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PCB Bancorp Reports Earnings of $10.3 million for Q1 2023

PCB Bancorp (the “Company”) (NASDAQ: PCB), the holding company of PCB Bank (the “Bank”), today reported net income of $10.3 million, or $0.70 per diluted common share, for the first quarter of 2023, compared with $8.7 million, or $0.58 per diluted common share, for the previous quarter and $10.2 million, or $0.67 per diluted common share, for the year-ago quarter.

Q1 2023 Highlights

  • Net income totaled $10.3 million, or $0.70 per diluted common share, for the current quarter;
  • Adopted Current Expected Credit Losses (“CECL”) accounting standard effective January 1, 2023, resulting in a cumulative effect adjustment to the allowance for credit losses (“ACL”)(1) of $2.7 million;
  • Recorded a provision (reversal) for credit losses(1),(2) of $(2.8) million for the current quarter compared with $1.1 million for the previous quarter and $(1.2) million for the year-ago quarter;
  • ACL to loans held-for-investment ratio was 1.18% at March 31, 2023 compared with 1.22% at December 31, 2022 and 1.22% at March 31, 2022;
  • Net interest income was $22.4 million for the current quarter compared with $24.3 million for the previous quarter and $20.0 million for the year-ago quarter. Net interest margin was 3.79% for the current quarter compared with 4.15% for the previous quarter and 3.87% for the year-ago quarter;
  • Gain on sale of loans was $1.3 million for the current quarter compared with $759 thousand for the previous quarter and $3.8 million for the year-ago quarter;
  • Total assets were $2.50 billion at March 31, 2023, an increase of $80.5 million, or 3.3%, from $2.42 billion at December 31, 2022 and an increase of $300.8 million, or 13.7%, from $2.20 billion at March 31, 2022;
  • Loans held-for-investment were $2.09 billion at March 31, 2023, an increase of $46.4 million, or 2.3%, from $2.05 billion at December 31, 2022 and an increase of $349.5 million, or 20.1%, from $1.74 billion at March 31, 2022;
  • Total deposits were $2.14 billion at March 31, 2023, an increase of $95.7 million, or 4.7%, from $2.05 billion at December 31, 2022 and an increase of $231.3 million, or 12.1%, from $1.91 billion at March 31, 2022; and
  • Completed the repurchase program that was announced on July 28, 2022. Repurchased and retired 747,938 shares of common stock at a weighted-average price of $18.15 under this program.

“Our 2023 first quarter results, highlighted by our strong earnings, continued strong capital position, stable deposit balance, and disciplined credit culture, contributed to the steadfast value of our franchise,” stated Henry Kim, President and Chief Executive Officer. “We did not experience any meaningful deposit outflows immediately following the closure of regional banks. Instead, during the quarter, our deposit balances increased $95.7 million, of which, $25.7 million represented an increase in retail deposits.”

“Despite ongoing economic uncertainty, we began the year with another solid quarterly financial results highlighted by $10.3 million net income, or $0.70 per diluted shares, a 2.8% increase in tangible common equity per share to $18.72 from year-end, and a common equity tier 1 capital ratio of 16.03% at the bank level.”

“Although recent bank failures may disrupt the banking industry for a period of time, we are seeing this as an opportunity for our franchise to differentiate itself and provide a sanctuary to customers to put their trust in PCB and in the community banks. Our customers can rely on our ample liquidity and strong capital to withstand any economic uncertainty, and we are well-positioned to accommodate our customers’ lending and deposit needs,” concluded Kim.

-------------------------------------------------------------------------------------

(1)

Provision (reversal) for credit losses and ACL for reporting periods beginning with January 1, 2023 are presented under ASC 326, while prior period comparisons continue to be presented under legacy ASC 450 and ASC 310 on this report

(2)

Provision for credit losses on off-balance sheet credit exposures of $57 thousand and $2 thousand, respectively, for the previous and year-ago quarters were recorded in Other Expense on Consolidated Statements of Income (Unaudited).

Financial Highlights (Unaudited)

 

($ in thousands, except per share data)

 

Three Months Ended

 

3/31/2023

 

12/31/2022

 

% Change

 

3/31/2022

 

% Change

Net income

 

$

10,297

 

 

$

8,702

 

 

18.3

%

 

$

10,240

 

 

0.6

%

Diluted earnings per common share

 

$

0.70

 

 

$

0.58

 

 

20.7

%

 

$

0.67

 

 

4.5

%

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

$

22,414

 

 

$

24,265

 

 

(7.6

)%

 

$

19,993

 

 

12.1

%

Provision (reversal) for credit losses (1)

 

 

(2,778

)

 

 

1,149

 

 

NM

 

 

 

(1,191

)

 

133.2

%

Noninterest income

 

 

3,021

 

 

 

2,389

 

 

26.5

%

 

 

5,286

 

 

(42.8

)%

Noninterest expense

 

 

13,754

 

 

 

13,115

 

 

4.9

%

 

 

12,071

 

 

13.9

%

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (2)

 

 

1.69

%

 

 

1.44

%

 

 

 

 

1.92

%

 

 

Return on average shareholders’ equity (2)

 

 

12.46

%

 

 

10.31

%

 

 

 

 

16.01

%

 

 

Return on average tangible common equity (“TCE”) (2),(3)

 

 

15.70

%

 

 

12.99

%

 

 

 

 

16.01

%

 

 

Net interest margin (2)

 

 

3.79

%

 

 

4.15

%

 

 

 

 

3.87

%

 

 

Efficiency ratio (4)

 

 

54.08

%

 

 

49.20

%

 

 

 

 

47.75

%

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands, except per share data)

 

3/31/2023

 

12/31/2022

 

% Change

 

3/31/2022

 

% Change

Total assets

 

$

2,500,524

 

 

$

2,420,036

 

 

3.3

%

 

$

2,199,742

 

 

13.7

%

Net loans held-for-investment

 

 

2,067,748

 

 

 

2,021,121

 

 

2.3

%

 

 

1,721,757

 

 

20.1

%

Total deposits

 

 

2,141,689

 

 

 

2,045,983

 

 

4.7

%

 

 

1,910,379

 

 

12.1

%

Book value per common share (5)

 

$

23.56

 

 

$

22.94

 

 

 

 

$

17.47

 

 

 

TCE per common share (3)

 

$

18.72

 

 

$

18.21

 

 

 

 

$

17.47

 

 

 

Tier 1 leverage ratio (consolidated)

 

 

13.90

%

 

 

14.33

%

 

 

 

 

12.22

%

 

 

Total shareholders’ equity to total assets

 

 

13.47

%

 

 

13.86

%

 

 

 

 

11.87

%

 

 

TCE to total assets (3), (6)

 

 

10.71

%

 

 

11.00

%

 

 

 

 

11.87

%

 

 

(1)

Provision for credit losses on off-balance sheet credit exposures of $57 thousand and $2 thousand, respectively, for the previous and year-ago quarters were recorded in Other Expense on Consolidated Statements of Income (Unaudited). See Provision (reversal) for credit losses included in the Result of Operations discussion for additional information.

(2)

Ratios are presented on an annualized basis.

(3)

Non-GAAP. See “Non-GAAP Measures” for reconciliation of this measure to its most comparable GAAP measure.

(4)

Calculated by dividing noninterest expense by the sum of net interest income and noninterest income.

(5)

Calculated by dividing total shareholders’ equity by the number of outstanding common shares.

(6)

The Company did not have any intangible asset component for the presented periods.

Result of Operations (Unaudited)

Net Interest Income and Net Interest Margin

The following table presents the components of net interest income for the periods indicated:

 

 

Three Months Ended

($ in thousands)

 

3/31/2023

 

12/31/2022

 

% Change

 

3/31/2022

 

% Change

Interest income/expense on

 

 

 

 

 

 

 

 

 

 

Loans

 

$

31,229

 

 

$

28,786

 

 

8.5

%

 

$

20,190

 

 

54.7

%

Investment securities

 

 

1,102

 

 

 

957

 

 

15.2

%

 

 

476

 

 

131.5

%

Other interest-earning assets

 

 

2,205

 

 

 

1,833

 

 

20.3

%

 

 

228

 

 

867.1

%

Total interest-earning assets

 

 

34,536

 

 

 

31,576

 

 

9.4

%

 

 

20,894

 

 

65.3

%

Interest-bearing deposits

 

 

11,913

 

 

 

7,295

 

 

63.3

%

 

 

850

 

 

1,301.5

%

Borrowings

 

 

209

 

 

 

16

 

 

1,206.3

%

 

 

51

 

 

309.8

%

Total interest-bearing liabilities

 

 

12,122

 

 

 

7,311

 

 

65.8

%

 

 

901

 

 

1,245.4

%

Net interest income

 

$

22,414

 

 

$

24,265

 

 

(7.6

)%

 

$

19,993

 

 

12.1

%

Average balance of

 

 

 

 

 

 

 

 

 

 

Loans

 

$

2,072,415

 

 

$

2,004,220

 

 

3.4

%

 

$

1,773,376

 

 

16.9

%

Investment securities

 

 

142,079

 

 

 

134,066

 

 

6.0

%

 

 

123,230

 

 

15.3

%

Other interest-earning assets

 

 

186,809

 

 

 

182,018

 

 

2.6

%

 

 

198,918

 

 

(6.1

)%

Total interest-earning assets

 

$

2,401,303

 

 

$

2,320,304

 

 

3.5

%

 

$

2,095,524

 

 

14.6

%

Interest-bearing deposits

 

$

1,410,812

 

 

$

1,269,739

 

 

11.1

%

 

$

1,034,012

 

 

36.4

%

Borrowings

 

 

15,811

 

 

 

1,739

 

 

809.2

%

 

 

10,400

 

 

52.0

%

Total interest-bearing liabilities

 

$

1,426,623

 

 

$

1,271,478

 

 

12.2

%

 

$

1,044,412

 

 

36.6

%

Total funding (1)

 

$

2,114,198

 

 

$

2,043,110

 

 

3.5

%

 

$

1,885,038

 

 

12.2

%

Annualized average yield/cost of

 

 

 

 

 

 

 

 

 

Loans

 

 

6.11

%

 

 

5.70

%

 

 

 

 

4.62

%

 

 

Investment securities

 

 

3.15

%

 

 

2.83

%

 

 

 

 

1.57

%

 

 

Other interest-earning assets

 

 

4.79

%

 

 

4.00

%

 

 

 

 

0.46

%

 

 

Total interest-earning assets

 

 

5.83

%

 

 

5.40

%

 

 

 

 

4.04

%

 

 

Interest-bearing deposits

 

 

3.42

%

 

 

2.28

%

 

 

 

 

0.33

%

 

 

Borrowings

 

 

5.36

%

 

 

3.65

%

 

 

 

 

1.99

%

 

 

Total interest-bearing liabilities

 

 

3.45

%

 

 

2.28

%

 

 

 

 

0.35

%

 

 

Net interest margin

 

 

3.79

%

 

 

4.15

%

 

 

 

 

3.87

%

 

 

Cost of total funding (1)

 

 

2.33

%

 

 

1.42

%

 

 

 

 

0.19

%

 

 

Supplementary information

 

 

 

 

 

 

 

 

 

 

Net accretion of discount on loans

 

$

671

 

 

$

869

 

 

(22.8

)%

 

$

908

 

 

(26.1

)%

Net amortization of deferred loan fees

 

$

175

 

 

$

167

 

 

4.8

%

 

$

1,165

 

 

(85.0

)%

(1)

Total funding is the sum of interest-bearing liabilities and noninterest-bearing deposits. The cost of total funding is calculated as annualized total interest expense divided by average total funding.

Loans. The increases in average yield for the current quarter compared with the previous and year-ago quarters were primarily due to an increase in overall interest rates on loans from the rising interest rate environment.

The following table presents a composition of total loans by interest rate type accompanied with the weighted-average contractual rates as of the dates indicated:

 

 

3/31/2023

 

12/31/2022

 

3/31/2022

 

 

% to Total Loans

 

Weighted-Average Contractual Rate

 

% to Total Loans

 

Weighted-Average Contractual Rate

 

% to Total Loans

 

Weighted-Average Contractual Rate

Fixed rate loans

 

23.4

%

 

4.64

%

 

23.2

%

 

4.51

%

 

26.7

%

 

4.25

%

Hybrid rate loans

 

39.0

%

 

4.51

%

 

39.1

%

 

4.40

%

 

31.5

%

 

4.07

%

Variable rate loans

 

37.6

%

 

8.26

%

 

37.7

%

 

7.86

%

 

41.8

%

 

4.14

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment Securities. The increases in average yield for the current quarter compared with the previous and year-ago quarters were primarily due to a decrease in net amortization of premiums on securities and higher yield on newly purchased investment securities.

Other Interest-Earning Assets. The increases in average yield for the current quarter compared with the previous and year-ago quarters were primarily due to an increased interest rate on cash held at the Federal Reserve Bank (“FRB”) account.

Interest-Bearing Deposits. The increases in average cost for the current quarter compared with the previous and year-ago quarters were primarily due to an increase in market rates.

Provision (Reversal) for Credit Losses

The following table presents a composition of provision (reversal) for credit losses for the periods indicated:

 

 

Three Months Ended

($ in thousands)

 

3/31/2023

 

12/31/2022

 

% Change

 

3/31/2022

 

% Change

Provision (reversal) for credit losses on loans

 

$

(2,417

)

 

$

1,149

 

NM

 

$

(1,191

)

 

102.9

%

Provision (reversal) for credit losses on off-balance sheet credit exposure (1)

 

 

(361

)

 

 

57

 

NM

 

 

2

 

 

NM

 

Total provision (reversal) for credit losses

 

$

(2,778

)

 

$

1,206

 

NM

 

$

(1,189

)

 

133.6

%

(1)

Provision for credit losses on off-balance sheet credit exposures for previous and year-ago quarters were recorded in Other Expense on Consolidated Statements of Income (Unaudited).

On January 1, 2023, the Company adopted the provisions of ASC 326 through the application of the modified retrospective transition approach. Provision (reversal) for credit losses and ACL for reporting periods beginning with January 1, 2023 are presented under ASC 326, while prior period comparisons continue to be presented under legacy ASC 450 and ASC 310 on this report. See CECL Adoption and Allowance for Credit Losses sections included in the Balance Sheet discussion for additional information.

The reversal for credit losses for the current quarter was primarily due to net recoveries of $1.1 million and decreases in classified and nonaccrual loans during the current quarter.

Noninterest Income

The following table presents the components of noninterest income for the periods indicated:

 

 

Three Months Ended

($ in thousands)

 

3/31/2023

 

12/31/2022

 

% Change

 

3/31/2022

 

% Change

Gain on sale of loans

 

$

1,309

 

$

759

 

72.5

%

 

$

3,777

 

(65.3

)%

Service charges and fees on deposits

 

 

344

 

 

352

 

(2.3

)%

 

 

303

 

13.5

%

Loan servicing income

 

 

860

 

 

734

 

17.2

%

 

 

700

 

22.9

%

Bank-owned life insurance income

 

 

180

 

 

181

 

(0.6

)%

 

 

172

 

4.7

%

Other income

 

 

328

 

 

363

 

(9.6

)%

 

 

334

 

(1.8

)%

Total noninterest income

 

$

3,021

 

$

2,389

 

26.5

%

 

$

5,286

 

(42.8

)%

 

 

 

 

 

 

 

 

 

 

 

Gain on Sale of Loans. The following table presents information on gain on sale of loans for the periods indicated:

 

 

Three Months Ended

($ in thousands)

 

3/31/2023

 

12/31/2022

 

% Change

 

3/31/2022

 

% Change

Gain on sale of SBA loans

 

 

 

 

 

 

 

 

 

 

Sold loan balance

 

$

27,133

 

$

17,448

 

55.5

%

 

$

39,683

 

(31.6

)%

Premium received

 

 

2,041

 

 

1,102

 

85.2

%

 

 

4,206

 

(51.5

)%

Gain recognized

 

 

1,309

 

 

759

 

72.5

%

 

 

3,777

 

(65.3

)%

 

 

 

 

 

 

 

 

 

 

 

Loan Servicing Income. The following table presents information on loan servicing income for the periods indicated:

 

 

Three Months Ended

($ in thousands)

 

3/31/2023

 

12/31/2022

 

% Change

 

3/31/2022

 

% Change

Loan servicing income

 

 

 

 

 

 

 

 

 

 

Servicing income received

 

$

1,284

 

 

$

1,284

 

 

%

 

$

1,230

 

 

4.4

%

Servicing assets amortization

 

 

(424

)

 

 

(550

)

 

(22.9

)%

 

 

(530

)

 

(20.0

)%

Loan servicing income

 

$

860

 

 

$

734

 

 

17.2

%

 

$

700

 

 

22.9

%

Underlying loans at end of period

 

$

540,502

 

 

$

531,095

 

 

1.8

%

 

$

531,183

 

 

1.8

%

 

 

 

 

 

 

 

 

 

 

 

The Company services SBA loans and certain residential property loans that are sold to the secondary market.

Noninterest Expense

The following table presents the components of noninterest expense for the periods indicated:

 

 

Three Months Ended

($ in thousands)

 

3/31/2023

 

12/31/2022

 

% Change

 

3/31/2022

 

% Change

Salaries and employee benefits

 

$

8,928

 

$

7,879

 

13.3

%

 

$

8,595

 

3.9

%

Occupancy and equipment

 

 

1,896

 

 

1,897

 

(0.1

)%

 

 

1,397

 

35.7

%

Professional fees

 

 

732

 

 

607

 

20.6

%

 

 

403

 

81.6

%

Marketing and business promotion

 

 

372

 

 

724

 

(48.6

)%

 

 

207

 

79.7

%

Data processing

 

 

412

 

 

434

 

(5.1

)%

 

 

404

 

2.0

%

Director fees and expenses

 

 

180

 

 

176

 

2.3

%

 

 

169

 

6.5

%

Regulatory assessments

 

 

155

 

 

159

 

(2.5

)%

 

 

141

 

9.9

%

Other expense

 

 

1,079

 

 

1,239

 

(12.9

)%

 

 

755

 

42.9

%

Total noninterest expense

 

$

13,754

 

$

13,115

 

4.9

%

 

$

12,071

 

13.9

%

 

 

 

 

 

 

 

 

 

 

 

Salaries and Employee Benefits. The increase for the current quarter compared with the previous quarter was primarily due to increases in salaries and other employee benefit expense, including bonus and vacation accruals, from an increase in number of employees, as well as annual merit increases, partially offset by a decrease in incentives tied to sales of Loan Production Offices (“LPO”) originated SBA loans. The increase for the current quarter compared with the year-ago quarter was primarily due to increases in salaries and other employee benefit expense, partially offset by decreases in bonus accrual and incentives tied to the sales of LPO originated SBA loans. The number of full-time equivalent employees was 276, 272 and 256 as of March 31, 2023, December 31, 2022 and March 31, 2022, respectively.

Occupancy and Equipment. The increase for the current quarter compared with the year-ago quarter was primarily due to new branch openings during the second half of 2022. The Company opened 3 new full-service branches in Dallas and Carrollton, Texas and Palisades Park, New Jersey.

Professional Fees. The increases for the current quarter and year were primarily due to an increase in internal audit fees.

Marketing and Business Promotion. The decreases for the current quarter compared with the previous quarter was primarily due to the larger marketing activities and advertisements for the Bank's name change to PCB Bank and new branch openings during the previous quarter.

Other Expense. The decrease for the current quarter compared with the previous quarter was primarily due to an increased office expense for the new branches during the previous quarter. The increase for the current quarter compared with the year-ago quarter was primarily due to increases in office expenses, other loan related expenses and armed guard expenses from the branch network expansion. Provision for credit losses on off-balance credit exposures of $57 thousand and $2 thousand was included in other expense for the previous and year-ago quarters, respectively, while the current quarter provision was included in provision (reversal) for credit losses.

Balance Sheet (Unaudited)

Total assets were $2.50 billion at March 31, 2023, an increase of $80.5 million, or 3.3%, from $2.42 billion at December 31, 2022 and an increase of $300.8 million, or 13.7%, from $2.20 billion at March 31, 2022. The increase for the current quarter was primarily due to increases in cash and cash equivalents and loans held-for-investment, partially offset by a decrease in loans held-for-sale.

CECL Adoption

On January 1, 2023, the Company adopted the provisions of ASC 326 through the application of the modified retrospective transition approach. The initial adjustment to the ACL is reflective of expected lifetime credit losses associated with the composition of financial assets within in the scope of ASC 326 as of January 1, 2023, as well as management’s current expectation of future economic conditions. The following table summarizes the initial adjustment to the ACL as of January 1, 2023:

($ in thousands)

 

Pre-ASC 326 Adoption

 

Impact of ASC 326 Adoption

 

As Reported Under ASC 326

Assets

 

 

 

 

 

 

Commercial real estate loans

 

$

15,536

 

$

(610

)

 

$

14,926

Commercial and industrial loans

 

 

5,502

 

 

4,344

 

 

 

9,846

Consumer loans

 

 

3,904

 

 

(2,667

)

 

 

1,237

Total ACL on loans

 

 

24,942

 

 

1,067

 

 

 

26,009

Deferred tax assets

 

 

3,115

 

 

788

 

 

 

3,903

Liabilities

 

 

 

 

 

 

ACL on off-balance sheet credit exposures (1)

 

$

299

 

$

1,607

 

 

$

1,906

Shareholders’ equity

 

 

 

 

 

 

Retained earnings

 

$

127,181

 

$

(1,886

)

 

$

125,295

(1)

ACL on off-balance sheet credit exposures was recorded in Accrued Interest Payable and Other Liabilities on Consolidated Balance Sheets (Unaudited).

In conjunction with the adoption of ASC 326, the Company made an accounting policy election not to measure an ACL on accrued interest receivables. When accrued interest receivable is deemed to be uncollectable, the Company promptly reverses such balances through current period interest income in the period they are deemed uncollectable. Additionally, the Company has also elected not to include the balance of accrued interest receivable in the amortized cost basis of financial assets within the scope of ASC 326. Accrued interest receivable will continue to be presented separately in the Consolidated Balance Sheets.

The measurement of the ACL on loans is performed by collectively evaluating loans with similar risk characteristics using a discounted cash flow approach. The discounted cash flow methodology incorporates a probability of default (“PD”) and loss given default (“LGD”) model, as well as reasonable and supportable forecasts, and generates estimate of the contractual cash flows that are not expected to be collected over the life of the loan.

As a part of the adoption of ASC 326, the Company reviewed loan segmentation and revised certain loan segmentations for the Company’s ACL model. Before the adoption of ASC 326, commercial property and SBA property loans were separately presented and represented 63.0% and 6.6% of loans held-for-investment at December 31, 2022, respectively. The Company re-divided these loan segments into commercial property (non-owner occupied), business property (owner occupied) and multifamily loans as these new loan segments are determined to share similar characteristics under the Company’s ACL model. In addition, four loan segments before the adoption of ASC 326 (commercial term loans, commercial lines of credit, SBA term loans and SBA PPP loans), which represented 12.2% of loans held-for-investment at December 31, 2022, are combined into a single loan segment, commercial and industrial loans, as these loans are determined to share similar risk characteristics under the Company’s ACL model. In this report, loan segments on loan related disclosures for prior period comparisons are revised accordingly in order to be comparable to the Company’s new loan segmentations.

Loans

The following table presents a composition of total loans (includes both loans held-for-sale and loans held-for-investment) as of the dates indicated:

($ in thousands)

 

3/31/2023

 

12/31/2022

 

% Change

 

3/31/2022

 

% Change

Commercial real estate:

 

 

 

 

 

 

 

 

 

 

Commercial property

 

$

780,282

 

$

772,020

 

1.1

%

 

$

646,764

 

20.6

%

Business property

 

 

521,965

 

 

526,513

 

(0.9

)%

 

 

536,107

 

(2.6

)%

Multifamily

 

 

127,012

 

 

124,751

 

1.8

%

 

 

96,630

 

31.4

%

Construction

 

 

15,930

 

 

17,054

 

(6.6

)%

 

 

9,522

 

67.3

%

Total commercial real estate

 

 

1,445,189

 

 

1,440,338

 

0.3

%

 

 

1,289,023

 

12.1

%

Commercial and industrial

 

 

267,674

 

 

249,250

 

7.4

%

 

 

217,048

 

23.3

%

Consumer:

 

 

 

 

 

 

 

 

 

 

Residential mortgage

 

 

356,967

 

 

333,726

 

7.0

%

 

 

215,132

 

65.9

%

Other consumer

 

 

22,612

 

 

22,749

 

(0.6

)%

 

 

21,752

 

4.0

%

Total consumer

 

 

379,579

 

 

356,475

 

6.5

%

 

 

236,884

 

60.2

%

Loans held-for-investment

 

 

2,092,442

 

 

2,046,063

 

2.3

%

 

 

1,742,955

 

20.1

%

Loans held-for-sale

 

 

14,352

 

 

22,811

 

(37.1

)%

 

 

18,340

 

(21.7

)%

Total loans

 

$

2,106,794

 

$

2,068,874

 

1.8

%

 

$

1,761,295

 

19.6

%

 

 

 

 

 

 

 

 

 

 

 

The increase in loans held-for-investment for the current quarter was primarily due to new funding and advances on lines of credit of $189.6 million and purchases of residential mortgage loans of $15.7 million, partially offset by pay-downs and pay-offs of $159.0 million.

The decrease in loans held-for-sale for the current quarter was primarily due to sales of $27.1 million and pay-downs and pay-offs of $4.1 million, partially offset by new funding of $22.7 million.

The following table presents a composition of off-balance sheet credit exposure as of the dates indicated:

($ in thousands)

 

3/31/2023

 

12/31/2022

 

% Change

 

3/31/2022

 

% Change

Commercial property

 

$

6,811

 

$

7,006

 

(2.8

)%

 

$

8,319

 

(18.1

)%

Business property

 

 

12,307

 

 

8,396

 

46.6

%

 

 

10,518

 

17.0

%

Multifamily

 

 

4,500

 

 

4,500

 

%

 

 

5,500

 

(18.2

)%

Construction

 

 

16,563

 

 

18,211

 

(9.0

)%

 

 

6,528

 

153.7

%

Commercial and industrial

 

 

279,543

 

 

254,668

 

9.8

%

 

 

179,366

 

55.9

%

Other consumer

 

 

399

 

 

692

 

(42.3

)%

 

 

1,080

 

(63.1

)%

Total commitments to extend credit

 

 

320,123

 

 

293,473

 

9.1

%

 

 

211,311

 

51.5

%

Letters of credit

 

 

5,400

 

 

5,392

 

0.1

%

 

 

5,505

 

(1.9

)%

Total off-balance sheet credit exposure

 

$

325,523

 

$

298,865

 

8.9

%

 

$

216,816

 

50.1

%

 

 

 

 

 

 

 

 

 

 

 

Allowance for Credit Losses

The following table presents activities in ACL for the periods indicated:

 

 

Three Months Ended

($ in thousands)

 

3/31/2023

 

12/31/2022

 

% Change

 

3/31/2022

 

% Change

ACL on loans

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

24,942

 

 

$

23,761

 

 

5.0

%

 

$

22,381

 

 

11.4

%

Impact of ASC 326 adoption

 

 

1,067

 

 

 

 

 

NM

 

 

 

 

 

NM

 

Charge-offs

 

 

 

 

 

(28

)

 

(100.0

)%

 

 

(12

)

 

(100.0

)%

Recoveries

 

 

1,102

 

 

 

60

 

 

1,736.7

%

 

 

20

 

 

5,410.0

%

Provision (reversal) for credit losses on loans

 

 

(2,417

)

 

 

1,149

 

 

NM

 

 

 

(1,191

)

 

102.9

%

Balance at end of period

 

$

24,694

 

 

$

24,942

 

 

(1.0

)%

 

$

21,198

 

 

16.5

%

Percentage to loans held-for-investment at end of period

 

 

1.18

%

 

 

1.22

%

 

 

 

 

1.22

%

 

 

ACL on off-balance sheet credit exposure (1)

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

299

 

 

$

242

 

 

23.6

%

 

$

214

 

 

39.7

%

Impact of ASC 326 adoption

 

 

1,607

 

 

 

 

 

NM

 

 

 

 

 

NM

 

Provision (reversal) for credit losses on off-balance sheet credit exposure

 

 

(361

)

 

 

57

 

 

NM

 

 

 

2

 

 

NM

 

Balance at end of period

 

$

1,545

 

 

$

299

 

 

416.7

%

 

$

216

 

 

615.3

%

(1)

ACL on off-balance sheet credit exposures was recorded in Accrued Interest Payable and Other Liabilities on Consolidated Balance Sheets (Unaudited).

Credit Quality

The following table presents a summary of non-performing loans, non-performing assets and classified assets as of the dates indicated:

($ in thousands)

 

3/31/2023

 

12/31/2022

 

% Change

 

3/31/2022

 

% Change

Nonaccrual loans

 

 

 

 

 

 

 

 

 

 

Commercial real estate:

 

 

 

 

 

 

 

 

 

 

Commercial property

 

$

 

 

$

 

 

%

 

$

166

 

 

(100.0

)%

Business property

 

 

2,904

 

 

 

2,985

 

 

(2.7

)%

 

 

567

 

 

412.2

%

Total commercial real estate

 

 

2,904

 

 

 

2,985

 

 

(2.7

)%

 

 

733

 

 

296.2

%

Commercial and industrial

 

 

11

 

 

 

 

 

%

 

 

199

 

 

(94.5

)%

Consumer:

 

 

 

 

 

 

 

 

 

 

Residential mortgage

 

 

 

 

 

372

 

 

(100.0

)%

 

 

461

 

 

(100.0

)%

Other consumer

 

 

45

 

 

 

3

 

 

1,400.0

%

 

 

25

 

 

80.0

%

Total consumer

 

 

45

 

 

 

375

 

 

(88.0

)%

 

 

486

 

 

(90.7

)%

Total nonaccrual loans held-for-investment

 

 

2,960

 

 

 

3,360

 

 

(11.9

)%

 

 

1,418

 

 

108.7

%

Loans past due 90 days or more and still accruing

 

 

 

 

 

 

 

%

 

 

 

 

%

Non-performing loans (“NPLs”) held-for-investment

 

 

2,960

 

 

 

3,360

 

 

(11.9

)%

 

 

1,418

 

 

108.7

%

NPLs held-for-sale

 

 

 

 

 

4,000

 

 

(100.0

)%

 

 

 

 

%

Total NPLs

 

 

2,960

 

 

 

7,360

 

 

(59.8

)%

 

 

1,418

 

 

108.7

%

Other real estate owned (“OREO”)

 

 

 

 

 

 

 

%

 

 

 

 

%

Non-performing assets (“NPAs”)

 

$

2,960

 

 

$

7,360

 

 

(59.8

)%

 

$

1,418

 

 

108.7

%

Loans past due and still accruing

 

 

 

 

 

 

 

 

 

 

Past due 30 to 59 days

 

$

779

 

 

$

47

 

 

1,557.4

%

 

$

119

 

 

554.6

%

Past due 60 to 89 days

 

 

13

 

 

 

87

 

 

(85.1

)%

 

 

1

 

 

1,200.0

%

Past due 90 days or more

 

 

 

 

 

 

 

%

 

 

 

 

%

Total loans past due and still accruing

 

$

792

 

 

$

134

 

 

491.0

%

 

$

120

 

 

560.0

%

Special mention loans

 

$

5,527

 

 

$

6,857

 

 

(19.4

)%

 

$

5,562

 

 

(0.6

)%

Classified assets

 

 

 

 

 

 

 

 

 

Classified loans held-for-investment

 

$

6,060

 

 

$

6,211

 

 

(2.4

)%

 

$

5,377

 

 

12.7

%

Classified loans held-for-sale

 

 

 

 

 

4,000

 

 

(100.0

)%

 

 

 

 

%

OREO

 

 

 

 

 

 

 

%

 

 

 

 

%

Classified assets

 

$

6,060

 

 

$

10,211

 

 

(40.7

)%

 

$

5,377

 

 

12.7

%

NPLs held-for-investment to loans held-for-investment

 

 

0.14

%

 

 

0.16

%

 

 

 

 

0.08

%

 

 

NPAs to total assets

 

 

0.12

%

 

 

0.30

%

 

 

 

 

0.06

%

 

 

Classified assets to total assets

 

 

0.24

%

 

 

0.42

%

 

 

 

 

0.24

%

 

 

 

 

 

 

 

 

 

 

 

 

 

During the current quarter, NPLs held-for-sale of $4.0 million were paid-off.

Investment Securities

Total investment securities were $144.7 million at March 31, 2023, an increase of $2.8 million, or 2.0%, from $141.9 million at December 31, 2022 and an increase of $13.3 million, or 10.1%, from $131.3 million at March 31, 2022. The increase for the current quarter was primarily due to purchases of $4.9 million and a fair value increase of $2.0 million, partially offset by principal pay-downs and calls of $4.1 million and net premium amortization of $57 thousand.

Deposits

The following table presents the Company’s deposit mix as of the dates indicated:

 

 

3/31/2023

 

12/31/2022

 

3/31/2022

($ in thousands)

 

Amount

 

% to Total

 

Amount

 

% to Total

 

Amount

 

% to Total

Noninterest-bearing demand deposits

 

$

653,970

 

30.5

%

 

$

734,989

 

35.9

%

 

$

891,797

 

46.7

%

Interest-bearing deposits

 

 

 

 

 

 

 

 

 

 

 

 

Savings

 

 

7,584

 

0.4

%

 

 

8,579

 

0.4

%

 

 

15,037

 

0.8

%

NOW

 

 

15,696

 

0.7

%

 

 

11,405

 

0.6

%

 

 

17,543

 

0.9

%

Retail money market accounts

 

 

436,906

 

20.3

%

 

 

494,749

 

24.1

%

 

 

431,057

 

22.5

%

Brokered money market accounts

 

 

1

 

0.1

%

 

 

8

 

0.1

%

 

 

1

 

0.1

%

Retail time deposits of

 

 

 

 

 

 

 

 

 

 

 

 

$250,000 or less

 

 

356,049

 

16.6

%

 

 

295,354

 

14.4

%

 

 

246,100

 

12.8

%

More than $250,000

 

 

454,464

 

21.3

%

 

 

353,876

 

17.3

%

 

 

173,844

 

9.1

%

State and brokered time deposits

 

 

217,019

 

10.1

%

 

 

147,023

 

7.2

%

 

 

135,000

 

7.1

%

Total interest-bearing deposits

 

 

1,487,719

 

69.5

%

 

 

1,310,994

 

64.1

%

 

 

1,018,582

 

53.3

%

Total deposits

 

$

2,141,689

 

100.0

%

 

$

2,045,983

 

100.0

%

 

$

1,910,379

 

100.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Estimated total deposits not covered by deposit insurance

 

$

1,019,689

 

47.6

%

 

$

1,062,111

 

51.9

%

 

$

1,015,255

 

53.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

The decrease in noninterest-bearing demand deposits was primarily due to strong deposit market competition and the migration of noninterest-bearing demand deposits to money market accounts and time deposits attributable to the rising market rates. To retain existing and attract new customers, the Bank offers competitive rates on deposit products in the rising interest rate environment.

The increase in retail time deposits for the current quarter was primarily due to new accounts of $300.3 million, renewals of the matured accounts of $117.4 million and balance increases of $6.9 million, partially offset by matured and closed accounts of $263.3 million.

Liquidity

The following table presents a summary of the Company’s liquidity position as of March 31, 2023:

($ in thousands)

 

3/31/2023

 

12/31/2022

 

% Change

Cash and cash equivalents

 

$

190,519

 

 

$

147,031

 

 

29.6

%

Cash and cash equivalents to total assets

 

 

7.6

%

 

 

6.1

%

 

 

 

 

 

 

 

 

 

Available borrowing capacity

 

 

 

 

 

 

FHLB advances

 

$

604,999

 

 

$

561,745

 

 

7.7

%

Federal Reserve Discount Window

 

 

29,776

 

 

 

23,902

 

 

24.6

%

Overnight federal funds lines

 

 

65,000

 

 

 

65,000

 

 

%

Total

 

$

699,775

 

 

$

650,647

 

 

7.6

%

Total available borrowing capacity to total assets

 

 

28.0

%

 

 

26.9

%

 

 

 

 

 

 

 

 

 

During the current quarter, the Company increased cash and cash equivalents by $43.5 million, or 29.6%, to $190.5 million and available borrowing capacity by $49.1 million, or 7.6%, to $699.8 million. As of March 31, 2023, the Company's cash and cash equivalents and available borrowing capacity cover approximately 87.3% of deposits not covered by deposit insurance compared to 75.1% at December 31, 2022.

Shareholders’ Equity

Shareholders’ equity was $336.8 million at March 31, 2023, an increase of $1.4 million, or 0.4%, from $335.4 million at December 31, 2022 and an increase of $75.8 million, or 29.0%, from $261.1 million at March 31, 2022. The increase for the current quarter was primarily due to net income, partially offset by cash dividends declared on common stock of $2.2 million and repurchase of 385,381 shares of common stock at a weighted-average price of $17.76, totaling $6.8 million.

Stock Repurchase

On July 28, 2022, the Company’s Board of Directors approved a repurchase program authorizing for the repurchase of up to 5% of the Company’s outstanding common stock as of the date of the board meeting, which represented 747,938 shares, through February 1, 2023. On January 26, 2023, the Company announced the amendment to the repurchase program, which extended the program expiration from February 1, 2023 to February 1, 2024. The Company completed the repurchase program during the current quarter. Under this repurchase program, the Company repurchased and retired 747,938 shares of common stock at a weighted-average price of $18.15 per share, totaling $13.6 million.

Issuance of Preferred Stock Under the Emergency Capital Investment Program

On May 24, 2022, the Company issued 69,141 shares of Senior Non-Cumulative Perpetual Preferred Stock, Series C, liquidation preference of $1,000 per share (“Series C Preferred Stock”) for the capital investment of $69.1 million from the U.S. Treasury under the Emergency Capital Investment Program (“ECIP”). ECIP investment is treated as tier 1 capital for regulatory capital purposes.

The Series C Preferred Stock bears no dividend for the first 24 months following the investment date. Thereafter, the dividend rate will be adjusted based on the lending growth criteria listed in the terms of the ECIP investment with an annual dividend rate up to 2%. After the tenth anniversary of the investment date, the dividend rate will be fixed based on average annual amount of lending in years 2 through 10.

Capital Ratios

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. The following table presents capital ratios for the Company and the Bank as of the dates indicated:

 

 

3/31/2023

 

12/31/2022

 

3/31/2022

 

Well Capitalized Requirements

PCB Bancorp

 

 

 

 

 

 

 

 

Common tier 1 capital (to risk-weighted assets)

 

13.09

%

 

13.29

%

 

14.77

%

 

N/A

 

Total capital (to risk-weighted assets)

 

17.61

%

 

17.83

%

 

15.97

%

 

N/A

 

Tier 1 capital (to risk-weighted assets)

 

16.37

%

 

16.62

%

 

14.77

%

 

N/A

 

Tier 1 capital (to average assets)

 

13.90

%

 

14.33

%

 

12.22

%

 

N/A

 

PCB Bank

 

 

 

 

 

 

 

 

Common tier 1 capital (to risk-weighted assets)

 

16.03

%

 

16.30

%

 

14.43

%

 

6.5

%

Total capital (to risk-weighted assets)

 

17.27

%

 

17.52

%

 

15.63

%

 

10.0

%

Tier 1 capital (to risk-weighted assets)

 

16.03

%

 

16.30

%

 

14.43

%

 

8.0

%

Tier 1 capital (to average assets)

 

13.62

%

 

14.05

%

 

11.94

%

 

5.0

%

 

 

 

 

 

 

 

 

 

About PCB Bancorp

PCB Bancorp is the bank holding company for PCB Bank, a California state chartered bank, offering a full suite of commercial banking services to small to medium-sized businesses, individuals and professionals, primarily in Southern California, and predominantly in Korean-American and other minority communities.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements. These forward-looking statements represent plans, estimates, objectives, goals, guidelines, expectations, intentions, projections and statements of our beliefs concerning future events, business plans, objectives, expected operating results and the assumptions upon which those statements are based. Forward-looking statements include without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and are typically identified with words such as “may,” “could,” “should,” “will,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “aim,” “intend,” “plan,” or words or phases of similar meaning. We caution that the forward-looking statements are based largely on our expectations and are subject to a number of known and unknown risks and uncertainties that are subject to change based on factors which are, in many instances, beyond our control, including but not limited to general economic uncertainty in the United States and abroad, the impact of inflation, changes in interest rates (including actions taken by the Federal Reserve to address inflation), deposit flows, and real estate values, and their corresponding impact on our customers, and the network and data incident discovered on August 30, 2021. These and other important factors are detailed in various securities law filings made periodically by the Company, copies of which are available from the Company without charge. Actual results, performance or achievements could differ materially from those contemplated, expressed, or implied by the forward-looking statements. Any forward-looking statements presented herein are made only as of the date of this press release, and we do not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise, except as required by law.

PCB Bancorp and Subsidiary

Consolidated Balance Sheets (Unaudited)

($ in thousands, except share and per share data)

 

 

3/31/2023

 

12/31/2022

 

% Change

 

3/31/2022

 

% Change

Assets

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

25,801

 

 

$

23,202

 

 

11.2

%

 

$

19,693

 

 

31.0

%

Interest-bearing deposits in other financial institutions

 

 

164,718

 

 

 

123,829

 

 

33.0

%

 

 

230,519

 

 

(28.5

)%

Total cash and cash equivalents

 

 

190,519

 

 

 

147,031

 

 

29.6

%

 

 

250,212

 

 

(23.9

)%

Securities available-for-sale, at fair value

 

 

144,665

 

 

 

141,863

 

 

2.0

%

 

 

131,345

 

 

10.1

%

Loans held-for-sale

 

 

14,352

 

 

 

22,811

 

 

(37.1

)%

 

 

18,340

 

 

(21.7

)%

Loans held-for-investment

 

 

2,092,442

 

 

 

2,046,063

 

 

2.3

%

 

 

1,742,955

 

 

20.1

%

Allowance for credit losses on loans

 

 

(24,694

)

 

 

(24,942

)

 

(1.0

)%

 

 

(21,198

)

 

16.5

%

Net loans held-for-investment

 

 

2,067,748

 

 

 

2,021,121

 

 

2.3

%

 

 

1,721,757

 

 

20.1

%

Premises and equipment, net

 

 

6,473

 

 

 

6,916

 

 

(6.4

)%

 

 

3,106

 

 

108.4

%

Federal Home Loan Bank and other bank stock

 

 

10,183

 

 

 

10,183

 

 

%

 

 

8,577

 

 

18.7

%

Bank-owned life insurance

 

 

30,244

 

 

 

30,064

 

 

0.6

%

 

 

29,530

 

 

2.4

%

Deferred tax assets, net

 

 

3,753

 

 

 

3,115

 

 

20.5

%

 

 

11,895

 

 

(68.4

)%

Servicing assets

 

 

7,345

 

 

 

7,347

 

 

%

 

 

7,533

 

 

(2.5

)%

Operating lease assets

 

 

5,854

 

 

 

6,358

 

 

(7.9

)%

 

 

6,511

 

 

(10.1

)%

Accrued interest receivable

 

 

7,998

 

 

 

7,472

 

 

7.0

%

 

 

5,050

 

 

58.4

%

Other assets

 

 

11,390

 

 

 

15,755

 

 

(27.7

)%

 

 

5,886

 

 

93.5

%

Total assets

 

$

2,500,524

 

 

$

2,420,036

 

 

3.3

%

 

$

2,199,742

 

 

13.7

%

Liabilities

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing demand

 

$

653,970

 

 

$

734,989

 

 

(11.0

)%

 

$

891,797

 

 

(26.7

)%

Savings, NOW and money market accounts

 

 

460,187

 

 

 

514,741

 

 

(10.6

)%

 

 

463,638

 

 

(0.7

)%

Time deposits of $250,000 or less

 

 

513,068

 

 

 

382,377

 

 

34.2

%

 

 

281,100

 

 

82.5

%

Time deposits of more than $250,000

 

 

514,464

 

 

 

413,876

 

 

24.3

%

 

 

273,844

 

 

87.9

%

Total deposits

 

 

2,141,689

 

 

 

2,045,983

 

 

4.7

%

 

 

1,910,379

 

 

12.1

%

Federal Home Loan Bank advances

 

 

 

 

 

20,000

 

 

(100.0

)%

 

 

10,000

 

 

(100.0

)%

Operating lease liabilities

 

 

6,238

 

 

 

6,809

 

 

(8.4

)%

 

 

7,176

 

 

(13.1

)%

Accrued interest payable and other liabilities

 

 

15,767

 

 

 

11,802

 

 

33.6

%

 

 

11,129

 

 

41.7

%

Total liabilities

 

 

2,163,694

 

 

 

2,084,594

 

 

3.8

%

 

 

1,938,684

 

 

11.6

%

Commitments and contingent liabilities

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

 

 

 

 

 

Preferred stock

 

 

69,141

 

 

 

69,141

 

 

%

 

 

 

 

%

Common stock

 

 

143,356

 

 

 

149,631

 

 

(4.2

)%

 

 

155,614

 

 

(7.9

)%

Retained earnings

 

 

133,415

 

 

 

127,181

 

 

4.9

%

 

 

109,142

 

 

22.2

%

Accumulated other comprehensive loss, net

 

 

(9,082

)

 

 

(10,511

)

 

(13.6

)%

 

 

(3,698

)

 

145.6

%

Total shareholders’ equity

 

 

336,830

 

 

 

335,442

 

 

0.4

%

 

 

261,058

 

 

29.0

%

Total liabilities and shareholders’ equity

 

$

2,500,524

 

 

$

2,420,036

 

 

3.3

%

 

$

2,199,742

 

 

13.7

%

 

 

 

 

 

 

 

 

 

 

 

Outstanding common shares

 

 

14,297,870

 

 

 

14,625,474

 

 

 

 

 

14,944,663

 

 

 

Book value per common share (1)

 

$

23.56

 

 

$

22.94

 

 

 

 

$

17.47

 

 

 

TCE per common share (2)

 

$

18.72

 

 

$

18.21

 

 

 

 

$

17.47

 

 

 

Total loan to total deposit ratio

 

 

98.37

%

 

 

101.12

%

 

 

 

 

92.20

%

 

 

Noninterest-bearing deposits to total deposits

 

 

30.54

%

 

 

35.92

%

 

 

 

 

46.68

%

 

 

(1)

The ratios are calculated by dividing total shareholders’ equity by the number of outstanding common shares. The Company did not have any intangible equity components for the presented periods.

(2)

Non-GAAP. See “Non-GAAP Measures” for reconciliation of this measure to its most comparable GAAP measure.

PCB Bancorp and Subsidiary

Consolidated Statements of Income (Unaudited)

($ in thousands, except share and per share data)

 

 

Three Months Ended

 

 

3/31/2023

 

12/31/2022

 

% Change

 

3/31/2022

 

% Change

Interest and dividend income

 

 

 

 

 

 

 

 

 

 

Loans, including fees

 

$

31,229

 

 

$

28,786

 

 

8.5

%

 

$

20,190

 

 

54.7

%

Investment securities

 

 

1,102

 

 

 

957

 

 

15.2

%

 

 

476

 

 

131.5

%

Other interest-earning assets

 

 

2,205

 

 

 

1,833

 

 

20.3

%

 

 

228

 

 

867.1

%

Total interest income

 

 

34,536

 

 

 

31,576

 

 

9.4

%

 

 

20,894

 

 

65.3

%

Interest expense

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

11,913

 

 

 

7,295

 

 

63.3

%

 

 

850

 

 

1,301.5

%

Other borrowings

 

 

209

 

 

 

16

 

 

1,206.3

%

 

 

51

 

 

309.8

%

Total interest expense

 

 

12,122

 

 

 

7,311

 

 

65.8

%

 

 

901

 

 

1,245.4

%

Net interest income

 

 

22,414

 

 

 

24,265

 

 

(7.6

)%

 

 

19,993

 

 

12.1

%

Provision (reversal) for credit losses

 

 

(2,778

)

 

 

1,149

 

 

NM

 

 

 

(1,191

)

 

133.2

%

Net interest income after provision (reversal) for credit losses

 

 

25,192

 

 

 

23,116

 

 

9.0

%

 

 

21,184

 

 

18.9

%

Noninterest income

 

 

 

 

 

 

 

 

 

 

Gain on sale of loans

 

 

1,309

 

 

 

759

 

 

72.5

%

 

 

3,777

 

 

(65.3

)%

Service charges and fees on deposits

 

 

344

 

 

 

352

 

 

(2.3

)%

 

 

303

 

 

13.5

%

Loan servicing income

 

 

860

 

 

 

734

 

 

17.2

%

 

 

700

 

 

22.9

%

Bank-owned life insurance income

 

 

180

 

 

 

181

 

 

(0.6

)%

 

 

172

 

 

4.7

%

Other income

 

 

328

 

 

 

363

 

 

(9.6

)%

 

 

334

 

 

(1.8

)%

Total noninterest income

 

 

3,021

 

 

 

2,389

 

 

26.5

%

 

 

5,286

 

 

(42.8

)%

Noninterest expense

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

8,928

 

 

 

7,879

 

 

13.3

%

 

 

8,595

 

 

3.9

%

Occupancy and equipment

 

 

1,896

 

 

 

1,897

 

 

(0.1

)%

 

 

1,397

 

 

35.7

%

Professional fees

 

 

732

 

 

 

607

 

 

20.6

%

 

 

403

 

 

81.6

%

Marketing and business promotion

 

 

372

 

 

 

724

 

 

(48.6

)%

 

 

207

 

 

79.7

%

Data processing

 

 

412

 

 

 

434

 

 

(5.1

)%

 

 

404

 

 

2.0

%

Director fees and expenses

 

 

180

 

 

 

176

 

 

2.3

%

 

 

169

 

 

6.5

%

Regulatory assessments

 

 

155

 

 

 

159

 

 

(2.5

)%

 

 

141

 

 

9.9

%

Other expense

 

 

1,079

 

 

 

1,239

 

 

(12.9

)%

 

 

755

 

 

42.9

%

Total noninterest expense

 

 

13,754

 

 

 

13,115

 

 

4.9

%

 

 

12,071

 

 

13.9

%

Income before income taxes

 

 

14,459

 

 

 

12,390

 

 

16.7

%

 

 

14,399

 

 

0.4

%

Income tax expense

 

 

4,162

 

 

 

3,688

 

 

12.9

%

 

 

4,159

 

 

0.1

%

Net income

 

$

10,297

 

 

$

8,702

 

 

18.3

%

 

$

10,240

 

 

0.6

%

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.71

 

 

$

0.59

 

 

 

 

$

0.69

 

 

 

Diluted

 

$

0.70

 

 

$

0.58

 

 

 

 

$

0.67

 

 

 

Average common shares

 

 

 

 

 

 

 

 

 

 

Basic

 

 

14,419,155

 

 

 

14,700,010

 

 

 

 

 

14,848,014

 

 

 

Diluted

 

 

14,574,929

 

 

 

14,904,106

 

 

 

 

 

15,141,693

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividend paid per common share

 

$

0.15

 

 

$

0.15

 

 

 

 

$

0.15

 

 

 

Return on average assets (1)

 

 

1.69

%

 

 

1.44

%

 

 

 

 

1.92

%

 

 

Return on average shareholders’ equity (1)

 

 

12.46

%

 

 

10.31

%

 

 

 

 

16.01

%

 

 

Return on average TCE (1), (2)

 

 

15.70

%

 

 

12.99

%

 

 

 

 

16.01

%

 

 

Efficiency ratio (3)

 

 

54.08

%

 

 

49.20

%

 

 

 

 

47.75

%

 

 

(1)

Ratios are presented on an annualized basis.

(2)

Non-GAAP. See “Non-GAAP Measures” for reconciliation of this measure to its most comparable GAAP measure.

(3)

The ratios are calculated by dividing noninterest expense by the sum of net interest income and noninterest income.

PCB Bancorp and Subsidiary

Average Balance, Average Yield, and Average Rate (Unaudited)

($ in thousands)

 

 

Three Months Ended

 

 

3/31/2023

 

12/31/2022

 

3/31/2022

 

 

Average Balance

 

Interest Income/ Expense

 

Avg. Yield/Rate(6)

 

Average Balance

 

Interest Income/ Expense

 

Avg. Yield/Rate(6)

 

Average Balance

 

Interest Income/ Expense

 

Avg. Yield/Rate(6)

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total loans (1)

 

$

2,072,415

 

 

$

31,229

 

6.11

%

 

$

2,004,220

 

 

$

28,786

 

5.70

%

 

$

1,773,376

 

 

$

20,190

 

4.62

%

Mortgage-backed securities

 

 

97,578

 

 

 

683

 

2.84

%

 

 

90,346

 

 

 

585

 

2.57

%

 

 

84,223

 

 

 

307

 

1.48

%

Collateralized mortgage obligation

 

 

26,743

 

 

 

256

 

3.88

%

 

 

25,570

 

 

 

221

 

3.43

%

 

 

18,242

 

 

 

48

 

1.07

%

SBA loan pool securities

 

 

9,027

 

 

 

82

 

3.68

%

 

 

9,545

 

 

 

71

 

2.95

%

 

 

10,095

 

 

 

38

 

1.53

%

Municipal bonds (2)

 

 

4,221

 

 

 

34

 

3.27

%

 

 

4,050

 

 

 

33

 

3.23

%

 

 

5,632

 

 

 

36

 

2.59

%

Corporate bonds

 

 

4,510

 

 

 

47

 

4.23

%

 

 

4,555

 

 

 

47

 

4.09

%

 

 

5,038

 

 

 

47

 

3.78

%

Other interest-earning assets

 

 

186,809

 

 

 

2,205

 

4.79

%

 

 

182,018

 

 

 

1,833

 

4.00

%

 

 

198,918

 

 

 

228

 

0.46

%

Total interest-earning assets

 

 

2,401,303

 

 

 

34,536

 

5.83

%

 

 

2,320,304

 

 

 

31,576

 

5.40

%

 

 

2,095,524

 

 

 

20,894

 

4.04

%

Noninterest-earning assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

 

21,155

 

 

 

 

 

 

 

21,139

 

 

 

 

 

 

 

20,385

 

 

 

 

 

ACL on loans

 

 

(26,757

)

 

 

 

 

 

 

(23,800

)

 

 

 

 

 

 

(22,377

)

 

 

 

 

Other assets

 

 

75,175

 

 

 

 

 

 

 

78,069

 

 

 

 

 

 

 

67,600

 

 

 

 

 

Total noninterest-earning assets

 

 

69,573

 

 

 

 

 

 

 

75,408

 

 

 

 

 

 

 

65,608

 

 

 

 

 

Total assets

 

$

2,470,876

 

 

 

 

 

 

$

2,395,712

 

 

 

 

 

 

$

2,161,132

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOW and money market accounts

 

$

485,962

 

 

 

3,445

 

2.87

%

 

$

540,312

 

 

 

2,852

 

2.09

%

 

$

431,981

 

 

 

313

 

0.29

%

Savings

 

 

8,099

 

 

 

5

 

0.25

%

 

 

10,692

 

 

 

3

 

0.11

%

 

 

15,644

 

 

 

2

 

0.05

%

Time deposits

 

 

916,751

 

 

 

8,463

 

3.74

%

 

 

718,735

 

 

 

4,440

 

2.45

%

 

 

586,387

 

 

 

535

 

0.37

%

Total interest-bearing deposits

 

 

1,410,812

 

 

 

11,913

 

3.42

%

 

 

1,269,739

 

 

 

7,295

 

2.28

%

 

 

1,034,012

 

 

 

850

 

0.33

%

Other borrowings

 

 

15,811

 

 

 

209

 

5.36

%

 

 

1,739

 

 

 

16

 

3.65

%

 

 

10,400

 

 

 

51

 

1.99

%

Total interest-bearing liabilities

 

 

1,426,623

 

 

 

12,122

 

3.45

%

 

 

1,271,478

 

 

 

7,311

 

2.28

%

 

 

1,044,412

 

 

 

901

 

0.35

%

Noninterest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing demand

 

 

687,575

 

 

 

 

 

 

 

771,632

 

 

 

 

 

 

 

840,626

 

 

 

 

 

Other liabilities

 

 

21,509

 

 

 

 

 

 

 

17,770

 

 

 

 

 

 

 

16,727

 

 

 

 

 

Total noninterest-bearing liabilities

 

 

709,084

 

 

 

 

 

 

 

789,402

 

 

 

 

 

 

 

857,353

 

 

 

 

 

Total liabilities

 

 

2,135,707

 

 

 

 

 

 

 

2,060,880

 

 

 

 

 

 

 

1,901,765

 

 

 

 

 

Total shareholders’ equity

 

 

335,169

 

 

 

 

 

 

 

334,832

 

 

 

 

 

 

 

259,367

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

2,470,876

 

 

 

 

 

 

$

2,395,712

 

 

 

 

 

 

$

2,161,132

 

 

 

 

 

Net interest income

 

 

 

$

22,414

 

 

 

 

 

$

24,265

 

 

 

 

 

$

19,993

 

 

Net interest spread (3)

 

 

 

 

 

2.38

%

 

 

 

 

 

3.12

%

 

 

 

 

 

3.69

%

Net interest margin (4)

 

 

 

 

 

3.79

%

 

 

 

 

 

4.15

%

 

 

 

 

 

3.87

%

Total deposits

 

$

2,098,387

 

 

$

11,913

 

2.30

%

 

$

2,041,371

 

 

$

7,295

 

1.42

%

 

$

1,874,638

 

 

$

850

 

0.18

%

Total funding (5)

 

$

2,114,198

 

 

$

12,122

 

2.33

%

 

$

2,043,110

 

 

$

7,311

 

1.42

%

 

$

1,885,038

 

 

$

901

 

0.19

%

(1)

Total loans include both loans held-for-sale and loans held-for-investment..

(2)

The yield on municipal bonds has not been computed on a tax-equivalent basis.

(3)

Net interest spread is calculated by subtracting average rate on interest-bearing liabilities from average yield on interest-earning assets.

(4)

Net interest margin is calculated by dividing annualized net interest income by average interest-earning assets.

(5)

Total funding is the sum of interest-bearing liabilities and noninterest-bearing deposits. The cost of total funding is calculated as annualized total interest expense divided by average total funding.

(6)

Annualized.

PCB Bancorp and Subsidiary

Non-GAAP Measures

($ in thousands)

Adjusted ACL on loans to loans held-for-investment ratio

Adjusted ACL on loans to loans held-for-investment ratio is calculated by removing SBA PPP loans from loans held-for-investment from the ACL on loans to loans held-for-investment ratio calculation. Management believed this non-GAAP measure enhanced comparability to prior periods and provided supplemental information regarding the Company’s credit trends; however, this non-GAAP measure had become less significant as most of SBA PPP loan balance were forgiven or paid off during 2022. This disclosure should not be viewed as a substitute for results determined in accordance with GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies. The following table provides reconciliations of this non-GAAP measure with financial measure defined by GAAP.

($ in thousands)

 

 

3/31/2023

 

12/31/2022

 

3/31/2022

Loans held-for-investment

(a)

 

$

2,092,442

 

 

$

2,046,063

 

 

$

1,742,955

 

Less: SBA PPP loans

(b)

 

 

1,100

 

 

 

1,197

 

 

 

22,926

 

Loans held-for-investment, excluding SBA PPP loans

(c)=(a)-(b)

 

$

2,091,342

 

 

$

2,044,866

 

 

$

1,720,029

 

ACL on Loans

(d)

 

$

24,694

 

 

$

24,942

 

 

$

21,198

 

ACL on loans to loans held-for-investment ratio

(d)/(a)

 

 

1.18

%

 

 

1.22

%

 

 

1.22

%

Adjusted ACL on loans to loans held-for-investment ratio

(d)/(c)

 

 

1.18

%

 

 

1.22

%

 

 

1.23

%

 

 

 

 

 

 

 

 

Return on average tangible common equity, tangible common equity per common share and tangible common equity to total assets ratios

The Company's TCE is calculated by subtracting preferred stock from stockholders’ equity. The Company does not have any intangible assets for the presented periods. Return on average TCE, TCE per common share, and TCE to total assets constitute supplemental financial information determined by methods other than in accordance with GAAP. These non-GAAP measures are used by management in its analysis of the Company's performance. This disclosure should not be viewed as a substitute for results determined in accordance with GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies. The following tables provide reconciliations of the non-GAAP measures with financial measures defined by GAAP.

($ in thousands)

 

 

Three Months Ended

 

 

3/31/2023

 

12/31/2022

 

3/31/2022

Average total shareholders' equity

(a)

 

$

335,169

 

 

$

334,832

 

 

$

259,367

 

Less: average preferred stock

(b)

 

 

69,141

 

 

 

69,141

 

 

 

 

Average TCE

(c)=(a)-(b)

 

$

266,028

 

 

$

265,691

 

 

$

259,367

 

Net income

(d)

 

$

10,297

 

 

$

8,702

 

 

$

10,240

 

Return on average shareholder's equity (1)

(d)/(a)

 

 

12.46

%

 

 

10.31

%

 

 

16.01

%

Return on average TCE (1)

(d)/(c)

 

 

15.70

%

 

 

12.99

%

 

 

16.01

%

 

 

 

 

 

 

 

 

(1) Annualized.

($ in thousands, except per share data)

 

 

3/31/2023

 

12/31/2022

 

3/31/2022

Total shareholders' equity

(a)

 

$

336,830

 

 

$

335,442

 

 

$

261,058

 

Less: preferred stock

(b)

 

 

69,141

 

 

 

69,141

 

 

 

 

TCE

(c)=(a)-(b)

 

$

267,689

 

 

$

266,301

 

 

$

261,058

 

Outstanding common shares

(d)

 

 

14,297,870

 

 

 

14,625,474

 

 

 

14,944,663

 

Book value per common share

(a)/(d)

 

$

23.56

 

 

$

22.94

 

 

$

17.47

 

TCE per common share

(c)/(d)

 

$

18.72

 

 

$

18.21

 

 

$

17.47

 

Total assets

(e)

 

$

2,500,524

 

 

$

2,420,036

 

 

$

2,199,742

 

Total shareholders' equity to total assets

(a)/(e)

 

 

13.47

%

 

 

13.86

%

 

 

11.87

%

TCE to total assets

(c)/(e)

 

 

10.71

%

 

 

11.00

%

 

 

11.87

%

 

 

 

 

 

 

 

 

 

Contacts

Timothy Chang

Executive Vice President & Chief Financial Officer

213-210-2000

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