%

December 31, 2018

​

(15.91)%

​

(7.75)%

​

(1.62)%

​

N/A

​

(2.00)%

​

(5.67)%

​

(11.22)%

​

(18.80)%

December 31, 2017

​

(28.58)%

​

(22.08)%

​

(7.78)%

​

N/A

​

4.68%

​

7.08%

​

7.16%

​

3.90%

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with GAAP and with general practices within the financial services industry. Application of these principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under current circumstances. These assumptions form the basis for our judgments about the carrying values of assets and liabilities that are not readily available from independent, objective sources. We evaluate our estimates on an ongoing basis. Use of alternative assumptions may have resulted in significantly different estimates. Actual results may differ from these estimates.

We have identified the following accounting policies and estimates that, due to the difficult, subjective, or complex judgments and assumptions inherent in those policies and estimates and the potential sensitivity of the financial statements to those judgments and assumptions, are critical to an understanding of our financial condition and results of operations. We believe that the judgments, estimates and assumptions used in the preparation of the consolidated financial statements are appropriate.

Allowance for Loan Losses

The allowance for loan losses provides for known and inherent losses in the loan portfolio based upon management’s best assessment of the loan portfolio at each balance sheet date. It is maintained at a level estimated to be adequate to absorb potential losses through periodic charges to the provision for loan losses.

The allowance for loan losses consists of specific and general reserves. Specific reserves relate to loans classified as impaired. Loans are considered impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due in accordance with the contractual terms of the loan. Impaired loans include troubled debt restructurings, and performing and nonperforming loans. Impaired loans are reviewed individually and a specific allowance is allocated, if necessary, based on evaluation of either the fair value of the collateral underlying the loan or the present value of future cash flows calculated using the loan’s existing interest rate. General reserves relate to the remainder of the loan portfolio, including overdrawn deposit accounts, and are based on evaluation of a number of factors, such as current economic conditions, the quality and composition of the loan portfolio, loss history, and other relevant factors.

Our loans are generally secured by specific items of collateral including real property, consumer assets, and business assets. However, the ability of borrowers to honor their contractual repayment obligations is substantially dependent on changing economic conditions. Because of the uncertainties associated with economic conditions, collateral values, and future cash flows on impaired loans, it is reasonably possible that management’s estimate of loan losses in the loan portfolio and the amount of the allowance needed may change in the future. The determination of the allowance for loan losses is, in large part, based on estimates that are particularly susceptible to significant changes in the economic environment and market conditions. In situations where the repayment of a loan is dependent on the value of the underlying collateral, an independent appraisal of the collateral’s current market value is customarily obtained and used in the determination of the allowance for loan loss.

264

While management uses available information to recognize losses on loans, further reductions in the carrying amounts of loans may be necessary based on changes in economic conditions. Also regulatory agencies, as an integral part of their examination process, periodically review management’s assessments of the adequacy of the allowance for loan losses. Such agencies may require us to recognize additional losses based on their judgments about information available to them at the time of their examination.

Fair Value Measurements

Fair value is the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for an asset or liability in an orderly transaction between market participants at the measurement date. The degree of management judgment involved in determining the fair value of a financial instrument is dependent upon the availability of quoted market prices or observable market inputs. For financial instruments that are traded actively and have quoted market prices or observable market inputs, there is minimal subjectivity involved in measuring fair value. However, when quoted market prices or observable market inputs are not fully available, significant management judgment may be necessary to estimate fair value. In developing our fair value estimates, we maximize the use of observable inputs and minimize the use of unobservable inputs.

The fair value hierarchy defines Level 1 valuations as those based on quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 valuations include inputs based on quoted prices for similar assets or liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Level 3 valuations are based on at least one significant assumption not observable in the market, or significant management judgment or estimation, some of which may be internally developed.

Financial assets that are recorded at fair value on a recurring basis include investment securities available for sale, and loans held for sale.

Recent Accounting Pronouncements

The following provides a brief description of accounting standards that have been issued but are not yet adopted that could have a material effect on the our financial statements. Please also refer to the Notes to our consolidated financial statements included in this joint proxy statement/prospectus for a full description of recent accounting pronouncements, including the respective expected dates of adoption and anticipated effects on our results of operations and financial condition.

ASU 2016-13, Financial Instruments — Credit Loses (Topic 326)

In June 2016, FASB issued guidance to replace the incurred loss model with an expected loss model, which is referred to as the current expected credit loss, or CECL, model. The CECL model is applicable to the measurement of credit losses on financial assets measured at amortized cost, including loan receivables and held to maturity debt securities. It also applies to off-balance sheet credit exposures not accounted for as insurance (i.e. loan commitments, standby letters of credit, financial guarantees and other similar instruments). We anticipated that this ASU would be effective for us on January 1, 2021, but the FASB announced on October 16, 2019, a delay of the effective date of ASU 2016-13 until January 1, 2023. We are in the process of evaluating and implementing changes to credit loss estimation models and related processes. Updates to business processes and the documentation of accounting policy decisions are ongoing. We may recognize an increase in the allowance for credit losses upon adoption, recorded as a one-time cumulative adjustment to retained earnings. However, the magnitude of the impact on our consolidated financial statements has not yet been determined. See “Supervision and Regulation — Current Expected Credit Losses.”

265

PRINCIPAL STOCKHOLDERS OF MARQUIS

The following table sets forth the beneficial ownership of Marquis voting stock as of            , 2020 by: (i) each person or entity who is known by Marquis to beneficially own more than 5% of the outstanding shares of Marquis voting stock; (ii) each director and executive officer of Marquis and Marquis Bank; and (iii) all directors and executive officers of Marquis as a group. Marquis is not aware of any other person who beneficially owns 5% or more of the aggregate Marquis voting stock, other than (i) Joseph Cohen (whose address is 526 Duval Street, Key West, Florida 33040) who owns 248,140 shares (7.26%) and (ii) Haim Yekezkel (whose address is c/o Elysee Investments, 210 71st Street, Miami, Florida 33141) who owns 190,000 shares (5.56%).

The percentage of beneficial ownership is calculated in relation to the 3,419,188 shares of Marquis voting stock and exercisable stock options. Beneficial ownership is determined in accordance with the rules of the SEC, which generally attribute beneficial ownership of securities to persons who possess sole or shared voting or investment power with respect to those securities, and includes shares issuable pursuant to the exercise of stock options that are exercisable within 60 days of                  , 2020. Unless otherwise indicated, to Marquis’s knowledge, the persons or entities identified in the table below have sole voting and investment power with respect to all shares shown as beneficially owned by them.

Beneficial Owner(a)	Number of shares of Marquis Voting Stock Beneficially Owned		Percent of Outstanding Shares of Marquis’s Voting Stock
Directors:	​	​	​	​
Paul B. Chaplin	​	60,847(b)	​	1.77%
Norman S. Edelcup	​	100,097(c)	​	2.90%
Philip J. Feldman	​	196,545(d)	​	5.64%
Jarret L. Gross	​	64,911(e)	​	1.86%
Javier Holtz	​	389,695(f)	​	10.87%
Miriam Lopez	​	126,170(g)	​	3.59%
Jeffrey M. Perlow	​	150,445(h)	​	4.32%
Hillel Shohet	​	247,272(i)	​	7.10%
Executive Officers (not listed above):	​	​	​	​
Filip Feller	​	9,167(j)	​	0.27%
Philip Gassman	​	46,001(k)	​	1.33%
All Directors and Executive Officers as a group (10 individuals)	​	1,391,151(l)	​	34.30%

(a)

The address of each of Marquis’s executive officers and directors is c/o Marquis Bancorp, Inc., 355 Alhambra Circle, Suite 1200, Coral Gables, Florida 33134.

(b)

Includes 40,662 shares held by the Paul B. Chaplin Revocable Trust and 20,185 shares which may be acquired by him pursuant to exercisable stock options. Dr. Chaplin owns a 25% interest in an entity which owns 163,250 shares of Marquis common stock and a 30% interest in an entity which owns 1,219 shares of Marquis common stock. The shares of these two entities are not included in Dr. Chaplin’s beneficial holdings as Dr. Chaplin does not have voting dispositive power over the shares.

(c)

Includes 61,858 shares held by him and 38,239 shares which may be acquired pursuant to exercisable stock options.

(d)

Includes 112,156 shares held by an affiliated entity, 16,128 shares held in his IRA, 5,350 shares held by his spouse’s IRA, and 62,911 shares which may be acquired pursuant to exercisable stock options. Mr. Feldman’s address is 1199 S. Federal Hwy, Suite 410, Boca Raton, Florida 33432.

(e)

Includes 2,000 shares held by an affiliated entity, and 62,911 shares which may be acquired pursuant to exercisable stock options.

266

(f)

Includes 202,527 shares held jointly with his spouse, 22,500 held by his IRA, and 164,668 shares which may be acquired pursuant to exercisable stock options. Mr. Holtz’s address is 28 Indian Creek Island Road, Indian Creek Village, Florida 33154.

(g)

Includes 32,338 shares held jointly with her spouse and 93,832 shares which may be acquired pursuant to exercisable stock options.

(h)

Includes 84,094 shares held jointly with his spouse, 3,440 shares held by his IRA, and 62,911 shares which may be acquired pursuant to exercisable stock options.

(i)

Includes 106,015 shares held by him, 78,346 shares held jointly with his spouse, and 62,911 shares which may be acquired pursuant to exercisable stock options.

(j)

Represents shares which may be acquired pursuant to exercisable stock options.

(k)

Includes 100 shares held by him and 45,901 shares which may be acquired pursuant to exercisable stock options.

(l)

Includes 623,637 exercisable stock options.

267

DESCRIPTION OF PROFESSIONAL’S CAPITAL STOCK

The following descriptions include summaries of the material terms of Professional’s amended and restated articles of incorporation and its amended and restated bylaws as will be in effect upon completion of the merger. Reference is made to the more detailed provisions of, and the descriptions are qualified in their entirety by reference to, the articles of incorporation and bylaws, copies of which will be filed as exhibits to the registration statement of which this joint proxy statement/prospectus is a part, and applicable law.

General

Professional is incorporated in the State of Florida. The rights of Professional’s shareholders are generally governed by Florida law and Professional’s articles of incorporation and bylaws (each as may be amended and restated from time to time). The terms of Professional’s capital stock are therefore subject to Florida law, including the FBCA, and the common and constitutional law of Florida.

Professional’s articles of incorporation authorize it to issue up to 50,000,000 shares of Class A common stock, par value $0.01 per share, 10,000,000 shares of Class B common stock, par value $0.01 per share, and 10,000,000 shares of preferred stock, par value $0.01 per share. The authorized but unissued shares of Professional’s capital stock are available for future issuance without shareholder approval, unless otherwise required by applicable law or the rules of any applicable securities exchange.

Common Stock

Shares Outstanding.   As of December 31, 2019, there were 5,115,262 shares of Professional’s Class A common stock and 752,184 shares of its Class B common stock outstanding held by approximately 325 shareholders of record. As of December 31, 2019, Professional had 200,784 shares of its Class A common stock available for issuance in connection with stock-based awards that may be granted under its 2019 Plan and 152,100 shares of its Class A common stock subject to outstanding stock options issued and 35,914 shares available for issuance under its 2016 Plan. Professional has also reserved up to 2,000,000 shares of its Class A common stock for issuance under its 2014 Associate Stock Purchase Plan. In connection with the merger, Professional expects to issue approximately [      ] shares of its Class A common stock to former holders of Marquis common stock as consideration in the merger.

Voting.   Each holder of Professional Class A common stock is entitled to one vote on all matters submitted to a vote of shareholders, except as otherwise required by law and subject to the rights and preferences of the holders of any outstanding shares of our preferred stock. Holders of Professional Class B common stock are not entitled to vote on any matters submitted to a vote of shareholders, except as otherwise required by law. The members of Professional’s Board are divided into three classes serving staggered three-year terms and are elected by a plurality of the votes cast. The Professional articles of incorporation expressly prohibit cumulative voting. In connection with the merger, each of Professional’s directors, except Mr. Schutz who does not own any shares directly, and RMB Capital, which Mr. Schutz is affiliated with, entered into voting agreements pursuant to which each of them agreed to vote all shares beneficially owned by them in favor of the transaction at the special meeting of shareholders to be held for such purpose. See “Certain Relationships and Related Party Transactions — Voting Agreements” and “Information about the Professional Special Meeting — Shares Subject to Voting Agreements; Shares Held by Directors and Executive Officers” for additional details.

Dividends and Other Distributions.   Subject to certain regulatory restrictions and restrictions under the merger agreement and terms of Marquis’s subordinated notes due 2026 which Professional will assume in connection with the merger, and to the rights of holders of any preferred stock that Professional may issue, all shares of Professional common stock, including its Class A common stock and Class B common stock, are entitled to share equally in dividends when, as, and if declared by the Professional Board. Upon any voluntary or involuntary liquidation, dissolution or winding up of Professional’s affairs, all shares of its common stock would be entitled to share equally in all of our remaining assets available for distribution to Professional shareholders after payment of creditors and subject to any prior distribution rights related to Professional preferred stock. Professional has never paid any cash dividends on its common stock and does not intend to pay dividends for the foreseeable future.

268

The Federal Reserve has established guidelines with respect to the maintenance of appropriate levels of capital by registered bank holding companies such as Professional. Compliance with such standards, as presently in effect, or as they may be amended from time to time, could possibly limit the amount of dividends that Professional may pay in the future. In 1985, the Federal Reserve issued a policy statement on the payment of cash dividends by bank holding companies. In the statement, the Federal Reserve expressed its view that a holding company experiencing earnings weaknesses should not pay cash dividends exceeding its net income, or which could only be funded in ways that weaken the holding company’s financial health, such as by borrowing. Professional’s ability to pay dividends and make other distributions to its shareholders depends in part upon the receipt of dividends from Professional Bank and is limited by federal law. Professional Bank is a legal entity separate and distinct from Professional. As a depository institution, the deposits of which are insured by the FDIC, Professional Bank’s primary federal regulator, the Federal Reserve, is authorized, and under certain circumstances is required, to determine that the payment of dividends or other distributions by a bank would be an unsafe or unsound practice and to prohibit that payment. The Florida Financial Institutions Code generally allows a Florida bank to pay dividends on common stock up to an amount equal to the bank’s retained earnings for the prior two fiscal years, plus the amount of any net profits for the current year-to-date period. Additionally, the Federal Deposit Insurance Act, or FDIA, generally prohibits an insured depository institution from making any capital distribution (including payment of a dividend) or paying any management fee to its parent holding company if the depository institution would thereafter be undercapitalized. See “Supervision and Regulation — Dividends.”

Preemptive Rights.   Professional’s articles of incorporation prohibit holders of its common stock from having preemptive or subscription rights to acquire any part of any new or additional issue of stock of any class whether now or hereafter authorized, or of any bond, debentures, notes or other securities. However, in connection with Professional’s 2017 offering, Professional entered into letter agreements pursuant to which it agreed to provide contractual preemptive rights to certain shareholders in that offering. Pursuant to the letter agreements, the contractual preemptive rights will cease upon the closing of Professional’s initial public offering resulting in gross proceeds of at least $25 million.

Right to Exchange Class B Common Stock.   Professional has entered into agreements with the institutional investors that, among other things, permit such holders to exchange all or a portion of their shares of Class B common stock for an equal number of shares of Class A common stock if  (i) the Professional Board approves the exchange and the exchange would not result in such institutional investor or its affiliates owning greater than 9.9% of the Class A common stock or (ii) upon the consummation of (a) a transfer pursuant to a widely distributed public offering, (b) a transfer in which no transferee acquires greater than two percent of the Class A common stock, (c) a transfer to a person that beneficially owns greater than 50% of Professional’s issued and outstanding Class A common stock or (d) a transfer approved by the Federal Reserve.

Restrictions on Ownership.   The BHC Act generally permits a company to acquire control of Professional with the prior approval of the Federal Reserve. However, any such company is restricted to banking activities, other activities closely related to the banking business as determined by the Federal Reserve and, for some companies, certain other financial activities. The BHC Act defines control in general as ownership of 25% or more of any class of voting securities, the authority to appoint a majority of the board or other exercise of a controlling influence. Federal Reserve regulations provide that a company that owns less than 5% of the outstanding shares a class of voting securities of a bank holding company is presumed not to control the bank holding company. As a supervisory matter, if a company owns more than 7.5% of a class of voting securities, the Federal Reserve expects the company to consult with the agency and in some cases will require the company to enter into passivity or anti-association commitments. Separately, an individual or company that is not required to register as a bank holding company that acquires 10% or more of a class of voting securities of a bank holding company is presumed, if the bank holding company has registered securities under Section 12 of the Exchange Act or if the investor would be the largest holder of that class of securities, to have acquired control and may be required to file a change in control notice with the Federal Reserve under the CBCA.

Preferred Stock

Under Professional’s articles of incorporation, upon authorization of the Professional Board, Professional may issue shares of one or more series of its preferred stock from time to time. The

269

Professional Board may, without any action by holders of our common stock or, except as may be otherwise provided in the terms of any series of preferred stock of which there are shares outstanding, holders of preferred stock, adopt resolutions to designate and establish a new series of preferred stock. Upon establishing such a series of preferred stock, the Professional Board will determine the number of shares of preferred stock of that series that may be issued and the rights and preferences of that series of preferred stock. The Professional Board has not designated or established any series of preferred stock.

The rights of any series of preferred stock may include, among others:

•

general or special voting rights;

•

preferential liquidation or preemptive rights;

•

preferential cumulative or noncumulative dividend rights;

•

redemption or put rights; and

•

conversion or exchange rights.

Professional may issue shares of, or rights to purchase shares of, one or more series of its preferred stock that have been designated from time to time, the terms of which might:

•

adversely affect voting or other rights evidenced by, or amounts otherwise payable with respect to, the common stock or other series of preferred stock;

•

discourage an unsolicited proposal to acquire Professional; or

•

facilitate a particular business combination involving Professional.

The existence of shares of authorized undesignated preferred stock enables Professional to meet possible contingencies or opportunities in which the issuance of shares of preferred stock may be advisable, such as in the case of acquisition or financing transactions. Having shares of preferred stock available for issuance gives Professional flexibility in that it would allow Professional to avoid the expense and delay of calling a meeting of shareholders at the time the contingency or opportunity arises. Any issuance of preferred stock with voting rights or which is convertible into voting shares could adversely affect the voting power of the holders of the Class A common stock.

Any of these actions could have an anti-takeover effect and discourage a transaction that some or a majority of the Professional shareholders might believe to be in their best interests or in which the Professional shareholders might receive a premium for their shares over Professional’s then market price.

Anti-Takeover Effects of Provisions of Professional’s Articles of Incorporation, Bylaws and Florida Law

The provisions of the FBCA and Professional’s articles of incorporation and bylaws could have the effect of discouraging others from attempting an unsolicited offer to acquire Professional. Such provisions may also have the effect of preventing changes in Professional’s management. It is possible that these provisions could make it more difficult to accomplish transactions that shareholders may otherwise deem to be in their best interests.

Election and Removal of Directors.   Pursuant to Professional’s bylaws, the Professional Board is divided into three classes with terms ending at the annual meetings of shareholders in 2020, 2021 and 2022, respectively. Upon completion of their respective terms, each class of directors will be elected for a three-year term. Professional’s articles of incorporation provide that the directors may be removed only by the affirmative vote of at least 66⅔% of Professional’s then-outstanding Class A common stock and only for cause. For more information on the terms of Professional’s directors, see the section entitled “Management of Professional — Board of Directors.” This system of electing and removing directors generally makes it more difficult for shareholders to replace a majority of Professional’s directors.

Authorized But Unissued Shares.   The authorized but unissued shares of Professional’s common stock and its preferred stock will be available for future issuance without any further vote or action by Professional shareholders. These additional shares may be utilized for a variety of corporate purposes, including future public offerings to raise additional capital, corporate acquisitions and employee benefit

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plans. The existence of authorized but unissued shares of Professional’s common stock and its preferred stock could render more difficult or discourage an attempt to obtain control over Professional by means of a proxy contest, changes in our management, tender offer, merger or otherwise.

Shareholders Action; Advance Notification of Shareholder Nominations and Proposals.   Professional’s articles of incorporation and bylaws require that any action required or permitted to be taken by its shareholders must be effected at a duly called annual or special meeting of shareholders and may not be effected by written consent. Professional’s articles of incorporation and bylaws also require that special meetings of shareholders be called by holders of at least 50% of all votes entitled to be cast on the issue proposed to be considered at the special meeting by signing, dating and delivering to Professional’s secretary one or more written demands for the meeting that describes the purpose for which the meeting is to be held. In addition, Professional’s bylaws allow special meetings of the shareholders to be held when directed by the Chairman of the Board, the President or the Board of Directors. In addition, Professional’s bylaws provide that candidates for director may be nominated by Professional’s Board or by any shareholder of any outstanding class of Professional’s capital stock entitled to vote for the election of directors. Nominations by shareholders shall be in writing to Professional’s secretary and shall be delivered to or mailed and received at Professional’s principal executive offices not less than 120 days and not more than 180 days prior to the date of the notice of annual meeting provided with respect to the previous year’s annual meeting. Professional may require any proposed nominee for election at an annual or special meeting of shareholders to furnish such other information as may reasonably be required to determine the eligibility of such proposed nominee to serve as a director of Professional. The Chairman of the meeting shall, if the facts warrant, determine and declare in the meeting that a nomination was not made in accordance with the requirements of the articles of incorporation and bylaws, and if he or she should so determine, he or she shall so declare to the meeting and the defective nomination shall be disregarded. These provisions may have the effect of deterring unsolicited offers to acquire Professional or delaying changes in Professional’s management, which could depress the market price of the Class A common stock.

Amendment of Certain Provisions in Professional’s Organizational Documents.   The amendment of provisions contained within Professional’s articles of incorporation that are (i) inconsistent with the bylaws or (i) contained in (a) Article IV(B) related to the designation of rights and authorized number of preferred stock, (b) Article V regarding action by shareholders without a meeting, (c) Article VI related to special meetings of shareholders, (d) Article VIII(B) regarding board vacancies, (e) Article VIII(C) related to the removal of directors, (f) Article IX regarding the power of amending the bylaws resting with the Professional Board, and (g) Article X regarding amending the articles of incorporation, would require approval by holders of at least 66 2∕3% of the voting power of all of the then outstanding shares of the capital stock then entitled to vote. Professional’s Board may generally amend the bylaws, from time to time, by majority approval except as otherwise required under the FBCA. These provisions may have the effect of deterring unsolicited offers to acquire Professional or delaying changes in Professional’s governance, which could depress the market price of the Class A common stock.

No Cumulative Voting.   The FBCA provides that shareholders are not entitled to the right to cumulate votes in the election of directors unless the articles of incorporation provide otherwise. Professional’s articles of incorporation expressly prohibit cumulative voting.

Exclusive Forum for Certain Shareholder Actions.   As described below under the heading “Exclusive Forum for Certain Shareholder Proceedings,” Professional’s articles of incorporation were amended to include an exclusive forum provision. This provision provides that the state and federal courts in or for Miami-Dade County, Florida or Palm Beach County, Florida, will be the exclusive forums for certain actions. Any person purchasing or otherwise acquiring any interest in Professional’s shares will be deemed to have notice of and have consented to the forum selection clause contained in the articles of incorporation. This amendment is intended to reduce the risks and costs associated with multijurisdictional litigation and “forum shopping” by plaintiffs by limiting potential plaintiffs’ ability to initiate proceedings of the type described above in courts outside of Miami-Dade and Palm Beach County. However, this provision may limit the ability of a shareholder to bring lawsuits in the shareholder’s preferred venue or make it more difficult or expensive to litigate the foregoing matters. Alternatively, if a court were to find the exclusive forum provision to be inapplicable or unenforceable in an action, Professional may incur additional costs associated with resolving such action in jurisdictions outside of Florida, which could have a

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material adverse effect on Professional’s business, financial condition, results of operations and growth prospects. The Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce duties or liabilities created by the Exchange Act. Federal courts have concurrent jurisdiction over all suits brought to enforce any duty or liability arising under the Securities Act. We note that there is uncertainty as to whether a court would enforce the exclusive forum provision with regard to any claim over which federal courts may have exclusive jurisdiction because investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder. Therefore, it is uncertain whether the exclusive forum provision would apply to claims under the Securities Act or Exchange Act. Although Professional believes this provision benefits Professional, it may have the effect of discouraging lawsuits against Professional’s directors and officers..

Florida Law and Federal Banking Laws.   The FBCA contains a control-share acquisition statute that provides that a person who acquires shares in an “issuing public corporation,” as defined in the statute, in excess of certain specified thresholds generally will not have any voting rights with respect to such shares unless such voting rights are approved by each class or series entitled to vote separately on the proposal by a majority of all the votes entitled to be cast by the class or series, with holders of the outstanding shares of a class or series being entitled to vote as a separate class if the proposed control-share acquisition would, if fully carried out, result in certain changes specified under the statute and each class or series entitled to vote separately on the proposal by a majority of all the votes entitled to be cast by that group, excluding shares held or controlled by the acquiring person.

The FBCA also provides that an “affiliated transaction” between a Florida corporation with an “interested shareholder,” as those terms are defined in the statute, generally must be approved by the board of directors and by the affirmative vote of the holders of two-thirds of the outstanding voting shares, other than the shares beneficially owned by the interested shareholder. The FBCA defines an “interested shareholder” as any person who is the beneficial owner of 10% or more of the outstanding voting shares of the corporation subject to certain exceptions. However, during the 2019 legislative session, the Florida legislature passed a bill amending the FBCA, including the provisions thereof related to affiliated transactions. The amendments to the FBCA, which will take effect on January 1, 2020, revise the definition of an “interested shareholder” to mean any person who is the beneficial owner of 15% or more of the outstanding voting shares of the corporation, subject to certain exceptions.

Furthermore, the BHC Act and the CBCA banking laws impose notice, application and approvals and ongoing regulatory requirements on any shareholder or other party that seeks to acquire direct or indirect “control” of bank holding companies. These laws could delay or prevent an acquisition.

Limitation of Liability and Indemnification

In addition to requirements under the FBCA, Professional’s bylaws also provide that Professional shall indemnify its directors, officers, and employees, and may indemnify agents, from any expenses, liabilities or other matters and are similar to the current provisions of the FBCA with respect to indemnification. Professional’s bylaws provide that indemnification or advancement of expenses shall not be made to or on behalf of any director, officer, employee or agent if a judgment or other final adjudication establishes that his or her actions, or omissions to act, were material to the cause of action so adjudicated and such person failed to comply with the required standards of conduct. The limitation of liability and indemnification provisions in Professional’s bylaws may discourage shareholders from bringing a lawsuit against directors for breach of their fiduciary duties and may reduce the likelihood of derivative litigation against directors and officers.

Additionally, Professional has entered into indemnification agreements with each of its directors that contractually obligate Professional to indemnify its directors to the fullest extent permitted under applicable law. These agreements generally require both Professional and Professional Bank to indemnify each director if the director is, or is threatened to be made, a party to or a participant in any proceeding, other than a proceeding by or in the right of Professional or Professional Bank to procure a judgment in the favor of Professional or Professional Bank or a proceeding by a federal banking agency if the director acted in good faith and in a manner the director reasonably believed to be in, or not opposed to, the best interests of Professional or Professional Bank, as applicable, and, in the case of a criminal action or proceeding, had no reasonable cause to believe that the director’s conduct was unlawful. Each director is further required to be

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indemnified for all expenses reasonably incurred by the director or on behalf of the director if the director is, or is threatened to be made, a party to or a participant in any proceeding by or in the right of Professional or Professional Bank to procure a judgment in favor of Professional or Professional Bank, provided that the director acted in good faith and in a manner such director reasonably believed to be in, or not opposed to, the best interests of Professional or Professional Bank. Notwithstanding the foregoing, no indemnification is available to a director in respect of any claim, issue or matter as to which the director is finally adjudged by a court to be liable to Professional, Professional Bank or both, as the case may be, unless and only to the extent that the court in which the proceeding was brought determines that, despite the adjudication of liability but in view of all the circumstances of the case, the director is fairly and reasonably entitled to indemnification for such expenses. The indemnification agreements also generally provide for indemnification of expenses in connection with certain specific scenarios, including proceedings by federal banking regulators, subject to certain customary exclusions. The indemnification agreements also obligate Professional and Professional Bank to advance expenses to a director, subject to the director’s obligation to repay the advance if and to the extent it is determined that the director is not entitled to be indemnified by Professional or Professional Bank. A shareholder’s investment may be harmed to the extent Professional pays the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions.

Professional has also agreed to indemnify former officers, directors, and employees of Marquis and its subsidiaries against all costs and expenses (including attorney’s fees), judgments, fines, losses, claims, damages, settlements or liabilities as incurred in connection with any claim arising out of actions or omissions of such persons in the course of performing their duties for Marquis occurring at or before the effective time of the merger, to the greatest extent as such persons are indemnified or have the right to the advancement of expenses pursuant to (i) Marquis’s articles of incorporation and bylaws or the comparable organization documents of Marquis Bank, each as in effect on the date of the merger agreement, and (ii) the FBCA.

To the extent that indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons, we have been advised that, in the opinion of the SEC, this indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. Finally, our ability to provide indemnification to our directors and officers is limited by federal banking laws and regulations.

Exclusive Forum for Certain Shareholder Proceedings

On April 19, 2019, Professional’s articles of incorporation were amended to include an exclusive forum provision. This provision provides that the state and federal courts in or for Miami-Dade County, Florida or Palm Beach County, Florida, will be the exclusive forums for (i) any action or proceeding asserting a claim for breach of a fiduciary duty owed by any current or former director, officer, employee, or agent of Professional to Professional or Professional’s shareholders; (ii) any derivative action or proceeding brought on behalf of Professional; (iii) any action or proceeding asserting a claim arising pursuant to any provision of the FBCA, or the Professional articles of incorporation or bylaws; or (iv) any action or proceeding asserting a claim governed by the internal affairs doctrine (not included in clauses (i) through (iii)); provided that if such state and federal courts lack personal or subject matter jurisdiction over an action, the sole and exclusive forum for such proceeding will be in another court located in Florida. Any person purchasing or otherwise acquiring any interest in Professional’s shares will be deemed to have notice of and have consented to the forum selection clause contained in the articles of incorporation.

This amendment was intended to reduce the risks and costs associated with multijurisdictional litigation and “forum shopping” by plaintiffs by limiting potential plaintiffs’ ability to initiate proceedings of the type described above in courts outside of Miami-Dade and Palm Beach Counties. However, this provision may limit the ability of a shareholder to bring lawsuits in the shareholder’s preferred venue or make it more difficult or expensive to litigate the foregoing matters. Alternatively, if a court were to find the exclusive forum provision to be inapplicable or unenforceable in an action, Professional may incur additional costs associated with resolving such action in jurisdictions outside of Florida, which could have a material adverse effect on Professional’s business, financial condition, results of operations and growth prospects. The Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce duties or

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liabilities created by the Exchange Act. Federal courts have concurrent jurisdiction over all suits brought to enforce any duty or liability arising under the Securities Act. We note that there is uncertainty as to whether a court would enforce the exclusive forum provision with regard to any claim over which federal courts may have exclusive federal jurisdiction because investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder. Therefore, it is uncertain whether the exclusive forum provision would apply to claims under the Securities Act or Exchange Act. Although Professional believes this provision benefits Professional, it may have the effect of discouraging lawsuits against Professional’s directors and officers.

Listing

Professional has applied to list its Class A common stock on the Nasdaq Global Market under the symbol “PFHD.” Professional has agreed to cause the shares of Professional Class A common stock to be issued to the holders of Marquis common stock in the merger to be authorized for listing on the Nasdaq Global Market, subject to official notice of issuance, prior to the effective time of the merger.

Transfer agent and registrar

Computershare N.A. serves as Professional’s transfer agent and registrar for its Class A common stock.

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SUPERVISION AND REGULATION

Unless the context requires otherwise, references in this “Supervision and Regulation” section of this joint proxy statement/prospectus to the “Company,” “we,” “us,” or “our” refer to Professional and its wholly owned subsidiaries on a consolidated basis, and references to the “Bank” refer to Professional Bank.

We must comply with state and federal banking laws and regulations that control virtually all aspects of our operations. These laws and regulations generally aim to protect our depositors, not necessarily our shareholders or our creditors. Any changes in applicable laws or regulations may materially affect our business and prospects. Proposed legislative or regulatory changes may also affect our operations. The following description summarizes some of the laws and regulations to which we are subject. References to applicable statutes and regulations are brief summaries, do not purport to be complete, and are qualified in their entirety by reference to such statutes and regulations.

Professional Holding Corp.

We are registered with the Board of Governors of the Federal Reserve as a financial holding company under the Bank Holding Company Act of 1956, or BHC Act. As a result, we are subject to supervisory regulation and examination by the Federal Reserve. The Gramm-Leach-Bliley Act, the BHC Act, and other federal laws subject financial holding companies to particular restrictions on the types of activities in which they may engage, and to a range of supervisory requirements and activities, including regulatory enforcement actions for violations of laws and regulations.

Permitted Activities

The Gramm-Leach-Bliley Act modernized the U.S. banking system by: (i) allowing bank holding companies that qualify as “financial holding companies,” such as Professional Holding Corp., to engage in a broad range of financial and related activities; (ii) allowing insurers and other financial service companies to acquire banks; (iii) removing restrictions that applied to bank holding company ownership of securities firms and mutual fund advisory companies; and (iv) establishing the overall regulatory scheme applicable to bank holding companies that also engage in insurance and securities operations. The general effect of the law was to establish a comprehensive framework to permit affiliations among commercial banks, insurance companies, securities firms, and other financial service providers. Activities that are financial in nature are broadly defined to include not only banking, insurance, and securities activities, but also merchant banking and additional activities that the Federal Reserve, in consultation with the Secretary of the Treasury, determines to be financial in nature, incidental to such financial activities, or complementary activities that do not pose a substantial risk to the safety and soundness of depository institutions or the financial system generally.

In contrast to financial holding companies, bank holding companies are limited to managing or controlling banks, furnishing services to or performing services for its subsidiaries, and engaging in other activities that the Federal Reserve determines by regulation or order to be so closely related to banking or managing or controlling banks as to be a proper incident thereto. In determining whether a particular activity is permissible, the Federal Reserve must consider whether the performance of such an activity reasonably can be expected to produce benefits to the public that outweigh possible adverse effects. Possible benefits include greater convenience, increased competition, and gains in efficiency. Possible adverse effects include undue concentration of resources, decreased or unfair competition, conflicts of interest, and unsound banking practices. Despite prior approval, the Federal Reserve may order a bank holding company or its subsidiaries to terminate any activity or to terminate ownership or control of any subsidiary when the Federal Reserve has reasonable cause to believe that a serious risk to the financial safety, soundness or stability of any bank subsidiary of that bank holding company may result from such an activity.

Changes in Control

Subject to certain exceptions, the BHC Act and the CBCA, together with the applicable regulations, require Federal Reserve approval (or, depending on the circumstances, no notice of disapproval) prior to any acquisition of  “control” of a bank or bank holding company. Under the BHC Act, a company (a broadly defined term that includes partnerships among other things) that acquires the power, directly or

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indirectly, to direct the management or policies of an insured depository institution or to vote 25% or more of any class of voting securities of any insured depository institution is deemed to control the institution and to be a bank holding company. A company that acquires less than 5% of any class of voting security (and that does not exhibit the other control factors) is presumed not to have control. For ownership levels between the 5% and 25% thresholds, the Federal Reserve has developed an extensive body of law on the circumstances in which control may or may not exist. The current guidance includes a 2008 policy statement on minority equity investments in banks and bank holding companies that generally permits investors to (i) acquire up to 33% of the total equity of a target bank or bank holding company, subject to certain conditions, including (but not limited to) that the investing firm does not acquire 15% or more of any class of voting securities, and (ii) designate at least one director, without triggering the various regulatory requirements associated with control. In April 2019, the Federal Reserve proposed several changes to its control rules under the BHC Act; when or if this proposal will be finalized is unknown.

Under the CBCA, if an individual or a company that acquires 10% or more of any class of voting securities of an insured depository institution or its holding company and either that institution or company has registered securities under Section 12 of the Exchange Act, or no other person will own a greater percentage of that class of voting securities immediately after the acquisition, then that investor is presumed to have control and may be required to file a change in bank control notice with the institution’s or the holding company’s primary federal regulator. Our Class A Common Stock is registered under Section 12 of the Exchange Act.

As a financial holding company, we are required to obtain prior approval from the Federal Reserve before (i) acquiring all or substantially all of the assets of a bank or bank holding company, (ii) acquiring direct or indirect ownership or control of more than 5% of the outstanding voting stock of any bank or bank holding company (unless we own a majority of such bank’s voting shares), or (iii) acquiring, merging or consolidating with any other bank or bank holding company. In determining whether to approve a proposed bank acquisition, federal bank regulators will consider, among other factors, the effect of the acquisition on competition, the public benefits expected to be received from the acquisition, the projected capital ratios and levels on a post-acquisition basis, and the companies records of addressing the credit needs of the communities they serve, including the needs of low and moderate income neighborhoods, consistent with the safe and sound operation of the bank, under the Community Reinvestment Act of 1977.

Under Florida law, a person or entity proposing to directly or indirectly acquire control of a Florida bank must also obtain permission from the Florida Office of Financial Regulation. Florida statutes define “control” as either (i) indirectly or directly owning, controlling or having power to vote 25% or more of the voting securities of a bank; (ii) controlling the election of a majority of directors of a bank; (iii) owning, controlling, or having power to vote 10% or more of the voting securities as well as directly or indirectly exercising a controlling influence over management or policies of a bank; or (iv) as determined by the Florida Office of Financial Regulation. These requirements affect us because the Bank is chartered under Florida law and changes in control of the Company are indirect changes in control of the Bank.

Tying

Financial holding companies and their affiliates are prohibited from tying the provision of certain services, such as extending credit, to other services or products offered by the holding company or its affiliates, such as deposit products.

Capital; Dividends; Source of Strength

The Federal Reserve imposes certain capital requirements on financial holding companies under the BHC Act, including a minimum leverage ratio and a minimum ratio of  “qualifying” capital to risk-weighted assets. These requirements are described below under “Capital Regulations.” Subject to its capital requirements and certain other restrictions, we are generally able to borrow money to make a capital contribution to the Bank, and such loans may be repaid from dividends paid from the Bank to us. We are also able to raise capital for contributions to the Bank by issuing securities without having to receive regulatory approval, subject to compliance with federal and state securities laws.

It is the Federal Reserve’s policy that bank holding companies should generally pay dividends on common stock only out of income available over the past year, and only if prospective earnings retention is

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consistent with the organization’s expected future needs and financial condition. It is also the Federal Reserve’s policy that bank holding companies should not maintain dividend levels that undermine their ability to be a source of strength to its banking subsidiaries. Additionally, the Federal Reserve has indicated that bank holding companies should carefully review their dividend policies and has discouraged payment ratios that are at maximum allowable levels unless both asset quality and capital are very strong. The Federal Reserve possesses enforcement powers over bank holding companies and their non-bank subsidiaries to prevent or remedy actions that represent unsafe or unsound practices or violations of applicable statutes and regulations. Among these powers is the ability to proscribe the payment of dividends by banks and bank holding companies.

Bank holding companies are expected to consult with the Federal Reserve before redeeming any equity or other capital instrument included in tier 1 or tier 2 capital prior to stated maturity, if such redemption could have a material effect on the level or composition of the organization’s capital base. In addition, a bank holding company may not repurchase shares equal to 10% or more of its net worth if it would not be well-capitalized (as defined by the Federal Reserve) after giving effect to such repurchase. Bank holding companies experiencing financial weaknesses, or that are at significant risk of developing financial weaknesses, must consult with the Federal Reserve before redeeming or repurchasing common stock or other regulatory capital instruments.

In accordance with Federal Reserve policy, which has been codified by the Dodd-Frank Act, we are expected to act as a source of financial strength to the Bank and to commit resources to support the Bank in circumstances in which we might not otherwise do so. In furtherance of this policy, the Federal Reserve may require a financial holding company to terminate any activity or relinquish control of a non-bank subsidiary (other than a non-bank subsidiary of a bank) upon the Federal Reserve’s determination that such activity or control constitutes a serious risk to the financial soundness or stability of any subsidiary depository institution of the financial holding company. Further, federal bank regulatory authorities have additional discretion to require a financial holding company to divest itself of any bank or non-bank subsidiary if the agency determines that divestiture may aid the depository institution’s financial condition.

Safe and Sound Banking Practices

Bank holding companies and their non-banking subsidiaries are prohibited from engaging in activities that represent unsafe and unsound banking practices or that constitute a violation of law or regulations. Under certain conditions the Federal Reserve may conclude that certain actions of a bank holding company, such as a payment of a cash dividend, would constitute an unsafe and unsound banking practice. The Federal Reserve also has the authority to regulate the debt of bank holding companies, including the authority to impose interest rate ceilings and reserve requirements on such debt. Under certain circumstances the Federal Reserve may require a bank holding company to file written notice and obtain its approval prior to purchasing or redeeming its equity securities, unless certain conditions are met.

Professional Bank

Professional Bank is a state-chartered commercial banking institution that is chartered by and headquartered in the State of Florida, and is subject to supervision and regulation by the Florida Office of Financial Regulation. The Florida Office of Financial Regulation supervises and regulates all areas of our operations including, without limitation, the making of loans, the issuance of securities, the conduct of our corporate affairs, and the satisfaction of capital adequacy requirements, the payment of dividends, and the establishment or closing of banking centers. We are also a member bank of the Federal Reserve System, which makes our operations subject to broad federal regulation and oversight by the Federal Reserve. In addition, our deposit accounts are insured by the FDIC up to the maximum extent permitted by law, and the FDIC has certain supervisory and enforcement powers over us.

As a state-chartered bank in the State of Florida, we are empowered by statute, subject to the limitations contained in those statutes, to take and pay interest on, savings and time deposits, to accept demand deposits, to make loans on residential and other real estate, to make consumer and commercial loans, to invest, with certain limitations, in equity securities and in debt obligations of banks and corporations and to provide various other banking services for the benefit of our clients. Various consumer laws and regulations also affect our operations, including state usury laws, laws relating to fiduciaries,

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consumer credit and equal credit opportunity laws, and fair credit reporting. In addition, the Federal Deposit Insurance Corporation Improvement Act of 1991, or FDICIA, prohibits insured state chartered institutions from conducting activities as principal that are not permitted for national banks. A bank, however, may engage in an otherwise prohibited activity if it meets its minimum capital requirements and the FDIC determines that the activity does not present a significant risk to the Deposit Insurance Fund.

Economic Growth Act

The Economic Growth Act, which was signed into law in May 2018, provides certain limited amendments to the Dodd-Frank Act, as well as certain targeted modifications to prior financial services reform regulatory requirements. As a result of the Economic Growth Act, we expect to experience the rollback of some of the more burdensome requirements resulting from the Dodd-Frank Act. Provisions in the Economic Growth Act generally address access to mortgage credit; consumer access to credit; protections for veterans, consumers, and homeowners; and protections for student borrowers. One of the Economic Growth Act’s highlights with potential implications for us is its increase in the asset threshold under the Federal Reserve’s Small Bank Holding Company Policy Statement from $1.0 billion to $3.0 billion. Another potentially significant provision is the Economic Growth Act’s requirement that the federal bank regulatory agencies adopt a threshold for a community bank leverage ratio, or CBLR, of not less than 8.0% and not more than 10.0% for banking organizations with $10.0 billion or less in total consolidated assets and that meet certain other conditions. A qualifying organization that satisfies the CBLR is deemed to satisfy the capital rules and to be well-capitalized for the purpose of the prompt corrective action regulations, subject to certain exceptions. The agencies have proposed a CBLR of 9.0%, but we do not know if or when the agencies will finalize the proposal. A number of the other specific provisions of this legislation are discussed in other parts of this “Supervision and Regulation” section.

At this time, it is difficult to anticipate the continued impact this expansive legislation will have on our business, our clients, and the financial industry generally. Changes resulting from further implementation of, changes to or repeal of the Dodd-Frank Act may impact the profitability of our business activities, require changes to certain of our business practices, impose upon us more stringent capital, liquidity and leverage requirements, or otherwise adversely affect our business. These changes may also require us to invest significant management attention and resources to evaluate and make any changes necessary to comply with new statutory and regulatory requirements. Failure to comply with any new requirements may negatively impact our results of operations and financial condition.

Safety and Soundness Standards / Risk Management

The federal banking agencies have adopted guidelines establishing operational and managerial standards to promote the safety and soundness of federally insured depository institutions. The guidelines set forth standards for internal controls, information systems, internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth, compensation, fees and benefits, asset quality and earnings.

In general, the safety and soundness guidelines prescribe the goals to be achieved in each area, and each institution is responsible for establishing its own procedures to achieve those goals. If an institution fails to comply with any of the standards set forth in the guidelines, the financial institution’s primary federal regulator may require the institution to submit a plan for achieving and maintaining compliance. If a financial institution fails to submit an acceptable compliance plan, or fails in any material respect to implement a compliance plan that has been accepted by its primary federal regulator, the regulator is required to issue an order directing the institution to cure the deficiency. Until the deficiency cited in the regulator’s order is cured, the regulator may restrict the financial institution’s rate of growth, require the financial institution to increase its capital, restrict the rates the institution pays on deposits or require the institution to take any action the regulator deems appropriate under the circumstances. Noncompliance with the standards established by the safety and soundness guidelines may also constitute grounds for other enforcement action by the federal bank regulatory agencies, including cease and desist orders and civil money penalty assessments.

During the past decade, the bank regulatory agencies have increasingly emphasized the importance of sound risk management processes and strong internal controls when evaluating the activities of the financial institutions they supervise. Properly managing risks has been identified as critical to the conduct of safe and

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sound banking activities and has become even more important as new technologies, product innovation and the size and speed of financial transactions have changed the nature of banking markets. The agencies have identified a spectrum of risks facing a banking institution including, but not limited to, credit, market, liquidity, operational, legal and reputational risk. In particular, recent regulatory pronouncements have focused on operational risk, which arises from the potential that inadequate information systems, operational problems, breaches in internal controls, fraud or unforeseen catastrophes will result in unexpected losses. New products and services, third party risk management and cybersecurity are critical sources of operational risk that financial institutions are expected to address in the current environment. The Bank is expected to have active board and senior management oversight; adequate policies, procedures and limits; adequate risk measurement, monitoring and management information systems; and comprehensive internal controls.

Reserves

The Federal Reserve requires all depository institutions to maintain reserves against transaction accounts (noninterest-bearing and NOW checking accounts). The balances maintained to meet the reserve requirements imposed by the Federal Reserve may be used to satisfy liquidity requirements. An institution may borrow from the Federal Reserve Bank “discount window” as a secondary source of funds, provided that the institution meets the Federal Reserve Bank’s credit standards.

Dividends

The Bank is subject to legal limitations on the frequency and amount of dividends that can be paid to the Company. The Federal Reserve may restrict the ability of the Bank to pay dividends if such payments would constitute an unsafe or unsound banking practice. Additionally, financial institutions are required to maintain a capital conservation buffer of at least 2.5% of risk-weighted assets in order to avoid restrictions on capital distributions and other payments. If a financial institution’s capital conservation buffer falls below the minimum requirement, its maximum payout amount for capital distributions and discretionary payments declines to a set percentage of eligible retained income based on the size of the buffer. See “Capital Regulations,” below for additional details on this new capital requirement.

In addition, Florida law and Federal regulation place restrictions on the declaration of dividends from state chartered banks to their holding companies. Pursuant to the Florida Financial Institutions Code, the board of directors of a state-chartered bank, after charging off bad debts, depreciation and other worthless assets, if any, and making provisions for reasonably anticipated future losses on loans and other assets, may quarterly, semi-annually or annually declare a dividend of up to the aggregate net profits of that period combined with the bank’s retained net profits for the preceding two years and, with the approval of the Florida Office of Financial Regulation and Federal Reserve, declare a dividend from retained net profits which accrued prior to the preceding two years. Before declaring such dividends, 20% of the net profits for the preceding period as is covered by the dividend must be transferred to the surplus fund of the bank until this fund becomes equal to the amount of the bank’s common stock then issued and outstanding. A state-chartered bank may not declare any dividend if  (i) its net income (loss) from the current year combined with the retained net income (loss) for the preceding two years aggregates a loss or (ii) the payment of such dividend would cause the capital account of the bank to fall below the minimum amount required by law, regulation, order or any written agreement with the Florida Office of Financial Regulation or a federal regulatory agency. Under Federal Reserve regulations, a state member bank may, without the prior approval of the Federal Reserve, pay a dividend in an amount that, when taken together with all dividends declared during the calendar year, does not exceed the sum of the bank’s net income during the current calendar year and the retained net income of the prior two calendar years. The Federal Reserve may approve greater amounts.

Insurance of Accounts and Other Assessments

Our deposit accounts are currently insured by the Deposit Insurance Fund generally up to a maximum of  $250,000 per separately insured depositor. We pay deposit insurance assessments to the Deposit Insurance Fund, which are determined through a risk-based assessment system.

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Under the current system, deposit insurance assessments are based on a bank’s assessment base, which is defined as average total assets minus average tangible equity. For established small institutions, such as the Bank, the FDIC sets deposit assessment rates based on the Financial Ratios Method, which takes into account several ratios that reflect leverage, asset quality, and earnings at each individual institution and then applies a pricing multiplier that is the same for all institutions. An institution’s rate must be within a certain minimum and a certain maximum, and the range varies based on the institution’s composite CAMELS rating. The deposit insurance assessment is calculated by multiplying the bank’s assessment base by the total base assessment rate.

All FDIC-insured institutions have been required to pay assessments to the FDIC at a current annual rate of approximately five tenths of a basis point of its assessment base to fund interest payments on bonds issued by the Financing Corporation, or FICO, an agency of the federal government established to recapitalize the predecessor to the Savings Association Insurance Fund. The last of the FICO bonds matured in 2019. The FDIC made its final collection of the assessment for these bonds in March 2019. FDIC-insured institutions accordingly are no longer required to pay the FICO bond assessment.

Under the FDIA, the FDIC may terminate deposit insurance upon a finding that the institution has engaged in unsafe and unsound practices, is in an unsafe or unsound condition to continue operations, or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC.

Transactions With Affiliates and Insiders

Pursuant to Sections 23A and 23B of the Federal Reserve Act and Regulation W, the authority of the Bank to engage in transactions with related parties or “affiliates” or to make loans to insiders is limited. Loan transactions with an affiliate generally must be collateralized and certain transactions between the Bank and its affiliates, including the sale of assets, the payment of money or the provision of services, must be on terms and conditions that are substantially the same, or at least as favorable to the Bank, as those prevailing for comparable nonaffiliated transactions. In addition, the Bank generally may not purchase securities issued or underwritten by affiliates.

Loans to executive officers and directors of an insured depository institution or any of its affiliates or to any person who directly or indirectly, or acting through or in concert with one or more persons, owns, controls or has the power to vote more than 10% of any class of voting securities of a bank, which we refer to as 10% Shareholders, or to any political or campaign committee the funds or services of which will benefit those executive officers, directors, or 10% Shareholders or which is controlled by those executive officers, directors or 10% Shareholders, are subject to Sections 22(g) and 22(h) of the Federal Reserve Act and the corresponding regulations (Regulation O) and Section 13(k) of the Exchange Act relating to the prohibition on personal loans to executives (which exempts financial institutions in compliance with the insider lending restrictions of Section 22(h) of the Federal Reserve Act). Among other things, these loans must be made on terms substantially the same as those prevailing on transactions made to unaffiliated individuals and certain extensions of credit to those persons must first be approved in advance by a disinterested majority of the entire board. Section 22(h) of the Federal Reserve Act prohibits loans to any of those individuals where the aggregate amount exceeds an amount equal to 15% of an institution’s unimpaired capital and surplus plus an additional 10% of unimpaired capital and surplus in the case of loans that are fully secured by readily marketable collateral, or when the aggregate amount on all of the extensions of credit outstanding to all of these persons would exceed our unimpaired capital and unimpaired surplus. Section 22(g) identifies limited circumstances in which we are permitted to extend credit to executive officers of the Bank.

Community Reinvestment Act

The Community Reinvestment Act and its corresponding regulations are intended to encourage banks to help meet the credit needs of the communities they serve, including low and moderate income neighborhoods, consistent with safe and sound banking practices. These regulations provide for regulatory assessment of a bank’s record in meeting the credit needs of its market area. Federal banking agencies are required to publicly disclose each bank’s rating under the Community Reinvestment Act. The Federal Reserve considers a bank’s Community Reinvestment Act rating when the bank submits an application to establish bank branches, merge with another bank, or acquire the assets and assume the liabilities of

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another bank. In the case of a financial holding company, the Community Reinvestment Act performance record of all banks involved in a merger or acquisition are reviewed in connection with the application to acquire ownership or control of shares or assets of a bank or to merge with another bank or bank holding company. An unsatisfactory record can substantially delay or block the transaction. We received a satisfactory rating on our most recent Community Reinvestment Act assessment.

Capital Regulations

The federal banking regulators have adopted risk-based, capital adequacy guidelines for financial holding companies and their subsidiary banks based on the Basel III standards. Under these guidelines, assets and off-balance sheet items are assigned to specific risk categories each with designated risk weightings. The new risk-based capital guidelines are designed to make regulatory capital requirements more sensitive to differences in risk profiles among banks and bank holding companies, to account for off-balance sheet exposure, to minimize disincentives for holding liquid assets, and to achieve greater consistency in evaluating the capital adequacy of major banks throughout the world. The resulting capital ratios represent capital as a percentage of total risk-weighted assets and off-balance sheet items. Final rules implementing the capital adequacy guidelines became effective, with various phase-in periods, on January 1, 2015 for community banks. All of the rules were fully phased in as of January 1, 2019. These final rules represent a significant change to the prior general risk-based capital rules and are designed to substantially conform to the Basel III international standards.

In computing total risk-weighted assets, bank and bank holding company assets are given risk-weights of 0%, 20%, 50%, 100% and 150%. In addition, certain off-balance sheet items are given similar credit conversion factors to convert them to asset equivalent amounts to which an appropriate risk-weight will apply. Most loans will be assigned to the 100% risk category, except for performing first mortgage loans fully secured by 1-to-4 family and certain multi-family residential property, which carry a 50% risk rating. Most investment securities (including, primarily, general obligation claims on states or other political subdivisions of the United States) will be assigned to the 20% category, except for municipal or state revenue bonds, which have a 50% risk-weight, and direct obligations of the U.S. Treasury or obligations backed by the full faith and credit of the U.S. Government, which have a 0% risk-weight. In covering off-balance sheet items, direct credit substitutes, including general guarantees and standby letters of credit backing financial obligations, are given a 100% conversion factor. Transaction-related contingencies such as bid bonds, standby letters of credit backing nonfinancial obligations, and undrawn commitments (including commercial credit lines with an initial maturity of more than one year) have a 50% conversion factor. Short-term commercial letters of credit are converted at 20% and certain short-term unconditionally cancelable commitments have a 0% factor.

Under the final rules, minimum requirements increased for both the quality and quantity of capital held by banking organizations. In this respect, the final rules implement strict eligibility criteria for regulatory capital instruments and improves the methodology for calculating risk-weighted assets to enhance risk sensitivity. Consistent with the international Basel III framework, the rules include a new minimum ratio of Common Equity Tier 1 Capital to Risk-Weighted Assets of 4.5%. The rules also create a Common Equity Tier 1 Capital conservation buffer of 2.5% of risk-weighted assets. This buffer is added to each of the three risk-based capital ratios to determine whether an institution has established the buffer. The rules raise the minimum ratio of Tier 1 Capital to Risk-Weighted Assets from 4% to 6% and include a minimum leverage ratio of 4% for all banking organizations. If a financial institution’s capital conservation buffer falls below 2.5% — e.g., if the institution’s Common Equity Tier 1 Capital to Risk-Weighted Assets is less than 7.0% — then capital distributions and discretionary payments will be limited or prohibited based on the size of the institution’s buffer. The types of payments subject to this limitation include dividends, share buybacks, discretionary payments on Tier 1 instruments, and discretionary bonus payments.

The new capital regulations may also impact the treatment of accumulated other comprehensive income, or AOCI, for regulatory capital purposes. Under the new rules, AOCI generally flows through to regulatory capital, however, community banks and their holding companies may make a one-time irrevocable opt-out election to continue to treat AOCI the same as under the old regulations for regulatory capital purposes. This election was required to be made on the first call report or bank holding company annual report (on form FR Y-9C) filed after January 1, 2015. We made the opt-out election. Additionally,

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the new rules also permit community banks with less than $15 billion in total assets to continue to count certain non-qualifying capital instruments issued prior to May 19, 2010 as Tier 1 capital, including trust preferred securities and cumulative perpetual preferred stock (subject to a limit of 25% of Tier 1 capital). However, non-qualifying capital instruments issued on or after May 19, 2010 do not qualify for Tier 1 capital treatment.

Additionally, effective August 30, 2018, under the Federal Reserve Board’s Small Bank Holding Company and Savings and Loan Holding Company Policy Act, bank holding companies with less than $3 billion in total consolidated assets are considered small bank holding companies. The small bank holding company policy statement eases the transfer of ownership of small community banks by allowing their holding companies to operate with higher levels of debt than would normally be permitted and excludes them from consolidated capital requirements. As such, we are excluded from consolidated capital requirements until such time that our total consolidated assets exceed $3 billion or the Federal Reserve Board decides that we are no longer to be considered a small bank holding company. However, if we were to be subject to the consolidated capital requirements, we would be in compliance.

On November 21, 2018, federal regulators released a proposed rulemaking that would, if enacted, provide certain banks and their holding companies with the option to elect out of complying with the Basel III capital rules. Under the proposal, a qualifying community banking organization would be eligible to elect the community bank leverage ratio framework if it has a community bank leverage ratio, or CBLR, greater than 9% at the time of election.

A qualifying community banking organization, or QCBO, is defined as a bank, a savings association, a bank holding company or a savings and loan holding company with:

•

total consolidated assets of less than $10 billion;

•

total off-balance sheet exposures (excluding derivatives other than credit derivatives and unconditionally cancelable commitments) of 25% or less of total consolidated assets;

•

total trading assets and trading liabilities of 5% or less of total consolidated assets;

•

Mortgage servicing rights assets of 25% or less of CBLR tangible equity; and

•

temporary difference Deferred tax assets of 25% or less of CBLR tangible equity.

A QCBO may elect out of complying with the Basel III capital rules if, at the time of the election, the QCBO has a CBLR above 9%. The numerator of the CBLR is referred to as “CBLR tangible equity” and is calculated as the QCBO’s total capital as reported in compliance with Call Report and FR Y-9C instructions, which are referred to as Reporting Instructions, prior to including non-controlling interests in consolidated subsidiaries, less:

•

AOCI;

•

Intangible assets, calculated in accordance with Reporting Instructions, other than mortgage servicing assets; and

•

Deferred tax assets that arise from net operating loss and tax credit carry forwards net of any related valuations allowances.

The denominator of the CBLR is the QCBO’s average assets, calculated in accordance with Reporting Instructions and less intangible assets and deferred tax assets deducted from CBLR tangible equity. We will continue to monitor this rulemaking. If and when the rulemaking goes into effect, we will consider whether it would be possible and advantageous at that time to elect to comply with the community bank leverage ratio framework.

Commercial Real Estate Concentration Guidelines

The federal banking regulators have implemented guidelines to address increased concentrations in commercial real estate loans. These guidelines describe the criteria regulatory agencies will use as indicators to identify institutions potentially exposed to commercial real estate concentration risk. An institution that has (i) experienced rapid growth in commercial real estate lending, (ii) notable exposure to a specific type of

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commercial real estate, (iii) total reported loans for construction, land development, and other land representing 100% or more of total capital, or (iv) total commercial real estate (including construction) loans representing 300% or more of total capital and the outstanding balance of the institutions commercial real estate portfolio has increased by 50% or more in the prior 36 months, may be identified for further supervisory analysis of a potential concentration risk.

As of September 30, 2019, the Bank’s ratio of construction loans to total capital was 45.1%, its ratio of total commercial real estate loans to total capital was 185.3% and, therefore, the Bank was under the 100% and 300% thresholds, respectively, set forth in clauses (iii) and (iv) above. As of September 30, 2019, Marquis Bank’s ratio of construction loans to total capital was 26.4%, below the 100% threshold in clause (iii) above. Its ratio of total commercial real estate loans to total capital was 336.2%, and this portfolio had increased by approximately 65.3% since September 30, 2016. Marquis Bank thus exceeded the 300% regulatory guideline threshold for commercial real estate, set forth in clause (iv) above. As a result, we are not deemed to have a concentration in commercial real estate lending under applicable regulatory guidelines, but Marquis Bank may be deemed to have such a concentration. However, we expect that the combined institution will fall below the regulatory guideline thresholds and would be deemed not to have a concentration in commercial real estate.

Prompt Corrective Action

Federal law and regulations establish a capital-based regulatory scheme designed to promote early intervention for troubled banks and require the FDIC to choose the least expensive resolution of bank failures. The capital-based regulatory framework contains five categories of compliance with regulatory capital requirements, including “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized,” and “critically undercapitalized.” To qualify as a “well-capitalized” institution under the new rules in effect as of January 1, 2015, a bank must have a leverage ratio of not less than 5%, a Tier 1 Common Equity ratio of not less than 6.5%, a Tier 1 Capital ratio of not less than 8%, and a total risk-based capital ratio of not less than 10%, and the bank must not be under any order or directive from the appropriate regulatory agency to meet and maintain a specific capital level.

Under the regulations, the applicable agency can treat an institution as if it were in the next lower category if the agency determines (after notice and an opportunity for hearing) that the institution is in an unsafe or unsound condition or is engaging in an unsafe or unsound practice. The degree of regulatory scrutiny of a financial institution will increase, and the permissible activities of the institution will decrease, as it moves downward through the capital categories.

Immediately upon becoming undercapitalized, a depository institution becomes subject to the provisions of Section 38 of the FDIA which: (i) restrict payment of capital distributions and management fees; (ii) require that the appropriate federal banking agency monitor the condition of the institution and its efforts to restore its capital; (iii) require submission of a capital restoration plan; (iv) restrict the growth of the institution’s assets; and (v) require prior approval of certain expansion proposals. The appropriate federal banking agency for an undercapitalized institution also may take any number of discretionary supervisory actions if the agency determines that any of these actions is necessary to resolve the problems of the institution at the least possible long-term cost to the deposit insurance fund, subject in certain cases to specified procedures. These discretionary supervisory actions include: (i) requiring the institution to raise additional capital; (ii) restricting transactions with affiliates; (iii) requiring divestiture of the institution or the sale of the institution to a willing purchaser; and (iv) any other supervisory action that the agency deems appropriate. These and additional mandatory and permissive supervisory actions may be taken with respect to significantly undercapitalized and critically undercapitalized institutions.

As of September 30, 2019, we exceeded the requirements contained in the applicable regulations, policies and directives pertaining to capital adequacy to be classified as “well capitalized” and are unaware of any material violation or alleged violation of these regulations, policies or directives (see table below). Rapid growth, poor loan portfolio performance, or poor earnings performance, or a combination of these factors, could change our capital position in a relatively short period of time, making additional capital infusions necessary.

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​

Actual

Minimum for capital adequacy

Minimum to be well capitalized

(Dollars in thousands)

Amount

Ratio

Amount

Ratio

Amount

Ratio

September 30, 2019

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Total risk-based capital ratio

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Bank

​

$

84,082

​

12.4%

​

$

54,424

​

8.0%

​

$

68,030

​

10.0%

Company

​

​

85,091

​

12.5%

​

​

54,424

​

8.0%

​

​

N/A

​

N/A

Tier 1 risk-based capital ratio

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Bank

​

​

77,026

​

11.3%

​

​

40,818

​

6.0%

​

​

54,424

​

8.0%

Company

​

​

78,036

​

11.5%

​

​

40,818

​

6.0%

​

​

N/A

​

N/A

Tier1 leverage ratio

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Bank

​

​

77,026

​

8.3%

​

​

33,713

​

4.0%

​

​

46,240

​

5.0%

Company

​

​

78,036

​

8.4%

​

​

33,713

​

4.0%

​

​

N/A

​

N/A

Common equity tier 1 capital ratio

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Bank

​

​

77,026

​

11.3%

​

​

30,614

​

4.5%

​

​

44,220

​

6.5%

Company

​

​

78,036

​

11.5%

​

​

30,614

​

4.5%

​

​

N/A

​

N/A

Interstate Banking and Branching

The BHC Act, as amended by the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994, or the Riegle-Neal Act, permits adequately capitalized and managed financial and bank holding companies to acquire banks in any state. State laws prohibiting interstate banking or discriminating against out-of-state banks are preempted. States are not permitted to enact laws opting out of this provision; however, states are allowed to adopt a minimum age restriction requiring that target banks located within the state be in existence for a period of time, up to a maximum of five years, before a bank may be subject to the Riegle-Neal Act. Also, the Dodd-Frank Act added deposit caps, which prohibit acquisitions that result in the acquiring company controlling 30% or more of the deposits of insured banks and thrift institutions held in the state in which the target maintains a branch or 10% or more of the deposits nationwide. States have the authority to waive the 30% deposit cap. State-level deposit caps are not preempted as long as they do not discriminate against out-of-state institutions, and the federal deposit caps apply only to initial entry acquisitions.

As a result of the Dodd-Frank Act, national banks and state banks are able to establish branches in any state if that state would permit the establishment of the branch by a state bank chartered in that state. Florida law permits a state bank to establish a branch of the bank anywhere in the state. Accordingly, a bank with its headquarters outside the State of Florida may establish branches anywhere within the state.

Anti-money Laundering

The USA PATRIOT Act provides the federal government with additional powers to address terrorist threats through enhanced domestic security measures, expanded surveillance powers, increased information sharing and broadened anti-money laundering requirements. By way of amendments to the Bank Secrecy Act, or BSA, the USA PATRIOT Act puts in place measures intended to encourage information sharing among bank regulatory and law enforcement agencies. In addition, certain provisions of the USA PATRIOT Act impose affirmative obligations on a broad range of financial institutions.

The USA PATRIOT Act and the related Federal Reserve regulations require banks to establish anti-money laundering programs that include, at a minimum:

•

internal policies, procedures and controls designed to implement and maintain the savings association’s compliance with all of the requirements of the USA PATRIOT Act, the BSA and related laws and regulations;

•

systems and procedures for monitoring and reporting of suspicious transactions and activities;

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•

a designated compliance officer;

•

employee training;

•

an independent audit function to test the anti-money laundering program;

•

procedures to verify the identity of each client upon the opening of accounts; and

•

heightened due diligence policies, procedures and controls applicable to certain foreign accounts and relationships.

Additionally, the USA PATRIOT Act requires each financial institution to develop a customer identification program, or CIP, as part of its anti-money laundering program. The key components of the CIP are identification, verification, government list comparison, notice and record retention. The purpose of the CIP is to enable the financial institution to determine the true identity and anticipated account activity of each customer. To make this determination, among other things, the financial institution must collect certain information from customers at the time they enter into the customer relationship with the financial institution. This information must be verified within a reasonable time. Furthermore, all customers must be screened against any CIP-related government lists of known or suspected terrorists. On May 11, 2018, the U.S. Treasury’s Financial Crimes Enforcement Network issued a final rule under the BSA requiring banks to identify and verify the identity of the natural persons behind their customers that are legal entities — the beneficial owners. We and our affiliates have adopted policies, procedures and controls designed to comply with the BSA and the USA PATRIOT Act.

Moreover, South Florida has been designated as a “High Intensity Financial Crime Area,” or HIFCA, by FinCEN and a “High Intensity Drug Trafficking Area,” or HIDTA, by the Office of National Drug Control Policy. The HIFCA program is intended to concentrate law enforcement efforts to combat money laundering efforts in higher-risk areas. The HIDTA designation makes it possible for local agencies to benefit from ongoing HIDTA-coordinated program initiatives that are working to reduce drug use. There is also increased scrutiny of compliance with the sanctions programs and rules administered and enforced by the Treasury Department’s Office of Foreign Assets Control.

Regulatory Enforcement Authority

Federal and state banking laws grant substantial regulatory authority and enforcement powers to federal and state banking regulators. This authority permits bank regulatory agencies to assess civil money penalties, to issue cease and desist or removal orders, and to initiate injunctive actions against banking organizations and institution-affiliated parties. In general, these enforcement actions may be initiated for either violations of laws or regulations or for unsafe or unsound practices. Other actions or inactions may provide the basis for enforcement action, including misleading or untimely reports filed with regulatory authorities.

Federal Home Loan Bank System

The Bank is a member of the Federal Home Loan Bank of Atlanta, which is one of 11 regional Federal Home Loan Banks. Each FHLB serves as a quasi-reserve bank for its members within its assigned region. It is funded primarily from funds deposited by member institutions and proceeds from the sale of consolidated obligations of the FHLB system. A FHLB makes loans to members (i.e., advances) in accordance with policies and procedures established by the Board of Trustees of the FHLB.

As a member of the FHLB of Atlanta, the bank is required to own capital stock in the FHLB in an amount at least equal to 0.09% (or 9 basis points), which is subject to annual adjustments, of the Bank’s total assets at the end of each calendar year (up to a maximum of  $15 million), plus 4.25% of its outstanding advances (borrowings) from the FHLB of Atlanta under the activity-based stock ownership requirement. As of December 31, 2019, the Bank was in compliance with this requirement.

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Privacy

Under the Gramm-Leach-Bliley Act, federal banking regulators adopted rules limiting the ability of banks and other financial institutions to disclose nonpublic information about consumers to nonaffiliated third parties. The rules require disclosure of privacy policies to consumers and, in some circumstances, allow consumers to prevent disclosure of certain personal information to nonaffiliated third parties.

Overdraft Fee Regulation

The Electronic Fund Transfer Act prohibits financial institutions from charging consumers fees for paying overdrafts on automated teller machines, or ATM, and one-time debit card transactions, unless a consumer consents, or opts in, to the overdraft service for those types of transactions. If a consumer does not opt in, any ATM transaction or debit that overdraws the consumer’s account will be denied. Overdrafts on the payment of checks and regular electronic bill payments are not covered by this new rule. Before opting in, the consumer must be provided a notice that explains the financial institution’s overdraft services, including the fees associated with the service, and the consumer’s choices. Financial institutions must provide consumers who do not opt in with the same account terms, conditions and features (including pricing) that they provide to consumers who do opt in.

Consumer Laws and Regulations

The Bank is also subject to other federal and state consumer laws and regulations that are designed to protect consumers in transactions with banks. While the list set forth below is not exhaustive, these laws and regulations include the Truth in Lending Act, the Truth in Savings Act, the Electronic Funds Transfer Act, the Expedited Funds Availability Act, the Check Clearing for the 21st Century Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the Equal Credit Opportunity Act, the Fair Housing Act, the Home Mortgage Disclosure Act, the Fair and Accurate Credit Transactions Act, the Mortgage Disclosure Improvement Act, and the Real Estate Settlement Procedures Act, among others. These laws and regulations mandate certain disclosure requirements and regulate the manner in which financial institutions must deal with clients when taking deposits or making loans to such clients. The Bank must comply with the applicable provisions of these consumer protection laws and regulations as part of its ongoing client relations.

In addition, the Consumer Financial Protection Bureau issues regulations and standards under these federal consumer protection laws that affect our consumer businesses. These include regulations setting “ability to repay” standards for residential mortgage loans and mortgage loan servicing and originator compensation standards, which generally require creditors to make a reasonable, good faith determination of a consumer’s ability to repay any consumer credit transaction secured by a dwelling (excluding an open-end credit plan, timeshare plan, reverse mortgage, or temporary loan) and establishes certain protections from liability under this requirement for loans that meet the requirements of the “qualified mortgage” safe harbor. In addition, on October 3, 2015, the new TILA-RESPA Integrated Disclosure, or TRID, rules for mortgage closings took effect for new loan applications. The new TRID rules were further amended in 2017.

Future Legislative Developments

Various bills are from time to time introduced in Congress and the Florida legislature. This legislation may change banking statutes and the environment in which our banking subsidiary and we operate in substantial and unpredictable ways. We cannot determine the ultimate effect that potential legislation, if enacted, or implementing regulations with respect thereto, would have upon our financial condition or results of operations or that of our banking subsidiary.

Current Expected Credit Loss Accounting Standard

In June 2016, the Financial Accounting Standards Board, or FASB, issued a new current expected credit loss rule, or CECL, which requires banks to record, at the time of origination, credit losses expected throughout the life of the asset portfolio on loans and held-to-maturity securities, as opposed the current practice of recording losses when it is probable that a loss event has occurred. The update also amends the

286

accounting for credit losses on available-for-sale debt securities and financial assets purchased with credit deterioration. The accounting standard change will be effective for us, as a smaller reporting company, on January 1, 2023 after the FASB elected to delay implementation for smaller reporting companies. The change in accounting standards could result in an increase in our reserve for probable loan losses and require us to book loan losses sooner than under the current requirements. We are taking the necessary steps to be in compliance with the CECL accounting standard which we expect will become a critical accounting policy.

Effect of Governmental Monetary Policies

The commercial banking business is affected not only by general economic conditions, but also by the monetary policies of the Federal Reserve. Changes in the discount rate on member bank borrowing, availability of borrowing at the “discount window,” open market operations, changes in the Fed Funds target interest rate, the imposition of changes in reserve requirements against member banks’ deposits and assets of foreign banking centers and the imposition of and changes in reserve requirements against certain borrowings by banks and their affiliates are some of the instruments of monetary policy available to the Federal Reserve. These monetary policies are used in varying combinations to influence overall growth and distributions of bank loans, investments and deposits, which may affect interest rates charged on loans or paid on deposits. The monetary policies of the Federal Reserve have had a significant effect on the operating results of commercial banks and are expected to continue to do so in the future. The Federal Reserve’s policies are primarily influenced by the dual mandate of price stability and full employment, and to a lesser degree by short-term and long-term changes in the international trade balance and in the fiscal policies of the U.S. Government. Future changes in monetary policy and the effect of such changes on our business and earnings in the future cannot be predicted.

London Inter-Bank Offered Rate (LIBOR)

We have contracts, including loan agreements, which are currently indexed to LIBOR. The use of LIBOR as a reference rate in the banking industry is beginning to decline. In 2014, a committee of private-market derivative participants and their regulators, the Alternative Reference Rate Committee, or ARRC, was convened by the Federal Reserve to identify an alternative reference interest rate to replace LIBOR. In June 2017, the ARRC announced the Secured Overnight Funding Rate, or SOFR, a broad measure of the cost of borrowing cash overnight collateralized by Treasury securities, as its preferred alternative to LIBOR. In July 2017, the Chief Executive of the United Kingdom Financial Conduct Authority, which regulates LIBOR, announced its intention to stop persuading or compelling banks to submit rates for the calculation of LIBOR to the administrator of LIBOR after 2021. In April 2018, the Federal Reserve Bank of New York began to publish SOFR rates on a daily basis. The International Swaps and Derivatives Association, Inc. provided guidance on fallback contract language related to derivative transactions in late 2019. We are currently evaluating risks and potential process changes arising from these developments.

Income Taxes

We are subject to income taxes at the federal level and subject to state taxation based on the laws of each state in which we operate. We file a consolidated federal tax return with a fiscal year ending on December 31. On December 22, 2017, the United States enacted tax reform legislation known as the H.R.1, commonly referred to as the “Tax Cuts and Jobs Act,” resulting in significant modifications to existing law. We completed the accounting for the effects of the new law during this period. Our financial statements for the year ended December 31, 2017, reflected certain effects of the new law, which included a reduction in the corporate tax rate from 35% to 21%, as well as other changes.

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COMPARISON OF SHAREHOLDERS’ RIGHTS

Professional and Marquis are each incorporated under the laws of the State of Florida and, accordingly, the rights of their shareholders are governed by Florida law and their respective articles of incorporation and bylaws. After the merger, the rights of former shareholders of Marquis who receive shares of Professional Class A common stock in the merger will be determined by reference to Professional’s articles of incorporation and bylaws and Florida law. Set forth below is a description of the material differences between the rights of Marquis shareholders and Professional shareholders. Professional and Marquis believe that this summary describes the material differences between the rights of holders of Professional Class A common stock as of the date of this joint proxy statement/prospectus and the rights of holders of Marquis common stock as of the date of this joint proxy statement/prospectus; however, it does not purport to be a complete description of those differences. This discussion is qualified in its entirety by reference to the FBCA and to the articles of incorporation and bylaws of Professional and Marquis, each as may be amended from time to time.

​	MARQUIS	PROFESSIONAL
Capital Stock	Holders of Marquis capital stock are entitled to all the rights and obligations provided to capital shareholders under the FBCA and Marquis’s articles of incorporation and bylaws.	Holders of Professional capital stock are entitled to all the rights and obligations provided to capital shareholders under the FBCA and Professional’s articles of incorporation and bylaws.
Authorized	Marquis’s authorized capital stock consists of  (i) 5,000,000 shares of common stock, par value $5.00 per share and (ii) 500,000 shares of preferred stock.	Professional’s authorized capital stock consists of  (i) 50,000,000 shares of Class A common stock, par value $0.01 per share, (ii) 10,000,000 shares of Class B common stock, par value $0.01 per share, and (iii) 10,000,000 shares of preferred stock, par value $0.01 per share.
Outstanding	As of the record date, there were [  ] shares of Marquis common stock outstanding and no shares of Marquis preferred stock outstanding.	As of the record date, there were [  ] shares of Professional Class A common stock outstanding, [  ] shares of Professional Class B common stock outstanding and no shares of Professional preferred stock outstanding.
Voting Rights	Holders of Marquis common stock generally are entitled to one vote per share in the election of directors and on all other matters submitted to a vote at a meeting of shareholders.	Holders of Professional Class A common stock generally are entitled to one vote per share in the election of directors and on all other matters submitted to a vote at a meeting of shareholders. Holders of Professional Class B common stock are not entitled to vote on any matters submitted to a vote of shareholders, except as otherwise required by law.
Cumulative Voting	No shareholder has the right of cumulative voting in the election of directors.	No shareholder has the right of cumulative voting in the election of directors.
Number of Directors	Marquis’s bylaws provide that the number of directors serving on the Marquis board may not be less than five nor more than 25 and shall be fixed from time to time by the majority of the full Marquis board.	Professional’s bylaws provide that the number of directors serving on the Professional board of directors shall be such number as determined from time to time by the board of directors, but not less than one director.

288

​	MARQUIS	PROFESSIONAL
​	The Marquis board is authorized to increase the number of directors by no more than two and to immediately appoint persons to fill the new director positions until the next annual shareholder meeting, at which meeting the new director positions are filled by a shareholder vote. Marquis directors are elected annually and each director holds office for the term for which he or she is elected and until his or her successor is elected and qualified, subject to such director’s death, resignation or removal.	Professional’s board of directors is divided into three classes, with the members of each class of directors serving staggered three-year terms and with approximately one-third of the directors being elected each year. Each director holds office for the term for which he or she is elected and until his or her successor is elected and qualified, subject to such directors’ death, resignation or removal.
Election of Directors	Under the FBCA and Marquis’s bylaws, unless otherwise provided in the articles of incorporation, directors are elected by a plurality of the votes cast by the holders of the shares entitled to vote in an election of directors at a meeting at which a quorum is present. Marquis’s articles of incorporation do not otherwise provide for the vote required to elect directors.	Professional directors are similarly elected in accordance with the FBCA and its articles of incorporation do not otherwise provide for the vote required to elect directors.
Removal of Directors	Marquis’s bylaws provide that Marquis directors may be removed with or without cause by a majority of the shares entitled to vote or for cause by a majority vote of disinterested directors. The term “cause” means (i) an act of willful misconduct, self dealing, malfeasance, gross negligence, personal dishonesty, breach of fiduciary duty including personal profit, intentional failure to perform stated duties, or willful violation of any law, rule, or regulation (other than traffic violations or similar offenses); (ii) conduct which could negatively reflect on Marquis in its market area or in the banking or regulatory communities; (iii) act or failure to act which is inconsistent with an oral or written commitment made to the board and which jeopardizes Marquis’s financial condition, business opportunities or reputation in its market area or in the banking and regulatory communities; or (iv) failure to telephonically or personally attend any three consecutive Board meetings, failure to telephonically or personally attend any two consecutive meetings of any	Professional’s articles of incorporation and bylaws provide that directors may only be removed for cause by the affirmative vote of 662∕3% of the shares of Professional entitled to vote. The term “cause” means a conviction of a felony, declaration of unsound mind by a court order, adjudication of bankruptcy, or such director having been adjudged by a court of competent jurisdiction to be liable for negligence or misconduct in the performance of his or her duty to Professional in a matter of substantial importance to Professional and such adjudication is no longer subject to direct appeal.

289

​	MARQUIS	PROFESSIONAL
​	board committee on which that director serves, or failure to personally attend two-thirds of the board meetings in a calendar year.	​
Vacancies on the Board of Directors	Marquis’s bylaws provide that vacancies in the Marquis board of directors may be filled by the affirmative vote of the majority of the remaining directors.	Professional’s bylaws provide that vacancies in the Professional board of directors may be filled by the affirmative vote of a majority of the remaining directors though less than a quorum of the Professional board of directors, or by the shareholders.
Shareholder Action by Written Consent	Marquis’s bylaws provide that any action required or permitted to be taken by the shareholders of Marquis may be taken without a meeting if consent in writing, setting forth the action to be taken, and signed by such shareholders pursuant to the FBCA.	Professional’s articles of incorporation and bylaws prohibit shareholder action by written consent.
Advance Notice Requirements for Shareholder Nominations and Other Proposals	Marquis’s bylaws provide that any new business to be taken up at the annual shall be stated in writing and filed with Marquis at least 30 days before the date of the annual meeting.	Professional’s bylaws provide that a shareholder who desires to nominate a person for election to the Professional board of directors at a meeting of shareholders must give written notice of the proposed nomination to the Secretary of Professional at the principal executive office of Professional not less than 120 nor more than 180 calendar days prior to the date of Professional’s notice of annual meeting provided with respect to the previous year’s annual meeting. However, if no annual meeting was held in the previous year or the date of the annual meeting has been changed to be more than 30 calendar days earlier than the date contemplated by the previous year’s statement, such notice by the shareholder to be timely must be received no later than the close of business on the 10th day following the date on which notice of the date of the annual meeting is given to shareholders or made public, whichever first occurs. For a shareholder proposal (other than a director nomination) to be timely, a shareholder’s notice must be received by the Secretary of Professional as of the date set forth in Professional’s proxy statement relating to the annual meeting for the preceding year. However, if no such date is stated, then such date shall be 120 calendar days in advance of the date (with respect to the forthcoming annual

290

​	MARQUIS	PROFESSIONAL
​	​	meeting) that Professional’s proxy statement was released to its shareholders in connection with the previous year’s annual meeting of security holders; and provided further that if no annual meeting was held in the previous year or the date of the annual meeting has been changed by more than 30 calendar days from the date contemplated at the time of the previous year’s proxy statement, a proposal shall be received by Professional no later than the close of business on the 10th day following the date on which notice of the date of the annual meeting is given to shareholders or made public, whichever first occurs.
Notice of Shareholder Meetings	Marquis’s bylaws provide that notice of each shareholder meeting must be mailed to each shareholder entitled to vote not less than 10, nor more than 60, days before the date of the meeting.	Professional’s bylaws have similar notice provisions.
Amendments to Articles of Incorporation	Subject to certain requirements set forth in Section 607.1003 of the FBCA, amendments to a corporation’s articles of incorporation must be approved by a corporation’s board of directors and holders of a majority of the outstanding stock of a corporation entitled to vote thereon and, in cases in which class voting is required, by holders of a majority of the outstanding shares of such class. The board of directors must recommend the amendment to the shareholders, unless the board of directors determines that, because of a conflict of interest or other special circumstances, it should make no recommendation and communicates the basis for its determination to the shareholders with the amendment. Section 607.1002 of the FBCA also allows the board of directors to amend the articles of incorporation without shareholder approval in certain discrete circumstances (for example, to change the par value for a class or series of shares).	Professional’s articles of incorporation provide that any amendments to the articles of incorporation that are (i) inconsistent with the bylaws or (i) contained in (a) Article IV(B) related to the designation of rights and authorized number of preferred stock, (b) Article V regarding action by shareholders without a meeting, (c) Article VI related to special meetings of shareholders, (d) Article VIII(B) regarding board vacancies, (e) Article VIII(C) related to the removal of directors, (f) Article IX regarding the power of amending the bylaws resting with the Professional Board, and (g) Article X regarding amending the articles of incorporation, would require approval by holders of at least 662∕3% of the voting power of all of the then outstanding shares of the capital stock then entitled to vote.

291

​	MARQUIS	PROFESSIONAL
Amendments to Bylaws	Marquis’s bylaws may be altered, amended or repealed in a manner consistent with the FBCA at any time by a majority of the full board of directors. Under the FBCA, Marquis’s shareholders have the power to adopt, amend or repeal the bylaws.	Professional’s bylaws may similarly be amended by the board of directors or the shareholders.
Special Meeting of Shareholders	Marquis’s bylaws provide that special meetings of the shareholders may be called by a majority of the authorized directors, the Chairman, the Chief Executive Officer or the President of Marquis or when requested in writing by the holders of at least 10% of the outstanding shares of Marquis.	Professional’s bylaws provide that special meetings of the shareholders shall be held when directed by the Chairman of the Board, the President or the board of directors, or when requested in writing by holders of not less than 50% of all the votes entitled to be cast on any issue proposed to be considered at the meeting.
Quorum	Marquis’s bylaws provide that a majority of the outstanding shares of Marquis entitled to vote constitutes a quorum at any shareholder meeting.	Professional’s bylaws have a similar provision.
Proxy	Under Marquis’s bylaws, a proxy is valid for no more than one year unless a longer period is expressly provided in the appointment form.	Under Professional’s bylaws, a proxy is valid for no more than 11 months unless a longer period is expressly provided in the appointment form.
Preemptive Rights	Marquis’s shareholders do not have preemptive rights.	Professional’s shareholders do not have preemptive rights.
Shareholder Rights Plan	Marquis does not currently have a shareholder rights plan in effect.	Professional does not currently have a shareholder rights plan in effect.
Indemnification of Directors and Officers	Marquis’s articles of incorporation and bylaws provide for indemnification coverage for its present and former directors, officers, employees and agents to the fullest extent permitted under law. Marquis’s bylaws also provide that Marquis shall advance expenses in connection with proceedings for which indemnification may be sought, provided that such director or officer undertakes to repay all amounts so advanced in the event that it is ultimately determined that such person is not entitled to be indemnified by Marquis.	Professional’s articles of incorporation and bylaws have similar provisions.
Certain Business Combination Restrictions	Control Share Acquisitions. Under FBCA Section 607.0902, unless there is a provision in the articles of incorporation or bylaws electing not to be governed by this provision, “control shares” (shares that would otherwise have voting power for the election of directors in certain ranges of ownership over 20%) of an “issuing public corporation” acquired in a control-share acquisition have the	Professional has not opted out of these provisions.

292

MARQUIS	PROFESSIONAL
same voting rights as were accorded to the shares before such acquisition only to the extent granted by a resolution approved by the majority of all the votes entitled to be cast by each class or series of the disinterested shareholders of the issuing corporation entitled to vote on the matter, subject to certain exceptions.	​
Affiliated Transactions. FBCA Section 607.0901 provides that, unless a specified exception is met (including approval by a majority of the corporation’s disinterested directors), an interested shareholder (i.e., a person beneficially owning 10% or more of a corporation’s outstanding voting stock) and its affiliates and associates may not engage in an affiliated transaction (including a merger or other significant corporate transactions) with a Florida corporation unless such transaction is approved by two-thirds of the voting shares of the corporation excluding the shares beneficially owned by the interested shareholder. However, during the 2019 legislative session, the Florida legislature passed a bill amending the FBCA, including the provisions thereof related to affiliated transactions. The amendments to the FBCA, which became effective on January 1, 2020, revise the definition of an “interested shareholder” to mean any person who is the beneficial owner of 15% or more of the outstanding voting shares of the corporation and also explicitly require the approval of the board of directors of an affiliated transaction. Marquis has not opted out of these provisions.	​

293

LEGAL MATTERS

The validity of the shares of Professional Class A common stock to be issued in connection with the merger will be passed upon for Professional by Wachtell, Lipton, Rosen & Katz. Certain U.S. federal income tax matters relating to the merger will also be passed upon for Professional by Wachtell, Lipton, Rosen & Katz and for Marquis by Crowe LLP.

EXPERTS

The consolidated financial statements of Professional Holding Corp. and its subsidiary as of and for the years ended December 31, 2018 and 2017, have been included herein in reliance upon the report of Crowe LLP, an independent registered public accounting firm, appearing elsewhere herein, and upon the authority of such firm as an expert in accounting and auditing.

The consolidated financial statements of Marquis Bancorp, Inc. and its subsidiary as of and for the years ended December 31, 2018 and 2017, have been included herein in reliance upon the report of Crowe LLP, an independent auditor, appearing elsewhere herein, and upon the authority of such firm as an expert in accounting and auditing.

294

SHAREHOLDER PROPOSALS

To be eligible under Rule 14a-8 under the Exchange Act and under Professional’s bylaws for inclusion in Professional’s proxy statement, proxy card, and presentation at Professional’s 2020 annual meeting of shareholders, a proper shareholder proposal must have been received by Professional at its principal office at 396 Alhambra Circle, Suite 255, Coral Gables, Florida 33134 no later than [           ]. The notice must be in the manner and form required by Professional’s bylaws and Rule 14a-8 under the Exchange Act.

295

FINANCIAL STATEMENTS OF PROFESSIONAL HOLDING CORP.

CONTENTS

Interim Financial Statements	​
Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018 (unaudited)	F-2
Consolidated Statements of Income for the nine months ended September 30, 2019 and 2018 (unaudited)	F-3
Consolidated Statements of Stockholders’ Equity for the nine months ended September 30, 2019 and 2018 (unaudited)	F-4
Consolidated Statements of Cash Flows for nine months ended September 30, 2019 and 2018 (unaudited)	F-5
Notes to Interim Financial Statements	F-6
Independent Auditor’s Report	F-22
Annual Financial Statements	​
Consolidated Balance Sheets as of December 31, 2018 and 2017	F-23
Consolidated Statements of Income for the years ended December 31, 2018 and 2017	F-24
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2018 and 2017	F-25
Consolidated Statements of Cash Flows for years ended December 31, 2018 and 2017	F-26
Notes to Financial Statements	F-27

F-1

PROFESSIONAL HOLDING CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollar amounts in thousands, except share data)

​	September 30, 2019			December 31, 2018
ASSETS	​	​	​	​	​	​
Cash and due from banks	​	$	18,870	​	$	10,451
Interest-bearing deposits	​	​	85,227	​	​	54,391
Federal funds sold	​	​	26,398	​	​	22,041
Cash and cash equivalents	​	​	130,495	​	​	86,883
Securities available for sale, at fair value	​	​	28,236	​	​	19,585
Securities held to maturity (fair value Sept 30, 2019 – $236; fair value Dec 31, 2018 – $265)	​	​	224	​	​	259
Equity securities	​	​	975	​	​	942
Loans, net of allowance of  $6,449 and $5,685 as of September 30, 2019 and December 31, 2018, respectively	​	​	764,663	​	​	601,480
Federal Home Loan Bank stock, at cost	​	​	2,782	​	​	2,192
Federal Reserve Bank stock, at cost	​	​	2,001	​	​	1,472
Accrued interest receivable	​	​	2,451	​	​	1,979
Premises and equipment, net	​	​	3,999	​	​	3,349
Company owned life insurance	​	​	16,728	​	​	8,449
Deferred tax asset	​	​	1,627	​	​	1,750
Other assets	​	​	9,012	​	​	1,283
​	​	$	963,193	​	$	729,625
LIABILITIES AND STOCKHOLDERS’ EQUITY	​	​	​	​	​	​
Deposits	​	​	​	​	​	​
Demand – non-interest bearing	​	$	187,927	​	$	130,245
Money market, NOW accounts, and savings accounts	​	​	523,155	​	​	379,479
Time deposits	​	​	111,983	​	​	93,578
Total deposits	​	​	823,065	​	​	603,302
Federal Home Loan Bank advances	​	​	50,000	​	​	40,000
Official checks	​	​	2,178	​	​	1,958
Income taxes payable	​	​	144	​	​	37
Accrued interest and other liabilities	​	​	9,834	​	​	4,647
Total liabilities	​	​	885,221	​	​	649,944
Commitments and contingent liabilities	​	​	​	​	​	​
Stockholders’ equity	​	​	​	​	​	​
Preferred stock, 10,000,000 shares authorized, none issued	​	​	—	​	​	—
Class A Voting Common stock, $0.01 par value; 50,000,000 shares authorized, 4,988,302 and 5,171,700 shares issued and outstanding as of September 30, 2019 and December 31, 2018	​	​	53	​	​	52
Class B Non-Voting Common stock, $0.01 par value; 10,000,000 shares authorized, 752,184 shares issued and outstanding as of September 30, 2019 and December 31, 2018	​	​	7	​	​	7
Treasury stock, at cost	​	​	(4,155)	​	​	(220)
Additional paid-in capital	​	​	76,667	​	​	76,152
Retained earnings	​	​	5,463	​	​	4,115
Accumulated other comprehensive loss	​	​	(63)	​	​	(425)
Total stockholders’ equity	​	​	77,972	​	​	79,681
​	​	$	963,193	​	$	729,625

See notes to unaudited condensed financial statements.

F-2

PROFESSIONAL HOLDING CORP.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
(Dollar amounts in thousands)

​

Three Months Ended September 30,

Nine Months Ended September 30,

​

2019

2018

2019

2018

Interest income

​

​

​

​

​

​

​

​

​

​

​

​

Loans, including fees

​

$

9,502

​

$

6,671

​

$

26,289

​

$

18,015

Taxable securities

​

​

172

​

​

160

​

​

504

​

​

463

Dividend income on restricted stock

​

​

73

​

​

70

​

​

200

​

​

156

Other

​

​

583

​

​

399

​

​

1,607

​

​

808

Total interest income

​

​

10,330

​

​

7,300

​

​

28,600

​

​

19,442

Interest expense

​

​

​

​

​

​

​

​

​

​

​

​

Deposits

​

​

2,789

​

​

1,392

​

​

7,200

​

​

3,332

Federal Home Loan Bank advances

​

​

288

​

​

225

​

​

795

​

​

503

Total interest expense

​

​

3,077

​

​

1,617

​

​

7,995

​

​

3,835

Net interest income

​

​

7,253

​

​

5,683

​

​

20,605

​

​

15,607

Provision for loan losses

​

​

380

​

​

300

​

​

762

​

​

790

Net interest income after provision for loan losses

​

​

7,633

​

​

5,383

​

​

19,843

​

​

14,817

Non-interest income

​

​

​

​

​

​

​

​

​

​

​

​

Service charges on deposit accounts

​

​

399

​

​

152

​

​

542

​

​

437

Income from Company owned life insurance

​

​

136

​

​

71

​

​

278

​

​

216

Gain on sale of securities

​

​

—

​

​

—

​

​

3

​

​

—

Other

​

​

309

​

​

191

​

​

1,304

​

​

665

Total non-interest income

​

​

844

​

​

414

​

​

2,127

​

​

1,318

Non-interest expense

​

​

​

​

​

​

​

​

​

​

​

​

Salaries and employee benefits

​

​

4,662

​

​

3,112

​

​

13,534

​

​

9,331

Occupancy and equipment

​

​

701

​

​

497

​

​

1,824

​

​

1,400

Data processing

​

​

165

​

​

153

​

​

489

​

​

466

Marketing

​

​

128

​

​

60

​

​

400

​

​

279

Professional fees

​

​

524

​

​

128

​

​

1,106

​

​

400

Regulatory assessments

​

​

46

​

​

149

​

​

353

​

​

402

Other

​

​

815

​

​

884

​

​

2,382

​

​

1,928

Total non-interest expense

​

​

7,041

​

​

4,983

​

​

20,088

​

​

14,206

Income before income taxes

​

​

676

​

​

814

​

​

1,882

​

​

1,929

Income tax provision

​

​

(182)

​

​

(240)

​

​

(534)

​

​

(609)

Net income

​

​

494

​

​

574

​

​

1,348

​

​

1,320

Other comprehensive income:

​

​

​

​

​

​

​

​

​

​

​

​

Unrealized holding gain (loss) on securities available for sale

​

​

1

​

​

(22)

​

​

485

​

​

(224)

Tax effect

​

​

—

​

​

6

​

​

(123)

​

​

57

Other comprehensive loss, net of tax

​

​

1

​

​

(16)

​

​

362

​

​

(167)

Comprehensive income

​

$

495

​

$

558

​

$

1,710

​

$

1,153

Earnings per share:

​

​

​

​

​

​

​

​

​

​

​

​

Basic

​

$

0.09

​

$

0.12

​

$

0.23

​

$

0.27

Diluted

​

$

0.08

​

$

0.11

​

$

0.22

​

$

0.26

See notes to unaudited condensed financial statements.

F-3

PROFESSIONAL HOLDING CORP.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)
(Dollar amounts in thousands, except share data)

​

Preferred Stock

Common Stock

Treasury Stock

Additional Paid-in Capital

Retained Earnings

Accumulated Other Comprehensive Loss

Total

​

Shares

Amount

Shares

Amount

Balance at June 30, 2019

​

—

​

$

—

​

5,937,987

​

$

60

​

$

(655)

​

$

76,612

​

$

4,969

​

$

(64)

​

$

80,922

Issuance of Common Stock, net of cost

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Employee stock purchase plan

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

30

​

​

—

​

​

—

​

​

30

Repurchase Treasury Stock

​

—

​

​

—

​

(200,000)

​

​

—

​

​

(3,500)

​

​

—

​

​

—

​

​

—

​

​

(3,500)

Net income

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

—

​

​

494

​

​

—

​

​

494

Other comprehensive loss

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

1

​

​

1

Stock based compensation

​

—

​

​

—

​

2,499

​

​

—

​

​

—

​

​

25

​

​

—

​

​

—

​

​

25

Balance at September 30, 2019

​

—

​

​

—

​

5,740,486

​

​

60

​

​

(4,155)

​

​

76,667

​

​

5,463

​

​

(63)

​

​

77,972

Balance at June 30, 2018

​

—

​

$

—

​

4,818,267

​

$

48

​

$

(220)

​

$

56,025

​

$

2,755

​

$

(353)

​

$

58,255

Issuance of Common Stock, net of cost

​

—

​

—

​

—

​

—

​

—

​

—

​

—

​

—

​

—

Employee stock purchase plan

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

27

​

​

—

​

​

—

​

​

27

Repurchase Treasury Stock

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Net income

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

—

​

​

574

​

​

—

​

​

574

Other comprehensive loss

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(16)

​

​

(16)

Stock based compensation

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

11

​

​

—

​

​

—

​

​

11

Balance at September 30, 2018

​

—

​

$

—

​

4,818,267

​

$

48

​

$

(220)

​

$

56,063

​

$

3,329

​

$

(369)

​

$

58,851

Balance at December 31, 2018

​

—

​

$

—

​

5,923,884

​

$

59

​

$

(220)

​

$

76,152

​

$

4,115

​

$

(425)

​

$

79,681

Issuance of Common Stock, net of cost

​

—

​

​

—

​

39,103

​

​

1

​

​

—

​

​

385

​

​

—

​

​

—

​

​

386

Employee stock purchase plan

​

—

​

​

—

​

2,499

​

​

—

​

​

—

​

​

130

​

​

—

​

​

—

​

​

130

Repurchase Treasury Stock

​

—

​

​

—

​

(225,000)

​

​

—

​

​

(3,935)

​

​

—

​

​

—

​

​

—

​

​

(3,935)

Net income

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

—

​

​

1,348

​

​

—

​

​

1,348

Other comprehensive loss

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

362

​

​

362

Stock based compensation

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Balance at September 30, 2019

​

—

​

​

—

​

5,740,486

​

​

60

​

​

(4,155)

​

​

76,667

​

​

5,463

​

​

(63)

​

​

77,972

Balance at December 31, 2017

​

—

​

$

—

​

4,818,267

​

$

48

​

$

(220)

​

$

55,957

​

$

2,009

​

$

(202)

​

$

57,592

Issuance of Common Stock, net of cost

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Employee stock purchase plan

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

70

​

​

—

​

​

—

​

​

70

Repurchase Treasury Stock

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Net income

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

—

​

​

1,320

​

​

—

​

​

1,320

Other comprehensive loss

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(167)

​

​

(167)

Stock based compensation

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

36

​

​

—

​

​

—

​

​

36

Balance at September 30, 2018

​

—

​

$

—

​

4,818,267

​

$

48

​

$

(220)

​

$

56,063

​

$

3,329

​

$

(369)

​

$

58,851

See notes to unaudited condensed financial statements.

F-4

PROFESSIONAL HOLDING CORP.

CONSOLIDATED SATEMENTS OF CASH FLOWS (Unaudited)
(Dollar amounts in thousands)

​	Nine Months Ended September 30,
​	2019			2018
Cash flows from operating activities	​	​	​	​	​	​
Net income	​	$	1,348	​	$	1,320
Adjustments to reconcile net income to net cash from operating activities	​	​	​	​	​	​
Provision for loan losses	​	​	762	​	​	790
Deferred income tax benefit	​	​	199	​	​	68
Depreciation and amortization	​	​	948	​	​	582
Gain on sale of securities	​	​	3	​	​	—
Change in fair value of equity securities	​	​	(33)	​	​	9
Net amortization of securities	​	​	(107)	​	​	409
Net amortization on deferred loan fees	​	​	487	​	​	478
Employee stock purchase plan	​	​	87	​	​	—
Stock compensation	​	​	—	​	​	36
Income from company owned life insurance	​	​	(279)	​	​	(178)
Changes in operating assets and liabilities:	​	​	​	​	​	​
Accrued interest receivable	​	​	(472)	​	​	(491)
Other assets	​	​	(656)	​	​	(134)
Official checks, accrued interest payable, and other liabilities	​	​	(1,557)	​	​	7,121
Net cash from operating activities	​	​	730	​	​	10,010
Cash flows from investing activities	​			​
Proceeds from maturities and paydowns of securities available for sale	​	​	4,247	​	​	4,835
Proceeds from paydowns of securities held to maturity	​	​	34	​	​	44
Purchase of securities available for sale	​	​	(17,008)	​	​	—
Sale of securities available for sale	​	​	4,501	​	​	—
Loans originations, net of principal repayments	​	​	(164,432)	​	​	(123,245)
Purchase of Federal Reserve Bank stock	​	​	(529)	​	​	(345)
Purchase of Federal Home Loan Bank Stock	​	​	(590)	​	​	(996)
Proceeds of Federal Home Loan Bank Stock	​	​	—	​	​	213
Purchase of company owned life insurance	​	​	(8,000)	​	​	—
Purchases of premises and equipment	​	​	(1,598)	​	​	(1,445)
Net cash used in investing activities	​	​	(183,375)	​	​	(120,939)
Cash flows from financing activities	​	​	​	​	​	​
Net increase in deposits	​	​	219,763	​	​	135,204
Proceeds from issuance of stock	​	​	386	​	​	—
Issuance costs of common stock	​	​	43	​	​	70
Purchase of treasury stock	​	​	(3,935)	​	​	—
Proceeds from Federal Home Loan Bank advances	​	​	20,000	​	​	20,000
Repayments of Federal Home Loan advances	​	​	(10,000)	​	​	(5,000)
Net cash provided by financing activities	​	​	226,257	​	​	150,274
Increase in cash and cash equivalents	​	​	43,612	​	​	39,345
Cash and cash equivalents at beginning of year	​	​	86,883	​	​	37,126
Cash and cash equivalents at end of year	​	$	130,495	​	$	76,471
Supplemental cash flow information:	​	​	​	​	​	​
Cash paid during the year for interest	​	$	7,985	​	$	3,678
Cash paid during the year for taxes	​	$	637	​	$	585
Supplemental noncash disclosures:	​	​	​	​	​	​
Other comprehensive loss – change in unrealized loss on securities available for sale, net of tax	​	$	362	​	$	(168)
Adoption of right of use asset – lease recognition standard	​	$	5,673	​	$	—

See notes to unaudited condensed financial statements.

F-5

PROFESSIONAL HOLDING CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited)
(Tables in thousands, except share data)

NOTE 1 — BASIS OF PRESENTATION

Basis of Presentation:   The accompanying unaudited condensed consolidated financial statements of Professional Holding Corp. and its subsidiary, Professional Bank, collectively (the “Company”) have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Certain prior period amounts have been reclassified to conform to the current period presentation.

Operating results for the nine months ended September 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019 or any other period. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Financial Statements for the year ended December 31, 2018.

Adoption of new accounting pronouncements:

ASU 2016-02:   On January 1, 2019, the Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2016-02, “Leases”, and all the related amendments (collectively, Accounting Standards Codification “ASC” Topic 842) through a cumulative-effect adjustment.

The new guidance requires a lessee to recognize at the transition date right-of-use assets (“ROUA”) and lease liabilities for all operating leases. Upon adoption, the Company recognized ROUAs of  $5.9 million and lease liabilities of  $6.2 million with no impact to equity. Operating lease liabilities are measured based on the present value of lease payments over the lease term. At the transition date, ROUA was determined by adjusting lease liabilities for the carrying balances of deferred rent under ASC Topic 840 Leases, cease-use liabilities under ASC Topic 420 Exit or Disposal Cost Obligations, and assets and liabilities recognized under ASC Topic 805 Business Combinations for acquired operating leases, which aggregated to $300 thousand.

We determine if an arrangement is a lease at the inception of a lease. ROUAs represent our right to use the underlying asset and lease liabilities represent our obligation to make lease payments for the lease term. Operating lease ROUAs and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the appropriate term and information available at commencement date in determining the present value of lease payments. The lease term may include options to extend the lease when it is reasonably certain that we will exercise that option. ROUAs and operating lease liabilities are reported in Other Assets and Other Liabilities, respectively, in the Consolidated Balance Sheet. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

The Company elected certain practical expedients offered by the FASB for all classes of leased assets. As a result, the Company has not reassessed whether existing contracts are or contain leases, nor has the Company reassessed the classification of existing leases. The Company elected not to separate lease and non-lease components and instead accounts for them as a single lease component. The Company also elected to exclude short-term leases from the recognition of right-of-use assets and lease liabilities. Therefore, if the lease term is equal to or less than twelve months (including the renewal options that we are reasonably certain to exercise) and we are not reasonably certain to exercise any available purchase options in the lease, we do not apply the new lease accounting guidance for those leases. The Company elected the hindsight practical expedient, which allows entities to use hindsight when determining lease term and impairment of ROUAs.

F-6

PROFESSIONAL HOLDING CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) (Continued)
(Tables in thousands, except share data)
 

NOTE 2 — RECENTLY ISSUED ACCOUNTING STANDARDS, NOT YET ADOPTED

The following provides a brief description of accounting standards that have been issued but are not yet adopted that could have a material effect on the Company’s financial statements:

ASU 2016-13, Financial Instruments – Credit Losses (Topic 326)
Description	In June 2016, FASB issued guidance to replace the incurred loss model with an expected loss model, which is referred to as the current expected credit loss (CECL) model. The CECL model is applicable to the measurement of credit losses on financial assets measured at amortized cost, including loan receivables and held to maturity debt securities. It also applies to off-balance sheet credit exposures not accounted for as insurance (i.e. loan commitments, standby letters of credit, financial guarantees and other similar instruments).
Date of Adoption	For PBEs that are non-SEC filers and for SEC filers that are considered emerging growth companies, it is effective for January 1, 2023.
Effect on the Consolidated Financial Statements	The Company’s management is in the process of evaluating and implementing changes to credit loss estimation models and related processes. Updates to business processes and the documentation of accounting policy decisions are ongoing. The company may recognize an increase in the allowance for credit losses upon adoption, recorded as a one-time cumulative adjustment to retained earnings. However, the magnitude of the impact on the Company’s consolidated financial statements has not yet been determined. The Company will adopt this accounting standard effective January 1, 2023.

NOTE 3 — EARNINGS PER SHARE

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 options during the year.

​

Three Months Ended September 30,

Nine Months Ended September 30,

​

2019

2018

2019

2018

Basic earnings per share:

​

​

​

​

​

​

​

​

​

​

​

​

Net Income

​

$

494

​

$

574

​

$

1,348

​

$

1,320

Total weighted average common stock outstanding

​

​

5,807

​

​

4,818

​

​

5,883

​

​

4,818

Net income per share

​

$

0.09

​

$

0.12

​

$

0.23

​

$

0.27

Diluted earnings per share:

​

​

​

​

​

​

​

​

​

​

​

​

Net Income

​

$

494

​

$

574

​

$

1,348

​

$

1,320

Total weighted average common stock outstanding

​

​

5,807

​

​

4,818

​

​

5,883

​

​

4,818

Add: Dilutive effect of employee stock options

​

​

181

​

​

219

​

​

202

​

​

219

Total weighted average diluted stock outstanding

​

​

5,988

​

​

5,037

​

​

6,085

​

​

5,037

Net income per share

​

$

0.08

​

$

0.11

​

$

0.22

​

$

0.26

F-7

PROFESSIONAL HOLDING CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) (Continued)
(Tables in thousands, except share data)
 

NOTE 3 — EARNINGS PER SHARE (Continued)
 

For both the three and nine months ended September 30, 2019 and September 30, 2018, there were no stock options that were anti-dilutive.

NOTE 4 — SECURITIES

The following table summarizes the amortized cost and fair value of securities available-for-sale and securities held-to-maturity at September 30, 2019 and December 31, 2018 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive loss and gross unrecognized gains and losses:

September 30, 2019

Amortized Cost

Gross Unrealized Gains

Gross Unrealized Losses

Fair Value

Available-for-sale

​

​

​

​

​

​

​

​

​

​

​

​

Small Business Administration loan pools

​

$

16,139

​

$

18

​

$

(133)

​

$

16,024

Mortgage-backed securities

​

​

5,688

​

​

3

​

​

(63)

​

​

5,628

US Agency Securities

​

​

4,493

​

​

92

​

​

—

​

​

4,585

Corporate bonds

​

​

2,000

​

​

—

​

​

(1)

​

​

1,999

Total available-for-sale

​

$

28,320

​

$

113

​

$

(197)

​

$

28,236

​

Amortized Cost

Gross Unrecognized Gains

Gross Unrecognized Losses

Fair Value

Held-to-Maturity

​

​

​

​

​

​

​

​

​

​

​

​

Mortgage-backed securities

​

$

224

​

$

12

​

$

—

​

$

236

Total Held-to-Maturity

​

$

224

​

$

12

​

$

—

​

$

236

December 31,2018

Amortized Cost

Gross Unrealized Gains

Gross Unrealized Losses

Fair Value

Available-for-sale

​

​

​

​

​

​

​

​

​

​

​

​

Small Business Administration loan pools

​

$

7,563

​

$

—

​

$

(114)

​

$

7,449

Mortgage-backed securities

​

​

6,533

​

​

2

​

​

(227)

​

​

6,308

US Agency Securities

​

​

—

​

​

—

​

​

—

​

​

—

Corporate bonds

​

​

6,000

​

​

21

​

​

(193)

​

​

5,828

Total available-for-sale

​

$

20,096

​

$

23

​

$

(534)

​

$

19,585

​

Amortized Cost

Gross Unrecognized Gains

Gross Unrecognized Losses

Fair Value

Held-to-Maturity

​

​

​

​

​

​

​

​

​

​

​

​

Mortgage-backed securities

​

$

259

​

$

6

​

$

—

​

$

265

Total Held-to-Maturity

​

$

259

​

$

6

​

$

—

​

$

265

As of September 30, 2019, and December 31, 2018, Corporate bonds are comprised primarily of investments in the financial services industry. Proceeds from the sales of securities during the three and nine months ended September 30, 2019 were $0 and $4.5 million, with gross realized gains of  $0 and $44 thousand, and gross realized losses of  $0 and $41 thousand, respectively. There were no sales of securities for the year ended December 31, 2018.

F-8

PROFESSIONAL HOLDING CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) (Continued)
(Tables in thousands, except share data)
 

NOTE 4 — SECURITIES (Continued)
 

The scheduled maturities of securities as of September 30, 2019 are as follows. The amortized cost and fair value of debt securities are shown by contractual maturity. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately.

​	September 30, 2019
​	Amortized Cost			Fair Value
Available-for-sale	​	​	​	​	​	​
Due in one year or less	​	$	—	​	$	—
Due after one year through five years	​	​	5,808	​	​	5,844
Due after five years through ten years	​	​	13,163	​	​	13,140
Due after ten years	​	​	3,661	​	​	3,679
Mortgage backed securities	​	​	5,688	​	​	5,573
Total	​	$	28,320	​	$	28,236
Held-to-maturity	​	​	​	​	​	​
Mortgage-backed securities	​	$	224	​	$	236
Total	​	$	224	​	$	236

At September 30, 2019 and December 31, 2018, there were no holdings of securities of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of shareholders’ equity.

The tables below indicate the fair value of debt securities with unrealized losses and the period of time for which these losses were outstanding at September 30, 2019 and December 31, 2018, respectively, aggregated by major security type and length of time in a continuous unrealized loss position:

​

Less Than 12 Months

12 Months or Longer

Total

September 30, 2019

Fair Value

Unrealized Losses

Fair Value

Unrealized Losses

Fair Value

Unrealized Losses

Available-for-sale

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

SBA loan pools

​

$

14,651

​

$

(101)

​

$

1,373

​

$

(32)

​

$

16,024

​

$

(133)

Mortgage-backed

​

​

—

​

​

—

​

​

4,597

​

​

(63)

​

​

4,597

​

​

(63)

US Agency Securities

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Corporate bonds

​

​

1,499

​

​

(1)

​

​

500

​

​

—

​

​

1,999

​

​

(1)

Total available-for-sale

​

$

16,150

​

$

(102)

​

$

6,470

​

$

(95)

​

$

22,620

​

$

(197)

​

Less Than 12 Months

12 Months or Longer

Total

December 31, 2018

Fair Value

Unrealized Losses

Fair Value

Unrealized Losses

Fair Value

Unrealized Losses

Available-for-sale

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

SBA loan pools

​

$

1,212

​

$

(16)

​

$

5,934

​

$

(98)

​

$

7,146

​

$

(114)

Mortgage-backed

​

​

—

​

​

—

​

​

5,964

​

​

(227)

​

​

5,964

​

​

(227)

US Agency Securities

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Corporate bonds

​

​

1,812

​

​

(188)

​

​

495

​

​

(5)

​

​

2,307

​

​

(193)

Total available-for-sale

​

$

3,024

​

$

(204)

​

$

12,393

​

$

(330)

​

$

15,417

​

$

(534)

F-9

PROFESSIONAL HOLDING CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) (Continued)
(Tables in thousands, except share data)
 

NOTE 4 — SECURITIES (Continued)
 

The unrealized holding losses within the investment portfolio are considered to be temporary and are mainly due to changes in the interest rate cycle. The unrealized loss positions may fluctuate positively or negatively with changes in interest rates or spreads. Because the decline in fair value is attributable to changes in interest rates and not credit quality, and because the Company does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the Company does not consider these securities to be other-than-temporarily impaired at September 30, 2019. No credit losses were recognized in operations during the nine months ended September 30, 2019 or during 2018.

NOTE 5 — LOANS

Loans at September 30, 2019 and December 31, 2018 were as follows:

​	September 30, 2019			December 31, 2018
Commercial real estate	​	$	262,761	​	$	191,930
Residential real estate	​	​	349,306	​	​	311,404
Commercial	​	​	114,003	​	​	83,276
Construction and development	​	​	37,925	​	​	17,608
Consumer and other loans	​	​	7,900	​	​	3,244
​	​	​	771,895	​	​	607,462
Less –	​	​	​	​	​	​
Unearned loan origination fees (costs), net	​	​	(783)	​	​	(297)
Allowance for loan losses	​	​	(6,449)	​	​	(5,685)
​	​	$	764,663	​	$	601,480

The recorded investment in loans excludes accrued interest receivable and net deferred loan fees due to immateriality.

The bank had two loans for $1.6 million in nonaccrual as of September 30, 2019. The bank had no loans on nonaccrual as of December 31, 2018.

There are two loans for $3.2 million past due over 90 days still accruing as of September 30, 2019. There are no loans past due over 90 days still accruing as of December 31, 2018.

The following table presents the aging of the recorded investment in past due loans as of September 30, 2019 and December 31, 2018 by class of loans:

September 30, 2019	30 – 59 Days Past Due			60 – 89 Days Past Due			Greater than 89 Days Past Due			Nonaccrual			Total Past Due			Total Loans Not Past Due			Total
Commercial real estate	​	$	—	​	$	—	​	$	2,446	​	$	—	​	$	2,446	​	$	260,315	​	$	262,761
Residential real estate	​	​	—	​	​	—	​	​	—	​	​	487	​	​	487	​	​	348,819	​	​	349,306
Commercial	​	​	98	​	​	138	​	​	728	​	​	1,068	​	​	2,032	​	​	111,971	​	​	114,003
Construction and land dev	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	37,925	​	​	37,925
Consumer and other	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	7,900	​	​	7,900
Total	​	$	98	​	$	138	​	$	3,174	​	$	1,555	​	$	4,965	​	$	766,930	​	$	771,895

F-10

PROFESSIONAL HOLDING CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) (Continued)
(Tables in thousands, except share data)
 

NOTE 5 — LOANS (Continued)
 

December 31, 2018	30 – 59 Days Past Due			60 – 89 Days Past Due			Greater than 89 Days Past Due			Nonaccrual			Total Past Due			Total Loans Not Past Due			Total
Commercial real estate	​	$	2,478	​	$	—	​	$	—	​	$	—	​	$	2,478	​	$	189,452	​	$	191,930
Residential real estate	​	​	257	​	​	—	​	​	—	​	​	—	​	​	257	​	​	311,147	​	​	311,404
Commercial	​	​	1,081	​	​	—	​	​	—	​	​	—	​	​	1,081	​	​	82,195	​	​	83,276
Construction and land dev	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	17,608	​	​	17,608
Consumer and other	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	3,244	​	​	3,244
Total	​	$	3,816	​	$	—	​	$	—	​	$	—	​	$	3,816	​	$	603,646	​	$	607,462

At September 30, 2019, there were five impaired loans with recorded investments totaling $4.0 million with no allowance. There was one loan impaired with a recorded investment of  $1.1 million with $619 thousand allowance. At December 31, 2018, there were two impaired residential real estate loans with recorded investments totaling $357 thousand with no allowance. The three and nine-month average net investment on the impaired residential real estate and commercial loans during 2019 was $1,437 thousand and $1,441 thousand, accordingly. The residential real estate loans had $13 thousand interest income recognized which was equal to cash basis interest income.

Troubled Debt Restructurings:

The principal carrying balance of loans that specifically met the criteria for consideration as a troubled debt restructuring was $376 thousand and $357 thousand as of September 30, 2019 and December 31, 2018, respectively. The Company has allocated no specific reserves to customers whose loan terms have been modified in troubled debt restructurings as of September 30, 2019 and December 31, 2018. The Company has not committed any additional amounts to customers whose loans are classified as a troubled debt restructuring.

There were no loans modified as troubled debt restructurings during the period ending September 30, 2019 or December 31, 2018.

Credit Quality Indicators:

The Corporation categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt including: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. Generally, all credits, aside from residential loans, greater than $500 thousand are reviewed no less than annually to monitor and adjust, if necessary, the credit risk profile. Loans classified as substandard or special mention are reviewed quarterly by the Corporation for further evaluation to determine if they are appropriately classified and whether there is any impairment. Beyond the annual review, all loans are graded upon initial issuance. In addition, during the renewal process of any loan, as well as if a loan becomes past due, the Corporation will determine the appropriate loan grade.

F-11

PROFESSIONAL HOLDING CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) (Continued)
(Tables in thousands, except share data)
 

NOTE 5 — LOANS (Continued)
 

Loans excluded from the review process above are generally classified as pass credits until: (a) they become past due; (b) management becomes aware of deterioration in the credit worthiness of the borrower; or (c) the customer contacts the Corporation for a modification. In these circumstances, the loan is specifically evaluated for potential classification as to special mention, substandard, doubtful, or even charged-off. The Corporation uses the following definitions for risk ratings:

Pass:   A Pass loan’s primary source of loan repayment is satisfactory, with secondary sources very likely to be realized if necessary. The pass category includes the following:

Riskless:   Loans that are fully secured by liquid, properly margined collateral (listed stock, bonds, or other securities; savings accounts; certificates of deposit; loans or that portion thereof which are guaranteed by the U.S. Government or agencies backed by the “full faith and credit” thereof; loans secured by properly executed letters of credit from prime financial institutions).

High Quality Risk:   Loans to recognized national companies and well-seasoned companies that enjoy ready access to major capital markets or to a range of financing alternatives. Borrower’s public debt offerings are accorded highest ratings by recognized rating agencies, e.g., Moody’s or Standard & Poor’s. Companies display sound financial conditions and consistent superior income performance. The borrower’s trends and those of the industry to which it belongs are positive.

Satisfactory Risk:   Loans to borrowers, reasonably well established, that display satisfactory financial conditions, operating results and excellent future potential. Capacity to service debt is amply demonstrated. Current financial strength, while financially adequate, may be deficient in a number of respects. Normal comfort levels are achieved through a closely monitored collateral position and/or the strength of outside guarantors.

Moderate Risk:   Loans to borrowers who are in non-compliance with periodic reporting requirements of the loan agreement, and any other credit file documentation deficiencies, which do not otherwise affect the borrower’s credit risk profile. This may include borrowers who fail to supply updated financial information that supports the adequacy of the primary source of repayment to service the Bank’s debt and prevents bank management to evaluate the borrower’s current debt service capacity. Existing loans will include those with consistent track record of timely loan payments, no material adverse changes to underlying collateral, and no material adverse change to guarantor(s) financial capacity, evidenced by public record searches.

Special mention:   A Special Mention loan has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in the deterioration of the repayment prospects for the asset or the Corporation’s credit position at some future date. Special Mention loans are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification.

Substandard:   A Substandard loan is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Corporation will sustain some loss if the deficiencies are not corrected.

Doubtful:   A loan classified Doubtful has all the weaknesses inherent in one classified Substandard with the added characteristics that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loss:   A loan classified Loss is considered uncollectible and of such little value that continuance as a bankable asset is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may be affected in the future.

F-12

PROFESSIONAL HOLDING CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) (Continued)
(Tables in thousands, except share data)
 

NOTE 5 — LOANS (Continued)
 

Based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

September 30, 2019

Pass

Special Mention

Substandard

Doubtful

Total

Commercial real estate

​

$

258,569

​

$

1,746

​

$

2,446

​

$

—

​

$

262,761

Residential real estate

​

​

348,549

​

​

757

​

​

—

​

​

—

​

​

349,306

Commercial

​

​

111,774

​

​

432

​

​

1,797

​

​

—

​

​

114,003

Construction and land development

​

​

37,925

​

​

—

​

​

—

​

​

—

​

​

37,925

Consumer

​

​

7,900

​

​

—

​

​

—

​

​

—

​

​

7,900

Total

​

$

764,717

​

$

2,935

​

$

4,243

​

$

—

​

$

771,895

December 31, 2018

Pass

Special Mention

Substandard

Doubtful

Total

Commercial real estate

​

$

189,228

​

$

2,702

​

$

—

​

$

—

​

$

191,930

Residential real estate

​

​

311,013

​

​

391

​

​

—

​

​

—

​

​

311,404

Commercial

​

​

82,668

​

​

577

​

​

31

​

​

—

​

​

83,276

Construction and land development

​

​

17,608

​

​

—

​

​

—

​

​

—

​

​

17,608

Consumer

​

​

3,244

​

​

—

​

​

—

​

​

—

​

​

3,244

Total

​

$

603,761

​

$

3,670

​

$

31

​

$

—

​

$

607,462

NOTE 6 — Allowance for Loan Losses

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method for the three and nine month periods ended September 30, 2019 and 2018:

​

Commercial Real Estate

Residential Real Estate

Commercial

Construction and land Development

Consumer and Other

Total

Three months ended September 30, 2019:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Allowance for loan losses:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Beginning balance

​

$

1,311

​

$

2,659

​

$

1,578

​

$

371

​

$

150

​

$

6,069

Provision for loan losses

​

​

477

​

​

633

​

​

(542)

​

​

(116)

​

​

(72)

​

​

380

Loans charged-off

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Recoveries

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Total ending allowance balance

​

$

1,788

​

$

3,292

​

$

1,036

​

$

255

​

$

78

​

$

6,449

F-13

PROFESSIONAL HOLDING CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) (Continued)
(Tables in thousands, except share data)
 

NOTE 6 — Allowance for Loan Losses (Continued)
 

​

Commercial Real Estate

Residential Real Estate

Commercial

Construction and land Development

Consumer and Other

Total

Three months ended September 30, 2018:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Allowance for loan losses:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Beginning balance

​

$

1,158

​

$

1,543

​

$

2,039

​

$

235

​

$

50

​

$

5,025

Provision for loan losses

​

​

87

​

​

71

​

​

145

​

​

(2)

​

​

(1)

​

​

300

Loans charged-off

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Recoveries

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Total ending allowance balance

​

$

1,245

​

$

1,614

​

$

2,184

​

$

233

​

$

49

​

$

5,325

​

Commercial Real Estate

Residential Real Estate

Commercial

Construction and land Development

Consumer and Other

Total

Nine months ended September 30, 2019:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Allowance for loan losses:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Beginning balance

​

$

1,435

​

$

1,822

​

$

2,106

​

$

262

​

$

60

​

$

5,685

Provision for loan losses

​

​

353

​

​

1,470

​

​

(1,070)

​

​

(7)

​

​

16

​

​

762

Loans charged-off

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Recoveries

​

​

—

​

​

—

​

​

—

​

​

—

​

​

2

​

​

2

Total ending allowance balance

​

$

1,788

​

$

3,292

​

$

1,036

​

$

255

​

$

78

​

$

6,449

​

Commercial Real Estate

Residential Real Estate

Commercial

Construction and land Development

Consumer and Other

Total

Nine months ended September 30, 2018:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Allowance for loan losses:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Beginning balance

​

$

1,275

​

$

1,590

​

$

1,170

​

$

452

​

$

48

​

$

4,535

Provision for loan losses

​

​

(30)

​

​

24

​

​

1,014

​

​

(219)

​

​

1

​

​

790

Loans charged-off

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Recoveries

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Total ending allowance balance

​

$

1,245

​

$

1,614

​

$

2,184

​

$

233

​

$

49

​

$

5,325

F-14

PROFESSIONAL HOLDING CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) (Continued)
(Tables in thousands, except share data)
 

NOTE 6 — Allowance for Loan Losses (Continued)
 

​

Commercial Real Estate

Residential Real Estate

Commercial

Construction and Land Development

Consumer and Other

Total

September 30, 2019:

​

​

​

​

​

​

Allowance for loan losses:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Ending allowance balance attributable to loans

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Individually evaluated for impairment

​

$

—

​

$

—

​

$

619

​

$

—

​

$

—

​

$

619

Collectively evaluated for impairment

​

​

1,788

​

​

3,292

​

​

417

​

​

255

​

​

78

​

​

5,830

Total ending allowance balance

​

$

1,788

​

$

3,292

​

$

1,036

​

$

255

​

$

78

​

$

6,449

Loans:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Loans individually evaluated for impairment

​

$

2,446

​

$

863

​

$

1,797

​

$

—

​

$

—

​

$

5,106

Loans collectively evaluated for impairment

​

​

260,331

​

​

348,443

​

​

112,313

​

​

37,925

​

​

7,777

​

​

766,789

Total ending loans balance

​

$

262,777

​

$

349,306

​

$

114,110

​

$

37,925

​

$

7,777

​

$

771,895

December 31, 2018:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Allowance for loan losses:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Ending allowance balance attributableto loans

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Individually evaluated for impairment

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

Collectively evaluated for impairment

​

​

1,435

​

​

1,822

​

​

2,106

​

​

262

​

​

60

​

​

5,685

Total ending allowance balance

​

$

1,435

​

$

1,822

​

$

2,106

​

$

262

​

$

60

​

$

5,685

Loans:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Loans individually evaluated for impairment

​

$

—

​

$

357

​

$

—

​

$

—

​

$

—

​

$

357

Loans collectively evaluated for impairment

​

​

191,930

​

​

311,047

​

​

83,276

​

​

17,608

​

​

3,244

​

​

607,105

Total ending loans balance

​

$

191,930

​

$

311,404

​

$

83,276

​

$

17,608

​

$

3,244

​

$

607,462

NOTE 7 — FAIR VALUE

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1 — Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2 — Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

F-15

PROFESSIONAL HOLDING CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) (Continued)
(Tables in thousands, except share data)
 

NOTE 7 — FAIR VALUE (Continued)
 

Level 3 — Significant unobservable inputs that reflect a Company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The Company used the following methods and significant assumptions to estimate fair value:

Securities available for sale and equity securities:   Where quoted prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. Level 1 securities include highly-liquid government bonds, certain mortgage products and exchange-traded equities. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics, or discounted cash flows. Examples of such instruments, which would generally be classified within Level 2 of the valuation hierarchy, include certain collateralized mortgage and debt obligations, corporate bonds, municipal bonds and U.S. agency notes. In certain cases where there is limited activity or less transparency around inputs to the valuation, securities are classified within Level 3 of the valuation hierarchy. Securities classified within Level 3 might include certain residual interests in securitizations and other less-liquid securities. As of September 30, 2019 and December 31, 2018, all securities available for sale were Level 2.

Assets and Liabilities Measured on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis, including financial assets and liabilities for which the Company has elected the fair value option, are summarized below:

​

​

​

​

Fair Value Measurements at September 30, 2019 Using:

September 30, 2019

Fair Value

Quoted Prices in Active Markets for Identical Assets (Level 1)

Significant Other Observable Inputs (Level 2)

Significant Unobservable Inputs (Level 3)

Securities available for sale

​

​

​

​

​

​

​

​

​

​

​

​

SBA loans pools

​

$

16,024

​

$

—

​

$

16,024

​

$

—

Mortgage backed securities

​

​

5,628

​

​

—

​

​

5,628

​

​

—

US Agency Securities

​

​

4,585

​

​

—

​

​

4,585

​

​

—

Corporate bonds

​

​

1,999

​

​

—

​

​

1,999

​

​

—

Total

​

$

28,236

​

$

—

​

$

28,236

​

$

—

Equity Securities

​

​

​

​

​

​

​

​

​

​

​

​

Mutual funds

​

$

975

​

​

—

​

$

975

​

​

—

Total

​

$

975

​

$

—

​

$

975

​

$

—

F-16

PROFESSIONAL HOLDING CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) (Continued)
(Tables in thousands, except share data)
 

NOTE 7 — FAIR VALUE (Continued)
 

​

​

​

​

Fair Value Measurements at December 31, 2018 Using:

December 31, 2018

Fair Value

Quoted Prices in Active Markets for Identical Assets (Level 1)

Significant Other Observable Inputs (Level 2)

Significant Unobservable Inputs (Level 3)

Securities available for sale

​

​

​

​

​

​

​

​

​

​

​

​

SBA loans pools

​

$

7,449

​

$

—

​

$

7,449

​

$

—

Mortgage backed securities

​

​

6,308

​

​

—

​

​

6,308

​

​

—

Corporate bonds

​

​

5,828

​

​

—

​

​

5,828

​

​

—

Total

​

$

19,585

​

$

—

​

$

19,585

​

$

—

Equity Securities

​

​

​

​

​

​

​

​

​

​

​

​

Mutual funds

​

$

942

​

​

—

​

$

942

​

​

—

Total

​

$

942

​

$

—

​

$

942

​

$

—

There were no securities reclassified into or out of Level 3 during the year through September 30, 2019 or the year ended December 31, 2018.

Impaired loans:   Level 3 loans consist of commercial, commercial real estate impaired loans and residential TDR’s. For these loans, evaluations may be single valuation or a combination of approaches that include comparative sales, cost or income approach. Significant unobservable inputs are observed with these level 3 loans types, they include, appraisal adjustments for local market conditions and economic factors that may result in changes in value of an assets over time.

Assets measured at fair value on a non-recurring basis are summarized below:

​

​

​

​

Fair Value Measurements at September 30, 2019 Using:

(Dollars in thousands)

Total at September 30, 2019

Quoted Prices in Active Markets for Identical Assets (Level 1)

Significant Other Observable Inputs (Level 2)

Significant Unobservable Inputs (Level 3)

Total Gains (Losses) for the nine months ended September 30, 2019

Impaired Loans:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Commercial real estate

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

Residential real estate

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Commercial

​

​

450

​

​

—

​

​

—

​

​

450

​

​

(619)

Construction and land development

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Consumer and other

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Total

​

$

450

​

$

—

​

$

—

​

$

450

​

$

(619)

F-17

PROFESSIONAL HOLDING CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) (Continued)
(Tables in thousands, except share data)
 

NOTE 7 — FAIR VALUE (Continued)
 

​

​

​

​

Fair Value Measurements at December 31, 2018 Using:

(Dollars in thousands)

Total at December 31, 2018

Quoted Prices in Active Markets for Identical Assets (Level 1)

Significant Other Observable Inputs (Level 2)

Significant Unobservable Inputs (Level 3)

Total Gains (Losses)

Impaired Loans:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Commercial real estate

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

Residential real estate

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Commercial

​

​

—

​

​

—

​

​

—

​

​

​

​

​

—

Construction and land development

​

​

—

​

​

—

​

​

—

​

​

—

​

​

​

Consumer and other

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Total

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

The table below presents the approximate carrying amount and estimated fair value of the Bank’s financial instruments (in thousands):

September 30, 2019	Carrying Amount			Fair Value			FairValue Hierarchy
Financial Assets:	​	​	​	​	​	​	​
Cash & Due from Banks, including interest bearing deposits	​	$	104,097	​	$	104,097	Level 1
Federal Funds Sold	​	​	26,398	​	​	26,398	Level 1
Securities, Available for Sale	​	​	28,236	​	​	28,236	Level 2
Securities, Held to Maturity	​	​	224	​	​	236	Level 2
Equity securities	​	​	975	​	​	975	Level 2
Loans, net	​	​	764,663	​	​	784,899	Level 3
Federal Home Loan Bank Stock	​	​	2,782	​	​	N/A	N/A
Federal Reserve Bank Stock	​	​	2,001	​	​	N/A	N/A
Company Owned Life Insurance	​	​	16,728	​	​	16,728	Level 2
Accrued Interest Receivable	​	​	2,451	​	​	2,451	Level 3
Financial Liabilities:	​	​	​	​	​	​	​
Deposits	​	​	823,065	​	​	803,018	Level 2
Federal Home Loan Bank Advances	​	​	50,000	​	​	49,359	Level 2
Accrued Interest Payable	​	​	353	​	​	353	Level 2

F-18

PROFESSIONAL HOLDING CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) (Continued)
(Tables in thousands, except share data)
 

NOTE 7 — FAIR VALUE (Continued)
 

December 31, 2018	Carrying Amount			Fair Value			FairValue Hierarchy
Financial Assets:	​	​	​	​	​	​	​
Cash & Due from Banks, including interest bearing deposits	​	$	64,842	​	$	64,842	Level 1
Federal Funds Sold	​	​	22,041	​	​	22,041	Level 1
Securities, Available for Sale	​	​	19,585	​	​	19,585	Level 2
Securities, Held to Maturity	​	​	259	​	​	265	Level 2
Equity securities	​	​	942	​	​	942	Level 2
Loans, net	​	​	601,480	​	​	606,838	Level 3
Federal Home Loan Bank Stock	​	​	2,192	​	​	N/A	N/A
Federal Reserve Bank Stock	​	​	1,472	​	​	N/A	N/A
Company Owned Life Insurance	​	​	8,449	​	​	8,449	Level 2
Accrued Interest Receivable	​	​	1,979	​	​	1,979	Level 3
Financial Liabilities:	​	​	​	​	​	​	​
Deposits	​	​	603,302	​	​	602,937	Level 2
Federal Home Loan Bank Advances	​	​	40,000	​	​	39,834	Level 2
Accrued Interest Payable	​	​	342	​	​	342	Level 2

NOTE 8 — LEASES

ASC 842 establishes a right-of-use (“ROU”) model that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases are classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement.

The Company leases certain properties and equipment under operating leases that resulted in the recognition of ROU Lease Assets of  $5,673 and Lease Liabilities of  $6,025 on the Company’s Condensed Consolidated Balance Sheets as of September 30, 2019.

ASC 842 was effective on January 1, 2019. A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application. The Company chose to use the adoption date of January 1, 2019 for ASC 842. As such, all periods presented after January 1, 2019 are under ASC 842 whereas periods presented prior to January 1, 2019 are in accordance with prior lease accounting of ASC 840. Financial information was not updated and the disclosures required under ASC 842 was not provided for dates and periods before January 1, 2019.

ASC 842 provides a number of optional practical expedients in transition. The Company has elected the package of practical expedients,’ which permits the Company not to reassess under the new standard the prior conclusions about lease identification, lease classification and initial direct costs. The Company also elected the use of the hindsight, a practical expedient which permits the use of information available after lease inception to determine the lease term via the knowledge of renewal options exercised not available as of the leases inception. The practical expedient pertaining to land easements is not applicable to the Company.

ASC 842 also requires certain accounting elections for ongoing application of ASC 842. The Company elected the short-term lease recognition exemption for all leases that qualify, meaning those with terms under twelve months. ROU assets or lease liabilities are not to be recognized for short-term leases. The

F-19

PROFESSIONAL HOLDING CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) (Continued)
(Tables in thousands, except share data)
 

NOTE 8 — LEASES (Continued)
 

Company also elected the practical expedient to not separate lease and non-lease components for all leases, the majority of which consist of real estate common area maintenance expenses. However, since these non-lease items are subject to change, they are treated and disclosed as variable payments in the quantitative disclosures below. Consequently, ASC 842’s changed guidance on contract components will not significantly affect our financial reporting. Similarly, ASC 842’s narrowed definition of initial direct costs will not significantly affect financial reporting.

Lessee Leases

The majority of the Company’s lessee leases are operating leases and consist of leased real estate for branches and operations centers. Options to extend and renew leases are generally exercised under normal circumstances. Advance notification is required prior to termination, and any noticing period is often limited to the months prior to renewal. Variable payments generally consist of common area maintenance and taxes. Rent escalations are generally specified by a payment schedule or are subject to a defined formula. The Company also elected the practical expedient to not separate lease and non-lease components for all leases, the majority of which consist of real estate common area maintenance expenses. Generally, leases do not include guaranteed residual values, but instead typically specify that the leased premises are to be returned in satisfactory condition with the Company liable for damages.

For operating leases, the lease liability and ROU asset (before adjustments) are recorded at the present value of future lease payments. ASC 842 requires the use of the lease interest rate; however, this rate is typically not known. As an alternative, ASC 842 permits the use of an entity’s fully secured incremental borrowing rate. The Company is electing to utilize the FHLB Atlanta Fixed Rate Advance index, as it is the most actively used institution-specific collateralized borrowing source available to the Company.

Lease cost for the three and nine months ended September 30, 2019 consists of:

​	Three-month period ended September 30, 2019			Nine-month period ended September 30, 2019
Operating Lease and Interest Cost	​	​	282	​	​	726
Variable Lease Cost	​	​	92	​	​	269
Total Lease Cost	​	$	374	​	$	995

The following table provides supplemental information related to leases for the three and nine months ended September 30, 2019:

​	Three-month period ended September 30, 2019		Nine-month period ended September 30, 2019
Operating Lease – Operating Cash Flows (Fixed Payments)	​	282	​	726
Operating Lease – Operating Cash Flows (Liability Reduction)	​	239	​	442
New ROU Assets – Operating Leases	​	—	​	411
Weighted Average Lease Term (Years) – Operating Leases	​	​	​	8.06
Weighted Average Discount Rate – Operating Leases	​	​	​	3.82%

F-20

PROFESSIONAL HOLDING CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) (Continued)
(Tables in thousands, except share data)
 

NOTE 8 — LEASES (Continued)
 

A maturity analysis of operating lease liabilities and reconciliation of the undiscounted cash flows to the total operating lease liabilities as of September 30, 2019 is as follows:

​	September 30, 2019
Operating lease payments due:	​	​	​
Within one year	​	$	1,060
After one but within two years	​	​	1,064
After two but within three years	​	​	1,083
After three but within four years	​	​	1,115
After four years but within five years	​	​	1,022
After five years	​	​	2,218
Total undiscounted cash flows	​	​	7,562
Discount on cash flows	​	​	(933)
Total operating lease liabilities	​	$	6,629

Lessor Leases

ASC 842 also impacted lessor accounting. Substantially, all the Company’s lessor leases are related to unused real estate office space owned by the Company. Most have defined terms, though some leases have gone month-to-month once the initial term has passed. The impact of subleases is not material. Income from operating leases are reported within Occupancy Expense as an offset to Non-interest Expense in the Company’s Condensed Consolidated Statements of Income and Comprehensive Income. Currently the Company does not have any lessor leases (formerly known as capital leases) to report on its financials.

NOTE 9 — SUBSEQUENT EVENTS

On August 9, 2019, Professional Holding Corp. entered into an Agreement and Plan of Merger, or Merger Agreement, with Marquis Bancorp. (MBI) and its wholly owned subsidiary, Marquis Bank, providing for the merger of Marquis Bancorp. with and into the Company and Marquis Bank with and into Professional Bank in an all-stock transaction, or merger, in which 100% of the Marquis Bancorp. (MBI) stock will be absorbed into Professional Holding Corp. stock, with the closing contingent upon various factors including regulatory approval. As of September 30, 2019, Marquis Bancorp. had total assets of  $677 million (unaudited), total loans of  $565 million (unaudited), and total deposits of  $578 million (unaudited).

F-21

Report of Independent Registered Public Accounting Firm

Shareholders and the Board of Directors of Professional Holding Corp.
Coral Gables, Florida

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Professional Holding Corp. (the “Company”) as of December 31, 2018 and 2017, the related consolidated statements of comprehensive income, changes in stockholders’ equity, and cash flows for the years then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Crowe LLP

Crowe LLP

We have served as the Company’s auditor since 2016.

Fort Lauderdale, Florida
September 26, 2019

F-22

PROFESSIONAL HOLDING CORP.

CONSOLIDATED BALANCE SHEETS
December 31, 2018 and 2017
(Dollar amounts in thousands, except share data)

​	2018			2017
ASSETS	​			​
Cash and due from banks	​	$	10,451	​	$	9,012
Interest-bearing deposits	​	​	54,391	​	​	11,824
Federal funds sold	​	​	22,041	​	​	16,290
Cash and cash equivalents	​	​	86,883	​	​	37,126
Securities available for sale, at fair value	​	​	19,585	​	​	26,720
Securities held to maturity (fair value 2018 – $265, 2017 – $325)	​	​	259	​	​	316
Equity securities	​	​	942	​	​	—
Loans, net of allowance of  $5,685 and $4,535 as of December 31, 2018 and 2017, respectively	​	​	601,480	​	​	465,587
Federal Home Loan Bank stock, at cost	​	​	2,192	​	​	1,409
Federal Reserve Bank stock, at cost	​	​	1,472	​	​	1,127
Accrued interest receivable	​	​	1,979	​	​	1,407
Premises and equipment, net	​	​	3,349	​	​	2,282
Company owned life insurance	​	​	8,449	​	​	8,212
Deferred tax asset	​	​	1,750	​	​	1,447
Other assets	​	​	1,283	​	​	1,388
​	​	$	729,625	​	$	547,021
LIABILITIES AND STOCKHOLDERS’ EQUITY	​			​
Deposits	​			​
Demand – non-interest bearing	​	$	130,245	​	$	100,847
Money market, NOW accounts, and savings accounts	​	​	379,479	​	​	283,025
Time deposits	​	​	93,578	​	​	75,302
Total deposits	​	​	603,302	​	​	459,174
Federal Home Loan Bank advances	​	​	40,000	​	​	25,000
Official checks	​	​	1,958	​	​	1,169
Income taxes payable	​	​	37	​	​	207
Accrued interest and other liabilities	​	​	4,647	​	​	3,879
Total liabilities	​	​	649,944	​	​	489,429
Commitments and contingent liabilities	​			​
Stockholders’ equity	​			​
Preferred stock, 10,000,000 shares authorized, none issued	​	​	—	​	​	—
Class A Voting Common stock, $0.01 par value; 50,000,000 shares authorized, 5,171,700 and 4,276,219 shares issued and outstanding as of December 31, 2018 and 2017	​	​	52	​	​	43
Class B Non-Voting Common stock, $0.01 par value; 10,000,000 shares authorized, 752,184 and 542,048 shares issued and outstanding as of December 31, 2018 and 2017	​	​	7	​	​	5
Treasury stock, at cost	​	​	(220)	​	​	(220)
Additional paid-in capital	​	​	76,152	​	​	55,957
Retained earnings	​	​	4,115	​	​	2,009
Accumulated other comprehensive loss	​	​	(425)	​	​	(202)
Total stockholders’ equity	​	​	79,681	​	​	57,592
​	​	$	729,625	​	$	547,021

See accompanying notes.

F-23

PROFESSIONAL HOLDING CORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Years ended December 31,
(Dollar amounts in thousands)

​	2018			2017
Interest income	​			​
Loans, including fees	​	$	25,633	​	$	17,857
Taxable securities	​	​	614	​	​	605
Tax-exempt securities	​	​	—	​	​	—
Dividend income on restricted stock	​	​	215	​	​	118
Other	​	​	1,288	​	​	277
Total interest income	​	​	27,750	​	​	18,857
Interest expense	​			​
Deposits	​	​	5,104	​	​	2,634
Federal Home Loan Bank advances	​	​	733	​	​	235
Total interest expense	​	​	5,837	​	​	2,869
Net interest income	​	​	21,913	​	​	15,988
Provision for loan losses	​	​	1,150	​	​	991
Net interest income after provision for loan losses	​	​	20,763	​	​	14,997
Non-interest income	​			​
Service charges on deposit accounts	​	​	283	​	​	194
Income from Company owned life insurance	​	​	288	​	​	306
Other	​	​	1,303	​	​	1,286
Total non-interest income	​	​	1,874	​	​	1,786
Non-interest expense	​			​
Salaries and employee benefits	​	​	13,538	​	​	8,672
Occupancy and equipment	​	​	1,872	​	​	1,473
Data processing	​	​	624	​	​	524
Marketing	​	​	430	​	​	180
Professional fees	​	​	693	​	​	396
Regulatory assessments	​	​	535	​	​	385
Other	​	​	2,170	​	​	1,495
Total non-interest expense	​	​	19,862	​	​	13,125
Income before income taxes	​	​	2,775	​	​	3,658
Income tax provision	​	​	(669)	​	​	(1,844)
Net income	​	​	2,106	​	​	1,814
Earnings per share:	​			​
Basic	​	$	0.43	​	$	0.39
Diluted	​	$	0.41	​	$	0.37
Other comprehensive income:	​			​
Unrealized holding gain (loss) on securities available for sale	​	​	(299)	​	​	1
Tax effect	​	​	76	​	​	(33)
Other comprehensive loss, net of tax	​	​	(223)	​	​	(32)
Comprehensive income	​	$	1,883	​	$	1,782

See accompanying notes.

F-24

PROFESSIONAL HOLDING CORP.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
For the years ended December 31, 2018 and 2017
(Dollar amounts in thousands, except share data)

​

Preferred Stock

Common Stock

Treasury Stock

Additional Paid-in Capital

Retained Earnings

Accumulated Other Comprehensive Loss

Total

​

Shares

Amount

Shares

Amount

Balance at January 1, 2017

​

—

​

$

—

​

3,513,478

​

$

35

​

$

(220)

​

$

37,066

​

$

195

​

$

(170)

​

$

36,905

Issuance of common stock, net of Issuance cost

​

—

​

​

—

​

1,300,266

​

​

13

​

​

—

​

​

18,787

​

​

—

​

​

—

​

​

18,880

Stock Grant

​

—

​

​

—

​

600

​

​

—

​

​

—

​

​

9

​

​

—

​

​

—

​

​

9

Employee stock purchase plan

​

—

​

​

—

​

3,923

​

​

—

​

​

—

​

​

56

​

​

—

​

​

—

​

​

56

Net income

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

—

​

​

1,814

​

​

—

​

​

1,814

Other comprehensive loss

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(32)

​

​

(32)

Stock based compensation

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

40

​

​

—

​

​

—

​

​

40

Balance at December 31, 2017

​

—

​

​

—

​

4,818,267

​

​

48

​

​

(220)

​

​

55,957

​

​

2,009

​

​

(202)

​

​

57,592

Issuance of common stock, net of Issuance cost

​

—

​

​

—

​

1,095,890

​

​

11

​

​

—

​

​

19,987

​

​

—

​

​

—

​

​

19,998

Stock Grant

​

—

​

​

—

​

3,955

​

​

—

​

​

—

​

​

72

​

​

—

​

​

—

​

​

72

Employee stock purchase plan

​

—

​

​

—

​

5,772

​

​

—

​

​

—

​

​

96

​

​

—

​

​

—

​

​

96

Net income

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

—

​

​

2,106

​

​

—

​

​

2,106

Other comprehensive loss

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(223)

​

​

(223)

Stock based compensation

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

39

​

​

—

​

​

—

​

​

39

Balance at December 31, 2018

​

—

​

$

—

​

5,923,884

​

$

59

​

$

(220)

​

$

76,152

​

$

4,115

​

$

(425)

​

$

79,681

See accompanying notes.

F-25

PROFESSIONAL HOLDING CORP.

CONSOLIDATED SATEMENTS OF CASH FLOWS
For the years ended December 31, 2018 and 2017
(Dollar amounts in thousands)

​	2018			2017
Cash flows from operating activities	​			​
Net income	​	$	2,106	​	$	1814
Adjustments to reconcile net income to net cash from operating activities	​			​
Provision for loan losses	​	​	1,150	​	​	991
Deferred income tax benefit	​	​	(227)	​	​	532
Depreciation and amortization	​	​	511	​	​	417
Net amortization of securities	​	​	238	​	​	285
Net amortization on deferred loan fees	​	​	(361)	​	​	184
Stock compensation	​	​	39	​	​	40
Income from company owned life insurance	​	​	(237)	​	​	(254)
Changes in operating assets and liabilities:	​			​
Accrued interest receivable	​	​	(572)	​	​	(403)
Other assets	​	​	105	​	​	1,065
Official checks, accrued interest, interest payable and other liabilities	​	​	1,386	​	​	899
Net cash from operating activities	​	​	4,138	​	​	5,570
Cash flows from investing activities	​			​
Proceeds from maturities and paydowns of securities available for sale	​	​	5,657	​	​	3,766
Proceeds from paydowns of securities held to maturity	​	​	55	​	​	89
Purchase of securities available for sale	​	​	—	​	​	—
Loans originations, net of principal repayments	​	​	(136,682)	​	​	(146,112)
Purchase of Federal Reserve Bank stock	​	​	(345)	​	​	(161)
Purchase of Federal Home Loan Bank Stock	​	​	(783)	​	​	(287)
Purchases of premises and equipment	​	​	(1,578)	​	​	(1,575)
Net cash used in investing activities	​	​	(133,676)	​	​	(144,280)
Cash flows from financing activities	​			​
Net increase in deposits	​	​	144,128	​	​	135,252
Proceeds from issuance of stock	​	​	20,169	​	​	18,918
Issuance costs of common stock	​	​	(2)	​	​	(54)
Proceeds from Federal Home Loan Bank advances	​	​	20,000	​	​	20,000
Repayments of Federal Home Loan advances	​	​	(5,000)	​	​	(15,000)
Net cash provided by financing activities	​	​	179,295	​	​	159,116
Increase in cash and cash equivalents	​	​	49,757	​	​	20,406
Cash and cash equivalents at beginning of year	​	​	37,126	​	​	16,720
Cash and cash equivalents at end of year	​	$	86,883	​	$	37,126
Supplemental cash flow information:	​			​
Cash paid during the year for interest	​	$	5,692	​	$	2,560
Cash paid during the year for taxes	​	​	885	​	​	1,957
Supplemental noncash disclosures:	​			​
Other comprehensive loss – change in unrealized loss on securities available for sale, net of tax	​	$	(223)	​	$	(32)

See accompanying notes.

F-26

PROFESSIONAL HOLDING CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2018 and 2017
(Tables in thousands, except share data)

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of organization and corporate reorganization:   Professional Holding Corp. (the Corporation and/or the Company) is a financial holding company headquartered in Coral Gables, Florida, with one wholly owned subsidiary, Professional Bank, a Florida-chartered commercial bank (the Bank). Professional Holding Corp. was formed on January 14, 2014 and became the sole shareholder of the Bank on July 1, 2014 through the consummation of a statutory share exchange with the Bank’s then current shareholders whereby holders of the Bank’s common stock were exchanged for an equal number of shares of the Corporation’s Class A Voting Common Stock, par value $0.01 per share. In 2017, Professional Holding Corp. had a second subsidiary, Professional Insurance Management, LLC (the Insurance Company). The Insurance Company was formed in 2016 and its activities were not material for 2017 and 2018. In February 2018, the Holding Corp. decided to close the insurance company. The Corporation’s assets consist of cash and business activity as of December 31, 2018 pertaining to the investment in the Bank and December 31, 2017, pertains to the investment in the Bank and the Insurance Company.

Professional Bank commenced banking operations on September 8, 2008. The Bank is focused on meeting the financial service needs of individuals and businesses in South Florida. The Bank offers a full complement of commercial banking products and services. Deposit products include traditional checking, savings and money market accounts, as well as IRAs and certificates of deposit. The Bank’s deposits are insured up to applicable limits by the Federal Deposit Insurance Corporation (the FDIC). Lending products include commercial loans, residential mortgage loans, home equity lines of credit, installment loans and consumer lines of credit. The Bank is subject to regulation, examination and supervision by the Federal Reserve Bank, (its primary regulator), the FDIC and the Office of Financial Regulation for the State of Florida (the OFR).

The consolidated financial statements include Professional Holding Corp. and its wholly-owned subsidiary, Professional Bank. Intercompany transactions and balances are eliminated in consolidation.

Concentration risks:   Most of the Corporation’s business activity is with customers located in South Florida. Therefore, the Corporation’s exposure to credit risk is significantly affected by changes in the economy of Miami-Dade, Broward and Palm Beach counties.

At December 31, 2018 and 2017, a deposit from one significant customer amounted to approximately 3.7% and 5.1% of total deposits.

A summary of the Corporation’s significant accounting policies is as follows:

Use of estimates:   In preparing consolidated financial statements in conformity with U.S generally accepted accounting principles (GAAP), management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheets and reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

Effect of new pronouncements:   In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities.” This ASU addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments by making targeted improvements to GAAP as follows: (1) require equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee to be measured at fair value with changes in fair value recognized in net income. However, an entity may choose to measure equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer; (2) simplify the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. When a qualitative assessment indicates that impairments exists, an entity is required to measure the investment at fair value;

F-27

PROFESSIONAL HOLDING CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2018 and 2017
(Tables in thousands, except share data)
 

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 

(3) eliminate the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; (4) require public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; (5) require separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet of the accompanying Notes to the Financial Statements; and (6) clarity that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. ASU No. 2016-01 is effective for interim and annual reporting periods beginning after December 15, 2017. The new guidance did not materially impact the Company’s Consolidated Financial Statements.

Cash Flows:   For purposes of the statement of cash flows, cash and cash equivalents include cash, due from bank, interest-earning deposits, and federal funds sold, all of which had origination maturities of less than 90 days. Net cash flows are reported for customer loan and deposit transactions, federal funds purchased and repurchase agreements.

Banks are required to maintain cash reserves in the form of vault cash or in an account with the Federal Reserve Bank or in noninterest-earning accounts with other qualified banks. This requirement is based on the Bank’s amount of transaction deposit accounts. The Bank’s cash reserve requirements at December 31, 2018 and 2017, was $11.2 million and $6.9 million; respectively.

Securities:   Securities may be classified as either trading, held-to-maturity or available-for-sale. Trading securities (if any) are held principally for resale and recorded at their fair value with changes in fair value included in income. Held-to-maturity securities are those which the Corporation has the positive intent and ability to hold to maturity and are reported at amortized cost. Equity securities are carried at fair value, with changes in fair value reported in net income. Equity securities without readily determinable fair values are carried at cost, minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment. Available-for-sale securities consist of securities not classified as trading securities nor as held-to maturity securities. Unrealized holding gains and losses on available-for-sale securities are excluded from income and reported in comprehensive income or loss. Gains and losses on the sale of available-for-sale securities are recorded on the trade date and are determined using the specific-identification method. Premiums and discounts on securities available for sale are recognized in interest income using the interest method over the period to maturity. There were no investment securities classified as trading as of December 31, 2018 and 2017.

Management evaluates securities for other-than-temporary impairment (OTTI) on at least a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. For securities in an unrealized loss position, management considers the extent and duration of the unrealized loss, and the financial condition and near-term prospects of the issuer. Management also assesses whether it intends to sell, or it is more likely than not that it will be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. For debt securities that do not meet the aforementioned criteria, the amount of impairment is split into two components as follows: (1 ) OTTI related to credit loss, which must be recognized in the income statement and (2) OTTI related to other factors, which is recognized in other comprehensive income. The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis.

F-28

PROFESSIONAL HOLDING CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2018 and 2017
(Tables in thousands, except share data)
 

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 

Loans:   Loans that management has the intent and the Bank has the ability to hold for the foreseeable future or until maturity or pay-off are reported at their outstanding principal balance, adjusted for any charge-offs, the allowance for loan losses, and any deferred fees or costs.

All interest accrued but not collected for loans that are placed on nonaccrual or charged-off is reversed against interest income. The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual status. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Allowance for loan losses:   The allowance for loan losses, a valuation allowance for probable incurred credit losses, is established as losses are estimated to have occurred through a provision for loan losses charged to income. Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is probable. Subsequent recoveries, if any, are credited to the allowance.

The Corporation has divided the loan portfolio into five portfolio segments and classes, each with different risk characteristics and methodologies for assessing risk. All loans are underwritten in accordance with polices set forth and approved by the Corporation’s Board of Directors. The portfolio segments and class are the same and are identified by the Corporation as follows:

Commercial real estate:   Commercial real estate loans consist of loans to finance real estate purchases, refinancing’s, expansions and improvements to commercial properties. These loans are secured by first liens on office buildings, apartments, farms, retail and mixed-use properties, churches, warehouses and restaurants located within the market area. The Corporation’s underwriting analysis includes credit verification, independent appraisals, a review of the borrower’s financial condition, and a detailed analysis of the borrower’s underlying cash flows. Commercial real estate loans are usually larger than residential loans and involve greater credit risk. The repayment of these loans largely depends on the results of operations and management of these properties. Adverse economic conditions also affect the repayment ability to a greater extent than that of residential real estate loans.

Residential real estate:   The Corporation originates mostly adjustable-rate mortgage loans for the purchase or refinance of residential properties. These loans are collateralized by first or second mortgages on owner-occupied, second homes or investment residential properties located in the Corporation’s market area. The Corporation’s underwriting analysis includes repayment capacity and source, value of the underlying property, credit history stability.

Commercial:   Commercial business loans and lines of credit consist of loans to small- and medium-sized companies in the Corporation’s market area. Commercial loans are generally used for working capital purposes or for acquiring equipment, inventory or furniture. Primarily all of the Corporation’s commercial loans are secured loans, along with a small amount of unsecured loans. The Corporation’s underwriting analysis consists of a review of the financial statements of the borrower, the lending history of the borrower, the debt service capabilities of the borrower, the projected cash flows of the business, the value of the collateral, if any, and whether the loan is guaranteed by the principals of the borrower. These loans are generally secured by accounts receivable, inventory and equipment. Commercial loans are typically made on the basis of the borrower’s ability to make repayment from the cash flow of the borrower’s business, which makes them of higher risk than residential loans and the collateral securing commercial loans may be difficult to appraise and may fluctuate in value based on the success of the business. The Corporation seeks to minimize these risks through our underwriting standards.

F-29

PROFESSIONAL HOLDING CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2018 and 2017
(Tables in thousands, except share data)
 

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 

Construction and land development:   Construction loans consist of loans to individuals for the construction of their primary residences and, to a limited extent, loans to builders and commercial borrowers. To the extent construction loans are not made to owner-occupants of single-family homes, they are more vulnerable to changes in economic conditions. Further, the nature of these loans is such that they are more difficult to evaluate and monitor. The risk of loss on a construction loan is dependent largely upon the accuracy of the initial estimate of the property’s value upon completion of the project and the estimated cost (including interest) of the project.

Consumer and other:   Consumer loans mainly consist of variable-rate and fixed-rate personal loans and lines of credit and installment loans. Most of the Corporation’s consumer loans share approximately the same level of risk as residential mortgages.

The allowance for loan losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. The allowance for loan losses is also reviewed by the Board of Directors on a quarterly basis. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.

The allowance consists of specific and general components. The specific component relates to loans that are considered impaired. For such loans, an allowance is established when the discounted expected future cash flows or collateral value or observable market price of the impaired loan is lower than the carrying value of that loan. The general component covers all other loans and is based on historical loss experience (if any) adjusted for qualitative factors.

The historical loss component of the allowance is determined by a combination of losses recognized by portfolio segment over the preceding five years, if any, and if no losses were recognized, the Bank uses historical loss data from peer banks. This is supplemented by the risks for each portfolio segment. Risk factors impacting loans in each of the portfolio segments include changes in property values and changes in credit availability. The historical experience and/or peer bank risk factors are adjusted for qualitative factors such as economic conditions including trends in real estate sales, housing statistics, local unemployment rates, commercial and retail vacancy rates and the past due loans and default rates as well as other trends or uncertainties that could affect management’s estimate of probable incurred losses.

A loan is considered impaired when, based on current information and events, it is probable that the Corporation will be unable to collect the scheduled payments of principal or interest when due according to the original contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis for each class of loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral-dependent.

F-30

PROFESSIONAL HOLDING CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2018 and 2017
(Tables in thousands, except share data)
 

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 

Troubled debt restructurings are separately identified for impairment disclosures and are measured at the present value of estimated future cash flows using the loan’s effective rate at inception. If a troubled debt restructuring is considered to be a collateral dependent loan, the loan is reported, net, at the fair value of the collateral. For troubled debt restructurings that subsequently default, the Corporation determines the amount of reserve in accordance with the accounting policy for the allowance for loan losses.

Federal Reserve Bank stock (FRB):   The Corporation is a member of its regional Federal Reserve Bank. FRB stock is carried at cost, classified as a restricted security and periodically evaluated for impairment based on the ultimate recovery of par value.

Federal Home Loan Bank stock (FHLB):   The Bank is a member of the FHLB system. Members are required to own a certain amount of stock based on the level of borrowings and other factors. FHLB stock is carried at cost, classified as a restricted security and periodically evaluated for impairment based on the ultimate recovery of par value.

Foreclosed assets:   Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. If fair value declines subsequent to foreclosure, a valuation allowance is recorded through expense. Operating costs after acquisition are expensed. As of December 31, 2018 and 2017, there were no foreclosed assets.

Premises and equipment:   Leasehold improvements, computer hardware and software, furniture, fixtures and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the shorter of the estimated useful life of each type of asset or the length of time the Corporation expects to lease the property.

Company-owned life insurance:   Company-owned life insurance is recorded at the estimated amount that can be realized under the insurance contract at the consolidated balance sheet date, which is the cash surrender value adjusted for other changes or amounts that are probable at settlement.

Transfer of financial assets:   Transfers of financial assets or a participating interest in an entire financial asset are accounted for as sales, when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when: (1) the assets have been isolated from the Corporation, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Corporation does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

Off-balance sheet financial instruments:   In the ordinary course of business, the Corporation has entered into off-balance sheet financial instruments consisting of unused lines of credit, commitments to extend credit and standby letters of credit. Such financial instruments are recorded in the financial statements when they are funded.

Share-based compensation:   Compensation cost is recognized for stock options and restricted stock awards issued to employees, based on the fair value of these awards at the date of grant. A Black Scholes model is utilized to estimate the fair value of stock options, while the market price of the Corporation’s common stock at the date of grant is used for restricted stock awards.

Compensation cost is recognized over the required service period, generally defined as the vesting period. For awards with graded vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award if conditions are met for recognition.

F-31

PROFESSIONAL HOLDING CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2018 and 2017
(Tables in thousands, except share data)
 

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 

Income taxes:   Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized.

A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded.

The Company recognizes interest and/or penalties related to income tax matters in income tax expense.

Earnings per Common Share:   Basic earnings per common share is net income divided by the weighted average number of common shares outstanding during the period. Diluted earnings per common share includes the dilutive effect of additional potential common shares issuable under stock options.

Revenue Recognition:   On January 1, 2018, we adopted FASB ASU 2014-9, “Revenue from Contracts with Customers,” and all the related amendments (collectively, Accounting Standards Codification “ASC” Topic 606) using the modified retrospective approach applied to all contracts in place at that date. Adoption had no material impact on the Company’s consolidated financial statements including no change to the amount or timing of revenue recognized for contracts within the scope of the new standard. Most of the company’s revenue is not with in the scope of ASU 2014-09. The guidance explicitly excludes net interest income from financial assets and financial liabilities as well as non-interest income from loans and investment securities. Revenue recognized reflects the consideration to which we expect to be entitled in exchange for the services provided and is recognized when the promised services (performance obligations) are transferred to a customer, requiring the application of the following five-steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract and (v) recognize revenue when (or as) the entity satisfies a performance obligation. Activity in the scope of the new standard includes:

•

Service Charges on Deposits: Professional Bank offers a variety of deposit-related services to its customers through several delivery channels including branch offices, mobile, and internet banking. Transaction-based fees are recognized when services, each of which represents a performance obligation, are satisfied. Service fees may be assessed monthly, quarterly, or annually; however, the account agreements to which these fees relate can be canceled at any time by Professional and/or the customer. Therefore, the contract term is considered a single day (a day-to-day contract).

•

Interchange Income: Fees earned on card transactions depend upon the volume of activity, as well as the fees permitted by the payment network. Such fees are recognized by the Company upon fulfilling its performance obligation to approve the card transaction.

•

Loan servicing fees: Professional Bank from time to time services third party loans for a fee that is collected through the monthly payment received by the customer. This fee is recognized once the servicing is completed by the Bank.

Comprehensive income:   GAAP requires that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available-for-sale securities, are reported as a separate component of the equity section of the balance sheets, such items, along with net income, are components of comprehensive income.

F-32

PROFESSIONAL HOLDING CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2018 and 2017
(Tables in thousands, except share data)
 

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 

Loss contingencies:   Loss contingencies, including claims and legal actions arising in the ordinary course of business (if any), are recorded as liabilities when the likelihood of loss is probable, and an amount or range of loss can be reasonably estimated. Management does not currently believe there are such matters that will have a material effect on the consolidated financial statements.

Dividend restriction:   Banking regulations require maintaining certain capital levels and may limit the dividends paid by the bank to the holding company or by the holding company to shareholders.

Operating Segments:   While the chief decision-makers monitor the revenue streams of the various products and services, operations are managed and financial performance is evaluated on a Company-wide basis. Discrete financial information is not available other than on a Company-wide basis. Accordingly, all of the financial services operations are considered by management to be aggregated in one reportable operating segment.

NOTE 2 — RECENTLY ISSUED ACCOUNTING STANDARDS, NOT ADOPTED AT DECEMBER 31, 2018

The following provides a brief description of accounting standards that have been issued but are not yet adopted that could have a material effect on the Company’s financial statements:

ASU 2016-02, Leases (Topic 842)
Description	In February 2016, the FASB amended existing guidance that requires lessees recognize the following for all leases (with the exception of short-term leases) at the commencement date: 1. A lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis. 2. A right-of-use specified asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align lessor accounting with the lessee accounting model and ASC Topic 606, Revenue from Contracts with Customers.
Date of Adoption	This amendment is effective for public business entities for reporting periods beginning after December 15, 2018, including interim periods within that reporting period. Early adoption is permitted.
Effect on the Consolidated Financial Statements	The Company will adopt the new standard effective January 1, 2019. Upon adoption, the Company will record lease liabilities and right-of-use assets totaling approximately $6.2 million and $5.7 million, respectively. Adoption is not expected to be material to the Company’s consolidated results of operations or cash flows.

F-33

PROFESSIONAL HOLDING CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2018 and 2017
(Tables in thousands, except share data)
 

NOTE 2 — RECENTLY ISSUED ACCOUNTING STANDARDS, NOT ADOPTED AT DECEMBER 31, 2018 (Continued)
 

ASU 2016-13, Financial Instruments — Credit Losses (Topic 326)
Description	In June 2016, FASB issued guidance to replace the incurred loss model with an expected loss model, which is referred to as the current expected credit loss (CECL) model. The CECL model is applicable to the measurement of credit losses on financial assets measured at amortized cost, including loan receivables and held to maturity debt securities. It also applies to off-balance sheet credit exposures not accounted for as insurance (i.e. loan commitments, standby letters of credit, financial guarantees and other similar instruments).
Date of Adoption	For PBEs that meet the definition of an SEC filer, the standard will be effective for fiscal years beginning after December 15, 2019, including interim periods in those fiscal years. For calendar year-end SEC filers, it is effective for March 31, 2020 interim financial statements. For PBEs that are non-SEC filers and for SEC filers that are considered emerging growth companies, it is effective for January 1, 2021.
Effect on the Consolidated Financial Statements	The Company’s management is in the process of evaluating and implementing changes to credit loss estimation models and related processes. Updates to business processes and the documentation of accounting policy decisions are ongoing. The company may recognize an increase in the allowance for credit losses upon adoption, recorded as a one-time cumulative adjustment to retained earnings. However, the magnitude of the impact on the Company’s consolidated financial statements has not yet been determined. The Company will adopt this accounting standard effective January 1, 2021.

NOTE 3 — SECURITIES

The following table summarizes the amortized cost and fair value of securities available-for-sale and securities held-to-maturity at December 31, 2018 and 2017 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive loss and gross unrecognized gains and losses:

​

Amortized Cost

Gross Unrealized Gains

Gross Unrealized Losses

Fair Value

2018

​

​

​

​

Available-for-sale

​

​

​

​

Small Business Administration loan pools

​

$

7,563

​

$

—

​

$

(114)

​

$

7,449

Mortgage-backed securities

​

​

6,533

​

​

2

​

​

(227)

​

​

6,308

Corporate bonds

​

​

6,000

​

​

21

​

​

(193)

​

​

5,828

Total available-for-sale

​

$

20,096

​

$

23

​

$

(534)

​

$

19,585

​	Amortized Cost			Gross Unrecognized Gains			Gross Unrecognized Losses			Fair Value
Held-to-Maturity	​			​			​			​
Mortgage-backed securities	​	$	259	​	$	6	​	$	—	​	$	265
Total Held-to-Maturity	​	$	259	​	$	6	​	$	—	​	$	265

F-34

PROFESSIONAL HOLDING CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2018 and 2017
(Tables in thousands, except share data)
 

NOTE 3 — SECURITIES (Continued)
 

​

Amortized Cost

Gross Unrealized Gains

Gross Unrealized Losses

Fair Value

2017

​

​

​

​

Available-for-sale

​

​

​

​

Small Business Administration loan pools

​

$

10,173

​

$

7

​

$

(69)

​

$

10,111

Mortgage-backed securities

​

​

7,827

​

​

2

​

​

(203)

​

​

7,626

Mutual Funds

​

​

1,000

​

​

—

​

​

(37)

​

​

963

Corporate bonds

​

​

7,990

​

​

49

​

​

(19)

​

​

8,020

Total available-for-sale

​

$

26,990

​

$

58

​

$

(328)

​

$

26,720

​	Amortized Cost			Gross Unrecognized Gains			Gross Unrecognized Losses			Fair Value
Held-to-Maturity	​			​			​			​
Mortgage-backed securities	​	$	316	​	$	9	​	$	—	​	$	325
Total Held-to-Maturity	​	$	316	​	$	9	​	$	—	​	$	325

As of December 31, 2018 and 2017, Corporate bonds are comprised primarily of investments in the financial services industry.

There were no sales of securities for the years ended December 31, 2018 and 2017.

The scheduled maturities of securities as of December 31, 2018 are as follows. The amortized cost and fair value of debt securities are shown by contractual maturity. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately.

​	December 31, 2018
​	Amortized Cost			Fair Value
Available-for-sale	​			​
Small Business Administration loan pools	​	$	7,563	​	$	7,449
Mortgage-backed securities	​	​	6,533	​	​	6,308
Corporate Bonds, One to Five Year Maturity	​	​	6,000	​	​	5,828
Total	​	$	20,096	​	$	19,585
Held-to-maturity	​			​
Mortgage-backed securities	​	$	259	​	$	265
Total	​	$	259	​	$	265

At year-end 2018 and 2017, there were no holdings of securities of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of shareholders’ equity.

F-35

PROFESSIONAL HOLDING CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2018 and 2017
(Tables in thousands, except share data)
 

NOTE 3 — SECURITIES (Continued)
 

The following table summarizes securities with unrealized losses at December 31, 2018 and 2017, aggregated by major security type and length of time in a continuous unrealized loss position:

​

Less Than 12 Months

12 Months or Longer

Total

​

Fair Value

Unrealized Losses

Fair Value

Unrealized Losses

Fair Value

Unrealized Losses

December 31, 2018

​

​

​

​

​

​

Available-for-sale

​

​

​

​

​

​

SBA loan pools

​

$

1,212

​

$

—

​

$

5,934

​

$

(98)

​

$

7,146

​

$

(114)

Mortgage-backed

​

​

—

​

​

(16)

​

​

5,964

​

​

(227)

​

​

5,964

​

​

(227)

Corporate bonds

​

​

1,812

​

​

(188)

​

​

495

​

​

(5)

​

​

2,307

​

​

(193)

Total available-for-sale

​

$

3,024

​

$

(204)

​

$

12,393

​

$

(330)

​

$

15,417

​

$

(534)

December 31, 2017

​

​

​

​

​

​

Available-for-sale

​

​

​

​

​

​

SBA loan pools

​

$

5,372

​

$

(34)

​

$

2,819

​

$

(35)

​

$

8,191

​

$

(69)

Mortgage-backed

​

​

—

​

​

—

​

​

7,198

​

​

(203)

​

​

7,198

​

​

(203)

Mutual Funds

​

​

—

​

​

—

​

​

963

​

​

(37)

​

​

963

​

​

(37)

Corporate bonds

​

​

—

​

​

—

​

​

3,981

​

​

(19)

​

​

3,981

​

​

(19)

Total available-for-sale

​

$

5,372

​

$

(34)

​

$

14,961

​

$

(294)

​

$

20,333

​

$

(328)

The unrealized holding losses within the investment portfolio are considered to be temporary and are mainly due to changes in the interest rate cycle. The unrealized loss positions may fluctuate positively or negatively with changes in interest rates or spreads. Because the decline in fair value is attributable to changes in interest rates and not credit quality, and because the Company does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the Company does not consider these securities to be other-than-temporarily impaired at December 31, 2018. No credit losses were recognized in operations during 2018 or 2017.

NOTE 4 — LOANS

Loans at December 31 were as follows:

​	2018			2017
Commercial real estate	​	$	191,930	​	$	156,720
Residential real estate	​	​	311,404	​	​	224,246
Commercial	​	​	83,276	​	​	59,065
Construction and development	​	​	17,608	​	​	28,272
Consumer and other loans	​	​	3,244	​	​	1,755
​	​	​	607,462	​	​	470,058
Less –	​			​
Unearned loan origination fees (costs), net	​	​	(297)	​	​	64
Allowance for loan losses	​	​	(5,685)	​	​	(4,535)
​	​	$	601,480	​	$	465,587

F-36

PROFESSIONAL HOLDING CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2018 and 2017
(Tables in thousands, except share data)
 

NOTE 4 — LOANS (Continued)
 

The following table presents the activity in the allowance for loan losses by portfolio segment for the year ending December 31, 2018 and 2017:

​

Commercial Real Estate

Residential Real Estate

Commercial

Construction and land Development

Consumer and Other

Total

December 31, 2018

​

​

​

​

​

​

Allowance for loan losses:

​

​

​

​

​

​

Beginning balance

​

$

1,275

​

$

1,590

​

$

1,170

​

$

452

​

$

48

​

$

4,535

Provision for loan losses

​

​

160

​

​

232

​

​

936

​

​

(190)

​

​

12

​

​

1,150

Loans charged-off

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Recoveries

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Total ending allowance balance

​

$

1,435

​

$

1,822

​

$

2,106

​

$

262

​

$

60

​

$

5,685

​

Commercial

Residential Real Estate

Commercial Real Estate

Construction and land Development

Consumer and Other

Total

December 31, 2017

​

​

​

​

​

​

Allowance for loan losses:

​

​

​

​

​

​

Beginning balance

​

$

838

​

$

1,281

​

$

648

​

$

742

​

$

23

​

$

3,532

Provision (credit) for loan losses

​

​

437

​

​

309

​

​

510

​

​

(290)

​

​

25

​

​

991

Loans charged-off

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Recoveries

​

​

—

​

​

—

​

​

12

​

​

—

​

​

—

​

​

12

Total ending allowance balance

​

$

1,275

​

$

1,590

​

$

1,170

​

$

452

​

$

48

​

$

4,535

F-37

PROFESSIONAL HOLDING CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2018 and 2017
(Tables in thousands, except share data)
 

NOTE 4 — LOANS (Continued)
 

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of December 31, 2018 and 2017:

​	Commercial Real Estate			Residential Real Estate			Commercial			Construction and Land Development			Consumer and Other			Total
December 31, 2018	​			​			​			​			​			​
Allowance for loan losses:	​			​			​			​			​			​
Ending allowance balance attributable to loans	​			​			​			​			​			​
Individually evaluated for impairment	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—
Collectively evaluated for impairment	​	​	1,435	​	​	1,822	​	​	2,106	​	​	262	​	​	60	​	​	5,685
Total ending allowance balance	​	$	1,435	​	$	1,822	​	$	2,106	​	$	262	​	$	60	​	$	5,685
Loans:	​			​			​			​			​			​
Loans individually evaluated for impairment	​	$	—	​	$	357	​	$	—	​	$	—	​	$	—	​	$	357
Loans collectively evaluated for impairment	​	​	191,930	​	​	311,047	​	​	83,276	​	​	17,608	​	​	3,244	​	​	607,105
Total ending loans balance	​	$	191,930	​	$	311,404	​	$	83,276	​	$	17,608	​	$	3,244	​	$	607,462
December 31, 2017	​			​			​			​			​			​
Allowance for loan losses:	​			​			​			​			​			​
Ending allowance balance attributable to loans	​			​			​			​			​			​
Individually evaluated for impairment	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—
Collectively evaluated for impairment	​	​	1,275	​	​	1,590	​	​	1,170	​	​	452	​	​	48	​	​	4,535
Total ending allowance balance	​	$	1,275	​	$	1,590	​	$	1,170	​	$	452	​	$	48	​	$	4,535
Loans:	​			​			​			​			​			​
Loans individually evaluated for impairment	​	$	—	​	$	378	​	$	31	​	$	—	​	$	—	​	$	409
Loans collectively evaluated for impairment	​	​	156,720	​	​	223,868	​	​	59,034	​	​	28,272	​	​	1,755	​	​	469,649
Total ending loans balance	​	$	156,720	​	$	224,246	​	$	59,065	​	$	28,272	​	$	1,755	​	$	470,058

As of December 31, 2018 and 2017, there are no loans individually evaluated for impairment with an allowance recorded. The recorded investment in loans excludes accrued interest receivable and net deferred loan fees due to immateriality.

The bank had no loans on nonaccrual as of December 31, 2018 and 2017.

There are no loans past due over 90 days still accruing as of December 31, 2018 or 2017.

F-38

PROFESSIONAL HOLDING CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2018 and 2017
(Tables in thousands, except share data)
 

NOTE 4 — LOANS (Continued)
 

The following table presents the aging of the recorded investment in past due loans as of December 31, 2018 and 2017 by class of loans:

​

30 - 59 Days Past Due

60 - 89 Days Past Due

Greater than 89 Days Past Due

Total Past Due

Loans Not Past Due

Total

December 31, 2018

​

​

​

​

​

​

Commercial real estate

​

$

2,478

​

$

—

​

$

—

​

$

2,478

​

$

189,452

​

$

191,930

Residential real estate

​

​

257

​

​

—

​

​

—

​

​

257

​

​

311,147

​

​

311,404

Commercial

​

​

1,081

​

​

—

​

​

—

​

​

1,081

​

​

82,195

​

​

83,276

Construction and land dev

​

​

—

​

​

—

​

​

—

​

​

—

​

​

17,608

​

​

17,608

Consumer and other

​

​

—

​

​

—

​

​

—

​

​

​

​

​

3,244

​

​

3,244

Total

​

$

3,816

​

$

—

​

$

—

​

$

3,816

​

$

603,646

​

$

607,462

​

30 - 59 Days Past Due

60 - 89 Days Past Due

Greater than 89 Days Past Due

Total Past Due

Loans Not Past Due

Total

December 31, 2017

​

​

​

​

​

​

Commercial real estate

​

$

—

​

$

—

​

$

—

​

$

—

​

$

156,720

​

$

156,720

Residential real estate

​

​

—

​

​

—

​

​

—

​

​

—

​

​

224,246

​

​

224,246

Commercial

​

​

—

​

​

—

​

​

—

​

​

—

​

​

59,065

​

​

59,065

Construction and land dev

​

​

—

​

​

—

​

​

—

​

​

—

​

​

28,272

​

​

28,272

Consumer and other

​

​

—

​

​

—

​

​

—

​

​

​

​

​

1,755

​

​

1,755

Total

​

$

—

​

$

—

​

$

—

​

$

—

​

$

470,058

​

$

470,058

At December 31, 2018, there were two impaired residential real estate loans with recorded investments totaling $357 thousand with no allowance. The average net investment on the impaired residential real estate and commercial loans during 2018 was $351 thousand. The residential real estate loans had $15 thousand interest income recognized which was equal to cash basis interest income.

At December 31, 2017, there were two impaired residential real estate loans and one impaired commercial loan with recorded investments totaling $378 thousand and $31 thousand, respectively, with no allowance. The average net investment on the impaired residential real estate and commercial loans during 2017 was $381 thousand and $48 thousand, respectively. The residential real estate loans had $16 thousand interest income recognized which was equal to cash basis interest income. The commercial loans had recognized $3 in interest income which was equal to cash basis interest income.

Troubled Debt Restructurings:

The principal carrying balance of loans that specifically met the criteria for consideration as a troubled debt restructuring was $357 thousand and $409 thousand as of December 31, 2018 and 2017, respectively. The Company has allocated no specific reserves to customers whose loan terms have been modified in troubled debt restructurings as of December 31, 2018 and 2017. The Company has not committed any additional amounts to customers whose loans are classified as a troubled debt restructuring.

There were no loans modified as troubled debt restructurings during the period ending December 31, 2018 or December 31, 2017.

F-39

PROFESSIONAL HOLDING CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2018 and 2017
(Tables in thousands, except share data)
 

NOTE 4 — LOANS (Continued)
 

Credit Quality Indicators:

The Corporation categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt including: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. Generally, all credits greater than $350 thousand are reviewed no less than annually to monitor and adjust, if necessary, the credit risk profile. Loans classified as substandard or special mention are reviewed quarterly by the Corporation for further evaluation to determine if they are appropriately classified and whether there is any impairment. Beyond the annual review, all loans are graded upon initial issuance. In addition, during the renewal process of any loan, as well as if a loan becomes past due, the Corporation will determine the appropriate loan grade.

Loans excluded from the review process above are generally classified as pass credits until: (a) they become past due; (b) management becomes aware of deterioration in the credit worthiness of the borrower; or (c) the customer contacts the Corporation for a modification. In these circumstances, the loan is specifically evaluated for potential classification as to special mention, substandard, doubtful, or even charged-off. The Corporation uses the following definitions for risk ratings:

Pass:   A Pass loan’s primary source of loan repayment is satisfactory, with secondary sources very likely to be realized if necessary. The pass category includes the following:

Riskless:   Loans that are fully secured by liquid, properly margined collateral (listed stock, bonds, or other securities; savings accounts; certificates of deposit; loans or that portion thereof which are guaranteed by the U.S. Government or agencies backed by the “full faith and credit” thereof; loans secured by properly executed letters of credit from prime financial institutions).

High Quality Risk:   Loans to recognized national companies and well-seasoned companies that enjoy ready access to major capital markets or to a range of financing alternatives. Borrower’s public debt offerings are accorded highest ratings by recognized rating agencies, e.g., Moody’s or Standard & Poor’s. Companies display sound financial conditions and consistent superior income performance. The borrower’s trends and those of the industry to which it belongs are positive.

Satisfactory Risk:   Loans to borrowers, reasonably well established, that display satisfactory financial conditions, operating results and excellent future potential. Capacity to service debt is amply demonstrated. Current financial strength, while financially adequate, may be deficient in a number of respects. Normal comfort levels are achieved through a closely monitored collateral position and/or the strength of outside guarantors.

Moderate Risk:   Loans to borrowers who are in non-compliance with periodic reporting requirements of the loan agreement, and any other credit file documentation deficiencies, which do not otherwise affect the borrower’s credit risk profile. This may include borrowers who fail to supply updated financial information that supports the adequacy of the primary source of repayment to service the Bank’s debt and prevents bank management to evaluate the borrower’s current debt service capacity. Existing loans will include those with consistent track record of timely loan payments, no material adverse changes to underlying collateral, and no material adverse change to guarantor(s) financial capacity, evidenced by public record searches.

Special mention:   A Special Mention loan has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in the deterioration of the repayment prospects for the asset or the Corporation’s credit position at some future date. Special Mention loans are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification.

F-40

PROFESSIONAL HOLDING CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2018 and 2017
(Tables in thousands, except share data)
 

NOTE 4 — LOANS (Continued)
 

Substandard:   A Substandard loan is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Corporation will sustain some loss if the deficiencies are not corrected.

Doubtful:   A loan classified Doubtful has all the weaknesses inherent in one classified Substandard with the added characteristics that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loss:   A loan classified Loss is considered uncollectible and of such little value that continuance as a bankable asset is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may be affected in the future.

Based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

​

Pass

Special Mention

Substandard

Doubtful

Total

December 31, 2018

​

​

​

​

​

Commercial real estate

​

$

189,228

​

$

2,702

​

$

—

​

$

—

​

$

191,930

Residential real estate

​

​

311,013

​

​

391

​

​

—

​

​

—

​

​

311,404

Commercial

​

​

82,668

​

​

577

​

​

31

​

​

—

​

​

83,276

Construction and land development

​

​

17,608

​

​

—

​

​

—

​

​

—

​

​

17,608

Consumer

​

​

3,244

​

​

—

​

​

—

​

​

—

​

​

3,244

Total

​

$

603,761

​

$

3,670

​

$

31

​

$

—

​

$

607,462

December 31, 2017

​

​

​

​

​

Commercial real estate

​

$

155,671

​

$

1,049

​

$

—

​

$

—

​

$

156,720

Residential real estate

​

​

224,246

​

​

—

​

​

—

​

​

—

​

​

224,246

Commercial

​

​

58,936

​

​

98

​

​

31

​

​

—

​

​

59,065

Construction and land development

​

​

28,272

​

​

—

​

​

—

​

​

—

​

​

28,272

Consumer

​

​

1,755

​

​

—

​

​

—

​

​

—

​

​

1,755

Total

​

$

468,880

​

$

1,147

​

$

31

​

$

—

​

$

470,058

NOTE 5 — PREMISES AND EQUIPMENT

Company premises and equipment, net are comprised of the following:

​	2018			2017			Estimated Useful Lives (In Years)
Furniture, fixture, and equipment	​	$	800	​	$	723	5-7 years
Computer hardware and software	​	​	1,321	​	​	1,131	3-5 years
Leasehold improvements	​	​	2,161	​	​	2,021	10-12 years
Corporate Branding	​	​	117	​	​	—	3-5 years
​	​	​	4,399	​	​	3,875	​
Accumulated depreciation and amortization	​	​	(1,050)	​	​	(1,593)	​
​	​	$	3,349	​	$	2,282	​

F-41

PROFESSIONAL HOLDING CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2018 and 2017
(Tables in thousands, except share data)
 

NOTE 5 — PREMISES AND EQUIPMENT (Continued)
 

Depreciation and amortization expense was $511 thousand and $417 thousand in 2018 and 2017, respectively.

The Corporation is obligated under non-cancelable operating leases for its main office and branch offices and for the rental of office equipment which expire through 2029. Rental expense totaled approximately $1.1 million and $948 thousand for the year ended December 31, 2018 and 2017 respectively. At December 31, 2018, future minimum rental commitments, under these non-cancellable leases were as follows:

2019	$	976
2020	​	937
2021	​	922
2022	​	922
2023	​	922
Thereafter	​	2,797
​	$	7,476

NOTE 6 — TIME DEPOSITS

Time deposits exceeding $250 thousand were approximately $58.5 million and $32.1 million at December 31, 2018 and 2017, respectively.

Scheduled maturities of time deposits at December 31, 2018 are as follows:

Year ending December 31	Amount
2019	​	$	79,722
2020	​	​	8,344
2021	​	​	4,867
2022	​	​	515
2023	​	​	130
​	​	$	93,578

NOTE 7 — FEDERAL HOME LOAN BANK ADVANCES

At year-end, advances from the Federal Home Loan Bank were as follows:

​	2018			2017
Maturities of 2018, fixed rate of 1.08%	​	$	—	​	$	5,000
Maturities of 2019, fixed rates of 1.58%	​	​	5,000	​	​	5,000
Maturities of 2019, fixed rate hybrid of 2.42%	​	​	10,000	​	​	—
Maturities of 2020, fixed rates of 1.67%	​	​	5,000	​	​	5,000
Maturities of 2020, adjustable rates from 2.52% to 2.53% as of 12/31/18	​	​	20,000	​	​	10,000
​	​	$	40,000	​	$	25,000

F-42

PROFESSIONAL HOLDING CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2018 and 2017
(Tables in thousands, except share data)
 

NOTE 7 — FEDERAL HOME LOAN BANK ADVANCES (Continued)
 

Each advance is payable at its maturity date, with a prepayment penalty for fixed rate advances. The advances were collateralized by $88.7 million and $59.3 million of first mortgage loans under a blanket lien arrangement at year-end 2018 and 2017. Based on this collateral and the Company’s holdings of FHLB stock, the Company is eligible to borrow up to a total of  $127.1 million at year-end 2018.

Payments over the next five years are as follows:

2019	$	15,000
2020	​	25,000

NOTE 8 — COMMON STOCK AND PREFERRED STOCK

The Corporation has Class A Voting and Class B Non-voting common stock with par values of  $0.01 per share. As of December 31, 2018 there are 50,000,000 and 10,000,000 shares authorized as Class A and Class B of which 5,171,700 and 752,184 are outstanding, respectively. During the year ended December 31, 2018, the Corporation issued 531, 571, 4,670, and 889,709 shares of Class A voting stock at $14.50, $16.00, $17.00 and $18.25 per share and 210,136 of Class B non-voting stock at $18.25 per share; respectively, with a par value of  $0.01.

The Corporation has 10,000,000 shares of undesignated and unissued preferred stock.

NOTE 9 — INCOME TAXES

Components of the provision for income taxes for the years ended December 31, 2018 and 2017 are as follows:

​	2018			2017
Current provision	​			​
Federal	​	$	660	​	$	1,066
State	​	​	236	​	​	215
Deferred provision	​			​
Federal	​	​	(172)	​	​	(217)
Adjustment for enacted tax rate	​	​	—	​	​	697
State	​	​	(55)	​	​	83
​	​	$	669	​	$	1,844

The difference between the financial statement tax provision and amounts computed by applying the statutory federal income tax rate is due primarily to state taxes and permanent items.

​	2018		2017
Federal statutory rate times financial statement income	​	21.0%	​	34.0%
Effect of:	​		​
Tax-exempt income	​	0.0%	​	0.0%
State taxes, net of federal benefit	​	4.3%	​	3.5%
Earnings from company owned life insurance	​	-1.8%	​	-2.4%
Other permanent differences	​	0.8%	​	0.9%
Change in rate	​	0.0%	​	19.1%
Other, net	​	-0.2%	​	-4.5%
​	​	24.1%	​	50.4%

F-43

PROFESSIONAL HOLDING CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2018 and 2017
(Tables in thousands, except share data)
 

NOTE 9 — INCOME TAXES (Continued)
 

The composition of the deferred tax assets:

​	2018			2017
Deferred Tax assets:	​			​
Allowance for loan losses	​	$	1,463	​	$	1,172
Preopening expenses	​	​	70	​	​	82
Stock-based compensation	​	​	89	​	​	89
Deferred loan fees	​	​	75	​	​	(16)
Deferred rent	​	​	70	​	​	55
Unrealized loss on securities available for sale	​	​	144	​	​	68
Other	​	​	14	​	​	16
​	​	​	1,926	​	​	1,483
Deferred Tax liabilities:	​			​
Property and equipment	​	​	(176)	​	​	(19)
Deferred Loan fees	​	​	—	​	​	(16)
​	​	​	(176)	​	​	(35)
Net deferred tax asset	​	$	1,750	​	$	1,447

In assessing the realizability of deferred tax assets, management considered whether it is more likely than not that some portion or all of the deferred tax assets will be realized using all available evidence, both positive and negative. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.

At December 31, 2018, the Company had no amounts recorded for uncertain tax positions. The Company does not expect the total amount of unrecognized tax benefits to significantly increase in the next twelve months. The Company recognizes interest and penalties related to income tax matters in income tax expense. The Company is subject to U.S. federal income tax as well as income tax of the state of Florida. The Company is not subject to examination by taxing authorities for years prior to 2015.

NOTE 10 — RELATED PARTY TRANSACTIONS

In the ordinary course of business, the Bank grants loans to and accepts deposits from executive officers, directors, and their affiliates. The amount of related party loans at year-end 2018 and 2017 were $4.5 million and $4.7 million, respectively.

Loans to principal officers, directors and their affiliates at year-end 2018 were as follows:

​	2018			2017
Balance at January 1, 2018	​	$	4,660	​	$	5,206
New loans	​	​	—	​	​	—
Effect of changes in composition of related parties	​	​	—	​	​	(323)
Repayments	​	​	(184)	​	​	(223)
Balance at December 31, 2018	​	$	4,476	​	$	4,660

Deposits from principal officers, directors and their affiliates at year-end 2018 and 2017 were $10.3 million and $22.8 million, respectively.

F-44

PROFESSIONAL HOLDING CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2018 and 2017
(Tables in thousands, except share data)
 

NOTE 11 — OTHER EMPLOYEE BENEFITS

The Corporation, through the Bank, has adopted a 401(k) benefit plan (the Plan) covering substantially all eligible employees and contains a safe harbor provision whereby all employees who initially enroll are 100% vested. The Corporation, at its discretion, matches the employees’ annual contribution up to 4% of their annual salary. The Corporation contributed approximately $251 thousand and $165 thousand to the Plan in 2018 and 2017, respectively.

NOTE 12 — FAIR VALUE

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1 — Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2 — Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3 — Significant unobservable inputs that reflect a Company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The Company used the following methods and significant assumptions to estimate fair value:

Securities available for sale:   Where quoted prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. Level 1 securities include highly-liquid government bonds, certain mortgage products and exchange-traded equities. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics, or discounted cash flows. Examples of such instruments, which would generally be classified within Level 2 of the valuation hierarchy, include certain collateralized mortgage and debt obligations, corporate bonds, municipal bonds and U.S. agency notes. In certain cases where there is limited activity or less transparency around inputs to the valuation, securities are classified within Level 3 of the valuation hierarchy. Securities classified within Level 3 might include certain residual interests in securitizations and other less-liquid securities. As of December 31, 2018 and 2017, all securities available for sale were Level 2.

The following methods and assumptions were used by the Corporation in estimating fair values of financial instruments:

Cash and cash equivalents:   The carrying amounts of cash and cash equivalents approximate their fair value.

Loans:   ASU 2016-1, “Recognition and Measurement of Financial Assets and Financial Liabilities,” requires the Company to use the exit price notion when measuring fair value of financial instruments for disclosure purposes effective January 1, 2018; therefore, the fair value presented in the following table may not be comparable to prior period. For performing loans, the fair value is based on a discounted cash flow analysis (income approach). The discounted cash flow was based on contractual maturity of the loan and market indication of rates, prepayment speeds, defaults and credit risk resulting in Level 3 classification. For non-performing loans, the fair value is determined based on the estimated values of the underlying collateral or individual analysis of receipts (asset approach) resulting in Level 3 classification. At December 31, 2017, the fair values of loans, excluding loans held for sale, were estimated as follows: for variable rate loans that reprice frequently and with no significant change in credit risk, fair values were

F-45

PROFESSIONAL HOLDING CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2018 and 2017
(Tables in thousands, except share data)
 

NOTE 12 — FAIR VALUE (Continued)
 

based on carrying values resulting in a Level 3 classification. Fair values for other loans were estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality resulting in a Level 3 classification. Impaired loans were value as described previously.

Securities:   The fair values of securities are based on the hierarchy for measuring fair value.

Federal Home Loan Bank stock:   It is not practical to determine fair value due to restrictions placed on transferability.

Federal Reserve Bank stock:   It is not practical to determine fair value due to restrictions placed on transferability.

Accrued interest receivable:   The carrying amounts of accrued interest approximate their fair values.

Deposits:   The fair values disclosed for demand, NOW, money-market and savings deposits are, by definition, equal to the amount payable on demand at the reporting date (that is, their carrying amounts). Fair values for fixed-rate time deposits are estimated using a discounted cash flow calculation that applies interest rates currently being offered on time deposits to a schedule of aggregated expected monthly maturities of time deposits.

Federal Home Loan Bank advances:   Fair values are estimated using discounted cash flow analysis based on the Bank’s current incremental borrowing rates for similar types of borrowing arrangements.

Off-balance-sheet instruments:   Fair values for off-balance-sheet lending commitments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing.

Assets and Liabilities Measured on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis, including financial assets and liabilities for which the Company has elected the fair value option, are summarized below:

​	​	​	​	Fair Value Measurements at December 31, 2018 Using:
2018	Fair Value			Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Securities available for sale	​			​			​			​
SBA loans pools	​	$	7,449	​	$	—	​	$	7,449	​	$	—
Mortgage backed securities	​	​	6,308	​	​	—	​	​	6,308	​	​	—
Corporate bonds	​	​	5,828	​	​	—	​	​	5,828	​	​	—
Total	​	$	19,585	​	$	—	​	$	19,585	​	$	—
Equity Securities	​			​			​			​
Mutual funds	​	$	942	​	$	—	​	$	942	​	$	—
Total	​	$	942	​	$	—	​	$	942	​	$	—

F-46

PROFESSIONAL HOLDING CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2018 and 2017
(Tables in thousands, except share data)
 

NOTE 12 — FAIR VALUE (Continued)
 

​

​

​

​

Fair Value Measurements at December 31, 2017 Using:

2017

Fair Value

Quoted Prices in Active Markets for Identical Assets (Level 1)

Significant Other Observable Inputs (Level 2)

Significant Unobservable Inputs (Level 3)

Securities available for sale

​

​

​

​

SBA loans pools

​

$

10,110

​

$

—

​

$

10,110

​

$

—

Mortgage backed securities

​

​

7,626

​

​

—

​

​

7,626

​

​

—

Mutual Funds

​

​

963

​

​

—

​

​

963

​

​

—

Corporate bonds

​

​

8,021

​

​

—

​

​

8,021

​

​

—

Total

​

$

26,720

​

$

—

​

$

26,720

​

$

—

There were no securities reclassified into or out of Level 3 during the year ended December 31, 2018 and 2017.

The table below presents the approximate carrying amount and estimated fair value of the Bank’s financial instruments (in thousands):

​	2018
​	Carrying Amount			Fair Value			Fair Value Hierarchy
Financial Assets:	​			​			​
Cash & Due from Banks, including interest bearing deposits	​	$	64,842	​	$	64,842	Level 1
Federal Funds Sold	​	​	22,041	​	​	22,041	Level 1
Securities, Available for Sale	​	​	19,585	​	​	19,585	Level 2
Securities, Held to Maturity	​	​	259	​	​	265	Level 2
Equity Securities	​	​	942	​	​	942	Level 2
Loans, net	​	​	601,480	​	​	606,838	Level 3
Federal Home Loan Bank Stock	​	​	2,192	​	​	N/A	N/A
Federal Reserve Bank Stock	​	​	1,472	​	​	N/A	N/A
Company Owned Life Insurance	​	​	8,449	​	​	8,449	Level 2
Accrued Interest Receivable	​	​	1,979	​	​	1,979	Level 3
Financial Liabilities:	​			​			​
Deposits	​	​	603,302	​	​	602,937	Level 2
Federal Home Loan Bank Advances	​	​	40,000	​	​	39,834	Level 2
Accrued Interest Payable	​	​	342	​	​	342	Level 2

F-47

PROFESSIONAL HOLDING CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2018 and 2017
(Tables in thousands, except share data)
 

NOTE 12 — FAIR VALUE (Continued)
 

​	2017
​	Carrying Amount			Fair Value			Fair Value Hierarchy
Financial Assets:	​			​			​
Cash & Due from Banks, including interest bearing deposits	​	$	20,836	​	$	20,836	Level 1
Federal Funds Sold	​	​	16,290	​	​	16,290	Level 1
Securities, Available for Sale	​	​	26,720	​	​	26,720	Level 2
Securities, Held to Maturity	​	​	316	​	​	325	Level 2
Loans, net	​	​	465,587	​	​	465,232	Level 2
Federal Home Loan Bank Stock	​	​	1,409	​	​	N/A	N/A
Federal Reserve Bank Stock	​	​	1,127	​	​	N/A	N/A
Company Owned Life Insurance	​	​	8,212	​	​	8,207	Level 2
Accrued Interest Receivable	​	​	1,407	​	​	1,407	Level 2
Financial Liabilities:	​			​			​
Deposits	​	​	459,174	​	​	444,574	Level 2
Federal Home Loan Bank Advances	​	​	25,000	​	​	24,494	Level 2
Accrued Interest Payable	​	​	162	​	​	162	Level 2

NOTE 13 — LOAN COMMITMENTS AND OTHER RELATED ACTIVITIES

Some financial instruments, such as loan commitments, credit lines, letters of credit, and overdraft protection, are issued to meet customer financing needs. These are agreements to provide credit or to support the credit of others, as long as conditions established in the contract are met, and usually have expiration dates. Commitments may expire without being used. Off-balance-sheet risk to credit loss exists up to the face amount of these instruments, although material losses are not anticipated. The same credit policies are used to make such commitments as are used for loans, including obtaining collateral at exercise of the commitment.

The contractual amounts of financial instruments with off-balance-sheet risk at year-end were as follows:

​	2018			2017
Available lines of credit	​	$	106,866	​	$	75,791
Unfunded loan commitments – fixed	​	​	20,243	​	​	5,210
Unfunded loan commitments – variable	​	​	10,356	​	​	37,599
Standby letters of credit	​	​	8,670	​	​	8,084
Commercial letters of credit	​	​	1,747	​	​	2,462

NOTE 14 — DIVIDENDS

The Corporation is limited in the amount of cash dividends that it may pay. The amount of cash dividends that may be paid is based on the Corporation’s net income of the current year combined with the Bank’s retained income of the preceding two years, as defined by state banking regulations. However, for any dividend declaration, the Corporation must consider additional factors such as the amount of current

F-48

PROFESSIONAL HOLDING CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2018 and 2017
(Tables in thousands, except share data)
 

NOTE 14 — DIVIDENDS (Continued)
 

period net income, liquidity, asset quality, capital adequacy and economic conditions at the Bank. It is likely that these factors would further limit the amount of dividends which the Corporation could declare. In addition, bank regulators have the authority to prohibit banks from paying dividends if they deem such payment to be an unsafe or unsound practice.

NOTE 15 — REGULATORY CAPITAL MATTERS

Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. The final rules implementing Basel Committee on Banking Supervision’s capital guidelines for U.S. banks (Basel III rules) became effective for the Bank on January 1, 2015 with full compliance with all of the requirements being phased in over a multi- year schedule, and fully phased in by January 1, 2019. Under the Basel III rules, the Bank and Company must hold a capital conservation buffer above the adequately capitalized risk-based capital ratios. The capital conservation buffer is being phased in from 0.0% for 2015 to 2.50% by 2019. The capital conservation buffer for 2018 is 1.875% and for 2017 was 1.25%. The net unrealized gain or loss on available for sale securities is not included in computing regulatory capital. Management believes as of December 31, 2018, the Company and Bank meet all capital adequacy requirements to which they are subject.

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. At year-end 2018 and 2017, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the institution’s category. Based on changes to the Federal Reserve’s definition of a “Small Bank Holding Company” that increased the threshold to $3 billion in assets in August 2018, the Company is not currently subject to separate minimum capital measurements. At such time as the Company reaches the $3 billion asset level, it will again be subject to capital measurements independent of the Bank. For comparison purposes, the Company’s ratios are included in following discussion as well, all of which would have exceeded the “well-capitalized” level had the Company been subject to separate capital minimums.

F-49

PROFESSIONAL HOLDING CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2018 and 2017
(Tables in thousands, except share data)
 

NOTE 15 — REGULATORY CAPITAL MATTERS (Continued)
 

Actual and required capital amounts and ratios are presented below at year-end, the required amounts for capital adequacy shown below do not include the capital conservation buffer previously discussed.

​

Actual

Required for Capital Adequacy Purposes

Well Capitalized Prompt Corrective Action Regulations

​

Amount

Ratio

Amount

Ratio

Amount

Ratio

2018

​

​

​

​

​

​

Total Capital ratio

​

​

​

​

​

​

Bank

​

$

68,427

​

13.4%

​

$

40,731

​

8.0%

​

$

50,914

​

10.0%

Corporation

​

​

86,014

​

16.9

​

​

40,731

​

8.0

​

​

N/A

​

N/A

Tier 1 Capital ratio

​

​

​

​

​

​

Bank

​

​

62,519

​

12.3

​

​

30,549

​

6.0

​

​

40,731

​

8.0

Corporation

​

​

80,107

​

15.7

​

​

30,549

​

6.0

​

​

N/A

​

N/A

Tier 1 Leverage ratio

​

​

​

​

​

​

Bank

​

​

62,519

​

8.6

​

​

29,129

​

4.0

​

​

36,411

​

5.0

Corporation

​

​

80,107

​

11.0

​

​

29,129

​

4.0

​

​

N/A

​

N/A

Common Equity Tier 1

​

​

​

​

​

​

Bank

​

​

62,519

​

12.3

​

​

22,911

​

4.5

​

​

33,094

​

6.5

Corporation

​

​

80,107

​

15.7

​

​

22,911

​

4.5

​

​

N/A

​

N/A

2017

​

​

​

​

​

​

Total Capital ratio

​

​

​

​

​

​

Bank

​

$

49,234

​

12.0%

​

$

32,866

​

8.0%

​

$

41,083

​

10.0%

Corporation

​

​

62,649

​

15.2

​

​

32,866

​

8.0

​

​

N/A

​

N/A

Tier 1 Capital ratio

​

​

​

​

​

​

Bank

​

​

44,476

​

10.8

​

​

24,650

​

6.0

​

​

32,866

​

8.0

Corporation

​

​

57,892

​

14.1

​

​

24,650

​

6.0

​

​

N/A

​

N/A

Tier 1 Leverage ratio

​

​

​

​

​

​

Bank

​

​

44,476

​

8.7

​

​

20,513

​

4.0

​

​

25,641

​

5.0

Corporation

​

​

57,892

​

11.3

​

​

20,513

​

4.0

​

​

N/A

​

N/A

Common Equity Tier 1

​

​

​

​

​

​

Bank

​

​

44,476

​

10.8

​

​

18,487

​

4.5

​

​

26,704

​

6.5

Corporation

​

​

57,892

​

14.1

​

​

18,487

​

4.5

​

​

N/A

​

N/A

NOTE 16 — LEGAL CONTINGENCIES

The Company is subject to legal proceedings and claims, which arise in the ordinary course of business. In the opinion of management, the amount of ultimate liability with respect to these actions will not materially affect the financial position or results of operations of the Company.

F-50

PROFESSIONAL HOLDING CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2018 and 2017
(Tables in thousands, except share data)
 

NOTE 17 — STOCK BASED COMPENSATION

Stock Option Plan

The Corporation’s 2009 Employee Share Option Plan (the Plan, as amended in April 2012), permits the grant of share options to certain key employees and directors for up to 265,000 shares of common stock. Option awards are generally granted with an exercise price equal to the market price of the Corporation common stock at the date of grant; those option awards have vesting periods up to three years and have a ten-year contractual term. Currently, the Corporation has a sufficient number of shares to satisfy expected share option exercises.

The fair value of each option award is estimated on the date of grant using a closed form option valuation (Black-Scholes) model that uses the assumptions noted in the table below. The expected volatility is the five year volatility of the Bank stocks in the NASDAQ OMX ABA Community Bank Index. The computation of expected life is calculated based on the simplified method. The risk free interest rate for all periods is based upon a zero coupon U.S. Treasury bond with a similar life as the option at the time of grant.

The per share weighted-average grant-date fair value of options granted was $6.40 and $4.62 during the year ended December 31 , 2018 and 2017 using the Black-Scholes option-pricing model with the following weighted-average assumptions:

​	2018	2017
Expected volatility ​	27.49%​	23.46%​
Risk-free interest rate ​	2.59%​	2.33%​
Expected life ​	7 years​	7 years​
Expected dividends ​	—​	—​

A summary of stock options were as follows:

​	Stock Options		Weighted- Average Exercise Price			Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value
Balance at January 1, 2018	​	219,483	​	$	11.46	​	​	​	​	​
Granted	​	15,750	​	​	18.25	​	​	​	​	​
Exercised	​	(8,750)	​	​	10.00	​	​	​	​	​
Expired	​	(2,750)	​	​	10.00	​	​	​	​	​
Forfeited	​	(1,400)	​	​	14.20	​	—	​	​	​
Balance at December 31, 2018	​	222,333	​	​	12.00	​	2.84	​	$	1,390
Exercisable at December 31, 2018	​	194,783	​	$	11.31	​	2.31	​	$	1,352

At December 31, 2018 and 2017, there was $127 thousand and $59 thousand of total unrecognized compensation expense related to nonvested share-based compensation arrangements granted under the Plan, respectively. The cost is expected to be recognized over a weighted-average period of two years. The total fair value of shares vesting and recognized as compensation expense was approximately $39 thousand and $36 thousand for the years ended December 31, 2018 and 2017, respectively. Additionally, the 8,750 options that were exercised were converted to stock based on the appreciation between the exercise price of $10 per share and the fair market value as of December 31, 2018 of  $18.25 per share, for a cost of $72 thousand or the stock equivalent of 3,955 shares of Class A Common Voting Stock.

F-51

PROFESSIONAL HOLDING CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2018 and 2017
(Tables in thousands, except share data)
 

NOTE 17 — STOCK BASED COMPENSATION (Continued)
 

During 2014, the Plan was modified with the Corporate reorganization described in Note 1 whereby the Corporation assumed the same provisions of the Plan established at the Bank in previous years. The options exchanged were equal in fair value and in terms to the original options received. No additional compensation expense was recognized as a result of the modification.

Employee Stock Purchase Plan

The Corporation’s 2014 Associate Stock Purchase Plan allows employees to purchase stock at a discounted price of fair market-value. The maximum amount of shares available under the plan is 2,000,000. The discount is 5% of fair market value with the difference recorded as compensation expense. The maximum an employee can participate is $25 thousand per calendar year. The December 31, 2018 fair value of the stock was determined based on the price of the most recent common stock offering ($18.25 per share).

Stock Appreciation Rights

The Corporation’s 2012 Stock Appreciation Rights Plan (SARs, as amended in 2014) is a grant awarded to selected employees and directors in recognition of their current and future contributions to the Corporation. A SAR unit provides the employee or director a “right” to the future appreciation of value in a share of common stock of the Corporation. The SAR unit is awarded at the then fair market value of the stock share as of the date of the grant (base price). As the stock appreciates in value, the difference between the base price and the fair market value is the potential benefit to the employee after it vests. Unlike a stock option, the employee is not required to pay any amount to exercise the SAR as the net amount of the increase in the stock value is paid (either in cash or stock) at the payment date after vesting occurs.

The SAR unit becomes vested at the earlier of: (i) five years of continuous service with the Corporation from the date of the grant; (ii) upon a liquidity event of the Corporation; and (iii) death or disability. Units granted under the SAR agreements have a base price ranging from $11.50 to $18.25 per common stock as of December 31, 2018. Total available units under the SAR program amount to 1.2 million as of December 31, 2018.

Total SARs granted were 243,000 and 270,500 in 2018 and 2017, respectively. There were no SARs exercised and there were 22,000 SARs forfeited for the year ended December 31, 2018. As of December 31, 2018, the company determined that a payout to employees under the SAR plan is unlikely and therefore no accrual has been made. There were no SARs exercised or forfeited during the year ended December 31, 2017. Total SARs outstanding as of December 31, 2018 were 944,500.

F-52

PROFESSIONAL HOLDING CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2018 and 2017
(Tables in thousands, except share data)
 

NOTE 18 — EARNINGS PER SHARE

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.

​	2018			2017
Basic earnings per share:	​			​
Net Income	​	$	2,106	​	$	1,814
Total weighted average common stock outstanding	​	​	4,910	​	​	4,706
Net income per share	​	$	0.43	​	$	0.39
Diluted earnings per share:	​			​
Net Income	​	$	2,106	​	$	1,814
Total weighted average common stock outstanding	​	​	4,910	​	​	4,706
Add: Dilutive effect of employee stock options	​	​	219	​	​	208
Total weighted average diluted stock outstanding	​	​	5,129	​	​	4,914
Net income per share	​	$	0.41	​	$	0.37

As of December 31, 2018, there were no stock options that were anti-dilutive. As of December 31, 2017, there were no stock options anti-dilutive.

NOTE 19 — PROFESSIONAL HOLDING CORP. (PARENT COMPANY ONLY) CONDENSED FINANCIAL INFORMATION

Balance Sheets

(In thousands)	2018			2017
Assets	​			​
Cash	​	$	17,798	​	$	13,265
Investment in Subsidiaries	​	​	62,087	​	​	44,280
Other Assets	​	​	—	​	​	50
​	​	$	79,885	​	$	57,595
Liabilities and Shareholders’ Equity	​			​
Other Liabilities	​	​	204	​	​	3
Shareholders’ equity	​	​	79,681	​	​	57,592
​	​	$	79,885	​	$	57,595

Statements of Income (Loss)

​	2018			2017
(In thousands)	​			​
Income	​	$	—	​	$	—
Interest Expenses	​	​	—	​	​	—
Non-interest expenses	​	​	897	​	​	272
Income (loss) before income taxes and equity in undistributed income of subsidiaries	​	$	(897)	​	$	(272)
Income tax provision (benefit)	​	​	—	​	​	—
Income (loss) before equity in undistributed income of subsidiaries	​	​	(897)	​	​	(272)
Equity in undistributed income of subsidiaries	​	​	3,003	​	​	2,086
Net Income	​	$	2,106	​	$	1,814

F-53

PROFESSIONAL HOLDING CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2018 and 2017
(Tables in thousands, except share data)
 

NOTE 19 — PROFESSIONAL HOLDING CORP. (PARENT COMPANY ONLY) CONDENSED FINANCIAL INFORMATION (Continued)
 

Statement of Cash Flows

Cash flows from operating activities	​		​
Adjustments to reconcile net income to net cash from operating activities:	​		​
Net income (loss)	$	2,106	$	1,814
Equity in undistributed income of subsidiaries	​	(3,003)	​	(2,086)
Net (increase) decrease in other assets	​	50	​	12
Net increase (decrease) in other liabilities	​	200	​	—
Net cash used in operating activities	​	(647)	​	(260)
Cash flows from investing activities	​		​
Investment in subsidiaries	​	(14,986)	​	(9,350)
Net cash used in investing activities	​	(14,986)	​	(9,350)
Cash flows from financing activities	​		​
Issuance of commons stock, net of related expense	​	19,998	​	18,880
Stock based employment benefit plans	​	168	​	105
Net cash provided by financing activities	​	20,166	​	18,905
Increase in cash and cash equivalents	​	4,533	​	9,295
Cash and cash equivalents at beginning of year	​	13,265	​	3,970
Cash and cash equivalents at end of year	$	17,798	$	13,265
Supplemental cash flow information:	​		​
Cash paid during the year for taxes	$	1,005	$	1,800

NOTE 20 — SUBSEQUENT EVENTS

Subsequent events:   Management has evaluated subsequent events for recognition and disclosure through September 26, 2019, which is the date the financial statements were available to be issued.

On August 9, 2019, Professional Holding Corp. entered into an Agreement and Plan of Merger, or Merger Agreement, with Marquis Bancorp. (MBI) and its wholly owned subsidiary, Marquis Bank, providing for the merger of Marquis Bancorp. with and into the Company and Marquis Bank with and into Professional Bank in an all-stock transaction, or merger, in which 100% of the Marquis Bancorp. (MBI) stock will be absorbed into Professional Holding Corp. stock, with the closing contingent upon various factors including regulatory approval. As of June 30, 2019, Marquis Bancorp. had total assts of $680 million (unaudited), total loans of  $558 million (unaudited), and total deposits of  $626 million (unaudited).

F-54

FINANCIAL STATEMENTS OF MARQUIS BANCORP, INC.

CONTENTS

Interim Financial Statements	​
Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018 (unaudited)	F-56
Consolidated Statements of Income for the nine months ended September 30, 2019 and 2018 (unaudited)	F-57
Consolidated Statements of Comprehensive Income for the nine months ended September 30, 2019 and 2018 (unaudited)	F-58
Consolidated Statements of Stockholders’ Equity for the nine months ended September 30, 2019 and 2018 (unaudited)	F-59
Consolidated Statements of Cash Flows for nine months ended September 30, 2019 and 2018 (unaudited)	F-61
Notes to Interim Financial Statements	F-62
Independent Auditor’s Report	F-81
Annual Financial Statements	​
Consolidated Balance Sheets as of December 31, 2018 and 2017	F-82
Consolidated Statements of Income for the years ended December 31, 2018 and 2017	F-83
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2018 and 2017	F-85
Consolidated Statements of Cash Flows for years ended December 31, 2018 and 2017	F-86
Notes to Consolidated Financial Statements	F-87

F-55

MARQUIS BANCORP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS
UNAUDITED

​	September 30, 2019			December 31, 2018
ASSETS	​			​
Cash on hand and due from financial institutions	​	$	13,554,073	​	$	16,720,631
Interest-bearing balances with financial institutions	​	​	67,235,456	​	​	49,907,408
Cash and cash equivalents	​	​	80,789,529	​	​	66,628,039
Securities available for sale, at fair value	​	​	26,170,629	​	​	31,970,846
Securities held to maturity, (fair value 2019 – $1,493,318 and 2018 − $1,533,969)	​	​	1,497,746	​	​	1,548,778
Loans, net of allowance of  $5,293,897 in 2019 and $4,862,807 in 2018	​	​	559,975,268	​	​	551,363,715
Premises and equipment, net	​	​	1,000,300	​	​	1,048,857
Federal Home Loan Bank stock, at cost	​	​	1,871,100	​	​	3,672,800
Accrued interest receivable	​	​	1,712,194	​	​	1,920,074
Other real estate owned	​	​	1,707,825	​	​	1,707,825
Deferred tax asset, net	​	​	1,594,075	​	​	1,566,932
Other assets	​	​	500,522	​	​	896,040
​	​	$	676,819,188	​	$	662,323,906
LIABILITIES AND STOCKHOLDERS’ EQUITY	​	​	​	​	​	​
Deposits	​	​	​	​	​	​
Non-interest bearing	​	$	147,307,791	​	$	116,994,924
Interest bearing	​	​	430,597,770	​	​	407,236,543
Total deposits	​	​	577,905,561	​	​	524,231,467
Federal Home Loan Bank advances	​	​	30,000,000	​	​	75,000,000
Subordinated notes payable, net	​	​	9,709,728	​	​	9,669,735
Accrued interest payable	​	​	689,083	​	​	559,962
Other liabilities	​	​	2,070,601	​	​	2,057,930
Total liabilities	​	​	620,374,973	​	​	611,519,094
Stockholders’ equity	​	​	​	​	​	​
Common stock, $5 par value, 5,000,000 shares authorized; issued and outstanding 3,419,188 shares in 2019; 3,411,946 shares in 2018	​	​	17,095,940	​	​	17,059,730
Additional paid-in capital	​	​	19,000,454	​	​	18,377,169
Retained earnings	​	​	20,300,502	​	​	15,591,404
Accumulated other comprehensive gain (loss)	​	​	47,319	​	​	(223,491)
Total stockholders’ equity	​	​	56,444,215	​	​	50,804,812
​	​	$	676,819,188	​	$	662,323,906

See accompanying notes to condensed interim financial statements.

F-56

MARQUIS BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
UNAUDITED
For the Nine Months Ended September 30,

​	2019			2018
Interest income	​	​	​	​	​	​
Loans, including fees	​	$	22,848,987	​	$	19,379,470
Investment securities	​	​	608,814	​	​	453,831
Interest bearing accounts in other financial institutions	​	​	859,423	​	​	604,379
​	​	​	24,317,224	​	​	20,437,680
Interest expense	​	​	​	​	​	​
Deposits	​	​	6,386,713	​	​	3,757,781
Borrowings	​	​	1,277,683	​	​	1,133,557
​	​	​	7,664,396	​	​	4,891,338
Net interest income	​	​	16,652,828	​	​	15,546,342
Provision for loan losses	​	​	367,000	​	​	712,000
Net interest income after provision for loan losses	​	​	16,285,828	​	​	14,834,342
Noninterest income	​	​	​	​	​	​
Service charges on deposit accounts	​	​	592,831	​	​	554,059
Gain on sale of loans	​	​	312,121	​	​	115,729
Other income	​	​	235,439	​	​	160,678
​	​	​	1,140,391	​	​	830,466
Noninterest expense	​	​	​	​	​	​
Salaries and employee benefits	​	​	6,154,529	​	​	5,531,266
Occupancy and equipment	​	​	1,111,261	​	​	1,010,011
Telecommunication expense	​	​	111,805	​	​	83,509
Data processing	​	​	456,013	​	​	403,174
Other real estate owned expense	​	​	107,448	​	​	—
Professional fees	​	​	516,424	​	​	336,542
Printing and supplies	​	​	60,548	​	​	69,353
Regulatory assessments	​	​	199,414	​	​	342,433
Directors’ compensation	​	​	756,165	​	​	692,960
Marketing	​	​	96,061	​	​	147,316
Other	​	​	551,364	​	​	437,714
​	​	​	10,121,032	​	​	9,054,278
Income before income taxes	​	​	7,305,187	​	​	6,610,530
Income tax expense	​	​	1,843,887	​	​	1,736,561
Net Income	​	$	5,461,300	​	$	4,873,969
Earnings per share:	​	​	​	​	​	​
Basic	​	$	1.60	​	$	1.43
Diluted	​	$	1.43	​	$	1.37

See accompanying notes to condensed interim financial statements.

F-57

MARQUIS BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
UNAUDITED
For the Nine Months Ended September 30,

​	2019			2018
Net income	​	$	5,461,300	​	$	4,873,969
Other comprehensive gain (loss):	​	​	​	​	​	​
Unrealized gains (losses) on securities available for sale:	​	​	​	​	​	​
Unrealized holding gain (loss) arising during the period	​	​	362,748	​	​	(476,361)
Tax effect	​	​	(91,938)	​	​	120,734
Total other comprehensive gain (loss)	​	​	270,810	​	​	(355,627)
Comprehensive income	​	$	5,732,110	​	$	4,518,342

See accompanying notes to condensed interim financial statements.

F-58

MARQUIS BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
UNAUDITED
For the Nine Months Ended September 30,

​	Preferred Shares		Preferred Stock			Common Shares		Common Stock			Additional Paid in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total
Balance at January 1, 2018	​	—	​	$	—	​	3,394,690	​	$	16,973,450	​	$	17,497,406	​	$	8,783,421	​	$	(106,991)	​	$	43,147,286
Common stock issuance	​	—	​	​	—	​	8,226	​	​	41,130	​	​	58,199	​	​	—	​	​	—	​	​	99,329
Stock based compensation	​	—	​	​	—	​	—	​	​	—	​	​	170,546	​	​	—	​	​	—	​	​	170,546
Net Income	​	—	​	​	—	​	—	​	​	—	​	​	—	​	​	1,579,788	​	​	—	​	​	1,579,788
Total other comprehensive loss	​	—	​	​	—	​	—	​	​	—	​	​	—	​	​	—	​	​	(164,852)	​	​	(164,852)
Balance at March 31, 2018	​	—	​	$	—	​	3,402,916	​	$	17,014,580	​	$	17,726,151	​	$	10,363,209	​	$	(271,843)	​	$	44,832,097
Common stock issuance	​	—	​	​	—	​	1,495	​	​	7,475	​	​	11,960	​	​	—	​	​	—	​	​	19,435
Stock based compensation	​	—	​	​	—	​	—	​	​	—	​	​	174,969	​	​	—	​	​	—	​	​	174,969
Net Income	​	—	​	​	—	​	—	​	​	—	​	​	—	​	​	1,642,142	​	​	—	​	​	1,642,142
Total other comprehensive loss	​	—	​	​	—	​	—	​	​	—	​	​	—	​	​	—	​	​	(52,340)	​	​	(52,340)
Balance at June 30, 2018	​	—	​	$	—	​	3,404,411	​	$	17,022,055	​	$	17,913,080	​	$	12,005,351	​	$	(324,183)	​	$	46,616,303
Common stock issuance	​	—	​	​	—	​	7,535	​	​	37,675	​	​	22,605	​	​	—	​	​	—	​	​	60,280
Stock based compensation	​	—	​	​	—	​	—	​	​	—	​	​	210,855	​	​	—	​	​	—	​	​	210,855
Net Income	​	—	​	​	—	​	—	​	​	—	​	​	—	​	​	1,652,038	​	​	—	​	​	1,652,038
Total other comprehensive loss	​	—	​	​	—	​	—	​	​	—	​	​	—	​	​	—	​	​	(138,435)	​	​	(138,435)
Balance at September 30, 2018	​	—	​	$	—	​	3,411,946	​	$	17,059,730	​	$	18,146,540	​	$	13,657,389	​	$	(462,618)	​	$	48,401,041

See accompanying notes to condensed interim financial statements.

F-59

MARQUIS BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
UNAUDITED
For the Nine Months Ended September 30,

​	Preferred Shares		Preferred Stock			Common Shares		Common Stock			Additional Paid in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
Balance at January 1, 2019	​	—	​	$	—	​	3,411,946	​	$	17,059,730	​	$	18,377,169	​	$	15,591,404	​	$	(223,491)	​	$	50,804,812
Stock based compensation	​	—	​	​	—	​	—	​	​	—	​	​	198,465	​	​	—	​	​	—	​	​	198,465
Net Income	​	—	​	​	—	​	—	​	​	—	​	​	—	​	​	1,912,011	​	​	—	​	​	1,912,011
Total other comprehensive income	​	—	​	​	—	​	—	​	​	—	​	​	—	​	​	—	​	​	102,215	​	​	102,215
Balance at March 31, 2019	​	—	​	$	—	​	3,411,946	​	$	17,059,730	​	$	18,575,634	​	$	17,503,415	​	$	(121,276)	​	$	53,017,503
Common stock issuance	​	—	​	​	—	​	7,142	​	​	35,710	​	​	27,997	​	​	—	​	​	—	​	​	63,707
Stock based compensation	​	—	​	​	—	​	—	​	​	—	​	​	199,505	​	​	—	​	​	—	​	​	199,505
Cash dividend declared ($0.11 per share)	​	—	​	​	—	​	—	​	​	—	​	​	—	​	​	(376,100)	​	​	—	​	​	(376,100)
Net Income	​	—	​	​	—	​	—	​	​	—	​	​	—	​	​	1,499,942	​	​	—	​	​	1,499,942
Total other comprehensive income	​	—	​	​	—	​	—	​	​	—	​	​	—	​	​	—	​	​	187,777	​	​	187,777
Balance at June 30, 2019	​	—	​	$	—	​	3,419,088	​	$	17,095,440	​	$	18,803,136	​	$	18,627,257	​	$	66,501	​	$	54,592,334
Common stock issuance	​	—	​	​	—	​	100	​	​	500	​	​	300	​	​	—	​	​	—	​	​	800
Stock based compensation	​	—	​	​	—	​	—	​	​	—	​	​	197,018	​	​	—	​	​	—	​	​	197,018
Cash dividend declared ($0.11 per share)	​	—	​	​	—	​	—	​	​	—	​	​	—	​	​	(376,100)	​	​	—	​	​	(376,100)
Net Income	​	—	​	​	—	​	—	​	​	—	​	​	—	​	​	2,049,345	​	​	—	​	​	2,049,345
Total other comprehensive loss	​	—	​	​	—	​	—	​	​	—	​	​	—	​	​	—	​	​	(19,182)	​	​	(19,182)
Balance at September 30, 2019	​	—	​	$	—	​	3,419,188	​	$	17,095,940	​	$	19,000,454	​	$	20,300,502	​	$	47,319	​	$	56,444,215

See accompanying notes to condensed interim financial statements.

F-60

MARQUIS BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
For the Nine Months Ended September 30,

​	2019			2018
Cash flows from operating activities	​	​	​	​	​	​
Net income	​	$	5,461,300	​	$	4,873,969
Adjustments to reconcile net income to net cash	​	​	​	​	​	​
From operating activities	​	​	​	​	​	​
Provision for loan losses	​	​	367,000	​	​	712,000
Loans originated held for sale	​	​	(534,000)	​	​	(1,486,000)
Proceeds from sales of loans held for sale	​	​	534,000	​	​	1,486,000
Net gain on sale of loans	​	​	(312,121)	​	​	(115,729)
Increase of deferred income tax	​	​	(119,082)	​	​	(422,548)
Depreciation and amortization	​	​	253,357	​	​	225,972
Shared based compensation	​	​	594,988	​	​	556,370
Provision for off – balance sheet items	​	​	18,633	​	​	85,628
Net amortization of premium and discount on securities	​	​	119,820	​	​	143,522
Amortization of subordinated note payable discount and debt issuance costs	​	​	39,993	​	​	42,885
Net change in:	​	​	​	​	​	​
Accrued interest receivable and other assets	​	​	603,399	​	​	(661,772)
Accrued interest payable and other liabilities	​	​	123,159	​	​	(992,573)
Net cash from operating activities	​	​	7,150,446	​	​	4,447,724
Cash flows from investing activities	​	​	​	​	​	​
Redemption of time deposits with financial institutions	​	​	—	​	​	1,406,983
Purchase of securities available for sale	​	​	(3,648,132)	​	​	(19,497,576)
Purchase of securities held to maturity	​	​	(1,201,259)	​	​	—
Proceeds from maturities and calls of securities available for sale	​	​	4,200,000	​	​	—
Proceeds from repayment of securities available for sale	​	​	5,494,516	​	​	2,054,585
Proceeds from repayment on securities held to maturity	​	​	49,050	​	​	52,299
Proceeds from maturities on securities held to maturity	​	​	1,200,000	​	​	—
Purchase of Federal Home Loan Bank stock	​	​	(5,380,800)	​	​	(4,515,700)
Proceeds from sale of Federal Home Loan Bank stock	​	​	7,182,500	​	​	3,527,500
Loan originations and payments, net	​	​	(8,666,432)	​	​	(75,691,484)
Capital expenditures	​	​	(204,800)	​	​	(81,130)
Net cash from investing activities	​	​	(975,357)	​	​	(92,744,523)
Cash flows from financing activities	​	​	​	​	​	​
Net increase in deposits	​	​	53,674,094	​	​	78,995,491
Proceeds from Federal Home Loan Bank Advances	​	​	124,000,000	​	​	110,000,000
Repayment of Federal Home Loan Bank Advances	​	​	(169,000,000)	​	​	(89,000,000)
Cash dividends to shareholders	​	​	(752,200)	​	​	—
Proceeds from issuance of common stock	​	​	64,507	​	​	179,044
Net cash from financing activities	​	​	7,986,401	​	​	100,174,535
Net change in cash and cash equivalents	​	​	14,161,490	​	​	11,877,736
Beginning cash and cash equivalents	​	​	66,628,039	​	​	54,609,504
Ending cash and cash equivalents	​	$	80,789,529	​	$	66,487,240
Supplemental cash flow information:	​	​	​	​	​	​
Interest paid	​	​	7,535,275	​	​	4,502,389
Income taxes paid	​	​	1,815,000	​	​	2,380,000

See accompanying notes to condensed interim financial statements.

F-61

MARQUIS BANCORP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Nine months ended September 30, 2019 and Year ended December 31, 2018

NOTE 1 — BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements include Marquis Bancorp, Inc. (the “Bancorp”) and its wholly owned subsidiary, Marquis Bank (the “Bank”), together referred to as “the Company”. The Company provides financial services through its offices in Miami-Dade and Broward County. Its primary deposit products are checking, savings, and term certificates accounts, and its primary lending products are residential mortgages, commercial, and installment loans.

These unaudited consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) followed within the financial services industry for interim financial information and Article 10 of Regulation S-X. Accordingly, they do not include all of the information or notes required for complete financial statements.

In the opinion of management, all adjustments, consisting of normal and recurring items, considered necessary for a fair presentation of the consolidated financial statements for the interim periods have been included. All significant intercompany accounts and transactions have been eliminated in consolidation. Certain amounts reported in prior periods have been reclassified to conform to current year presentation. These reclassifications did not have a material effect on previously reported net income, shareholders’ equity or cash flows.

Operating results for the nine-month period ended September 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. These statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2018.

The Company’s significant accounting policies are described in Note 1 of the Notes to Consolidated Financial Statements for the year ended December 31, 2018. There were no new accounting policies or changes to existing policies adopted during the first nine months of 2019 which had a significant effect on the Company’s results of operations or statement of financial condition. For interim reporting purposes, the Company follows the same basic accounting policies and considers each interim period as an integral part of an annual period.

Earnings per Common Share:   Basic earnings per common share is net income divided by the weighted average number of common shares outstanding during the period. Earnings and dividends per share are restated for all stock splits and stock dividends through the date of issuance of the financial statements. Diluted earnings per common share includes the dilutive effect of additional potential common shares issuable under stock options.

Recently Adopted Accounting Standards

In May 2014, the FASB published ASU 2014-09, Revenue From Contracts With Customers (Topic 606). This guidance requires entities to recognize revenues when they transfer promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance describes a 5-step process that entities can apply to achieve the core principle of revenue recognition and requires disclosures sufficient to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers and the significant judgments used in determining that information.

The Company adopted the guidance on January 1, 2019 using a modified retrospective method, in which the guidance applies to existing contracts in effect at January 1, 2018 and new contracts entered into after this date. Most of the Company’s revenue, including net interest income, gain on sale of loans, and loan fees is explicitly out of scope of the new revenue recognition guidance. The Company conducted an assessment of the revenue streams that were potentially affected by the new guidance and reviewed contracts in scope to ensure compliance with the new guidance.

F-62

MARQUIS BANCORP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Nine months ended September 30, 2019 and Year ended December 31, 2018
 

NOTE 1 — BASIS OF PRESENTATION (Continued)
 

The Company has identified service charges on deposits and related cash management services, and card interchange income as its most significant revenue streams within the scope of the standard. For the revenue streams that were found in scope, management reviewed in detail its most significant contracts with corresponding customers. The adoption of this guidance did not have a material effect on the Company’s consolidated financial statements.

Recently Issued Accounting Standards, Not Yet Adopted

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 amends the existing standards for lease accounting effectively requiring that most leases be carried on the balance sheets of the related lessees by requiring them to recognize a right-of-use asset and a corresponding lease liability. ASU 2016-02 includes qualitative and quantitative disclosure requirements intended to provide greater insight into the nature of an entity’s leasing activities. ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2020, and interim periods within those annual periods, resulting in no adjustment to amounts reported in prior periods.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326) to replace the incurred loss model with an expected loss model, which is referred to as the current expected credit loss (CECL) model. The CECL model is applicable to the measurement of credit losses on financial assets measured at amortized cost, including loan receivables and held-to-maturity debt securities. It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and similar instruments) and net investments in leases recognized by a lessor. For debt securities with other-than-temporary impairment (OTTI), the guidance will be applied prospectively. Existing purchased credit impaired (PCI) assets will be grandfathered and classified as purchased credit deteriorated (PCD) assets at the date of adoption. The assets will be grossed up for the allowance of expected credit losses for all PCD assets at the date of adoption and will continue to recognize the noncredit discount in interest income based on the yield of such assets as of the adoption date. Subsequent changes in expected credit losses will be recorded through the allowance. Adoption is effective for interim and annual reporting periods beginning after December 15, 2022. Early adoption is permitted. The Company has selected a software solution supported by a third-party vendor to be used in developing an expected credit loss model compliant with ASU 2016-13 and will continue to evaluate the impact of this new accounting standard through its effective date.

The Company has further evaluated other Accounting Standards Updates issued during 2019 but does not expect updates other than those summarized above to have a material impact on the consolidated financial statements.

F-63

MARQUIS BANCORP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Nine months ended September 30, 2019 and Year ended December 31, 2018
 

NOTE 2 — SECURITIES

The following tables summarizes the amortized cost and fair value of securities available for sale and securities held to maturity at September 30, 2019 and December 31, 2018 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive loss and gross unrecognized gains and losses:

September 30, 2019

Amortized Cost

Gross Unrealized Gains

Gross Unrealized Losses

Fair Value

Available for Sale

​

​

​

​

​

​

​

​

​

​

​

​

U.S. government agencies

​

$

3,266,627

​

$

—

​

$

(86,567)

​

$

3,180,060

U.S. government sponsored entities

​

​

20,791,487

​

​

158,302

​

​

(39,782)

​

​

20,910,007

State, county and municipal bonds

​

​

1,048,860

​

​

26,166

​

​

—

​

​

1,075,026

Corporate bonds

​

​

1,000,271

​

​

5,265

​

​

—

​

​

1,005,536

Total Available for Sale

​

$

26,107,245

​

$

189,733

​

$

(126,349)

​

$

26,170,629

​

Amortized Cost

Gross Unrecognized Gains

Gross Unrecognized Losses

Fair Value

Held to Maturity

​

​

​

​

​

​

​

​

​

​

​

​

U.S. treasuries

​

$

201,059

​

$

160

​

$

—

​

$

201,219

U.S. government sponsored entities

​

​

296,687

​

​

117

​

​

(5,115)

​

​

291,689

Foreign Sovereign (Israel)

​

​

1,000,000

​

​

410

​

​

—

​

​

1,000,410

Total Held to Maturity

​

$

1,497,746

​

$

687

​

$

(5,115)

​

$

1,493,318

December 31, 2018

Amortized Cost

Gross Unrealized Gains

Gross Unrealized Losses

Fair Value

Available for Sale

​

​

​

​

​

​

​

​

​

​

​

​

U.S. government agencies

​

$

4,181,794

​

$

—

​

$

(107,668)

​

$

4,074,126

U.S. government sponsored entities

​

​

25,533,218

​

​

35,662

​

​

(220,639)

​

​

25,348,241

State, county and municipal bonds

​

​

1,054,225

​

​

—

​

​

(15,169)

​

​

1,039,056

Corporate bonds

​

​

1,500,973

​

​

8,450

​

​

—

​

​

1,509,423

Total Available for Sale

​

$

32,270,210

​

$

44,112

​

$

(343,476)

​

$

31,970,846

​

Amortized Cost

Gross Unrecognized Gains

Gross Unrecognized Losses

Fair Value

Held to Maturity

​

​

​

​

​

​

​

​

​

​

​

​

U.S. treasuries

​

$

199,912

​

$

—

​

$

(1,162)

​

$

198,750

U.S. government sponsored entities

​

​

348,866

​

​

148

​

​

(13,795)

​

​

335,219

Foreign Sovereign (Israel)

​

​

1,000,000

​

​

—

​

​

—

​

​

1,000,000

Total Held to Maturity

​

$

1,548,778

​

$

148

​

$

(14,957)

​

$

1,533,969

The amortized cost and fair value of the investment securities portfolio are shown by contractual maturity in the following table. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

F-64

MARQUIS BANCORP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Nine months ended September 30, 2019 and Year ended December 31, 2018
 

NOTE 2 — SECURITIES (Continued)
 

​	September 30, 2019
​	Amortized Cost			Fair Value
Available for Sale	​			​
Within one year	​	$	2,501,397	​	$	2,499,217
One to five years	​	​	7,498,747	​	​	7,541,971
Over five to ten years	​	​	8,664,626	​	​	8,741,732
Over ten years	​	​	7,442,475	​	​	7,387,709
Total	​	$	26,107,245	​	$	26,170,629
Held to Maturity	​	​	​	​	​	​
Within one year	​	$	2,948	​	$	3,065
One to five years	​	​	1,201,059	​	​	1,201,629
Over five to ten years	​	​	—	​	​	—
Over ten years	​	​	293,739	​	​	288,624
Total	​	$	1,497,746	​	$	1,493,318

​	December 31, 2018
​	Amortized Cost			Fair Value
Available for Sale	​			​
Within one year	​	$	500,000	​	$	500,353
One to five years	​	​	16,684,471	​	​	16,627,417
Over five to ten years	​	​	9,416,578	​	​	9,315,487
Over ten years	​	​	5,669,161	​	​	5,527,589
Total	​	$	32,270,210	​	$	31,970,846
Held to Maturity	​	​	​	​	​	​
Within one year	​	$	1,199,912	​	$	1,198,750
One to five years	​	​	5,538	​	​	5,686
Over five to ten years	​	​	—	​	​	—
Over ten years	​	​	343,328	​	​	329,533
Total	​	$	1,548,778	​	$	1,533,969

There were no sales of securities in 2019 or 2018. Securities pledged at September 30, 2019 and December 31, 2018 had a carrying amount of  $201,059 and $199,912, respectively, and were pledged to secure US public deposits.

F-65

MARQUIS BANCORP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Nine months ended September 30, 2019 and Year ended December 31, 2018
 

NOTE 2 — SECURITIES (Continued)
 

The following table summarizes the investment securities with unrealized losses at September 30, 2019 and December 31, 2018 aggregated by major security type and length of time in a continuous unrealized loss position:

​

Less Than 12 Months

12 Months or Longer

Total

September 30, 2019

Fair Value

Unrealized Losses

Fair Value

Unrealized Losses

Fair Value

Unrealized Losses

Available for Sale

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

U.S. Gov. Agencies

​

$

—

​

$

—

​

$

3,180,060

​

$

(86,567)

​

$

3,180,060

​

$

(86,567)

U.S. Government sponsored entities

​

​

6,377,814

​

​

(14,811)

​

​

3,485,318

​

​

(24,971)

​

​

9,863,132

​

​

(39,782)

Total Available for Sale

​

$

6,377,814

​

$

(14,811)

​

$

6,665,378

​

$

(111,538)

​

$

13,043,192

​

$

(126,349)

​

Less Than 12 Months

12 Months or Longer

Total

September 30, 2019

Fair Value

Unrecognized Losses

Fair Value

Unrecognized Losses

Fair Value

Unrecognized Losses

Held to Maturity

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

U.S. Government sponsored entities

​

$

—

​

$

—

​

$

288,624

​

$

(5,115)

​

$

288,624

​

$

(5,115)

Total Held to Maturity

​

$

—

​

$

—

​

$

288,624

​

$

(5,115)

​

$

288,624

​

$

(5,115)

​

Less Than 12 Months

12 Months or Longer

Total

December 31, 2018

Fair Value

Unrealized Losses

Fair Value

Unrealized Losses

Fair Value

Unrealized Losses

Available for Sale

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

U.S. Gov. Agencies

​

$

402,429

​

$

(5,560)

​

$

3,671,697

​

$

(102,108)

​

$

4,074,126

​

$

(107,668)

U.S. Government sponsored entities

​

​

5,033,957

​

​

(36,305)

​

​

8,804,943

​

​

(184,334)

​

​

13,838,900

​

​

(220,639)

State, county and municipal bonds

​

​

525,225

​

​

(718)

​

​

513,831

​

​

(14,451)

​

​

1,039,056

​

​

(15,169)

Total Available for Sale

​

$

5,961,611

​

$

(42,583)

​

$

12,990,471

​

$

(300,893)

​

$

18,952,082

​

$

(343,476)

​

Less Than 12 Months

12 Months or Longer

Total

December 31, 2018

Fair Value

Unrecognized Losses

Fair Value

Unrecognized Losses

Fair Value

Unrecognized Losses

Held to Maturity

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

U.S. Gov. Agencies

​

$

—

​

$

—

​

$

198,750

​

$

(1,162)

​

$

198,750

​

$

(1,162)

U.S. Government sponsored entities

​

​

—

​

​

—

​

​

329,533

​

​

(13,795)

​

​

329,533

​

​

(13,795)

Total Held to Maturity

​

$

—

​

$

—

​

$

528,283

​

$

(14,957)

​

$

528,283

​

$

(14,957)

During the nine months ended September 30, 2019 and year ended December 31, 2018, there was no other than temporary impairment recognized on securities. The decline in fair value of securities is due to changes in interest rates and other market conditions and is not credit related. The fair value of all securities is expected to recover as the securities approach maturity. Accordingly, it is expected that the securities will not be settled at a price less than the amortized cost basis of the Company’s investments. Management does not intend, and it is likely that it will not be required to sell the securities prior to their anticipated recovery.

F-66

MARQUIS BANCORP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Nine months ended September 30, 2019 and Year ended December 31, 2018
 

NOTE 3 — LOANS

Loans held to maturity at September 30, 2019 and December 31, 2018 were as follows:

​	2019			2018
Commercial	​	$	72,902,412	​	$	80,171,846
Real Estate:	​	​	​	​	​	​
Residential	​	​	3,514,674	​	​	3,769,129
Commercial	​	​	422,799,372	​	​	403,444,475
Home equity lines of credit (HELOC)	​	​	61,470,715	​	​	65,798,734
Consumer and other	​	​	4,882,104	​	​	3,408,497
​	​	​	565,569,277	​	​	556,592,681
Plus (Less): Fees and Costs	​	​	(300,112)	​	​	(366,159)
Less: Allowance for loan losses	​	​	(5,293,897)	​	​	(4,862,807)
Loans, net	​	$	559,975,268	​	$	551,363,715

The following table presents the activity in the allowance for loan losses by portfolio segment for the nine months ended September 30, 2019:

​

​

​

​

Real Estate

​

​

​

​

​

​

​

​

​

​

Commercial

Residential

Commercial

HELOC

Consumer & Other

Unallocated

Total

Allowance for loan losses:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Beginning balance

​

$

846,485

​

$

26,384

​

$

3,298,020

​

$

660,331

​

$

31,587

​

$

—

​

$

4,862,807

Provision for loan losses

​

​

(148,126)

​

​

(1,781)

​

​

469,957

​

​

23,435

​

​

3,275

​

​

20,240

​

​

367,000

Charge-offs

​

​

​

​

​

​

​

​

​

​

​

​

​

​

(777)

​

​

​

​

​

(777)

Recoveries

​

​

59,867

​

​

​

​

​

​

​

​

​

​

​

5,000

​

​

​

​

​

64,867

Ending balance

​

$

758,226

​

$

24,603

​

$

3,767,977

​

$

683,766

​

$

39,085

​

$

20,240

​

$

5,293,897

The following table presents the activity in the allowance for loan losses by portfolio segment for the nine months ended September 30, 2018:

​

​

​

​

Real Estate

​

​

​

​

​

​

​

​

​

​

Commercial

Residential

Commercial

HELOC

Consumer & Other

Unallocated

Total

Allowance for loan losses:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Beginning balance

​

$

567,669

​

$

22,733

​

$

2,994,235

​

$

577,204

​

$

37,111

​

$

—

​

$

4,198,952

Provision for loan losses

​

​

215,874

​

​

(4,137)

​

​

218,847

​

​

127,043

​

​

5,458

​

​

148,915

​

​

712,000

Charge-offs

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Recoveries

​

​

—

​

​

—

​

​

—

​

​

—

​

​

3,298

​

​

—

​

​

3,298

Ending balance

​

$

783,543

​

$

18,596

​

$

3,213,082

​

$

704,247

​

$

45,867

​

$

148,915

​

$

4,914,250

F-67

MARQUIS BANCORP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Nine months ended September 30, 2019 and Year ended December 31, 2018
 

NOTE 3 — LOANS (Continued)
 

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of September 30, 2019:

​

​

​

​

Real Estate

Consumer & Other

​

​

​

​

​

​

​

Commercial

Residential

Commercial

HELOC

Unallocated

Total

Allowance for loan losses:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Ending allowance balance attributable to loans:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Individually evaluated for impairment

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

Collectively evaluated for impairment

​

​

758,226

​

​

24,603

​

​

3,767,977

​

​

683,766

​

​

39,085

​

​

20,240

​

​

5,293,897

Total ending balance

​

$

758,226

​

$

24,603

​

$

3,767,977

​

$

683,766

​

$

39,085

​

$

20,240

​

$

5,293,897

Loans:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Loans individually evaluated for impairment

​

$

—

​

$

—

​

$

—

​

$

110,199

​

$

—

​

$

—

​

$

110,199

Loans collectively evaluated for impairment

​

​

72,902,412

​

​

3,514,674

​

​

422,799,372

​

​

61,360,516

​

​

4,882,104

​

​

—

​

​

565,459,078

Total ending loans balance

​

$

72,902,412

​

$

3,514,674

​

$

422,799,372

​

$

61,470,715

​

$

4,882,104

​

$

—

​

$

565,569,277

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of December 31, 2018:

​

​

​

​

Real Estate

Consumer & Other

​

​

​

​

​

​

December 31, 2018

Commercial

Residential

Commercial

HELOC

Unallocated

Total

Allowance for loan losses:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Ending allowance balance attributable to loans:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Individually evaluated for impairment

​

$

—

​

$

—

​

$

—

​

$

69,134

​

$

—

​

$

—

​

$

69,134

Collectively evaluated for impairment

​

​

846,485

​

​

26,384

​

​

3,298,020

​

​

591,197

​

​

31,587

​

​

—

​

​

4,793,673

Total ending balance

​

$

846,485

​

$

26,384

​

$

3,298,020

​

$

660,331

​

$

31,587

​

$

—

​

$

4,862,807

Loans:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Loans individually evaluated for impairment

​

$

294,245

​

$

—

​

$

—

​

$

110,199

​

$

—

​

$

—

​

$

404,444

Loans collectively evaluated for impairment

​

​

79,877,601

​

​

3,769,129

​

​

403,444,475

​

​

65,688,535

​

​

3,408,497

​

​

—

​

​

556,188,237

Total ending loans balance

​

$

80,171,846

​

$

3,769,129

​

$

403,444,475

​

$

65,798,734

​

$

3,408,497

​

$

—

​

$

556,592,681

F-68

MARQUIS BANCORP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Nine months ended September 30, 2019 and Year ended December 31, 2018
 

NOTE 3 — LOANS (Continued)
 

The following table presents the average balance of impaired loans for the period ended September 30, 2019 and December 31, 2018 and the interest income recognized during impairment:

​	2019			2018
Average of individually impaired loans during year	​	$	208,642	​	$	404,444
Interest income recognized during impairment	​	​	—	​	​	61,015
Cash-basis interest income recognized	​	​	—	​	​	—

There were no loans past due 90 days and still on accrual as of September 30, 2019 and December 31, 2018. There was one non-accrual loan with an outstanding balance of  $110,199 as of September 30, 2019 and two non-accrual loans with an outstanding balance of  $404,444 as of December 31, 2018. Two commercial real estate loans were past due between 30-59 days with outstanding balances of approximately $1.19 million and $940 thousand as of September 30, 2019 and none as of December 31, 2018. All other loans were current as of September 30, 2019 and December 31, 2018.

Troubled Debt Restructurings

A loan whose terms are modified due to financial difficulties resulting in the borrower’s inability to meet the contractual repayment terms is considered a troubled debt restructuring. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the company’s internal underwriting policy.

There were no loans modified as troubled debt restructurings during the nine months ended September 30, 2019 and year ended December 31, 2018.

There were no loans modified as troubled debt restructurings for which there were payment defaults within twelve months following the modification during the nine months ended September 30, 2019 and year ended December 31, 2018. A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms.

Credit Quality Indicators

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk at inception. This credit risk rating is updated based on an annual review of loans with an outstanding balance greater than $ 500 thousand and is reviewed when a loan is delinquent 30 days or more or is delinquent on property tax payments if applicable. The Company uses the following definitions for risk ratings:

Special Mention:   A loan in this category has potential weaknesses that deserve management’s close attention. A loan in this category does not expose an institution to sufficient risk to warrant adverse classification at this time, but if left uncorrected these potential weaknesses may result in the deterioration of the repayment prospects on the loan at some future date.

Substandard:   A loan classified as substandard is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Loans rated substandard have a well-defined weakness or weaknesses that jeopardize the liquidation of the obligation. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

F-69

MARQUIS BANCORP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Nine months ended September 30, 2019 and Year ended December 31, 2018
 

NOTE 3 — LOANS (Continued)
 

Doubtful:   A loan classified doubtful has all the weaknesses inherent in one classified substandard with the added characteristic that the weaknesses make collection in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.

Loans not meeting the criteria above are assigned risk ratings that are considered to be pass rated loans.

Based on the most recent analysis performed as of September 30, 2019 and December 31, 2018, the risk category of loans by portfolio segment is as follows:

2019

Pass

Special Mention

Substandard

Doubtful

Total

Commercial

​

$

72,902,412

​

$

—

​

$

—

​

$

—

​

$

72,902,412

Real Estate:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Residential

​

​

3,514,674

​

​

—

​

​

—

​

​

—

​

​

3,514,674

Commercial

​

​

422,799,372

​

​

—

​

​

—

​

​

—

​

​

422,799,372

Home Equity Line of Credit

​

​

61,360,516

​

​

—

​

​

110,199

​

​

—

​

​

61,470,715

Consumer and other

​

​

4,882,104

​

​

—

​

​

—

​

​

—

​

​

4,882,104

Total

​

$

565,459,078

​

$

—

​

$

110,199

​

$

—

​

$

565,569,277

2018

Pass

Special Mention

Substandard

Doubtful

Total

Commercial

​

$

79,877,601

​

$

—

​

$

294,245

​

$

—

​

$

80,171,846

Real Estate:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Residential

​

​

3,769,129

​

​

—

​

​

—

​

​

—

​

​

3,769,129

Commercial

​

​

403,444,475

​

​

—

​

​

—

​

​

—

​

​

403,444,475

Home Equity Line of Credit

​

​

65,688,535

​

​

—

​

​

110,199

​

​

—

​

​

65,798,734

Consumer and other

​

​

3,408,497

​

​

—

​

​

—

​

​

—

​

​

3,408,497

Total

​

$

556,188,237

​

$

—

​

$

404,444

​

$

—

​

$

556,592,681

NOTE 4 — PREMISES AND EQUIPMENT

Premises and equipment were as follows:

​	September 30, 2019			December 31, 2018
Leasehold improvements	​	$	1,161,544	​	$	1,110,252
Furniture and equipment	​	​	1,528,311	​	​	1,374,803
​	​	​	2,689,855	​	​	2,485,055
Less: Accumulated depreciation	​	​	(1,689,555)	​	​	(1,436,198)
​	​	$	1,000,300	​	$	1,048,857

The Company leases its main office under an operating lease. The lease is for a ten year period and provides for an additional five year renewal option. The Company entered into operating leases in September 2015 for branch office space in Aventura, Florida and December 2018 for branch office space in Ft. Lauderdale, Florida. The branch lease in Aventura is for an initial term of 3 years with an additional three year option that the Company plans to exercise and the branch lease in Ft. Lauderdale is for an initial

F-70

MARQUIS BANCORP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Nine months ended September 30, 2019 and Year ended December 31, 2018
 

NOTE 4 — PREMISES AND EQUIPMENT (Continued)
 

term of 5 years with an additional five year option that the Company plans to exercise. Rent expense is recognized on a straight line basis over the ten years and six year terms of the respective leases. Rent expense was approximately $635,465 and $598,395 for the period ended September 30, 2019 and 2018, respectively.

The following is a schedule of future minimum lease payments as of September 30, 2019 under the amended operating lease on the Company’s facility.

October 1 – December 31, 2019	$	176,253
2020	​	699,851
2021	​	677,658
2022	​	340,683
2023	​	100,887
Thereafter	​	—
​	$	1,995,332

NOTE 5 — DEPOSITS

Time deposits of more than $250 thousand were approximately $100,556,608 and $129,824,915 at September 30, 2019 and December 31, 2018, respectively. At September 30, 2019, scheduled maturities of all time deposits were as follows:

2019	$	73,440,672
2020	​	132,634,984
2021	​	14,655,234
2022	​	21,541,109
2023	​	300,000
2024	​	639,422
​	$	243,211,421

NOTE 6 — FEDERAL HOME LOAN BANK ADVANCES

At September 30, 2019 and December 31, 2018, notes payable to the FHLB totaled $30,000,000 and $75,000,000, respectively. The advances are collateralized by a blanket lien on the Company’s real estate loan portfolio. The Company may borrow based on qualifying collateral reports submitted on a quarterly basis. Qualifying loans in the amount $117,310,996 and $111,035,140, respectively, were available as collateral for the quarter ended September 30, 2019 and December 31, 2018.

The Company was eligible to borrow an additional $140,067,750 and $85,892,500 at September 30, 2019 and December 31, 2018, respectively, under its available line of credit based on pledged qualifying loan collateral. Securities held in safe keeping at the FHLB of Atlanta may also be pledged to secure additional advances under the line of credit. No securities were pledged at September 30, 2019 and December 31, 2018 for this purpose.

The individual advances at September 30, 2019 and December 31, 2018 mature within the next year and bear fixed interest rates within the range of rates indicated below. Advances are subject to a prepayment penalty if repaid before maturity.

F-71

MARQUIS BANCORP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Nine months ended September 30, 2019 and Year ended December 31, 2018
 

NOTE 6 — FEDERAL HOME LOAN BANK ADVANCES (Continued)
 

2019
Amount	Rate
$30,000,000	2.04% to 2.16%​

2018
Amount	Rate
$75,000,000	2.35% to 2.82%

NOTE 7 — EARNINGS PER SHARE

The following table sets forth the computation of basic earnings per common share and diluted earnings per common share:

​	Nine Months Ended September 30,
​	2019			2018
Basic	​			​
Net income	​	$	5,461,300	​	$	4,873,969
Weighted average common shares outstanding	​	​	3,416,730	​	​	3,406,258
Basic earnings per common share	​	$	1.60	​	$	1.43

​	2019			2018
Diluted	​			​
Net income	​	$	5,461,300	​	$	4,873,969
Weighted average common shares outstanding for basic earnings per common share	​	​	3,416,730	​	​	3,406,258
Add: Dilutive effects of assumed exercises of stock options	​	​	394,308	​	​	150,041
Average shares	​	​	3,811,038	​	​	3,556,299
Diluted	​	$	1.43	​	$	1.37

NOTE 8 — INCOME TAXES

Income taxes for the nine months ended September 30, 2019 and 2018 were as follows:

​	2019			2018
Current	​	$	1,962,969	​	$	2,159,109
Deferred	​	​	(119,082)	​	​	(422,548)
Total	​	$	1,843,887	​	$	1,736,561

F-72

MARQUIS BANCORP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Nine months ended September 30, 2019 and Year ended December 31, 2018
 

NOTE 8 — INCOME TAXES (Continued)
 

Period-end deferred tax assets and liabilities for September 30, 2019 and December 31, 2018 were due to the following:

​	2019			2018
Deferred tax assets	​			​
Organizational and start-up expenses	​	$	33,193	​	$	41,980
Capital losses	​	​	25,345	​	​	25,345
Stock option expense	​	​	444,259	​	​	341,731
Allowance for loan losses	​	​	1,341,738	​	​	1,232,478
Securities available for sale	​	​	(16,065)	​	​	75,874
Accrued expenses	​	​	281,850	​	​	247,812
Other	​	​	2,172	​	​	414
​	​	​	2,112,492	​	​	1,965,634
Deferred tax liabilities	​			​
Accumulated depreciation	​	​	197,996	​	​	65,721
Deferred loan fees	​	​	263,944	​	​	265,557
Other	​	​	31,132	​	​	42,079
​	​	​	493,072	​	​	373,357
Valuation allowance	​	​	25,345	​	​	25,345
Net deferred tax asset	​	$	1,594,075	​	$	1,566,932

Effective tax rates differ from the federal statutory rate of 21% applied to 2018 and 2019 taxes due to the following:

​	2019			2018
Federal statutory rate times financial statement income	​	$	1,534,089	​	$	1,388,211
Effect of state income tax (net of federal benefit)	​	​	264,423	​	​	293,148
Stock compensation	​	​	29,959	​	​	33,137
Other	​	​	15,416	​	​	22,065
​	​	$	1,843,887	​	$	1,736,561

A valuation allowance for deferred tax assets is recorded when it is more likely than not that some portion or all of the deferred tax asset will not be realized. The Company recorded a valuation allowance for its capital loss carry forward.

The Company is subject to U.S. federal income tax as well as income tax of the state of Florida. The Company is no longer subject to examination by taxing authorities for all years prior to 2015.

F-73

MARQUIS BANCORP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Nine months ended September 30, 2019 and Year ended December 31, 2018
 

NOTE 9 — SUBORDINATED NOTES PAYABLE

At September 30, 2019 and December 31, 2018, long-term debt was as follows:

​	2019						2018
​	Principal			Unamortized Discount and Debt Issuance Costs			Principal			Unamortized Discount and Debt Issuance Costs
7.0% subordinated debentures, due 2026 (discount is based on imputed interest rate of 7.458%)	​	$	10,000,000	​	$	(290,272)	​	$	10,000,000	​	$	(330,265)
Total	​	$	10,000,000	​	$	(290,272)	​	$	10,000,000	​	$	(330,265)

NOTE 10 — STOCK OPTION PLAN

The Company’s Board of Directors approved the granting of options on January 2, 2017 to purchase up to 96,102 of additional shares to directors and principal officers under the Marquis Bancorp Company 2009 Stock Option Plan. All 680,000 authorized share grants under the 2009 Stock Option Plan have been issued and no further grants will be authorized under this plan.

The Marquis Bancorp 2017 Stock Option Plan, (“the Option Plan”), was adopted and approved by the stockholders at the April 2017 stockholders’ annual meeting. The Option Plan authorizes granting 500,000 shares as incentive stock options or non-qualified stock options to purchase common stock of the Company to eligible participants including directors and principal officers of the Company. The Option Plan increased the aggregate number of shares of the Company’s common stock authorized for incentive stock option grants or non-qualified stock options to purchase common stock from 680,000 approved in 2015 to 1,180,000 in 2017.

During December 2017, the Company’s Board of Directors approved the granting of options to purchase up to 217,332 of additional shares to the directors and certain employees. During 2018, the Company’s Board of Directors approved the granting of an additional 140,000 shares to the directors and certain employees. Vesting periods and exercise terms are set on the grant date. Option awards are generally granted with an exercise price equal to or greater than the estimated fair value of the Company’s common stock at the date of grant and a vesting period of three years.

Share based compensation is recognized over the vesting period based on the use of the Black-Scholes Model for valuing stock options. Assumptions used in the model as to the expected life of the option and volatility are based on management’s expectation of the life of the option and the stock volatility of similar community banks. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury Note rate for the expected life of the option in effect at the time of the grant.

There were no options granted in 2019. The fair value of options granted in 2018 were determined using the following weighted average assumptions as of the grant date:

​	2018
Risk-free interest rate	2.59% – 2.78%
Expected life	6 years
Expected volatility	30%
Dividend yield	0%

The average estimated fair value of the stock options granted in 2018 was $5.13. Share based compensation expense of  $594,989 and $556,370 was recognized for the nine months ended September 30, 2019 and 2018, respectively.

F-74

MARQUIS BANCORP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Nine months ended September 30, 2019 and Year ended December 31, 2018
 

NOTE 10 — STOCK OPTION PLAN (Continued)
 

A summary of option activity for 2019 follows:

​	Shares		Weighted Average Exercise Price			Weighted Average Remaining Contractual Term
Outstanding January 1, 2019	​	977,128	​	$	11.88	6.6 years
Granted	​	—	​	​	—	​
Exercised	​	(7,242)	​	​	8.91	​
Forfeited/Expired	​	(5,500)	​	​	12.15	​
Outstanding September 30, 2019	​	964,386	​	$	11.90	5.8 years
Options vested and exercisable at period end	​	686,329	​	$	10.82	4.8 years
Options not vested	​	278,057	​	$	14.58	8.3 years

A summary of option activity for 2018 follows:

​	Shares		Weighted Average Exercise Price			Weighted Average Remaining Contractual Term
Outstanding January 1, 2018	​	638,602	​	$	10.17	6 years
Granted	​	358,332	​	​	14.85	​
Exercised	​	(17,256)	​	​	10.38	​
Forfeited/Expired	​	(2,550)	​	​	9.65	​
Outstanding December 31, 2018	​	977,128	​	$	11.88	6.6 years
Options vested and exercisable at end of year	​	502,439	​	$	9.60	4.4 years
Options not vested	​	474,689	​	$	14.31	8.9 years

Unrecognized shared based compensation related to non-vested stock options granted amounts to $960,562 and $1,553,437 as of September 30, 2019 and December 31, 2018, respectively. This cost is recognized over a weighted average period of 36 months.

Intrinsic value represents the difference between the closing stock price of  $22.29 as of September 30, 2019 and the weighted average exercise price, multiplied by the number of options. The intrinsic value of option exercises was $96,909 and $88,424 as of September 30, 2019 and December 31, 2018, respectively. Cash received from option exercises was $64,507 and $179,044 during 2019 and 2018, respectively. The amount of tax benefit recognized was immaterial during 2019 and 2018.

NOTE 11 — REGULATORY CAPITAL MATTERS

Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. The final rules implementing Basel Committee on Banking Supervision’s capital guidelines for U.S. banks (Basel III rules) became effective for the Company on January 1, 2015 with full compliance with all of the requirements being phased in over a multi-year schedule, and fully phased in by January 1, 2019. Under the Basel III rules, the Company must hold a capital conservation buffer above the adequately capitalized risk-based capital ratios. The capital conservation buffer is being phased in from 0.0% for 2015 to 2.50% by 2019. The

F-75

MARQUIS BANCORP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Nine months ended September 30, 2019 and Year ended December 31, 2018
 

NOTE 11 — REGULATORY CAPITAL MATTERS (Continued)
 

capital conservation buffer for 2019 is 2.5% and for 2018 is 1.875%. The net unrealized gain or loss on available for sale securities is not included in computing regulatory capital. Management believes as of September 30, 2019 and December 31, 2018, the Bank meets all capital adequacy requirements to which they are subject.

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. At September 30, 2019 and December 31, 2018, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the institution’s category.

Holding companies with total assets under $3 billion are not subject to capital requirements. Actual and required capital amounts and ratios are presented below.

​

Actual

Minimum Required To Be Adequately Capitalized Plus Conservation Buffer

Minimum Required To Be Well Capitalized

September 30, 2019

Amount

Ratio

Amount

Ratio

Amount

Ratio

Total Capital to risk weighted assets

​

​

​

​

​

​

Consolidated

​

$

71,838,702

​

12.33%

​

​

N/A

​

N/A

​

​

N/A

​

N/A

Bank

​

$

70,919,672

​

12.17%

​

$

61,187,805

​

10.50%

​

$

58,274,100

​

10.00%

Tier 1 (Core) Capital to risk weighted assets

​

​

​

​

​

​

Consolidated

​

$

56,396,899

​

9.68%

​

​

N/A

​

N/A

​

​

N/A

​

N/A

Bank

​

$

65,187,597

​

11.19%

​

$

49,532,985

​

8.50%

​

$

46,619,280

​

8.00%

Common Tier 1 (CET 1)

​

​

​

​

​

​

Consolidated

​

$

56,396,899

​

9.68%

​

​

N/A

​

N/A

​

​

N/A

​

N/A

Bank

​

$

65,187,597

​

11.19%

​

$

40,791,870

​

7.00%

​

$

37,878,165

​

6.50%

Tier 1 (Core) Capital to average assets

​

​

​

​

​

​

Consolidated

​

$

56,396,899

​

8.41%

​

​

N/A

​

N/A

​

​

N/A

​

N/A

Bank

​

$

65,187,597

​

9.72%

​

$

26,838,502

​

4.00%

​

$

33,548,128

​

5.00%

F-76

MARQUIS BANCORP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Nine months ended September 30, 2019 and Year ended December 31, 2018
 

NOTE 11 — REGULATORY CAPITAL MATTERS (Continued)
 

​

Actual

Minimum Required To Be Adequately Capitalized Plus Conservation Buffer

Minimum Required To Be Well Capitalized

December 31, 2018

Amount

Ratio

Amount

Ratio

Amount

Ratio

Total Capital to risk weighted assets

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Consolidated

​

$

65,980,388

​

11.53%

​

​

N/A

​

N/A

​

​

N/A

​

N/A

Bank

​

$

65,167,154

​

11.39%

​

$

56,494,381

​

9.875%

​

$

57,209,500

​

10.00%

Tier 1 (Core) Capital to risk weighted assets

​

​

​

​

​

​

Consolidated

​

$

51,028,303

​

8.92%

​

​

N/A

​

N/A

​

​

N/A

​

N/A

Bank

​

$

59,884,803

​

10.47%

​

$

45,052,481

​

7.875%

​

$

45,767,600

​

8.00%

Common Tier 1 (CET 1)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Consolidated

​

$

51,028,303

​

8.92%

​

​

N/A

​

N/A

​

​

N/A

​

N/A

Bank

​

$

59,884,803

​

10.47%

​

$

36,471,056

​

6.375%

​

$

37,186,175

​

6.50%

Tier 1 (Core) Capital to average assets

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Consolidated

​

$

51,028,303

​

8.08%

​

​

N/A

​

N/A

​

​

N/A

​

N/A

Bank

​

$

59,884,803

​

9.49%

​

$

25,251,000

​

4.000%

​

$

31,563,750

​

5.00%

NOTE 12 — FAIR VALUE

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1:   Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2:   Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3:   Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

Investment Securities: The fair values for investment securities available for sale and held to maturity are determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available or markets that are not active, fair values are calculated based on market prices of similar securities (Level 2).

F-77

MARQUIS BANCORP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Nine months ended September 30, 2019 and Year ended December 31, 2018
 

NOTE 12 — FAIR VALUE (Continued)
 

Assets and liabilities measured at fair value on a recurring basis are summarized below:

​

​

​

​

Fair Value Measurements using:

​

Fair Value

Quoted Prices in Active Markets for Identical Assets (Level 1)

Significant Other Observable Inputs (Level 2)

Significant Unobservable Inputs (Level 3)

September 30, 2019

​

​

​

​

Assets

​

​

​

​

U.S. government agencies

​

$

3,180,060

​

$

—

​

$

3,180,060

​

$

—

U.S. government sponsored entities

​

​

20,910,007

​

​

—

​

​

20,910,007

​

​

—

State, County and Municipal bonds

​

​

1,075,026

​

​

—

​

​

1,075,026

​

​

—

Corporate Bonds

​

​

1,005,536

​

​

—

​

​

1,005,536

​

​

—

Total securities available for sale

​

$

26,170,629

​

$

—

​

$

26,170,629

​

$

—

December 31, 2018

​

​

​

​

Assets

​

​

​

​

U.S. government agencies

​

$

4,074,126

​

$

—

​

$

4,074,126

​

$

—

U.S. government sponsored entities

​

​

25,348,241

​

​

—

​

​

25,348,241

​

​

—

State, County and Municipal bonds

​

​

1,039,056

​

​

—

​

​

1,039,056

​

​

—

Corporate Bonds

​

​

1,509,423

​

​

—

​

​

1,509,423

​

​

—

Total securities available for sale

​

$

31,970,846

​

$

—

​

$

31,970,846

​

$

—

There were no securities reclassified into or out of Level 3 during the nine months ended September 30, 2019 and year ended December 31, 2018.

Assets and liabilities measured at fair value on a non-recurring basis are summarized below:

​

​

​

​

Fair Value Measurements using:

​

Fair Value

Quoted Prices in Active Markets for Identical Assets (Level 1)

Significant Other Observable Inputs (Level 2)

Significant Unobservable Inputs (Level 3)

September 30, 2019

​

​

​

​

​

​

​

​

​

​

​

​

Impaired Loan (Home Equity)

​

$

110,199

​

$

—

​

$

—

​

$

110,199

Other Real Estate Owned (Residential)

​

​

1,707,825

​

​

—

​

​

1,707,825

​

​

—

December 31, 2018

​

​

​

​

​

​

​

​

​

​

​

​

Impaired Loan (Home Equity)

​

$

110,199

​

$

—

​

$

—

​

$

110,199

Impaired Loan (Commercial Line)

​

​

294,245

​

​

—

​

​

—

​

​

294,245

Other Real Estate Owned (Residential)

​

​

1,707,825

​

​

—

​

​

1,707,825

​

​

—

The Home Equity impaired loan which is measured for impairment using the fair value of the collateral had an outstanding principal balance of  $110,199 and no valuation allowance at September 30, 2019. The impaired loan resulted in a specific reserve of  $69,134 for the year ended December 31, 2018.

The Commercial impaired loan which is measured for impairment using the fair value of the collateral had an outstanding principal balance of  $294,425 with no valuation allowance at December 31, 2018. The

F-78

MARQUIS BANCORP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Nine months ended September 30, 2019 and Year ended December 31, 2018
 

NOTE 12 — FAIR VALUE (Continued)
 

related loan collateral was sold to a third party in March 2019. The sale resulted in a recovery of  $59,867 for the nine months ended September 30, 2019.

Foreclosed real estate which is measured using the fair value less estimated selling costs of the collateral had an outstanding balance of  $1,707,825 with no valuation allowance at September 30, 2019. The related impaired loan resulted in a charge-off of  $491,208 through the provision for loan losses for the year ended December 31, 2018.

F-79

MARQUIS BANCORP, INC.
Coral Gables, Florida

CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018 and 2017

CONTENTS

INDEPENDENT AUDITOR’S REPORT	F-81
CONSOLIDATED FINANCIAL STATEMENTS	​
CONSOLIDATED BALANCE SHEETS	F-82
CONSOLIDATED STATEMENTS OF INCOME	F-83
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME	F-84
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY	F-85
CONSOLIDATED STATEMENTS OF CASH FLOWS	F-86
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	F-87

F-80

 

INDEPENDENT AUDITOR’S REPORT

Board of Directors
Marquis Bancorp, Inc.
Coral Gables, Florida

Report on the Financial Statements

We have audited the accompanying consolidated financial statements of Marquis Bancorp, Inc., which comprise the consolidated balance sheets as of December 31, 2018 and 2017, and the related consolidated statements of income, comprehensive income, changes in stockholders’ equity, and cash flows for the years then ended, and the related notes to financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Marquis Bancorp, Inc. as of December 31, 2018 and 2017, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Crowe LLP

Miami, Florida
March 18, 2019, except Note 7, as to which the date is December 12, 2019

F-81

MARQUIS BANCORP, INC.

CONSOLIDATED BALANCE SHEETS
December 31, 2018 and 2017

​	2018			2017
ASSETS	​			​
Cash on hand and due from financial institutions	​	$	16,720,631	​	$	12,514,224
Interest-bearing balances with financial institutions	​	​	49,907,408	​	​	42,095,280
Cash and cash equivalents	​	​	66,628,039	​	​	54,609,504
Interest-bearing time deposits	​	​	—	​	​	1,406,983
Securities available for sale, at fair value	​	​	31,970,846	​	​	16,645,207
Securities held to maturity, (fair value 2018 – $1,533,969 and 2017 – $1,609,876)	​	​	1,548,778	​	​	1,619,395
Loans, net of allowance of  $4,862,807 in 2018 and $4,198,952 in 2017	​	​	551,363,715	​	​	458,868,998
Premises and equipment, net	​	​	1,048,857	​	​	881,863
Federal Home Loan Bank stock, at cost	​	​	3,672,800	​	​	2,047,100
Accrued interest receivable	​	​	1,920,074	​	​	1,355,786
Other real estate owned	​	​	1,707,825	​	​	—
Deferred tax asset, net	​	​	1,566,932	​	​	1,144,724
Other assets	​	​	896,040	​	​	604,814
​	​	$	662,323,906	​	$	539,184,374
LIABILITIES AND STOCKHOLDERS’ EQUITY	​			​
Deposits	​			​
Non-interest bearing	​	$	116,994,924	​	$	106,799,889
Interest bearing	​	​	407,236,543	​	​	337,165,005
Total deposits	​	​	524,231,467	​	​	443,964,894
Federal Home Loan Bank advances	​	​	75,000,000	​	​	39,000,000
Subordinated notes payable, net	​	​	9,669,735	​	​	9,613,047
Accrued interest payable	​	​	559,962	​	​	227,462
Other liabilities	​	​	2,057,930	​	​	3,231,685
Total liabilities	​	​	611,519,094	​	​	496,037,088
Stockholders’ equity	​			​
Common stock, $5 par value, 5,000,000 shares authorized; issued and outstanding 3,411,946 shares in 2018; 3,394,690 shares in 2017	​	​	17,059,730	​	​	16,973,450
Additional paid-in capital	​	​	18,377,169	​	​	17,497,406
Retained earnings	​	​	15,591,404	​	​	8,783,421
Accumulated other comprehensive loss	​	​	(223,491)	​	​	(106,991)
Total stockholders’ equity	​	​	50,804,812	​	​	43,147,286
​	​	$	662,323,906	​	$	539,184,374

See accompanying notes to consolidated financial statements.

F-82

MARQUIS BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME
Years ended December 31, 2018 and 2017

​	2018			2017
Interest income	​			​
Loans, including fees	​	$	26,797,356	​	$	20,520,930
Investment securities	​	​	663,805	​	​	298,991
Interest bearing accounts in other financial institutions	​	​	778,764	​	​	483,326
​	​	​	28,239,925	​	​	21,303,247
Interest expense	​			​
Deposits	​	​	5,473,234	​	​	2,910,313
Borrowings	​	​	1,599,823	​	​	1,101,195
Net interest income	​	​	7,073,057	​	​	4,011,508
​	​	​	21,166,868	​	​	17,291,739
Provision for loan losses	​	​	1,148,865	​	​	921,261
Net interest income after provision for loan losses	​	​	20,018,003	​	​	16,370,478
Noninterest income	​			​
Service charges on deposit accounts	​	​	750,342	​	​	614,540
Gain on sale of loans	​	​	249,756	​	​	526,573
Other income	​	​	256,964	​	​	167,497
​	​	​	1,257,062	​	​	1,308,610
Noninterest expense	​			​
Salaries and employee benefits	​	​	7,319,899	​	​	6,275,276
Occupancy and equipment	​	​	1,335,161	​	​	1,110,152
Telecommunication expense	​	​	113,352	​	​	96,778
Data processing	​	​	544,608	​	​	499,081
Charitable contributions	​	​	294,694	​	​	300,702
Professional fees	​	​	414,807	​	​	432,147
Printing and supplies	​	​	103,899	​	​	79,314
Regulatory assessments	​	​	442,271	​	​	239,294
Directors’ compensation	​	​	929,759	​	​	737,504
Marketing	​	​	193,034	​	​	138,372
Other	​	​	634,098	​	​	728,095
​	​	​	12,325,582	​	​	10,636,715
Net income before income taxes	​	​	8,949,483	​	​	7,042,373
Income tax expense	​	​	2,141,500	​	​	3,079,529
Net Income	​	$	6,807,983	​	$	3,962,844
Net income available to common stockholders	​	$	6,807,983	​	$	3,962,844
Earnings per share:	​			​
Basic	​	$	2.00	​	$	1.17
Diluted	​	$	1.91	​	$	1.14

See accompanying notes to consolidated financial statements.

F-83

MARQUIS BANCORP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Years ended December 31, 2018 and 2017

​	2018			2017
Net income	​	$	6,807,983	​	$	3,962,844
Other comprehensive loss:	​			​
Unrealized losses on securities available for sale:	​			​
Unrealized holding loss arising during the period	​	​	(156,050)	​	​	(19,344)
Tax effect	​	​	39,550	​	​	6,644
Total other comprehensive loss	​	​	(116,500)	​	​	(12,700)
Comprehensive income	​	$	6,691,483	​	$	3,950,144

See accompanying notes to consolidated financial statements.

F-84

MARQUIS BANCORP, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Years ended December 31, 2018 and 2017

​	Preferred Shares		Preferred Stock			Common Shares		Common Stock			Additional Paid in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total
Balance at January 1, 2017	​	—	​	$	—	​	3,376,759	​	$	16,883,795	​	$	16,991,251	​	$	4,802,970	​	$	(76,684)	​	$	38,601,332
Common stock issuance	​	—	​	​	—	​	17,931	​	​	89,655	​	​	76,151	​	​	—	​	​	—	​	​	165,806
Stock based compensation	​	—	​	​	—	​	—	​	​	—	​	​	430,004	​	​	—	​	​	—	​	​	430,004
Net Income	​	—	​	​	—	​	—	​	​	—	​	​	—	​	​	3,962,844	​	​	—	​	​	3,962,844
Total other comprehensive loss	​	—	​	​	—	​	—	​	​	—	​	​	—	​	​	—	​	​	(12,700)	​	​	(12,700)
Reclassification due to new tax laws enacted	​	—	​	​	—	​	—	​	​	—	​	​	—	​	​	17,607	​	​	(17,607)	​	​	—
Balance at December 31, 2017	​	—	​	$	—	​	3,394,690	​	$	16,973,450	​	$	17,497,406	​	$	8,783,421	​	$	(106,991)	​	$	43,147,286
Common stock issuance	​	—	​	​	—	​	17,256	​	​	86,280	​	​	92,764	​	​	—	​	​	—	​	​	179,044
Stock based compensation	​	—	​	​	—	​	—	​	​	—	​	​	786,999	​	​	—	​	​	—	​	​	786,999
Net Income	​	—	​	​	—	​	—	​	​	—	​	​	—	​	​	6,807,983	​	​	—	​	​	6,807,983
Total other comprehensive loss	​	—	​	​	—	​	—	​	​	—	​	​	—	​	​	—	​	​	(116,500)	​	​	(116,500)
Balance at December 31, 2018	​	—	​	$	—	​	3,411,946	​	$	17,059,730	​	$	18,377,169	​	$	15,591,404	​	$	(223,491)	​	$	50,804,812

See accompanying notes to consolidated financial statements.

F-85

MARQUIS BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 2018 and 2017

​	2018			2017
Cash flows from operating activities	​			​
Net income	​	$	6,807,983	​	$	3,962,844
Adjustments to reconcile net income to net cash	​			​
From operating activities	​			​
Provision for loan losses	​	​	1,148,865	​	​	921,261
Loans originated for sale	​	​	(1,486,000)	​	​	(1,881,980)
Proceeds from loan sales	​	​	1,486,000	​	​	4,841,603
Increase of deferred income tax	​	​	(382,657)	​	​	(1,983)
Depreciation and amortization	​	​	294,990	​	​	273,313
Shared based compensation	​	​	786,999	​	​	430,004
Provision for off-balance sheet items	​	​	85,628	​	​	331,666
Write-off of property and equipment	​	​	294	​	​	—
Net amortization of premium and discount on securities	​	​	194,286	​	​	175,476
Amortization of subordinated note payable discount and debt issuance costs	​	​	56,688	​	​	60,785
Net change in:	​			​
Accrued interest receivable and other assets	​	​	(855,514)	​	​	(621,424)
Accrued interest payable and other liabilities	​	​	(926,883)	​	​	1,595,614
Net cash from operating activities	​	​	7,210,679	​	​	10,087,179
Cash flows from investing activities	​			​
Increase in time deposits with financial institutions	​	​	—	​	​	(3,764)
Redemption of time deposits with financial institutions	​	​	1,406,983	​	​	—
Purchase of securities available for sale	​	​	(19,497,575)	​	​	(6,161,965)
Purchase of securities held to maturity	​	​	—	​	​	(199,656)
Proceeds from maturities and calls of securities available for sale	​	​	1,000,000	​	​	1,000,000
Proceeds from repayment of securities available for sale	​	​	2,825,744	​	​	1,626,280
Proceeds from repayment on securities held to maturity	​	​	66,473	​	​	78,032
Proceeds from maturities on securities held to maturity	​	​	—	​	​	200,000
Purchase of Federal Home Loan Bank stock	​	​	(1,625,700)	​	​	(205,400)
Loan originations and payments, net	​	​	(95,351,408)	​	​	(98,754,729)
Capital expenditures	​	​	(462,278)	​	​	(272,501)
Net cash from investing activities	​	​	(111,637,761)	​	​	(102,693,703)
Cash flows from financing activities	​			​
Net increase in deposits	​	​	80,266,573	​	​	96,837,683
Proceeds from Federal Home Loan Bank Advances	​	​	206,000,000	​	​	37,025,000
Repayment of Federal Home Loan Bank Advances	​	​	(170,000,000)	​	​	(34,025,000)
Proceeds from issuance of common stock	​	​	179,044	​	​	165,806
Net cash from financing activities	​	​	116,445,617	​	​	100,003,489
Net change in cash and cash equivalents	​	​	12,018,535	​	​	7,396,965
Beginning cash and cash equivalents	​	​	54,609,504	​	​	47,212,539
Ending cash and cash equivalents	​	$	66,628,039	​	$	54,609,504
Supplemental cash flow information:	​			​
Interest paid	​	​	6,740,557	​	​	3,974,839
Income taxes paid	​	​	2,930,000	​	​	2,965,000
Loans transferred to other real estate	​	​	1,707,825	​	​	—

See accompanying notes to consolidated financial statements.

F-86

MARQUIS BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2018 and 2017

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations and Principles of Consolidation:   The consolidated financial statements include Marquis Bancorp, Inc. (the “Bancorp”) and its wholly owned subsidiary, Marquis Bank (the “Bank”), together referred to as “the Company”. Intercompany transactions and balances are eliminated in consolidation.

The Company provides financial services through its offices in Miami-Dade and Broward County. Its primary deposit products are checking, savings, and term certificates accounts, and its primary lending products are residential mortgages, commercial, and installment loans. Substantially all loans are secured by specific items of collateral including business assets, consumer assets, and commercial and residential real estate. Commercial loans are expected to be repaid from cash flow from operations of businesses. There are no significant concentrations of loans to any one industry or customer. However, the customer’s ability to repay their loans is dependent on the real estate and general economic conditions in the area.

Use of Estimates:   To prepare financial statements in conformity with accounting principles generally accepted in the United States of America management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and actual results could differ.

Cash Flows:   Cash and cash equivalents include cash, and deposits with other financial institutions with maturities fewer than 90 days. Net cash flows are reported for customer loan and deposit transactions and interest bearing deposits in other financial institutions.

Interest Bearing Deposits in other Financial Institutions:   Interest-bearing time deposits in other financial institutions are carried at cost.

Securities:   Debt securities are classified as held to maturity and carried at amortized cost when management has the positive intent and ability to hold them to maturity. Debt securities are classified as available for sale when they might be sold before maturity. Securities available for sale are carried at fair value, with unrealized holding gains and losses reported in other comprehensive loss, net of tax.

Interest income includes amortization of purchase premium or discount. Premiums and discounts on securities are amortized on the level-yield method without anticipating prepayments, except for mortgage backed securities where prepayments are anticipated. Gains and losses realized on the sale of investment securities are recorded on the trade date and determined using the specific identification method. Management evaluates securities for other-than-temporary impairment (“OTTI”) on at least a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. For securities in an unrealized loss position, management considers the extent and duration of the unrealized loss, and the financial condition and near-term prospects of the issuer. Management also assesses whether it intends to sell, or it is more likely than not that it will be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. For debt securities that do not meet the aforementioned criteria, the amount of impairment is split into two components as follows: 1) OTTI related to credit loss, which must be recognized in the income statement and 2) other-than-temporary impairment (OTTI) related to other factors, which is recognized in other comprehensive income. The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis. For equity securities, the entire amount of impairment is recognized through earnings.

Loans:   Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, net of deferred loan fees and costs, and an allowance for loan losses. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the level-yield method without anticipating prepayments. Most loans are secured by specific items of

F-87

MARQUIS BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2018 and 2017
 

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 

collateral including business assets, consumer assets, and commercial and residential real estate. The Company segregates its loan portfolio into the following segments: Commercial, Real Estate-Residential, Real Estate-Commercial, Home Equity lines of credits (HELOC) and Consumer and Other.

Each portfolio segment has different source of payments and or risk characteristics. Commercial loans are expected to be repaid from cash flow generated from the operations of businesses. Commercial real estate loans are secured by either owner occupied operating businesses or are secured by investment properties that are income producing from rental activities. For commercial real estate loans that are not owner occupied, the customers’ ability to repay is dependent on the income produced by the real estate and general economic conditions in the area. Residential loans, home equity lines of credit (HELOC) and other consumer loans are repayable from the individual borrower’s personal cash flow.

The Company underwrites and originates loans sponsored by the U.S. Small Business Administration (“SBA”). Under the SBA 7a program the Company underwrites and originates loans that carry a partial SBA guarantee up to 75%. These loans are carried in the held to maturity. Participations in the SBA guaranteed portion of these loans may be sold to pool assemblers who securitize the loans into pools sold in the secondary market. The gains on the sale of SBA 7a loan participations net of origination costs are recorded as non-interest income.

The Company also is participating in the SBA 504 program. In this program the Company underwrites and originates a first mortgage loan that it retains in the held to maturity. It also funds a second mortgage loan intended for sale to a Community Development Corporation (“CDC”). The loan is initially funded by the Company pending the takeout by the CDC of the loan with funds provided by a debenture issued by the CDC with the second mortgage loan as collateral and with a full guarantee from the SBA. These 504 debenture loans are carried in the held for sale portfolio and are sold at par to the CDC. Loans originated and intended for sale to a CDC under the SBA 504 program market are carried at the outstanding balance of the loan pending takeout by a CDC. No gain or loss is recognized from the sale of these loans.

Interest income on substantially all loans is discontinued at the time the loan is 90 days delinquent unless the loan is well-secured and in process of collection. Past due status is based on the contractual terms of the loan. For all portfolio segments, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the level-yield method without anticipating prepayments.

When interest accrual is discontinued, uncollected interest is reversed against interest income. Interest income on non-accrual loans is recognized on a cash basis when paid by the borrower unless collection in full of principal and interest is not expected. In that case, interest payments received are applied to principal. Accrual of interest is generally not resumed until the customer is current on all principal and interest payments and has demonstrated the ability to make contractual payments for at least six months.

Concentration of Credit Risk:   Most of the Company’s business activity is with customers located within Miami-Dade County. Therefore, the Company’s exposure to credit risk is significantly affected by changes in the economy in that county. The Company’s largest lending segment is commercial real estate loans.

Allowance for Loan Losses:   The allowance for loan losses is a valuation allowance for probable incurred credit losses. Loan losses are charged against the allowance when management believes the amount of the loan or a portion thereof is uncollectible. Subsequent recoveries, if any, are credited to the allowance. Management estimates the allowance balance required using industry loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions, and other factors. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management’s judgment, should be charged off.

F-88

MARQUIS BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2018 and 2017
 

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 

The allowance consists of specific and general components. The specific component relates to loans that are individually classified as impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. Loans for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings (TDRs) and classified as impaired.

Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

Troubled debt restructurings are individually evaluated for impairment and included in the separately identified impairment disclosures. TDRs are measured at the present value of estimated future cash flows using the loan’s effective rate at inception. If a TDR is considered to be a collateral dependent loan, the loan is reported, net, at the fair value of the collateral. For TDRs that subsequently default, the Company determines the amount of the allowance on that loan in accordance with the accounting policy for the allowance for loan losses on loans individually identified as impaired. The Company incorporates recent historical experience related to TDRs including the performance of TDRs that subsequently default into the calculation of the allowance by loan portfolio segment.

The general component covers pools of unimpaired loans sharing similar risk characteristics and is based on the Company’s loss experience factors adjusted for current environmental conditions as well as the Company’s internal risk grading of loans in the portfolio. Management estimates the general allowance amount required using the Company’s loss experience. The Company’s loss experience is applied by each portfolio segment. These economic factors include consideration of the following: levels of and trends in delinquencies and impaired loans; levels of and trends in charge-offs and recoveries; trends in volume and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures, and practices; experience, ability, and depth of lending management and other relevant staff; national and local economic trends and conditions; industry conditions; impact on severe weather events; and effects of changes in credit concentrations.

Due to the added risks associated with loans which are graded as special mention or substandard that are not classified as impaired, an additional analysis is performed to determine whether an allowance is needed that is not fully captured by the historical loss experience.

Premises and Equipment:   Premises and equipment, which includes computer software, are stated at cost less accumulated depreciation. Depreciation or amortization is computed on a straight-line basis over the useful life of the asset. Amortization of leasehold improvements is computed utilizing the straight- line method over the shorter of the lease term or the useful life of the asset. Premises and equipment are reviewed for impairment when events indicate their carrying amount may not be recoverable from future undiscounted cash flows. If impaired, the assets are recorded at fair value.

Federal Home Loan Bank (FHLB) Stock:   The Bank is a member of the FHLB system. Members are required to own a certain amount of stock based on the level of borrowings and other factors, and may invest in additional amounts. FHLB stock is carried at cost, classified as a restricted security, and periodically evaluated for impairment based on ultimate recovery of par value. Both cash and stock dividends are reported as income.

F-89

MARQUIS BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2018 and 2017
 

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 

Other Real Estate Owned:   Foreclosed assets are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. Physical possession of residential or commercial real estate property collateralizing a consumer or commercial loan occurs when legal title is obtained upon completion of foreclosure or when the borrower conveys all interest in the property to satisfy the loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. If fair value declines subsequent to foreclosure, a valuation allowance is recorded through expense. Operating costs after acquisition are expensed.

Loan Commitments and Related Financial Instruments:   Financial instruments include off-balance sheet credit instruments, such as commitments to make loans and commercial letters of credit, issued to meet customer financing needs. The face amount for these items represents the exposure to loss, before considering customer collateral or ability to repay. Such financial instruments are recorded when they are funded.

Stock-Based Compensation:   Compensation cost is recognized for stock options and restricted stock awards issued to employees or directors, based on the fair value of these awards at the date of grant. A Black-Scholes model is utilized to estimate the fair value of stock options on the date of grant.

Compensation cost is recognized over the required service period, generally defined as the vesting period. For awards with graded vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award.

Income Taxes:   Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized.

A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded.

The Company recognizes any interest and/or penalties related to income tax matters as other operating expenses.

Earnings per Common Share:   Basic earnings per common share is net income divided by the weighted average number of common shares outstanding during the period. Earnings and dividends per share are restated for all stock splits and stock dividends through the date of issuance of the financial statements. Diluted earnings per common share includes the dilutive effect of additional potential common shares issuable under stock options.

Comprehensive Income:   Comprehensive income consists of net income and other comprehensive loss. Other comprehensive loss includes unrealized losses on securities available for sale which are recognized as a separate component of stockholders’ equity.

Dividend Restrictions:   Banking regulations require maintaining certain capital levels and may limit the dividends paid by the bank to the holding company or by the holding company to shareholders.

Loss Contingencies:   Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe there are such matters that will have a material effect on the financial statements.

F-90

MARQUIS BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2018 and 2017
 

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 

Transfers of Financial Assets:   Transfers of financial assets are accounted for as sales, when control over the assets has been relinquished. Control over transferred assets is deemed to be surrendered when the assets have been isolated from the Company, the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

Loans Held for Sale:   Loans originated and intended for sale in the secondary market are carried at the lower of aggregate cost or fair value, as determined by outstanding commitments from investors. Net unrealized losses, if any, are recorded as a valuation allowance and charged to earnings.

Loans held for sale are generally sold with servicing rights released. The carrying value of loans sold is reduced by the amount allocated to the servicing right, if any. Gains and losses on sales of loans are based on the difference between the selling price and the carrying value of the related loan sold.

Fair Value of Financial Instruments:   Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in a separate note. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect these estimates.

NOTE 2 — SECURITIES

The following tables summarizes the amortized cost and fair value of securities available for sale and securities held to maturity at December 31, 2018 and 2017 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive loss and gross unrecognized gains and losses:

2018

Amortized Cost

Gross Unrealized Gains

Gross Unrealized Losses

Fair Value

Available for Sale

​

​

​

​

U.S. government agencies

​

$

4,181,794

​

$

—

​

$

(107,668)

​

$

4,074,126

U.S. government sponsored entities

​

​

25,533,218

​

​

35,662

​

​

(220,639)

​

​

25,348,241

State, county and municipal bonds

​

​

1,054,225

​

​

—

​

​

(15,169)

​

​

1,039,056

Corporate bonds

​

​

1,500,973

​

​

8,450

​

​

—

​

​

1,509,423

Total Available for Sale

​

$

32,270,210

​

$

44,112

​

$

(343,476)

​

$

31,970,846

​

Amortized Cost

Gross Unrealized Gains

Gross Unrealized Losses

Fair Value

Held to Maturity

​

​

​

​

U.S. treasuries

​

$

199,912

​

$

—

​

$

(1,162)

​

$

198,750

U.S. government sponsored entities

​

​

348,866

​

​

148

​

​

(13,795)

​

​

335,219

Foreign Sovereign (Israel)

​

​

1,000,000

​

​

—

​

​

—

​

​

1,000,000

Total Held to Maturity

​

$

1,548,778

​

$

148

​

$

(14,957)

​

$

1,533,969

F-91

MARQUIS BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2018 and 2017
 

NOTE 2 — SECURITIES (Continued)
 

2017

Amortized Cost

Gross Unrealized Gains

Gross Unrealized Losses

Fair Value

Available for Sale

​

​

​

​

U.S. government agencies

​

$

5,532,898

​

$

709

​

$

(51,148)

​

$

5,482,459

U.S. government sponsored entities

​

​

8,692,485

​

​

—

​

​

(109,233)

​

​

8,583,252

State, county and municipal bonds

​

​

1,061,228

​

​

15,505

​

​

(7,598)

​

​

1,069,135

Corporate bonds

​

​

1,501,910

​

​

10,507

​

​

(2,056)

​

​

1,510,361

Total Available for Sale

​

$

16,788,521

​

$

26,721

​

$

(170,035)

​

$

16,645,207

​

Amortized Cost

Gross Unrealized Gains

Gross Unrealized Losses

Fair Value

Held to Maturity

​

​

​

​

U.S. treasuries

​

$

199,737

​

$

—

​

$

(1,518)

​

$

198,219

U.S. government sponsored entities

​

​

419,658

​

​

233

​

​

(8,234)

​

​

411,657

Foreign Sovereign (Israel)

​

​

1,000,000

​

​

—

​

​

—

​

​

1,000,000

Total Held to Maturity

​

$

1,619,395

​

$

233

​

$

(9,752)

​

$

1,609,876

The amortized cost and fair value of the investment securities portfolio are shown by contractual maturity in the following table. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

​	December 31, 2018
​	Amortized Cost			Fair Value
Available for Sale	​			​
Within one year	​	$	500,000	​	$	500,353
One to five years	​	​	16,684,471	​	​	16,627,417
Over five to ten years	​	​	9,416,578	​	​	9,315,487
Over ten years	​	​	5,669,161	​	​	5,527,589
Total	​	$	32,270,210	​	$	31,970,846
Held to Maturity	​			​
Within one year	​	$	1,199,912	​	$	1,198,750
One to five years	​	​	5,538	​	​	5,686
Over five to ten years	​	​	—	​	​	—
Over ten years	​	​	343,328	​	​	329,533
Total	​	$	1,548,778	​	$	1,533,969

F-92

MARQUIS BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2018 and 2017
 

NOTE 2 — SECURITIES (Continued)
 

​	December 31, 2017
​	Amortized Cost			Fair Value
Available for Sale	​			​
Within one year	​	$	1,000,000	​	$	993,567
One to five years	​	​	5,501,240	​	​	5,468,477
Over five to ten years	​	​	3,973,544	​	​	3,931,590
Over ten years	​	​	6,313,737	​	​	6,251,573
Total	​	$	16,788,521	​	$	16,645,207
Held to Maturity	​			​
Within one year	​	$	—	​	$	—
One to five years	​	​	1,209,237	​	​	1,207,952
Over five to ten years	​	​	—	​	​	—
Over ten years	​	​	410,158	​	​	401,925
Total	​	$	1,619,395	​	$	1,609,876

There were no sales of securities in 2018 or 2017. Securities pledged at December 31, 2018 and 2017 had a carrying amount of  $199,912 and $199,737, respectively, and were pledged to secure US public deposits.

The following table summarizes the investment securities with unrealized losses at December 31, 2018 and 2017 aggregated by major security type and length of time in a continuous unrealized loss position:

​

Less Than 12 Months

12 Months or Longer

Total

December 31, 2018

Fair Value

Unrealized Losses

Fair Value

Unrealized Losses

Fair Value

Unrealized Losses

Available for Sale

​

​

​

​

​

​

U.S. Gov. Agencies

​

$

402,429

​

$

(5,560)

​

$

3,671,697

​

$

(102,108)

​

$

4,074,126

​

$

(107,668)

U.S. Government sponsored entities

​

​

5,033,957

​

​

(36,305)

​

​

8,804,943

​

​

(184,334)

​

​

13,838,900

​

​

(220,639)

State, county and municipal bonds

​

​

525,225

​

​

(718)

​

​

513,831

​

​

(14,451)

​

​

1,039,056

​

​

(15,169)

Total Available for Sale

​

$

5,961,611

​

$

(42,583)

​

$

12,990,471

​

$

(300,893)

​

$

18,952,082

​

$

(343,476)

​	Less Than 12 Months						12 Months or Longer						Total
December 31, 2018	Fair Value			Unrealized Losses			Fair Value			Unrealized Losses			Fair Value			Unrealized Losses
Held to Maturity	​			​			​			​			​			​
U.S. Gov. Agencies	​	$	—	​	$	—	​	$	198,750	​	$	(1,162)	​	$	198,750	​	$	(1,162)
U.S. Government sponsored entities	​	​	—	​	​	—	​	​	329,533	​	​	(13,795)	​	​	329,533	​	​	(13,795)
Total Held to Maturity	​	$	—	​	$	—	​	$	528,283	​	$	(14,957)	​	$	528,283	​	$	(14,957)

F-93

MARQUIS BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2018 and 2017
 

NOTE 2 — SECURITIES (Continued)
 

​

Less Than 12 Months

12 Months or Longer

Total

December 31, 2017

Fair Value

Unrealized Losses

Fair Value

Unrealized Losses

Fair Value

Unrealized Losses

Available for Sale

​

​

​

​

​

​

U.S. Gov. Agencies

​

$

3,430,696

​

$

(31,630)

​

$

1,482,444

​

$

(19,518)

​

$

4,913,140

​

$

(51,148)

U.S. Government sponsored entities

​

​

5,512,605

​

​

(60,445)

​

​

3,070,647

​

​

(48,788)

​

​

8,583,252

​

​

(109,233)

State, county and municipal bonds

​

​

497,943

​

​

(7,598)

​

​

—

​

​

—

​

​

497,943

​

​

(7,598)

Corporate securities

​

​

523,761

​

​

(2,056)

​

​

—

​

​

—

​

​

523,761

​

​

(2,056)

Total Available for Sale

​

$

9,965,005

​

$

(101,729)

​

$

4,553,091

​

$

(68,306)

​

$

14,518,096

​

$

(170,035)

​	Less Than 12 Months						12 Months or Longer						Total
December 31, 2017	Fair Value			Unrecognized Losses			Fair Value			Unrecognized Losses			Fair Value			Unrecognized Losses
Held to Maturity	​			​			​			​			​			​
U.S. Gov. Agencies	​	$	198,219	​	$	(1,518)	​	$	—	​	$	—	​	$	198,219	​	$	(1,518)
U.S. Government sponsored entities	​	​	—	​	​	—	​	​	401,925	​	​	(8,234)	​	​	401,925	​	​	(8,234)
Total Held to Maturity	​	$	198,219	​	$	(1,518)	​	$	401,925	​	$	(8,234)	​	$	600,144	​	$	(9,752)

During the year ended December 31, 2018 and 2017, there was no other than temporary impairment recognized on securities. The decline in fair value of securities is due to changes in interest rates and other market conditions and is not credit related. The fair value of all securities is expected to recover as the securities approach maturity. Accordingly, it is expected that the securities will not be settled at a price less than the amortized cost basis of the Company’s investments. Management does not intend and it is likely that it will not be required to sell the securities prior to their anticipated recovery.

NOTE 3 — LOANS

Loans held to maturity at December 31, 2018 and 2017 were as follow:

​	2018			2017
Commercial	​	$	80,171,846	​	$	61,661,118
Real Estate:	​			​
Residential	​	​	3,769,129	​	​	5,772,633
Commercial	​	​	403,444,475	​	​	327,306,009
Home equity lines of credit (HELOC)	​	​	65,798,734	​	​	66,233,804
Consumer and other	​	​	3,408,497	​	​	2,209,565
​	​	​	556,592,681	​	​	463,183,129
Less: Fees and Costs	​	​	(366,159)	​	​	(115,179)
Less: Allowance for loan losses	​	​	(4,862,807)	​	​	(4,198,952)
Loans, net	​	$	551,363,715	​	$	458,868,998

F-94

MARQUIS BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2018 and 2017
 

NOTE 3 — LOANS (Continued)
 

The following table presents the activity in the allowance for loan losses by portfolio segment for the year ending December 31, 2018:

December 31, 2018

Commercial

Real Estate

Consumer & Other

Total

Residential

Commercial

HELOC

Allowance for loan losses:

​

​

​

​

​

​

Beginning balance

​

$

567,669

​

$

22,733

​

$

2,994,235

​

$

577,204

​

$

37,111

​

$

4,198,952

Provision for loan losses

​

​

278,816

​

​

3,651

​

​

303,785

​

​

574,335

​

​

(11,722)

​

​

1,148,865

Loans charged-off

​

​

—

​

​

—

​

​

—

​

​

(491,208)

​

​

—

​

​

(491,208)

Recoveries

​

​

—

​

​

—

​

​

—

​

​

—

​

​

6,198

​

​

6,198

Total ending balance

​

$

846,485

​

$

26,384

​

$

3,298,020

​

$

660,331

​

$

31,587

​

$

4,862,807

The following table presents the activity in the allowance for loan losses by portfolio segment for the year ending December 31, 2017:

December 31, 2017

Commercial

Real Estate

Consumer & Other

Total

Residential

Commercial

HELOC

Allowance for loan losses:

​

​

​

​

​

​

Beginning balance

​

$

505,828

​

$

76,277

​

$

2,439,450

​

$

576,082

​

$

27,731

​

$

3,625,368

Provision for loan losses

​

​

372,140

​

​

(53,544)

​

​

554,785

​

​

1,122

​

​

46,758

​

​

921,261

Loans charged-off

​

​

(310,299)

​

​

—

​

​

—

​

​

—

​

​

(40,611)

​

​

(350,910)

Recoveries

​

​

—

​

​

—

​

​

—

​

​

—

​

​

3,233

​

​

3,233

Total ending balance

​

$

567,669

​

$

22,733

​

$

2,994,235

​

$

577,204

​

$

37,111

​

$

4,198,952

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of December 31, 2018:

December 31, 2018	Commercial			Real Estate									Consumer & Other			Total
				Residential			Commercial			HELOC
Allowance for loan losses:	​			​			​			​			​			​
Ending allowance balance attributable to loans:	​			​			​			​			​			​
Individually evaluated for impairment	​	$	—	​	$	—	​	$	—	​	$	69,134	​	$	—	​	$	69,134
Collectively evaluated for impairment	​	​	846,485	​	​	26,384	​	​	3,298,020	​	​	591,197	​	​	31,587	​	​	4,793,673
Total ending balance	​	$	846,485	​	$	26,384	​	$	3,298,020	​	$	660,331	​	$	31,587	​	$	4,862,807
Loans:	​			​			​			​			​			​
Loans individually evaluated for impairment	​	$	294,245	​	$	—	​	$	—	​	$	110,199	​	$	—	​	$	404,444
Loans collectively evaluated for impairment	​	​	79,877,601	​	​	3,769,129	​	​	403,444,475	​	​	65,688,535	​	​	3,408,497	​	​	556,188,237
Total ending loans balance	​	$	80,171,846	​	$	3,769,129	​	$	403,444,475	​	$	65,798,734	​	$	3,408,497	​	$	556,592,681

F-95

MARQUIS BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2018 and 2017
 

NOTE 3 — LOANS (Continued)
 

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of December 31, 2017:

December 31, 2017	Commercial			Real Estate									Consumer & Other			Total
				Residential			Commercial			HELOC
Allowance for loan losses:	​			​			​			​			​			​
Ending allowance balance attributable to loans:	​			​			​			​			​			​
Individually evaluated for impairment	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—
Collectively evaluated for impairment	​	​	567,669	​	​	22,733	​	​	2,994,235	​	​	577,204	​	​	37,111	​	​	4,198,952
Total ending balance	​	$	567,669	​	$	22,733	​	$	2,994,235	​	$	577,204	​	$	37,111	​	$	4,198,952
Loans:	​			​			​			​			​			​
Loans individually evaluated for impairment	​	$	305,544	​	$	—	​	$	—	​	$	2,100,000	​	$	—	​	$	2,405,544
Loans collectively evaluated for impairment	​	​	61,355,574	​	​	5,772,633	​	​	327,306,009	​	​	64,133,804	​	​	2,209,565	​	​	460,777,585
Total ending loans balance	​	$	61,661,118	​	$	5,772,633	​	$	327,306,009	​	$	66,233,804	​	$	2,209,565	​	$	463,183,129

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of December 31, 2018 and 2017:

​	2018			2017
Average of individually impaired loans during year	​	$	404,444	​	$	2,405,544
Interest income recognized during impairment	​	​	61,015	​	​	104,073
Cash-basis interest income recognized	​	​	—	​	​	—

There were no loans past due 90 days and still on accrual on December 31, 2018 and 2017. There were two non-accrual loans with an outstanding balance of  $404,444 as of December 31, 2018 and two with an outstanding balance of  $2,405,544 as of December 31, 2017. There were no loans past due between 30 – 59 days as of December 31, 2018 and 2017. All other loans were current as of December 31, 2018 and 2017.

Troubled Debt Restructurings:

A loan whose terms are modified due to financial difficulties resulting in the borrower’s inability to meet the contractual repayment terms is considered a troubled debt restructuring. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the company’s internal underwriting policy.

There were no loans modified as troubled debt restructurings during the year ended December 31, 2018 and 2017.

There were no loans modified as troubled debt restructurings for which there were payment defaults within twelve months following the modification during the years ending December 31, 2018 and 2017. A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms.

F-96

MARQUIS BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2018 and 2017
 

NOTE 3 — LOANS (Continued)
 

Credit Quality Indicators

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk at inception. This credit risk rating is updated based on an annual review of loans with an outstanding balance greater than $ 500 thousand and is reviewed when a loan is delinquent 30 days or more or is delinquent on property tax payments if applicable. The Company uses the following definitions for risk ratings:

Special Mention:   A loan in this category has potential weaknesses that deserve management’s close attention. A loan in this category does not expose an institution to sufficient risk to warrant adverse classification at this time, but if left uncorrected these potential weaknesses may result in the deterioration of the repayment prospects on the loan at some future date.

Substandard:   A loan classified as substandard is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Loans rated substandard have a well-defined weakness or weaknesses that jeopardize the liquidation of the obligation. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful:   A loan classified doubtful has all the weaknesses inherent in one classified substandard with the added characteristic that the weaknesses make collection in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.

Loans not meeting the criteria above are assigned risk ratings that are considered to be pass rated loans.

Based on the most recent analysis performed as of December 31, 2018 and 2017, the risk category of loans by portfolio segment is as follows:

2018

Pass

Special Mention

Substandard

Doubtful

Total

Commercial

​

$

79,877,601

​

$

—

​

$

294,245

​

$

—

​

$

80,171,846

Real Estate:

​

​

​

​

​

Residential

​

​

3,769,129

​

​

—

​

​

—

​

​

—

​

​

3,769,129

Commercial

​

​

403,444,475

​

​

—

​

​

—

​

​

—

​

​

403,444,475

Home Equity Line of Credit

​

​

65,688,535

​

​

—

​

​

110,199

​

​

—

​

​

65,798,734

Consumer and other

​

​

3,408,497

​

​

—

​

​

—

​

​

—

​

​

3,408,497

Total

​

$

556,188,237

​

$

—

​

$

404,444

​

$

—

​

$

556,592,681

2017

Pass

Special Mention

Substandard

Doubtful

Total

Commercial

​

$

61,355,574

​

$

—

​

$

305,544

​

$

—

​

$

61,661,118

Real Estate:

​

​

​

​

​

Residential

​

​

5,772,633

​

​

—

​

​

—

​

​

—

​

​

5,772,633

Commercial

​

​

327,306,009

​

​

—

​

​

—

​

​

—

​

​

327,306,009

Home Equity Line of Credit

​

​

64,133,804

​

​

—

​

​

2,100,000

​

​

—

​

​

66,233,804

Consumer and other

​

​

2,209,565

​

​

—

​

​

—

​

​

—

​

​

2,209,565

Total

​

$

460,777,585

​

$

—

​

$

2,405,544

​

$

—

​

$

463,183,129

F-97

MARQUIS BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2018 and 2017
 

NOTE 4 — PREMISES AND EQUIPMENT

Premises and equipment were as follows:

​	2018			2017
Leasehold improvements	​	$	1,110,252	​	$	859,859
Furniture and equipment	​	​	1,374,803	​	​	1,172,998
​	​	​	2,485,055	​	​	2,032,857
Less: Accumulated depreciation	​	​	(1,436,198)	​	​	(1,150,994)
​	​	$	1,048,857	​	$	881,863

The Company leases its main office under an operating lease. The lease is for a ten year period expiring May 2022, and provides for an additional five year renewal option. The Company entered into an operating lease in September 2014 for branch office space in Aventura, Florida for an initial term of three years with an additional three year renewal option that was exercised in 2017. In March 2018, the Company entered into an operating lease for branch office space in Davie, Florida for an initial term of five years with an additional five year renewal option. Rent expense is recognized on a straight line basis over the 10 years, six years and five year terms of the respective leases. Rent expense was approximately $806,236 and $674,666 for the period ended December 31, 2018 and 2017, respectively.

The following is a schedule of future minimum lease payments as of December 31, 2018 under the amended operating lease on the Company’s facility.

2019	​	699,323
2020	​	699,851
2021	​	677,658
2022	​	340,683
2023	​	100,887
Thereafter	​	—
​	$	2,518,402

NOTE 5 — DEPOSITS

Time deposits of  $250,000 thousand or more were approximately $129,824,815 and $111,915,533 at December 31, 2018 and 2017, respectively. At December 31, 2018, scheduled maturities of all time deposits were as follows:

2019	​	266,916,257
2020	​	13,834,430
2021	​	500,038
2022	​	1,069,884
2023	​	—
​	$	282,320,609

NOTE 6 — FEDERAL HOME LOAN BANK ADVANCES

At December 31, 2018 and 2017, notes payable to the FHLB totaled $75,000,000 and $39,000,000, respectively. The advances are collateralized by a blanket lien on the Company’s real estate loan portfolio. The Company may borrow based on qualifying collateral reports submitted on a quarterly basis. Qualifying loans in the amount $111,035,140 and $101,543,866, respectively, were available as collateral for the quarter ended December 31, 2018 and 2017.

F-98

MARQUIS BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2018 and 2017
 

NOTE 6 — FEDERAL HOME LOAN BANK ADVANCES (Continued)
 

The Company was eligible to borrow an additional $85,892,500 and $28,213,620 at December 31, 2018 and 2017, respectively, under its available line of credit based on pledged qualifying loan collateral. Securities held in safe keeping at the FHLB of Atlanta may also be pledged to secure additional advances under the line of credit. No securities were pledged at December 31, 2018 and 2017 for this purpose

The individual advances at December 31, 2018 and 2017 mature within the next year and bear fixed interest rates within the range of rates indicated below. Advances are subject to a prepayment penalty if repaid before maturity.

2018
Amount	Rate
$75,000,000	2.35% to 2.82%

2017
Amount	Rate
$39,000,000	0.88% to 1.79%

NOTE 7 — EARNINGS PER SHARE

The following table sets forth the computation of basic earnings per common share and diluted earnings per common share for the years ended December 31, 2018 and 2017:

​	2018			2017
Basic	​	​	​	​	​	​
Net Income	​	$	6,807,983	​	$	3,962,844
Weighted average common shares outstanding	​	​	3,407,680	​	​	3,390,525
Basic earnings per common share	​	$	2.00	​	$	1.17

​	2018			2017
Diluted	​	​	​	​	​	​
Net Income	​	$	6,807,983	​	$	3,962,844
Weighted average common shares outstanding for basic earnings per common share	​	​	3,407,680	​	​	3,390,525
Add: Dilutive effects of assumed exercises of stock options	​	​	155,001	​	​	72,062
Average shares	​	​	3,562,681	​	​	3,462,587
Diluted	​	$	1.91	​	$	1.14

NOTE 8 — INCOME TAXES

In 2017, new tax legislation was enacted, when H.R. 1, commonly referred to as the Tax Cuts and Jobs Act, was signed into law on December 22, 2017. Under the new tax law, the Company’s federal statutory rate will be reduced to 21%, from 34%, for tax years beginning January 1st, 2018. As such, U.S. generally accepted accounting principles require that the effect of changes in tax laws or rates be recognized in the period in which the legislation is enacted.

As a result, the Company’s deferred tax assets and deferred tax liabilities are required to be measured at the enacted tax rates expected to apply when these assets and liabilities are expected to be realized or settled. The impact of this remeasurement results in decreased deferred tax assets with a corresponding increase in income tax expense, and decreased deferred tax liabilities with a corresponding decrease in income tax expense.

F-99

MARQUIS BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2018 and 2017
 

NOTE 8 — INCOME TAXES (Continued)
 

The deferred tax effects of items reported in accumulated other comprehensive income are also recorded through income tax expense, and not through other comprehensive income. This creates a disproportionate tax effect in accumulated other comprehensive income for related deferred tax assets and deferred tax liabilities. The amount in accumulated other comprehensive income that does not reflect the appropriate tax rate is referred to as the stranded tax effects, resulting from enactment of the Tax Cuts and Jobs Act. Accounting Standards Update (ASU) 2018-2 — Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income — allows for the reclassification of the stranded tax effects from accumulated other comprehensive income to retained earnings. This reclassification is meant to increase the usefulness of the information reported to financial statement users. The underlying guidance that requires that the effect of changes in tax laws or rates be recognized through income in the period in which the legislation is enacted is not affected. The effect of the reclassification to the Consolidated Balance Sheet and Consolidated Statement of Stockholder’s Equity is as follows:

​	2017
Retained Earnings	​	$	17,607
Accumulated Other Comprehensive Loss	​	$	(17,607)

Income taxes for the years ended December 31, 2018 and 2017 were as follows:

​	2018			2017
Current	​	$	2,524,157	​	$	3,081,512
Deferred	​	​	(382,657)	​	​	(1,983)
Total	​	$	2,141,500	​	$	3,079,529

Year-end deferred tax assets and liabilities were due to the following:

​	2018			2017
Deferred tax assets	​			​
Organizational and start-up expenses	​	$	41,980	​	$	53,695
Capital losses	​	​	25,345	​	​	25,345
Stock option expense	​	​	341,731	​	​	199,916
Allowance for loan losses	​	​	1,232,478	​	​	1,034,485
Securities available for sale	​	​	75,874	​	​	36,323
Accrued expenses	​	​	247,812	​	​	176,434
Other	​	​	414	​	​	—
​	​	​	1,965,634	​	​	1,526,198
Deferred tax liabilities	​			​
Accumulated depreciation	​	​	65,721	​	​	65,250
Deferred loan fees	​	​	265,557	​	​	289,191
Other	​	​	42,079	​	​	1,688
​	​	​	373,357	​	​	356,129
Valuation allowance	​	​	25,345	​	​	25,345
Net deferred tax asset	​	$	1,566,932	​	$	1,144,724

F-100

MARQUIS BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2018 and 2017
 

NOTE 8 — INCOME TAXES (Continued)
 

Effective tax rates differ from the federal statutory rate of 21% applied to 2018 income before income taxes, and 34% applied to 2017 income before income taxes due to the following:

​	2018			2017
Federal statutory rate times financial statement income	​	$	1,879,391	​	$	2,394,407
Effect of state income tax (net of federal benefit)	​	​	192,935	​	​	92,159
Stock compensation	​	​	47,749	​	​	81,047
Other	​	​	21,425	​	​	(40,199)
Effect of tax rate change	​	​	—	​	​	552,115
​	​	$	2,141,500	​	$	2,213,569

A valuation allowance for deferred tax assets is recorded when it is more likely than not that some portion or all of the deferred tax asset will not be realized. The Company recorded a valuation allowance for its capital loss carry forward.

The Company is subject to U.S. federal income tax as well as income tax of the state of Florida. The Company is no longer subject to examination by taxing authorities for all years prior to 2015. The Company does not expect the total amount of unrecognized tax benefits to significantly increase or decrease in the next twelve months.

NOTE 9 — SUBORDINATED NOTES PAYABLE

At year-end, long-term debt was as follows:

​	2018						2017
​	Principal			Unamortized Discount and Debt Issuance Costs			Principal			Unamortized Discount and Debt Issuance Costs
7.0% subordinated debentures, due 2026 (discount is based on imputed interest rate of 7.458%)	​	$	10,000,000	​	$	(330,265)	​	$	10,000,000	​	$	(386,953)
Total	​	$	10,000,000	​	$	(330,265)	​	$	10,000,000	​	$	(386,953)

NOTE 10 — STOCK OPTION PLAN

The Company’s Board of Directors approved the granting of options on January 2, 2017 to purchase up to 96,102 of additional shares to directors and principal officers under the Marquis Bancorp Company 2009 Stock Option Plan. All 680,000 authorized share grants under the 2009 Stock Option Plan have been issued and no further grants will be authorized under this plan.

The Marquis Bancorp 2017 Stock Option Plan, (“the Option Plan”), was adopted and approved by the stockholders at the April 2017 stockholders’ annual meeting. The Option Plan authorizes granting 500,000 shares as incentive stock options or non-qualified stock options to purchase common stock of the Company to eligible participants including directors and principal officers of the Company. The Option Plan increased the aggregate number of shares of the Company’s common stock authorized for incentive stock option grants or non-qualified stock options to purchase common stock from 680,000 approved in 2015 to 1,180,000.

During December 2017, the Company’s Board of Directors approved the granting of options to purchase up to 217,332 of additional shares to the directors and certain employees. During 2018, the Company’s Board of Directors approved the granting of an additional 140,000 shares to the directors and

F-101

MARQUIS BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2018 and 2017
 

NOTE 10 — STOCK OPTION PLAN (Continued)
 

certain employees. Vesting periods and exercise terms are set on the grant date. Option awards are generally granted with an exercise price equal to or greater than the estimated fair value of the Company’s common stock at the date of grant and a vesting period of three years.

Share based compensation is recognized over the vesting period based on the use of the Black-Scholes Model for valuing stock options. Assumptions used in the model as to the expected life of the option and volatility are based on management’s expectation of the life of the option and the stock volatility of similar community banks. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury Note rate for the expected life of the option in effect at the time of the grant.

The fair value of options granted in 2018 and 2017 were determined using the following weighted average assumptions as of the grant date:

​	2018	2017
Risk-free interest rate	2.59% – 2.78%	2.07% – 2.26%
Expected life	6 years	6 years
Expected volatility	30%	30%
Dividend yield	0%	0%

The average estimated fair value of the stock options granted in 2018 and 2017 was $5.13 and $4.35, respectively. Share based compensation expense of  $786,999 and $430,004 was recognized in 2018 and 2017, respectively.

A summary of option activity for 2018 follows:

​	Shares		Weighted Average Exercise Price			Weighted Average Remaining Contractual Term
Outstanding January 1, 2018	​	638,602	​	$	10.17	6 years
Granted	​	357,332	​	​	14.85	​
Exercised	​	(17,256)	​	​	10.38	​
Forfeited/Expired	​	(2,550)	​	​	9.65	​
Outstanding December 31, 2018	​	976,128	​	$	11.88	6.6 years
Options vested and exercisable at end of year	​	502,439	​	$	9.60	4.4 years
Options not vested	​	473,689	​	$	14.31	8.9 years

A summary of option activity for 2017 follows:

​	Shares		Weighted Average Exercise Price			Weighted Average Remaining Contractual Term
Outstanding January 1, 2017	​	534,433	​	$	9.49	6.2 years
Granted	​	123,000	​	​	13.00	​
Exercised	​	(17,931)	​	​	9.25	​
Forfeited/Expired	​	(900)	​	​	11.66	​
Outstanding December 31, 2017	​	638,602	​	$	10.17	6 years
Options vested and exercisable at end of year	​	414,455	​	$	8.96	4.7 years
Options not vested	​	224,147	​	$	12.41	8.5 years

F-102

MARQUIS BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2018 and 2017
 

NOTE 10 — STOCK OPTION PLAN (Continued)
 

Unrecognized shared based compensation related to non-vested stock options granted amounts to $1,553,437 and $ 509,630 as of December 31, 2018 and 2017, respectively. This cost is expected to be recognized over a weighted average period of 36 months.

Intrinsic value represents the difference between the closing stock price of  $15.50 as of December 31, 2018 and the weighted average exercise price, multiplied by the number of options. The intrinsic value of option exercises was $88,424 and $94,138 as of December 31, 2018 and 2017, respectively. Cash received from option exercises was $179,044 and $165,806 during 2018 and 2017, respectively. No tax benefit from option exercises was recognized during 2018 and 2017.

NOTE 11 — REGULATORY CAPITAL MATTERS

Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. The final rules implementing Basel Committee on Banking Supervision’s capital guidelines for U.S. banks (Basel III rules) became effective for the Company on January 1, 2015 with full compliance with all of the requirements being phased in over a multi-year schedule, and fully phased in by January 1, 2019. Under the Basel III rules, the Company must hold a capital conservation buffer above the adequately capitalized risk-based capital ratios. The capital conservation buffer is being phased in from 0.0% for 2015 to 2.50% by 2019. The capital conservation buffer for 2018 is 1.875% and for 2017 is 1.25%. The net unrealized gain or loss on available for sale securities is not included in computing regulatory capital. Management believes as of December 31, 2018 and 2017, the Company and Bank meet all capital adequacy requirements to which they are subject.

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. At year-end 2018 and 2017, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the institution’s category.

Actual and required capital amounts and ratios are presented below at year-end.

​

Actual

Minimum Required To Be Adequately Capitalized Plus Conservation Buffer

Minimum Required To Be Well Capitalized

2018

Amount

Ratio

Amount

Ratio

Amount

Ratio

Total Capital to risk weighted assets

​

​

​

​

​

​

Consolidated

​

$

65,980,388

​

11.53%

​

$

56,495,776

​

9.875%

​

​

N/A

​

N/A

Bank

​

$

65,167,154

​

11.39%

​

$

56,494,381

​

9.875%

​

$

57,209,500

​

10.00%

Tier 1 (Core) Capital to risk weighted assets

​

​

​

​

​

​

Consolidated

​

$

51,028,303

​

8.92%

​

$

45,053,594

​

7.875%

​

​

N/A

​

N/A

Bank

​

$

59,884,803

​

10.47%

​

$

45,052,481

​

7.875%

​

$

45,767,600

​

8.00%

F-103

MARQUIS BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2018 and 2017
 

NOTE 11 — REGULATORY CAPITAL MATTERS (Continued)
 

​

Actual

Minimum Required To Be Adequately Capitalized Plus Conservation Buffer

Minimum Required To Be Well Capitalized

2018

Amount

Ratio

Amount

Ratio

Amount

Ratio

Common Tier 1 (CET 1)

​

​

​

​

​

​

Consolidated

​

$

51,028,303

​

8.92%

​

$

36,471,957

​

6.375%

​

​

N/A

​

N/A

Bank

​

$

59,884,803

​

10.47%

​

$

36,471,056

​

6.375%

​

$

37,186,175

​

6.50%

Tier 1 (Core) Capital to average assets

​

​

​

​

​

​

Consolidated

​

$

51,028,303

​

8.08%

​

$

25,249,033

​

4.000%

​

​

N/A

​

N/A

Bank

​

$

59,884,803

​

9.49%

​

$

25,251,000

​

4.000%

​

$

28,604,750

​

5.00%

​

Actual

Minimum Required To Be Adequately Capitalized Plus Conservation Buffer

Minimum Required To Be Well Capitalized

2017

Amount

Ratio

Amount

Ratio

Amount

Ratio

Total Capital to risk weighted assets

​

​

​

​

​

​

Consolidated

​

$

57,400,192

​

12.21%

​

$

43,497,940

​

9.25%

​

​

N/A

​

N/A

Bank

​

$

55,527,832

​

11.81%

​

$

43,497,940

​

9.25%

​

$

47,024,800

​

10.00%

Tier 1 (Core) Capital to risk weighted assets

​

​

​

​

​

​

Consolidated

​

$

43,236,671

​

9.19%

​

$

34,092,980

​

7.25%

​

​

N/A

​

N/A

Bank

​

$

50,994,964

​

10.84%

​

$

34,092,980

​

7.25%

​

$

37,619,840

​

8.00%

Common Tier 1 (CET 1)

​

​

​

​

​

​

Consolidated

​

$

43,236,671

​

9.19%

​

$

27,039,260

​

5.75%

​

​

N/A

​

N/A

Bank

​

$

50,994,964

​

10.84%

​

$

27,039,260

​

5.75%

​

$

30,566,120

​

6.50%

Tier 1 (Core) Capital to average assets

​

​

​

​

​

​

Consolidated

​

$

43,236,671

​

8.24%

​

$

20,983,080

​

4.00%

​

​

N/A

​

N/A

Bank

​

$

50,994,964

​

9.72%

​

$

20,983,080

​

4.00%

​

$

23,512,400

​

5.00%

NOTE 12 — COMMITMENTS, CONTINGENCIES AND FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK

Off-balance sheet financial instruments, such as loan commitments, credit lines, and letters of credit, are issued to meet customer financing needs. These are agreements to provide credit or to support the credit of others, as long as conditions established in the contract are met, and have expiration dates. Commitments may expire without being used. Credit risk exists up to the face amount of these instruments. The same credit policies and underwriting standards are applied in issuing such commitments as for granting other extensions of credit including, obtaining collateral to support the credit exposure as considered appropriate.

F-104

MARQUIS BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2018 and 2017
 

NOTE 12 — COMMITMENTS, CONTINGENCIES AND FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK (Continued)
 

Commitments at December 31, 2018 and 2017 were as follows:

​	2018			2017
Commitments to extend credit	​	$	146,343,914	​	$	150,836,945
Stand-by letters of credit	​	​	1,501,541	​	​	620,918
Commercial letters of credit	​	​	—	​	​	1,946,887

NOTE 13 — FAIR VALUE

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1:   Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2:   Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3:   Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

Investment Securities:   The fair values for investment securities available for sale and held to maturity are determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available or markets that are not active, fair values are calculated based on market prices of similar securities (Level 2).

Assets and liabilities measured at fair value on a recurring basis are summarized below:

​

​

​

​

Fair Value Measurements at December 31 using:

​

Fair Value

Quoted Prices in Active Markets for Identical Assets (Level 1)

Significant Other Observable Inputs (Level 2)

Significant Unobservable Inputs (Level 3)

2018

​

​

​

​

Assets

​

​

​

​

U.S. government agencies

​

$

4,074,126

​

$

—

​

$

4,074,126

​

$

—

U.S. government sponsored entities

​

​

25,348,241

​

​

—

​

​

25,348,241

​

​

—

State, County and Municipal bonds

​

​

1,039,056

​

​

—

​

​

1,039,056

​

​

—

Corporate Bonds

​

​

1,509,423

​

​

—

​

​

1,509,423

​

​

—

Total securities available for sale

​

$

31,970,846

​

$

—

​

$

31,970,846

​

$

—

2017

​

​

​

​

Assets

​

​

​

​

U.S. government agencies

​

$

5,482,459

​

$

—

​

$

5,482,459

​

$

—

U.S. government sponsored entities

​

​

8,583,252

​

​

—

​

​

8,583,252

​

​

—

State, County and Municipal bonds

​

​

1,069,135

​

​

—

​

​

1,069,135

​

​

—

Corporate Bonds

​

​

1,510,361

​

​

—

​

​

1,510,361

​

​

—

Total securities available for sale

​

$

16,645,207

​

$

—

​

$

16,645,207

​

$

—

F-105

MARQUIS BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2018 and 2017
 

NOTE 13 — FAIR VALUE (Continued)
 

There were no securities reclassified into or out of Level 3 during the year ended December 31, 2018 and 2017.

Assets and liabilities measured at fair value on a non-recurring basis are summarized below:

​

​

​

​

Fair Value Measurements at December 31 using:

​

Fair Value

Quoted Prices in Active Markets for Identical Assets (Level 1)

Significant Other Observable Inputs (Level 2)

Significant Unobservable Inputs (Level 3)

2018

​

​

​

​

Impaired Loan (Home Equity)

​

$

110,199

​

$

—

​

$

—

​

$

110,199

Impaired Loan (Commercial Line)

​

​

294,245

​

​

—

​

​

—

​

​

294,245

Other Real Estate Owned (Residential)

​

​

1,707,825

​

​

—

​

​

1,707,825

​

​

—

2017

​

​

​

​

Impaired Loan (Home Equity)

​

$

2,100,000

​

$

—

​

$

—

​

$

2,100,000

Impaired Loan (Commercial Line)

​

​

305,544

​

​

—

​

​

—

​

​

305,544

The Home Equity impaired loan which is measured for impairment using the fair value of the collateral had an outstanding principal balance of  $110,199 with a $69,134 valuation allowance at December 31, 2018. The impaired loan resulted in a specific reserve of  $69,134 for the year ended December 31, 2018.

The Commercial impaired loan which is measured for impairment using the fair value of the collateral had an outstanding principal balance of  $294,425 with no valuation allowance at December 31, 2018.

Foreclosed real estate which is measured using the fair value less estimated selling costs of the collateral had an outstanding balance of  $1,707,825 with no valuation allowance at December 31, 2018. The related impaired loan resulted in a charge-off of  $491,208 through the provision for loan losses for the year ended December 31, 2018.

NOTE 14 — RELATED PARTY TRANSACTIONS

In the ordinary course of business, directors of the Company are customers of and engage in transactions with the Company. At December 31, 2018 and 2017, aggregate loans to related parties (directors) were approximately $764,303 and $465,886, respectively.

At December 31, 2018 and 2017, deposits from principal officers, directors and their affiliates were approximately $35,946,344 and $44,204,603, respectively.

NOTE 15 — SUBSEQUENT EVENTS

The Company has evaluated subsequent events for recognition and disclosure through March 18, 2019, which is the date the financial statements were available to be issued. During this period, the Bank did not have any material subsequent events to be recorded or disclosed.

F-106

ANNEX A​

EXECUTION VERSION​

AGREEMENT AND PLAN OF MERGER

By and Between

PROFESSIONAL HOLDING CORP.

and

MARQUIS BANCORP, INC.

Dated as of August 9, 2019

TABLE OF CONTENTS

​	Page
ARTICLE I THE MERGER	​	A-1
1.1 The Merger	​	A-1
1.2 Effective Time	​	A-1
1.3 Effects of the Merger	​	A-1
1.4 Conversion of Stock	​	A-2
1.5 Treatment of MBI Stock Options	​	A-3
1.6 Incorporation Documents and Bylaws of the Surviving Company	​	A-3
1.7 Directors and Officers	​	A-3
1.8 The Bank Merger	​	A-4
1.9 Tax Consequences	​	A-4
ARTICLE II DELIVERY OF MERGER CONSIDERATION	​	A-4
2.1 Exchange Agent	​	A-4
2.2 Delivery of Merger Consideration	​	A-4
ARTICLE III REPRESENTATIONS AND WARRANTIES OF MBI	​	A-6
3.1 Organization, Standing and Power	​	A-6
3.2 Capitalization	​	A-6
3.3 Authority; No Violation	​	A-7
3.4 Consents and Approvals	​	A-8
3.5 Reports	​	A-9
3.6 Financial Statements	​	A-9
3.7 Absence of Changes	​	A-10
3.8 Compliance with Applicable Law	​	A-10
3.9 Material Contracts; Defaults	​	A-11
3.10 State Takeover Laws	​	A-12
3.11 MBI Benefit Plans	​	A-12
3.12 Approvals	​	A-14
3.13 Opinion	​	A-14
3.14 MBI Information	​	A-14
3.15 Litigation	​	A-14
3.16 Labor Matters	​	A-14
3.17 Environmental Matters	​	A-15
3.18 Loan Matters	​	A-16
3.19 Intellectual Property	​	A-17
3.20 Transactions with Affiliates	​	A-17
3.21 Derivative Instruments and Transactions	​	A-17
3.22 Trust Business	​	A-17
3.23 Taxes	​	A-17
3.24 Community Reinvestment Act Compliance	​	A-19
3.25 Insurance	​	A-19

A-i

​	Page
3.26 Title	​	A-19
3.27 Investment Portfolio	​	A-19
3.28 Books and Records	​	A-19
3.29 Indemnification	​	A-19
3.30 Broker’s Fees	​	A-19
3.31 No Other Representations	​	A-19
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PHC	​	A-20
4.1 Organization, Standing and Power	​	A-20
4.2 Capitalization	​	A-20
4.3 Authority; No Violation	​	A-21
4.4 Consents and Approvals	​	A-22
4.5 Reports	​	A-22
4.6 Financial Statements	​	A-22
4.7 Absence of Changes	​	A-23
4.8 Compliance with Applicable Law	​	A-23
4.9 Material Contracts; Defaults	​	A-24
4.10 State Takeover Laws	​	A-24
4.11 PHC Benefit Plans	​	A-24
4.12 Approvals	​	A-26
4.13 Opinion	​	A-26
4.14 PHC Information	​	A-26
4.15 Litigation	​	A-27
4.16 Labor Matters	​	A-27
4.17 Environmental Matters	​	A-27
4.18 Loan Matters	​	A-28
4.19 Intellectual Property	​	A-29
4.20 Transactions with Affiliates	​	A-29
4.21 Derivative Instruments and Transactions	​	A-29
4.22 Trust Business	​	A-29
4.23 Taxes	​	A-29
4.24 Community Reinvestment Act	​	A-30
4.25 Insurance	​	A-30
4.26 Title	​	A-30
4.27 Investment Portfolio	​	A-31
4.28 Books and Records	​	A-31
4.29 Indemnification	​	A-31
4.30 Broker’s Fees	​	A-31
4.31 Financing	​	A-31
4.32 No Other Representations	​	A-31

A-ii

​	Page
ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS	​	A-31
5.1 Conduct of MBI Business Prior to the Effective Time	​	A-31
5.2 MBI Forbearances	​	A-31
5.3 Conduct of PHC Business Prior to the Effective Time	​	A-34
5.4 PHC Forbearances	​	A-34
ARTICLE VI ADDITIONAL AGREEMENTS	​	A-37
6.1 Regulatory Matters	​	A-37
6.2 Access to Information; Current Information; Attendance at Meetings	​	A-38
6.3 Shareholder Meetings	​	A-39
6.4 Nasdaq Listing	​	A-40
6.5 Employee Matters	​	A-40
6.6 Indemnification; Directors’ and Officers’ Insurance	​	A-41
6.7 No Solicitation	​	A-43
6.8 Notification of Certain Matters	​	A-45
6.9 System Integration	​	A-45
6.10 Coordination; Integration	​	A-45
6.11 Director Non-Competition and Non-Disclosure Agreement	​	A-45
6.12 Tax Treatment	​	A-45
6.13 Failure to Fulfill Conditions	​	A-45
6.14 Assumption of MBI Subordinated Notes	​	A-45
6.15 Restructuring Efforts	​	A-46
ARTICLE VII CONDITIONS PRECEDENT	​	A-46
7.1 Conditions to Each Party’s Obligations	​	A-46
7.2 Conditions to Obligations of PHC	​	A-46
7.3 Conditions to Obligations of MBI	​	A-47
ARTICLE VIII TERMINATION AND AMENDMENT	​	A-48
8.1 Termination	​	A-48
8.2 Effect of Termination	​	A-49
8.3 Fees and Expenses	​	A-49
8.4 Termination Fees	​	A-49
8.5 Amendment	​	A-50
8.6 Extension; Waiver	​	A-50
ARTICLE IX MISCELLANEOUS PROVISIONS	​	A-50
9.1 Closing	​	A-50
9.2 Nonsurvival of Representations, Warranties and Agreements	​	A-51
9.3 Notices	​	A-51
9.4 Interpretation	​	A-51
9.5 Counterparts	​	A-52
9.6 Entire Agreement	​	A-52

A-iii

​	Page
9.7 Governing Law; Waiver of Jury Trial	​	A-52
9.8 Publicity	​	A-52
9.9 Assignment; Third Party Beneficiaries	​	A-53
9.10 Specific Performance; Time of the Essence	​	A-53
9.11 Disclosure Schedule	​	A-53
9.12 Confidential Supervisory Information	​	A-53

Exhibit A – Form of MBI Shareholder Voting Agreement

Exhibit B – Form of PHC Shareholder Voting Agreement

Exhibit C – Form of Bank Plan of Merger and Merger Agreement

Exhibit D – Form of Director Non-Competition and Non-Disclosure Agreement

Schedule 1.1 – Restrictive Covenant Agreement Counterparties

Schedule 1.5 – Definition of Cause

Schedule 1.7 – Directors of Surviving Company and Surviving Bank

A-iv

INDEX OF DEFINED TERMS

Acquisition Proposal	6.7(e)​
Action	3.15​
Agreement	Preamble​
Articles of Merger	1.2​
Bank Merger	1.8​
Bank Merger Agreement	1.8​
Bankruptcy and Equity Exception	3.3(a)​
BHC Act	3.8(a)​
Book-Entry Shares	1.4(d)​
Business Day	9.1​
Cancelled Shares	1.4(e)​
Cash Payment	2.2(f)​
Certificate	1.4(d)​
Change in Recommendation	6.7(c)​
Claim	6.6(a)​
Closing	9.1​
Closing Date	9.1​
Code	Recitals​
Confidentiality Agreement	6.2(c)​
Continuation Period	6.5(a)​
Controlled Group Liability	3.11(b)​
Covered Employees	6.5(a)​
D&O Insurance	6.6(c)​
Derivative Transaction	3.21(b)​
Director Restrictive Covenant Agreements	6.11​
Disclosure Schedule	9.11​
Dissenting Shares	1.4(f)​
DPC Common Shares	1.4(e)​
Effective Time	1.2​
Environmental Law	3.17(b)​
ERISA	3.11(b)​
ERISA Affiliate	3.11(d)​
Exchange Agent	2.1​
Exchange Agent Agreement	2.1​
Exchange Ratio	1.4(b)​
Exchangeable Share	1.4(b)​
FBCA	1.1​
FDIC	3.4​
FHLB	3.2(c)​
Form S-4	3.4​
FRB	3.4​
GAAP	3.1(c)​

A-v

Governmental Entity	3.4​
Hazardous Substance	3.17(c)​
Indemnified Parties	6.6(a)​
Intellectual Property	3.19(b)​
Intervening Event	6.7(e)​
IRS	3.11(a)​
Letter of Transmittal	2.2(a)​
Liens	3.2(c)​
Loss-Share Agreement	3.9(a)​
Marquis Bank	1.8​
Material Adverse Effect	3.7(a)​
Materially Burdensome Regulatory Condition	6.1(f)​
Maximum D&O Tail Premium	6.6(c)​
MBI	Preamble​
MBI Benefit Plans	3.11(a)​
MBI Board Recommendation	6.3(a)​
MBI Bylaws	3.1(b)​
MBI Charter	3.1(b)​
MBI Confidential Information	6.7(a)​
MBI Equity Plans	1.5​
MBI Financial Statements	3.6(a)​
MBI Individuals	6.7(a)​
MBI Insurance Policies	3.25​
MBI Material Contract	3.9(a)​
MBI Notes	6.14​
MBI Regulatory Agreement	3.8(b)​
MBI Representatives	6.7(a)​
MBI Shareholder Approval	3.3(a)​
MBI Shareholder Meeting	6.3(a)​
MBI Shareholder Meeting Notice Date	6.3(a)​
MBI Stock Option	1.5​
MBI Voting Agreement	Recitals​
Merger	Recitals​
Merger Consideration	1.4(b)​
Multiemployer Plan	3.11(d)​
Nasdaq	3.4​
OFR	6.1(c)​
Parties	Preamble​
Party	Preamble​
PBGC	3.11(e)​
Permits	3.8(a)​
Person	3.2(c)​
PHC	Preamble​
PHC Benefit Plans	4.11(a)​

A-vi

PHC Board Recommendation	6.3(b)​
PHC Bylaws	4.1(b)​
PHC Charter	4.1(b)​
PHC Common Stock	1.4(a)​
PHC Equity Plans	4.2(a)​
PHC Financial Statements	4.6(a)​
PHC Insurance Policies	4.25​
PHC Material Contract	4.9(a)​
PHC Regulatory Agreement	4.8(b)​
PHC Shareholder Approval	4.3(a)​
PHC Shareholder Meeting	6.3(b)​
PHC Shareholder Meeting Notice Date	6.3(b)​
PHC Stock Issuance	4.3(a)​
PHC Stock Option	4.2(a), 1.5​
PHC Voting Agreement	Recitals​
Previously Disclosed	9.11​
Professional Bank	1.8​
Proxy Statement	3.4​
Regulatory Approvals	3.4​
Requisite Regulatory Approvals	7.1(e)​
Rights	3.2(a)​
SEC	3.4​
Securities Act	3.2(a)​
SRO	3.4​
Subsidiary	3.1(c)​
Superior Proposal	6.7(e)​
Surviving Bank	1.8​
Surviving Company	Recitals​
Tax Returns	3.23(k)​
Taxes	3.23(j)​
Termination Fee	8.4(a)​
Trust Account Common Shares	1.4(e)​
Voting Debt	3.2(a)​

A-vii

AGREEMENT AND PLAN OF MERGER

This Agreement and Plan of Merger (this “Agreement”) is dated as of the 9th day of August, 2019, by and between Professional Holding Corp., a Florida corporation (“PHC”), and Marquis Bancorp, Inc., a Florida corporation (“MBI” and, together with PHC, the “Parties” and each a “Party”).

RECITALS

WHEREAS, the Boards of Directors of the Parties have determined that it is in the best interests of their respective companies and their shareholders to consummate the business combination transaction provided for in this Agreement in which MBI will, on the terms and subject to the conditions set forth in this Agreement, merge with and into PHC (the “Merger”), with PHC as the surviving company in the Merger (sometimes referred to in such capacity as the “Surviving Company”);

WHEREAS, as a condition to the willingness of PHC and MBI to enter into this Agreement, all of the directors of MBI set forth on Schedule 1.7 to this Agreement have entered into voting agreements (each a “MBI Voting Agreement”), substantially in the form attached hereto as Exhibit A, dated as of the date hereof, with PHC, pursuant to which each such director has agreed, among other things, to vote all of the MBI Common Stock owned by such director in favor of the approval of this Agreement and the transactions contemplated hereby, subject to the terms of the MBI Voting Agreement, and all of the directors of PHC have entered into voting agreements (each a “PHC Voting Agreement”), substantially in the form attached hereto as Exhibit B, dated as of the date hereof, with MBI, pursuant to which each such director has agreed, among other things, to vote all of the PHC Common Stock owned by such director in favor of the issuance of PHC Common Stock in connection with this Agreement and the transactions contemplated hereby, subject to the terms of the PHC Voting Agreement;

WHEREAS, for U.S. federal income tax purposes, it is intended that the Merger shall qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”), and this Agreement is intended to be and is adopted as a plan of reorganization for purposes of Sections 354 and 361 of the Code;

WHEREAS, concurrently with the execution of this Agreement, PHC is entering into the Restrictive Covenant and Voting Agreements with the individuals set forth on Schedule 1.1 to this Agreement; and

WHEREAS, the Parties desire to make certain representations, warranties and agreements in connection with the Merger and also to prescribe certain conditions to the Merger.

NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties and agreements contained in this Agreement, the Parties agree as follows:

ARTICLE I

THE MERGER

1.1   The Merger.   Subject to the terms and conditions of this Agreement, in accordance with the Florida Business Corporation Act (the “FBCA”), at the Effective Time, MBI shall merge with and into PHC. PHC shall be the Surviving Company in the Merger and shall continue its existence as a corporation under the laws of the State of Florida. As of the Effective Time, the separate corporate existence of MBI shall cease.

1.2   Effective Time.   Subject to the terms and conditions of this Agreement, simultaneously with the Closing, the Parties shall execute, and PHC shall cause to be filed with the Department of State of the State of Florida and the Secretary of State of the State of Florida, articles of merger as provided in the FBCA (the “Articles of Merger”). The Merger shall become effective at such time as the Articles of Merger are filed or such other time as may be specified in such Articles of Merger (the “Effective Time”).

1.3   Effects of the Merger.   At and after the Effective Time, the Merger shall have the effects set forth in the FBCA.

A-1

1.4   Conversion of Stock.   By virtue of the Merger and without any action on the part of MBI, PHC or the holders of any of the following securities, at the Effective Time:

(a)   each share of Class A common stock, par value $.01 per share, of PHC (“PHC Common Stock”) issued and outstanding immediately prior to the Effective Time shall continue to be one validly issued, fully paid and nonassessable share of common stock, par value $.01, of the Surviving Company; and

(b)   subject to Section 1.4(g) below, each share of MBI Common Stock issued and outstanding immediately prior to the Effective Time (excluding (i) shares cancelled pursuant to Section 1.4(e) below and (ii) shares held by shareholders who perfect their dissenters’ rights of appraisal as provided in Section 1.4(f) below) (collectively, the “Exchangeable Shares”, and each an “Exchangeable Share”) shall cease to be outstanding and shall be converted into and exchanged for the right to receive 1.2048 shares of PHC Common Stock (the “Merger Consideration” and the “Exchange Ratio”).

(c)   [Reserved].

(d)   All of the Exchangeable Shares converted into the right to receive the Merger Consideration pursuant to this Article I shall no longer be outstanding and shall automatically be cancelled and shall cease to exist as of the Effective Time, and each certificate previously representing any such shares of MBI Common Stock (each, a “Certificate”) and non-certificated shares of MBI Common Stock represented by book-entry (“Book-Entry Shares”) shall thereafter represent only the right to receive the Merger Consideration into which the shares of MBI Common Stock represented by such Certificate or Book-Entry Shares have been converted pursuant to this Section 1.4 and any cash lieu of fractional shares as specified in Section 2.2(f) as well as any dividends to which holders of MBI Common Stock become entitled in accordance with Section 2.2(c).

(e)   All shares of MBI Common Stock that are owned by MBI or PHC (other than (i) shares of MBI Common Stock held in trust accounts, managed accounts, mutual funds and the like, or otherwise held in a fiduciary or agency capacity, that are beneficially owned by third parties (any such shares, “Trust Account Common Shares”) and (ii) shares of MBI Common Stock held, directly or indirectly, by MBI or PHC in respect of a debt previously contracted (any such shares, “DPC Common Shares”)) shall be cancelled and shall cease to exist (any such shares, the “Cancelled Shares”), and no stock of PHC or other consideration shall be delivered in exchange therefor. All shares of MBI Common Stock that are owned by any wholly owned Subsidiary of MBI or by any wholly owned Subsidiary of PHC shall remain outstanding, adjusted to maintain relative ownership percentages, and no consideration shall be delivered in exchange therefor.

(f)   Notwithstanding anything in this Agreement to the contrary, shares of MBI Common Stock that are issued and outstanding immediately prior to the Effective Time and which are held by a shareholder who did not vote in favor of the Merger (or consent thereto in writing) and who is entitled to demand and properly demands the fair value of such shares pursuant to, and who complies in all respects with, the provisions of Sections 607.1301 to 607.1333 of the FBCA (the “Dissenting Shares”), shall not be converted into or be exchangeable for the right to receive the Merger Consideration, but instead the holder of such Dissenting Shares shall be entitled to payment of the fair value of such shares in accordance with the provisions of Sections 607.1301 to 607.1333 of the FBCA (and at the Effective Time, such Dissenting Shares shall no longer be outstanding and shall automatically be cancelled and shall cease to exist), unless and until such holder shall have failed to perfect such holder’s right to receive, or shall have effectively withdrawn or lost rights to demand or receive, the fair value of such shares of MBI Common Stock under such provisions of the FBCA. If any shareholder dissenting pursuant to Sections 607.1301 to 607.1333 of the FBCA and this Section 1.4(f) shall have failed to perfect or shall have effectively withdrawn or lost such right, such holder’s shares of MBI Common Stock shall thereupon be treated as if they had been converted into and become Exchangeable Shares as of the Effective Time, eligible to receive the Merger Consideration in accordance with Section 1.4(b), without any interest thereon. MBI shall give PHC (i) prompt notice of any written notices to exercise dissenters’ rights in respect of any shares of MBI Common Stock, attempted withdrawals of such notices and any other instruments served pursuant to the FBCA and received by

A-2

MBI relating to dissenters’ rights and (ii) the opportunity to participate in negotiations and proceedings with respect to demands for fair value under the FBCA. MBI shall not, except with the prior written consent of PHC, voluntarily make any payment with respect to, or settle, or offer or agree to settle, any such demand for payment.

(g)   If the number of shares of PHC Common Stock or MBI Common Stock issued and outstanding prior to the Effective Time as a result of a stock split, stock combination, stock dividend or similar recapitalization with respect to such stock, and the record date therefor shall be prior to the Effective Time, the Merger Consideration shall be proportionately adjusted as necessary to preserve the relative economic benefit to the Parties.

1.5   Treatment of MBI Stock Options.   Each stock option granted under the Marquis Bancorp, Inc. 2009 Stock Option Plan or the Marquis Bancorp, Inc. 2017 Stock Option Plan (collectively, “MBI Equity Plans”) and outstanding immediately prior to the Effective Time (each such award, an “MBI Stock Option”), whether vested or unvested, shall, by virtue of this Agreement and without any action on the part of the holder thereof, be converted into, at the Effective Time, an option to purchase PHC Common Stock (each, a “PHC Stock Option”), which, except as provided in this Section 1.5, shall be subject to substantially the same terms as applied to the corresponding MBI Stock Option as of immediately prior to the Effective Time; provided that (i) no PHC Stock Option held by a Person who, as of immediately prior to the Effective Time, was a director or employee of MBI or Marquis Bank shall terminate at the Effective Time because the holder thereof is no longer a director or employee of MBI or Marquis Bank solely as a result of MBI or Marquis Bank, as applicable, not being the surviving entity in the Merger or the Bank Merger, as applicable, (ii) any PHC Stock Option held by a Person who, as of immediately prior to the Effective Time, was a non-employee director of MBI shall be fully vested as of the Effective Time, while all other such PHC Stock Options shall remain subject to the vesting terms that applied to the corresponding MBI Stock Option as of immediately prior to the Effective Time (with service with PHC being counted as service with MBI for this purpose) and (iii) if, during the Continuation Period, any Person who, as of immediately prior to the Effective Time, was an employee of MBI or Marquis Bank (other than the Persons set forth on Schedule 1.1 to this Agreement) is terminated by PHC or its Subsidiaries other than for “cause” (as defined on Schedule 1.5 to this Agreement), then any PHC Stock Option held by such Person shall be fully vested as of immediately prior to such termination, subject to the execution by such Person of a release of claims against PHC and Professional Bank that is reasonably satisfactory to PHC; provided, further, that after the Effective Time: (i) the number of shares of PHC Common Stock purchasable upon exercise of each PHC Stock Option will equal the product of  (A) the number of shares of MBI Common Stock that were purchasable under the corresponding MBI Stock Option immediately before the Effective Time and (B) the Exchange Ratio (rounded down to the nearest whole share); and (ii) the per share exercise price for each PHC Stock Option will equal the quotient obtained by dividing (A) the per share exercise price of the corresponding MBI Stock Option in effect immediately before the Effective Time by (B) the Exchange Ratio (rounded up to the nearest whole cent). Prior to the Effective Time, MBI shall adopt such resolutions and take such other actions as are reasonably necessary or appropriate in order to effectuate the actions contemplated by this Section 1.5.

1.6   Incorporation Documents and Bylaws of the Surviving Company.   At the Effective Time, the articles of incorporation of PHC in effect immediately prior to the Effective Time shall be the articles of incorporation of the Surviving Company until thereafter amended in accordance with applicable law. The bylaws of PHC in effect immediately prior to the Effective Time shall be the bylaws of the Surviving Company until thereafter amended in accordance with applicable law and the terms of such bylaws.

1.7   Directors and Officers.   The directors of the Surviving Company immediately following the Effective Time shall consist of up to thirteen (13) directors, including the eight (8) PHC directors set forth on Schedule 1.7 to this Agreement and up to five (5) of the MBI directors to be mutually agreed by MBI and PHC prior to the Effective Time, and such directors shall hold office until their respective successors are duly elected and qualified, or their earlier death, resignation or removal. The officers of the Surviving Company immediately following the Effective Time shall consist of the officers of PHC immediately prior to the Effective Time, and such officers shall hold office until their respective successors are duly elected and qualified, or their earlier death, resignation or removal.

A-3

1.8   The Bank Merger.   Except as provided below, after the Effective Time and at or after the close of business on the Closing Date, Marquis Bank (“Marquis Bank”), a Florida state-chartered bank and first-tier subsidiary of MBI, shall be merged (the “Bank Merger”) with and into Professional Bank, a Florida state-chartered bank and wholly owned first-tier subsidiary of PHC (“Professional Bank”), in accordance with the provisions of applicable federal and state banking laws and regulations, and Professional Bank shall be the surviving bank (the “Surviving Bank”). The Bank Merger shall have the effects as set forth under applicable federal and state banking laws and regulations, and the Parties shall cause the Boards of Directors of Marquis Bank and Professional Bank, respectively, to approve a separate merger agreement (the “Bank Merger Agreement”) in substantially the form attached hereto as Exhibit C, and cause the Bank Merger Agreement to be executed and delivered as soon as practicable following the date of execution of this Agreement. The directors of the Surviving Bank immediately following the Effective Time shall consist of up to thirteen (13) directors, including the eight (8) PHC directors set forth on Schedule 1.7 to this Agreement and up to five (5) of the MBI directors to be mutually agreed by MBI and PHC as contemplated by Section 1.7 of this Agreement, provided that each such MBI director as contemplated by Section 1.7 to this Agreement shall be selected to serve on at least one of  (a) the Board of Directors of the Surviving Company or (b) the Board of Directors of the Surviving Bank. PHC shall cause the Bank Merger to be effected following the Effective Time in accordance with the FBCA. As provided in the Bank Merger Agreement, the Bank Merger may be abandoned at the election of Professional Bank at any time, whether before or after filings are made for regulatory approval of the Bank Merger, but if the Bank Merger is abandoned for any reason, Marquis Bank shall continue to operate under that name (together with any appendix required of national banking associations if its charter should be converted to that of a national bank).

1.9   Tax Consequences.   It is intended that the Merger shall qualify as a “reorganization” within the meaning of Section 368(a) of the Code, and that this Agreement is intended to be and is adopted as a “plan of reorganization” for purposes of Sections 354 and 361 of the Code.

ARTICLE II

DELIVERY OF MERGER CONSIDERATION

2.1   Exchange Agent.   Prior to the Effective Time, PHC shall appoint its transfer agent, Computershare Limited, pursuant to an agreement in a form reasonably acceptable to MBI (the “Exchange Agent Agreement”) to act as exchange agent (the “Exchange Agent”) hereunder.

2.2   Delivery of Merger Consideration.   

(a)   Promptly (and within five Business Days) after the Effective Time, the Exchange Agent shall mail to each holder of record of a Certificate which immediately prior to the Effective Time represented outstanding shares of MBI Common Stock whose shares were converted into the right to receive the Merger Consideration pursuant to Section 1.4(b), including any cash in lieu of fractional shares of PHC Common Stock to be issued or paid in consideration therefor and any dividends or distributions to which such holder is entitled, (i) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to each Certificate shall pass, only upon delivery of such Certificate (or affidavits of loss in lieu of such Certificate)) to the Exchange Agent and which shall be substantially in such form and have such other provisions as shall be prescribed by the Exchange Agent Agreement (the “Letter of Transmittal”) and (ii) instructions for use in surrendering a Certificate in exchange for the Merger Consideration to be issued or paid in consideration therefor.

(b)   Upon surrender to the Exchange Agent of its Certificate or Certificates, accompanied by a properly completed Letter of Transmittal, a holder of MBI Common Stock will be entitled to receive promptly after the Effective Time the Merger Consideration, including any dividends that are payable to PHC shareholders of record as of any date on or after the Closing Date and cash in lieu of fractional shares of PHC Common Stock to be issued or paid in consideration therefor in respect of the shares of MBI Common Stock represented by its Certificate or Certificates. Until so surrendered, each such Certificate shall represent after the Effective Time, for all purposes, only the right to receive, without interest, the Merger Consideration, including any cash in lieu of fractional shares of PHC Common Stock to be issued or paid in consideration therefor upon surrender of such Certificate and

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any dividends or distributions to which such holder is entitled pursuant to Section 2.2(c), in accordance with the provisions of this Article II. Any holder of Book-Entry Shares shall not be required to deliver a Certificate or an executed letter of transmittal to the Exchange Agent to receive the Merger Consideration. In lieu thereof, each holder of one or more Book-Entry Shares shall automatically upon the Effective Time be entitled to receive, and the Exchange Agent shall as soon as practicable following the Effective Time (and in any event within three (3) Business Days thereafter) pay to the holder, the Merger Consideration for each Book-Entry Share and any cash in lieu of fractional shares of PHC Common Stock to be issued or paid in consideration therefor and any dividends or distributions to which such holder is entitled pursuant to Section 2.2(c).

(c)   Notwithstanding the provisions of Section 1.4(b), no dividends or other distributions with respect to PHC Common Stock shall be paid to the holder of any unsurrendered Certificate with respect to the shares of PHC Common Stock represented thereby, in each case unless and until the surrender of such Certificate in accordance with this Article II. Subject to the effect of applicable abandoned property, escheat or similar laws, following surrender of any such Certificate or payment of the Merger Consideration in respect of Book-Entry Shares in accordance with this Article II, the record holder thereof shall be entitled to receive, without interest, (i) the amount of dividends or other distributions with a record date after the Effective Time theretofore payable with respect to the whole shares of PHC Common Stock represented by such Certificate or Book-Entry Shares and not paid or (ii) at the appropriate payment date, the amount of dividends or other distributions payable with respect to shares of PHC Common Stock represented by such Certificate or Book-Entry Shares with a record date after the Effective Time (but before such surrender date) and with a payment date subsequent to the issuance of the PHC Common Stock issuable with respect to such Certificate or Book-Entry Shares.

(d)   In the event of a transfer of ownership of a Certificate representing MBI Common Stock that is not registered in the stock transfer records of MBI, the Merger Consideration and cash in lieu of fractional shares of PHC Common Stock and dividends or distributions payable pursuant to Section 2.2(c) shall be issued or paid in exchange therefor to a Person other than the Person in whose name the Certificate so surrendered is registered if the Certificate formerly representing such MBI Common Stock shall be properly endorsed or otherwise be in proper form for transfer and the Person requesting such payment or issuance shall pay any transfer or other similar taxes required by reason of the payment or issuance to a Person other than the registered holder of the Certificate or establish to the satisfaction of PHC that the tax has been paid or is not applicable. The Exchange Agent (or, subsequent to the one-year anniversary of the Effective Time, PHC) shall be entitled to deduct and withhold from any cash consideration or cash in lieu of fractional shares of PHC Common Stock otherwise payable pursuant to this Agreement to any holder of MBI Common Stock such amounts as the Exchange Agent or PHC, as the case may be, is required to deduct and withhold under the Code, or any provision of state, local or foreign tax law, with respect to the making of such payment. To the extent the amounts are so withheld by the Exchange Agent or PHC, as the case may be, and timely paid over to the appropriate Governmental Entity, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of shares of MBI Common Stock in respect of whom such deduction and withholding was made by the Exchange Agent or PHC, as the case may be. For purposes of Section 1.5, any required withholding shall be satisfied by the applicable holder tendering to the Surviving Company, the Exchange Agent or PHC, as applicable, a number of shares of PHC Common Stock with a fair market value equal to the amount required to be withheld.

(e)   After the Effective Time, there shall be no transfers on the stock transfer books of MBI of the shares of MBI Common Stock that were issued and outstanding immediately prior to the Effective Time other than to settle transfers of MBI Common Stock that occurred prior to the Effective Time. If, after the Effective Time, Certificates representing such shares are presented for transfer to the Exchange Agent, they shall be cancelled and exchanged for the Merger Consideration and any cash in lieu of fractional shares of PHC Common Stock to be issued or paid in consideration therefor and any dividends or distributions to which the holder is entitled pursuant to Section 2.2(c) in accordance with the procedures set forth in this Article II.

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(f)   Notwithstanding anything to the contrary contained in this Agreement, no fractional shares of PHC Common Stock shall be issued to the holder of Book-Entry Shares or upon the surrender of Certificates for exchange, no dividend or distribution with respect to PHC Common Stock shall be payable on or with respect to any fractional share, and such fractional share interests shall not entitle the owner thereof to vote or to any other rights of a shareholder of PHC. In lieu of the issuance of any such fractional share, PHC shall pay to each former shareholder of MBI who otherwise would be entitled to receive such fractional share an amount in cash (rounded to the nearest whole cent) determined by multiplying (i) the Cash Payment by (ii) the fraction of a share (after taking into account all shares of MBI Common Stock held by such holder at the Effective Time and rounded to the nearest one thousandth when expressed in decimal form) of PHC Common Stock to which such holder would otherwise be entitled to receive pursuant to Section 1.4. “Cash Payment” means an amount of cash in lieu per fractional share of PHC Common Stock corresponding to the market value of PHC Common Stock and calculated as agreed by the Parties prior to the Effective Time.

(g)   In the event any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if reasonably required by PHC or the Exchange Agent, the posting by such Person of a bond in such amount as PHC may determine is reasonably necessary as indemnity against any claim that may be made against it with respect to such Certificate, the Exchange Agent will issue in exchange for such lost, stolen or destroyed Certificate the Merger Consideration deliverable in respect thereof pursuant to this Agreement.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF MBI

Except as Previously Disclosed, MBI hereby represents and warrants to PHC as follows:

3.1   Organization, Standing and Power.   

(a)   Each of MBI and its Subsidiaries (i) is an entity duly organized, validly existing and in good standing (with respect to jurisdictions that recognize such concept) under the laws of the jurisdiction of its incorporation or formation, (ii) has all requisite corporate or similar power and authority to own, lease and operate its properties and to carry on its business as now being conducted and (iii) is duly qualified or licensed to do business and is in good standing (with respect to jurisdictions that recognize such concept) in each jurisdiction in which the nature of its business or the ownership, leasing or operation of its properties or assets makes such qualification or licensing necessary, except, in the case of clauses (i) (with respect to MBI’s Subsidiaries only), (ii) and (iii), where the failure to be so qualified or licensed would not have a Material Adverse Effect on MBI.

(b)   MBI has previously made available to PHC true and complete copies of MBI’s articles of incorporation (the “MBI Charter”) and bylaws (the “MBI Bylaws”) and the articles or certificate of incorporation or formation and bylaws (or comparable organizational documents) of each of its Subsidiaries, in each case as amended to the date of this Agreement, and each as so made available is in full force and effect. Neither MBI nor any of its Subsidiaries is in violation of any provision of the MBI Charter or MBI Bylaws or such articles or certificate of incorporation or formation and bylaws (or comparable organizational documents) of such Subsidiary, as applicable.

(c)   As used in this Agreement, the term “Subsidiary,” when used with respect to either Party, means any bank, corporation, partnership, limited liability company or other organization, whether incorporated or unincorporated, that is consolidated with such Party for financial reporting purposes under U.S. generally accepted accounting principles (“GAAP”).

3.2   Capitalization.

(a)   The authorized capital stock of MBI consists of  (i) 5,000,000 shares of MBI Common Stock, of which 3,419,088 shares are issued and outstanding as of the date hereof  (which excludes any shares of MBI Common Stock reserved for issuance or to be delivered in respect of MBI Stock Options), and (ii) 500,000 shares of preferred stock, no par value per share, none of which shares are

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issued or outstanding. As of the date hereof, there are 969,986 shares of MBI Common Stock reserved for issuance or to be delivered in respect of outstanding MBI Stock Options, which are the only MBI Stock Options that are outstanding and the exercise price for each such MBI Stock Options has been Previously Disclosed. All of the issued and outstanding shares of MBI Common Stock have been duly authorized and validly issued and are fully paid and non-assessable, with no personal liability attaching to the ownership thereof. As of the date hereof, no bonds, debentures, notes or other indebtedness having the right to vote on any matters on which shareholders of MBI may vote (“Voting Debt”) are issued or outstanding. As of the date hereof, except as set forth in Section 3.2(b) and this Section 3.2(a), MBI does not have and is not bound by any outstanding subscriptions, options, warrants, calls, rights, restricted shares, commitments or agreements of any character (“Rights”) calling for the purchase or issuance of, or the payment of any amount based on, any shares of MBI Common Stock, Voting Debt or any other equity securities of MBI or any securities representing the right to purchase or otherwise receive any shares of MBI Common Stock, Voting Debt or other equity securities of MBI. There are no contractual obligations of MBI or any of its Subsidiaries (i) to repurchase, redeem or otherwise acquire any shares of capital stock of MBI or any equity security of MBI or its Subsidiaries or any securities representing the right to purchase or otherwise receive any shares of capital stock or any other equity security of MBI or its Subsidiaries or (ii) pursuant to which MBI or any of its Subsidiaries is or could be required to register shares of MBI capital stock or other securities under the Securities Act of 1933, as amended (the “Securities Act”), in each case, other than contractual obligations with respect to the issuance of shares of MBI Common Stock in respect of any exercise of MBI Stock Options outstanding on the date hereof. Immediately prior to the Effective Time, the total number of shares of MBI Common Stock outstanding or deemed outstanding for purposes of this Agreement, after giving effect to the exercise of MBI Stock Options, shall not exceed 4,389,074.

(b)   Other than 969,986 shares of MBI Common Stock issuable in respect of MBI Stock Options that are outstanding as of the date hereof, no other equity-based awards are outstanding as of the date hereof. The name of each holder of a MBI Stock Option, together with the number of shares subject to each such stock option, the exercise price (or payment obligation of the holder) with respect to each share subject to such stock option, the vesting date(s) of unvested stock options, and the expiration dates thereof, as of the date hereof, have been Previously Disclosed.

(c)   All of the issued and outstanding shares of capital stock or other equity ownership interests of each Significant Subsidiary (as defined in Rule 1-02 of Regulation S-X promulgated under the Exchange Act) of MBI (and which, for purposes of this Agreement, shall include Marquis Bank) are owned by MBI, directly or indirectly, free and clear of any liens, pledges, charges, claims and security interests and similar encumbrances (“Liens”), and all of such shares or equity ownership interests are duly authorized and validly issued and are fully paid, non-assessable and free of preemptive rights. There are 3,375,375 shares of Marquis Bank common stock outstanding (which are the only shares of capital stock of Marquis Bank outstanding), all of which shares are owned by MBI. No Significant Subsidiary of MBI has or is bound by any Rights calling for the purchase or issuance of any shares of capital stock or any other equity security of such Subsidiary or any securities representing the right to purchase or otherwise receive any shares of capital stock or any other equity security of such Subsidiary. Except as Previously Disclosed and for the ownership of MBI Subsidiaries, readily marketable securities, securities held-to-maturity in Marquis Bank’s investment portfolio and stock in the Federal Home Loan Bank of Atlanta (“FHLB”), neither MBI nor any of its Subsidiaries owns any equity or profit-and-loss interest in any individual, bank, corporation, partnership or joint venture, limited liability company, association, joint-stock company, business trust or unincorporated organization (“Person”).

(d)   MBI does not have a dividend reinvestment plan or any shareholder rights plan.

3.3   Authority; No Violation.

(a)   MBI has full corporate power and authority to execute and deliver this Agreement and, subject to receipt of the MBI Shareholder Approval, to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions

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contemplated hereby have been duly and validly approved by the Board of Directors of MBI. As of the date of this Agreement, the Board of Directors of MBI has determined that this Agreement is advisable and in the best interests of MBI and its shareholders and has directed that this Agreement be submitted to MBI’s shareholders for approval at a duly held meeting of such shareholders and has adopted a resolution to the foregoing effect. Except for receipt of the affirmative vote to approve this Agreement by the holders of a majority of all the votes entitled to be cast by the holders of the outstanding MBI Common Stock at a meeting called therefor (the “MBI Shareholder Approval”), this Agreement and the transactions contemplated hereby have been authorized by all necessary corporate action. This Agreement has been duly and validly executed and delivered by MBI and (assuming due authorization, execution and delivery by PHC) constitutes the valid and binding obligations of MBI, enforceable against MBI in accordance with its terms (except as may be limited by bankruptcy, insolvency, fraudulent transfer, moratorium, reorganization or similar laws of general applicability relating to or affecting the rights of creditors generally and subject to general principles of equity (the “Bankruptcy and Equity Exception”)).

(b)   Except as Previously Disclosed, neither the execution and delivery of this Agreement by MBI or the Bank Merger Agreement by Marquis Bank nor the consummation by MBI of the transactions contemplated in this Agreement or by Marquis Bank of the transactions in the Bank Merger Agreement, nor compliance by MBI or Marquis Bank with any of the terms or provisions of this Agreement or the Bank Merger Agreement, will (i) assuming that the MBI Shareholder Approval is duly obtained or given, violate any provision of the MBI Charter or MBI Bylaws or the organizational documents of Marquis Bank or (ii) assuming that the consents, approvals and filings referred to in Section 3.4 are duly obtained or made, (A) violate any law, judgment, order, injunction or decree applicable to MBI, any of its Subsidiaries or any of their respective properties or assets in a manner that would reasonably be expected to have a Material Adverse Effect on MBI or (B) violate, conflict with, result in a breach of any provision of or the loss of any benefit under, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of or a right of termination or cancellation under, accelerate the performance required by, or result in the creation of any Lien upon any of the respective properties or assets of MBI or any of its Subsidiaries under, any of the terms, conditions or provisions of any material contract, note, bond, mortgage, indenture, deed of trust, license, lease, franchise, permit, agreement, bylaw or other instrument or obligation to which MBI or any of its Subsidiaries is a party or by which any of them or any of their respective properties or assets is bound.

3.4   Consents and Approvals.   Except for (i) filings of applications and notices with, and receipt of consents, authorizations, approvals, exemptions or nonobjections from the Securities and Exchange Commission (the “SEC”), the Nasdaq Stock Market LLC (“Nasdaq”), state securities authorities, the Financial Industry Regulatory Authority, applicable securities, commodities and futures exchanges, and other industry self-regulatory organizations (each, an “SRO”), (ii) the filing of any other required applications, filings or notices with the Board of Governors of the Federal Reserve System (“FRB”), the Federal Deposit Insurance Corporation (“FDIC”), and other banking, regulatory, self-regulatory or enforcement authorities or any courts, administrative agencies or commissions or other governmental authorities or instrumentalities (each a “Governmental Entity”) and approval of or non-objection to such applications, filings and notices (taken together with the items listed in clause (i), the “Regulatory Approvals”), (iii) the filing with the SEC of a registration statement on Form S-4 (the “Form S-4”) with respect to the shares of PHC Common Stock to be issued in the Merger, in which a joint proxy statement relating to the meetings of the shareholders of MBI and PHC to be held in connection with this Agreement (the “Proxy Statement”) will be included, and declaration of effectiveness of the Form S-4, (iv) the filing of the Articles of Merger contemplated by Section 1.2 and the filing of documents with the FDIC, applicable Governmental Entities, and the Secretary of State of the State of Florida to cause the Bank Merger to become effective and (v) such filings and approvals as are required to be made or obtained under the securities or “Blue Sky” laws of various states in connection with the issuance of the shares of PHC Common Stock pursuant to this Agreement and the approval of listing of such PHC Common Stock on Nasdaq, no consents or approvals of or filings or registrations with any Governmental Entity are necessary

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in connection with the consummation by MBI or any of its Subsidiaries of the Merger, the Bank Merger, or any of the other transactions contemplated by this Agreement. No consents or approvals of or filings or registrations with any Governmental Entity are necessary in connection with the execution and delivery by MBI of this Agreement.

3.5   Reports.   MBI and each of its Subsidiaries have timely filed all reports, registrations, statements and certifications, together with any amendments required to be made with respect thereto, that they were required to file since December 31, 2016 and prior to the date hereof with Governmental Entities, and have paid all fees and assessments due and payable in connection therewith. There is no unresolved violation or exception of which MBI has been given notice by any Governmental Entity with respect to any such report, registration, statement or certification.

3.6   Financial Statements.

(a)   The audited consolidated balance sheets (including related notes and schedules, if any) of MBI and its Subsidiaries as of December 31, 2018, 2017 and 2016 and the consolidated statements of operations, shareholders’ equity, and cash flows (including related notes and schedules, if any) of MBI and its Subsidiaries for each of the three (3) years ended December 31, 2018, 2017 and 2016, and the unaudited interim consolidated financial statements of MBI and its Subsidiaries as of June 30, 2019 and for the period then ended (collectively, the “MBI Financial Statements”) have been previously made available to PHC or its representatives. The MBI Financial Statements have been prepared in accordance with GAAP, and (including the related notes where applicable) fairly present in each case in all material respects (subject, in the case of the unaudited interim statements, to normal year-end adjustments), the consolidated financial position, results of operations and (with respect to the audited year-end financial statements) cash flows of MBI and its Subsidiaries on a consolidated basis as of and for the respective periods ending on the dates thereof, in accordance with GAAP during the periods involved, except as indicated in such statements or in the notes thereto. As of the date of this Agreement, the financial and accounting books and records of MBI and its Subsidiaries have been maintained in all material respects in accordance with GAAP and any other applicable legal and accounting requirements and reflect only actual transactions.

(b)   The call reports of Marquis Bank and accompanying schedules, as filed with the FDIC, for each calendar quarter beginning with the quarter ended March 31, 2017, through the Closing Date have been prepared in all material respects in accordance with applicable regulatory requirements, including applicable regulatory accounting principles and practices, through periods covered by such reports.

(c)   There is no transaction, arrangement or other relationship between MBI or any of its Subsidiaries and any unconsolidated or other affiliated entity that is not reflected in the MBI Financial Statements.

(d)   The records, systems, controls, data and information of MBI and its Subsidiaries are recorded, stored, maintained and operated under means (including any electronic, mechanical or photographic process, whether computerized or not) that are under the exclusive ownership and direct control of MBI or its Subsidiaries or accountants (including all means of access thereto and therefrom), except for any non-exclusive ownership and non-direct control that would not reasonably be expected to have a Material Adverse Effect on MBI’s (or any MBI Subsidiary’s) system of internal accounting controls.

(e)   Since December 31, 2016, (i) neither MBI nor, to the Knowledge of MBI, any director, officer, employee, auditor, accountant or representative of MBI or Marquis Bank has received or otherwise had or obtained Knowledge of any material complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of MBI or any of its Subsidiaries or its internal accounting controls, including any material complaint, allegation, assertion or claim that MBI or any of its Subsidiaries has engaged in questionable accounting or auditing practices, and (ii) no attorney representing MBI or any of its Subsidiaries, or other Person, whether or not employed by MBI or any of its Subsidiaries, has reported evidence of a material violation of securities laws, breach of fiduciary duty or violation of banking or

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other laws by MBI or any of its Subsidiaries or any of their officers, directors, employees or agents to the Board of Directors or senior management of MBI or any of its Subsidiaries or any committee thereof or to any director or officer of MBI or any of its Subsidiaries. For purposes of this Agreement, “Knowledge” of MBI, shall mean the actual knowledge of the individuals listed in Section 3.6 of the MBI Disclosure Schedule, after reasonable inquiry.

3.7   Absence of Changes.

(a)   Since December 31, 2016, no event or events have occurred that have had or would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on MBI. As used in this Agreement, the term “Material Adverse Effect” means, with respect to PHC or MBI, as the case may be, any event, circumstance, development, change or effect that, individually or in the aggregate, (i) is material and adverse to the business, financial condition or results of operations of such Party and its Subsidiaries taken as a whole; provided, however, that, with respect to this clause (i), a “Material Adverse Effect” shall not be deemed to include any event, circumstance, development, change or effect resulting from (A) changes after the date of this Agreement in GAAP or regulatory accounting requirements, (B) changes after the date of this Agreement in laws, rules or regulations or interpretations of laws, rules or regulations by Governmental Entities of general applicability to companies in the industry in which such Party and its Subsidiaries operate, (C) changes after the date of this Agreement in general economic or market conditions in the United States or any state or territory thereof, including changes in the credit markets, any downgrades in the credit markets, or adverse credit events resulting in deterioration in the credit markets or changes in prevailing interest rates, currency exchange rates, and price levels or trading volumes in the United States, in each case generally affecting the industries in which such Party or its Subsidiaries operate and including changes to any previously correctly applied asset marks resulting therefrom, in each case generally affecting other companies in the industry in which such Party and its Subsidiaries operate, (D) the execution or public disclosure of this Agreement or the transactions contemplated hereby or the consummation thereof, including the impacts thereof on relationships with customers and employees (provided that this clause (D) shall not apply to any representation or warranty to the extent the purpose of such representation or warranty is to address, as applicable, the consequences resulting from the execution or public disclosure of this Agreement or the transactions contemplated hereby or the consummation thereof), or (E) any action taken by such Party with the other Party’s written consent or any action taken by such Party that is required by this Agreement (other than pursuant to Section 5.1, in the case of MBI, and Section 5.3, in the case of PHC), except, with respect to clauses (A), (B) and (C), to the extent that the effects of such change are disproportionately adverse to the business, financial condition or results of operations of such Party and its Subsidiaries, taken as a whole, as compared to other companies in the industry in which such Party and its Subsidiaries operate (in which case only the incrementally disproportionate effect may be taken into account in determining whether there has been or may be a Material Adverse Effect); or (ii) prevents or materially impairs, or would be reasonably likely to prevent or materially impair, the ability of such Party to timely consummate the transactions contemplated by this Agreement or to perform its agreements or covenants hereunder.

(b)   Since December 31, 2017, MBI and its Subsidiaries have conducted their respective businesses in the ordinary course of business in all material respects (other than in connection with the negotiation of this Agreement and the transactions contemplated hereby).

3.8   Compliance with Applicable Law.

(a)   MBI and each of its Subsidiaries are, and at all times since December 31, 2016, have been, in compliance in all material respects with all laws applicable to their businesses, operations, properties or assets, including Sections 23A and 23B of the Federal Reserve Act, the Equal Credit Opportunity Act, the Fair Housing Act, the Community Reinvestment Act, the Home Mortgage Disclosure Act, the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001, the Bank Secrecy Act and all other applicable fair lending laws and other laws relating to discriminatory business practices. MBI is not aware of any facts or circumstances that would cause it to believe that any nonpublic customer information possessed by

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it or any of its Subsidiaries has been disclosed to, or accessed by, an unauthorized third party in a manner that would require or cause it or any of its Subsidiaries to undertake any material remedial action. MBI and each of its Subsidiaries have in effect, and at all relevant times since December 31, 2016 held, all material permits, licenses, variances, exemptions, authorizations, operating certificates, franchises, orders and approvals of all Governmental Entities (collectively, “Permits”) necessary for them to own, lease or operate their properties and assets and to carry on their businesses and operations as conducted, and to the Knowledge of MBI, no suspension or cancellation of any such Permits is threatened and there has occurred no violation of, default (with or without notice or lapse of time or both) under or event giving to others any right of revocation, non-renewal, adverse modification or cancellation of, with or without notice or lapse of time or both, any such Permit. MBI is duly registered with the FRB as a bank holding company under the Bank Holding Company Act of 1956, as amended (the “BHC Act”). The deposit accounts of Marquis Bank are insured by the FDIC through the Deposit Insurance Fund to the fullest extent permitted by law, and all premiums and assessments required to be paid in connection therewith have been paid when due. No Action for the revocation or termination of such deposit insurance is pending or, to the Knowledge of MBI, threatened.

(b)   Since December 31, 2016, neither MBI nor any of its Subsidiaries has received any written notification or communication from any Governmental Entity (i) requiring MBI or any of its Subsidiaries to enter into or consent to the issuance of a cease and desist order, formal or written agreement, directive, commitment, memorandum of understanding, board resolution, extraordinary supervisory letter or other formal or informal enforcement action of any kind that imposes any material restrictions on its conduct of business or that relates to its capital adequacy, its credit or risk management policies, its dividend policy, its management or legal compliance, its business or its operations (any of the foregoing, a “MBI Regulatory Agreement”), or (ii) threatening or contemplating revocation or limitation of, or which would have the effect of revoking or limiting, FDIC insurance coverage, and neither MBI nor any of its Subsidiaries has been advised by any Governmental Entity that such Governmental Entity is contemplating issuing or requesting (or is considering the appropriateness of issuing or requesting) any such judgment, order, injunction, rule, agreement, memorandum of understanding, commitment letter, supervisory letter, decree or similar submission. Neither MBI nor any of its Subsidiaries is party to or subject to any MBI Regulatory Agreement.

(c)   Neither MBI nor any of its Subsidiaries (nor, to the Knowledge of MBI, any of their respective directors, executives, representatives, agents or employees) (i) has used or is using any corporate funds for any illegal contributions, gifts, entertainment or other unlawful expenses relating to political activity, (ii) has used or is using any corporate funds for any direct or indirect unlawful payments to any foreign or domestic governmental officials or employees, (iii) has violated or is violating any provision of the Foreign Corrupt Practices Act of 1977, (iv) has established or maintained, or is maintaining, any unlawful fund of corporate monies or other properties or (v) has made any bribe, unlawful rebate, payoff, influence payment, kickback or other unlawful payment of any nature.

3.9   Material Contracts; Defaults.

(a)   Except with respect to certain MBI Benefit Plans described in Section 3.11, neither MBI nor any of its Subsidiaries is a party to, bound by or subject to any agreement, contract, arrangement, commitment or understanding (whether written or oral) (each a “MBI Material Contract”): (i) that (A) limits or would limit in any respect the manner in which, or the localities in which, MBI or any of its Subsidiaries may conduct its business, (B) obligates MBI or any of its Subsidiaries to conduct business with any Person to the exclusion of others, or (C) other than provisions of standard vendor, service or supply contracts entered into the ordinary course of business, limits or would limit in any way the ability of MBI or any of its Subsidiaries to solicit prospective employees or customers or would so limit or purport to limit the ability of PHC or any of its affiliates to do so following consummation of the transactions contemplated by this Agreement; (ii) for the purchase of services, materials, supplies, goods, equipment or for the purchase, lease or license of other assets or property that provides for, or that creates future payment obligations in excess of, either (x) annual payments of

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$100,000 or more or (y) aggregate payments of  $250,000 or more, other than contracts that can be terminated by MBI or a MBI Subsidiary on thirty (30) days or less written notice at any time without penalty or premium; or (iii) any contract or agreement that is a shared loss contract or agreement (including any related or ancillary contract or agreement) with the FDIC (each such contract, agreement or related or ancillary contract or agreement, a “Loss-Share Agreement”).

(b)   Neither MBI nor any of its Subsidiaries, nor, to the Knowledge of MBI, any counterparty or counterparties, is in breach of any MBI Material Contract, and there has not occurred any event that, with the lapse of time or the giving of notice or both, would constitute such a breach.

3.10   State Takeover Laws.   The Board of Directors of MBI has approved this Agreement and the transactions contemplated hereby as required to render inapplicable to this Agreement and such transactions the restrictions on “business combinations” set forth in any applicable “moratorium,” “control share,” “fair price,” “takeover” or “interested shareholder” law.

3.11   MBI Benefit Plans.

(a)   Section 3.11(a) of the MBI Disclosure Schedule sets forth a list of each material MBI Benefit Plan (as defined below). With respect to each material MBI Benefit Plan, MBI has made available to PHC a current, correct and complete copy (or, to the extent no written copy exists, an accurate description) thereof and, to the extent applicable: (i) the MBI Benefit Plan, the related trust agreement or other funding instrument (if any), and any other related documents (including all amendments to such MBI Benefit Plan); (ii) the most recent Internal Revenue Service (“IRS”) determination or opinion letter, if applicable; (iii) any summary plan description and summary of material modifications for such MBI Benefit Plan; (iv) all communications to or from the IRS or any other Governmental Entity relating to each MBI Benefit Plan; and (v) for the most recent year, (A) the Form 5500 and attached schedules, (B) audited financial statements, and (C) actuarial valuation reports. For purposes of this Agreement, “MBI Benefit Plans” means any “employee benefit plan,” as defined in Section 3(3) of ERISA, and all other benefit plans, arrangements or agreements, including any other employment, consulting, bonus, incentive or deferred compensation, commission, vacation, stock option or other equity-based award, severance, termination, retention, change of control, profit-sharing, insurance, split dollar insurance, fringe benefit, perquisite or other similar plan, program, agreement or commitment, whether written or unwritten, whether or not subject to ERISA, or whether formal or informal, for the benefit of any employee, former employee, individual service provider, former individual service provider, director or former director of MBI or any of its Subsidiaries entered into, maintained or contributed to by MBI or any of its Subsidiaries or to which MBI or any of its Subsidiaries is obligated to contribute, or with respect to which MBI or any of its Subsidiaries has any liability, direct or indirect, contingent or otherwise, other than any Multiemployer Plan.

(b)   (i) Each MBI Benefit Plan has been established, operated and administered in all material respects in accordance with its terms, and in compliance with the applicable provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), the Code and other laws; (ii) each MBI Benefit Plan which is intended to be qualified within the meaning of Section 401(a) of the Code is so qualified (and each corresponding trust is exempt under Section 501 of the Code) and has received or is the subject of a favorable determination letter or uses a prototype document that is subject to a favorable opinion letter relating to the most recently completed IRS remedial amendment period cycle, and, to the Knowledge of MBI, nothing has occurred (whether by action or failure to act) that would reasonably be expected to adversely affect the qualified status of any such MBI Benefit Plan (or the exempt status of any related trust); (iii) no “reportable event” (as such term is defined in Section 4043 of ERISA) that would reasonably be expected to result in liability has occurred with respect to any MBI Benefit Plan, and no non-exempt “prohibited transaction” (as such term is defined in Section 406 of ERISA and Section 4975 of the Code) has been engaged in by MBI or any of its Subsidiaries with respect to any MBI Benefit Plan that has resulted, or would reasonably be expected to result, in any material liability with respect to any MBI Benefit Plan; (iv) no liability under Subtitle C or D of Title IV of ERISA has been or would reasonably be expected to be incurred by MBI or any of its Subsidiaries with respect to any ongoing, frozen or terminated “single-employer plan,” within the meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by any

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of MBI or its Subsidiaries, or the single-employer plan of any ERISA Affiliate; (v) there does not now exist, nor do any circumstances exist that would reasonably be expected to result in, any Controlled Group Liability that would be a liability of MBI or any of its Subsidiaries; (vi) except as expressly contemplated by this Agreement, there is no present intention by MBI that any MBI Benefit Plan be materially amended, suspended or terminated, or otherwise modified to change benefits (or the levels thereof) in a manner that results in an increased cost to MBI or any of its Subsidiaries (other than an immaterial increase in administrative costs or changes required by law) under any MBI Benefit Plan at any time within the twelve (12) months immediately following the date hereof; (vii) no MBI Benefit Plan provides for post-employment or post-retirement health, medical or life insurance benefits for current, former or retired employees of MBI or any of its Subsidiaries, except as required under Section 4980B of the Code or otherwise except as may be required pursuant to any other laws; (viii) each of the MBI Benefit Plans that is intended to satisfy the requirements of Section 125, 423 or 501(c)(9) of the Code satisfies such requirements; and (ix) all contributions required to have been made under the terms of any MBI Benefit Plan or pursuant to ERISA and the Code have been timely made, and, to the extent required, all obligations in respect of each MBI Benefit Plan have been properly accrued and reflected in the MBI Financial Statements. As used in this Agreement, the term “Controlled Group Liability” means any and all liabilities (A) under Title IV of ERISA, (B) Section 302 or 4068(a) of ERISA, (C) under Sections 412, 430 and 4971 of the Code, or (D) as a result of a failure to comply with the continuation coverage requirements of Section 601 et seq. of ERISA and Section 4980B of the Code.

(c)   With respect to each MBI Benefit Plan that is subject to Title IV of ERISA, as of the Effective Time, the assets of each such MBI Benefit Plan will be at least equal in value to the present value of the accrued benefits (vested and unvested) of the participants in such MBI Benefit Plan on a termination and projected benefit obligation basis, based on the actuarial methods and assumptions indicated in the most recent applicable actuarial valuation reports.

(d)   Neither MBI nor any of its Subsidiaries (nor any ERISA Affiliate) maintains or contributes to a “multiemployer plan” within the meaning of Section 4001(a)(3) of ERISA (a “Multiemployer Plan”) or a “multiple employer welfare arrangement” (as defined in Section 3(40) or ERISA). As used in this Agreement, the term “ERISA Affiliate” means any entity that is considered one employer with MBI or PHC, as applicable, under Section 4001(b)(1) of ERISA or Section 414(b), (c), (m) or (o) of the Code.

(e)   With respect to any MBI Benefit Plan, (i) no actions, suits or claims (other than routine claims for benefits in the ordinary course) are pending or, to the Knowledge of MBI, threatened, (ii) to the Knowledge of MBI, no facts or circumstances exist that would reasonably be expected to give rise to any such actions, suits or claims, (iii) no written or oral communication has been received from the Pension Benefit Guaranty Corporation (“PBGC”) in respect of any MBI Benefit Plan subject to Title IV of ERISA concerning the funded status of any such plan or any transfer of assets or liabilities from any such plan in connection with the transactions contemplated herein, (iv) no administrative investigation, audit or other administrative proceeding by the Department of Labor, the PBGC, the IRS or any other Governmental Entity is pending, in progress or, to the Knowledge of MBI, threatened (including any routine requests for information from the PBGC), and (v) there is no judgment, decree, injunction, rule or order of any Governmental Entity or arbitrator outstanding against or in favor of any MBI Benefit Plan or any fiduciary thereof  (other than rules of general applicability). With respect to each MBI Benefit Plan that is subject to Title IV or Section 302 of ERISA or Section 412, 430 or 4971 of the Code, (A) no MBI Benefit Plan has failed to satisfy minimum funding standards (within the meaning of Section 412 or 430 of the Code or Section 302 of ERISA), whether or not waived; and (B) there has been no determination that any MBI Benefit Plan is, or is expected to be, in “at risk” status (within the meaning of Section 430 of the Code or Section 303 of ERISA). None of the assets of MBI, any of its Subsidiaries, or any ERISA Affiliate are subject to any Lien arising under ERISA or Subchapter D of Chapter 1 of the Code, and no condition exists that presents a material risk of any such Lien arising.

(f)   Except as described in Section 3.11(f) of the MBI Disclosure Schedule, neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will result in (i) any payment or benefit (including severance, an “excess parachute payment” (within the

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meaning of Section 280G of the Code), forgiveness of indebtedness or otherwise) becoming due to any current or former employee, officer or director of MBI or any of its Subsidiaries from MBI or any of its Subsidiaries under any MBI Benefit Plan or otherwise, (ii) any increase in compensation or benefits otherwise payable under any MBI Benefit Plan, (iii) any acceleration of the time of payment or vesting of any such benefits, (iv) the requirement to fund or increase the funding of any such benefits (through a grantor trust or otherwise), (v) except as otherwise provided in this Agreement, any limitation on the right of MBI or any of its Subsidiaries to (A) amend, merge or terminate any MBI Benefit Plan or related trust or (B) receive a reversion of assets from any MBI Benefit Plan or related trust, (vi) the renewal or extension of the term of any agreement regarding the compensation of any current or former employee, director or individual service provider of MBI or any of its Subsidiaries, or (vii) any payments under any of the MBI Benefit Plans or otherwise that would not be deductible under Section 280G of the Code.

(g)   No MBI Benefit Plan provides for the gross-up or reimbursement of Taxes under Section 409A or 4999 of the Code.

3.12   Approvals.   As of the date of this Agreement, MBI knows of no reason why all Regulatory Approvals required for the consummation of the transactions contemplated by this Agreement should not be obtained on a timely basis.

3.13   Opinion.   The Board of Directors of MBI has received the opinion of Janney Montgomery Scott LLC to the effect that, as of the date of such opinion, and based upon and subject to the factors and assumptions set forth therein, the Merger Consideration to be paid to the holders of MBI Common Stock in the Merger is fair from a financial point of view to such holders.

3.14   MBI Information.   None of the information supplied or to be supplied by MBI for inclusion or incorporation by reference in the Proxy Statement or in the Form S-4, or in any other application, notification or other document filed with any Governmental Entity in connection with the transactions contemplated by this Agreement or in any amendment or supplement thereto, will, at the time the Proxy Statement or any such amendment or supplement thereto is first mailed to MBI’s shareholders or PHC’s shareholders or at the time MBI’s shareholders vote on the matters constituting the MBI Shareholder Approval or PHC’s shareholders vote on the matters constituting the PHC Shareholder Approval or at the time the Form S-4 or any such amendment or supplement thereto becomes effective under the Securities Act or at the Effective Time, or at the time any such other applications, notifications or other documents or any such amendments or supplements thereto are so filed, as the case may be, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. No representation or warranty is made by MBI in this Section 3.14 with respect to statements made or incorporated by reference therein based on information supplied by PHC or any of its representatives in writing expressly for inclusion or incorporation by reference in the Proxy Statement, the Form S-4 or such other applications, notifications or other documents. If at any time prior to the Effective Time any event should be discovered by MBI or any of its Subsidiaries which should be set forth in an amendment or supplement to the Proxy Statement, the Form S-4 or in any amendment or supplement to any such other applications, notifications or other documents, MBI shall promptly so inform PHC.

3.15   Litigation.   There is no action, suit, charge, claim, arbitration, investigation, inquiry, grievance, demand or other proceeding, whether judicial, arbitral, administrative or other (each, an “Action”), pending or, to the Knowledge of MBI, threatened against or affecting MBI or any of its Subsidiaries, any of their respective properties or assets, or any present (or, to the Knowledge of MBI, former) officer, director or employee of MBI or any of its Subsidiaries in such individual’s capacity as such, other than any immaterial, ordinary routine Action incidental to the business of MBI and its Subsidiaries. Neither MBI nor any of its Subsidiaries nor any of their respective properties or assets is subject to any outstanding judgment, order, injunction, rule or decree of any Governmental Entity (other than those of general application that apply to similarly situated banks and bank holding companies or their Subsidiaries).

3.16   Labor Matters.

(a)   There are no collective bargaining agreements or other labor union contracts, agreements or understandings applicable to any employees of MBI or any of its Subsidiaries. There is no labor dispute, strike, work stoppage, work slowdown or lockout, or, to the Knowledge of MBI, threat

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thereof, by or with respect to any employees of MBI or any of its Subsidiaries, and there has been no labor dispute, strike, work stoppage, work slowdown, lockout or other work related disruption since December 31, 2016. To the Knowledge of MBI, there are no organizational efforts with respect to the formation of a collective bargaining unit or similar employee representative body presently being made or threatened involving employees of MBI or any of its Subsidiaries. MBI and its Subsidiaries are in compliance in all material respects with all applicable laws respecting employment and employment practices, terms and conditions of employment, wages, hours of work, employee classification, family and medical leave, occupational safety and health, disability, non-discrimination in employment and workers’ compensation. No Action asserting that MBI or any of its Subsidiaries has committed an unlawful employment practice or an unfair labor practice (within the meaning of the National Labor Relations Act of 1935) or seeking to compel MBI or any of its Subsidiaries to bargain with any labor organization as to wages or conditions of employment is pending or, to the Knowledge of MBI, threatened with respect to MBI or any of its Subsidiaries before the National Labor Relations Board, the Equal Employment Opportunity Commission, the Department of Labor or any other Governmental Entity.

(b)   Neither MBI nor any of its Subsidiaries is a party to, or otherwise bound by, any consent decree with, or citation by, any Governmental Entity relating to employees or employment practices. None of MBI, any of its Subsidiaries or any of its or their executive officers has received within the past three (3) years any notice of intent by any Governmental Entity responsible for the enforcement of labor or employment laws to conduct an investigation relating to MBI or any of its Subsidiaries and, to the Knowledge of MBI, no such investigation is in progress.

3.17   Environmental Matters.

(a)   (i) Neither MBI’s conduct nor its operation or the conduct or operation of its Subsidiaries nor any condition of any property presently or previously owned, leased or operated by any of them (including in a fiduciary or agency capacity), violates or has violated Environmental Laws; (ii) there has been no release of any Hazardous Substance by MBI or any of its Subsidiaries in any manner that has given or would reasonably be expected to give rise to any remedial obligation, corrective action requirement or liability under applicable Environmental Laws; (iii) since December 31, 2017, neither MBI nor any of its Subsidiaries has received any written claims, notices, demand letters or requests for information (except for such claims, notices, demand letters or requests for information the subject matter of which has been resolved prior to the date of this Agreement) from any Governmental Entity or any third party asserting that MBI or any of its Subsidiaries or the operation or condition of any property ever owned, leased, operated or held as collateral or in a fiduciary capacity by any of them are or were in violation of or otherwise are alleged to have liability under any Environmental Law, including responsibility (or potential responsibility) for the cleanup or other remediation of any pollutants, contaminants or hazardous or toxic wastes, substances or materials at, on, beneath or originating from any such property; (iv) no Hazardous Substance has been disposed of, arranged to be disposed of, released or transported in violation of any applicable Environmental Law, or in a manner that has given rise to, or that would reasonably be expected to give rise to, any liability under any Environmental Law, from any current or former properties or facilities while owned or operated by MBI or any of its Subsidiaries or as a result of any operations or activities of MBI or any of its Subsidiaries at any location, and no other condition has existed or event has occurred with respect to MBI or any of its Subsidiaries or any such properties or facilities that, with notice or the passage of time, or both, would be reasonably likely to result in liability under Environmental Laws, and Hazardous Substances are not otherwise present at or about any such properties or facilities in amount or condition that has resulted in or could reasonably be expected to result in liability to MBI or any of its Subsidiaries under any Environmental Law; and (v) neither MBI or its Subsidiaries nor any of their respective properties or facilities are subject to, or are, to the Knowledge of MBI, threatened to become subject to, any liabilities relating to any suit, settlement, court order, administrative order, regulatory requirement, judgment or claim asserted or arising under any Environmental Law or any agreement relating to environmental liabilities.

(b)   As used in this Agreement, the term “Environmental Law” means any law relating to (i) the protection, preservation or restoration of the environment (including air, surface water, groundwater, drinking water supply, surface land, subsurface land, plant and animal life or any other natural

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resource) or (ii) the exposure to, or the use, storage, recycling, treatment, generation, transportation, processing, handling, labeling, production, release or disposal of Hazardous Substances, including the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation, and Liability Act, the Clean Water Act, the Clean Air Act and the Occupational Safety and Health Act; regulations promulgated thereunder, and state counterparts to the foregoing.

(c)   As used in this Agreement, the term “Hazardous Substance” means any substance listed, defined, designated, classified or regulated as a waste, pollutant or contaminant or as hazardous, toxic, radioactive or dangerous or any other term of similar import under any Environmental Law, including petroleum.

3.18   Loan Matters.

(a)   There are no outstanding loans to any directors, executive officers and principal shareholders (as such terms are defined in the FRB’s Regulation O (12 C.F.R. Part 215)) of MBI or any of its Subsidiaries on which the borrower is paying a rate other than that reflected in the note or other relevant credit or security agreement or on which the borrower is paying a rate which was below market at the time the loan was originated.

(b)   Each outstanding loan held by MBI or any of its Subsidiaries (including loans held for resale to investors) was solicited and originated, and is and has been administered and, where applicable, serviced, and the relevant loan files are being maintained, in accordance with the relevant notes or other credit or security documents, MBI’s or its applicable Subsidiary’s written underwriting standards (and, in the case of loans held for resale to investors, the underwriting standards, if any, of the applicable investors) and with all applicable laws in all material respects.

(c)   None of the agreements pursuant to which MBI or any of its Subsidiaries has sold loans or pools of loans or participations in loans or pools of loans contains any obligation to repurchase such loans or interests therein.

(d)   Each outstanding loan held by MBI or any of its Subsidiaries (i) is evidenced by notes, agreements or other evidences of indebtedness that are true, genuine and what they purport to be, (ii) to the extent secured, has been secured by valid Liens which have been perfected and (iii) is a legal, valid and binding obligation of the obligor named therein, enforceable in accordance with its terms (subject to the Bankruptcy and Equity Exception).

(e)   With respect to the loans held by MBI or any of its Subsidiaries, MBI has provided or made available to PHC a list of the following: (i) all loans (A) that as of June 30, 2019, are contractually past due ninety (90) days or more in the payment of principal or interest, (B) that as of June 30, 2019 are on non-accrual status, (C) that as of June 30, 2019 are classified as “Other Loans Specially Mentioned,” “Special Mention,” “Substandard,” “Doubtful,” “Loss,” “Classified,” “Criticized,” “Watch List,” or words of similar import, together with the principal amount of and accrued and unpaid interest on each such loan and the identity of the obligor thereunder, (D) where, as of June 30, 2019, the interest rate terms have been reduced or the maturity dates have been extended subsequent to the agreement under which the loan was originally created due to concerns regarding the borrower’s ability to pay in accordance with such initial terms, (E) where a specific reserve allocation exists in connection therewith, or (F) where a borrower, customer or other party has notified it during the past twelve (12) months of, or has asserted against it, in each case in writing, any “lender liability” or similar claim and, to the Knowledge of MBI, each borrower, customer or other party which has given any oral notification of, or orally asserted to or against it, any such claim; and (ii) all assets classified by it as real estate acquired through foreclosure or in lieu of foreclosure, including in-substance foreclosures, and all other assets currently held that were acquired through foreclosure or in lieu of foreclosure.

(f)   The allowance for loan losses reflected in the MBI Financial Statements was (and will be for periods ended after June 30, 2019) in compliance with its methodology for determining the adequacy of allowance for loan losses as well as the standards established by applicable Governmental Entities and the Financial Accounting Standards Board and was adequate under such standards.

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3.19   Intellectual Property.

(a)   MBI and each of its Subsidiaries either owns or licenses all Intellectual Property used by it and necessary for the conduct of its businesses as currently conducted. Neither MBI nor any of its Subsidiaries is the licensor of material Intellectual Property to any third party. None of the Intellectual Property used by MBI or any of its Subsidiaries violates or infringes upon the Intellectual Property rights of any other Person in any material respect. As of the date hereof, there is no Action pending or, to the Knowledge of MBI, threatened, which challenges the rights of MBI or any of its Subsidiaries with respect to Intellectual Property used in its business or which asserts any violation or infringement of the Intellectual Property rights of any other Person.

(b)   For purposes of this Agreement, the term “Intellectual Property” means (i) trademarks, service marks, trade names, Internet domain names, designs and logos, together with all registrations and applications related to the foregoing; (ii) patents and industrial designs (including any applications for either of the foregoing); (iii) copyrights (including any registrations and applications for any of the foregoing); and (iv) computer programs, whether in source code or object code form (including any and all software implementation of algorithms, models and methodologies), databases and compilations (including any and all data and collections of data), and all documentation (including user manuals and training materials) related to the foregoing.

3.20   Transactions with Affiliates.   There are no agreements, contracts, plans, arrangements or other transactions between MBI or any of its Subsidiaries, on the one hand, and any (i) officer or director of MBI or any of its Subsidiaries, (ii) record or beneficial owner of five percent (5%) or more of the voting securities of MBI, (iii) affiliate or family member of any such officer, director or record or beneficial owner or (iv) any other affiliate of MBI, on the other hand, except those of a type available to non-affiliates of MBI generally and compensation or benefit arrangements with officers and directors.

3.21   Derivative Instruments and Transactions.

(a)   All Derivative Transactions, whether entered into for MBI’s own account or for the account of one or more of its Subsidiaries or their customers, if any, were entered into (i) in the ordinary course of business consistent with past practice and in accordance with prudent business practices and all applicable laws and (ii) with counterparties believed to be financially responsible at the time. Each Derivative Transaction constitutes the valid and legally binding obligation of MBI or one of its Subsidiaries, enforceable in accordance with its terms (subject to the Bankruptcy and Equity Exception), and is, as of the date hereof, in full force and effect. Neither MBI nor its Subsidiaries, nor, to the Knowledge of MBI, any other party thereto, is in breach of any of its obligations under any such agreement or arrangement.

(b)   As used in this Agreement, the term “Derivative Transaction” means any instrument currently considered to be a “swap” in the banking industry, option, warrant, forward purchase or sale transaction, futures transaction, cap transaction, floor transaction or collar transaction relating to one or more currencies, commodities, bonds, equity securities, loans, interest rates, catastrophe events or weather-related events, credit-related events or conditions or any indexes (including any option with respect to any of these transactions) or combination of any of these transactions, including collateralized mortgage obligations or other similar instruments or any debt or equity instruments evidencing or embedding any such types of transactions, and any related credit support, collateral or other similar arrangements related to such transactions.

3.22   Trust Business.   Neither MBI nor any of its Subsidiaries is authorized to act in any capacity as a corporate fiduciary.

3.23   Taxes.

(a)   All Tax Returns required to have been filed by or with respect to MBI or its Subsidiaries have been timely filed (taking into account any extension of time to file granted or obtained), and such Tax Returns are accurate and complete in all material respects. All Taxes shown to be payable on such Tax Returns have been paid or will be timely paid and all other Taxes required to be paid by MBI or its Subsidiaries have been paid or will be timely paid, except for those Taxes being contested in good faith

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or for which adequate reserves have been established in the MBI Financial Statements or will be established in financial statements of MBI to be provided to PHC after the date hereof pursuant to this Agreement. No deficiency for any Tax has been asserted or assessed by a Governmental Entity in writing against MBI or any of its Subsidiaries that has not been satisfied by payment, settled, withdrawn or adequately reserved for. There are no Liens for Taxes on the assets of MBI or any of its Subsidiaries (except for statutory Liens for Taxes not yet delinquent). There are no outstanding waivers or agreements extending the period for assessment of Taxes for any period with respect to any Tax to which MBI or any of its Subsidiaries may be subject. All Taxes not yet due and payable by MBI or its Subsidiaries have been properly accrued on the financial books and records of MBI and its Subsidiaries in accordance with GAAP.

(b)   None of MBI or its Subsidiaries is a party to or bound by or has any obligation under any Tax allocation sharing or similar agreement or arrangement (other than an agreement or arrangement solely among MBI and its Subsidiaries).

(c)   MBI and its Subsidiaries have complied with all applicable laws relating to withholding of Taxes (including withholding of Taxes pursuant to Sections 1441, 1442, 3121 and 3402 of the Code and similar provisions under any other domestic or foreign tax laws) and have, within the time and the manner prescribed by law, paid over to the proper Governmental Entities all amounts required to be so withheld and paid over under applicable laws. MBI and each of its Subsidiaries have complied with all information reporting requirements imposed by the Code (and similar provisions under any other domestic or foreign Tax laws).

(d)   As of the date of this Agreement, there are no audits, claims or controversies now pending or, to the Knowledge of MBI, threatened against or with respect to MBI or any of its Subsidiaries with respect to any Tax or failure to file any Tax Return.

(e)   Neither MBI nor any of its Subsidiaries has been a party to any distribution occurring in the last five (5) years in which the parties to such distribution treated the distribution as one to which Section 355 of the Code applied.

(f)   No closing agreement pursuant to Section 7121 of the Code (or any similar provision of state, local or foreign law) has been entered into by or with respect to MBI or any of its Subsidiaries.

(g)   Neither MBI nor any of its Subsidiaries has engaged in any “listed transaction,” as defined in Section 6707A(c)(2) of the Code and the Treasury Regulations thereunder, as a principal, as a material advisor or otherwise.

(h)   Neither MBI nor any of its Subsidiaries (i) is or has, since December 31, 2007, been a member of an affiliated group (other than a group the common parent of which is MBI or a MBI Subsidiary) filing a consolidated, joint, combined or unitary Tax Return or (ii) has any liability for Taxes of any Person (other than MBI and any of its Subsidiaries) arising from the application of Treasury Regulations Section 1.1502-6 or any analogous provision of state, local or foreign law, or as a transferee or successor, by contract, or otherwise.

(i)   Neither MBI nor any of its Subsidiaries has taken or agreed to take any action or has any knowledge or any fact or circumstance that could reasonably be expected to prevent the Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code.

(j)   As used in this Agreement, the term “Taxes” means any federal, state, local or foreign income, gross receipts, property, sales, use, license, excise, franchise, employment, payroll, withholding, alternative or add on minimum, ad valorem, transfer or excise tax, or any other tax, custom, duty, governmental fee or other like assessment or charge of any kind whatsoever, including all interest, penalties and additions imposed with respect to such amounts, imposed by any Governmental Entity.

(k)   As used in this Agreement, the term “Tax Returns” means all domestic or foreign (whether national, federal, state, provincial, local or otherwise) returns, declarations, statements, reports, schedules, forms, claims for refund and information returns relating to Taxes and including any attachment thereto or amendment thereof.

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3.24   Community Reinvestment Act Compliance.   Marquis Bank is in compliance with the applicable provisions of the Community Reinvestment Act of 1977 and the regulations promulgated thereunder and has received a Community Reinvestment Act rating of  “satisfactory” or better in its most recently completed exam, and MBI has no Knowledge of the existence of any fact or circumstance or set of facts or circumstances which could reasonably be expected to result in Marquis Bank having its current rating lowered.

3.25   Insurance.   MBI and each of its Subsidiaries are presently insured, with what MBI believes to be financially sound and reputable insurance companies, against such risks and for such amounts as Previously Disclosed (which coverage is in accordance with all contractual and legal requirements applicable to MBI and its Subsidiaries). All of the policies, bonds and other arrangements providing for the foregoing (the “MBI Insurance Policies”) are in full force and effect, the premiums due and payable thereon have been or will be timely paid through the Effective Time, and there is no breach or default (and no condition exists or event has occurred that, with the giving of notice or lapse of time or both, would constitute such a breach or default) by MBI or any of its Subsidiaries under any of the MBI Insurance Policies or, to the Knowledge of MBI, by any other party to the MBI Insurance Policies, and neither MBI nor any of its Subsidiaries has received any notice of cancellation or non-renewal of any MBI Insurance Policy nor, to the Knowledge of MBI, is the termination of any such policies threatened by the insurer, and there is no claim for coverage by MBI or any of its Subsidiaries pending under any of such MBI Insurance Policies as to which coverage has been denied or disputed by the underwriters of such MBI Insurance Policies or in respect of which such underwriters have reserved their rights.

3.26   Title.   MBI and its Subsidiaries have good and marketable title in fee simple to all real property owned by them and good and valid title to all personal property owned by them, in each case free and clear of all Liens, except for Liens reflected in the MBI Financial Statements and statutory Liens for amounts not yet due and payable and such other Liens as are not material. Any real property and facilities held under lease by MBI or its Subsidiaries are valid, subsisting and enforceable leases and none of such real property or facilities leases will be adversely affected by the consummation of the Merger or the Bank Merger.

3.27   Investment Portfolio.   Except for pledges to secure public and trust deposits or otherwise made in the ordinary course of business, Liens securing repurchase obligations incurred in the ordinary course of business consistent with past practice, and for FHLB stock, none of the investment securities reflected in the MBI Financial Statements and none of the investment securities since acquired by MBI or any of its Subsidiaries is subject to any restriction, whether contractual or statutory, which impairs the ability of MBI or any of its Subsidiaries to freely dispose of such investment at any time, other than those restrictions imposed on securities held to maturity under GAAP.

3.28   Books and Records.   The corporate record books of MBI and its Subsidiaries are complete and accurate in all material respects and reflect all meetings, consents and other actions of the boards of directors and shareholders of MBI and its Subsidiaries.

3.29   Indemnification.   To the Knowledge of MBI, as of the date hereof no action or failure to take action by any present or former director, officer, employee or agent of MBI or any of its Subsidiaries has occurred which would give rise to a claim by any such individual for indemnification from MBI or any of its Subsidiaries.

3.30   Broker’s Fees.   Neither MBI nor any of its Subsidiaries nor any of their respective officers, directors, employees or agents has utilized any broker, finder or financial advisor or incurred any liability for any broker’s fees, commissions or finder’s fees in connection with the Merger or any other transactions contemplated by this Agreement, other than to Hovde Group LLC and FIG Partners LLC, pursuant to separate letter agreements between them and MBI, the terms of which have been previously disclosed.

3.31   No Other Representations.   MBI acknowledges that PHC makes no representations or warranties as to any matter whatsoever except as expressly set forth in Article IV, including with respect to any information furnished, disclosed or made available to MBI or its representatives in the course of their due diligence investigation and the negotiation of this Agreement. The representations and warranties set forth in Article IV are made solely by PHC, and no representative of PHC shall have any responsibility or

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liability related thereto. MBI acknowledges and agrees that it has not relied on any representation, warranty or other statement by any person on behalf PHC or any of its Subsidiaries, other than the representations and warranties expressly contained in Article IV of this Agreement and that all other representations and warranties are specifically disclaimed.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PHC

Except as Previously Disclosed, PHC hereby represents and warrants to MBI as follows:

4.1   Organization, Standing and Power.

(a)   Each of PHC and its Subsidiaries (i) is an entity duly organized, validly existing and in good standing (with respect to jurisdictions that recognize such concept) under the laws of the jurisdiction of its incorporation or organization, (ii) has all requisite corporate or similar power and authority to own, lease and operate its properties and to carry on its business as now being conducted and (iii) is duly qualified or licensed to do business and is in good standing (with respect to jurisdictions that recognize such concept) in each jurisdiction in which the nature of its business or the ownership, leasing or operation of its properties or assets makes such qualification or licensing necessary, except, in the case of clauses (i) (with respect to PHC’s Subsidiaries only), (ii) and (iii), where the failure to be so qualified or licensed would not have a Material Adverse Effect on PHC.

(b)   PHC has previously made available to MBI true and complete copies of PHC’s articles of incorporation (the “PHC Charter”) and bylaws (the “PHC Bylaws”) and the articles or certificate of incorporation or formation and bylaws (or comparable organizational documents) of each of its Subsidiaries, in each case as amended to the date of this Agreement and as in full force and effect. Neither PHC nor any of its Subsidiaries is in violation of any provision of the PHC Charter or PHC Bylaws or such articles or certificate of incorporation or formation and bylaws (or comparable organizational documents) of such Subsidiary, as applicable.

4.2   Capitalization.

(a)   The authorized capital stock of PHC consists of  (i) 50,000,000 shares of PHC Common Stock of which, as of the date hereof, 5,188,302 shares were issued and outstanding (not including shares held in treasury), which includes 2,499 shares of restricted stock granted under the PHC 2019 Equity Incentive Plan, and 3,848 shares of PHC Common Stock that have been purchased by employees under an employee stock purchase plan and pending issuance at year-end, (ii) 10,000,000 shares of Class B Non-Voting Common Stock, of which, as of the date hereof, 752,184 shares are issued or outstanding, and (iii) 10,000,000 shares of preferred stock, none of which are issued or outstanding. All of the issued and outstanding shares of PHC Common Stock have been duly authorized and validly issued and are fully paid, non-assessable and free of preemptive rights with no personal liability attaching to the ownership thereof. As of the date of this Agreement, no Voting Debt of PHC is issued or outstanding. As of the date hereof, PHC held 45,000 shares of PHC Common Stock in its treasury. As of the date of this Agreement, there are 181,233 shares of PHC Common Stock reserved for issuance or to be delivered in respect of outstanding stock options granted under the PHC Stock Option Plan and there are 954,500 shares of PHC Common Stock reserved for issuance or to be delivered in respect of outstanding stock appreciation rights granted under the PHC 2014 Stock Appreciation Rights Plan (together with the PHC 2019 Equity Incentive Plan, the “PHC Equity Plans”) and outstanding immediately prior to the Effective Time (each such award, an “PHC Stock Option”) and, except for such outstanding Stock Options, PHC does not have and is not bound by any Rights calling for the purchase or issuance of or the payment of any amount based on any shares of PHC Common Stock, Voting Debt of PHC or any other equity securities of PHC or any securities representing the right to purchase or otherwise receive any shares of PHC Common Stock, Voting Debt of PHC or other equity securities of PHC. The shares of PHC Common Stock to be issued pursuant to the Merger will be duly authorized and validly issued and, at the Effective Time, all such shares will be fully paid, non-assessable and free of preemptive rights, with no personal liability attaching to the ownership thereof. There are no contractual obligations of PHC or any of its

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Subsidiaries (i) to repurchase, redeem or otherwise acquire any shares of capital stock of PHC or any equity security of PHC or its Subsidiaries or any securities representing the right to purchase or otherwise receive any shares of capital stock or any other equity security of PHC or its Subsidiaries or (ii) pursuant to which PHC or any of its Subsidiaries is or could be required to register shares of PHC capital stock or other securities under the Securities Act, in each case, other than contractual obligations with respect to (A) the issuance of shares of PHC Common Stock in respect of any exercise of PHC Stock Options granted under the PHC Equity Plans or settlement of any equity or equity-based award granted under the PHC Equity Plans that is outstanding on the date hereof, and (B) the acquisition of shares of PHC Common Stock from a holder of a PHC stock option or PHC equity or equity-based award in satisfaction of withholding obligations or in payment of the exercise price.

(b)   All of the issued and outstanding shares of capital stock or other equity ownership interests of each Significant Subsidiary (as defined in Rule 1-02 of Regulation S-X promulgated under the Exchange Act) of PHC (which, for purposes of this Agreement, shall include Professional Bank) are owned by PHC, directly or indirectly, free and clear of any Liens, and all of such shares or equity ownership interests are duly authorized and validly issued and are fully paid, non-assessable and free of preemptive rights. No Significant Subsidiary of PHC has or is bound by any Rights calling for the purchase or issuance of any shares of capital stock or any other equity security of such Subsidiary or any securities representing the right to purchase or otherwise receive any shares of capital stock or any other equity security of such Subsidiary. Except as Previously Disclosed and for the ownership of PHC Subsidiaries, readily marketable securities, securities held-to-maturity in PHC Bank’s investment portfolio and stock in the FHLB, neither PHC nor any of its Subsidiaries owns any equity or profit-and-loss interest in any Person.

(c)   PHC does not have a dividend reinvestment plan or any shareholder rights plan.

4.3   Authority; No Violation.

(a)   PHC has full corporate power and authority to execute and deliver this Agreement and, subject to receipt of the PHC Shareholder Approval, to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly approved by the Board of Directors of PHC. As of the date of this Agreement, the Board of Directors of PHC has determined that this Agreement is advisable and in the best interests of PHC and its shareholders and has directed that the issuance of shares of PHC Common Stock to be issued in connection with this Agreement and the Merger (the “PHC Stock Issuance”) be submitted to PHC’s shareholders for approval at a duly held meeting of such shareholders and has adopted a resolution to the foregoing effect. Except for the receipt of the affirmative vote to approve the PHC Stock Issuance by the holders of the PHC Common Stock by a majority of the total votes cast at a meeting called therefor (the “PHC Shareholder Approval”), this Agreement and the transactions contemplated hereby have been authorized by all necessary corporate action. This Agreement has been duly and validly executed and delivered by PHC and (assuming due authorization, execution and delivery by MBI) constitutes the valid and binding obligation of PHC, enforceable against PHC in accordance with its terms (subject to the Bankruptcy and Equity Exception).

(b)   Neither the execution and delivery of this Agreement by PHC or the Bank Merger Agreement by Professional Bank, nor the consummation by PHC of the transactions contemplated in this Agreement or by Professional Bank of the transactions in the Bank Merger Agreement, nor compliance by PHC or Professional Bank with any of the terms or provisions of this Agreement or the Bank Merger Agreement, will (i) assuming that the PHC Shareholder Approval is duly obtained or given, violate any provision of the PHC Charter or the PHC Bylaws or the organizational documents of Professional Bank, or (ii) assuming that the consents, approvals and filings referred to in Section 4.4 are duly obtained or made, (A) violate any law, judgment, order, injunction or decree applicable to PHC, any of its Subsidiaries or any of their respective properties or assets in a manner that would reasonably be expected to have a Material Adverse Effect on PHC, or (B) violate, conflict with, result in a breach of any provision of or the loss of any benefit under, constitute a default (or an event which,

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with notice or lapse of time, or both, would constitute a default) under, result in the termination of or a right of termination or cancellation under, accelerate the performance required by, or result in the creation of any Lien upon any of the respective properties or assets of PHC or any of its Subsidiaries under, any of the terms, conditions or provisions of any material contract, note, bond, mortgage, indenture, deed of trust, license, lease, franchise, permit, agreement, bylaw or other instrument or obligation to which PHC or any of its Subsidiaries is a party or by which any of them or any of their respective properties or assets is bound.

4.4   Consents and Approvals.   Except for (i) the Regulatory Approvals, (ii) the filing with the SEC of the Proxy Statement and the filing and declaration of effectiveness of the Form S-4, (iii) the filing of the Articles of Merger contemplated by Section 1.2 and the filing of documents with the FDIC, applicable state banking agencies, the Department of State of the State of Florida and the Secretary of State of the State of Florida to cause the Bank Merger to become effective and (iv) such filings and approvals as are required to be made or obtained under the securities or “Blue Sky” laws of various states in connection with the issuance of the shares of PHC Common Stock pursuant to this Agreement and approval of listing of such PHC Common Stock on the Nasdaq, no consents or approvals of or filings or registrations with any Governmental Entity are necessary in connection with the consummation by PHC or any of its Subsidiaries of the Merger, the Bank Merger, or any of the other transactions contemplated by this Agreement. No consents or approvals of or filings or registrations with any Governmental Entity are necessary in connection with the execution and delivery by PHC of this Agreement.

4.5   Reports.   PHC and each of its Subsidiaries have timely filed all reports, registrations, statements and certifications, together with any amendments required to be made with respect thereto, that they were required to file since December 31, 2016 and prior to the date hereof with Governmental Entities, and have paid all fees and assessments due and payable in connection therewith. There is no unresolved violation or exception of which PHC has been given notice by any Governmental Entity with respect to any such report, registration, statement or certification.

4.6   Financial Statements.

(a)   The audited consolidated balance sheets (including related notes and schedules, if any) of PHC and its Subsidiaries as of December 31, 2018, 2017 and 2016 and the consolidated statements of operations, shareholders’ equity and cash flows (including related notes and schedules, if any) of PHC and its Subsidiaries for each of the three (3) years ended December 31, 2018, 2017 and 2016, and the unaudited interim consolidated financial statements of PHC and its Subsidiaries as of June 30, 2019 and for the period then ended (collectively, the “PHC Financial Statements”) have been previously made available to MBI or its representatives. The PHC Financial Statements have been prepared in accordance with GAAP, and (including the related notes where applicable) fairly present in each case in all material respects (subject, in the case of the unaudited interim statements, to normal year-end adjustments), the consolidated financial position, results of operations and (with respect to the audited year-end financial statements) cash flows of PHC and its Subsidiaries on a consolidated basis as of and for the respective periods ending on the dates thereof, in accordance with GAAP during the periods involved, except as indicated in such statements or in the notes thereto. As of the date hereof, the financial and accounting books and records of PHC and its Subsidiaries have been maintained in all material respects in accordance with GAAP and any other applicable legal and accounting requirements and reflect only actual transactions.

(b)   The call reports of Professional Bank and accompanying schedules, as filed with the FDIC, for each calendar quarter beginning with the quarter ended March 31, 2017, through the Closing Date have been prepared in all material respects in accordance with applicable regulatory requirements, including applicable regulatory accounting principles and practices, through periods covered by such reports.

(c)   There is no transaction, arrangement or other relationship between PHC or any of its Subsidiaries and any unconsolidated or other affiliated entity that, as of the date hereof, is not reflected in the PHC Financial Statements.

(d)   The records, systems, controls, data and information of PHC and its Subsidiaries are recorded, stored, maintained and operated under means (including any electronic, mechanical or photographic process, whether computerized or not) that are under the exclusive ownership and direct

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control of PHC or its Subsidiaries or accountants (including all means of access thereto and therefrom), except for any non-exclusive ownership and non-direct control that would not reasonably be expected to have a Material Adverse Effect on PHC’s (or any PHC Subsidiary’s) system of internal accounting controls.

(e)   Since December 31, 2016, (i) neither PHC nor, to the Knowledge of PHC, any director, officer, employee, auditor, accountant or representative of PHC or Professional Bank has received or otherwise had or obtained Knowledge of any material complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of PHC or any of its Subsidiaries or its internal accounting controls, including any material complaint, allegation, assertion or claim that PHC or any of its Subsidiaries has engaged in questionable accounting or auditing practices, and (ii) no attorney representing PHC or any of its Subsidiaries, or other Person, whether or not employed by PHC or any of its Subsidiaries, has reported evidence of a material violation of securities laws, breach of fiduciary duty or violation of banking or other laws by PHC or any of its Subsidiaries or any of their officers, directors, employees or agents to the Board of Directors or senior management of PHC or any of its Subsidiaries or any committee thereof or to any director or officer of PHC or any of its Subsidiaries. For purposes of this Agreement, “Knowledge” of PHC shall mean the actual knowledge of the individuals listed in Section 4.6(e) of the PHC Disclosure Schedule, after reasonable inquiry.

4.7   Absence of Changes.

(a)   Since December 31, 2016, no event or events have occurred that have had or would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on PHC.

(b)   Since December 31, 2017, PHC and its Subsidiaries have conducted their respective businesses in the ordinary course of business in all material respects (other than in connection with the negotiation of this Agreement and the transactions contemplated hereby).

4.8   Compliance with Applicable Law.

(a)   PHC and each of its Subsidiaries are, and at all times since December 31, 2016, have been, in compliance in all material respects with all laws applicable to their businesses, operations, properties or assets, including Sections 23A and 23B of the Federal Reserve Act, the Equal Credit Opportunity Act, the Fair Housing Act, the Community Reinvestment Act, the Home Mortgage Disclosure Act, the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001, the Bank Secrecy Act and all other applicable fair lending laws and other laws relating to discriminatory business practices. PHC is not aware of any facts or circumstances that would cause it to believe that any nonpublic customer information possessed by it or any of its Subsidiaries has been disclosed to, or accessed by, an unauthorized third party in a manner that would require or cause it or any of its Subsidiaries to undertake any material remedial action. PHC and each of its Subsidiaries have in effect, and at all relevant times since December 31, 2016, held all material Permits necessary for them to own, lease or operate their properties and assets and to carry on their businesses and operations as conducted and, to PHC’s Knowledge, no suspension or cancellation of any such Permits is threatened and there has occurred no violation of, default (with or without notice or lapse of time or both) under or event giving to others any right of revocation, non-renewal, adverse modification or cancellation of, with or without notice or lapse of time or both, any such Permit. PHC is duly registered with the FRB as a bank holding company under the BHC Act. The deposit accounts of Professional Bank are insured by the FDIC through the Deposit Insurance Fund to the fullest extent permitted by law, and all premiums and assessments required to be paid in connection therewith have been paid when due. No Action for the revocation or termination of such deposit insurance is pending or, to the Knowledge of PHC, threatened.

(b)   Since December 31, 2016, neither PHC nor any of its Subsidiaries has received any written notification or communication from any Governmental Entity (i) requiring PHC or any of its Subsidiaries to enter into or consent to the issuance of a cease and desist order, formal or written agreement, directive, commitment, memorandum of understanding, board resolution, extraordinary

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supervisory letter or other formal or informal enforcement action of any kind that imposes any material restrictions on its conduct of business or that relates to its capital adequacy, its credit or risk management policies, its dividend policy, its management or legal compliance, its business or its operations (any of the foregoing, a “PHC Regulatory Agreement”), or (ii) threatening or contemplating revocation or limitation of, or which would have the effect of revoking or limiting, FDIC insurance coverage, and neither PHC nor any of its Subsidiaries has been advised by any Governmental Entity that such Governmental Entity is contemplating issuing or requesting (or is considering the appropriateness of issuing or requesting) any such judgment, order, injunction, rule, agreement, memorandum of understanding, commitment letter, supervisory letter, decree or similar submission. Neither PHC nor any of its Subsidiaries is party to or subject to any PHC Regulatory Agreement.

(c)   Neither PHC nor any of its Subsidiaries (nor, to the Knowledge of PHC, any of their respective directors, executives, representatives, agents or employees) (i) has used or is using any corporate funds for any illegal contributions, gifts, entertainment or other unlawful expenses relating to political activity, (ii) has used or is using any corporate funds for any direct or indirect unlawful payments to any foreign or domestic governmental officials or employees, (iii) has violated or is violating any provision of the Foreign Corrupt Practices Act of 1977, (iv) has established or maintained, or is maintaining, any unlawful fund of corporate monies or other properties or (v) has made any bribe, unlawful rebate, payoff, influence payment, kickback or other unlawful payment of any nature.

4.9   Material Contracts; Defaults.

(a)   Neither PHC nor any of its Subsidiaries is a party to, bound by or subject to any agreement, contract, arrangement, commitment or understanding (whether written or oral) (each a “PHC Material Contract”) (i) that (A) limits or would limit in any respect the manner in which, or the localities in which, PHC or any of its Subsidiaries may conduct its business, (B) obligates PHC or any of its Subsidiaries to conduct business with any Person to the exclusion of others, or (C) other than provisions of standard vendor, service or supply contracts entered into the ordinary course of business, limits or would limit in any way the ability of PHC or any of its Subsidiaries to solicit prospective employees or customers or (ii) any contract or agreement that is a shared loss contract or agreement (including any related or ancillary contract or agreement) with the FDIC.

(b)   Neither PHC nor any of its Subsidiaries, nor, to the Knowledge of PHC, any counterparty or counterparties, is in breach of any PHC Material Contract, and there has not occurred any event that, with the lapse of time or the giving of notice or both, would constitute such a breach.

4.10   State Takeover Laws.   The Board of Directors of PHC has approved this Agreement and the transactions contemplated hereby as required to render inapplicable to this Agreement and such transactions the restrictions on “business combinations” set forth in any applicable “moratorium,” “control share,” “fair price,” “takeover” or “interested shareholder” law.

4.11   PHC Benefit Plans.

(a)   Section 4.11(a) of the PHC Disclosure Schedule sets forth a list of each material PHC Benefit Plan (as defined below). With respect to each material PHC Benefit Plan, PHC has made available to PHC a current, correct and complete copy (or, to the extent no such copy exists, an accurate description) thereof and, to the extent applicable: (i) the PHC Benefit Plan, the related trust agreement or other funding instrument (if any), and any other related documents (including all amendments to such PHC Benefit Plan); (ii) the most recent IRS determination or opinion letter, if applicable; (iii) any summary plan description and summary of material modifications for such PHC Benefit Plan; (iv) all communications to or from the IRS or any other Governmental Entity relating to each PHC Benefit Plan; and (v) for the most recent year, (A) the Form 5500 and attached schedules, (B) audited financial statements, and (C) actuarial valuation reports. For purposes of this Agreement, “PHC Benefit Plans” means any “employee benefit plan,” as defined in Section 3(3) of ERISA, and all other benefit plans, arrangements or agreements, including any other employment, consulting, bonus, incentive or deferred compensation, commission, vacation, stock option or other equity-based award,

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severance, termination, retention, change of control, profit-sharing, insurance, split dollar insurance, fringe benefit, perquisite or other similar plan, program, agreement or commitment, whether written or unwritten, whether or not subject to ERISA, or whether formal or informal, for the benefit of any employee, former employee, individual service provider, former individual service provider, director or former director of PHC or any of its Subsidiaries entered into, maintained or contributed to by PHC or any of its Subsidiaries or to which PHC or any of its Subsidiaries is obligated to contribute, or with respect to which PHC or any of its Subsidiaries has any liability, direct or indirect, contingent or otherwise, other than any Multiemployer Plan.

(b)   (i) Each PHC Benefit Plan has been established, operated and administered in all material respects in accordance with its terms, and in compliance with the applicable provisions of ERISA, the Code and other laws; (ii) each PHC Benefit Plan which is intended to be qualified within the meaning of Section 401(a) of the Code is so qualified (and each corresponding trust is exempt under Section 501 of the Code) and has received or is the subject of a favorable determination letter or uses a prototype document that is subject to a favorable opinion letter relating to the most recently completed IRS remedial amendment period cycle, and, to the Knowledge of PHC, nothing has occurred (whether by action or failure to act) that would reasonably be expected to adversely affect the qualified status of any such PHC Benefit Plan (or the exempt status of any related trust); (iii) no “reportable event” (as such term is defined in Section 4043 of ERISA) that would reasonably be expected to result in liability has occurred with respect to any PHC Benefit Plan, and no non-exempt “prohibited transaction” (as such term is defined in Section 406 of ERISA and Section 4975 of the Code) has been engaged in by PHC or any of its Subsidiaries with respect to any PHC Benefit Plan that has resulted, or would reasonably be expected to result, in any material liability with respect to any PHC Benefit Plan; (iv) no liability under Subtitle C or D of Title IV of ERISA has been or would reasonably be expected to be incurred by PHC or any of its Subsidiaries with respect to any ongoing, frozen or terminated “single-employer plan,” within the meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by any of PHC or its Subsidiaries, or the single-employer plan of any ERISA Affiliate; (v) there does not now exist, nor do any circumstances exist that would reasonably be expected to result in, any Controlled Group Liability that would be a liability of PHC or any of its Subsidiaries; (vi) except as expressly contemplated by this Agreement, there is no present intention by PHC that any PHC Benefit Plan be materially amended, suspended or terminated, or otherwise modified to change benefits (or the levels thereof) in a manner that results in an increased cost to PHC or any of its Subsidiaries (other than an immaterial increase in administrative costs or changes required by law) under any PHC Benefit Plan at any time within the twelve (12) months immediately following the date hereof; (vii) no PHC Benefit Plan provides for post-employment or post-retirement health, medical or life insurance benefits for current, former or retired employees of PHC or any of its Subsidiaries, except as required under Section 4980B of the Code or otherwise except as may be required pursuant to any other laws; (viii) each of the PHC Benefit Plans that is intended to satisfy the requirements of Section 125, 423 or 501(c)(9) of the Code satisfies such requirements; and (ix) all contributions required to have been made under the terms of any PHC Benefit Plan or pursuant to ERISA and the Code have been timely made, and, to the extent required, all obligations in respect of each PHC Benefit Plan have been properly accrued and reflected in the PHC Financial Statements.

(c)   With respect to each PHC Benefit Plan that is subject to Title IV of ERISA, as of the Effective Time, the assets of each such PHC Benefit Plan will be at least equal in value to the present value of the accrued benefits (vested and unvested) of the participants in such PHC Benefit Plan on a termination and projected benefit obligation basis, based on the actuarial methods and assumptions indicated in the most recent applicable actuarial valuation reports.

(d)   Neither PHC nor any of its Subsidiaries (nor any ERISA Affiliate) maintains or contributes to a Multiemployer Plan within the meaning of Section 4001(a)(iii) of ERISA or a “multiple employer welfare arrangement” (as defined in Section 3(40) or ERISA).

(e)   With respect to any PHC Benefit Plan, (i) no actions, suits or claims (other than routine claims for benefits in the ordinary course) are pending or, to the Knowledge of PHC, threatened, (ii) to the Knowledge of PHC, no facts or circumstances exist that would reasonably be expected to give rise to any such actions, suits or claims, (iii) no written or oral communication has been received from the

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PBGC in respect of any PHC Benefit Plan subject to Title IV of ERISA concerning the funded status of any such plan or any transfer of assets or liabilities from any such plan in connection with the transactions contemplated herein, (iv) no administrative investigation, audit or other administrative proceeding by the Department of Labor, the PBGC, the IRS or any other Governmental Entity is pending, in progress or, to the Knowledge of PHC, threatened (including any routine requests for information from the PBGC), and (v) there is no judgment, decree, injunction, rule or order of any Governmental Entity or arbitrator outstanding against or in favor of any PHC Benefit Plan or any fiduciary thereof  (other than rules of general applicability). With respect to each PHC Benefit Plan that is subject to Title IV or Section 302 of ERISA or Section 412, 430 or 4971 of the Code, (A) no PHC Benefit Plan has failed to satisfy minimum funding standards (within the meaning of Section 412 or 430 of the Code or Section 302 of ERISA), whether or not waived; and (B) there has been no determination that any PHC Benefit Plan is, or is expected to be, in “at risk” status (within the meaning of Section 430 of the Code or Section 303 of ERISA). None of the assets of PHC, any of its Subsidiaries, or any ERISA Affiliate are subject to any Lien arising under ERISA or Subchapter D of Chapter 1 of the Code, and no condition exists that presents a material risk of any such Lien arising.

(f)   Except as described in Section 4.11(f) of the PHC Disclosure Schedule, neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will result in (i) any payment or benefit (including severance, an “excess parachute payment” (within the meaning of Section 280G of the Code), forgiveness of indebtedness or otherwise) becoming due to any current or former employee, officer or director of PHC or any of its Subsidiaries from PHC or any of its Subsidiaries under any PHC Benefit Plan or otherwise, (ii) any increase in compensation or benefits otherwise payable under any PHC Benefit Plan, (iii) any acceleration of the time of payment or vesting of any such benefits, (iv) the requirement to fund or increase the funding of any such benefits (through a grantor trust or otherwise), (v) except as otherwise provided in this Agreement, any limitation on the right of PHC or any of its Subsidiaries to (A) amend, merge or terminate any PHC Benefit Plan or related trust or (B) receive a reversion of assets from any PHC Benefit Plan or related trust, (vi) the renewal or extension of the term of any agreement regarding the compensation of any current or former employee, director or individual service provider of PHC or any of its Subsidiaries, or (vii) any payments under any of the PHC Benefit Plans or otherwise that would not be deductible under Section 280G of the Code.

(g)   No PHC Benefit Plan provides for the gross-up or reimbursement of Taxes under Section 409A or 4999 of the Code.

4.12   Approvals.   As of the date of this Agreement, PHC knows of no reason why all Regulatory Approvals required for the consummation of the transactions contemplated by this Agreement should not be obtained on a timely basis.

4.13   Opinion.   The Board of Directors of PHC has received the opinion of Stephens Inc. to the effect that, as of the date of such opinion, and based upon and subject to the factors and assumptions set forth therein, the Exchange Ratio was fair, from a financial point of view, to PHC.

4.14   PHC Information.   None of the information supplied or to be supplied by PHC for inclusion or incorporation by reference in the Proxy Statement or in the Form S-4, or in any other application, notification or other document filed with any Governmental Entity in connection with the transactions contemplated by this Agreement, or any amendment or supplement thereto will, at the time the Proxy Statement or any such amendment or supplement thereto is first mailed to MBI’s shareholders or PHC’s shareholders or at the time MBI’s shareholders vote on the matters constituting the MBI Shareholder Approval or PHC’s shareholders vote on the matters constituting the PHC Shareholder Approval or at the time the Form S-4 or any such amendment or supplement becomes effective under the Securities Act or at the Effective Time, or at the time any such other applications, notifications or other documents or any such amendments or supplements thereto are so filed, as the case may be, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. No representation or warranty is made by PHC in this Section 4.10 with respect to statements made or incorporated by reference therein based on information supplied by MBI or any of its representatives in

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writing expressly for inclusion or incorporation by reference in the Proxy Statement, the Form S-4 or such other applications, notifications or other documents. If at any time prior to the Effective Time any event should be discovered by PHC or any of its Subsidiaries which should be set forth in an amendment or supplement to the Proxy Statement, the Form S-4 or in any amendment or supplement to any such other applications, notifications or other documents, PHC shall promptly so inform MBI.

4.15   Litigation.   There is no Action pending or, to the Knowledge of PHC, threatened against or affecting PHC or any of its Subsidiaries, any of their respective properties or assets, or any present (or, to the Knowledge of PHC, former) officer, director or employee of PHC or any of its Subsidiaries in such individual’s capacity as such, other than any immaterial, ordinary routine Action incidental to the business of PHC and its Subsidiaries. Neither PHC nor any of its Subsidiaries nor any of their respective properties or assets is subject to any outstanding judgment, order, injunction, rule or decree of any Governmental Entity (other than those of general application that apply to similarly situated banks and bank holding companies or their Subsidiaries).

4.16   Labor Matters.

(a)   There are no collective bargaining agreements or other labor union contracts, agreements or understandings applicable to any employees of PHC or any of its Subsidiaries. There is no labor dispute, strike, work stoppage, work slowdown or lockout, or, to the Knowledge of PHC, threat thereof, by or with respect to any employees of PHC or any of its Subsidiaries, and there has been no labor dispute, strike, work stoppage, work slowdown, lockout or other work related disruption since December 31, 2016. To the Knowledge of PHC, there are no organizational efforts with respect to the formation of a collective bargaining unit or similar employee representative body presently being made or threatened involving employees of PHC or any of its Subsidiaries. PHC and its Subsidiaries are in compliance in all material respects with all applicable laws respecting employment and employment practices, terms and conditions of employment, wages, hours of work, employee classification, family and medical leave, occupational safety and health, disability, non-discrimination in employment and workers’ compensation. No Action asserting that PHC or any of its Subsidiaries has committed an unlawful employment practice or an unfair labor practice (within the meaning of the National Labor Relations Act of 1935) or seeking to compel PHC or any of its Subsidiaries to bargain with any labor organization as to wages or conditions of employment is pending or, to the Knowledge of PHC, threatened with respect to PHC or any of its Subsidiaries before the National Labor Relations Board, the Equal Employment Opportunity Commission, the Department of Labor or any other Governmental Entity.

(b)   Neither PHC nor any of its Subsidiaries is a party to, or otherwise bound by, any consent decree with, or citation by, any Governmental Entity relating to employees or employment practices. None of PHC, any of its Subsidiaries or any of its or their executive officers has received within the past three (3) years any notice of intent by any Governmental Entity responsible for the enforcement of labor or employment laws to conduct an investigation relating to PHC or any of its Subsidiaries and, to the Knowledge of PHC, no such investigation is in progress.

4.17   Environmental Matters.

(a)   (i) Neither PHC’s conduct nor its operation or the conduct or operation of its Subsidiaries nor any condition of any property presently or previously owned, leased or operated by any of them (including in a fiduciary or agency capacity), violates or has violated Environmental Laws; (ii) there has been no release of any Hazardous Substance by PHC or any of its Subsidiaries in any manner that has given or would reasonably be expected to give rise to any remedial obligation, corrective action requirement or liability under applicable Environmental Laws; (iii) since December 31, 2017, neither PHC nor any of its Subsidiaries has received any written claims, notices, demand letters or requests for information (except for such claims, notices, demand letters or requests for information the subject matter of which has been resolved prior to the date of this Agreement) from any Governmental Entity or any third party asserting that PHC or any of its Subsidiaries or the operation or condition of any property ever owned, leased, operated or held as collateral or in a fiduciary capacity by any of them are or were in violation of or otherwise are alleged to have liability under any Environmental Law, including responsibility (or potential responsibility) for the cleanup or other remediation of any

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pollutants, contaminants or hazardous or toxic wastes, substances or materials at, on, beneath or originating from any such property; (iv) no Hazardous Substance has been disposed of, arranged to be disposed of, released or transported in violation of any applicable Environmental Law, or in a manner that has given rise to, or that would reasonably be expected to give rise to, any liability under any Environmental Law, from any current or former properties or facilities while owned or operated by PHC or any of its Subsidiaries or as a result of any operations or activities of PHC or any of its Subsidiaries at any location, and no other condition has existed or event has occurred with respect to PHC or any of its Subsidiaries or any such properties or facilities that, with notice or the passage of time, or both, would be reasonably likely to result in liability under Environmental Laws, and Hazardous Substances are not otherwise present at or about any such properties or facilities in amount or condition that has resulted in or could reasonably be expected to result in liability to PHC or any of its Subsidiaries under any Environmental Law; and (v) neither PHC or its Subsidiaries nor any of their respective properties or facilities are subject to, or are, to the Knowledge of PHC, threatened to become subject to, any liabilities relating to any suit, settlement, court order, administrative order, regulatory requirement, judgment or claim asserted or arising under any Environmental Law or any agreement relating to environmental liabilities.

4.18   Loan Matters.

(a)   There are no outstanding loans to any directors, executive officers and principal shareholders (as such terms are defined in the FRB’s Regulation O (12 C.F.R. Part 215)) of PHC or any of its Subsidiaries on which the borrower is paying a rate other than that reflected in the note or other relevant credit or security agreement or on which the borrower is paying a rate which was below market at the time the loan was originated.

(b)   Each outstanding loan held by PHC or any of its Subsidiaries (including loans held for resale to investors) was solicited and originated, and is and has been administered and, where applicable, serviced, and the relevant loan files are being maintained, in accordance with the relevant notes or other credit or security documents, PHC’s or its applicable Subsidiary’s written underwriting standards (and, in the case of loans held for resale to investors, the underwriting standards, if any, of the applicable investors) and with all applicable laws in all material respects.

(c)   None of the agreements pursuant to which PHC or any of its Subsidiaries has sold loans or pools of loans or participations in loans or pools of loans contains any obligation to repurchase such loans or interests therein.

(d)   Each outstanding loan held by PHC or any of its Subsidiaries (i) is evidenced by notes, agreements or other evidences of indebtedness that are true, genuine and what they purport to be, (ii) to the extent secured, has been secured by valid Liens which have been perfected and (iii) is a legal, valid and binding obligation of the obligor named therein, enforceable in accordance with its terms (subject to the Bankruptcy and Equity Exception).

(e)   With respect to the loans held by PHC or any of its Subsidiaries, PHC has provided or made available to MBI a list of the following: (i) all loans (A) that as of June 30, 2019, are contractually past due ninety (90) days or more in the payment of principal or interest, (B) that as of June 30, 2019 are on non-accrual status, (C) that as of June 30, 2019 are classified as “Other Loans Specially Mentioned,” “Special Mention,” “Substandard,” “Doubtful,” “Loss,” “Classified,” “Criticized,” “Watch List,” or words of similar import, together with the principal amount of and accrued and unpaid interest on each such loan and the identity of the obligor thereunder, (D) where, as of June 30, 2019, the interest rate terms have been reduced or the maturity dates have been extended subsequent to the agreement under which the loan was originally created due to concerns regarding the borrower’s ability to pay in accordance with such initial terms, (E) where a specific reserve allocation exists in connection therewith or (F) where a borrower, customer or other party has notified it during the past twelve (12) months of, or has asserted against it, in each case in writing, any “lender liability” or similar claim and, to the Knowledge of PHC, each borrower, customer or other party which has given any oral notification of, or orally asserted to or against it, any such claim; and (ii) all assets classified by it as real estate acquired through foreclosure or in lieu of foreclosure, including in-substance foreclosures, and all other assets currently held that were acquired through foreclosure or in lieu of foreclosure.

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(f)   The allowance for loan losses reflected in the PHC Financial Statements was (and will be for periods ended after June 30, 2019) in compliance with its methodology for determining the adequacy of allowance for loan losses as well as the standards established by applicable Governmental Entities and the Financial Accounting Standards Board and was adequate under such standards.

4.19   Intellectual Property.   PHC and each of its Subsidiaries either owns or licenses all Intellectual Property used by it and necessary for the conduct of its businesses as currently conducted. Neither PHC nor any of its Subsidiaries is the licensor of material Intellectual Property to any third party. None of the Intellectual Property used by PHC or any of its Subsidiaries violates or infringes upon the Intellectual Property rights of any other Person in any material respect. As of the date hereof, there is no Action pending or, to the Knowledge of PHC, threatened, which challenges the rights of PHC or any of its Subsidiaries with respect to Intellectual Property used in its business or which asserts any violation or infringement of the Intellectual Property rights of any other Person.

4.20   Transactions with Affiliates.   There are no agreements, contracts, plans, arrangements or other transactions between PHC or any of its Subsidiaries, on the one hand, and any (i) officer or director of PHC or any of its Subsidiaries, (ii) record or beneficial owner of five percent (5%) or more of the voting securities of PHC, (iii) affiliate or family member of any such officer, director or record or beneficial owner or (iv) any other affiliate of PHC, on the other hand, except those of a type available to non-affiliates of PHC generally, and compensation or benefit arrangements with officers and directors.

4.21   Derivative Instruments and Transactions.   All Derivative Transactions, whether entered into for PHC’s own account or for the account of one or more of its Subsidiaries or their customers, if any, were entered into (i) in the ordinary course of business consistent with past practice and in accordance with prudent business practices and all applicable laws and (ii) with counterparties believed to be financially responsible at the time. Each Derivative Transaction constitutes the valid and legally binding obligation of PHC or one of its Subsidiaries, enforceable in accordance with its terms (subject to the Bankruptcy and Equity Exception), and is, as of the date hereof, in full force and effect. Neither PHC nor its Subsidiaries, nor, to the Knowledge of PHC, any other party thereto, is in breach of any of its obligations under any such agreement or arrangement.

4.22   Trust Business.   Neither PHC nor any of its Subsidiaries is authorized to act in any capacity as a corporate fiduciary.

4.23   Taxes.

(a)   All Tax Returns required to have been filed by or with respect to PHC or its Subsidiaries have been timely filed (taking into account any extension of time to file granted or obtained), and such Tax Returns are accurate and complete in all material respects. All Taxes shown to be payable on such Tax Returns have been paid or will be timely paid and all other Taxes required to be paid by PHC or its Subsidiaries have been paid or will be timely paid, except for those Taxes being contested in good faith or for which adequate reserves have been established in the PHC Financial Statements or will be established in financial statements of PHC to be provided to MBI after the date hereof pursuant to this Agreement. No deficiency for any Tax has been asserted or assessed by a Governmental Entity in writing against PHC or any of its Subsidiaries that has not been satisfied by payment, settled, withdrawn or adequately reserved for. There are no Liens for Taxes on the assets of PHC or any of its Subsidiaries (except for statutory Liens for Taxes not yet delinquent). There are no outstanding waivers or agreements extending the period for assessment of Taxes for any period with respect to any Tax to which PHC or any of its Subsidiaries may be subject. All material Taxes not yet due and payable by PHC or its Subsidiaries have been properly accrued on the financial books and records of PHC and its Subsidiaries in accordance with GAAP.

(b)   None of PHC or its Subsidiaries is a party to or bound by or has any obligation under any Tax allocation sharing or similar agreement or arrangement (other than an agreement or arrangement solely among PHC and its Subsidiaries).

(c)   PHC and its Subsidiaries have complied with all applicable laws relating to withholding of Taxes (including withholding of Taxes pursuant to Sections 1441, 1442, 3121 and 3402 of the Code and similar provisions under any other domestic or foreign tax laws) and have, within the time and the

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manner prescribed by law, paid over to the proper Governmental Entities all amounts required to be so withheld and paid over under applicable laws. PHC and each of its Subsidiaries have complied with all information reporting requirements imposed by the Code (and similar provisions under any other domestic or foreign Tax laws).

(d)   As of the date of this Agreement, there are no audits, claims or controversies now pending or, to the Knowledge of PHC, threatened against or with respect to PHC or any of its Subsidiaries with respect to any Tax or failure to file any Tax Return.

(e)   Neither PHC nor any of its Subsidiaries has been a party to any distribution occurring in the last five (5) years in which the parties to such distribution treated the distribution as one to which Section 355 of the Code applied.

(f)   No closing agreement pursuant to Section 7121 of the Code (or any similar provision of state, local or foreign law) has been entered into by or with respect to PHC or any of its Subsidiaries.

(g)   Neither PHC nor any of its Subsidiaries has engaged in any “listed transaction,” as defined in Section 6707A(c)(2) of the Code and the Treasury Regulations thereunder, as a principal, as a material advisor or otherwise.

(h)   Neither PHC nor any of its Subsidiaries (i) is or has, since December 31, 2008, been a member of an affiliated group (other than a group the common parent of which is PHC or a PHC Subsidiary) filing a consolidated, joint, combined or unitary Tax Return or (ii) has any liability for Taxes of any Person (other than PHC and any of its Subsidiaries) arising from the application of Treasury Regulations Section 1.1502-6 or any analogous provision of state, local or foreign law, or as a transferee or successor, by contract, or otherwise.

(i)   Neither PHC nor any of its Subsidiaries has taken or agreed to take any action or has any knowledge or any fact or circumstance that could reasonably be expected to prevent the Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code.

4.24   Community Reinvestment Act.   Professional Bank is in compliance with the applicable provisions of the Community Reinvestment Act of 1977 and the regulations promulgated thereunder and has received a Community Reinvestment Act rating of  “satisfactory” or better in its most recently completed exam, and PHC has no Knowledge of the existence of any fact or circumstance or set of facts or circumstances which could reasonably be expected to result in Professional Bank having its current rating lowered.

4.25   Insurance.   PHC and each of its Subsidiaries are presently insured, with what PHC believes to be financially sound and reputable insurance companies, against such risks and for such amounts as Previously Disclosed (which coverage is in accordance with all contractual and legal requirements applicable to PHC and its Subsidiaries). All of the policies, bonds and other arrangements providing for the foregoing (the “PHC Insurance Policies”) are in full force and effect, the premiums due and payable thereon have been or will be timely paid through the Effective Time, and there is no breach or default (and no condition exists or event has occurred that, with the giving of notice or lapse of time or both, would constitute such a breach or default) by PHC or any of its Subsidiaries under any of the PHC Insurance Policies or, to the Knowledge of PHC, by any other party to the PHC Insurance Policies, and neither PHC nor any of its Subsidiaries has received any notice of cancellation or non-renewal of any PHC Insurance Policy nor, to the Knowledge of PHC, is the termination of any such policies threatened by the insurer, and there is no claim for coverage by PHC or any of its Subsidiaries pending under any of such PHC Insurance Policies as to which coverage has been denied or disputed by the underwriters of such PHC Insurance Policies or in respect of which such underwriters have reserved their rights.

4.26   Title.   PHC and its Subsidiaries have good and marketable title in fee simple to all real property owned by them and good and valid title to all personal property owned by them, in each case free and clear of all Liens, except for Liens reflected in the PHC Financial Statements and statutory Liens for amounts not yet due and payable and such other Liens as are not material. Any real property and facilities held under lease by PHC or its Subsidiaries are valid, subsisting and enforceable leases and none of such real property or facilities leases will be adversely affected by the consummation of the Merger or the Bank Merger.

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4.27   Investment Portfolio.   Except for pledges to secure public and trust deposits or otherwise made in the ordinary course of business, Liens securing repurchase obligations incurred in the ordinary course of business consistent with past practice, and for FHLB stock, none of the investment securities reflected in the PHC Financial Statements and none of the investment securities since acquired by PHC or any of its Subsidiaries is subject to any restriction, whether contractual or statutory, which impairs the ability of PHC or any of its Subsidiaries to freely dispose of such investment at any time, other than those restrictions imposed on securities held to maturity under GAAP.

4.28   Books and Records.   The corporate record books of PHC and its Subsidiaries are complete and accurate in all material respects and reflect all meetings, consents and other actions of the boards of directors and shareholders of PHC and its Subsidiaries.

4.29   Indemnification.   To the Knowledge of PHC, as of the date hereof no action or failure to take action by any present or former director, officer, employee or agent of PHC or any of its Subsidiaries has occurred which would give rise to a claim by any such individual for indemnification from PHC or any of its Subsidiaries.

4.30   Broker’s Fees.   Neither PHC nor any of its Subsidiaries nor any of their respective officers, directors, employees or agents has utilized any broker, finder or financial advisor or incurred any liability for any broker’s fees, commissions or finder’s fees in connection with the Merger or any other transactions contemplated by this Agreement, other than to Stephens Inc.

4.31   Financing.   Prior to the Closing, PHC will have sufficient cash and shares of PHC Common Stock available for issuance as are necessary to satisfy all of its obligations under this Agreement and to consummate the transactions contemplated hereby, including the payment of the aggregate Merger Consideration to holders of MBI Common Stock and MBI equity awards and to pay all related expenses of PHC.

4.32   No Other Representations.   PHC acknowledges that MBI makes no representations or warranties as to any matter whatsoever except as expressly set forth in Article III, including with respect to any information furnished, disclosed or made available to PHC or its representatives in the course of their due diligence investigation and the negotiation of this Agreement. The representations and warranties set forth in Article III are made solely by MBI, and no representative of MBI shall have any responsibility or liability related thereto. PHC acknowledges and agrees that it has not relied on any representation, warranty or other statement by any person on behalf MBI or any of its Subsidiaries, other than the representations and warranties expressly contained in Article III of this Agreement and that all other representations and warranties are specifically disclaimed.

ARTICLE V

COVENANTS RELATING TO CONDUCT OF BUSINESS

5.1   Conduct of MBI Business Prior to the Effective Time.   Except as expressly contemplated or permitted by this Agreement or as required by applicable law or a Governmental Entity, or with the prior written consent of PHC (which shall not be unreasonably withheld, conditioned or delayed), or as Previously Disclosed, during the period from the date of this Agreement to the Effective Time or earlier termination of this Agreement, MBI shall, and shall cause each of its Subsidiaries to, (a) conduct its business in the ordinary course consistent with past practice, (b) use commercially reasonable best efforts to maintain and preserve intact its business organization and advantageous business relationships, including with its employees, and (c) take no action that is intended to or would reasonably be expected to adversely affect or materially delay the ability of MBI or PHC or any of their respective Subsidiaries to obtain any necessary Regulatory Approvals or to timely consummate the transactions contemplated hereby.

5.2   MBI Forbearances.   During the period from the date of this Agreement to the Effective Time or earlier termination of this Agreement, except as expressly contemplated or permitted by this Agreement, as Previously Disclosed or as required by applicable law or a Governmental Entity, MBI shall not, and shall not permit any of its Subsidiaries, without the prior written consent of PHC (which shall not be unreasonably withheld, conditioned or delayed), to:

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(a)   Capital Stock.   Issue, sell or otherwise permit to become outstanding, or authorize the creation of, any additional shares of its capital stock, other ownership interests or any Rights, other than issuances of shares of MBI Common Stock in respect of any exercise of a MBI Stock Option that is outstanding on the date hereof in accordance with its terms as in effect on the date hereof.

(b)   Other Securities.   Issue or repurchase any other capital securities, Voting Debt, or other securities.

(c)   Dividends, Etc.   (i) Make, declare, pay or set aside for payment any dividend or distribution on its capital stock or other ownership interests (other than dividends from wholly owned Subsidiaries to MBI or to another wholly owned Subsidiary of MBI); or (ii) directly or indirectly adjust, split, combine, redeem, reclassify, purchase or otherwise acquire, any shares of its capital stock, other ownership interests or Rights.

(d)   Compensation and Employment, Etc.   Except (i) as required by applicable law or any MBI Benefit Plan (including for this purpose, if applicable, in order to avoid Tax penalties under Section 409A of the Code), or (ii) with respect to transactions Previously Disclosed to PHC, (A) enter into, modify, amend, renew or terminate any employment, consulting, severance, change in control, or similar agreement or arrangement with any director or Executive Officer (as defined in Regulation O issued pursuant to the Federal Reserve Act) of MBI or any of its Subsidiaries; (B) grant any salary or wage increase or increase any employee benefit (including incentive or bonus payments), other than (I) payment of normal individual increases in salary (not to exceed 5% per annum in the aggregate for all employees), (II) payment of accumulated but unused sick leave during a longer term illness period or pending commencement of disability benefits to rank and file employees, and (III) payment of severance, in each case in the ordinary course of business consistent with past practice; or (C) hire and new Executive Officers.

(e)   Benefit Plans.   Except (i) as required by applicable law (including for this purpose, if applicable, in order to avoid Tax penalties under Section 409A of the Code), (ii) required by any MBI Benefit Plan, or (iii) with respect to transactions Previously Disclosed to PHC, enter into, establish, adopt, modify, amend, renew, or terminate any MBI Benefit Plan, or take any action to grant, pay or accelerate the vesting of compensation or benefits payable thereunder.

(f)   Dispositions.   Sell, transfer, mortgage or encumber any of its assets or properties except in the ordinary course of business consistent with past practice, and in the case of a sale or transfer, at fair value, or sell or transfer any portion of its deposit liabilities.

(g)   Leases or Licenses.   Enter into, modify, amend or renew any data processing contract, service provider agreement, or any lease, license or maintenance agreement relating to real or personal property or Intellectual Property, other than the renewal of an agreement that is necessary or advisable to operate its business in the ordinary course consistent with past practice, or permit to lapse its rights in any material Intellectual Property.

(h)   Acquisitions.   Acquire (other than by way of foreclosures or acquisitions of control in a bona fide fiduciary capacity or in satisfaction of debts contracted prior to the date hereof in good faith, in each case in the ordinary course of business consistent with past practice) all or any portion of, the assets, business or properties of any Person.

(i)   Loans, Loan Participations and Servicing Rights.   Sell or acquire any loans (excluding originations) or loan participations, except in the ordinary course of business consistent with past practice or to bring a loan in compliance with legal lending limits, or sell or acquire any servicing rights.

(j)   Governing Documents.   Amend its organizational documents or the organizational documents of any of its Subsidiaries (or similar governing documents).

(k)   Accounting Methods.   Implement or adopt any material change in its accounting principles, practices or methods, other than as may be required by GAAP or any Governmental Entity.

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(l)   Contracts.   Except with respect to transactions Previously Disclosed to PHC, or to the extent permitted by Section 5.2(g), enter into or terminate any MBI Material Contract or amend or modify in any material respect or renew any existing MBI Material Contract other than the renewal of an agreement that is necessary or advisable to operate its business in the ordinary course consistent with past practice.

(m)   Claims.   Except in the ordinary course of business and involving an amount not in excess of  $125,000 (exclusive of any amounts paid directly or reimbursed to MBI or any of its Subsidiaries under any insurance policy maintained by MBI or any of its Subsidiaries), settle any claim, action or proceeding against it. Notwithstanding the foregoing, no settlement shall be made if it creates an adverse precedent for other similar claims, which in the aggregate, would reasonably be expected to be material to MBI and its Subsidiaries, taken as a whole.

(n)   Deposit Taking and Other Bank Activities.   In the case of Marquis Bank (i) voluntarily make any material changes in or to its deposit mix; (ii) materially increase or decrease the rate of interest paid on time deposits or on certificates of deposit, except pursuant to policies consistent with past practice and competitive factors in the marketplace or to be equivalent to interest rate offerings of Professional Bank; (iii) open any new branch or deposit taking facility; or (iv) close or relocate any existing branch or other facility.

(o)   Investments.   (i) Purchase any equity securities or purchase any debt securities, other than securities (A) fully guaranteed as to principal and interest by the U.S. government, (B) with a weighted average life of not more than five (5) years and (C) otherwise in the ordinary course of business consistent with its current investment policy; (ii) enter into or acquire any derivatives contract or structured note except in the ordinary course of business consistent with past practice; or (iii) enter into any new, or modify, amend or extend the terms of any existing, contracts relating to the purchase or sale of financial or other futures, or any put or call option relating to cash, securities or commodities or any interest rate swap agreements or other agreements relating to the hedging of interest rate risk except in the ordinary course of business consistent with past practice.

(p)   Capital Expenditures.   Purchase any fixed assets (by installment purchase, capital lease, synthetic lease or otherwise) where the amount paid or committed thereof is in excess of  $100,000 individually or $500,000 in the aggregate, except for emergency repairs or replacements.

(q)   Lending.   (i) Make any material changes in its policies concerning loan underwriting or which classes of Persons may approve loans or fail to comply with such policies as previously provided; (ii) make any loans or extensions of credit except in the ordinary course of business consistent with past practice, provided any individual fully unsecured loan or extension of credit in excess of 5% of MBI’s legal lending limit as of the date hereof or any individual secured loan or extension of credit in excess of 50% of MBI’s legal lending limit as of the date hereof in a single transaction or 75% of MBI’s legal lending limit as of the date hereof to a single borrower shall require the prior written approval of the President or Chief Credit Officer or Credit Administrator of Professional Bank, which approval or rejection shall be given in writing within two (2) Business Days after the loan package is delivered to such individual (and if not so rejected within such two (2) Business Day period, such loan request shall be deemed approved) or (iii) make any loans or extensions of credit that, individually or in the aggregate, would cause the aggregate principal balance of MBI’s commercial real estate loan portfolio to equal or exceed 105% of such aggregate principal balance as of June 30, 2019.

(r)   Risk Management.   Except as required by applicable law or regulation or guidance or at the direction of a Governmental Entity, (i) implement or adopt any material change in its interest rate and other risk management policies, procedures or practices; (ii) fail to follow its existing policies or practices with respect to managing its exposure to interest rate and other risk; or (iii) fail to use commercially reasonable means to avoid any material increase in its aggregate exposure to interest rate risk.

(s)   Indebtedness and Guaranties.   Incur any indebtedness for borrowed money other than in the ordinary course of business consistent with past practice with a term not in excess of one year, or incur, assume or become subject to, whether directly or by way of any guarantee or otherwise, any

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obligations or liabilities (absolute, accrued, contingent or otherwise) of any other Person, other than the issuance of letters of credit in the ordinary course of business and in accordance with the restrictions set forth in Section 5.2(q) other than FHLB borrowings.

(t)   New Lines of Business.   Develop, market or implement any new line of business.

(u)   Tax Matters.   Make, change or revoke any material tax election, file any materially amended Tax Return, enter into any Tax closing agreement, or settle or agree to compromise any material liability with respect to disputed Taxes, in each case except in the ordinary course of business consistent with past practice.

(v)   Reorganization.   Take any action or knowingly fail to take any action that could reasonably be expected to prevent the Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code.

(w)   Performance of Obligations.   Take any action that is likely to materially impair or delay MBI’s ability to perform any of its obligations under this Agreement or Marquis Bank’s ability to perform any of its obligations under the Bank Merger Agreement.

(x)   Commitments.   Agree or commit to do any of the foregoing.

5.3   Conduct of PHC Business Prior to the Effective Time.   Except as expressly contemplated or permitted by this Agreement or as required by applicable law or a Governmental Entity, or with the prior written consent of MBI (which shall not be unreasonably withheld, conditioned or delayed) or as Previously Disclosed, during the period from the date of this Agreement to the Effective Time or earlier termination of this Agreement, PHC shall, and shall cause each of its Subsidiaries to, (a) conduct its business in the ordinary course, (b) use commercially reasonable best efforts to maintain and preserve intact its business organization and advantageous business relationships, including with its employees, and (c) take no action that is intended to or would reasonably be expected to adversely affect or materially delay the ability of MBI or PHC or any of their respective Subsidiaries to obtain any necessary Regulatory Approvals or to consummate the transactions contemplated hereby.

5.4   PHC Forbearances.   During the period from the date of this Agreement to the Effective Time or earlier termination of this Agreement, except as expressly contemplated or permitted by this Agreement, as Previously Disclosed or as required by applicable law or a Governmental Entity, PHC shall not, and shall not permit any of its Subsidiaries, without the prior written consent of MBI (which shall not be unreasonably withheld, conditioned or delayed), to:

(a)   Capital Stock.   Issue, sell or otherwise permit to become outstanding, or authorize the creation of, any additional shares of its capital stock, other ownership interests or any Rights, other than issuances of shares of PHC Common Stock in respect of any exercise of a PHC Stock Option that is outstanding on the date hereof in accordance with its terms as in effect on the date hereof.

(b)   Other Securities.   Issue or repurchase any other capital securities, Voting Debt, or other securities.

(c)   Dividends, Etc.   (i) Make, declare, pay or set aside for payment any dividend or distribution on its capital stock or other ownership interests (other than dividends from wholly owned Subsidiaries to PHC or to another wholly owned Subsidiary of PHC); or (ii) directly or indirectly adjust, split, combine, redeem, reclassify, purchase or otherwise acquire, any shares of its capital stock, other ownership interests or Rights.

(d)   Compensation; Employment, Etc.   Except (i) as required by applicable law or any PHC Benefit Plan (including for this purpose, if applicable, in order to avoid Tax penalties under Section 409A of the Code), or (ii) with respect to transactions Previously Disclosed to PHC, (A) enter into, modify, amend, renew or terminate any employment, consulting, severance, change in control, or similar agreement or arrangement with any director or Executive Officer of PHC or any of its Subsidiaries; (B) grant any salary or wage increase or increase any employee benefit (including incentive or bonus payments), other than (I) payment of normal individual increases in salary (not to exceed 5% per annum in the aggregate for all employees), (II) payment of accumulated but unused sick

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leave during a longer term illness period or pending commencement of disability benefits to rank and file employees, and (III) payment of severance, in each case, in the ordinary course of business consistent with past practice; or (C) hire any new Executive Officers.

(e)   Benefit Plans.   Except (i) as required by applicable law (including for this purpose, if applicable, in order to avoid Tax penalties under Section 409A of the Code), (ii) required by any PHC Benefit Plan, or (iii) with respect to transactions Previously Disclosed to MBI enter into, establish, adopt, modify, amend, renew, or terminate any PHC Benefit Plan, or take any action to accelerate the vesting of benefits payable thereunder.

(f)   Dispositions.   Sell, transfer, mortgage or encumber any of its assets or properties except in the ordinary course of business consistent with past practice, and in the case of a sale or transfer, at fair value, or sell or transfer any portion of its deposit liabilities.

(g)   Leases or Licenses.   Enter into, modify, amend or renew any data processing contract, service provider agreement, or any lease, license or maintenance agreement relating to real or personal property or Intellectual Property, other than the renewal of an agreement that is necessary or advisable to operate its business in the ordinary course consistent with past practice, or permit to lapse its rights in any material Intellectual Property.

(h)   Acquisitions.   Acquire (other than by way of foreclosures or acquisitions of control in a bona fide fiduciary capacity or in satisfaction of debts contracted prior to the date hereof in good faith, in each case in the ordinary course of business consistent with past practice) all or any portion of, the assets, business or properties of any Person.

(i)   Loans, Loan Participations and Servicing Rights.   Sell or acquire any loans (excluding originations) or loan participations, except in the ordinary course of business consistent with past practice or to bring a loan in compliance with legal lending limits, or sell or acquire any servicing rights.

(j)   Governing Documents.   Amend its organizational documents or the organizational documents of any its Significant Subsidiaries (or similar governing documents).

(k)   Accounting Methods.   Implement or adopt any material change in its accounting principles, practices or methods, other than as may be required by GAAP or any Governmental Entity.

(l)   Contracts.   Except with respect to transactions Previously Disclosed to MBI, or to the extent permitted by Section 5.2(g), enter into or terminate any PHC Material Contract or amend or modify in any material respect or renew any existing PHC Material Contract other than the renewal of an agreement that is necessary or advisable to operate its business in the ordinary course consistent with past practice.

(m)   Claims.   Except in the ordinary course of business and involving an amount not in excess of  $500,000 (exclusive of any amounts paid directly or reimbursed to PHC or any of its Subsidiaries under any insurance policy maintained by PHC or any of its Subsidiaries), settle any claim, action or proceeding against it. Notwithstanding the foregoing, no settlement shall be made if it creates an adverse precedent for other similar claims, which in the aggregate, would reasonably be expected to be material to PHC and its Subsidiaries, taken as a whole.

(n)   Deposit Taking and Other Bank Activities.   In the case of Professional Bank (i) voluntarily make any material changes in or to its deposit mix; (ii) materially increase or decrease the rate of interest paid on time deposits or on certificates of deposit, except pursuant to policies consistent with past practice and competitive factors in the marketplace or to be equivalent to interest rate offerings of Marquis Bank; (iii) open any new branch or deposit taking facility; or (iv) close or relocate any existing branch or other facility.

(o)   Investments.   (i) Purchase any equity securities or purchase any debt securities, other than securities (A) rated “AA” or higher investment grade by either Standard and Poor’s Ratings Services or Moody’s Investor Service, (B) with a weighted average life of not more than five (5) years and (C) otherwise in the ordinary course of business consistent with its current investment policy; (ii) enter

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into or acquire any derivatives contract or structured note except in the ordinary course of business consistent with past practice; or (iii) enter into any new, or modify, amend or extend the terms of any existing, contracts relating to the purchase or sale of financial or other futures, or any put or call option relating to cash, securities or commodities or any interest rate swap agreements or other agreements relating to the hedging of interest rate risk except in the ordinary course of business consistent with past practice.

(p)   Capital Expenditures.   Purchase any fixed assets (by installment purchase, capital lease, synthetic lease or otherwise) where the amount paid or committed thereof is in excess of  $250,000 individually or $1,000,000 in the aggregate, except for emergency repairs or replacements.

(q)   Lending.   (i) Make any material changes in its policies concerning loan underwriting or which classes of Persons may approve loans or fail to comply with such policies as previously provided; or (ii) make any loans or extensions of credit except in the ordinary course of business consistent with past practice, provided any individual fully unsecured loan or extension of credit in excess of 5% of PHC’s legal lending limit as of the date hereof or any individual secured loan or extension of credit in excess of 50% of PHC’s legal lending limit as of the date hereof in a single transaction or 75% of PHC’s legal lending limit as of the date hereof to a single borrower shall require the prior written approval of a designee appointed by the Board of Directors of MBI, which approval or rejection shall be given in writing within two (2) Business Days after the loan package is delivered to such individual (and if not so rejected within such two (2) Business Day period, such loan request shall be deemed approved).

(r)   Risk Management.   Except as required by applicable law or regulation or guidance or at the direction of a Governmental Entity, (i) implement or adopt any material change in its interest rate and other risk management policies, procedures or practices; (ii) fail to follow its existing policies or practices with respect to managing its exposure to interest rate and other risk; or (iii) fail to use commercially reasonable means to avoid any material increase in its aggregate exposure to interest rate risk.

(s)   Indebtedness and Guaranties.   Incur any indebtedness for borrowed money other than in the ordinary course of business consistent with past practice with a term not in excess of one year, or incur, assume or become subject to, whether directly or by way of any guarantee or otherwise, any obligations or liabilities (absolute, accrued, contingent or otherwise) of any other Person, other than the issuance of letters of credit in the ordinary course of business and in accordance with the restrictions set forth in Section 5.4(q) other than FHLB borrowings.

(t)   New Lines of Business.   Develop, market or implement any new line of business.

(u)   Tax Matters.   Make, change or revoke any material tax election, file any materially amended Tax Return, enter into any Tax closing agreement, or settle or agree to compromise any material liability with respect to disputed Taxes, in each case except in the ordinary course of business consistent with past practice.

(v)   Reorganization.   Take any action or knowingly fail to take any action that could reasonably be expected to prevent the Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code.

(w)   Performance of Obligations.   Take any action that is likely to materially impair or delay PHC’s ability to perform any of its obligations under this Agreement or Professional Bank’s ability to perform any of its obligations under the Bank Merger Agreement.

(x)   Commitments.   Agree or commit to do any of the foregoing.

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ARTICLE VI

ADDITIONAL AGREEMENTS

6.1   Regulatory Matters.

(a)   As promptly as practicable following the date of this Agreement (but in no event later than ten (10) days following the first public filing of a registration statement relating to an initial public offering of PHC Common Stock), PHC, with the assistance and cooperation of MBI, shall promptly prepare and file with the SEC the Form S-4, and, if not included in the Form S-4, a Form S-8, together with the Proxy Statement which will be included in Form S-4, which shall provide for the registration of the shares to the PHC Common Stock to be issued as a result of the Merger, and upon the exercise of the MBI Stock Options to be assumed by PHC pursuant to the terms of this Agreement. Each of PHC and MBI shall use its reasonable best efforts to respond as promptly as practicable to any written or oral comments from the SEC or its staff with respect to the Form S-4 or any related matters. Each of MBI and PHC shall use its commercially reasonable best efforts to have the Form S-4 declared effective under the Securities Act as promptly as practicable after such filing and to maintain such effectiveness for as long as necessary to consummate the Merger and the other transactions contemplated by this Agreement; provided that each of MBI and PHC shall use its reasonable best efforts to ensure that the Form S-4 is not declared effective prior to the consummation of the initial public offering of PHC Common Stock. Upon the Form S-4 being declared effective, PHC and MBI shall thereafter mail or deliver the Proxy Statement to their respective shareholders. PHC shall also use its commercially reasonable best efforts to obtain all necessary state securities law or “Blue Sky” permits and approvals required to carry out the transactions contemplated by this Agreement, and MBI shall furnish all information concerning MBI and the holders of MBI Common Stock as may be reasonably requested in connection with any such action. If at any time prior to the Effective Time any event occurs or information relating to MBI or PHC, or any of their respective affiliates, directors or officers, should be discovered by MBI or PHC that should be set forth in an amendment or supplement to either the Form S-4 or the Proxy Statement, so that either such document would not include any misstatement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, the Party that discovers such information shall promptly notify the other Party and an appropriate amendment or supplement describing such information shall be promptly filed with the SEC and, to the extent required by applicable law, disseminated to PHC’s and MBI’s shareholders.

(b)   In addition to their obligations pursuant to Section 6.1(a), MBI and PHC shall make all necessary filings with respect to the Merger and the other transactions contemplated by this Agreement under the Securities Act, the Exchange Act and applicable foreign or state securities or “Blue Sky” laws and regulations promulgated thereunder and provide each other with copies of any such filings. PHC and MBI shall advise the other Party, promptly after receipt of notice thereof, of (and provide copies of any notices or communications with respect to) the time of the effectiveness of the Form S-4, the filing of any supplement or amendment thereto, the issuance of any stop order relating thereto, the suspension of the qualification of PHC Common Stock issuable in connection with the Merger for offering or sale in any jurisdiction, or of any request by the SEC or its staff for amendment to the Proxy Statement or the Form S-4, comments thereon from the SEC’s staff and each Party’s responses thereto or request of the SEC or its staff for additional information. No amendment or supplement to the Proxy Statement or the Form S-4 shall be filed without the approval of each of MBI and PHC, which approval shall not be unreasonably withheld, conditioned or delayed.

(c)   Subject to the terms and conditions set forth in this Agreement, PHC and MBI shall, and shall cause their respective Subsidiaries to, use commercially reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other Party in doing, all things necessary, proper or advisable to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated by this Agreement, including (i) the satisfaction of the conditions precedent to the obligations of MBI (in the case of PHC) or PHC (in the case of MBI) to the Merger, (ii) the obtaining of all necessary consents or waivers from third parties, (iii) the obtaining of all necessary actions or no-actions, waivers, consents, authorizations, permits,

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orders and approvals from, or any exemption by, any Governmental Entities and the taking of all commercially reasonable steps as may be necessary to obtain an approval or waiver from, or to avoid an action or proceeding by any Governmental Entity, and (iv) the execution and delivery of any additional instruments necessary to consummate the Merger and to fully carry out the purposes of this Agreement. The Parties shall cooperate with each other and use their respective commercially reasonable best efforts to promptly prepare and file, and cause their respective Subsidiaries to prepare and file, all necessary documentation, to effect all applications, notices, petitions and filings, to obtain as promptly as practicable all permits, consents, approvals and authorizations of all third parties and Governmental Entities that are necessary or advisable to consummate the transactions contemplated by this Agreement (including the Merger and the Bank Merger), and to comply with the terms and conditions of all such permits, consents, approvals and authorizations of all such third parties or Governmental Entities. In furtherance (but not in limitation) of the foregoing, PHC shall, and shall cause Professional Bank to, use commercially reasonable efforts to file any required applications, notices or other filings with the FRB, the Florida Office of Financial Regulation (the “OFR”), the FDIC and applicable state banking agencies within forty-five (45) days of the date hereof. MBI and PHC shall have the right to review in advance, and, to the extent practicable, each will consult the other on, in each case subject to applicable laws relating to the confidentiality of information, all the information relating to MBI or PHC, as the case may be, and any of their respective Subsidiaries, that appear in any filing made with, or written materials submitted to, any third party or any Governmental Entity in connection with the transactions contemplated by this Agreement. In exercising the foregoing right, each of the Parties shall act reasonably and as promptly as practicable. The Parties shall consult with each other with respect to the obtaining of all permits, consents, approvals and authorizations of all third parties and Governmental Entities necessary or advisable to consummate the transactions contemplated by this Agreement, and each Party will keep the other apprised of the status of matters relating to completion of the transactions contemplated by this Agreement. The Parties shall promptly deliver to each other copies of all filings, orders and material correspondence to and from all Governmental Entities in connection with the transactions contemplated by this Agreement.

(d)   Each of PHC and MBI shall, upon request, furnish to the other all information concerning itself, its Subsidiaries, directors, officers and shareholders and such other matters as may be reasonably necessary or advisable in connection with the Proxy Statement, the Form S-4 or any other statement, filing, notice or application made by or on behalf of PHC, MBI or any of their respective Subsidiaries to any Governmental Entity in connection with the Merger, the Bank Merger or any other transactions contemplated by this Agreement.

(e)   Each of PHC and MBI shall promptly advise the other upon receiving any communication from any Governmental Entity the consent or approval of which is required for consummation of the transactions contemplated by this Agreement that causes such Party to believe that there is a reasonable likelihood that any Requisite Regulatory Approval will not be obtained or that the receipt of any such approval may be materially delayed. Without limiting the foregoing, each Party shall, to the extent permitted by applicable law, promptly advise the other of the receipt of any substantive communication from a Governmental Entity with respect to the transactions contemplated hereby and cooperate with the other in preparing any response thereto.

(f)   Notwithstanding the obligations of PHC in this Section 6.1 or anything in this Agreement to the contrary, in no event shall PHC be required in connection with obtaining any Requisite Regulatory Approval to agree to any condition or restriction or take any action that would have a Material Adverse Effect on the Surviving Company and its Subsidiaries, taken as a whole, after giving effect to the Merger (each of the foregoing referred to as a “Materially Burdensome Regulatory Condition”).

6.2   Access to Information; Current Information; Attendance at Meetings.

(a)   Upon reasonable notice and subject to applicable laws relating to the confidentiality of information, each Party shall, and shall cause each of its Subsidiaries to, afford to the officers, employees, accountants, counsel, advisors, agents and other representatives of the other Party, reasonable access, during normal business hours during the period prior to the Effective Time, to all its properties, books, contracts, commitments and records, and, during such period, each Party shall, and

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shall cause its Subsidiaries to, make available to the other Party all other information concerning its business, properties and personnel as the other Party may reasonably request. Neither MBI nor PHC or any of their respective Subsidiaries shall be required to provide access to or to disclose information (i) where such access or disclosure would jeopardize the attorney-client privilege of such Party or its Subsidiaries or contravene any binding agreement entered into prior to the date of this Agreement or any law, rule, regulation, order, judgment, decree or fiduciary duty or (ii) relating to such Party’s or its directors’, officers’, employees’, accountants’, counsel’s, advisors’ (including investment bankers), agents’ or other representatives’ consideration of, or deliberations regarding, the transactions contemplated by this Agreement. The Parties shall make appropriate substitute disclosure arrangements under circumstances in which the restrictions of clause (i) of the immediately preceding sentence apply.

(b)   Subject to applicable law and regulations, during the period from the date hereof to the Effective Time, each Party shall, upon the request of the Requesting Party, cause one or more of its designated officers to confer not less frequently than monthly with officers of the Requesting Party regarding the financial condition, operations and business of the Examined Party and its Subsidiaries and matters relating to the completion of the transactions contemplated by this Agreement. As soon as reasonably available, but in no event more than five (5) Business Days after filing, each Party will deliver to the other party all non-confidential reports filed by it or any of its Subsidiaries with any Governmental Entity subsequent to the date hereof, including all financial and call reports filed with the FRB, the OCC and the FDIC. Each Party will also deliver to the other party as soon as practicable all quarterly and annual financial statements of such party and its Subsidiaries prepared with respect to periods ending subsequent to June 30, 2019.

(c)   All information and materials provided pursuant to this Agreement shall be subject to the provisions of the Confidentiality Agreement entered into between the Parties as of June 14, 2019 (the “Confidentiality Agreement”).

(d)   No investigation by a Party or its representatives shall affect the representations and warranties of the other Party set forth in this Agreement. Nothing contained in this Agreement shall give either Party, directly or indirectly, the right to control or direct the operations of the other Party prior to the Effective Time.

6.3   Shareholder Meetings.   (a) MBI shall, and shall cause its Board of Directors to, (i) take all action in accordance with the federal securities laws, the FBCA and the MBI Charter and the MBI Bylaws necessary to (A) call and give notice of a special meeting of MBI’s shareholders (the “MBI Shareholder Meeting”) for the purpose of seeking the MBI Shareholder Approval within five (5) Business Days following the date the Form S-4 is declared effective under the Securities Act (the “MBI Shareholder Meeting Notice Date”) and (B) use its commercially reasonable best efforts to schedule the MBI Shareholder Meeting to take place on the same date as the PHC Shareholder Meeting; (ii) use its reasonable best efforts to (x) cause the MBI Shareholder Meeting to be convened and held on the scheduled date and (y) obtain the MBI Shareholder Approval; and (iii) subject to Section 6.7, include in the Proxy Statement the recommendation that the shareholders of MBI approve this Agreement (the “MBI Board Recommendation”). Notwithstanding anything to the contrary contained in this Agreement, MBI shall have an unqualified obligation to submit this Agreement to a vote of its shareholders at the MBI Shareholder Meeting.

(b)   PHC shall, and shall cause its Board of Directors to, (i) take all action in accordance with the federal securities laws, the FBCA and the PHC Charter and the PHC Bylaws necessary to (A) call and give notice of a special meeting of PHC’s shareholders (the “PHC Shareholder Meeting”) for the purpose of seeking the PHC Shareholder Approval within five (5) Business Days following the date the Form S-4 is declared effective under the Securities Act (the “PHC Shareholder Meeting Notice Date”) and (B) schedule the PHC Shareholder Meeting to take place on a date that is at least twenty (20) Business Days after the PHC Shareholder Meeting Notice Date; (ii) use its reasonable best efforts to (x) cause the PHC Shareholder Meeting to be convened and held on the scheduled date and (y) obtain the PHC Shareholder Approval; and (iii) include in the Proxy Statement the recommendation that the shareholders of PHC approve the issuance of PHC Common Stock in connection with this Agreement

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and the Merger (the “PHC Board Recommendation”) unless including the PHC Board Recommendation in the Proxy Statement would violate applicable law or be inconsistent with the PHC Board of Directors’ fiduciary duties, in which case it may omit the PHC Board Recommendation from the Proxy Statement. Notwithstanding anything to the contrary contained in this Agreement PHC shall have an unqualified obligation to submit the issuance of PHC Common Stock in connection with this Agreement and the Merger to a vote of its shareholders at the PHC Shareholder Meeting.

6.4   Nasdaq Listing.   PHC shall use its reasonable best efforts to cause the shares of PHC Common Stock to be issued to the holders of MBI Common Stock in the Merger to be authorized for listing on Nasdaq, subject to official notice of issuance, prior to the Effective Time.

6.5   Employee Matters.

(a)   From the Effective Time until the first anniversary thereof  (the “Continuation Period”), PHC shall maintain or cause to be maintained employee benefit plans and compensation opportunities for the benefit of employees who are employed by MBI and its Subsidiaries on the Closing Date (“Covered Employees”) that provide employee benefits and compensation opportunities during the portion of the Continuation Period that each such employee remains employed by PHC which, in the aggregate, are substantially comparable to the employee benefits and compensation opportunities that are made available to similarly situated employees of PHC or its Subsidiaries, as applicable; provided, however, that in no event shall any Covered Employee be eligible to participate in any closed or frozen plan of PHC or its Subsidiaries. PHC shall give the Covered Employees full credit for their prior service with MBI and its Subsidiaries (i) for purposes of eligibility (including initial participation and eligibility for current benefits) and vesting under any qualified or non-qualified employee benefit plan maintained by PHC and in which Covered Employees may be eligible to participate and (ii) for all purposes under any defined contribution retirement plans, welfare benefit plans, vacation plans, severance plans and similar arrangements maintained by PHC; provided, however, that the foregoing service recognition shall not apply (A) to the extent it would result in duplication of benefits for the same period of service, (B) for purposes of benefit accruals under any defined benefit pension plan or (C) for purposes of any benefit plan that provides retiree or post-termination welfare benefits.

(b)   With respect to any employee benefit plan of PHC that is a health, dental, vision or other welfare plan in which any Covered Employee is eligible to participate following the Closing Date, PHC or its applicable Subsidiary shall (i) cause any pre-existing condition limitations or eligibility waiting periods under such PHC or Subsidiary plan to be waived with respect to such Covered Employee and his or her covered dependents to the extent such condition was or would have been covered under the MBI Benefit Plan in which such Covered Employee participated immediately prior to the Effective Time, and (ii) recognize any health, dental, vision or other welfare expenses incurred by such Covered Employee or his or her covered dependents in the year that includes the Closing Date for purposes of any applicable co-payment, deductible or annual out-of-pocket expense requirements under any such health, dental, vision or other welfare plan.

(c)   Prior to the Effective Time, MBI shall take, and shall cause its Subsidiaries to take, all actions requested by PHC that may be necessary or appropriate to (i) cause the MBI Benefits Plans set forth on Section 6.5(e) of the MBI Disclosure Schedule to terminate as of the Effective Time, or as of the date immediately preceding the Effective Time, (ii) cause benefit accruals and entitlements under any such MBI Benefit Plan to cease as of the Effective Time, or as of the date immediately preceding the Effective Time, (iii) cause the continuation on and after the Effective Time of any contract, arrangement or insurance policy relating to any such MBI Benefit Plan for such period as may be requested by PHC, and (iv) facilitate the merger of any such MBI Benefit Plan into any employee benefit plan maintained by PHC or a PHC Subsidiary. All resolutions, notices, or other documents issued, adopted or executed in connection with the implementation of this Section 6.5(c) shall be subject to PHC’s reasonable prior review, comment and approval, which shall not be unreasonably withheld, conditioned or delayed.

(d)   Nothing in this Section 6.5 shall be construed (i) to limit the right of PHC or any of its Subsidiaries (including, following the Closing Date, MBI and its Subsidiaries) to amend or terminate any MBI Benefit Plan or other employee benefit plan, to the extent such amendment or termination is

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permitted by the terms of the applicable plan, (ii) to require PHC or any of its Subsidiaries (including, following the Closing Date, MBI and its Subsidiaries) to retain the employment of any particular Covered Employee for any fixed period of time following the Closing Date, or (iii) to amend any MBI Benefit Plan or other employee benefit plan, arrangement or agreement.

(e)   If, during the Continuation Period, any Covered Employee is terminated by PHC or its Subsidiaries other than “for cause,” then PHC shall pay severance to such Covered Employee, subject to such Covered Employee’s execution and non-revocation of a general release of claims in a form satisfactory to PHC, in an amount equal to two weeks of base salary for each twelve months of such Covered Employee’s prior employment with MBI or Marquis Bank; provided, however, that in no event will the total amount of severance for any single Covered Employee be less than four weeks of such base salary nor greater than twenty-six weeks of such base salary.

(f)   At the Effective Time, all accrued and unused sick time for all employees of MBI and its subsidiaries and relating to periods prior to the Effective Time shall be carried over to, and assumed by, PHC or its Subsidiaries.

(g)   No later than thirty (30) days following the date of this Agreement, PHC and MBI shall agree upon the names of the MBI and PHC employees to whom PHC shall pay a stay bonus after the Closing and setting forth the compensation to be paid to each such employee, which shall be in addition to any severance payment to such employee otherwise provided pursuant to Section 6.5(e) of this Agreement.

(h)   Prior to the Closing Date, MBI shall submit to a vote of its stockholders all payments or benefits that, in the absence of such a vote, could reasonably constitute “parachute payments” (within the meaning of Section 280G of the Code and the regulations thereunder) to any individuals who are “disqualified individuals” (within the meaning of Section 280G(c) of the Code and the regulations thereunder). Such vote shall satisfy the requirements of Section 280G(b)(5)(B) of the Code and the regulations thereunder, and all related materials (including the waiver agreement executed by the disqualified individuals and the disclosure statement provided to MBI’s stockholders) shall be in a form reasonably satisfactory to PHC.

(i)   Nothing in this Agreement shall confer upon any employee, director or individual service provider of PHC or MBI or any of their respective Subsidiaries or affiliates any right to continue in the employ or service of PHC or its Subsidiaries or affiliates, or shall interfere with or restrict in any way the rights of PHC or its Subsidiaries or affiliates to discharge or terminate the services of any employee, director or individual service provider of PHC or MBI or any of their respective Subsidiaries or affiliates at any time for any reason whatsoever, with or without cause. Nothing in this Agreement shall be deemed to (i) establish, amend, or modify any MBI Benefit Plan, PHC Benefit Plan or any other benefit or employment plan, program, agreement or arrangement, or (ii) alter or limit the ability of PHC or any of its Subsidiaries or affiliates to amend, modify or terminate any particular MBI Benefit Plan, PHC Benefit Plan or any other benefit or employment plan, program, agreement or arrangement after the Effective Time. Without limiting the generality of Section 9.9, nothing in this Agreement, express or implied, is intended to or shall confer upon any person, including any current or former employee, officer, director or consultant of PHC or MBI or any of their respective Subsidiaries or affiliates, any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

6.6   Indemnification; Directors’ and Officers’ Insurance.

(a)   From and after the Effective Time, PHC shall indemnify, defend and hold harmless the present and former directors, officers and employees of MBI and its Subsidiaries (the “Indemnified Parties”) against all costs or expenses (including reasonable attorneys’ fees), judgments, fines, losses, claims, damages, settlements or liabilities as incurred in connection with any claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative (each, a “Claim”), arising out of actions or omissions of such Persons in the course of performing their duties for MBI occurring at or before the Effective Time (including the transactions contemplated hereby), to the greatest extent as such persons are indemnified or have the right to advancement of expenses pursuant to (i) the MBI Charter, the MBI Bylaws or the articles or certificate of incorporation or formation and

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bylaws (or comparable organizational documents) of MBI’s Subsidiaries, each as in effect on the date of this Agreement, and (ii) the FBCA.

(b)   Any Indemnified Party wishing to claim indemnification under this Section 6.6 shall promptly notify PHC upon learning of any Claim, provided that failure to so notify shall not affect the obligation of PHC under this Section 6.6 unless, and only to the extent that, PHC is actually and materially prejudiced in the defense of such Claim as a consequence. In the event of any such Claim (whether arising before or after the Effective Time), (i) PHC shall have the right to assume the defense thereof and PHC shall not be liable to such Indemnified Parties for any legal expenses of other counsel or any other expenses subsequently incurred by such Indemnified Parties in connection with the defense thereof; provided, that PHC shall not settle or compromise or consent to the entry of any judgment in any such Claim unless such settlement, compromise or consent includes an unconditional release of such Indemnified Parties from all liability arising out of such Claim, (ii) the Indemnified Parties will cooperate in the defense of any such matter, (iii) PHC shall not be liable for any settlement effected without its prior written consent (not to be unreasonably withheld) and (iv) PHC shall have no obligation hereunder in the event that a federal or state banking agency or a court of competent jurisdiction shall determine that indemnification of an Indemnified Party in the manner contemplated hereby is prohibited by applicable laws and regulations.

(c)   For a period of six (6) years following the Effective Time, PHC will provide director’s and officer’s liability insurance (“D&O Insurance”) that serves to reimburse the present and former officers and directors of MBI or its Subsidiaries (determined as of the Effective Time) with respect to claims against such directors and officers arising from facts or events occurring at or before the Effective Time (including the transactions contemplated hereby), which insurance will contain at least the same coverage and amounts, and contain terms and conditions no less advantageous to the Indemnified Party, as the coverage currently provided by MBI; provided, however, that (i) if PHC is unable to maintain or obtain the insurance called for by this Section 6.6(c) then PHC will provide as much comparable insurance as is reasonably available, (ii) officers and directors of MBI or its Subsidiaries may be required to make application and provide customary representations and warranties to the carrier of the D&O Insurance for the purpose of obtaining such insurance, and (iii) in satisfaction of its obligations under this Section 6.6(c), PHC may purchase, prior to but effective as of the Effective Time, tail insurance providing such coverage as described in this sentence. Whether or not PHC shall procure such coverage, in no event shall PHC be required to expend for such tail insurance a premium amount in excess of an amount equal to 300% of the annual premiums paid by MBI for D&O Insurance in effect as of the date of this Agreement (the “Maximum D&O Tail Premium”). If the cost of such tail insurance exceeds the Maximum D&O Tail Premium, then PHC shall obtain tail insurance coverage or a separate tail insurance policy with the greatest coverage available for a cost not exceeding the Maximum D&O Tail Premium.

(d)   If PHC or any of its successors and assigns (i) shall consolidate with or merge into any other corporation or entity and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (ii) shall transfer all or substantially all of its property and assets to any individual, corporation or other entity, then, in each such case, proper provision shall be made so that the successors and assigns of PHC and its Subsidiaries shall assume the obligations set forth in this Section 6.6. The provisions of this Section 6.6 shall survive the Effective Time and are intended to be for the benefit of, and shall be enforceable by, each Indemnified Party and his or her heirs and representatives.

(e)   These rights shall survive consummation of the Merger and are intended to benefit, and shall be enforceable by, each Indemnified Party and his or her heirs, representatives or administrators. After the Closing, the obligations of PHC under this Section 6.6 shall not be terminated or modified in such a manner as to adversely affect any Indemnified Party unless the affected Indemnified Party shall have consented in writing to such termination or modification. If any Indemnified Party makes any claim for indemnification or advancement of expenses under this Section 6.6 that is denied by PHC, and a court of competent jurisdiction determines that the Indemnified Party is entitled to such indemnification or advancement of expense, then PHC shall pay such Indemnified Party’s costs and expenses, including legal fees and expenses, incurred in connection with enforcing such claim against

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PHC. If any Indemnified Party makes any claim for indemnification or advancement of expenses under this Section 6.6 that is denied by PHC, and a court of competent jurisdiction determines that the Indemnified Party is not entitled to such indemnification or advancement of expense, the Indemnified Party shall pay PHC’s costs and expenses, including legal fees and expenses, incurred in connection with defending such claim against the Indemnified Party.

(f)   Nothing in this Agreement is intended to, shall be construed to or shall release, waive or impair any rights to directors’ and officers’ insurance claims under any policy that is or has been in existence with respect to PHC or MBI or any of their Subsidiaries for any of their respective directors, officers or other employees, it being understood and agreed that the indemnification provided for in this Section 6.6 is not prior to or in substitution for any such claims under such policies.

6.7   No Solicitation.

(a)   MBI agrees that, except as expressly permitted by Section 6.7(b), from the date of this Agreement until the Effective Time or, if earlier, the termination of this Agreement in accordance with Section 8.1, it will not, and will cause its Subsidiaries and its and its Subsidiaries’ officers, directors, and employees (the “MBI Individuals”) not to, and will use its reasonable best efforts to cause MBI and its Subsidiaries’ agents, advisors, accountants, legal counsel, and financial advisors (the “MBI Representatives”) not to, initiate, solicit, knowingly encourage or knowingly facilitate inquiries or proposals with respect to, or engage in any discussions or negotiations concerning, or provide any confidential or nonpublic information or data concerning its and its Subsidiaries’ business, properties or assets (“MBI Confidential Information”) to, or have any discussions with, any Person relating to, any Acquisition Proposal. MBI will immediately cease and cause to be terminated any activities, discussions or negotiations conducted before the date of this Agreement with any Persons other than PHC with respect to any Acquisition Proposal and will, subject to applicable law, enforce and not waive any confidentiality or similar agreement relating to such an Acquisition Proposal. It is understood that any breach of the provisions of this Section 6.7 by any MBI Representative shall constitute a breach by MBI. Promptly after the date hereof, MBI shall (A) request in writing that each person that has heretofore executed a confidentiality agreement in connection with its consideration of an Acquisition Proposal or potential Acquisition Proposal promptly destroy or return to MBI all nonpublic information heretofore furnished by MBI or any MBI Representatives to such person or any of its representatives in accordance with the terms of such confidentiality agreement and (B) terminate access to any physical or electronic data rooms relating to a possible Acquisition Proposal by such person and its representatives.

(b)   Notwithstanding anything to the contrary in Section 6.7(a), at any time from the date of this Agreement and prior to obtaining the MBI Shareholder Approval, in the event MBI receives a bona fide, written Acquisition Proposal that did not result from a breach of Section 6.7(a), and the Board of Directors of MBI determines in good faith that such Acquisition Proposal constitutes, or is reasonably likely to result in, a Superior Proposal, MBI may, and may permit its Subsidiaries and the MBI Individuals and the MBI Representatives to, (i) negotiate the terms of, and enter into, a confidentiality agreement with terms and conditions no less favorable in the aggregate to MBI than the Confidentiality Agreement, (ii) furnish or cause to be furnished MBI Confidential Information to the Person or Persons making such Acquisition Proposal pursuant to such confidentiality agreement, provided that MBI provides PHC, prior to or substantially concurrently with the time such information is provided or made available to such Person, any MBI Confidential Information furnished to such other Person that was not previously furnished to PHC, and (iii) negotiate and participate in such negotiations or discussions with the Person or Persons making such Acquisition Proposal concerning such Acquisition Proposal, if the Board of Directors of MBI determines in good faith (following consultation with counsel) that failure to take such actions would or would reasonably be expected to cause the MBI Board of Directors to breach its fiduciary duties under applicable law.

(c)   Subject to the succeeding sentence, the Board of Directors of MBI shall not (nor shall any committee thereof) withdraw or modify, in a manner adverse to PHC, the MBI Board Recommendation or make or cause to be made any third party or public communication proposing or announcing an intention to withdraw or modify in any manner adverse to PHC the MBI Board

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Recommendation (any such action, a “Change in Recommendation”). The foregoing notwithstanding, at any time prior to obtaining the MBI Shareholder Approval and subject to compliance with Section 6.7(d), the MBI Board of Directors may make a Change in Recommendation in response to (A) a Superior Proposal or (B) an Intervening Event, in the case of each of Clause (A) and (B), if the MBI Board of Directors concludes in good faith after consultation with outside legal advisors that the failure to take such action would reasonably be expected to cause the MBI Board of Directors to breach its fiduciary duties under applicable law.

(d)   The MBI Board of Directors shall not be entitled to exercise its right to make a Change in Recommendation pursuant to Section 6.7(c) unless (i) MBI has given PHC at least five (5) Business Days’ prior written notice of its intention to take such action set forth above, which notice shall (A) if relating to a Superior Proposal specify the material terms and conditions of any such Superior Proposal (including the identity of the Person making such Superior Proposal) and attached an unredacted copy of the relevant proposed transaction agreements with the Person making such Superior Proposal, or (B) in respect to an Intervening Event, describe such Intervening Event and the reasons for the proposed Change in Recommendation; (ii) if the Change in Recommendation is in response to a Superior Proposal, before effecting such Change in Recommendation, MBI has negotiated, and has caused its representatives to negotiate, in good faith with PHC during such notice period to the extent PHC wishes to negotiate, to enable PHC to revise the terms of this Agreement such that it would cause such Superior Proposal to no longer constitute a Superior Proposal; (iii) if the Change in Recommendation is in response to an Intervening Event, during such five (5) Business Days period, if requested by PHC, MBI shall engage in good faith negotiations with PHC to amend this Agreement in such a manner that obviates the need for a Change in Recommendation as a result of the Intervening Event; and (iv) if the Change in Recommendation is in response to a Superior Proposal, the Board of Directors of MBI determines in good faith (after consultation with counsel) that such Superior Proposal has been made and has not been withdrawn and continues to be a Superior Proposal after taking into account all adjustments to the terms of this Agreement that may be offered by PHC under Section 6.7(d)(ii). In the event of any material change to the terms of such Superior Proposal, MBI shall, in each case, be required to deliver to PHC a new written notice, the notice period shall have recommenced and MBI shall be required to comply with its obligations under this Section 6.7 with respect to each such new written notice.

(e)   MBI will advise PHC in writing within twenty-four (24) hours following receipt of any Acquisition Proposal and the substance thereof  (including the identity of the Person making such Acquisition Proposal), and will keep PHC reasonably apprised of any related developments, discussions and negotiations (including the material terms and conditions of the Acquisition Proposal) on a reasonably current basis.

(f)   As used in this Agreement, the following terms have the meanings set forth below:

“Acquisition Proposal”   means a tender or exchange offer, proposal for a merger, consolidation or other business combination involving MBI in which any third-party would acquire more than twenty percent (20%) of the voting power of MBI or the surviving entity in such merger or business combination or any proposal or offer to acquire in any manner in a single transaction or series of transactions more than twenty percent (20%) of the voting power in, or more than twenty percent (20%) of the fair market value of the business, assets or deposits of, MBI and its Subsidiaries, taken as a whole, other than the transactions contemplated by this Agreement.

“Intervening Event”   means a material event or circumstance (other than an event or circumstance relating to an Acquisition Proposal, changes in general economic, political or financial conditions or markets or changes in GAAP, other applicable accounting rules or applicable law or, in any such case, changes in the interpretation thereof) that was not known to the MBI Board of Directors on this date of this Agreement (or if known, the material consequences of which are not known to or reasonably foreseeable by the MBI Board of Directors as of the date of this Agreement), which event or circumstance, or any material consequences thereof, become known to the MBI Board of Directors prior to the time at which MBI receives the MBI Shareholder Approval.

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“Superior Proposal”   means a written Acquisition Proposal that the Board of Directors of MBI concludes in good faith to be more favorable from a financial point of view to its shareholders than the Merger and the other transactions contemplated hereby, (i) after receiving the advice of its financial advisors (who shall be a nationally recognized investment banking firm, PHC acknowledging that Hovde Group LLC and FIG Partners LLC is each a nationally recognized investment banking firm), (ii) after taking into account the likelihood and timing of consummation of such transaction on the terms set forth therein and (iii) after taking into account all legal (with the advice of outside counsel), financial (including the financing terms of any such proposal), regulatory and other aspects of such proposal and any other relevant factors permitted under applicable law; provided, however, that for purposes of the definition of  “Superior Proposal,” the references to twenty percent (20%) in the definition of Acquisition Proposal shall be deemed to be references to eighty percent (80%).

6.8   Notification of Certain Matters.   Each of the Parties shall give prompt written notice to the other of any fact, event or circumstance known to it that (a) is reasonably likely, individually or taken together with all other facts, events and circumstances known to it, to result in any Material Adverse Effect with respect to it or (b) would cause or constitute a material breach of any of its representations, warranties, covenants or agreements contained herein; provided, that any failure to give such notice in accordance with the foregoing with respect to any breach shall not be deemed to constitute a violation of this Section 6.8 or the failure of a condition contained in Article VII unless the underlying breach would independently result in a failure of a condition set forth in Article VII. Each of the Parties shall promptly inform the other in writing upon receiving notice of any material Action by any Governmental Entity or third party against, or threatened against, it or any of its Subsidiaries or any of their respective assets, properties, or any of their respective directors, officers or employees in their individual capacities as such.

6.9   System Integration.   From and after the date hereof, subject to applicable law and regulation, MBI shall cause Marquis Bank and its directors, officers and employees to, and shall make all commercially reasonable best efforts (without undue disruption to either business) to cause Marquis Bank’s data processing consultants and software providers to, cooperate and assist Marquis Bank and Professional Bank in connection with an electronic and systematic conversion of all applicable data of Marquis Bank to the PHC system following the Effective Time, including the training of Marquis Bank employees without undue disruption to Marquis Bank’s business, during normal business hours and at the expense of PHC (not to include Marquis Bank’s standard employee payroll).

6.10   Coordination; Integration.   Subject to applicable law and regulation, during the period from the date hereof until the Effective Time, MBI shall cause the Chief Executive Officer of Marquis Bank or, if such Person is unavailable, another senior officer thereof, to assist and confer with the officers of Professional Bank, on a weekly basis, relating to the development, coordination and implementation of the post-Merger operating and integration plans of Professional Bank, as the resulting institution in the Bank Merger.

6.11   Director Non-Competition and Non-Disclosure Agreement.   MBI has used commercially reasonable best efforts to cause, concurrently with the execution and delivery of this Agreement and effective upon Closing, each non-employee director of MBI (other than those set forth on Schedule 1.7 to this Agreement) to execute and deliver the Non-Competition and Non-Disclosure Agreement in the form attached hereto as Exhibit D (collectively, the “Director Restrictive Covenant Agreements”).

6.12   Tax Treatment.   Each of the Parties undertakes and agrees to use its reasonable best efforts to cause the Merger, and to use its reasonable best efforts to take no action which would cause the Merger not to qualify as a “reorganization” within the meaning of Section 368(a) of the Code for U.S. federal income tax purposes.

6.13   Failure to Fulfill Conditions.   In the event that either Party determines that a condition to its obligation to complete the Merger cannot be fulfilled and that it will not waive that condition, it will promptly notify the other Party.

6.14   Assumption of MBI Subordinated Notes.   Upon the Effective Time, PHC shall assume the due and punctual payment of the principal of and any premium and interest on MBI’s 7% Fixed-to-Floating Rate Subordinated Notes Due 2026 in the principal amount of  $10,000,000 (the “MBI Notes”) according

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to their terms, and the due and punctual performance of all covenants and conditions hereof on the part of MBI to be performed or observed. In connection therewith, PHC and MBI shall cooperate and use reasonable best efforts to execute and deliver any documents required to make such assumption effective as of the Effective Time.

6.15   Restructuring Efforts.   Subject to Section 8.1 of this Agreement, if either MBI or PHC shall have failed to obtain the MBI Shareholder Approval or the PHC Shareholder Approval at the duly convened MBI Shareholder Meeting or PHC Shareholder Meeting, as applicable, or any adjournment or postponement thereof, each of the parties shall in good faith use its reasonable best efforts to negotiate a restructuring of the transactions provided for herein (it being understood that neither party shall have any obligation to alter or change any material terms, including the amount or kind of the consideration to be issued to holders of MBI Common Stock as provided for in this Agreement, in a manner adverse to such party or its shareholders) and/or resubmit this Agreement and the transactions contemplated hereby (or as restructured pursuant to this Section 6.15) to its respective shareholders for approval.

ARTICLE VII

CONDITIONS PRECEDENT

7.1   Conditions to Each Party’s Obligations.   The respective obligations of the Parties to effect the Merger shall be subject to the satisfaction or, to the extent permitted by law, waiver by each of MBI and PHC, at or prior to the Closing, of the following conditions:

(a)   Shareholder Approvals.   The MBI Shareholder Approval and the PHC Shareholder Approval shall have been obtained.

(b)   Nasdaq Listing.   The shares of PHC Common Stock to be issued in exchange for MBI Common Stock in the Merger shall have been authorized for listing on the Nasdaq, subject to official notice of issuance.

(c)   Form S-4.   The Form S-4 shall have become effective under the Securities Act and no stop order suspending the effectiveness of the Form S-4 have been issued and no proceedings for that purpose shall have been initiated or threatened by the SEC.

(d)   No Injunctions or Restraints; Illegality.   No order, injunction or decree issued by any court or agency of competent jurisdiction or other law preventing or making illegal the consummation of the Merger, the Bank Merger, or any of the other transactions contemplated by this Agreement shall be in effect.

(e)   Regulatory Approvals.   All regulatory approvals from the FRB and any other Regulatory Approvals required to consummate the Merger the failure of which to obtain would reasonably be expected to have a Material Adverse Effect on the Surviving Company shall have been obtained and remain in full force and effect and all statutory waiting periods in respect thereof shall have expired (such approvals and the expiration of such waiting periods, the “Requisite Regulatory Approvals”), and no such Requisite Regulatory Approval shall have resulted in the imposition of any Materially Burdensome Regulatory Condition.

7.2   Conditions to Obligations of PHC.   The obligation of PHC to effect the Merger is also subject to the satisfaction or, to the extent permitted by law, waiver by PHC, at or prior to the Closing, of the following conditions:

(a)   Representations and Warranties.   The representations and warranties of MBI (in each case after giving effect to the lead in to Article III) (i) set forth in the first, third and fourth sentences of Section 3.2(a) (Capitalization) regarding the number of outstanding MBI Common Stock and MBI Stock Options, and the first sentence of Section 3.2(b) (Capitalization) regarding the number of outstanding MBI Stock Options shall be true and correct, except for such failures to be true and correct as are de minimis, as of the date of this Agreement and as of the Effective Time as though made at and as of the Effective Time (except that representations and warranties that by their terms speak specifically as of the date of this Agreement shall be true and correct, except for such failures to be true and correct as are de minimis, as of the date of this Agreement); (ii) set forth in the remainder

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of Section 3.2(a) (Capitalization), in Section 3.2(b) (Capitalization), and in Section 3.3(a) (Authority; No Violation) shall be true and correct in all material respects as of the date of this Agreement and as of the Effective Time as though made at and as of the Effective Time (except that representations and warranties that by their terms speak specifically as of the date of this Agreement or another date shall be true and correct in all material respects as of such date); and (iii) set forth in Section 3.7(a) (Absence of Changes) shall be true and correct in all respects as of the date of this Agreement and as of the Effective Time as though made at and as of the Effective Time. All other representations and warranties of MBI contained in this Agreement (in each case after giving effect to the lead in to Article III) shall be true and correct (disregarding any qualification or exception for, or reference to, materiality (including the terms “material,” “materially,” “in all material respects,” “Material Adverse Effect” or similar terms or phrases) in any such representation or warranty) as of the date of this Agreement and as of the Effective Time as though made at and as of the Effective Time (except that representations and warranties that by their terms speak specifically as of the date of this Agreement or another date shall be true and correct as of such date); provided, that for purposes of this sentence, such representations and warranties shall be deemed to be true and correct unless the failure or failures of such representations and warranties to be so true and correct, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect on MBI. PHC shall have received a certificate signed on behalf of MBI by the Chief Executive Officer or the Chief Financial Officer of MBI to the foregoing effect.

(b)   Performance of Obligations of MBI.   MBI shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Effective Time, and PHC shall have received a certificate signed on behalf of MBI by the Chief Executive Officer or the Chief Financial Officer of MBI to such effect.

(c)   No MBI Material Adverse Effect.   Since the date of this Agreement (i) no event shall have occurred which has resulted in a Material Adverse Effect on MBI, and (ii) no condition, event, fact, circumstance or other occurrence shall have occurred that is reasonably expected to have or result in a Material Adverse Effect on MBI.

(d)   Tax Opinion.   PHC shall have received the opinion of Wachtell, Lipton, Rosen & Katz, in form and substance reasonably satisfactory to PHC, dated as of the Closing Date, to the effect that, on the basis of facts, representations and assumptions set forth or referred to in such opinion, the Merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. In rendering such opinion, counsel may require and rely upon representations contained in certificates of officers of MBI and PHC, reasonably satisfactory in form and substance to such counsel.

7.3   Conditions to Obligations of MBI.   The obligation of MBI to effect the Merger is also subject to the satisfaction or waiver by MBI at or prior to the Effective Time of the following conditions:

(a)   Representations and Warranties.   The representations and warranties of PHC (in each case after giving effect to the lead in to Article IV) (i) set forth in the first and fifth sentences of Section 4.2(a) (Capitalization) regarding the number of outstanding shares of PHC Common Stock and the number of outstanding shares of PHC Common Stock issuable in respect of outstanding PHC Rights, shall be true and correct, except for such failures to be true and correct as are de minimis, as of the date of this Agreement and as of the Effective Time as though made at and as of the Effective Time (except that representations and warranties that by their terms speak specifically as of the date of this Agreement shall be true and correct, except for such failures to be true and correct as are de minimis, as of the date of this Agreement); (ii) set forth in the remainder of Section 4.2(a) (Capitalization), and in Section 4.3(a) (Authority; No Violation) shall be true and correct in all material respects as of the date of this Agreement and as of the Effective Time as though made at and as of the Effective Time (except that representations and warranties that by their terms speak specifically as of the date of this Agreement or another date shall be true and correct in all material respects as of such date); and (iii) set forth in Section 4.14(a) (Absence of Changes) shall be true and correct in all respects as of the date of this Agreement and as of the Effective Time as though made at and as of the Effective Time. All other representations and warranties of PHC contained in this Agreement (in each case after giving effect to the lead in to Article IV) shall be true and correct (disregarding any

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qualification or exception for, or reference to, materiality (including the terms “material,” “materially,” “in all material respects”, “Material Adverse Effect” or similar terms or phrases) in any such representation or warranty) as of the date of this Agreement and as of the Effective Time as though made at and as of the Effective Time (except that representations and warranties that by their terms speak specifically as of the date of this Agreement or another date shall be true and correct as of such date); provided, that for purposes of this sentence, such representations and warranties shall be deemed to be true and correct unless the failure or failures of such representations and warranties to be so true and correct, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect on PHC. MBI shall have received a certificate signed on behalf of PHC by the Chief Executive Officer or the Chief Financial Officer of PHC to the foregoing effect.

(b)   Performance of Obligations of PHC.   PHC shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Effective Time, and MBI shall have received a certificate signed on behalf of PHC by the Chief Executive Officer or the Chief Financial Officer of PHC to such effect.

(c)   No PHC Material Adverse Effect.   Since the date of this Agreement (i) no event shall have occurred which has resulted in a Material Adverse Effect on PHC, and (ii) no condition, event, fact, circumstance or other occurrence shall have occurred that is reasonably expected to have or result in a Material Adverse Effect on PHC.

(d)   Tax Opinion.   MBI shall have received the opinion of Crowe LLP, in form and substance reasonably satisfactory to MBI, dated as of the Closing Date, to the effect that, on the basis of facts, representations and assumptions set forth or referred to in such opinion, the Merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. In rendering such opinion, counsel may require and rely upon representations contained in certificates of officers of MBI and PHC, reasonably satisfactory in form and substance to such counsel.

(e)   Initial Public Offering.   PHC shall have closed an underwritten public offering of PHC Common Stock pursuant to an effective registration statement under the Securities Act on Form S-1 or any similar or successor form.

ARTICLE VIII

TERMINATION AND AMENDMENT

8.1   Termination.

(a)   This Agreement may be terminated at any time prior to the Effective Time, whether before or after the MBI Shareholder Approval or the PHC Shareholder Approval:

(i)   by mutual consent of MBI and PHC in a written instrument authorized by the Boards of Directors of MBI and PHC;

(ii)   by either MBI or PHC, if any Governmental Entity that must grant a Requisite Regulatory Approval has denied approval of the Merger or the Bank Merger and such denial has become final and nonappealable or any Governmental Entity of competent jurisdiction shall have issued a final and nonappealable order, injunction or decree permanently enjoining or otherwise prohibiting or making illegal the consummation of the Merger or the Bank Merger; provided, however, that a Party shall not be permitted to terminate this Agreement pursuant to this Section 8.1(a)(ii) if such denial is attributable to the failure of such Party to perform any covenant in this Agreement required to be performed prior to the Effective Time;

(iii)   by either MBI or PHC, if the Merger shall not have been consummated on or before the date that is one year following the date of this Agreement, unless the failure of the Closing to occur by such date shall be due to the failure of the Party seeking to terminate this Agreement to perform or observe the covenants and agreements of such Party set forth in this Agreement;

(iv)   by either MBI or PHC (provided that the terminating Party is not then in material breach of any representation, warranty, covenant or other agreement contained herein), if there shall have been a breach of any of the covenants or agreements or any of the representations or

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warranties set forth in this Agreement on the part of MBI, in the case of a termination by PHC, or PHC, in the case of a termination by MBI, which breach, either individually or in the aggregate, would result in, if occurring or continuing on the Closing Date, the failure of the conditions set forth in Section 7.2, in the case of a termination by PHC, or Section 7.3, in the case of a termination by MBI, and which is not cured within twenty (20) Business Days following written notice to the Party committing such breach or by its nature or timing cannot be cured within such time period;

(v)   by PHC if  (i) the Board of Directors of MBI (or any committee thereof) shall have failed to make the MBI Board Recommendation or shall have made a Change in Recommendation, or (ii) MBI shall have materially breached any of the provisions set forth in Section 6.7;

(vi)   by PHC, if the shareholders of MBI fail to provide the MBI Shareholder Approval at a duly held meeting of shareholders or at an adjournment or postponement thereof;

(vii)   by MBI if the Board of Directors of PHC (or any committee thereof) shall have failed to make the PHC Board Recommendation or shall have withdrawn or modified, in a manner adverse to MBI, the PHC Board Recommendation or made or caused to be made any third party or public communication proposing or announcing an intention to withdraw or modify in any manner adverse to MBI the PHC Board Recommendation; or

(viii)   by MBI, if the shareholders of PHC fail to provide the PHC Shareholder Approval at a duly held meeting of shareholders or at an adjournment or postponement thereof.

8.2   Effect of Termination.   In the event of termination of this Agreement by either MBI or PHC as provided in Section 8.1, this Agreement shall forthwith become void and have no effect, and none of MBI, PHC, any of their respective Subsidiaries or any of the officers or directors of any of them shall have any liability of any nature whatsoever under this Agreement, or in connection with the transactions contemplated by this Agreement; provided, however, that (i) this Section 8.2 and Sections 6.2(e), 8.3, 8.4, 9.3, 9.4, 9.5, 9.6, 9.7, 9.8, 9.9 and 9.10 shall survive any termination of this Agreement, and (ii) termination will not relieve a breaching party from liability for any willful and material breach of any provision of this Agreement.

8.3   Fees and Expenses.   Except as provided in Section 8.4 and with respect to costs and expenses of printing and mailing the Proxy Statement, which shall be borne equally by PHC and MBI, and all filing and other fees in connection with any filing with the SEC relating to the Merger, which shall be borne by PHC, all fees and expenses incurred in connection with the Merger, the Bank Merger, this Agreement, and the other transactions contemplated by this Agreement shall be paid by the Party incurring such fees or expenses, whether or not the Merger is consummated, provided that nothing contained herein shall limit either Party’s rights to recover any liabilities or damages arising out of the other Party’s willful and material breach of any provision of this Agreement. Notwithstanding the foregoing, if any legal action or other proceeding relating to this Agreement or the transactions contemplated hereby or the enforcement of any provision of this Agreement is brought by a Party against the other Party, the prevailing Party in such action or proceeding shall be entitled to recover all reasonable expenses relating thereto (including reasonable attorneys’ fees and expenses, court costs and expenses incident to arbitration, appellate and post-judgment proceedings) from the other Party, in addition to any other relief to which such prevailing Party may be entitled.

8.4   Termination Fees.

(a)   In recognition of the efforts, expenses and other opportunities foregone by PHC while structuring and pursuing the Merger, if this Agreement is terminated pursuant to Section 8.1(a)(v), then MBI shall, within three (3) Business Days after such termination, pay PHC an amount equal to $4 million (the “Termination Fee”) by wire transfer of same-day funds.

(b)   If this Agreement is terminated by PHC under Section 8.1(a)(vi) or Section 8.1(a)(iv), and prior to the MBI Shareholder Meeting there has been publicly announced (and not publicly withdrawn) an Acquisition Proposal, then if within twelve (12) months of such termination MBI or

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any of its Significant Subsidiaries either (i) enters into a definitive agreement with respect to an Acquisition Proposal or (ii) consummates an Acquisition Proposal, MBI shall, within three (3) Business Days after the first to occur of entering into a definitive agreement with respect to an Acquisition Proposal or consummating an Acquisition Proposal, pay PHC the Termination Fee by wire transfer of same-day funds.

(c)   If this Agreement is terminated (i) by MBI pursuant to Section 8.1(a)(vii), or (ii) by MBI pursuant to Section 8.1(a)(iv) following a material breach by PHC of any of the provisions of Section 6.1 (which for the avoidance of doubt shall not be deemed to include any delay in or failure to launch or complete an initial public offering of PHC Common Stock, due to market conditions, SEC review or comments, or other factors outside the control of PHC, or a failure to comply with the provisions therein that provide for a specific filing deadline with respect to applications or filings with Governmental Entities), PHC shall, within three (3) Business Days after such termination, pay MBI the Termination Fee by wire transfer of same-day funds.

(d)   Notwithstanding anything to the contrary in this Agreement, other than in the case of a willful and material breach of this Agreement, the payment of the Termination Fee pursuant to this Section 8.4 shall fully discharge the Party paying such Termination Fee from, and be the sole and exclusive remedy of the other Party with respect to, any and all losses that may be suffered by such other Party based upon, resulting from or arising out of the circumstances giving rise to such termination of this Agreement. In no event shall MBI or PHC be required to pay the Termination Fee on more than one occasion.

(e)   The Parties agree that the agreements contained in this Section 8.4 are an integral part of the transactions contemplated by this Agreement, and that, without these agreements, the Parties would not enter into this Agreement.

8.5   Amendment.   This Agreement may be amended by the Parties, by action taken or authorized by their respective Boards of Directors, at any time before or after approval of the matters presented in connection with this Agreement by the shareholders of MBI or PHC; provided, however, that after any approval of the transactions contemplated by this Agreement by the shareholders of MBI or PHC, there may not be, without further approval of such shareholders, any amendment of this Agreement that requires further approval under applicable law. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the Parties.

8.6   Extension; Waiver.   At any time prior to the Effective Time, the Parties, by action taken or authorized by their respective Board of Directors, may, to the extent legally allowed, (a) extend the time for the performance of any of the obligations or other acts of the other Party, (b) waive any inaccuracies in the representations and warranties contained in this Agreement on the part of the other Party or (c) waive compliance with any of the agreements or conditions contained in this Agreement on the part of the other Party. Any agreement on the part of a Party to any such extension or waiver shall be valid only if set forth in a written instrument signed on behalf of such Party, but such extension or waiver or failure to insist on strict compliance with an obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure.

ARTICLE IX

MISCELLANEOUS PROVISIONS

9.1   Closing.   On the terms and subject to the conditions set forth in this Agreement, the closing of the Merger (the “Closing”) shall take place at 10:00 a.m., Coral Gables, Florida time, at the offices of PHC, on the fourth (4th) Business Day after the satisfaction or waiver (subject to applicable law) of the latest to occur of the conditions set forth in Article VII (other than those conditions that by their nature are to be satisfied or waived at the Closing, but subject to the satisfaction or waiver of such conditions at such time), unless another time or date is determined by mutual agreement of the Parties (the “Closing Date”). For purposes of this Agreement, a “Business Day” is any Monday, Tuesday, Wednesday, Thursday or Friday, excluding federal holidays on which banking organizations in Florida are authorized or required by law to be closed.

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9.2   Nonsurvival of Representations, Warranties and Agreements.   None of the representations, warranties, covenants and agreements set forth in this Agreement other than this Section 9.2 shall survive the Effective Time, except for those covenants and agreements contained in this Agreement that by their terms apply or are to be performed in whole or in part after the Effective Time, including, without limitation, the agreements contained in Articles I and II, and Sections 6.3, 6.4, 6.5 and 6.6.

9.3   Notices.   All notices and other communications in connection with this Agreement shall be in writing and shall be deemed given if delivered personally, sent via facsimile (with confirmation), mailed by registered or certified mail (return receipt requested) or delivered by an express courier (with confirmation) to the Parties at the following addresses (or at such other address for a Party as shall be specified by like notice):

(a)

if to PHC, to:
Professional Holding Corp
5100 PGA Boulevard, Suite 101
Palm Beach Gardens, Florida 33418
Attn: Mr. Daniel R. Sheehan
Fax: (305) 675-8045

with a copy (which shall not constitute notice to PHC) to:

Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attn: Matthew M. Guest, Esq.
Fax: (212) 403-2341

(b)

if to MBI, to:
Marquis Bancorp, Inc.
355 Alhambra Circle, Suite 125
Coral Gables, Florida 33134
Attn: Mr. Javier J. Holtz
Chairman and Chief Executive Officer
Fax: (305) 774-9937

with a copy (which shall not constitute notice to MBI) to:

Smith Mackinnon, PA
255 South Orange Avenue, Suite 1200
Orlando, Florida 32801
Attn: John P. Greeley, Esq.
Fax: (407) 843-2448

9.4   Interpretation.

(a)   For the purposes of this Agreement, references to the date hereof refer to the date of this Agreement.

(b)   The words “hereof”, “herein” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement. When a reference is made in this Agreement to Articles, Sections, Exhibits or Schedules, such reference shall be to an Article or Section of or Exhibit or Schedule to this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

(c)   Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.”

(d)   The word “or” as used in this Agreement shall not be exclusive.

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(e)   The meaning assigned to each term defined herein shall be equally applicable to both the singular and the plural forms of such term, and words denoting any gender shall include all genders. Where a word or phrase is defined herein, each of its other grammatical forms shall have a corresponding meaning.

(f)   A reference to any statute or to any provision of any statute shall include any amendment to, and any modification or re-enactment thereof, and all regulations and statutory instruments issued thereunder or pursuant thereto.

(g)   The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provisions of this Agreement.

(h)   If any term, provision, covenant or restriction contained in this Agreement is held by a court or a federal or state regulatory agency of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions and covenants and restrictions contained in this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. If for any reason such court or regulatory agency determines that any provision, covenant or restriction is invalid, void or unenforceable, it is the express intention of the Parties that such provision, covenant or restriction be enforced to the maximum extent permitted.

9.5   Counterparts.   This Agreement may be executed and delivered in two or more counterparts (including delivery by facsimile or other electronic means), all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each of the Parties and delivered to the other Party, it being understood that each Party need not sign the same counterpart.

9.6   Entire Agreement.   This Agreement (including the documents and the instruments referred to in this Agreement), together with the Confidentiality Agreement, constitutes the entire agreement and supersedes all prior written, and prior or contemporaneous oral, agreements and understandings, between the Parties with respect to the subject matter of this Agreement, other than the Confidentiality Agreement.

9.7   Governing Law; Waiver of Jury Trial.   This Agreement shall be governed and construed in accordance with the laws of the State of Florida, without regard to any applicable conflicts of law principles or any other principle that could require the application of the application of the law of any other jurisdiction. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE EXTENT PERMITTED BY LAW AT THE TIME OF INSTITUTION OF THE APPLICABLE LITIGATION, ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT: (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (IV) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.7.

9.8   Publicity.   Other than in connection with the matters described in Section 6.7, neither MBI nor PHC shall, and neither MBI nor PHC shall permit any of its Subsidiaries to, issue or cause the publication of any press release or other public announcement with respect to, or otherwise make any public statement concerning, the transactions contemplated by this Agreement without the prior consent (which shall not be unreasonably withheld, conditioned or delayed) of PHC, in the case of a proposed announcement or statement by MBI, or MBI, in the case of a proposed announcement or statement by PHC; provided,

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however, that either Party may, without the prior consent of the other Party (but after prior consultation with the other Party to the extent practicable under the circumstances) issue or cause the publication of any press release or other public announcement to the extent required by law or by the rules and regulations of the Nasdaq.

9.9   Assignment; Third Party Beneficiaries.   Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned by either of the Parties (whether by operation of law or otherwise) without the prior written consent of the other Party (which shall not be unreasonably withheld, conditioned or delayed). Any purported assignment in contravention hereof shall be null and void. Subject to the immediately preceding sentence, this Agreement shall be binding upon, inure to the benefit of and be enforceable by each of the Parties and their respective successors and assigns. Except (i) for Section 6.6, which is intended to benefit each Indemnified Party and his or her heirs and representatives, (ii) if the Effective Time occurs, the right of the holders of MBI Common Stock and MBI Stock Options to receive the Merger Consideration and the option conversion rights pursuant to this Agreement, and (iii) the right of each Party’s shareholders to pursue claims for damages (including damages based on the loss of the economic benefits of the Merger, including the loss of any premium offered to such shareholders) and other relief, including equitable relief, for a material breach by the other Party of its obligations under this Agreement, or as otherwise specifically provided herein, this Agreement (including the documents and instruments referred to in this Agreement) is not intended to and does not confer upon any Person other than the Parties hereto any rights or remedies under this Agreement; provided that the rights granted pursuant to the preceding clause (iii) shall be enforceable on behalf of each Party’s shareholders only by the applicable Party, in its sole and absolute discretion, and any amounts received by such Party in connection therewith may be retained by such Party.

9.10   Specific Performance; Time of the Essence.   The Parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms. It is accordingly agreed that the Parties shall be entitled specific performance of the terms hereof, without the necessity of demonstrating irreparable harm or posting of any bond or security, in addition to any other remedies to which they are entitled at law or equity. Time is of the essence for performance of the agreements, covenants and obligations of the Parties herein.

9.11   Disclosure Schedule.   Before entry into this Agreement, each Party delivered to the other a schedule (each a “Disclosure Schedule”) that sets forth, among other things, items the disclosure of which is necessary or appropriate either in response to an express disclosure requirement contained in a provision hereof or as an exception to one or more representations or warranties of the disclosing Party contained in Article III or Article IV or one or more covenants of the disclosing Party contained herein, as applicable; provided, however, that notwithstanding anything in this Agreement to the contrary, (a) no such item is required to be set forth as an exception to a representation or warranty if its absence would not result in the related representation or warranty being deemed untrue or incorrect and (b) the mere inclusion of an item as an exception to a representation or warranty shall not be deemed an admission that such item represents a material exception or material fact, event or circumstance. For purposes of this Agreement, “Previously Disclosed” or “previously disclosed” means information set forth by a Party in the applicable paragraph of its Disclosure Schedule or any other paragraph of its Disclosure Schedule (so long as it is reasonably clear from the context that the disclosure in such other paragraph of its Disclosure Schedule is also applicable to the section of this Agreement in question).

9.12   Confidential Supervisory Information.   Notwithstanding any other provision of this Agreement, no disclosure, representation or warranty shall be made (or other action taken) pursuant to this Agreement that would involve the disclosure of confidential supervisory information (including confidential supervisory information as defined in 12 C.F.R. § 261.2(c) and as identified in 12 C.F.R. § 309.5(g)(8)) of a Governmental Entity by any party to this Agreement to the extent prohibited by applicable law. To the extent legally permissible, appropriate substitute disclosures or actions shall be made or taken under circumstances in which the limitations of the preceding sentence apply.

[Remainder of page intentionally left blank; signature page follows.]

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IN WITNESS WHEREOF, PHC and MBI have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the date first above written.

PROFESSIONAL HOLDING CORP

By:

/s/ Daniel Sheehan

Daniel R. Sheehan
Chairman and Chief Executive Officer

MARQUIS BANCORP, INC.

By:

/s/ Javier Holtz

Javier Holtz
Chairman and Chief Executive Officer

[Signature Page to Agreement and Plan of Merger]

List of Exhibits and Schedules Omitted from the Purchase Agreement
Referenced in Exhibit 2.1 Above

Pursuant to Regulation S-K, Item 601(a)(5), the Exhibits and Schedules to the Purchase Agreement referenced in Exhibit 2.1 above, as listed below, have not been filed. The Registrant agrees to furnish supplementally a copy of any omitted Exhibit or Schedule to the Securities and Exchange Commission (the “Commission”) upon request; provided, however, that the Registrant may request confidential treatment of omitted items.

Schedules:

Schedule 1.1:	Restrictive Covenant Agreement Counterparties
Schedule 1.5:	Definition of Cause
Schedule 1.7:	Directors of Surviving Company and Surviving Bank

Exhibits:

Exhibit A:	Shareholder Voting Agreement
Exhibit B:	Shareholder Voting Agreement
Exhibit C:	Plan of Merger and Merger Agreement
Exhibit D:	Non-Competition and Non-Disclosure Agreement

ANNEX B​

August 12, 2019
Board of Directors
Marquis Bancorp, Inc.
355 Alhambra Circle
Suite 1200
Coral Gables, FL 33134

Dear Members of the Board of Directors:

We understand that Marquis Bancorp, Inc. (or “Marquis”) has entered into an Agreement and Plan of Merger with Professional Holding Corp. (or “Professional”), dated as of August 12, 2019 (the “Agreement”), pursuant to which, among other things, the Marquis will merge with and into the Professional (the “Merger”), and Marquis’s bank subsidiary will merge with and into Professional’s bank subsidiary. Pursuant to the terms detailed in the Agreement, upon the effective date of such Merger, each share of Marquis Common Stock shall be converted into the right to receive 1.2048 shares (the “Exchange Ratio”) of Professional common stock (the “Merger Consideration”). In connection therewith, you have requested our opinion as to the fairness (the “Opinion”), from a financial point of view, of the Merger Consideration to be paid to the shareholders of Marquis pursuant to the Agreement. Unless otherwise defined in this letter, capitalized terms used herein will have the same meaning as in the Agreement.

Janney Montgomery Scott LLC (or “Janney”), as part of its investment banking business, is continually engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, competitive bidding, secondary distributions of listed and unlisted securities, private placements and valuations for estate, corporate and other purposes. As specialists in the securities of banking companies, we have experience and knowledge of the valuation of banking institutions. This opinion has been reviewed by Janney’s compliance officer consistent with internal policy and it has been reviewed by a fairness committee. In addition, Janney has not had a material relationship with any party to the transaction for which we have received compensation during the prior two years.

We were retained exclusively by Marquis to act as its financial advisor in connection with the Merger and in rendering this fairness opinion. We will receive compensation from Marquis in connection with our services upon delivery of the fairness opinion dated August 12, 2019. Marquis has agreed to indemnify us for certain liabilities arising out of our engagement.

During the course of our engagement and for the purposes of the opinion set forth herein, we have:

(i)

reviewed the Agreement;

(ii)

reviewed certain historical, publicly available business and financial information concerning Marquis and Professional;

(iii)

held discussions with members or representatives of the senior management of Marquis and Professional for the purpose of reviewing future prospects of the potential pro forma institution related to the respective businesses, earnings, assets, liabilities and the amount of and timing of cost savings expected to be achieved as a result of the Merger;

(iv)

reviewed the terms of recent merger and acquisition transactions, to the extent publicly available, involving banks, thrifts and bank and thrift holding companies that we considered relevant;

(v)

reviewed the current and historical financial results of Marquis and Professional;

(vi)

performed a comparison of certain Marquis and Professional operating and trading information with other similar publicly traded companies;

(vii)

performed such other analyses and considered such other factors as we have deemed appropriate.

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Marquis Bancorp, Inc.
August 12, 2019
Page 2 of 2

We also took into account our assessment of general economic, market and financial conditions and our experience in other transactions as well as our knowledge of the banking industry and our general experience in securities valuations.

In rendering this opinion, we have assumed, without independent verification, the accuracy and completeness of the financial and other information and representations contained in the materials provided to us by Marquis and Professional and in the discussions with the respective management teams or representatives of Marquis and Professional. In that regard, we have assumed that any financial forecasts, including, without limitation, the synergies and Marquis projections of the pro forma institution have been reasonably prepared on a basis reflecting the best currently available information and judgments and estimates of Marquis and Professional and that such financial results will be realized in the amounts and at the times contemplated thereby. We are not experts in the evaluation of loan and lease portfolios for purposes of assessing the adequacy of the allowances for losses with respect thereto and have assumed and relied upon management’s estimates and projections. We were not retained to and did not conduct a physical inspection of any of the properties or facilities Marquis and Professional or their respective subsidiaries. In addition, we have not reviewed individual credit files nor have we made an independent evaluation or appraisal of the assets and liabilities of Marquis and Professional or any of their respective subsidiaries, and we were not furnished with any such evaluations or appraisals.

We have assumed that the Merger will be consummated substantially in accordance with the terms set forth in the Agreement. We have further assumed that the Merger will be accounted for as a purchase under generally accepted accounting principles. We have assumed that the Merger is, and will be, in compliance with all laws and regulations that are applicable to Marquis and Professional. In rendering this Opinion, we have been advised by Marquis and Professional, and we have assumed that there are no factors that would impede any necessary regulatory or governmental approval of the Merger.

Our Opinion is based solely upon the information available to us and the economic, market and other circumstances, as they exist as of the date hereof. Events occurring and information that becomes available after the date hereof could materially affect the assumptions and analyses used in preparing this opinion. We have not undertaken to reaffirm or revise this opinion or otherwise comment upon any events occurring or information that becomes available after the date hereof, except as otherwise agreed in our engagement letter.

This letter is solely for the information of the Board of Directors of Marquis and is not to be used, circulated, quoted or otherwise referred to for any other purpose, nor is it to be filed with, included in or referred to in whole or in part in any proxy statement or any other document, except in each case in accordance with our prior written consent, which shall not be unreasonably withheld; provided, however, that we hereby consent to the inclusion and reference to this letter in any proxy statement, information statement or tender offer document to be delivered to the holders of Marquis Common Stock in connection with the Merger if and only if this letter is quoted in full or attached as an exhibit to such document.

Subject to the foregoing and based on our experience as investment bankers, our activities and assumptions as described above, and other factors we have deemed relevant, we are of the opinion as of the date hereof that the Merger Consideration to be received by the holders of Marquis Common Stock pursuant to the Agreement is fair, from a financial point of view, to the shareholders of the Marquis.

Sincerely,

/s/ Janney Montgomery Scott, LLC

Janney Montgomery Scott, LLC

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ANNEX C​

August 9, 2019

Board of Directors
Professional Holding Corp.
396 Alhambra Circle, Suite 255
Coral Gables, FL 33134

Dear Members of the Board:

We have acted as your financial advisor in connection with the proposed acquisition of Marquis Bancorp, Inc. (the “Target”) by Professional Holding Corp. (the “Company”) (the “Transaction”), and you have requested that we provide our opinion (the “Opinion”) as to whether the Exchange Ratio is fair to the Company from a financial point of view.

The terms and conditions of the Transaction are more fully set forth in an Agreement and Plan of Merger (the “Agreement”) between the Company and the Target. Pursuant to the Agreement and for purposes of our Opinion, we understand that the consideration expected to be exchanged by the Company for the outstanding common stock and options of the Target consists of 1.2048 shares of the Class A common stock of the Company (“Exchange Ratio”) for each outstanding share of the Target and options for the Class A common stock of the Company will be issued to replace outstanding options for common stock of the Target based on the Exchange Ratio.

In connection with rendering our Opinion, we have:

(i)

analyzed certain publicly available financial statements and reports regarding the Company and the Target;

(ii)

analyzed the audited financial statements and certain management reports regarding the Company and the Target;

(iii)

analyzed certain internal financial statements and other financial and operating data concerning the Company and the Target prepared by management of the Company and Target, respectively;

(iv)

compared the financial performance of the Company with that of certain publicly-traded companies and their securities that we deemed relevant to our analysis of the Transaction;

(v)

analyzed the Exchange Ratio relative to each company’s contribution to the pro forma entity using both June 30, 2019 financials and projections provided by Company management;

(vi)

analyzed, on a pro forma basis, the effect of the Transaction on the balance sheet, capitalization ratios, earnings and tangible book value both in the aggregate and, where applicable, on a per share basis of the Company;

(vii)

reviewed the most recent draft of the Agreement and related documents provided to us by the Company;

(viii)

discussed with management of the Company the operations of and future business prospects for the Company and the Target and the anticipated financial consequences of the Transaction to the Company;

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(ix)

assisted in your deliberations regarding the material terms of the Transaction and your negotiations with the Target; and

(x)

performed such other analyses and provided such other services as we have deemed appropriate.

We have relied on the accuracy and completeness of the information and financial data provided to us by the Company and the Target and of the other information reviewed by us in connection with the preparation of our Opinion, and our Opinion is based upon such information. We have not assumed any responsibility for independent verification of the accuracy or completeness of any of such information or financial data. Management of the Company has assured us that they are not aware of any relevant information that has been omitted or remains undisclosed to us. We have not assumed any responsibility for making or undertaking an independent evaluation or appraisal of any of the assets or liabilities of the Company or of the Target, and we have not been furnished with any such evaluations or appraisals; nor have we evaluated the solvency or fair value of the Company or of the Target under any laws relating to bankruptcy, insolvency or similar matters. We have not assumed any obligation to conduct any physical inspection of the properties or facilities of the Company or Target. With respect to the financial forecasts prepared by the Company, including the forecasts of potential cost savings and purchase accounting adjustments, we have assumed that such financial forecasts have been reasonably prepared and reflect the best currently available estimates and judgments of the management of the Company as to the future financial performance of the Company and the Target, and that the financial results reflected by such projections will be realized as predicted. We have not received or reviewed any individual credit files nor have we made an independent evaluation of the adequacy of the allowance for loan losses of the Company or the Target. We have also assumed that the representations and warranties contained in the Agreement and all related documents are true, correct and complete in all material respects.

As part of our investment banking business, we regularly issue fairness opinions and are continually engaged in the valuation of companies and their securities in connection with business reorganizations, private placements, negotiated underwritings, mergers and acquisitions and valuations for estate, corporate and other purposes. We serve as financial adviser to the Company in connection with the Transaction, and we are entitled to receive from the Company reimbursement of our expenses and a fee for our services as financial adviser to the Company, a significant portion of which is contingent upon the consummation of the Transaction. We are also entitled to receive a fee from the Company for providing our Opinion to the Board of Directors of the Company. The Company has also agreed to indemnify us for certain liabilities arising out of our engagement, including certain liabilities that could arise out of our providing this Opinion letter. We expect to pursue future investment banking services assignments with the Company, including (but not limited to) potentially serving as an underwriter in the Company’s initial public offering. In the ordinary course of business, Stephens Inc. and its affiliates at any time may hold long or short positions, and may trade or otherwise effect transactions as principal or for the accounts of customers, in debt or equity securities or options on securities of the Company or of any other participant in the Transaction. As you know, affiliates and employees of Stephens Inc. (including, among others, employees involved in preparing this Opinion) own, in the aggregate, approximately five percent of the outstanding stock of the Company.

We are not legal, accounting, regulatory or tax experts, and we have relied solely, and without independent verification, on the assessments of the Company and its other advisors with respect to such matters. We have assumed, with your consent, that the Transaction will not result in any material adverse legal, regulatory, accounting or tax consequences for the Company.

The Opinion is necessarily based upon market, economic and other conditions as they exist and can be evaluated on, and on the information made available to us as of the date hereof. It should be understood that subsequent developments may affect this Opinion and that we do not have any obligation to update, revise or reaffirm this Opinion. We have assumed that the Transaction will be consummated in all material respects on the terms of the latest draft of the Agreement provided to us, without material waiver or modification. We have assumed that in the course of obtaining the necessary regulatory approvals, or other consents or approvals (contractual or otherwise) for the Transaction, no restrictions will be imposed that would have a material adverse effect on the contemplated benefits of the Transaction to the Company. We are not expressing any opinion herein as to the price at which the common stock or any other securities of the Company will trade following the announcement of the Transaction.

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This Opinion is for the use and benefit of the Board of Directors of the Company for purposes of assisting with its evaluation of the Transaction. Our Opinion does not address the merits of the underlying decision by the Company to engage in the Transaction, the merits of the Transaction as compared to other alternatives potentially available to the Company or the relative effects of any alternative transaction in which the Company might engage, nor is it intended to be a recommendation to any person as to any specific action that should be taken in connection with the Transaction. This Opinion is not intended to confer any rights or remedies upon any other person. In addition, except as explicitly set forth in this letter, you have not asked us to address, and this Opinion does not address, the fairness to, or any other consideration of, the holders of any class of securities, creditors or other constituencies of the Company. We have not been asked to express any opinion, and do not express any opinion, as to the fairness of the amount or nature of the compensation to any of the Company’s officers, directors or employees, or to any group of such officers, directors or employees, relative to the compensation to other stockholders of the Company. Our Fairness Opinion Committee has approved the Opinion set forth in this letter. Neither this Opinion nor its substance may be disclosed by you to anyone other than your advisors without our written permission. Notwithstanding the foregoing, this Opinion and a summary discussion of our underlying analyses and role as financial adviser to the Company may be included in communications to stockholders of the Company, provided that we approve of the content of such disclosures prior to any filing, distribution or publication of such communications.

Based on the foregoing and our general experience as investment bankers, and subject to the assumptions and qualifications stated herein, we are of the opinion, on the date hereof, that the Exchange Ratio is fair from a financial point of view to the Company.

Very truly yours,

/s/ Stephens Inc.

STEPHENS INC.

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ANNEX D​

Florida Statutes § 607.1301

Appraisal rights; definitions.

The following definitions apply to ss. 607.1301—607.1340:

(1)

“Accrued interest” means interest from the date the corporate action becomes effective until the date of payment, at the rate of interest determined for judgments pursuant to s. 55.03, determined as of the effective date of the corporate action.

(2)

“Affiliate” means a person that directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with another person or is a senior executive of such person. For purposes of paragraph (6)(a), a person is deemed to be an affiliate of its senior executives.

(3)

“Corporate action” means an event described in s. 607.1302(1).

(4)

“Corporation” means the domestic corporation that is the issuer of the shares held by a shareholder demanding appraisal and, for matters covered in ss. 607.1322—607.1340, includes the domesticated eligible entity in a domestication, the covered eligible entity in a conversion, and the survivor of a merger.

(5)

“Fair value” means the value of the corporation’s shares determined:

(a)

Immediately before the effectiveness of the corporate action to which the shareholder objects.

(b)

Using customary and current valuation concepts and techniques generally employed for similar businesses in the context of the transaction requiring appraisal, excluding any appreciation or depreciation in anticipation of the corporate action unless exclusion would be inequitable to the corporation and its remaining shareholders.

(c)

Without discounting for lack of marketability or minority status.

(6)

“Interested transaction” means a corporate action described in s. 607.1302(1), other than a merger pursuant to s. 607.1104, involving an interested person in which any of the shares or assets of the corporation are being acquired or converted. As used in this definition:

(a)

“Interested person” means a person, or an affiliate of a person, who at any time during the 1-year period immediately preceding approval by the board of directors of the corporate action:

1.

Was the beneficial owner of 20 percent or more of the voting power of the corporation, other than as owner of excluded shares;

2.

Had the power, contractually or otherwise, other than as owner of excluded shares, to cause the appointment or election of 25 percent or more of the directors to the board of directors of the corporation; or

3.

Was a senior executive or director of the corporation or a senior executive of any affiliate of the corporation, and will receive, as a result of the corporate action, a financial benefit not generally available to other shareholders as such, other than:

a.

Employment, consulting, retirement, or similar benefits established separately and not as part of or in contemplation of the corporate action;

b.

Employment, consulting, retirement, or similar benefits established in contemplation of, or as part of, the corporate action that are not more favorable than those existing before the corporate action or, if more favorable, that have been approved on behalf of the corporation in the same manner as is provided in s. 607.0832; or

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c.

In the case of a director of the corporation who, in the corporate action, will become a director or governor of the acquirer or any of its affiliates in the corporate action, rights and benefits as a director or governor that are provided on the same basis as those afforded by the acquirer generally to other directors or governors of such entity or such affiliate.

(b)

“Beneficial owner” means any person who, directly or indirectly, through any contract, arrangement, or understanding, other than a revocable proxy, has or shares the power to vote, or to direct the voting of, shares; except that a member of a national securities exchange is not deemed to be a beneficial owner of securities held directly or indirectly by it on behalf of another person if the member is precluded by the rules of the exchange from voting without instruction on contested matters or matters that may affect substantially the rights or privileges of the holders of the securities to be voted. When two or more persons agree to act together for the purpose of voting their shares of the corporation, each member of the group formed thereby is deemed to have acquired beneficial ownership, as of the date of the agreement, of all shares having voting power of the corporation beneficially owned by any member of the group.

(c)

“Excluded shares” means shares acquired pursuant to an offer for all shares having voting power if the offer was made within 1 year before the corporate action for consideration of the same kind and of a value equal to or less than that paid in connection with the corporate action.

(7)

“Preferred shares” means a class or series of shares the holders of which have preference over any other class or series of shares with respect to distributions.

(8)

“Senior executive” means the chief executive officer, chief operating officer, chief financial officer, or any individual in charge of a principal business unit or function.

(9)

Notwithstanding s. 607.01401(67), “shareholder” means a record shareholder, a beneficial shareholder, and a voting trust beneficial owner.

Florida Statutes § 607.1302

Right of shareholders to appraisal.

(1)

A shareholder of a domestic corporation is entitled to appraisal rights, and to obtain payment of the fair value of that shareholder’s shares, in the event of any of the following corporate actions:

(a)

Consummation of a domestication or a conversion of such corporation pursuant to s. 607.11921 or s. 607.11932, as applicable, if shareholder approval is required for the domestication or the conversion;

(b)

Consummation of a merger to which such corporation is a party:

1.

If shareholder approval is required for the merger under s. 607.1103 or would be required but for s. 607.11035, except that appraisal rights shall not be available to any shareholder of the corporation with respect to shares of any class or series that remains outstanding after consummation of the merger where the terms of such class or series have not been materially altered; or

2.

If such corporation is a subsidiary and the merger is governed by s. 607.1104;

(c)

Consummation of a share exchange to which the corporation is a party as the corporation whose shares will be acquired, except that appraisal rights are not available to any shareholder of the corporation with respect to any class or series of shares of the corporation that is not acquired in the share exchange;

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(d)

Consummation of a disposition of assets pursuant to s. 607.1202 if the shareholder is entitled to vote on the disposition, including a sale in dissolution, except that appraisal rights shall not be available to any shareholder of the corporation with respect to shares or any class or series if:

1.

Under the terms of the corporate action approved by the shareholders there is to be distributed to shareholders in cash the corporation’s net assets, in excess of a reasonable amount reserved to meet claims of the type described in ss. 607.1406 and 607.1407, within 1 year after the shareholders’ approval of the action and in accordance with their respective interests determined at the time of distribution; and

2.

The disposition of assets is not an interested transaction;

(e)

An amendment of the articles of incorporation with respect to a class or series of shares which reduces the number of shares of a class or series owned by the shareholder to a fraction of a share if the corporation has the obligation or the right to repurchase the fractional share so created;

(f)

Any other merger, share exchange, disposition of assets, or amendment to the articles of incorporation, in each case to the extent provided by the articles of incorporation, bylaws, or a resolution of the board of directors, except that no bylaw or board resolution providing for appraisal rights may be amended or otherwise altered except by shareholder approval;

(g)

An amendment to the articles of incorporation or bylaws of the corporation, the effect of which is to alter or abolish voting or other rights with respect to such interest in a manner that is adverse to the interest of such shareholder, except as the right may be affected by the voting or other rights of new shares then being authorized of a new class or series of shares;

(h)

An amendment to the articles of incorporation or bylaws of a corporation the effect of which is to adversely affect the interest of the shareholder by altering or abolishing appraisal rights under this section;

(i)

With regard to a class of shares prescribed in the articles of incorporation prior to October 1, 2003, including any shares within that class subsequently authorized by amendment, any amendment of the articles of incorporation if the shareholder is entitled to vote on the amendment and if such amendment would adversely affect such shareholder by:

1.

Altering or abolishing any preemptive rights attached to any of his or her shares;

2.

Altering or abolishing the voting rights pertaining to any of his or her shares, except as such rights may be affected by the voting rights of new shares then being authorized of any existing or new class or series of shares;

3.

Effecting an exchange, cancellation, or reclassification of any of his or her shares, when such exchange, cancellation, or reclassification would alter or abolish the shareholder’s voting rights or alter his or her percentage of equity in the corporation, or effecting a reduction or cancellation of accrued dividends or other arrearages in respect to such shares;

4.

Reducing the stated redemption price of any of the shareholder’s redeemable shares, altering or abolishing any provision relating to any sinking fund for the redemption or purchase of any of his or her shares, or making any of his or her shares subject to redemption when they are not otherwise redeemable;

5.

Making noncumulative, in whole or in part, dividends of any of the shareholder’s preferred shares which had theretofore been cumulative;

6.

Reducing the stated dividend preference of any of the shareholder’s preferred shares; or

7.

Reducing any stated preferential amount payable on any of the shareholder’s preferred shares upon voluntary or involuntary liquidation;

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(j)

An amendment of the articles of incorporation of a social purpose corporation to which s. 607.504 or s. 607.505 applies;

(k)

An amendment of the articles of incorporation of a benefit corporation to which s. 607.604 or s. 607.605 applies;

(l)

A merger, domestication, conversion, or share exchange of a social purpose corporation to which s. 607.504 applies; or

(m)

A merger, domestication, conversion, or share exchange of a benefit corporation to which s. 607.604 applies.

(2)

Notwithstanding subsection (1), the availability of appraisal rights under paragraphs (1)(a), (b), (c), (d), and (e) shall be limited in accordance with the following provisions:

(a)

Appraisal rights shall not be available for the holders of shares of any class or series of shares which is:

1.

A covered security under s. 18(b)(1)(A) or (B) of the Securities Act of 1933;

2.

Not a covered security, but traded in an organized market and has at least 2,000 shareholders and the outstanding shares of such class or series have a market value of at least $20 million, exclusive of the value of outstanding shares held by the corporation’s subsidiaries, by the corporation’s senior executives, by the corporation’s directors, and by the corporation’s beneficial shareholders and voting trust beneficial owners owning more than 10 percent of the outstanding shares; or

3.

Issued by an open end management investment company registered with the Securities and Exchange Commission under the Investment Company Act of 1940 and which may be redeemed at the option of the holder at net asset value.

(b)

The applicability of paragraph (a) shall be determined as of:

1.

The record date fixed to determine the shareholders entitled to receive notice of the meeting of shareholders to act upon the corporate action requiring appraisal rights, or, in the case of an offer made pursuant to s. 607.11035, the date of such offer; or

2.

If there will be no meeting of shareholders and no offer is made pursuant to s. 607.11035, the close of business on the day before the consummation of the corporate action or the effective date of the amendment of the articles, as applicable.

(c)

Paragraph (a) is not applicable and appraisal rights shall be available pursuant to subsection (1) for the holders of any class or series of shares where the corporate action is an interested transaction.

(3)

Notwithstanding any other provision of this section, the articles of incorporation as originally filed or any amendment to the articles of incorporation may limit or eliminate appraisal rights for any class or series of preferred shares, except that:

(a)

No such limitation or elimination shall be effective if the class or series does not have the right to vote separately as a voting group, alone or as part of a group, on the action or if the action is a domestication under s. 607.11920 or a conversion under s. 607.11930, or a merger having a similar effect as a domestication or conversion in which the domesticated eligible entity or the converted eligible entity is an eligible entity; and

(b)

Any such limitation or elimination contained in an amendment to the articles of incorporation that limits or eliminates appraisal rights for any of such shares that are outstanding immediately before the effective date of such amendment or that the corporation is or may be required to issue or sell thereafter pursuant to any conversion, exchange, or other right existing immediately before the effective date of such amendment shall not apply to any corporate action that becomes effective within 1 year after the effective date of such amendment if such action would otherwise afford appraisal rights.

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Florida Statutes § 607.1303

Assertion of rights by nominees and beneficial owners.

(1)

A record shareholder may assert appraisal rights as to fewer than all the shares registered in the record shareholder’s name but owned by a beneficial shareholder or a voting trust beneficial owner only if the record shareholder objects with respect to all shares of the class or series owned by the beneficial shareholder or a voting trust beneficial owner and notifies the corporation in writing of the name and address of each beneficial shareholder or voting trust beneficial owner on whose behalf appraisal rights are being asserted. The rights of a record shareholder who asserts appraisal rights for only part of the shares held of record in the record shareholder’s name under this subsection shall be determined as if the shares as to which the record shareholder objects and the record shareholder’s other shares were registered in the names of different record shareholders.

(2)

A beneficial shareholder and a voting trust beneficial owner may assert appraisal rights as to shares of any class or series held on behalf of the shareholder only if such shareholder:

(a)

Submits to the corporation the record shareholder’s written consent to the assertion of such rights no later than the date referred to in s. 607.1322(2)(b) 2.

(b)

Does so with respect to all shares of the class or series that are beneficially owned by the beneficial shareholder or the voting trust beneficial owner.

Florida Statutes § 607.1320

Notice of appraisal rights.

(1)

If a proposed corporate action described in s. 607.1302(1) is to be submitted to a vote at a shareholders’ meeting, the meeting notice (or, where no approval of such action is required pursuant to s. 607.11035, the offer made pursuant to s. 607.11035), must state that the corporation has concluded that shareholders are, are not, or may be entitled to assert appraisal rights under this chapter. If the corporation concludes that appraisal rights are or may be available, a copy of ss. 607.1301—607.1340 must accompany the meeting notice or offer sent to those record shareholders entitled to exercise appraisal rights.

(2)

In a merger pursuant to s. 607.1104, the parent corporation must notify in writing all record shareholders of the subsidiary who are entitled to assert appraisal rights that the corporate action became effective. Such notice must be sent within 10 days after the corporate action became effective and include the materials described in s. 607.1322.

(3)

If a proposed corporate action described in s. 607.1302(1) is to be approved by written consent of the shareholders pursuant to s. 607.0704:

(a)

Written notice that appraisal rights are, are not, or may be available must be sent to each shareholder from whom a consent is solicited at the time consent of such shareholder is first solicited, and, if the corporation has concluded that appraisal rights are or may be available, a copy of ss. 607.1301—607.1340 must accompany such written notice; and

(b)

Written notice that appraisal rights are, are not, or may be available must be delivered, at least 10 days before the corporate action becomes effective, to all nonconsenting and nonvoting shareholders, and, if the corporation has concluded that appraisal rights are or may be available, a copy of ss. 607.1301—607.1340 must accompany such written notice.

(4)

Where a corporate action described in s. 607.1302(1) is proposed or a merger pursuant to s. 607.1104 is effected, and the corporation concludes that appraisal rights are or may be available, the notice referred to in subsection (1), paragraph (3)(a), or paragraph (3)(b) must be accompanied by:

(a)

Financial statements of the corporation that issued the shares that may be or are subject to appraisal rights, consisting of a balance sheet as of the end of the fiscal year ending not more

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than 16 months before the date of the notice, an income statement for that fiscal year, and a cash flow statement for that fiscal year; however, if such financial statements are not reasonably available, the corporation must provide reasonably equivalent financial information; and

(b)

The latest available interim financial statements, including year-to-date through the end of the interim period, of such corporation, if any.

(5)

The right to receive the information described in subsection (4) may be waived in writing by a shareholder before or after the corporate action is effected.

Florida Statutes § 607.1321

Notice of intent to demand payment.

(1)

If a proposed corporate action requiring appraisal rights under s. 607.1302 is submitted to a vote at a shareholders’ meeting, a shareholder who wishes to assert appraisal rights with respect to any class or series of shares:

(a)

Must deliver to the corporation before the vote is taken written notice of the shareholder’s intent to demand payment if the proposed corporate action is effectuated; and

(b)

Must not vote, or cause or permit to be voted, any shares of such class or series in favor of the proposed corporate action.

(2)

If a proposed corporate action requiring appraisal rights under s. 607.1302 is to be approved by written consent, a shareholder who wishes to assert appraisal rights with respect to any class or series of shares must not sign a consent in favor of the proposed corporate action with respect to that class or series of shares.

(3)

If a proposed corporate action specified in s. 607.1302(1) does not require shareholder approval pursuant to s. 607.11035, a shareholder who wishes to assert appraisal rights with respect to any class or series of shares:

(a)

Must deliver to the corporation before the shares are purchased pursuant to the offer a written notice of the shareholder’s intent to demand payment if the proposed action is effected; and

(b)

Must not tender, or cause or permit to be tendered, any shares of such class or series in response to such offer.

(4)

A shareholder who may otherwise be entitled to appraisal rights but does not satisfy the requirements of subsection (1), subsection (2), or subsection (3) is not entitled to payment under this chapter.

Florida Statutes § 607.1322

Appraisal notice and form.

(1)

If a proposed corporate action requiring appraisal rights under s. 607.1302(1) becomes effective, the corporation must deliver a written appraisal notice and form required by paragraph (2)(a) to all shareholders who satisfied the requirements of s. 607.1321(1), (2), or (3). In the case of a merger under s. 607.1104, the parent must deliver a written appraisal notice and form to all record shareholders who may be entitled to assert appraisal rights.

(2)

The appraisal notice must be delivered no earlier than the date the corporate action became effective, and no later than 10 days after such date, and must:

(a)

Supply a form that specifies the date that the corporate action became effective and that provides for the shareholder to state:

1.

The shareholder’s name and address.

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2.

The number, classes, and series of shares as to which the shareholder asserts appraisal rights.

3.

That the shareholder did not vote for or consent to the transaction.

4.

Whether the shareholder accepts the corporation’s offer as stated in subparagraph (b)4.

5.

If the offer is not accepted, the shareholder’s estimated fair value of the shares and a demand for payment of the shareholder’s estimated value plus accrued interest.

(b)

State:

1.

Where the form must be sent and where certificates for certificated shares must be deposited and the date by which those certificates must be deposited, which date may not be earlier than the date by which the corporation must receive the required form under subparagraph 2.

2.

A date by which the corporation must receive the form, which date may not be fewer than 40 nor more than 60 days after the date the subsection (1) appraisal notice and form are sent, and state that the shareholder shall have waived the right to demand appraisal with respect to the shares unless the form is received by the corporation by such specified date.

3.

The corporation’s estimate of the fair value of the shares.

4.

An offer to each shareholder who is entitled to appraisal rights to pay the corporation’s estimate of fair value set forth in subparagraph 3.

5.

That, if requested in writing, the corporation will provide to the shareholder so requesting, within 10 days after the date specified in subparagraph 2., the number of shareholders who return the forms by the specified date and the total number of shares owned by them.

6.

The date by which the notice to withdraw under s. 607.1323 must be received, which date must be within 20 days after the date specified in subparagraph 2.

(c)

If not previously provided, be accompanied by a copy of ss. 607.1301—607.1340.

Florida Statutes § 607.1323

Perfection of rights; right to withdraw.

(1)

A shareholder who receives notice pursuant to s. 607.1322 and who wishes to exercise appraisal rights must sign and return the form received pursuant to s. 607.1322(1) and, in the case of certificated shares, deposit the shareholder’s certificates in accordance with the terms of the notice by the date referred to in the notice pursuant to s. 607.1322(2)(b) 2. Once a shareholder deposits that shareholder’s certificates or, in the case of uncertificated shares, returns the signed forms, that shareholder loses all rights as a shareholder, unless the shareholder withdraws pursuant to subsection (2).

(2)

A shareholder who has complied with subsection (1) may nevertheless decline to exercise appraisal rights and withdraw from the appraisal process by so notifying the corporation in writing by the date set forth in the appraisal notice pursuant to s. 607.1322(2)(b) 6. A shareholder who fails to so withdraw from the appraisal process may not thereafter withdraw without the corporation’s written consent.

(3)

A shareholder who does not sign and return the form and, in the case of certificated shares, deposit that shareholder’s share certificates if required, each by the date set forth in the notice described in s. 607.1322(2), shall not be entitled to payment under ss. 607.1301—607.1340.

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Florida Statutes § 607.1324

Shareholder’s acceptance of corporation’s offer.

(1)

If the shareholder states on the form provided in s. 607.1322(1) that the shareholder accepts the offer of the corporation to pay the corporation’s estimated fair value for the shares, the corporation shall make such payment to the shareholder within 90 days after the corporation’s receipt of the form from the shareholder.

(2)

Upon payment of the agreed value, the shareholder shall cease to have any right to receive any further consideration with respect to such shares.

Florida Statutes § 607.1326

Procedure if shareholder is dissatisfied with offer.

(1)

A shareholder who is dissatisfied with the corporation’s offer as set forth pursuant to s. 607.1322(2)(b) 4. must notify the corporation on the form provided pursuant to s. 607.1322(1) of that shareholder’s estimate of the fair value of the shares and demand payment of that estimate plus accrued interest.

(2)

A shareholder who fails to notify the corporation in writing of that shareholder’s demand to be paid the shareholder’s stated estimate of the fair value plus accrued interest under subsection (1) within the timeframe set forth in s. 607.1322(2)(b) 2. waives the right to demand payment under this section and shall be entitled only to the payment offered by the corporation pursuant to s. 607.1322(2)(b) 4.

Florida Statutes § 607.1330

Court action.

(1)

If a shareholder makes demand for payment under s. 607.1326 which remains unsettled, the corporation shall commence a proceeding within 60 days after receiving the payment demand and petition the court to determine the fair value of the shares and accrued interest from the date of the corporate action. If the corporation does not commence the proceeding within the 60-day period, any shareholder who has made a demand pursuant to s. 607.1326 may commence the proceeding in the name of the corporation.

(2)

The proceeding shall be commenced in the circuit court in the applicable county. If by virtue of the corporate action becoming effective the entity has become a foreign eligible entity without a registered office in this state, the proceeding shall be commenced in the county in this state in which the principal office or registered office of the domestic corporation merged with the foreign eligible entity was located immediately before the time the corporate action became effective. If such entity has, and immediately before the corporate action became effective had, no principal or registered office in this state, then the proceeding shall be commenced in the county in this state in which the corporation has, or immediately before the time the corporate action became effective had, an office in this state. If such entity has, or immediately before the time the corporate action became effective had, no office in this state, the proceeding shall be commenced in the county in which the corporation’s registered office is or was last located.

(3)

All shareholders, whether or not residents of this state, whose demands remain unsettled shall be made parties to the proceeding as in an action against their shares. The corporation shall serve a copy of the initial pleading in such proceeding upon each shareholder party who is a resident of this state in the manner provided by law for the service of a summons and complaint and upon each nonresident shareholder party by registered or certified mail or by publication as provided by law.

(4)

The jurisdiction of the court in which the proceeding is commenced under subsection (2) is plenary and exclusive. If it so elects, the court may appoint one or more persons as appraisers to

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receive evidence and recommend a decision on the question of fair value. The appraisers shall have the powers described in the order appointing them or in any amendment to the order. The shareholders demanding appraisal rights are entitled to the same discovery rights as parties in other civil proceedings. There shall be no right to a jury trial.

(5)

Each shareholder made a party to the proceeding is entitled to judgment for the amount of the fair value of such shareholder’s shares, plus accrued interest, as found by the court.

(6)

The corporation shall pay each such shareholder the amount found to be due within 10 days after final determination of the proceedings. Upon payment of the judgment, the shareholder shall cease to have any rights to receive any further consideration with respect to such shares other than any amounts ordered to be paid for court costs and attorney fees under s. 607.1331.

Florida Statutes § 607.1331

Court costs and counsel fees.

(1)

The court in an appraisal proceeding shall determine all costs of the proceeding, including the reasonable compensation and expenses of appraisers appointed by the court. The court shall assess the costs against the corporation, except that the court may assess costs against all or some of the shareholders demanding appraisal, in amounts the court finds equitable, to the extent the court finds such shareholders acted arbitrarily, vexatiously, or not in good faith with respect to the rights provided by this chapter.

(2)

The court in an appraisal proceeding may also assess the fees and expenses of counsel and experts for the respective parties, in amounts the court finds equitable:

(a)

Against the corporation and in favor of any or all shareholders demanding appraisal if the court finds the corporation did not substantially comply with ss. 607.1320 and 607.1322; or

(b)

Against either the corporation or a shareholder demanding appraisal, in favor of any other party, if the court finds that the party against whom the fees and expenses are assessed acted arbitrarily, vexatiously, or not in good faith with respect to the rights provided by this chapter.

(3)

If the court in an appraisal proceeding finds that the services of counsel for any shareholder were of substantial benefit to other shareholders similarly situated, and that the fees for those services should not be assessed against the corporation, the court may award to such counsel reasonable fees to be paid out of the amounts awarded the shareholders who were benefited.

(4)

To the extent the corporation fails to make a required payment pursuant to s. 607.1324, the shareholder may sue directly for the amount owed and, to the extent successful, shall be entitled to recover from the corporation all costs and expenses of the suit, including attorney fees.

Florida Statutes § 607.1332

Disposition of acquired shares.

Shares acquired by a corporation pursuant to payment of the agreed value thereof or pursuant to payment of the judgment entered therefor, as provided in this chapter, may be held and disposed of by such corporation as authorized but unissued shares of the corporation, except that, in the case of a merger or share exchange, they may be held and disposed of as the plan of merger or share exchange otherwise provides. The shares of the survivor into which the shares of such shareholders demanding appraisal rights would have been converted had they assented to the merger shall have the status of authorized but unissued shares of the survivor.

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Florida Statutes § 607.1333

Limitation on corporate payment.

(1)

No payment shall be made to a shareholder seeking appraisal rights if, at the time of payment, the corporation is unable to meet the distribution standards of s. 607.06401. In such event, the shareholder shall, at the shareholder’s option:

(a)

Withdraw his or her notice of intent to assert appraisal rights, which shall in such event be deemed withdrawn with the consent of the corporation; or

(b)

Retain his or her status as a claimant against the corporation and, if it is liquidated, be subordinated to the rights of creditors of the corporation, but have rights superior to the shareholders not asserting appraisal rights, and if the corporation is not liquidated, retain his or her right to be paid for the shares, which right the corporation shall be obliged to satisfy when the restrictions of this section do not apply.

(2)

The shareholder shall exercise the option under paragraph (1)(a) or paragraph (1)(b) by written notice filed with the corporation within 30 days after the corporation has given written notice that the payment for shares cannot be made because of the restrictions of this section. If the shareholder fails to exercise the option, the shareholder shall be deemed to have withdrawn his or her notice of intent to assert appraisal rights.

Florida Statutes § 607.1340

Other remedies limited.

(1)

A shareholder entitled to appraisal rights under this chapter may not challenge a completed corporate action for which appraisal rights are available unless such corporate action was either:

(a)

Not authorized and approved in accordance with the applicable provisions of this chapter;

(b)

Procured as a result of fraud, a material misrepresentation, or an omission of a material fact necessary to make statements made, in light of the circumstances in which they were made, not misleading.

(2)

Nothing in this section operates to override or supersede the provisions of s. 607.0832.

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PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 20.

Indemnification of Directors and Officers

The Florida Business Corporation Act, or FBCA, permits, under certain circumstances, the indemnification of officers, directors, employees and agents of a corporation, or indemnified party, with respect to any threatened, pending or completed action, suit or proceeding to which such person is or was a party because of his or her being a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against liability incurred in such proceeding; provided, however, that such person acted in good faith and in a manner that he or she reasonably believed to be in, or not opposed to, the best interests of the corporation and, with respect to any criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful. The FBCA also permits indemnification against expenses and amounts paid in settlement actually and reasonably incurred in connection with such proceeding. Unless ordered by a court, a corporation may not indemnify an indemnified party unless authorized for a specific proceeding after a determination that indemnification is permissible because the director or officer has met the relevant standard of conduct by either, depending on the circumstances, (i) a majority of directors or a committee designated by the board if a quorum is not obtainable, (ii) independent special legal counsel selected by the board, or (iii) the shareholders (excluding shares voted by a party to the proceeding).

Under the FBCA, a corporation must indemnify an indemnified party who was successful, on the merits or otherwise, in the defense of any proceeding to which the individual was a party because he or she is or was a director, officer, employee, or agent of the corporation against expenses incurred by the individual in connection with the proceeding.

A corporation may, under the FBCA, before final disposition of a proceeding, advance funds to pay for or reimburse expenses incurred in connection with the proceeding by an officer or director who is a party to the proceeding because that individual is or was a director or an officer if such person delivers to the corporation a signed written undertaking to repay any funds advanced if such person is not entitled to indemnification under the FBCA. Expenses incurred by other employees and agents may be paid in advance upon the terms the board of directors of a corporation decide to be appropriate.

Unless a corporation’s articles of incorporation provide otherwise, notwithstanding the failure of a corporation to provide indemnification, and despite any contrary determination of the board or of the shareholders in the specific case, the FBCA permits an indemnified party to apply for indemnification or an advance for expenses, or both, to a court having jurisdiction.

Notwithstanding other sections of the FBCA regarding indemnification, unless ordered by a court in certain circumstances, the FBCA prohibits indemnification or the advancement of expenses to an indemnified party if a judgment or other final adjudication establishes that his or her actions, or omissions to act, were material to the cause of action so adjudicated and constitute (i) willful misconduct or a conscious disregard for the best interests of the corporation in a proceeding by or in the right of the corporation to procure a judgment in its favor or in a proceeding by or in the right of a shareholder, (ii) a transaction in which a director or officer derived an improper personal benefit, (iii) a violation of the criminal law, unless the director or officer had reasonable cause to believe his or her conduct was lawful or had no reasonable cause to believe his or her conduct was unlawful, or (iv) in the case of a director, a circumstance under which the liability provisions related to unlawful distributions are applicable.

In addition to the authority granted to us by the FBCA to indemnify our directors and officers, certain other provisions of the FBCA have the effect of further limiting the personal liability of our directors and officers. For example, a director of a Florida corporation cannot be held personally liable for monetary damages to the corporation or any other person for any statement, vote, decision or failure to act as a director except in the case of certain qualifying breaches of the director’s duties.

Additionally, in 2019, the Florida Legislature enacted legislation amending the FBCA, which amendments are scheduled to take effect on January 1, 2020. Professional does not expect that these amendments will materially affect the indemnification rights of its officers or directors. However, the

II-1

amendments to the FBCA do not address indemnification of employees and agents under the new statute. Notwithstanding these amendments, Professional does not believe the amendments will or are intended to substantively cut back on the power of a corporation to indemnify its employees or agents, and the new statute affirmatively provides that nothing therein limits the power of the corporation to indemnify agents and employees. Therefore, Professional does not believe the amendments to the FBCA will have a material impact on Professional with respect to indemnification.

Professional’s bylaws also provide that Professional must indemnify its directors, officers and employees, and may indemnify agents, in a manner similar to the rights to indemnification such persons would have generally under the FBCA. Professional’s bylaws state it must indemnify such person from expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with a claim, action or suit by reason of his or her position or is serving in such position at the our request if he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of Professional and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. Professional’s bylaws require it to indemnify a director, officer, employee or agent who is successful on the merits and entitled to indemnification under the bylaws. We must also indemnify any director, officer or employee and may indemnify an agent for expenses actually and reasonably incurred in connection with a claim, action or suit by or in the right of Professional. Any indemnification under Professional’s bylaws is subject to a determination that such person met the applicable standard of conduct by a majority of the board of directors or, in certain circumstances, a committee, by independent legal counsel or the shareholders by a majority vote. Professional may advance expenses, including attorneys’ fees, upon a preliminary determination that such person met the applicable standard of conduct, or as authorized by the board of directors in a specific case or, in either event, upon receipt of a written commitment from or on behalf of such person to repay the expenses unless it is ultimately determined he or she is entitled to indemnification. Professional’s bylaws provide that indemnification under the bylaws is not exclusive and any indemnification or advancement of expenses shall not be made to or on behalf of any director, officer, employee or agent if a judgment or other final adjudication establishes that his or her actions, or omissions to act, were material to the cause of action so adjudicated and such person complied with the required standards of conduct. Professional’s bylaws further provide that it may purchase and maintain insurance on behalf of Professional’s directors, officers, employees and agents in their capacities as such, or serving at the request of Professional, against any liabilities asserted against such persons and incurred by such persons in any capacity, or arising of such persons status as such, whether or not Professional would have the power to indemnify such persons against such liability under Professional’s bylaws.

Additionally, Professional has entered into indemnification agreements with each of its directors that contractually obligate Professional to indemnify its directors to the fullest extent permitted under applicable law. These agreements generally require both Professional and Professional Bank to indemnify each director if the director is, or is threatened to be made, a party to or a participant in any proceeding, other than a proceeding by or in the right of Professional or Professional Bank to procure a judgment in the favor of Professional or Professional Bank or a proceeding by a federal banking agency if the director acted in good faith and in a manner the director reasonably believed to be in, or not opposed to, the best interests of Professional or Professional Bank, as applicable, and, in the case of a criminal action or proceeding, had no reasonable cause to believe that the director’s conduct was unlawful. Each director is further required to be indemnified for all expenses reasonably incurred by the director or on behalf of the director if the director is, or is threatened to be made, a party to or a participant in any proceeding by or in the right of Professional or Professional Bank to procure a judgment in favor of Professional or Professional Bank, provided that the director acted in good faith and in a manner the indemnitee reasonably believed to be in, or not opposed to, the best interests of Professional or Professional Bank. Notwithstanding the foregoing, no indemnification is available to a director in respect of any claim, issue or matter as to which the director is finally adjudged by a court to be liable to Professional, Professional Bank or both, as the case may be, unless and only to the extent that the court in which the proceeding was brought determines that, despite the adjudication of liability but in view of all the circumstances of the case, the director is fairly and reasonably entitled to indemnification for such expenses. The indemnification agreements also generally provide for indemnification of expenses in connection with certain specific scenarios, including proceedings

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by federal banking regulators, subject to certain customary exclusions. The indemnification agreements also obligate Professional and Professional Bank to advance expenses to a director, subject to the director’s obligation to repay the advance if and to the extent it is determined that the director is not entitled to be indemnified by Professional or Professional Bank.

Professional maintains liability insurance policies that cover certain liabilities of its directors and officers arising out of proceedings based on acts or omissions in their capacities as directors or officers, including directors and officers liability insurance and excess directors and officers liability insurance.

Professional has also agreed to indemnify former officers, directors, and employees of Marquis and its subsidiaries against all costs and expenses (including attorney’s fees), judgments, fines, losses, claims, damages, settlements or liabilities as incurred in connection with any claim arising out of actions or omissions of such persons in the course of performing their duties for Marquis occurring at or before the effective time of the merger, to the greatest extent as such persons are indemnified or have the right to advancement of expenses pursuant to (i) Marquis’s articles of incorporation and Marquis’s bylaws or the comparable organization documents of its subsidiaries, each as in effect on the date of the merger agreement, and (ii) the FBCA.

The foregoing is only a general summary of certain aspects of the FBCA and Professional’s governing documents and agreements dealing with indemnification of directors and officers, and does not purport to be complete. It is qualified in its entirety by reference to Professional’s bylaws and its form of indemnification agreement, which are filed as an exhibit to this registration statement, and to the relevant provisions of the FBCA.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted for Professional’s directors and officers, or for persons controlling Professional, pursuant to Professional’s articles of incorporation, its bylaws or the FBCA, or pursuant to an indemnification agreement, Professional acknowledges that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

Item 21.

Exhibits and Financial Statement Schedules

(a)

Exhibits

2.1†	Agreement and Plan of Merger, dated as of August 9, 2019, by and between Professional Holding Corp. and Marquis Bancorp, Inc. (attached as Annex A to the joint proxy statement/prospectus).
3.1	Articles of Incorporation of Professional Holding Corp.
3.2	Articles of Amendment to Articles of Incorporation of Professional Holding Corp., effective as of April 19, 2019.
3.3	Amended and Restated Bylaws of Professional Holding Corp., effective as of August 23, 2019.
4.1	Form of Class A Common Stock Certificate of Professional Holding Corp.
4.2	Form of Class B Common Stock Certificate of Professional Holding Corp.
5.1*	Form of Opinion of Wachtell, Lipton, Rosen & Katz as to the validity of the securities being registered.
8.1*	Form of Tax Opinion of Wachtell, Lipton, Rosen & Katz.
8.2*	Form of Tax Opinion of Crowe LLP.
10.1+	Employment Agreement among Professional Holding Corp., Professional Bank and Daniel R. Sheehan.
10.2+	Employment Agreement among Professional Holding Corp., Professional Bank and Abel L. Iglesias.
10.3+	Employment Agreement among Professional Holding Corp., Professional Bank and Mary Usategui.

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10.4+	Employment Agreement among Professional Holding Corp., Professional Bank and Ryan Gorney.
10.5+	Professional Holding Corp. 2012 Share Appreciation Rights Plan
10.6+	Professional Holding Corp. 2014 Associate Stock Purchase Plan.
10.7+	Professional Holding Corp. 2014 Share Appreciation Rights Plan.
10.8+	Amendment No.1 to Professional Holding Corp. 2014 Share Appreciation Rights Plan.
10.9+	Amendment No. 2 to Professional Holding Corp. 2014 Share Appreciation Rights Plan.
10.10+	Form of Unit Agreement for Professional Holding Corp. 2014 Share Appreciation Rights Plan.
10.11+	Professional Holding Corp. 2016 Amended and Restated Stock Option Plan.
10.12+	Professional Holding Corp. 2019 Equity Incentive Plan.
10.13+	Form of Restricted Stock Award Agreement for the Professional Holding Corp. 2019 Equity Incentive Plan.
10.14	Form of Indemnification Agreement.
10.15	Form of Stock Purchase Agreement (2017 Private Offering).
10.16	Form of Subscription Agreement (2018 Private Offering).
10.17	Letter Agreement between the Professional Holding Corp. and BayBoston Capital L.P., dated as of April 1, 2015.
10.18	Amendment to Letter Agreement Dated April 1, 2015 between the Company and BayBoston Capital L.P., dated as of February 17, 2017.
10.19	Letter Agreement between the Professional Holding Corp. and EJF Sidecar Fund, Series LLC — Series E, dated as of February 17, 2017.
10.20	Letter Agreement between the Professional Holding Corp. and BayBoston Capital L.P., dated as of February 17, 2017.
10.21	Form of Letter Agreement between the Professional Holding Corp. and each of Mendon Capital QP LP, Mendon Capital Master Fund LP, and Iron Road Multi Strategy Fund LP.
10.22	Registration Rights Agreement between the Professional Holding Corp. and EJF Sidecar Fund, Series LLC — Series E, dated as of February 17, 2017.
10.23	Registration Rights Agreement between the Professional Holding Corp. and BayBoston Capital L.P., dated as of February 17, 2017.
10.24	Form of Registration Rights Agreement between the Professional Holding Corp. and each of Mendon Capital QP LP, Mendon Capital Master Fund LP, and Iron Road Multi Strategy Fund LP.
10.25	Form of Voting Agreement between Marquis Bancorp, Inc. and each of the directors of Professional Holding Corp. (except Anton V. Schutz) and Mendon Capital QP LP, Mendon Capital Master Fund LP, and Iron Road Multi Strategy Fund LP.
10.26	Form of Voting Agreement between Professional Holding Corp. and each of the directors of Marquis Bancorp, Inc.
21.1	Subsidiaries of Professional Holding Corp.
23.1	Consent of Crowe LLP (with respect to Professional Holding Corp.).
23.2	Consent of Crowe LLP (with respect to Marquis Bancorp, Inc.).

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23.3	Consent of Wachtell, Lipton, Rosen & Katz (included in Exhibit 5.1).
23.4	Consent of Wachtell, Lipton, Rosen & Katz (included in Exhibit 8.1).
23.5	Consent of Crowe LLP (included in Exhibit 8.2).
24	Power of Attorney (included with signature pages to this Registration Statement).
99.1*	Form of Proxy of Professional Holding Corp.
99.2*	Form of Proxy of Marquis Bancorp, Inc.
99.3	Consent of Stephens Inc.
99.4	Consent of Janney Montgomery Scott LLC.

†

Pursuant to Item 601(b)(2) of Regulation S-K, certain schedules and similar attachments have been omitted. The registrant hereby agrees to furnish a copy of any omitted schedule or similar attachment to the SEC upon request

*

To be filed by amendment

+

Indicates a management contract or compensatory plan

(b)

Financial Statement Schedules

Not applicable.

Schedules are omitted for the reason that they are not required or are not applicable, or the required information is shown in the financial statements or notes thereto.

Item 22.

Undertakings

The undersigned Registrant hereby undertakes to file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement:

(i)

To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

(ii)

To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective Registration Statement; and

(iii)

To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement.

The undersigned Registrant hereby undertakes that, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona-fide offering thereof.

The undersigned Registrant hereby undertakes to remove from registration by means of a post-effective amendment any of the securities being registered which remained unsold at the termination of the offering.

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The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant’s annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

The undersigned Registrant hereby undertakes as follows: that prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this Registration Statement, by any person or party who is deemed to be an underwriter within the meaning of the Rule 145(c), the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form.

The undersigned Registrant undertakes that every prospectus (i) that is filed pursuant to the immediately preceding paragraph, or (ii) that purports to meet the requirements of Section 10(a)(3) of the Securities Act of 1933 and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the Registration Statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers, and controlling persons of the Registrant pursuant to the foregoing, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer, or controlling person of the Registrant in the successful defense of any action, suit, or proceeding) is asserted by such director, officer, or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

The undersigned Registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this Registration Statement, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the Registration Statement through the date of responding to the request.

The undersigned Registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the Registration Statement when it became effective.

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SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the Registrant has duly caused this Amendment to Registration Statement to be signed in its behalf by the undersigned, thereunto duly authorized, in the City of Coral Gables, State of Florida, on January 28, 2020.

PROFESSIONAL HOLDING CORP.

/s/ Daniel R. Sheehan

Daniel R. Sheehan
Chairman, President and Chief Executive Officer

POWER OF ATTORNEY

BE IT KNOWN BY THESE PRESENT: Each of the undersigned directors and officers, has made, constituted, and appointed, and does hereby make, constitute, and appoint Daniel R. Sheehan and Mary Usategui, and each of them, with full power of substitution, his or her true and lawful attorneys-in-fact, for him or her and in his or her name, place and stead to affix his or her signature as director or officer or both, as the case may be, of the registrant, to any and all registration statements and amendments thereto (including post-effective amendments) and to file the same, with all exhibits thereto, and other documents in connection therewith, and to file with the Securities and Exchange Commission, granting unto such attorney-in-fact full power and authority to do and perform every act and thing whatsoever necessary to be done in the premises, as fully as he or she might or could do if personally present, hereby ratifying and confirming all that such attorney-in-fact shall lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on January 28, 2020.

Signature	Title
/s/ Daniel R. Sheehan Daniel R. Sheehan	Chairman, Chief Executive Officer and Director (Principal executive officer)
/s/ Mary Usategui Mary Usategui	Chief Executive Officer (Principal financial officer and principal accounting officer)
/s/ Rolando DiGasbarro Rolando DiGasbarro	Director
/s/ Carlos M. Garcia Carlos M. Garcia	Director
/s/ Jon L. Gorney Jon L. Gorney	Director
Abel L. Iglesias Abel L. Iglesias	Director

Signature	Title
/s/ Herbert Martens, Jr. Herbert Martens, Jr.	Director
/s/ Lawrence Schimmel, M.D. Dr. Lawrence Schimmel, M.D.	Director
/s/ Anton V. Schutz Anton V. Schutz	Director

EX-3.1

Exhibit 3.1

ARTICLES OF INCORPORATION

OF

PROFESSIONAL HOLDING CORP.

The undersigned incorporator, for the purpose of forming a corporation under and by virtue of the laws of the State of Florida, hereby adopts the following Articles of Incorporation of Professional Holding Corp., a Florida corporation (the “Company”):

ARTICLE I
Name

The name of the Company is Professional Holding Corp.

ARTICLE II
Duration

The Company shall exist perpetually.

ARTICLE III
Purpose

The general purpose of the Company shall be the transaction of any and all lawful business for which corporations may be incorporated under the Florida Business Corporation Act (the “Act”). The Company shall have all of the powers enumerated in the Act and all such other powers as are not specifically prohibited to corporations for profit under the laws of the State of Florida.

ARTICLE IV
Capital Stock

The maximum number of shares of capital stock that the Company is authorized to issue shall be 70,000,000 shares as follows:

A.Common Stock

The Company is authorized to issue up to (i) 50,000,000 shares of Class A Voting Common Stock with a par value of $0.01 per share (“Class A Common Stock”) and (ii) 10,000,000 shares of Class B Non-Voting Common Stock with a par value of $0.01 per share (“Class B Common Stock,” and collectively with the Class A Common Stock, the “Common Stock”). Each holder of shares of Class A Common Stock shall be entitled to one vote per share on all matters on which such holders are entitled to vote. Except as otherwise required by applicable law, holders of shares of Class B Common Stock shall not be entitled to any voting rights on any matter. Shares of Common Stock may not be voted cumulatively. 

B.Preferred Stock

1.Number and Class of Shares Authorized. The Company is authorized to issue up to 10,000,000 shares of Preferred Stock (“Preferred Stock”), which constitutes a separate and single class of shares that may be issued in one or more series.

2.Rights, Preferences and Restrictions of Preferred Stock. The Board of Directors of the Company is vested with the authority to establish, in its discretion, the voting rights and other designations, preferences, rights, qualifications, limitations, and restrictions, if any, of each such series by the adoption and filing in accordance with the Act, before any such issuance of any shares of such series, of an amendment or amendments to these Articles of Incorporation determining the terms of such series, which amendment need not be approved by the shareholders or holders of any class or series of shares of capital stock except as provided by law. All shares of Preferred Stock of the same series shall be identical with each other in all respects.

C.No Preemptive Rights

Holders of Common Stock shall not have, as a matter of right, any preemptive or preferential right to subscribe for, purchase, receive or otherwise acquire any part of any new or additional issue of stock of any class, whether now or hereafter authorized, or of any bonds, debentures, notes or other securities of the Company, whether or not convertible into shares of stock of the Company.

ARTICLE V
Action by Shareholders Without a Meeting

No action required or permitted to be taken at an annual meeting of the Company’s shareholders or at a special meeting of the Company’s shareholders may be taken without a meeting. The power of the shareholders of the Company to consent in writing, without a meeting, to the taking of any action is expressly denied hereby.

ARTICLE VISpecial Meeting of Shareholders

The shareholders of the Company may not call a special meeting of shareholders unless the holders of at least fifty percent (50%) of all of the votes entitled to be cast on any issue proposed to be considered at the proposed special meeting sign, date and deliver to the Company’s secretary one or more written demands for the meeting describing the purpose or purposes for which it is to be held.

ARTICLE VII
Registered Office and Agent; Principal Place of Business

The street address of the registered office of the Company shall be 396 Alhambra Circle, Suite 255, Coral Gables, Florida 33134, and the registered agent of the Company at such address shall be Raul Valdes-Fauli. The principal place of business and the mailing address of the Company shall be 396 Alhambra Circle, Suite 255, Coral Gables, Florida 33134. The Company may change its registered agent, the location of its registered office, its principal place of business, or its mailing address, or any of the foregoing, from time to time without amendment of these Articles of Incorporation.

2

ARTICLE VIII 

Directors

A.Number of Directors

The number of directors of the Company shall be the number from time to time fixed by the shareholders or by the directors, in accordance with the provisions of the bylaws of the Company, but at no time shall the number of directors be less than one.

B.Vacancies

Any vacancies in the Board of Directors resulting from death, resignation, retirement, removal from office, the creation of a new directorship by an increase in the authorized number of directors, or otherwise shall be filled by an affirmative vote of the majority of the directors then in office, even if such majority constitutes less than a quorum of the entire Board of Directors. Directors so chosen to fill any vacancy shall hold office for a term expiring at the Company’s next annual meeting of shareholders.

C.Removal of Directors

A director may only be removed for cause, which shall be defined for these purposes as a conviction of a felony, declaration of unsound mind by a court order, adjudication of bankruptcy, or such director having been adjudged by a court of competent jurisdiction to be liable for negligence or misconduct in the performance of his or her duty to the Company in a matter of substantial importance to this corporation and such adjudication is no longer subject to direct appeal. Removal for cause, as defined in this section, must be approved by a vote of at least sixty six and two-thirds percent (66 2/3%) of the shares of the Company then entitled to vote at an election for that director. Any action for the removal of a director must be brought within one (1) year of the date of such conviction, declaration or adjudication.

ARTICLE IX
Bylaws

The power to adopt, alter, amend or repeal bylaws shall be vested in the Board of Directors.

ARTICLE X
Amendment of Articles of Incorporation

These Articles of Incorporation may be amended in the manner from time to time provided by law and any right conferred upon the shareholders by any provision of these Articles of Incorporation is hereby made subject to this reservation. However, notwithstanding anything contained in these Articles of Incorporation to the contrary, the affirmative vote of the holders of at least sixty six and two thirds percent (66 2/3%) of the shares of the Company then entitled to vote shall be required to amend, alter or repeal, or to adopt any provision inconsistent with the Company’s Bylaws, or Article IV(B), V, VI, VIII(B), VIII(C), IX and X hereof.

3

ARTICLE XI 

Incorporator

The name and address of the incorporator is:

Daniel R. Sheehan

396 Alhambra Circle, Suite 255

Coral Gables, Florida 33134

IN WITNESS WHEREOF, the undersigned incorporator of the Company does hereby make and file these Articles of Incorporation declaring and certifying that the facts stated herein are true, and hereby subscribes thereto and hereunto sets his hand and seal this 22^nd day of January, 2014.

/s/ Daniel R Sheehan

Daniel R. Sheehan

Incorporator

CERTIFICATE OF REGISTERED AGENT

Having been named as registered agent and to accept service of process for the above-stated corporation at the place designated above, I hereby accept the appointment as registered agent and agree to act in this capacity. I further agree to comply with the provisions of all statutes relating to the proper and complete performance of my duties, and I am familiar with and accept the obligations of my position as registered agent as provided in Chapter 607, Florida Statutes.

Dated this 22^nd day of January, 2014.

/s/ Raul Valdes-Fauli

Raul Valdes-Fauli

Registered Agent

4

EX-3.2

Exhibit 3.2

ARTICLES OF AMENDMENT

TO

ARTICLES OF INCORPORATION

OF

PROFESSIONAL HOLDING CORP.

Professional Holding Corp., a Florida corporation (the “Company”), pursuant to the provisions of Section 607.1006, Florida Statutes, adopts these Articles of Amendment (“Amendment”) pursuant to the provisions of the Florida Business Corporation Act (the “Act”).

1. The Company filed its Articles of Incorporation with the Florida Department of State on January 24, 2014, document number P14000007358.

2. ARTICLE XII is hereby added to the Company’s Articles of Incorporation and reads as follows:

ARTICLE XII

Forum Selection

Unless the Company consents in writing to the selection of an alternative forum (an “Alternative Forum Consent”), the state and federal courts in or for Miami-Dade County, Florida or Palm Beach County, Florida will be the exclusive forums for (A) any action or proceeding asserting a claim for breach of a fiduciary duty owed by any current or former director, officer, employee, or agent of the Company to the Company or the Company’s shareholders; (B) any derivative action or proceeding brought on behalf of the Company; (C) any action or proceeding asserting a claim arising pursuant to any provision of the Florida Business Corporation Act, these Articles of Incorporation, or the Bylaws of the Company; or (D) any action or proceeding asserting a claim governed by the internal affairs doctrine that is not included in subsections (A)-(C) above; provided, however, that, in the event that the state and federal courts in and for Miami-Dade County, Florida or Palm Beach County, Florida lack personal or subject matter jurisdiction over any such action or proceeding, the sole and exclusive forum for such action or proceeding will be another state or federal court located within the State of Florida, in each such case, unless such state or federal court, as applicable, has dismissed a prior action by the same plaintiff asserting the same claims because such court lacked personal jurisdiction over an indispensable party named as a defendant therein. If any action, the subject matter of which is within the scope of this Article XII, is filed in a court other than the state and federal courts in and for Miami-Dade County, Florida or Palm Beach County, Florida (or any other state or federal court located within the State of Florida in accordance with this Article XII, as applicable) (a “Foreign Action”) by or in the name of any shareholder, such shareholder will be deemed to have consented to (i) the personal jurisdiction of the state and federal courts in and for Miami-Dade County, Florida and Palm Beach County, Florida (or such other state or federal court located within the State of Florida in accordance with this Article XII, as applicable) in connection with any action brought in any such court to enforce this Article XII; and (ii) having service of process made upon such shareholder in any such action by service upon such shareholder’s counsel in the Foreign Action as agent for such shareholder. The existence of any prior Alternative Forum Consent will not act as a waiver of the Company’s ongoing consent right as set forth above in this Article XII with respect to any current or future actions or claims. Any person purchasing or otherwise acquiring any interest in shares of capital stock of the Company will be deemed to have notice of and have consented to the provisions of this Article XII. Failure to enforce the foregoing provisions would cause the Company irreparable harm and the Company will be entitled to equitable relief, including, without limitation, injunctive relief and specific performance, to enforce the foregoing provisions.

3. Except and to the extent modified by these Articles of Amendment, the provisions of the Company’s Articles of Incorporation shall remain in full force and effect.

4. The amendment was approved by the Company’s shareholders. The number of votes cast for the amendment was sufficient for approval.

Signed this 19th day of April, 2019.

/s/ Daniel R. Sheehan

Daniel R. Sheehan

President and Chairman of the Board

EX-3.3

Exhibit 3.3 

BYLAWS

OF

PROFESSIONAL HOLDING CORP.

As Amended and Restated by the Board of Directors on August 23, 2019.

ARTICLE I

MEETINGS OF SHAREHOLDERS

1.1       Annual Meeting. The annual meeting of the shareholders of Professional Holding Corp., a Florida corporation (the “Company”), shall be held at the time and place designated by the Board of Directors of the Company but no later than the end of the fourth (4^th) month after the commencement of each fiscal year. Business transacted at the annual meeting shall include the election of directors of the Company and other business as may properly be brought.

1.2       Special Meetings. Special meetings of the shareholders shall be held when directed by the Chairman of the Board, the President or the Board of Directors, or when requested in writing by the one or more shareholders in accordance with the Company’s Articles of Incorporation. Such written request shall state the purpose or purposes of the meeting and shall be delivered at the main office of the Company addressed to the Chairman of the Board or the President. The call for the meeting shall be issued by the Secretary, unless the Chairman of the Board, the President, or the Board of Directors shall designate another person to do so. The shareholders of the Company may not call a special meeting of shareholders unless the holders of at least fifty percent (50%) of all of the votes entitled to be cast on any issue proposed to be considered at the proposed special meeting sign, date and deliver to the Company’s Secretary one or more written demands for the special meeting describing the purpose or purposes for which it is to be held.

1.3       Place. Meetings of shareholders may be held within or outside of the State of Florida. If no place is designated in the notice for a meeting of shareholders, the place of meeting shall be the principal office of the Company.

1.4       Notice. Except as provided in the Florida Business Corporation Act (the “Act”), written notice stating the place, day and hour of the meeting and, in the case of a special meeting or as otherwise provided by law, the purpose or purposes for which the meeting is called, shall be delivered to each shareholder of record entitled to vote at such meeting not less than ten (10) nor more than sixty (60) days before the date of the meeting, either personally or by first class mail, by or at the direction of the President, the Secretary, or the officer or other persons calling the meeting. If the notice is mailed at least thirty (30) days before the date of the meeting, it may be done by a class of United States mail other than first class. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail addressed to the shareholder at the shareholder’s address as it appears in the current records of shareholders of the Company, with postage thereon prepaid.

1.5       Notice of Adjourned Meetings. When a meeting is adjourned to another time or place, it shall not be necessary to give any notice of the adjourned meeting if the time and place to which the meeting is adjourned are announced at the meeting at which the adjournment is taken, and at the adjourned meeting any business may be transacted that might have been transacted on the original date of the meeting. If, however, after the adjournment the Board of Directors fixes a new record date for the adjourned meeting, a notice of the adjourned meeting shall be given as provided in Section 1.4 to each shareholder of record on the new record date entitled to vote at such meeting.

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1.6       Waiver of Notice of Shareholders Meetings. Whenever any notice is required to be given to any shareholder, a waiver thereof in writing signed by the shareholder or shareholders entitled to such notice, whether before, during or after the time of the meeting stated therein and delivered to the Company for inclusion in the minutes or filing with the corporate records, shall be equivalent to the giving of such notice. Attendance by a shareholder at a meeting shall constitute a waiver of: (a) lack of notice or defective notice of such meeting, unless the shareholder at the beginning of the meeting objects to holding the meeting; or (b) lack of defective notice of a particular matter at a meeting that is not within the purpose or purposes described in the meeting notice, unless the person objects to considering that particular matter when it is presented. Unless otherwise required by the Articles of Incorporation, neither the business to be transacted at, nor the purpose of, any regular or special meeting of the shareholders need be specified in any written waiver of notice.

1.7       Record Date. For the purpose of determining shareholders entitled to notice of, or to vote at, any meeting of shareholders or any adjournment thereof, or to receive payment of any distribution, or in order to make a determination of shareholders for any other purpose, the Board of Directors may fix in advance a date as the record date for any determination of shareholders, such date in any case to be not more than seventy (70) days prior to the date on which the particular action requiring such determination of shareholders is to be taken. A determination of shareholders entitled to notice of, or to vote at, any meeting of shareholders shall apply to any adjournment thereof, unless the Board of Directors fixes a new record date for the adjourned meeting, which it must do if the meeting is adjourned to a date more than one hundred twenty (120) days after the date fixed for the original meeting.

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1.8       Shareholders’ List for Meeting. After fixing a record date for a meeting of shareholders, the Company shall prepare an alphabetical list of the names of all shareholders who are entitled to notice of such meeting, with the address of each shareholder and the number, class, and series, if any, of the shares held by each shareholder. The shareholders’ list must be available for inspection by any shareholder for a period of ten (10) days prior to the meeting or such shorter time as exists between the record date and the meeting and continuing through the meeting at the Company’s principal office, at a place identified in the meeting notice in the city where the meeting will be held, or at the office of the Company’s transfer agent or registrar. Any shareholder of the Company or his or her agent or attorney is entitled on written demand to inspect the shareholders’ list (subject to the requirements of the Act), during regular business hours and at his or her expense, during the period it is available for inspection. The Company shall make the shareholders’ list available at the meeting of shareholders, and any shareholder or his or her agent or attorney is entitled to inspect the list at any time during the meeting or any adjournment.

1.9       Shareholder Quorum and Voting. Except as otherwise provided in the Articles of Incorporation, the Act, or these Bylaws, a majority of the shares entitled to vote on a matter, represented in person or by proxy, shall constitute a quorum at any meeting of shareholders for action on that matter. If less than a majority of outstanding shares entitled to vote are represented at a meeting, a majority of the shares so represented may adjourn the meeting from time to time without further notice. After a quorum has been established at any shareholders’ meeting, the subsequent withdrawal of shareholders, so as to reduce the number of shares entitled to vote at the meeting below the number required for a quorum, shall not affect the validity of any action taken at the meeting or any adjournment thereof.

Once a share is represented for any purpose at a meeting, it is deemed present for quorum purposes for the remainder of the meeting and for any adjournment of that meeting, unless a new record date is or must be set for that adjourned meeting. When a specified item of business is required to be voted on by a class or series of stock, a majority of the shares of such class or series shall constitute a quorum for the transaction of such item of business by that class or series.

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1.10       Votes Per Share. Except as otherwise provided in the Articles of Incorporation or by the Act, each outstanding share, regardless of class, shall be entitled to one vote on each matter submitted to a vote at a meeting of shareholders.

1.11       Manner of Action. If a quorum is present, action on a matter (other than the election of directors) is approved if the votes cast favoring the action exceed the votes cast opposing the action, unless a greater or lesser number of affirmative votes is required by the Articles of Incorporation, the Act, or these Bylaws. No action required or permitted to be taken at an annual meeting of the Company’s shareholders or at a special meeting of the Company’s shareholders may be taken without a meeting. The power of the shareholders of the Company to consent in writing, without a meeting, to the taking of any action is expressly denied hereby.

1.12       Voting for Directors. At each election for directors, every shareholder entitled to vote at such election shall have the right to vote, in person or by proxy, the number of shares owned by him or her for as many persons as there are directors to be elected at that time and for whose election he or she has a right to vote. Unless otherwise provided in the Articles of Incorporation, cumulative voting is not authorized and the directors shall be elected by a plurality of the votes cast by the shares entitled to vote in the election at a meeting at which a quorum is present.

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1.13       Voting of Shares. A shareholder may vote at any meeting of shareholders of the Company, either in person or by proxy.

Shares standing in the name of another entity, domestic or foreign, may be voted by the officer, agent or proxy designated by the bylaws or other organizational documents of such corporate shareholder or, in the absence of any applicable bylaw, by such person as the board of directors of the corporate shareholder may designate. Proof of such designation may be made by presentation of a certified copy of these Bylaws or other instrument of the corporate shareholder. In the absence of any such designation or, in the case of conflicting designation by the corporate shareholder, the chairman of the board, the chief executive officer, the president, any vice president, the secretary and the treasurer of the corporate shareholder shall be presumed to possess, in that order, authority to vote such shares.

Shares held by an administrator, executor, guardian, personal representative or conservator may be voted by him or her, either in person or by proxy, without a transfer of such shares into his or her name. Shares standing in the name of a trustee may be voted by him or her, either in person or by proxy, but no trustee shall be entitled to vote shares held by him or her without a transfer of such shares into his or her name or the name of his or her nominee.

Shares held by or under the control of a receiver, a trustee in a bankruptcy proceeding or an assignee for the benefit of creditors may be voted by such person without the transfer thereof into his or her name.

If shares stand of record in the names of two or more persons, whether fiduciaries, members of a partnership, joint tenants, tenants in common, tenants by the entirety or otherwise, or if two or more persons have the same fiduciary relationship with respect to the same shares, unless the Secretary of the Company is given notice to the contrary and is furnished with a copy of the instrument or order appointing them or creating the relationship wherein it is so provided, then acts with respect to voting shall have the following effect: (a) if only one votes, in person or by proxy, that act binds all; (b) if more than one votes, in person or by proxy, the act of the majority so voting binds all; (c) if more than one votes, in person or by proxy, but the vote is evenly split on any particular matter, each faction is entitled to vote the share or shares in question proportionally; or (d) if the instrument or order so filed shows that any such tenancy is held in unequal interest, a majority or a vote evenly split for purposes hereof shall be a majority or a vote evenly split in interest. The principles of this paragraph shall apply, insofar as possible, to execution of proxies, waivers, consents, or objections and for the purpose of ascertaining the presence of a quorum.

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1.14       Proxies. Any shareholder of the Company, other person entitled to vote on behalf of a shareholder pursuant to the Act, or attorney-in-fact for such persons, may vote the shareholder’s shares in person or by proxy. Any shareholder of the Company may appoint a proxy to vote or otherwise act for him or her by signing an appointment form, either personally or by an attorney-in-fact. A photographic, photostatic, or equivalent reproduction of an appointment form shall be deemed a sufficient appointment form.

An appointment of a proxy is effective when received by the Secretary of the Company or such other officer or agent which is authorized to tabulate votes, and shall be valid for up to eleven (11) months, unless a longer period is expressly provided in the appointment form.

The death or incapacity of the shareholder appointing a proxy does not affect the right of the Company to accept the proxy’s authority unless notice of the death or incapacity is received by the Secretary or other officer or agent authorized to tabulate votes before the proxy exercises his or her authority under the appointment.

An appointment of a proxy is revocable by the shareholder unless the appointment form conspicuously states that it is irrevocable and the appointment is coupled with an interest.

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1.15       Voting Trusts. One or more shareholders may create a voting trust, conferring on a trustee the right to vote or otherwise act for them, by signing an agreement setting out the provisions of the trust and transferring their shares to the trustee. When a voting trust agreement is signed, the trustee shall prepare a list of the names and addresses of all owners of beneficial interest in the trust, together with the number and class of shares each transferred to the trust, and deliver copies of the list and agreement to the Company’s principal office. After filing a copy of the list and agreement in the Company’s principal office, such copies shall be open to inspection by any shareholder of the Company, subject to the requirements of the Act, or to any beneficiary of the trust under the agreement during business hours.

1.16       Shareholders’ Agreements. Two or more shareholders may provide for the manner in which they will vote their shares, and providing for such other matters as are permitted by the Act, by signing an agreement for that purpose. When a shareholders’ agreement is signed, the shareholders who are parties thereto shall deliver copies of the agreement to the Company’s principal office. After filing a copy of the agreement in the Company’s principal office, such copies shall be open to inspection by any shareholder of the Company, subject to the requirements of the Act, or any party to the agreement during business hours.

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1.17       Nominations for Director. Nominations for election to the Board of Directors may be made by the Board of Directors or by any shareholder of any outstanding class of capital stock of the Company entitled to vote for the election of directors. Nominations, other than those made by or on behalf of the Board of Directors of the Company, shall be made in writing to the Secretary of the Company and shall be delivered to or mailed and received at the principal executive offices of the Company not less than one hundred twenty (120) days and not more than one hundred eighty (180) days prior to the date of the Company’s notice of annual meeting provided with respect to the previous year’s annual meeting; provided, however, that if no annual meeting was held in the previous year or the date of the annual meeting has been changed to be more than thirty (30) calendar days earlier than the date contemplated by the previous year’s statement, such notice by the shareholder to be timely must be received no later than the close of business on the tenth (10^th) day following the date on which notice of the date of the annual meeting is given to shareholders or made public, whichever first occurs. Such notification shall contain the following information to the extent known to the notifying shareholder: (a) as to each person whom the shareholder proposes to nominate for election or re-election as a director at the annual meeting; (i) the name, age, business address and residence address of the proposed nominee, (ii) the principal occupation or employment of the proposed nominee, (iii) the class and number of shares of capital stock of the Company which are beneficially owned by the proposed nominee, and (iv) any other information relating to the proposed nominee that is required to be disclosed in solicitations for proxies for election of directors pursuant to Schedule 14A of Regulation 14A promulgated under Section 14(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”); and (b) as to the shareholder giving the notice of nominees for election at the annual meeting, (i) the name and record address of the shareholder, and (ii) the class and number of shares of capital stock of the Company which are beneficially owned by the shareholder. The Company may require any proposed nominee for election at an annual or special meeting of shareholders to furnish such other information as may reasonably be required by the Company to determine the eligibility of such proposed nominee to serve as a director of the Company. No person shall be eligible for election as a director of the Company unless nominated in accordance with the procedures set forth herein. The Chairman of the meeting shall, if the facts warrant, determine and declare in the meeting that a nomination was not made in accordance with the requirements of the Articles of Incorporation and this Section, and if he or she should so determine, he or she shall so declare to the meeting and the defective nomination shall be disregarded.

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1.18       Shareholder Proposals. At an annual meeting of the shareholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (ii) otherwise properly brought before the meeting by or at the direction of the Board of Directors, or (iii) otherwise properly brought before the meeting by a shareholder in accordance with this Section and applicable law.

For business to be properly brought before an annual meeting by a shareholder, the Company must have received timely notice thereof in writing from such shareholder. To be timely, a shareholder’s notice must be received by the Secretary of the Company as of the date set forth in the Company’s proxy statement relating to the annual meeting for the preceding year; provided, however, that if no such date is stated, then such date shall be one hundred and twenty (120) calendar days in advance of the date (with respect to the forthcoming annual meeting) that the Company’s proxy statement was released to its shareholders in connection with the previous year’s annual meeting of security holders; and provided further that if no annual meeting was held in the previous year or the date of the annual meeting has been changed by more than thirty (30) calendar days from the date contemplated at the time of the previous year’s proxy statement, a proposal shall be received by the Company no later than the close of business on the tenth (10^th) day following the date on which notice of the date of the annual meeting is given to shareholders or made public, whichever first occurs.

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A shareholder notification shall contain the following information as to each matter the shareholder proposes to bring before the annual meeting: (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting; (ii) the name and address, as they appear on the Company’s books, of the shareholder proposing such business; (iii) the class and number of shares of the Company which are beneficially owned, as such term is defined in Rule 13d-3 promulgated under the Exchange Act, by the shareholder; (iv) any substantial interest of the shareholder in such business; and (v) any other information required pursuant to the rules and regulations promulgated under the Exchange Act relating to shareholder proposals. For purposes of clause (iv) above, a “substantial interest of the shareholder in such business” shall be deemed to occur if such interest were reportable (assuming that the shareholder’s business was in fact brought before the annual meeting) pursuant to Schedule 14A promulgated under the Exchange Act.

Notwithstanding anything in these Bylaws to the contrary, no business shall be conducted at any annual meeting except in accordance with the procedures set forth in this Section and under applicable law.

This Section shall not apply to a shareholder proposal made pursuant to and in compliance with Rule 14a-4 or Rule 14a-8 under the Exchange Act.

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1.19       Inspectors of Election. Prior to each meeting of shareholders, the Board of Directors may appoint one or more Inspectors of Election. Upon his or her appointment, each such Inspector shall take and sign an oath to faithfully execute the duties of Inspector at such meeting with strict impartiality and to the best of his or her ability. Such Inspectors shall determine the number of shares outstanding, the number of shares present at the meeting and whether a quorum is present at such meeting. The Inspectors shall receive votes and ballots and shall determine all challenges and questions as to the right to vote and shall thereafter count and tabulate all votes and ballots and determine the result. Such Inspectors shall do such further acts as are proper to conduct the elections of directors and the vote on other matters with fairness to all shareholders. The Inspectors shall make a certificate of the results of the elections of directors and the vote on other matters. No Inspector shall be a candidate for election as a director of the Company.

ARTICLE II

DIRECTORS

2.1       Functions. Except as provided in the Articles of Incorporation or Bylaws, all corporate powers shall be exercised by or under the authority of, and the business and affairs of the Company shall be managed under the direction of, the Board of Directors.

2.2       Number. The Board of Directors of the Company shall consist of not less than one (1) person, the specific number of which shall be set from time to time by resolution of the Board of Directors. The number of directors may at any time and from time to time be increased or decreased by action of the Board of Directors, but no decrease in the number of directors shall have the effect of shortening the term of any incumbent director.

2.3       Classified Board, Term and Election. Commencing with the organizational meeting of shareholders, the directors shall be divided into three classes, designated Class I, Class II and Class III. Each Class shall consist, as nearly as may be possible, of one-third (1/3) of the full Board of Directors. Should the number of directors not be equally divisible by three, the excess director or directors shall be assigned to Classes I and II as follows: (i) if there shall be an excess of one directorship over a number equally divisible by three, such extra directorship shall be classified as Class I; and (ii) if there be an excess of two directorships over a number equally divisible by three, one shall be classified in Class I and the other in Class II. The term of the Class I directors shall terminate on the date of the 2014 annual meeting of shareholders, the term of the Class II directors shall terminate on the date of the 2015 annual meeting of shareholders and the term of the Class III directors shall terminate on the date of the 2016 annual meeting of shareholders. At each annual meeting of shareholders beginning in 2014, successors to the class of directors whose term expires at that annual meeting shall be elected for a three (3) year term. If the number of directors has changed, any increase or decrease shall be apportioned among the classes so as to maintain the number of directors in each class as nearly equal as possible, and any additional directors of any class elected to fill a vacancy resulting from an increase in such class shall hold office for a term that shall coincide with the remaining term of that class, but in no case will a decrease in the number of directors shorten the term of any incumbent director.

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2.4       Qualifications. Except as otherwise provided by law, a director must be a natural person who is 18 years of age or older but need not be a resident of this state or a shareholder of this Company.

2.5       Term. Each director shall hold office until the annual meeting for the year in which his or her term expires and until a successor has been elected and qualified, subject, however, to the director’s earlier resignation, removal from office or death.

2.6       Resignation and Removal. Any director may resign at any time by delivering written notice to the Company, the Board of Directors or its Chairman. Such resignation is effective when the notice is delivered unless the notice specifies a later effective date, in which event the Board of Directors may fill the pending vacancy before the effective date if the Board of Directors determines that the successor does not take office until the effective date.

A director may only be removed for cause, which shall be defined for these purposes as a conviction of a felony, declaration of unsound mind by a court order, adjudication of bankruptcy, or such director having been adjudged by a court of competent jurisdiction to be liable for negligence or misconduct in the performance of his or her duty to the Company in a matter of substantial importance to this Company and such adjudication is no longer subject to direct appeal. Removal for cause, as defined in this Section, must be approved by a vote of at least sixty six and two-thirds percent (66 2/3%) of the shares of the Company then entitled to vote at an election for that director. Any action for the removal of a director must be brought within one (1) year of the date of such conviction, declaration or adjudication.

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2.7       Vacancies. Subject to the provisions of the Articles of Incorporation, any vacancy occurring in the Board of Directors, including any vacancy created by reason of an increase in the number of directors, may be filled by the affirmative vote of a majority of the remaining directors though less than a quorum of the Board of Directors, or by the shareholders. A director elected to fill a vacancy shall hold office only until the next meeting of the shareholders.

2.8       Regular Meetings. An annual regular meeting of the Board of Directors shall be held without notice promptly after the annual meeting of shareholders for the purpose of the election of officers and the transaction of such other business as may come before the meeting, and at such other time and place as may be determined by the Board of Directors. The Board of Directors may, at any time and from time to time, provide by resolution, the time and place, either within or outside of the State of Florida, for the holding of the annual regular meeting or additional regular meetings of the Board of Directors. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting.

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2.9       Special Meetings. Special meetings of the Board of Directors may be called by the Chairman of the Board, the President or any two (2) directors.

The person or persons authorized to call special meetings of the Board of Directors may designate any place, either within or outside of the State of Florida, as the place for holding any special meeting of the Board of Directors called by them. If no designation is made, the place of meeting shall be the principal office of the Company in the State of Florida.

Notice of any special meeting of the Board of Directors may be given by any reasonable means, whether oral or written (including via electronic transmission), and at any reasonable time prior to such meeting. The reasonableness of any notice given in connection with any special meeting of the Board of Directors shall be determined in light of all of the pertinent circumstances. It shall be presumed that notice of any special meeting given at least two (2) days prior to such special meeting, either orally (by telephone or in person), or by written notice (including via electronic transmission) delivered personally or mailed to each director at his or her business or residence address (or delivered to his or her email address or facsimile number if being delivered via electronic transmission), is reasonable. If mailed, such notice of any special meeting shall be deemed to be delivered on the second day after it is deposited in the United States mail, so addressed, with postage thereon prepaid. If notice is given by telegram, such notice shall be deemed to be delivered when the telegram is delivered to the telegraph company. Neither the business to be transacted at, nor the purpose or purposes of, any special meetings of the Board of Directors need be specified in the notice or in any written waiver of notice of such meeting.

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2.10       Waiver of Notice of Meeting. Notice of a meeting of the Board of Directors need not be given to any director who signs a written waiver of notice before, during or after such meeting. Attendance of a director at a meeting shall constitute a waiver of notice of such meeting and waiver of any and all objections to the place of the meeting, the time of the meeting and the manner in which it has been called or convened, except when a director states, at the beginning of the meeting or promptly upon arrival at the meeting, any objection to the transaction of business because the meeting is not lawfully called or convened.

2.11       Quorum and Voting. A majority of the number of directors fixed in the manner provided by these Bylaws shall constitute a quorum for the transaction of business; provided however, that whenever, for any reason, a vacancy occurs in the Board of Directors, a quorum shall consist of a majority of the remaining directors until the vacancy has been filled. The act of the majority of the directors present at a meeting at which a quorum is present when the vote is taken shall be the act of the Board of Directors.

A majority of the directors present, whether or not a quorum exists, may adjourn any meeting of the Board of Directors to another time and place. Notice of any such adjourned meeting shall be given to the directors who were not present at the time of the adjournment and, unless the time and place of the adjourned meeting are announced at the time of the adjournment, to the other directors.

2.12       Presumption of Assent. A director of the Company who is present at a meeting of its Board of Directors, or a committee of the Board of Directors, at which action on any corporate matter is taken shall be presumed to have assented to the action taken, unless he or she (i) objects at the beginning of the meeting (or promptly upon his or her arrival) to holding the meeting or transacting specified business at the meeting, or (ii) votes against such action or abstains from the action taken.

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2.13       Meetings of the Board of Directors by Means of a Conference Telephone or Similar Communications. Members of the Board of Directors may participate in a meeting of such Board by means of a conference telephone or similar communications equipment if all persons participating in the meeting can hear each other at the same time. Participation by such means shall constitute presence in person at a meeting.

2.14       Action Without a Meeting. Any action required or permitted to be taken at a meeting of the Board of Directors or a committee thereof may be taken without a meeting if a consent in writing, setting forth the action so taken, is signed by all of the directors of the Company, or all the members of the committee, as the case may be. Action taken under this Section is effective when the last director or member of the committee signs the consent, unless the consent specifies a different effective date. Such consent shall have the effect as a meeting vote and may be described as such in any document.

2.15       Compensation. Each director may be paid his or her expenses, if any, of attendance at each meeting of the Board of Directors and a committee thereof, and may be paid a stated salary as a director or a fixed sum for attendance at each meeting of the Board of Directors (or a committee thereof) or both, as may from time to time be determined by action of the Board of Directors. No such payment shall preclude any director from serving the Company in any other capacity and receiving compensation therefor.

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2.16       Director Conflicts of Interests. No contract or other transaction between the Company and one or more of its directors or any other entity, firm, association or entity in which one or more of the directors of the Company are directors or officers or are financially interested shall be either void or voidable because of such relationship or interest, or because such director or directors of the Company are present at the meeting of the Board of Directors or a committee thereof which authorizes, approves or ratifies such contract or transaction, or because his, her or their vote(s) are counted for such purpose, if:

(a)       The fact of such relationship or interest is disclosed or known to the Board of Directors or committee which authorizes, approves or ratifies the contract or transaction by a vote or consent sufficient for the purpose without counting the vote(s) or written consent(s) of such interested director(s); or

(b)       The fact of such relationship or interest is disclosed or known to the shareholders entitled to vote and they authorize, approve or ratify such contract or transaction by vote or written consent; or

(c)       The contract or transaction is fair and reasonable as to the Company at the time it is authorized by the Board of Directors, a committee thereof or the shareholders.

Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or a committee thereof which authorizes, approves or ratifies such contract or transaction.

ARTICLE III

COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors, by resolution adopted by a majority of the full Board of Directors, may designate from among its members an executive committee and one or more other committees each of which, to the extent provided in such resolution, shall have and may exercise all the authority of the Board of Directors, except as prohibited by the Act. Each committee must have two (2) or more members who serve at the pleasure of the Board of Directors. The Board of Directors, by resolution adopted in accordance with this Article, may designate one (1) or more directors as alternate members of any such committee who may act in the place and stead of any absent member or members at any meeting of such committee.

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ARTICLE IV

OFFICERS

4.1       Officers. If so appointed by the Board of Directors, the officers of the Company shall consist of a Chairman of the Board, a President, a Secretary and such other officers as appointed by the Board of Directors. Any two (2) or more offices may be held by the same person.

4.2       Appointment and Term of Office. The officers of the Company shall be appointed annually by the Board of Directors at the first meeting of the Board held after the shareholders’ annual meeting. If the appointment of officers does not occur at this meeting, the appointment shall occur as soon thereafter as practicable. Each officer shall hold office until a successor has been duly appointed and qualified, or until an earlier resignation, removal from office, or death.

4.3       Removal of Officers. Any officer of the Company may be removed from his or her office or position at any time, with or without cause, by the Board of Directors. Any officer or assistant officer, if appointed by another officer pursuant to authority, if any, received from the Board of Directors, may likewise be removed by such officer.

4.4       Resignation. Any officer of the Company may resign at any time from his or her office or position by delivering notice to the Company, the Board of Directors or its Chairman. Such resignation is effective when the notice is delivered unless the notice specifies a later effective date. If a resignation is made effective at a later date and the Company accepts the future effective date, the Board of Directors may fill the pending vacancy before the effective date if the Board provides that the successor does not take office until the effective date.

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4.5       Duties. If so appointed by the Board of Directors, the officers of the Company shall have the following duties:

The Chairman of the Board shall preside at all meetings of the shareholders, the Board of Directors and all committees of the Board of Directors on which he or she may serve. The Chairman of the Board shall also perform any and all other duties as are incident to the office or are properly required by the Board of Directors.

The President shall, subject to the control of the Board of Directors, in general, supervise and control all of the business and affairs of the Company. In addition, the President shall possess, and may exercise, such power and authority, and shall perform such duties, as may from time to time be assigned to him or her by the Board of Directors, and as are incident to the office of President.

Each Vice President shall possess, and may exercise, such power and authority, and shall perform such duties, as may from time to time be assigned to him or her by the Board of Directors or the President.

The Secretary shall have custody of, and maintain, all of the corporate records except the financial records, shall record the minutes of all meetings of the shareholders and Board of Directors, see that all notices of meetings are duly given, keep a register of the mailing address of each shareholder of the Company, be responsible for authenticating records of the Company and perform such other duties as may be prescribed by the Board of Directors or the President.

4.6       Other Officers, Employees, and Agents. Each and every other officer, employee, and agent of the Company shall possess, and may exercise, such power and authority, and shall perform such duties, as may from time to time be assigned to him or her by the Board of Directors, the officer appointing him or her, and such officer or officers who may from time to time be designated by the Board to exercise supervisory authority.

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ARTICLE V

INDEMNIFICATION

5.1       Insurance. The Board of Directors of the Company, in its discretion, shall have authority on behalf of the Company to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee, or agent of the Company, or is or was serving at the request of the Company as a director, partner, officer, employee or agent of another Company, partnership, joint venture, trust or other enterprise, against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his status as such, whether or not the Company would have the power to indemnify him or her against such liability under the provisions of this Article.

5.2       Action Against a Party Because of Company Position. The Company shall indemnify each director, officer, or employee, and may indemnify, in its sole discretion, any agent, of the Company who was or is a party, or is threatened to be made a party, to any threatened, pending, or completed claim, action, suit, or proceeding, whether civil, criminal, administrative, or investigative (other than an action by, or in the right of, the Company) by reason of the fact that he or she is or was a director, officer, employee, or agent of the Company, as the case may be, or is or was serving at the request of the Company as a director, partner, officer, employee, or agent of another corporation, a partnership, joint venture, trust, or other enterprise against expenses (including attorneys' fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred by him or her in connection with such action, suit or proceeding, including any appeal thereof, if he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the Company and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. The termination of any claim, action, suit or proceeding by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent shall not, in and of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in, or not opposed to, the best interests of the Company or, with respect to any criminal action or proceeding, had reasonable cause to believe that his or her conduct was unlawful.

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5.3       Action by or in the Right of Company. The Company shall indemnify any director, officer, or employee, and may indemnify, in its sole discretion, any agent, of the Company who was or is a party, or is threatened to be made a party, to any threatened, pending, or completed claim, action or suit by or in the right of the Company to procure a judgment in its favor by reason of the fact that he or she is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, partner, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by him or her in connection with the defense or settlement of such claim, action, or suit, including any appeal thereof, if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Company, except that no indemnification shall be made in respect of any claim, issue, or matter as to which such person shall have been adjudged to be liable unless, and only to the extent that, the court in which such claim, action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such court shall deem proper.

5.4        Reimbursement if Successful. To the extent that the director, officer, employee, or agent of the Company has been successful on the merits or otherwise in defense of any claim, action, suit, or proceeding referred to in Section 5.2 or Section 5.3 of these Bylaws, or in defense of any claim, issue, or matter therein, and is indemnified by the Company against expenses (including attorneys' fees) actually and reasonably incurred by him or her in connection therewith, he or she shall remain indemnified for such expenses, notwithstanding that he or she has not been successful (on the merits or otherwise) on any other claim, issue, or matter in any such claim, action, suit or proceeding.

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5.5       Authorization. Any indemnification under Section 5.2 or Section 5.3 of these Bylaws (unless ordered by a court of competent jurisdiction) shall be made by the Company only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent, as the case may be, is proper in the circumstances because he or she met the applicable standard of conduct set forth in Section 5.2 or Section 5.3 of these Bylaws. Such determination shall be made:

(a)       By a majority vote of a quorum of the Board of Directors; however, for the purposes of this Subsection, a quorum shall consist of directors who are or were not parties to such action, suit or proceeding; or

(b)       If such quorum is not obtainable, or even if obtainable, by the majority vote of a committee duly designated by the Board of Directors (in which directors who are parties may participate) consisting solely of two or more directors not at the time parties to the proceeding; or

(c)       By independent legal counsel that is (i) selected by the Board of Directors as prescribed by Subsection 5.5(a) or by the committee as prescribed by Subsection 5.5(b), or (ii) if a quorum of the directors cannot be obtained in accordance with Subsection 5.5(a) hereof and a committee cannot be designated in accordance with Subsection 5.5(b), selected by majority vote of the full Board of Directors (including directors who are parties to the proceeding); or

(d)       By the shareholders by a majority vote of a quorum consisting of shareholders who are or were not parties to such action, suit or proceeding, or if no such quorum is obtainable, by a majority vote of shareholders who were not parties to such proceeding.

5.6       Advance Reimbursement. Expenses, including attorneys' fees, incurred in defending a civil or criminal action, suit, or proceeding shall be paid by the Company to any officer, director, or employee, and may be paid, in its sole discretion, to any agent, in advance of the final disposition of such action, suit or proceeding, upon a preliminary determination, following one of the procedures set forth in Section 5.5 of these Bylaws, that the director, officer, employee or agent, as the case may be, met the applicable standard of conduct set forth in Section 5.2 or Section 5.3 of these Bylaws, or as authorized by the Board of Directors in the specific case and, in either event, upon receipt of a written commitment from or on behalf of the director, officer, employee or agent to repay such amount unless it shall ultimately be determined that he or she is entitled to be indemnified by the Company as authorized in this Article.

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5.7       Further Indemnification. Indemnification as provided in this Article shall not be deemed exclusive. The Company may make any other further indemnification of any of its directors, officers, employees or agents that may be authorized under any statute, rule or law, provision of Articles of Incorporation, agreement, vote of shareholders or disinterested directors, or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, provided, however, that indemnification or advancement of expenses shall not be made to or on behalf of any director, officer, employee or agent if a judgment or other final adjudication establishes that his or her actions, or omissions to act, were material to the cause of action so adjudicated and constitute:

(a)       A violation of the criminal law, unless the director, officer, employee or agent had reasonable cause to believe his or her conduct was lawful or had no reasonable cause to believe his or her conduct was unlawful;

(b)       A transaction from which the director, officer, employee or agent derived an improper personal benefit;

(c)       In the case of a director, a circumstance under which the liability provisions of Section 607.0834 of the Act are applicable; or

(d)      Willful misconduct or a conscious disregard for the best interests of the Company in a proceeding by or in the right of the Company to procure a judgment in its favor or in a proceeding by or in the right of a shareholder of the Company.

Where such other provision provides broader rights of indemnification than these Bylaws, such other provision shall control.

5.8       Continuing Right of Indemnification. Indemnification as provided in this Article shall continue as to a person who has ceased to be a director, officer, employee, or agent, and shall inure to the benefit of the heirs, executors, and administrators of such a person.

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5.9       Limitation on Indemnity and Reimbursement. Notwithstanding any other provisions of this Article, in the event that the Board of Directors determines that the action giving rise to a claim for indemnity or expense reimbursement is the result of action enumerated in any of the provisions set forth in Subsection 5.7(a)-5.7(d) of these Bylaws upon the part of the claimant, no such indemnity or expense reimbursement shall be provided by the Company. Further, the Company’s obligation, if any, to indemnify any person who was or is serving at its request as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, enterprise, or nonprofit entity will be reduced by any amount such person may collect as indemnification from such other corporation, partnership, joint venture, trust, nonprofit entity, or other enterprise.

5.10       Indemnity Not Exclusive. The right conferred on any person by this Article will not be exclusive of any other rights which such person may have or hereafter acquire under any applicable law, provision of the Articles of Incorporation, these Bylaws, agreement, vote of shareholders or disinterested directors, or otherwise.

5.11       Conflicts. No indemnification or advance will be made under this Article, except where such indemnification or advance is mandated by applicable law or the order, judgment, or decree of any court of competent jurisdiction, in any circumstance where a court of competent jurisdiction determines:

(a)       That it would be inconsistent with a provision of the Articles of Incorporation, these Bylaws, a resolution of the shareholders or an agreement in effect at the time of the accrual of the alleged cause of the action asserted in the proceeding in which the expenses were incurred or other amounts were paid, which prohibits or otherwise limits indemnification; or

(b)       That it would be inconsistent with any condition expressly imposed by a court in approving a settlement.

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ARTICLE VI

STOCK CERTIFICATES

6.1       Certificates for Shares. The Board of Directors shall determine whether shares of the Company shall be uncertificated or certificated. If certificated shares are issued, certificates representing shares in the Company shall be signed (either manually or by facsimile) by the Chairman of the Board or President and the Secretary or an Assistant Secretary and may be sealed with the seal of the Company or a facsimile thereof. A certificate which has been signed by an officer or officers who later shall have ceased to be such officer when the certificate is issued shall nevertheless be valid. No certificate shall be issued for any share until such share is fully paid. Upon receipt of the consideration for which the Board of Directors has authorized for the issuance of the shares, such shares so issued shall be fully paid and nonassessable.

Each share certificate representing shares shall state upon the face thereof: (a) the name of the Company; (b) that the Company is organized under the laws of the State of Florida; (c) the name of the person or persons to whom issued; (d) the number and class of shares, and the designation of the series, if any, which such certificate represents; and (e) if different classes of shares or different series within a class are authorized, a summary of the designation, relative rights, preferences, and limitations applicable to each class and the variations in rights, preferences, and limitations determined for each series (and the authority of the Board of Directors to determine variations for future series), or in the alternative, that the Company will provide the shareholder with a full statement of this information on request and without charge. If the share is uncertificated, the Company shall, within a reasonable time after the issue or transfer of such share, send the shareholder a written statement of the information required to be placed on a certificate as above set forth.

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6.2       Transfer of Shares; Ownership of Shares. Transfers of shares of stock of the Company shall be made only on the stock transfer books of the Company, and only after the surrender to the Company of the certificates representing such shares, if any. Except as provided by the Act, the person in whose name the shares stand on the books of the Company shall be deemed by the Company to be the owner thereof for all purposes and the Company shall not be bound to recognize any equitable or other claim to, or interest in, such shares on the part of any other person, whether or not it shall have express or other notice thereof.

6.3       Lost, Stolen or Destroyed Certificates. The Company shall issue a new stock certificate in the place of any certificate previously issued if the holder of record of the certificate: (a) makes proof in affidavit form that it has been lost, destroyed or wrongfully taken; (b) requests the issuance of a new certificate before the Company has notice that the certificate has been acquired by a purchaser for value in good faith and without notice of any adverse claim; (c) at the discretion of the Board of Directors, gives bond in such form and amount as the Company may require, to indemnify the Company, the transfer agent and registrar against any claim that may be made on account of the alleged loss, destruction or theft of such certificate; and (d) satisfies any other reasonable requirements imposed by the Company.

ARTICLE VII

ACTIONS WITH RESPECT TO SECURITIES OF OTHER ENTITIES

Unless otherwise directed by the Board of Directors, the Chairman or a designee of the Chairman shall have the power to vote and to otherwise act on behalf of the Company, in person or by proxy, at any meeting of shareholders on, or with respect to, any action of shareholders of any other entity in which the Company may hold securities, including but not limited to any subsidiary bank of the Company, and to otherwise exercise any and all rights and powers which the Company may possess by reason of its ownership of securities in other entities.

ARTICLE VIII

CORPORATE SEAL

The Board of Directors shall provide for a corporate seal which may be facsimile, engraved, printed or an impression seal which shall be circular in form and shall have inscribed thereon the name of the Company, the words “seal” and “Florida” and the year of incorporation.

ARTICLE IX

AMENDMENTS

The Board of Directors shall have the exclusive authority to adopt or amend these Bylaws. These Bylaws shall be for the governance of the Company, subordinate only to the Articles of Incorporation and the laws of the United States and of Florida.

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EX-4.1

Exhibit 4.1

 

. ZQ|CERT#|COY|CLS|RGSTRY|ACCT#|TRANSTYPE|RUN#|TRANS# CLASS A VOTING COMMON STOCK CLASS A VOTING COMMON STOCK Authorized Stock: 50,000,000 Shares of Class A Voting Common Stock, Par Value $.01 10,000,000 Shares of Class B Non-Voting Common Stock, Par Value $.01 10,000,000 Shares of Preferred Stock PO BOX 43004, Providence, RI 02940-3004 MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 Certificate Number ZQ00000000 THIS CERTIFIES THAT Is the record holder of (HOLDING COMPANY FOR PROFESSIONAL BANK) INCORPORATED UNDER THE LAWS OF THE STATE OF FLORIDA ** Mr. Alexander David Sample MR. SAMPLE & MRS. SAMPLE SEE REVERSE FOR CERTAIN DEFINITIONS CUSIP 743139107 THIS CERTIFICATE IS TRANSFERABLE IN CITIES DESIGNATED BY THE TRANSFER AGENT, AVAILABLE ONLINE AT www.computershare.com FULLY PAID AND NON-ASSESSABLE SHARES OF PROFESSIONAL HOLDING CORP. CLASS “A” VOTING COMMON STOCK transferable on the books of the Corporation in person or by attorney upon surrender of this certificate duly endorsed or assigned. This certificate and the shares represented hereby are subject to the laws of the State of Florida, and to the Articles of Incorporation and Bylaws of the Corporation, as now or hereafter amended. In Witness Whereof, the said Corporation has caused this Certificate to be signed by its duly authorized officers, and its Corporate Seal to be hereunto affixed. DATED DD-MMM-YYYY COUNTERSIGNED AND REGISTERED: COMPUTERSHARE TRUST COMPANY, N.A. TRANSFER AGENT AND REGISTRAR, President and Chief Executive Officer By Secretary AUTHORIZED SIGNATURE CUSIPHolder ID Insurance Value Number of Shares DTC Certificate Numbers 1234567890/12345678901234567890/12345678901234567890/12345678901234567890/12345678901234567890/12345678901234567890/1234567890 Total Transaction XXXXXXXXXXXXXXXXX 1,000,000.00123456 12345678 123456789012345 Num/No. Denom. Total 1 1 1 2 2 2 3 3 3 4 4 4 5 5 5 6 6 6

PROFESSIONAL HOLDING CORP. The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM -as tenants in common UNIF GIFT MIN ACT -Custodian (Cust) (Minor) TEN ENT -as tenants by the entireties under Uniform Gifts to Minors Act (State) JT TEN -as joint tenants with right of survivorship UNIF TRF MIN ACT -.Custodian (until age) and not as tenants in common (Cust) under Uniform Transfers to Minors Act (Minor) (State) Additional abbreviations may also be used though not in the above list. PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE For value received, hereby sell, assign and transfer unto (PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING POSTAL ZIP CODE, OF ASSIGNEE) Shares of the capital stock represented by the within Certificate, and do hereby irrevocably constitute and appoint Attorney to transfer the said stock on the books of the within named Corporation with full power of substitution in the premises. Dated: 20 Signature(s) Guaranteed: Medallion Guarantee StampTHE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (Banks, Stockbrokers, Savings and Loan Associations and Credit Unions) WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM, PURSUANT TO S.E.C. RULE 17Ad-15. Signature: Signature: Notice: The signature to this assignment must correspond with the name as written upon the face of the certificate, in every particular, without alteration or enlargement, or any change whatever. The IRS requires that the named transfer agent (“we”) report the cost basis of certain shares or units acquired after January 1, 2011. If your shares or units are covered by the legislation, and you requested to sell or transfer the shares or units using a specific cost basis calculation method, then we have processed as you requested. If you did not specify a cost basis calculation method, then we have defaulted to the first in, first out (FIFO) method. Please consult your tax advisor if you need additional information about cost basis. If you do not keep in contact with the issuer or do not have any activity in your account for the time period specified by state law, your property may become subject to state unclaimed property laws and transferred to the appropriate state.

EX-4.2

Exhibit 4.2

 

. ZQ|CERT#|COY|CLS|RGSTRY|ACCT#|TRANSTYPE|RUN#|TRANS# CLASS B NON-VOTING COMMON STOCK CLASS B NON-VOTING COMMON STOCK Authorized Stock: 50,000,000 Shares of Class A Voting Common Stock, Par Value $.01 10,000,000 Shares of Class B Non-Voting Common Stock, Par Value $.01 10,000,000 Shares of Preferred Stock Certificate Number ZQ00000000 THIS CERTIFIES THAT Is the record holder of (HOLDING COMPANY FOR PROFESSIONAL BANK) INCORPORATED UNDER THE LAWS OF THE STATE OF FLORIDA MR. SAMPLE & MRS. SAMPLE & ZERO HUNDRED AND ZERO*** THIS CERTIFICATE IS TRANSFERABLE IN CANTON, MA, JERSEY CITY, NJ AND COLLEGE STATION, TX Shares SEE REVERSE FOR CERTAIN DEFINITIONS PO BOX 43004, Providence, RI 02940-3004 DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 CUSIPHolder IDInsurance Value Number of SharesDTC Certificate Numbers 1234567890/12345678901234567890/12345678901234567890/12345678901234567890/12345678901234567890/12345678901234567890/1234567890 Total Transaction XXXXXX XX XXXXXXXXXXX 1,000,000.00123456 12345678 123456789012345 Num/No. Denom. Total 1 1 1 2 2 2 3 3 3 4 4 4 5 5 5 6 6 6 7 FULLY PAID AND NON-ASSESSABLE SHARES OF PROFESSIONAL HOLDING CORP. CLASS “B” VOTING COMMON STOCK transferable on the books of the Corporation in person or by attorney upon surrender of this certificate duly endorsed or assigned. This certificate and the shares represented hereby are subject to the laws of the State of Florida, and to the Articles of Incorporation and Bylaws of the Corporation, as now or hereafter amended. In Witness Whereof, the said Corporation has caused this Certificate to be signed by its duly authorized officers, and its Corporate Seal to be hereunto affixed. DATED DD-MMM-YYYY COUNTERSIGNED AND REGISTERED: COMPUTERSHARE TRUST COMPANY, N.A. TRANSFER AGENT AND REGISTRAR, President and Chief Executive Officer By Secretary AUTHORIZED SIGNATURE

PROFESSIONAL HOLDING CORP. The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM -as tenants in common UNIF GIFT MIN ACT -Custodian (Cust) (Minor) TEN ENT -as tenants by the entireties under Uniform Gifts to Minors Act (State) JT TEN -as joint tenants with right of survivorship UNIF TRF MIN ACT -Custodian (until age.) and not as tenants in common (Cust) under Uniform Transfers to Minors Act (Minor) (State) Additional abbreviations may also be used though not in the above list. PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE For value received, hereby sell, assign and transfer unto (PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING POSTAL ZIP CODE, OF ASSIGNEE) Shares of the capital stock represented by the within Certificate, and do hereby irrevocably constitute and appoint Attorney to transfer the said stock on the books of the within named Corporation with full power of substitution in the premises. Dated: 20 Signature(s) Guaranteed: Medallion Guarantee StampTHE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (Banks, Stockbrokers, Savings and Loan Associations and Credit Unions) WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM, PURSUANT TO S.E.C. RULE 17Ad-15. Signature: Signature: Notice: The signature to this assignment must correspond with the name as written upon the face of the certificate, in every particular, without alteration or enlargement, or any change whatever. The IRS requires that the named transfer agent (“we”) report the cost basis of certain shares or units acquired after January 1, 2011. If your shares or units are covered by the legislation, and you requested to sell or transfer the shares or units using a specific cost basis calculation method, then we have processed as you requested. If you did not specify a cost basis calculation method, then we have defaulted to the first in, first out (FIFO) method. Please consult your tax advisor if you need additional information about cost basis. If you do not keep in contact with the issuer or do not have any activity in your account for the time period specified by state law, your property may become subject to state unclaimed property laws and transferred to the appropriate state.

EX-10.1

Exhibit 10.1

Strictly Confidential

EMPLOYMENT AGREEMENT

This Employment Agreement (this “Agreement”) is made as of this 2nd day of May, 2018 (the “Effective Date”), by and among Professional Holding Corp., a Florida corporation (the “Parent”), Professional Bank, a Florida state-chartered commercial bank (the “Bank”), and Daniel R. Sheehan (the “Executive”).

WITNESSETH:

WHEREAS, the Parent and the Bank desire to retain the services of and employ the Executive, and the Executive desires to provide services to the Parent and the Bank, pursuant to the terms and conditions of this Agreement;

NOW, THEREFORE, in consideration of the promises and of the covenants and agreements herein contained, the Parent, the Bank and the Executive covenant and agree as follows:

1.Employment. Pursuant to the terms and conditions of this Agreement, the Parent and the Bank agree to employ the Executive and the Executive agrees to render services to the Parent and the Bank as set forth herein. Upon signing this Agreement, the Executive represents and warrants to the Parent and the Bank that the Executive has the full right and authority to perform all services required of the Executive during the Term (as defined below) and that such service by the Executive to the Parent and the Bank does not constitute a breach of any contract or legal obligation that the Executive may have to any other party.

2.Position and Duties. During the Term, the Executive shall serve as Chairman and Chief Executive Officer of the Parent and the Chairman of the Bank, shall at all times report solely to the Board of Directors of the Parent (the “Board”) and the Board of Directors of the Bank (as applicable), and shall undertake such duties, consistent with such titles and positions, as may be assigned to him from time to time by the Board, including serving on committees of the Parent and the Bank as required in the Parent’s or the Bank’s bylaws and as appointed from time to time by the Board, keeping the Board informed of industry and regulatory developments regarding the Parent or the Bank, and coordinating with Bank personnel and third parties to the extent necessary to further the strategic plan of the Parent and the Bank. In addition, the Board and/or its Compensation Committee (the “Compensation Committee”) shall provide the Executive with annual goals and responsibilities, as outlined in a "performance evaluation," after consulting with the Executive about the goals and responsibilities, and it is the Executive's responsibility to meet or exceed these goals as reasonably determined by the Board and/or Compensation Committee. The Executive will be based at the Bank's facility currently located in Palm Beach Gardens, Florida, subject to customary travel and business requirements, including the potential need to spend several days per week at one of the Bank’s other facilities. While the Executive is employed under this Agreement, the Board shall nominate the Executive as a member of the Board at each annual shareholders’ meeting during the Term, including any extension thereof; the Executive shall serve on the Board without additional compensation. In performing duties pursuant to this Agreement, the Executive shall devote his full business time, energy, skill and best efforts to promote the Parent and the Bank and their business and affairs; provided that, subject to Sections 10, 12 and 13 of this Agreement, the Executive shall have the right to serve on boards of directors (or equivalent bodies) of commercial entities fully disclosed in writing by the Executive to, and acknowledged in writing by, the Compensation Committee, manage and pursue personal and family interests, make passive investments in securities, real estate, and other assets, and also to participate in charitable and community activities and organizations, so long as such activities do not adversely affect the performance by the Executive of his duties and obligations to the Parent and/or the Bank and/or their subsidiaries (collectively, the “Bank Group”).

3.Term.

(a)Subject to the provisions of Section 8 of this Agreement, the initial term of employment pursuant to this Agreement shall be for a period of three (3) years, commencing on the Effective Date and expiring (unless sooner terminated as provided in this Agreement) on the third anniversary of the Effective Date; provided that the term of this Agreement shall be automatically extended for additional successive one (1) year renewal terms on each anniversary of the Effective Date unless at least three (3) months prior to such anniversary of the Effective Date, the Parent or the Executive shall have given written notice to the other party that this Agreement shall not be extended beyond the then current term (the initial term and any renewal term, the “Term”).

(b)In the event that the Executive’s employment with the Parent ceases at the end of the Term because the Executive (and not the Parent) has given a non-renewal notice set forth in Section 3(a) above, and not as a result of the occurrence of Good Reason pursuant to Section 8(b) below, then such termination of employment shall be treated as a voluntary termination by the Executive without Good Reason upon the last day of the Term.

4.Compensation. During the Term, the Parent shall pay or provide to the Executive as compensation for the services of the Executive set forth in Section 1 of this Agreement:

(a)Annual Base Salary. An annual base salary (the “Annual Base Salary”) of no less than $400,000.00, which shall be payable in accordance with the Bank’s regular payroll practices. The Annual Base Salary may be increased (but not decreased) during the Term, and the Board or the Compensation Committee shall consider, on an annual basis, the appropriateness, nature and extent, if any, of an increase in the Annual Base Salary in its sole discretion.

(b)Annual Bonus.

(i)The Executive shall have the opportunity to earn, for each fiscal year of the Parent during the Term, an annual bonus (the “Annual Bonus”) pursuant to the terms of an annual incentive plan for senior executives of the Bank Group, as in effect from time to time. The Executive’s target Annual Bonus opportunity shall be no less than thirty percent (30%) of the Annual Base Salary on the last day of the applicable fiscal year (the “Target Bonus”). The actual amount of the Annual Bonus will be determined by the Board or the Compensation Committee in its discretion based on the achievement of performance goals established by the Board or the Compensation Committee in consultation with the Executive.

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(ii)The Annual Bonus shall be paid in the form of cash on or prior to the January 15 immediately following the end of each fiscal year to which it relates.

(iii)The Target Bonus may be increased (but not decreased) during the Term, and the Board or the Compensation Committee shall consider, on an annual basis, the appropriateness, nature and extent, if any, of an increase in the Target Bonus in its sole discretion.

(c)Long-Term Incentive Awards. With respect to each fiscal year of the Parent during the Term, the Executive shall be granted equity awards, as of no later than January 15 following the end of such fiscal year, for the applicable fiscal year. If such equity awards are granted after the Effective Date in the form of options to purchase common stock of the Parent (“Stock Options”), they shall vest in four (4) equal installments commencing on the last business day of each fiscal year following the fiscal year to which the Stock Option relates (for example, if a Stock Option in respect of fiscal year 2018 is granted on January 15, 2019, the first tranche would vest on December 31, 2019), subject to accelerated vesting upon a Change in Control (as defined below) and termination of employment without Cause or for Good Reason (each as defined below), have a ten (10)-year term from the date of grant and be exercisable on a net settlement basis with respect to both exercise price and tax withholding. If such equity awards are in the form of awards of restricted common stock of Parent (“Restricted Stock Awards”), they shall have the same vesting schedule and terms as set forth in the immediately preceding sentence with respect to the Stock Options. If such equity awards are in the form of awards of stock appreciation rights in respect of the common stock of the Parent (“SARs”), they shall be on the terms established by the Parent’s Board or Compensation Committee at the time of each grant.

(d)Payroll and Tax Withholding. The Annual Base Salary, the Annual Bonus, the other incentive payments, and all other payments and compensation to the Executive for his services to the Bank Group shall be subject to all tax withholding and deductions required by federal, state or other law (including those authorized by the Executive but not otherwise required by law), including but not limited to state, federal and local income taxes, unemployment tax, Medicare and FICA, together with such deductions as the Executive may from time to time specifically authorize under any employee benefit program that may be adopted by the Bank Group for the benefit of its senior executives or the Executive.

5.Benefits and Insurance.

(a)Generally. The Bank Group shall provide to the Executive such medical, disability, and life insurance, as well as any other benefits or perquisites, as the Bank Group shall provide from time to time to its other senior executives. As to health insurance, the Bank Group shall provide family health insurance coverage. The Executive understands that eligibility for the Bank’s benefit plans is contingent upon the Executive qualifying for eligibility under such plans. Subject to the terms of this Agreement, the Bank reserves the right to modify, suspend or terminate the benefit plans of the Bank Group at any time and from time to time. Once every five (5) years during the Term, the Bank Group shall pay or reimburse the Executive for any reasonable out-of-pocket cost that the foregoing insurance does not cover for annual physicals for the Executive.

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(b)Key Employee Insurance. The Bank Group shall have the right to obtain on the life of the Executive, pay all premium amounts related to, and maintain, “key employee” insurance naming any of the Bank Group as beneficiary. Selection of such insurance policy shall be in the sole and absolute discretion of the Board. The Executive shall, to the extent reasonably practicable, cooperate fully with the Bank Group and the insurer in applying for, obtaining and maintaining such life insurance, by executing and delivering such further and other documents as the Bank Group and/or the insurer may request from time to time, and doing all matters and things which may be convenient or necessary to obtain such insurance, including, without limitation, submitting to any physical examinations and providing any medical information required by the insurer. The Bank Group shall pay or reimburse the Executive for any reasonable costs he incurs in connection with his commitments under this Section 5(b).

(c)Supplemental Disability and Life Insurance. The Bank Group shall provide supplemental disability and life insurance for the benefit of the Executive or his estate (as the case may be) in such reasonable amount to cover the estimated difference between the “Unit Appreciation Payment” (as defined in the Parent’s 2014 Share Appreciation Plan) in respect of outstanding SARs as provided in Section 8(e)(ii) and a Liquidity Event (as defined in the Parent’s 2014 Share Appreciation Rights Plan) that may occur following the Executive’s termination of employment due to death or Disability. The disability and life insurance provided for in this Section 5(c) shall be in addition to any other disability and life insurance that the Bank Group may provide to the Executive.

6.Vacation. During the twelve (12)-month period commencing on the date of this Agreement and each twelve (12)-month period thereafter, the Executive may take four (4) weeks of paid vacation time at such periods during each year as the Board and the Executive shall determine from time to time. Any unused vacation time will not roll over to the next twelve (12)-month period unless otherwise authorized by the Board. The Executive shall be entitled to full compensation during such vacation periods.

7.Reimbursement of Expenses. The Bank Group shall reimburse the Executive for reasonable expenses incurred in connection with his employment hereunder, subject to guidelines issued from time to time by the Board and upon submission of documentation in conformity with applicable requirements of federal income tax laws and regulations supporting reimbursement of such expenses. The Executive also shall be entitled to receive a monthly automobile allowance of $500.

8.Termination. The employment of the Executive may be terminated as follows:

(a)Cause. By the Parent for Cause.

(i)For purposes of this Agreement, any one or more of the following conditions shall constitute grounds for termination of the employment of the Executive for “Cause” under this Section 8(a):

(1)The Executive’s willful failure or refusal to comply with the obligations required of him as set forth in this Agreement or comply with the material written policies of the Bank Group established from time to time or fail to perform the duties assigned to the Executive by the Board (other than any such failure resulting from the Executive’s incapacity due to physical or mental illness);

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(2)The Executive’s willful engaging in conduct involving fraud (other than good faith expense account disputes), deceit, personal dishonesty, or breach of fiduciary duty that has or would have if generally known adversely affected the business of the Bank Group;

(3)The Executive’s violation of any law or regulation, memorandum of understanding, cease and desist order, or other agreement with any regulatory agency having jurisdiction over any of the Bank Group;

(4)The Executive’s having become subject to continuing intemperance in the use of alcohol or drugs which has adversely affected, or may adversely affect, the business or reputation of the Bank or the Parent, or if the Executive reported to work under the influence of alcohol or any controlled substance;

(5)The Executive’s having filed, or had filed against him, any petition under the federal bankruptcy laws or any state insolvency laws;

(6)The Executive’s conviction of, or the entering by the Executive of a plea of guilty or nolo contendere with respect to, a criminal offense constituting a felony or involving moral turpitude;

(7)The Executive having engaged in the unlawful harassment of employees or customers of any of the Bank Group, or conduct relating to creation of a hostile work environment, or violent acts or threats of violence;

(8)The Executive having exposed the Bank Group to criminal liability substantially caused by the Executive which results in an adverse effect on the business, financial condition, prospects or results of operations of the Bank Group; or

(9)The Executive being in material breach of any provision of this Agreement.

No act or failure to act, on the part of the Executive, shall be considered “willful” unless it is done, or omitted to be done, in bad faith or without reasonable belief that the Executive’s action or omission was in the best interests of the Bank Group. Any determination of Cause by the Parent shall be made by a resolution approved by two-thirds majority of the members of the Board, provided that no such determination may be made until the Executive has been given written notice detailing the specific event constituting such Cause and a period of thirty (30) days following receipt of such notice to cure such event (if susceptible to cure), and, if such event is not curable or is not cured, an opportunity to appear before the Board (with legal counsel if so requested in writing by the Executive) to discuss the specific circumstances alleged to give rise to the Cause event. Subject to the Executive’s right to cure and/or appear before the Board, if the Executive’s employment is terminated for Cause, the termination shall take effect on the effective date of such termination as specified in the written notice of such termination delivered to the Executive.

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(ii)In the event of termination for Cause, the Executive shall be entitled to receive only:

(1)payment for all accrued but unpaid Annual Base Salary and accrued but unused vacation as of the date of the Executive’s termination of employment;

(2)reimbursement for expenses incurred by the Executive pursuant to Section 7 hereof up to and including the date on which employment is terminated;

(3)any earned or vested compensation or benefits to which the Executive may be entitled as of the date of termination pursuant to the terms of any compensation or benefit plans, including any vested benefits under retirement plans (with the payments described in subsections (1) through (3) above collectively called the “Accrued Obligations”); and

(4)all of the Executive’s equity awards (including SARs) that are outstanding and vested as of the effective date of termination (provided, however, that in the case of equity awards which are not vested because they are subject to “cliff” vesting which has not yet occurred, a pro rata portion of such equity awards shall be deemed vested based on the total number of full months that have transpired as of the effective date of termination since the date of grant, divided by the total number of months required to satisfy the “cliff” vesting as provided in the grant) shall remain outstanding, in the case of SARs until the Liquidity Event (provided, however, that the “Unit Appreciation Payment” (as defined in the Parent’s 2014 Share Appreciation Rights Plan) in respect of such SARs would be deemed to be equal to the amount determined as of the effective date of termination), and in the case of any Stock Options (whether or not granted pursuant to this Agreement), until the earlier of (x) the 30^th day following the date of termination (or any later expiration date specified in the applicable award agreement) and (y) the expiration of the full remaining term (the “Vested Equity Benefits”).

The payments contemplated by subsections (1) and (2) shall be paid within thirty (30) days following the date of the Executive’s termination of employment, and the payments or benefits contemplated by subsection (3) shall be paid in accordance with the terms of the applicable benefit plan.

(b)Good Reason. By the Executive for Good Reason.

(i)For purposes of this Agreement, any one or more of the following conditions shall constitute grounds for the Executive’s resignation for “Good Reason” under this Section 8(b):

(1)the assignment to the Executive of duties materially inconsistent with his positions as Chairman and Chief Executive Officer of the Parent and the Chairman of the Bank (including status, offices, titles and reporting requirements), authority, duties or responsibilities as contemplated by this Agreement, or a material diminution in such position, authority, duties or responsibilities (provided, however, that any assignment, reduction or diminution shall not be considered “Good Reason” if due to (A) the Executive's illness or Disability, (B) an order from any regulatory authority having jurisdiction over any of the Bank Group, or (C) the temporary suspensions of the Executive's duties, responsibilities, authority or title pending results of any Board commissioned investigation as to potential Cause for termination of the Executive's employment);

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(2)a requirement that the Executive report to an officer or employee instead of reporting directly to the Board;

(3)a reduction in the Annual Base Salary or the Target Bonus, or any material reduction in the aggregate benefits provided under Section 5(a) (except if the Board reduces any such benefits for all senior executives);

(4)the Bank Group’s requiring Executive to be based permanently at any office or location other than as provided in Section 2 of this Agreement resulting in an increase in his commute to and from his primary residence by thirty-five (35) miles or more;

(5)the Board’s provision of notice of non-renewal of the Term; or

(6)any other action or inaction that constitutes a material breach by the Bank Group of this Agreement.

In order to invoke a termination for Good Reason, the Executive shall provide written notice to the Parent of the existence of one or more of the conditions described in subsection (1) through (6) within sixty (60) days following the Executive first becoming aware of the existence of such condition or conditions, specifying in reasonable detail the conditions constituting Good Reason, and the Bank Group shall have thirty (30) days following receipt of such written notice (the “Cure Period”) during which it may remedy the condition. In the event that the Bank Group fails to remedy the condition constituting Good Reason during the applicable Cure Period, the Executive’s “separation from service” (within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (together with any regulations or other guidance promulgated thereunder, the “Code”)) must occur, if at all, within thirty (30) days following such Cure Period in order for such termination as a result of such condition to constitute a termination for Good Reason.

(ii)If the Executive’s employment is terminated by the Executive for Good Reason, then the Executive shall be entitled only to:

(1)the Accrued Obligations;

(2)a separation allowance, payable in equal installments in accordance with normal payroll practices over the eighteen (18)-month period beginning immediately following the date of termination, equal to the product of (x) one and one-half (1.5) multiplied by (y) the sum of (A) the Annual Base Salary as of immediately prior to the date of termination and (B) the Target Bonus as of immediately prior to the date of termination (or, if none has been established, the Target Bonus in respect of the fiscal year completed prior to the date of termination);

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(3)any unpaid Annual Bonus earned by the Executive in respect of the fiscal year of the Parent that was completed on or prior to the date of termination (the “Unpaid Annual Bonus”), which Unpaid Annual Bonus shall be paid in a lump sum in cash within thirty (30) days following the date of termination (or any later date as may be required by Section 409A of the Code);

(4)a prorated Annual Bonus in respect of the fiscal year of the Parent in which the date of termination occurs, with such amount to equal the product of (A) the portion of the Target Bonus for the fiscal year in which the date of termination occurs, such portion to be based on the Executive’s actual performance achieved for such fiscal year as measured against his performance goals for that fiscal year, as determined by the Compensation Committee; and (B) a fraction, (I) the numerator of which is the number of days in the fiscal year of the Parent in which the date of termination occurs through the date of termination, and (II) the denominator of which is 365 (the “Prorated Annual Bonus”), which Prorated Annual Bonus shall be paid in a lump sum in cash within thirty (30) days following the date of termination (or any later date as may be required by Section 409A of the Code);

(5)the Parent and the Bank shall arrange and pay all costs for the Executive to continue to participate (through reimbursement by the Bank to the Executive for COBRA payments, insurance premiums, or otherwise) on substantially the same terms and conditions as in effect for the Executive immediately prior to such termination, in the medical, dental, vision, disability and life insurance programs provided to the Executive pursuant to Section 5(a) of this Agreement until the earlier of (i) the end of the eighteen (18) month period beginning on the effective date of the termination of the Executive’s employment hereunder, or (ii) such time as the Executive is eligible to be covered by comparable benefit(s) of a subsequent employer, with the Executive to notify the Parent promptly upon eligibility for any such comparable coverage; and

(6)all of the Executive’s equity awards, including SARs, Stock Options and Restricted Stock, whether or not granted pursuant to this Agreement, that are outstanding as of the date of termination shall fully vest, with the vesting of any performance-based awards to be determined based on the actual performance measured as of the latest practicable date prior to the date of termination. Any Stock Options held by the Executive shall remain exercisable for the full remaining term to the same extent as if the Executive had remained actively employed by the Bank Group, and any SARs will remain outstanding through the Liquidity Event. The “Unit Appreciation Payment” (as defined in the Parent’s 2014 Share Appreciation Rights Plan) in respect of outstanding SARs would be deemed to be equal to the amount determined as of the Liquidity Event (as defined in the Parent’s 2014 Share Appreciation Rights Plan) and be paid at the time set forth in such plan. Awards (other than SARs, Stock Options and Restricted Stock Awards) shall be settled as soon as reasonably practicable following the date of termination (but not later than thirty (30) days following the termination date) or such later date as is required by 409A of the Code. For the avoidance of doubt, the terms of this Section 8(b)(ii)(6) (including the definitions of “Cause,” “Disability,” “Good Reason” and “Change in Control” set forth in this Agreement) shall supersede any different terms set forth in the plans or award agreements governing equity awards held by the Executive.

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(c)Resignation without Good Reason. By the Executive upon the lapse of sixty (60) days following written notice by the Executive to the Board of his resignation from the Bank Group for other than Good Reason; provided, however, that the Parent, in its discretion, may cause such termination to be effective at any time during such thirty (30)-day period. If the Executive’s employment is terminated because of the Executive’s resignation, without Good Reason, the Executive will be entitled only to the Accrued Obligations and the Vested Equity Benefits.

(d)Without Cause. If the Executive’s employment is terminated by the Parent without Cause at any time, the Executive shall be entitled only to the payments and benefits specified in Sections 8(b)(ii)(1) – 8(b)(ii)(6).

(e)Death or Disability. In the event of the Executive’s death, the Executive’s employment shall automatically cease and terminate as of the date of death. If the Executive becomes Disabled, the Parent may terminate the Executive’s employment upon thirty (30) days written notice to the Executive.

(i)For purposes of this Agreement, the terms “Disabled” or “Disability” means the Executive’s inability, because of physical or mental illness or injury, substantially to perform his duties hereunder as a result of physical incapacity for a continuous period of at least four (4) months, and any dispute as to the Executive’s incapacitation shall be resolved by an independent physician selected by the Board and reasonably acceptable to the Executive, whose determination shall be final and binding upon both the Executive and the Parent.

(ii)In the event of the Executive’s termination of employment due to his death or Disability, the Executive or his estate or legal representatives shall be entitled to only the compensation and benefits set forth in Sections 8(b)(ii)(1), (3), and (4) and the Vested Equity Benefits (provided, however, that (A) all SARs that are outstanding as of the date of death or Disability shall fully vest, and (B) the “Unit Appreciation Payment” (as defined in the Parent’s 2014 Share Appreciation Rights Plan) in respect of outstanding SARs would be determined and made pursuant to the terms of the Parent’s 2014 Share Appreciation Rights Plan).

(f)Change in Control.

(i)For purposes of this Agreement, the term “Change in Control” shall mean the occurrence of any of the following events:

(1)An acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934) of more than fifty percent (50%) of either (A) the then outstanding shares of common stock of the Parent (the “Outstanding Parent Common Stock”) or (B) the combined voting power of the then outstanding voting securities of the Parent entitled to vote generally in the election of directors (the “Outstanding Parent Voting Securities”); provided, however, that for purposes of this subsection (1), the following acquisitions shall not constitute a Change in Control: (W) any acquisition directly from the Parent, (X) any acquisition by the Parent, (Y) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Parent or any entity controlled by the Parent, or (Z) any acquisition by any entity pursuant to a transaction that complies with clauses (A), (B) and (C) of subsection (3) of this Section 8(f)(i);

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(2)A change in the composition of the Board such that the individuals who, as of the Effective Date, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that, for purposes of this Section 8(f)(i), any individual who becomes a member of the Board subsequent to the Effective Date whose election, or nomination for election by the Parent’s shareholders, was approved by a vote of at least a majority of those individuals who are members of the then Board shall be considered as though such individual were a member of the Incumbent Board; provided further, that any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board shall not be considered as a member of the Incumbent Board;

(3)The consummation of a reorganization, merger, statutory share exchange or consolidation or similar transaction involving the Parent or any of its subsidiaries or sale or other disposition of all or substantially all of the assets of the Parent, or the acquisition of assets or securities of another entity by the Parent or any of its subsidiaries (a “Business Combination”), in each case, unless, following such Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Parent Common Stock and Outstanding Parent Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than fifty percent (50%) of, respectively, the then outstanding shares of common stock (or, for a noncorporate entity, equivalent securities) and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors (or, for a noncorporate entity, equivalent securities), as the case may be, of the entity resulting from such Business Combination (including an entity that, as a result of such transaction, owns the Parent or all or substantially all of the Parent’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Parent Common Stock and Outstanding Parent Voting Securities, as the case may be; (B) no Person (excluding any entity resulting from such Business Combination or any employee benefit plan (or related trust) of the Parent or such entity resulting from such Business Combination) beneficially owns, directly or indirectly, more than fifty percent (50%) or more of, respectively, the then outstanding shares of common stock (or, for a noncorporate entity, equivalent securities) of the entity resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such entity except to the extent that such ownership existed prior to the Business Combination; and (C) at least a majority of the members of the board of directors (or, for a noncorporate entity, equivalent body or committee) of the entity resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

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(4)The approval by the shareholders of the Parent of a complete liquidation or dissolution of the Parent.

(ii)In the event of the Executive’s termination of employment without Cause or for Good Reason within twelve (12) months following a Change in Control, the Executive shall be entitled to only the payments and benefits specified in Sections 8(b)(ii)(1) – 8(b)(ii)(6); provided, however, that the payments contemplated by Section 8(b)(ii)(2) shall be paid in a lump sum within thirty (30) days following the date of termination to the extent permitted by Section 409A of the Code.

(g)Expiration. In the event of the termination of the Executive’s employment following the expiration of the Term, the Executive shall be entitled only to the Accrued Obligations and the Vested Equity Benefits.

(h)Release. Notwithstanding anything in this Agreement to the contrary, as a condition to receipt by the Executive of the payments due from the Bank pursuant to the applicable provision in this Section 8 in connection with a termination or expiration of his employment, the Executive shall execute and deliver to the Bank within twenty-two (22) days of the effective date of his termination of employment a general release of claims in the form attached as Exhibit A.

(i)Resignation from Other Positions. Any termination or expiration of the Executive’s employment for any reason shall require that the Executive resign all other positions (including as director) the Executive may then be holding with the Bank Group or as trustee of any of their benefit plans, unless the Board and the Executive agree to the contrary.

(j)Regulatory Restrictions. The parties acknowledge and agree that the compensation and benefits set forth in this Section 8 as being payable upon termination or expiration of this Agreement constitute liquidated damages upon the termination or expiration of this Agreement, and the parties hereto have agreed that such compensation and benefits are reasonable. The parties further acknowledge and agree that the Bank Group shall not be required to pay any compensation or benefits under this Section 8 to the extent prohibited by 12 C.F.R. Part 359 or any successor regulations regarding employee compensation promulgated by any regulatory agency having jurisdiction over any of the Bank Group.

9.Notice. All notices permitted or required to be given to either party under this Agreement shall be in writing and shall be deemed to have been given (a) in the case of delivery, when addressed to the other party as set forth at the end of this Agreement and delivered to said address, (b) in the case of mailing, three (3) days after the same has been mailed by certified mail, return receipt requested, and deposited postage prepaid in the U.S. Mails, addressed to the other party at the address as set forth at the end of this Agreement, and (c) in any other case, when actually received by the other party. Either party may change the address at which said notice is to be given by delivering notice of such to the other party to this Agreement in the manner set forth herein.

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10.Confidential Matters.

(a)The Executive is aware and acknowledges that the Executive shall have access to Confidential Information by virtue of his employment. The Executive agrees that, during the period of time the Executive is retained to provide services to the Bank Group, and thereafter subsequent to the termination or expiration of the Executive’s services to the Bank Group for any reason whatsoever, the Executive will not, directly or indirectly, use, release or divulge any Confidential Information whatsoever relating to any of the Bank Group or their business, to any other person or entity without the prior written consent of the Parent. During the Term, the Executive shall take all steps reasonably necessary and/or requested by the Board to ensure that the Bank Group’s Confidential Information is kept confidential pursuant to this Agreement. “Confidential Information” shall include the various confidential, trade secret and/or proprietary information of any of the Bank Group and of their clients and customers, including, without limitation, ideas, concepts, plans, designs, marketing techniques, sales techniques, forecasts, projections, products, technology, methods, procedures, pricing, costs, cost reports, customers, customer lists, customer identification, customer prospects, designs, computer systems, passwords, computer software, procedures, methods, formulae, financial statements, assets, liabilities, revenues, business methods, marketing information, marketing methods, acquisition plans, contract terms, contract negotiations, compensation information, structures and plans, employee responsibilities and duties, copyrights, trademarks, patents and other proprietary information. Confidential Information does not include information that is available to the public or which becomes available to the public other than through a breach of this Agreement on the part of the Executive. Also, the Executive shall not be precluded from disclosing Confidential Information in furtherance of the performance of his services to the Bank Group or to the extent required by any legal proceeding. The Executive also agrees that all files, records, documents, equipment and similar items and technological information whether maintained in hard copy or by electronic means relating to the Bank Group’s business, whether prepared by the Executive or others, shall remain the exclusive property of the Bank Group. Upon the termination of Executive’s employment, or at any earlier time requested by the Parent, the Executive will promptly return to the Parent all copies and manifestations of all Confidential Information as well as any other property of any of the Bank Group, which is in the Executive’s possession or under the Executive’s control. The Executive agrees not to delete, modify or copy any work file or Confidential Information prior to or subsequent to termination or expiration of employment. For the avoidance of doubt, the parties agree that each of the terms of this Agreement shall be considered “Confidential Information” within the meaning of this Section 10, and may be disclosed by the Executive only to the limited extent permitted by the terms of this Section 10, to his spouse, and to his advisors; without limiting the generality of the foregoing, they may not be disclosed by the Executive to any other employees of any of the Bank Group other than anyone designated in writing by the Board.

(b)In the event the Executive is requested pursuant to, or required by, applicable law or regulation or by legal process to disclose any Confidential Information, the Executive agrees to provide the Bank Group with prompt notice of such request or requirement to enable the Bank Group to seek an appropriate protective order, waive compliance with the provisions of this Agreement or take other appropriate action. The Executive agrees to use the Executive’s best efforts in such event to assist the Bank Group in obtaining a protective order. If, in the absence of a protective order or the receipt of a waiver under this Agreement, the Executive is nonetheless, in the written opinion of the Executive’s counsel, compelled to disclose the Confidential Information to any tribunal, the Executive, after notice to the Bank Group, may disclose to such tribunal only such Confidential Information that the Executive is compelled to disclose. The Executive shall not be liable for the disclosure of Confidential Information to a tribunal compelling such disclosure unless such disclosure was caused or resulted from a previous disclosure by the Executive not permitted under this Agreement.

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(c)Notwithstanding anything in this Agreement to the contrary, nothing in this Agreement shall impair the Executive’s rights under the whistleblower provisions of any applicable federal law or regulation or, for the avoidance of doubt, limit the Executive’s right to receive an award for information provided to any government authority under such law or regulation.

11.Injunction without Bond. The Bank Group has entered into this Agreement in order to obtain the benefit of the Executive’s unique skills, talent, and experience. The parties enter into this Agreement with the understanding that the base salary and all other compensation and benefits to be paid to the Executive pursuant to this Agreement have been based in part on the value to the Bank Group of each of the provisions of this Agreement. The Executive acknowledges and agrees that any breach or threatened breach of this Agreement will result in irreparable damage to the Bank Group and, accordingly, any of the Bank Group may obtain injunctive relief, a decree of specific performance and/or any other equitable relief for any breach or threatened breach of this Agreement in addition to any other remedies available to the Bank Group, without being required to show any actual damage, or to post an injunction bond, and the prevailing party in any such proceeding will be entitled to reimbursement for all costs and expenses, including reasonable attorneys' fees in connection therewith. Nothing herein shall be construed as prohibiting the Bank Group from pursuing such other remedies available to it for any such breach or threatened breach including recovery of damages from the Executive.

12.Legitimate Business Interests; Noncompetition.

(a)Legitimate Business Interests. The Executive acknowledges and agrees that in the performance of his duties of employment with the Bank Group he will be in contact with customers, potential customers and/or information about customers or potential customers of the Bank Group either in person, through the mails, by telephone or by other electronic means. The Executive also acknowledges and agrees that trade secrets and confidential information of the Bank Group that will be gained by the Executive during his employment with the Bank Group, have been developed by the Bank Group through substantial expenditures of time, effort and financial resources and constitute valuable and unique property of the Bank Group. The Executive further understands, acknowledges and agrees that the foregoing makes it necessary for the protection of the Bank Group’s businesses that the Executive not divert business or customers from the Bank Group and that the Executive maintain the confidentiality and integrity of the Confidential Information as provided in this Agreement.

(b)Noncompetition. Notwithstanding anything in this Agreement to the contrary, the Executive agrees that during the period of time the Executive is retained to provide services to the Bank, and thereafter for a period of one (1) year subsequent to the termination or expiration of the Executive’s services to the Bank Group for any reasons whatsoever, the Executive will not enter the employ of, or have any interest in, directly or indirectly (either as executive, partner, director, officer, consultant, principal, agent, employee or investor), any other bank or financial institution or any entity which accepts deposits, makes loans (whether presently existing or subsequently established) similar to the types of loans made by the Bank (or for which the Bank plans on making based on a then-existing plan to do so) as of the date of the Executive’s termination, or engages in any other business being conducted by the Bank (or for which the Bank plans on conducting based on a then-existing agreement to do so) as of the date of the Executive’s termination, and/or any holding company or other affiliate for or of any of the foregoing, and which has an office located within a radius of fifty (50) miles of any office of the Bank as of the date of Executive’s termination; provided, however, that the foregoing shall not preclude any ownership by the Executive of an amount not to exceed five percent (5%) of the equity securities of any entity which is subject to the periodic reporting requirements of the 1934 Act (so long as the Executive has no active participation in the business of such entity and does not have, other than in his capacity as a common shareholder, the right to elect or appoint a member to the board of directors or comparable governing body of such entity or of any of its affiliates) and the shares of the Parent’s common stock owned by the Executive at the time of termination or expiration of employment.

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13.Nonsolicitation; Noninterference; Non-Disparagement.

(a)The Executive agrees that during the period of time the Executive is retained to provide services to the Bank Group, and thereafter for a period of twelve (12) months subsequent to the termination or expiration of the Executive's services to the Bank Group for any reason whatsoever, the Executive will not, directly or indirectly through any other person or entity, (i) solicit for employment by the Executive, or anyone else, or employ (directly or indirectly) any employee of the Bank Group or any person who was an employee of the Bank Group within twelve (12) months prior to such proposed employment or solicitation of employment; (ii) induce, or attempt to induce, any employee of the Bank Group to terminate such employee’s employment; (iii) induce, or attempt to induce, anyone having a business relationship with the Bank Group to terminate or curtail such relationship or enter into a similar relationship with another financial institution or financial services company or, on behalf of himself or anyone else, compete with the Bank Group; (iv) knowingly make any untrue statement concerning the Bank Group or their directors or officers to anyone; or (v) permit anyone controlled by the Executive, or any person acting on behalf of the Executive or anyone controlled by an employee of the Executive, to do any of the foregoing.

(b)The Executive agrees not to hold himself out in any manner as a director, officer, employee, agent or in any other manner as a representative of Parent, the Bank or any of their respective direct or indirect affiliates from and after the termination or expiration of the Term and going forward.

14.Remedies. The Executive agrees that the restrictions set forth in this Agreement are fair and reasonable. The covenants set forth in this Agreement are not dependent covenants and any claim against the Bank Group, whether arising out of this Agreement or any other agreement or contract between any of the Bank Group and the Executive, shall not be a defense to a claim against the Executive for a breach or alleged breach of any of the covenants of the Executive contained in this Agreement. It is expressly understood by and between the parties hereto that the covenants contained in this Agreement shall be deemed to be a series of separate covenants. The Executive understands and agrees that if any of the separate covenants are judicially held invalid or unenforceable, such holding shall not release the Executive from the Executive’s obligations under the remaining covenants of this Agreement. If in any judicial proceedings, a court shall refuse to enforce any or all of the separate covenants because taken together they are more extensive (whether as to geographic area, duration, scope of business or otherwise) than necessary to protect the business and goodwill of the Bank Group, it is expressly understood and agreed between the parties hereto that those separate covenants which, if eliminated or restricted, would permit the remaining separate covenants or the restricted separate covenant to be enforced in such proceeding shall, for the purposes of such proceeding, be eliminated from the provisions of this Agreement or restriction, as the case may be.

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15.Invalid Provision. In the event any provision should be or become invalid or unenforceable, such facts shall not affect the validity and enforceability of any other provision of this Agreement. Similarly, if the scope of any restriction or covenant contained herein should be or become too broad or extensive to permit enforcement thereof to its full extent, then any such restriction or covenant shall be enforced to the maximum extent permitted by law, and the Executive hereby consents and agrees that the scope of any such restriction or covenant may be modified accordingly in any judicial proceeding brought to enforce such restriction or covenant.

16.Governing Law; Venue. This Agreement shall be construed in accordance with and shall be governed by the laws of the State of Florida. The sole and exclusive venue for any action arising out of this Agreement shall be a state court situated in Palm Beach County, Florida, and the parties to this Agreement agree to be subject to the personal jurisdiction of such Court and that service on each party shall be valid if served by certified mail, return receipt requested or hand delivery. Notwithstanding anything to the contrary in this Agreement, each of the parties agrees that prior to commencing any claims for breach of this Agreement (except to pursue injunctive or other equitable relief) to submit, for a period of sixty (60) days, to voluntary mediation before a jointly selected neutral third party mediator under the auspices of JAMS, Miami, Florida, Resolutions Center (or any successor location), pursuant to the procedures of JAMS Mediation Rules conducted in the State of Florida (however, such mediation or obligation to mediate shall not suspend or otherwise delay any termination or other action of the Bank Group or affect the Bank Group’s other rights). The Bank Group shall be responsible for the costs of the mediator and the related mediation costs, provided that each party shall be responsible for its or his attorneys’ fees and costs.

17.Attorneys’ Fees and Costs. In the event a dispute arises between the parties under this Agreement and suit is instituted, the prevailing party shall be entitled to recover his or its costs and attorneys’ fees from the nonprevailing party. As used herein, costs and attorneys’ fees include any costs and attorneys’ fees in any appellate proceeding.

18.Binding Effect. The rights and obligations of the parties under this Agreement shall inure to the benefit of and shall be binding upon the successors, assigns and legal representatives of the Bank Group and the heirs and legal representatives of the Executive.

19.Effect on Other Agreements. This Agreement and the termination or expiration thereof shall not affect any other agreement between the Executive and the Bank Group, and the receipt by the Executive of benefits thereunder.

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20.Miscellaneous. The rights and duties of the parties hereunder are personal and may not be assigned or delegated without the prior written consent of the other party to this Agreement; provided, however, that the Executive’s rights to payments or benefits hereunder may be transferred only by will or the laws of descent and distribution or to the Executive’s representative in the event of his disability; and provided further, that the rights and obligations of the Bank Group under this Agreement may be assigned in the case of a consolidation or merger with, or a transfer of all or substantially all of the assets of the Bank Group to, another entity which prior to the consummation of such combination transaction expressly assumes all of the Bank Group’s obligations to the Executive hereunder (for the avoidance of doubt, the foregoing proviso shall not affect the Bank Group’s and the Executive’s rights set forth in Section 8(f) of this Agreement). The captions used herein are solely for the convenience of the parties and are not used in construing this Agreement. Time is of the essence of this Agreement and the performance by each party of its or his duties and obligations hereunder.

21.Compliance with Section 409A.

(a)General. It is intended that payments and benefits made or provided under this Agreement shall not result in penalty taxes or accelerated taxation pursuant to Section 409A of the Code. Any payments that qualify for the “short-term deferral” exception, the separation pay exception or another exception under Section 409A of the Code shall be paid under the applicable exception. For purposes of the limitations on nonqualified deferred compensation under Section 409A of the Code, each payment of compensation under this Agreement shall be treated as a separate payment of compensation. All payments to be made upon a termination of employment under this Agreement may only be made upon a “separation from service” under Section 409A of the Code to the extent necessary in order to avoid the imposition of penalty taxes on the Executive pursuant to Section 409A of the Code. In no event may the Executive, directly or indirectly, designate the calendar year of any payment under this Agreement, and to the extent required by Section 409A of the Code, any payment that may be paid in more than one taxable year (depending on the time that the Executive executes the Release) shall be paid in the later taxable year. With respect to any compensation that constitutes nonqualified deferred compensation within the meaning of Section 409A of the Code, to the extent necessary to comply with Section 409A of the Code, a Change in Control (whether alone or with any other event) shall not constitute a payment or distribution event, or an event that otherwise changes the timing of payment or distribution, unless the Change in Control also constitutes an event described in Section 409A(a)(2)(v) of the Code and the regulations promulgated thereunder (a “Section 409A CIC”); provided, however, that whether or not a Change in Control is a Section 409A CIC, such Change in Control shall result in the accelerated vesting of any compensation to the extent provided by the terms thereof or this Agreement.

(b)Reimbursements and In-Kind Benefits. Notwithstanding anything to the contrary in this Agreement, all reimbursements and in-kind benefits provided under this Agreement that are subject to Section 409A of the Code shall be made in accordance with the requirements of Section 409A of the Code, including, where applicable, the requirement that (i) any reimbursement is for expenses incurred during the Executive’s lifetime (or during a shorter period of time specified in this Agreement); (ii) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during a calendar year may not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year; (iii) the reimbursement of an eligible expense will be made no later than the last day of the calendar year following the year in which the expense is incurred; and (iv) the right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.

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(c)Delay of Payments. Notwithstanding any other provision of this Agreement to the contrary, if the Executive is considered a “specified employee” for purposes of Section 409A of the Code (as determined in accordance with the methodology established by the Bank Group as in effect on the date of termination), any payment that constitutes nonqualified deferred compensation within the meaning of Section 409A of the Code that is otherwise due to the Executive under this Agreement during the six (6)-month period immediately following the Executive’s separation from service (as determined in accordance with Section 409A of the Code) on account of the Executive’s separation from service shall be accumulated and paid to the Executive on the first business day of the seventh (7^th) month following his separation from service (the “Delayed Payment Date”), to the extent necessary to prevent the imposition of tax penalties on the Executive under Section 409A of the Code. If the Executive dies during the postponement period, the amounts and entitlements delayed on account of Section 409A of the Code shall be paid to the personal representative of his estate on the first to occur of the Delayed Payment Date or thirty (30) days after the date of the Executive’s death.

22.Limitation on Parachute Payments. In the event that the payments and other benefits provided for in this Agreement or otherwise payable to the Executive (such payments and benefits, the “280G Payments”) (a) constitute "parachute payments" within the meaning of Section 280G of the Code and (b) but for this Section 22, would be subject to the excise tax imposed by Section 4999 of the Code, then, subject to the immediately following sentence, the 280G Payments under this Agreement will be reduced to the extent such reduction would result in no portion of the 280G Payments being subject to excise tax under Section 4999 of the Code. Notwithstanding the foregoing, the reduction contemplated by this Section 22 shall be made only if the Accountants (as defined below) determine that such reduction would result in the Executive retaining a greater amount of the 280G Payments on a net after-tax basis than if no reduction were made.

Any reduction in 280G Payments pursuant to this Section 22 will occur in the following order: (i) cash payments that may not be valued under Treas. Reg. § 1.280G-1, Q&A-24(c) (“24(c)”), (ii) equity-based payments that may not be valued under 24(c), (iii) cash payments that may be valued under 24(c), (iv) equity-based payments that may be valued under 24(c) and (v) other types of benefits. Within any such category of 280G Payments (that is, (i), (ii), (iii), (iv) or (v)), a reduction shall occur first with respect to amounts that are not deferred payments and then with respect to amounts that are. In the event that acceleration of vesting of equity award compensation is to be reduced, such acceleration of vesting will be cancelled in the reverse order of the date of grant of the Executive's equity awards.

To the extent requested by the Executive, the Bank Group shall cooperate with the Executive in good faith in valuing, and the Accountants shall take into account the value of, services provided or to be provided by the Executive (including, without limitation, the Executive’s agreeing to refrain from performing services pursuant to a covenant not to compete or similar covenant, before, on or after the date of a change in ownership or control of the Bank Group (within the meaning of Q&A-2(b) of the final regulations under Section 280G of the Code), such that payments in respect of such services may be considered reasonable compensation within the meaning of Q&A-9 and Q&A-40 to Q&A-44 of the final regulations under Section 280G of the Code and/or exempt from the definition of the term “parachute payment” within the meaning of Q&A-2(a) of the final regulations under Section 280G of the Code in accordance with Q&A-5(a) of the final regulations under Section 280G of the Code.

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Any determination required under this Section 22 will be made in writing by the Parent's independent public accountants engaged by the Parent for general audit purposes immediately prior to the Change of Control (the "Accountants"), whose good faith determination will be conclusive and binding upon the Executive and the Bank Group for all purposes. If the independent registered public accounting firm so engaged by the Parent is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, or if such firm otherwise cannot perform the calculations, the Parent shall appoint a nationally recognized independent registered public accounting firm or other professional organization that is a certified public accounting firm recognized as an expert in determinations and calculations for purposes of Section 280G of the Code to make the determinations required hereunder and to act as the Accountants. For purposes of making the calculations required by this Section 22, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. The Bank Group and the Executive will furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section. The Parent will bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section.

23.Regulatory Actions. Notwithstanding any other provision of this Agreement to the contrary, any amounts paid or payable to the Executive pursuant to this Agreement, or otherwise, are subject to and conditioned upon their compliance with Sections 18(k) and 32(a) of the Federal Deposit Insurance Act (“FDIA”) and Part 359 of the FDIC’s rules and regulations, and any regulations promulgated under the FDIA, and also are subject to and conditioned upon compliance by the Bank Group with any Memorandum of Understanding, Consent Order, or other agreement between any of the Bank Group and the FDIC and/or the Florida Office of Financial Regulation. In the event that any provision of this Agreement is found to be inconsistent with such regulations, the parties shall cooperate to reform such provisions to preserve their original intentions in executing this Agreement to the maximum extent possible.

24.Complete Agreement. This Agreement constitutes the complete agreement between the parties hereto and incorporates all prior discussions, agreements and representations made in regard to the matters set forth herein. The covenants concerning confidential matters, noncompetition, nonsolicitation and nondisparagement set forth in Sections 10 through 15 of this Agreement shall supersede any similar provisions set forth in any contract, agreement or arrangement between the Executive and any member of the Bank Group, and shall be the exclusive covenants applicable to the Executive while employed by the Bank Group. This Agreement may not be amended, modified or changed except by a writing signed by the party to be charged by said amendment, change or modification.

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25.Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument. Confirmation of execution by electronic transmission of a facsimile signature page shall be binding on a party so confirming.

26.Indemnification.

(a)The Bank Group shall jointly and severally indemnify, defend and hold the Executive harmless, to the maximum extent permitted by law (and subject to any mandatory exclusion of indemnification under Florida law), against all judgments, fines, amounts paid in settlement and all reasonable expenses, including reasonable attorneys’ fees and costs incurred by the Executive, in connection with the defense of, or as a result of, any action or proceeding (or any appeal from any action or proceeding) in which the Executive is made or is threatened to be made a party by reason of the fact that the Executive is or was an officer or director of the Bank Group, regardless of whether such action or proceeding is one brought by or in the right of any of the Bank Group, except that the foregoing shall not apply if the action or proceeding is one brought by or in the right of the Bank Group if the Executive has been terminated for “Cause” as defined in this Agreement. Each of the parties hereto shall give prompt notice to the other of any action or proceeding from which the Bank Group is obligated to indemnify, defend and hold harmless the Executive of which it or he (as the case may be) gains knowledge.

(b)The Parent agrees that, during the Executive’s employment and through all applicable statutes of limitations, the Parent shall use its best efforts to cause the Executive to be covered and insured up to the full limits provided by all directors’ and officers’ insurance which the Bank Group then maintains to indemnify its directors and officers (and to indemnify the Bank Group for any obligations which it incurs as a result of its undertaking to indemnify its officers and directors), subject to applicable deductibles and to the terms and conditions of such policies.

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27.JURY WAIVER. IN ANY CIVIL ACTION, COUNTERCLAIM, OR PROCEEDING, WHETHER AT LAW OR IN EQUITY, WHICH ARISES OUT OF CONCERNS, OR RELATES TO THIS AGREEMENT, ANY AND ALL TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, THE PERFORMANCE OF THIS AGREEMENT, OR THE RELATIONSHIP CREATED BY THIS AGREEMENT, WHETHER SOUNDING IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE, TRIAL SHALL BE TO A COURT OF COMPETENT JURISDICTION AND NOT TO A JURY. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY. ANY PARTY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT, AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES TO THIS AGREEMENT OF THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. NEITHER PARTY HAS MADE OR RELIED UPON ANY ORAL REPRESENTATIONS TO OR BY ANY OTHER PARTY REGARDING THE ENFORCEABILITY OF THIS PROVISION. EACH PARTY HAS READ AND UNDERSTANDS THE EFFECT OF THIS JURY WAIVER PROVISION. EACH PARTY ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY ITS OWN COUNSEL WITH RESPECT TO THE TRANSACTION GOVERNED BY THIS AGREEMENT AND SPECIFICALLY WITH RESPECT TO THE TERMS OF THIS SECTION 27.

28.Survivability. The provisions of this Agreement that by their terms call for performance subsequent to the termination of either the Executive’s employment or this Agreement (including the terms of Sections 8 through 27) shall so survive such termination.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

PROFESSIONAL HOLDING CORP.
By:	/s/ Herb Martens
Name:	Herb Martens
Title:	Director
PROFESSIONAL BANK
By:	/s/ Herb Martens
Name:	Herb Martens
Title:	Director

EXECUTIVE

/s/ Daniel R. Sheehan

Print Name:   Daniel R. Sheehan

Address:       11814 Lake Shore Place
                       North Palm Beach, FL 33408

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Exhibit A

GENERAL RELEASE OF CLAIMS

This General Release of Claims (this “Agreement”) is entered into on [●], 201[●], by and among Professional Holding Corp., a Florida corporation (the “Parent”), Professional Bank, a Florida state-chartered commercial bank (the “Bank”), and Daniel R. Sheehan (the “Executive”).

1.General Release and Waiver of Claims.

(a)Release. In consideration of the payments and benefits provided under the Employment Agreement, dated as of [●], by and among the Parent, the Bank and the Executive (the “Employment Agreement”), and after consultation with counsel, the Executive and each of the Executive’s respective heirs, executors, administrators, representatives, agents, successors and assigns (collectively, the “Releasors”) hereby irrevocably and unconditionally release and forever discharge the Bank Group (as defined in the Employment Agreement) and its officers, employees, directors and agents (“Releasees”) from any and all claims, actions, causes of action, rights, judgments, obligations, damages, demands, accountings or liabilities of whatever kind or character (collectively, “Claims”) that the Releasors may have arising out of the Executive’s employment relationship with and service as an employee, officer or director of the Bank Group, and the termination of any such relationship or service, in each case up to and including the Executive’s date of termination; provided, however, that notwithstanding anything contained herein to the contrary, this Agreement shall not affect: (i) the obligations of the Bank Group set forth in the Employment Agreement which survive termination or expiration, including without limitation under Sections 8, 20 and 26, or under any other benefit plan, agreement, arrangement or policy of the Bank Group that is applicable to the Executive that, in each case, by its terms, contains obligations that are to be performed after the date hereof by the Bank Group; (ii) any indemnification or similar rights the Executive has as a current or former officer, director, employee or agent of the Bank Group, including, without limitation, any and all rights thereto under applicable law, the Parent’s or the Bank’s bylaws or other governance documents, or any rights with respect to coverage under any directors’ and officers’ insurance policies and/or indemnification agreements; (iii) benefits or the right to seek benefits under applicable workers’ compensation and/or unemployment compensation statutes; and (iv) any Claims that may arise in the future from events or actions occurring after the date of the Executive’s execution of this General Release of Claims or that the Executive may not by law release through an agreement such as this.

(b)Specific Release of ADEA Claims. In further consideration of the payments and benefits provided to the Executive under the Agreement, the Releasors hereby unconditionally release and forever discharge the Releasees from any and all Claims that the Releasors may have as of the date the Executive signs this Agreement arising under the Federal Age Discrimination in Employment Act of 1967, as amended, and the applicable rules and regulations promulgated thereunder (“ADEA”). By signing this Agreement, the Executive hereby acknowledges and confirms the following: (i) the Executive was advised by the Parent in connection with the Executive’s termination of employment to consult with an attorney of the Executive’s choice prior to signing this Agreement and to have such attorney explain to the Executive the terms of this Agreement, including, without limitation, the terms relating to the Executive’s release of claims arising under ADEA, and the Executive has in fact consulted with an attorney; (ii) the Executive was given a period of not fewer than [twenty-one (21)] [forty-five (45)] calendar days to consider the terms of this Agreement and to consult with an attorney of the Executive’s choosing with respect thereto; and (iii) the Executive knowingly and voluntarily accepts the terms of this Agreement. The Executive also understands that the Executive has seven (7) calendar days following the date on which the Executive signs this Agreement within which to revoke the release contained in this Section 1(b), by providing the Parent a written notice of the Executive’s revocation of the release and waiver contained in this Section 1(b).

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(c)No Assignment. The Executive represents and warrants that the Executive has not assigned any of the Claims being released under this Agreement.

2.Proceedings. The Executive has not filed, and agrees not to initiate or cause to be initiated on the Executive’s behalf, any complaint, charge, claim or proceeding against the Releasees with respect to any Claims released under Section 1(a) or (b) before any local, state or federal agency, court or other body (each, individually, a “Proceeding”), and agrees not to participate voluntarily in any Proceeding involving such Claims. The Executive waives any right the Executive may have to benefit in any manner from any relief (whether monetary or otherwise) arising out of any Proceeding involving such Claims. To the maximum extent permitted by law, the Executive waives any right he may have to benefit in any manner from any relief (whether monetary or otherwise) arising out of any Proceeding, provided that the foregoing shall not apply to any legally protected whistleblower rights (including under Rule 21F under the Securities Exchange Act of 1934).

3.Severability Clause. In the event any provision or part of this Agreement is found to be invalid or unenforceable, only that particular provision or part so found, and not the entire Agreement, will be inoperative.

4.No Admission. Nothing contained in this Agreement will be deemed or construed as an admission of wrongdoing or liability on the part of the Bank Group.

5.Governing Law and Venue. All matters affecting this Agreement, including the validity thereof, are to be governed by, and interpreted and construed in accordance with, the laws of the State of Florida applicable to contracts executed in and to be performed therein. The parties acknowledge that a substantial portion of the negotiations, anticipated performance and execution of this Agreement occurred or shall occur in Palm Beach County, Florida. Any civil action or legal proceeding arising out of or relating to this Agreement shall be brought in the courts of record of the State of Florida in Palm Beach County or the United States District Court, Southern District of Florida. Each party consents to the jurisdiction of such Florida court in any such civil action or legal proceeding and waives any objection to the laying of venue of any such civil action or legal proceeding in such Florida court. Service of any court paper may be effected on such party by mail, as provided in this Agreement, or in such other manner as may be provided under applicable laws, rules of procedure or local rules.

6.Counterparts. This Agreement may be executed in counterparts and each counterpart will be deemed an original.

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7.Notices. All notices, requests, demands or other communications under this Agreement shall be in writing and shall be deemed to have been duly given when delivered in person or deposited in the United States mail, postage prepaid, by registered or certified mail, return receipt requested, to the party to whom such notice is being given as follows:

As to the Executive:	the Executive’s last address on the books and records of the Parent
As to the Parent:	[●] Attention: General Counsel [ADDRESS]

Any party may change his, her or its address or the name of the person to whose attention the notice or other communication shall be directed from time to time by serving notice thereof upon the other party as provided herein.

THE EXECUTIVE ACKNOWLEDGES THAT THE EXECUTIVE HAS READ THIS AGREEMENT AND THAT THE EXECUTIVE FULLY KNOWS, UNDERSTANDS AND APPRECIATES ITS CONTENTS, AND THAT THE EXECUTIVE HEREBY EXECUTES THE SAME AND MAKES THIS AGREEMENT AND THE RELEASE PROVIDED FOR HEREIN VOLUNTARILY AND OF THE EXECUTIVE’S OWN FREE WILL.

IN WITNESS WHEREOF, the Executive has executed this Agreement on the date set forth below.

_______________________________________

Dated as of:  _____________________________

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EX-10.2

Exhibit 10.2

EMPLOYMENT AGREEMENT

This Employment Agreement (the "Agreement") is made as of this 16^th day of July, 2019, by and between Professional Bank, a Florida state-chartered commercial bank (the "Bank"), and Abel L. Iglesias (the "Executive").

WITNESSETH:

WHEREAS, the Bank desires to continue retaining the services of and employing the Executive, and the Executive desires to continue providing services to the Bank, pursuant to the terms and conditions of this Agreement.

NOW, THEREFORE, in consideration of the promises and of the covenants and agreements herein contained, the Bank and the Executive covenant and agree as follows:

1.               Employment. Pursuant to the terms and conditions of this Agreement, the Bank agrees to employ the Executive and the Executive agrees to render services to the Bank as set forth herein. Upon signing this Agreement, the Executive represents and warrants to the Bank that the Executive has the full right and authority to perform all services required of the Executive during the term of this Agreement and that such service by the Executive to the Bank does not and will not constitute a breach of any contract or legal obligation that the Executive may have to any other party.

2.               Position and Duties. During the term of this Agreement, the Executive shall serve as President and Chief Operating Officer of the Bank and shall undertake such duties as are consistent with such positions and titles. Executive shall also undertake such duties, consistent with Executive’s positions and titles, as may be assigned to him from time to time by the Chairman of the Board of Directors of the Bank ("Chairman"), including management of Bank personnel who report to the Executive as determined by the Chairman from time to time, serving on Bank committees as required in the Bank's Bylaws and as appointed from time to time by the Board of Directors of the Bank ("Board") or the Chairman, keeping the Chairman and Board informed of industry and regulatory developments regarding the Bank, coordinating with Bank personnel and third parties to the extent necessary to further the profitability and business of the Bank, and assisting in keeping the Bank in compliance with applicable laws and regulations. In addition, the Chairman shall provide the Executive with annual goals and responsibilities agreed to by the Executive, as outlined in a "performance evaluation," and it is the Executive's responsibility to meet or exceed these goals as reasonably determined by the Board and/or its Compensation Committee. In performing duties pursuant to this Agreement, the Executive shall devote his full business time, energy, skill and reasonable best efforts to promote the Bank and its business and affairs; provided that, subject to Sections 10, 12 and 13 of this Agreement, the Executive shall have the right to manage and pursue personal and family interests, and make passive investments in securities, real estate, and other assets, and also to participate in charitable and community activities and organizations, so long as such activities do not adversely affect the performance by Executive of his duties and obligations to the Bank and/or Professional Holding Corp, ("Parent") and/or their subsidiaries (collectively, the "Bank Group").

3.               Term. Subject to the provisions of Section 8 of this Agreement, the initial term of employment pursuant to this Agreement shall be for a period of three years, commencing on the date set forth above and expiring (unless sooner terminated as otherwise provided in this Agreement or unless otherwise renewed or extended as set forth herein) on the third anniversary of the date of this Agreement, which date, including any earlier date of termination or any extended expiration date, shall be referred to as the "Expiration Date". Subject to the provisions of Section 8 of this Agreement, the term of this Agreement and the employment of the Executive by the Bank hereunder shall be deemed to continue thereafter until terminated in accordance with Section 8 of this Agreement. After termination of the employment of the Executive for any reason whatsoever, or the expiration of this Agreement, the Executive will continue to be subject to the provisions of Sections 10 through 27, inclusive, of this Agreement subject to the terms thereof.

4.               Compensation. During the term of this Agreement, the Bank shall pay or provide to the Executive as compensation for the services of the Executive set forth in Section 2 hereof:

(a)              A base annual salary of $380,000; such base annual salary may be increased thereafter in the discretion of the Board but may not be decreased; and

(b)              Such incentive bonuses as may be authorized by the Board from time to time.

Within five (5) business days after the execution of this Agreement, the Bank shall pay to the Executive a $40,000 signing bonus, fifty percent (50%) of which shall be in cash and fifty percent (50%) of which shall be in the form of a grant of restricted stock of the Parent (the shares of which shall be valued at "Fair Market Value" as defined in the Parent's 2019 Equity Incentive Plan).

The base salary, the bonuses, and all other payments and compensation to Executive for his services to the Bank shall be subject to all withholding and deductions required by federal, state or other law (including those authorized by the Executive but not otherwise required by law), including but not limited to state, federal and local income taxes, unemployment tax, Medicare and FICA, together with such deductions as the Executive may from time to time specifically authorize under any employee benefit program that may be adopted by the Bank for the benefit of its senior executives or the Executive.

5.               Benefits and Insurance.

(a)             The Executive shall be eligible to participate in all medical, dental, disability, life insurance (for an amount not less than the then base salary being received by the Executive) and other fringe benefits generally provided to other employees, as the Board shall determine from time to time. As to health insurance, the Bank shall provide family health insurance coverage. The Bank also shall reimburse the Executive for medical insurance coverage under COBRA until the earlier of 90 days following the date of this Agreement or the eligibility of the Executive for enrollment in the Bank's medical insurance plan. The Executive understands that eligibility for the Bank's benefit plans is contingent upon the Executive qualifying for eligibility under such plans. The Bank reserves the right to modify, suspend or terminate the Bank benefit plans at any time and from time to time. The Executive also shall be entitled to participate in the 2014 Share Appreciation Rights Plan (the "SAR Plan") of Parent, to the extent units are granted to the Executive by the Parent, all subject to the terms and conditions of the SAR Plan.

(b)             The Bank shall have the right to obtain on the life of the Executive, pay all premium amounts related to, and maintain, "key employee" insurance naming any of the Bank Group as beneficiary. Selection of such insurance policy shall be in the sole and absolute discretion of the Board. The Executive shall cooperate fully with the Bank Group and the insurer in applying for, obtaining and maintaining such life insurance, by executing and delivering such further and other documents as the Bank Group and/or the insurer may request from time to time, and doing all matters and things which may be convenient or necessary to obtain such insurance, including, without limitation, submitting to any physical examinations and providing any medical information required by the insurer.

6.               Vacation. During each 12-month period during the term of this Agreement, the Executive may take four weeks of paid vacation time at such periods during each year as the Chairman and the Executive shall determine from time to time. Any unused vacation time will not roll over to the next 12-month period unless otherwise authorized by the Chairman. The Executive shall be entitled to full compensation during such vacation periods.

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7.               Reimbursement of Expenses. The Bank shall reimburse the Executive for reasonable expenses incurred in connection with his employment hereunder subject to guidelines issued from time to time by the Board and upon submission of documentation in conformity with applicable requirements of federal income tax laws and regulations supporting reimbursement of such expenses. The Executive also shall be entitled to receive a monthly automobile allowance of $1,000.

8.               Termination. The employment of the Executive may be terminated as follows:

(a)                By the Bank, by action taken by the Board, at any time and immediately upon written notice to the Executive if said discharge is for Cause (as defined below). In the notice of termination furnished to the Executive under this Section 8(a), the specific reason or reasons for said termination shall be reasonably described and, if no reason or reasons are given for said termination, said termination shall be deemed to be without Cause and therefore termination pursuant to Section 8(f). Any one or more of the following conditions shall be deemed to be grounds for termination of the employment of the Executive for Cause under this Section 8(a):

(i)               If the Executive shall fail or refuse to comply with the obligations required of him as set forth in this Agreement or comply with the policies of the Bank Group established from time to time or fail to perform the duties assigned to the Executive by the Board from time to time or fails to use his best efforts to perform his mutually agreed upon duties as set forth in the annual document entitled "executive performance evaluation" (as reasonably determined by the Board); provided, however, that for the first such failure or refusal, the Executive shall be given a written warning (providing at least a 30 day period for an opportunity to cure), and the second failure or refusal shall be grounds for termination for Cause:

(ii)               If the Executive shall have engaged in conduct involving fraud, deceit, personal dishonesty, or breach of fiduciary duty, or any other conduct, which in any such case has adversely affected, or may adversely affect, the business or reputation of the Bank Group;

(iii)             If the Executive shall have violated (A) any law or regulation, memorandum of understanding, cease and desist order, or other agreement with any regulatory agency having jurisdiction over any of the Bank Group or (B) any rules and regulations of any regulatory agency having jurisdiction over the Bank Group by reason of any person within the Bank Group becoming a public reporting company under Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the "1934 Act");

(iv)              If the Executive shall have become subject to continuing intemperance in the use of alcohol or any controlled substance which has adversely affected, or may adversely affect, the business or reputation of the Bank or the Parent;

(v)              If after the date of this Agreement, the Executive shall have filed, or had filed against him, any petition under the federal bankruptcy laws or any state insolvency laws;

(vi)            If the Executive has been convicted of, or the entering by the Executive of a plea of nolo contendere with respect to, a criminal offense constituting a felony or involving moral turpitude;

(vii)            If the Executive engaged in the unlawful harassment of employees or customers of any of the Bank Group;

(viii)           If the Executive exposed the Bank Group to criminal liability substantially caused by the Executive which results in an adverse effect on the business, financial condition, prospects or results of operations of the Bank Group; or

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(ix)          If the Executive is in material breach of any provision of this Agreement.

In the event of termination for Cause, the Bank shall pay the Executive only salary, vacation, and bonus amounts accrued and unpaid as of the effective date of termination.

(b)              By the Executive upon the lapse of 30 days following written notice by the Executive to the Bank of termination of his employment hereunder for Good Reason (as defined below), which notice shall reasonably describe the Good Reason for which the Executive's employment is being terminated; provided, however, that the Bank shall have the opportunity to cure such Good Reason, during such 30 day period, and the Executive's employment shall continue in effect during such time. If such Good Reason shall be cured by the Bank during such time to the reasonable satisfaction of the Executive, the Executive's employment and the obligations of the Bank hereunder shall not terminate as a result of the notice which has been given with respect to such Good Reason. Cure of any Good Reason with or without notice from the Executive shall not relieve the Bank from any obligations to the Executive under this Agreement or otherwise and shall not affect the Executive's rights upon the reoccurrence of the same, or the occurrence of any other, Good Reason, For purposes of this Agreement, the term "Good Reason" shall mean any material breach by the Bank of any provision of this Agreement, or any significant reduction, without the Executive's prior written consent, in the duties, responsibilities, authority or title of the Executive as an officer of the Bank, except for any reduction in duties, responsibilities, authority or title due to (i) the Executive's illness or disability, (ii) an order from any regulatory authority having jurisdiction over any of the Bank Group, (iii) the temporary suspensions (not to exceed 120 days) of the Executive's duties, responsibilities, authority or title pending results of any Board commissioned investigation as to potential Cause for termination of the Executive's employment, (iv) the appointment of market presidents or other positions created by the Bank Group, or (v) the Executive no longer serving as Chief Operating Officer of the Bank provided Executive is appointed Chief Administrative Officer of the Bank on or about that time. Good Reason shall also include requiring the Executive to be permanently based anywhere other than within thirty-five (35) miles of the Executive's current job location.

If the Executive's employment is terminated by the Executive for Good Reason, the Bank shall, for a period of six (6) months after said termination, continue to pay to the Executive the base annual salary in effect under Section 4(a) on the date of said termination (or, if greater, the highest annual salary in effect for the Executive within the thirty-six (36) month period prior to said termination).

(c)              By the Executive upon the lapse of ninety (90) days following written notice by the Executive to the Bank of his resignation from the Bank for other than Good Reason; provided, however, that the Bank, in its discretion, may cause such termination to be effective at any time during such 30-day period. If the Executive's employment is terminated because of the Executive's resignation, the Bank shall be obligated to pay to the Executive any salary, vacation, and bonus amounts that would have been accrued and unpaid through the end of 30-day period.

(d)             If the Executive's employment is terminated by the death or disability (i.e., the Executive is unable to perform the essential functions of his position for at least 180 days) of the Executive, this Agreement shall automatically terminate effective immediately, and the Bank shall be obligated to pay to the Executive or the Executive's estate any salary, vacation, and bonus amounts accrued and unpaid at the date of disability or death.

(e)              By the Bank or the Executive within twelve (12) months of the closing of a Change of Control, in which event the Bank shall pay to the Executive, on the Bank's regular payroll payment date next following the thirtieth (30th) day after the effective date of termination, an amount equal to one times the average base annual salary received by the Executive during the three-year period prior to such termination. For purposes of this Agreement, a Change of Control shall mean a merger or acquisition in which the Parent or the Bank is not the surviving entity, or the acquisition by any individual or group of beneficial ownership of more than 50% of the outstanding shares of the Parent's or the Bank's common stock. The term "group" and the concept of beneficial ownership shall have such meanings ascribed thereto as set forth in the Securities Exchange Act of 1934, as amended (the "1934 Act"), and the regulations and rules thereunder. If the provisions of this Section 8(e) are triggered by the Bank or the Executive, the provisions of this Section 8(e) shall override and supersede the provisions of Sections 8(b), (c), (d) and (f), as applicable (for the avoidance of doubt, no duplicative compensation).

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(f)                By the Bank at any time if said discharge is without Cause (but excluding the expiration of this Agreement as provided in Section 8(g)). If the Executive's employment is terminated by the Bank without Cause, the Bank shall, for a period of six (6) months after said termination continue to pay to the Executive at the base annual salary rate in effect under Section 4(a) on the date of said termination (or, if greater, the highest annual salary rate in effect for the Executive within the thirty-six (36) month period prior to said termination).

(g)              Upon the expiration of this Agreement on the third anniversary of the date of this Agreement (or on such later Expiration Date which has been extended specifically by written agreement of the parties), the Bank shall be obligated to pay to the Executive only any salary, vacation, and bonus amounts accrued and unpaid through the effective date of the expiration, plus reimbursements for any business expenses incurred by the Executive prior to the Expiration Date (subject to the terms of the Bank's reimbursement policies).

(h)              Any amounts payable by the Bank to the Executive pursuant to this Section 8 shall be reduced by any amounts owed to the Bank by the Executive.

(i)              Notwithstanding anything in this Agreement to the contrary, as a condition to receipt by the Executive of the payments due from the Bank pursuant to the applicable provision in this Section 8 in connection with termination or expiration of his employment, the Executive shall execute and deliver to the Bank within twenty-two (22) days of the effective date of the termination or expiration of his employment, a general release of all claims the Executive may have against the Bank Group and their respective officers and Boards of Directors with respect to the subject matter of this Agreement (other than any obligations of the Bank under this Agreement or any severance agreement which by their terms survive) in a form reasonably acceptable to the Bank and/or its counsel, and such release shall not have been revoked by the Executive.

(j)              Any termination of the Executive's employment for any reason shall require that the Executive resign all other positions (including as director) Executive may then be holding with the Bank Group or as trustee of any of their benefit plans, unless the Board or Chairman and the Executive agree to the contrary.

(k)             The parties acknowledge and agree that the compensation and benefits set forth in this Section 8 as being payable upon termination or expiration of this Agreement constitute liquidated damages upon the termination or expiration of this Agreement, and the parties hereto have agreed that such compensation and benefits are reasonable.

9.               Notice. All notices permitted or required to be given to either party under this Agreement shall be in writing and shall be deemed to have been given (a) in the case of delivery, when addressed to the other party as set forth at the end of this Agreement and delivered to said address, (b) in the case of mailing, three days after the same has been mailed by certified mail, return receipt requested, and deposited postage prepaid in the U.S. Mails, addressed to the other party at the address as set forth at the end of this Agreement, and (c) in any other case, when actually received by the other party. Either party may change the address at which said notice is to be given by delivering notice of such to the other party to this Agreement in the manner set forth herein.

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10.             Confidential Matters.

(a)             The Executive is aware and acknowledges that the Executive shall have access to confidential information by virtue of his employment. The Executive agrees that, during the period of time the Executive is retained to provide services to the Bank, and thereafter subsequent to the termination of Executive's services to the Bank for any reason whatsoever, the Executive will not release or divulge any confidential information whatsoever relating to any of the Bank Group or its business, to any other person or entity without the prior written consent of the Bank, including, without limitation, during any "quiet period" or related to an offering of securities by the Bank Group. Confidential information does not include information that is available to the public or which becomes available to the public other than through a breach of this Agreement on the part of the Executive. Also, the Executive shall not be precluded from disclosing confidential information in furtherance of the performance of his services to the Bank or to the extent required by any legal proceeding. The Executive also agrees that all files, records, documents, equipment and similar items and technological information whether maintained in hard copy or by electronic means relating to the Bank's business, whether prepared by the Executive or others, shall remain the exclusive property of the Bank. Upon termination or expiration of employment, or at any earlier time requested by the Bank, the Executive will promptly return to the Bank all confidential information as well as any other property of the Bank, which is in the Executive's possession or under the Executive's control. The Executive agrees not to delete, modify, or copy any work file or confidential information prior to or subsequent to termination or expiration of employment. For the avoidance of doubt, the parties agree that each of the terms of this Agreement shall be considered "confidential information" within the meaning of this Section 10, and may be disclosed by the Executive only to the limited extent permitted by the terms of this Section 10, to his spouse, and to his advisors solely to the extent necessary; without limiting the generality of the foregoing, they may not be disclosed by the Executive to any other employees of the Bank other than its Chairman or to anyone else designated in writing by the Chairman.

(b)             Notwithstanding anything to the contrary in this Agreement, in the event the Executive is requested pursuant to, or required by, applicable law or regulation or by legal process to disclose any confidential information of the Bank Group, the Executive agrees, if permitted by applicable laws or regulations, to provide the Bank Group with prompt notice of such request or requirement to enable the Bank Group to seek an appropriate protective order, waive compliance with the provisions of this Agreement or take other appropriate action. The Executive agrees to use the Executive’s best efforts in such event to assist the Bank Group in obtaining a protective order, and the Bank shall be responsible for any reasonable third party costs incurred by the Executive in providing that assistance. If, in the absence of a protective order or the receipt of a waiver under this Agreement, the Executive is nonetheless, in the written opinion of the Executive’s counsel, compelled to disclose such confidential information to any tribunal or else stand liable for contempt or suffer other censure or significant penalty, the Executive, after notice to the Bank Group, may disclose to such tribunal only such confidential information that the Executive is compelled to disclose.

(c)             The Executive acknowledges that the Bank or its holding company may, in the future, become a public reporting company pursuant to Section 13 or 15(d) of the 1934 Act and the Executive will comply with all laws, rules and regulations applicable to the Executive by reason of the Bank or its holding company becoming a public reporting company. Without limiting the generality of the foregoing, the Executive acknowledges that in the course of Executive’s employment, with the Bank the Executive may become aware of material nonpublic information relating to the Bank Group or third parties with whom the Bank Group does business and under federal and state securities laws, it may be illegal for the Executive to buy or sell securities at a time when the Executive possesses such material nonpublic information. Therefore, the Executive agrees to comply with all laws related to trading in securities on the basis of material nonpublic information and the requirements of any insider trading policy that may be adopted from time to time by the Bank Group.

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11.             Legitimate Business Interests; Noncompetition.

(a)              Legitimate Business Interests. The Executive acknowledges and agrees that in the performance of his duties of employment with the Bank he will be in contact with customers, potential customers and/or information about customers or potential customers of the Bank Group either in person, through the mails, by telephone or by other electronic means. The Executive also acknowledges and agrees that trade secrets and confidential information of the Bank Group that will be gained by Executive during his employment with the Bank, have been developed by the Bank Group through substantial expenditures of time, effort and financial resources and constitute valuable and unique property of the Bank Group. The Executive further understands, acknowledges and agrees that the foregoing makes it necessary for the protection of the Bank Group's businesses that the Executive not divert business or customers from the Bank Group and that the Executive maintain the confidentiality and integrity of the confidential information as provided in this Agreement.

(b)              Non-competition.

(i)              Notwithstanding anything in this Agreement to the contrary, the Executive agrees that during the period of time the Executive is retained to provide services to the Bank, and thereafter for a period of one (1) year subsequent to the termination of the Executive's services to the Bank for any of the reasons set forth in Section 8(c), the Executive will not enter the employ of, or have any interest in, directly or indirectly (either as executive, partner, director, officer, consultant, principal, agent or employee), any other bank or financial institution or any entity which either accepts deposits or makes loans (whether presently existing or subsequently established) and which has an office located within a radius of 50 miles of any office of the Bank, provided, however, that the foregoing shall not preclude any ownership by the Executive of an amount not to exceed 5% of the equity securities of any entity which is subject to the periodic reporting requirements of the 1934 Act and the shares of the Parent's common stock owned by the Executive at the time of termination of employment.

(ii)             Notwithstanding anything in this Agreement to the contrary, if the Executive's employment is terminated or expires for any of the reasons set forth in Sections 8(a), 8(b), 8(d), 8(e), 8(f), and/or 8(g), then for a period of ninety (90) days subsequent to the effective date of such termination pursuant to Section 8(a), 8(b), 8(d), 8(e), and/or 8(f), and/or for a period of sixty (60) days subsequent to the effective date of an expiration pursuant to Section 8(g), of Executive's services to the Bank, the Executive will not enter the employ of, or have any interest in, directly or indirectly (either as executive, partner, director, officer, consultant, principal, agent or employee), any other bank or financial institution or any entity which either accepts deposits or makes loans (whether presently existing or subsequently established) and which has an office located within a radius of 50 miles of any office of the Bank, provided, however, that the foregoing shall not preclude any ownership by the Executive of an amount not to exceed 5% of the equity securities of any entity which is subject to the periodic reporting requirements of the 1934 Act and the shares of the Parent's common stock owned by the Executive at the time of termination of employment.

12.             Nonsolicitation; Noninterference; Non-Disparagement.

(a)               The Executive agrees that during the period of time the Executive is retained to provide services to the Bank, and thereafter for a period of one (1) year subsequent to the termination or expiration of Executive's services to the Bank for any reason whatsoever, the Executive will not (a) solicit for employment by Executive, or anyone else, any employee of the Bank Group or any person who was an employee of the Bank Group within 12 months prior to such solicitation of employment; (b) induce, or attempt to induce, any employee of the Bank Group to terminate such employee's employment; (c) induce, or attempt to induce, anyone having a business relationship with the Bank Group to terminate or curtail such relationship or, on behalf of himself or anyone else, compete with the Bank Group; (d) knowingly make any untrue statement concerning the Bank Group or their directors or officers to anyone; or (e) permit anyone controlled by the Executive, or any person acting on behalf of the Executive or anyone controlled by an employee of the Executive, to do any of the foregoing.

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(b)               The Executive shall not, during his employment by the Bank or at any time thereafter, directly or indirectly, in any communications in any media, criticize, ridicule or make (or cause or permit others to criticize, ridicule or make) any statement which disparages or is derogatory of any of the Bank Group, their products or services, or any of the Bank Group's present, former or future shareholders, officers, directors, employees, affiliates and/or subsidiaries.

13.            Equitable Relief. The Executive acknowledges and agrees that any breach or threatened breach of Sections 10, 11 or 12 of this Agreement will result in irreparable damage to the Bank Group and, accordingly, any of the Bank Group may obtain injunctive relief, a decree of specific performance and/or any other equitable relief for any breach or threatened breach of such Sections of this Agreement in addition to any other remedies available to the Bank Group, without being required to show any actual damage, or to post an injunction bond, and the prevailing party in any such proceeding will be entitled to reimbursement for all costs and expenses, including reasonable attorneys’ fees and expenses in connection therewith. Nothing herein shall be construed as prohibiting the Bank Group from pursuing such other remedies available to it for any such breach or threatened breach including recovery of damages from the Executive.

14.           Remedies. The Executive agrees that the restrictions set forth in this Agreement are fair and reasonable. The covenants set forth in this Agreement are not dependent covenants and any claim against the Bank Group, whether arising out of this Agreement or any other agreement or contract between the Bank and Executive, shall not be a defense to a claim against Executive for a breach or alleged breach of any of the covenants of Executive contained in this Agreement. It is expressly understood by and between the parties hereto that the covenants contained in this Agreement shall be deemed to be a series of separate covenants. The Executive understands and agrees that if any of the separate covenants are judicially held invalid or unenforceable, such holding shall not release Executive from Executive's obligations under the remaining covenants of this Agreement. If in any judicial proceedings, a court shall refuse to enforce any or all of the separate covenants because taken together they are more extensive (whether as to geographic area, duration, scope of business or otherwise) than necessary to protect the business and goodwill of the Bank Group, it is expressly understood and agreed between the parties hereto that those separate covenants which, if eliminated or restricted, would permit the remaining separate covenants or the restricted separate covenant to be enforced in such proceeding shall, for the purposes of such proceeding, be eliminated from the provisions of this Agreement or restriction, as the ease may be.

15.           Invalid Provision. In the event any provision should be or become invalid or unenforceable, such facts shall not affect the validity and enforceability of any other provision of this Agreement. Similarly, if the scope of any restriction or covenant contained herein should be or become too broad or extensive to permit enforcement thereof to its full extent, then any such restriction or covenant shall be enforced to the maximum extent permitted by law, and Executive hereby consents and agrees that the scope of any such restriction or covenant may be modified accordingly in any judicial proceeding brought to enforce such restriction or covenant.

16.           Governing Law; Venue. This Agreement shall be construed in accordance with and shall be governed by the laws of the State of Florida. The sole and exclusive venue for any action arising out of this Agreement shall be a state court situated in Miami-Dade County, Florida, and the parties to this Agreement agree to be subject to the personal jurisdiction of such Court and that service on each party shall be valid if served by certified mail, return receipt requested or hand delivery.

17.           Attorneys' Fees and Costs. In the event a dispute arises between the parties under this Agreement and suit is instituted, the prevailing party shall be entitled to recover his or its costs and attorneys' fees from the nonprevailing party. As used herein, costs and attorneys' fees include any costs and attorneys' fees in any appellate proceeding.

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18.           Binding Effect. The rights and obligations of the parties under this Agreement shall inure to the benefit of and shall be binding upon the successors, assigns and legal representatives of the Bank Group and the heirs and legal representatives of the Executive.

19.           Effect on Other• Agreements. This Agreement and the termination thereof shall not affect any other agreement between the Executive and the Bank Group, and the receipt by the Executive of benefits thereunder.

20.           Miscellaneous. The captions used herein are solely for the convenience of the parties and are not used in construing this Agreement. Time is of the essence of this Agreement and the performance by each party of its or his duties and obligations hereunder.

21.           Compliance with Section 409A. Notwithstanding anything herein to the contrary, if it is determined by the Bank or the Executive, in good faith, at the time of the Executive's termination of employment that the Executive is a "specified employee" within the meaning of Section 409A(a)(2)(B)(i) of the Internal Revenue Code of 1986, as amended (the "Code") and that payments to be made to the Executive hereunder, if made earlier than as required under Section 409A(a)(2)(B)(i) of the Code would result in the requirement for the Executive to pay additional interest and taxes to be imposed in accordance with Section 409A(a)(I)(B) of the Code, then any payments to be made in accordance with this Agreement shall be made as of the date that is 184 calendar days from the date of the Executive's termination of employment, or immediately upon the death of the Executive, if earlier. The provisions of this Section 21 shall survive the expiration of this Agreement.

22.             Regulatory Actions. Notwithstanding any other provision of this Agreement to the contrary, any amounts paid or payable to the Executive pursuant to this Agreement, or otherwise, arc subject to and conditioned upon their compliance with Sections 18(k) and 32(a) of the Federal Deposit Insurance Act ("FDIA") and Part 359 of the FDIC’s rules and regulations, and any regulations promulgated under the FDIA, and also are subject to and conditioned upon compliance by the Bank with any Memorandum of Understanding, Consent Order, or other agreement between the Bank and the FDIC and/or the Florida Office of Financial Regulation.

23.           Complete Agreement. This Agreement constitutes the complete agreement between the parties hereto and incorporates all prior discussions, agreements and representations made in regard to the matters set forth herein, including, without limitation, that it replaces and supersedes in all respects those certain previous employment agreements between the Bank and the Executive dated April 10, 2013, December 31, 2015, and November 15, 2016 (collectively, "Prior Employment Agreements"). This Agreement may not be amended, modified or changed except by a writing signed by the party to be charged by said amendment, change or modification.

24.           Waiver and Acknowledgement by Executive. The Executive waives any and all claims pursuant to the Prior Employment Agreements. For the avoidance of doubt, the Executive acknowledges and agrees he has no right to any payments, including, without limitation, payments of severance, under Section 8 of the Prior Employment Agreement dated November 15, 2016.

25.            Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument. Confirmation of execution by electronic transmission of a facsimile signature page shall be binding on a party so confirming.

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26.           Assignability. The Executive’s rights and obligations hereunder are personal and may not be assigned by the Executive (other than his rights to payments or benefits hereunder, which may be transferred only by will or the laws of descent and distribution or to the Executive’s representative in the event of his disability); provided, however, in the event of the Executive’s death or disability, the Executive’s representative may also exercise any unexercised stock options or stock appreciation rights, if any, to the extent permitted by the relevant option or stock appreciation rights plan agreement or this Agreement. As used in this Agreement, “Bank” and “Bank Group” shall mean the entities as hereinbefore defined and any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the equity, business and/or assets of the Bank Group or that otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

27.           JURY WAIVER. IN ANY CIVIL ACTION, COUNTERCLAIM, OR PROCEEDING, WHETHER AT LAW OR IN EQUITY, WHICH ARISES OUT OF CONCERNS, OR RELATES TO THIS AGREEMENT, ANY AND ALL TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, THE PERFORMANCE OF THIS AGREEMENT, OR THE RELATIONSHIP CREATED BY THIS AGREEMENT, WHETHER SOUNDING IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE, TRIAL SHALL BE TO A COURT OF COMPETENT JURISDICTION AND NOT TO A JURY. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY. ANY PARTY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT, AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES TO THIS AGREEMENT OF THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. NEITHER PARTY HAS MADE OR RELIED UPON ANY ORAL REPRESENTATIONS TO OR BY ANY OTHER PARTY REGARDING THE ENFORCEABILITY OF THIS PROVISION. EACH PARTY HAS READ AND UNDERSTANDS THE EFFECT OF THIS JURY WAIVER PROVISION. EACH PARTY ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY ITS OWN COUNSEL WITH RESPECT TO THE TRANSACTION GOVERNED BY THIS AGREEMENT AND SPECIFICALLY WITH RESPECT TO THE TERMS OF THIS SECTION.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

PROFESSIONAL BANK
By:	/s/ Daniel R. Sheehan
Name:	Daniel R. Sheehan
Title:	Chairman
“EXECUTIVE”
/s/ Abel L. Iglesias
Print Name: Abel L. Iglesias
Address:	1533 Mantua Avenue
	Coral Gables, FL 33146

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EX-10.3

Exhibit 10.3

EMPLOYMENT AGREEMENT

This Employment Agreement (the "Agreement") is made as of this 31 day of December, 2017, by and between Professional Bank, a Florida state-chartered commercial bank (the "Bank"), and Mary Usategui (the "Executive").

WITNESSETH:

WHEREAS, the Bank desires to retain the services of and employ the Executive, and the Executive desires to provide services to the Bank, pursuant to the terms and conditions of this Agreement.

NOW, THEREFORE, in consideration of the promises and of the covenants and agreements herein contained, the Bank and the Executive covenant and agree as follows:

1.               Employment. Pursuant to the terms and conditions of this Agreement, the Bank agrees to employ the Executive and the Executive agrees to render services to the Bank as set forth herein. Upon signing this Agreement, the Executive represents and warrants to the Bank that the Executive has the full right and authority to perform all services required of the Executive during the term of this Agreement and that such service by the Executive to the Bank does not and will not constitute a breach of any contract or legal obligation that the Executive may have to any other party.

2.               Position and Duties. During the term of this Agreement, the Executive shall serve as Chief Financial Officer of the Bank, and shall undertake such duties, consistent with such titles, as may be assigned to him or her from time to time by the Board of Directors of the Bank (referred to as the "Board") and/or the President and Chief Executive Officer of the Bank (the "CEO"), including serving on Board committees appointed from time to time by the Board or the CEO, keeping the CEO informed of industry and regulatory developments regarding the Bank, and assisting in keeping the Bank in compliance with applicable laws and regulations. In performing duties pursuant to this Agreement, the Executive shall devote his or her full business time, energy, skill and best efforts to promote the Bank and its business and affairs; provided that, subject to Sections 10, 12 and 13 of this Agreement, the Executive shall have the right to manage and pursue personal and family interests, and make passive investments in securities, real estate, and other assets, and also to participate in charitable and community activities and organizations, so long as such activities do not adversely affect the performance by Executive of his or her duties and obligations to the Bank.

3.               Term. Subject to the provisions of Section 8 of this Agreement, the initial term of employment pursuant to this Agreement shall be for a period of five years, commencing on the date set forth above and expiring (unless sooner terminated as otherwise provided in this Agreement or unless otherwise renewed or extended as set forth herein) on the fifth anniversary of the date of this Agreement, which date, including any earlier date of termination or any extended expiration date, shall be referred to as the "Expiration Date". Subject to the provisions of Section 8 of this Agreement, the term of this Agreement and the employment of the Executive by the Bank hereunder shall be deemed to continue thereafter until terminated in accordance with Section 8 of this Agreement. After termination of the employment of the Executive for any reason whatsoever, or the expiration of this Agreement, the Executive will continue to be subject to the provisions of Sections 10 through 25, inclusive, of this Agreement subject to the terms thereof.

4.               Compensation. During the term of this Agreement, the Bank shall pay or provide to the Executive as compensation for the services of the Executive set forth in Section 2 hereof:

(a)                A base annual salary of $200,000, such base annual salary and such base may be increased thereafter in the discretion of the Board or the CEO; and

(b)                Such incentive bonuses as may be authorized by the Board from time to time.

5.               Benefits and Insurance. The Bank shall provide to the Executive such medical, disability, and life insurance (for an amount not less than the then base salary being received by the Executive) as well as any other benefits as the Board shall determine from time to time. As to health insurance, the Bank shall provide family health insurance coverage. The Bank also shall reimburse the Executive for medical insurance coverage under COBRA until the earlier of 90 days following the date of this Agreement or the eligibility of the Executive for enrollment in the Bank's medical insurance plan. The Executive understands that eligibility for the Bank's benefit plans is contingent upon the Executive qualifying for eligibility under such plans, The Bank reserves the right to modify, suspend or terminate the Bank benefit plans at any time and from time to time. The Executive also shall be entitled to participate in the 2014 Share Appreciation Rights Plan (the "SAR Plan") of Professional Holding Corp., the sole shareholder of the Bank ("Parent"), to the extent units are granted to the Executive by the Parent, all subject to the terms and conditions of the SAR Plan.

6.               Vacation. Commencing six months following the date of this Agreement, and during each 12-month period thereafter, the Executive may take four weeks of paid vacation time as authorized by the CEO and at such periods during each year as the CEO and the Executive shall determine from time to time. Any unused vacation time will not roll over to the next 12-month period unless otherwise authorized by the CEO. The Executive shall be entitled to full compensation during such vacation periods.

7.               Reimbursement of Expenses. The Bank shall reimburse the Executive for reasonable expenses incurred in connection with his or her employment hereunder subject to guidelines issued from time to time by the Board and upon submission of documentation inconformity with applicable requirements of federal income tax laws and regulations supporting reimbursement of such expenses. The Executive also shall be entitled to receive a monthly automobile allowance of $500 and $200 monthly cell phone allowance

8.               Termination. The employment of the Executive may be terminated as follows:

(a)        By the Bank, by action taken by the CEO, at any time and immediately upon written notice to the Executive if said discharge is for cause. In the notice of termination furnished to the Executive under this Section 8(a), the reason or reasons for said termination shall be given and, if no reason or reasons are given for said termination, said termination shall be deemed to be without cause and therefore termination pursuant to Section 8(f). Any one or more of the following conditions shall be deemed to be grounds for termination of the employment of the Executive for cause under this Section 8(a):

(i)               If the Executive shall fail or refuse to comply with the obligations required of him or her as set forth in this Agreement or comply with the policies of the Bank established by the Board or CEO from time to time or fail to perform the duties assigned to the Executive by the Board or CEO from time to time; provided, however, that for the first such failure or refusal, the Executive shall be given a written warning (providing at least a 30 day period for an opportunity to cure), and the second failure or refusal shall be grounds for termination for cause;

(ii)              If the Executive shall have engaged in conduct involving fraud, deceit, personal dishonesty, or breach of fiduciary duty, or any other conduct, which in any such case has adversely affected, or may adversely affect, the business or reputation of the Bank;

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(iii)            If the Executive shall have violated any banking law or regulation, memorandum of understanding, cease and desist order, or other agreement with any banking agency having jurisdiction over the Bank;

(iv)            If the Executive shall have become subject to continuing intemperance in the use of alcohol or drugs which has adversely affected, or may adversely affect, the business or reputation of the Bank or the Parent;

(v)              If after the date of this Agreement, the Executive shall have filed, or had filed against him or her, any petition under the federal bankruptcy laws or any state insolvency laws;

(vi)             If the Executive has been convicted of, or the entering by the Executive of a plea of nolo contendere with respect to, a criminal offense constituting a felony or involving moral turpitude;

(vii)            If the Executive engaged in the unlawful harassment of employees or customers of the Bank or the Parent;

(viii)           If the Executive exposed the Bank or the Parent to criminal liability substantially caused by the Executive which results in an adverse effect on the business, financial condition, prospects or results of operations of the Parent or the Bank; or

(ix)              If the Executive is in material breach of any provision of this Agreement.

In the event of termination for cause, the Bank shall pay the Executive only salary, vacation, and bonus amounts accrued and unpaid as of the effective date of termination.

(b)         By the Executive upon the lapse of 30 days following written notice by the Executive to the Bank of termination of his or her employment hereunder for Good Reason (as defined below), which notice shall reasonably describe the Good Reason for which the Executive's employment is being terminated; provided, however, that the Bank shall have the opportunity to cure such Good Reason, during such 30 day period, and the Executive's employment shall continue in effect during such time. If such Good Reason shall be cured by the Bank during such time to the reasonable satisfaction of the Executive, the Executive's employment and the obligations of the Bank hereunder shall not terminate as a result of the notice which has been given with respect to such Good Reason. Cure of any Good Reason with or without notice from the Executive shall not relieve the Bank from any obligations to the Executive under this Agreement or otherwise and shall not affect the Executive's rights upon the reoccurrence of the same, or the occurrence of any other, Good Reason. For purposes of this Agreement, the term "Good Reason" shall mean any material breach by the Bank of any provision of this Agreement, or any significant reduction, without the Executive's prior written consent, in the duties, responsibilities, authority or title of the Executive as an officer of the Bank, except for any reduction in duties, responsibilities, authority or title due to (i) the Executive's illness or disability, (ii) an order from any regulatory authority having jurisdiction over the Parent or the Bank, or (iii) the temporary suspensions of the Executive's duties, responsibilities, authority or title pending results of any Board commissioned investigation as to potential cause for termination of the Executive's employment.

If the Executive's employment is terminated by the Executive for Good Reason, the Bank shall, for a period of six (6) months after said termination, continue to pay to the Executive the base annual salary in effect under Section 4(a) on the date of said termination (or, if greater, the highest annual salary in effect for the Executive within the thirty-six (36) month period prior to said termination).

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(c)        By the Executive upon the lapse of 30 days following written notice by the Executive to the Bank of his or her resignation from the Bank for other than Good Reason; provided, however, that the Bank, in its discretion, may cause such termination to be effective at any time during such 30-day period. If the Executive's employment is terminated because of the Executive's resignation, the Bank shall be obligated to pay to the Executive any salary, vacation, and bonus amounts that would have been accrued and unpaid through the end of 30-day period.

(d)        If the Executive's employment is terminated by the death or disability (i.e., the Executive is unable to perform the essential functions of his or her position for at least 180 days) of the Executive, this Agreement shall automatically terminate, and the Bank shall be obligated to pay to the Executive or the Executive' s estate any salary, vacation, and bonus amounts accrued and unpaid at the date of disability or death.

(e)        By the Bank or the Executive within twelve (12) months of the closing of a Change of Control, in which event the Bank shall pay to the Executive, on the Bank's regular payroll payment date next following the thirtieth (30th) day after the effective date of termination, an amount equal to one times the average base annual salary received by the Executive during the three-year period prior to such termination. For purposes of this Agreement, a Change of Control shall mean a merger or acquisition in which the Parent or the Bank is not the surviving entity, or the acquisition by any individual or group of beneficial ownership of more than 50% of the outstanding shares of the Parent's or the Bank's common stock. The term "group" and the concept of beneficial ownership shall have such meanings ascribed thereto as set forth in the Securities Exchange Act of 1934, as amended (the "1934 Act"), and the regulations and rules thereunder. If the provisions of this Section 8(e) are triggered by the Bank or the Executive, the provisions of this Section 8(e) shall override and supersede the provisions of Sections 8(b), (c), (d) and (f), as applicable (for the avoidance of doubt, no duplicative compensation).

(f)         By the Bank at any time if said discharge is without cause (but excluding the expiration of this Agreement as provided in Section 8(g)). If the Executive's employment is terminated by the Bank without cause, the Bank shall, for a period of six (6) months after said termination continue to pay to the Executive the base annual salary in effect under Section 4(a) on the date of said termination (or, if greater, the highest annual salary in effect for the Executive within the 36 month period prior to said termination).

(g)        Upon the expiration of this Agreement on the fifth anniversary of the date of this Agreement (or on such later Expiration Date which has been extended specifically by written agreement of the parties), the Bank shall be obligated to pay to the Executive only any salary, vacation, and bonus amounts accrued and unpaid through the effective date of the expiration, plus reimbursements for any business expenses incurred by the Executive prior to the expiration date (subject to the terms of the Bank's reimbursement policies).

(h)         Any amounts payable by the Bank to the Executive pursuant to this Section 8 shall be reduced by any amounts owed to the Bank by the Executive.

(i)         Notwithstanding anything in this Agreement to the contrary, as a condition to receipt by the Executive of the payments due from the Bank pursuant to the applicable provision in this Section 8 in connection with termination of his or her employment, the Executive shall execute and deliver to the Bank within twenty-two (22) days of the effective date of the termination of his or her employment, a general release of all claims the Executive may have against the Parent and Bank and their respective officers and Boards of Directors with respect to the subject matter of this Agreement (other than any obligations of the Bank under this Agreement or any severance agreement which by their terms survive) in a form reasonably acceptable to the Bank and/or its counsel, and such release shall not have been revoked by the Executive.

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(j)        Any termination of the Executive's employment for any reason shall require that the Executive resign all other positions (including as director) Executive may then be holding with the Parent of the Bank or as trustee of any of their benefit plans, unless the CEO and the Executive agree to the contrary.

9.               Notice. All notices permitted or required to be given to either party under this Agreement shall be in writing and shall be deemed to have been given (a) in the case of delivery, when addressed to the other party as set forth at the end of this Agreement and delivered to said address, (b) in the case of mailing, three days after the same has been mailed by certified mail, return receipt requested, and deposited postage prepaid in the U.S. Mails, addressed to the other party at the address as set forth at the end of this Agreement, and (c) in any other case, when actually received by the other party. Either party may change the address at which said notice is to be given by delivering notice of such to the other party to this Agreement in the manner set forth herein.

10.              Confidential Matters. The Executive is aware and acknowledges that the Executive shall have access to confidential information by virtue of his or her employment. The Executive agrees that, during the period of time the Executive is retained to provide services to the Bank, and thereafter subsequent to the termination of Executive's services to the Bank for any reason whatsoever, the Executive will not release or divulge any confidential information whatsoever relating to the Bank or its business, to any other person or entity without the prior written consent of the Bank. Confidential information does not include information that is available to the public or which becomes available to the public other than through a breach of this Agreement on the part of the Executive. Also, the Executive shall not be precluded from disclosing confidential information in furtherance of the performance of his or her services to the Bank or to the extent required by any legal proceeding. The Executive also agrees that all files, records, documents, equipment and similar items and technological information whether maintained in hard copy or by electronic means relating to the Bank's business, whether prepared by the Executive or others, shall remain the exclusive property of the Bank. Upon termination of employment, or at any earlier time requested by the Bank, the Executive will promptly return to the Bank all confidential information as well as any other property of the Bank, which is in the Executive's possession or under the Executive' s control. The Executive agrees not to delete, modify, or copy any work file or confidential information prior to or subsequent to termination of employment. For the avoidance of doubt, the parties agree that each of the terms of this Agreement shall be considered "confidential information" within the meaning of this Section 10, and may be disclosed by the Executive only to the limited extent permitted by the terms of this Section 10, to his or her spouse, and to his or her advisors solely to the extent necessary; without limiting the generality of the foregoing, they may not be disclosed by the Executive to any other employees of the Bank other than its Chairman or to anyone else designated in writing by the Chairman.

11.              Injunction Without Bond. In the event there is a breach or threatened breach by the Executive of the provisions of Sections 10, 12, or 13, the Bank shall be entitled to an injunction without bond to restrain such breach or threatened breach, and the prevailing party in any such proceeding will be entitled to reimbursement for all costs and expenses, including reasonable attorneys' fees in connection therewith. Nothing herein shall be construed as prohibiting the Bank from pursuing such other remedies available to it for any such breach or threatened breach including recovery of damages from the Executive.

12.              Legitimate Business Interests; Noncompetition.

(a)       Legitimate Business Interests. The Executive acknowledges and agrees that in the performance of his or her duties of employment with the Bank he or she will be in contact with customers, potential customers and/or information about customers or potential customers of the Parent or the Bank either in person, through the mails, by telephone or by other electronic means. The Executive also acknowledges and agrees that trade secrets and confidential information of the Parent or the Bank that will be gained by Executive during his or her employment with the Bank, have been developed by the Parent and the Bank through substantial expenditures of time, effort and financial resources and constitute valuable and unique property of the Parent and the Bank. The Executive further understands, acknowledges and agrees that the foregoing makes it necessary for the protection of the Parent's and the Bank's businesses that the Executive not divert business or customers from the Parent and the Bank and that the Executive maintain the confidentiality and integrity of the confidential information as provided in this Agreement.

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(b)       Non-competition.

(i)       Notwithstanding anything in this Agreement to the contrary, the Executive agrees that during the period of time the Executive is retained to provide services to the Bank, and thereafter for a period of one (1) year subsequent to the termination of the Executive's services to the Bank for any of the reasons set forth in Section 8(c), the Executive will not enter the employ of, or have any interest in, directly or indirectly (either as executive, partner, director, officer, consultant, principal, agent or employee), any other bank or financial institution or any entity which either accepts deposits or makes loans (whether presently existing or subsequently established) and which has an office located within a radius of 50 miles of any office of the Bank, provided, however, that the foregoing shall not preclude any ownership by the Executive of an amount not to exceed 5% of the equity securities of any entity which is subject to the periodic reporting requirements of the 1934 Act and the shares of the Parent's common stock owned by the Executive at the time of termination of employment.

(ii)       Notwithstanding anything in this Agreement to the contrary, if the Executive's employment is terminated for any of the reasons set forth in Sections 8(a), 8(b), 8(d), 8(e), 8(f), and/or 8(g), then for a period of sixty (60) days subsequent to the effective date of such termination of Executive's services to the Bank, the Executive will not enter the employ of, or have any interest in, directly or indirectly (either as executive, partner, director, officer, consultant, principal, agent or employee), any other bank or financial institution or any entity which either accepts deposits or makes loans (whether presently existing or subsequently established) and which has an office located within a radius of 50 miles of any office of the Bank, provided, however, that the foregoing shall not preclude any ownership by the Executive of an amount not to exceed 5% of the equity securities of any entity which is subject to the periodic reporting requirements of the 1934 Act and the shares of the Parent's common stock owned by the Executive at the time of termination of employment.

13.       Nonsolicitation; Noninterference; Non-Disparagement.

(a)         The Executive agrees that during the period of time the Executive is retained to provide services to the Bank, and thereafter for a period of one year subsequent to the termination of Executive's services to the Bank for any reason whatsoever, the Executive will not (a) solicit for employment by Executive, or anyone else, or employ any employee of the Bank or any person who was an employee of the Bank within 12 months prior to such solicitation of employment; (b) induce, or attempt to induce, any employee of the Bank to terminate such employee's employment; (c) induce, or attempt to induce, anyone having a business relationship with the Bank to terminate or curtail such relationship or, on behalf of himself or anyone else, compete with the Bank; (d) knowingly make any untrue statement concerning the Bank or its directors or officers to anyone; or (e) permit anyone controlled by the Executive, or any person acting on behalf of the Executive or anyone controlled by an employee of the Executive to do any of the foregoing.

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(b)       The Executive shall not, during his or her employment by the Bank or at any time thereafter, directly or indirectly, in any communications in any media, criticize, ridicule or make (or cause or permit others to criticize, ridicule or make) any statement which disparages or is derogatory of any of the Parent or the Bank, their products or services, or any of the Parent's or the Bank's present, former or future shareholders, officers, directors, employees, affiliates and/or subsidiaries.

14.             Remedies. The Executive agrees that the restrictions set forth in this Agreement are fair and reasonable. The covenants set forth in this Agreement are not dependent covenants and any claim against the Bank, whether arising out of this Agreement or any other agreement or contract between the Bank and Executive, shall not be a defense to a claim against Executive for a breach or alleged breach of any of the covenants of Executive contained in this Agreement. It is expressly understood by and between the parties hereto that the covenants contained in this Agreement shall be deemed to be a series of separate covenants. The Executive understands and agrees that if any of the separate covenants are judicially held invalid or unenforceable, such holding shall not release Executive from Executive's obligations under the remaining covenants of this Agreement. If in any judicial proceedings, a court shall refuse to enforce any or all of the separate covenants because taken together they are more extensive (whether as to geographic area, duration, scope of business m otherwise) than necessary to protect the business and goodwill of the Bank, it is expressly understood and agreed between the parties hereto that those separate covenants which, if eliminated or restricted, would permit the remaining separate covenants or the restricted separate covenant to be enforced in such proceeding shall, for the purposes of such proceeding, be eliminated from the provisions of this Agreement or restriction, as the case may be.

15.             Invalid Provision. In the event any provision should be or become invalid or unenforceable, such facts shall not affect the validity and enforceability of any other provision of this Agreement. Similarly, if the scope of any restriction or covenant contained herein should be or become too broad or extensive to permit enforcement thereof to its full extent, then any such restriction or covenant shall be enforced to the maximum extent permitted by law, and Executive hereby consents and agrees that the scope of any such restriction or covenant may be modified accordingly in any judicial proceeding brought to enforce such restriction or covenant.

16.             Governing Law; Venue. This Agreement shall be construed in accordance with and shall be governed by the laws of the State of Florida. The sole and exclusive venue for any action arising out of this Agreement shall be a state court situated in Miami-Dade County, Florida, and the parties to this Agreement agree to be subject to the personal jurisdiction of such Court and that service on each party shall be valid if served by certified mail, return receipt requested or hand delivery.

17.             Attorneys' Fees and Costs. In the event a dispute arises between the parties under this Agreement and suit is instituted, the prevailing party shall be entitled to recover his or her or its costs and attorneys' fees from the nonprevailing party. As used herein, costs and attorneys' fees include any costs and attorneys' fees in any appellate proceeding.

18.             Binding Effect. The rights and obligations of the parties under this Agreement shall inure to the benefit of and shall be binding upon the successors, assigns and legal representatives of the Bank and the Parent and the heirs and legal representatives of the Executive.

19.             Effect on Other Agreements. This Agreement and the termination thereof shall not affect any other agreement between the Executive and the Bank, and the receipt by the Executive of benefits thereunder.

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20.             Miscellaneous. The rights and duties of the parties hereunder are personal and may not be assigned or delegated without the prior written consent of the other party to this Agreement. The captions used herein are solely for the convenience of the parties and are not used in construing this Agreement. Time is of the essence of this Agreement and the performance by each party of its or his or her duties and obligations hereunder.

21.             Compliance with Section 409A. Notwithstanding anything herein to the contrary, if it is determined by the Bank or the Executive, in good faith, at the time of the Executive's termination of employment that the Executive is a "specified employee" within the meaning of Section 409A(a)(2)(B)(i) of the Internal Revenue Code of 1986, as amended (the "Code") and that payments to be made to the Executive hereunder, if made earlier than as required under Section 409A(a)(2)(B)(i) of the Code would result in the requirement for the Executive to pay additional interest and taxes to be imposed in accordance with Section 409A(a)(l)(B) of the Code, then any payments to be made in accordance with this Agreement shall be made as of the date that is 184 calendar days from the date of the Executive's termination of employment, or immediately upon the death of the Executive, if earlier. The provisions of this Section 21 shall survive the expiration of this Agreement.

22.             Regulatory Actions. Notwithstanding any other provision of this Agreement to the contrary, any amounts paid or payable to the Executive pursuant to this Agreement, or otherwise, arc subject to and conditioned upon their compliance with Sections 18(k) and 32(a) of the Federal Deposit Insurance Act ("FDIA") and Part 359 of the FDIC's rules and regulations, and any regulations promulgated under the FDIA, and also are subject to and conditioned upon compliance by the Ban k with any Memorandum of Understanding, Consent Order, or other agreement between the Bank and the FDIC and/or the Florida Office of Financial Regulation.

23.             Complete Agreement. This Agreement constitutes the complete agreement between the parties hereto and incorporates all prior discussions, agreements and representations made in regard to the matters set forth herein. This Agreement may not be amended, modified or changed except by a writing signed by the party to be charged by said amendment, change or modification.

24.             Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument. Confirmation of execution by electronic transmission of a facsimile signature page shall be binding on a party so confirming.

25.             JURY WAIVER. IN ANY CIVIL ACTION, COUNTERCLAIM, OR PROCEEDING, WHETHER AT LAW OR IN EQUITY, WHICH ARISES OUT OF CONCERNS, OR RELATES TO THIS AGREEMENT, ANY AND ALL TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, THE PERFORMANCE OF THIS AGREEMENT, OR THE RELATIONSHIP CREATED BY THIS AGREEMENT, WHETHER SOUNDING IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE, TRIAL SHALL BE TO A COURT OF COMPETENT JURISDICTION AND NOT TO A JURY. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY. ANY PARTY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT, AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES TO THIS AGREEMENT OF THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. NEITHER PARTY HAS MADE OR RELIED UPON ANY ORAL REPRESENTATIONS TO OR BY ANY OTHER PARTY REGARDING THE ENFORCEABILITY OF THIS PROVISION. EACH PARTY HAS READ AND UNDERSTANDS THE EFFECT OF THIS JURY WAIVER PROVISION. EACH PARTY ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY ITS OWN COUNSEL WITH RESPECT TO THE TRANSACTION GOVERNED BY THIS AGREEMENT AND SPECIFICALLY WITH RESPECT TO THE TERMS OF THIS SECTION.

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

PROFESSIONAL BANK
By:	/s/ Abel L. Iglesias
Name:	Abel L. Iglesias
Title:	President and Chief Executive Office
Address:	396 Alhambra Circle, Suite 255
	Coral Gables FL 33134
“EXECUTIVE”
/s/ Mary B. Usategui
Print Name: Mary B. Usategui
Address:	6787 SW 53rd St
	Miami, FL 33155

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EX-10.4

Exhibit 10.4

EMPLOYMENT AGREEMENT

This Employment Agreement (the “Agreement”) is made as of this 28th day of November, 2018, by and between Professional Bank (the “Bank”), and Ryan Gorney (the “Executive”).

WITNESSETH:

WHEREAS, the Bank desires to retain the services of and employ the Executive, and the Executive desires to provide services to the Bank, pursuant to the terms and conditions of this Agreement.

NOW, THEREFORE, in consideration of the promises and of the covenants and agreements herein contained, the Bank and the Executive covenant and agree as follows:

1.Employment. Pursuant to the terms and conditions of this Agreement, the Bank agrees to employ the Executive and the Executive agrees to render services to the Bank as set forth herein. Upon signing this Agreement, the Executive represents and warrants to the Bank that: (a) the Executive has the full right and authority to perform all services required of the Executive during the term of this Agreement, (b) that such service by the Executive to the Bank does not and will not constitute a breach of any contract or legal obligation that the Executive may have to any other party, (c) the Executive has not, and in connection with his employment with the Bank will not, violate any non-solicitation or other similar covenant or agreement by which he is or may be bound, and (d) in connection with his employment with the Bank, the Executive will not use any confidential or proprietary information he may have obtained in connection with employment with any prior employer.

2.Position and Duties. During the term of this Agreement, the Executive shall serve as Chief Information Officer and Chief Digital Officer of the Bank, and shall undertake such duties, consistent with such title, as may be assigned to him from time to time by the Executive Chairman of the Bank (the "Chairman") and the Board of Directors of the Bank (referred to as the “Board”), including overseeing all technology issues (including the preparation, implementation and monitoring of appropriate policies) of the Bank and/or any holding company of the Bank and/or their subsidiaries (collectively, the “Bank Group”), keeping the Board and the Chairman informed of industry and regulatory developments regarding the Bank's technology issues, and assisting in keeping the Bank Group in compliance with applicable technology laws and regulations. In addition, the Board and/or the Chairman shall provide the Executive with annual goals and responsibilities outlined in a “performance evaluation,” and it is the Executive’s responsibility to meet or exceed these goals as determined in the sole discretion of the Board and/the Chairman. In performing his duties pursuant to this Agreement, the Executive shall devote his full business time, energy, skill and best efforts to promote the Bank Group and its business and affairs; provided that, subject to Sections 10, 13 and 14 of this Agreement, the Executive shall have the right to manage and pursue personal and family interests, and make passive investments in securities, real estate, and other assets, and also to participate in charitable and community activities and organizations, so long as such activities do not adversely affect the performance by Executive of his duties and obligations to the Bank Group.

3.Term. The initial term of employment pursuant to this Agreement shall be for a period of three (3) years, commencing on the date set forth above and expiring (unless sooner terminated as otherwise provided in this Agreement or unless otherwise renewed or extended as set forth herein) on the third anniversary of this Agreement; provided, however that commencing on the third anniversary of the date of this Agreement and each anniversary thereafter, the term of this Agreement shall automatically renew for additional one (1) year periods on the same terms and conditions contained in this Agreement in effect as of the time of renewal, unless at least ninety (90) days prior to any such anniversary date either party shall notify the other in writing that it does not wish to extend the term of this Agreement beyond the then applicable expiration date. All references to the term of this Agreement shall refer both to the initial term and any successive term. After termination of the employment of the Executive for any reason whatsoever (including, without limitation, the expiration and/or termination of this Agreement), the Executive shall continue to be subject to the provisions of Sections 8 through 29, inclusive, of this Agreement, which shall be deemed to survive.

4.Compensation. During the term of this Agreement, the Bank shall pay or provide to the Executive as compensation for the services of the Executive set forth in Section 2 hereof:

(a)A base annual salary of $350,000 effective on the date of this Agreement, and such base annual salary may be increased thereafter in the discretion of the Board or the Chairman; and

(b)Such incentive bonuses as may be authorized by the Board from time to time.

The base salary, the bonuses, and all other payments and compensation to Executive for his services to the Bank shall be subject to all withholding and deductions required by federal, state or other law (including those authorized by the Executive but not otherwise required by law), including but not limited to state, federal and local income taxes, unemployment tax, Medicare and FICA, together with such deductions as the Executive may from time to time specifically authorize under any employee benefit program that may be adopted by the Bank for the benefit of its senior executives or the Executive.

5.Benefits and Insurance.

(a)The Bank shall provide to the Executive such medical, health, disability, and life insurance as well as any other benefits as the Board shall determine from time to time. As to health insurance, the Bank shall provide family health insurance coverage. The Bank also shall reimburse the Executive for medical insurance coverage under COBRA until the earlier of 90 days following the date of this Agreement or the eligibility of the Executive for enrollment in the Bank's medical insurance plan. The Executive understands that eligibility for the Bank's benefit plans is contingent upon the Executive qualifying for eligibility under such plans. The Bank reserves the right to modify, suspend or terminate the Bank benefit plans at any time and from time to time. The Executive also shall be entitled to participate in the 2014 Share Appreciation Rights Plan, as amended from time to time (the "SAR Plan"), of Professional Holding Corp., the sole shareholder of the Bank ("Parent"), to the extent units are granted to the Executive by the Parent, all subject to the terms and conditions of the SAR Plan; the Bank hereby confirms that the Executive will be granted 20,000 units in accordance with and subject to the terms of the SAR Plan.

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(b)The Bank shall have the right to obtain on the life of the Executive, pay all premium amounts related to, and maintain, “key employee” insurance naming any of the Bank Group as beneficiary. Selection of such insurance policy shall be in the sole and absolute discretion of the Board. The Executive shall cooperate fully with the Bank Group and the insurer in applying for, obtaining and maintaining such life insurance, by executing and delivering such further and other documents as the Bank Group and/or the insurer may request from time to time, and doing all matters and things which may be convenient or necessary to obtain such insurance, including, without limitation, submitting to any physical examinations and providing any medical information required by the insurer.

6.Vacation. During each 12-month period during the term of this Agreement, the Executive may take such weeks of vacation time as authorized by the Bank’s personnel policies and at such periods during each year as the Chairman and the Executive shall determine from time to time. Any unused vacation time will not roll over to the next 12-month period unless otherwise authorized by the Chairman. The Executive shall be entitled to full compensation during such vacation periods.

7.Reimbursement of Expenses. The Bank shall reimburse the Executive for reasonable expenses incurred in connection with his employment hereunder subject to guidelines issued from time to time by the Board and upon submission of documentation in conformity with applicable requirements of federal income tax laws and regulations supporting reimbursement of such expenses.

8.Termination. The employment of the Executive may be terminated as follows:

(a)By the Bank, by action taken by the Chairman, at any time and immediately upon written notice to the Executive if said discharge is for "Cause" (as defined below). In the notice of termination furnished to the Executive under this Section 8(a), the reason or reasons for said termination shall be given. Any one or more of the following conditions shall be deemed to be grounds for termination of the employment of the Executive for "Cause" under this Section 8(a):

(i)If the^-Executive shall fail or refuse to comply with the obligations required of him as set forth in this Agreement or comply with the policies of the Bank Group established from time to time or fail to perform the duties assigned to the Executive by the Chairman or the Board from time to time or fails to perform his duties set forth in the annual document entitled “executive performance evaluation”;

(ii)If the Executive shall have engaged in conduct involving fraud, deceit, personal dishonesty, or breach of fiduciary duty, or any other conduct, which in any such case has adversely affected, or may adversely affect, the business or reputation of the Bank Group;

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(iii)If the Executive shall have violated any law or regulation, memorandum of understanding, cease and desist order, or other agreement with any regulatory agency having jurisdiction over any of the Bank Group;

(iv)If the Executive habitually abused alcohol or any controlled substance or reported to work under the influence of alcohol or any controlled substance;

(v)If the Executive has been convicted of, or the entering by the Executive of a plea of nolo contendere with respect to, a criminal offense constituting a felony or involving moral turpitude;

(vi)If the Executive engaged in the unlawful harassment of employees or customers of any of the Bank Group;

(vii)If the Executive exposed any of the Bank Group to criminal liability substantially caused by the Executive which results in an adverse effect on the business, financial condition, prospects or results of operations of the Bank Group;

(viii)If the Executive is in material breach of any provision of this Agreement; and/or

(ix)If after the date of this Agreement, the Executive shall have filed, or had filed against him, any petition under the federal bankruptcy laws or any state insolvency laws.

In the event of termination for Cause, the Bank shall pay the Executive, on the Bank’s regular payroll payment date next following the thirtieth (30^th) day after the effective date of a termination, only salary, vacation, and bonus amounts accrued and unpaid as of the effective date of termination (less any amounts owed to the Bank by the Executive).

(b)By the Executive upon the lapse of thirty (30) days following written notice by the Executive to the Bank of termination of his employment hereunder for Good Reason (as defined below), which notice shall reasonably describe the Good Reason for which the Executive’s employment is being terminated; provided, however, that the Bank shall have the opportunity to cure such Good Reason, during such 30-day period, and the Executive’s employment shall continue in effect during such time. If such Good Reason shall be cured by the Bank during such time to the reasonable satisfaction of the Executive, the Executive’s employment and the obligations of the Bank hereunder shall not terminate as a result of the notice which has been given with respect to such Good Reason. Cure of any Good Reason with or without notice from the Executive shall not relieve the Bank from any obligations to the Executive under this Agreement or otherwise and shall not affect the Executive’s rights upon the reoccurrence of the same, or the occurrence of any other, Good Reason. For purposes of this Agreement, the term “Good Reason” shall mean any material breach by the Bank of any provision of this Agreement, or any significant reduction, without the Executive’s prior written consent, in the duties, responsibilities, authority or title of the Executive as an officer of the Bank, except for any reduction in duties, responsibilities, authority or title due to (i) the Executive’s illness or disability, (ii) an order from any regulatory authority having jurisdiction over any of the Bank Group, (iii) the temporary suspensions of the Executive’s duties, responsibilities, authority or title pending results of any Board commissioned investigation as to potential Cause for termination of the Executive’s employment, or (iv) the appointment of other positions created by the Bank Group.

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If the Executive’s employment is terminated by the Executive for Good Reason, the Bank shall, for a period which is the longer of (A) twelve (12) months after the effective date of termination or (B) the remainder of the then term of this Agreement (but, in either case, in no event beyond the date the Executive commences employment elsewhere), continue to pay to the Executive in accordance with the Bank's payroll policies the base annual salary in effect under Section 4(a) on the date of said termination, less any amounts owed to the Bank by the Executive, with such payments to commence on the Bank’s regular payroll payment date next following the thirtieth (30^th) day after the effective date of such termination of employment (but retroactive to such effective date).

(c)By the Executive upon the lapse of ninety (90) days following written notice by the Executive to the Bank of his resignation from the Bank for other than Good Reason; provided, however, that the Bank, in its discretion, may cause such termination to be effective at any time during such 90-day period. If the Executive’s employment is terminated because of the Executive’s resignation, the Bank shall be obligated to pay to the Executive, within thirty (30) days of the effective date of such termination, only any salary, vacation, and bonus amounts that would have been accrued and unpaid through the end of such 90-day period (less any amounts owed to the Bank by the Executive).

(d)If the Executive’s employment is terminated by the death or disability (i.e., the Executive is unable to perform the essential functions of him position for at least 180 days within a nine-month period) of the Executive, this Agreement shall automatically terminate effective immediately, and the Bank shall be obligated to pay to the Executive or the Executive’s estate, on the Bank’s regular payroll payment date next following the thirtieth (30^th) day after the effective date of termination, only any salary, vacation, and bonus amounts accrued and unpaid at the date of disability or death (less any amounts owed to the Bank by the Executive).

(e)By the Bank or the Executive within twelve (12) months of the closing of a Change of Control, in which event (i) the Bank shall pay to the Executive, on the Bank’s regular payroll payment date next following the thirtieth (30^th) day after the effective date of termination, an amount equal to one times the average base annual salary received by the Executive during the three-year period prior to such termination, and (ii) the Bank, at its sole expense, shall maintain in full force and effect for the continued benefit of the Executive and his dependents, if any, or shall pay for (under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) or otherwise), for a period of one (1) year after the effective date of termination, all benefits provided by the Bank in which the Executive and/or his dependents were participating immediately prior to the effective date of termination at the level in effect and upon substantially the same terms and conditions (including, without limitation, contributions required by the Executive for such benefits) as existed immediately prior to the effective date of termination (except to the extent that the Executive and/or his dependents may be ineligible for one or more such benefits under applicable plan terms). For purposes of this Agreement, a Change of Control shall mean a merger or acquisition in which the Bank or its holding company is not the surviving entity, or the acquisition by any individual or group of beneficial ownership of more than 50% of the outstanding shares of the common stock of the Bank’s holding company or of the Bank. The term “group” and the concept of beneficial ownership shall have such meanings ascribed thereto as set forth in the Securities Exchange Act of 1934, as amended (the “1934 Act”), and the regulations and rules thereunder. If the provisions of this Section 8(e) are triggered by the Bank or the Executive, the provisions of this Section 8(e) shall override and supersede the provisions of Sections 8(b), (c), (d) and (f), as applicable (for the avoidance of doubt, no duplicative compensation).

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(f)By the Bank, by action taken by its Board, at any time if said discharge is without Cause. If the Executive’s employment is terminated by the Bank without Cause, the Bank shall, for a period which is the longer of (A) twelve (12) months after the effective date of termination or (B) the remainder of the then term of this Agreement (but, in either case, in no event beyond the date the Executive commences employment elsewhere), continue to pay to the Executive in accordance with the Bank’s payroll policies the base annual salary in effect under Section 4(a) on the date of said termination, less any amounts owed to the Bank by the Executive, with such payments to commence on the Bank’s regular payroll payment date next following the thirtieth (30^th) day after the effective date of such termination of employment (but retroactive to such effective date).

(g)Notwithstanding anything in this Agreement to the contrary, as a condition to receipt by the Executive of the payments due from the Bank pursuant to the applicable provision in this Section 8 in connection with termination of his employment, the Executive shall execute and deliver to the Bank within twenty-two (22) days of the effective date of the termination of his employment, a general release of all claims the Executive may have against the Bank Group and their respective Boards of Directors with respect to the subject matter of this Agreement (other than any obligations of the Bank under this Agreement or any severance agreement which by their terms survive) in a form reasonably acceptable to the Bank and/or its counsel, and such release shall not have been revoked by the Executive.

(h)Any termination of the Executive’s employment for any reason shall require that the Executive resign all other positions (including as director) he may then be holding with the Bank Group or as trustee of any of their benefit plans, unless the Board and the Executive agree to the contrary.

(i)The parties acknowledge and agree that the compensation and benefits set forth in this Section 8 as being payable upon termination of this Agreement constitute liquidated damages upon the termination of this Agreement, and the parties hereto have agreed that such compensation and benefits are reasonable. The parties further acknowledge and agree that the Bank and any holding company of the Bank shall not be required to pay any salary, bonus or benefits under this Section 8 if, upon the advice of counsel, the Bank determines that the payment of such salary, bonus or benefits would be prohibited by 12 C.F.R. Part 359 or any successor regulations regarding employee compensation promulgated by any regulatory agency having jurisdiction over any of the Bank Group.

9.Notice. All notices permitted or required to be given to either party under this Agreement shall be in writing and shall be deemed to have been given (a) in the case of delivery, when addressed to the other party as set forth at the end of this Agreement and delivered to said address, (b) in the case of mailing, three days after the same has been mailed by certified mail, return receipt requested, and deposited postage prepaid in the U.S. Mails, addressed to the other party at the address as set forth at the end of this Agreement, and (c) in any other case, when actually received by the other party. Either party may change the address at which said notice is to be given by delivering notice of such to the other party to this Agreement in the manner set forth herein.

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10.Confidential Matters; Work Product.

(a)The Executive is aware and acknowledges that the Executive shall have access to Confidential Information by virtue of his employment. The Executive agrees that, during the period of time the Executive is retained to provide services to the Bank, and thereafter subsequent to the termination of Executive’s services to the Bank for any reason whatsoever, the Executive will not, except as is necessary for the Executive to perform his duties on behalf of the Bank Group, directly or indirectly, use, release or divulge any Confidential Information whatsoever relating to any of the Bank Group or their business, to any other person or entity without the prior written consent of the Bank. During the term of this Agreement, the Executive shall take all steps reasonably necessary and/or requested by the Bank to ensure that its Confidential Information is kept confidential pursuant to this Agreement. “Confidential Information” shall include the various confidential, trade secret and/or proprietary information of any of the Bank Group and of their clients and customers, including, without limitation, ideas, concepts, plans, designs, marketing techniques, sales techniques, forecasts, projections, products, technology, methods, procedures, pricing, costs, cost reports, customers, customer lists, customer identification, customer prospects, designs, computer systems, passwords, computer software, procedures, methods, formulae, financial statements, assets, liabilities, revenues, business methods, marketing information, marketing methods, acquisition plans, contract terms, contract negotiations, compensation information, structures and plans, employee responsibilities and duties, copyrights, trademarks, patents and other proprietary information. Confidential Information does not include information that is available to the public or which becomes available to the public other than through a breach of this Agreement on the part of the Executive.

(b)In the event the Executive is requested pursuant to, or required by, applicable law or regulation or by legal process to disclose any Confidential Information, the Executive agrees to provide the Bank Group with prompt notice of such request or requirement to enable the Bank Group to seek an appropriate protective order, waive compliance with the provisions of this Agreement or take other appropriate action. The Executive agrees to use the Executive’s best efforts in such event to assist the Bank Group in obtaining a protective order. If, in the absence of a protective order or the receipt of a waiver under this Agreement, the Executive is nonetheless, in the written opinion of the Executive’s counsel, compelled to disclose the Confidential Information to any tribunal or else stand liable for contempt or suffer other censure or significant penalty, the Executive, after notice to the Bank Group, may disclose to such tribunal only such Confidential Information that the Executive is compelled to disclose. The Executive shall not be liable for the disclosure of Confidential Information to a tribunal compelling such disclosure unless such disclosure was caused or resulted from a previous disclosure by the Executive not permitted under this Agreement.

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(c)The Executive acknowledges and agrees that all right, title and interest in and to all “Results” (as defined below), as well as any and all intellectual property rights therein and all improvements thereto, shall be the sole and exclusive property of the Bank Group. Results shall and shall at all times remain the Confidential Information of the Bank Group and the Bank Group shall have the unrestricted right (but not any obligation), in its sole and absolute discretion, to (i) use, commercialize or market any Results; or (ii) file an application for patent, copyright registration or any other intellectual property rights and prosecute or abandon such application prior to issuance or registration. No royalty or other consideration shall be due or owing to the Executive now or in the future as a result of such activities. For purposes of this Agreement, “Results” means all writings, works of authorship, technology, inventions, discoveries, processes, techniques, methods, ideas, concepts, research, proposals, materials and all other work product of any nature whatsoever, that are created, prepared, produced, authored, edited, amended, conceived or reduced to practice by the Executive individually or jointly with others as a result of the Executive’s employment by the Bank or related in any way to the business or contemplated business, products, activities, research or development of the Bank Group (in each case, regardless of when or where prepared or whose equipment or other resources are used in preparing the same), all rights and claims related to the foregoing, and all printed, physical and electronic copies, all improvements, and other tangible embodiments thereof.

(d)To the extent permitted by law, all Results consisting of copyrightable subject matter will be deemed “works for hire” or “works made for hire,” within the meaning of the United States Copyright Act of 1976, for the benefit of the Bank Group. To the extent the foregoing sentence does not apply to certain Results, the Executive irrevocably assigns to the Bank Group, and their successors and assigns, for no additional consideration, the Executive’s entire right, title and interest in and to all such Results and any related intellectual property rights therein, whether or not now or hereafter known, existing, contemplated, recognized or developed, and the Bank Group will have the right to use the same in perpetuity throughout the universe in any manner it determines, in its sole discretion, without any further payment or compensation to the Executive whatsoever. To the extent the Executive has any rights in any Results or any related intellectual property rights that cannot be assigned in the manner described above, the Executive unconditionally and irrevocably waives the enforcement of such rights. To the extent any copyrights are assigned under this Agreement, the Executive irrevocably waives in favor of the Bank Group, to the extent permitted by applicable law, any and all claims that the Executive may now or hereafter have in any jurisdiction to all rights of paternity, integrity, disclosure and withdrawal and any other rights that may be known as “moral rights” with respect to all Results and all intellectual property rights therein.

(e)During and after the Executive’s employment by the Bank, the Executive shall reasonably cooperate with the Bank Group to do any and all things which the Bank Group may deem useful, necessary or desirable to establish, maintain, protect and enforce the Bank Group’s exclusive ownership of any and all rights in any Results. The Executive hereby irrevocably grants the Bank Group a power of attorney to do all such things (including the execution and delivery of documents) on the Executive’s behalf and in the Executive’s name and to do all other lawfully permitted acts to establish, maintain, protect and enforce the Bank Group’s exclusive ownership of any and all rights in any Results and intellectual property rights therein, to the fullest extent permitted by law, if the Executive does not promptly cooperate with the Bank Group’s request (without limiting the rights the Bank Group may have in such circumstances by operation of law). This power of attorney is coupled with an interest and shall not be affected by the Executive’s subsequent incapacity.

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(f)The Executive will, immediately upon the Bank’s request, upon termination of the Executive’s employment by the Bank, for any reason or for no reason, return to the Bank: (i) all copies and manifestations of Confidential Information (including, without limitation, Results) that the Executive may have or have access to; (ii) all documents, other materials and equipment provided by any of the Bank Group; and (iii) all documents and materials that the Executive has prepared during the Executive’s employment by any of the Bank Group (collectively, the “Bank Property”). The Executive acknowledges and agrees that the Bank Property is, and shall, remain at all times the exclusive property of the Bank Group.

11.Equitable Relief. The Bank has entered into this Agreement in order to obtain the benefit of the Executive’s unique skills, talent, and experience. The parties enter into this Agreement with the understanding that the base salary and all other compensation and benefits to be paid to the Executive pursuant to this Agreement have been based in part on the value to the Bank Group of each of the provisions of this Agreement. The Executive acknowledges and agrees that any breach or threatened breach of this Agreement will result in irreparable damage to the Bank Group and, accordingly, any of the Bank Group may obtain injunctive relief, a decree of specific performance and/or any other equitable relief for any breach or threatened breach of this Agreement in addition to any other remedies available to the Bank Group, without being required to show any actual damage, or to post an injunction bond, and the prevailing party in any such proceeding will be entitled to reimbursement for all costs and expenses, including reasonable attorneys’ fees and expenses in connection therewith. Nothing herein shall be construed as prohibiting the Bank Group from pursuing such other remedies available to it for any such breach or threatened breach including recovery of damages from the Executive.

12.Legitimate Business Interests. The Executive acknowledges and agrees that in the performance of his duties of employment with the Bank, he will be in contact with customers, potential customers and/or information about customers or potential customers of the Bank Group either in person, through the mails, by telephone or by other electronic means. The Executive also acknowledges and agrees that trade secrets and confidential information of the Bank Group that will be gained by Executive during his employment with the Bank, have been developed by the Bank Group through substantial expenditures of time, effort and financial resources and constitute valuable and unique property of the Bank Group. The Executive further understands, acknowledges and agrees that the foregoing makes it necessary for the protection of the Bank Group’s businesses that the Executive not divert business or customers from the Bank Group and that the Executive maintain the confidentiality and integrity of the confidential information as provided in this Agreement.

13.Noncompetition. The Executive agrees that during the period of time the Executive is retained to provide services to the Bank, and thereafter for a period of one year subsequent to the termination of Executive’s services to the Bank for any reason (including expiration of this Agreement), the Executive will not enter the employ of, or have any interest in, directly or indirectly (either as executive, partner, director, officer, consultant, principal, agent or employee), any other bank or financial institution or any entity which either accepts deposits or makes loans (whether presently existing or subsequently established) or any holding company for any of the foregoing and which has an office located within a radius of 50 miles of any office of any of the Bank Group within the State of Florida; provided, however, that the foregoing shall not preclude any ownership by the Executive of an amount not to exceed 5% of the equity securities of any entity which is subject to the periodic reporting requirements of the 1934 Act and the shares of the Bank’s (or its holding company’s) common stock owned by the Executive at the time of termination of employment.

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14.Nonsolicitation; Noninterference. The Executive agrees that during the period of time the Executive is retained to provide services to the Bank, and thereafter for a period of one year subsequent to the termination of the Executive’s services to the Bank for any reason whatsoever, the Executive will not (a) solicit for employment by Executive, or anyone else, or employ any employee of the Bank Group or any person who was an employee of the Bank Group within twelve (12) months prior to such proposed employment or solicitation of employment; (b) induce, or attempt to induce, any employee of the Bank Group to terminate such employee’s employment; (c) induce, or attempt to induce, anyone having a business relationship with the Bank Group to terminate or curtail such relationship or enter into a similar relationship with another financial institution or financial services company or, on behalf of himself or anyone else, compete with the Bank Group; (d) knowingly make any untrue statement concerning the Bank Group or its directors or officers to anyone; or (e) permit anyone controlled by the Executive, or any person acting on behalf of the Executive or anyone controlled by an employee of the Executive, to do any of the foregoing.

15.Non-Disparagement. The Executive shall not, during his employment by the Bank or at any time thereafter, directly or indirectly, in any communications in any media, criticize, ridicule or make (or cause or permit others to criticize, ridicule or make) any statement which disparages or is derogatory of any of the Bank Group, the Bank Group’s products or services, or any of the Bank Group’s present, former or future shareholders, officers, directors, employees, affiliates and/or subsidiaries.

16.Remedies. The Executive agrees that the restrictions set forth in this Agreement are fair and reasonable. The covenants set forth in this Agreement are not dependent covenants and any claim against the Bank Group, whether arising out of this Agreement or any other agreement or contract between any of the Bank Group and the Executive, shall not be a defense to a claim against the Executive for a breach or alleged breach of any of the covenants of the Executive contained in this Agreement. It is expressly understood by and between the parties hereto that the covenants contained in this Agreement shall be deemed to be a series of separate covenants. The Executive understands and agrees that if any of the separate covenants are judicially held invalid or unenforceable, such holding shall not release him from his obligations under the remaining covenants of this Agreement. If in any judicial proceedings, a court shall refuse to enforce any or all of the separate covenants because taken together they are more extensive (whether as to geographic area, duration, scope of business or otherwise) than necessary to protect the business and goodwill of the Bank Group, it is expressly understood and agreed between the parties hereto that those separate covenants which, if eliminated or restricted, would permit the remaining separate covenants or the restricted separate covenant to be enforced in such proceeding shall, for the purposes of such proceeding, be eliminated from the provisions of this Agreement or restriction, as the case may be.

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17.Invalid Provision. In the event any provision should be or become invalid or unenforceable, such facts shall not affect the validity and enforceability of any other provision of this Agreement. Similarly, if the scope of any restriction or covenant contained herein should be or become too broad or extensive to permit enforcement thereof to its full extent, then any such restriction or covenant shall be enforced to the maximum extent permitted by law, and Executive hereby consents and agrees that the scope of any such restriction or covenant may be modified accordingly in any judicial proceeding brought to enforce such restriction or covenant.

18.Governing Law; Venue. This Agreement shall be construed in accordance with and shall be governed by the laws of the State of Florida. The sole and exclusive venue for any action arising out of this Agreement shall be a state court situated in Miami-Dade County, Florida, and the parties to this Agreement agree to be subject to the personal jurisdiction of such Court and that service on each party shall be valid if served by certified mail, return receipt requested or hand delivery.

19.Attorneys’ Fees and Costs. In the event a dispute arises between the parties under this Agreement and suit is instituted, the prevailing party shall be entitled to recover him or its costs and attorneys’ fees from the nonprevailing party. As used herein, costs and attorneys’ fees include any costs and attorneys’ fees and costs in any appellate proceeding.

20.Binding Effect. The rights and obligations of the parties under this Agreement shall inure to the benefit of and shall be binding upon the successors, assigns and legal representatives of the Bank Group and the heirs and legal representatives of the Executive.

21.Effect on Other Agreements. This Agreement and the termination thereof shall not affect any other agreement between the Executive and the Bank Group, and the receipt by the Executive of benefits thereunder.

22.Miscellaneous. The captions used herein are solely for the convenience of the parties and are not used in construing this Agreement. Time is of the essence of this Agreement and the performance by each party of its or his duties and obligations hereunder.

23.Compliance with Section 409A.

(a)If any amounts that become due under Section 8 of this Agreement constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), payment of such amounts shall not commence until the Executive incurs a “Separation from Service” (as defined below) if and only if necessary to avoid accelerated taxation or tax penalties in respect of such amounts.

(b)Notwithstanding any provision of this Agreement to the contrary, if the Executive is a “Specified Employee” (as defined below), he shall not be entitled to any payments upon a Separation from Service until the earlier of (i) the date which is the first (1^st) business day following the date that is six (6) months after Executive’s Separation from Service for any reason other than death or (ii) Executive’s date of death. The provisions of this Section shall only apply if required to comply with Section 409A of the Code.

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(c)For purposes of this Agreement, “Separation from Service” shall have the meaning set forth in Section 409A(a)(2)(A)(i) of the Code and determined in accordance with the default rules under Section 409A of the Code. “Specified Employee” shall have the meaning set forth in Section 409A(a)(2)(B)(i) of the Code, as determined in accordance with the uniform methodology and procedures adopted by the Bank and then in effect.

(d)It is intended that the terms and conditions of this Agreement comply with Section 409A of the Code. If any provision of this Agreement contravenes any regulations or Treasury guidance promulgated under Section 409A of the Code, or could cause any amounts or benefits hereunder to be subject to taxes, interest and penalties under Section 409A of the Code, this Agreement or any provision hereof may be reformed by the Executive, subject to the consent of the Bank (which consent shall not be unreasonably withheld) to: (i) comply with, or avoid being subject to, Section 409A of the Code, (ii) avoid the imposition of taxes, interest and penalties under Section 409A of the Code, and/or (iii) maintain, to the maximum extent practicable, the original intent of the applicable provision without violating the provisions of Section 409A of the Code; provided, however, that no such amendment shall have the effect of reducing the amount of any payment or benefit payable to the Executive pursuant to this Agreement.

(e)Anything in this Agreement to the contrary notwithstanding, no reimbursement payable to the Executive pursuant to any provisions of this Agreement or pursuant to any plan or arrangement of the Bank Group covered by this Agreement shall be paid later than the last day of the calendar year following the calendar year in which the related expense was incurred, except to the extent that the right to reimbursement does not provide for a “deferral of compensation” within the meaning of Section 409A of the Code. No amount reimbursed during any calendar year shall affect the amounts eligible for reimbursement in any other calendar year.

24.Complete Agreement. This Agreement constitutes the complete agreement between the parties hereto and incorporates all prior discussions, agreements and representations made in regard to the matters set forth herein. This Agreement may not be amended, modified or changed except by a writing signed by the party to be charged by said amendment, change or modification.

25.Regulatory Actions. Notwithstanding any other provision of this Agreement to the contrary, any amounts paid or payable to the Executive pursuant to this Agreement, or otherwise, are subject to and conditioned upon their compliance with Sections 18(k) and 32(a) of the Federal Deposit Insurance Act ("FDIA") and Part 359 of the FDIC's rules and regulations, and any regulations promulgated under the FDIA, and also are subject to and conditioned upon compliance by the Bank with any Memorandum of Understanding, Consent Order, or other agreement between the Bank and the FDIC and/or the Florida Office of Financial Regulation.

26.Assignability. The Executive’s rights and obligations hereunder are personal and may not be assigned by the Executive (other than his rights to payments or benefits hereunder, which may be transferred only by will or the laws of descent and distribution or to the Executive’s representative in the event of his disability); provided, however, in the event of the Executive’s death or disability, the Executive’s representative may also exercise any unexercised stock options or stock appreciation rights, if any, to the extent permitted by the relevant option or stock appreciation rights plan agreement or this Agreement. As used in this Agreement, “Bank” and “Bank Group” shall mean the entities as hereinbefore defined and any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the equity, business and/or assets of the Bank Group or that otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

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27.Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument. Confirmation of execution by electronic transmission of a facsimile signature page shall be binding on a party so confirming.

28.Indemnification. The Executive agrees and promises to indemnify and hold the Bank and its affiliates and each of their respective officers, directors, agents, owners, shareholders, employees, contractors, agents and representatives (each, individually, an "Indemnified Party") harmless from any and all damages, losses, claims and/or suits (including reasonable attorneys' fees, whether incurred at, prior to, or in preparation for trial, on appeal, or otherwise) arising as a result of any breach of any representation, warranty, covenant, or agreement, or duty of the Executive under this Agreement; provided, however, that the amount owed by the Executive to the Indemnified Party shall be reduced by the actual amount received by the Indemnified Party from insurance or other obligated person with respect to the matter which is the subject of indemnification.

29.JURY WAIVER. IN ANY CIVIL ACTION, COUNTERCLAIM, OR PROCEEDING, WHETHER AT LAW OR IN EQUITY, WHICH ARISES OUT OF, CONCERNS, OR RELATES TO THIS AGREEMENT, ANY AND ALL TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, THE PERFORMANCE OF THIS AGREEMENT, OR THE RELATIONSHIP CREATED BY THIS AGREEMENT, WHETHER SOUNDING IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE, TRIAL SHALL BE TO A COURT OF COMPETENT JURISDICTION AND NOT TO A JURY. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY. ANY PARTY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT, AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES TO THIS AGREEMENT OF THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. NEITHER PARTY HAS MADE OR RELIED UPON ANY ORAL REPRESENTATIONS TO OR BY ANY OTHER PARTY REGARDING THE ENFORCEABILITY OF THIS PROVISION. EACH PARTY HAS READ AND UNDERSTANDS THE EFFECT OF THIS JURY WAIVER PROVISION. EACH PARTY ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY ITS OWN COUNSEL WITH RESPECT TO THE TRANSACTION GOVERNED BY THIS AGREEMENT AND SPECIFICALLY WITH RESPECT TO THE TERMS OF THIS SECTION.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

PROFESSIONAL BANK
By:	/s/ Daniel R. Sheehan
	Daniel R. Sheehan,
	Executive Chairman
“EXECUTIVE”
/s/ Ryan Gorney
Ryan Gorney

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EX-10.5

Exhibit 10.5

PROFESSIONAL BANK

2012 SHARE APPRECIATION RIGHTS PLAN

Professional Bank, a Florida commercial bank (“Professional Bank” or the “Bank”), previously adopted the Stock Option Plan (the “Prior Plan”). The Board of Directors adopted an amendment to the Prior Plan and adopted this 2012 Share Appreciation Rights Plan (the “SAR Plan”), effective upon approval by the Board of Directors of Professional Bank, for the benefit of its eligible employees.

The purposes of the amendment to the Prior Plan and of the SAR Plan are to directly benefit the interests of Professional Bank’s stockholders as follows:

a) To further the growth, development and financial success of Professional Bank by providing appropriate incentives to certain key employees who have been or will be given responsibility for the management or administration of the business affairs of the Bank;

b) To provide for distinct plans for board and for management in order to maximize incentives offered while minimizing expenses; and

c) To enable Professional Bank to obtain and retain the services of the type of professional, technical and managerial employees considered essential to Professional Bank’s long-range success.

1.             Definitions. Wherever used herein, the following words and phrases shall have the meanings hereinafter set forth:

a. “Award” means the grant of a Unit to a Participant;

b. “Base Price” shall have the meaning set out in Section 8;

c. “Board” means the Board of Directors of the Bank;

d. “Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute thereto;

e. “Committee” means the Compensation Committee of the Board;

f. “Common Stock” means the shares of common stock of the Bank;

g. “Fair Market Value”, wherever used to refer to the price of a share of Common Stock, means the greater of the most recent offered price or book value.

h. “Liquidity Event” means an event that triggers an exit opportunity for holders of Common Stock of the Bank to liquidate their holdings through a reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, liquidation, dissolution, or sale, transfer, exchange or other disposition of all or substantially all of the assets of the Bank, or exchange of Common Stock or other securities of the Bank, issuance of warrants or other rights to purchase Common Stock or other securities of the Bank, going public transaction or other similar corporate transaction or event that results in the ability of holders of Common Stock to receive a cash payment in exchange for their shares of Common Stock; provided, however, that the formation of a holding company with shareholders consisting substantially of the shareholders of the Bank shall not be considered a Liquidity Event.

i. “Participant” means any employee or officer of the Bank who has been selected to receive an Award under the SAR Plan;

j. “Unit” means a right granted under this SAR Plan to a Participant, which entitles the Participant to receive at the time of exercise a cash amount equal to the difference between the Fair Market Value of a single share of Common Stock and the Base Price of a single share of Common Stock;

k. “Unit Agreement” means an agreement between the Bank and a Participant setting out the terms and conditions for an Award of Units.

2.Effective Date and Termination Date. The SAR Plan was approved by the Board on December 18, 2012. The Plan shall terminate on December 17, 2022].

3.Administration. The Plan shall be administered by the Committee. Subject to the provisions of the SAR Plan, the Committee shall have full authority to determine the number and type of Awards granted under the SAR Plan, to interpret the SAR Plan, to enact, amend and rescind any rules and regulations relating to the SAR Plan, to determine the provisions of each Unit Agreement, and to take such other action and make such other determinations as the Committee deems necessary or advisable for the administration of the Plan. The decisions of the Committee under the SAR Plan, in its sole and absolute discretion, shall be conclusive and binding. No member of the Board or the Committee shall be liable for any action relating to the affairs governing the SAR Plan.

4.Available Units. The maximum number of Units available for issuance under the SAR Plan is equal to 50% of the share options available under the Prior Plan. In the event that any Unit granted under the SAR Plan is not exercised before its expiry date, or is terminated, or ceases to be exercisable for any other reason prior to the end of the period during which Units may be granted under the SAR Plan, such unexercised Units shall become available for new Awards to be granted under the SAR Plan to any eligible employee, including the original holder of such Units.

5.Awards. Awards may be made to any of the employees or officers of the Bank who, in the opinion of the Committee, have already made or are in a position to make a significant contribution to the success of the Bank. Subject to the provisions of the SAR Plan, the Committee shall determine at what time(s) Units are to be granted, which key employees are to be granted Units, the number of Units, the duration of each Unit, the Base Price for each Unit, and the time or times within which all or portions of each Unit may be exercised. In making such determinations, the Committee shall consider the nature of the services rendered by the employee, the employee’s present and potential future contributions and such other factors as the Committee, in its sole discretion, deems relevant. Notwithstanding the above, the Committee may delegate certain powers relating to the granting of Awards as it deems appropriate to executive officers of the Bank, including the power to determine certain terms and conditions of such Awards.

6.Consideration. In consideration of the granting of an Award under the SAR Plan, the Participant shall agree, in the Unit Agreement, to a noncompetition provision for a period of at least one (1) year (or such shorter period as may be fixed in the Unit Agreement or by action of the Committee following grant of the Award) after the Award is granted and to penalties, including but not limited to nullification of the Award in the event of a breach of the Unit Agreement. The Committee may also require the Participant to amend their employment agreement to participate in the SAR Plan and forego participation in the Prior Plan and, at the discretion of the Committee, may consider a Participant’s willing waiver of options under the Prior Plan.

7.At Will Employment. Nothing in the SAR Plan or in any Unit Agreement hereunder shall confer upon any Participant any right to continue in the employ of the Bank, or shall interfere with or restrict in any way the rights of the Bank, which are hereby expressly reserved, to discharge any Participant at any time for any reason whatsoever, with or without cause, except to the extent expressly provided otherwise in a written employment agreement between the Participant and the Bank.

8.Base Price. The Base Price for each Unit shall be the Fair Market Value at the time of the Award, provided, however, that the Fair Market Value is subject to a high water mark such that a reduction in the Fair Market Value does not lower the Base Price below its highest level to date.

9.Vesting and Exercise. Subject to a one (1) year minimum period from Award to the right to exercise, a Unit granted to a Participant vests, in whole or in part, upon a Liquidity Event. If the Liquidity Event results in only a partial cash distribution to shareholders, then the Unit vests in proportional part and the remainder continues subject to a Liquidity Event. The Committee, in its sole discretion, may determine that an Award may not be exercised in whole or in part for a specified period after it is granted. No portion of an Award granted to a Participant which is not exercisable at termination of employment, as applicable, shall thereafter become exercisable provided, however, that if a there shall be a six month look-back period if a Participant is terminated without cause less than six months before the Liquidity Event.

10.Summary of Calculations. As set forth herein, each Unit represents a share of Common Stock. The Participant’s Award is a number of shares with the value measured as the Fair Market Value at the time the Award is granted (the Base Price – as of the date hereof $10). Upon a Liquidity Event whereby the shareholders have the right to liquidate their Common Stock, the Unit vests (subject to the minimum periods set forth above) and the Bank shall pay the Participant an amount equal to the increase of the Fair Market Value at the Liquidity Event above the Base Price then multiplied by the number of Units.

11.Compliance with Laws. The SAR Plan, the granting and vesting of Awards under the SAR Plan and the payment of money under the SAR Plan or under Awards granted hereunder are subject to compliance with all applicable federal and state laws, rules and regulations and to such approvals by any regulatory or governmental authority as may, in the opinion of counsel for the Bank, be necessary or advisable in connection therewith. To the extent permitted by applicable law, the SAR Plan and Awards granted or awarded hereunder shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.

Unless otherwise determined by the Committee, in each Unit Agreement, the Participant will acknowledge and agree with the Bank as follows: (a) the SAR Plan serves as part of the compensation package for key employees and provides a mechanism to monetize executive performance consistent with adding shareholder value; (b) the Award expires if the Participant is not an employee at the time of the Liquidity Event, subject to a six month look-back in the event the Participant is terminated without cause; (c) the issuance of Units is not a security and does not provide rights as a holder of Common Stock; (d) the SAR Plan is intended to be outside of ERISA and is provided to key employee participants and is not available to all employees; (e) no award under the SAR Plan may be sold, pledged, assigned or transferred in any way; and (f) the Bank shall be entitled to require appropriate taxes be withheld at the time of the payment to the Participant.

The SAR Plan is intended to comply with Section 409A of the Code and shall be construed and interpreted in accordance with such intent. Any provision of the SAR Plan that would cause a grant or any other payment under the Plan to fail to satisfy Section 409A of the Code shall have no force and effect until amended to comply with Code Section 409A (which amendment may be retroactive to the extent permitted by the Guidance). If the Committee at any time determines that the SAR Plan or Awards granted under the SAR Plan are or may be subject to, and fail or may fail to comply with, the requirements of Section 409A of the Code, the Committee may make such modifications to the SAR Plan and to the terms of any Unit Agreements as it deems advisable to comply. Notwithstanding the foregoing, nothing herein shall create any obligation by the Bank to any participant should any grant or other payment fail to satisfy Section 409A of the Code. The SAR Plan is not intended to be deferred compensation under Code Section 409A because there is no right to payment until the Liquidity Event occurs and there is no grant of stock – instead there is a cash bonus measured by an increase in value for shareholders.

The SAR Plan and any agreements hereunder shall be administered, interpreted and enforced under the laws of the State of Florida without regard to conflicts of law issues.

12.           WAIVER OF JURY TRIAL. THE BANK AND EACH PERSON WHO IS A PARTICIPANT EXPRESSLY WAIVES ALL RIGHTS TO ANY TRIAL BY JURY IN ALL LITIGATION RELATING TO OR ARISING OUT OF THE SUBJECT MATTER OF THIS SAR PLAN.

EX-10.6

Exhibit 10.6

PROFESSIONAL HOLDING CORP.

2014 ASSOCIATE STOCK PURCHASE PLAN

1.Purpose. The purpose of the Plan is to provide Associates of the Company and its Designated Subsidiaries with an opportunity to purchase Common Stock of the Company through accumulated payroll deductions. It is the intention of the Company to have the Plan qualify as an "Employee Stock Purchase Plan" under Section 423 of the Internal Revenue Code of 1986, as amended. The provisions of the Plan, accordingly, shall be construed so as to extend and limit participation in a manner consistent with the requirements of that section of the Code.

2.Definitions.

(a)"Associate" shall mean any individual who is an employee of the Company or a Designated Subsidiary for purposes of tax withholding under the Code and who is not an owner of five percent (5%) or more of all outstanding Common Stock on a fully diluted basis (i.e., after taking into account outstanding stock options and other Common Stock equivalents) except that the Chief Executive Officer of the Company shall not be an Associate for purposes of this Plan provided that the Chief Executive Officer is a highly compensated employee as defined in §414(q) of the Code.

(b)"Board" shall mean the Board of Directors of the Company.

(c)"Code" shall mean the Internal Revenue. Code of 1986, as amended.

(d)"Committee" shall mean a committee appointed by the Board which shall be the administrative committee for the Plan (the “Committee”); provided, that to the extent required by Rule 16b-3 of the Securities and Exchange Commission under the Exchange Act, such Committee shall be comprised solely of two or more Non-Employee Directors, as defined in Rule 16b-3(b)(3) under the Exchange Act. All references in this Plan to the “Committee” shall mean the Board if no Committee has been appointed.

(e)"Common Stock" shall mean the Class A Common Stock of the Company, $0.01 par value per share.

(f)"Company" shall mean Professional Holding Corp., a Florida corporation.

(g)"Compensation" shall mean all base gross earnings, salary, wages, annual bonuses and commissions paid to the Associate by the Company or a Designated Subsidiary as compensation for services to the Company or Designated Subsidiary, before deduction for any salary deferral contributions made by the Associate to any tax-qualified or nonqualified deferred compensation plan, including overtime, vacation pay, holiday pay, jury duty pay and funeral leave pay, but excluding education or tuition reimbursements, imputed income arising under any group insurance or benefit program, travel expenses, business and relocation expenses, and income received in connection with stock options or other equity-based awards.

(h)"Designated Subsidiaries" shall mean the Subsidiaries which have been designated by the Board from time to time in its sole discretion as eligible to participate in the Plan.

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(i)"Enrollment Date" shall mean the first day of each Offering Period.

(j)"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.

(k)"Exercise Date" shall mean the last day of each Offering Period.

(l)"Fair Market Value" shall mean (1) the closing price of the Common Stock on the principal national securities exchange on which the Common Stock is traded, if the Common Stock is then traded on a national securities exchange; or (2) the closing price of the Common Stock on the Nasdaq National Market, if the Common Stock is not then traded on a national securities exchange; or (3) the closing bid price last quoted by an established quotation service for over-the-counter securities, if the Common Stock is not reported on the Nasdaq National Market. However, if the Common Stock is not publicly-traded, "Fair Market Value" shall be deemed to be the fair value of the Common Stock as determined by the Committee after taking into consideration all factors which it deems appropriate, including, without limitation, recent sale and offer prices of the Common Stock in private transactions negotiated at arm’s length.

(m)"Offering Period" shall mean, subject to the second sentence of Section 4 hereof, a period of twelve months, commencing on January 1 of each calendar year and terminating on December 31 of that calendar year.

(n)"Parent" shall mean a corporation which is a "parent corporation" of the Company within the meaning of Section 424(e) of the Code.

(o)"Plan" shall mean this Professional Holding Corp. 2014 Associate Stock Purchase Plan.

(p)"Purchase Price" shall mean an amount equal to ninety-five percent (95%) of the Fair Market Value of a share of Common Stock on the Enrollment Date or on the Exercise Date, whichever is lower, as determined in the sole discretion of the Committee. Subject to the limitations imposed under Section 423 of the Code, the Committee may adjust the Purchase Price to such other percentage of Fair Market Value as determined by the Committee.

(q)"Reserves" shall mean the number of shares of Common Stock covered by each option under the Plan which have not yet been exercised and the number of shares of Common Stock which have been authorized for issuance under the Plan but not yet placed under option.

(r)"Subsidiary" shall mean a corporation which is a "subsidiary corporation" of the Company within the meaning of Section 424(f) of the Code.

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3.Eligibility.

(a)Each person who is an Associate on a given Enrollment Date shall be eligible to participate in the Plan for the Offering Period containing such Enrollment Date, subject to the requirements of Section 423 of the Code.

(b)Any provisions of the Plan to the contrary notwithstanding, no Associate shall be granted an option under the Plan (i) if, immediately after the grant, such Associate would own stock (together with stock owned by any other person or entity that would be attributed to such Associate pursuant to Section 424(d) of the Code) of the Company (including, for this purpose, all shares of stock subject to any outstanding options to purchase such stock, whether or not currently exercisable and irrespective of whether such options are subject to the favorable tax treatment of Section 421(a) of the Code) possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company or of any Parent or Subsidiary, or (ii) which permits his or her rights to purchase stock under all employee stock purchase plans (within the meaning of Section 423 of the Code) of the Company and its Parents and Subsidiaries to accrue at a rate which exceeds twenty-five thousand dollars ($25,000) worth of stock (determined at the Fair Market Value of the stock at the time such option is granted) for each calendar year in which such option is outstanding at any time. The limitation described in clause (ii) of the preceding sentence shall be applied in a manner consistent with Section 423(b)(8) of the Code.

4.Offering Periods. The Plan shall be implemented by consecutive Offering Periods continuing from the first Offering Period until terminated in accordance with Section 19 hereof. The Committee shall have the power to change the duration of Offering Periods (including the commencement dates thereof) with respect to future offerings without shareowner approval if such change is announced at least fifteen (15) days prior to the scheduled beginning of the first Offering Period to be affected thereafter.

5.Participation.

(a)An Associate may become a participant in the Plan for an Offering Period by completing a subscription agreement authorizing payroll deductions in the form of Exhibit A to this Plan (or in such other form as the Committee shall approve and which shall contain substantially the same terms as Exhibit A) and filing it with the human resources office of the Company or applicable Designated Subsidiary at least fifteen (15) business days prior to the applicable Enrollment Date, unless a later time for filing the subscription agreement is set by the Committee for all Associates with respect to a given Offering Period.

(b)Payroll deductions for a participant shall commence on the first payroll date following the Enrollment Date and shall end on the last payroll date in the Offering Period to which such authorization is applicable, unless sooner terminated by the participant as provided in Section 10 hereof.

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6.Payroll Deductions.

(a)At the time a participant files his or her subscription agreement, he or she shall elect to have payroll deductions made on each pay day during the Offering Period in an amount (expressed as a whole number percentage or a fixed dollar amount) of the Compensation he or she receives on each pay day during the Offering Period.

(b)All payroll deductions made for a participant shall be credited to his or her account under the Plan. Subject to the limitations set forth in Section 7, the Committee may, in its sole discretion, determine whether or not to permit participants to make any additional payments into such account and, if so, upon such terms as the Committee may determine. However, in all events, all employees shall have the same rights and privileges with respect to their right to make such additional payments.

(c)A participant may discontinue his or her participation in the Plan, as provided in Section 10 hereof, at any time during the Offering Period prior to the Exercise Date. Once an Offering Period has commenced, a participant may not increase or decrease the rate or amount of his or her payroll deductions for that Offering Period, but may, during that Offering Period, increase or decrease the rate or amount of his or her payroll deductions for the next succeeding Offering Period, by completing or filing with the Company or applicable Designated Subsidiary a new subscription agreement, at least fifteen (15) business days prior to the end of that Offering Period, authorizing a change in payroll deduction rate or amount. A participant’s subscription agreement shall remain in effect for successive Offering Periods unless terminated as provided in Section 10 hereof.

(d)Notwithstanding the foregoing, a participant’s payroll deductions may be decreased to 0% at any time, to the extent necessary to comply with Section 423(b)(8) of the Code and Section 3(b) hereof. Subject to the preceding sentence, payroll deductions shall recommence at the rate or amount provided in such participant’s subscription agreement at the beginning of the next succeeding Offering Period, unless terminated by the participant as provided in Section 10 hereof.

(e)At the time the option is exercised, in whole or in part, or at the time some or all of the Common Stock issued under the Plan is disposed of, the participant must make adequate provisions for the federal, state, or other tax withholding obligations of the Company or applicable Designated Subsidiary, if any, which arise upon the exercise of the option or the disposition of the Common Stock. At any time, the Company or applicable Designated Subsidiary may, but will not be obligated to, withhold from the participant’s compensation the amount necessary for the Company or applicable Designated Subsidiary to meet applicable withholding obligations, including any withholding required to make available to the Company or applicable Designated Subsidiary any tax deductions or benefits attributable to sale or early disposition of Common Stock by the Associate.

7.Grant of Option. On the Enrollment Date of each Offering Period, each Associate participating in such Offering Period shall be granted an option to purchase on the Exercise Date of such Offering Period (at the applicable Purchase Price) up to a number of shares of the Company’s Common Stock determined by dividing such Associate’s payroll deductions accumulated prior to such Exercise Date and retained in the participant’s account as of the Exercise Date by the applicable Purchase Price; provided, however, that in no event shall an Associate be permitted to purchase during any calendar year more than $25,000 in Fair Market Value of Common Stock (with Fair Market Value to be determined on each Enrollment Date) within such calendar year and, provided further, that such purchase shall be subject to the limitations set forth in Sections 3(b) and 12 hereof. Exercise of the option shall occur as provided in Section 8 hereof, unless the participant has withdrawn pursuant to Section 10 hereof, and shall expire on the last day of the Offering Period.

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8.Exercise of Option. Unless a participant withdraws from the Plan as provided in Section 10 hereof, his or her option for the purchase of shares will be exercised automatically on the Exercise Date and, subject to the limitations set forth in Sections 3(b) and 12 hereof, the maximum number of full shares subject to option shall be purchased for such participant at the applicable Purchase Price with the accumulated payroll deductions in his or her account. No fractional shares will be purchased; any payroll deductions accumulated in a participant’s account which are not sufficient to purchase a full share shall be retained in the participant’s account for the subsequent Offering Period, subject to earlier withdrawal by the participant as provided in Section 10 hereof. During a participant’s lifetime, a participant’s option to purchase shares hereunder is exercisable only by the participant.

9.Delivery. As promptly as practicable after each Exercise Date on which a purchase of shares occurs, the Company shall arrange the delivery to or for the account of each participant, as appropriate, a certificate representing the shares purchased upon exercise of his or her option; provided, however, that the Committee may instead determine to hold such shares in an account for each such participant until the participant either ceases participation in the Plan or requests delivery of such shares.

10.Withdrawal; Termination of Employment.

(a)A participant may withdraw all but not less than all the payroll deductions credited to his or her account and not yet used to exercise his or her option under the Plan at any time prior to the last business day of an Offering Period (or such earlier date established by the Committee in its discretion) by giving written notice to the Company or applicable Designated Subsidiary in the form of Exhibit B to this Plan. All of the participant’s payroll deductions credited to his or her account will be paid to such participant promptly after receipt of notice of withdrawal and such participant’s option for the Offering Period will be automatically terminated, and no further payroll deductions for the purchase of shares will be made during the Offering Period. If a participant withdraws from the Plan during an Offering Period, he or she may not resume participation until the next Offering Period. He or she may resume participation for any other Offering Period by delivering to the Company or applicable Designated Subsidiary a new subscription agreement at least fifteen (15) days prior to the Enrollment Date for such Offering Period.

(b)Upon a participant’s ceasing to be an Associate for any reason, he or she will be deemed to have elected to withdraw from the Plan and the payroll deductions credited to such participant’s account during the Offering Period but not yet used to exercise the option will be returned to such participant or, in the case of his or her death, to the person or persons entitled thereto under Section 14 hereof, and such participant’s option will be automatically terminated.

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(c)A participant’s withdrawal from an Offering Period will not have any effect upon his or her eligibility to participant in any similar plan which may hereafter be adopted by the Company.

11.Interest. No interest shall accrue or be payable with respect to any of the payroll deductions of a participant in the Plan.

12.Stock.

(a)The maximum number of shares of Common Stock which shall be made available for sale under the Plan shall be Two Million (2,000,000) shares, subject to adjustment upon changes in capitalization of the Company as provided in Section 18 hereof. If on a given Exercise Date the number of shares with respect to which options are to be exercised exceeds the number of shares then available under the Plan, the Company shall make a pro rata allocation of the shares remaining available for purchase in as uniform a manner as shall be practicable and as it shall determine to be equitable.

(b)No participant will have an interest or voting right in shares covered by his or her option until such option has been exercised.

(c)Shares to be issued to a participant under the Plan will be registered in the record or beneficial name of the participant or in the record or beneficial name of the participant and his or her spouse.

13.Administration. The Plan shall be administered by the Committee. The Committee shall have full and exclusive discretionary authority to construe, interpret and apply the terms of the Plan, to determine eligibility and to adjudicate all disputed claims filed under the Plan. Every finding, decision and determination made by the Committee shall, to the full extent permitted by law, be final and binding upon all parties. Members of the Board who are Associates are permitted to participate in the Plan, provided that members of the Board who are eligible to participate in the Plan may not vote on any matter affecting the administration of the Plan or the grant of any option pursuant to the Plan.

14.Payments Upon Death of Participant. In the event of a participant’s death subsequent to an Exercise Date on which the option is exercised but prior to delivery to such participant of such shares (or cash, if applicable), the Company shall deliver such shares or cash to the participant’s estate. In addition, in the event of a participant’s death prior to the exercise of an option, the Company shall remit any cash from the participant’s account under the Plan to his estate.

15.Transferability. Neither payroll deductions credited to a participant’s account nor any rights with regard to the exercise of an option or to receive shares under the Plan may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of descent and distribution or as provided in Section 14 hereof) by the participant. Any such attempt at assignment, transfer, pledge or other disposition shall be without effect, except that the Company may treat such act as an election to withdraw funds from an Offering Period in accordance with Section 10 hereof.

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16.Use of Funds. All payroll deductions received or held by the Company or applicable Designated Subsidiary under the Plan may be used by the Company or such Subsidiary for any corporate purpose, and the Company or applicable Designated Subsidiary shall not be obligated to segregate such payroll deductions.

17.Reports. Individual accounts will be maintained for each participant in the Plan. Statements of account will be given to participating Associates at least annually, within such time as the Committee may reasonably determine, which statements will set forth the amounts of payroll deductions, the Purchase Price, the number of shares purchased and the remaining cash balance, if any.

18.Adjustments Upon Changes in Capitalization.

(a)Changes in Capitalization. Unless the Committee specifically determines otherwise, the Reserves as well as the price per share of Common Stock covered by each option under the Plan which has not yet been exercised shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of shares of Common Stock effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been "effected without receipt of consideration." Such adjustment shall be made by the Committee, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to an option. Any adjustment accomplished as a result of a change in capitalization shall be subject to any required action by the shareowners of the Company.

(b)Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Offering Period will terminate immediately prior to the consummation of such proposed action, unless otherwise provided by the Committee.

(c)Merger or Asset Sale. In the event of a proposed sale of all or substantially all of the assets of the Company, or the merger of the Company with or into another corporation, each option under the Plan shall be assumed or an equivalent option shall be substituted by such successor corporation or a parent or subsidiary of such successor corporation, unless the Committee determines, in the exercise of its sole discretion and in lieu of such assumption or substitution, to shorten the Offering Period then in progress by setting a new Exercise Date (the "New Exercise Date"). If the Committee shortens the Offering Period then in progress in lieu of assumption or substitution in the event of a merger or sale of assets, the Committee shall notify each participant in writing, at least ten (10) business days prior to the New Exercise Date, that the Exercise Date for his or her option has been changed to the New Exercise Date and that his or her option will be exercised automatically on the New Exercise Date, unless prior to such date he or she has withdrawn from the Offering Period as provided in Section 10 hereof. For purposes of this paragraph, an option granted under the Plan shall be deemed to be assumed if, following the sale of assets or merger, the option confers the right to purchase, for each share of option stock subject to the option immediately prior to the sale of assets or merger, the consideration (whether stock, cash or other securities or property) received in the sale of assets or merger by holders of Common Stock for each share of Common Stock held on the effective date of the transaction (and if such holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares of Common Stock); provided, however, that if such consideration received in the sale of assets or merger was not solely common stock of the successor corporation or its parent (as defined in Section 424(e) of the Code), the Committee may, with the consent of the successor corporation and the participant, provide for the consideration to be received upon exercise of the option to be solely common stock of the successor corporation or its parent equal in fair market value to the per share consideration received by holders of Common Stock in the sale of assets or merger.

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The Committee may, if it so determines in the exercise of its sole discretion, also make provision for adjusting the Reserves, as well as the price per share of Common Stock covered by each outstanding option, in the event the Company effects one or more reorganizations, recapitalizations, rights offerings or other increases or reductions of shares of its outstanding Common Stock, and in the event of the Company being consolidated with or merged into any other corporation.

19.Amendment or Termination.

(a)The Committee may, without further action by the shareowners and without receiving further consideration from the Associates, amend this Plan or condition or modify awards under this Plan in response to changes in securities or other laws or rules, regulations or regulatory interpretations thereof applicable to this Plan or to comply with applicable self-regulatory organization rules or requirements.

(b)The Committee may at any time and from time to time terminate or modify or amend the Plan in any respect, except that, without shareowner approval, the Committee may not materially amend the Plan, including, but not limited to, the following:

(i)increasing the number of shares of Common Stock to be issued under the Plan (other than pursuant to Section 18); and

(ii)       changing the corporations whose employees may be offered purchase rights under the plan.

In addition to the foregoing, the Committee shall seek shareowner approval for amendments that require shareowner approval under Section 423 of the Code (or any successor provision or any other applicable law or regulation).

(c)Except as provided in Sections 18 and 19(a) hereof, no termination may, without the consent of an affected Associate, adversely affect options previously granted; provided, that an Offering Period may be terminated by the Committee on any Exercise Date if the Committee determines that the termination of the Plan is in the best interests of the Company and its shareowners. Except as provided in Sections 18 and 19(a) hereof, no amendment may adversely affect the rights of any options previously granted. The Committee shall determine in its sole discretion for purposes of this Section 19 whether or not a participant’s rights have been "adversely affected."

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20.Notices. All notices or other communications by a participant to the Company under or in connection with the Plan shall be deemed to have been duly given when received in the form specified by the Company at the location, or by the person, designated by the Company for the receipt thereof.

21.Conditions Upon Issuance of Shares. Shares shall not be issued with respect to an option unless the exercise of such option and the issuance and delivery of such shares pursuant thereto shall comply with all applicable provisions of law, domestic or foreign, including, without limitation, the Securities Act of 1933, as amended, the Exchange Act, the rules and regulations promulgated thereunder and the requirements of any stock exchange upon which the shares may then be listed.

22.Term of Plan. The Plan shall be effective as of October 21, 2014 upon its adoption by the Board. It shall continue in effect for a term of ten (10) years thereafter unless sooner terminated under Section 19 hereof.

23.Additional Restrictions of Section 16 of the Exchange Act. The terms and conditions of options granted hereunder to, and the purchase of shares by, persons subject to Section 16 of the Exchange Act shall comply with the applicable provisions of the rules and regulations promulgated under such Section 16. This Plan shall be deemed to contain, and such options shall contain, and the shares issued upon exercise thereof shall be subject to, such additional conditions and restrictions as may be required by such rules and regulations to qualify for the maximum exemption from Section 16 of the Exchange Act with respect to Plan transactions.

*                    *                    *

As adopted by the Board of Directors of

Professional Holding Corp.

Effective as of October 21, 2014

By:   /s/ Daniel R. Sheehan

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EXHIBIT A

PROFESSIONAL HOLDING CORP.

2014 ASSOCIATE STOCK PURCHASE PLAN

SUBSCRIPTION AGREEMENT

___	Original Application	Enrollment Date:_________________
___	Change in Payroll Deduction Rate
___	Change of Beneficiary(ies)

1._____________________________________ hereby elects to participate in the Professional Holding Corp. 2014 Associate Stock Purchase Plan (the "Associate Stock Purchase Plan") and subscribes to purchase shares of the Company’s Common Stock in accordance with this Subscription Agreement and the Associate Stock Purchase Plan.

2.I hereby authorize payroll deductions from each paycheck in the amount of (please complete one or the other) (i) _______% (a whole number) of my Compensation, or (ii) $_______, on each payday during the Offering Period in accordance with the Associate Stock Purchase Plan. (Please note that no fractional percentages are permitted.)

3.I understand that said payroll deductions will be accumulated for the purchase of shares of Common Stock at applicable Purchase Price determined in accordance with the Associate Stock Purchase Plan. I understand that if I do not withdraw from an Offering Period, any accumulated payroll deductions will be used to automatically exercise my option on the Exercise Date.

4.I have received a copy of the complete "Professional Holding Corp. 2014 Associate Stock Purchase Plan." I understand that my participation in the Associate Stock Purchase Plan is in all respects subject to the terms of the Associate Stock Purchase Plan.

5.Shares purchased for me under the Associate Stock Purchase Plan should be issued in the name(s) of (Associate or Associate and Spouse Only):______________________

____________________________________________________________________________.

6.I understand that, under current federal income tax law, if I dispose of any shares received by me pursuant to the Plan before the later of the expiration of (i) two (2) years after the first day of the Offering Period during which I purchased such shares, or (ii) one (1) year after the date I purchased any Common Stock under the Associate Stock Purchase Plan, I will be treated for federal income tax purposes as having made a "disqualifying disposition" under Section 421(b) of the Code and as having received ordinary income at the time of such disposition in an amount equal to the excess of fair market value of the shares at the time such shares were delivered to me over the price which I paid for the shares. The remainder of the gain, if any, recognized on such disqualifying disposition will be taxed as capital gain. I hereby agree to notify the Company in writing within thirty (30) days after the date of any disqualifying disposition of my shares and I will make adequate provision for federal, state or other tax withholding obligations, if any, which arise upon such disqualifying disposition. The Company or applicable Designated Subsidiary may, but will not be obligated to, withhold from my compensation the amount necessary to meet any applicable withholding obligation including any withholding necessary to make available to the Company or such Subsidiary any tax deductions or benefits attributable to sale or disqualifying disposition of Common Stock by me. If I dispose of such shares at any time after the expiration of the two-year holding period, I understand that I will be treated for federal income tax purposes as having received income only at the time of such disposition, and that such income will be taxed as ordinary income only to the extent of an amount equal to the lesser of (a) the excess of the fair market value of the shares at the time of such disposition over the purchase price which I paid for the shares, or (b) the excess of the fair market value of the shares over the Purchase Price on the first day of the Offering Period in which the shares were purchased. The remainder of the gain, if any, recognized on such disposition will be taxed as capital gain.

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7.I hereby agree to be bound by the terms of the Associate Stock Purchase Plan. The effectiveness of this Subscription Agreement is dependent upon my eligibility to participate in the Associate Stock Purchase Plan.

Associate’s Social Security Number:

Associate’s Address:

I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.

Dated:_______________________________
	Signature of Associate

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EXHIBIT B

PROFESSIONAL HOLDING CORP.

2014 ASSOCIATE STOCK PURCHASE PLAN

NOTICE OF WITHDRAWAL

The undersigned participant in the Offering Period of the Professional Holding Corp. 2014 Associate Stock Purchase Plan (the "Plan") which began on ______________, 2014 (the "Enrollment Date") hereby notifies the Company that he or she hereby withdraws from the Offering Period. The undersigned hereby directs the Company or applicable Designated Subsidiary to pay to the undersigned as promptly as practicable all the payroll deductions credited to his or her account with respect to such Offering Period. The undersigned understands and agrees that his or her option for such Offering Period will be automatically terminated. The undersigned understands further that no further payroll deductions will be made for the purchase of shares in the current Offering Period and the undersigned shall thereafter be eligible to participate in succeeding Offering Periods only by delivering to the Company or applicable Designated Subsidiary a new Subscription Agreement within the time period set forth in Section 5 of the Plan.

Name and Address of Participant

Signature

Date:_______________________________________________________

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EX-10.7

Exhibit 10.7

PROFESSIONAL HOLDING CORP.

2014 SHARE APPRECIATION RIGHTS PLAN

Professional Holding Corp., a registered bank holding company organized under the laws of the State of Florida (“Corporation”), hereby adopts this 2014 Share Appreciation Rights Plan (“Plan”) through its Board of Directors for benefit of its employees and for the benefit of the employees of Professional Bank (“Bank”), its wholly owned subsidiary, effective as of October 21, 2014, (“Effective Date”) (Corporation and Bank are collectively referred to as “Company”).

1.Purpose. The purpose of the Plan is to further the growth, development and financial success of the Company by providing appropriate incentives to certain key employees who have been or will be given responsibility for the management or administration of the business affairs; to provide for distinct plans for operating management in order to maximize incentives offered while minimizing expenses; and to enable the Company to obtain and retain the services of the type of professional, technical and managerial employees considered essential to both the Company’s long-range success. This Plan shall be separate and distinct from the Professional Bank 2012 Share Appreciation Rights Plan.

2.Definitions.

(a)               “Base Price” shall mean the Fair Market Value of a Unit at the time of the Grant.

(b)“Board” shall mean the Board of Directors of the Corporation.

(c)“Change in Control” shall mean any one of the following events with respect to the Company (and as pertains to either the Corporation or the Bank):

(i)“Change in the Ownership of the Company” that occurs on the date that any one person, or more than one person acting as a group acquires ownership of Common Stock of the Company that, together with Common Stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the Common Stock of the Company. However, if any one person, or more than one person acting as a group, is considered to own more than 50 percent of the total fair market value or total voting power of the Common Stock of the Company (or such higher percentage specified in accordance with the preceding sentence), the acquisition of additional Common Stock by the same person or persons is not considered to cause a change in the ownership of the Company (or to cause a change in the effective control of the Company. An increase in the percentage of Common Stock owned by any one person, or persons acting as a group, as a result of a transaction in which the Company acquires its Common Stock in exchange for property will be treated as an acquisition of Common Stock for purposes of this section. This section applies only when there is a transfer of Common Stock of the Company (or issuance of Common Stock of a Company) and Common Stock in the Company remains outstanding after the transaction; or

(ii)“Change in the Effective Control of the Company” that occurs only on either of the following dates:

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(1)The date any one person, or more than one person acting as a group acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of Common Stock of the corporation possessing 30 percent or more of the total voting power of the Common Stock of such corporation, or

(2)The date a majority of members of the Company’s Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Company’s Board before the date of the appointment or election; or

(iii)               “Change in the Ownership of a Substantial Portion of a Company’s Assets” occurs on the date that any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than 40 percent of the total gross fair market value of all of the assets of the Company immediately before such acquisition or acquisitions.

(d)“Chairman” shall mean the Chairman of the Board of the Corporation, as elected from time to time.

(e)“Code” shall mean the Internal Revenue Code of 1986, as amended.

(f)“Committee” shall mean the Compensation Committee of the Corporation, which shall be the administrative committee for the Plan (the “Committee”); provided, that to the extent required by Rule 16b-3 of the Securities and Exchange Commission under the Exchange Act, such Committee shall be comprised solely of two or more Non-Employee Directors, as defined in Rule 16b-3(b)(3) under the Exchange Act. All references in this Plan to the “Committee” shall mean the Board if no Committee has been appointed.

(g)“Common Stock” shall mean the Class A Common Stock of the Corporation, $0.01 par value per share.

(h)“Company” shall mean the Corporation and/or the Bank as the case may be in the context used as to all provisions of this Plan.

(i)“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

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(j)“Fair Market Value” shall mean (1) the closing price of the Common Stock on the principal national securities exchange on which the Common Stock is traded, if the Common Stock is then traded on a national securities exchange; or (2) the closing price of the Common Stock on the Nasdaq National Market, if the Common Stock is not then traded on a national securities exchange; or (3) the closing bid price last quoted by an established quotation service for over-the-counter securities, if the Common Stock is not reported on the Nasdaq National Market. However, if the Common Stock is not publicly-traded, “Fair Market Value” shall be deemed to be the fair value of the Common Stock as determined by the Committee after taking into consideration all factors which it deems appropriate, including, without limitation, recent sale and offer prices of the Common Stock in private transactions negotiated at arm’s length consistent with the provisions of Regulation 1.409A-1(b)(5)(iv)(B). The Fair Market Value of the Common Stock shall be determined consistently once every 365 days during which period the Fair Market Value so determined shall be used for all purposes of this Plan; provided, however, the Committee may select an interim valuation date on a nondiscriminatory basis it its discretion if and when it deems necessary. Notwithstanding the foregoing, the Committee’s determination of the Fair Market Value of Common Stock under this Plan shall not take into consideration any amounts paid by the Company to Shareholders in redemption of Common Stock. In addition, the Committee may use any other alternate valuation methods for separate actions for which a valuation is relevant provided that a single valuation method is used for each separate action and, once used, may not retroactively be altered once the valuation has been established, as contemplated in Regulation 1.409A-1(b)(5)(iv)(B)(3).

(k)                 “Grant Date” shall mean, with respect to any individual Participant, the date such Participant has executed a separate Unit Agreement pursuant to the terms of this Plan.

(1)                 “Liquidity Event” shall mean an event that triggers an exit opportunity for holders of the Common Stock of the Corporation or the holders of the common stock of the Bank (depending on the nature of the sales transaction) to liquidate their stock holdings through a transaction with the Corporation or with the Bank that (A) results in the receipt of cash or securities by either (i) the Corporation for Bank’s common stock or (ii) by the Corporation’s Shareholders for their Common Stock and provided (B) the receipt of cash or securities in (A) occurs in the same transaction in which a Change in Control shall occur.

(m)“Noncompetition Requirement” shall mean the agreement by the Participant with the Company, contained within each Unit Agreement, that during the Term and for a period of three hundred sixty-five days (365) following the Participant’s separation from service with the Bank for any reason whatsoever (except where the employment of the Participant is terminated pursuant to Section 8.(c) of the Plan), Participant will not enter the employ of, or have any interest in, directly or indirectly (either as executive, partner, director, officer, consultant, principal, agent or employee), any other bank or financial institution or any entity which either accepts deposits or makes loans (whether presently existing or subsequently established) and which has an office located within a radius of 50 miles of any office of the Bank; provided, however, that the foregoing shall not preclude any ownership by the Participant of an amount not to exceed 5% of the equity securities of any entity which is subject to the periodic reporting requirements of the 1934 Act and the shares of Bank common stock owned by the Participant at the time of termination of employment.

(n)“Option 1” shall mean the Participant has made an irrevocable election, as of the Grant Date, to receive payment of a Unit Appreciation Payment under this Plan after the Unit has vested in accordance with Section 7(a) of this Plan.

(o)“Option 2” shall mean the Participant has made an irrevocable election, as of the Grant Date, to receive payment of a Unit Appreciation Payment under this Plan after the Unit has vested in accordance with Section 7(b) of this Plan.

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(p)“Participant” shall mean select group of management or highly compensated employees who are in the regular employment of the Company and who are expected to be primarily responsible for the management, growth, or supervision of some part or all of the business of the Company. The power to determine who is and who is not a Participant shall be reserved solely for the Committee but participation shall exclude employees who would not qualify as one of the foregoing group of employees.

(q)“Participant Election” shall mean the irrevocable election the Participant makes in the Unit Agreement to receive payment of a Unit Appreciation Payment under this Plan under Option 1 or Option 2.

(r)“Plan” shall mean this Professional Bank 2014 Share Appreciation Rights Plan.

(s)“Prior Plan” shall mean the Professional Bank 2012 Share Appreciation Rights Plan.

(t)“Regulation” shall mean a Treasury Regulation unless otherwise clear from the context used.

(u)“Separation from service” shall have the same meaning as in Regulation 1.409A-1(h).

(v)“Shareholders” shall mean the holders of the Common Stock.

(w)“Term” shall include the period beginning upon the effective date of this Plan, October 21, 2014, and continuing until such time as Participant has separated from service with the Company in Section 8.

(x)“Unit” shall mean a vested or nonvested future right to share in the increase the Fair Market Value of a share of Common Stock as may be granted under this Plan which may entitle a Participant to receive a Unit Appreciation Payment as more specifically provided in Section 8.

(y)“Unit Agreement” shall mean an agreement between Company and a Participant setting out the terms and conditions of a grant of Units, substantially in the form attached hereto as Exhibit A.

(z)“Unit Appreciation Payment” shall mean the payment equal to the difference between the Base Price of a Unit and the Fair Market Value of the Unit (but not below zero) as of the date set forth in Section 8 hereof.

3.       Effective Date and Termination Date. The Plan was approved by the Board on October 21, 2014. The Plan shall be effective as of October 21, 2014 upon its adoption by the Board. It shall continue in effect for a term of ten (10) years thereafter unless sooner terminated under Section 13 hereof (“Termination Date”). With respect to any Units outstanding after the Termination Date, vested or unvested, the terms of this Plan shall continue to apply to: (i) unvested Units under Option 1 until such time as the Units are vested and a Unit Appreciation Payment has been made pursuant to Section 8.(a); and (ii) all Units under Option 2, until such Units are vested under Section 7.(b), the occurrence of an event described in Section 8.(b) and a Unit Appreciation Payment is made.

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4.       Grants of Units. Units may be granted to any Participant designated by the Committee, who in the discretion of the Committee, has already made or is in a position to make a significant contribution to the success of the Company. Subject to the provisions of this Plan, the Committee shall determine at what time(s) Units are to be granted, which Participants are to be granted Units, the number of Units, the duration of each Unit, the Base Price for each Unit (as herein defined), and the time or times within which all or portions of each Unit shall vest. In making such determinations, the Committee shall consider the nature of the services rendered by the employee, the employee’s present and potential future contributions and such other factors as the Committee, in its sole discretion, deems relevant. Notwithstanding the above, the Committee may delegate certain powers relating to the granting of Awards as it deems appropriate to executive officers of the Company, including the power to determine certain terms and conditions of such grants. The Participant shall make the Participant Election in the Unit Agreement to receive payment of a Unit Appreciation Payment under this Plan pursuant to either Option 1 or Option 2. A Participant Election that is made for Unit(s) in a Unit Agreement cannot subsequently be changed or modified by Participant or Company. However, different Participant Elections may be made for the Unit(s) granted in each separate Unit Agreement.

5.       Available Units. The maximum number of Units which shall be made available for issuance under the Plan shall be Five Hundred Thousand (500,000) Units. If any Unit granted under the Plan is terminated, forfeited, or ceases to be exercisable for any other reason prior to the end of the period during which Units may be granted under the Plan, such unpaid Units shall become available for new grants under the Plan to any eligible employee, including the original holder of such Units.

6.       Consideration of Grant.

(a)Services are Consideration of Grants. Grants of Units under the Plan are made in consideration of the services to be rendered by the Participant to the Company and is subject to the terms and conditions of the Plan and the Unit Agreement.

(b)Noncompetition Requirement. As a condition precedent to the grant of any Unit, the Participant shall agree by execution of the Unit Agreement that any entitlements to a Unit Appreciation Payment accrued or received under this Plan shall be subject to Participant’s compliance with the Noncompetition Requirement. The Committee may also require the Participant to agree to the amendment of the Participant’s employment agreement, if any, to participate in the Plan and forego participation in the Prior Plan. The Committee may take into consideration a Participant’s willing waiver of future participation under the Prior Plan.

7.       Vesting of Units.

(a)               Vesting of Units under Option 1. A nonvested Unit granted to a Participant who has elected to receive a Unit Appreciation Payment under Option 1 of this Plan shall vest at the earlier of the following events: (i) completion of 1,825 full calendar days of continuous service with the Bank from Grant Date; (ii) an involuntary separation from service without cause (as defined in Section 8.(a)(ii)) that occurs within the one hundred and eighty (180) day period preceding a Liquidity Event; (iii) upon Disability or death of the Participant described in Section 8.(d) and (e), respectively; or (iv) upon the occurrence of a Liquidity Event.

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(b)Vesting of Units under Option 2. A nonvested Unit granted to a Participant who has elected to receive a Unit Appreciation Payment under Option 2 of this Plan shall vest at the earlier of the following events: (i) completion of 1,825 full calendar days of continuous service with the Bank from the Grant Date; (ii) an involuntary separation from service without cause that occurs within the one hundred and eighty (180) day period preceding a Liquidity Event; (iii) upon Disability or death of the Participant; or (iv) upon the occurrence of a Liquidity Event.

(c)Partial Vesting upon a Partial Liquidity Event. If the Liquidity Event results in only a partial cash distribution to the Company or to the Shareholders so that less than 100% of the Common Stock or Company assets are sold, the nonvested Units shall partially vest based on a fraction, the numerator of which shall be the cash exchanged in the Liquidity event and the denominator shall be 100% of the Fair Market Value of the then outstanding Common Stock: the remainder of the nonvested Units shall continue to be subject to vesting as provided above in Sections 7.(a) or 7.(b) or shall be forfeited as the case may be.

(d)Forfeiture of Nonvested Units Upon Separation From Service. Except as may otherwise be provided in this Section 7., all nonvested Units granted to a Participant shall be forfeited and become null and void upon separation from service for any reason.

(e)Forfeiture of Vested Units and/or Repayment of Unit Appreciation Payments.

(i)Forfeiture. Notwithstanding the foregoing, a Participant’s vested Units shall become forfeited and null and void if the Participant’s involuntary separation from service for cause (as defined in Section 8(c)).

(ii)Repayment of Unit Appreciation Payments. If after separation from service for any reason (except an involuntary separation from service without cause), the Participant shall fail to comply with the Noncompetition Requirement in the Unit Agreement, (i) all vested Units shall be forfeited and (ii) any payments attributable to Units received by the Participant within the Noncompetition Requirement shall be repaid to the Company within ninety (90) days of such failure to comply or as the Participant and Committee may otherwise agree in writing.

8.       Unit Appreciation Payment

(a)       Payment Pursuant to Option 1.

(i)                 Payment of Vested Units. A Unit Appreciation Payment for vested Units under Option 1 shall be made in a lump sum on the 90th day following the date such Units become vested under Section 7.(a), and pursuant to such additional applicable payment terms under this Section 8. The amount of the Unit Appreciation Payment shall be the difference between the Base Price of the vested Unit and the Fair Market Value as of the date of vesting.

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(ii)                 Payment of Certain Nonvested Units. If the Bank had initiated the Participant’s involuntary separation from service for any reason other than for Cause, Death or Disability (“involuntary separation from service without cause”) and the Participant had not completed 1,825 full calendar days of continuous service with the Bank from the Grant Date as of the date of the involuntary separation from service without cause, the Participant shall nevertheless receive a Unit Appreciation Payment if and only if a Liquidity Event occurs within 180 days after the date of the Participant’s involuntary separation from service without cause. The amount of the Unit Appreciation Payment shall be the difference between the Base Price of each vested Unit and the Fair Market Value of such Unit determined as of the date of the Liquidity Event (but not below zero). If no Liquidity Event shall occur within the 180 day period after the involuntary separation from service without cause, the nonvested Unit shall be forfeited and null and void as of the date of separation from service.

(b)       Payment Pursuant to Option 2.

(i)                 Payment of Vested Units.

(1)While Employed by the Company. A Unit Appreciation Payment for vested Units under Option 2 shall be made only upon the occurrence of a Liquidity Event and pursuant to the same terms and conditions of the Liquidity Event as applicable to holders of the Common Stock. The amount of the Unit Appreciation Payment shall be the difference between the Base Price of each vested Unit and the Fair Market Value of such Unit as determined in the Liquidity Event.

(2)Termination after Involuntary Separation from Service Without Cause. A Unit Appreciation Payment for vested Units under Option 2, after a Participant’s involuntary separation from service without cause, shall be made only upon the occurrence of a Liquidity Event and pursuant to the same terms and conditions of the Liquidity Event as applicable to holders of the Common Stock. The amount of the Unit Appreciation Payment shall be the difference between the Base Price of each vested Unit and the Fair Market Value of such Unit as determined on the date of the Participant’s involuntary separation from service without cause.

(ii)                 Payment of Certain Nonvested Units. If the Bank had initiated the Participant’s involuntary separation from service without cause and the Participant had not completed 1,825 full calendar days of continuous service with the Bank from the Grant Date as of the date of the involuntary separation from service without cause, the Participant shall nevertheless receive a Unit Appreciation Payment if and only if a Liquidity Event occurs within 180 days after the date of the Participant’s involuntary separation from service without cause. The amount of the Unit Appreciation Payment shall be the difference between the Base Price of each vested Unit and the Fair Market Value of such Unit determined as of the date of the Liquidity Event (but not below zero). If no Liquidity Event shall occur within the 180 day period after the involuntary separation from service without cause, the nonvested Unit shall be forfeited and null and void as of the date of separation from service.

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(c)       Separation from Service for Cause. If the Bank shall initiate the Participant’s separation from service for cause (“involuntary separation from service for cause”), all of the Units then granted to the Participant (whether vested or unvested) shall immediately be forfeited and become null and void, and no Unit Appreciation Payment shall be made as to such forfeited Units under any circumstances. If the involuntary separation from service for cause is not defined in any separate employment agreement between the Participant and the Company, then for purposes of this Plan, “involuntary separation from service for cause” shall mean the Participant’s:

(i)dishonesty, fraud, malfeasance, gross negligence or misconduct which, in the reasonable judgment of the Company, has resulted, or is likely to result, in material injury to Company, its affiliates or the business reputation of Company or its affiliates;

(ii)willful failure to comply with the direction (consistent with Participant’s duties) of the Company or the Bank or to follow the policies, procedures, and rules of Company or Bank;

(iii)negligent failure to comply with the direction (consistent with Participant’s duties) of the Company or the Bank or to follow the policies, procedures, and rules of Company or Bank which is not substantially cured as is objectively reasonable within thirty (30) days of receipt of written notice from Company or Bank specifying the failure;

(iv)conviction of, or Participant’s entry of a plea of guilty or no contest to, a felony or crime involving moral turpitude; or

(v)failure to meet goals and performance objectives as specified by the Company and/or the Chairman on an annual basis.

(d)       Separation from Service due to Disability. A Participant’s separation from service due to the Participant’s Disability occurs when the Participant has been diagnosed with a medically determinable physical or mental impairment that conforms to one of the definitions in Regulation 1.409A-3(i)(4)(i). All nonvested Units shall thereupon vest as of the date of Disability. All vested Units under Option 1 and Option 2 shall receive Unit Appreciation Payments in an amount that shall be the difference between the Base Price of each vested Unit and the Fair Market Value of such Unit determined as of the date of separation from service due to Disability (but not below zero). Unless the Participant or the Participant’s guardian shall tender cash to the Company in full payment of applicable all Participant and Company payroll and withholding taxes attributable to all Unit Appreciation Payments, the amount of such Unit Appreciation Payment shall be reduced (but not below zero) by the amount of Participant and Company payroll and withholding taxes. Payment of the Unit Appreciation Payment shall be made on the 90^th day following the date of separation from service due to Disability. No further payments shall thereafter be made to such Units.

(e)       Separation from Service due to Death. A Participant’s separation from service due to the Participant’s Death shall cause all nonvested Units to vest as of the date of Death. All vested Units under Option 1 and Option 2 shall receive Unit Appreciation Payments in an amount that shall be the difference between the Base Price of each vested Unit and the Fair Market Value of such Unit determined as of the date of separation from service due to Death (but not below zero). Unless the Participant’s estate or trust shall tender cash to the Company in full payment of applicable all Participant and Company payroll and withholding taxes attributable to all Unit Appreciation Payments, the amount of such Unit Appreciation Payment shall be reduced (but not below zero) by the amount of Participant and Company payroll and withholding taxes. Payment of the Unit Appreciation Payment shall be made on the 90^th day following the date of separation from service due to Death. No further payments shall thereafter be made to such Units.

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(f)Voluntary Separation from Service. If a Participant voluntarily separates from service before the Units are vested under Option 1 or Option 2, the Participant’s nonvested Units shall immediately be forfeited and become null and void, and no Unit Appreciation Payment shall be made as to those nonvested Units under any circumstances.

(g)Form of payment. The Committee shall have the discretion to pay the amount of the Unit Appreciation Payment either in (i) cash, (ii) Common Stock with cash for fractional shares and for the payment of withholding and payroll taxes, or (iii) in kind consideration as provided in the Liquidity Event with cash for fractional shares and for the payment of withholding and payroll taxes.

(h)No interest. No interest shall be paid on any unpaid vested Unit Appreciation Payment under any circumstances.

(i)Withholding and Payroll Taxes. Unless the Participant shall tender cash to the Company in full payment of all applicable Participant and Company payroll and withholding taxes attributable to a Unit Appreciation Payment, the amount of such Unit Appreciation Payment shall be reduced (but not below zero) by the total amount of Participant’s and Company’s payroll and withholding tax obligations.

9.At Will Employment. Nothing in the Plan or in any Unit Agreement hereunder shall confer upon any Participant any right to continue in the employ of the Bank, or shall interfere with or restrict in any way the rights of the Bank, which are hereby expressly reserved, to discharge any Participant at any time for any reason whatsoever, as an involuntary separation from service without cause or for cause as those terms are defined in Section 8 hereof except to the extent expressly provided otherwise in a written employment agreement between the Participant and the Company.

10.Administration. The Plan shall be administered by the Committee. The Committee shall have full and exclusive discretionary authority to construe, interpret and apply the terms of the Plan, to determine eligibility and to adjudicate all disputed claims filed under the Plan. Every finding, decision and determination made by the Committee shall, to the full extent permitted by law, be final and binding upon all parties. Members of the Board who are Participants are permitted to participate in the Plan, provided that members of the Board who are eligible to participate in the Plan may not vote on any matter affecting the administration of the Plan or the grant of any Unit pursuant to the Plan.

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11.              Transferability. Any rights granted to a Participant under the terms of this Plan may not be assigned, transferred, pledged or otherwise disposed of in any way by the Participant. Any such attempt at assignment, transfer, pledge or other disposition shall be without effect and null and void.

12.              Adjustments Upon Changes in Capitalization. Unless the Committee specifically determines otherwise, the price per share of Common Stock covered by each Unit under the Plan which has not yet been exercised shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of shares of Common Stock effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.” Such adjustment shall be made by the Committee, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to the Plan. Any adjustment accomplished as a result of a change in capitalization shall be subject to any required action by the shareowners of the Company.

13.              Amendment or Termination.

(a)The Committee may, without further action by the Board and without receiving further consideration from the Participants, amend this Plan or condition or modify awards under this Plan in response to changes in securities or other laws or rules, regulations or regulatory interpretations thereof applicable to this Plan or to comply with applicable self-regulatory organization rules or requirements.

(b)The Committee may at any time and from time to time terminate or modify or amend the Plan in any respect, except that, without Board approval, the Committee may not materially amend the Plan, including, but not limited to, increasing the number of shares of Common Stock to be issued under the Plan (other than adjustments pursuant to Section 12).

14.              Notices. All notices or other communications by a Participant to the Company under or in connection with the Plan shall be deemed to have been duly given when received in the form specified by the Company at the location, or by the person, designated by the Company for the receipt thereof.

15.              Conditions Upon Issuance of Shares. Common Stock that may be issued with respect to a Unit Appreciation Payment shall comply with all applicable provisions of law, domestic or foreign, including, without limitation, the Securities Act of 1933, as amended, the Exchange Act, the rules and regulations promulgated thereunder and the requirements of any stock exchange upon which the shares may then be listed.

16.              Compliance with Laws.

(a)       Securities Laws. The Plan, the granting and vesting of Units under the Plan and the payment of Unit Appreciation Payment are subject to compliance with all applicable federal and state laws, rules and regulations and to such approvals by any regulatory or governmental authority as may, in the opinion of counsel for the Company, be necessary or advisable in connection therewith. To the extent permitted by applicable law, the Plan and Units granted or awarded hereunder shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.

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(b)Non-ERISA Plan. Unless otherwise determined by the Committee, in each Unit Agreement, the Participant shall acknowledge and agree with the Company as follows: (a) the Plan serves as part of the compensation package for key employees and provides a mechanism to monetize executive performance consistent with adding Shareholder value; (b) the award of Units is not a security and does not provide rights as a holder of Common Stock; (c) the Plan is intended not to be an ERISA plan and is limited to key employee participants and not available to all employees; (e) no Units granted under the Plan may be sold, pledged, assigned or transferred in any way; and (f) the Company shall be entitled to require that appropriate payroll and withholding taxes be withheld at the time of the payment of the Unit Appreciation Payment to the Participant.

(c)Code §409A Compliant Construction. The Plan is intended to comply with Section 409A of the Code and shall be construed and interpreted in accordance with such intent. Any provision of the Plan that would cause a grant or any other payment under the Plan to fail to satisfy Section 409A of the Code shall have no force and effect until amended to comply with Code Section 409A (which amendment may be retroactive to the extent permitted by the Guidance). If the Committee at any time determines that the Plan or Units granted under the Plan are or may be subject to, and fail or may fail to comply with, the requirements of Section 409A of the Code, the Committee may make such modifications to the Plan and to the terms of any Unit Agreements as it deems advisable to comply. Notwithstanding the foregoing, nothing herein shall create any obligation by the Company to any participant should the grant of a Unit or if a Unit Appreciation Payment shall fail to satisfy Section 409A of the Code.

17.Interpretation. Any dispute regarding the interpretation of this Plan shall be submitted by the Participant or the Company to the Committee for review, and shall be reviewed in favor of this Plan. The resolution of such dispute by the Committee shall be final and binding on the Participant and the Company.

18.Confidentiality of the Plan. The terms of this Plan are proprietary in nature and the Participant shall not make any public statement, announcement, press release, or otherwise disclose the terms of the Plan, or make public any documents Participant receives describing the Plan (including but not limited to, the Unit Agreement, the Plan, summary plan document, etc.), to any third parties not affiliated with the Company, without the prior written consent of the Company. Notwithstanding the foregoing, nothing herein shall prohibit Participant from sharing the terms of the Plan with Participant’s own legal counsel and/or accountants.

19.Additional Restrictions of Section 16 of the Exchange Act. The terms and conditions of rights granted hereunder to persons subject to Section 16 of the Exchange Act shall comply with the applicable provisions of the rules and regulations promulgated under such Section 16. This Plan, the Units, the Unit Appreciation Payment any and the shares that may be issued hereunder shall be subject to, such additional conditions and restrictions as may be required by such rules and regulations to qualify for the maximum exemption from Section 16 of the Exchange Act with respect to Plan transactions.

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20.              WAIVER OF JURY TRIAL. THE COMPANY AND EACH PERSON WHO IS A PARTICIPANT, BENEFICIARY, ESTATE, HEIR OR ASSIGN OF A UNIT EXPRESSLY WAIVES ALL RIGHTS TO ANY TRIAL BY JURY IN ALL LITIGATION RELATING TO OR ARISING OUT OF THE SUBJECT MATTER OF THIS PLAN.

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As adopted by the Board of Directors of

Professional Holding Corp.

Effective as of October 21, 2014

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EXHIBIT A

PROFESSIONAL HOLDING CORP.

2014 STOCK APPRECIATION RIGHTS PLAN

UNIT AGREEMENT

EX-10.8

Exhibit 10.8

EXHIBIT A

AMENDMENT NO. 1 TO PROFESSIONAL HOLDING CORP.
2014 SHARE APPRECIATION RIGHTS PLAN

THIS AMENDMENT TO THE PROFESSIONAL HOLDING CORP. 2014 SHARE APPRECIATION RIGHTS PLAN (this "Amendment") is to be effective as of December 20, 2016 (the "Amendment Date").

WHEREAS, the Board of Directors of Professional Holding Corp. (the "Corporation") approved this Amendment;

NOW, THEREFORE:

1.       Amendments. The Professional Holding Corp. 2014 Share Appreciation Rights Plan (the "Plan") is hereby amended and modified as follows:

(a)               The text of Section 1 of the Plan is hereby deleted in its entirety and replaced with the following:

1.       Purpose. The purpose of the Plan is to further the growth, development and financial success of the Company by providing appropriate incentives to Directors and to certain key employees who have been or will be given responsibility for the management or administration of the business affairs of the Company and/or the Bank; to provide for distinct plans for operating in order to maximize incentives offered while minimizing expenses; and to enable the Company to obtain and retain the services of Directors and the type of professional, technical and managerial employees considered essential to both the Company's and the Bank's long-range success. This Plan shall be separate and distinct from the Professional Bank 2012 Share Appreciation Rights Plan.

(b)               The following definition is hereby added as Section 2(i) in the Plan and all of the other definitions in Section 2 of the Plan which follow 2(i) alphabetically shall be re-numbered accordingly:

(i)       "Director" shall mean a member of the Board of Directors of the Corporation or a member of the Board of Directors of the Bank.

(c)               The text of re-numbered Section 2(n) of the Plan is hereby deleted in its entirety and replaced with the following:

(n)       "Noncompetition Requirement" shall mean the agreement by the Participant with the Company, contained within each Unit Agreement, that during the Term and for a period of three hundred sixty-five days (365) following the Participant's cessation of service as a Director or separation from service with the Bank (as applicable) for any reason whatsoever (except where the Participant is terminated pursuant to Section8.(c) of the Plan), Participant will not enter the employ of, or have any interest in, directly or indirectly (either as executive, partner, director, officer, consultant, principal, agent or employee), any other bank or financial institution, any holding company of any bank or other financial institution, or any other entity which either accepts deposits or makes loans (whether presently existing or subsequently established) and which has an office located within a radius of 50 miles of any office of the Bank; provided, however, that the foregoing shall not preclude any ownership by the Participant of an amount not to exceed 5% of the equity securities of any entity which is subject to the periodic reporting requirements of the 1934 Act and the shares of the Corporation's or the Bank's common stock owned by the Participant at the time of termination of employment or of his/her status as a Director.

(d)             The text of re-numbered Section 2(q) of the Plan is hereby deleted in its entirety and replaced with the following:

(q)       "Participant" shall mean a Director, and/or a select group of management or highly compensated employees who are in the regular employment of the Company, and who are expected to be primarily responsible for the management, growth, or supervision of some part of all of the business of the Company. The power to determine who is and who is not a Participant shall be reserved solely for the Committee but participation shall exclude employees who would not qualify as one of the foregoing group.

(e)             The term "Bank" as used in each of Sections 7(a), 7(b), 8(a)(ii), 8(b)(ii) and 8(c) (first line only), of the Plan is hereby deleted and replaced with the term "Company."

(f)               The text of Section 9 of the Plan is hereby deleted in its entirety and replaced with the following:

9.       At Will Service. Nothing in the Plan or in any Unit Agreement hereunder shall confer upon any Participant any right to continue in the employ of the Bank or as a Director, or shall interfere with or restrict in any way the rights of the Company, which are hereby expressly reserved, to discharge any Participant at any time for any reason whatsoever, as an involuntary separation from service without cause or for cause as those terms are defined in Section 8 hereof except to the extent expressly provided otherwise in a written employment agreement between the Participant and the Company.

2.                  Definitions. Each capitalized term not otherwise defined in this Amendment shall have the definition ascribed to such term in the Plan.

3.                  Other Terms Unchanged. Except as expressly modified in this Amendment, all terms and provisions of the Plan shall remain unchanged and in full force and effect.

IN WITNESS WHEREOF, the Company has executed this Amendment as of the Amendment Date.

PROFESSIONAL HOLDING CORP.
By:	/s/ Daniel R. Sheehan
	Daniel R. Sheehan
	Chairman and President

EX-10.9

Exhibit 10.9

EXHIBIT B

AMENDMENT NO. 2 TO PROFESSIONAL HOLDING CORP. 2014 SHARE APPRECIATION RIGHTS PLAN

THIS AMENDMENT TO THE PROFESSIONAL HOLDING CORP. 2014 SHARE APPRECIATION RIGHTS PLAN (this "Amendment") is to be effective as of September 26, 2017 (the "Amendment Date").

WHEREAS, the Board of Directors of Professional Holding Corp. (the "Corporation") approved this Amendment:

NOW, THEREFORE:

1.            Amendments. The Professional Holding Corp. 2014 Share Appreciation Rights Plan (the "Plan") is hereby amended and modified as follows:

(a)       The text of Section 5 of the Plan is hereby deleted in its entirety and replaced with the following:

5. Available Units. The maximum number of Units which shall be made available for issuance under the Plan shall be One Million Two Hundred Thousand (1,200,000) Units. If any Unit granted under the Plan is terminated, forfeited, or ceases to be exercisable for any other reason prior to the end of the period during which Units may be granted under the Plan, such unpaid Units shall become available for new grants under the Plan to any eligible employee, including the original holder of such Units.

IN WITNESS WHEREOF, the Company has executed this Amendment as of the Amendment Date.

PROFESSIONAL HOLDING CORP.
By:	/s/ Daniel R. Sheehan
	Daniel R. Sheehan
	Chairman & President

As adopted by the Board of Directors of

Professional Holding Corp.

Effective as of September 26, 2017

EX-10.10

Exhibit 10.10

UNIT AGREEMENT

PROFESSIONAL HOLDING CORP. SHARE APPRECIATION RIGHTS PLAN

This Professional Holding Corp. Share Appreciation Rights Plan Unit Agreement (“Unit Agreement”), dated as of ________________ (“Grant Date”), has been made by and between (i) Professional Holding Corp., a registered bank holding company organized under the laws of the State of Florida (“Company”); (ii) Professional Bank (“Bank”), its wholly owned subsidiary, effective as of_____________ (“Effective Date”) (Corporation and Bank are collectively referred to as “Company”); and, (iii) ________________ (“Participant”).

The purposes of this Unit Agreement are to mutually benefit Company, Bank and Participant as follows:

a) To further the growth, development and financial success of the Company and the Bank by providing appropriate incentives to certain key employees of the Bank and/or Company who have been or will be given responsibility for the management or administration of the business affairs of the Bank;

b) To provide for distinct plans for operating management in order to maximize incentives offered while minimizing expenses; and

c) To enable the Bank to obtain and retain the services of the type of professional, technical and managerial employees considered essential to both the Company’s and the Bank’s long-range success.

WHEREAS, the provisions of the Professional Holding Corp. 2014 Share Appreciation Rights Plan (“SAR Plan”), adopted by the Company’s Board of Directors on October 21, 2014, are hereby incorporated herein by reference. Except as otherwise expressly set forth herein, this Agreement shall be construed in accordance with the provisions of the SAR Plan and any capitalized terms not otherwise defined in this Agreement shall have the definitions set forth in the SAR Plan. The Committee shall have final authority to interpret and construe the SAR Plan and this Agreement and to make any and all determinations thereunder, and its decision shall be binding and conclusive upon the Participant and his/her legal representative in respect of any questions arising under the SAR Plan or this Agreement;

NOW, THEREFORE, in consideration of the recitals and the mutual agreements herein contained, the parties hereto agree as follows:

Section 1. Grant of Units

(a)Grant of Units. Company hereby grants the Participant _____ Units at the Base Price as of the Grant Date. The Base Price referred to in this Agreement is equivalent to $____ per share of the Common Stock. The Units are granted on and subject to the terms and conditions set forth in this Agreement and as otherwise provided in the SAR Plan.

(b)Participant Election. Participant hereby makes an election of one of the two below options, to determine how the Company shall pay Participant under the SAR Plan. This Participant Election, made as of the Grant Date shall be irrevocable and cannot be modified by the Participant or Company at any time.

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[ ____ ]    Participant elects Option 1 under the SAR Plan.

[ ____ ]    Participant elects Option 2 under the SAR Plan.

(c)Unit Appreciation Payment Upon Separation From Service of the Company and/or Upon Liquidity Event. Unit Appreciation Payments attributable to vested Units shall only be made at such times and upon such events as provided in the SAR Plan. Units that are or have been forfeited shall receive no payment of any kind.

(d)Non-Transferability of Units. The Units and the right to any Unit Appreciation Payment and any interest therein, may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of, except by will or the laws of descent and distribution, prior to the time of Unit Appreciation Payments, if any, pursuant to the terms hereof. Any attempt to dispose of any Unit in contravention of the above restriction shall be null and void and without effect.

Section 2. Terms and Conditions of Award; Acknowledgments by Participant

(a)Income Taxes. Company shall withhold taxes that it determines it is required to withhold under applicable tax laws with respect to any Unit Appreciation Payment (with such withholding obligation determined based on any applicable statutory withholding rates).

(b)Additional Acknowledgments.

i.	The SAR Plan serves as part of the compensation package for a select group of management and highly compensated employees to provide a mechanism to monetize executive performance consistent with adding value to the Common Stock;
ii.	The issuance of any Unit hereunder is not a security and shall not provide any rights as a holder of Common Stock;
iii.	The SAR Plan is not intended to be subject to ERISA and shall be provided solely to participants selected by the Committee who are limited to a select group of management and highly compensated employees; and
iv.	The SAR Plan is intended to comply with Section 409A of the Code and shall be construed and interpreted in accordance with such intent. To the extent applicable, this Agreement shall incorporate the terms and conditions required by Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”) and this Agreement shall be interpreted in accordance with Section 409A and Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the date of this Agreement.

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Section 3. Condition Precedent to Receiving Unit Appreciation Payments under the SAR Plan

The Participant hereby covenants and agrees that any Unit Appreciation Payments received under the SAR Plan, shall be subject to Participant’s compliance with the Noncompetition Requirement that during the Term and for a period of three hundred sixty-five days (365) following the Participant’s separation from service with the Bank for any reason whatsoever (except where the employment of the Participant is terminated pursuant to Section 8.(c) of the SAR Plan), Participant will not enter the employ of, or have any interest in, directly or indirectly (either as executive, partner, director, officer, consultant, principal, agent or employee), any other bank or financial institution or any entity which either accepts deposits or makes loans (whether presently existing or subsequently established) and which has an office located within a radius of 50 miles of any office of the Bank; provided, however, that the foregoing shall not preclude any ownership by the Participant of an amount not to exceed 5% of the equity securities of any entity which is subject to the periodic reporting requirements of the 1934 Act and the shares of Bank common stock owned by the Participant at the time of termination of employment. In the event that Participant fails to comply with this Noncompetition Requirement, Participant shall immediately repay to the Company any Unit Appreciation Payments received under the SAR Plan.

Section 4. Miscellaneous

(a)Confidentiality of the Agreement and the SAR Plan. By signing this Agreement, Participant acknowledges the proprietary nature of the SAR Plan, and agrees not to make any public statement, announcement, press release, or otherwise disclose the terms of the SAR Plan, or make public any documents Participant receives describing the SAR Plan (including but not limited to, the Unit Agreement, SAR Plan, summary plan document, etc.), to any third parties not affiliated with the Company, without the prior written consent of the Company. Notwithstanding the foregoing, nothing herein shall prohibit Participant from sharing the terms of the SAR Plan with Participant’s own legal counsel and/or accountants.

(b)No Right to Continued Employment. Nothing in the SAR Plan or in this Agreement shall confer upon the Participant any right to continue in the employ of Bank or shall interfere with or restrict in any way the right of Bank to remove, terminate or discharge Participant at any time for any reason whatsoever, with or without cause and with or without advance notice.

(c)Bound by SAR Plan. By signing this Agreement, Participant acknowledges that he/she has received a copy of the SAR Plan and has had an opportunity to review the SAR Plan and agrees to be bound by all the terms and provisions of the SAR Plan.

(d)Successors. The terms of this Agreement shall be binding upon and inure to the benefit of Bank, its successors and assigns, and of the Participant and the beneficiaries, executors, administrators, heirs and successors of the Participant.

(e)Invalid Provision. The invalidity or unenforceability of any particular provision thereof shall not affect the other provisions hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provision had been omitted.

(f)Modifications. No change, modification or waiver of any provision of this Agreement shall be valid unless the same is in writing and signed by the parties hereto.

(g)Entire Agreement. This Agreement and the SAR Plan contain the entire agreement and understanding of the parties hereto with respect to the subject matter contained herein and therein and supersedes all prior communications, representations and negotiations in respect thereto.

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(h)Governing Law. This Agreement and the rights of the Participant hereunder shall be construed and determined in accordance with the laws of the State of Florida.

(i)Headings. The headings of the Sections hereof are provided for convenience only and are not to serve as a basis for interpretation or construction, and shall not constitute a part, of this Agreement.

(j)Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

(k)WAIVER OF JURY TRIAL. THE COMPANY AND EACH PERSON WHO IS A PARTICIPANT, BENEFICIARY, ESTATE, HEIR OR ASSIGN OF A UNIT EXPRESSLY WAIVES ALL RIGHTS TO ANY TRIAL BY JURY IN ALL LITIGATION RELATING TO OR ARISING OUT OF THE SUBJECT MATTER OF THIS PLAN.

IN WITNESS WHEREOF, this Agreement has been executed and delivered by the parties hereto as of the ___day of ___, 20___.

PROFESSIONAL HOLDING CORP., a

Florida corporation

By: Daniel Sheehan

Its: President / CEO

PROFESSIONAL BANK

By: Abel Iglesias

Its: President / CEO

PARTICIPANT:

Print Name:

Address:

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EX-10.11

Exhibit 10.11

PROFESSIONAL HOLDING CORP.

2016 AMENDED AND RESTATED stock OPTION PLAN

ARTICLE 1

GENERAL PROVISIONS

1.1Purpose.

This Stock Option Plan (the “Plan”) of PROFESSIONAL HOLDING CORP. (the “Company”) is adopted for the following purposes: (1) to closely associate the interests of certain Key Persons (as hereinafter defined) with the interests of the Company; (2) to encourage the Key Persons to focus on the growth and development of the Company, as reflected in increased shareholder value; (3) to maintain competitive compensation levels; and (4) to provide an incentive for the Key Persons to maintain association or employment with the Company so that the Company may retain the services of the most highly qualified individuals in high level capacities.

1.2Administration.

(a)The Plan shall be administered by the Committee. The Committee shall at all times consist of at least three members. If the Stock is registered under Section 12 of the Securities Exchange Act of 1934, as amended, then each member of the Committee shall be a director who is a “non-employee director” within the meaning of Rule 16(b)-3 and, if necessary for any Options to qualify for any tax or other material benefit to Optionee under applicable regulations under Section 162(m) of the Code, each shall be an “outside director” (as defined in applicable regulations). The Committee shall be appointed by, and serve at the pleasure of, the Board.

(b)The Committee shall have the authority, in its sole discretion and from time to time to:

(i)grant awards to such employees, officers and directors of the Company as the Committee shall select, provided that the Committee may grant Incentive Stock Options only to eligible employees of the Company or its subsidiaries (as defined for this purpose in Section 424(f) of the Code or any successor thereto);

(ii)make all determinations necessary or desirable for the administration of the Plan including, within any applicable limits specifically set out in the Plan, the number of shares of Stock that may be subject to Options, the Option Price, and the period during which an Optionee must remain an employee, officer or director of the Company prior to the exercise of an Option;

(iii)impose such limitations, restrictions and conditions upon any such award as the Committee shall determine;

(iv)interpret the Plan, adopt, amend, and rescind rules and regulations relating to the Plan, and

(v)make all other determinations and take all other actions necessary or advisable for the implementation and administration of the Plan.

(c)The Committee may select one of its members as its chair, and shall hold meetings at such times and places as it may determine. Acts by a majority of the Committee, or acts reduced to or approved in writing by a majority of the members, shall be the valid acts of the Committee.

(d)The Committee’s interpretation of the Plan or any Awards granted pursuant thereto and all decisions and determinations by the Committee with respect to the Plan shall be final, binding, and conclusive on all parties unless otherwise determined by the Committee. Nothing in this Section 1.2(d) shall give the committee the right to increase the Total Authorized Shares or to extend the term of the Plan.

1.3Eligibility for Participation.

Only Key Persons shall be eligible for participation in the Plan. For purposes of the Plan, “Key Persons” shall be individuals selected by the Committee for grants of Awards under this Plan.

1.4Types of Awards Under Plan.

Awards that are available under the Plan shall be as follows:

(a)Nonqualified Stock Options (as described in Article 3);

(b)Incentive Stock Options (as described in Article 4); or

(c)Any combination of the foregoing Awards.

1.5Aggregate Limitation on Awards.

(a)Shares of Stock which may be issued under the Plan shall be authorized and unissued or treasury shares of the Common Stock of the Company; provided, however, that treasury shares shall not be used unless the Company has total capital accounts in excess of eight (8) percent of total assets. The shares of Common Stock which may be issued under the Plan shall not exceed 265,000 of the issued and outstanding Common Stock; provided however, that if there shall be a prospective reduction in the outstanding Common Stock, any previously issued Awards shall remain valid and exercisable in Common Stock notwithstanding that Common Stock subsequently issued pursuant to the prior Awards may exceed such limit.

(b)For purposes of calculating the maximum number of shares of Common Stock which may be issued under the Plan, the following shall apply:

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(i)All the shares issued (including the shares, if any, withheld for tax withholding requirements) shall be counted when cash is used as full payment for the shares issued for any Award; and

(ii)Only the net shares issued (including the shares, if any, sold for withholding tax requirements as provided herein) shall be counted when shares of Common Stock are used as full or partial payment for the shares issued for any Award.

(c)Shares tendered by a Participant as payment for shares issued upon exercise of any Award shall be available for issuance under the Plan. If any Award granted under the Plan terminates for any reason without being wholly exercised, then the Committee shall have the discretion to grant new Awards to Participants covering the number of shares of Common Stock to which such Awards related. Any shares of Common Stock issued pursuant to an Award which are subsequently reacquired by the Company shall again be available for issuance under the Plan.

1.6Effective Date and Term of Plan.

The Plan shall become effective on the date it is approved by the shareholders of the Company. Subject to the applicable provisions in Section 6 below, the Plan shall continue in effect from the Effective Date until the day before the tenth anniversary of the Effective Date (the “Termination Date”), provided that the terms of the Plan shall continue in effect after the Termination Date for so long as is necessary to the enforcement of the rights and obligations of the Company and of any Optionee under the Plan or any Option. In no event shall any Options be granted under the Plan after the Termination Date. Options granted prior to the Termination Date shall remain in effect until the exercise, surrender, cancellation or expiration in accordance with their terms and the terms of the Plan.

ARTICLE 2

Definitions

The following definitions shall be applicable throughout the Plan.

2.1“Award” shall mean, individually or collectively, any Incentive Stock Option or Nonqualified Stock Option granted to a Participant pursuant to the terms of the Plan.

2.2“Board” or “Board of Directors” shall mean the Board of Directors of the Company.

2.3“Change in Control” shall, unless the Committee otherwise directs by resolution adopted prior thereto, be deemed to occur if (i) any “person” (as that term is used in Sections 13 and 14(d)(2) of the Exchange Act (as defined herein) is or becomes the beneficial owner (as that term is used in Section 13(d) of the Exchange Act), directly or indirectly, of fifty percent (50%) or more of the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (“Voting Stock”); or (ii) during any period of twelve moths, individuals who at the beginning of such period constitute the Board cease for any reason to constitute at least a majority thereof, unless the election or the nomination for election by the Company’s shareholders of each new Director was approved by a vote of at least three-quarters (3/4) of the Directors then still in office who were Directors at the beginning of the period.

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2.4“Code” shall mean the Internal Revenue Code of 1986, as amended. Reference in the Plan to any section of the Code shall be deemed to include any amendments or successor provisions to such section and any regulations under such section.

2.5“Committee” shall have the meaning set forth in Section 1.2(a) of the Plan.

2.6“Common Stock” shall mean the Class A Voting Common Stock of the Company, $0.01 par value per share.

2.7“Company” shall mean PROFESSIONAL HOLDING CORP. and its successors.

2.8“Director” shall mean a member of the Board of Directors.

2.9“Disability” shall mean any of the following: (a) the Participant’s inability to perform each of the essential duties of such Participant’s position by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months; or (b) the incurrence by the Participant of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months.

2.10“Effective Date” shall mean April 16, 2009.

2.11“Employee” shall mean a statutory employee of the Company as defined in Code Section 1402(d).

2.12“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

2.13“Fair Market Value” shall have the following meaning:

(a)Company’s Common Stock is Publicly Traded.

For purposes of the Plan, if the Company’s Common Stock is publicly traded at the time of determination, “Fair Market Value” as of any date and in respect of any share of Common Stock shall mean:

(i)the average of the high and low prices of the Common Stock on the principal national securities exchange on which the Common Stock is traded, or if no sales of Common Stock occur on the date in question, on the last preceding date on which there was a sale on such market, if the Common Stock is then traded on a national securities exchange; or

(ii)the mean between the closing bid and ask prices last quoted by an established quotation service for over-the-counter securities, or if no sales of Common Stock occur on the date in question, on the last preceding date on which there was a sale on such market, if the Common Stock is not reported on a national securities exchange.

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The above definition shall be interpreted consistent with Treas. Reg. §1.409A-1(b)(5)(iv)(A).

(b)Company’s Common Stock is Not Publicly Traded.

For purposes of the Plan, if the Company’s Common Stock is not publicly traded at the time of determination, “Fair Market Value” as of any date and in respect of any share of Common Stock shall be deemed to be the fair value of the Common Stock as determined by the Committee after taking into consideration all factors which it deems appropriate, including, without limitation, recent sale and offer prices of the Common Stock in private transactions negotiated at arm’s length and taking into account the factors listed in Treas. Reg. §1.409A-1(b)(5)(iv)(B).

2.14“Holder” shall mean a Participant who has been granted a Nonqualified Stock Option or an Incentive Stock Option.

2.15“Incentive Stock Option” shall have the meaning set forth in Section 4.1.

2.16“Incentive Stock Option Period” shall mean the period described in Section 4.6(a).

2.17“Initial Public Offering” means the first public offering of the Company’s equity securities registered under the Securities Act of 1933, as amended, or any successor statute, or such other event as a result of which outstanding equity securities of the Company (or any successor entity) shall be publicly traded.

2.18“Key Persons” shall mean any Employee and shall also include any officers or Directors of the Company whether or not the latter shall be an Employee of the Company.

2.19“Nonqualified Stock Option” shall mean an Option granted by the Committee to a Participant under the Plan which is not designated by the Committee as an Incentive Stock Option.

2.20“Nonqualified Stock Option Period” shall mean the period described in Section 3.5(a).

2.21“Option” shall mean a Nonqualified Stock Option or an Incentive Stock Option.

2.22“Optionee” shall mean a participant who has been granted an Option hereunder.

2.23“Option Period” shall mean a Nonqualified Stock Option Period or an Incentive Stock Option Period.

2.24“Option Price” shall mean the applicable Stock Option Price or Incentive Option Price.

2.25“Participant” shall mean a Key Person who shall be granted an Award under the Plan.

2.26“Plan” shall mean this Stock Option Plan of the Company, as amended from time to time.

2.27“Stock” shall mean the Common Stock or such other authorized shares of stock of the Company as the Board may from time to time authorize for use under the Plan.

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ARTICLE 3

NONQUALIFIED STOCK OPTIONS

3.1Award of Nonqualified Stock Options.

3.2The Committee may from time to time, and subject to the provisions of the Plan and such other terms and conditions as the Committee may prescribe, grant to any Key Person one or more Options to purchase for cash or shares, the number of shares of Common Stock (“Nonqualified Stock Options”) allotted by the Committee. The date a Nonqualified Stock Option is granted shall mean the date selected by the Committee as of which the Committee shall allot a specific number of shares to a Participant pursuant to the Plan and when the Participant has a legally binding right constituting the Nonqualified Stock Option; provided that the grant date may not be a date that occurs prior to the date the Committee takes action to approve the Nonqualified Stock Option.

3.3Nonqualified Stock Option Agreements.

Each Nonqualified Stock Option granted under the Plan shall be evidenced by a “Nonqualified Stock Option Agreement” between the Company and the Holder of the Nonqualified Stock Option containing such provisions as may be determined by the Committee, but shall be subject to the following terms and conditions.

(a)Each Nonqualified Stock Option or portion thereof that is exercisable shall be exercisable for the full amount or for any part thereof, except as otherwise determined by the terms of the Nonqualified Stock Option Agreement.

(b)Each share of Common Stock purchased through the exercise of a Nonqualified Stock Option shall be paid for in full at the time of the exercise. Each Nonqualified Stock Option shall cease to be exercisable as to any share of Common Stock, at the earlier of: (i) the Holder purchases the share; or (ii) when the Nonqualified Stock Option lapses.

(c)Nonqualified Stock Options shall not be assignable or transferable by the Holder except by (i) will or the laws of descent and distribution, or (ii) a domestic relations order, and shall be exercisable during the Holder’s lifetime only by him or her or his or her guardian or legal representative.

(d)Each Nonqualified Stock Option shall become exercisable by the Holder in accordance with the vesting schedule (if any) established by the Committee for the Award.

(e)Each Nonqualified Stock Option Agreement may contain an agreement that, upon demand by the Committee for such a representation, the Holder shall deliver to the Committee at the time of any exercise of a Nonqualified Stock Option a written representation that the shares to be acquired upon such exercise are to be acquired for investment and not for resale or with a view to the distribution thereof. Upon such demand, delivery of such representation prior to the delivery of any shares issued upon exercise of a Nonqualified Stock Option shall be a condition precedent to the right of the Holder or such other person to purchase any shares. In the event certificates for Common Stock are delivered under the Plan with respect to which such investment representation has been obtained, the Committee may cause a legend or legends to be placed on such certificates to make appropriate reference to such representation and to restrict transfer in the absence of compliance with applicable federal or state securities laws.

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3.4Nonqualified Stock Option Price.

The exercise price per share of Common Stock (the “Nonqualified Stock Option Price”) shall be set by the Committee at the time of grant subject to the following: (i) the Nonqualified Stock Option Price shall never be less than the greater of the Fair Market Value of the underlying stock on the date the Nonqualified Stock Option is granted or the par value of the stock; (ii) the number of shares subject to the Nonqualified Stock Option Price must be fixed on the original date of grant; and (iii) the Nonqualified Stock Option Price may not include any additional feature for the deferral of compensation.

3.5Manner of Exercise and Form of Payment.

(a)Nonqualified Stock Options which have become exercisable may be exercised by delivery of written notice of exercise (“Notice of Exercise”) to the Committee accompanied by payment of the Nonqualified Stock Option Price. The Nonqualified Stock Option Price shall be payable in cash or such other means as set forth in the Nonqualified Stock Option Agreement plus the amount (if any) of federal and/or other taxes which the Company may, in its judgment, be required to withhold with respect to an Award. If a Participant shall fail to pay the Nonqualified Stock Option Price at the time of exercise, the Nonqualified Stock Option(s) which are being exercised shall become null and void.

(b)Notwithstanding Section 3.4(a), at the time the Notice of Exercise pertaining to the Nonqualified Stock Option is given to the Committee with respect to the exercise of any Nonqualified Stock Option, if the Company’s shares of Common Stock are traded on a national securities exchange, a Participant may elect in writing to pay the Nonqualified Stock Option Price through a “cashless” feature. Upon such election, the Committee shall sell a sufficient number of shares of Common Stock on behalf of the electing Participant which would otherwise be a part of the shares exercised through the Nonqualified Stock Option in the Notice of Exercise. The sale price shall be the closing price of the shares as quoted on the exchange or market as of the trading day immediately preceding the date of the Notice of Exercise. The proceeds from such sale(s) shall be used to pay any and all applicable state and federal withholding or other employment or payroll taxes, if any, applicable to the taxable income of the Participant resulting from such exercise together with any sales, transfer or similar taxes imposed with respect to the issuance or transfer of shares of Common Stock in connection with such exercise. The exercising Participant shall then receive the balance of the shares net of those sold in order for the Company to pay such taxes.

(c)Any state or federal withholding taxes attributable to the portion of the Non Qualified Stock Option payable in cash shall be withheld from the cash that would otherwise be paid to the Participant hereunder.

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3.6Nonqualified Stock Option Period; Termination.

(a)Each Nonqualified Stock Option shall be exercisable by the Holder in accordance with such terms as shall be established by the Committee for the Nonqualified Stock Option, and unless a shorter period is provided by the Committee or by another section of the Plan, may be exercised during a period of ten (10) years from the date of grant thereof (the “Nonqualified Stock Option Period”). No Nonqualified Stock Option shall be exercisable after the expiration of its Nonqualified Stock Option Period.

(b)If the Holder dies within the Nonqualified Stock Option Period (or such other period as may have been established by the Committee), any rights to the extent exercisable on the date of death may be exercised by the Holder’s estate, or by a person who acquires the right to exercise such Nonqualified Stock Option by bequest or inheritance or by reason of the death of the Holder, provided that such exercise occurs within both the Nonqualified Stock Option Period and twelve (12) months after the Holder’s death.

(c)If the Holder’s relationship as an Employee, officer or Director of the Company terminates by reason of Disability within the Nonqualified Stock Option Period, the Holder may, within twelve (12) months from the date of termination (or within such other period as determined by the Committee), exercise any Nonqualified Stock Options to the extent such options are exercisable during such twelve (12) month period.

(d)If the Holder’s relationship with the Company terminates for any reason other than death or Disability, all unvested Nonqualified Stock Options shall, except as set forth in the Holder’s Nonqualified Stock Option Agreement or as otherwise determined by the Committee at the time of the grant, terminate at the time of the termination of such relationship or employment, as the case may be.

3.7Effect of Exercise.

As soon as practicable after receipt of payment, the Company shall deliver to the Participant a certificate or certificates for such shares of Common Stock. The Participant shall become a shareholder of the Company with respect to Common Stock represented by share certificates so issued and as such shall be fully entitled to receive dividends, to vote and to exercise all other rights of a shareholder.

3.8Order of Exercise.

Options granted under the Plan may be exercised in any order, regardless of the date of the grant or the existence of any other outstanding Nonqualified Stock Option awarded to the Participant.

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ARTICLE 4

INCENTIVE STOCK OPTIONS

4.1Award of Incentive Stock Options.

The Committee may, from time to time and subject to the provisions of the Plan and such other terms and conditions as the Committee may prescribe, grant to any Key Person who is an Employee of the Company one or more “incentive stock options” (intended to qualify as such under the provisions of Section 422 of the Code (“Incentive Stock Options”) to purchase for cash or shares, the number of shares of Common Stock allotted by the Committee. The date an Incentive Stock Option is granted shall mean the date selected by the Committee as of which the Committee allots a specific number of shares to a Participant pursuant to the Plan; provided that the grant date may not be a date that occurs prior to the date the Committee takes action to approve the Nonqualified Stock Option.

4.2Incentive Stock Option Agreements.

Each Incentive Stock Option granted under the Plan shall be evidenced by an “Incentive Stock Option Agreement” between the Company and the Holder of the Incentive Stock Option, stating the number of shares of Common Stock subject to the Incentive Stock Option evidenced thereby and containing such other provisions as may be determined by the Committee from time to time, but shall be subject to the following terms and conditions.

(a)Each Incentive Stock Option or portion thereof that is exercisable shall be exercisable for the full amount or for any part thereof, except as otherwise determined by the terms of the Incentive Stock Option Agreement.

(b)Each share of Common Stock purchased through the exercise of an Incentive Stock Option shall be paid for in full at the time of the exercise. Each Incentive Stock Option shall cease to be exercisable, as to any share of Common Stock, at the earlier of: (i) the Holder purchases the share; or (ii) when the Incentive Stock Option lapses.

(c)Incentive Stock Options shall not be assignable or transferable by the Holder except by (i) will or the laws of descent and distribution, or (ii) a domestic relations order, and shall be exercisable during the Holder’s lifetime only by him or her or his or her guardian or legal representative.

(d)Each Incentive Stock Option shall become exercisable by the Holder in accordance with the vesting schedule (if any) established by the Committee for the Award.

(e)Each Incentive Stock Option Agreement may contain an agreement that, upon demand by the Committee for such a representation, the Holder shall deliver to the Committee at the time of any exercise of an Incentive Stock Option a written representation that the shares to be acquired upon such exercise are to be acquired for investment and not for resale or with a view to the distribution thereof. Upon such demand, delivery of such representation prior to the delivery of any shares issued upon exercise of an Incentive Stock Option shall be a condition precedent to the right of the Holder or such other person to purchase any shares. In the event certificates for Common Stock are delivered under the Plan with respect to which such investment representation has been obtained, the Committee may cause a legend or legends to be placed on such certificates to make appropriate reference to such representation and to restrict transfer in the absence of compliance with applicable federal or state securities laws.

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4.3Incentive Stock Option Price.

The option price per share of Common Stock deliverable upon the exercise of an Incentive Stock Option shall be the greater of the Fair Market Value of a share of Common Stock on the date the Incentive Stock Option is granted or the par value of the stock.

4.4Special Rule for Ten Percent Shareholder.

Notwithstanding Sections 4.2 and 4.3, if Incentive Stock Options are issued to an individual who owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company, then (a) the option price per share of Common Stock deliverable upon the exercise of an Incentive Stock Option shall be at least the greater of one hundred and ten percent (110%) of the Fair Market Value of a share of Common Stock on the date the Incentive Stock Option is granted or the par value of the stock; and (b) such option, by its terms, shall not be exercisable after the expiration of five (5) years from the date such option is granted.

4.5Maximum Amount of Incentive Stock Option Grant.

To the extent required for “Incentive Stock Option” status under Section 422 of the Code, the aggregate Fair Market Value (determined as of the Date of Grant) of the Common Shares with respect to which Incentive Stock Options are exercisable for the first time by the Optionee during any calendar year under the Plan and/or any other stock option plan of the Company (within the meaning of Section 424 of the Code) shall not exceed $100,000 (or such other amount set forth in section 422 of the Code) (the “ISO Limitation Amount”). To the extent the aggregate Fair Market Value (determined on the date the option is granted) of Common Stock for which Incentive Stock Options are exercisable for the first time during any calendar year (under all plans of the Company) exceeds the ISO Limitation Amount, such excess Incentive Stock Options shall be treated as Nonqualified Stock Options.

4.6Incentive Stock Option Period; Termination.

(a)Each Incentive Stock Option shall be exercisable by the Holder in accordance with such terms as shall be established by the Committee for the Incentive Stock Option, and, unless a shorter period is provided by the Committee or by another section of the Plan, may be exercised during a period of ten (10) years from the date of grant thereof (the “Incentive Stock Option Period”). No Incentive Stock Option shall be exercisable after the expiration of its Incentive Stock Option Period.

(b)If the Holder dies within the Incentive Stock Option Period (or such other period as may have been established by the Committee), any rights to the extent exercisable on the date of death may be exercised by the Holder’s estate, or by a person who acquires the right to exercise such Incentive Stock Option by bequest or inheritance or by reason of the death of the Holder, provided that such exercise occurs within both the Incentive Stock Option Period and twelve (12) months after the Holder’s death.

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(c)If the Holder’s relationship as an Employee officer or Director of the Company terminates by reason of Disability within the Incentive Stock Option Period, the Holder may, within twelve (12) months from the date of termination (or within such other period as determined by the Committee), exercise any Incentive Stock Options to the extent such options are exercisable during such twelve (12) month period (or such other period as determined by the Committee).

(d)Notwithstanding the foregoing, the tax treatment available pursuant to Section 422 of the Code upon the exercise of an Incentive Stock Option will not be available to a Holder who exercises any Incentive Stock Options more than (i) twelve (12) months after the date of termination of employment due to Disability or (ii) three (3) months after the date of termination of employment due to death.

(e)If the Holder’s employment or relationship with the Company terminates for any reason other than death or Disability, all unvested Incentive Stock Options shall, except as set forth in the Holder’s Incentive Stock Option Agreement or as otherwise determined by the Committee at the time of the grant, terminate at the time of the termination of such relationship.

4.7Notice of Disposition.

Participants shall give prompt notice to the Committee of any disposition of Common Stock acquired upon exercise of an Incentive Stock Option if such disposition occurs within either two (2) years after the date of the grant of such Incentive Stock Option and/or one (1) year after the receipt of such Common Stock by the Holder.

4.8Applicability of Nonqualified Stock Options Sections.

Sections 3.4 (Manner of Exercise and Form of Payment), 3.6 (Effect of Exercise) and 3.7 (Order of Exercise) applicable to Nonqualified Stock Options, shall apply equally to Incentive Stock Options. These sections are incorporated by reference in this Article 4 as though fully set forth herein.

ARTICLE 5

vesting

Vesting. Unless otherwise designated by the Committee, the Options granted hereunder may initially be unvested or subject to forfeiture. The Committee shall determine the timing, terms and conditions of the vesting of any Options acquired hereunder, and in its discretion, may accelerate the vesting of the Option or any part thereof from time to time. Notwithstanding anything herein to contrary, if the Participant is terminated for Cause (as defined below), the Participant’s interest in such Stock Option Award, and the shares of Common Stock underlying such Stock Option Award, shall terminate at the time the Participant is terminated for Cause without regard to whether the Participant has satisfied any applicable vesting period before the Participant’s termination date. Cause is defined as: (i) violation of any standard of conduct or ethics applicable generally for officers, directors, employees or associates of the Company and its subsidiaries; (ii) the Participant is convicted of, or pleads guilty or no contest to, any crime punishable as a felony; (iii) conduct by the Participant which by the standard of clear and convincing evidence, in the Committee’s sole discretion, is unprofessional or unethical or behavior that is materially detrimental to the financial well-being or reputation of the Company; or (iv) any other for “Cause” reason for termination, as set forth in any employment agreement of Participant with the Company, that causes Participant’s employment to terminate with the Company. The terms of this Article 5 shall supercede and control anything to the contrary contained in any Nonqualified Stock Option Agreement or Incentive Stock Option Agreement between the Participant and the Company.

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ARTICLE 6

mISCELLANEOUS

6.1General Restriction.

Each Award under the Plan shall be subject to the requirement that, if at any time the Committee shall determine that (a) the listing, registration or qualification of the shares of Common Stock subject or related thereto upon any securities exchange or under any state or Federal law, or (b) the consent or approval of any government regulatory body, or (c) an agreement by the grantee of an award with respect to the disposition of shares of Common Stock, is necessary or desirable as a condition of, or in connection with, the granting of such Award or the issue or purchase of shares of Common Stock thereunder, such Award may not be consummated in whole or in part unless such listing, registration, qualification, consent, approval or agreement shall have been effected or obtained free of any conditions not acceptable to the Committee.

6.2Additional Provisions of an Award.

The award of any benefit under the Plan may also be subject to such other provisions (whether or not applicable to the benefit awarded to any other Participant) as the Committee determines appropriate, including, without limitation, provisions to assist the Participant in financing the purchase of Common Stock through the exercise of Options, provisions for the forfeiture of or restrictions on resale or other disposition of shares acquired under any form of benefit, provisions giving the Company the right to repurchase shares acquired under any form of benefit in the event the Participant elects to dispose of such shares, and provisions to comply with Federal and state securities laws and Federal and state income tax withholding requirements.

6.3Restrictions on Transferability.

No Award under the Plan shall be assignable or transferable by the recipient thereof, except by will or by the laws of descent and distribution. During the life of the recipient, such Award shall be exercisable only by such person or by such person’s guardian or legal representative. No right or benefit under this Plan shall be subject to anticipation, alienation, sale, assignment, pledge, encumbrance or charge and any attempt to anticipate, alienate, sell, assign, pledge, encumber or charge the same shall be void. No right or benefit hereunder shall in any manner be liable for or subject to any debts, contracts, liabilities or torts of the person entitled to such benefits. If any Participant or beneficiary hereunder shall become bankrupt or attempt to anticipate, alienate, assign, pledge, sell, encumber or charge any right or benefit hereunder, then such right or benefit shall in the discretion of the Committee cease. Such Units shall thereupon become null and void.

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6.4Withholding Taxes.

Notwithstanding any other provision of the Plan, the Company shall have the right in general and in addition to any other specific procedure for the payment of taxes attributable to any Award to deduct from all Awards, to the extent paid in cash, all federal, state or local taxes as required by law to be withheld with respect to such Awards and, in the case of Awards paid in Common Stock, the Holder or other person receiving such Common Stock may be required to pay to the Company prior to delivery of such stock, the amount of any such taxes which the Company is required to withhold, if any, with respect to such Common Stock. Subject in particular cases to the approval of the Committee, the Company may accept shares of Common Stock of equivalent Fair Market Value in payment of such withholding tax obligations if the Holder of the Award elects to make payment in such manner at least six (6) months prior to the date such tax obligation is determined.

6.5Compliance with Section 409A of the Code.

The Plan is intended to comply with Section 409A of the Code and shall be construed and interpreted in accordance with such intent. Grants under this Plan shall be treated in a manner that will comply with Section 409A of the Code, including proposed, temporary or final regulations or any other guidance issued by the Secretary of Treasury and the Internal Revenue Service with respect thereto (the “Guidance”). Any provision of the Plan that would cause a grant or any other payment under the Plan to fail to satisfy Section 409A of the Code shall have no force and effect until amended to comply with Code Section 409A (which amendment may be retroactive to the extent permitted by the Guidance). If the Committee at any time determines that the Plan or Options granted under the Plan are or may be subject to, and fail or may fail to comply with, the requirements of Section 409A of the Code, the Committee may make such modifications to the Plan and to the terms of any awards under the Plan, including without limitation, modifications with respect to the exercisability of Options, as it deems advisable either to ensure that the Plan and Options granted under the Plan comply with any applicable requirements of Section 409A of the Code. Notwithstanding the foregoing, nothing herein shall create any obligation by the Company to any participant should any grant or other payment fail to satisfy Section 409A of the Code.

6.6Fractional Shares.

The Company shall not be required to issue any fractional Common Stock pursuant to this Plan. The Committee may provide for the elimination of fractional Common Shares or for the settlement of fractional Common Shares for cash.

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6.7Lock-Up Agreement.

The Company may, in its discretion, require in connection with an Initial Public Offering that a Participant agree that any Option not be sold, offered for sale, or otherwise disposed of for a period of time as determined by the Board, provided at least a majority of the Company’s Directors and officers who hold Options or Common Stock at such time are similarly bound.

6.8Employment Not Affected.

Nothing in the Plan or in any agreement entered into pursuant to the Plan shall confer upon any Participant the right to continue to serve on the Committee or Board or in the employment of the Company or affect any right which the Company, or its shareholders, may have to terminate the relationship or employment or service of such Participant.

6.9Acceleration Events.

If an event occurs which in the opinion of the Board is likely to lead to a Change in Control of the Company, whether or not such Change in Control actually occurs, the Board may direct the Committee to declare that all Nonqualified Stock Options and Incentive Stock Options granted under the Plan shall become immediately vested; provided, however, that to the extent that so accelerating the time an Incentive Stock Option may first be exercised would cause the limitation provided in Section 4.5 to be exceeded, such Options shall instead first become exercisable in so many of the next following years as is necessary to comply with such limitation. In addition, to the extent provided in the applicable Stock Option Agreement between the Participant and the Company, the vesting of Options granted hereunder may be accelerated if the Participant’s employment or service to the Company terminates by reason of the Participant’s death or Disability.

6.10Payments to Persons Other than Participants.

If the Committee shall find that any person to whom any amount is payable under the Plan is unable to care for his or her affairs because of illness or accident, or is a minor, or has died, then any payment due to such person or his or her estate (unless a prior claim therefor has been made by a duly appointed legal representative), may, if the Committee so directs the Company, be paid to his or her spouse, child, relative, an institution maintaining or having custody of such person, or any other person deemed by the Committee to be a proper recipient on behalf of such person otherwise entitled to payment. Any such payment shall be a complete discharge of the liability of the Committee and the Company therefor.

6.11Non-Uniform Determinations.

The Committee’s determinations under the Plan (including, without limitation, determinations of the persons to receive Awards, the form, amount and timing of such Awards, the terms and provisions of such Awards and the agreements evidencing same) need not be uniform and may be made by it selectively among persons who receive, or are eligible to receive, Awards under the Plan, whether or not such persons are similarly situated.

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6.12Rights as a Shareholder.

Except as otherwise specifically provided in the Plan, no person shall be entitled to the privileges of stock ownership in respect of shares of Common Stock which are subject to Options hereunder until such shares have been issued to that person.

6.13Leaves of Absence.

The Committee shall be entitled to make such rules, regulations and determinations as it deems appropriate under the Plan in respect of any leave of absence taken by the recipient of any award. Without limiting the generality of the foregoing, the Committee shall be entitled to determine (a) whether or not any such leave of absence shall constitute a termination of employment within the meaning of the Plan and (b) the impact, if any, of any such leave of absence on awards under the Plan previously made to any recipient who takes such leave of absence.

6.14Newly Eligible Employees.

The Committee shall be entitled to make such rules, regulations, determinations and awards as it deems appropriate in respect of any person who becomes eligible to participate in the Plan or any portion thereof after the commencement of an Award or incentive period.

6.15Adjustments.

Unless the Committee specifically determines otherwise, Options and any agreements evidencing such Awards shall be subject to adjustment or substitution as to the number, price or if applicable, kind of a shares of stock or other consideration subject to such Awards or as otherwise determined by the Committee to be equitable (a) in the event of changes in the outstanding Common Stock or in the capital structure of the Company, or of any other corporation whose performance is relevant to the attainment of performance goals hereunder, if any, by reason of stock dividends, stock splits, recapitalizations, reorganizations, mergers, consolidations, combinations, exchanges or other relevant changes in capitalization occurring after the date of the grant of any such Award or (b) in the event of any change in applicable laws or any change in circumstances which results in or would result in any substantial dilution or enlargement of the rights granted to, or available for, Participants in the Plan, or which otherwise warrants equitable adjustment because it interferes with the intended operation of the Plan. In addition, unless the Committee specifically determines otherwise, in the event of any such adjustments or substitution, the aggregate number of shares of Common Stock available under the Plan shall be appropriately adjusted by the Committee, whose determination shall be conclusive. Any adjustment in Incentive Stock Options under this Section shall be made only to the extent not constituting a “modification” within the meaning of Section 424(h)(3) of the Code, and any adjustments under this Section shall be made in a manner which does not adversely affect the exemption provided pursuant to Rule 16b-3 under the Exchange Act. The Company shall give each Participant notice of an adjustment hereunder and, upon notice, such adjustment shall be conclusive and binding for all purposes.

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6.16Effect of Change in Control.

(a)In the event a Change in Control occurs and notwithstanding any vesting schedule provided for hereunder or by the Committee with respect to an Award of Options, such Option shall become immediately exercisable with respect to one hundred percent (100%) of the shares subject to such Option; provided, however, that to the extent that so accelerating the time an Incentive Stock Option may first be exercised would cause the limitation provided in Section 4.5 to be exceeded, such Options shall instead first become exercisable in so many of the next following years as is necessary to comply with such limitation.

(b)The obligations of the Company under the Plan shall be binding upon any successor corporation or organization resulting from the merger, consolidation or other reorganization of the Company, or upon any successor corporation or organization succeeding to substantially all of the assets and business of the Company. The Company agrees that it will make appropriate provisions for the preservation of a Participant’s rights under the Plan in any agreement or plan which it may enter into or adopt to effect any such merger, consolidation, reorganization or transfer of assets.

6.17Funding.

Except as otherwise provided in the Plan, no provision of the Plan shall require the Company, for the purpose of satisfying any obligations under the Plan, to purchase assets or place any assets in a trust or other entity to which contributions are made or otherwise to segregate any assets, nor shall the Company maintain separate bank accounts, books, records, or other evidence of the existence of a segregated or separately maintained or administered fund for such purposes. Holders shall have no rights under the Plan other than as unsecured general creditors of the Company, except that insofar as they may have become entitled to payment of additional compensation by performance of services, they shall have the same rights as other employees under general law.

6.18Reliance on Reports.

Each member of the Committee shall be fully justified in relying, acting or failing to act, and shall not be liable for having so relied, acted or failed to act in good faith, upon any report made by the independent public accountant of the Company and upon any other information furnished in connection with the Plan by any person or persons other than himself or herself.

6.19Relationship to Other Benefits.

No payment under the Plan shall be taken into account in determining any benefits under any pension, retirement, profit sharing, group insurance or other benefit plan of the Company except as otherwise specifically provided.

6.20Expenses.

The expenses of administering the Plan shall be borne by the Company.

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6.21Titles and Headings.

The titles and headings of the sections in the Plan are for convenience of reference only, and in the event of any conflict, the text of the Plan, rather than such titles or headings, shall control.

6.22No Presumption.

The fact that this Agreement was prepared by counsel for the Company shall create no presumptions and specifically shall not cause any ambiguities to be construed against the Company.

6.23Nonexclusivity of the Plan.

Neither the adoption of this Plan by the Board nor the submission of this Plan to the shareholders of the Company for approval shall be construed as creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including, without limitation, the granting of stock options otherwise than under this Plan, and such arrangements may be either applicable generally or only in specific cases.

6.24No Liability of Committee Members.

No member of the Committee shall be personally liable by reason of any contract or other instrument executed by such member or on his or her behalf in his or her capacity as a member of the Committee nor for any mistake of judgment made in good faith, and the Company shall defend, indemnify and hold harmless each member of the Board and each other employee, officer or Director of the Company to whom any duty or power relating to the administration or interpretation of the Plan may be allocated or delegated, against any cost or expense (including counsel fees) or liability (including any sum paid in settlement of a claim) arising out of any act or omission to act in connection with the Plan unless arising out of such person’s own fraud or bad faith; provided, however, that approval of the Board shall be required for the payment of any amount in settlement of a claim against any such person. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company’s Articles of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.

6.25Governing Law; Construction.

The Plan shall be governed by the laws of the state of Florida without regard to its conflict of laws principles. In case any one or more of the provisions contained herein are for any reason deemed to be invalid, illegal or unenforceable in any respect by a judicial body having jurisdiction, such illegality, invalidity or unenforceability shall not effect any other provision of this Plan, and this Plan shall be construed as if such invalid, unenforceable or illegal provision had never been contained herein. In construing the Plan, the singular shall include the plural and the masculine gender shall include the feminine and neuter, unless the context otherwise requires.

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6.26Amendment of the Plan.

(a)The Committee may, without further action by the shareholders and without receiving further consideration from the Participants, amend this Plan or condition or modify awards under this Plan in response to changes in securities or other laws or rules, regulations or regulatory interpretations thereof applicable to this Plan or to comply with stock exchange rules or requirements.

(b)The Committee may at any time and from time to time terminate or modify or amend the Plan in any respect, except that, without shareholder approval, the Committee may not materially amend the Plan, including, but not limited to, the following:

(i)materially increase the number of shares of Common Stock to be issued under the Plan (other than pursuant to Sections 6.15 and 6.16);

(ii)materially increase benefits to Participants, including any material change to (A) permit a re-pricing (or decrease in exercise price) of outstanding Options, (B) reduce the price at which Options may be offered, or (C) extend the duration of the Plan;

(iii)materially expand the class of Participants eligible to participate in the Plan; and

(iv)expand the types of Options or other awards provided under the Plan.

(c)The termination or any modification or amendment of the Plan, except as provided in subsection (a), shall not without the consent of a Participant, affect his or her rights under an Award previously granted to him or her.

6.27Binding Effect.

This Agreement shall be legally binding upon and shall operate for the benefit of the parties hereto, their respective heirs, personal and legal representatives, transferees, successors and assigns.

6.28Survival.

All representations and other relevant provisions herein shall survive and thereby continue in full force and effect after termination of the Optionee’s employment with the Company.

6.29No Waiver of Breach.

The waiver or inaction by any party hereto of a breach of any condition of this Agreement by the other party shall not be construed as a waiver of any subsequent breach by such party, nor shall it constitute a waiver of that party’s rights, actual or inherent. The failure of any party hereto in any instance to insist upon a strict performance of the terms of this Agreement or to exercise any option herein shall not be construed as a waiver or a relinquishment in the future of such term or option, but that the same shall continue in full force and effect.

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6.30Notices.

All notices or communications provided for herein or incidental to the transactions contemplated hereby shall be in writing and shall be deemed duly given if delivered personally, sent by facsimile, certified mail and/or by registered mail, return receipt requested or sent by overnight delivery (i) to any officer of the Company (other than the Participant) at the address of the principal office of the Company and (ii) to any Participant at his or her address as reflected on the records of the Company for federal income tax purposes or at such other address as either party may have specified by prior written notice to the other party. Notices shall be effective as of the date of personal delivery or as of the first day after any other notice procedure.

6.31WAIVER OF JURY TRIAL.

THE COMPANY AND EACH PERSON WHO IS A PARTICIPANT EXPRESSLY WAIVES ALL RIGHTS TO ANY TRIAL BY JURY IN ALL LITIGATION RELATING TO OR ARISING OUT OF THE SUBJECT MATTER OF THIS PLAN.

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EX-10.12

Exhibit 10.12

Professional Holding Corp.

2019 Equity Incentive Plan

1.              Purpose; Eligibility.

1.1               General Purpose. The name of this plan is the Professional Holding Corp. 2019 Equity Incentive Plan (the “Plan”). The purposes of the Plan are to (a) enable Professional Holding Corp., a Florida corporation (the “Company”), and any Affiliate to attract and retain the types of Employees, Consultants and Directors who will contribute to the Company’s long-term success; (b) provide incentives that align the interests of Employees, Consultants and Directors with those of the shareholders of the Company; and (c) promote the success of the Company’s business.

1.2               Eligible Award Recipients. The Persons eligible to receive Awards are the Employees, Consultants and Directors of the Company or its Affiliates and such other individuals designated by the Committee who are reasonably expected to become Employees, Consultants and Directors of the Company or its Affiliates after the receipt of Awards.

1.3               Available Awards. Awards that may be granted under the Plan include: (a) Incentive Stock Options, (b) Non-qualified Stock Options, (c) Stock Appreciation Rights, (d) Restricted Awards, (e) Performance Share Awards, (f) Cash Awards, and (g) Other Equity-Based Awards, or any combination of the foregoing.

2.              Definitions.

“Affiliate” means a Person that, directly or through one or more intermediaries, controls, is controlled by or is under common control with, the Company.

“Applicable Laws” means the requirements related to or implicated by the administration of the Plan under applicable state corporate law, United States federal and state securities laws, the Code, any stock exchange or quotation system on which the shares of Common Stock are listed or quoted, and the applicable laws of any foreign country or jurisdiction where Awards are granted under the Plan.

“Award” means any right granted under the Plan, including an Incentive Stock Option, a Non-qualified Stock Option, a Stock Appreciation Right, a Restricted Award, a Performance Share Award, a Cash Award, or an Other Equity-Based Award.

“Award Agreement” means a written agreement, contract, certificate or other instrument or document evidencing the terms and conditions of an individual Award granted under the Plan which may be transmitted electronically to a Participant. Each Award Agreement shall be subject to the terms and conditions of the Plan.

“Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular Person, such Person shall be deemed to have beneficial ownership of all securities that such Person has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only after the passage of time. The terms “Beneficially Owns” and “Beneficially Owned” have a corresponding meaning.

“Board” means the Board of Directors of the Company, as constituted at any time.

“Cash Award” means an Award denominated in cash that is granted under Section 7.4 of the Plan.

“Cause” means:

(a)       With respect to any Employee or Consultant, unless the applicable Award Agreement states otherwise:

(i)        If the Employee or Consultant is a party to an employment or service agreement with the Company or its Affiliates and such agreement provides for a definition of Cause, the definition contained therein; or

(ii)        If no such agreement exists, or if such agreement does not define Cause: (A) the commission of, or plea of guilty or no contest to, a felony, a crime involving moral turpitude, or the commission of any other act involving willful malfeasance or material fiduciary breach with respect to the Company or an Affiliate; (B) conduct that results in, or is reasonably likely to result in, harm to the reputation or business of the Company or any of its Affiliates; (C) gross negligence or willful misconduct with respect to the Company or any of its Affiliates; (D) a material breach of any employment or similar agreement or any Company policy; and (E) a material violation of state or federal securities or banking laws.

(b)       With respect to any Director, unless the applicable Award Agreement states otherwise, a determination by a majority of the disinterested Directors that the Director has engaged in any of the following:

(i)        malfeasance during term as a director of the Company or its Affiliates;

(ii)        the commission of, or plea of guilty or no contest to, a felony, a crime involving moral turpitude, or the commission of any other act involving a material fiduciary breach with respect to the Company or an Affiliate

(iii)       gross misconduct or neglect;

(iv)        false or fraudulent misrepresentation inducing the Director’s appointment;

(v)        willful conversion of corporate funds; or

(vi)        repeated failure to participate in Board meetings on a regular basis despite having received proper notice of the meetings in advance.

The Committee shall determine the effect of all matters and questions relating to whether a Participant has been discharged for Cause.

“Change in Control” means:

(a)        One Person (or more than one Person acting as a group) acquires ownership of stock of the Company that, together with the stock held by such person or group, constitutes more than 50% of the total Fair Market Value or total voting power of the capital stock of the Company; provided, that, a Change in Control shall not occur if any Person (or more than one Person acting as a group) owns more than 50% of the total Fair Market Value or total voting power of the Company’s capital stock and acquires additional capital stock;

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(b)      One Person (or more than one Person acting as a group) acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) ownership of 30% or more of the total voting power of the capital stock of the Company;

(c)      A majority of the Directors are replaced during any 12-month period by Directors whose appointment or election is not endorsed by a majority of the Board before the date of appointment or election; or

(d)      One Person (or more than one Person acting as a group), acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) assets from the Company that have a total gross fair market value equal to or greater than 40% of the total gross fair market value of all of the assets of the Company immediately before such acquisition(s).

“Clawback Policy” has the meaning set forth in Section 14.2.

“Code” means the Internal Revenue Code of 1986, as it may be amended from time to time. Any reference to a section of the Code shall be deemed to include a reference to any regulations promulgated thereunder.

“Committee” means a committee of one or more Directors appointed by the Board to administer the Plan in accordance with Section 3.3 and Section 3.4.

“Common Stock” means the Class A Voting Common Stock, $0.01 par value per share, of the Company, or such other securities of the Company as may be designated by the Committee from time to time in substitution thereof.

“Company” means Professional Holding Corp., a Florida corporation, and any successor thereto.

“Consultant” means any individual or entity which performs bona fide services to the Company or an Affiliate, other than as an Employee or Director.

“Continuous Service” means that the Participant’s service with the Company or an Affiliate, whether as an Employee, Consultant or Director, is not interrupted or terminated. The Participant’s Continuous Service shall not be deemed to have terminated merely because of a change in the capacity in which the Participant renders service to the Company or an Affiliate as an Employee, Consultant or Director or a change in the entity for which the Participant renders such service, provided that there is no interruption or termination of the Participant’s Continuous Service; provided further that if any Award is subject to Section 409A of the Code, this sentence shall only be given effect to the extent consistent with Section 409A of the Code. For example, a change in status from an Employee to a director of an Affiliate will not constitute an interruption of Continuous Service. The Committee may determine whether Continuous Service shall be considered interrupted in the case of any approved leave of absence approved, including sick leave, military leave or any other personal or family leave of absence. The Committee may determine whether a Company transaction, such as a sale or spin-off of a division or subsidiary that employs a Participant, shall be deemed to result in a termination of Continuous Service for purposes of affected Awards, and such decision shall be final, conclusive and binding.

“Deferred Stock Units” has the meaning set forth in Section 7.2.

“Director” means a member of the Board.

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“Disability” means, unless the applicable Award Agreement says otherwise, that the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment; provided, however, for purposes of determining the term of an Incentive Stock Option pursuant to Section 6.10, the term Disability shall have the meaning ascribed to it under Section 22(e)(3) of the Code. The determination of whether an individual has a Disability shall be determined under procedures established by the Committee. Except in situations where the Committee is determining Disability for purposes of the term of an Incentive Stock Option pursuant to Section 6.10 within the meaning of Section 22(e)(3) of the Code, the Committee may rely on any determination that a Participant is disabled for purposes of benefits under any long-term disability plan maintained by the Company or any Affiliate in which a Participant participates.

“Disqualifying Disposition” has the meaning set forth in Section 14.10.

“Dividend Equivalents” has the meaning set forth in Section 7.2

“Effective Date” means the date that the Company’s shareholders approve this Plan if such shareholder approval occurs before the first anniversary of the date the Plan is adopted by the Board.

“Employee” means any person, including an Officer or Director, employed by the Company or an Affiliate; provided, that, for purposes of determining eligibility to receive Incentive Stock Options, an Employee means an employee of the Company or a parent or subsidiary within the meaning of Section 424 of the Code. Mere service as a Director or payment of a Director’s fee by the Company or an Affiliate is not sufficient to constitute “employment” by the Company or an Affiliate.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Fair Market Value” means, as of any date, the value of the Common Stock as determined below. If the Common Stock is listed on any established stock exchange or a national market system, including without limitation, the New York Stock Exchange or the Nasdaq Stock Market, the Fair Market Value shall be the closing price of a share of Common Stock (or if no sales were reported the closing price on the date immediately preceding such date) as quoted on such exchange or system on the day of determination, as reported in the Wall Street Journal. If the Common Stock is not listed on an established stock exchange, but is quoted on an OTC market, then the Fair Market Value shall be the 20-day volume-weighted average price per share on such OTC market. In the absence of an established market for the Common Stock, the Fair Market Value shall be determined in good faith by the Committee in accordance with the requirements of Code Section 409A and such determination shall be conclusive and binding on all Persons.

“Fiscal Year” means the Company’s fiscal year.

“Free Standing Rights” has the meaning set forth in Section 7.1(a).

“Good Reason” means, unless the applicable Award Agreement states otherwise:

(a)      If an Employee or Consultant is a party to an employment or service agreement with the Company or any of its Affiliates and such agreement provides for a definition of Good Reason, the definition contained therein; or

(b)      If no such agreement exists or if such agreement does not define Good Reason, the occurrence of one or more of the following without the Participant’s express written consent, which circumstances are not remedied by the Company within 30 days of its receipt of a written notice from the Participant describing the applicable circumstances (which notice must be provided by the Participant within 30 days of the Participant’s knowledge of the applicable circumstances): (i) any material, adverse change in the Participant’s duties, responsibilities, authority, title, status or reporting structure; (ii) a material reduction in the Participant’s base salary or bonus opportunity; or (iii) a geographical relocation of the Participant’s principal office location by more than 50 miles.

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“Grant Date” means the date on which the Committee adopts a resolution, or takes other appropriate action, expressly granting an Award to a Participant that specifies the key terms and conditions of the Award or, if a later date is set forth in such resolution, then such date as is set forth in such resolution.

“Incentive Stock Option” means an Option that is designated by the Committee as an incentive stock option within the meaning of Section 422 of the Code and that meets the requirements set out in the Plan.

“ISO Limit” has the meaning set forth in Section 4.3.

“Non-Employee Director” means a Director who is a “non-employee director” within the meaning of Rule 16b-3.

“Non-qualified Stock Option” means an Option that by its terms does not qualify or is not intended to qualify as an Incentive Stock Option.

“Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

“Option” means an Incentive Stock Option or a Non-qualified Stock Option granted pursuant to the Plan.

“Optionholder” means a person to whom an Option is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Option.

“Option Exercise Price” means the price at which a share of Common Stock may be purchased upon the exercise of an Option.

“Other Equity-Based Award” means an Award that is not an Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, or Performance Share Award that is granted under Section 7.4 and is payable by delivery of Common Stock or which is measured by reference to the value of Common Stock.

“Participant” means an eligible person to whom an Award is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Award.

“Performance Goals” means, for a Performance Period, the one or more goals established by the Committee for the Performance Period based upon business criteria or other performance measures determined by the Committee.

“Performance Period” means the one or more periods of time as the Committee may select over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Participant’s right to and the payment of a Performance Share Award or a Cash Award.

“Performance Share Award” means any Award granted pursuant to Section 7.3.

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“Performance Share” means the grant of a right to receive a number of actual shares of Common Stock or share units based upon the performance of the Company during a Performance Period, as determined by the Committee.

“Permitted Transferee” means: (a) a member of the Optionholder’s immediate family (child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships), any individual sharing the Optionholder’s household (other than a tenant or employee), a trust in which the foregoing individuals collectively have more than 50% of the beneficial interest, a foundation in which the foregoing individuals or the Optionholder control the management of assets, and any other Person in which the foregoing individuals or the Optionholder own more than 50% of the voting interests; (b) third parties designated by the Committee in connection with a program established and approved by the Committee pursuant to which Participants may receive a cash payment or other consideration in consideration for the transfer of a Non-qualified Stock Option; and (c) such other transferees as may be permitted by the Committee.

“Person” means a person as defined in Section 13(d)(3) of the Exchange Act.

“Plan” means this Professional Holding Corp. 2019 Equity Incentive Plan, as amended or restated from time to time.

“Related Rights” has the meaning set forth in Section 7.1(a).

“Restricted Award” means any Award granted pursuant to Section 7.2(a).

“Restricted Period” has the meaning set forth in Section 7.2(a).

“Restricted Stock” has the meaning set forth in Section 7.2(a)

“Restricted Stock Unit” has the meaning set forth in Section 7.2(a)

“Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any successor to Rule 16b-3, as in effect from time to time.

“Securities Act” means the Securities Act of 1933, as amended.

“Stock Appreciation Right” means the right pursuant to an Award granted under Section 7.1 to receive, upon exercise, an amount payable in cash or shares equal to the number of shares subject to the Stock Appreciation Right that is being exercised multiplied by the excess of (a) the Fair Market Value of a share of Common Stock on the date the Award is exercised, over (b) the exercise price specified in the Stock Appreciation Right Award Agreement.

“Stock for Stock Exchange” has the meaning set forth in Section 6.4.

“Substitute Award” has the meaning set forth in Section 4.6.

“Ten Percent Shareholder” means a Person who owns (or is deemed to own pursuant to Section 424(d) of the Code) stock having more than 10% of the total combined voting power of all classes of capital stock of the Company or of any of its Affiliates.

“Total Share Reserve” has the meaning set forth in Section 4.1.

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3.              Administration.

3.1               Authority of Committee. The Plan shall be administered by the Committee or, in the Board’s sole discretion, by the Board. Subject to the terms of the Plan, the Committee’s charter and Applicable Laws, and in addition to other express powers and authorization conferred by the Plan, the Committee (or the Board, as applicable) shall have the authority:

(a)to construe and interpret the Plan and apply its provisions;

(b)to promulgate, amend, and rescind rules and regulations relating to the administration of the Plan;

(c)to authorize any Person to execute, on behalf of the Company, any instrument required to carry out the purposes of the Plan;

(d)to delegate its authority to one or more Officers of the Company with respect to Awards that do not involve “insiders” within the meaning of Section 16 of the Exchange Act;

(e)to determine when Awards are to be granted under the Plan and the applicable Grant Date;

(f)from time to time to select, subject to the limitations set forth in this Plan, those eligible Award recipients to whom Awards shall be granted;

(g)to determine the number of shares of Common Stock to be made subject to each Award;

(h)to determine whether each Option is to be an Incentive Stock Option or a Non-qualified Stock Option;

(i)to prescribe the terms and conditions of each Award, including, without limitation, the exercise price and medium of payment and vesting provisions, and to specify the provisions of the Award Agreement relating to such grant;

(j)to determine the target number of Performance Shares to be granted pursuant to a Performance Share Award, the performance measures that will be used to establish the Performance Goals, the Performance Periods and the number of Performance Shares earned by a Participant;

(k)to amend any outstanding Awards, including for the purpose of modifying the time or manner of vesting, or the term of any outstanding Award; provided, however, that if any such amendment impairs a Participant’s rights or increases a Participant’s obligations under an Award or creates or increases a Participant’s federal income tax liability with respect to an Award, such amendment shall also be subject to the Participant’s consent;

(l)to determine the duration and purpose of leaves of absences which may be granted to a Participant without constituting termination of their employment for purposes of the Plan, which periods shall be no shorter than the periods generally applicable to Employees under the Company’s employment policies;

(m)    to make decisions with respect to outstanding Awards that may become necessary upon a change in corporate control or an event that triggers anti-dilution adjustments;

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(n)to exclusively interpret, administer, reconcile any inconsistency in, correct any defect in or supply any omission in the Plan and any instrument or agreement relating to, or Award granted under, the Plan; and

(o)to exclusively make any and all other determinations which it determines to be necessary or advisable for the administration of the Plan in its sole and absolute discretion.

The Committee (or the Board, as applicable) may also modify the purchase price or the exercise price of any outstanding Award, provided that if the modification effects a repricing, shareholder approval shall be required before the repricing is effective.

3.2               Committee Decisions Final. All decisions made by the Committee (or the Board, as applicable) pursuant to the provisions of the Plan shall be final and binding on the Company and the Participants, unless such decisions are determined by a court having jurisdiction to be arbitrary and capricious.

3.3               Delegation. The Committee (or the Board, if applicable) may delegate administration of the Plan to a committee or committees of one or more Directors, and the term “Committee” shall apply to any Person or Persons to whom such authority has been delegated. The Committee may delegate to a subcommittee any of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Board or the Committee shall thereafter be to the committee or subcommittee), subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The Board may abolish the Committee at any time and re-vest in the Board the administration of the Plan. The members of the Committee shall be appointed by and serve at the pleasure of the Board. From time to time, the Board may increase or decrease the size of the Committee, add additional members to, remove members (with or without cause) from, appoint new members in substitution therefor, and fill vacancies, however caused, in the Committee. The Committee shall act pursuant to a vote of the majority of its members or, in the case of a Committee comprised of only two members, the unanimous consent of its members, whether present or not, or by the written consent of the majority of its members and minutes shall be kept of all of its meetings and copies thereof shall be provided to the Board. Subject to the limitations prescribed by the Plan and the Board, the Committee may establish and follow such rules and regulations for the conduct of its business as it may determine to be advisable.

3.4               Committee Composition. Except as otherwise determined by the Board, the Committee shall consist solely of two or more Non-Employee Directors. The Board may determine whether to comply with the exemption requirements of Rule 16b-3. However, if the Board intends to satisfy such exemption requirements, with respect to any insider subject to Section 16 of the Exchange Act, the Committee shall be a compensation committee of the Board that at all times consists solely of two or more Non-Employee Directors. The Board or the Committee may delegate the authority to grant Awards to eligible Persons who are not then subject to Section 16 of the Exchange Act to a committee of one or more Directors who are not Non-Employee Directors. Nothing herein shall create an inference that an Award is not validly granted under the Plan in the event Awards are granted under the Plan by Committee even though the Committee does not at all times consist solely of two or more Non-Employee Directors.

3.5               Indemnification. To the extent allowed by Applicable Laws, the Committee shall be indemnified by the Company against the reasonable expenses, including attorney’s fees, actually incurred in connection with any action, suit or proceeding or in connection with any appeal therein, to which the Committee may be party by reason of any action taken or failure to act under or in connection with the Plan or any Award granted under the Plan, and against all amounts paid by the Committee in settlement thereof (provided, however, that the settlement has been approved by the Company, which approval shall not be unreasonably withheld) or paid by the Committee in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it is adjudged in such action, suit or proceeding that the Committee did not act in good faith and in a manner which the Committee reasonably believed to be in the best interests of the Company, or in the case of a criminal proceeding, had no reason to believe that the conduct complained of was unlawful.

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4.              Shares Subject to the Plan.

4.1Number of Shares Available; Automatic Annual Increase. Subject to adjustment in accordance with Section 11, no more than 300,000 shares of Common Stock shall be available for the grant of Awards under the Plan (the “Total Share Reserve”), provided that the Total Share Reserve shall automatically increase (but not decrease) on the first day of each Fiscal Year such that the Total Share Reserve shall be equal to 5% of the Company’s issued and outstanding shares of capital stock (including without limitation, the Company’s Common Stock and Class B Non-Voting Common Stock) as of each such date. During the terms of the Awards, the Company shall keep available at all times the number of shares of Common Stock required to satisfy such Awards.

4.2Shares Available for Awards. Shares of Common Stock available for Awards under the Plan may consist, in whole or in part, of authorized and unissued shares, treasury shares or shares reacquired by the Company or its Affiliates in any manner.

4.3Limit on ISO Shares. Subject to adjustment in accordance with Section 11, no more than 300,000 shares of Common Stock may be issued in the aggregate pursuant to the exercise of Incentive Stock Options (the “ISO Limit”).

4.4Limit on Director Awards. The maximum number of shares of Common Stock subject to Awards granted during a single Fiscal Year to any Director, together with any cash fees paid to such Director during the Fiscal Year, shall not exceed a total value of $300,000 (calculating the value of any Awards based on the grant date fair value for financial reporting purposes).

4.5Recycling of Unissued Shares. Any shares of Common Stock subject to an Award that expires or is canceled, forfeited, or terminated without issuance of the full number of shares of Common Stock to which the Award related will again be available for issuance under the Plan. Notwithstanding anything to the contrary contained herein, shares subject to an Award under the Plan shall not again be made available for issuance or delivery under the Plan if such shares are (a) shares tendered in payment of an Option, (b) shares delivered or withheld by the Company to satisfy any tax withholding obligation, or (c) shares covered by a stock-settled Stock Appreciation Right or other Awards that were not issued upon the settlement of the Award.

4.6Substitute Awards. The Committee may grant Awards under the Plan in assumption of, or in substitution for, outstanding awards previously granted by a Person acquired by the Company or with which the Company combines (“Substitute Awards”). Substitute Awards shall not be counted against the Total Share Reserve; provided, that, Substitute Awards issued in connection with the assumption of, or in substitution for, outstanding options intended to qualify as Incentive Stock Options shall be counted against the ISO Limit. Subject to applicable stock exchange requirements, available shares under a shareholder-approved plan of a Person directly or indirectly acquired by the Company or with which the Company combines (as appropriately adjusted to reflect such acquisition or transaction) may be used for Awards under this Plan and shall not count against the Total Share Reserve.

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5.              Eligibility.

5.1               Eligibility for Specific Awards. Incentive Stock Options may be granted only to Employees. Awards other than Incentive Stock Options may be granted to Employees, Consultants and Directors and those individuals whom the Committee determines are reasonably expected to become Employees, Consultants and Directors following the Grant Date.

5.2               Ten Percent Shareholders. A Ten Percent Shareholder may not be granted an Incentive Stock Option unless the Option Exercise Price is at least 110% of the Fair Market Value of the Common Stock on the Grant Date and the Incentive Stock Option is not exercisable after the date that is five years after the Grant Date.

6.              Option Provisions. Each Option granted under the Plan shall be evidenced by an Award Agreement and shall be subject to the conditions set forth in this Section 6 and to such other conditions not inconsistent with the Plan as may be reflected in the applicable Award Agreement. All Options shall be separately designated Incentive Stock Options or Non-qualified Stock Options at the time of grant, and, if certificates are issued upon exercise of an Option, a separate certificate or certificates will be issued for shares of Common Stock acquired upon exercise of each type of Option. Notwithstanding the foregoing, the Company will not have any liability to any Participant or any other Person if an Option designated as an Incentive Stock Option fails to qualify as such at any time or if an Option is determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Code and the terms of such Option do not satisfy the requirements of Section 409A of the Code. The provisions of separate Options need not be identical, but each Option shall include (through incorporation by reference or otherwise) the substance of each of the following provisions:

6.1               Term. Subject to the provisions of Section 5.2 regarding Ten Percent Shareholders, no Incentive Stock Option shall be exercisable after the expiration of 10 years from the Grant Date. The term of a Non-qualified Stock Option granted under the Plan shall be determined by the Committee; provided, however, no Non-qualified Stock Option may be exercisable after the date that is 10 years after the applicable Grant Date.

6.2               Exercise Price of an Incentive Stock Option. Subject to the provisions of Section 5.2 regarding Ten Percent Shareholders, the Option Exercise Price of each Incentive Stock Option shall be not less than 100% of the Fair Market Value of the Common Stock subject to the Option on the Grant Date. Notwithstanding the foregoing, an Incentive Stock Option may be granted with an Option Exercise Price less than the amount set forth in the preceding sentence if such Option is granted pursuant to an assumption of, or substitution for, another option in a manner satisfying the provisions of Section 424(a) of the Code.

6.3               Exercise Price of a Non-qualified Stock Option. The Option Exercise Price of each Non-qualified Stock Option shall be not less than 100% of the Fair Market Value of the Common Stock subject to the Option on the Grant Date. Notwithstanding the foregoing, a Non-qualified Stock Option may be granted with an Option Exercise Price less than the amount set forth in the preceding sentence if such Option is granted pursuant to an assumption of, or substitution for, another option in a manner satisfying the provisions of Section 409A of the Code.

6.4               Consideration. The Option Exercise Price of Common Stock acquired pursuant to an Option shall be paid, to the extent permitted by applicable statutes and regulations, either (a) in cash or by certified or bank check at the time the Option is exercised or (b) upon such terms as the Committee shall approve, the Option Exercise Price may be paid: (i) by delivery to the Company of other Common Stock, duly endorsed for transfer to the Company, with a Fair Market Value on the date of delivery equal to the Option Exercise Price (or portion thereof) due for the number of shares being acquired, or by means of attestation whereby the Participant identifies for delivery specific shares of Common Stock that have an aggregate Fair Market Value on the date of attestation equal to the Option Exercise Price (or portion thereof) and receives a number of shares of Common Stock equal to the difference between the number of shares thereby purchased and the number of identified attestation shares of Common Stock (a “Stock for Stock Exchange”); (ii) a “cashless” exercise program established with a broker; (iii) by reduction in the number of shares of Common Stock otherwise deliverable upon exercise of such Option with a Fair Market Value equal to the aggregate Option Exercise Price at the time of exercise; (iv) by any combination of the foregoing methods; or (v) in any other form of legal consideration that may be acceptable to the Committee. Notwithstanding the foregoing, during any period for which the Common Stock is publicly traded (i.e., the Common Stock is listed on any established stock exchange or a national market system), an exercise by a Director or Officer that involves or may involve a direct or indirect extension of credit or arrangement of an extension of credit by the Company, directly or indirectly, in violation of Section 402(a) of the Sarbanes-Oxley Act of 2002 shall be prohibited with respect to any Award under this Plan.

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6.5               Transferability of an Incentive Stock Option. An Incentive Stock Option shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Optionholder only by the Optionholder. Notwithstanding the foregoing, the Optionholder may, by delivering written notice to the Company, in a form satisfactory to the Company, designate a third party who, in the event of the death of the Optionholder, shall thereafter be entitled to exercise the Option.

6.6               Transferability of a Non-qualified Stock Option. A Non-qualified Stock Option may be transferable to a Permitted Transferee upon written approval by the Committee to the extent provided in the Award Agreement. If the Non-qualified Stock Option does not provide for transferability, then the Non-qualified Stock Option shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Optionholder only by the Optionholder. Notwithstanding the foregoing, the Optionholder may, by delivering written notice to the Company in a form satisfactory to the Company, designate a third party who, in the event of the death of the Optionholder, shall thereafter be entitled to exercise the Option.

6.7               Vesting of Options. Each Option may, but need not, vest and therefore become exercisable in periodic installments that may, but need not, be equal. An Option may be subject to such other terms and conditions on the time or times when it may be exercised (which may be based on performance or other criteria) as the Committee may deem appropriate. The vesting provisions of individual Options may vary. The Committee may provide for an acceleration of vesting and exercisability in the terms of any Award Agreement upon the occurrence of a specified event.

6.8               Termination of Continuous Service. Unless otherwise provided in an Award Agreement or in an employment agreement the terms of which have been approved by the Committee, in the event an Optionholder’s Continuous Service terminates (other than upon the Optionholder’s death or Disability), the Optionholder may exercise his or her Option (to the extent that the Optionholder was entitled to exercise such Option as of the date of termination) but only within such period of time ending on the earlier of (a) the date three months following the termination of the Optionholder’s Continuous Service or (b) the expiration of the term of the Option as set forth in the Award Agreement; provided that, if the termination of Continuous Service is by the Company for Cause, all outstanding Options (whether or not vested) shall immediately terminate and cease to be exercisable. If, after termination, the Optionholder does not exercise his or her Option within the time specified in the Award Agreement, the Option shall terminate.

6.9               Extension of Termination Date. An Optionholder’s Award Agreement may also provide that if the exercise of the Option following the termination of the Optionholder’s Continuous Service for any reason would be prohibited at any time because the issuance of shares of Common Stock would violate the registration requirements under the Securities Act or any other state or federal securities law or the rules of any securities exchange or interdealer quotation system, then the Option shall terminate on the earlier of (a) the expiration of the term of the Option in accordance with Section 6.1 or (b) the expiration of a period after termination of the Participant’s Continuous Service that is three months after the end of the period during which the exercise of the Option would be in violation of such registration or other securities law requirements.

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6.10           Disability of Optionholder. Unless otherwise provided in an Award Agreement, in the event that an Optionholder’s Continuous Service terminates as a result of the Optionholder’s Disability, the Optionholder may exercise his or her Option (to the extent that the Optionholder was entitled to exercise such Option as of the date of termination), but only within such period of time ending on the earlier of (a) the date 12 months following such termination or (b) the expiration of the term of the Option as set forth in the Award Agreement. If, after termination, the Optionholder does not exercise his or her Option within the time specified herein or in the Award Agreement, the Option shall terminate.

6.11           Death of Optionholder. Unless otherwise provided in an Award Agreement, in the event an Optionholder’s Continuous Service terminates as a result of the Optionholder’s death, then the Option may be exercised (to the extent the Optionholder was entitled to exercise such Option as of the date of death) by the Optionholder’s estate, by a Person who acquired the right to exercise the Option by bequest or inheritance or by a Person designated to exercise the Option upon the Optionholder’s death, but only within the period ending on the earlier of (a) the date 12 months following the date of death or (b) the expiration of the term of such Option as set forth in the Award Agreement. If, after the Optionholder’s death, the Option is not exercised within the time specified herein or in the Award Agreement, the Option shall terminate.

6.12           Incentive Stock Option $100,000 Limitation. To the extent that the aggregate Fair Market Value (determined at the time of grant) of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any Optionholder during any calendar year (under all plans of the Company and its Affiliates) exceeds $100,000, the Options or portions thereof which exceed such limit (according to the order in which they were granted) shall be treated as Non-qualified Stock Options.

7.              Provisions for Awards Other Than Options.

7.1               Stock Appreciation Rights.  

(a)General. Each Stock Appreciation Right granted under the Plan shall be evidenced by an Award Agreement and shall be subject to the conditions set forth in this Section 7.1, and to such other conditions not inconsistent with the Plan as may be reflected in the applicable Award Agreement. Stock Appreciation Rights may be granted alone (“Free Standing Rights”) or in tandem with an Option granted under the Plan (“Related Rights”).

(b)Grant Requirements. Any Related Right that relates to a Non-qualified Stock Option may be granted at the same time the Option is granted or at any time thereafter but before the exercise or expiration of the Option. Any Related Right that relates to an Incentive Stock Option must be granted at the same time the Incentive Stock Option is granted.

(c)Term of Stock Appreciation Rights. The term of a Stock Appreciation Right granted under the Plan shall be determined by the Committee; provided, however, no Stock Appreciation Right shall be exercisable later than the tenth anniversary of the Grant Date.

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(d)Vesting of Stock Appreciation Rights. Each Stock Appreciation Right may, but need not, vest and therefore become exercisable in periodic installments that may, but need not, be equal. The Stock Appreciation Right may be subject to such other terms and conditions on the time or times when it may be exercised as the Committee may deem appropriate. The vesting provisions of individual Stock Appreciation Rights may vary. No Stock Appreciation Right may be exercised for a fraction of a share of Common Stock. The Committee may, but shall not be required to, provide for an acceleration of vesting and exercisability in the terms of any Stock Appreciation Right upon the occurrence of a specified event.

(e)Exercise and Payment. Upon exercise of a Stock Appreciation Right, the holder shall be entitled to receive from the Company an amount equal to the number of shares of Common Stock subject to the Stock Appreciation Right that is being exercised multiplied by the excess of (i) the Fair Market Value of a share of Common Stock on the date the Award is exercised, over (ii) the exercise price specified in the Stock Appreciation Right or related Option. Payment with respect to the exercise of a Stock Appreciation Right shall be made on the date of exercise. Payment shall be made in the form of shares of Common Stock (with or without restrictions as to substantial risk of forfeiture and transferability, as determined by the Committee), cash or a combination thereof, as determined by the Committee.

(f)Exercise Price. The exercise price of a Free Standing Right shall be determined by the Committee, but shall not be less than 100% of the Fair Market Value of one share of Common Stock on the Grant Date of such Stock Appreciation Right. A Related Right granted simultaneously with or subsequent to the grant of an Option and in conjunction therewith or in the alternative thereto shall, subject to the requirements of Code Section 409A, have the same exercise price as the related Option, shall be transferable only upon the same terms and conditions as the related Option, and shall be exercisable only to the same extent as the related Option; provided, however, that a Stock Appreciation Right, by its terms, shall be exercisable only when the Fair Market Value per share of Common Stock subject to the Stock Appreciation Right and related Option exceeds the exercise price per share thereof and no Stock Appreciation Rights may be granted in tandem with an Option unless the Committee determines that the requirements of Section 7.1(b) are satisfied.

(g)Reduction in the Underlying Option Shares. Upon any exercise of a Related Right, the number of shares of Common Stock for which any related Option shall be exercisable shall be reduced by the number of shares for which the Stock Appreciation Right has been exercised. The number of shares of Common Stock for which a Related Right shall be exercisable shall be reduced upon any exercise of any related Option by the number of shares of Common Stock for which such Option has been exercised.

7.2                   Restricted Awards.  

(a)General. A Restricted Award is an Award of actual shares of Common Stock (“Restricted Stock”) or hypothetical Common Stock units (“Restricted Stock Units”) having a value equal to the Fair Market Value of an identical number of shares of Common Stock, which may, but need not, provide that such Restricted Award may not be sold, assigned, transferred or otherwise disposed of, pledged or hypothecated as collateral for a loan or as security for the performance of any obligation or for any other purpose for such period (the “Restricted Period”) as the Committee shall determine. Each Restricted Award granted under the Plan shall be evidenced by an Award Agreement and shall be subject to the conditions set forth in this Section 7.2, and to such other conditions not inconsistent with the Plan as may be reflected in the applicable Award Agreement.

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(b)Restricted Stock and Restricted Stock Units. Each Participant granted Restricted Stock shall execute and deliver to the Company an Award Agreement with respect to the Restricted Stock setting forth the restrictions and other terms and conditions applicable to such Restricted Stock. If the Committee determines that the Restricted Stock shall be held by the Company or in escrow rather than delivered to the Participant pending the release of the applicable restrictions, the Committee may require the Participant to additionally execute and deliver to the Company (A) an escrow agreement satisfactory to the Committee, if applicable, and (B) the appropriate blank stock power with respect to the Restricted Stock covered by such agreement. If a Participant fails to execute an agreement evidencing an Award of Restricted Stock and, if applicable, an escrow agreement and stock power, the Award shall be null and void. Subject to the restrictions set forth in the Award, the Participant generally shall have the rights and privileges of a shareholder as to such Restricted Stock, including the right to vote such Restricted Stock and the right to receive dividends; provided that, any cash dividends and stock dividends with respect to the Restricted Stock shall be withheld by the Company for the Participant’s account, and interest may be credited on the amount of the cash dividends withheld at a rate and subject to such terms as determined by the Committee. The cash dividends or stock dividends so withheld by the Committee and attributable to any particular share of Restricted Stock (and earnings thereon, if applicable) shall be distributed to the Participant in cash or in shares of Common Stock having a Fair Market Value equal to the amount of such dividends, if applicable, upon the release of restrictions on such share and, if such share is forfeited, the Participant shall have no right to such dividends.

(c)Terms of Restricted Stock Units. The terms and conditions of a grant of Restricted Stock Units shall be reflected in an Award Agreement. No shares of Common Stock shall be issued at the time a Restricted Stock Unit is granted, and the Company will not be required to set aside funds for the payment of any such Award. A Participant shall have no voting rights with respect to any Restricted Stock Units granted hereunder. The Committee may also grant Restricted Stock Units with a deferral feature, whereby settlement is deferred beyond the vesting date until the occurrence of a future payment date or event set forth in an Award Agreement (“Deferred Stock Units”). Each Restricted Stock Unit or Deferred Stock Unit (representing one share of Common Stock) may be credited with an amount equal to the cash and stock dividends paid by the Company in respect of one share of Common Stock (“Dividend Equivalents”). In those instances, Dividend Equivalents shall be paid currently (and in no case later than the end of the calendar year in which the dividend is paid to the holders of the Common Stock or, if later, the 15^th day of the third month following the date the dividend is paid to holders of the Common Stock). Dividend Equivalents shall be withheld by the Company and credited to the Participant’s account, and interest may be credited on the amount of cash Dividend Equivalents credited to the Participant’s account at a rate and subject to such terms as determined by the Committee. Dividend Equivalents credited to a Participant’s account and attributable to any particular Restricted Stock Unit or Deferred Stock Unit (and earnings thereon, if applicable) shall be distributed in cash or in shares of Common Stock having a Fair Market Value equal to the amount of such Dividend Equivalents and earnings, if applicable, to the Participant upon settlement of such Restricted Stock Unit or Deferred Stock Unit and, if such Restricted Stock Unit or Deferred Stock Unit is forfeited, the Participant shall have no right to such Dividend Equivalents.

(d)Restrictions. Restricted Stock awarded to a Participant shall be subject to the following restrictions until the expiration of the Restricted Period, and to such other terms and conditions as may be set forth in the applicable Award Agreement: (A) if an escrow arrangement is used, the Participant shall not be entitled to delivery of the stock certificate; (B) the shares shall be subject to the restrictions on transferability set forth in the Award Agreement; (C) the shares shall be subject to forfeiture to the extent provided in the applicable Award Agreement; and (D) to the extent such shares are forfeited, the stock certificates shall be returned to the Company, and all rights of the Participant to such shares and as a shareholder with respect to such shares shall terminate without further obligation on the part of the Company.

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(i)Restricted Stock Units and Deferred Stock Units awarded to any Participant shall be subject to (A) forfeiture until the expiration of the Restricted Period, and satisfaction of any applicable Performance Goals during such period, to the extent provided in the applicable Award Agreement, and to the extent such Restricted Stock Units or Deferred Stock Units are forfeited, all rights of the Participant to such Restricted Stock Units or Deferred Stock Units shall terminate without further obligation on the part of the Company and (B) such other terms and conditions as may be set forth in the applicable Award Agreement.

(ii)The Committee may remove any or all of the restrictions on the Restricted Stock, Restricted Stock Units and Deferred Stock Units whenever it may determine that, by reason of changes in Applicable Laws or other changes in circumstances arising after the date the Restricted Stock or Restricted Stock Units or Deferred Stock Units are granted, such action is appropriate.

(e)Restricted Period. The Restricted Period for Restricted Awards shall commence on the Grant Date and end at the time or times set forth on a schedule established by the Committee in the applicable Award Agreement. No Restricted Award may be granted or settled for a fraction of a share of Common Stock. The Committee may provide for an acceleration of vesting in the terms of any Award Agreement upon the occurrence of a specified event.

(f)Delivery of Restricted Stock and Settlement of Restricted Stock Units. Upon the expiration of the Restricted Period for any shares of Restricted Stock, the restrictions set forth in Section 7.2(d) and the applicable Award Agreement shall be of no further force or effect with respect to such shares, except as set forth in the applicable Award Agreement. If an escrow arrangement is used, upon such expiration, the Company shall deliver to the Participant, or his or her beneficiary, without charge, the stock certificate evidencing the shares of Restricted Stock that have not then been forfeited and any cash dividends or stock dividends credited to the Participant’s account with respect to such Restricted Stock. Upon the expiration of the Restricted Period with respect to any outstanding Restricted Stock Units, or at the expiration of the deferral period with respect to any outstanding Deferred Stock Units, the Company shall deliver to the Participant, or his or her beneficiary, without charge, one share of Common Stock for each such outstanding vested Restricted Stock Unit or Deferred Stock Unit (“Vested Unit”) and cash equal to any Dividend Equivalents credited with respect to each such Vested Unit in accordance with Section 7.2(b) or in shares of Common Stock having a Fair Market Value equal to such Dividend Equivalents; provided, however, that, if explicitly provided in the applicable Award Agreement, the Committee may elect to pay cash or part cash and part Common Stock in lieu of delivering only shares of Common Stock for Vested Units. If a cash payment is made in lieu of delivering shares of Common Stock, the amount of such payment shall be equal to the Fair Market Value of the Common Stock as of the date on which the Restricted Period lapsed in the case of Restricted Stock Units, or the delivery date in the case of Deferred Stock Units, with respect to each Vested Unit.

(g)Stock Restrictions. Each certificate representing Restricted Stock awarded under the Plan shall bear a legend in such form as the Company deems appropriate.

7.3               Performance Share Awards.  

(a)Grant of Performance Share Awards. Each Performance Share Award granted under the Plan shall be evidenced by an Award Agreement and will be subject to the conditions set forth in this Section 7.3, and to such other conditions not inconsistent with the Plan as may be reflected in the applicable Award Agreement. The Committee may determine: (i) the number of shares of Common Stock or stock-denominated units subject to a Performance Share Award granted to any Participant; (ii) the Performance Period applicable to any Award; (iii) the conditions that must be satisfied for a Participant to earn an Award; and (iv) the other terms, conditions and restrictions of the Award.

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(b)Earning Performance Share Awards. The number of Performance Shares earned by a Participant will depend on the extent to which the performance goals established by the Committee are attained within the applicable Performance Period, as determined by the Committee.

7.4               Other Equity-Based Awards and Cash Awards. The Committee may grant Other Equity-Based Awards, either alone or in tandem with other Awards, in such amounts and subject to such conditions as the Committee shall determine. Each Equity-Based Award shall be evidenced by an Award Agreement and shall be subject to such conditions, not inconsistent with the Plan, as may be reflected in the applicable Award Agreement. The Committee may grant Cash Awards in such amounts and subject to such Performance Goals, other vesting conditions, and such other terms as the Committee determines. Cash Awards shall be evidenced in such form as the Committee may determine.

8.              Securities Law Compliance. Each Award Agreement shall provide that no shares of Common Stock may be purchased or sold thereunder unless and until (a) any then applicable requirements of state or federal laws and regulatory agencies have been fully complied with to the satisfaction of the Company and its counsel and (b) if required to do so by the Company, the Participant has executed and delivered to the Company a letter of investment intent in such form and containing such provisions as the Committee may require. If, after reasonable efforts, the Company is unable to obtain from any such regulatory commission or agency having jurisdiction over the Plan or the issuance of Awards under the Plan the authorization which counsel for the Company deems necessary for the lawful issuance and sale of Common Stock under the Plan, the Company shall be relieved from any liability for failure to issue and sell Common Stock upon exercise of such Awards unless and until such authorization is obtained.

9.              Use of Proceeds from Stock. Proceeds from the sale of Common Stock pursuant to Awards, or upon exercise thereof, shall constitute general funds of the Company.

10.            Miscellaneous.

10.1           Acceleration of Exercisability and Vesting. The Committee may accelerate the time at which an Award may first be exercised or the time during which an Award or any part thereof will vest in accordance with the Plan, notwithstanding the provisions in the Award stating the time at which it may first be exercised or the time during which it will vest.

10.2           Shareholder Rights. Except as provided in the Plan or an Award Agreement, no Participant shall be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares of Common Stock subject to such Award unless and until such Participant has satisfied all requirements for exercise of the Award pursuant to its terms and no adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property) or distributions of other rights for which the record date is prior to the date such Common Stock certificate is issued, except as provided in Section 11.

10.3           No Employment or Other Service Rights. Nothing in the Plan or any instrument executed or Award granted pursuant thereto shall confer upon any Participant any right to continue to serve the Company or an Affiliate in any capacity or shall affect the right of the Company or an Affiliate to terminate (a) the employment of an Employee with or without notice and with or without Cause or (b) the service of a Director pursuant to the Bylaws of the Company or an Affiliate, and any applicable provisions of the corporate law of the state in which the Company or the Affiliate is incorporated, as the case may be.

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10.4           Transfer; Approved Leave of Absence. For purposes of the Plan, no termination of employment by an Employee shall be deemed to result from either (a) a transfer of employment to the Company from an Affiliate or from the Company to an Affiliate, or from one Affiliate to another, or (b) an approved leave of absence for military service or sickness, or for any other purpose approved by the Company, if the Employee’s right to reemployment is guaranteed either by a statute or by contract or under the policy pursuant to which the leave of absence was granted or if the Committee otherwise so provides in writing, in either case, except to the extent inconsistent with Section 409A of the Code if the applicable Award is subject thereto.

10.5           Withholding Obligations. To the extent provided by the terms of an Award Agreement or as determined by the Committee, the Participant may satisfy any federal, state or local tax withholding obligation relating to the exercise or acquisition of Common Stock under an Award by any of the following means (in addition to the Company’s right to withhold from any compensation paid to the Participant by the Company) or by a combination of such means: (a) tendering a cash payment; (b) authorizing the Company to withhold shares of Common Stock from the shares of Common Stock otherwise issuable to the Participant as a result of the exercise or acquisition of Common Stock under the Award, provided, however, that no shares of Common Stock are withheld with a value exceeding the maximum amount of tax required to be withheld by law; or (c) delivering to the Company previously owned and unencumbered shares of Common Stock of the Company.

11.          Adjustments Upon Changes in Capital Structure. In the event of changes in the outstanding Common Stock or in the capital structure of the Company by reason of any stock or extraordinary cash dividend, stock split, reverse stock split, an extraordinary corporate transaction such as any recapitalization, reorganization, merger, consolidation, combination, exchange, or other relevant change in capitalization occurring after the Grant Date of any Award, Awards granted under the Plan and any Award Agreements, the exercise price of Options and Stock Appreciation Rights, the Performance Goals to which Performance Share Awards and Cash Awards are subject, the maximum number of shares of Common Stock subject to all Awards stated in Section 4 will be equitably adjusted or substituted, as determined by the Committee, as to the number, price or kind of a share of Common Stock or other consideration subject to such Awards to the extent necessary to preserve the economic intent of such Award. In the case of adjustments made pursuant to this Section 11, unless the Committee specifically determines that such adjustment is in the best interests of the Company or its Affiliates, the Committee shall, in the case of Incentive Stock Options, ensure that any adjustments under this Section 11 will not constitute a modification, extension or renewal of the Incentive Stock Options within the meaning of Section 424(h)(3) of the Code and in the case of Non-qualified Stock Options, ensure that any adjustments under this Section 11 will not constitute a modification of such Non-qualified Stock Options within the meaning of Section 409A of the Code. Any adjustments made under this Section 11 shall be made in a manner which does not adversely affect the exemption provided pursuant to Rule 16b-3 under the Exchange Act. The Company shall give each Participant notice of an adjustment hereunder and such adjustment shall be conclusive and binding for all purposes.

12.          Effect of Change in Control.

12.1Accelerated Vesting Upon a Change in Control. Unless otherwise provided in an Award Agreement, notwithstanding any provision of the Plan to the contrary:

(a)In the event of a Participant’s termination of Continuous Service without Cause or for Good Reason during the 12-month period following a Change in Control, notwithstanding any provision of the Plan or any applicable Award Agreement to the contrary, all outstanding Options and Stock Appreciation Rights shall become immediately exercisable with respect to 100% of the shares subject to such Options or Stock Appreciation Rights, and the Restricted Period shall expire immediately with respect to 100% of the outstanding shares of Restricted Stock or Restricted Stock Units as of the date of the Participant’s termination of Continuous Service.

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(b)With respect to Performance Share Awards and Cash Awards, in the event of a Participant’s termination of Continuous Service without Cause or for Good Reason, in either case, within 12 months following a Change in Control, all Performance Goals or other vesting criteria will be deemed achieved at 100% of target levels and all other terms and conditions will be deemed met as of the date of the Participant’s termination of Continuous Service.

To the extent practicable, any actions taken by the Committee under the immediately preceding clauses (a) and (b) shall occur in a manner and at a time which allows affected Participants the ability to participate in the Change in Control with respect to the shares of Common Stock subject to their Awards.

12.2Cancelation of Awards Upon a Change in Control. In addition, in the event of a Change in Control, the Committee may, upon at least 10 days’ advance notice to the affected Persons, cancel any outstanding Awards and pay to the holders thereof, in cash or stock, or any combination thereof, the value of such Awards based upon the price per share of Common Stock received or to be received by other shareholders of the Company in the event. In the case of any Option or Stock Appreciation Right with an exercise price (or SAR Exercise Price in the case of a Stock Appreciation Right) that equals or exceeds the price paid for a share of Common Stock in connection with the Change in Control, the Committee may cancel the Option or Stock Appreciation Right without the payment of consideration therefor.

12.3Binding Effect Upon Successors. The obligations of the Company under the Plan shall be binding upon any successor corporation or organization resulting from the merger, consolidation or other reorganization of the Company, or upon any successor corporation or organization succeeding to all or substantially all of the assets and business of the Company and its Affiliates, taken as a whole.

13.          Amendment of the Plan and Awards.

13.1           Amendment of Plan. The Board at any time, and from time to time, may amend or terminate the Plan. However, except as provided in Section 4.1 relating to annual increases to the Total Share Reserve, Section 11 relating to adjustments upon changes in Common Stock and Section 13.3, no amendment shall be effective unless approved by the shareholders of the Company to the extent shareholder approval is necessary to satisfy any Applicable Laws. At the time of such amendment, the Board shall determine, upon advice from counsel, whether such amendment will be contingent on shareholder approval.

13.2           Shareholder Approval. The Board may submit any other amendment to the Plan for shareholder approval.

13.3           Contemplated Amendments. It is expressly contemplated that the Board may amend the Plan in any respect the Board deems necessary or advisable to provide eligible Employees, Consultants and Directors with the maximum benefits provided or to be provided under the provisions of the Code and the regulations promulgated thereunder relating to Incentive Stock Options or to the nonqualified deferred compensation provisions of Section 409A of the Code or to bring the Plan or Awards granted under it into compliance therewith.

13.4           No Impairment of Rights. Rights under any Award granted before amendment of the Plan shall not be impaired by any amendment of the Plan unless (a) the Company requests the consent of the Participant and (b) the Participant consents in writing.

13.5           Amendment of Awards. The Committee at any time, and from time to time, may amend the terms of any one or more Awards; provided, however, that the Committee may not effect any amendment which would otherwise constitute an impairment of the rights under any Award unless the Participant consents in writing to such amendment.

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14.          General Provisions.

14.1           Forfeiture Events. The Committee may specify in an Award Agreement that the Participant’s rights, payments and benefits with respect to an Award are subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain events, in addition to applicable vesting conditions of an Award. Such events may include, without limitation, breach of non-competition, non-solicitation, non-disparagement, confidentiality, or other restrictive covenants that are contained in the Award Agreement or otherwise applicable to the Participant, a termination of the Participant’s Continuous Service for Cause, or other conduct by the Participant that is detrimental to the business or reputation of the Company or its Affiliates.

14.2           Clawback. Notwithstanding any other provisions in this Plan, the Company may cancel any Award, require reimbursement of any Award by a Participant, and effect any other right of recoupment of equity or other compensation provided under the Plan in accordance with any Company policies that may be adopted or modified from time to time, including, without limitation, to comply with applicable law or stock exchange listing requirements (“Clawback Policy”). In addition, a Participant may be required to repay to the Company previously paid compensation, whether provided pursuant to the Plan or an Award Agreement, in accordance with the Clawback Policy. By accepting an Award, the Participant agrees to be bound by the Clawback Policy.

14.3           Other Compensation Arrangements. Nothing contained in this Plan shall prevent the Board from adopting other or additional compensation arrangements, subject to shareholder approval if such approval is required; and such arrangements may be either generally applicable or applicable only in specific cases.

14.4           Sub-Plans. The Committee may from time to time establish sub-plans under the Plan for purposes of satisfying securities, tax or other laws of various jurisdictions in which the Company intends to grant Awards. Any sub-plans shall contain such limitations and other terms and conditions as the Committee determines are necessary or desirable. All sub-plans shall be deemed a part of the Plan, but each sub-plan shall apply only to the Participants in the jurisdiction for which the sub-plan was designed.

14.5           Deferral of Awards. The Committee may establish one or more programs under the Plan to permit selected Participants the opportunity to elect to defer receipt of consideration upon exercise of an Award, satisfaction of performance criteria, or other event that absent the election would entitle the Participant to payment or receipt of shares of Common Stock or other consideration under an Award. The Committee may establish the election procedures, the timing of such elections, the mechanisms for payments of, and accrual of interest or other earnings, if any, on amounts, shares or other consideration so deferred, and such other terms, conditions, rules and procedures that the Committee deems advisable for the administration of any such deferral program.

14.6           Unfunded Plan. The Plan shall be unfunded and none of the Company, the Board or the Committee shall be required to establish any special or separate fund or to segregate any assets to assure the performance of their obligations under the Plan.

14.7           No Fractional Shares. No fractional shares of Common Stock shall be issued or delivered pursuant to the Plan. The Committee shall determine whether cash, additional Awards or other securities or property shall be issued or paid in lieu of fractional shares of Common Stock or whether any fractional shares should be rounded, forfeited or otherwise eliminated.

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14.8           Other Provisions. The Award Agreements authorized under the Plan may contain such other provisions not inconsistent with this Plan, including, without limitation, restrictions upon the exercise of Awards, as the Committee may deem advisable.

14.9           Section 409A. The Plan is intended to comply with Section 409A of the Code to the extent subject thereto, and, accordingly, to the maximum extent permitted, the Plan shall be interpreted and administered to be in compliance therewith. Any payments described in the Plan that are due within the “short-term deferral period” as defined in Section 409A of the Code shall not be treated as deferred compensation unless Applicable Laws require otherwise. Notwithstanding anything to the contrary in the Plan, to the extent required to avoid accelerated taxation and tax penalties under Section 409A of the Code, amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to the Plan during the six-month period immediately following the Participant’s termination of Continuous Service shall instead be paid on the first payroll date after the six-month anniversary of the Participant’s separation from service (or the Participant’s death, if earlier). Notwithstanding the foregoing, unless otherwise expressly agreed, neither the Company nor the Committee shall have any obligation to take any action to prevent the assessment of any additional tax or penalty on any Participant under Section 409A of the Code and neither the Company nor the Committee will have any liability to any Participant for such tax or penalty.

14.10        Disqualifying Dispositions. Any Participant who shall make a “disposition” (as defined in Section 424 of the Code) of all or any portion of shares of Common Stock acquired upon exercise of an Incentive Stock Option within two years from the Grant Date of such Incentive Stock Option or within one year after the issuance of the shares of Common Stock acquired upon exercise of such Incentive Stock Option (a “Disqualifying Disposition”) shall be required to immediately advise the Company in writing as to the occurrence of the sale and the price realized upon the sale of such shares of Common Stock.

14.11        Section 16. It is the intent of the Company that the Plan satisfy, and be interpreted in a manner that satisfies, the applicable requirements of Rule 16b-3 as promulgated under Section 16 of the Exchange Act so that Participants will be entitled to the benefit of Rule 16b-3, or any other rule promulgated under Section 16 of the Exchange Act, and will not be subject to short-swing liability under Section 16 of the Exchange Act. Accordingly, if the operation of any provision of the Plan would conflict with the intent expressed in this Section 14.11, such provision to the extent possible shall be interpreted or deemed amended so as to avoid such conflict.

14.12        Beneficiary Designation. Each Participant under the Plan may from time to time name any beneficiary or beneficiaries by whom any right under the Plan is to be exercised in case of such Participant’s death. Each designation will revoke all prior designations by the same Participant, shall be in a form reasonably prescribed by the Committee and shall be effective only when filed by the Participant in writing with the Company during the Participant’s lifetime.

14.13        Expenses. The costs of administering the Plan shall be paid by the Company.

14.14        Severability. If any of the provisions of the Plan or any Award Agreement is held to be invalid, illegal or unenforceable, whether in whole or in part, such provision shall be deemed modified to the extent, but only to the extent, of such invalidity, illegality or unenforceability and the remaining provisions shall not be affected thereby.

14.15        Plan Headings. The headings in the Plan are for purposes of convenience only and are not intended to define or limit the construction of the provisions of the Plan.

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14.16        Non-Uniform Treatment. The Committee’s determinations under the Plan need not be uniform and may be made by it selectively among Persons who are eligible to receive, or actually receive, Awards. Without limiting the generality of the foregoing, the Committee shall be entitled to make non-uniform and selective determinations, amendments and adjustments, and to enter into non-uniform and selective Award Agreements.

15.          Effective Date of Plan. The Plan shall become effective as of the Effective Date, but no Award shall be exercised (or, in the case of a stock Award, shall be granted) unless and until the Plan has been approved by the shareholders of the Company, which approval shall be within 12 months before or after the date the Plan is adopted by the Board.

16.          Termination or Suspension of the Plan. The Plan shall terminate automatically on the 10^th anniversary of the Effective Date. No Award shall be granted pursuant to the Plan after such date, but Awards granted prior to the Plan’s termination may extend beyond that date. The Board may suspend or terminate the Plan at any earlier date pursuant to Section 13.1. No Awards may be granted under the Plan while the Plan is suspended or after it is terminated.

17.          Choice of Law. The laws of the State of Florida shall govern all questions concerning the construction, validity and interpretation of this Plan, without regard to any conflict of law rules.

As adopted by the Board of Directors of Professional Holding Corp. on March 14, 2019.

As approved by the shareholders of Professional Holding Corp. on April 18, 2019.

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EX-10.13

Exhibit 10.13

RESTRICTED STOCK AWARD AGREEMENT

This Restricted Stock Award Agreement (this “Agreement”) sets forth the terms of a Restricted Stock award granted on __________________ (the “Effective Date”) by Professional Holding Corp., a Florida corporation (the “Company”), to _________________________ (the “Participant”). Capitalized terms used but not defined in this Agreement have the meanings ascribed to them in the Professional Holding Corp. 2019 Equity Incentive Plan (the “Plan”).

RECITALS

A.       The Company adopted Plan pursuant to which the Company may grant Restricted Stock awards to certain Employees, Consultants and Directors or those persons expected to become Employees, Consultants or Directors.

B.       The Committee has determined that it is in the best interests of the Company and its shareholders to grant Restricted Stock to the Participant in accordance with the terms and conditions of this Agreement.

C.       Participant wishes to accept such grant of Restricted Stock on the terms and subject to the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the mutual promises set forth in this Agreement, and for other good and valuable consideration, the adequacy of which is acknowledged by the parties’ execution of this Agreement, the Company and the Participant agree as follows:

1.Grant of Restricted Stock. Pursuant to Section 7 of the Plan, the Company has granted to the Participant on the Effective Date a Restricted Stock award consisting of, in the aggregate, _____________ shares of Class A Voting Common Stock of the Company, subject to the terms and conditions and subject to the restrictions set forth in this Agreement and the Plan. This grant of Restricted Stock is made in consideration of the services rendered and to be rendered by the Participant to the Company.

2.Restricted Period; Vesting.

a.Vesting Schedule. Except as otherwise provided in this Agreement, provided that the Participant remains in Continuous Service (as defined below) through the applicable vesting date, and further provided that any additional conditions and Performance Goals set forth in Schedule A have been satisfied, if any, the Restricted Stock will vest in accordance with the following schedule:

Vesting Date	Shares of Class A Voting Common Stock
[DATE]	[NUMBER OR % OF SHARES]
[DATE]	[NUMBER OR % OF SHARES]
[DATE]	[NUMBER OR % OF SHARES]
[DATE] (the “Final Vesting Date”)	[NUMBER OR % OF SHARES]

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The period from the Effective Date through the Final Vesting Date is referred to as the “Restricted Period.” For purposes of this Agreement, “Continuous Service” means that the Participant’s service with the Company, whether as an Employee, Consultant or Director, is not interrupted or terminated. The Participant’s Continuous Service shall not be deemed to have terminated merely because of a change in the capacity in which the Participant renders service to the Company as an employee, consultant or director or a change in the entity for which the Participant renders such service, provided that there is no interruption or termination of the Participant’s Continuous Service; and provided further that if any Award is subject to Section 409A of the Code, this sentence shall only be given effect to the extent consistent with Section 409A of the Code. The Committee, in its sole discretion, may determine whether Continuous Service shall be considered interrupted in the case of any leave of absence by the Participant, including sick leave, military leave or any other personal or family leave of absence.

b.Termination of Continuous Service. Except as set forth in this Agreement and subject to the Plan, the foregoing vesting schedule notwithstanding, if the Participant’s Continuous Service terminates for any reason at any time before all of his or her Restricted Stock has vested, the Participant’s unvested Restricted Stock shall be automatically forfeited upon such termination of Continuous Service and the Company shall have no further obligations to the Participant under this Agreement. Neither the Plan nor this Agreement shall confer upon the Participant any right to be retained in any position, as an Employee, Consultant or Director of the Company. Further, nothing in the Plan or this Agreement shall be construed to limit the discretion of the Company to terminate the Participant’s Continuous Service at any time, with or without Cause.

c.Change in Control. The foregoing vesting schedule notwithstanding, upon the occurrence of a Change in Control, 100% of the unvested Restricted Stock shall vest as of the date of the Change in Control.

d.Death or Disability. The foregoing vesting schedule notwithstanding, if the Participant’s Continuous Service terminates as a result of death or Disability of the Participant, then any unvested Restricted Stock that would have vested within one (1) year from the date of termination (or within such other period as determined by the Committee) shall vest as of the date of termination and all other unvested shares shall be automatically forfeited as of the date of termination.

e.Termination without Cause. The foregoing vesting schedule notwithstanding, if the Participant’s Continuous Service terminates as a result of voluntary resignation by the Participant or termination by the Company without Cause, then any unvested Restricted Stock that would have vested within thirty (30) days from the date of termination (or within such other period as determined by the Committee) shall vest as of the date of termination and all other unvested shares shall be automatically forfeited as of the date of termination.

3. Restrictions.

a.Transfer Restriction. Subject to any exceptions set forth in this Agreement or the Plan, during the Restricted Period, the Restricted Stock or the rights relating thereto may not be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by the Participant. Any attempt to assign, alienate, pledge, attach, sell or otherwise transfer or encumber the Restricted Stock or the rights relating thereto during the Restricted Period shall be wholly ineffective and, if any such attempt is made, the Restricted Stock will be forfeited by the Participant and all of the Participant’s rights to such shares shall immediately terminate without any payment or consideration by the Company.

b.Effect of Prohibited Transfer. The Company shall not be required to (i) transfer on its books any shares of Restricted Stock that have been transferred in violation of any of the provisions set forth in this Agreement, or (i) treat as owner of such Restricted Stock or to pay dividends or other distributions to any transferee to whom any such Restricted Stock shall have been so sold or transferred.

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4. Rights as a Shareholder; Dividends.

a.Shareholder Rights. The Participant shall be the record owner of the Restricted Stock (including unvested Restricted Stock) granted under this Agreement until the shares are sold or otherwise disposed of, and shall be entitled to all of the rights of a shareholder of the Company including, without limitation, the right to vote such shares and receive all dividends or other distributions paid with respect to such shares. Notwithstanding the foregoing, (i) any dividends or other distributions shall be subject to the same restrictions on transferability as the shares of Restricted Stock with respect to which they were paid; and (ii) any dividends or other distributions paid by the Company with respect to any shares of Restricted Stock shall accrue but shall not be payable unless and until vesting of such Restricted Stock occurs, at which time the accumulated dividends shall be paid by the Company.

b.Stock Certificates. The Company may, but need not, issue stock certificates or evidence the Participant’s interest by using a restricted book entry account with the Company’s transfer agent.

c.Forfeiture. If the Participant forfeits any rights he or she has under this Agreement pursuant to Section 3, the Participant shall, on the date of such forfeiture, no longer have any rights as a shareholder with respect to any unvested Restricted Stock and shall no longer be entitled to vote or receive dividends on such shares.

5.Tax Liability and Withholding.

a.Payment of Taxes. The Participant shall be required to pay to the Company, and the Company shall have the right to deduct from any compensation paid to the Participant pursuant to this Agreement, the amount of any required withholding taxes in respect of the Restricted Stock granted under this Agreement and to take all such other action as the Committee deems necessary to satisfy all obligations for the payment of such withholding taxes. The Committee may permit the Participant to satisfy any federal, state or local tax withholding obligation by any of the following means, or by a combination of such means: (i) tendering a cash payment; (ii) authorizing the Company to withhold shares from those otherwise issuable or deliverable to the Participant as a result of the vesting of the Restricted Stock; provided, however, that no shares of Class A Voting Common Stock shall be withheld with a value exceeding the minimum amount of tax required to be withheld by law; or (iii) delivering to the Company previously owned and unencumbered shares of Class A Voting Common Stock.

b.Liability. Notwithstanding any action the Company takes with respect to any or all income tax, social insurance, payroll tax, or other tax-related withholding (the “Tax-Related Items”), the ultimate liability for all Tax-Related Items is and remains the Participant’s responsibility and the Company (a) makes no representation or undertakings regarding the treatment of any Tax-Related Items in connection with the grant or vesting of the Restricted Stock or the subsequent sale of any shares; and (b) does not commit to structure the Restricted Stock to reduce or eliminate the Participant’s liability for Tax-Related Items.

6.Section 83 Election. The Participant may make an election under Code Section 83(b) (a “Section 83(b) Election”) with respect to the Restricted Stock granted under this Agreement. Any such election must be made within thirty (30) days after the Effective Date. If the Participant elects to make a Section 83(b) Election, the Participant shall provide the Company with a copy of an executed version and satisfactory evidence of the filing of the executed Section 83(b) Election with the U.S. Internal Revenue Service. The Participant agrees to assume full responsibility for ensuring that the Section 83(b) Election is actually and timely filed with the U.S. Internal Revenue Service and for all tax consequences resulting from the Section 83(b) Election.

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7. Compliance with Law.

a.Compliance. The issuance and transfer of shares of Restricted Stock granted under this Agreement shall be subject to compliance by the Company and the Participant with all applicable requirements of federal and state securities laws and with all applicable requirements of any stock exchange on which the Company’s shares of Class A Voting Common Stock may be listed. No shares of Restricted Stock granted under this Agreement shall be issued or transferred unless and until any then applicable requirements of state and federal laws and regulatory agencies have been fully complied with to the satisfaction of the Company and its counsel. The Participant understands that the Company is under no obligation to register the shares of Class A Voting Common Stock with the Securities and Exchange Commission, any state securities commission or any stock exchange to effect such compliance.

b.Legend. A legend may be placed on any certificate(s) or other document(s) delivered to the Participant indicating restrictions on transferability of the shares of Restricted Stock pursuant to this Agreement or any other restrictions that the Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any applicable federal or state securities laws or any stock exchange on which the shares of Class A Voting Common Stock are then listed or quoted.

8. Miscellaneous.

a.Interpretation. Any dispute regarding the interpretation of this Agreement shall be submitted by the Participant or the Company to the Committee for review. The resolution of such dispute by the Committee shall be final and binding on the Participant and the Company. In the event of any inconsistency between the terms and conditions of this Agreement and any existing employment agreement, service contract or other agreement between the Participant and the Company (each, a “Service Agreement”), the terms and conditions of the Service Agreement shall control.

b.Restricted Stock Subject to the Plan. This Agreement is subject to the Plan as approved by the Company’s shareholders, as the Plan may be amended from time to time, and the terms and provisions of the Plan, as it may be amended from time to time, are hereby incorporated herein by reference. In the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of the Plan will govern and prevail.

c.Discretionary Nature of the Plan. The Plan is discretionary and may be amended, cancelled or terminated by the Company at any time, in its discretion. The grant of the Restricted Stock in this Agreement does not create any contractual right or other right to receive any Restricted Stock or other Awards in the future. Future Awards, if any, will be at the sole discretion of the Company. Any amendment, modification, or termination of the Plan shall not constitute a change or impairment of the terms and conditions of the Participant’s employment or engagement with the Company.

d.No Impact on Other Benefits. The value of the Participant’s Restricted Stock granted under this Agreement is not part of his normal or expected compensation for purposes of calculating any severance, retirement, welfare, insurance or similar employee benefit.

e.Acceptance. The Participant hereby acknowledges receipt of a copy of the Plan and this Agreement. The Participant has read and understands the terms and provisions this Agreement and the Plan, and accepts the Restricted Stock granted under this Agreement subject to all of the terms and conditions of the Plan and this Agreement. The Participant acknowledges that there may be tax consequences upon the grant or vesting of the Restricted Stock granted under this Agreement and/or the disposition of the underlying shares and that the Participant has been advised to consult a tax advisor prior to such grant, vesting or disposition.

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f.Gunster, Yoakley & Stewart, P.A. Represents the Company. The Participant acknowledges and agrees that Gunster, Yoakley & Stewart, P.A., a Florida professional association (“Gunster”) represents the Company and not the Participant. Participant acknowledges that Gunster has not represented him or her in connection with this Agreement and that he or she has been advised to engage legal counsel to advise him or her regarding this Agreement.

g.Further Instruments. The Company and the Participant agree to execute such further instruments and to take such further action as may reasonably be necessary to carry out the intent of this Agreement.

h.Notices. Any notice required to be delivered to the Company under this Agreement shall be in writing and addressed to the Chief Financial Officer of the Company at the Company’s principal corporate offices. Any notice required to be delivered to the Participant under this Agreement shall be in writing and addressed to the Participant at the Participant’s address as shown in the records of the Company. Either party may designate another address by delivering notice of such designation in accordance with this Section.

i.Governing Law, Venue and Jurisdiction. This Agreement shall be governed in all respects by the laws of the State of Florida without regard to conflicts-of-law principles. Any civil action or legal proceeding arising out of or relating to this Agreement shall be brought in the courts of record of the State of Florida in Miami-Dade County, Florida. Each party consents to the jurisdiction of such Florida court in any such civil action or legal proceeding and waives any objection to the laying of venue of any such civil action or legal proceeding in such Florida court. Service of any court paper may be affected on such party by mail, as provided in this Agreement, or in such other manner as may be provided under applicable laws, rules of procedure or local rules.

j.Assignment. The Company may assign any of its rights under this Agreement. This Agreement will be binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth in this Agreement, this Agreement will be binding upon the Participant and the Participant’s beneficiaries, executors, administrators and the person(s) to whom the Restricted Stock may be transferred by will or the laws of descent or distribution.

k.Amendment. The Committee has the right to amend, alter, suspend, discontinue or cancel the Restricted Stock granted under this Agreement, prospectively or retroactively; provided, that, no such amendment, nor any amendment to the Plan, shall adversely affect the Participant’s material rights under this Agreement without the Participant’s consent.

l.Severability. The invalidity or unenforceability of any provision of the Plan or this Agreement shall not affect the validity or enforceability of any other provision of the Plan or this Agreement, and each provision of the Plan and this Agreement shall be severable and enforceable to the extent permitted by law.

m.Waiver. No delay or omission by the Company in exercising any right under this Agreement shall operate as a waiver of that or any other right. A waiver or consent given by the Company on any one occasion shall be effective only in that instance and shall not be construed as a bar or waiver of any right on any other occasion.

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n.JURY WAIVER. IN ANY CIVIL ACTION, COUNTERCLAIM, OR PROCEEDING, WHETHER AT LAW OR IN EQUITY, WHICH ARISES OUT OF, CONCERNS, OR RELATES TO THIS AGREEMENT, ANY AND ALL TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, THE PERFORMANCE OF THIS AGREEMENT, OR THE RELATIONSHIP CREATED BY THIS AGREEMENT, WHETHER SOUNDING IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE, TRIAL SHALL BE TO A COURT OF COMPETENT JURISDICTION AND NOT TO A JURY. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY. ANY PARTY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT, AS WRITTEN EVIDENCE OF THE CONSENT OF THE COMPANY AND PARTICIPANT OF THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. NEITHER PARTY HAS MADE OR RELIED UPON ANY ORAL REPRESENTATIONS TO OR BY ANY OTHER PARTY REGARDING THE ENFORCEABILITY OF THIS PROVISION. EACH PARTY HAS READ AND UNDERSTANDS THE EFFECT OF THIS JURY WAIVER PROVISION. EACH PARTY ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY ITS OWN COUNSEL WITH RESPECT TO THE TRANSACTION GOVERNED BY THIS AGREEMENT AND SPECIFICALLY WITH RESPECT TO THE TERMS OF THIS SECTION.

o.Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, and a complete set of which, when taken together, shall constitute one and the same document. Confirmation of execution by electronic transmission of a facsimile or .pdf signature page shall be binding, and each party hereby irrevocably waives any objection that it has or may have in the future as to the validity of any such electronic transmission of a signature page.

p.Entire Agreement. This Agreement, together with the attached Schedule A and the Plan, constitutes the sole and entire agreement of the parties with respect to the subject matter of this Agreement and supersedes all prior and contemporaneous understandings, agreements, representations and warranties, both written and oral, with respect to such subject matter.

The Company and the Participant have executed this Restricted Stock Award Agreement as of the Effective Date.

COMPANY:	PARTICIPANT:
PROFESSIONAL HOLDING CORP.	[NAME]
By:
Name:
Title:

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Schedule A

Additional Conditions and Performance Goals

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EX-10.14

Exhibit 10.14 

INDEMNIFICATION AGREEMENT

THIS INDEMNIFICATION AGREEMENT (“Agreement”) is made as of _____________________, 20___, by and among PROFESSIONAL HOLDING CORP., a registered bank holding company organized under the laws of the State of Florida (the “Company”), PROFESSIONAL BANK, a bank chartered under the laws of the State of Florida (the “Bank”) and ____________________________________________ (“Indemnitee”).

RECITALS

WHEREAS, highly competent persons have become more reluctant to serve corporations and banks as directors or in other capacities unless they are provided with adequate protection through insurance, adequate indemnification, or both, against inordinate risks of claims and actions against them arising out of their service to and activities on behalf of the corporation or bank;

WHEREAS, the Company and the Bank have determined that, in order to attract and retain qualified individuals to serve as directors or in other capacities, the Company and the Bank will attempt to maintain on an ongoing basis, at their sole expense, liability insurance to protect persons serving, in any capacity, the Company, the Bank or any other part of the Enterprise (as hereinafter defined) from certain liabilities. Although the furnishing of such insurance has been a customary and widespread practice among United States-based corporations, banks and other business enterprises, the Company and the Bank believe that, given current market conditions and trends, such insurance may be available in the future only at higher premiums and with more exclusions. At the same time, directors, officers, and other persons in service to corporations, banks or business enterprises are being increasingly subjected to expensive and time-consuming litigation relating to, among other things, matters that traditionally would have been brought only against the business enterprise itself. The Bylaws of the Company (the “Company Bylaws”) permit indemnification by the Company of its officers and directors. The Bylaws of the Bank (the “Bank Bylaws”) require indemnification by the Bank of its officers and directors. Indemnitee may also be entitled to indemnification pursuant to the Act (as hereinafter defined). The Act expressly provides that the indemnification provisions set forth therein and in the Bank Bylaws are not exclusive, and thereby contemplate that contracts may be entered into between the Company, the Bank and the members of their respective boards of directors, officers and other persons with respect to indemnification;

WHEREAS, the Company and the Bank have determined that the increased difficulty in attracting and retaining such persons is detrimental to the best interests of the Company and the Bank and that the Company and the Bank should act to assure such persons that there will be increased certainty of such protection in the future;

WHEREAS, it is reasonable, prudent and necessary for the Company and the Bank contractually to obligate themselves to indemnify, and to advance expenses on behalf of, such persons to the fullest extent permitted by applicable law so that they will serve or continue to serve the Company, the Bank, or both, free from undue concern that they will not be so indemnified;

WHEREAS, this Agreement is a supplement to and in furtherance of the indemnification provided in the Act, the Company Bylaws, the Bank Bylaws and any resolutions adopted pursuant thereto, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder; and

WHEREAS, Indemnitee is concerned that the protection available under the Company Bylaws, Bank Bylaws and insurance may not be adequate in the present circumstances, and in consideration of serving as a director of the Company, the Bank or both, desires to be assured of adequate protection, and the Company and the Bank desire Indemnitee to serve in such capacity. Indemnitee is willing to serve, continue to serve and to take on additional service for or on behalf of the Company and/or the Bank, on the condition that Indemnitee be so indemnified.

NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and the Bank, jointly and severally, and Indemnitee do hereby covenant and agree as follows:

Section 1.Services to the Company, the Bank or Both. Indemnitee agrees to continue to serve as a director of the Company or the Bank or both, as the case may be. Indemnitee may at any time and for any reason resign from such position or positions (subject to any contractual or other obligation or any obligation imposed by operation of law), in which event the Company or the Bank, as applicable, shall have no obligation under this Agreement to cause Indemnitee to continue to serve in such position. This Agreement shall not be deemed an employment contract between the Company, the Bank (or any of their respective subsidiaries or any other part of the Enterprise) and Indemnitee. Notwithstanding the foregoing, this Agreement shall continue in force after Indemnitee has ceased to serve as a director of the Company or the Bank, as the case may be.

Section 2.Definitions.

As used in this Agreement:

(a)“Act” shall mean the Florida Business Corporation Act, as amended from time to time.

(b)“Bank” shall have the meaning in the preamble to this Agreement.

(c)“Bank Bylaws” shall have the meaning in the recitals to this Agreement.

(d)“Board” shall mean the Board of Directors of the Company or the Bank, as the case may be.

(e)“Company” shall have the meaning in the preamble to this Agreement.

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(f)“Company Bylaws” shall have the meaning in the recitals to this Agreement.

(g)“Corporate Status” describes the status of a person who is or was a director, officer, employee, agent or fiduciary of the Company, the Bank or any other corporation, partnership or joint venture, trust, employee benefit plan or other entity or enterprise which such person is or was serving at the request of the Company or the Bank.

(h)“Enterprise” shall mean the Company, the Bank and any other corporation, partnership, joint venture, trust, employee benefit plan or other entity or enterprise of which Indemnitee is or was serving at the request of the Company or the Bank as a director, officer, employee, agent, fiduciary, or any other capacity.

(i)“Expenses” shall include all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts, witness fees, paralegal and investigative fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, or otherwise participating in, a Proceeding. Expenses also shall include Expenses incurred in connection with any appeal resulting from any Proceeding, including without limitation the premium, security for, and other costs relating to any cost bond, supersedes bond, or other appeal bond or its equivalent. Expenses, however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee. The parties agree that for the purposes of any advancement of Expenses for which Indemnitee has made written demand to the Company or the Bank, as the case may be, in accordance with this Agreement, all Expenses included in such demand that are certified by affidavit of Indemnitee’s counsel as being reasonable shall be presumed conclusively to be reasonable.

(j)“FDI Act” shall mean the Federal Deposit Insurance Act, as amended from time to time.

(k)“Indemnitee” shall have the meaning in the preamble to this Agreement.

(l)“Losses” means any and all Expenses, damages, losses, liabilities, judgments, fines, penalties (whether civil, criminal or other), ERISA excise taxes, amounts paid or payable in settlement, including any interest, assessments, any federal, state, local or foreign taxes imposed as a result of the actual or deemed receipt of any payments under this Agreement and all other charges paid or payable in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to defend, be a witness or participate in, any Proceeding.

(m)“Part 359” shall mean Part 359 of the Rules and Regulations of the Federal Deposit Insurance Corporation, as amended from time to time.

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(n)The term “Proceeding” shall include any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding (including on appeal), whether brought in the right of the Company, the Bank or otherwise and whether of a civil, criminal, administrative or investigative nature, in which Indemnitee was, is or will be involved as a party or otherwise by reason of the fact that Indemnitee is or was a director of the Company, the Bank, or both, as the case may be, by reason of any action taken or omitted by him or of any action on Indemnitee’s part while acting as director of the Company or the Bank, as the case may be, or by reason of the fact that Indemnitee is or was serving at the request of the Company, the Bank, or both, as a director, officer, employee, agent, fiduciary, or other capacity of another corporation, partnership, joint venture, trust, employee benefit plan or other entity or enterprise, in each case whether or not serving in such capacity at the time any liability or expense is incurred for which indemnification, reimbursement, or advancement of Expenses can be provided under this Agreement; except one initiated by Indemnitee to enforce Indemnitee’s rights under this Agreement.

(o)“Prohibited Indemnification Payment” shall mean any payment (or any agreement or arrangement to make any payment, including under this Agreement) by the Company or the Bank, as the case may be, for the benefit of Indemnitee, to pay or reimburse Indemnitee for any civil money penalty or judgment resulting from any Proceeding instituted by any federal banking agency, or any other liability or legal expense with regard to any Proceeding instituted by any federal banking agency which results in a final order or settlement pursuant to which Indemnitee:

(i)is assessed a civil money penalty;

(ii)is removed from office or prohibited from participating in the conduct of the affairs of the Company or the Bank; or

(iii)is required to cease and desist from or take any affirmative action described in section 8(b) of the FDI Act with respect to the Company or the Bank;

provided, however, that “Prohibited Indemnification Payment” shall not include any reasonable payment by the Company or the Bank:

(i)used to purchase any commercial insurance policy or fidelity bond, provided that such insurance policy or bond shall not be used to pay or reimburse Indemnitee for the cost of any judgment or civil money penalty assessed against Indemnitee in a Proceeding commenced by any federal banking agency, but may be used to pay any Expenses incurred in connection with such Proceeding or the amount of any restitution to the Company, the Bank or a receiver; or

(ii)that represents partial indemnification for Expenses specifically attributable to particular charges for which there has been a formal and final adjudication or finding in connection with a settlement that Indemnitee has not violated certain banking laws or regulations or has not engaged in certain unsafe or unsound banking practices or breaches of fiduciary duty (as more fully defined or described in or pursuant to the FDI Act), unless the Proceeding has resulted in a prohibition against Indemnitee from participating in the conduct of the affairs of the Company or the Bank, as the case may be.

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Section 3.Indemnity in Third-Party Proceedings. The Company or the Bank, as applicable, shall indemnify Indemnitee in accordance with the provisions of this Section 3 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding, other than a Proceeding by or in the right of the Company or the Bank to procure a judgment in the favor of the Company or the Bank or a Proceeding by a federal banking agency. Pursuant to this Section 3, Indemnitee shall be indemnified against all Losses incurred by Indemnitee or on Indemnitee’s behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in, or not opposed to, the best interests of the Company or the Bank, as applicable, and, in the case of a criminal action or proceeding, had no reasonable cause to believe that Indemnitee’s conduct was unlawful. Indemnitee shall not enter into any settlement in connection with a Proceeding without the prior written consent of the Company or the Bank, as applicable, which consent shall not be unreasonably withheld or delayed.

Section 4.Indemnity in Proceedings by or in the Right of the Company or the Bank. The Company or the Bank, as applicable, shall indemnify Indemnitee in accordance with the provisions of this Section 4 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding by or in the right of the Company or the Bank to procure a judgment in favor of the Company or the Bank. Pursuant to this Section 4, Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with any such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in, or not opposed to, the best interests of the Company or the Bank, as applicable. No indemnification for Expenses shall be made under this Section 4 in respect of any claim, issue or matter as to which Indemnitee shall have been finally adjudged by a court to be liable to the Company, the Bank, or both, as the case may be, unless and only to the extent that the court in which the Proceeding was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnification for such Expenses as such court shall deem proper.

Section 5.Indemnification in Proceeding by Federal Banking Agency. The Company or the Bank, as applicable, shall indemnify Indemnitee in accordance with this Section 5 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding initiated by any federal banking agency. Pursuant to this Section 5, Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with a Proceeding initiated by any federal banking agency, or any claim, issue or matter therein, if the Board of the Company or the Bank, as applicable, in good faith, determines and confirms in writing after due investigation and consideration (a) that Indemnitee acted in good faith and in a manner Indemnitee believed to be in the best interests of the Company or the Bank, as the case may be; (b) that the indemnification will not materially adversely affect the safety and soundness of the Company or the Bank, as the case may be; (c) that payment of such indemnification does not constitute a Prohibited Indemnification Payment; and (d) Indemnitee agrees in writing to reimburse the Company or the Bank, as applicable, for any indemnification payments or any portion thereof, which subsequently become Prohibited Indemnification Payments (to the extent that the Company or the Bank, as the case may be, is not reimbursed for such payments by any insurance policy or bonds).

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Section 6.Indemnification for Expenses of a Party Who is Wholly or Partly Successful. Notwithstanding any other provisions of this Agreement (but subject to Section 5 hereof), to the extent that Indemnitee is a party to or a participant in and is successful, on the merits or otherwise, in any Proceeding or in defense of any claim, issue or matter therein, in whole or in part, the Company or the Bank, as applicable, shall indemnify Indemnitee against all Losses incurred by Indemnitee in connection therewith and no standard of conduct determination (as set forth in Section 11) shall be required. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company or the Bank, as applicable, shall indemnify Indemnitee against all Losses incurred by Indemnitee or on Indemnitee’s behalf in connection with (a) each successfully resolved claim, issue or matter and (b) any claim, issue or matter related to any such successfully resolved claim, issue or matter, provided that no indemnification payment shall be made if it would constitute a Prohibited Indemnification Payment and no standard of conduct determination (as set forth in Section 11) shall be required. For purposes of this Section and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

Section 7.Indemnification For Losses of a Witness. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of Indemnitee’s Corporate Status, a witness in any Proceeding to which Indemnitee is not a party, Indemnitee shall be indemnified against all Losses incurred by Indemnitee or on Indemnitee’s behalf in connection therewith and no standard of conduct determination (as set forth in Sections 11 and 12) shall be required.

Section 8.Additional Indemnification.

(a)Notwithstanding any limitation in Sections 3, 4, 5 or 6, the Company or the Bank, as applicable, shall indemnify Indemnitee to the fullest extent permitted by law if Indemnitee is a party to or threatened to be made a party to any Proceeding (including a Proceeding by or in the right of the Company or the Bank, as applicable, to procure a judgment in its favor) against all Losses incurred by Indemnitee in connection with the Proceeding.

(b)For purposes of Section 8(a), the meaning of the phrase “to the fullest extent permitted by law” shall include, but not be limited to:

(i)to the fullest extent permitted by the provisions of the Act, Part 359, the FDI Act, and any other applicable statutes and regulations that authorize or contemplate additional indemnification by agreement, or the corresponding provision of any amendment to or replacement of the Act, Part 359 or the FDI Act, and

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(ii)to the fullest extent authorized or permitted by any amendments to or replacements of the Act, Part 359 or the FDI Act adopted after the date of this Agreement that increase the extent to which a corporation or a bank, as the case may be, may indemnify its officers and directors.

Section 9.Exclusions. Notwithstanding any provision in this Agreement to the contrary, the Company and the Bank shall not be obligated under this Agreement to make any indemnity in connection with any claim made against Indemnitee:

(a)for which payment has actually been made to or on behalf of Indemnitee under any insurance policy or other indemnity provision, except with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision;

(b)for an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Securities Exchange Act of 1934, as amended, or similar provisions of state statutory or common law, to the extent applicable;

(c)for which payment is prohibited by applicable law, including without limitation Section 607.0850 of the Act.

Section 10.Advances of Expenses. The Company or the Bank, as applicable, shall advance, to the extent not prohibited by law, the Expenses incurred by Indemnitee in connection with any Proceeding, and such advancement shall be made within 30 days after the receipt by the Company or the Bank, as applicable, of a statement or statements requesting such advances (which shall include invoices received by Indemnitee in connection with such Expenses but, in the case of invoices in connection with legal services, any references to legal work performed or to expenditures made that would cause Indemnitee to waive any privilege accorded by applicable law shall not be included with the invoice) from time to time, whether prior to or after final disposition of any Proceeding. Advances shall be unsecured and interest free. Advances shall be made without regard to Indemnitee’s ability to repay the expenses and without regard to Indemnitee’s ultimate entitlement to indemnification under the other provisions of this Agreement, including the standard of conduct determination (as set forth in Section 11). Advances shall include any and all Expenses incurred pursuing an action to enforce this right of advancement, including Expenses incurred preparing and forwarding statements to the Company or the Bank, as applicable, to support the advances claimed. The Indemnitee shall qualify for advances upon the execution and delivery to the Company and the Bank of this Agreement, which shall constitute an undertaking providing that the Indemnitee undertakes to the fullest extent permitted by law to repay the advance if and to the extent that it is ultimately determined that Indemnitee is not entitled to be indemnified by the Company or the Bank, as applicable. This Section 10 shall not apply to any claim made by Indemnitee for which indemnity is excluded pursuant to Section 9.

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Section 11.Procedure for Notification and Defense of Claim.

(a)To obtain indemnification under this Agreement, Indemnitee shall submit to the Company or the Bank, as applicable, a written request therefor.

(b)Indemnitee requesting indemnification shall not participate in any way in the discussion and approval of indemnification; provided, however, that Indemnitee may present Indemnitee’s request to the Board of the Company, the Bank, or both, as applicable, and respond to any inquiries from the Board of the Company or the Bank, as applicable, concerning Indemnitee’s involvement in the circumstances giving rise to the Proceeding.

(c)The Company or the Bank, as applicable, will be entitled to participate in the Proceeding at its own expense.

Section 12.Procedure Upon Application for Indemnification.

(a)Upon written request by Indemnitee for indemnification pursuant to Section 11(a), a determination, if required by applicable law, with respect to Indemnitee’s entitlement thereto shall be made in good faith by a majority vote of the directors of the Company or the Bank, as applicable, not party to the action, suit or proceeding (the “disinterested directors”). Such determination shall be contained in a written opinion, a copy of which shall be delivered to Indemnitee. If it is determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within ten (10) days after such determination. Indemnitee shall cooperate with the disinterested directors making such determination with respect to Indemnitee’s entitlement to indemnification, including providing upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. Any reasonable costs or expenses (including reasonable attorneys’ fees and disbursements) incurred by Indemnitee in so cooperating with the disinterested directors shall be borne by the Company or the Bank, as applicable (irrespective of the determination as to Indemnitee’s entitlement to indemnification unless it is a Prohibited Indemnification Payment), and the Company and the Bank, as applicable, hereby indemnify and agree to hold Indemnitee harmless therefrom.

(b)In the event that a majority of the Board of the Company or the Bank, as applicable, are, or threatened to be made, parties to or participants to the Proceeding and request indemnification, the remaining members of the Board of the Company or the Bank, as applicable, may authorize independent legal counsel to review the indemnification request and provide the remaining members of the Board of the Company or the Bank, as applicable, with a written opinion of counsel as to whether Indemnitee is entitled to indemnification. If independent legal counsel opines that Indemnitee is entitled to indemnification, the remaining members of the Board of the Company or the Bank, as applicable, may rely on such opinion in authorizing the requested indemnification of Indemnitee.

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(c)In the event that all of the members of the Board of the Company or the Bank, as applicable, are named as respondents in a Proceeding and request indemnification, the Board of the Company or the Bank, as applicable, shall authorize independent legal counsel to review the indemnification request and provide the Board of the Company or the Bank, as applicable, with a written opinion of counsel as to whether Indemnitee is entitled to indemnification. If independent legal counsel opines that Indemnitee is entitled to indemnification, the Board of the Company or the Bank, as applicable, may rely on such opinion in authorizing the requested indemnification of Indemnitee.

Section 13.Presumptions and Effect of Certain Proceedings.

(a)Except as otherwise provided in Section 2(o), the Company acknowledges that a settlement or other disposition short of final judgment may be successful on the merits or otherwise for purposes of Section 6 if it permits a party to avoid expense, delay, distraction, disruption and uncertainty. In the event that any Proceeding to which Indemnitee is a party is resolved in any manner other than by adverse judgment against Indemnitee (including, without limitation, settlement of such action, claim or proceeding with or without payment of money or other consideration), it shall be presumed that Indemnitee has been successful on the merits or otherwise for purposes of Section 6. The Company shall have the burden of proof to overcome this presumption.

(b)For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Enterprise, including financial statements, or on information supplied to Indemnitee by the officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or the Board of the Company or the Bank, as applicable, or counsel selected by any committee of the Board of the Company or the Bank, as applicable, or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser, investment banker or other expert selected with reasonable care by the Company, the Bank or the Board or any committee of the Board of the Company or the Bank, as applicable. The provisions of this Section 13(b) shall not be deemed to be exclusive or to limit in any way the other circumstances in which the Indemnitee may be deemed to have met the applicable standard of conduct set forth in this Agreement.

(c)The knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.

Section 14.Remedies of Indemnitee.

(a)Subject to Section 14(e), in the event that (i) a determination is made pursuant to Sections 11 and 12 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 10 of this Agreement, (iii) no determination of entitlement to indemnification has been made pursuant to Sections 11 and 12 of this Agreement within 30 days after receipt by the Company or the Bank, as applicable, of the request for indemnification, (iv) payment of indemnification is not made pursuant to Sections 6, 7 or 12 of this Agreement within ten (10) days after receipt by the Company or the Bank, as applicable, of a written request therefor, or (v) payment of indemnification pursuant to Sections 3, 4, 5 or 8 of this Agreement is not made within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification, Indemnitee shall be entitled to an adjudication by a court of Indemnitee’s entitlement to such indemnification of Losses and advancement of Expenses. Alternatively, Indemnitee, at Indemnitee’s option, may seek an award in arbitration, in which event Indemnitee and the Company shall each appoint one (1) arbitrator, and within twenty (20) days after the appointment of the second arbitrator, the two (2) appointed arbitrators shall select a third arbitrator. No arbitrator shall be affiliated, directly or indirectly, with Indemnitee, the Company or the Bank. The three arbitrators shall render a written decision upon the matter presented to them by a majority vote. Indemnitee shall commence such proceeding seeking an adjudication or an award in arbitration within 180 days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 14(a); provided, however, that the foregoing clause shall not apply in respect of a proceeding brought by Indemnitee to enforce Indemnitee’s rights under Section 6 of this Agreement. The Company or the Bank, as applicable, shall not oppose Indemnitee’s right to seek any such adjudication or award in arbitration.

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(b)In the event that a determination has been made pursuant to Sections 11 and 12 of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 14 shall be conducted in all respects as a de novo trial, or arbitration, on the merits and Indemnitee shall not be prejudiced by reason of that adverse determination. In any judicial proceeding or arbitration commenced pursuant to this Section 14, the Company or the Bank, as applicable, shall have the burden of proving Indemnitee is not entitled to indemnification of Losses or advancement of Expenses, as the case may be.

(c)If a determination has been made pursuant to Sections 11 and 12 of this Agreement that Indemnitee is entitled to indemnification, the Company or the Bank, as applicable, shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 14, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law.

(d)The Company and the Bank shall be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 14 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Company and the Bank are bound by all the provisions of this Agreement. Except as otherwise provided in Section 2(o), the Company or the Bank, as applicable, shall indemnify Indemnitee against any and all Expenses and, if requested by Indemnitee, shall (within ten (10) days after receipt by the Company or the Bank, as applicable, of a written request therefor) advance, to the extent not prohibited by law, such Expenses to Indemnitee, which are incurred by Indemnitee in connection with any action brought by Indemnitee for indemnification or advance of Expenses from the Company or the Bank, as applicable, under this Agreement or under any directors’ and officers’ liability insurance policies maintained by the Company or the Bank, as applicable, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement of Expenses or insurance recovery, as the case may be.

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(e)Notwithstanding anything in this Agreement to the contrary, no determination as to entitlement to indemnification under this Agreement shall be required to be made prior to the final disposition of the Proceeding.

Section 15.Non-exclusivity; Survival of Rights; Insurance; Subrogation.

(a)The rights of indemnification and to receive advancement of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Company’s Articles of Incorporation, the Bank’s Articles of Incorporation, the Company Bylaws, the Bank Bylaws, any agreement, a vote of shareholders or a resolution of directors of the Company or the Bank, as applicable, or otherwise. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in Indemnitee’s Corporate Status prior to such amendment, alteration or repeal. To the extent that a change in Florida law, Part 359 or the FDI Act, or other applicable law or regulations, whether by statute or judicial decision, permits greater indemnification or advancement of Expenses than would be afforded under the Company’s Articles of Incorporation, the Bank’s Articles of Incorporation, the Company Bylaws, the Bank Bylaws and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.

(b)For the duration of Indemnitee’s service as a director of the Company and/or the Bank, and thereafter for as long as Indemnitee may be made a party to or a participant in any Proceeding, the Company and the Bank shall use commercially reasonable efforts (taking into account the scope and amount of coverage available relative to the cost thereof) to continue to maintain in effect policies of directors’ and officers’ liability insurance providing coverage that is at least substantially comparable in scope and amount to the greater of that provided by the directors’ and officers’ liability insurance maintained by the Company and the Bank (i) on the date of this Agreement, and (ii) on the date the Proceeding is instituted. In all policies of directors’ and officers’ liability insurance maintained by the Company and Bank, Indemnitee shall be named as an insured in such a manner as to provide Indemnitee the same rights and benefits as are provided to the most favorably insured of the directors of the Company and the Bank, but only to the extent that payments pursuant thereto do not constitute Prohibited Indemnification Payments. Upon request, the Company and Bank will provide to Indemnitee copies of all directors’ and officers’ liability insurance applications, binders, policies, declarations, endorsements and other related materials. Upon receipt of a notice of a claim pursuant to the terms hereof, the Company or the Bank, as applicable, shall give prompt notice of the commencement of such proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Company or the Bank, as applicable, shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such policies.

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(c)In the event of any payment under this Agreement, the Company and the Bank, as applicable, shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company or the Bank, as the case may be, to bring suit to enforce such rights.

(d)The Company and the Bank shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable (or for which advancement is provided hereunder) hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

(e)The Company and the Bank’s obligation to indemnify or advance Expenses hereunder to Indemnitee who is or was serving at the request of the Company or the Bank, as applicable, as a director, officer, employee or agent of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise shall be reduced by any amount Indemnitee has actually received as indemnification or advancement of Expenses from such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise.

Section 16.Duration of Agreement. This Agreement shall continue during the period that Indemnitee is a director or officer of the Company or the Bank, as applicable (or is serving at the request of the Company or Bank as a director, officer, employee, member, trustee or agent of another entity or Enterprise) and shall continue thereafter (i) so long as Indemnitee may be made a party to or a participant in any Proceeding and (ii) throughout the pendency of any Proceeding commenced by Indemnitee to enforce or interpret Indemnitee’s rights under this Agreement, even if, in either case, Indemnitee may have ceased to serve in such capacity at the time of any such Proceeding. This Agreement shall be binding upon the Company, the Bank and their respective successors and assigns and shall inure to the benefit of Indemnitee and Indemnitee’s heirs, permitted assigns, legal and personal representatives, executors and administrators.

Section 17.Severability. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; (b) such provision or provisions shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.

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Section 18.Enforcement.

(a)The Company and the Bank expressly confirm and agree that they have entered into this Agreement and assumed the obligations imposed on them hereby in order to induce Indemnitee to serve as a director of the Company and/or the Bank, as applicable, and the Company and the Bank acknowledge that Indemnitee is relying upon this Agreement in serving as a director of the Company and/or the Bank, as applicable.

(b)This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof; provided, however, that this Agreement is a supplement to and in furtherance of the Company’s Articles of Incorporation, the Bank’s Articles of Incorporation, the Company Bylaws, the Bank Bylaws and applicable law, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder.

Section 19.Modification and Waiver. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by the parties thereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions of this Agreement nor shall any waiver constitute a continuing waiver.

Section 20.Notice by Indemnitee. Indemnitee agrees promptly to notify the Company or the Bank, as applicable, in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification or advancement of Expenses covered hereunder. The failure of Indemnitee to so notify the Company or the Bank, as applicable, shall not relieve the Company or the Bank, as applicable, of any obligation which they may have to the Indemnitee under this Agreement or otherwise, except to the extent that the Company or the Bank, as applicable, has been prejudiced in any material respect by such failure or from any liability that the Company or the Bank may have to Indemnitee otherwise than under this Section 20.

Section 21.Notices. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given if (a) delivered by hand to whom said notice or other communication shall have been directed, (b) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed, (c) mailed by reputable overnight courier to whom said notice or other communication shall have been directed, or (d) sent by facsimile transmission with confirmation (electronic or otherwise) of receipt:

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(a)If to Indemnitee, at such address as Indemnitee shall provide to the Company;

(b)If to the Company or the Bank, to:

Professional Holding Corp.

396 Alhambra Circle, Suite 255

Coral Gables, FL 33134

Attn: Chief Executive Officer

or to any other address as may have been furnished to Indemnitee by the Company or the Bank.

Section 22.Contribution. To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company or the Bank, as applicable, in lieu of indemnifying Indemnitee, shall, to the extent permitted under applicable law, contribute to the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company or the Bank, as applicable, and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relative fault of the Company or the Bank, as applicable (and their respective directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s).

Section 23.Applicable Law and Consent to Jurisdiction. This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Florida, without regard to its conflict of laws rules, except to the extent superseded by applicable Federal law. Except with respect to any arbitration commenced by Indemnitee pursuant to Section 14(a) of this Agreement, the Company, the Bank and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in a court of the State of Florida in Miami-Dade County or the United States District Court, Southern District of Florida, and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent to submit to the exclusive jurisdiction of such Florida court for purposes of any action or proceeding arising out of or in connection with this Agreement, (iii) waive any objection to the laying of venue of any such action or proceeding in such Florida court, and (iv) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in such Florida court has been brought in an improper or inconvenient forum.

Section 24.Identical Counterparts. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement. Confirmation of execution by electronic transmission of a facsimile signature page shall be binding upon any party so confirming.

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Section 25.Miscellaneous. The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

Section 26.JURY WAIVER. IN ANY CIVIL ACTION, COUNTERCLAIM, OR PROCEEDING, WHETHER AT LAW OR IN EQUITY, WHICH ARISES OUT OF, CONCERNS, OR RELATES TO THIS AGREEMENT, ANY AND ALL TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, THE PERFORMANCE OF THIS AGREEMENT, OR THE RELATIONSHIP CREATED BY THIS AGREEMENT, WHETHER SOUNDING IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE, TRIAL SHALL BE TO A COURT OF COMPETENT JURISDICTION AND NOT TO A JURY. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY. ANY PARTY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT, AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES TO THIS AGREEMENT OF THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. NEITHER PARTY HAS MADE OR RELIED UPON ANY ORAL REPRESENTATIONS TO OR BY ANY OTHER PARTY REGARDING THE ENFORCEABILITY OF THIS PROVISION. EACH PARTY HAS READ AND UNDERSTANDS THE EFFECT OF THIS JURY WAIVER PROVISION. EACH PARTY ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY ITS OWN COUNSEL WITH RESPECT TO THE TRANSACTION GOVERNED BY THIS AGREEMENT AND SPECIFICALLY WITH RESPECT TO THE TERMS OF THIS SECTION.

IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as of the day and year first above written.

Professional Holding Corp.

By:

Print Name:

Its:

Professional Bank

By:

Print Name:

Its:

INDEMNITEE:

By:

Print Name:

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EX-10.15

Exhibit 10.15

EXECUTION VERSION

STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT (this “Agreement”) is entered into by and between Professional Holding Corp., a Florida corporation (the “Company”), and each Investor (each an “Investor” and collectively, the “Investors”) whose name appears on the signature page hereto and is made as of the date of the Company’s acceptance hereof (the “Acceptance Date”).

RECITALS

WHEREAS, the Company is proposing to issue and sell shares of the Company’s Class A Voting Common Stock, $0.01 par value per share (the “Class A Common Stock”), and Class B Non-Voting Common Stock, $0.01 par value per share (the “Class B Common Stock”, and together with the Class A Common Stock, the “Company Stock”), to the Investors in a private offering of up to $20,000,000 (the “Offering”) at a purchase price of US$14.50 per share (the “Per Share Purchase Price”). The Company Stock is being offered only to persons who are accredited investors within the meaning of Rule 501 of Regulation D promulgated under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to a private placement exemption from the securities registration requirements of the Securities Act.

WHEREAS, the Company and each Investor agree that, upon the terms, representations and warranties, agreements, and covenants and subject to the conditions set forth in this Agreement, the Investor will purchase from the Company, and the Company will issue and sell to the Investor, at a price per share equal to the Per Share Purchase Price, Company Stock, pursuant to this Agreement. The Company Stock purchased by each Investor will be delivered in certificated form, registered in such Investor’s name and address as set forth below, to the Investors at the Closing.

NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and Investor mutually agree as follows:

ARTICLE 1

PURCHASE; CLOSINGS

1.1Issuance, Sale and Purchase. On the terms and subject to the conditions set forth herein, the Company agrees to issue and sell to each Investor, and each Investor, severally and not jointly, agrees to purchase from the Company, free and clear of any Liens, at a price per share equal to the Per Share Purchase Price, the number of shares of Class A Common Stock and a number of shares of Class B Common Stock as indicated on the signature page for each respective Investor (the “Investment“), subject to the conditions set forth in Section 1.2.

1.2Closings; Deliverables for the Closings; Conditions to the Closings.

(a)Closing. Unless this Agreement has been terminated pursuant to Article 4, and subject to the satisfaction or, to the extent permitted by Law and this Agreement, the written waiver of the conditions set forth in Section 1.2(c), the closing of an Investment in the amount set forth on the signature page for each respective Investor (the “Purchase Price”) and the transactions contemplated by this Agreement (the “Closing”) shall take place remotely via the electronic or other exchange of documents and signature pages, on a date to be specified by the Company on no less than two Business Days’ notice to the Investors, or at such other place or such other date as agreed to in writing by the parties hereto (the “Closing Date”).

(b)Closing Deliverables. Subject to the satisfaction or waiver on the Closing Date of the conditions to the Closing set forth in Section 1.2(c), at the Closing the parties shall make the following deliveries:

(i)the Company shall deliver to the Investor certificates evidencing the Company Stock to be purchased pursuant to Section 1.1 registered in the name of the Investor; and

(ii)each Investor shall deliver such Investor’s Purchase Price by wire transfer of immediately available funds to the account set forth in the Instruction Sheet attached hereto as Exhibit C.

(c)Closing Conditions.

(i)The obligations of each Investor, on the one hand, and the Company, on the other hand, to consummate the purchase and sale of Company Stock provided for in this Agreement are each subject to the satisfaction or, to the extent permitted by Law and this Agreement, the written waiver by the Company or such Investor (as to itself only), as applicable, of the following conditions at the Closing:

(A)No provision of any Law and no judgment, injunction, order or decree shall prohibit the Closing or shall prohibit or restrict the Investor from owning any Company Stock (or voting any Class A Common Stock) to be purchased pursuant to this Agreement or exercising any of the rights under any of the other Transaction Documents; and

(B)Any Governmental Consent required to consummate the transactions contemplated by this Agreement shall have been obtained and shall be in full force and effect, and all statutory waiting periods in respect thereof shall have expired; provided, however, that (x) no such required Governmental Consent shall impose or contain any restraint or condition that would impair in any material respect the benefits to the Investor of the transactions contemplated by this Agreement and (y) other than such restrictions as are commonly imposed by the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”) in its standard passivity commitments, no such required Governmental Consent shall impose any restrictions on any activities or otherwise on, require any modification of governance, fee or carried interest arrangements with respect to, or impose any capital or other requirements on, such Investor or any of its Affiliates, including any agreement or requirement to maintain or contribute, directly or indirectly, to the capital of Professional Bank, a Florida-chartered commercial bank (the “Bank”), or the Company (each, a “Burdensome Condition”) and, provided, further that, notwithstanding any other provision of this Agreement, the imposition of a Burdensome Condition in connection with any such required Governmental Consent shall constitute a denial of such required Governmental Consent and such required Governmental Consent shall be deemed not received for all purposes in this Agreement, including Section 4.1(h).

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(ii)The obligation of each Investor to consummate the purchase of Company Stock provided for in this Agreement is also subject to the satisfaction or written waiver by such Investor (as to itself only) of the following conditions at the Closing:

(A)The representations and warranties of the Company set forth in this Agreement shall be true and correct in all respects on and as of the date of this Agreement and on and as of the Closing Date as though made on and as of the Closing Date, except to the extent that the failure to be true and correct (without regard to any materiality or Material Adverse Effect qualifications contained therein), would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect (and except that (1) representations and warranties made as of a specified date shall be true and correct as of such date and (2) the representations and warranties of the Company set forth in Sections 2.2(a), 2.2(b), 2.2(c), 2.2(d), 2.2(q) and 2.2(ff) shall be true and correct in all respects);

(B)The Company shall have performed and complied with, in all material respects, all agreements, covenants and conditions required by this Agreement to be performed by it on or prior to the Closing Date;

(C)Since the date of this Agreement, a Material Adverse Effect shall not have occurred and no change or other event shall have occurred that would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect;

(D)The Investors shall have received a certificate, dated as of the Closing Date, signed on behalf of the Company by a senior executive officer certifying that the conditions set forth in Section 1.2(c)(ii)(A), Section 1.2(c)(ii)(B) and Section 1.2(c)(ii)(C) have been satisfied on and as of the Closing Date;

(E)The Company shall receive at the Closing aggregate gross proceeds from the sale of the Company Stock to all Investors of no more than $20.0 million, at a price per share equal to the Per Share Purchase Price;

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(F)The Investment shall not (i) cause such Investor or any of its affiliates to violate any banking regulation, (ii) require such Investor or any of its affiliates to file a prior notice under the Change in Bank Control Act, or otherwise seek prior approval of any banking regulator, (iii) require such Investor or any of its affiliates to become a bank holding company or otherwise serve as a source of strength for the Company or the Bank, or (iv) cause such Investor, together with any other person whose Company securities would be aggregated with such Investor’s Company securities for purposes of any banking regulation or law, to collectively be deemed to own, control, or have the power to vote securities which (assuming, for this purpose only, full conversion and/or exercise of such securities by the Investor and such other persons) would represent more than (a) 9.9% of any class of voting securities of the Company or (b) 14.9% of the total outstanding Capital Stock of the Company;

(G)With respect to EJF Sidecar Fund, Series LLC – Series E, a Delaware series limited liability company (“EJF”), the Company shall have entered into a letter agreement (including the Registration Rights Agreement) substantially in the form attached hereto as Exhibit A (the “EJF Letter Agreement“) with EJF which shall be in full force and effect and any closing conditions specified therein shall have been satisfied, and, with respect to each of Mendon Capital, LLC, a Delaware limited liability company (“Mendon”), and BayBoston Managers, LLC, a Delaware limited liability company (“BayBoston”), the Company shall have entered a letter agreement (including the Registration Rights Agreement) substantially in the form attached hereto as Exhibit B (the “Mendon/BayBoston Letter Agreement” and collectively with the EJF Letter Agreement, the “Letter Agreements”) with each of Mendon and BayBoston, which shall be in full force and effect and any closing conditions specified therein shall have been satisfied; and

(H)Each Investor who, together with its Affiliates and persons who share a common investment advisor with such Investor, has committed to acquire a beneficial ownership of 5% or more of the outstanding shares of Company Stock (each a “9.9% Investor”) has received, in each 9.9% Investor’s sole discretion, satisfactory feedback from the Federal Reserve Board that such 9.9% Investor will not have “control” of the Company or the Bank for purposes of the BHCA.

(iii)The obligation of the Company to consummate the sale of Company Stock to each Investor provided for in this Agreement is also subject to the satisfaction or written waiver by the Company of the following conditions at the Closing:

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(A)The representations and warranties of such Investor set forth in this Agreement shall be true and correct in all respects on and as of the date of this Agreement and on and as of the Closing Date as though made on and as of the Closing Date, except where the failure to be true and correct (without regard to any materiality qualifications contained therein) would not materially adversely affect the ability of such Investor to perform its obligations hereunder (and except that (1) representations and warranties made as of a specified date shall be true and correct as of such date and (2) the representations and warranties of each Investor set forth in Sections 2.3(d) and 2.3(h) shall be true and correct in all respects); and

(B)Each Investor shall have performed and complied with, in all material respects, all agreements, covenants and conditions required by this Agreement to be performed by it on or prior to the Closing Date.

ARTICLE 2

REPRESENTATIONS AND WARRANTIES

2.1Certain Terms.

(a)As used in this Agreement, the term “Material Adverse Effect” means any circumstance, event, change, development or effect that would (i) result in a material adverse effect on the assets, liabilities (actual or contingent), prospects, business, operations, financial condition or results of operations of the Company and the Company Subsidiaries, taken as a whole, or (ii) materially impair or delay the ability of the Company or any of the Company Subsidiaries to perform its or their obligations under this Agreement or the other Transaction Documents to consummate the Closing or any of the transactions contemplated hereby; provided, however, that in determining whether a Material Adverse Effect has occurred under clause (i), there shall be excluded any circumstance, event, change, development or effect to the extent resulting from (A) actions or omissions of the Company or any Company Subsidiary expressly required or contemplated by the terms of this Agreement, (B) changes after the date hereof in general economic conditions in the United States, including financial market volatility or downturns, or in the markets in which the Company and the Company Subsidiaries operate, (C) changes after the date hereof affecting the banking industry generally or (D) any changes after the date hereof in applicable Laws or accounting rules or principles, including changes in GAAP, in each case to the extent that such circumstance, event, change, development or effect referred to in clauses (B), (C) and (D) do not have a disproportionate effect on the Company and the Company Subsidiaries compared to other participants in the industries or markets in which the Company and the Company Subsidiaries operate.

2.2Representations and Warranties of the Company. The Company hereby represents and warrants to each of the Investors, as of the date hereof and as of the Closing Date (except for the representations and warranties that are as of a specific date which are made as of that date) that:

(a)Organization and Authority. Each of the Company and the Company Subsidiaries is a corporation or other entity duly organized and validly existing under the laws of the jurisdiction of its incorporation or organization, is duly qualified to do business and is in good standing in all jurisdictions where its ownership or leasing of property or the conduct of its business requires it to be so qualified except where any failure to be so qualified would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, and has the corporate or other organizational power and authority to own its properties and assets and to carry on its business as it is now being conducted. Copies of the articles of incorporation and bylaws (or similar governing documents) as amended through the date of this Agreement for the Company and the Bank have been Previously Disclosed. The Company is duly registered with the Board of Governors of the Federal Reserve Board as a financial holding company under the Bank Holding Company Act of 1956, as amended (“BHCA”).

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(b)Company Subsidiaries. Except for the Bank and Professional Insurance Management, LLC, a Florida limited liability company (each, a “Company Subsidiary” and, collectively, the “Company Subsidiaries”), the Company does not own beneficially, directly or indirectly, more than 5% of any class of equity securities or similar interests of any corporation, business trust, association or similar organization, and is not, directly or indirectly, a partner in any partnership or party to any joint venture. The Company owns, directly or indirectly, all of its interests in each Company Subsidiary free and clear of any and all Liens. The deposit accounts of the Bank are insured by the Federal Deposit Insurance Corporation (“FDIC”) to the fullest extent permitted by the Federal Deposit Insurance Act, as amended (the “FDI Act”), and the rules and regulations of the FDIC thereunder, and all premiums and assessments required to be paid in connection therewith have been paid when due (after giving effect to any applicable extensions). The Company beneficially owns all of the outstanding capital securities of, and has sole control of, the Bank.

(c)Capitalization.

(i)As of the date hereof, the authorized Capital Stock of the Company consists of (A) 50,000,000 shares of Class A Common Stock, $0.01 par value per share, (B) 10,000,000 shares of Class B Common Stock, $0.01 par value per share, and (C) 10,000,000 shares of Preferred Stock.

(ii)As of the date hereof, without giving effect to the shares issued to the Investors pursuant to this Agreement, the Company had outstanding 3,513,478 shares of Class A Common Stock, no shares of Class B Common Stock and no shares of Preferred Stock. As of the date hereof, the Company has reserved 265,000 shares of Class A Voting Common Stock for issuance under or pursuant to the Company’s 2016 Amended and Restated Stock Option Plan (the “Company Option Plan”).

(iii)All of the issued and outstanding shares of Capital Stock have been duly authorized and validly issued and are fully paid and nonassessable. None of the outstanding shares of Capital Stock or other securities of the Company or any of the Company Subsidiaries was issued, sold or offered by the Company or any Company Subsidiary in violation of the Securities Act or the securities or blue sky laws of any state or jurisdiction. No bonds, debentures, notes or other indebtedness having the right to vote on any matters on which the shareholders of the Company may vote (“Voting Debt”) are issued and outstanding.

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(iv)As of the date of this Agreement, except for the outstanding awards under the Company Option Plan, the Company’s 2014 Associate Stock Purchase Plan or the Company’s Share Appreciation Rights Plan (collectively, the “Company Equity Plans”), the Company does not have any and is not bound by any outstanding subscriptions, options, warrants, calls, commitments or agreements of any character calling for the purchase or issuance of, or securities or rights convertible into or exchangeable or exercisable for, any shares of Capital Stock or any other equity securities of the Company or Voting Debt or any securities representing the right to purchase or otherwise receive any shares of Capital Stock of the Company.

(v)The issuance of the Company Stock in connection with the transactions contemplated by this Agreement has been duly authorized and such Company Stock, when issued and paid for in accordance with the terms of this Agreement, will be duly and validly issued, fully paid and nonassessable and free and clear of all Liens, other than restrictions on transfer imposed by applicable securities Laws, and shall not be subject to preemptive or similar rights. The Company has a sufficient number of authorized and unissued shares of Capital Stock for the purpose of issuance of the Company Stock pursuant to this Agreement.

(d)Authorization; No Conflicts; Shareholder Approval.

(i)The Company has the corporate power and authority to execute and deliver this Agreement and the other Transaction Documents and to perform its obligations hereunder. The execution, delivery and performance of this Agreement and the other Transaction Documents by the Company and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of the Company and no further approval or authorization is required on the part of the Company or its shareholders. The Board of Directors has unanimously approved the transactions contemplated by this Agreement. This Agreement and the other Transaction Documents have been duly and validly executed and delivered by the Company and, assuming due authorization, execution and delivery by the Investors, are the valid and binding obligation of the Company enforceable against the Company in accordance with their respective terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors’ rights or by general equity principles (whether applied in equity or at law). There are no shareholder agreements, voting agreements, or other similar arrangements with respect to the Capital Stock to which the Company is a party or, to the Company’s Knowledge, between or among any of the Company’s shareholders.

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(ii)Neither the execution and delivery by the Company of this Agreement and the other Transaction Documents nor the consummation of the transactions contemplated hereby or thereby, nor compliance by the Company with any of the provisions hereof or thereof, will (A) violate, conflict with, or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or result in the loss of any benefit or creation of any right on the part of any third party under, or accelerate the performance required by, or result in a right of termination or acceleration of, or result in the creation of any liens, charges, adverse rights or claims, pledges, covenants, title defects, security interests or other encumbrances of any kind (“Liens”) upon any of the properties or assets of the Company or any Company Subsidiary, under any of the terms, conditions or provisions of (1) the certificate of incorporation or bylaws (or similar governing documents) of the Company and each Company Subsidiary or (2) any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which the Company or any of the Company Subsidiaries is a party or by which it may be bound, or to which the Company or any of the Company Subsidiaries, or any of the properties or assets of the Company or any of the Company Subsidiaries may be subject, or (B) violate any Law applicable to the Company or any of the Company Subsidiaries or any of their respective properties or assets, except in the case of clauses (A)(2) and (B) for such violations, conflicts and breaches as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

(e)Governmental Consents. No Governmental Consents are necessary for the Company to execute and deliver this Agreement or the other Transaction Documents, to perform all obligations under this Agreement or the other Transaction Documents, or to consummate the Closing or any of the transactions contemplated by this Agreement or the other Transaction Documents, other than: (i) the filing with the Securities and Exchange Commission one or more registration statements in accordance with the requirements of the Registration Rights Agreement, if applicable, (ii) the filings required in accordance with Section 3.9 of this Agreement, (iii) the feedback required in accordance with Section 1.2(c)(ii)(H), and (iv) those that have been obtained prior to the date of this Agreement.

(f)Litigation and Other Proceedings.

(i)Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, there is no pending or, to the Knowledge of the Company, threatened claim, action, suit, arbitration, complaint, charge or investigation or proceeding (each an “Action”) against the Company or any Company Subsidiary or any of their respective assets, rights or properties, nor is the Company or any Company Subsidiary a party or named as subject to the provisions of any order, writ, injunction, settlement, judgment or decree of any Governmental Entity, and, to the Knowledge of the Company, there is no basis for any of the foregoing. Neither the Company nor the Bank, nor, to the Knowledge of the Company, any director or executive officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty.

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(ii)Neither the Company nor the Bank is a party to any pending, or, to the Knowledge of the Company, threatened Action or subject to any order, judgment or decree, which challenges the legality, validity or enforceability of this Agreement or the issuance of the Company Stock.

(g)Financial Statements. True, correct and complete copies of (i) the unaudited consolidated balance sheet of the Company and the Company Subsidiaries and the related consolidated statements of operations, changes in stockholders’ equity and cash flows, together with the notes thereto, as of and for the nine-month period ended September 30, 2016 and (ii) the audited consolidated balance sheets of the Company and the Company Subsidiaries and the related consolidated statements of operations, changes in shareholders’ equity and cash flows, together with the notes thereto, as of and for the fiscal year periods ended December 31, 2015 and December 31, 2014 (the “Company Financial Statements”) have been Previously Disclosed. Each of the Company Financial Statements (i) have been prepared from, and are in accordance with, the books and records of the Company and the Company Subsidiaries, (ii) have been complied, as of the dates therein stated, in all material respects with applicable accounting requirements, (iii) have been prepared in accordance with GAAP applied on a consistent basis and (iv) present fairly in all material respects the consolidated financial position of the Company and the Company Subsidiaries at the dates stated therein and the consolidated results of operations, changes in shareholders’ equity and cash flows of the Company and the Company Subsidiaries for the periods stated therein. There is no transaction, arrangement, or other relationship between the Company (or any Company Subsidiary) and an unconsolidated or other off-balance sheet entity that is not reflected in the Company Financial Statements, other than financial instruments entered into in the Ordinary Course of Business.

(h)Accounting Matters.

(i)Each of the Company and each Company Subsidiary has established and maintains a system of internal control over financial reporting that is effective to provide reasonable assurance regarding the reliability of the Company’s and each Company Subsidiary’s financial reporting and the preparation of the Company’s and each Company Subsidiary’s financial statements for external purposes in accordance with GAAP. The Company has no Knowledge of (i) any significant deficiencies or material weaknesses in the design or operation of its internal control over financial reporting which are reasonably likely to adversely affect its ability to record, process, summarize and report financial information or (ii) any fraud, whether or not material, that involves management or other employees who have a role in the Company’s internal control over financial reporting. To the Company’s Knowledge, no change in the Company’s or and any Company Subsidiary’s internal control over financial reporting that has occurred since December 31, 2015 that has materially affected, or that is reasonably likely to materially affect, the Company’s or the Bank’s internal control over financial reporting.

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(ii)Since December 31, 2015 (i) neither the Company nor any Company Subsidiary has received any material complaint, allegation, assertion or claim, written or oral, regarding the accounting or auditing practices, or internal procedures or accounting controls, methodologies or methods of the Company or any Company Subsidiary, including but not limited to any complaint, allegation, assertion or claim that the Company or any Company Subsidiary has engaged in any questionable accounting or auditing practice, or regarding any violation of the securities laws; and (ii) no attorney representing the Company or any Company Subsidiary has reported to their respective Boards of Directors, committee thereof, any member thereof or any executive officer, evidence of a material violation of the securities or banking laws, breach of fiduciary duty or similar violation by the Company or any Company Subsidiary or any of their respective officers, directors, employees or agents.

(i)Environmental Matters.  To the Company’s Knowledge, neither the Company nor any of the Company Subsidiaries (i) is in violation of any Law of any Governmental Entity relating to the use, disposal or release of hazardous or toxic substances or relating to the protection or restoration of the environment or human exposure to hazardous or toxic substances (collectively, “Environmental Laws”), (ii) is liable for any off-site disposal or contamination pursuant to any Environmental Laws, (iii) owns or operates any real property contaminated with any substance that is in violation of any Environmental Laws or (iv) is subject to any claim relating to any Environmental Laws; in each case, which violation, contamination, liability or claim has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect; and there is no pending or, to the Company’s Knowledge, threatened investigation that might lead to such a claim.  Except as would not result in a Material Adverse Effect, there are no circumstances or conditions (including the presence of asbestos, underground storage tanks, lead products, polychlorinated biphenyls, prior manufacturing operations, dry-cleaning or automotive services) involving the Company or any of the Company Subsidiaries, or any currently or formerly owned or operated property of the Company or any of the Company Subsidiaries, that could reasonably be expected to result in any claim, liability, investigation, cost or restriction against the Company or any of the Company Subsidiaries, or result in any restriction on the ownership, use, or transfer of any property pursuant to any Environmental Law, or adversely affect the value of any currently owned property of the Company or any of the Company Subsidiaries.

(j)Risk Management Instruments. The Company and any Company Subsidiary have in place risk management policies and procedures designed to protect against risks of the type and in the amounts reasonably expected to be incurred by companies of similar sizes and in similar lines of business as the Company and any Company Subsidiary. All material derivative instruments, including swaps, caps, floors and option agreements entered into for the Company’s or any of the Company Subsidiaries’ own account were entered into (i) only in the Ordinary Course of Business, (ii) in accordance with prudent practices and in all material respects with all applicable Laws and (iii) with counterparties believed to be financially responsible at the time; and each of them constitutes the valid and legally binding obligation of the Company or any Company Subsidiary, as applicable, enforceable in accordance with its terms. Neither the Company nor, to the Knowledge of the Company, any other party thereto is in breach of any of its material obligations under any such agreement or arrangement.

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(k)No Undisclosed Liabilities. There are no liabilities of the Company or any of the Company Subsidiaries of any kind whatsoever, whether accrued, contingent, absolute, determined, determinable or otherwise, except for (i) liabilities adequately reflected or reserved against in accordance with GAAP in the Company’s Financial Statements and (ii) liabilities that have arisen in the Ordinary Course of Business since December 31, 2015 and that have not or would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

(l)Mortgage Lending. The Company and each of the Company Subsidiaries have complied in all material respects with, and all documentation in connection with the origination, processing, underwriting and credit approval of any mortgage loan originated, purchased or serviced by the Company or any Company Subsidiary has satisfied, in all material respects (i) all Laws with respect to the origination, insuring, purchase, sale, pooling, servicing, subservicing, or filing of claims in connection with mortgage loans, including all Laws relating to real estate settlement procedures, consumer credit protection, truth in lending Laws, usury limitations, fair housing, transfers of servicing, collection practices, equal credit opportunity and adjustable rate mortgages, (ii) the responsibilities and obligations relating to mortgage loans set forth in any agreement between the Company and any Agency, Loan Investor or Insurer, (iii) the applicable rules, regulations, guidelines, handbooks and other requirements of any Agency, Loan Investor or Insurer and (iv) the terms and provisions of any mortgage or other collateral documents and other loan documents with respect to each mortgage loan. No Agency, Loan Investor or Insurer has (A) claimed in writing that the Company or any Company Subsidiary has violated or has not complied with the applicable underwriting standards with respect to mortgage loans sold by the Company or any Company Subsidiary to a Loan Investor or Agency, or with respect to any sale of mortgage servicing rights to a Loan Investor, (B) imposed in writing restrictions on the activities (including commitment authority) of the Company or any Company Subsidiary, or (C) indicated in writing to the Company or any Company Subsidiary that it has terminated or intends to terminate its relationship with the Company or any Company Subsidiary for poor performance, poor loan quality, or concern with respect to the Company’s or any Company Subsidiary’s compliance with laws.

(m)Bank Secrecy Act; Anti-Money Laundering; OFAC; and Customer Information. To the Company’s Knowledge, the Company and each Company Subsidiary have operated in compliance, in all material respects, with the Bank Secrecy Act of 1970, as amended, the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (also known as the USA PATRIOT Act), any order or regulation issued by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), or any other applicable anti-money laundering or anti-terrorist-financing statute, rule or regulation. The Company is not aware of any facts or circumstances that would cause it to believe that any nonpublic customer information has been disclosed to or accessed by an unauthorized third party in a manner that would cause the Company to undertake any material remedial action. The Company and each of the Company Subsidiaries have adopted and implemented an anti-money laundering program designed to provide appropriate customer identification verification procedures that comply with the USA PATRIOT Act and such anti-money laundering program meets the requirements in all material respects of Section 352 of the USA PATRIOT Act and the regulations thereunder, and they have complied in all respects with any requirements to file reports and other necessary documents as required by the USA PATRIOT Act and the regulations thereunder. The Company will not directly or indirectly use the proceeds of the sale of the Company Stock pursuant to transactions contemplated by this Agreement, or lend, contribute or otherwise make available such proceeds to any Company Subsidiary, joint venture partner or other Person, towards any sales or operations in any country appearing on the OFAC Specially Designated Nationals List (“SDN List”) or for the purpose of financing the activities of any Person currently appearing on the SDN List.

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(n)Certain Payments. Neither the Company nor any of the Company Subsidiaries, nor any directors, officers, nor to the Knowledge of the Company, employees or any of their Affiliates or any other Person who to the Knowledge of the Company is associated with or acting on behalf of the Company or any of the Company Subsidiaries has directly or indirectly (i) made any contribution, gift, bribe, rebate, payoff, influence payment, kickback, or other payment in material violation of any Law to any Person, private or public, regardless of form, whether in money, property, or services (A) to obtain favorable treatment in securing business for the Company or any of the Company Subsidiaries, (B) to pay for favorable treatment for business secured by the Company or any of the Company Subsidiaries, or (C) to obtain special concessions or for special concessions already obtained, for or in respect of the Company or any of the Company Subsidiaries or (ii) established or maintained any fund or asset with respect to the Company or any of the Company Subsidiaries that was required by Law or GAAP to have been recorded and was not recorded in the books and records of the Company or any of the Company Subsidiaries.

(o)Absence of Certain Changes. Since December 31, 2015 and except as required or contemplated by the terms of this Agreement, (i) the Company and the Company Subsidiaries have conducted their respective businesses in all material respects in the Ordinary Course of Business, (ii) none of the Company or any Company Subsidiary has issued any securities (other than Capital Stock and options and other equity-based awards issued prior to the date of this Agreement pursuant to the Company Equity Plans and reflected in the numbers set forth in Section 2.2(c)), (iii) the Company has not made or declared any distribution in cash or in kind to its shareholders or repurchased any shares of its Capital Stock (other than 20,000 shares repurchased in 2016), (iv) through (and including) the date of this Agreement, no fact, event, change, condition, development, circumstance or effect has occurred that has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect; (v) there has not been any change in the nature of the business, results of operations, assets, financial condition, method of accounting or accounting practice, or manner or conduct of the business of the Company and the Bank that has had, or may reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, or on the ability of the Company to consummate the transactions contemplated hereby; and (vi) no material default (or event which, with notice or lapse of time, or both, would constitute a material default) exists on the part of the Company or any Company Subsidiary in the due performance and observance of any term, covenant or condition of any agreement to which the Company or any Company Subsidiary is a party and which would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

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(p)Compliance with Laws. The Company and each Company Subsidiary have all material permits, licenses, franchises, authorizations, orders and approvals of, and have made all filings, applications and registrations with, Governmental Entities that are required in order to permit them to own or lease their properties and assets and to carry on their business as presently conducted and that are material to the business of the Company and each Company Subsidiary. The Company and each Company Subsidiary have complied in all respects and (i) are not in default or violation in any respect of, (ii) are not, to the Company’s Knowledge, under investigation with respect to, and (iii) have not, to the Company’s Knowledge, been threatened to be charged with or given notice of any violation of, any applicable domestic (federal, state or local) or foreign law, statute, ordinance, license, rule, regulation, policy or guideline, order, demand, writ, injunction, decree or judgment of any Governmental Entity (each, a “Law”), other than such noncompliance, defaults or violations as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. No Governmental Entity has placed any material restriction on the business or properties of the Company or any of the Company Subsidiaries. As of the date hereof, the Bank has a Community Reinvestment Act rating of “satisfactory.”

(q)Regulatory Agencies.

(i)The Company and the Company Subsidiaries (i) are not subject to any cease-and-desist or other similar order or enforcement action issued by, (ii) are not a party to any written agreement, consent agreement or memorandum of understanding with, and (iii) are not a party to any commitment letter or similar undertaking to maintain capital ratios above the regulatory minimum. Since December 31, 2015, neither the Company nor any of the Company Subsidiaries has adopted any board resolutions at the request of any Governmental Entity that currently restricts in any material respect the conduct of its business or that in any material manner relates to its capital adequacy, its liquidity and funding policies and practices, its ability to pay dividends, its credit, risk management or compliance policies, its internal controls, its management or its operations or business (each item in the two previous sentences being referred to herein as a “Regulatory Agreement”), nor has the Company nor any of the Company Subsidiaries been advised since December 31, 2015 by any Governmental Entity that it is considering issuing, initiating, ordering, or requesting any such Regulatory Agreement.

(ii)As of December 31, 2016, the Company and each Company Subsidiary had filed, since that date have filed, and subsequent to the date hereof will file, all reports, registrations and statements, if any, together with any amendments required to be made with respect thereto, that were and are required to be filed with (i)  the Federal Reserve Board, (ii) the FDIC, and (iii) the Florida Office of Financial Regulation (“FLOFR”) (all such reports and statements are collectively referred to herein as the “Company Reports). As of their respective dates, the Company Reports complied and will comply in all material respects with all the statutes, rules and regulations enforced or promulgated by the Governmental Entity with which they were filed and did not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading. There are no outstanding comments from any Governmental Entity with respect to any Company Reports.

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(iii)All documents which the Company is responsible for filing with any Governmental Entity in connection with the transactions contemplated by this Agreement will comply as to form in all material respects with the provisions of applicable Law.

(r)The Bank. No shares of Capital Stock of the Bank are or may become required to be issued by reason of any options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relative to, or concerning securities or rights convertible into, or exchangeable for, shares of any class of Capital Stock of the Bank, and there are no other contracts, commitments, understandings or arrangements by which the Bank is bound to issue, or the Company is bound to cause the Bank to issue, additional shares of its Capital Stock or options, warrants, scrip, rights to purchase or acquire, or securities or rights convertible into or exchangeable for, any additional shares of its Capital Stock. All of the shares of Capital Stock of the Bank so owned by the Company are fully paid and non-assessable and are owned by it free and clear of any Liens or agreement with respect thereto. The Bank is a commercial bank duly organized, validly existing and in good standing under the laws of the State of Florida and has the corporate power and authority and all necessary federal, state, local and foreign authorizations to own or lease its properties and assets and to carry on its business as it is now being conducted.

(s)Adequate Capitalization. The Bank meets or exceeds the standards necessary to be considered “well capitalized” under the FDIC’s regulatory framework for prompt corrective action and is in compliance with all minimum capital adequacy requirements of the FDIC and the FLOFR, as applicable. The Company is in compliance with all applicable minimum capital adequacy requirements of the Federal Reserve Board. The Company and the Bank have not received written notice of any facts or circumstances in existence, which would cause the Company or the Bank to be deemed to be not in compliance with applicable minimum capital adequacy requirements.

(t)Contracts. The Company has provided to each Investor that has made a request (including via access in any virtual data room) or such Investor’s representatives true, correct and complete copies of each of the following to which the Company or any Company Subsidiary is a party, each of which has been Previously Disclosed (each, a “Material Contract”):

(i)any contract or agreement relating to indebtedness of the Company or any Company Subsidiary for borrowed money, letters of credit, capital lease obligations, obligations secured by a Lien or interest rate or currency hedging agreements (including guarantees in respect of any of the foregoing, but in any event excluding trade payables, securities transactions and brokerage agreements arising in the Ordinary Course of Business, intercompany indebtedness and immaterial leases for telephones, copy machines, facsimile machines and other office equipment) in excess of $300,000, except for those issued in the Ordinary Course of Business;

(ii)any contract or agreement limiting, in any material respect, the ability of the Company or any of the Company Subsidiaries to engage in any line of business or to compete, whether by restricting territories, customers or otherwise, or in any other material respect, with any Person;

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(iii)any contract or agreement that concerns the sale or acquisition of any material portion of the Company’s business;

(iv)any alliance, cooperation, joint venture, shareholders, partnership or similar agreement involving a sharing of profits or losses relating to the Company or any Company Subsidiary;

(v)any contract or agreement involving annual payments in excess of $300,000 that cannot be cancelled by the Company or a Company Subsidiary without penalty on not more than 60 days’ notice;

(vi)any material hedge, collar, option, forward purchasing, swap, derivative or similar agreement, understanding or undertaking;

(vii)any contract or agreement with respect to the employment or service of any current or former directors, officers, employees or consultants of the Company or any of the Company Subsidiaries other than, with respect to non-executive employees and consultants, in the Ordinary Course of Business; and

(viii)any contract or agreement containing any (x) non-competition or exclusive dealing obligations or other obligation which purports to limit or restrict in any respect the ability of the Company or any Company Subsidiary to solicit customers or the manner in which, or the localities in which, all or any portion of the business of the Company or the Company Subsidiaries is or can be conducted, or (y) right of first refusal or right of first offer or similar right that limits or purports to limit the ability of the Company or any of the Company Subsidiaries to own, operate, sell, transfer, pledge or otherwise dispose of any material assets or business.

Each Material Contract (A) is legal, valid and binding on the Company and the Company Subsidiaries which are a party to such contract, (B) is in full force and effect and enforceable in accordance with its terms and (C) will continue to be legal, valid, binding, enforceable, and in full force and effect in all material respects following the consummation of the transactions contemplated by this Agreement. Neither the Company nor any of the Company Subsidiaries, nor to the Knowledge of the Company, any other party thereto is in material violation or default under any Material Contract. No benefits under any Material Contract will be increased, and no vesting of any benefits under any Material Contract will be accelerated, by the occurrence of any of the transactions contemplated by this Agreement, nor will the value of any of the benefits under any Material Contract be calculated on the basis of any of the transactions contemplated by this Agreement. The Company and the Company Subsidiaries, and to the Knowledge of the Company, each of the other parties thereto, have performed in all material respects all material obligations required to be performed by them under each Material Contract, and to the Knowledge of the Company, no event has occurred that with notice or lapse of time would constitute a material breach or default or permit termination, modification, or acceleration, under the Material Contracts.

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(u)Insurance. The Company and each of the Company Subsidiaries are presently insured, and have been insured for at least the past two years, for reasonable amounts with financially sound and reputable insurance companies against such risks as companies engaged in a similar business would, in accordance with good business practice, customarily be insured. All of the policies, bonds and other arrangements providing for the foregoing (the “Company Insurance Policies”) are in full force and effect, the premiums due and payable thereon have been timely paid and there is no material breach or default (and no condition exists or event has occurred that, with the giving of notice or lapse of time or both, would constitute such a material breach or default) by the Company or any of the Company Subsidiaries under any of the Company Insurance Policies or, to the Knowledge of the Company, by any other party to the Company Insurance Policies. Neither the Company nor any of the Company Subsidiaries has received any written notice of cancellation or non-renewal of any Company Insurance Policy nor, to the Knowledge of the Company, is the termination of any of the Company Insurance Policies threatened in writing by the insurer, and there is no material claim for coverage by the Company, or any of the Company Subsidiaries, pending under any of such Company Insurance Policies as to which coverage has been denied or disputed by the underwriters of such Company Insurance Policies or in respect of which such underwriters have reserved their rights.

(v)Title. The Company and the Company Subsidiaries have good and marketable title in fee simple to all real property owned by them and good and valid title to all material personal property owned by them, in each case free and clear of all Liens, except for Liens which do not materially affect the value of such property or do not interfere with the use made and proposed to be made of such property by the Company or any Company Subsidiary. Any real property and facilities held under lease by the Company or the Company Subsidiaries are valid, subsisting and enforceable leases with such exceptions that are not material and do not interfere with the use made and proposed to be made of such property and facilities by the Company or the Company Subsidiaries.

(w)Patents and Trademarks.  The Company and the Company Subsidiaries own, possess, license, or have other rights to use all domestic patents, patent applications, trade and service marks, trade and service mark registrations, trade names, copyrights, inventions, trade secrets, technology, internet domain names, know-how, and other intellectual property (collectively, the “Intellectual Property”) necessary for the conduct of their respective businesses as now conducted or as proposed to be conducted except where the failure to own, possess, license, or have such rights would not have or reasonably be expected to have a Material Adverse Effect.  Except where such violations or infringements would not have or reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect, (a) there are no rights of third parties to any such Intellectual Property, (b) there is no infringement by third parties of any such Intellectual Property, (c) there is no pending or threatened action, suit, proceeding, or claim by others challenging the Company’s and its Subsidiary’s rights in or to any such Intellectual Property, (d) there is no pending or threatened action, suit, proceeding, or claim by others challenging the validity or scope of any such Intellectual Property, and (e) there is no pending or threatened action, suit, proceeding, or claim by others that the Company and/or any of the Company Subsidiaries infringes or otherwise violates any patent, trademark, copyright, trade secret, or other proprietary rights of others.

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(x)Employee Benefits.

(i)The Company has Previously Disclosed each “employee benefit plan” (within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), including multiemployer plans within the meaning of Section 3(37) of ERISA), and all stock purchase, stock option, severance, employment, change-in-control, fringe benefit, bonus, incentive, deferred compensation and all other employee benefit plans, agreements, programs, policies or other arrangements, whether or not subject to ERISA (including any funding mechanism therefor now in effect or required in the future as a result of the transactions contemplated by this Agreement or otherwise), whether formal or informal, oral or written, under which (A) any current or former employee or director of the Company or any of the Company Subsidiaries (the “Company Employees”) has any present or future right to benefits and which are contributed to, sponsored by or maintained by the Company or any of the Company Subsidiaries or (B) the Company or any Company Subsidiary has had or has any present or future liability. All such plans, agreements, programs, policies and arrangements shall be collectively referred to as the “Benefit Plans.”

(ii)(A) Each Benefit Plan has been established and administered in all material respects in accordance with its terms, and in compliance with the applicable provisions of ERISA, the Code and other Laws; (B) the contributions made to, and benefits provided by, each Benefit Plan are eligible for the tax treatment accorded to them by the Company and each Company Subsidiary; and (C) no non-exempt “prohibited transaction” (as such term is defined in Section 406 of ERISA and Section 4975 of the Code) has been engaged in by the Company or any Company Subsidiary with respect to any Benefit Plan that has or is expected to result in any material liability.

(iii)Neither Company nor any trade or business (whether or not incorporated) which together with the Company is treated as a single employer under Section 4001(b) of ERISA and any of their predecessors: (A) maintains or has ever maintained a plan subject to Title IV of ERISA or Section 412 of the Code; (B) has had or has any obligation to contribute or other liability with respect to a multiemployer plan, as defined in Sections 3(37)(A) and 4001(a)(3) of ERISA; (C) maintains or has ever maintained a multiple employer welfare arrangement within the meaning of Section 3(40) of ERISA; or (D) has had or has any liability or obligation to provide retiree or post-termination of employment health or life benefits, except as required under Part 6 of ERISA, Section 4980B of the Code or any similar state law.

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(y)Taxes.

(i)All Tax Returns required to be filed by, or on behalf of, Company or the Company Subsidiaries have been timely filed, or will be timely filed, in accordance with all applicable Laws, and all such Tax Returns were, at the time of filing, complete and correct in all material respects. The Company and the Company Subsidiaries have timely paid all material Taxes due and payable (whether or not shown on such Tax Returns), or, where payment is not yet due, have made adequate provisions in accordance with GAAP. There are no Liens with respect to Taxes upon any of the assets or properties of the Company or any of the Company Subsidiaries other than with respect to Taxes not yet due and payable. The Company reasonably believes that neither it nor the Bank has or will have any material liability for any such Taxes in excess of the amounts so paid or reserved or accruals so established. Neither the Company nor any Company Subsidiary is delinquent in the payment of any material Tax, has not requested any extension of time within which to file any Tax Returns in respect of any fiscal year which have not since been filed or has participated in any “reportable transaction” within the meaning of Treasury Regulation 1.6011-4.

(ii)No material deficiencies for any Tax have been assessed (tentatively or definitively) or, to the Company’s Knowledge, proposed or asserted against the Company or any Company Subsidiary which have not been settled and paid and, as of the date of this Agreement, no requests for waivers of the time to assess any Tax, or waivers of the statutory period of limitation, are pending or have been granted, and the Company and each Company Subsidiary do not have in effect any currently effective power of attorney or authorization to any Person to represent it in connection with any Taxes. No issue has been raised with the Company by any federal, state, local or foreign Governmental Entity in connection with an audit or examination of the Tax Returns, or the business or properties of the Company and each Company Subsidiary which has not been settled, resolved and fully satisfied. No claim has ever been made by any Governmental Entity in a jurisdiction where the Company or a Company Subsidiary does not file Tax Return that the Company or the Company Subsidiary is or may be subject to taxation by that jurisdiction.

(iii)The Company and each Company Subsidiary have paid (or have had paid on their behalf) or have withheld and remitted to the appropriate Governmental Entity all material Taxes due and payable, or, where payment is not yet due, has established (or has had established on its behalf and for its sole benefit and recourse) in accordance with GAAP an adequate accrual for all Taxes through the end of the last period for which the Company and each Company Subsidiary ordinarily record items on their respective books. The Company and each Company Subsidiary have withheld or collected from each payment made to its employees the amount of all Taxes required to be withheld or collected therefrom, and have paid the same to the proper tax officers or authorized depositories.

(iv)Neither the Company nor any Company Subsidiary is a party to, or bound by, any agreement or arrangement relating to the apportionment, sharing, assignment, or indemnification or allocation of any Tax or Tax assets (other than an agreement or arrangement solely among the current members of a group the common parent of which is the Company) or has any liability for the Taxes of any Person including any former subsidiary of the Company or the Bank, other than the Company or the Bank, under (i) Treasury Regulation Section 1.1502-6 (or similar provision of federal, state or local law), (ii) any contract, (iii) any agreement, or (iv) any other arrangement.

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(z)Labor.

(i)Employees of the Company and the Company Subsidiaries are not represented by any labor union nor are any collective bargaining agreements otherwise in effect with respect to such employees. No labor organization or group of employees of the Company or any Company Subsidiary has made a pending demand for recognition or certification, and there are no representation or certification proceedings or petitions presently pending or threatened to be brought or filed with the National Labor Relations Board or any other labor relations tribunal or authority, nor have there been in the last three years. There are no strikes, work stoppages, slowdowns, labor picketing lockouts, material arbitrations or material grievances, or other material labor disputes pending or, to the Knowledge of the Company, threatened against or involving the Company or any Company Subsidiary, nor have there been any in the past year.

(ii)Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, the Company and the Company Subsidiaries are in compliance with all applicable Laws and requirements respecting employment and employment practices, terms and conditions of employment, collective bargaining, disability, immigration, health and safety, wages, hours and benefits, non-discrimination in employment, workers’ compensation and the collection and payment of withholding and/or payroll taxes and similar taxes.

(iii)Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, there is no charge or complaint pending or threatened before any Governmental Entity alleging unlawful discrimination in employment practices, unfair labor practices or other unlawful employment practices by the Company or any Company Subsidiary.

(aa)Loan Portfolio.

(i)Each of the loans, including loans held for sale, of the Bank (“Loans): (i) is evidenced by notes, agreements or other evidences of indebtedness which are true, genuine and what they purport to be; (ii) to the extent secured, has been secured by valid liens or security interests which have been perfected; and (iii) represents the legal, valid and binding obligation of the borrowers named therein, enforceable in accordance with its terms (including the validity, perfection and enforceability of any Lien, security interest or other encumbrance relating to such Loan), except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting the enforcement of creditors’ rights generally, and subject to general principles of equity which may limit the enforcement of certain remedies. For purposes of the foregoing sentence, it is agreed that the phrase “enforceable in accordance with its terms” shall not mean that the borrower or other obligor has the financial ability to repay a Loan or that the collateral is sufficient in value to result in payment of the Loan secured thereby.

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(ii)Each Loan of the Bank was made in material compliance with the provisions of applicable Law, including but not limited to the Real Estate Settlement Practices Act (“RESPA”), the Truth in Lending Act, the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, and the regulations promulgated thereunder, as well as the rules and regulations promulgated by the Consumer Financial Protection Bureau.

(iii)No default (including any event or circumstance which with the passage of time or the giving of notice or both would constitute a default) in respect of any material provision (including any default in payment) of any Loan of the Bank exists, except as Previously Disclosed.

(bb)Offering of Securities.

(i)Neither the Company nor any Person acting on its behalf has taken any action which would subject the offering, issuance or sale of any of the Company Stock to be issued pursuant to this Agreement to be subject to the registration requirements of the Securities Act. Neither the Company nor any Person acting on its behalf has engaged or will engage in any form of general solicitation or general advertising (within the meaning of Regulation D under the Securities Act) in connection with any offer or sale of the Company Stock pursuant to the transactions contemplated by this Agreement. Assuming the accuracy of each Investor’s representations and warranties set forth in this Agreement, no registration under the Securities Act is required for the offer and sale of the Company Stock by the Company to the Investors. Except for this Agreement and the related agreements referenced herein, the Company is not a party to or otherwise bound by any agreement with respect to the sale of its Capital Stock.

(ii)Each offering circular, private placement memorandum or other securities offering document used by the Company in connection with the sale of Company Stock, and all other sales documentation relating thereto, did not, as of the respective dates thereof, contain any untrue or misleading statement of a material fact, and did not omit to state a material fact necessary in order to make the statements contained therein, in light of the circumstances in which they were made, not misleading.

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(iii)Assuming the accuracy of each Investor’s representations and warranties set forth in this Agreement, none of the Company, the Company’s Subsidiaries nor, to the Company’s Knowledge, any of its Affiliates or any Person acting on its behalf has, directly or indirectly, at any time within the past six months, made any offers or sales of any Company security or solicited any offers to buy any security under circumstances that would eliminate the availability of the exemption from registration under Regulation D under the Securities Act in connection with the offer and sale by the Company of the Company Stock as contemplated hereby.

(iv) To the Company’s Knowledge, following the exercise of reasonable care, no Covered Person (as defined below) is subject to any of the “bad actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities Act (“Disqualification Events”), except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3) under the Securities Act.  The Company has complied, to the extent applicable, with any disclosure obligations under Rule 506(e) under the Securities Act.  “Covered Persons” are those persons specified in Rule 506(d)(1) under the Securities Act, including the Company, any predecessor or affiliate of the Company, any director, executive officer, other officer participating in the offering, general partner or managing member of the Company, any beneficial owner of 20% or more of the Company’s outstanding voting equity securities, calculated on the basis of voting power, any promoter (as defined in Rule 405 under the Securities Act) connected with the Company in any capacity at the time of the sale of the Company Stock, and any person that has been or will be paid (directly or indirectly) remuneration for solicitation of purchasers in connection with the sale of the Shares (a “Solicitor”), any general partner or managing member of any Solicitor, and any director, executive officer or other officer participating in the offering of any Solicitor or general partner or managing member of any Solicitor.

(v)The Company has not, and to the Company’s Knowledge, no one acting on its behalf has, taken, directly or indirectly, any action designed to cause or result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Company Stock.

(vi)Other than the Letter Agreements and Registration Rights Agreements to be entered into with each of EJF, Mendon and BayBoston, the Company has no agreements or understandings (including, without limitation, side letters) with any Investor or other Person to purchase shares of Company Stock on terms more favorable to such Person than as set forth herein. Except for this Agreement and the Letter Agreements, the Company does not have any agreement or understanding with any Investor with respect to the transactions contemplated by the Transaction Documents. To the extent any Letter Agreements or additional agreements or modifications to the Transaction Documents have been entered into on or prior to the date hereof, the Company has provided each Investor with true and accurate copies of such Letter Agreements, other additional agreements or modified Transaction Documents into which it has entered.

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(cc)Investment Company Status. The Company is not, and upon consummation of the transactions contemplated by this Agreement will not be, an “investment company,” a company controlled by an “investment company” or an “affiliated Person” of, or “promoter” or “principal underwriter” of, an “investment company,” as such terms are defined in the Investment Company Act of 1940, as amended.

(dd)Affiliate Transactions. No officer, director, five percent (5%) shareholder or other Affiliate of the Company (or any Company Subsidiary), or any individual who, to the Knowledge of the Company, is related (including by marriage or adoption) to or shares the same home as any such Person, or any entity which, to the Knowledge of the Company, is controlled by any such Person (collectively, an “Insider”), is a party to any contract or transaction with the Company (or any Company Subsidiary) which pertains to the business of the Company (or any Company Subsidiary) or has any interest in any property, real or personal or mixed, tangible or intangible, used in or pertaining to the business of the Company (or any Company Subsidiary). The foregoing representation and warranty does not include deposits at the Company (or any Company Subsidiary) or loans of $250,000 or less made in the Ordinary Course of Business in compliance with Regulation O and other applicable Law.

(ee)Anti-takeover Provisions Not Applicable. The Board of Directors has taken all necessary action to ensure that the transactions contemplated by this Agreement and the consummation of the transactions contemplated hereby will be exempt from any anti-takeover or similar provisions of the Company’s articles of incorporation and bylaws and any provisions of any applicable “moratorium”, “control share”, “fair price”, “interested shareholder” or other anti-takeover Laws and regulations of the jurisdiction of the Company’s incorporation.

(ff)No Triggering Events. The transactions contemplated by this Agreement will not be deemed a Change in Control or constitute any other triggering event which would result in the (i) obligation of the Company or any of the Company Subsidiaries to make any payments under any employment, change in control or other agreements to which the Company or any of the Company Subsidiaries is a party or (ii) acceleration or vesting of any benefits under any employee benefit plan of the Company or any of the Company Subsidiaries.

(gg)No Brokers. No broker, placement agent, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement or any other Transaction Document based upon arrangements made by or on behalf of the Company.

(hh)Common Control. The Company is not and, after giving effect to the offering and sale of the Company Stock, will not be under the control (as defined in the BHCA and the Federal Reserve Board’s Regulation Y (12 C.F.R. Part 225) (“BHCA Control”),”) of any company (as defined in the BHCA and the Federal Reserve Board’s Regulation Y).  The Company is not in BHCA Control of any federally insured depository institution other than the Bank.  The Bank is not under the BHCA Control of any company (as defined in the BHCA and the Federal Reserve Board’s Regulation Y) other than Company.  Neither the Company nor the Bank controls, in the aggregate, more than five percent of the outstanding voting class, directly or indirectly, of any federally insured depository institution, except for the Company’s ownership of 100% of the capital stock of the Bank.  The Bank is not subject to the liability of any commonly controlled depository institution pursuant to Section 5(e) of the FDI Act.

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For purposes of this Agreement, “Previously Disclosed” means information (i) set forth by the Company in the applicable section of its Disclosure Schedules or any other paragraph of its Disclosure Schedule (so long as it is reasonably clear from the context that the disclosure in such other paragraph of its Disclosure Schedule is also applicable to the section of this Agreement in question) or (ii) contained in the virtual data room maintained by the Company in connection with the transactions contemplated hereby to which the Investor was provided access.

2.3Representations and Warranties of the Investors. Each Investor, for itself and no other Investor, hereby represents and warrants to the Company, as of the date hereof and as of the Closing Date (except for the representations and warranties that are as of a specific date which are made as of that date) that:

(a)Organization and Authority. If the Investor is an entity, the Investor is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, is duly qualified to do business and is in good standing in all jurisdictions where its ownership or leasing of property or the conduct of its business requires it to be so qualified and where failure to be so qualified would be reasonably expected to materially and adversely impair or delay its ability to perform its obligations under this Agreement or to consummate the transactions contemplated hereby.

(b)Authorization; No Conflicts.

(i)The Investor has the necessary power and authority to execute and deliver this Agreement and to perform its obligations hereunder. With regard to each Investor that is not an individual, the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by its board of directors, general partners, managers, investment committee, investment adviser or other authorized person, as the case may be, and no further approval or authorization by any of its shareholders, partners, members or other equity owners, as the case may be, is required. With regard to each Investor that is an individual, the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized. This Agreement has been duly and validly executed and delivered by the Investor and, assuming due authorization, execution and delivery by the Company is the valid and binding obligation of the Investor enforceable against the Investor in accordance with its terms (except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors’ rights or by general equity principles).

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(ii)Neither the execution, delivery and performance by the Investor of this Agreement nor the consummation of the transactions contemplated hereby, nor compliance by the Investor with any of the provisions hereof, will (A) violate, conflict with, or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration of, or result in the creation of any Liens upon any of the properties or assets of the Investor under any of the terms, conditions or provisions of (1) its certificate of incorporation or its similar governing documents, if applicable, or (2) any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which the Investor is a party or by which the Investor may be bound, or to which the Investor or any of the properties or assets of the Investor may be subject, or (B) violate any Law applicable to the Investor or any of its properties or assets except in the case of clauses (A)(2) and (B) for such violations, conflicts and breaches as would not reasonably be expected to materially adversely affect the Investor’s ability to perform its obligations under this Agreement or consummate the transactions contemplated hereby on a timely basis.

(c)Governmental Consents. No Governmental Consents are necessary for the Investor to execute and deliver this Agreement or the other Transaction Documents, to perform all obligations under this Agreement or the other Transaction Documents, or to consummate the Closing or any of the transactions contemplated by this Agreement or the other Transaction Documents, other than: (i) the filing with the Securities Exchange Commission one or more registration statements in accordance with the requirements of the Registration Rights Agreement, if applicable, (ii) the filings required in accordance with Section 3.9 of this Agreement, (iii) the feedback required in accordance with Section 1.2(c)(ii)(H), and (iv) those that have been obtained prior to the date of this Agreement.

(d)Purchase for Investment; Accredited Investor Status. The Investor acknowledges that the Company Stock to be purchased by the Investor pursuant to this Agreement has not been registered under the Securities Act or under any state securities laws and may not be resold or transferred by the Investor without such registration or appropriate reliance on any available exemption from such requirements. The Investor (i) is acquiring the Company Stock pursuant to an exemption from the registration requirements of the Securities Act and other applicable securities laws solely for investment with no present intention to distribute any of the Company Stock to any Person, (ii) will not sell or otherwise dispose of any of the Company Stock, except in compliance with the registration requirements or exemption provisions of the Securities Act and any other applicable securities laws, (iii) has such knowledge and experience in financial and business matters and in investments of this type that it is capable of evaluating the merits and risks of its investment in the Company Stock and of making an informed investment decision and (iv) is an “accredited investor” (as that term is defined by Rule 501 of the Securities Act).

(e)Brokers and Finders. Neither the Investor, nor its respective Affiliates nor any of their respective officers or directors, has employed any broker or finder or incurred any liability for any financial advisory fees, brokerage fees, commissions or finder’s fees, and no broker or finder has acted directly or indirectly for the Investor in connection with this Agreement or the transactions contemplated hereby.

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(f)Investment Decision. The Investor has independently evaluated the merits of its decision to purchase the Company Stock pursuant to this Agreement, and the Investor confirms that it has not relied on the advice of any other Person’s business or legal counsel in making such decision. The Investor understands that nothing in this Agreement or any other materials presented by or on behalf of the Company to the Investor in connection with the purchase of the Company Stock constitutes legal, tax or investment advice. The Investor has consulted such accounting, legal, tax and investment advisors as it has deemed necessary or appropriate in connection with its purchase of the Company Stock. Except as Previously Disclosed and except for the Transaction Documents, there are no agreements or understandings with respect to the transactions contemplated by this Agreement and any of the Letter Agreements, as applicable, between the Investor or any of its Affiliates, on the one hand, and (i) any of the other shareholders of the Company or any of their respective Affiliates, in each case, the identity of which is known to the Investor, (ii) the Company or (iii) the Company Subsidiaries, on the other hand.

(g)Financial Capability. At the Closing, the Investor shall have available all funds necessary to pay the Purchase Price and consummate the purchase of Company Stock on the terms and conditions contemplated by this Agreement.

(h)Access to Information. The Investor acknowledges that it has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Company Stock and the merits and risks of investing in the Company Stock; (ii) access to information about the Company and the Company Subsidiaries and their respective financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the Investment.

(i)No Reliance. The Investor has not relied on any representation or warranty in connection with the Investment other than those contained in this Agreement.

(j)No Coordinated Acquisition. The Investor (i) reached its decision to invest in the Company Stock independently from any other Person known by the Investor to be a potential investor in the Company (any such person, a “Potential Investor”), (ii) is not affiliated with any other Potential Investor, (iii) is not advised or managed by an advisor or manager that advises or manages any other Potential Investor, (iv) has not entered into any agreement or understanding, whether written or not reduced to writing, with any other Potential Investor to act in concert for the purpose of exercising a controlling influence over the Company or any Company Subsidiaries, including any agreements or understandings regarding the voting or transfer of shares of the Company, (v) has not shared due diligence materials prepared by such Investor or any of its advisors or representatives with respect to the Company or any Company Subsidiaries with any other Potential Investor, (vi) has not been induced, nor has induced any other Potential Investor, to enter into the transactions contemplated by this Agreement by any other Potential Investor, (vii) was not notified of or provided the opportunity to enter into the transactions contemplated by this Agreement pursuant to the terms of any agreement or informal understanding with, or otherwise acting in concert with, any other Potential Investor and was not required by the terms of any agreement or informal understanding to so notify any other Potential Investor, (viii) is not a party to any formal or informal understanding with any other Potential Investor to make a coordinated acquisition of stock of the Company, and the investment decision of the Investor is not based on the investment decision of any other Potential Investor, (ix) is not a party to any formal or informal agreement or understanding concerning the appointment of any individual to the Board of Directors (other than as set forth in the Letter Agreements, as applicable), (x) has not engaged as part of a group consisting of substantially the same entities as the Potential Investors, in substantially the same combination of interests, in any additional banking or nonbanking activities or business ventures in the United States and (xi) will not pay any other Potential Investor any fee in connection with the transactions contemplated hereby.

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(k)No Advertisement. The Investor has not seen, received, been presented with, or been solicited by any leaflet, public promotional meeting, newspaper or magazine article or advertisement, radio or television advertisement, or any other form of advertising or general solicitation with respect to the purchase of Company Stock.

(l)Residency. The Investor’s residence or principal executive office, as applicable is set forth on such Investor’s signature page hereto.

(m)Anti-Money Laundering Procedures. The Investor understands, acknowledges, represents and agrees that (i) the Investor is not the target of any sanction, regulation, or law promulgated by the Office of Foreign Assets Control, the Financial Crimes Enforcement Network or any other U.S. governmental entity (“U.S. Sanctions Laws”),”); (ii) the Investor is not owned by, controlled by, under common control with, or acting on behalf of any person that is the target of U.S. Sanctions Laws; (iii) the Investor is not a “foreign shell bank” and is not acting on behalf of a “foreign shell bank” under applicable anti-money laundering Laws and regulations; (iv) the Investor’s entry into this Agreement or consummation of the transactions contemplated hereby will not contravene U.S. Sanctions Laws or applicable anti-money laundering Laws or regulations; (v) the Investor will promptly provide to the Company or any regulatory or law enforcement authority such information or documentation as may be required to comply with U.S. Sanctions Laws or applicable anti-money laundering Laws or regulations; and (vi) the Company may provide to any regulatory or law enforcement authority information or documentation regarding, or provided by, the Investor for the purposes of complying with U.S. Sanctions Laws or applicable anti-money laundering laws or regulations.

ARTICLE 3

COVENANTS

3.1Conduct of Business Prior to Closing. Except as otherwise expressly required or contemplated by this Agreement or applicable Law or in the performance of any Material Contract, or with the prior written consent of the Investors, between the date of this Agreement and the Closing, the Company shall, and the Company shall cause each Company Subsidiary to:

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(a)use commercially reasonable efforts to conduct its business only in the Ordinary Course of Business;

(b)use commercially reasonable efforts to (i) preserve the present business operations, organization (including officers and employees) and goodwill of the Company and each Company Subsidiary and (ii) preserve business relationships with customers, suppliers, consultants and others having business dealings with the Company; provided, however, that nothing in this clause (b) shall place any limit on the ability of the Board of Directors to act, or require any actions, that the Board of Directors may, in good faith, determine to be inconsistent with their duties or the Company’s obligations under applicable Law or imposed by any Governmental Entity;

(c)not knowingly take any action which would: (i) adversely affect the ability to obtain the necessary Governmental Consents required for the transactions contemplated hereby or (ii) adversely affect the ability to perform the covenants and agreements under this Agreement;

(d)not amend, repeal or modify any provision of its articles of incorporation or bylaws; and

(e)maintain the allowance for loan losses at a level which, in management’s reasonable and good faith determination, is adequate to absorb reasonably anticipated losses in the loan portfolio in accordance with GAAP and regulatory requirements, after taking charge-offs required in accordance with GAAP and regulatory requirements.

3.2Confidentiality. From time to time, the Company may disclose or make available to the Investors information about the Company’s business affairs, products, services, confidential intellectual property, trade secrets, third-party confidential information and other sensitive or proprietary information, whether orally or in written, electronic or other form or media, and whether or not marked, designated or otherwise identified as “confidential” (collectively, “Confidential Information”). Each Investor shall: (A) protect and safeguard the confidentiality of the Company’s Confidential Information with at least the same degree of care as such Investor would protect its own Confidential Information, but in no event with less than a commercially reasonable degree of care; (B) not use the Company’s Confidential Information, or permit it to be accessed or used, for any purpose other than to exercise its rights or perform its obligations under this Agreement; and (C) not disclose any such Confidential Information to any person or entity, except to such Investor’s representatives who need to know the Confidential Information to assist the Investor, or act on its behalf, to exercise its rights or perform its obligations under the Agreement. The Investors shall be responsible for any breach of this Section 3.2 caused by their respective representatives. Upon the Company’s request, the Investors shall promptly return, and shall require their respective representatives to return to the Company all copies, whether in written, electronic or other form or media, of the Company’s Confidential Information, or destroy all such copies and certify in writing to the Disclosing Party that such Confidential Information has been destroyed. In addition to all other remedies available at law, the Company may seek equitable relief (including injunctive relief) against the Investors and their respective representatives to prevent the breach or threatened breach of this Section 3.2 and to secure its enforcement.

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3.3Filings; Other Actions. Investor, on the one hand, and the Company, on the other hand, will cooperate and consult with the other and use commercially reasonable efforts to prepare and file all necessary documentation, to effect all necessary applications, notices, petitions, filings and other documents, and to obtain all necessary permits, consents, orders, approvals and authorizations of, or any exemption by, all third parties and Governmental Entities, and the expiration or termination of any applicable waiting period, necessary or advisable to consummate the transactions contemplated by this Agreement, and to perform the covenants contemplated hereby. Each party shall execute and deliver, both before and after the Closing, such further certificates, agreements and other documents, and shall take such other actions as the other party may reasonably request to consummate or implement such transactions contemplated by this Agreement or to evidence such events or matters. Investor and the Company will have the right to review in advance and, to the extent practicable, each will consult with the other, in each case, subject to applicable Laws relating to the exchange of information, all the information relating to such other party and any of their respective Affiliates which appears in any filing made with, or written materials submitted to, any third party or any Governmental Entity in connection with the transactions contemplated by this Agreement to which it will be party. In exercising the foregoing right, each of the parties hereto agrees to act reasonably and as promptly as practicable. Each party hereto agrees to keep the other party apprised of the status of the matters referred to in this Section 3.3. Investor shall promptly furnish the Company, and the Company shall promptly furnish the Investor, to the extent permitted by applicable Law, with copies of written communications received by it or its Affiliates from, or delivered by any of the foregoing to, any Governmental Entity in respect of the transactions contemplated by this Agreement. For the avoidance of doubt, none of the foregoing obligations shall require Investor or any of its Affiliates to take any action that would (i) result in Investor or its Affiliates being deemed to control the Company for purposes of the BHCA or the cross-guaranty liability provisions of the FDI Act, (ii) require Investor or its Affiliates to register as a bank holding company, or (ii) result in the imposition of any Burdensome Condition.

3.4Legend.

(a)Each Investor agrees that all certificates or other instruments representing the Company Stock subject to this Agreement shall bear a legend substantially to the following effect, until such time as they are not required under Section 3.4(b):

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE STATE SECURITIES LAWS OF ANY STATE.  WITHOUT REGISTRATION, THESE SECURITIES MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SHARES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO COUNSEL FOR THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH LAWS.”

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(b)Upon request of an Investor, the Company shall promptly cause such legend to be removed from any certificate for any Company Stock to be so transferred if (i) such Company Stock is being transferred pursuant to a registration statement in effect with respect to such transfer or (ii) such Company Stock is being transferred pursuant to an exemption from registration under the Securities Act and applicable state laws subject to receipt by the Company of a reasonably acceptable legal opinion from counsel for such Investor who is reasonably satisfactory to the Company to the effect that such legend is no longer required under the Securities Act and applicable state laws. Each Investor acknowledges that the Company Stock has not been registered under the Securities Act or under any state securities laws and agrees that it shall not sell or otherwise dispose of any of the Company Stock, except in compliance with the registration requirements or exemption provisions of the Securities Act and any other applicable securities laws.

3.5Certain Other Transactions.

(a)Prior to the Closing, notwithstanding anything in this Agreement to the contrary, the Company shall not directly or indirectly effect or cause to be effected any transaction with a third party that would reasonably be expected to result in a Change in Control unless such third party shall have provided prior assurance in writing to each Investor (in a form that is reasonably satisfactory to such Investor) that the terms of this Agreement shall be fully performed (i) by the Company or (ii) by such third party if it is the successor of the Company or if the Company is its direct or indirect Subsidiary. For the avoidance of doubt, it is understood and agreed that, in the event that a Change in Control occurs on or prior to the Closing, each Investor shall maintain the right under this Agreement to acquire, pursuant to the terms and conditions of this Agreement, the Company Stock that is to be purchased by such Investor pursuant to this Agreement (or such other securities or property (including cash) into which the Company Stock that is to be purchased by Investor pursuant to this Agreement may have become exchangeable as a result of such Change in Control), as if the Closing had occurred immediately prior to such Change in Control.

(b)In the event that, at or prior to the Closing, (i) the number of shares of Company Stock, or securities convertible or exchangeable into or exercisable for shares of Company Stock, issued and outstanding is changed as a result of any reclassification, stock split (including reverse split), stock dividend or distribution (including any dividend or distribution of securities convertible or exchangeable into or exercisable for shares of Company Stock), merger, tender or exchange offer or other similar transaction, or (ii) the Company fixes a record date that is at or prior to the Closing Date for the payment of any non-stock dividend or distribution on the Company Stock, then the number of shares of Company Stock to be issued to each Investor at the Closing under this Agreement, together with the applicable implied per share price, shall be equitably adjusted and/or the shares of Company Stock to be issued to such Investor at the applicable Closing under this Agreement shall be equitably replaced with shares of other stock or securities or property (including cash), in each case, to provide each Investor with substantially the same economic benefit from this Agreement as such Investor had prior to the applicable transaction. Notwithstanding anything in this Agreement to the contrary, in no event shall the Purchase Price or any component thereof, or the aggregate percentage of shares to be purchased by any Investor, be changed by the foregoing.

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(c)Notwithstanding anything in the foregoing to the contrary, the provisions of this Section 3.5 shall not apply to any issuance or sale of any Capital Stock, or any securities, options or debt that are convertible or exchangeable into Capital Stock, issued or sold by the Company in connection with: (a) a grant to any existing or prospective directors, officers or other employees, consultants or service providers of the Company or any Company Subsidiary pursuant to the Company Option Plan or similar equity-based plans or other compensation agreement; (b) the conversion or exchange of any securities of the Company into Capital Stock, or the exercise of any warrants or other rights to acquire Capital Stock; (c) any acquisition by the Company or any Company Subsidiary of any equity interests, assets, properties or business of any Person; (d) any merger, consolidation or other business combination involving the Company or any Company Subsidiary; (e) the commencement of any public offering or any transaction or series of related transactions involving a Change in Control; (f) any subdivision of Capital Stock (by a split of Capital Stock or otherwise), payment of stock dividend, reclassification, reorganization or any similar recapitalization; (g) a joint venture, strategic alliance or other commercial relationship with any Person relating to the operation of the Company’s or any Company Subsidiary’s business and not for the primary purpose of raising equity capital; or (h) a purchase of Capital Stock by an employee pursuant to the Company’s employee stock purchase plan.

3.6Insurance. The Company shall maintain directors’ and officers’ liability insurance and fiduciary liability insurance with insurers of recognized financial responsibility in such amounts as the Board determines to be prudent and customary for the Company's business and operations.

3.7Access to Information. From the date hereof until the Closing Date, the Company will permit, and cause the Bank to permit, Investor and its officers, employees, accountants, counsel and other representatives to visit and inspect, at Investor’s expense, the properties of the Company and the Bank, and to examine the corporate books of the Company and the Bank and discuss the affairs, finances and accounts of the Company and the Bank with the officers and employees of the Company, all upon reasonable notice and at such reasonable times and as often as the Investor may reasonably request. Any investigation pursuant to this Section 3.7 shall be conducted during normal business hours and in such a manner as not to interfere unreasonably with the conduct of the business of the Company, and nothing herein shall require the Company or the Bank to disclose any information to the extent (1) prohibited by applicable Law or regulation, (2) that the Company reasonably believes such information to be competitively sensitive proprietary information (except to the extent Investor provides assurances acceptable to the Company that such information shall not be used by Investor or its Affiliates to compete with the Company or the Bank), or (3) that such disclosure would reasonably be expected to cause a violation of any agreement to which the Company or any Company Subsidiary is a party or would cause a risk of a loss of privilege to the Company or any Company Subsidiary (provided that the Company shall use commercially reasonable efforts to make appropriate substitute disclosure arrangements under circumstances where the restrictions in clauses (1) or (3) apply).

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3.8Tax Matters. The Company will pay any and all Transfer Taxes incurred in connection with this Agreement and the issuance and purchase of the Company Stock purchased as part of the Investment. The Company shall timely make all filings, Tax Returns, reports and forms relating to such Transfer Taxes as may be required to comply with the provisions of such Transfer Tax laws. “Transfer Taxes” means transfer, documentary, sales, use, registration and other such taxes (including all applicable real estate transfer taxes).

3.9Form D and Blue Sky. The Company agrees to timely file a Form D with respect to the Company Stock as required under Regulation D. Investor agrees to timely provide Company with any and all needed information in connection with Company’s preparation and filing of a Form D. The Company, on or before the Closing Date, shall take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for or to qualify the applicable Company Stock for sale to the Investors at the Closing pursuant to this Agreement under applicable securities or “Blue Sky” laws of the states of the United States (or to obtain an exemption from such qualification).  The Company shall make all filings and reports relating to the offer and sale of the Company Stock required under applicable securities or blue sky laws of the states of the United States following the Closing Date.

ARTICLE 4

TERMINATION

4.1Termination. This Agreement may be terminated prior to the Closing:

(a)by mutual written agreement of the Company and any Investor (with respect to itself only);

(b)by any the Company or any Investor (with respect to itself only), upon written notice to the non-terminating parties, in the event that the Closing does not occur on or before the date that is 120 days after the date of this Agreement; provided, however, that the right to terminate this Agreement pursuant to this Section 4.1(b) shall not be available to any party or parties whose failure to fulfill any obligation under this Agreement shall have been the cause of, or shall have resulted in, the failure of the Closing to occur on or prior to such date;

(c)by any Investor (with respect to itself only), upon written notice to the Company, if (i) there has been a breach of any representation, warranty, covenant or agreement made by the Company in this Agreement, or any such representation and warranty shall have become untrue after the date of this Agreement, such that Section 1.2(c)(ii)(A) would not be satisfied and (ii) such breach or condition is not curable or, if curable, is not cured prior to the date that would otherwise be the Closing Date in absence of such breach or condition; provided that this Section 4.1(c) shall only apply if the Investor is not in material breach of any of the terms of this Agreement;

(d)by any Investor (with respect to itself only), if such Investor or any of its Affiliates receives written notice from or is otherwise advised by a Governmental Entity that it will not grant (or intends to rescind or revoke if previously approved) any required regulatory approval or receives written notice from such Governmental Entity that it will not grant such required regulatory approval on the terms contemplated by this Agreement without imposing any Burdensome Condition;

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(e)by the Company, upon written notice to any Investor, if (i) there has been a breach of any representation, warranty, covenant or agreement made by such Investor in this Agreement, or any such representation and warranty shall have become untrue after the date of this Agreement, such that Section 1.2(c)(iii)(A) would not be satisfied and (ii) such breach or condition is not curable or, if curable, is not cured prior to the date that would otherwise be the Closing Date in absence of such breach or condition; provided that this Section 4.1(e) shall only apply if the Company is not in material breach of any of the terms of this Agreement;

(f)by the Company or any Investor (with respect to itself only) if it becomes impossible to satisfy the conditions contained in Section 1.2(c)(i), by the Company if it becomes impossible to satisfy the conditions contained in Section 1.2(c)(iii), or by any Investor (with respect to itself only) if it becomes impossible to satisfy the conditions contained in Section 1.2(c)(ii);

(g)by any Investor (with respect to itself only), in the event the Company enters into a definitive agreement with a third party that would reasonably be expected to result in a Change in Control of the Company;

(h)by any Investor (with respect to itself only), if such Investor or its Affiliates receives written notice from or is otherwise advised by the Federal Reserve Board that the Federal Reserve Board will not issue a determination (formal or informal) that such Investor will not be deemed in control of the Company for purposes of the BHCA or that it will not make such determination without the imposition of a Burdensome Condition, or otherwise indicates that it will deem Investor or any of its Affiliates to control the Company for purposes of the BHCA; or

(i)by the Company or any Investor (with respect to itself only), upon written notice to the non-terminating parties, in the event that any Governmental Entity shall have issued any order, decree or injunction or taken any other action restraining, enjoining or prohibiting any of the transactions contemplated by this Agreement, and such order, decree, injunction or other action shall have become final and nonappealable.

4.2Effects of Termination. In the event of any termination of this Agreement as provided in Section 4.1, this Agreement (other than Section 3.2, this Article 4 and Article 6 of this Agreement, which shall remain in full force and effect) shall forthwith become wholly void and of no further force and effect; provided that nothing herein shall relieve any party from liability for fraud or willful breach of this Agreement.

ARTICLE 5

INDEMNITY

5.1Indemnification by the Company. In addition to the indemnity provided in the Registration Rights Agreement, if applicable, after the Closing, and subject to Sections 5.3 and 5.4, the Company shall indemnify, defend and hold harmless to the fullest extent permitted by Law each Investor and its Affiliates, and their successors and assigns, officers, directors, shareholders partners, members, agents, investment advisors, and employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), as applicable (the “Investor Indemnified Parties”), against, and reimburse any of the Investor Indemnified Parties for, all Losses that any of the Investor Indemnified Parties may at any time suffer or incur, or become subject to, as a result of or in connection with (i) the inaccuracy or breach of any representation or warranty made by the Company in this Agreement or any certificate delivered pursuant hereto, (ii) any breach or failure by the Company to perform any of its covenants or agreements contained in this Agreement, (iii) any action instituted against an Investor Indemnified Party in any capacity, or any of them or their respective affiliates, by any shareholder of the Company who is not an affiliate of such Investor Indemnified Party, with respect to any of the transactions contemplated by this Agreement, and (iv) any actions involving the Company arising out of or related to any event, fact, change, occurrence, development or condition prior to the Closing Date. Notwithstanding anything herein to the contrary, the obligations of the Company under this Section 5.1(a) shall not be applicable to or inure to the benefit of any transferee of the Company Stock sold pursuant to this Agreement who is not an Affiliate of an Investor.

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5.2Indemnification by the Investors. After the Closing, and subject to Sections 5.3 and 5.4, each Investor shall indemnify, defend and hold harmless to the fullest extent permitted by Law the Company, its Affiliates and their respective successors and assigns, officers, directors, partners, members and employees (collectively, the “Company Indemnified Parties”) against, and reimburse any of the Company Indemnified Parties for, all Losses that the Company Indemnified Parties may at any time suffer or incur, or become subject to, as a result of or in connection with (i) the inaccuracy or breach of any representation or warranty made by such Investor in this Agreement or any certificate delivered pursuant hereto or (ii) any breach or failure by such Investor to perform any of its covenants or agreements contained in this Agreement.

5.3Notification of Claims.

(a)Any Person that may be entitled to be indemnified under this Article 5 (the “Indemnified Party”) shall promptly notify the party or parties liable for such indemnification (the “Indemnifying Party”) in writing of any claim in respect of which indemnity may be sought hereunder, including any pending or threatened claim or demand by a third party that the Indemnified Party has determined has given or could reasonably give rise to a right of indemnification under this Agreement (including a pending or threatened claim or demand asserted by a third party against the Indemnified Party) (each, a “Third Party Claim”), describing in reasonable detail the facts and circumstances with respect to the subject matter of such claim or demand; provided, however, that the failure to provide such notice shall not release the Indemnifying Party from any of its obligations under this Agreement except to the extent that the Indemnifying Party is materially prejudiced by such failure. The parties agree that notices for claims in respect of a breach of a representation, warranty, covenant or agreement must be delivered prior to the expiration of any applicable survival period specified in Section 6.1 for such representation, warranty, covenant or agreement; provided, that if, prior to such applicable date, a party hereto shall have notified the other parties hereto in accordance with the requirements of this Section 5.3(a) of a claim for indemnification under this Agreement (whether or not formal legal action shall have been commenced based upon such claim), such claim shall continue to be subject to indemnification in accordance with this Agreement notwithstanding the passing of such applicable date.

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(b)Upon receipt of a notice of a claim for indemnity from an Indemnified Party pursuant to Section 5.3(a) in respect of a Third Party Claim, the Indemnifying Party may, by notice to the Indemnified Party delivered within twenty (20) Business Days of the receipt of notice of such Third Party Claim, assume the defense and control of any Third Party Claim, with its own counsel reasonably acceptable to the Indemnified Party and at its own expense. The Indemnified Party shall have the right to employ counsel on its own behalf for, and otherwise participate in the defense of, any such Third Party Claim, but the fees and expenses of its counsel will be at its own expense unless (A) the employment of counsel by the Indemnified Party at the Indemnifying Party’s expense has been authorized in writing by the Indemnifying Party, as applicable, (B) the Indemnified Party reasonably believes there may be a conflict of interest between the Indemnified Party and the Indemnifying Party in the conduct of the defense of such Third Party Claim, (C) the Indemnified Party reasonably believes there are legal defenses available to it that are different from, additional to or inconsistent with those available to the Indemnifying Party, or (D) the Indemnifying Party has not in fact employed counsel to assume the defense of such Third Party Claim within a reasonable time after receipt of notice of the commencement of such Third Party Claim, in each of which cases the fees and expenses of such Indemnified Party’s counsel shall be at the expense of the Indemnifying Party; provided, however, that in the event any Investor Indemnified Party is similarly situated with any other Investor Indemnified Party with respect to any Third Party Claim, and does not have any conflict of interest with such Person in the conduct of the defense of such Third Party Claim or have legal defenses available to it that are different from, additional to or inconsistent with those available to such Person, such Investor Indemnified Party shall be required to employ the same counsel as such Person and the Company shall be responsible for the fees and expenses of only one such counsel for such Investor Indemnified Party and such other Person or Persons (assuming any of clauses (A) through (D) is satisfied). The Indemnified Party may take any actions reasonably necessary to defend such Third Party Claim prior to the time that it receives a notice from the Indemnifying Party as contemplated by the immediately preceding sentence. The Indemnified Party shall, and shall cause each of their Affiliates and representatives to, use reasonable best efforts to cooperate with the Indemnifying Party in the defense of any Third Party Claim. The Indemnifying Party shall not, without the prior written consent of the Indemnified Party (which shall not be unreasonably withheld), consent to a settlement, compromise or discharge of, or the entry of any judgment arising from, any Third Party Claim, unless such settlement, compromise, discharge or entry of any judgment does not involve any statement, finding or admission of any fault, culpability, failure to act, violation of Law or admission of any wrongdoing by or on behalf of the Indemnified Party, and the Indemnifying Party shall (i) pay or cause to be paid all amounts arising out of such settlement or judgment concurrently with the effectiveness of such settlement or judgment (unless otherwise provided in such judgment), (ii) not encumber any of the assets of any Indemnified Party or agree to any restriction or condition that would apply to or materially adversely affect any Indemnified Party or the conduct of any Indemnified Party’s business and (iii) obtain, as a condition of any settlement, compromise, discharge, entry of judgment (if applicable), or other resolution, a complete and unconditional release of each Indemnified Party in form and substance reasonably satisfactory to such Indemnified Party from any and all liabilities in respect of such Third Party Claim. An Indemnified Party shall not settle, compromise or consent to the entry of any judgment with respect to any claim or demand for which it is seeking indemnification from the Indemnifying Party or admit to any liability with respect to such claim or demand without the prior written consent of the Indemnifying Party (which consent shall not be unreasonably withheld or delayed); provided that such consent shall not be required if the Indemnifying Party has not fulfilled any material obligations under this Section 5.3(b).

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(c)In the event any Indemnifying Party receives a notice of a claim for indemnity from an Indemnified Party pursuant to Section 5.3(a) that does not involve a Third Party Claim, the Indemnifying Party shall notify the Indemnified Party within twenty (20) Business Days following its receipt of such notice whether the Indemnifying Party disputes its liability to the Indemnified Party under this Agreement. The Indemnified Party shall reasonably cooperate with and assist the Indemnifying Party in determining the validity of any such claim for indemnity by the Indemnified Party.

5.4Indemnification Payment. In the event a claim or any Action for indemnification hereunder has been finally determined, the amount of such final determination shall be paid by the Indemnifying Party to the Indemnified Party on demand in immediately available funds; provided, however, that any reasonable and documented out-of-pocket expenses incurred by the Indemnified Party as a result of such claim or Action shall be reimbursed promptly by the Indemnifying Party upon receipt of an invoice describing such costs incurred by the Indemnified Party. A claim or an Action, and the liability for and amount of damages therefor, shall be deemed to be “finally determined” for purposes of this Agreement when the parties hereto have so determined by mutual agreement or, if disputed, when a final non-appealable judicial order has been entered into with respect to such claim or Action.

5.5Exclusive Remedies. Each party hereto acknowledges and agrees that following the Closing, the indemnification provisions hereunder shall be the sole and exclusive remedies of the parties hereto for any breach of the representations, warranties or covenants contained in the this Agreement. No investigation of the Company by the Investor, or of the Investor by the Company, whether prior to or after the date of this Agreement, shall limit any Indemnified Party’s exercise of any right hereunder or be deemed to be a waiver of any such right. The parties agree that any indemnification payment made pursuant to this Agreement shall be treated as an adjustment to the Purchase Price for Tax purposes, unless otherwise required by Law.

ARTICLE 6

MISCELLANEOUS

6.1Survival. The representations and warranties of the parties hereto contained in this Agreement shall survive in full force and effect until the date that is eighteen (18) months after the Closing Date (or until final resolution of any claim or Action arising from the breach of any such representation and warranty, if notice of such breach was provided prior to the end of such period), at which time they shall terminate and no claims shall be made for indemnification under Section 5.1 or Section 5.2, as applicable, for breaches of representations or warranties thereafter, except the Company Specified Representations and the Investor Specified Representations shall survive the Closing indefinitely. The covenants and agreements set forth in this Agreement shall survive until the earliest of the duration of any applicable statute of limitations or until performed or no longer operative in accordance with their respective terms.

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6.2Other Definitions. Wherever required by the context of this Agreement, the singular shall include the plural and vice versa, and the masculine gender shall include the feminine and neuter genders and vice versa, and references to any agreement, document or instrument shall be deemed to refer to such agreement, document or instrument as amended, supplemented or modified from time to time. In addition, the following terms shall have the meanings assigned to them below:

(a)“Affiliate“ means, with respect to any Person, any Person directly or indirectly controlling, controlled by or under common control with, such other Person provided that no security holder of the Company shall be deemed to be an Affiliate of any other security holder or of the Company or any of the Company Subsidiaries solely by reason of any investment in the Company and, for purposes of this definition, “control” (including, with correlative meanings, the terms “controlling”, “controlled by” and “under common control with”) when used with respect to any Person, means the possession, directly or indirectly, of the power to cause the direction of management or policies of such Person, whether through the ownership of voting securities by contract or otherwise;

(b)“Agency“ means the Federal Housing Administration, the Federal Home Loan Mortgage Corporation, the Farmers Home Administration (now known as Rural Housing and Community Development Services), the Federal National Mortgage Association, the United States Department of Veterans’ Affairs, the Rural Housing Service of the U.S. Department of Agriculture or any other Governmental Entity with authority to (i) determine any investment, origination, lending or servicing requirements with regard to mortgage loans originated, purchased or serviced by the Company or (ii) originate, purchase, or service mortgage loans, or otherwise promote mortgage lending, including state and local housing finance authorities;

(c)“Board of Directors“ means the Board of Directors of the Company;

(d)“Business Day“ means any day except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking institutions in the State of Florida generally are authorized or required by Law or other governmental actions to close;

(e)“Capital Stock“ means the capital stock or other applicable type of equity interest in a Person;

(f)“Change in Control“ means the acquisition by any Person (including a group of related persons within the meaning of Rule 13d-2 of the Exchange Act) of (i) more than fifty percent (50%) of the outstanding Capital Stock of the Company, (ii) all or substantially all of the assets of the Company (including the sale of more than two-thirds (2/3) of the Capital Stock held by the Company in the Bank), or (iii) a merger of the Company with or into any Person, or of any Person with or into the Company, immediately after which the shareholders of the Company (as measured immediately prior to completion of the transaction) own less than a majority of the combined Capital Stock of the surviving Person.

(g)“Code“ means the Internal Revenue Code of 1986, as amended;

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(h)“Company Specified Representations” means the representations and warranties made in Section 2.2(a), Section 2.2(b), Section 2.2(c), Section 2.2(d), Section 2.2(q) and Section 2.2(ff);

(i)“Disclosure Schedule” shall mean a schedule delivered, on or prior to the date of this Agreement, by (i) the Investor to the Company and (ii) the Company to the Investor setting forth, among other things, items the disclosure of which is necessary or appropriate either in response to an express disclosure requirement contained in a provision hereof or as an exception to one or more representations or warranties contained in Section 2.2 with respect to the Company, or in Section 2.3 with respect to the Investor, or to one or more covenants contained in Article 3;

(j)“GAAP” means United States generally accepted accounting principles and practices as in effect from time to time;

(k)“Governmental Consent” means any notice to, registration, declaration or filing with, exemption or review by, or authorization, order, consent or approval of, any Governmental Entity, or the expiration or termination of any statutory waiting periods;

(l)“Governmental Entity” means any court, administrative agency or commission or other governmental authority or instrumentality, whether federal, state, local or foreign, and any applicable industry self-regulatory organization or securities exchange;

(m)“Insurer” means a Person who insures or guarantees for the benefit of the mortgagee all or any portion of the risk of loss upon borrower default on any of the mortgage loans originated, purchased or serviced by the Bank, including the Federal Housing Administration, the United States Department of Veterans’ Affairs, the Rural Housing Service of the U.S. Department of Agriculture and any private mortgage insurer, and providers of hazard, title or other insurance with respect to such mortgage loans or the related collateral;

(n)“Investor Specified Representations” means the representations and warranties made in Section 2.3(a), Section 2.3(b)(i), Section 2.3(d), Section 2.3(e), Section 2.3(h) and Section 2.3(i);

(o)“Knowledge” of the Company and words of similar import mean the actual knowledge of any directors or executive officers of the Company;

(p)“Loan Investor” means any Person (including an Agency) having a beneficial interest in any mortgage loan originated, purchased or serviced by the Bank or a security backed by or representing an interest in any such mortgage loan;

(q)“Losses” means any and all losses, damages, reasonable costs, reasonable expenses (including reasonable attorneys’ fees and disbursements), liabilities, settlement payments, awards, judgments, fines, obligations, claims, and deficiencies of any kind;

(r)“Ordinary Course of Business” means an action taken by any Person only if such action is constituent with the past practices of such Person and is similar in nature and magnitude to actions customarily taken in the ordinary course of the normal day-to-day operations of other Persons that are in the same line of business as such Person.

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(s)“Person” means any individual, firm, corporation, partnership, trust, incorporated or unincorporated association, joint venture, joint stock company, limited liability company, Governmental Entity or other entity of any kind, and shall include any successor (by merger or otherwise) of such entity;

(t)“Subsidiary” means, with respect to any Person, any corporation, partnership, joint venture, limited liability company or other entity (x) of which such Person or a Subsidiary of such Person is a general partner or (y) of which a majority of the voting securities or other voting interests, or a majority of the securities or other interests of which having by their terms ordinary voting power to elect a majority of the board of directors or persons performing similar functions with respect to such entity, is directly or indirectly owned by such Person and/or one or more Subsidiaries thereof;

(u)“Tax” or “Taxes” means all United States federal, state, local or foreign income, profits, estimated, gross receipts, windfall profits, severance, property, intangible property, occupation, production, sales, use, license, excise, emergency excise, franchise, capital gains, Capital Stock, employment, withholding, transfer, stamp, payroll, goods and services, value added, alternative or add-on minimum tax, or any other tax, custom, duty or governmental fee, or other like assessment or charge of any kind whatsoever, together with any interest, penalties, fines, related liabilities or additions to tax that may become payable in respect thereof imposed by any Governmental Entity, whether or not disputed;

(v)“Tax Return” means any return, declaration, report or similar statement required to be filed with respect to any Taxes (including any attached schedules), including any information return, claim or refund, amended return and declaration of estimated Tax;

(w)the word “or” is not exclusive;

(x)the words “including,” “includes,” “included” and “include” are deemed to be followed by the words “without limitation”;

(y)the terms “herein,” “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular section, paragraph or subdivision; and

(z)all article, section, paragraph or clause references not attributed to a particular document shall be references to such parts of this Agreement, and all exhibit and schedule references not attributed to a particular document shall be references to such exhibits and schedules to this Agreement.

6.3Expense Reimbursement. The Company shall promptly pay the fees and expenses incurred by EJF in connection with its evaluation of the Company and negotiation of this Agreement and the documents and instruments delivered or to be delivered in connection herewith (including legal and travel expenses) in an amount not to exceed $20,000 in the aggregate, provided the Closing occurs. In the event there is more than one Closing, the cap on reimbursement described herein shall apply cumulatively to all such Closings.

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6.4Corporate Opportunities.

(a)                Investor and any of its Affiliates may engage in or possess an interest in other business ventures of any nature or description, independently or with others, similar or dissimilar to the business of the Company or any Company Subsidiary, and the Company, any Company Subsidiary, the directors, the directors of any Company Subsidiary, and their other stockholders shall have no rights by virtue of this Agreement in and to such ventures or the income or profits derived therefrom, and the pursuit of any such venture, even if competitive with the business of the Company, shall not be deemed wrongful or improper.

(b)               To the fullest extent permitted by law and except as otherwise provided below, neither Investor nor any of its directors, principals, officers, members, limited or general partners, fiduciaries, managers, employees and/or other representatives (the “Investor Equityholders”) or its or their Affiliates or director designees shall be obligated to refer or present any particular business opportunity to the Company or any Company Subsidiary even if such opportunity is of a character that, if referred or presented to the Company or any Company Subsidiary, could be taken by the Company or any Company Subsidiary, and Investor, any such Investor Equityholder or any of its or their Affiliates, respectively, shall have the right to take for its own account (individually or as a partner, investor, member, participant or fiduciary) or to recommend to others such particular opportunity.

(c)                In the event that a director of the Company who has been designated by Investor acquires knowledge of a potential transaction or other matter which may be a corporate or business opportunity for both the Company and Investor, such director of the Company shall have fully satisfied and fulfilled the fiduciary duty of such director to the Company and its stockholders with respect to such corporate or other business opportunity, if such director acts in a manner consistent with the following policy: A business or corporate opportunity offered to any person who is a director but not an officer of the Company and who has been designated by Investor shall belong to the Company only if such opportunity is offered to such person in his or her capacity as a director of the Company, and otherwise shall belong to Investor.

(d)               No act or omission by Investor or any of its Affiliates in accordance with this Section shall be considered contrary to (i) any fiduciary duty that Investor or any of its Affiliates may owe to the Company or any Company Subsidiary or to any other stockholder or by reason of Investor or any of its Affiliates being a stockholder of the Company, or (ii) any fiduciary duty of any director of the Company or any Company Subsidiary who has been designated by Investor to the Company or any Company Subsidiary, or to any stockholder thereof. Any person purchasing or otherwise acquiring any Capital Stock of the Company, or any interest therein, in connection with the transactions contemplated by the Transaction Documents or at any time thereafter shall be deemed to have notice of and to have consented to the provisions of this Section. The Company hereby waives any right to bring a claim for breach of fiduciary duty against Investor or any Affiliate thereof, or any director designated by Investor, based on any act or omission by Investor or any Affiliate thereof, or such director, taken in accordance with this Section.

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6.5Amendment and Waivers. The conditions to each party’s obligation to consummate the Closing are for the sole benefit of such party and may be waived by such party in whole or in part to the extent permitted by Law. No amendment or waiver of any provision of this Agreement will be effective against any party hereto unless it is in a writing signed by a duly authorized officer of such party.

6.6Counterparts and Facsimile. For the convenience of the parties hereto, this Agreement may be executed in any number of separate counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts will together constitute the same agreement. Executed signature pages to this Agreement may be delivered by facsimile or other electronic transmission and such transmissions shall be deemed as sufficient as if manually signed signature pages had been delivered.

6.7Governing Law. This Agreement will be governed by and construed in accordance with the Laws of the State of Florida applicable to contracts made and to be performed entirely within such jurisdiction.

6.8Jurisdiction. The parties hereby agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby shall be brought in the federal or state courts located in Miami-Dade County, Florida, so long as such court shall have subject matter jurisdiction over such suit, action or proceeding, and each of the parties hereby irrevocably consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by Law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding which is brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 6.10 shall be deemed effective service of process on such party. The parties hereby irrevocably and unconditionally consent to submit to the exclusive jurisdiction of the state and federal courts referred to above for any actions, suits or proceedings arising out of or relating to this Agreement and the transactions contemplated hereby.

6.9WAIVER OF JURY TRIAL. THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT OR UNDER ANY AGREEMENT, INSTRUMENT OR OTHER DOCUMENT CONTEMPLATED HEREBY OR RELATED HERETO AND IN ANY ACTION DIRECTLY OR INDIRECTLY RELATED TO OR CONNECTED WITH THE OBLIGATIONS OF THIS AGREEMENT. THE PARTIES ACKNOWLEDGE THAT THIS WAIVER MAY DEPRIVE EACH OF THEM AN IMPORTANT RIGHT AND THAT SUCH WAIVER HAS BEEN KNOWINGLY AND VOLUNTARILY MADE BY THE PARTIES AFTER CONSULTATION WITH THEIR LEGAL COUNSEL.

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6.10Notices. Any notice, request, instruction or other document to be given hereunder by any party to the other will be in writing and will be deemed to have been duly given (a) on the date of delivery if delivered personally or by e-mail (upon confirmation of receipt), (b) on the first Business Day following the date of dispatch if delivered by a recognized next-day courier service, or (c) on the third Business Day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid. All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice.

(a)If to the Company:

Professional Holding Corp.

396 Alhambra Circle, Suite 255

Coral Gables, FL 33134

E-mail: dsheehan@professionalbankfl.com

Attention: Daniel R. Sheehan

Title: Chairman and Chief Executive Officer

with a copy to:

Gunster, Yoakley & Stewart, P.A.

777 South Flagler Drive, Suite 500 East

West Palm Beach, FL 33401

Attention: Michael V. Mitrione

Facsimile: (561) 671-2425

E-Mail: mmitrione@gunster.com

(b)If to any Investor:

To the address or e-mail set forth on the applicable signature page for such Investor

6.11Entire Agreement. This Agreement and the agreements referred to herein (including the Annexes, the Letter Agreements, as applicable, and Schedules hereto) (collectively, the “Transaction Documents”) constitute the entire agreement, and supersede all other prior agreements, understandings, representations and warranties, inducements or conditions, both written and oral, among the parties, with respect to the subject matter hereof and thereof.

6.12Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns, including any purchasers of the Company Stock to be issued pursuant to this Agreement. The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Investor. The Investor may assign some or all of its rights hereunder or thereunder without the consent of the Company to any Affiliate of the Investor, unless such assignment would result in a breach of any of the representations or warranties of the Investor or a failure of any of the conditions set forth in Section 1.2(c) of this Agreement. Any such permitted assignee shall be deemed to be an Investor hereunder with respect to such assigned rights and shall be bound by the terms and conditions of this Agreement that apply to the Investor.

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6.13Captions. The article, section, paragraph and clause captions herein are for convenience of reference only, do not constitute part of this Agreement and will not be deemed to limit or otherwise affect any of the provisions hereof.

6.14Severability. If any provision of this Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to Persons or circumstances other than those as to which it has been held invalid or unenforceable, will remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination, the parties shall negotiate in good faith in an effort to agree upon a suitable and equitable substitute provision to effect the original intent of the parties.

6.15Third Party Beneficiaries. Nothing contained in this Agreement, expressed or implied, is intended to confer upon any Person other than the parties hereto, any benefit right or remedies, except that the provisions of Sections 5.1 and 5.2 shall inure to the benefit of the Persons referred to in such Sections.

6.16Public Announcements. The Investor will not make (and will use its reasonable best efforts to ensure that its Affiliates and representatives do not make) any news release or public disclosure with respect to this Agreement and any of the transactions contemplated hereby, without first consulting with the Company and, in each case, also receiving the Company’s consent (which shall not be unreasonably withheld or delayed).

6.17Specific Performance. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms. It is accordingly agreed that the parties shall be entitled to seek specific performance of the terms hereof, this being in addition to any other remedies to which they are entitled at law or equity.

6.18Independent Nature of Investors’ Obligations and Rights. The obligations of each Investor under any Transaction Document are several and not joint with the obligations of any other Investor, and no Investor shall be responsible in any way for the performance of the obligations of any other Investor under any Transaction Document.  The decision of each Investor to purchase Company Stock pursuant to the Transaction Documents has been made by such Investor independently of any other Investor and independently of any information, materials, statements, or opinions as to the business, affairs, operations, assets, properties, liabilities, results of operations, condition (financial or otherwise), or prospects of the Company or any Company Subsidiary which may have been made or given by any other Investor or by any agent or employee of any other Investor, and no Investor and none of its agents or employees shall have any liability to any other Investor (or any other Person) relating to or arising from any such information, materials, statements, or opinions.  Nothing contained herein or in any Transaction Document, and no action taken by any Investor pursuant thereto, shall be deemed to constitute the Investors as a partnership, an association, a joint venture, or any other kind of entity, or create a presumption that the Investors are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents.  Each Investor acknowledges that no other Investor has acted as agent for such Investor in connection with making its investment hereunder and that no Investor will be acting as agent of such Investor in connection with monitoring its investment in the Company Stock or enforcing its rights under the Transaction Documents.  Each Investor shall be entitled to independently protect and enforce its rights, including without limitation the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Investor to be joined as an additional party in any proceeding for such purpose.  It is expressly understood and agreed that each provision contained in this Agreement is between the Company and an Investor, solely, and not between the Company and the Investors collectively and not between and among the Investors.

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6.19No Recourse. This Agreement may only be enforced against the named parties hereto. All claims or causes of action that may be based upon, arise out of or relate to this Agreement, or the negotiation, execution or performance of this Agreement may be made only against the Persons that are expressly identified as parties hereto or that are subject to the terms hereof, and no past, present or future director, officer, employee, incorporator, member, manager, partner, shareholder, Affiliate, agent, attorney or representative of any party hereto (including any person negotiating or executing this Agreement on behalf of a party hereto) shall have any liability or obligation with respect to this Agreement or with respect to any claim or cause of action, whether in tort, contract or otherwise, that may arise out of or relate to this Agreement, or the negotiation, execution or performance of this Agreement and the transactions contemplated hereby.

[Signature Page Follows]

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SIGNATURE PAGE FOR INDIVIDUAL

IN WITNESS WHEREOF, this Stock Purchase Agreement has been executed by Investor and by the Company on the respective dates set forth below.

Signature	Signature (If Shares Purchased Jointly)
Name	Name
(Please Print)	(Please Print)

Taxpayer ID Number Taxpayer ID Number

Address Address

Telephone # Telephone #

Fax #	Fax #
Email:	Email:
Date:	Date:

Stock Purchase Amount:

(1)	Number of shares of Class A Voting Common Stock:
(2)	Number of shares of Class B Non-Voting Common Stock:
(3)	Total number of shares subscribed (Line 1 plus Line 2):
(4)	Amount per share to be paid with subscription:	$14.50
(5)	Total Payment (Line 3 multiplied by Line 4):

Form of ownership: o Individual        o TBE        o JTWROS        o TIC        o Other (specify): ___________________

PROFESSIONAL HOLDING CORP.
By:
	Name:	Daniel R. Sheehan
	Title:	Chairman and President

Date:

SIGNATURE PAGE FOR CORPORATIONS, PARTNERSHIPS, LIMITED LIABILITY COMPANIES, ASSOCIATIONS, TRUSTS AND OTHER ENTITIES

IN WITNESS WHEREOF, this Stock Purchase Agreement has been executed by Investor and by the Company on the respective dates set forth below.

(Name of Entity) (Taxpayer Identification Number)

By:

Its:
	(Date)

Address of Investor:

Telephone Number:

Fax Number:

E-mail Address:

Stock Purchase Amount:

(1)	Number of shares of Class A Voting Common Stock:
(2)	Number of shares of Class B Non-Voting Common Stock:
(3)	Total number of shares subscribed (Line 1 plus Line 2):
(4)	Amount per share to be paid with subscription:	$14.50
(5)	Total Payment (Line 3 multiplied by Line 4):

PROFESSIONAL HOLDING CORP.

By:
	Name:	Daniel R. Sheehan
	Title:	Chairman and President

Date:

List of Exhibits and Schedules Omitted from the Purchase Agreement

Referenced in Exhibit 10.15 Above

Pursuant to Regulation S-K, Item 601(a)(5), the Exhibits and Schedules to the Purchase Agreement referenced in Exhibit 10.15 above, as listed below, have not been filed. The Registrant agrees to furnish supplementally a copy of any omitted Exhibit or Schedule to the Securities and Exchange Commission (the “Commission”) upon request; provided, however, that the Registrant may request confidential treatment of omitted items.

Exhibits:

Exhibit A:	EJF Sidecar Fund Letter Agreement
Exhibit B:	Mendon/BayBoston Letter Agreement
Exhibit C:	Instruction Sheet

EX-10.16

Exhibit 10.16

PROFESSIONAL HOLDING CORP.

SUBSCRIPTION INSTRUCTIONS

To subscribe for shares of Class A Voting Common Stock and/or Class B Non-Voting Common Stock of Professional Holding Corp., a Florida corporation (Company), prospective investors must complete all of the subscription documents contained in this package in accordance with the instructions below:

(1) Prospective investors must carefully review, complete and execute the following attached documents:

(a) Subscription Agreement (please note that there are separate signature pages for individuals and entities); and

(b) Purchaser Questionnaire, which is attached to the Subscription Agreement as Exhibit 1 (please note that there are separate questions for individuals and entities).

(2) Prospective investors must wire the full amount of the purchase price of the shares subscribed on or before December 18, 2018 to:

Wire to: Professional Bank

ABA Number: 067016574

Account Name: Professional Holding Corp. Escrow Account

Account Number: 2005195

Reference: 2018 PFHD Stock Purchase

(3) Prospective investors should direct all questions and send the completed originals or electronic copies of the above-referenced documents, to the address below so that the Representative may determine whether the prospective investor meets federal and state securities law standards to subscribe for shares in the Company:

Professional Holding Corp.

Attn: Daniel R. Sheehan

5100 PGA Blvd., Suite 101

Palm Beach Gardens, Florida 33418

Tel: (561) 868-1275

Email: drs@probankfl.com

(4) Upon acceptance of the subscription, a copy of the executed Subscription Agreement signed by the Company will be returned to the investor as soon as is practicable.

(5) The applicable documents should be completed in their entirety and executed. If any documents are signed for the prospective investor by the prospective investor’s attorney-in-fact, a copy of the power of attorney must be enclosed with the subscription documents the prospective investor returns.

(6) The Company will have the right, in its sole and absolute discretion, to accept or reject this subscription for any reason or no reason in whole or in part and at any time prior to acceptance thereof.

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THE SECURITIES SUBSCRIBED FOR BY THIS SUBSCRIPTION AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (SECURITIES ACT), OR ANY APPLICABLE STATE SECURITIES LAWS. TRANSFER OF THE SECURITIES IS RESTRICTED BY THE TERMS OF THIS SUBSCRIPTION AGREEMENT AND BY APPLICABLE LAW. NEITHER THE SECURITIES AND EXCHANGE COMMISSION (COMMISSION) NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THE OFFERING DOCUMENTS OR ANY OFFERING NOTICE IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

SUBSCRIPTION AGREEMENT

Professional Holding Corp.

5100 PGA Blvd., Suite 101

Palm Beach Gardens, Florida 33418

Re:     Purchase of Class A Voting Common Stock and/or Class B Non-Voting Common Stock

Ladies and Gentlemen:

To induce Professional Holding Corp., a Florida corporation (Company), to accept this subscription for shares of its Class A Voting Common Stock and/or Class B Non-Voting Common Stock, par value $0.01, per share in the Company (Securities), the undersigned (Purchaser) hereby offers to purchase Securities pursuant to the terms and conditions of this Subscription Agreement (Subscription Agreement), the Purchaser Questionnaire attached to this Subscription Agreement (Purchaser Questionnaire), and any other relevant documents provided by the Company in connection with this offering, if any (collectively, Offering Documents).

1. Purchase and Terms of Offering.

1.1. The Purchaser agrees to purchase and subscribe for the aggregate amount of Securities in the Company as set forth on the signature page hereof (including the specified allocation of shares of Class A Voting Common Stock and Class B Non-Voting Common Stock, if applicable) at a price of $18.25 per share, which is payable in accordance with the instructions provided with this Subscription Agreement.

1.2. The Purchaser tenders this Subscription Agreement on the understanding that the investment is part of a private offering to a limited group of investors of up to $20,000,000 (Maximum). The offering does not have a minimum to be sold and subscriptions for Securities may be closed in one or more closings at the discretion of the Company. The offering is being made on a “best efforts” basis.

1.3. The Purchaser understands that the Company has imposed certain standards that prospective investors must meet to be eligible to purchase the Securities. The Company has the right to accept or reject the Purchaser’s subscription, in whole or in part, for any reason. The Company may also allocate to the Purchaser, in the Company’s sole discretion, less than the number of the Securities the Purchaser subscribes for, even if the Purchaser meets those standards. Subscriptions need not be accepted in the order received. The Purchaser further understands that the Company shall not have any obligation to sell any Securities to any prospective investor who is a resident of a jurisdiction in which the sale of the Securities to such prospective investor would constitute a violation of the securities, “blue sky” or other similar laws of such jurisdiction. The Company will notify the Purchaser whether the Purchaser’s subscription is accepted. In the event the Purchaser’s subscription is rejected in whole, the Company will return the Purchaser’s entire payment for the Securities to the Purchaser without interest along with this Subscription Agreement and the Purchaser Questionnaire, and all of the rights and obligations of the parties under this Subscription Agreement will terminate. In the event the Purchaser’s subscription is rejected in part, the Company will return payment for the rejected portion of the subscription without interest along with this Subscription Agreement and the Purchaser Questionnaire, and all rights and obligations of the parties under this Subscription Agreement will continue to the extent accepted.

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1.4. The Purchaser acknowledges that the Company intends to use substantially all of the net proceeds primarily to support the Company’s growth, for general corporate purposes, and to fund operational expenses, including, without limitation, costs and expenses incurred by the Company in connection with the offering.

2. Representations of the Purchaser. By executing this Subscription Agreement, the Purchaser warrants, covenants and represents as follows:

2.1. Information Concerning the Company.

2.1.1. The Purchaser has been furnished with the Offering Documents, and such other documents, materials and information as the Purchaser deems necessary or appropriate for evaluating an investment in the Company, including all exhibits referred to in the Offering Documents. The Purchaser has carefully read and understands these materials, and has made such further investigation of the Company as the Purchaser (or its professional advisors) deemed appropriate to obtain additional information to verify the accuracy of such materials and to evaluate the merits and risks of the investment. The Purchaser has not been furnished with any offering literature other than the Offering Documents and has relied only on the Offering Documents.

2.1.2. The Purchaser acknowledges that the Purchaser has had the opportunity to ask questions of, and receive answers from, the Company, concerning the terms and conditions of the offering and the information contained in the Offering Documents, and all such questions have been answered to the Purchaser’s full satisfaction. The Company has afforded the Purchaser the opportunity to obtain any additional information (to the extent that the Company possesses such information or can acquire it without unreasonable effort or expense) necessary to verify the accuracy of any information in the Offering Documents and to make an informed investment decision.

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2.1.3. The Purchaser had the opportunity to seek and receive tax, legal, and financial advice or counsel with respect to this offering.

2.1.4. The Purchaser is familiar with the nature of, and risks attendant to, investments in securities of the type being subscribed for and has determined, in consultation with the Purchaser’s professional advisors, if any, that the purchase of such securities is consistent with the Purchaser’s investment objectives.

2.1.5. The Purchaser understands that the distribution of the Offering Documents and the offer and sale of Securities in certain jurisdictions may be restricted by law. Delivery of the Offering Documents does not constitute an offer to sell or the solicitation of an offer to buy in a state or other jurisdiction to any person to whom it is unlawful to make such offer or solicitation in such state or jurisdiction. This offering does not constitute an offer of Securities to the public and no action has been or will be taken to permit a public offering in any jurisdiction where action would be required for that purpose. Securities may not be offered or sold, directly or indirectly, and the Offering Documents may not be distributed, in any jurisdiction, except in accordance with the legal requirements applicable in such jurisdiction.

2.2. Non-reliance.

2.2.1. The Purchaser agrees that neither the Company nor any of its officers, directors, employees, agents, counsel, advisors, accountants, or other representatives have furnished, and that the Offering Documents do not constitute, any investment, legal, or tax advice to the Purchaser. The Purchaser acknowledges and understands that, except as set forth in this Subscription Agreement, no representations or warranties have been made to the Purchaser by the Company or any agent, employee or affiliate of the Company, and that in making a decision to subscribe for the Securities, the Purchaser is relying solely upon the information that is contained in Offering Documents and the result of independent investigation by the Purchaser and its professional advisors.

2.2.2. The Purchaser confirms that the Company has not (A) given any guarantee or representation as to the potential success, return, effect or benefit (either legal, regulatory, tax, financial, accounting or otherwise) of an investment in the Securities or (B) made any representation to the undersigned regarding the legality of an investment in the Securities under applicable legal investment or similar laws or regulations.

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2.3. Information About the Purchaser.

2.3.1. The Purchaser acknowledges and agrees that an investment in the Securities is suitable only for persons who are able to afford the risk. Accordingly, Securities will be offered only to selected individuals and entities that qualify as “accredited investors” as that term is defined in Rule 501 of Regulation D (Regulation D) promulgated under the Securities Act and described in the Purchaser Questionnaire. The Purchaser is an “accredited investor” and has reviewed, completed and returned to the Company the Purchaser Questionnaire. The Purchaser hereby affirms the completeness and correctness of Purchaser’s answers to such questions.

2.3.2. The Purchaser has sufficient “sophistication,” including such knowledge and experience in financial and business matters (especially in investments that have risks similar to those that may be encountered by the Company), to evaluate the merits and risks of an investment in the Company.

2.3.3. Unless otherwise indicated in a writing attached hereto, the Purchaser is not, and is not acting on behalf of, (A) an employee benefit plan within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (ERISA), (B) a plan described by Section 4975 of the Code (including, without limitation, Individual Retirement Accounts and Keogh Plans); or (C) an entity that is deemed to hold the plan assets of any of the foregoing pursuant to 29 C.F.R. Section 2510.3-101.

2.3.4. The Purchaser has the power and authority to enter into this Subscription Agreement and each other document required to be or otherwise executed and delivered by the Purchaser in connection with this subscription for the Securities, and to perform Purchaser’s obligations hereunder and thereunder and consummate the transactions contemplated hereby and thereby, and, if applicable, the person signing this Subscription Agreement on behalf of the Purchaser has been duly authorized to execute and deliver such documents. If other than an individual, the Purchaser is duly organized validly existing and in good standing under the laws of its jurisdiction of incorporation or organization. The execution and delivery by the Purchaser of, and compliance by the Purchaser with, each document required to be or otherwise executed and delivered by the Purchaser in connection with this subscription for Securities does not conflict with, or constitute a default under, any instruments governing the Purchaser, or any law, permit, regulation, order, franchise, judgment, decree, statute or rule or any agreement or other instrument to which the Purchaser is a party or by which the Purchaser or any of its properties is bound. No consent, approval or authorization of any person or entity (including any governmental authority) is required on the part of the Purchaser in connection with the execution, delivery and performance of this Subscription Agreement or any other document required to be or otherwise executed and delivered by the Purchaser in connection with this subscription for Securities.

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2.3.5. The address set forth on the signature page of this Subscription Agreement is the Purchaser’s true and correct primary residence, and Purchaser has no present intention of becoming a resident of any other state or jurisdiction. Purchaser is not acquiring the Securities as a nominee or agent or otherwise for any other person.

2.3.6. The Purchaser will comply with all applicable laws and regulations in effect in any jurisdiction in which the Purchaser purchases or sells Securities and obtain any consent, approval or permission required for such purchases or sales under the laws and regulations of any jurisdiction to which the Purchaser is subject or in which the Purchaser makes such purchases or sales, and the Company shall have no responsibility therefor.

2.3.7. The funds provided for the purchase of the Securities are either separate property of the Purchaser, community property over which the Purchaser has the right of control or are otherwise funds as to which the Purchaser has the sole right of management.

2.3.8. There are no actions, suits, proceedings or investigations pending against the Purchaser or any of the Purchaser’s assets before any court or governmental agency (nor, to the best of the Purchaser’s knowledge, is there any threat thereof) which would impair in any way the Purchaser’s ability to enter into and fully perform the Purchaser’s commitments and obligations under this Subscription Agreement or the transactions contemplated hereby.

2.3.9. No broker, financial advisor or finder is entitled to any brokerage fees, commissions or finder’s fees in connection with the transactions contemplated by this Subscription Agreement based upon arrangements made by or on behalf of the Purchaser.

2.4. General Solicitation. The Purchaser is not subscribing for the Securities as a result of, or subsequent to, any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or broadcast over television or radio, or presented at any seminar or meeting or other general solicitation or general advertising. Purchaser has not provided or made available the Offering Documents to any other person other than the Purchaser’s professional advisors.

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2.5. Gunster is Company’s Counsel and Not Counsel to Purchaser. The Purchaser acknowledges and agrees that Gunster, Yoakley & Stewart, P.A. (Gunster) is acting as counsel to the Company in connection with preparation and execution of the Offering Documents, the offering of the Securities, the management and operations of the Company and its subsidiaries and unrelated matters. The Purchaser acknowledges that Gunster does not represent or owe any duty to the Purchaser and that Gunster has not performed any due diligence on the Purchaser’s behalf. The Purchaser acknowledges that neither this Subscription Agreement, nor the transactions contemplated hereby relating to the management and operation of the Company are intended to create an attorney-client or any other relationship between the Purchaser and Gunster. The Purchaser further acknowledges that the Company and its affiliates may further engage Gunster in the future and that, in such event, such engagement will also not create an attorney-client or any other relationship between the Purchaser and Gunster. The Purchaser acknowledges and agrees that Gunster has not provided any legal, tax or business advice to the Purchaser and the Purchaser has been advised to seek its own independent counsel. The Purchaser acknowledges that Gunster is an intended third-party beneficiary of this Section of the Subscription Agreement, having the right to enforce this Section.

2.6. Restrictions on Transfer; Exchange of Class B Non-Voting Common Stock.

2.6.1. The Purchaser understands that the Securities have not been registered under the Securities Act or related laws and regulations or any other applicable securities laws of any other jurisdiction (collectively, the Securities Laws), in reliance on exemptions therefrom for non-public offerings.

2.6.2. The Purchaser understands that the Securities are “restricted securities” under applicable federal securities laws and that the Securities Act and the rules of the Commission provide in substance that the Purchaser may dispose of the Securities only pursuant to an effective registration statement under the Securities Act or an exemption therefrom, and the Purchaser understands that the Company has no obligation or intention to register any of the Securities, or to take action so as to permit sales pursuant to the Securities Act (including Rule 144 thereunder). Accordingly, the Purchaser understands that under the Commission’s rules, the Purchaser may dispose of the Securities principally only in “private placements” which are exempt from registration under the Securities Act, in which event the transferee will acquire “restricted securities” subject to the same limitations as in the hands of the Purchaser. Consequently, the Purchaser understands that the Purchaser must bear the economic risks of the investment in the Securities for an indefinite period of time.

2.6.3. The Purchaser further acknowledges that there is no public market for the Securities and that such a market may never develop. The Purchaser has no presumption that there will be a public offering of the Securities.

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2.6.4. The Purchaser is acquiring the Securities solely for Purchaser’s own account and is not acquiring such Securities with a view to, or for resale in connection with, any distribution within the meaning of the Securities Act or any other applicable Securities Laws. The Purchaser will not resell or offer to resell the Securities except in accordance with the terms of this Subscription Agreement and in compliance with the Securities Laws.

2.6.5. The Purchaser covenants and agrees to not sell, make any short sale of, loan, grant any option for the purchase of, effect any public sale or distribution of or otherwise dispose of any Securities owned by Purchaser during the 180 days after a registration statement relating to an initial public offering of the Company’s equity securities (or such shorter period as may be required by the underwriter).

2.6.6. To induce the Company to issue and sell the Securities, the Purchaser agrees that the Company will have no obligation to recognize the ownership of such Securities by anyone but the Purchaser and Purchaser’s heirs and beneficiaries at law, except as set forth herein.

2.6.7. The Purchaser (or a transferee) may exchange shares of Class B Voting Common Stock into an equal number of shares of Class A Voting Common Stock (automatically by the transferee upon the Purchaser’s permitted transfer of shares of Class B Non-Voting Common Stock to such transferee (a) upon the consummation of a Permitted Transfer or (b) if the Company’s Board of Directors, acting in its sole and absolute discretion, have approved the exchange and the exchange would not result in the Purchaser (or the transferee, together with their respective affiliates) beneficially owning greater than 9.9% of the outstanding shares of the Company’s Class A Voting Common Stock. For the purposes of this Subscription Agreement, Permitted Transfer means (1) a transfer pursuant to a widely distributed public offering, (2) a transfer in which no transferee acquires greater than 2% of the issued and outstanding shares Class A Voting Common Stock (after giving effect to any conversion of Class B Non-Voting Common Stock, (3) a transfer to a person that beneficially owns greater than 50% of the issued and outstanding shares of the Company’s Class A Voting Common Stock or (4) a transfer that is approved by the Federal Reserve Board. The Company shall hold in reserve, at all times, sufficient shares of Class A Voting Common Stock to permit the exchange of all shares of Class B Non-Voting Common Stock then outstanding.

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2.7. Anti-Money Laundering.

2.7.1. The Purchaser understands that Federal regulations and Executive Orders administered by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) prohibit, among other things, the engagement in transactions with, and the provision of services to, certain foreign countries, territories, entities and individuals.¹ The Purchaser represents and warrants that neither the Purchaser nor any person controlling, controlled by, or under common control with, the Purchaser, nor, to the best of the Purchaser’s knowledge, any person having a beneficial interest in the Purchaser or the Purchaser’s investment in the Securities, or for whom the Purchaser is acting as agent or nominee in connection with this investment, is not a country (or instrumentality thereof), territory (or instrumentality thereof), person or other entity named on an OFAC list, nor are any of the foregoing a person or other entity with whom dealings are prohibited under any OFAC regulations. The Purchaser and any of the foregoing are each not a foreign bank without a physical presence in any country that is not a Regulated Affiliate² (Foreign Shell Bank).

2.7.2. Except as otherwise disclosed to the Company in writing: (i) the Purchaser is not resident in, or organized or chartered under the laws of, (A) a jurisdiction that has been designated by the Secretary of the Treasury under the USA PATRIOT Act Improvement and Reauthorization Act of 2005, as amended, or any other anti-money laundering or anti-terrorist laws, rules, regulations, directives or special measures (AML Laws) as warranting special measures due to money laundering concerns or (B) any foreign country that has been designated as non-cooperative with international anti-money laundering principles or procedures by an intergovernmental group or organization, such as the Financial Action Task Force on Money Laundering, of which the United States is a member and with which designation the United States representative to the group or organization continues to concur (Non-Cooperative Jurisdiction); (ii) the funds used by the Purchaser to purchase the Securities or to make capital contributions to the Company do not originate from, nor will they be routed through, an account maintained at (A) a Foreign Shell Bank, (B) a foreign bank (other than a Regulated Affiliate) that is barred, pursuant to its banking license, from conducting banking activities with the citizens of, or with the local currency of, the country that issued the license, or (C) a bank organized or chartered under the laws of a Non-Cooperative Jurisdiction; and (iii) the Purchaser is not a senior foreign political figure, or any immediate family member or close associate of a senior foreign political figure, in each case within the meaning of any AML Laws.

¹ The lists of OFAC prohibited countries, territories, persons and entities can be found on the OFAC website at www.treas.gov/ofac.

² Regulated Affiliate means a foreign bank that (i) is an affiliate of a depositary institution, credit union or foreign bank that maintains a physical presence in the United States or a foreign country, as applicable and (ii) is subject to supervision by a banking authority in the country regulating such affiliated depositary institution, credit union, or foreign bank.

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2.7.3. The proposed investment by the Purchaser in the Company will not directly or indirectly contravene United States Federal, State, international or other laws, rules or regulations, including anti-money laundering laws, rules and regulations (Prohibited Investment), and neither the funds used to purchase the Securities or any capital contributions to the Company by the Purchaser are or will be derived from any illegal or illegitimate activities. The Purchaser acknowledges and agrees that, notwithstanding anything to the contrary contained in any document (including this Subscription Agreement, the LLC Agreement, any side letters or similar agreements), if, following the Purchaser’s investment in the Company, the Company reasonably believes that the investment is or has become a Prohibited Investment or if otherwise required by law, the Company may be obligated to freeze the account of the Purchaser, either by prohibiting additional capital contributions, restricting any distributions and/or declining any requests to transfer the Purchaser’s Securities. In addition, in any such event, the Purchaser may forfeit its Securities, may be forced to withdraw from the Company or may otherwise be subject to the remedies required by law, and the Purchaser shall have no claim against any Indemnitee (as defined below) for any form of damages as a result of any of the actions described in this paragraph. The Company may also be required to report such action and to disclose the Purchaser’s identity or provide other information with respect to the Purchaser to OFAC or other governmental entities.

2.8. Subject to applicable Securities Laws, the Purchaser acknowledges and is aware that the Purchaser is not entitled to cancel, terminate or revoke this subscription, and any agreements of the Purchaser in connection herewith shall survive the death or disability of the Purchaser.

2.9. The Purchaser understands the meaning and legal consequences of the foregoing representations and warranties, which are true as of the date hereof and will be true as of the date of the purchase of the Securities subscribed for herein.

2.10. This Subscription Agreement does not contain any untrue statement of a material fact or omit any material fact concerning the Purchaser.

3. Further Advice and Assurances. Purchaser agrees to notify the Company immediately upon learning that any representation, warranty or information contained in this Subscription Agreement (including, without limitation, the Purchaser Questionnaire) has become untrue at any time. The Purchaser agrees to provide such information and execute and deliver such documents regarding itself and all of its beneficial owners as the Company may reasonably request from time to time to verify the accuracy of the Purchaser’s representations and warranties herein or to comply with any law, rule or regulation to which the Company may be subject (including, without limitation, compliance with AML Laws and OFAC regulations). The Purchaser agrees to respond promptly to each questionnaire from the Company requesting information as to the ownership of the Securities and agrees to provide the Company with such other documents, declarations and other evidence or information as the Company may reasonably request.

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4. Tax Information. The Purchaser certifies that the Purchaser’s name, taxpayer identification or social security number and address provided in the Purchaser Questionnaire are correct. The Purchaser agrees to execute promptly and provide to the Company in a timely manner any tax documentation that may reasonably be required by the Company.

5. Binding Effect and Survival of Representations and Warranties. This Subscription Agreement and the representations and warranties contained in it shall be binding upon the Purchaser’s heirs, personal and legal representatives, successors and permitted assigns (and will, if the Purchaser consists of more than one person, be the joint and several obligation of all such persons). The representations, warranties, agreements, and indemnification obligations of the Purchaser contained in this Subscription Agreement and in the Purchaser Questionnaire and related subscription documents shall survive the execution hereof, the acceptance of this subscription, the closing of the transactions contemplated hereby and any investigation made by the Company on behalf of the Company and shall be deemed to be reaffirmed by the Purchaser at any time the Purchaser makes an additional capital contribution to the Company. The act of making such additional capital contributions shall be evidence of such reaffirmation.

6. Indemnification.

6.1. If the Company accepts Purchaser’s investment in the Securities, such acceptance will have been based upon the Purchaser’s representations, warranties and acknowledgments set forth in this Subscription Agreement. The Purchaser understands the meaning of the representations the Purchaser has made in this Subscription Agreement, and the Purchaser hereby agrees to indemnify, defend and hold harmless the Company, their affiliates, and each of their respective directors, officers, members, shareholders, employees, agents, attorneys and other representatives (each, an Indemnitee), and all persons deemed to be in control of the foregoing, and to hold such persons harmless, from and against any and all loss, damage, liability or expense, including costs and reasonable attorneys’ fees, to which they may be put or which they may incur by reason of, or in connection with:

6.1.1. any misstatement, misrepresentation or omission made by the Purchaser or on the Purchaser’s behalf with respect to the matters described in this Subscription Agreement; or

6.1.2. any breach of any representations or warranties or any failure to fulfill any covenants or agreements set forth in this Subscription Agreement, including, but not limited to, any sale, transfer or other disposition of all or any part of the Securities by the Purchaser in violation of the Securities Act, other applicable law, or this Subscription Agreement.

6.2. The indemnification obligations of the Purchaser contained in this Section 6 will survive the Company’s acceptance of the Purchaser’s subscription, the closing of the transactions contemplated hereby and any investigation made by the Company.

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7. Miscellaneous.

7.1. Governing Law and Venue. This Subscription Agreement shall be governed by and construed in accordance with the laws of the State of Florida without regard to the application of the principles of conflicts of law. Any suit, action or legal proceeding arising out of or relating to this Subscription Agreement, any other agreement or document delivered pursuant hereto or any transaction contemplated hereby, shall be brought solely and exclusively in the courts of record of the State of Florida in Palm Beach County or the district court of the United States, Southern District of Florida, West Palm Beach Division. Each of the parties hereby irrevocably and unconditionally submits to the exclusive jurisdiction of such courts. In addition, each of the parties hereto irrevocably waives, to the fullest extent it may effectively do so, the defense of an inconvenient forum to the maintenance of such action or proceeding, and irrevocably and unconditionally consents to the service of any and all process in any such action or proceeding by the mailing of copies of such process by certified mail to such party and its counsel at their respective addresses or in any other manner permitted by law.

7.2. Severability. The invalidity of any one or more words, phrases, sentences, clauses, sections or subsections contained in this Subscription Agreement shall not affect the enforceability of the remaining portions of this Subscription Agreement or any part hereof, all of which are inserted conditionally on their being valid in law, and, in the event that any one or more of the words, phrases, sentences, clauses, sections or subsections contained in this Subscription Agreement shall be declared invalid, this Subscription Agreement shall be construed as if such invalid word or words, phrase or phrases, sentence or sentences, clause or clauses, section or sections, or subsection or subsections had not been inserted.

7.3. Pronouns. In this Subscription Agreement, the use of any gender shall be deemed to include all genders, and the use of the singular shall include the plural and vice versa, wherever it appears appropriate from the context.

7.4. Confidentiality. The Purchaser agrees that the Purchaser will keep confidential and will not disclose or divulge any confidential, proprietary or secret information that the Purchaser may obtain from the Offering Documents or other material submitted by the Company to the Purchaser pursuant to this Subscription Agreement. Notwithstanding the foregoing, the Purchaser may disclose such information (i) as has become generally available to the public, (ii) as may be required in any report, statement or testimony submitted to any municipal, state or federal regulatory body having jurisdiction over the Purchaser, (iii) as may be required in response to any summons or subpoena or in connection with any litigation (provided the Purchaser makes reasonable efforts to enable the Company to seek a protective order or other confidential treatment), (iv) in order to comply with any law, order, regulation or ruling applicable to the Company or (v) on a confidential basis to the Purchaser’s agents, advisors, members, attorneys, accountants, consultants and other professionals to the extent necessary to obtain their services in connection with the Purchaser’s investment in the Company.

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7.5. Non-Assignable. Neither this Subscription Agreement nor any rights, remedies, obligations or liabilities that may accrue to the Purchaser under it may be transferred or assigned without the Company’s prior written consent.

7.6. Jury Waiver. IN ANY CIVIL ACTION, COUNTERCLAIM, OR PROCEEDING, WHETHER AT LAW OR IN EQUITY, WHICH ARISES OUT OF, CONCERNS, OR RELATES TO THIS SUBSCRIPTION AGREEMENT, ANY AND ALL TRANSACTIONS CONTEMPLATED BY THIS SUBSCRIPTION AGREEMENT, THE PERFORMANCE OF THIS SUBSCRIPTION AGREEMENT, OR THE RELATIONSHIP CREATED BY THIS SUBSCRIPTION AGREEMENT, WHETHER SOUNDING IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE, TRIAL SHALL BE TO A COURT OF COMPETENT JURISDICTION AND NOT TO A JURY. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY. ANY PARTY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SUBSCRIPTION AGREEMENT WITH ANY COURT, AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES TO THIS SUBSCRIPTION AGREEMENT OF THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. NEITHER PARTY HAS MADE OR RELIED UPON ANY ORAL REPRESENTATIONS TO OR BY ANY OTHER PARTY REGARDING THE ENFORCEABILITY OF THIS PROVISION. EACH PARTY HAS READ AND UNDERSTANDS THE EFFECT OF THIS JURY WAIVER PROVISION. EACH PARTY ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY ITS OWN COUNSEL WITH RESPECT TO THE TRANSACTION GOVERNED BY THIS SUBSCRIPTION AGREEMENT AND SPECIFICALLY WITH RESPECT TO THE TERMS OF THIS SECTION.

7.7. Counterparts. This Subscription Agreement may be executed in counterparts, each of which shall be deemed an original, and a complete set of which, when taken together, shall constitute one and the same document. Confirmation of execution by electronic transmission of a .pdf signature page shall be binding, and each party hereby irrevocably waives any objection that it has or may have in the future as to the validity of any such electronic transmission of a signature page.

7.8. Entire Agreement. This Subscription Agreement constitutes the entire agreement among the parties hereto, and supersedes all prior agreements, understandings, negotiations and discussions, both written and oral, among the parties hereto with respect to the subject matters hereof. This Subscription Agreement may not be amended or modified in any way except by a written instrument executed by all of the parties.

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Notices Required by Law:

In making an investment decision, investors must rely on their own examination of the issuer and the terms of the offering, including the merits and risks involved. The Securities have not been recommended by any federal or state securities commission or regulatory authority. Furthermore, the foregoing authorities have not confirmed the accuracy or determined the adequacy of this memorandum. Any representation to the contrary is a criminal offense.

For Purchases in Florida Only. Florida Law Provides That, When Sales Are Made To Five Or More Persons In Florida, Any Sale Made In Florida Is Voidable By The Purchaser Within Three Days After The First Tender Of Consideration Is Made By Such Purchaser To The Company, An Agent Of The Company Or An Escrow Agent Or Within Three Days After The Availability Of That Privilege Is Communicated To Such Purchaser, Whichever Occurs Later. ALL Sales IN THIS OFFERING Are deemed to be SALES In Florida for purposes of this notice. Payments For Terminated Subscriptions Voided By Purchasers As Provided For In This Paragraph Will Be Promptly Refunded Without Interest. Notice Should Be Given To The Company At The Address Set Forth On The Cover Page Of The Subscription Agreement.

[Signature Pages Follow]

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SUBSCRIPTION AGREEMENT SIGNATURE PAGE FOR
INDIVIDUALS AND JOINT ACCOUNTS

IN WITNESS WHEREOF, the undersigned has executed this Subscription Agreement as of the date set forth below.

$_______________ by wired funds no later than December 18, 2018 ($18.25 per share multiplied by the aggregate number of shares to be purchased).

Shares of Class A Voting Common Stock to be purchased:

Shares of Class B Non-Voting Common Stock to be purchased:

Signature	Print Name	Date
Signature	Print Name	Date

Type of Ownership (Initial One)

 Individual (Only One Signature Required)

 Tenants in Common (Both Parties Sign)

 Tenants by the Entirety (Both Parties Sign)

 Joint Tenants with Right of Survivorship (Both Parties Sign)

If Securities are held in more than one name, please indicate the relationship (spouses, siblings, business partners, etc.) of all named owners. 

Address:

FOR INDIVIDUALS ONLY

SUBSCRIPTION AGREEMENT SIGNATURE PAGE FOR ENTITIES

IN WITNESS WHEREOF, the undersigned has executed this Subscription Agreement as of the date set forth below.

$_______________ by wired funds no later than December 18, 2018 ($18.25 per share multiplied by the aggregate number of shares to be purchased).

Shares of Class A Voting Common Stock to be purchased:

Shares of Class B Non-Voting Common Stock to be purchased:

Print or Type Name of Purchaser
By:
	Signature of Authorized Signatory
Name:
	Print or Type Name and Title of Signatory
Date:
Address:
FOR ENTITIES ONLY

ACCEPTANCE BY THE COMPANY

Professional Holding Corp. hereby accepts (subject to receipt of cleared funds) the foregoing subscription in the amount set forth below as of the date set forth below.

Accepted Subscription:

Amount: $_______________

PROFESSIONAL HOLDING CORP.
By:
Name:	Daniel R. Sheehan
Title:	President
Date:

EXHIBIT 1

Purchaser Questionnaire

IT IS MANDATORY THAT EACH PURCHASER COMPLETE THIS QUESTIONNAIRE

AND SIGN IN THE APPROPRIATE SPOT

PURCHASER QUESTIONNAIRE

Instructions. This Purchaser Questionnaire is being sent to each person (you, your or Purchaser) who has indicated an interest in purchasing shares (Securities) in Professional Holding Corp., a Florida corporation (Company). The purpose of this Purchaser Questionnaire is to permit the Company to determine whether each such person meets certain standards imposed by exemptions from the registration requirements of the Securities Act of 1933 (Securities Act), the securities laws of certain states, and rules promulgated thereunder since the Securities will not be registered under any such laws.

Please complete, sign, date and return one copy of this Purchaser Questionnaire to the Company. Neither the provision of this Purchaser Questionnaire to you nor your completion of it constitutes an offer of Securities to you. All information contained herein must be complete and accurate and shall be deemed a representation of the person or entity executing this Purchaser Questionnaire, and the Company and its agents may rely on such representations. Moreover, in reliance upon the representations and information contained herein, the Securities will not be registered under applicable securities laws. Should there be any material change in the information contained herein prior to acceptance by the Company of your subscription for the Securities, you must notify the Company or its authorized representative immediately.

FOR ALL INVESTORS

Accredited Investor Representation. By signing the Purchaser Questionnaire, the prospective investor certifies that it is an accredited investor for one of the reasons enumerated below. Please check one.

For Individual Investors Only:

¨ I certify that I am an accredited investor because I have an individual net worth, or my spouse and I have combined net worth, in excess of $1,000,000. For purposes of calculating net worth under this paragraph (1), (i) the primary residence shall not be included as an asset, (ii) to the extent that the indebtedness that is secured by the primary residence is in excess of the fair market value of the primary residence, the excess amount shall be included as a liability, and (iii) if the amount of outstanding indebtedness that is secured by the primary residence exceeds the amount outstanding 60 days prior to the execution of this Subscription Agreement, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability.

¨ I certify that I am an accredited investor because I had individual income (exclusive of any income attributable to my spouse) of more than $200,000 in the two most recent calendar years and I reasonably expect to have an individual income in excess of $200,000 in the current year.

¨ I certify that I am an accredited investors because my spouse and I have joint income in excess of $300,000 in the two most recent calendar years and my spouse and I reasonably expect to have a joint income in excess of $300,000 in the current year.

¨ I certify that I am an accredited investors because I am a director or executive officer of the Company.

For Entity Investors Only:

¨ The undersigned certifies that it is one of the following: any bank as defined in Section 3(a)(2) of the Securities Act, or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary capacity; any broker or dealer registered pursuant to section 15 of the Securities Exchange Act of 1934; insurance company as defined in Section 2(a)(13) of the Securities Act; investment company registered under the Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of that Act; Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000; employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974, if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company, or registered investment advisor, or if the employee benefit plan has total assets in excess of $5,000,000, or if a self-directed plan, with investment decisions made solely by persons that are accredited investors.

¨ The undersigned certifies that it is a private business development company as defined in Section 202(a)(22) of the Investment Advisors Act of 1940.

¨ The undersigned certifies that it is an organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000.

¨ The undersigned certifies that it is a trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) of the Securities Act.

¨ The undersigned certifies that it is an entity in which all of the equity owners are accredited investors.

The Purchaser understands that the foregoing information will be relied upon by the Company for the purpose of determining the eligibility of the Purchaser to purchase and own Securities in the Company. The Purchaser agrees to notify the Company immediately if any representation or warranty contained in this Subscription Agreement, including this Purchaser Questionnaire, becomes untrue at any time. The Purchaser agrees to provide, if requested, any additional information that may reasonably be required to substantiate the Purchaser’s status as an accredited investor or to otherwise determine the eligibility of the Purchaser to purchase Securities in the Company. The Purchaser agrees to indemnify, defend and hold harmless the Company and their affiliates and agents from and against any loss, damage or liability due to or arising out of a breach of any representation, warranty or agreement of the Purchaser contained herein.

Purchaser Name:

Signature:

Printed Name:

Title (if applicable):

Date:

EX-10.17

Exhibit 10.17

April 1, 2015 BayBoston Capital L.P. 1280 Centre Street, Suite 2 Newton Center, MA 02459 Attention: Carlos Garcia Re: Board Seat and Holdings Confirmation Dear Carlos: This letter will confirm our mutual understanding that BayBoston Capital L.P. (the "Fund") shall have the right to designate one board member of Professional Holdings Corp. (the "Company") as well as its wholly owned subsidiary, Professional Bank (the "Bank"). The Company agrees to take all necessary steps to cause the prompt appointment (within 45 days of the closing date of Fund's acquisition of Class A Voting Common Stock of the Company, as described in further detail below) of such designee to the Board of Directors of the Company and Bank for a term expiring at the 2018 annual meeting. The Fund's initial designee is Carlos Garcia. The Company agrees that if a vacancy occurs because of the death, disability, disqualification or legal inability to serve of the Fund's designee, prior to the expiration of such term, the Fund shall be entitled to designate a replacement, and, in the meantime, the vacant board seat shall not be filled. In addition, this letter will serve as confirmation that the Fund's purchase of 339,073 shares of Class A Voting Common Stock, for a total dollar purchase price of $3,729,803, on or about the date hereof is less than or equal to 9.9% of the voting power and contributed capital of the Company. Sincerely, PROFESSIONAL HOLDING CORP. By: Name: Daniel R. Sheehan Title: Chairman & CEO Acknowledged and Agreed: BAYBOSTON CAPITAL L.P. By: BayBoston Capital G.1:tt LLC, its general partner Name: Carlos M Garak Title: Manager

EX-10.18

Exhibit 10.18

 

February 17, 2017 BayBoston Capital L.P. 1280 Centre Street, Suite 2 Newton Center, MA 02459 Attention: Carlos Garcia Re: Amendment to Letter Agreement Dated April 1, 2015 Dear Carlos: This letter will confirm the mutual agreement between Professional Holding Corp. ("PHC") and BayBoston Capital L.P. ("BayBoston") that the first sentence of that certain letter agreement, dated as of April 1, 2015, by and between PHC and BayBoston (the "Letter Agreement") is hereby deleted in its entirety and replaced with the following: This letter will confirm our mutual understanding that BayBoston Capital L.P. (the "Fund") shall have the right to designate one board member of Professional Holdings Corp. (the "Company") as well as its wholly owned subsidiary, Professional Bank (the "Bank"). The Company agrees to take all necessary steps to cause the prompt appointment (within 45 days of the closing date of Fund's acquisition of Class A Voting Common Stock of the Company, as described in further detail below) of such designee to the Board of Directors of the Company and Bank for a term expiring at the 2021 annual meeting. Except and to the extent modified by this letter, the provisions of the Letter Agreement shall remain in full force and effect and are hereby incorporated into and made a part of this letter as if fully stated herein. Sincerely, PROFESS ONAL HOLDING CORP. By: CON Daniel R. Sheehan Chairman & President Acknowledged and Agreed: BAYBOSTON CAPITAL L.P. By: BayBoston Capital GP LLC, its general partner By: *4111410 TWOS Carlos M. Garcia Manager

EX-10.19

Exhibit10.19

PROFESSIONAL HOLDING CORP.

396 Alhambra Circle, Suite 255

Coral Gables, Florida 33146

February 17, 2017

EJF Sidecar Fund, Series LLC – Series E

2107 Wilson Blvd.

Suite 410

Arlington, VA 22201

Re:       Investor Rights Letter Agreement

Ladies and Gentlemen:

This letter agreement (the “Letter Agreement”) will confirm our agreement that pursuant to and effective as of the Closing Date of your purchase of capital stock of Professional Holding Corp. (the “Company”), a Florida corporation and parent company of Professional Bank, a Florida-chartered commercial bank (the “Bank”), EJF Sidecar Fund, Series LLC – Series E, a Delaware series limited liability company (“EJF”), shall be entitled to the contractual rights set forth in this Letter Agreement, in addition to any other rights specifically provided to EJF pursuant to that certain Stock Purchase Agreement dated as of February 17, 2017 by and among the Company and certain investors, including EJF (the “Agreement”), including any amendments or supplements thereto, and such other agreements, instruments and certificates delivered in connection therewith (collectively, the “Transaction Documents”). Capitalized terms not defined in this Letter Agreement shall have the meanings ascribed in the Agreement.

1.       Board Observer Rights. For as long as EJF and its Affiliates beneficially own at least 9.9% of the Company’s issued and outstanding Class A Voting Common Stock (calculated assuming any Class B Non-Voting Common Stock held by EJF and its Affiliates is converted into Class A Voting Common Stock), the Company and the Bank shall allow EJF to designate one (1) representative to attend all meetings of the Board and Bank Board in a non-voting observer capacity and, in this respect, shall give such representative copies of all notices, minutes, consents and other materials that it provides to its directors at the same time and in the same manner as provided to such directors; provided, however, that (i) such representative shall enter into a customary confidentiality agreement with the Company and the Bank (in form and substance reasonably satisfactory to EJF, the Company and the Bank) requiring the representative to hold in confidence and trust all information so provided; and (ii) the representative may be excluded from access to any material or meeting or portion thereof if the Board or Bank Board (as applicable) determines in good faith, upon advice of counsel, that access to such material or attendance at such meeting would adversely affect the attorney-client privilege between the Company or the Bank and its counsel or would conflict with applicable banking laws or regulations or if such material or meeting relates to relations or negotiations with EJF or require the consent or non-objection of any Regulator. For the avoidance of doubt, such representative shall not have access to any “confidential supervisory information” (as such term or relevant similar term is defined under the regulations of any Regulator).

2.       Exchange of Class B Non-Voting Common Stock. EJF may exchange shares of Class B Voting Common Stock into an equal number of shares of Class A Voting Common Stock (automatically upon EJF’s permitted transfer of shares of Class B Non-Voting Common Stock (a) upon the consummation of a Permitted Transfer or (b) if the Company’s Board of Directors, acting in its sole and absolute discretion, have approved the exchange and the exchange would not result in EJF (together with its Affiliates) beneficially owning greater than 9.9% of the outstanding shares of the Company’s Class A Voting Common Stock. For the purposes of this Letter Agreement, “Permitted Transfer” means (1) a transfer pursuant to a widely distributed public offering, (2) a transfer in which no transferee acquires greater than 2% of the issued and outstanding shares Class A Voting Common Stock (after giving effect to any conversion of Class B Non-Voting Common Stock, (3) a transfer to a Person that beneficially owns greater than 50% of the issued and outstanding shares of the Company’s Class A Voting Common Stock or (4) a transfer that is approved by the Federal Reserve Board. The Company shall hold in reserve, at all times, sufficient shares of Class A Voting Common Stock to permit the exchange of all shares of Class B Non-Voting Common Stock then outstanding.

3.       Preemptive Rights. If, following the consummation of the transactions contemplated by the Transaction Documents, the Company authorizes the issuance or sale, other than an Excluded Issuance, of any Capital Stock, or any securities, options or debt that are convertible or exchangeable into Capital Stock (“Stock Equivalents”) of the Company (any such security, a “New Security”), EJF shall be entitled, in its sole discretion, to purchase its pro rata portion of the New Securities for the same price and on the same terms as such New Securities are proposed to be offered to others, such that EJF and its Affiliates are able to maintain their aggregate percentage ownership interest in the Company’s Capital Stock on a fully diluted basis, subject to compliance with applicable Law. With respect to such rights described above (the “Preemptive Rights”), the Company shall give written notice of such proposed issuance or sale (including the terms and conditions thereof) to EJF at least thirty (30) days prior to the anticipated issuance or sale date, and EJF shall have twenty (20) days from the receipt thereof to provide the Company with notice of the exercise of its Preemptive Rights with respect to such issuance or sale. For the purposes of this Letter Agreement, “Excluded Issuance” means an issuance or sale of any Capital Stock or Stock Equivalents issued or sold by the Company in connection with: (a) a grant to any existing or prospective directors, officers or other employees, consultants or service providers of the Company or any Company Subsidiary pursuant to the Company Option Plan or similar equity-based plans or other compensation agreement; (b) the conversion or exchange of any securities of the Company into Capital Stock, or the exercise of any warrants or other rights to acquire Capital Stock; (c) any acquisition by the Company or any Company Subsidiary of any equity interests, assets, properties or business of any Person; (d) any merger, consolidation or other business combination involving the Company or any Company Subsidiary; (e) the commencement of any transaction or series of related transactions involving a Change in Control; (f) any subdivision of Capital Stock (by a split of Capital Stock or otherwise), payment of stock dividend, reclassification, reorganization or any similar recapitalization; or (g) a joint venture, strategic alliance or other commercial relationship with any Person relating to the operation of the Company’s or any Company Subsidiary’s business and not for the primary purpose of raising equity capital. The Preemptive Rights described herein will terminate upon the consummation of a firm commitment underwritten public offering of the Company’s Capital Stock pursuant to a registration statement or registration statements resulting in gross proceeds to the Company of at least $25 million.

4.       Registration Rights. In addition to, and not exclusive of, any other registration rights granted to EJF pursuant to the Transaction Documents, EJF shall be entitled to exercise registration rights as are set forth in a Registration Rights Agreement in the form of Exhibit A hereto.

5.       Most Favored Nation. The Company shall provide EJF with rights and benefits under the this Letter Agreement and the Agreement that are no less favorable to those of any other investor participating in the Offering.

6.       Legal Opinion. At the Closing, Investor shall have received an opinion from the Company’s legal counsel in the form set forth in Exhibit B to this Letter Agreement. Delivery of such opinion shall be a closing condition as expressed in Section 1.2(c)(ii)(G) of the Agreement.

7.       Miscellaneous. The provisions of Sections 6.4, 6.5, 6.6, 6.7, 6.8, 6.9, 6.10, 6.11, 6.14, 6.16 and 6.17 of the Agreement are hereby incorporated into and made a part of this letter agreement and shall apply mutatis mutandis to this Letter Agreement.

[Signature Page Follows]

Very truly yours,
PROFESSIONAL HOLDING CORP.
By:	/s/ Daniel R. Sheehan
Name:  Daniel R. Sheehan
Title:  Chairman and President
Professional BANK
By:	/s/ Abel Iglesias
Name: Abel L. Iglesias
Title: Chief Executive Officer

Acknowledged and agreed:
EJF Sidecar Fund, Series LLC – Series E
By:	/s/ Emmanuel J. Friedman
Name:	Emmanuel J. Friedman
Title:	Chief Executive Officer

EXECUTION VERSION

EXHIBIT A

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of February 17, 2017, by and between Professional Holding Corp., a Florida corporation and the parent company of Professional Bank (the “Company”), and the undersigned Investor (the “Investor”). Capitalized terms not defined in this Agreement shall have the meaning ascribed in that certain Stock Purchase Agreement dated February 17, 2017 by and between the Company and certain investors, including Investor (the “Purchase Agreement”).

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and Investor hereby mutually agree as follows:

1. Registration RIGHTS

(a)Any time after the fourth (4^th) anniversary of the date of this Agreement, Investor may request one registration (the “Demand Registration”) under the Securities Act of 1933, as amended (the “Securities Act”), of its Registrable Securities (as defined below). The Demand Registration shall be on such form as the Company shall select. The Demand Registration shall specify the number of Registrable Securities to be registered. The Company shall use best efforts to cause a registration statement to be filed within 180 days after the date on which the initial request by Investor is received by the Company and shall use its best efforts to cause such registration statement to be declared effective by the U.S. Securities and Exchange Commission (“SEC”) as soon as practicable thereafter. The Company shall use best efforts to keep such Demand Registration current and effective until the Registrable Securities registered thereby cease to be Registrable Securities.

(b)As long as Investor holds Registrable Securities, if at any time or from time to time, the Company shall determine to register any of its securities under the Securities Act (except for the registration of securities to be offered pursuant to an employee benefit plan on Form S-8 or pursuant to a registration made on Form S-4, or any successor forms then in effect) and the registration form to be used may be used for the registration of the Registrable Securities (a “Piggyback Registration”), the Company shall:

(1)Provide thirty (30) calendar days’ advance written notice to Investor prior to filing the registration statement (the “Registration Rights Notice”); and

(2)include in such registration, and in any underwriting involved therein, all the Registrable Securities specified in a written request made by Investor within fifteen (15) calendar days after receipt of the Registration Rights Notice from the Company, except as set forth in Section 1(c) below.

(c)If the registration is for a registered public offering involving an underwriting, the Company shall so advise Investor as a part of the Registration Rights Notice. In such event, the right of Investor to registration shall be conditioned upon Investor’s participation in such underwriting and the inclusion of Investor’s Registrable Securities in the underwriting to the extent provided herein. If Investor proposes to distribute its securities through such underwriting, it shall (together with the Company and any other holders distributing their securities through such underwriting) enter into an underwriting agreement in the form agreed to by the Company with the underwriter(s) selected for such underwriting by the Company. Notwithstanding any other provision of this Agreement, if the managing underwriters advise the Company and Investor in writing that in their reasonable and good faith opinion the number of securities requested to be included in such offering exceeds the number which can be sold without adversely affecting the per share offering price of the securities, the Company will include in such registration (i) first, the securities that the Company proposes to sell; (ii) second, the Registrable Securities requested to be included therein by Investor, allocated pro rata among all such holders on the basis of the number of Registrable Securities owned by each such holder or in such manner as they may otherwise agree; and (iii) third, the securities requested to be included therein by holders of securities other than holders of Registrable Securities, allocated among such holders in such manner as they may agree. If Investor disapproves of the terms of any such underwriting, Investor may elect to withdraw therefrom by written notice to the Company and the managing underwriter.

(d)For purposes of this Agreement, “Registrable Securities” shall mean any and all shares of (i) Company Stock issued pursuant to the Purchase Agreement (including Class A Common Stock issued or issuable upon exchange of Class B Common Stock), (ii) Capital Stock issued in respect of the Company Stock in any reorganization of the Company, and (iii) Capital Stock issued in respect of the stock referred to in clause (i) or (ii) above as a result of a stock split, stock dividend, recapitalization or combination.

2. Expenses of Registration

All expenses incurred in connection with the registrations pursuant to Section 1 hereof, including all registration, filing and qualification fees, printing expenses, fees and disbursements of counsel for the Company and expenses of any special audits of the Company’s financial statements incidental to or required by such registration, shall be borne by the Company, except that the Company shall not be required to pay underwriters’ fees, discounts or commissions relating to Registrable Securities.

3. Registration Procedures

In the case of each registration affected by the Company pursuant to this Agreement, the Company will keep Investor advised in writing as to the initiation of each registration and as to the completion thereof. At its expense the Company will:

(a)keep such registration pursuant to this Agreement continuously effective until all of such Registrable Securities have been disposed of and to comply with the provisions of the Securities Act with respect to the disposition of such Registrable Securities in accordance with the intended methods of disposition set forth in such registration statement;

(b)promptly prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to comply with the provisions of the Securities Act, and to keep such registration statement effective for that period of time specified in Section 3(a) above;

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(c)at least five (5) business days before filing such registration statement, prospectus or amendments or supplements thereto with the SEC, furnish to Investor copies of such documents proposed to be filed, which documents shall be subject to the reasonable review, comment and approval of Investor;

(d)notify Investor, promptly after the Company receives notice thereof, of the time when such registration statement has been declared effective or a supplement to any prospectus forming a part of such registration statement has been filed with the SEC;

(e)advise Investor, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the SEC suspending the effectiveness of such registration statement or the initiation or threatening of any proceeding for such purpose and promptly use best efforts to obtain the withdrawal of any order suspending the effectiveness of a registration statement, or the lifting of any suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction, at the earliest possible moment;

(f)cause all Registrable Securities covered by such registrations to be listed on each securities exchange on which similar securities issued by the Company are then listed or, if such securities are not then listed, on a national securities exchange selected by Investor;

(g)notify each selling holder of such Registrable Securities, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event that would cause the prospectus included in such registration statement to contain an untrue statement of a material fact or omit any fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading, and, at the request of any such holder, the Company shall prepare a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;

(h)make available for inspection by Investor all financial and other records, pertinent corporate documents and properties of the Company (collectively, the “Records”), and cause the Company’s officers, directors and employees to supply all Records requested by Investor in connection with such registration statement;

(i)provide a transfer agent and registrar (which may be the same entity) for all such Registrable Securities not later than the effective date of such registration;

(j)otherwise use its best efforts to comply with all applicable rules and regulations of the SEC and make available to its shareholders an earnings statement (in a form that satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 under the Securities Act or any successor rule thereto) no later than thirty (30) days after the end of the 12-month period beginning with the first day of the Company’s first full fiscal quarter after the effective date of such Registration Statement, which earnings statement shall cover said 12-month period, and which requirement will be deemed to be satisfied if the Company timely files complete and accurate information on Forms 10-K, 10-Q and 8-K under the Securities Exchange Act of 1934, as amended (“Exchange Act”), and otherwise complies with Rule 158 under the Securities Act or any successor rule thereto; and

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(k)enter into such customary agreements (including underwriting agreements in customary form) and take all such other actions as the holders of a majority of the Registrable Securities being sold or the underwriters, if any, reasonably request in order to expedite or facilitate the disposition of such Registrable Securities;

(l)use its best efforts to cause such Registrable Securities to be registered with or approved by such other Governmental Entities as may be necessary by virtue of the business and operations of the Company to enable the holders of such Registrable Securities to consummate the disposition of such Registrable Securities in accordance with their intended method of distribution thereof;

(m)notify Investor promptly of any request by the Commission for the amending or supplementing of such registration statement or prospectus or for additional information;

(n)permit Investor to participate in the preparation of such Registration Statement and to require the insertion therein of language, furnished to the Company in writing, which in the reasonable judgment of such holder and its counsel should be included, if in Investor’s judgment, Investor might be deemed to be an underwriter or a “controlling person” (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act) (a “Controlling Person”) of the Company; and

(o)take such other actions as reasonably requested by Investor.

4. Indemnification

(a)In the event of a registration of any of the Registrable Securities under the Securities Act pursuant to this Agreement, the Company will (i) indemnify and hold harmless, to the fullest extent permitted by law, Investor, each underwriter of such Registrable Securities thereunder, and any other person acting on behalf of Investor and each other person, if any, who controls such foregoing persons within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which any of the foregoing persons may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which such Registrable Securities were registered under the Securities Act, any preliminary prospectus, free writing prospectus, or final prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by the Company of any rule or regulation promulgated under the Securities Act or any state securities law applicable to the Company and relating to action or inaction required of the Company in connection with any such registration, and (ii) will reimburse such persons, each of their officers, directors and partners, and each person controlling such persons, for any legal and any other expenses incurred in connection with investigating, defending or settling any such claim, loss, damage, liability or action. Notwithstanding the foregoing, the Company will not be liable in any such case to the extent that any such claim, loss, damage or liability arises out of or is based on any untrue statement or omission based upon written information furnished to the Company in an instrument duly executed by Investor or an underwriter, as applicable, specifically for use therein. This indemnity shall be in addition to any liability the Company may otherwise have.

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(b)Investor will, if Registrable Securities held by or issuable to Investor are included in the securities for which such registration is being effected, indemnify and hold harmless, to the fullest extent permitted by law, the Company, each of its directors and officers, each underwriter, if any, of the Company’s securities covered by such registration statement, each person who controls the Company and each underwriter within the meaning of the Securities Act, against all claims, losses, expenses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading (in the case of a prospectus, in light of the circumstances under with they were made), but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Company in an instrument duly executed by Investor specifically for use therein. Notwithstanding the foregoing, the total amount for which Investor, its officers, directors and partners, and any person controlling Investor, shall be liable under this Section 4(b) shall not in any event exceed the net proceeds (after deducting underwriting fees, commissions, and discounts) received by Investor from the sale of its Registrable Securities in such registration. This indemnity shall be in addition to any liability Investor may otherwise have.

(c)Each party entitled to indemnification under this Section 4 (the “Indemnified Party”) shall give notice to the party required to provide indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has actual knowledge of any claims as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom; provided, however, that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not be unreasonably withheld), and the Indemnified Party may participate in such defense at such party’s expense. Notwithstanding the foregoing, the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations hereunder, unless such failure resulted in actual detriment to the Indemnifying Party. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect of such claim or litigation.

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(d)Notwithstanding the foregoing, to the extent that the provisions on indemnification contained in the underwriting agreements entered into among Investor, the Company and the underwriters in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall be controlling as to the Registrable Securities included in the public offering.

(e)The indemnification provided by this Section 4 shall be a continuing right to indemnification and shall survive the registration and sale of any securities by any person entitled to indemnification hereunder and the expiration or termination of this Agreement.

(f)If the indemnification provided for hereunder is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any loss, claim, damage, liability or action referred to herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party hereunder, shall contribute to the amounts paid or payable by such Indemnified Party as a result of such loss, claim, damage, liability or action in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and of the Indemnified Party on the other in connection with the statements or omissions which resulted in such loss, claim, damage, liability or action as well as any other relevant equitable considerations; provided, that the maximum amount of liability in respect of such contribution shall be limited, in the case of each holder of Registrable Securities, to an amount equal to the net proceeds (after underwriting fees, commissions or discounts) actually received by such seller from the sale of Registrable Securities effected pursuant to such registration. The relative fault of the Indemnifying Party and of the Indemnified Party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Indemnifying Party or by the Indemnified Party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties agree that it would not be just and equitable if contribution pursuant hereto were determined by pro rata allocation or by any other method or allocation which does not take account of the equitable considerations referred to herein. No Person guilty or liable of fraudulent misrepresentation within the meaning of Section 11(f) of the Securities Act shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.

5. REPORTS UNDER the EXCHANGE ACT

With a view to making available to Investor the benefits of Rule 144 promulgated under the Securities Act and any other rule or regulation of the SEC that may at any time permit Investor to sell securities of the Company to the public without registration, the Company shall:

(a)make and keep public information available, within the meaning of Rule 144, at all times after the effective date of (i) the first registration statement covering an underwritten public offering filed by the Company or (ii) the first registration by the Company under the Exchange Act;

(b)following a public offering or a registration under the Exchange Act, file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and

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(c)furnish to Investor forthwith upon request a written statement by the Company that it has complied with the reporting requirements of Rule 144 (at any time after ninety (90) days after the effective date of said first registration statement filed by the Company), and of the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), a copy of the most recent annual or quarterly report of the Company, and such other reports and documents filed by the Company with the SEC as may be reasonably requested in availing any such holder to take advantage of any rule or regulation of the SEC permitting the selling of any such securities without registration.

6. LIMITATIONS IN CONNECTION WITH FUTURE GRANTS OF REGISTRATION RIGHTS

From and after the date of this Agreement, the Company shall not, without the prior written consent of Investor, enter into any agreement with any holder or prospective holder of any securities of the Company which would allow such holder or prospective holder to include such securities in any registration filed under Section 1 hereof, unless under the terms of such agreement, such holder or prospective holder may include such securities in any such registration only to the extent that the inclusion of his securities will not reduce the amount of the Registrable Securities of Investor to be included in such registration.

7. TRANSFER OF REGISTRATION RIGHTS

The registration rights of Investor (and of any permitted transferee of Investor) under this Agreement with respect to any Registrable Securities may be assigned in whole or in part as provided in Section 8(b) below.

8. Miscellaneous

(a)No amendment or waiver of any provision of this Agreement will be effective against any party hereto unless it is in a writing signed by a duly authorized officer of such party.

(b)This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, executors, administrators, legal representatives, successors and permitted assigns. This Agreement, and the rights and obligations of Investor hereunder, may be assigned by Investor to any person or entity to which Registrable Securities are transferred by Investor, and such transferee shall be deemed to have acquired all of the rights and obligations of Investor for purposes of this Agreement; provided, that the transferee provides written notice of such assignment to the Company and provided that any such transfer shall be made strictly in accordance with all applicable laws; and provided, further, that such rights may not be held or exercised by more than one transferee at any one time. The Company may not assign its rights under this Agreement except to its successors-in-interest as a result of a merger, reorganization or a sale of all or substantially all of the assets of the Company.

(c)For the convenience of the parties hereto, this Agreement may be executed in any number of separate counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts will together constitute the same agreement. Executed signature pages to this Agreement may be delivered by facsimile or other electronic transmission and such transmissions shall be deemed as sufficient as if manually signed signature pages had been delivered.

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(d)Any notice, request, instruction or other document to be given hereunder by any party to the other will be in writing and will be deemed to have been duly given (i) on the date of delivery if delivered personally or by e-mail (upon confirmation of receipt), (ii) on the first Business Day following the date of dispatch if delivered by a recognized next-day courier service, or (iii) on the third Business Day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid. All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice.

If to the Company:

Professional Holding Corp.

396 Alhambra Circle, Suite 255

Coral Gables, FL 33146

E-mail: dsheehan@professionalbankfl.com

Attention: Daniel R. Sheehan

Title: Chairman and President

with a copy to:

Gunster, Yoakley & Stewart, P.A.

777 South Flagler Drive, Suite 500 East

West Palm Beach, FL 33401

E-mail: mmitrione@gunster.com

Attention: Michael V. Mitrione

If to Investor:

EJF Sidecar Fund, Series LLC – Series E

2107 Wilson Blvd., Suite 410

Arlington, VA 22201

E-mail: trading@ejfcap.com

Attention: Neal J. Wilson

Title: Chief Operating Officer

with copies to:

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(e)If any provision of this Agreement or the application thereof to any person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to persons remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination, the parties shall negotiate in good faith in an effort to agree upon a suitable and equitable substitute provision to effect the original intent of the parties.

(f)If, and as often as, there is any change in the Class A Common Stock or Class B Common Stock by way of a stock split, stock dividend, combination or reclassification, or through a merger, consolidation, reorganization or recapitalization, or by any other means, appropriate adjustment shall be made in the provisions hereof so that the rights and privileges granted hereby shall continue with respect to the Class A Common Stock and Class B Common Stock as so changed.

(g)This Agreement will be governed by and construed in accordance with the Laws of the State of Florida applicable to contracts made and to be performed entirely within such jurisdiction.

(h)The parties hereby agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby shall be brought in the federal or state courts located in Miami-Dade County, Florida, so long as such court shall have subject matter jurisdiction over such suit, action or proceeding, and each of the parties hereby irrevocably consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by Law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding which is brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 8(h) shall be deemed effective service of process on such party. The parties hereby irrevocably and unconditionally consent to submit to the exclusive jurisdiction of the state and federal courts referred to above for any actions, suits or proceedings arising out of or relating to this Agreement and the transactions contemplated hereby.

(i)THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT OR UNDER ANY AGREEMENT, INSTRUMENT OR OTHER DOCUMENT CONTEMPLATED HEREBY OR RELATED HERETO AND IN ANY ACTION DIRECTLY OR INDIRECTLY RELATED TO OR CONNECTED WITH THE OBLIGATIONS OF THIS AGREEMENT. THE PARTIES ACKNOWLEDGE THAT THIS WAIVER MAY DEPRIVE EACH OF THEM AN IMPORTANT RIGHT AND THAT SUCH WAIVER HAS BEEN KNOWINGLY AND VOLUNTARILY MADE BY THE PARTIES AFTER CONSULTATION WITH THEIR LEGAL COUNSEL.

(j)The article, section, paragraph and clause captions herein are for convenience of reference only, do not constitute part of this Agreement and will not be deemed to limit or otherwise affect any of the provisions hereof.

[Signature page follows]

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EXECUTION VERSION

IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date set forth above.

COMPANY:
	PROFESSIONAL HOLDING CORP.
	By:
	Name:	Daniel R. Sheehan
	Title:	Chairman and President
	INVESTOR:
	EJF SIDECAR FUND, SERIES LLC – SERIES E
	By:
	Name:
	Title:

EXHIBIT B

FORM OF OPINION

1.The Company has been incorporated under the Florida Business Corporation Act, and its corporate status is active under the laws of the State of Florida.

2.The Bank (a) has been incorporated under the Florida Business Corporation Act and is a Florida-chartered commercial bank, and its corporate status is active, and (b) based solely on the FDIC Certificate, is an “insured depository” as defined under Section 3(c)(2) of the Federal Deposit Insurance Act, and the deposit accounts of the Bank are insured by the FDIC up to the maximum amounts provided by law and the rules of the FDIC.

3.The Company has the corporate power to execute and deliver the Agreement and to perform its obligations thereunder.

4.The Company has authorized the execution, delivery and performance of the Agreement by all necessary corporate action.

5.Subject to the limitations set forth herein, the Agreement is a valid and binding obligation of the Company and is enforceable against the Company in accordance with its terms under the laws of the State of Florida.

6.The Securities have been duly authorized by the Company, and the Securities, when issued, delivered and paid for in accordance with the terms of the Agreement, will be validly issued, fully paid and nonassessable.

7.The Company is not and, after giving effect to the offer and sale of the Securities, will not be an “investment company” as such term is defined in the Investment Company Act of 1940, as amended (the “ICA”).

8.The execution and delivery by the Company of the Agreement and the performance by the Company of its obligation under the Agreement do not: (a) violate the Company’s Articles of Incorporation or Bylaws; (b) to our knowledge, constitute a breach or a default under, or result in the creation of a security interest or a lien on the assets of the Company under, any of the Company’s material agreements that are known to us (to the extent that any such agreement is governed by the law of a jurisdiction other than the State of Florida, we express no opinion with respect to the effect or other matters of any such law and have assumed that the laws of such jurisdiction are identical to the laws of the State of Florida, without giving effect to principles of conflicts of laws); (c) violate any judgment, decree or order known to us of any court or administrative tribunal of the State of Florida that is known to us to be applicable to the Company; or (d) based on existing facts of which we are aware, violate any Applicable Laws (as hereinafter defined).

[Signature Page to Registration Rights Agreement]

EX-10.20

Exhibit 10.20

PROFESSIONAL HOLDING CORP.

396 Alhambra Circle, Suite 255

Coral Gables, Florida 33146

February 17, 2017

BayBoston Capital L.P.

1280 Centre Street, Suite 2

Newton Center, MA 02459

Attention: Carlos M. Garcia

Re:       Investor Rights Letter Agreement

Ladies and Gentlemen:

This letter agreement (the “Letter Agreement”) will confirm our agreement that pursuant to and effective as of the Closing Date of your purchase of capital stock of Professional Holding Corp. (the “Company”), a Florida corporation and parent company of Professional Bank, a Florida-chartered commercial bank (the “Bank”), BayBoston Capital L.P., a Delaware limited partnership (the “Investor”), shall be entitled to the contractual rights set forth in this Letter Agreement, in addition to any other rights specifically provided to Investor pursuant to that certain Stock Purchase Agreement dated as of February 17, 2017 by and among the Company and certain investors, including Investor (the “Agreement”), including any amendments or supplements thereto, and such other agreements, instruments and certificates delivered in connection therewith (collectively, the “Transaction Documents”). Capitalized terms not defined in this Letter Agreement shall have the meanings ascribed in the Agreement.

1.       Exchange of Class B Non-Voting Common Stock. Investor may exchange shares of Class B Voting Common Stock into an equal number of shares of Class A Voting Common Stock (automatically upon Investor’s permitted transfer of shares of Class B Non-Voting Common Stock (a) upon the consummation of a Permitted Transfer or (b) if the Company’s Board of Directors, acting in its sole and absolute discretion, have approved the exchange and the exchange would not result in Investor (together with its Affiliates) beneficially owning greater than 9.9% of the outstanding shares of the Company’s Class A Voting Common Stock. For the purposes of this Letter Agreement, “Permitted Transfer” means (1) a transfer pursuant to a widely distributed public offering, (2) a transfer in which no transferee acquires greater than 2% of the issued and outstanding shares Class A Voting Common Stock (after giving effect to any conversion of Class B Non-Voting Common Stock, (3) a transfer to a Person that beneficially owns greater than 50% of the issued and outstanding shares of the Company’s Class A Voting Common Stock or (4) a transfer that is approved by the Federal Reserve Board. The Company shall hold in reserve, at all times, sufficient shares of Class A Voting Common Stock to permit the exchange of all shares of Class B Non-Voting Common Stock then outstanding.

2.       Preemptive Rights. If, following the consummation of the transactions contemplated by the Transaction Documents, the Company authorizes the issuance or sale, other than an Excluded Issuance, of any Capital Stock, or any securities, options or debt that are convertible or exchangeable into Capital Stock (“Stock Equivalents”) of the Company (any such security, a “New Security”), Investor shall be entitled, in its sole discretion, to purchase its pro rata portion of the New Securities for the same price and on the same terms as such New Securities are proposed to be offered to others, such that Investor and its Affiliates are able to maintain their aggregate percentage ownership interest in the Company’s Capital Stock on a fully diluted basis, subject to compliance with applicable Law. With respect to such rights described above (the “Preemptive Rights”), the Company shall give written notice of such proposed issuance or sale (including the terms and conditions thereof) to Investor at least thirty (30) days prior to the anticipated issuance or sale date, and Investor shall have twenty (20) days from the receipt thereof to provide the Company with notice of the exercise of its Preemptive Rights with respect to such issuance or sale. For the purposes of this Letter Agreement, “Excluded Issuance” means an issuance or sale of any Capital Stock or Stock Equivalents issued or sold by the Company in connection with: (a) a grant to any existing or prospective directors, officers or other employees, consultants or service providers of the Company or any Company Subsidiary pursuant to the Stock Option Plan or similar equity-based plans or other compensation agreement; (b) the conversion or exchange of any securities of the Company into Capital Stock, or the exercise of any warrants or other rights to acquire Capital Stock; (c) any acquisition by the Company or any Company Subsidiary of any equity interests, assets, properties or business of any Person; (d) any merger, consolidation or other business combination involving the Company or any Company Subsidiary; (e) the commencement of any transaction or series of related transactions involving a Change in Control; (f) any subdivision of Capital Stock (by a split of Capital Stock or otherwise), payment of stock dividend, reclassification, reorganization or any similar recapitalization; or (g) a joint venture, strategic alliance or other commercial relationship with any Person relating to the operation of the Company’s or any Company Subsidiary’s business and not for the primary purpose of raising equity capital. The Preemptive Rights described herein will terminate upon the consummation of a firm commitment underwritten public offering of the Company’s Capital Stock pursuant to a registration statement or registration statements resulting in gross proceeds to the Company of at least $25 million.

3.       Registration Rights. In addition to, and not exclusive of, any other registration rights granted to Investor pursuant to the Transaction Documents, Investor shall be entitled to exercise registration rights as are set forth in a Registration Rights Agreement in the form of Exhibit A hereto.

4.       Most Favored Nation. The Company shall provide Investor with rights and benefits under the this Letter Agreement and the Agreement that are no less favorable to those of any other investor participating in the Offering.

5.       Legal Opinion. At the Closing, Investor shall have received an opinion from the Company’s legal counsel in the form set forth in Exhibit B to this Letter Agreement. Delivery of such opinion shall be a closing condition as expressed in Section 1.2(c)(ii)(G) of the Agreement.

6.       Miscellaneous. The provisions of Sections 6.4, 6.5, 6.6, 6.7, 6.8, 6.9, 6.10, 6.11, 6.14, 6.16 and 6.17 of the Agreement are hereby incorporated into and made a part of this letter agreement and shall apply mutatis mutandis to this Letter Agreement.

[Signature Page Follows]

Very truly yours,
PROFESSIONAL HOLDING CORP.
By:	/s/ Daniel R. Sheehan
Name:  Daniel R. Sheehan
Title:  Chairman and President
Professional BANK
By:	/s/ Abel L. Iglesias
Name: Abel L. Iglesias
Title: Chief Executive Officer

Acknowledged and agreed:
BAYBOSTON MANAGERS, LLC
By:	/s/ Carlos M. Garcia
Name:	Carlos M. Garcia
Title:	Manager of its general partner,
BayBoston Capital GP, LLC

EXECUTION VERSION

EXHIBIT A

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of February 17, 2017, by and between Professional Holding Corp., a Florida corporation and the parent company of Professional Bank (the “Company”), and the undersigned Investor (the “Investor”). Capitalized terms not defined in this Agreement shall have the meaning ascribed in that certain Stock Purchase Agreement dated February 17, 2017 by and between the Company and certain investors, including Investor (the “Purchase Agreement”).

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and Investor hereby mutually agree as follows:

1. Registration RIGHTS

(a)Any time after the fourth (4^th) anniversary of the date of this Agreement, Investor may request one registration (the “Demand Registration”) under the Securities Act of 1933, as amended (the “Securities Act”), of its Registrable Securities (as defined below). The Demand Registration shall be on such form as the Company shall select. The Demand Registration shall specify the number of Registrable Securities to be registered. The Company shall use best efforts to cause a registration statement to be filed within 180 days after the date on which the initial request by Investor is received by the Company and shall use its best efforts to cause such registration statement to be declared effective by the U.S. Securities and Exchange Commission (“SEC”) as soon as practicable thereafter. The Company shall use best efforts to keep such Demand Registration current and effective until the Registrable Securities registered thereby cease to be Registrable Securities.

(b)As long as Investor holds Registrable Securities, if at any time or from time to time, the Company shall determine to register any of its securities under the Securities Act (except for the registration of securities to be offered pursuant to an employee benefit plan on Form S-8 or pursuant to a registration made on Form S-4, or any successor forms then in effect) and the registration form to be used may be used for the registration of the Registrable Securities (a “Piggyback Registration”), the Company shall:

(1)Provide thirty (30) calendar days’ advance written notice to Investor prior to filing the registration statement (the “Registration Rights Notice”); and

(2)include in such registration, and in any underwriting involved therein, all the Registrable Securities specified in a written request made by Investor within fifteen (15) calendar days after receipt of the Registration Rights Notice from the Company, except as set forth in Section 1(c) below.

(c)If the registration is for a registered public offering involving an underwriting, the Company shall so advise Investor as a part of the Registration Rights Notice. In such event, the right of Investor to registration shall be conditioned upon Investor’s participation in such underwriting and the inclusion of Investor’s Registrable Securities in the underwriting to the extent provided herein. If Investor proposes to distribute its securities through such underwriting, it shall (together with the Company and any other holders distributing their securities through such underwriting) enter into an underwriting agreement in the form agreed to by the Company with the underwriter(s) selected for such underwriting by the Company. Notwithstanding any other provision of this Agreement, if the managing underwriters advise the Company and Investor in writing that in their reasonable and good faith opinion the number of securities requested to be included in such offering exceeds the number which can be sold without adversely affecting the per share offering price of the securities, the Company will include in such registration (i) first, the securities that the Company proposes to sell; (ii) second, the Registrable Securities requested to be included therein by Investor, allocated pro rata among all such holders on the basis of the number of Registrable Securities owned by each such holder or in such manner as they may otherwise agree; and (iii) third, the securities requested to be included therein by holders of securities other than holders of Registrable Securities, allocated among such holders in such manner as they may agree. If Investor disapproves of the terms of any such underwriting, Investor may elect to withdraw therefrom by written notice to the Company and the managing underwriter.

(d)For purposes of this Agreement, “Registrable Securities” shall mean any and all shares of (i) Company Stock issued pursuant to the Purchase Agreement (including Class A Common Stock issued or issuable upon exchange of Class B Common Stock), (ii) Capital Stock issued in respect of the Company Stock in any reorganization of the Company, and (iii) Capital Stock issued in respect of the stock referred to in clause (i) or (ii) above as a result of a stock split, stock dividend, recapitalization or combination.

2. Expenses of Registration

All expenses incurred in connection with the registrations pursuant to Section 1 hereof, including all registration, filing and qualification fees, printing expenses, fees and disbursements of counsel for the Company and expenses of any special audits of the Company’s financial statements incidental to or required by such registration, shall be borne by the Company, except that the Company shall not be required to pay underwriters’ fees, discounts or commissions relating to Registrable Securities.

3. Registration Procedures

In the case of each registration affected by the Company pursuant to this Agreement, the Company will keep Investor advised in writing as to the initiation of each registration and as to the completion thereof. At its expense the Company will:

(a)keep such registration pursuant to this Agreement continuously effective until all of such Registrable Securities have been disposed of and to comply with the provisions of the Securities Act with respect to the disposition of such Registrable Securities in accordance with the intended methods of disposition set forth in such registration statement;

(b)promptly prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to comply with the provisions of the Securities Act, and to keep such registration statement effective for that period of time specified in Section 3(a) above;

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(c)at least five (5) business days before filing such registration statement, prospectus or amendments or supplements thereto with the SEC, furnish to Investor copies of such documents proposed to be filed, which documents shall be subject to the reasonable review, comment and approval of Investor;

(d)notify Investor, promptly after the Company receives notice thereof, of the time when such registration statement has been declared effective or a supplement to any prospectus forming a part of such registration statement has been filed with the SEC;

(e)advise Investor, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the SEC suspending the effectiveness of such registration statement or the initiation or threatening of any proceeding for such purpose and promptly use best efforts to obtain the withdrawal of any order suspending the effectiveness of a registration statement, or the lifting of any suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction, at the earliest possible moment;

(f)cause all Registrable Securities covered by such registrations to be listed on each securities exchange on which similar securities issued by the Company are then listed or, if such securities are not then listed, on a national securities exchange selected by Investor;

(g)notify each selling holder of such Registrable Securities, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event that would cause the prospectus included in such registration statement to contain an untrue statement of a material fact or omit any fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading, and, at the request of any such holder, the Company shall prepare a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;

(h)make available for inspection by Investor all financial and other records, pertinent corporate documents and properties of the Company (collectively, the “Records”), and cause the Company’s officers, directors and employees to supply all Records requested by Investor in connection with such registration statement;

(i)provide a transfer agent and registrar (which may be the same entity) for all such Registrable Securities not later than the effective date of such registration;

(j)otherwise use its best efforts to comply with all applicable rules and regulations of the SEC and make available to its shareholders an earnings statement (in a form that satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 under the Securities Act or any successor rule thereto) no later than thirty (30) days after the end of the 12-month period beginning with the first day of the Company’s first full fiscal quarter after the effective date of such Registration Statement, which earnings statement shall cover said 12-month period, and which requirement will be deemed to be satisfied if the Company timely files complete and accurate information on Forms 10-K, 10-Q and 8-K under the Securities Exchange Act of 1934, as amended (“Exchange Act”), and otherwise complies with Rule 158 under the Securities Act or any successor rule thereto; and

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(k)enter into such customary agreements (including underwriting agreements in customary form) and take all such other actions as the holders of a majority of the Registrable Securities being sold or the underwriters, if any, reasonably request in order to expedite or facilitate the disposition of such Registrable Securities;

(l)use its best efforts to cause such Registrable Securities to be registered with or approved by such other Governmental Entities as may be necessary by virtue of the business and operations of the Company to enable the holders of such Registrable Securities to consummate the disposition of such Registrable Securities in accordance with their intended method of distribution thereof;

(m)notify Investor promptly of any request by the Commission for the amending or supplementing of such registration statement or prospectus or for additional information;

(n)permit Investor to participate in the preparation of such Registration Statement and to require the insertion therein of language, furnished to the Company in writing, which in the reasonable judgment of such holder and its counsel should be included, if in Investor’s judgment, Investor might be deemed to be an underwriter or a “controlling person” (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act) (a “Controlling Person”) of the Company; and

(o)take such other actions as reasonably requested by Investor.

4. Indemnification

(a)In the event of a registration of any of the Registrable Securities under the Securities Act pursuant to this Agreement, the Company will (i) indemnify and hold harmless, to the fullest extent permitted by law, Investor, each underwriter of such Registrable Securities thereunder, and any other person acting on behalf of Investor and each other person, if any, who controls such foregoing persons within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which any of the foregoing persons may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which such Registrable Securities were registered under the Securities Act, any preliminary prospectus, free writing prospectus, or final prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by the Company of any rule or regulation promulgated under the Securities Act or any state securities law applicable to the Company and relating to action or inaction required of the Company in connection with any such registration, and (ii) will reimburse such persons, each of their officers, directors and partners, and each person controlling such persons, for any legal and any other expenses incurred in connection with investigating, defending or settling any such claim, loss, damage, liability or action. Notwithstanding the foregoing, the Company will not be liable in any such case to the extent that any such claim, loss, damage or liability arises out of or is based on any untrue statement or omission based upon written information furnished to the Company in an instrument duly executed by Investor or an underwriter, as applicable, specifically for use therein. This indemnity shall be in addition to any liability the Company may otherwise have.

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(b)Investor will, if Registrable Securities held by or issuable to Investor are included in the securities for which such registration is being effected, indemnify and hold harmless, to the fullest extent permitted by law, the Company, each of its directors and officers, each underwriter, if any, of the Company’s securities covered by such registration statement, each person who controls the Company and each underwriter within the meaning of the Securities Act, against all claims, losses, expenses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading (in the case of a prospectus, in light of the circumstances under with they were made), but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Company in an instrument duly executed by Investor specifically for use therein. Notwithstanding the foregoing, the total amount for which Investor, its officers, directors and partners, and any person controlling Investor, shall be liable under this Section 4(b) shall not in any event exceed the net proceeds (after deducting underwriting fees, commissions, and discounts) received by Investor from the sale of its Registrable Securities in such registration. This indemnity shall be in addition to any liability Investor may otherwise have.

(c)Each party entitled to indemnification under this Section 4 (the “Indemnified Party”) shall give notice to the party required to provide indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has actual knowledge of any claims as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom; provided, however, that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not be unreasonably withheld), and the Indemnified Party may participate in such defense at such party’s expense. Notwithstanding the foregoing, the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations hereunder, unless such failure resulted in actual detriment to the Indemnifying Party. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect of such claim or litigation.

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(d)Notwithstanding the foregoing, to the extent that the provisions on indemnification contained in the underwriting agreements entered into among Investor, the Company and the underwriters in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall be controlling as to the Registrable Securities included in the public offering.

(e)The indemnification provided by this Section 4 shall be a continuing right to indemnification and shall survive the registration and sale of any securities by any person entitled to indemnification hereunder and the expiration or termination of this Agreement.

(f)If the indemnification provided for hereunder is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any loss, claim, damage, liability or action referred to herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party hereunder, shall contribute to the amounts paid or payable by such Indemnified Party as a result of such loss, claim, damage, liability or action in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and of the Indemnified Party on the other in connection with the statements or omissions which resulted in such loss, claim, damage, liability or action as well as any other relevant equitable considerations; provided, that the maximum amount of liability in respect of such contribution shall be limited, in the case of each holder of Registrable Securities, to an amount equal to the net proceeds (after underwriting fees, commissions or discounts) actually received by such seller from the sale of Registrable Securities effected pursuant to such registration. The relative fault of the Indemnifying Party and of the Indemnified Party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Indemnifying Party or by the Indemnified Party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties agree that it would not be just and equitable if contribution pursuant hereto were determined by pro rata allocation or by any other method or allocation which does not take account of the equitable considerations referred to herein. No Person guilty or liable of fraudulent misrepresentation within the meaning of Section 11(f) of the Securities Act shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.

5. REPORTS UNDER the EXCHANGE ACT

With a view to making available to Investor the benefits of Rule 144 promulgated under the Securities Act and any other rule or regulation of the SEC that may at any time permit Investor to sell securities of the Company to the public without registration, the Company shall:

(a)make and keep public information available, within the meaning of Rule 144, at all times after the effective date of (i) the first registration statement covering an underwritten public offering filed by the Company or (ii) the first registration by the Company under the Exchange Act;

(b)following a public offering or a registration under the Exchange Act, file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and

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(c)furnish to Investor forthwith upon request a written statement by the Company that it has complied with the reporting requirements of Rule 144 (at any time after ninety (90) days after the effective date of said first registration statement filed by the Company), and of the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), a copy of the most recent annual or quarterly report of the Company, and such other reports and documents filed by the Company with the SEC as may be reasonably requested in availing any such holder to take advantage of any rule or regulation of the SEC permitting the selling of any such securities without registration.

6. LIMITATIONS IN CONNECTION WITH FUTURE GRANTS OF REGISTRATION RIGHTS

From and after the date of this Agreement, the Company shall not, without the prior written consent of Investor, enter into any agreement with any holder or prospective holder of any securities of the Company which would allow such holder or prospective holder to include such securities in any registration filed under Section 1 hereof, unless under the terms of such agreement, such holder or prospective holder may include such securities in any such registration only to the extent that the inclusion of his securities will not reduce the amount of the Registrable Securities of Investor to be included in such registration.

7. TRANSFER OF REGISTRATION RIGHTS

The registration rights of Investor (and of any permitted transferee of Investor) under this Agreement with respect to any Registrable Securities may be assigned in whole or in part as provided in Section 8(b) below.

8. Miscellaneous

(a)No amendment or waiver of any provision of this Agreement will be effective against any party hereto unless it is in a writing signed by a duly authorized officer of such party.

(b)This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, executors, administrators, legal representatives, successors and permitted assigns. This Agreement, and the rights and obligations of Investor hereunder, may be assigned by Investor to any person or entity to which Registrable Securities are transferred by Investor, and such transferee shall be deemed to have acquired all of the rights and obligations of Investor for purposes of this Agreement; provided, that the transferee provides written notice of such assignment to the Company and provided that any such transfer shall be made strictly in accordance with all applicable laws; and provided, further, that such rights may not be held or exercised by more than one transferee at any one time. The Company may not assign its rights under this Agreement except to its successors-in-interest as a result of a merger, reorganization or a sale of all or substantially all of the assets of the Company.

(c)For the convenience of the parties hereto, this Agreement may be executed in any number of separate counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts will together constitute the same agreement. Executed signature pages to this Agreement may be delivered by facsimile or other electronic transmission and such transmissions shall be deemed as sufficient as if manually signed signature pages had been delivered.

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(d)Any notice, request, instruction or other document to be given hereunder by any party to the other will be in writing and will be deemed to have been duly given (i) on the date of delivery if delivered personally or by e-mail (upon confirmation of receipt), (ii) on the first Business Day following the date of dispatch if delivered by a recognized next-day courier service, or (iii) on the third Business Day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid. All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice.

If to the Company:

Professional Holding Corp.

396 Alhambra Circle, Suite 255

Coral Gables, FL 33146

E-mail: dsheehan@professionalbankfl.com

Attention: Daniel R. Sheehan

Title: Chairman and President

with a copy to:

Gunster, Yoakley & Stewart, P.A.

777 South Flagler Drive, Suite 500 East

West Palm Beach, FL 33401

E-mail: mmitrione@gunster.com

Attention: Michael V. Mitrione

If to Investor:

BayBoston Capital L.P.

1280 Centre Street, Suite 2

Newton Center, MA 02459

E-mail: carlos@bayboston.com

Attention: Carlos Garcia

Title: Chief Executive Officer

with copies to:

________________________

________________________

________________________

E-mail________________________

Attention: ________________________

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(e)If any provision of this Agreement or the application thereof to any person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to persons or circumstances other than those as to which it has been held invalid or unenforceable, will remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination, the parties shall negotiate in good faith in an effort to agree upon a suitable and equitable substitute provision to effect the original intent of the parties.

(f)If, and as often as, there is any change in the Class A Common Stock or Class B Common Stock by way of a stock split, stock dividend, combination or reclassification, or through a merger, consolidation, reorganization or recapitalization, or by any other means, appropriate adjustment shall be made in the provisions hereof so that the rights and privileges granted hereby shall continue with respect to the Class A Common Stock and Class B Common Stock as so changed.

(g)This Agreement will be governed by and construed in accordance with the Laws of the State of Florida applicable to contracts made and to be performed entirely within such jurisdiction.

(h)The parties hereby agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby shall be brought in the federal or state courts located in Miami-Dade County, Florida, so long as such court shall have subject matter jurisdiction over such suit, action or proceeding, and each of the parties hereby irrevocably consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by Law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding which is brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 8(h) shall be deemed effective service of process on such party. The parties hereby irrevocably and unconditionally consent to submit to the exclusive jurisdiction of the state and federal courts referred to above for any actions, suits or proceedings arising out of or relating to this Agreement and the transactions contemplated hereby.

(i)THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT OR UNDER ANY AGREEMENT, INSTRUMENT OR OTHER DOCUMENT CONTEMPLATED HEREBY OR RELATED HERETO AND IN ANY ACTION DIRECTLY OR INDIRECTLY RELATED TO OR CONNECTED WITH THE OBLIGATIONS OF THIS AGREEMENT. THE PARTIES ACKNOWLEDGE THAT THIS WAIVER MAY DEPRIVE EACH OF THEM AN IMPORTANT RIGHT AND THAT SUCH WAIVER HAS BEEN KNOWINGLY AND VOLUNTARILY MADE BY THE PARTIES AFTER CONSULTATION WITH THEIR LEGAL COUNSEL.

(j)The article, section, paragraph and clause captions herein are for convenience of reference only, do not constitute part of this Agreement and will not be deemed to limit or otherwise affect any of the provisions hereof.

[Signature page follows]

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EXECUTION VERSION

IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date set forth above.

COMPANY:
PROFESSIONAL HOLDING CORP.
By:	/s/ Daniel R. Sheehan
Name:	Daniel R. Sheehan
Title:	Chairman and President
INVESTOR:
BAYBOSTON CAPITAL L.P.
By:	/s/ Carlos M. Garcia
Name:	Carlos M. Garcia
Title:	BayBoston Capital GP LLC

EX-10.21

Exhibit 10.21

PROFESSIONAL HOLDING CORP.

396 Alhambra Circle, Suite 255

Coral Gables, Florida 33146

February 17, 2017

___________________________

___________________________

___________________________

___________________________

Re:       Investor Rights Letter Agreement

Ladies and Gentlemen:

This letter agreement (the “Letter Agreement”) will confirm our agreement that pursuant to and effective as of the Closing Date of your purchase of capital stock of Professional Holding Corp. (the “Company”), a Florida corporation and parent company of Professional Bank, a Florida-chartered commercial bank (the “Bank”), __________________, a Delaware limited liability company (the “Investor”), shall be entitled to the contractual rights set forth in this Letter Agreement, in addition to any other rights specifically provided to Investor pursuant to that certain Stock Purchase Agreement dated as of February 17, 2017 by and among the Company and certain investors, including Investor (the “Agreement”), including any amendments or supplements thereto, and such other agreements, instruments and certificates delivered in connection therewith (collectively, the “Transaction Documents”). Capitalized terms not defined in this Letter Agreement shall have the meanings ascribed in the Agreement.

1.       Exchange of Class B Non-Voting Common Stock. Investor may exchange shares of Class B Voting Common Stock into an equal number of shares of Class A Voting Common Stock (automatically upon Investor’s permitted transfer of shares of Class B Non-Voting Common Stock (a) upon the consummation of a Permitted Transfer or (b) if the Company’s Board of Directors, acting in its sole and absolute discretion, have approved the exchange and the exchange would not result in Investor (together with its Affiliates) beneficially owning greater than 9.9% of the outstanding shares of the Company’s Class A Voting Common Stock. For the purposes of this Letter Agreement, “Permitted Transfer” means (1) a transfer pursuant to a widely distributed public offering, (2) a transfer in which no transferee acquires greater than 2% of the issued and outstanding shares Class A Voting Common Stock (after giving effect to any conversion of Class B Non-Voting Common Stock, (3) a transfer to a Person that beneficially owns greater than 50% of the issued and outstanding shares of the Company’s Class A Voting Common Stock or (4) a transfer that is approved by the Federal Reserve Board. The Company shall hold in reserve, at all times, sufficient shares of Class A Voting Common Stock to permit the exchange of all shares of Class B Non-Voting Common Stock then outstanding.

2.       Preemptive Rights. If, following the consummation of the transactions contemplated by the Transaction Documents, the Company authorizes the issuance or sale, other than an Excluded Issuance, of any Capital Stock, or any securities, options or debt that are convertible or exchangeable into Capital Stock (“Stock Equivalents”) of the Company (any such security, a “New Security”), Investor shall be entitled, in its sole discretion, to purchase its pro rata portion of the New Securities for the same price and on the same terms as such New Securities are proposed to be offered to others, such that Investor and its Affiliates are able to maintain their aggregate percentage ownership interest in the Company’s Capital Stock on a fully diluted basis, subject to compliance with applicable Law. With respect to such rights described above (the “Preemptive Rights”), the Company shall give written notice of such proposed issuance or sale (including the terms and conditions thereof) to Investor at least thirty (30) days prior to the anticipated issuance or sale date, and Investor shall have twenty (20) days from the receipt thereof to provide the Company with notice of the exercise of its Preemptive Rights with respect to such issuance or sale. For the purposes of this Letter Agreement, “Excluded Issuance” means an issuance or sale of any Capital Stock or Stock Equivalents issued or sold by the Company in connection with: (a) a grant to any existing or prospective directors, officers or other employees, consultants or service providers of the Company or any Company Subsidiary pursuant to the Stock Option Plan or similar equity-based plans or other compensation agreement; (b) the conversion or exchange of any securities of the Company into Capital Stock, or the exercise of any warrants or other rights to acquire Capital Stock; (c) any acquisition by the Company or any Company Subsidiary of any equity interests, assets, properties or business of any Person; (d) any merger, consolidation or other business combination involving the Company or any Company Subsidiary; (e) the commencement of any transaction or series of related transactions involving a Change in Control; (f) any subdivision of Capital Stock (by a split of Capital Stock or otherwise), payment of stock dividend, reclassification, reorganization or any similar recapitalization; or (g) a joint venture, strategic alliance or other commercial relationship with any Person relating to the operation of the Company’s or any Company Subsidiary’s business and not for the primary purpose of raising equity capital. The Preemptive Rights described herein will terminate upon the consummation of a firm commitment underwritten public offering of the Company’s Capital Stock pursuant to a registration statement or registration statements resulting in gross proceeds to the Company of at least $25 million.

3.       Registration Rights. In addition to, and not exclusive of, any other registration rights granted to Investor pursuant to the Transaction Documents, Investor shall be entitled to exercise registration rights as are set forth in a Registration Rights Agreement in the form of Exhibit A hereto.

4.       Most Favored Nation. The Company shall provide Investor with rights and benefits under the this Letter Agreement and the Agreement that are no less favorable to those of any other investor participating in the Offering.

5.       Legal Opinion. At the Closing, Investor shall have received an opinion from the Company’s legal counsel in the form set forth in Exhibit B to this Letter Agreement. Delivery of such opinion shall be a closing condition as expressed in Section 1.2(c)(ii)(G) of the Agreement.

6.       Miscellaneous. The provisions of Sections 6.4, 6.5, 6.6, 6.7, 6.8, 6.9, 6.10, 6.11, 6.14, 6.16 and 6.17 of the Agreement are hereby incorporated into and made a part of this letter agreement and shall apply mutatis mutandis to this Letter Agreement.

[Signature Page Follows]

	Very truly yours,
	PROFESSIONAL HOLDING CORP.
	By:
	Name:	Daniel R. Sheehan
	Title:	Chairman and President
	PROFESSIONAL BANK
	By:
	Name:	Abel L. Iglesias
	Title:	Chief Executive Officer
Acknowledged and agreed:
[INVESTOR]
By:
Name:
Title:

EXECUTION VERSION

EXHIBIT A

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of February 17, 2017, by and between Professional Holding Corp., a Florida corporation and the parent company of Professional Bank (the “Company”), and the undersigned Investor (the “Investor”). Capitalized terms not defined in this Agreement shall have the meaning ascribed in that certain Stock Purchase Agreement dated February 17, 2017 by and between the Company and certain investors, including Investor (the “Purchase Agreement”).

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and Investor hereby mutually agree as follows:

1. Registration RIGHTS

(a)Any time after the fourth (4^th) anniversary of the date of this Agreement, Investor may request one registration (the “Demand Registration”) under the Securities Act of 1933, as amended (the “Securities Act”), of its Registrable Securities (as defined below). The Demand Registration shall be on such form as the Company shall select. The Demand Registration shall specify the number of Registrable Securities to be registered. The Company shall use best efforts to cause a registration statement to be filed within 180 days after the date on which the initial request by Investor is received by the Company and shall use its best efforts to cause such registration statement to be declared effective by the U.S. Securities and Exchange Commission (“SEC”) as soon as practicable thereafter. The Company shall use best efforts to keep such Demand Registration current and effective until the Registrable Securities registered thereby cease to be Registrable Securities.

(b)As long as Investor holds Registrable Securities, if at any time or from time to time, the Company shall determine to register any of its securities under the Securities Act (except for the registration of securities to be offered pursuant to an employee benefit plan on Form S-8 or pursuant to a registration made on Form S-4, or any successor forms then in effect) and the registration form to be used may be used for the registration of the Registrable Securities (a “Piggyback Registration”), the Company shall:

(1)Provide thirty (30) calendar days’ advance written notice to Investor prior to filing the registration statement (the “Registration Rights Notice”); and

(2)include in such registration, and in any underwriting involved therein, all the Registrable Securities specified in a written request made by Investor within fifteen (15) calendar days after receipt of the Registration Rights Notice from the Company, except as set forth in Section 1(c) below.

(c)If the registration is for a registered public offering involving an underwriting, the Company shall so advise Investor as a part of the Registration Rights Notice. In such event, the right of Investor to registration shall be conditioned upon Investor’s participation in such underwriting and the inclusion of Investor’s Registrable Securities in the underwriting to the extent provided herein. If Investor proposes to distribute its securities through such underwriting, it shall (together with the Company and any other holders distributing their securities through such underwriting) enter into an underwriting agreement in the form agreed to by the Company with the underwriter(s) selected for such underwriting by the Company. Notwithstanding any other provision of this Agreement, if the managing underwriters advise the Company and Investor in writing that in their reasonable and good faith opinion the number of securities requested to be included in such offering exceeds the number which can be sold without adversely affecting the per share offering price of the securities, the Company will include in such registration (i) first, the securities that the Company proposes to sell; (ii) second, the Registrable Securities requested to be included therein by Investor, allocated pro rata among all such holders on the basis of the number of Registrable Securities owned by each such holder or in such manner as they may otherwise agree; and (iii) third, the securities requested to be included therein by holders of securities other than holders of Registrable Securities, allocated among such holders in such manner as they may agree. If Investor disapproves of the terms of any such underwriting, Investor may elect to withdraw therefrom by written notice to the Company and the managing underwriter.

(d)For purposes of this Agreement, “Registrable Securities” shall mean any and all shares of (i) Company Stock issued pursuant to the Purchase Agreement (including Class A Common Stock issued or issuable upon exchange of Class B Common Stock), (ii) Capital Stock issued in respect of the Company Stock in any reorganization of the Company, and (iii) Capital Stock issued in respect of the stock referred to in clause (i) or (ii) above as a result of a stock split, stock dividend, recapitalization or combination.

2. Expenses of Registration

All expenses incurred in connection with the registrations pursuant to Section 1 hereof, including all registration, filing and qualification fees, printing expenses, fees and disbursements of counsel for the Company and expenses of any special audits of the Company’s financial statements incidental to or required by such registration, shall be borne by the Company, except that the Company shall not be required to pay underwriters’ fees, discounts or commissions relating to Registrable Securities.

3. Registration Procedures

In the case of each registration affected by the Company pursuant to this Agreement, the Company will keep Investor advised in writing as to the initiation of each registration and as to the completion thereof. At its expense the Company will:

(a)keep such registration pursuant to this Agreement continuously effective until all of such Registrable Securities have been disposed of and to comply with the provisions of the Securities Act with respect to the disposition of such Registrable Securities in accordance with the intended methods of disposition set forth in such registration statement;

(b)promptly prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to comply with the provisions of the Securities Act, and to keep such registration statement effective for that period of time specified in Section 3(a) above;

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(c)at least five (5) business days before filing such registration statement, prospectus or amendments or supplements thereto with the SEC, furnish to Investor copies of such documents proposed to be filed, which documents shall be subject to the reasonable review, comment and approval of Investor;

(d)notify Investor, promptly after the Company receives notice thereof, of the time when such registration statement has been declared effective or a supplement to any prospectus forming a part of such registration statement has been filed with the SEC;

(e)advise Investor, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the SEC suspending the effectiveness of such registration statement or the initiation or threatening of any proceeding for such purpose and promptly use best efforts to obtain the withdrawal of any order suspending the effectiveness of a registration statement, or the lifting of any suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction, at the earliest possible moment;

(f)cause all Registrable Securities covered by such registrations to be listed on each securities exchange on which similar securities issued by the Company are then listed or, if such securities are not then listed, on a national securities exchange selected by Investor;

(g)notify each selling holder of such Registrable Securities, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event that would cause the prospectus included in such registration statement to contain an untrue statement of a material fact or omit any fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading, and, at the request of any such holder, the Company shall prepare a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;

(h)make available for inspection by Investor all financial and other records, pertinent corporate documents and properties of the Company (collectively, the “Records”), and cause the Company’s officers, directors and employees to supply all Records requested by Investor in connection with such registration statement;

(i)provide a transfer agent and registrar (which may be the same entity) for all such Registrable Securities not later than the effective date of such registration;

(j)otherwise use its best efforts to comply with all applicable rules and regulations of the SEC and make available to its shareholders an earnings statement (in a form that satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 under the Securities Act or any successor rule thereto) no later than thirty (30) days after the end of the 12-month period beginning with the first day of the Company’s first full fiscal quarter after the effective date of such Registration Statement, which earnings statement shall cover said 12-month period, and which requirement will be deemed to be satisfied if the Company timely files complete and accurate information on Forms 10-K, 10-Q and 8-K under the Securities Exchange Act of 1934, as amended (“Exchange Act”), and otherwise complies with Rule 158 under the Securities Act or any successor rule thereto; and

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(k)enter into such customary agreements (including underwriting agreements in customary form) and take all such other actions as the holders of a majority of the Registrable Securities being sold or the underwriters, if any, reasonably request in order to expedite or facilitate the disposition of such Registrable Securities;

(l)use its best efforts to cause such Registrable Securities to be registered with or approved by such other Governmental Entities as may be necessary by virtue of the business and operations of the Company to enable the holders of such Registrable Securities to consummate the disposition of such Registrable Securities in accordance with their intended method of distribution thereof;

(m)notify Investor promptly of any request by the Commission for the amending or supplementing of such registration statement or prospectus or for additional information;

(n)permit Investor to participate in the preparation of such Registration Statement and to require the insertion therein of language, furnished to the Company in writing, which in the reasonable judgment of such holder and its counsel should be included, if in Investor’s judgment, Investor might be deemed to be an underwriter or a “controlling person” (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act) (a “Controlling Person”) of the Company; and

(o)take such other actions as reasonably requested by Investor.

4. Indemnification

(a)In the event of a registration of any of the Registrable Securities under the Securities Act pursuant to this Agreement, the Company will (i) indemnify and hold harmless, to the fullest extent permitted by law, Investor, each underwriter of such Registrable Securities thereunder, and any other person acting on behalf of Investor and each other person, if any, who controls such foregoing persons within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which any of the foregoing persons may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which such Registrable Securities were registered under the Securities Act, any preliminary prospectus, free writing prospectus, or final prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by the Company of any rule or regulation promulgated under the Securities Act or any state securities law applicable to the Company and relating to action or inaction required of the Company in connection with any such registration, and (ii) will reimburse such persons, each of their officers, directors and partners, and each person controlling such persons, for any legal and any other expenses incurred in connection with investigating, defending or settling any such claim, loss, damage, liability or action. Notwithstanding the foregoing, the Company will not be liable in any such case to the extent that any such claim, loss, damage or liability arises out of or is based on any untrue statement or omission based upon written information furnished to the Company in an instrument duly executed by Investor or an underwriter, as applicable, specifically for use therein. This indemnity shall be in addition to any liability the Company may otherwise have.

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(b)Investor will, if Registrable Securities held by or issuable to Investor are included in the securities for which such registration is being effected, indemnify and hold harmless, to the fullest extent permitted by law, the Company, each of its directors and officers, each underwriter, if any, of the Company’s securities covered by such registration statement, each person who controls the Company and each underwriter within the meaning of the Securities Act, against all claims, losses, expenses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading (in the case of a prospectus, in light of the circumstances under with they were made), but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Company in an instrument duly executed by Investor specifically for use therein. Notwithstanding the foregoing, the total amount for which Investor, its officers, directors and partners, and any person controlling Investor, shall be liable under this Section 4(b) shall not in any event exceed the net proceeds (after deducting underwriting fees, commissions, and discounts) received by Investor from the sale of its Registrable Securities in such registration. This indemnity shall be in addition to any liability Investor may otherwise have.

(c)Each party entitled to indemnification under this Section 4 (the “Indemnified Party”) shall give notice to the party required to provide indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has actual knowledge of any claims as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom; provided, however, that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not be unreasonably withheld), and the Indemnified Party may participate in such defense at such party’s expense. Notwithstanding the foregoing, the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations hereunder, unless such failure resulted in actual detriment to the Indemnifying Party. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect of such claim or litigation.

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(d)Notwithstanding the foregoing, to the extent that the provisions on indemnification contained in the underwriting agreements entered into among Investor, the Company and the underwriters in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall be controlling as to the Registrable Securities included in the public offering.

(e)The indemnification provided by this Section 4 shall be a continuing right to indemnification and shall survive the registration and sale of any securities by any person entitled to indemnification hereunder and the expiration or termination of this Agreement.

(f)If the indemnification provided for hereunder is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any loss, claim, damage, liability or action referred to herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party hereunder, shall contribute to the amounts paid or payable by such Indemnified Party as a result of such loss, claim, damage, liability or action in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and of the Indemnified Party on the other in connection with the statements or omissions which resulted in such loss, claim, damage, liability or action as well as any other relevant equitable considerations; provided, that the maximum amount of liability in respect of such contribution shall be limited, in the case of each holder of Registrable Securities, to an amount equal to the net proceeds (after underwriting fees, commissions or discounts) actually received by such seller from the sale of Registrable Securities effected pursuant to such registration. The relative fault of the Indemnifying Party and of the Indemnified Party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Indemnifying Party or by the Indemnified Party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties agree that it would not be just and equitable if contribution pursuant hereto were determined by pro rata allocation or by any other method or allocation which does not take account of the equitable considerations referred to herein. No Person guilty or liable of fraudulent misrepresentation within the meaning of Section 11(f) of the Securities Act shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.

5. REPORTS UNDER the EXCHANGE ACT

With a view to making available to Investor the benefits of Rule 144 promulgated under the Securities Act and any other rule or regulation of the SEC that may at any time permit Investor to sell securities of the Company to the public without registration, the Company shall:

(a)make and keep public information available, within the meaning of Rule 144, at all times after the effective date of (i) the first registration statement covering an underwritten public offering filed by the Company or (ii) the first registration by the Company under the Exchange Act;

(b)following a public offering or a registration under the Exchange Act, file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and

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(c)furnish to Investor forthwith upon request a written statement by the Company that it has complied with the reporting requirements of Rule 144 (at any time after ninety (90) days after the effective date of said first registration statement filed by the Company), and of the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), a copy of the most recent annual or quarterly report of the Company, and such other reports and documents filed by the Company with the SEC as may be reasonably requested in availing any such holder to take advantage of any rule or regulation of the SEC permitting the selling of any such securities without registration.

6. LIMITATIONS IN CONNECTION WITH FUTURE GRANTS OF REGISTRATION RIGHTS

From and after the date of this Agreement, the Company shall not, without the prior written consent of Investor, enter into any agreement with any holder or prospective holder of any securities of the Company which would allow such holder or prospective holder to include such securities in any registration filed under Section 1 hereof, unless under the terms of such agreement, such holder or prospective holder may include such securities in any such registration only to the extent that the inclusion of his securities will not reduce the amount of the Registrable Securities of Investor to be included in such registration.

7. TRANSFER OF REGISTRATION RIGHTS

The registration rights of Investor (and of any permitted transferee of Investor) under this Agreement with respect to any Registrable Securities may be assigned in whole or in part as provided in Section 8(b) below.

8. Miscellaneous

(a)No amendment or waiver of any provision of this Agreement will be effective against any party hereto unless it is in a writing signed by a duly authorized officer of such party.

(b)This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, executors, administrators, legal representatives, successors and permitted assigns. This Agreement, and the rights and obligations of Investor hereunder, may be assigned by Investor to any person or entity to which Registrable Securities are transferred by Investor, and such transferee shall be deemed to have acquired all of the rights and obligations of Investor for purposes of this Agreement; provided, that the transferee provides written notice of such assignment to the Company and provided that any such transfer shall be made strictly in accordance with all applicable laws; and provided, further, that such rights may not be held or exercised by more than one transferee at any one time. The Company may not assign its rights under this Agreement except to its successors-in-interest as a result of a merger, reorganization or a sale of all or substantially all of the assets of the Company.

(c)For the convenience of the parties hereto, this Agreement may be executed in any number of separate counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts will together constitute the same agreement. Executed signature pages to this Agreement may be delivered by facsimile or other electronic transmission and such transmissions shall be deemed as sufficient as if manually signed signature pages had been delivered.

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(d)Any notice, request, instruction or other document to be given hereunder by any party to the other will be in writing and will be deemed to have been duly given (i) on the date of delivery if delivered personally or by e-mail (upon confirmation of receipt), (ii) on the first Business Day following the date of dispatch if delivered by a recognized next-day courier service, or (iii) on the third Business Day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid. All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice.

If to the Company:

Professional Holding Corp.

396 Alhambra Circle, Suite 255

Coral Gables, FL 33146

E-mail: dsheehan@professionalbankfl.com

Attention: Daniel R. Sheehan

Title: Chairman and President

with a copy to:

Gunster, Yoakley & Stewart, P.A.

777 South Flagler Drive, Suite 500 East

West Palm Beach, FL 33401

E-mail: mmitrione@gunster.com

Attention: Michael V. Mitrione

If to Investor:

with copies to:

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(e)If any provision of this Agreement or the application thereof to any person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to persons or circumstances other than those as to which it has been held invalid or unenforceable, will remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination, the parties shall negotiate in good faith in an effort to agree upon a suitable and equitable substitute provision to effect the original intent of the parties.

(f)If, and as often as, there is any change in the Class A Common Stock or Class B Common Stock by way of a stock split, stock dividend, combination or reclassification, or through a merger, consolidation, reorganization or recapitalization, or by any other means, appropriate adjustment shall be made in the provisions hereof so that the rights and privileges granted hereby shall continue with respect to the Class A Common Stock and Class B Common Stock as so changed.

(g)This Agreement will be governed by and construed in accordance with the Laws of the State of Florida applicable to contracts made and to be performed entirely within such jurisdiction.

(h)The parties hereby agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby shall be brought in the federal or state courts located in Miami-Dade County, Florida, so long as such court shall have subject matter jurisdiction over such suit, action or proceeding, and each of the parties hereby irrevocably consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by Law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding which is brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 8(h) shall be deemed effective service of process on such party. The parties hereby irrevocably and unconditionally consent to submit to the exclusive jurisdiction of the state and federal courts referred to above for any actions, suits or proceedings arising out of or relating to this Agreement and the transactions contemplated hereby.

(i)THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT OR UNDER ANY AGREEMENT, INSTRUMENT OR OTHER DOCUMENT CONTEMPLATED HEREBY OR RELATED HERETO AND IN ANY ACTION DIRECTLY OR INDIRECTLY RELATED TO OR CONNECTED WITH THE OBLIGATIONS OF THIS AGREEMENT. THE PARTIES ACKNOWLEDGE THAT THIS WAIVER MAY DEPRIVE EACH OF THEM AN IMPORTANT RIGHT AND THAT SUCH WAIVER HAS BEEN KNOWINGLY AND VOLUNTARILY MADE BY THE PARTIES AFTER CONSULTATION WITH THEIR LEGAL COUNSEL.

(j)The article, section, paragraph and clause captions herein are for convenience of reference only, do not constitute part of this Agreement and will not be deemed to limit or otherwise affect any of the provisions hereof.

[Signature page follows]

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EXECUTION VERSION

IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date set forth above.

COMPANY:
PROFESSIONAL HOLDING CORP.
By:
Name:	Daniel R. Sheehan
Title:	Chairman and President
INVESTOR:
[INVESTOR]
By:
By:
Name:
Title:

EXHIBIT B

FORM OF OPINION

1.The Company has been incorporated under the Florida Business Corporation Act, and its corporate status is active under the laws of the State of Florida.

2.The Bank (a) has been incorporated under the Florida Business Corporation Act and is a Florida-chartered commercial bank, and its corporate status is active, and (b) based solely on the FDIC Certificate, is an “insured depository” as defined under Section 3(c)(2) of the Federal Deposit Insurance Act, and the deposit accounts of the Bank are insured by the FDIC up to the maximum amounts provided by law and the rules of the FDIC.

3.The Company has the corporate power to execute and deliver the Agreement and to perform its obligations thereunder.

4.The Company has authorized the execution, delivery and performance of the Agreement by all necessary corporate action.

5.Subject to the limitations set forth herein, the Agreement is a valid and binding obligation of the Company and is enforceable against the Company in accordance with its terms under the laws of the State of Florida.

6.The Securities have been duly authorized by the Company, and the Securities, when issued, delivered and paid for in accordance with the terms of the Agreement, will be validly issued, fully paid and nonassessable.

7.The Company is not and, after giving effect to the offer and sale of the Securities, will not be an “investment company” as such term is defined in the Investment Company Act of 1940, as amended (the “ICA”).

8. The execution and delivery by the Company of the Agreement and the performance by the Company of its obligation under the Agreement do not: (a) violate the Company’s Articles of Incorporation or Bylaws; (b) to our knowledge, constitute a breach or a default under, or result in the creation of a security interest or a lien on the assets of the Company under, any of the Company’s material agreements that are known to us (to the extent that any such agreement is governed by the law of a jurisdiction other than the State of Florida, we express no opinion with respect to the effect or other matters of any such law and have assumed that the laws of such jurisdiction are identical to the laws of the State of Florida, without giving effect to principles of conflicts of laws); (c) violate any judgment, decree or order known to us of any court or administrative tribunal of the State of Florida that is known to us to be applicable to the Company; or (d) based on existing facts of which we are aware, violate any Applicable Laws (as hereinafter defined).

[Signature Page to Registration Rights Agreement] 

EX-10.22

Exhibit 10.22

EXECUTION VERSION

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of February 17, 2017, by and between Professional Holding Corp., a Florida corporation and the parent company of Professional Bank (the “Company”), and the undersigned Investor (the “Investor”). Capitalized terms not defined in this Agreement shall have the meaning ascribed in that certain Stock Purchase Agreement dated February 17, 2017 by and between the Company and certain investors, including Investor (the “Purchase Agreement”).

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and Investor hereby mutually agree as follows:

1. Registration RIGHTS

(a)Any time after the fourth (4^th) anniversary of the date of this Agreement, Investor may request one registration (the “Demand Registration”) under the Securities Act of 1933, as amended (the “Securities Act”), of its Registrable Securities (as defined below). The Demand Registration shall be on such form as the Company shall select. The Demand Registration shall specify the number of Registrable Securities to be registered. The Company shall use best efforts to cause a registration statement to be filed within 180 days after the date on which the initial request by Investor is received by the Company and shall use its best efforts to cause such registration statement to be declared effective by the U.S. Securities and Exchange Commission (“SEC”) as soon as practicable thereafter. The Company shall use best efforts to keep such Demand Registration current and effective until the Registrable Securities registered thereby cease to be Registrable Securities.

(b)As long as Investor holds Registrable Securities, if at any time or from time to time, the Company shall determine to register any of its securities under the Securities Act (except for the registration of securities to be offered pursuant to an employee benefit plan on Form S-8 or pursuant to a registration made on Form S-4, or any successor forms then in effect) and the registration form to be used may be used for the registration of the Registrable Securities (a “Piggyback Registration”), the Company shall:

(1)Provide thirty (30) calendar days’ advance written notice to Investor prior to filing the registration statement (the “Registration Rights Notice”); and

(2)include in such registration, and in any underwriting involved therein, all the Registrable Securities specified in a written request made by Investor within fifteen (15) calendar days after receipt of the Registration Rights Notice from the Company, except as set forth in Section 1(c) below.

(c)If the registration is for a registered public offering involving an underwriting, the Company shall so advise Investor as a part of the Registration Rights Notice. In such event, the right of Investor to registration shall be conditioned upon Investor’s participation in such underwriting and the inclusion of Investor’s Registrable Securities in the underwriting to the extent provided herein. If Investor proposes to distribute its securities through such underwriting, it shall (together with the Company and any other holders distributing their securities through such underwriting) enter into an underwriting agreement in the form agreed to by the Company with the underwriter(s) selected for such underwriting by the Company. Notwithstanding any other provision of this Agreement, if the managing underwriters advise the Company and Investor in writing that in their reasonable and good faith opinion the number of securities requested to be included in such offering exceeds the number which can be sold without adversely affecting the per share offering price of the securities, the Company will include in such registration (i) first, the securities that the Company proposes to sell; (ii) second, the Registrable Securities requested to be included therein by Investor, allocated pro rata among all such holders on the basis of the number of Registrable Securities owned by each such holder or in such manner as they may otherwise agree; and (iii) third, the securities requested to be included therein by holders of securities other than holders of Registrable Securities, allocated among such holders in such manner as they may agree. If Investor disapproves of the terms of any such underwriting, Investor may elect to withdraw therefrom by written notice to the Company and the managing underwriter.

(d)For purposes of this Agreement, “Registrable Securities” shall mean any and all shares of (i) Company Stock issued pursuant to the Purchase Agreement (including Class A Common Stock issued or issuable upon exchange of Class B Common Stock), (ii) Capital Stock issued in respect of the Company Stock in any reorganization of the Company, and (iii) Capital Stock issued in respect of the stock referred to in clause (i) or (ii) above as a result of a stock split, stock dividend, recapitalization or combination.

2. Expenses of Registration

All expenses incurred in connection with the registrations pursuant to Section 1 hereof, including all registration, filing and qualification fees, printing expenses, fees and disbursements of counsel for the Company and expenses of any special audits of the Company’s financial statements incidental to or required by such registration, shall be borne by the Company, except that the Company shall not be required to pay underwriters’ fees, discounts or commissions relating to Registrable Securities.

3. Registration Procedures

In the case of each registration affected by the Company pursuant to this Agreement, the Company will keep Investor advised in writing as to the initiation of each registration and as to the completion thereof. At its expense the Company will:

(a)keep such registration pursuant to this Agreement continuously effective until all of such Registrable Securities have been disposed of and to comply with the provisions of the Securities Act with respect to the disposition of such Registrable Securities in accordance with the intended methods of disposition set forth in such registration statement;

(b)promptly prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to comply with the provisions of the Securities Act, and to keep such registration statement effective for that period of time specified in Section 3(a) above;

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(c)at least five (5) business days before filing such registration statement, prospectus or amendments or supplements thereto with the SEC, furnish to Investor copies of such documents proposed to be filed, which documents shall be subject to the reasonable review, comment and approval of Investor;

(d)notify Investor, promptly after the Company receives notice thereof, of the time when such registration statement has been declared effective or a supplement to any prospectus forming a part of such registration statement has been filed with the SEC;

(e)advise Investor, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the SEC suspending the effectiveness of such registration statement or the initiation or threatening of any proceeding for such purpose and promptly use best efforts to obtain the withdrawal of any order suspending the effectiveness of a registration statement, or the lifting of any suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction, at the earliest possible moment;

(f)cause all Registrable Securities covered by such registrations to be listed on each securities exchange on which similar securities issued by the Company are then listed or, if such securities are not then listed, on a national securities exchange selected by Investor;

(g)notify each selling holder of such Registrable Securities, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event that would cause the prospectus included in such registration statement to contain an untrue statement of a material fact or omit any fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading, and, at the request of any such holder, the Company shall prepare a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;

(h)make available for inspection by Investor all financial and other records, pertinent corporate documents and properties of the Company (collectively, the “Records”), and cause the Company’s officers, directors and employees to supply all Records requested by Investor in connection with such registration statement;

(i)provide a transfer agent and registrar (which may be the same entity) for all such Registrable Securities not later than the effective date of such registration;

(j)otherwise use its best efforts to comply with all applicable rules and regulations of the SEC and make available to its shareholders an earnings statement (in a form that satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 under the Securities Act or any successor rule thereto) no later than thirty (30) days after the end of the 12-month period beginning with the first day of the Company’s first full fiscal quarter after the effective date of such Registration Statement, which earnings statement shall cover said 12-month period, and which requirement will be deemed to be satisfied if the Company timely files complete and accurate information on Forms 10-K, 10-Q and 8-K under the Securities Exchange Act of 1934, as amended (“Exchange Act”), and otherwise complies with Rule 158 under the Securities Act or any successor rule thereto; and

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(k)enter into such customary agreements (including underwriting agreements in customary form) and take all such other actions as the holders of a majority of the Registrable Securities being sold or the underwriters, if any, reasonably request in order to expedite or facilitate the disposition of such Registrable Securities;

(l)use its best efforts to cause such Registrable Securities to be registered with or approved by such other Governmental Entities as may be necessary by virtue of the business and operations of the Company to enable the holders of such Registrable Securities to consummate the disposition of such Registrable Securities in accordance with their intended method of distribution thereof;

(m)notify Investor promptly of any request by the Commission for the amending or supplementing of such registration statement or prospectus or for additional information;

(n)permit Investor to participate in the preparation of such Registration Statement and to require the insertion therein of language, furnished to the Company in writing, which in the reasonable judgment of such holder and its counsel should be included, if in Investor’s judgment, Investor might be deemed to be an underwriter or a “controlling person” (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act) (a “Controlling Person”) of the Company; and

(o)take such other actions as reasonably requested by Investor.

4. Indemnification

(a)In the event of a registration of any of the Registrable Securities under the Securities Act pursuant to this Agreement, the Company will (i) indemnify and hold harmless, to the fullest extent permitted by law, Investor, each underwriter of such Registrable Securities thereunder, and any other person acting on behalf of Investor and each other person, if any, who controls such foregoing persons within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which any of the foregoing persons may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which such Registrable Securities were registered under the Securities Act, any preliminary prospectus, free writing prospectus, or final prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by the Company of any rule or regulation promulgated under the Securities Act or any state securities law applicable to the Company and relating to action or inaction required of the Company in connection with any such registration, and (ii) will reimburse such persons, each of their officers, directors and partners, and each person controlling such persons, for any legal and any other expenses incurred in connection with investigating, defending or settling any such claim, loss, damage, liability or action. Notwithstanding the foregoing, the Company will not be liable in any such case to the extent that any such claim, loss, damage or liability arises out of or is based on any untrue statement or omission based upon written information furnished to the Company in an instrument duly executed by Investor or an underwriter, as applicable, specifically for use therein. This indemnity shall be in addition to any liability the Company may otherwise have.

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(b)Investor will, if Registrable Securities held by or issuable to Investor are included in the securities for which such registration is being effected, indemnify and hold harmless, to the fullest extent permitted by law, the Company, each of its directors and officers, each underwriter, if any, of the Company’s securities covered by such registration statement, each person who controls the Company and each underwriter within the meaning of the Securities Act, against all claims, losses, expenses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading (in the case of a prospectus, in light of the circumstances under with they were made), but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Company in an instrument duly executed by Investor specifically for use therein. Notwithstanding the foregoing, the total amount for which Investor, its officers, directors and partners, and any person controlling Investor, shall be liable under this Section 4(b) shall not in any event exceed the net proceeds (after deducting underwriting fees, commissions, and discounts) received by Investor from the sale of its Registrable Securities in such registration. This indemnity shall be in addition to any liability Investor may otherwise have.

(c)Each party entitled to indemnification under this Section 4 (the “Indemnified Party”) shall give notice to the party required to provide indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has actual knowledge of any claims as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom; provided, however, that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not be unreasonably withheld), and the Indemnified Party may participate in such defense at such party’s expense. Notwithstanding the foregoing, the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations hereunder, unless such failure resulted in actual detriment to the Indemnifying Party. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect of such claim or litigation.

(d)Notwithstanding the foregoing, to the extent that the provisions on indemnification contained in the underwriting agreements entered into among Investor, the Company and the underwriters in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall be controlling as to the Registrable Securities included in the public offering.

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(e)The indemnification provided by this Section 4 shall be a continuing right to indemnification and shall survive the registration and sale of any securities by any person entitled to indemnification hereunder and the expiration or termination of this Agreement.

(f)If the indemnification provided for hereunder is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any loss, claim, damage, liability or action referred to herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party hereunder, shall contribute to the amounts paid or payable by such Indemnified Party as a result of such loss, claim, damage, liability or action in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and of the Indemnified Party on the other in connection with the statements or omissions which resulted in such loss, claim, damage, liability or action as well as any other relevant equitable considerations; provided, that the maximum amount of liability in respect of such contribution shall be limited, in the case of each holder of Registrable Securities, to an amount equal to the net proceeds (after underwriting fees, commissions or discounts) actually received by such seller from the sale of Registrable Securities effected pursuant to such registration. The relative fault of the Indemnifying Party and of the Indemnified Party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Indemnifying Party or by the Indemnified Party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties agree that it would not be just and equitable if contribution pursuant hereto were determined by pro rata allocation or by any other method or allocation which does not take account of the equitable considerations referred to herein. No Person guilty or liable of fraudulent misrepresentation within the meaning of Section 11(f) of the Securities Act shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.

5. REPORTS UNDER the EXCHANGE ACT

With a view to making available to Investor the benefits of Rule 144 promulgated under the Securities Act and any other rule or regulation of the SEC that may at any time permit Investor to sell securities of the Company to the public without registration, the Company shall:

(a)make and keep public information available, within the meaning of Rule 144, at all times after the effective date of (i) the first registration statement covering an underwritten public offering filed by the Company or (ii) the first registration by the Company under the Exchange Act;

(b)following a public offering or a registration under the Exchange Act, file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and

(c)furnish to Investor forthwith upon request a written statement by the Company that it has complied with the reporting requirements of Rule 144 (at any time after ninety (90) days after the effective date of said first registration statement filed by the Company), and of the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), a copy of the most recent annual or quarterly report of the Company, and such other reports and documents filed by the Company with the SEC as may be reasonably requested in availing any such holder to take advantage of any rule or regulation of the SEC permitting the selling of any such securities without registration.

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6. LIMITATIONS IN CONNECTION WITH FUTURE GRANTS OF REGISTRATION RIGHTS

From and after the date of this Agreement, the Company shall not, without the prior written consent of Investor, enter into any agreement with any holder or prospective holder of any securities of the Company which would allow such holder or prospective holder to include such securities in any registration filed under Section 1 hereof, unless under the terms of such agreement, such holder or prospective holder may include such securities in any such registration only to the extent that the inclusion of his securities will not reduce the amount of the Registrable Securities of Investor to be included in such registration.

7. TRANSFER OF REGISTRATION RIGHTS

The registration rights of Investor (and of any permitted transferee of Investor) under this Agreement with respect to any Registrable Securities may be assigned in whole or in part as provided in Section 8(b) below.

8. Miscellaneous

(a)No amendment or waiver of any provision of this Agreement will be effective against any party hereto unless it is in a writing signed by a duly authorized officer of such party.

(b)This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, executors, administrators, legal representatives, successors and permitted assigns. This Agreement, and the rights and obligations of Investor hereunder, may be assigned by Investor to any person or entity to which Registrable Securities are transferred by Investor, and such transferee shall be deemed to have acquired all of the rights and obligations of Investor for purposes of this Agreement; provided, that the transferee provides written notice of such assignment to the Company and provided that any such transfer shall be made strictly in accordance with all applicable laws; and provided, further, that such rights may not be held or exercised by more than one transferee at any one time. The Company may not assign its rights under this Agreement except to its successors-in-interest as a result of a merger, reorganization or a sale of all or substantially all of the assets of the Company.

(c)For the convenience of the parties hereto, this Agreement may be executed in any number of separate counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts will together constitute the same agreement. Executed signature pages to this Agreement may be delivered by facsimile or other electronic transmission and such transmissions shall be deemed as sufficient as if manually signed signature pages had been delivered.

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(d)Any notice, request, instruction or other document to be given hereunder by any party to the other will be in writing and will be deemed to have been duly given (i) on the date of delivery if delivered personally or by e-mail (upon confirmation of receipt), (ii) on the first Business Day following the date of dispatch if delivered by a recognized next-day courier service, or (iii) on the third Business Day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid. All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice.

If to the Company:

Professional Holding Corp.

396 Alhambra Circle, Suite 255

Coral Gables, FL 33146

E-mail: dsheehan@professionalbankfl.com

Attention: Daniel R. Sheehan

Title: Chairman and President

with a copy to:

Gunster, Yoakley & Stewart, P.A.

777 South Flagler Drive, Suite 500 East

West Palm Beach, FL 33401

E-mail: mmitrione@gunster.com

Attention: Michael V. Mitrione

If to Investor:

EJF Sidecar Fund, Series LLC – Series E

2107 Wilson Blvd., Suite 410

Arlington, VA 22201

E-mail: trading@ejfcap.com

Attention: Neal J. Wilson

Title: Chief Operating Officer

with copies to:

(e)If any provision of this Agreement or the application thereof to any person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to persons remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination, the parties shall negotiate in good faith in an effort to agree upon a suitable and equitable substitute provision to effect the original intent of the parties.

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(f)If, and as often as, there is any change in the Class A Common Stock or Class B Common Stock by way of a stock split, stock dividend, combination or reclassification, or through a merger, consolidation, reorganization or recapitalization, or by any other means, appropriate adjustment shall be made in the provisions hereof so that the rights and privileges granted hereby shall continue with respect to the Class A Common Stock and Class B Common Stock as so changed.

(g)This Agreement will be governed by and construed in accordance with the Laws of the State of Florida applicable to contracts made and to be performed entirely within such jurisdiction.

(h)The parties hereby agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby shall be brought in the federal or state courts located in Miami-Dade County, Florida, so long as such court shall have subject matter jurisdiction over such suit, action or proceeding, and each of the parties hereby irrevocably consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by Law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding which is brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 8(h) shall be deemed effective service of process on such party. The parties hereby irrevocably and unconditionally consent to submit to the exclusive jurisdiction of the state and federal courts referred to above for any actions, suits or proceedings arising out of or relating to this Agreement and the transactions contemplated hereby.

(i)THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT OR UNDER ANY AGREEMENT, INSTRUMENT OR OTHER DOCUMENT CONTEMPLATED HEREBY OR RELATED HERETO AND IN ANY ACTION DIRECTLY OR INDIRECTLY RELATED TO OR CONNECTED WITH THE OBLIGATIONS OF THIS AGREEMENT. THE PARTIES ACKNOWLEDGE THAT THIS WAIVER MAY DEPRIVE EACH OF THEM AN IMPORTANT RIGHT AND THAT SUCH WAIVER HAS BEEN KNOWINGLY AND VOLUNTARILY MADE BY THE PARTIES AFTER CONSULTATION WITH THEIR LEGAL COUNSEL.

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(j)The article, section, paragraph and clause captions herein are for convenience of reference only, do not constitute part of this Agreement and will not be deemed to limit or otherwise affect any of the provisions hereof.

[Signature page follows]

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IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date set forth above.

COMPANY:
PROFESSIONAL HOLDING CORP.
By:	/s/ Daniel R. Sheehan
Name:	Daniel R. Sheehan
Title:	Chairman and President
INVESTOR:
EJF SIDECAR FUND, SERIES LLC – SERIES E
By:	/s/ Emmanuel J. Friedman
Name:	Emmanuel J. Friedman
Title:	Chief Executive Officer

[Signature Page to Registration Rights Agreement]

EX-10.23

Exhibit 10.23

EXECUTION VERSION

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of February 17, 2017, by and between Professional Holding Corp., a Florida corporation and the parent company of Professional Bank (the “Company”), and the undersigned Investor (the “Investor”). Capitalized terms not defined in this Agreement shall have the meaning ascribed in that certain Stock Purchase Agreement dated February 17, 2017 by and between the Company and certain investors, including Investor (the “Purchase Agreement”).

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and Investor hereby mutually agree as follows:

1. Registration RIGHTS

(a)Any time after the fourth (4^th) anniversary of the date of this Agreement, Investor may request one registration (the “Demand Registration”) under the Securities Act of 1933, as amended (the “Securities Act”), of its Registrable Securities (as defined below). The Demand Registration shall be on such form as the Company shall select. The Demand Registration shall specify the number of Registrable Securities to be registered. The Company shall use best efforts to cause a registration statement to be filed within 180 days after the date on which the initial request by Investor is received by the Company and shall use its best efforts to cause such registration statement to be declared effective by the U.S. Securities and Exchange Commission (“SEC”) as soon as practicable thereafter. The Company shall use best efforts to keep such Demand Registration current and effective until the Registrable Securities registered thereby cease to be Registrable Securities.

(b)As long as Investor holds Registrable Securities, if at any time or from time to time, the Company shall determine to register any of its securities under the Securities Act (except for the registration of securities to be offered pursuant to an employee benefit plan on Form S-8 or pursuant to a registration made on Form S-4, or any successor forms then in effect) and the registration form to be used may be used for the registration of the Registrable Securities (a “Piggyback Registration”), the Company shall:

(1)Provide thirty (30) calendar days’ advance written notice to Investor prior to filing the registration statement (the “Registration Rights Notice”); and

(2)include in such registration, and in any underwriting involved therein, all the Registrable Securities specified in a written request made by Investor within fifteen (15) calendar days after receipt of the Registration Rights Notice from the Company, except as set forth in Section 1(c) below.

(c)If the registration is for a registered public offering involving an underwriting, the Company shall so advise Investor as a part of the Registration Rights Notice. In such event, the right of Investor to registration shall be conditioned upon Investor’s participation in such underwriting and the inclusion of Investor’s Registrable Securities in the underwriting to the extent provided herein. If Investor proposes to distribute its securities through such underwriting, it shall (together with the Company and any other holders distributing their securities through such underwriting) enter into an underwriting agreement in the form agreed to by the Company with the underwriter(s) selected for such underwriting by the Company. Notwithstanding any other provision of this Agreement, if the managing underwriters advise the Company and Investor in writing that in their reasonable and good faith opinion the number of securities requested to be included in such offering exceeds the number which can be sold without adversely affecting the per share offering price of the securities, the Company will include in such registration (i) first, the securities that the Company proposes to sell; (ii) second, the Registrable Securities requested to be included therein by Investor, allocated pro rata among all such holders on the basis of the number of Registrable Securities owned by each such holder or in such manner as they may otherwise agree; and (iii) third, the securities requested to be included therein by holders of securities other than holders of Registrable Securities, allocated among such holders in such manner as they may agree. If Investor disapproves of the terms of any such underwriting, Investor may elect to withdraw therefrom by written notice to the Company and the managing underwriter.

(d)For purposes of this Agreement, “Registrable Securities” shall mean any and all shares of (i) Company Stock issued pursuant to the Purchase Agreement (including Class A Common Stock issued or issuable upon exchange of Class B Common Stock), (ii) Capital Stock issued in respect of the Company Stock in any reorganization of the Company, and (iii) Capital Stock issued in respect of the stock referred to in clause (i) or (ii) above as a result of a stock split, stock dividend, recapitalization or combination.

2. Expenses of Registration

All expenses incurred in connection with the registrations pursuant to Section 1 hereof, including all registration, filing and qualification fees, printing expenses, fees and disbursements of counsel for the Company and expenses of any special audits of the Company’s financial statements incidental to or required by such registration, shall be borne by the Company, except that the Company shall not be required to pay underwriters’ fees, discounts or commissions relating to Registrable Securities.

3. Registration Procedures

In the case of each registration affected by the Company pursuant to this Agreement, the Company will keep Investor advised in writing as to the initiation of each registration and as to the completion thereof. At its expense the Company will:

(a)keep such registration pursuant to this Agreement continuously effective until all of such Registrable Securities have been disposed of and to comply with the provisions of the Securities Act with respect to the disposition of such Registrable Securities in accordance with the intended methods of disposition set forth in such registration statement;

(b)promptly prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to comply with the provisions of the Securities Act, and to keep such registration statement effective for that period of time specified in Section 3(a) above;

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(c)at least five (5) business days before filing such registration statement, prospectus or amendments or supplements thereto with the SEC, furnish to Investor copies of such documents proposed to be filed, which documents shall be subject to the reasonable review, comment and approval of Investor;

(d)notify Investor, promptly after the Company receives notice thereof, of the time when such registration statement has been declared effective or a supplement to any prospectus forming a part of such registration statement has been filed with the SEC;

(e)advise Investor, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the SEC suspending the effectiveness of such registration statement or the initiation or threatening of any proceeding for such purpose and promptly use best efforts to obtain the withdrawal of any order suspending the effectiveness of a registration statement, or the lifting of any suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction, at the earliest possible moment;

(f)cause all Registrable Securities covered by such registrations to be listed on each securities exchange on which similar securities issued by the Company are then listed or, if such securities are not then listed, on a national securities exchange selected by Investor;

(g)notify each selling holder of such Registrable Securities, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event that would cause the prospectus included in such registration statement to contain an untrue statement of a material fact or omit any fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading, and, at the request of any such holder, the Company shall prepare a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;

(h)make available for inspection by Investor all financial and other records, pertinent corporate documents and properties of the Company (collectively, the “Records”), and cause the Company’s officers, directors and employees to supply all Records requested by Investor in connection with such registration statement;

(i)provide a transfer agent and registrar (which may be the same entity) for all such Registrable Securities not later than the effective date of such registration;

(j)otherwise use its best efforts to comply with all applicable rules and regulations of the SEC and make available to its shareholders an earnings statement (in a form that satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 under the Securities Act or any successor rule thereto) no later than thirty (30) days after the end of the 12-month period beginning with the first day of the Company’s first full fiscal quarter after the effective date of such Registration Statement, which earnings statement shall cover said 12-month period, and which requirement will be deemed to be satisfied if the Company timely files complete and accurate information on Forms 10-K, 10-Q and 8-K under the Securities Exchange Act of 1934, as amended (“Exchange Act”), and otherwise complies with Rule 158 under the Securities Act or any successor rule thereto; and

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(k)enter into such customary agreements (including underwriting agreements in customary form) and take all such other actions as the holders of a majority of the Registrable Securities being sold or the underwriters, if any, reasonably request in order to expedite or facilitate the disposition of such Registrable Securities;

(l)use its best efforts to cause such Registrable Securities to be registered with or approved by such other Governmental Entities as may be necessary by virtue of the business and operations of the Company to enable the holders of such Registrable Securities to consummate the disposition of such Registrable Securities in accordance with their intended method of distribution thereof;

(m)notify Investor promptly of any request by the Commission for the amending or supplementing of such registration statement or prospectus or for additional information;

(n)permit Investor to participate in the preparation of such Registration Statement and to require the insertion therein of language, furnished to the Company in writing, which in the reasonable judgment of such holder and its counsel should be included, if in Investor’s judgment, Investor might be deemed to be an underwriter or a “controlling person” (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act) (a “Controlling Person”) of the Company; and

(o)take such other actions as reasonably requested by Investor.

4. Indemnification

(a)In the event of a registration of any of the Registrable Securities under the Securities Act pursuant to this Agreement, the Company will (i) indemnify and hold harmless, to the fullest extent permitted by law, Investor, each underwriter of such Registrable Securities thereunder, and any other person acting on behalf of Investor and each other person, if any, who controls such foregoing persons within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which any of the foregoing persons may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which such Registrable Securities were registered under the Securities Act, any preliminary prospectus, free writing prospectus, or final prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by the Company of any rule or regulation promulgated under the Securities Act or any state securities law applicable to the Company and relating to action or inaction required of the Company in connection with any such registration, and (ii) will reimburse such persons, each of their officers, directors and partners, and each person controlling such persons, for any legal and any other expenses incurred in connection with investigating, defending or settling any such claim, loss, damage, liability or action. Notwithstanding the foregoing, the Company will not be liable in any such case to the extent that any such claim, loss, damage or liability arises out of or is based on any untrue statement or omission based upon written information furnished to the Company in an instrument duly executed by Investor or an underwriter, as applicable, specifically for use therein. This indemnity shall be in addition to any liability the Company may otherwise have.

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(b)Investor will, if Registrable Securities held by or issuable to Investor are included in the securities for which such registration is being effected, indemnify and hold harmless, to the fullest extent permitted by law, the Company, each of its directors and officers, each underwriter, if any, of the Company’s securities covered by such registration statement, each person who controls the Company and each underwriter within the meaning of the Securities Act, against all claims, losses, expenses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading (in the case of a prospectus, in light of the circumstances under with they were made), but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Company in an instrument duly executed by Investor specifically for use therein. Notwithstanding the foregoing, the total amount for which Investor, its officers, directors and partners, and any person controlling Investor, shall be liable under this Section 4(b) shall not in any event exceed the net proceeds (after deducting underwriting fees, commissions, and discounts) received by Investor from the sale of its Registrable Securities in such registration. This indemnity shall be in addition to any liability Investor may otherwise have.

(c)Each party entitled to indemnification under this Section 4 (the “Indemnified Party”) shall give notice to the party required to provide indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has actual knowledge of any claims as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom; provided, however, that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not be unreasonably withheld), and the Indemnified Party may participate in such defense at such party’s expense. Notwithstanding the foregoing, the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations hereunder, unless such failure resulted in actual detriment to the Indemnifying Party. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect of such claim or litigation.

(d)Notwithstanding the foregoing, to the extent that the provisions on indemnification contained in the underwriting agreements entered into among Investor, the Company and the underwriters in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall be controlling as to the Registrable Securities included in the public offering.

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(e)The indemnification provided by this Section 4 shall be a continuing right to indemnification and shall survive the registration and sale of any securities by any person entitled to indemnification hereunder and the expiration or termination of this Agreement.

(f)If the indemnification provided for hereunder is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any loss, claim, damage, liability or action referred to herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party hereunder, shall contribute to the amounts paid or payable by such Indemnified Party as a result of such loss, claim, damage, liability or action in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and of the Indemnified Party on the other in connection with the statements or omissions which resulted in such loss, claim, damage, liability or action as well as any other relevant equitable considerations; provided, that the maximum amount of liability in respect of such contribution shall be limited, in the case of each holder of Registrable Securities, to an amount equal to the net proceeds (after underwriting fees, commissions or discounts) actually received by such seller from the sale of Registrable Securities effected pursuant to such registration. The relative fault of the Indemnifying Party and of the Indemnified Party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Indemnifying Party or by the Indemnified Party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties agree that it would not be just and equitable if contribution pursuant hereto were determined by pro rata allocation or by any other method or allocation which does not take account of the equitable considerations referred to herein. No Person guilty or liable of fraudulent misrepresentation within the meaning of Section 11(f) of the Securities Act shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.

5. REPORTS UNDER the EXCHANGE ACT

With a view to making available to Investor the benefits of Rule 144 promulgated under the Securities Act and any other rule or regulation of the SEC that may at any time permit Investor to sell securities of the Company to the public without registration, the Company shall:

(a)make and keep public information available, within the meaning of Rule 144, at all times after the effective date of (i) the first registration statement covering an underwritten public offering filed by the Company or (ii) the first registration by the Company under the Exchange Act;

(b)following a public offering or a registration under the Exchange Act, file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and

(c)furnish to Investor forthwith upon request a written statement by the Company that it has complied with the reporting requirements of Rule 144 (at any time after ninety (90) days after the effective date of said first registration statement filed by the Company), and of the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), a copy of the most recent annual or quarterly report of the Company, and such other reports and documents filed by the Company with the SEC as may be reasonably requested in availing any such holder to take advantage of any rule or regulation of the SEC permitting the selling of any such securities without registration.

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6. LIMITATIONS IN CONNECTION WITH FUTURE GRANTS OF REGISTRATION RIGHTS

From and after the date of this Agreement, the Company shall not, without the prior written consent of Investor, enter into any agreement with any holder or prospective holder of any securities of the Company which would allow such holder or prospective holder to include such securities in any registration filed under Section 1 hereof, unless under the terms of such agreement, such holder or prospective holder may include such securities in any such registration only to the extent that the inclusion of his securities will not reduce the amount of the Registrable Securities of Investor to be included in such registration.

7. TRANSFER OF REGISTRATION RIGHTS

The registration rights of Investor (and of any permitted transferee of Investor) under this Agreement with respect to any Registrable Securities may be assigned in whole or in part as provided in Section 8(b) below.

8. Miscellaneous

(a)No amendment or waiver of any provision of this Agreement will be effective against any party hereto unless it is in a writing signed by a duly authorized officer of such party.

(b)This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, executors, administrators, legal representatives, successors and permitted assigns. This Agreement, and the rights and obligations of Investor hereunder, may be assigned by Investor to any person or entity to which Registrable Securities are transferred by Investor, and such transferee shall be deemed to have acquired all of the rights and obligations of Investor for purposes of this Agreement; provided, that the transferee provides written notice of such assignment to the Company and provided that any such transfer shall be made strictly in accordance with all applicable laws; and provided, further, that such rights may not be held or exercised by more than one transferee at any one time. The Company may not assign its rights under this Agreement except to its successors-in-interest as a result of a merger, reorganization or a sale of all or substantially all of the assets of the Company.

(c)For the convenience of the parties hereto, this Agreement may be executed in any number of separate counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts will together constitute the same agreement. Executed signature pages to this Agreement may be delivered by facsimile or other electronic transmission and such transmissions shall be deemed as sufficient as if manually signed signature pages had been delivered.

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(d)Any notice, request, instruction or other document to be given hereunder by any party to the other will be in writing and will be deemed to have been duly given (i) on the date of delivery if delivered personally or by e-mail (upon confirmation of receipt), (ii) on the first Business Day following the date of dispatch if delivered by a recognized next-day courier service, or (iii) on the third Business Day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid. All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice.

If to the Company:

Professional Holding Corp.

396 Alhambra Circle, Suite 255

Coral Gables, FL 33146

E-mail: dsheehan@professionalbankfl.com

Attention: Daniel R. Sheehan

Title: Chairman and President

with a copy to:

Gunster, Yoakley & Stewart, P.A.

777 South Flagler Drive, Suite 500 East

West Palm Beach, FL 33401

E-mail: mmitrione@gunster.com

Attention: Michael V. Mitrione

If to Investor:

BayBoston Capital L.P.

1280 Centre Street, Suite 2

Newton Center, MA 02459

E-mail: carlos@bayboston.com

Attention: Carlos Garcia

Title: Chief Executive Officer

with copies to:

E-mail

Attention:   

(e)If any provision of this Agreement or the application thereof to any person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to persons or circumstances other than those as to which it has been held invalid or unenforceable, will remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination, the parties shall negotiate in good faith in an effort to agree upon a suitable and equitable substitute provision to effect the original intent of the parties.

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(f)If, and as often as, there is any change in the Class A Common Stock or Class B Common Stock by way of a stock split, stock dividend, combination or reclassification, or through a merger, consolidation, reorganization or recapitalization, or by any other means, appropriate adjustment shall be made in the provisions hereof so that the rights and privileges granted hereby shall continue with respect to the Class A Common Stock and Class B Common Stock as so changed.

(g)This Agreement will be governed by and construed in accordance with the Laws of the State of Florida applicable to contracts made and to be performed entirely within such jurisdiction.

(h)The parties hereby agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby shall be brought in the federal or state courts located in Miami-Dade County, Florida, so long as such court shall have subject matter jurisdiction over such suit, action or proceeding, and each of the parties hereby irrevocably consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by Law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding which is brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 8(h) shall be deemed effective service of process on such party. The parties hereby irrevocably and unconditionally consent to submit to the exclusive jurisdiction of the state and federal courts referred to above for any actions, suits or proceedings arising out of or relating to this Agreement and the transactions contemplated hereby.

(i)THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT OR UNDER ANY AGREEMENT, INSTRUMENT OR OTHER DOCUMENT CONTEMPLATED HEREBY OR RELATED HERETO AND IN ANY ACTION DIRECTLY OR INDIRECTLY RELATED TO OR CONNECTED WITH THE OBLIGATIONS OF THIS AGREEMENT. THE PARTIES ACKNOWLEDGE THAT THIS WAIVER MAY DEPRIVE EACH OF THEM AN IMPORTANT RIGHT AND THAT SUCH WAIVER HAS BEEN KNOWINGLY AND VOLUNTARILY MADE BY THE PARTIES AFTER CONSULTATION WITH THEIR LEGAL COUNSEL.

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(j)The article, section, paragraph and clause captions herein are for convenience of reference only, do not constitute part of this Agreement and will not be deemed to limit or otherwise affect any of the provisions hereof.

[Signature page follows]

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IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date set forth above.

COMPANY:
PROFESSIONAL HOLDING CORP.
By:	/s/ Daniel R. Sheehan
Name:	Daniel R. Sheehan
Title:	Chairman and President
INVESTOR:
BAYBOSTON Capital L.P.
By:	/s/ Carlos M. Garcia
Name:	Carlos M. Garcia
Title:	its manager of the general partner, BayBoston Capital GP LLC

[Signature Page to Registration Rights Agreement]

EX-10.24

Exhibit 10.24

EXECUTION VERSION

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of February 17, 2017, by and between Professional Holding Corp., a Florida corporation and the parent company of Professional Bank (the “Company”), and the undersigned Investor (the “Investor”). Capitalized terms not defined in this Agreement shall have the meaning ascribed in that certain Stock Purchase Agreement dated February 17, 2017 by and between the Company and certain investors, including Investor (the “Purchase Agreement”).

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and Investor hereby mutually agree as follows:

1. Registration RIGHTS

(a)Any time after the fourth (4^th) anniversary of the date of this Agreement, Investor may request one registration (the “Demand Registration”) under the Securities Act of 1933, as amended (the “Securities Act”), of its Registrable Securities (as defined below). The Demand Registration shall be on such form as the Company shall select. The Demand Registration shall specify the number of Registrable Securities to be registered. The Company shall use best efforts to cause a registration statement to be filed within 180 days after the date on which the initial request by Investor is received by the Company and shall use its best efforts to cause such registration statement to be declared effective by the U.S. Securities and Exchange Commission (“SEC”) as soon as practicable thereafter. The Company shall use best efforts to keep such Demand Registration current and effective until the Registrable Securities registered thereby cease to be Registrable Securities.

(b)As long as Investor holds Registrable Securities, if at any time or from time to time, the Company shall determine to register any of its securities under the Securities Act (except for the registration of securities to be offered pursuant to an employee benefit plan on Form S-8 or pursuant to a registration made on Form S-4, or any successor forms then in effect) and the registration form to be used may be used for the registration of the Registrable Securities (a “Piggyback Registration”), the Company shall:

(1)Provide thirty (30) calendar days’ advance written notice to Investor prior to filing the registration statement (the “Registration Rights Notice”); and

(2)include in such registration, and in any underwriting involved therein, all the Registrable Securities specified in a written request made by Investor within fifteen (15) calendar days after receipt of the Registration Rights Notice from the Company, except as set forth in Section 1(c) below.

(c)If the registration is for a registered public offering involving an underwriting, the Company shall so advise Investor as a part of the Registration Rights Notice. In such event, the right of Investor to registration shall be conditioned upon Investor’s participation in such underwriting and the inclusion of Investor’s Registrable Securities in the underwriting to the extent provided herein. If Investor proposes to distribute its securities through such underwriting, it shall (together with the Company and any other holders distributing their securities through such underwriting) enter into an underwriting agreement in the form agreed to by the Company with the underwriter(s) selected for such underwriting by the Company. Notwithstanding any other provision of this Agreement, if the managing underwriters advise the Company and Investor in writing that in their reasonable and good faith opinion the number of securities requested to be included in such offering exceeds the number which can be sold without adversely affecting the per share offering price of the securities, the Company will include in such registration (i) first, the securities that the Company proposes to sell; (ii) second, the Registrable Securities requested to be included therein by Investor, allocated pro rata among all such holders on the basis of the number of Registrable Securities owned by each such holder or in such manner as they may otherwise agree; and (iii) third, the securities requested to be included therein by holders of securities other than holders of Registrable Securities, allocated among such holders in such manner as they may agree. If Investor disapproves of the terms of any such underwriting, Investor may elect to withdraw therefrom by written notice to the Company and the managing underwriter.

(d)For purposes of this Agreement, “Registrable Securities” shall mean any and all shares of (i) Company Stock issued pursuant to the Purchase Agreement (including Class A Common Stock issued or issuable upon exchange of Class B Common Stock), (ii) Capital Stock issued in respect of the Company Stock in any reorganization of the Company, and (iii) Capital Stock issued in respect of the stock referred to in clause (i) or (ii) above as a result of a stock split, stock dividend, recapitalization or combination.

2. Expenses of Registration

All expenses incurred in connection with the registrations pursuant to Section 1 hereof, including all registration, filing and qualification fees, printing expenses, fees and disbursements of counsel for the Company and expenses of any special audits of the Company’s financial statements incidental to or required by such registration, shall be borne by the Company, except that the Company shall not be required to pay underwriters’ fees, discounts or commissions relating to Registrable Securities.

3. Registration Procedures

In the case of each registration affected by the Company pursuant to this Agreement, the Company will keep Investor advised in writing as to the initiation of each registration and as to the completion thereof. At its expense the Company will:

(a)keep such registration pursuant to this Agreement continuously effective until all of such Registrable Securities have been disposed of and to comply with the provisions of the Securities Act with respect to the disposition of such Registrable Securities in accordance with the intended methods of disposition set forth in such registration statement;

(b)promptly prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to comply with the provisions of the Securities Act, and to keep such registration statement effective for that period of time specified in Section 3(a) above;

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(c)at least five (5) business days before filing such registration statement, prospectus or amendments or supplements thereto with the SEC, furnish to Investor copies of such documents proposed to be filed, which documents shall be subject to the reasonable review, comment and approval of Investor;

(d)notify Investor, promptly after the Company receives notice thereof, of the time when such registration statement has been declared effective or a supplement to any prospectus forming a part of such registration statement has been filed with the SEC;

(e)advise Investor, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the SEC suspending the effectiveness of such registration statement or the initiation or threatening of any proceeding for such purpose and promptly use best efforts to obtain the withdrawal of any order suspending the effectiveness of a registration statement, or the lifting of any suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction, at the earliest possible moment;

(f)cause all Registrable Securities covered by such registrations to be listed on each securities exchange on which similar securities issued by the Company are then listed or, if such securities are not then listed, on a national securities exchange selected by Investor;

(g)notify each selling holder of such Registrable Securities, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event that would cause the prospectus included in such registration statement to contain an untrue statement of a material fact or omit any fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading, and, at the request of any such holder, the Company shall prepare a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;

(h)make available for inspection by Investor all financial and other records, pertinent corporate documents and properties of the Company (collectively, the “Records”), and cause the Company’s officers, directors and employees to supply all Records requested by Investor in connection with such registration statement;

(i)provide a transfer agent and registrar (which may be the same entity) for all such Registrable Securities not later than the effective date of such registration;

(j)otherwise use its best efforts to comply with all applicable rules and regulations of the SEC and make available to its shareholders an earnings statement (in a form that satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 under the Securities Act or any successor rule thereto) no later than thirty (30) days after the end of the 12-month period beginning with the first day of the Company’s first full fiscal quarter after the effective date of such Registration Statement, which earnings statement shall cover said 12-month period, and which requirement will be deemed to be satisfied if the Company timely files complete and accurate information on Forms 10-K, 10-Q and 8-K under the Securities Exchange Act of 1934, as amended (“Exchange Act”), and otherwise complies with Rule 158 under the Securities Act or any successor rule thereto; and

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(k)enter into such customary agreements (including underwriting agreements in customary form) and take all such other actions as the holders of a majority of the Registrable Securities being sold or the underwriters, if any, reasonably request in order to expedite or facilitate the disposition of such Registrable Securities;

(l)use its best efforts to cause such Registrable Securities to be registered with or approved by such other Governmental Entities as may be necessary by virtue of the business and operations of the Company to enable the holders of such Registrable Securities to consummate the disposition of such Registrable Securities in accordance with their intended method of distribution thereof;

(m)notify Investor promptly of any request by the Commission for the amending or supplementing of such registration statement or prospectus or for additional information;

(n)permit Investor to participate in the preparation of such Registration Statement and to require the insertion therein of language, furnished to the Company in writing, which in the reasonable judgment of such holder and its counsel should be included, if in Investor’s judgment, Investor might be deemed to be an underwriter or a “controlling person” (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act) (a “Controlling Person”) of the Company; and

(o)take such other actions as reasonably requested by Investor.

4. Indemnification

(a)In the event of a registration of any of the Registrable Securities under the Securities Act pursuant to this Agreement, the Company will (i) indemnify and hold harmless, to the fullest extent permitted by law, Investor, each underwriter of such Registrable Securities thereunder, and any other person acting on behalf of Investor and each other person, if any, who controls such foregoing persons within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which any of the foregoing persons may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which such Registrable Securities were registered under the Securities Act, any preliminary prospectus, free writing prospectus, or final prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by the Company of any rule or regulation promulgated under the Securities Act or any state securities law applicable to the Company and relating to action or inaction required of the Company in connection with any such registration, and (ii) will reimburse such persons, each of their officers, directors and partners, and each person controlling such persons, for any legal and any other expenses incurred in connection with investigating, defending or settling any such claim, loss, damage, liability or action. Notwithstanding the foregoing, the Company will not be liable in any such case to the extent that any such claim, loss, damage or liability arises out of or is based on any untrue statement or omission based upon written information furnished to the Company in an instrument duly executed by Investor or an underwriter, as applicable, specifically for use therein. This indemnity shall be in addition to any liability the Company may otherwise have.

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(b)Investor will, if Registrable Securities held by or issuable to Investor are included in the securities for which such registration is being effected, indemnify and hold harmless, to the fullest extent permitted by law, the Company, each of its directors and officers, each underwriter, if any, of the Company’s securities covered by such registration statement, each person who controls the Company and each underwriter within the meaning of the Securities Act, against all claims, losses, expenses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading (in the case of a prospectus, in light of the circumstances under with they were made), but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Company in an instrument duly executed by Investor specifically for use therein. Notwithstanding the foregoing, the total amount for which Investor, its officers, directors and partners, and any person controlling Investor, shall be liable under this Section 4(b) shall not in any event exceed the net proceeds (after deducting underwriting fees, commissions, and discounts) received by Investor from the sale of its Registrable Securities in such registration. This indemnity shall be in addition to any liability Investor may otherwise have.

(c)Each party entitled to indemnification under this Section 4 (the “Indemnified Party”) shall give notice to the party required to provide indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has actual knowledge of any claims as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom; provided, however, that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not be unreasonably withheld), and the Indemnified Party may participate in such defense at such party’s expense. Notwithstanding the foregoing, the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations hereunder, unless such failure resulted in actual detriment to the Indemnifying Party. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect of such claim or litigation.

(d)Notwithstanding the foregoing, to the extent that the provisions on indemnification contained in the underwriting agreements entered into among Investor, the Company and the underwriters in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall be controlling as to the Registrable Securities included in the public offering.

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(e)The indemnification provided by this Section 4 shall be a continuing right to indemnification and shall survive the registration and sale of any securities by any person entitled to indemnification hereunder and the expiration or termination of this Agreement.

(f)If the indemnification provided for hereunder is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any loss, claim, damage, liability or action referred to herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party hereunder, shall contribute to the amounts paid or payable by such Indemnified Party as a result of such loss, claim, damage, liability or action in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and of the Indemnified Party on the other in connection with the statements or omissions which resulted in such loss, claim, damage, liability or action as well as any other relevant equitable considerations; provided, that the maximum amount of liability in respect of such contribution shall be limited, in the case of each holder of Registrable Securities, to an amount equal to the net proceeds (after underwriting fees, commissions or discounts) actually received by such seller from the sale of Registrable Securities effected pursuant to such registration. The relative fault of the Indemnifying Party and of the Indemnified Party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Indemnifying Party or by the Indemnified Party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties agree that it would not be just and equitable if contribution pursuant hereto were determined by pro rata allocation or by any other method or allocation which does not take account of the equitable considerations referred to herein. No Person guilty or liable of fraudulent misrepresentation within the meaning of Section 11(f) of the Securities Act shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.

5. REPORTS UNDER the EXCHANGE ACT

With a view to making available to Investor the benefits of Rule 144 promulgated under the Securities Act and any other rule or regulation of the SEC that may at any time permit Investor to sell securities of the Company to the public without registration, the Company shall:

(a)make and keep public information available, within the meaning of Rule 144, at all times after the effective date of (i) the first registration statement covering an underwritten public offering filed by the Company or (ii) the first registration by the Company under the Exchange Act;

(b)following a public offering or a registration under the Exchange Act, file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and

(c)furnish to Investor forthwith upon request a written statement by the Company that it has complied with the reporting requirements of Rule 144 (at any time after ninety (90) days after the effective date of said first registration statement filed by the Company), and of the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), a copy of the most recent annual or quarterly report of the Company, and such other reports and documents filed by the Company with the SEC as may be reasonably requested in availing any such holder to take advantage of any rule or regulation of the SEC permitting the selling of any such securities without registration.

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6. LIMITATIONS IN CONNECTION WITH FUTURE GRANTS OF REGISTRATION RIGHTS

From and after the date of this Agreement, the Company shall not, without the prior written consent of Investor, enter into any agreement with any holder or prospective holder of any securities of the Company which would allow such holder or prospective holder to include such securities in any registration filed under Section 1 hereof, unless under the terms of such agreement, such holder or prospective holder may include such securities in any such registration only to the extent that the inclusion of his securities will not reduce the amount of the Registrable Securities of Investor to be included in such registration.

7. TRANSFER OF REGISTRATION RIGHTS

The registration rights of Investor (and of any permitted transferee of Investor) under this Agreement with respect to any Registrable Securities may be assigned in whole or in part as provided in Section 8(b) below.

8. Miscellaneous

(a)No amendment or waiver of any provision of this Agreement will be effective against any party hereto unless it is in a writing signed by a duly authorized officer of such party.

(b)This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, executors, administrators, legal representatives, successors and permitted assigns. This Agreement, and the rights and obligations of Investor hereunder, may be assigned by Investor to any person or entity to which Registrable Securities are transferred by Investor, and such transferee shall be deemed to have acquired all of the rights and obligations of Investor for purposes of this Agreement; provided, that the transferee provides written notice of such assignment to the Company and provided that any such transfer shall be made strictly in accordance with all applicable laws; and provided, further, that such rights may not be held or exercised by more than one transferee at any one time. The Company may not assign its rights under this Agreement except to its successors-in-interest as a result of a merger, reorganization or a sale of all or substantially all of the assets of the Company.

(c)For the convenience of the parties hereto, this Agreement may be executed in any number of separate counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts will together constitute the same agreement. Executed signature pages to this Agreement may be delivered by facsimile or other electronic transmission and such transmissions shall be deemed as sufficient as if manually signed signature pages had been delivered.

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(d)Any notice, request, instruction or other document to be given hereunder by any party to the other will be in writing and will be deemed to have been duly given (i) on the date of delivery if delivered personally or by e-mail (upon confirmation of receipt), (ii) on the first Business Day following the date of dispatch if delivered by a recognized next-day courier service, or (iii) on the third Business Day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid. All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice.

If to the Company:

Professional Holding Corp.

396 Alhambra Circle, Suite 255

Coral Gables, FL 33146

E-mail: dsheehan@professionalbankfl.com

Attention: Daniel R. Sheehan

Title: Chairman and President

with a copy to:

Gunster, Yoakley & Stewart, P.A.

777 South Flagler Drive, Suite 500 East

West Palm Beach, FL 33401

E-mail: mmitrione@gunster.com

Attention: Michael V. Mitrione

If to Investor:

with copies to:

(e)If any provision of this Agreement or the application thereof to any person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to persons remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination, the parties shall negotiate in good faith in an effort to agree upon a suitable and equitable substitute provision to effect the original intent of the parties.

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(f)If, and as often as, there is any change in the Class A Common Stock or Class B Common Stock by way of a stock split, stock dividend, combination or reclassification, or through a merger, consolidation, reorganization or recapitalization, or by any other means, appropriate adjustment shall be made in the provisions hereof so that the rights and privileges granted hereby shall continue with respect to the Class A Common Stock and Class B Common Stock as so changed.

(g)This Agreement will be governed by and construed in accordance with the Laws of the State of Florida applicable to contracts made and to be performed entirely within such jurisdiction.

(h)The parties hereby agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby shall be brought in the federal or state courts located in Miami-Dade County, Florida, so long as such court shall have subject matter jurisdiction over such suit, action or proceeding, and each of the parties hereby irrevocably consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by Law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding which is brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 8(h) shall be deemed effective service of process on such party. The parties hereby irrevocably and unconditionally consent to submit to the exclusive jurisdiction of the state and federal courts referred to above for any actions, suits or proceedings arising out of or relating to this Agreement and the transactions contemplated hereby.

(i)THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT OR UNDER ANY AGREEMENT, INSTRUMENT OR OTHER DOCUMENT CONTEMPLATED HEREBY OR RELATED HERETO AND IN ANY ACTION DIRECTLY OR INDIRECTLY RELATED TO OR CONNECTED WITH THE OBLIGATIONS OF THIS AGREEMENT. THE PARTIES ACKNOWLEDGE THAT THIS WAIVER MAY DEPRIVE EACH OF THEM AN IMPORTANT RIGHT AND THAT SUCH WAIVER HAS BEEN KNOWINGLY AND VOLUNTARILY MADE BY THE PARTIES AFTER CONSULTATION WITH THEIR LEGAL COUNSEL.

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(j)The article, section, paragraph and clause captions herein are for convenience of reference only, do not constitute part of this Agreement and will not be deemed to limit or otherwise affect any of the provisions hereof.

[Signature page follows]

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IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date set forth above.

COMPANY:
PROFESSIONAL HOLDING CORP.
By:
Name:	Daniel R. Sheehan
Title:	Chairman and President
INVESTOR:
[INVESTOR]
By:
Name:
Title:

[Signature Page to Registration Rights Agreement]

EX-10.25

Exhibit 10.25

SHAREHOLDER VOTING AGREEMENT

This Shareholder Voting Agreement (this “Agreement”) is entered into as of the 9th day of August, 2019, by and between Marquis Bancorp, Inc., a Florida corporation (“MBI”), and the undersigned holder (“Shareholder”) of Common Stock (as defined herein).

RECITALS

WHEREAS, as of the date hereof, Shareholder “beneficially owns” (as such term is defined in Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended) and is entitled to dispose of (or to direct the disposition of) and to vote (or to direct the voting of) the number of shares of Class A voting common stock, $0.01 par value per share (the “Common Stock”), of Professional Holding Corp (“PHC”), indicated on the signature page of this Agreement under the heading “Total Number of Shares of Common Stock Subject to this Agreement” (such shares of Common Stock, which for the avoidance of doubt shall not include any shares of Common Stock underlying PHC stock options) together with any other shares of Common Stock the voting power over which is acquired by Shareholder during the period from and including the date hereof through and including the date on which this Agreement is terminated in accordance with its terms, are collectively referred to herein as the “Shares”);

WHEREAS, MBI and PHC propose to enter into an Agreement and Plan of Merger, dated as of the date hereof (the “Merger Agreement”; for purposes of this Agreement, capitalized terms used and not otherwise defined herein shall have the respective meanings ascribed to them in the Merger Agreement), pursuant to which, among other things, MBI will merge with and into PHC (the “Merger”); and

WHEREAS, as a condition to the willingness of MBI to enter into the Merger Agreement, Shareholder is executing this Agreement;

NOW, THEREFORE, in consideration of, and as a material inducement to, MBI entering into the Merger Agreement and proceeding with the transactions contemplated thereby, and in consideration of the expenses incurred and to be incurred by MBI in connection therewith, Shareholder and MBI, intending to be legally bound, hereby agree as follows:

1.Agreement to Vote SharesShareholder agrees that, while this Agreement is in effect, at any meeting of shareholders of PHC, however called, or at any adjournment thereof, or in any other circumstances in which Shareholder is entitled to vote, consent or give any other approval, except as otherwise agreed to in writing in advance by MBI, Shareholder shall:

(a)appear at each such meeting or otherwise cause the Shares to be counted as present thereat for purposes of calculating a quorum; and

(b)vote (or cause to be voted), in person or by proxy, all the Shares as to which Shareholder has, directly or indirectly, the right to vote or direct the voting, (i) in favor of the issuance of Common Stock in connection with the Merger and the other transactions contemplated by the Merger Agreement (“the Stock Issuance”); (ii) against any action or agreement that would result in a breach of any covenant, representation or warranty or any other obligation or agreement of PHC contained in the Merger Agreement or of Shareholder contained in this Agreement; and (iii) against any action, agreement or transaction that is intended, or could reasonably be expected, to impede, interfere or be inconsistent with, delay, postpone, discourage or materially and adversely affect consummation of the Merger, the Stock Issuance or the other transactions contemplated by the Merger Agreement or this Agreement.

Shareholder further agrees not to vote or execute any written consent to rescind or amend in any manner any prior vote or written consent, as a shareholder of PHC, to approve the Stock Issuance unless this Agreement shall have been terminated in accordance with its terms.

2.No Transfers. While this Agreement is in effect, Shareholder agrees not to, directly or indirectly, sell, transfer, pledge, assign or otherwise dispose of, or enter into any contract option, commitment or other arrangement or understanding with respect to the sale, transfer, pledge, assignment or other disposition of, any of the Shares; provided, however, that the following transfers shall be permitted: (a) transfers by will or operation of law, in which case this Agreement shall bind the transferee; (b) transfers pursuant to any pledge agreement, subject to the pledgee agreeing in writing, prior to such transfer, to be bound by the terms of this Agreement; (c) transfers in connection with estate and tax planning purposes, including transfers to relatives, trusts and charitable organizations, subject to each transferee agreeing in writing, prior to such transfer, to be bound by the terms of this Agreement; (d) disposing of or surrendering Shares in connection with the vesting, settlement or exercise of PHC stock options or restricted shares of Common Stock for the payment of taxes thereon or, in the case of PHC stock options, the exercise price; and (e) such transfers as MBI may otherwise permit in its sole discretion. Any transfer or other disposition in violation of the terms of this Section 2 shall be null and void.

3.Representations and Warranties of Shareholder. Shareholder represents and warrants to and agrees with MBI as follows:

(a)Shareholder has all requisite capacity and authority to enter into and perform his, her or its obligations under this Agreement.

(b)This Agreement has been duly executed and delivered by Shareholder, and assuming the due authorization, execution and delivery by MBI, constitutes the valid and legally binding obligation of Shareholder enforceable against Shareholder in accordance with its terms, except as may be limited by bankruptcy, insolvency, fraudulent transfer, moratorium, reorganization or similar laws of general applicability relating to or affecting the rights of creditors generally and subject to general principles of equity.

(c)The execution and delivery of this Agreement by Shareholder does not, and the performance by Shareholder of his, her or its obligations hereunder and the consummation by Shareholder of the transactions contemplated hereby will not, violate or conflict with, or constitute a default under, any agreement, instrument, contract or other obligation or any order, arbitration award, judgment or decree to which Shareholder is a party or by which Shareholder is bound, or any statute, rule or regulation to which Shareholder is subject or, in the event that Shareholder is a corporation, limited liability company, partnership, trust or other entity, any charter, bylaw or other organizational document of Shareholder.

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(d)Shareholder is the beneficial owner of the Shares. Shareholder does not own, of record or beneficially, any shares of capital stock of PHC other than the Shares or any other securities convertible into or exercisable or exchangeable for such capital stock, other than any PHC stock options. Shareholder has the right to vote the Shares, and none of the Shares is subject to any voting trust or other agreement, arrangement or restriction with respect to the voting of the Shares, except as contemplated by this Agreement or provided by the FBCA.

4.Prohibited Actions. From and after the date hereof until the termination of this Agreement pursuant to Section 7 hereof, Shareholder, in his, her or its capacity as a shareholder of PHC, shall not, nor shall Shareholder authorize any shareholder, member, partner, officer, director, advisor or representative of Shareholder or any of his, her or its affiliates to (and, to the extent applicable to Shareholder, such Shareholder shall use commercially reasonable efforts to not permit any of his, her or its representatives or affiliates to) encourage or assist any party in taking or planning any action that would compete with, restrain or otherwise serve to interfere with or inhibit the timely consummation of the Merger in accordance with the terms of the Merger Agreement. For avoidance of doubt, the parties acknowledge and agree that nothing in this Agreement shall limit or restrict Shareholder or any of his, her or its affiliates who is or becomes during the term hereof a member of the Board of Directors or an officer of PHC or any of its Subsidiaries from acting, omitting to act or refraining from taking any action, solely in such person’s capacity as a member of the Board of Directors or as an officer of PHC (or as an officer or director of any of its Subsidiaries), including without limitation actions taken consistent with his or her fiduciary duties in such capacity under applicable law.

5.Proxy. Subject to the last sentence of this Section 5, by execution of this Agreement, Shareholder does hereby appoint MBI with full power of substitution and resubstitution, as Shareholder’s true and lawful attorney and proxy, to the full extent of Shareholder’s rights with respect to the Shares, to vote each of such Shares that Shareholder shall be entitled to so vote with respect to the matters set forth in Section 1 hereof at any meeting of the shareholders of PHC, and at any adjournment or postponement thereof, and in connection with any action of the shareholders of PHC taken by written consent. Shareholder hereby revokes any proxy previously granted by Shareholder with respect to the Shares. Notwithstanding anything contained herein to the contrary, this proxy shall automatically terminate and be revoked upon the termination of this Agreement.

6.Specific Performance; Remedies; Attorneys’ Fees. Shareholder acknowledges that it is a condition to the willingness of MBI to enter into the Merger Agreement that Shareholder execute and deliver this Agreement and that it will be impossible to measure in money the damage to MBI if Shareholder fails to comply with the obligations imposed by this Agreement and that, in the event of any such failure, MBI will not have an adequate remedy at law or in equity. Accordingly, Shareholder agrees that injunctive relief or other equitable remedy is the appropriate remedy for any such failure and will not oppose the granting of such relief on the basis that MBI has an adequate remedy at law. In addition, MBI shall have the right to inform any third party that MBI reasonably believes to be, or to be contemplating, participating with Shareholder or receiving from Shareholder assistance in violation of this Agreement, of the terms of this Agreement and of the rights of MBI hereunder, and that participation by any such thirty party with Shareholder in activities in violation of Shareholder’s agreement with MBI set forth in this Agreement may give rise to claims by MBI against such third party. In any legal action or other proceeding relating to this Agreement and the transactions contemplated hereby or if the enforcement of any provision of this Agreement is brought against either Party, the prevailing Party in such action or proceeding shall be entitled to recover all reasonable expenses relating thereto (including reasonable attorneys’ fees and expenses, court costs and expenses incident to arbitration, appellate and post-judgment proceedings) from the Party against which such action or proceeding is brought, in addition to any other relief to which such prevailing Party may be entitled.

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7.Term of Agreement; Termination. The term of this Agreement shall commence on the date hereof. This Agreement may be terminated at any time prior to consummation of the transactions contemplated by the Merger Agreement by the written consent of the parties hereto, and this Agreement shall be automatically terminated upon termination of the Merger Agreement or the consummation of the Merger. Upon such termination, no party shall have any further obligations or liabilities hereunder; provided, however, that such termination shall not relieve any party from liability for any willful and material breach of this Agreement prior to such termination.

8.Entire Agreement; Amendments. This Agreement supersedes all prior agreements, written or oral, among the parties hereto with respect to the subject matter hereof and contains the entire agreement among the parties with respect to the subject matter hereof. This Agreement may not be amended, supplemented or modified, and no provision hereof may be modified or waived, except by an instrument in writing signed by each party hereto. No waiver of any provision hereof by either party shall be deemed a waiver of any other provision hereof by any such party, nor shall any such waiver be deemed a continuing waiver of any provision hereof by such party.

9.Severability. In the event that any one or more provisions of this Agreement shall for any reason be held invalid, illegal or unenforceable in any respect by any court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provisions of this Agreement, and the parties shall use their reasonable best efforts to substitute a valid, legal and enforceable provision which, insofar as practical, implements the purpose and intents of this Agreement.

10.Capacity as Shareholder. This Agreement shall apply to Shareholder solely in his, her or its capacity as a shareholder of PHC, and it shall not apply in any manner to Shareholder in any capacity as a director, officer or employee of PHC or its Subsidiaries or in any other capacity, and shall not limit or affect any actions taken by Shareholder in such capacity.

11.Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of Florida, without regard to any applicable conflicts of law principles or any other principle that could require the application of the law of any other jurisdiction.

12.WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF THE PARTIES IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT OF THIS AGREEMENT. EACH OF THE PARTIES HERETO (A) CERTIFIES THAT NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 12.

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13.Waiver of Appraisal Rights; Further Assurances. To the extent permitted by applicable law, Shareholder hereby waives any rights of appraisal or rights to dissent from the Merger or to demand fair value for his, her or its Shares in connection with the Merger, in each case, that Shareholder may have under applicable law. Shareholder further agrees not to commence or participate in, and to take all actions necessary to opt out of any class in any class action with respect to, any claim, derivative or otherwise, against PHC, MBI or any of their respective successors relating to the negotiation, execution or delivery of this Agreement or the Merger Agreement or the consummation of the Merger. From time to time prior to the termination of this Agreement, at MBI’s request and without further consideration, Shareholder shall execute and deliver such additional documents and take all such further action as may be reasonably necessary or desirable to effect the actions and consummate the transactions contemplated by this Agreement.

14.Disclosure. Shareholder hereby permits MBI and PHC to publish and disclose in the Proxy Statement and Form S-4 (including, without limitation, all related documents and schedules filed with the Securities and Exchange Commission) his, her or its identity and ownership of shares of Common Stock and the nature of Shareholder’s commitments, arrangements and understandings pursuant to this Agreement.

15.Counterparts. This Agreement may be executed in counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. Executed counterparts may be delivered by facsimile or other electronic transmission.

[Signature page follows.]

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IN WITNESS WHEREOF, MBI has caused this Agreement to be duly executed, and Shareholder has duly executed this Agreement, all as of the day and year first above written.

MARQUIS BANCORP, INC.
By:
	Javier J. Holtz
	Chairman and Chief Executive Officer
SHAREHOLDER:
Printed Name:
Total Number of Shares of Common Stock Subject to this Agreement: ________________________________

[Signature Page to PHC Voting Agreement]

EX-10.26

Exhibit 10.26

SHAREHOLDER VOTING AGREEMENT

This Shareholder Voting Agreement (this “Agreement”) is entered into as of the 9th day of August, 2019, by and between Professional Holding Corp, a Florida corporation (“PHC”), and the undersigned holder (“Shareholder”) of Common Stock (as defined herein).

RECITALS

WHEREAS, as of the date hereof, Shareholder “beneficially owns” (as such term is defined in Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended) and is entitled to dispose of (or to direct the disposition of) and to vote (or to direct the voting of) the number of shares of voting common stock, $5.00 par value per share (the “Common Stock”), of Marquis Bancorp, Inc. (“MBI”), indicated on the signature page of this Agreement under the heading “Total Number of Shares of Common Stock Subject to this Agreement” (such shares of Common Stock, which for the avoidance of doubt shall not include any shares of Common Stock underlying MBI Stock Options) together with any other shares of Common Stock the voting power over which is acquired by Shareholder during the period from and including the date hereof through and including the date on which this Agreement is terminated in accordance with its terms, are collectively referred to herein as the “Shares”);

WHEREAS, PHC and MBI propose to enter into an Agreement and Plan of Merger, dated as of the date hereof (the “Merger Agreement”; for purposes of this Agreement, capitalized terms used and not otherwise defined herein shall have the respective meanings ascribed to them in the Merger Agreement), pursuant to which, among other things, MBI will merge with and into PHC (the “Merger”); and

WHEREAS, as a condition to the willingness of PHC to enter into the Merger Agreement, Shareholder is executing this Agreement;

NOW, THEREFORE, in consideration of, and as a material inducement to, PHC entering into the Merger Agreement and proceeding with the transactions contemplated thereby, and in consideration of the expenses incurred and to be incurred by PHC in connection therewith, Shareholder and PHC, intending to be legally bound, hereby agree as follows:

1.Agreement to Vote Shares. Shareholder agrees that, while this Agreement is in effect, at any meeting of shareholders of MBI, however called, or at any adjournment thereof, or in any other circumstances in which Shareholder is entitled to vote, consent or give any other approval, except as otherwise agreed to in writing in advance by PHC, Shareholder shall:

(a) appear at each such meeting or otherwise cause the Shares to be counted as present thereat for purposes of calculating a quorum; and

(b) vote (or cause to be voted), in person or by proxy, all the Shares as to which Shareholder has, directly or indirectly, the right to vote or direct the voting, (i) in favor of adoption and approval of the Merger Agreement and the transactions contemplated thereby (including, without limitation, any amendments or modifications of the terms thereof adopted in accordance with the terms thereof); (ii) against any action or agreement that would result in a breach of any covenant, representation or warranty or any other obligation or agreement of MBI contained in the Merger Agreement or of Shareholder contained in this Agreement; and (iii) against any Acquisition Proposal or any other action, agreement or transaction that is intended, or could reasonably be expected, to impede, interfere or be inconsistent with, delay, postpone, discourage or materially and adversely affect consummation of the transactions contemplated by the Merger Agreement or this Agreement.

Shareholder further agrees not to vote or execute any written consent to rescind or amend in any manner any prior vote or written consent, as a shareholder of MBI, to approve or adopt the Merger Agreement unless this Agreement shall have been terminated in accordance with its terms.

2.No Transfers. While this Agreement is in effect, Shareholder agrees not to, directly or indirectly, sell, transfer, pledge, assign or otherwise dispose of, or enter into any contract option, commitment or other arrangement or understanding with respect to the sale, transfer, pledge, assignment or other disposition of, any of the Shares; provided, however, that the following transfers shall be permitted: (a) transfers by will or operation of law, in which case this Agreement shall bind the transferee; (b) transfers pursuant to any pledge agreement, subject to the pledgee agreeing in writing, prior to such transfer, to be bound by the terms of this Agreement; (c) transfers in connection with estate and tax planning purposes, including transfers to relatives, trusts and charitable organizations, subject to each transferee agreeing in writing, prior to such transfer, to be bound by the terms of this Agreement; (d) disposing of or surrendering Shares in connection with the vesting, settlement or exercise of MBI Stock Options or MBI Restricted Shares for the payment of taxes thereon or, in the case of MBI Stock Options, the exercise price or in connection with the repurchase, redemption or cancellation of any MBI Restricted Shares as permitted pursuant to the Merger Agreement; and (e) such transfers as PHC may otherwise permit in its sole discretion. Any transfer or other disposition in violation of the terms of this Section 2 shall be null and void.

3.Representations and Warranties of Shareholder. Shareholder represents and warrants to and agrees with PHC as follows:

(a) Shareholder has all requisite capacity and authority to enter into and perform his, her or its obligations under this Agreement.

(b) This Agreement has been duly executed and delivered by Shareholder, and assuming the due authorization, execution and delivery by PHC, constitutes the valid and legally binding obligation of Shareholder enforceable against Shareholder in accordance with its terms, except as may be limited by bankruptcy, insolvency, fraudulent transfer, moratorium, reorganization or similar laws of general applicability relating to or affecting the rights of creditors generally and subject to general principles of equity.

(c) The execution and delivery of this Agreement by Shareholder does not, and the performance by Shareholder of his, her or its obligations hereunder and the consummation by Shareholder of the transactions contemplated hereby will not, violate or conflict with, or constitute a default under, any agreement, instrument, contract or other obligation or any order, arbitration award, judgment or decree to which Shareholder is a party or by which Shareholder is bound, or any statute, rule or regulation to which Shareholder is subject or, in the event that Shareholder is a corporation, limited liability company, partnership, trust or other entity, any charter, bylaw or other organizational document of Shareholder.

(d) Shareholder is the beneficial owner of the Shares. Shareholder does not own, of record or beneficially, any shares of capital stock of MBI other than the Shares or any other securities convertible into or exercisable or exchangeable for such capital stock, other than any MBI Stock Options. Shareholder has the right to vote the Shares, and none of the Shares is subject to any voting trust or other agreement, arrangement or restriction with respect to the voting of the Shares, except as contemplated by this Agreement or provided by the FBCA.

4.No Solicitation. From and after the date hereof until the termination of this Agreement pursuant to Section 7 hereof, Shareholder, in his, her or its capacity as a shareholder of MBI, shall not, nor shall Shareholder authorize any shareholder, member, partner, officer, director, advisor or representative of Shareholder or any of his, her or its affiliates to (and, to the extent applicable to Shareholder, such Shareholder shall use commercially reasonable efforts to not permit any of his, her or its representatives or affiliates to), (a) initiate, solicit, induce or knowingly encourage, or knowingly take any action to facilitate the making of, any inquiry, offer or proposal which constitutes, or could reasonably be expected to lead to, an Acquisition Proposal, (b) participate in any discussions or negotiations regarding any Acquisition Proposal, or furnish, or otherwise afford access, to any person (other than PHC) any information or data with respect to MBI or otherwise relating to an Acquisition Proposal, (c) enter into any agreement, agreement in principle, letter of intent, memorandum of understanding or similar arrangement with respect to an Acquisition Proposal, (d) solicit proxies with respect to an Acquisition Proposal (other than the Merger and the Merger Agreement) or otherwise encourage or assist any party in taking or planning any action that would compete with, restrain or otherwise serve to interfere with or inhibit the timely consummation of the Merger in accordance with the terms of the Merger Agreement, or (e) initiate a shareholders’ vote or action by consent of MBI’s shareholders with respect to an Acquisition Proposal, in each case, except to the extent that at such time MBI is permitted to take such action pursuant to Section 6.7 of the Merger Agreement. For avoidance of doubt, the parties acknowledge and agree that nothing in this Agreement shall limit or restrict Shareholder or any of his, her or its affiliates who is or becomes during the term hereof a member of the Board of Directors or an officer of MBI or any of its Subsidiaries from acting, omitting to act or refraining from taking any action, solely in such person’s capacity as a member of the Board of Directors or as an officer of MBI (or as an officer or director of any of its Subsidiaries), including without limitation actions taken consistent with his or her fiduciary duties in such capacity under applicable law.

5.Proxy. Subject to the last sentence of this Section 5, by execution of this Agreement, Shareholder does hereby appoint PHC with full power of substitution and resubstitution, as Shareholder’s true and lawful attorney and proxy, to the full extent of Shareholder’s rights with respect to the Shares, to vote each of such Shares that Shareholder shall be entitled to so vote with respect to the matters set forth in Section 1 hereof at any meeting of the shareholders of MBI, and at any adjournment or postponement thereof, and in connection with any action of the shareholders of MBI taken by written consent. Shareholder hereby revokes any proxy previously granted by Shareholder with respect to the Shares. Notwithstanding anything contained herein to the contrary, this proxy shall automatically terminate and be revoked upon the termination of this Agreement.

6.Specific Performance; Remedies; Attorneys’ Fees. Shareholder acknowledges that it is a condition to the willingness of PHC to enter into the Merger Agreement that Shareholder execute and deliver this Agreement and that it will be impossible to measure in money the damage to PHC if Shareholder fails to comply with the obligations imposed by this Agreement and that, in the event of any such failure, PHC will not have an adequate remedy at law or in equity. Accordingly, Shareholder agrees that injunctive relief or other equitable remedy is the appropriate remedy for any such failure and will not oppose the granting of such relief on the basis that PHC has an adequate remedy at law. In addition, PHC shall have the right to inform any third party that PHC reasonably believes to be, or to be contemplating, participating with Shareholder or receiving from Shareholder assistance in violation of this Agreement, of the terms of this Agreement and of the rights of PHC hereunder, and that participation by any such thirty party with Shareholder in activities in violation of Shareholder’s agreement with PHC set forth in this Agreement may give rise to claims by PHC against such third party. In any legal action or other proceeding relating to this Agreement and the transactions contemplated hereby or if the enforcement of any provision of this Agreement is brought against either Party, the prevailing Party in such action or proceeding shall be entitled to recover all reasonable expenses relating thereto (including reasonable attorneys’ fees and expenses, court costs and expenses incident to arbitration, appellate and post-judgment proceedings) from the Party against which such action or proceeding is brought, in addition to any other relief to which such prevailing Party may be entitled.

7.Term of Agreement; Termination. The term of this Agreement shall commence on the date hereof. This Agreement may be terminated at any time prior to consummation of the transactions contemplated by the Merger Agreement by the written consent of the parties hereto, and this Agreement shall be automatically terminated upon termination of the Merger Agreement or the consummation of the Merger. Upon such termination, no party shall have any further obligations or liabilities hereunder; provided, however, that such termination shall not relieve any party from liability for any willful and material breach of this Agreement prior to such termination.

8.Entire Agreement; Amendments. This Agreement supersedes all prior agreements, written or oral, among the parties hereto with respect to the subject matter hereof and contains the entire agreement among the parties with respect to the subject matter hereof. This Agreement may not be amended, supplemented or modified, and no provision hereof may be modified or waived, except by an instrument in writing signed by each party hereto. No waiver of any provision hereof by either party shall be deemed a waiver of any other provision hereof by any such party, nor shall any such waiver be deemed a continuing waiver of any provision hereof by such party.

9.Severability. In the event that any one or more provisions of this Agreement shall for any reason be held invalid, illegal or unenforceable in any respect by any court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provisions of this Agreement, and the parties shall use their reasonable best efforts to substitute a valid, legal and enforceable provision which, insofar as practical, implements the purpose and intents of this Agreement.

10.Capacity as Shareholder. This Agreement shall apply to Shareholder solely in his, her or its capacity as a shareholder of MBI, and it shall not apply in any manner to Shareholder in any capacity as a director, officer or employee of MBI or its Subsidiaries or in any other capacity, and shall not limit or affect any actions taken by Shareholder in such capacity.

11.Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of Florida, without regard to any applicable conflicts of law principles or any other principle that could require the application of the law of any other jurisdiction.

12.WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF THE PARTIES IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT OF THIS AGREEMENT. EACH OF THE PARTIES HERETO (A) CERTIFIES THAT NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 12.

13.Waiver of Appraisal Rights; Further Assurances. To the extent permitted by applicable law, Shareholder hereby waives any rights of appraisal or rights to dissent from the Merger or to demand fair value for his, her or its Shares in connection with the Merger, in each case, that Shareholder may have under applicable law. Shareholder further agrees not to commence or participate in, and to take all actions necessary to opt out of any class in any class action with respect to, any claim, derivative or otherwise, against PHC, MBI or any of their respective successors relating to the negotiation, execution or delivery of this Agreement or the Merger Agreement or the consummation of the Merger. From time to time prior to the termination of this Agreement, at PHC’s request and without further consideration, Shareholder shall execute and deliver such additional documents and take all such further action as may be reasonably necessary or desirable to effect the actions and consummate the transactions contemplated by this Agreement.

14.Disclosure. Shareholder hereby permits PHC and MBI to publish and disclose in the Proxy Statement and Form S-4 (including, without limitation, all related documents and schedules filed with the Securities and Exchange Commission) his, her or its identity and ownership of shares of Common Stock and the nature of Shareholder’s commitments, arrangements and understandings pursuant to this Agreement.

15.Counterparts. This Agreement may be executed in counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. Executed counterparts may be delivered by facsimile or other electronic transmission.

[Signature page follows.]

IN WITNESS WHEREOF, PHC has caused this Agreement to be duly executed, and Shareholder has duly executed this Agreement, all as of the day and year first above written.

PROFESSIONAL HOLDING CORP
By:
	Daniel R. Sheehan
	Chairman and Chief Executive Officer

SHAREHOLDER:

Printed Name:

Total Number of Shares of Common Stock Subject to this Agreement:

EX-21.1

Exhibit 21.1

Subsidiaries of the Registrant

Professional Bank (Florida)

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the use in this Registration Statement of Professional Holding Corp. on Form S-4 of our report dated September 26, 2019 on the consolidated financial statements of Professional Holding Corp. and to the reference to us under the heading "Experts" in the prospectus.

/s/ Crowe LLP

Fort Lauderdale, Florida

January 27, 2020

EX-23.2

 Exhibit 23.2

CONSENT OF INDEPENDENT AUDITOR

We consent to the use in this Registration Statement of Professional Holding Corp. on Form S-4 of our report dated March 18, 2019, except Note 7, as to which the date is December 12, 2019, on the consolidated financial statements of Marquis Bancorp, Inc., and to the reference to our firm under the heading “Experts” in the prospectus.

/s/ Crowe LLP

Miami, Florida

January 27, 2020

EX-99.3

Exhibit 99.3

[Insert Stephens Inc. Letterhead]

Consent of Stephens Inc.

We hereby consent to the inclusion of our opinion letter dated August 9, 2019 to the board of directors of Professional Holding Corp. (“Professional”) as Appendix C to the Proxy Statement/Prospectus relating to the proposed merger of Professional with Marquis Bancorp, Inc. contained in the Registration Statement on Form S-4 of Professional, and to the references to our firm and such opinion in such Proxy Statement/Prospectus and Registration Statement.

In giving such consent, we do not admit, and we disclaim, that we come within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the rules and regulations of the Securities and Exchange Commission promulgated thereunder, nor do we admit that we are experts with respect to any part of such Proxy Statement/Prospectus and Registration Statement within the meaning of the terms “experts” as used in the Securities Act of 1933, as amended, or the rules and regulations of the Securities and Exchange Commission thereunder.

/s/ Stephens Inc.

January 27, 2020

EX-99.4

Exhibit 99.4

January 23, 2020

Marquis Bancorp, Inc.

355 Alhambra Circle

Suite 1200

Coral Gables, FL 33134

Re: Fairness Opinion Consent

To whom it may concern,

We hereby consent to the inclusion of our opinion letter to the board of directors of Marquis Bancorp, Inc. (“Marquis”) as an Appendix to the Form S-4, relating to the proposed merger of Marquis with Professional described in the Form S-4, and to the references to our firm and such opinion in such Form S-4. In giving such consent, we do not admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended (the “Act”), or the rules and regulations of the Securities and Exchange Commission thereunder (the “Regulations”), nor do we admit that we are experts with respect to any part of such Form S-4 within the meaning of the term “experts” as used in the Act or the Regulations.

Very truly yours,

/s/ Janney Montgomery Scott LLC

JANNEY MONTGOMERY SCOTT LLC