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Share Name | Share Symbol | Market | Type |
---|---|---|---|
PCB Bancorp | NASDAQ:PCB | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.37 | -2.33% | 15.51 | 15.00 | 19.91 | 16.025 | 15.48 | 15.97 | 16,806 | 18:17:25 |
PCB Bancorp (the “Company”) (NASDAQ: PCB), the holding company of PCB Bank (the “Bank”), today reported net income of $7.0 million, or $0.49 per diluted common share, for the third quarter of 2023, compared with $7.5 million, or $0.52 per diluted common share, for the previous quarter and $7.0 million, or $0.46 per diluted common share, for the year-ago quarter.
Q3 2023 Highlights
“We are pleased with our continued solid earnings, modest loan growth, and a slight increase in net interest margin and net interest income during the third quarter,” said Henry Kim, President and Chief Executive Officer. “Our loan balance increased 2.1% to $2.17 billion, deposit balance remained steady and our asset quality continued to be strong with non-performing assets and classified assets to total assets ratios of 0.15% and 0.26%, respectively.”
Mr. Kim added, “We announced a new stock repurchase program and repurchased 67,202 shares. The Company continued to maintain a strong capital position with the Bank’s tier 1 capital to average assets ratio of 13.44% and the Company’s tangible common equity to total assets ratio of 10.62%. These robust ratios provide us with extensive confidence to maneuver through these uncharted times and enable us to prudently manage our capital to maximize shareholder value.”
Mr. Kim concluded, “This past September, we celebrated our 20th anniversary of PCB Bank. We will continue to build a strong franchise by focusing on maintaining a strong balance sheet and asset quality, disciplined expense management, repurchasing our shares whenever feasible, and maintainable cash dividend.”
-------------------------------------------------
(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 in this release.
(2)
Provision (reversal) for credit losses on off-balance sheet credit exposures of $(10) thousand and $28 thousand, respectively, for the year-ago quarter and previous year-to-date period were recorded in Other Expense on Consolidated Statements of Income (Unaudited).
Financial Highlights (Unaudited)
($ in thousands, except per share data)
Three Months Ended
Nine Months Ended
9/30/2023
6/30/2023
% Change
9/30/2022
% Change
9/30/2023
9/30/2022
% Change
Net income
$
7,023
$
7,477
(6.1
)%
$
6,953
1.0
%
$
24,797
$
26,285
(5.7
)%
Diluted earnings per common share
$
0.49
$
0.52
(5.8
)%
$
0.46
6.5
%
$
1.71
$
1.73
(1.2
)%
Net interest income
$
22,449
$
21,717
3.4
%
$
24,023
(6.6
)%
$
66,580
$
65,367
1.9
%
Provision (reversal) for credit losses (1)
751
197
281.2
%
3,753
(80.0
)%
(1,830
)
2,453
NM
Noninterest income
2,502
2,657
(5.8
)%
3,176
(21.2
)%
8,180
12,110
(32.5
)%
Noninterest expense
14,207
13,627
4.3
%
13,695
3.7
%
41,588
38,011
9.4
%
Return on average assets (2)
1.09
%
1.19
%
1.19
%
1.32
%
1.58
%
Return on average shareholders’ equity (2)
8.12
%
8.82
%
8.16
%
9.77
%
11.84
%
Return on average tangible common equity (“TCE”) (2),(3)
10.17
%
11.08
%
10.25
%
12.27
%
13.31
%
Net interest margin (2)
3.57
%
3.55
%
4.25
%
3.63
%
4.05
%
Efficiency ratio (4)
56.94
%
55.91
%
50.35
%
55.63
%
49.06
%
($ in thousands, except per share data)
9/30/2023
6/30/2023
% Change
12/31/2022
% Change
9/30/2022
% Change
Total assets
$
2,567,974
$
2,556,345
0.5
%
$
2,420,036
6.1
%
$
2,327,051
10.4
%
Net loans held-for-investment
2,142,006
2,097,560
2.1
%
2,021,121
6.0
%
1,935,476
10.7
%
Total deposits
2,192,129
2,188,232
0.2
%
2,045,983
7.1
%
1,978,098
10.8
%
Book value per common share (5)
$
23.87
$
23.77
$
22.94
$
22.40
TCE per common share (3)
$
19.05
$
18.94
$
18.21
$
17.75
Tier 1 leverage ratio (consolidated)
13.76
%
13.84
%
14.33
%
14.74
%
Total shareholders’ equity to total assets
13.31
%
13.32
%
13.86
%
14.30
%
TCE to total assets (3), (6)
10.62
%
10.61
%
11.00
%
11.33
%
(1)
Provision (reversal) for credit losses on off-balance sheet credit exposures of $(10) thousand and $28 thousand, respectively, for the year-ago quarter and previous year-to-date period were recorded in Other Expense on Consolidated Statements of Income (Unaudited). See Provision (reversal) for credit losses included in the Result of Operations discussion for additional information.
(2)
Ratios are presented on an annualized basis.
(3)
Non-GAAP. See “Non-GAAP Measures” for reconciliation of this measure to its most comparable GAAP measure.
(4)
Calculated by dividing noninterest expense by the sum of net interest income and noninterest income.
(5)
Calculated by dividing total shareholders’ equity by the number of outstanding common shares.
(6)
The Company did not have any intangible asset component for the presented periods.
Result of Operations (Unaudited)
Net Interest Income and Net Interest Margin
The following table presents the components of net interest income for the periods indicated:
Three Months Ended
Nine Months Ended
($ in thousands)
9/30/2023
6/30/2023
% Change
9/30/2022
% Change
9/30/2023
9/30/2022
% Change
Interest income/expense on
Loans
$
34,651
$
32,960
5.1
%
$
24,835
39.5
%
$
98,840
$
66,268
49.2
%
Investment securities
1,170
1,136
3.0
%
806
45.2
%
3,408
1,950
74.8
%
Other interest-earning assets
3,031
2,742
10.5
%
1,194
153.9
%
7,978
1,957
307.7
%
Total interest-earning assets
38,852
36,838
5.5
%
26,835
44.8
%
110,226
70,175
57.1
%
Interest-bearing deposits
16,403
15,121
8.5
%
2,798
486.2
%
43,437
4,689
826.4
%
Borrowings
—
—
—
%
14
(100.0
)%
209
119
75.6
%
Total interest-bearing liabilities
16,403
15,121
8.5
%
2,812
483.3
%
43,646
4,808
807.8
%
Net interest income
$
22,449
$
21,717
3.4
%
$
24,023
(6.6
)%
$
66,580
$
65,367
1.9
%
Average balance of
Loans
$
2,137,184
$
2,097,489
1.9
%
$
1,905,366
12.2
%
$
2,102,600
$
1,828,187
15.0
%
Investment securities
138,993
142,136
(2.2
)%
137,363
1.2
%
141,057
132,023
6.8
%
Other interest-earning assets
219,115
213,883
2.4
%
200,367
9.4
%
206,720
198,311
4.2
%
Total interest-earning assets
$
2,495,292
$
2,453,508
1.7
%
$
2,243,096
11.2
%
$
2,450,377
$
2,158,521
13.5
%
Interest-bearing deposits
$
1,561,582
$
1,527,522
2.2
%
$
1,137,739
37.3
%
$
1,500,523
$
1,058,105
41.8
%
Borrowings
—
—
—
%
2,033
(100.0
)%
5,212
7,824
(33.4
)%
Total interest-bearing liabilities
$
1,561,582
$
1,527,522
2.2
%
$
1,139,772
37.0
%
$
1,505,735
$
1,065,929
41.3
%
Total funding (1)
$
2,188,320
$
2,155,649
1.5
%
$
1,965,134
11.4
%
$
2,152,993
$
1,917,766
12.3
%
Annualized average yield/cost of
Loans
6.43
%
6.30
%
5.17
%
6.29
%
4.85
%
Investment securities
3.34
%
3.21
%
2.33
%
3.23
%
1.97
%
Other interest-earning assets
5.49
%
5.14
%
2.36
%
5.16
%
1.32
%
Total interest-earning assets
6.18
%
6.02
%
4.75
%
6.01
%
4.35
%
Interest-bearing deposits
4.17
%
3.97
%
0.98
%
3.87
%
0.59
%
Borrowings
—
%
—
%
2.73
%
5.36
%
2.03
%
Total interest-bearing liabilities
4.17
%
3.97
%
0.98
%
3.88
%
0.60
%
Net interest margin
3.57
%
3.55
%
4.25
%
3.63
%
4.05
%
Cost of total funding (1)
2.97
%
2.81
%
0.57
%
2.71
%
0.34
%
Supplementary information
Net accretion of discount on loans
$
775
$
751
3.2
%
$
867
(10.6
)%
$
2,197
$
2,682
(18.1
)%
Net amortization of deferred loan fees
$
226
$
247
(8.5
)%
$
243
(7.0
)%
$
648
$
2,014
(67.8
)%
(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 and year-to-date period compared with the same periods of 2022 were primarily due to an increase in overall interest rates on loans from the rising interest rate environment, partially offset by decreases in net accretion of discount on loans and net amortization of deferred loan fees from the decreased amount of SBA PPP loan payoffs.
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:
9/30/2023
6/30/2023
12/31/2022
9/30/2022
% to Total Loans
Weighted-Average Contractual Rate
% to Total Loans
Weighted-Average Contractual Rate
% to Total Loans
Weighted-Average Contractual Rate
% to Total Loans
Weighted-Average Contractual Rate
Fixed rate loans
22.4
%
4.75
%
22.6
%
4.64
%
23.2
%
4.51
%
24.0
%
4.43
%
Hybrid rate loans
38.8
%
4.71
%
39.2
%
4.62
%
39.1
%
4.40
%
38.0
%
4.23
%
Variable rate loans
38.8
%
8.52
%
38.2
%
8.39
%
37.7
%
7.86
%
38.0
%
6.75
%
Investment Securities. The increases in average yield for the current quarter and year-to-date period 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 and year-to-date period were primarily due to an increased interest rate on cash held at the Federal Reserve Bank.
Interest-Bearing Deposits. The increases in average cost for the current quarter and year-to-date period were primarily due to an increase in market rates and the migration of noninterest-bearing demand deposits to interest-bearing 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.
Provision (Reversal) for Credit Losses
The following table presents a composition of provision (reversal) for credit losses for the periods indicated:
Three Months Ended
Nine Months Ended
($ in thousands)
9/30/2023
6/30/2023
% Change
9/30/2022
% Change
9/30/2023
9/30/2022
% Change
Provision (reversal) for credit losses on loans
$
822
$
157
423.6
%
$
3,753
(78.1
)%
$
(1,438
)
$
2,453
NM
Provision (reversal) for credit losses on off-balance sheet credit exposure (1)
(71
)
40
NM
(10
)
610.0
%
(392
)
28
NM
Total provision (reversal) for credit losses
$
751
$
197
281.2
%
$
3,743
(79.9
)%
$
(1,830
)
$
2,481
NM
(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, also known as the current expected credit losses (“CECL”) accounting standard, 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 in this release. See CECL Adoption and Allowance for Credit Losses sections included in the Balance Sheet section of this release for additional information.
The provision for credit losses on loans for the current quarter was primarily due to an increase in loan held-for-investment. The reversal for credit losses for the current year-to-date period was primarily due to net recoveries and the improvement in the economic forecast.
Noninterest Income
The following table presents the components of noninterest income for the periods indicated:
Three Months Ended
Nine Months Ended
($ in thousands)
9/30/2023
6/30/2023
% Change
9/30/2022
% Change
9/30/2023
9/30/2022
% Change
Gain on sale of loans
$
689
$
769
(10.4
)%
$
1,415
(51.3
)%
$
2,767
$
7,231
(61.7
)%
Service charges and fees on deposits
371
369
0.5
%
341
8.8
%
1,084
974
11.3
%
Loan servicing income
851
868
(2.0
)%
780
9.1
%
2,579
2,235
15.4
%
Bank-owned life insurance income
187
184
1.6
%
178
5.1
%
551
525
5.0
%
Other income
404
467
(13.5
)%
462
(12.6
)%
1,199
1,145
4.7
%
Total noninterest income
$
2,502
$
2,657
(5.8
)%
$
3,176
(21.2
)%
$
8,180
$
12,110
(32.5
)%
Gain on Sale of Loans. The following table presents information on gain on sale of loans for the periods indicated:
Three Months Ended
Nine Months Ended
($ in thousands)
9/30/2023
6/30/2023
% Change
9/30/2022
% Change
9/30/2023
9/30/2022
% Change
Gain on sale of SBA loans
Sold loan balance
$
17,697
$
16,762
5.6
%
$
27,313
(35.2
)%
$
61,592
$
105,438
(41.6
)%
Premium received
1,112
1,209
(8.0
)%
2,036
(45.4
)%
4,362
8,842
(50.7
)%
Gain recognized
689
769
(10.4
)%
1,407
(51.0
)%
2,767
7,223
(61.7
)%
Gain on sale of residential property loans
Sold loan balance
$
—
$
—
—
%
$
858
(100.0
)%
$
—
$
858
(100.0
)%
Gain recognized
—
—
—
%
8
(100.0
)%
—
8
(100.0
)%
Loan Servicing Income. The following table presents information on loan servicing income for the periods indicated:
Three Months Ended
Nine Months Ended
($ in thousands)
9/30/2023
6/30/2023
% Change
9/30/2022
% Change
9/30/2023
9/30/2022
% Change
Loan servicing income
Servicing income received
$
1,321
$
1,317
0.3
%
$
1,302
1.5
%
$
3,922
$
3,819
2.7
%
Servicing assets amortization
(470
)
(449
)
4.7
%
(522
)
(10.0
)%
(1,343
)
(1,584
)
(15.2
)%
Loan servicing income
$
851
$
868
(2.0
)%
$
780
9.1
%
$
2,579
$
2,235
15.4
%
Underlying loans at end of period
$
536,424
$
539,160
(0.5
)%
$
538,904
(0.5
)%
$
536,424
$
538,904
(0.5
)%
The Company services SBA loans and certain residential property loans sold to the secondary market.
Noninterest Expense
The following table presents the components of noninterest expense for the periods indicated:
Three Months Ended
Nine Months Ended
($ in thousands)
9/30/2023
6/30/2023
% Change
9/30/2022
% Change
9/30/2023
9/30/2022
% Change
Salaries and employee benefits
$
8,572
$
8,675
(1.2
)%
$
8,457
1.4
%
$
26,175
$
25,177
4.0
%
Occupancy and equipment
1,964
1,919
2.3
%
1,650
19.0
%
5,779
4,584
26.1
%
Professional fees
685
772
(11.3
)%
587
16.7
%
2,189
1,632
34.1
%
Marketing and business promotion
980
203
382.8
%
909
7.8
%
1,555
1,426
9.0
%
Data processing
367
380
(3.4
)%
427
(14.1
)%
1,159
1,272
(8.9
)%
Director fees and expenses
152
217
(30.0
)%
179
(15.1
)%
549
530
3.6
%
Regulatory assessments
281
382
(26.4
)%
150
87.3
%
818
438
86.8
%
Other expense
1,206
1,079
11.8
%
1,336
(9.7
)%
3,364
2,952
14.0
%
Total noninterest expense
$
14,207
$
13,627
4.3
%
$
13,695
3.7
%
$
41,588
$
38,011
9.4
%
Salaries and Employee Benefits. The increases for the current quarter and year-to-date period compared with the same periods of 2022 were primarily due to increases in salaries and other employee benefit expense, partially offset by decreases in bonus accruals and incentives tied to sales of SBA loans originated at loan production offices. The number of full-time equivalent employees was 270, 272 and 274 as of September 30, 2023, June 30, 2023 and September 30, 2022, respectively.
Occupancy and Equipment. The increases for the current quarter and year-to-date period compared with the same periods of 2022 were primarily due to new branch openings during the second half of 2022. 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-to-date period compared with the same periods of 2022 were primarily due to increases in audit and consulting fees.
Marketing and Business Promotion. The increase for the current quarter compared with the previous quarter was primarily due to an increase in advertisements and the Company’s 20th anniversary celebration.
Director fees and expenses. The decrease for the current quarter compared with the previous quarter was primarily due to the retirement of a director during the previous quarter.
Regulatory Assessments. The increases for the current quarter and year-to-date period compared with the same periods of 2022 were due to an increase in FDIC assessment rates. During the previous quarter, an adjustment of $113 thousand was made for the first quarter of 2023. The FDIC increased the initial base deposit insurance assessment rate schedules by two basis points beginning in the first quarterly assessment period of 2023.
Other Expense. The increases for the current quarter and year-to-date period were primarily due to increases in office expenses and armed guard expenses attributable to the branch network expansion. Provision (reversal) for credit losses on off-balance credit exposures of $(10) thousand and $28 thousand was included in other expense for the year-ago quarter and previous year-to-date period, respectively, while the provision (reversal) for the current reporting periods beginning January 1, 2023 was included in provision (reversal) for credit losses.
Balance Sheet (Unaudited)
Total assets were $2.57 billion at September 30, 2023, an increase of $11.6 million, or 0.5%, from $2.56 billion at June 30, 2023, an increase of $147.9 million, or 6.1%, from $2.42 billion at December 31, 2022, and an increase of $240.9 million, or 10.4%, from $2.33 billion at September 30, 2022. The increase for the current quarter was primarily due to an increase in loans held-for-investment, partially offset by decreases in cash and cash equivalents and loans held-for-sale. The increase for the year-to-date period 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 reflects the 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 Company recorded a net decrease of $1.9 million to the beginning balance of retained earnings as of January 1, 2023 for the cumulative effect adjustment, reflecting an initial adjustment to the ACL on loans of $1.1 million and the ACL on off-balance sheet credit exposures of $1.6 million, net of related deferred tax assets arising from temporary differences of $788 thousand. As a part of the adoption of ASC 326, the Company reviewed and revised certain loan segments for the Company’s ACL model. See Loan Segments Revision section of this release for a reconciliation of revised loan segments to legacy loan segments, which were utilized before the adoption of ASC 326.
Loans
The following table presents a composition of total loans (includes both loans held-for-sale and loans held-for-investment) as of the dates indicated:
($ in thousands)
9/30/2023
6/30/2023
% Change
12/31/2022
% Change
9/30/2022
% Change
Commercial real estate:
Commercial property
$
814,547
$
793,946
2.6
%
$
772,020
5.5
%
$
759,644
7.2
%
Business property
537,351
533,592
0.7
%
526,513
2.1
%
526,395
2.1
%
Multifamily
132,558
124,029
6.9
%
124,751
6.3
%
121,830
8.8
%
Construction
19,246
16,942
13.6
%
17,054
12.9
%
14,592
31.9
%
Total commercial real estate
1,503,702
1,468,509
2.4
%
1,440,338
4.4
%
1,422,461
5.7
%
Commercial and industrial
279,608
272,278
2.7
%
249,250
12.2
%
216,036
29.4
%
Consumer:
Residential mortgage
363,369
359,655
1.0
%
333,726
8.9
%
297,506
22.1
%
Other consumer
20,926
21,985
(4.8
)%
22,749
(8.0
)%
23,234
(9.9
)%
Total consumer
384,295
381,640
0.7
%
356,475
7.8
%
320,740
19.8
%
Loans held-for-investment
2,167,605
2,122,427
2.1
%
2,046,063
5.9
%
1,959,237
10.6
%
Loans held-for-sale
6,693
13,065
(48.8
)%
22,811
(70.7
)%
18,982
(64.7
)%
Total loans
$
2,174,298
$
2,135,492
1.8
%
$
2,068,874
5.1
%
$
1,978,219
9.9
%
The increase in loans held-for-investment for the current quarter was primarily due to new funding and advances on lines of credit of $259.3 million, partially offset by pay-downs and pay-offs of $214.1 million. The increase for the current year-to-date period was primarily due to new funding and advances on lines of credit of $717.0 million and purchases of residential mortgage loans of $15.7 million, partially offset by pay-downs and pay-offs of $611.2 million.
The decrease in loans held-for-sale for the current quarter was primarily due to sales of $17.7 million, partially offset by new funding of $11.5 million. The decrease for the current year-to-date was primarily due to sales of $61.6 million and pay-downs and pay-offs of $4.3 million, partially offset by new funding of $49.8 million.
The following table presents a composition of off-balance sheet credit exposure as of the dates indicated:
($ in thousands)
9/30/2023
6/30/2023
% Change
12/31/2022
% Change
9/30/2022
% Change
Commercial property
$
9,827
$
11,118
(11.6
)%
$
7,006
40.3
%
$
6,283
56.4
%
Business property
8,388
9,487
(11.6
)%
8,396
(0.1
)%
10,847
(22.7
)%
Multifamily
1,800
4,500
(60.0
)%
4,500
(60.0
)%
5,000
(64.0
)%
Construction
29,293
30,865
(5.1
)%
18,211
60.9
%
11,093
164.1
%
Commercial and industrial
283,119
279,584
1.3
%
254,668
11.2
%
257,337
10.0
%
Other consumer
271
445
(39.1
)%
692
(60.8
)%
847
(68.0
)%
Total commitments to extend credit
332,698
335,999
(1.0
)%
293,473
13.4
%
291,407
14.2
%
Letters of credit
6,083
6,027
0.9
%
5,392
12.8
%
5,096
19.4
%
Total off-balance sheet credit exposure
$
338,781
$
342,026
(0.9
)%
$
298,865
13.4
%
$
296,503
14.3
%
Credit Quality
The following table presents a summary of non-performing loans and assets, and classified assets as of the dates indicated:
($ in thousands)
9/30/2023
6/30/2023
% Change
12/31/2022
% Change
9/30/2022
% Change
Nonaccrual loans
Commercial real estate:
Commercial property
$
686
$
699
(1.9
)%
$
—
—
%
$
—
—
%
Business property
2,964
3,007
(1.4
)%
2,985
(0.7
)%
2,996
(1.1
)%
Total commercial real estate
3,650
3,706
(1.5
)%
2,985
22.3
%
2,996
21.8
%
Commercial and industrial
72
88
(18.2
)%
—
—
%
4,003
(98.2
)%
Consumer:
Residential mortgage
—
—
—
%
372
(100.0
)%
372
(100.0
)%
Other consumer
8
51
(84.3
)%
3
166.7
%
25
(68.0
)%
Total consumer
8
51
(84.3
)%
375
(97.9
)%
397
(98.0
)%
Total nonaccrual loans held-for-investment
3,730
3,845
(3.0
)%
3,360
11.0
%
7,396
(49.6
)%
Loans past due 90 days or more and still accruing
—
—
—
%
—
—
%
—
—
%
Non-performing loans (“NPLs”) held-for-investment
3,730
3,845
(3.0
)%
3,360
11.0
%
7,396
(49.6
)%
NPLs held-for-sale
—
—
—
%
4,000
(100.0
)%
—
—
%
Total NPLs
3,730
3,845
(3.0
)%
7,360
(49.3
)%
7,396
(49.6
)%
Other real estate owned (“OREO”)
—
—
—
%
—
—
%
—
—
%
Non-performing assets (“NPAs”)
$
3,730
$
3,845
(3.0
)%
$
7,360
(49.3
)%
$
7,396
(49.6
)%
Loans past due and still accruing
Past due 30 to 59 days
$
654
$
428
52.8
%
$
47
1,291.5
%
$
215
204.2
%
Past due 60 to 89 days
54
—
—
%
87
(37.9
)%
195
(72.3
)%
Past due 90 days or more
—
—
—
%
—
—
%
—
—
%
Total loans past due and still accruing
$
708
$
428
65.4
%
134
428.4
%
$
410
72.7
%
Special mention loans
$
5,281
$
5,406
(2.3
)%
$
6,857
(23.0
)%
$
5,986
(11.8
)%
Classified assets
Classified loans held-for-investment
$
6,742
$
6,901
(2.3
)%
$
6,211
8.5
%
$
10,293
(34.5
)%
Classified loans held-for-sale
—
—
—
%
4,000
(100.0
)%
—
—
%
OREO
—
—
—
%
—
—
%
—
—
%
Classified assets
$
6,742
$
6,901
(2.3
)%
$
10,211
(34.0
)%
$
10,293
(34.5
)%
NPLs held-for-investment to loans held-for-investment
0.17
%
0.18
%
0.16
%
0.38
%
NPAs to total assets
0.15
%
0.15
%
0.30
%
0.32
%
Classified assets to total assets
0.26
%
0.27
%
0.42
%
0.44
%
During the first quarter of 2023, NPLs held-for-sale of $4.0 million were paid-off.
Allowance for Credit Losses
The following table presents activities in ACL for the periods indicated:
Three Months Ended
Nine Months Ended
($ in thousands)
9/30/2023
6/30/2023
% Change
9/30/2022
% Change
9/30/2023
9/30/2022
% Change
ACL on loans
Balance at beginning of period
$
24,867
$
24,694
0.7
%
$
21,071
18.0
%
$
24,942
$
22,381
11.4
%
Impact of ASC 326 adoption
—
—
NM
—
NM
1,067
—
NM
Charge-offs
(112
)
(7
)
1,500.0
%
(1,112
)
(89.9
)%
(119
)
(1,171
)
(89.8
)%
Recoveries
22
23
(4.3
)%
49
(55.1
)%
1,147
98
1,070.4
%
Provision (reversal) for credit losses on loans
822
157
423.6
%
3,753
(78.1
)%
(1,438
)
2,453
NM
Balance at end of period
$
25,599
$
24,867
2.9
%
$
23,761
7.7
%
$
25,599
$
23,761
7.7
%
Percentage to loans held-for-investment at end of period
1.18
%
1.17
%
1.22
%
1.22
%
ACL on off-balance sheet credit exposure (1)
Balance at beginning of period
$
1,585
$
1,545
2.6
%
$
252
529.0
%
$
299
$
214
39.7
%
Impact of ASC 326 adoption
—
—
NM
—
NM
1,607
—
NM
Provision (reversal) for credit losses on off-balance sheet credit exposure
(71
)
40
NM
(10
)
610.0
%
(392
)
28
NM
Balance at end of period
$
1,514
$
1,585
(4.5
)%
$
242
525.6
%
$
1,514
$
242
525.6
%
(1)
ACL on off-balance sheet credit exposures was recorded in Accrued Interest Payable and Other Liabilities on Consolidated Balance Sheets (Unaudited).
Investment Securities
Total investment securities were $139.2 million at September 30, 2023, an increase of $545 thousand, or 0.4%, from $138.7 million at June 30, 2023, a decrease of $2.6 million, or 1.9%, from $141.9 million at December 31, 2022, and an increase of $9.8 million, or 7.6%, from $129.4 million at September 30, 2022. The increase for the current quarter was primarily due to purchases of $10.0 million, partially offset by principal pay-downs and calls of $5.6 million, a fair value decrease of $3.8 million and net premium amortization of $53 thousand. The decrease for the current year-to-date period was primarily due to principal pay-downs and calls of $14.3 million, a fair value decrease of $4.1 million and net premium amortization of $169 thousand, partially offset by purchases of $16.0 million.
Deposits
The following table presents the Company’s deposit mix as of the dates indicated:
9/30/2023
6/30/2023
12/31/2022
9/30/2022
($ in thousands)
Amount
% to Total
Amount
% to Total
Amount
% to Total
Amount
% to Total
Noninterest-bearing demand deposits
$
611,021
27.9
%
$
635,329
29.0
%
$
734,989
35.9
%
$
809,842
40.9
%
Interest-bearing deposits
Savings
6,846
0.3
%
7,504
0.3
%
8,579
0.4
%
13,028
0.7
%
NOW
16,076
0.7
%
16,993
0.8
%
11,405
0.6
%
17,550
0.9
%
Retail money market accounts
436,115
19.8
%
464,655
21.1
%
494,749
24.1
%
522,412
26.4
%
Brokered money market accounts
1
0.1
%
1
0.1
%
8
0.1
%
10,010
0.5
%
Retail time deposits of
$250,000 or less
406,407
18.5
%
392,012
17.9
%
295,354
14.4
%
236,864
12.0
%
More than $250,000
454,406
20.8
%
451,590
20.7
%
353,876
17.3
%
239,271
12.1
%
State and brokered time deposits
261,257
11.9
%
220,148
10.1
%
147,023
7.2
%
129,121
6.5
%
Total interest-bearing deposits
1,581,108
72.1
%
1,552,903
71.0
%
1,310,994
64.1
%
1,168,256
59.1
%
Total deposits
$
2,192,129
100.0
%
$
2,188,232
100.0
%
$
2,045,983
100.0
%
$
1,978,098
100.0
%
Estimated total deposits not covered by deposit insurance
$
983,851
44.9
%
$
1,034,148
47.3
%
$
1,062,111
51.9
%
$
1,199,502
60.6
%
The decrease in noninterest-bearing demand deposits was primarily due to strong deposit market competition and the migration to interest-bearing deposits attributable to the rising market rates. To retain existing and attract new customers, the Bank offers competitive rates on deposit products.
The increase in retail time deposits for the current quarter was primarily due to new accounts of $60.8 million, renewals of the matured accounts of $85.1 million and balance increases of $5.3 million, partially offset by matured and closed accounts of $133.9 million. The increase for the current year-to-date period was primarily due to new accounts of $469.0 million, renewals of the matured accounts of $291.3 million and balance increases of $17.1 million, partially offset by matured and closed accounts of $565.8 million.
Liquidity
The following table presents a summary of the Company’s liquidity position as of September 30, 2023:
($ in thousands)
9/30/2023
12/31/2022
% Change
Cash and cash equivalents
$
192,350
$
147,031
30.8
%
Cash and cash equivalents to total assets
7.5
%
6.1
%
Available borrowing capacity
FHLB advances
$
639,072
$
561,745
13.8
%
Federal Reserve Discount Window
490,633
23,902
1952.7
%
Overnight federal funds lines
65,000
65,000
—
%
Total
$
1,194,705
$
650,647
83.6
%
Total available borrowing capacity to total assets
46.5
%
26.9
%
During the current year-to-date period, the Company increased cash and cash equivalents by $45.3 million, or 30.8%, to $192.4 million and available borrowing capacity by $544.1 million, or 83.6%, to $1.19 billion. During the current quarter, the Company began participating in the Borrower-in Custody Program with the Federal Reserve Bank providing additional borrowing capacity. As of September 30, 2023, the Company's cash and cash equivalents and available borrowing capacity covered approximately 141.0% of deposits not covered by deposit insurance compared to 75.1% at December 31, 2022.
Shareholders’ Equity
Shareholders’ equity was $341.9 million at September 30, 2023, an increase of $1.4 million, or 0.4%, from $340.4 million at June 30, 2023, an increase of $6.4 million, or 1.9%, from $335.4 million at December 31, 2022, and an increase of $9.1 million, or 2.7%, from $332.7 million at September 30, 2022. The increase for the current quarter was primarily due to net income and cash proceeds from exercise of stock options of $662 thousand, partially offset by cash dividends declared on common stock of $2.6 million, repurchase of common stock of $1.1 million and an increase in other comprehensive loss of $2.7 million. The increase for the current year-to-date period was primarily due to net income and cash proceeds from exercise of stock options of $1.3 million, partially offset by cash dividend declared on common stock of $7.3 million, repurchase of common stock of $7.9 million, an increase in other comprehensive loss of $2.9 million, and cumulative effect adjustment upon adoption of ASC 326 of $1.9 million.
Stock Repurchases
On July 28, 2022, the Company’s Board of Directors approved a stock repurchase program authorizing the repurchase of up to 5% of the Company’s outstanding common stock, 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 first quarter of 2023. 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.
On August 2, 2023, the Company’s Board of Directors approved a new stock repurchase program authorizing the repurchase of up to 5% of the Company’s outstanding common stock, which represented 720,000 shares, through August 2, 2024. The Company repurchased and retired 67,202 shares of common stock at a weighted-average price of $15.75 per share, totaling $1.1 million under this repurchase program through September 30, 2023.
For the current year-to-date period, the Company repurchased and retired 452,583 shares of common stock at a weighted-average price of $17.46, totaling $7.9 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”). The 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 the Federal Reserve’s Small Bank Holding Company policy, the Company is not currently subject to consolidated minimum capital measurements. At such time as the Company reaches the $3 billion asset level, it will be subject to consolidated capital requirements independent of the Bank. For comparison purposes, the Company’s capital ratios are included in following table, which presents capital ratios for the Company and the Bank as of the dates indicated:
9/30/2023
6/30/2023
12/31/2022
9/30/2022
Well Capitalized Requirements
PCB Bancorp
Common tier 1 capital (to risk-weighted assets)
13.07
%
13.12
%
13.29
%
13.69
%
N/A
Total capital (to risk-weighted assets)
17.48
%
17.57
%
17.83
%
18.34
%
N/A
Tier 1 capital (to risk-weighted assets)
16.24
%
16.34
%
16.62
%
17.14
%
N/A
Tier 1 capital (to average assets)
13.76
%
13.84
%
14.33
%
14.74
%
N/A
PCB Bank
Common tier 1 capital (to risk-weighted assets)
15.87
%
16.00
%
16.30
%
16.82
%
6.5
%
Total capital (to risk-weighted assets)
17.11
%
17.23
%
17.52
%
18.02
%
10.0
%
Tier 1 capital (to risk-weighted assets)
15.87
%
16.00
%
16.30
%
16.82
%
8.0
%
Tier 1 capital (to average assets)
13.44
%
13.55
%
14.05
%
14.47
%
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 the health of the national and local economies including the impact to the Company and its customers resulting from changes to, and the level of, inflation and interest rates; the Company’s ability to maintain and grow its deposit base; loan demand and continued portfolio performance; the impact of adverse developments at other banks, including bank failures, that impact general sentiment regarding the stability and liquidity of banks that could affect the Company’s financial performance and stock price; changes to valuations of the Company’s assets and liabilities including the allowance for credit losses, earning assets, and intangible assets; changes to the availability of liquidity sources including borrowing lines and the ability to pledge or sell certain assets; the Company's ability to attract and retain skilled employees, customers' service expectations; cyber security risks; the Company's ability to successfully deploy new technology; acquisitions and branch and loan production office expansions; operational risks including the ability to detect and prevent errors and fraud; the effectiveness of the Company’s enterprise risk management framework; costs related to litigation; changes in laws, rules, regulations, or interpretations to which the Company is subject; the effects of severe weather events, pandemics, other public health crises, acts of war or terrorism, and other external events on our business. These and other important factors are detailed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 and other filings the Company makes with the SEC, which are available at the SEC’s Internet site (http://www.sec.gov) or 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 the Company does 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)
9/30/2023
6/30/2023
% Change
12/31/2022
% Change
9/30/2022
% Change
Assets
Cash and due from banks
$
22,691
$
22,159
2.4
%
$
23,202
(2.2
)%
$
22,252
2.0
%
Interest-bearing deposits in other financial institutions
169,659
199,987
(15.2
)%
123,829
37.0
%
131,786
28.7
%
Total cash and cash equivalents
192,350
222,146
(13.4
)%
147,031
30.8
%
154,038
24.9
%
Securities available-for-sale, at fair value
139,218
138,673
0.4
%
141,863
(1.9
)%
129,401
7.6
%
Loans held-for-sale
6,693
13,065
(48.8
)%
22,811
(70.7
)%
18,982
(64.7
)%
Loans held-for-investment
2,167,605
2,122,427
2.1
%
2,046,063
5.9
%
1,959,237
10.6
%
Allowance for credit losses on loans
(25,599
)
(24,867
)
2.9
%
(24,942
)
2.6
%
(23,761
)
7.7
%
Net loans held-for-investment
2,142,006
2,097,560
2.1
%
2,021,121
6.0
%
1,935,476
10.7
%
Premises and equipment, net
6,229
6,394
(2.6
)%
6,916
(9.9
)%
4,671
33.4
%
Federal Home Loan Bank and other bank stock
12,716
12,716
—
%
10,183
24.9
%
10,183
24.9
%
Bank-owned life insurance
30,615
30,428
0.6
%
30,064
1.8
%
29,883
2.4
%
Deferred tax assets, net
4,486
4,348
3.2
%
3,115
44.0
%
12,135
(63.0
)%
Servicing assets
6,920
7,142
(3.1
)%
7,347
(5.8
)%
7,627
(9.3
)%
Operating lease assets
5,626
5,182
8.6
%
6,358
(11.5
)%
6,897
(18.4
)%
Accrued interest receivable
8,731
8,040
8.6
%
7,472
16.8
%
6,070
43.8
%
Other assets
12,384
10,651
16.3
%
15,755
(21.4
)%
11,688
6.0
%
Total assets
$
2,567,974
$
2,556,345
0.5
%
$
2,420,036
6.1
%
$
2,327,051
10.4
%
Liabilities
Deposits
Noninterest-bearing demand
$
611,021
$
635,329
(3.8
)%
$
734,989
(16.9
)%
$
809,842
(24.6
)%
Savings, NOW and money market accounts
459,038
489,153
(6.2
)%
514,741
(10.8
)%
563,000
(18.5
)%
Time deposits of $250,000 or less
607,664
552,160
10.1
%
382,377
58.9
%
305,985
98.6
%
Time deposits of more than $250,000
514,406
511,590
0.6
%
413,876
24.3
%
299,271
71.9
%
Total deposits
2,192,129
2,188,232
0.2
%
2,045,983
7.1
%
1,978,098
10.8
%
Federal Home Loan Bank advances
—
—
—
%
20,000
(100.0
)%
—
—
%
Operating lease liabilities
5,852
5,495
6.5
%
6,809
(14.1
)%
7,402
(20.9
)%
Accrued interest payable and other liabilities
28,141
22,207
26.7
%
11,802
138.4
%
8,832
218.6
%
Total liabilities
2,226,122
2,215,934
0.5
%
2,084,594
6.8
%
1,994,332
11.6
%
Commitments and contingent liabilities
Shareholders’ equity
Preferred stock
69,141
69,141
—
%
69,141
—
%
69,141
—
%
Common stock
143,401
143,686
(0.2
)%
149,631
(4.2
)%
153,890
(6.8
)%
Retained earnings
142,750
138,315
3.2
%
127,181
12.2
%
120,699
18.3
%
Accumulated other comprehensive loss, net
(13,440
)
(10,731
)
25.2
%
(10,511
)
27.9
%
(11,011
)
22.1
%
Total shareholders’ equity
341,852
340,411
0.4
%
335,442
1.9
%
332,719
2.7
%
Total liabilities and shareholders’ equity
$
2,567,974
$
2,556,345
0.5
%
$
2,420,036
6.1
%
$
2,327,051
10.4
%
Outstanding common shares
14,319,014
14,318,890
14,625,474
14,853,140
Book value per common share (1)
$
23.87
$
23.77
$
22.94
$
22.40
TCE per common share (2)
$
19.05
$
18.94
$
18.21
$
17.75
Total loan to total deposit ratio
99.19
%
97.59
%
101.12
%
100.01
%
Noninterest-bearing deposits to total deposits
27.87
%
29.03
%
35.92
%
40.94
%
(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
Nine Months Ended
9/30/2023
6/30/2023
% Change
9/30/2022
% Change
9/30/2023
9/30/2022
% Change
Interest and dividend income
Loans, including fees
$
34,651
$
32,960
5.1
%
$
24,835
39.5
%
$
98,840
$
66,268
49.2
%
Investment securities
1,170
1,136
3.0
%
806
45.2
%
3,408
1,950
74.8
%
Other interest-earning assets
3,031
2,742
10.5
%
1,194
153.9
%
7,978
1,957
307.7
%
Total interest income
38,852
36,838
5.5
%
26,835
44.8
%
110,226
70,175
57.1
%
Interest expense
Deposits
16,403
15,121
8.5
%
2,798
486.2
%
43,437
4,689
826.4
%
Other borrowings
—
—
—
%
14
(100.0
)%
209
119
75.6
%
Total interest expense
16,403
15,121
8.5
%
2,812
483.3
%
43,646
4,808
807.8
%
Net interest income
22,449
21,717
3.4
%
24,023
(6.6
)%
66,580
65,367
1.9
%
Provision (reversal) for credit losses
751
197
281.2
%
3,753
(80.0
)%
(1,830
)
2,453
NM
Net interest income after provision (reversal) for credit losses
21,698
21,520
0.8
%
20,270
7.0
%
68,410
62,914
8.7
%
Noninterest income
Gain on sale of loans
689
769
(10.4
)%
1,415
(51.3
)%
2,767
7,231
(61.7
)%
Service charges and fees on deposits
371
369
0.5
%
341
8.8
%
1,084
974
11.3
%
Loan servicing income
851
868
(2.0
)%
780
9.1
%
2,579
2,235
15.4
%
Bank-owned life insurance income
187
184
1.6
%
178
5.1
%
551
525
5.0
%
Other income
404
467
(13.5
)%
462
(12.6
)%
1,199
1,145
4.7
%
Total noninterest income
2,502
2,657
(5.8
)%
3,176
(21.2
)%
8,180
12,110
(32.5
)%
Noninterest expense
Salaries and employee benefits
8,572
8,675
(1.2
)%
8,457
1.4
%
26,175
25,177
4.0
%
Occupancy and equipment
1,964
1,919
2.3
%
1,650
19.0
%
5,779
4,584
26.1
%
Professional fees
685
772
(11.3
)%
587
16.7
%
2,189
1,632
34.1
%
Marketing and business promotion
980
203
382.8
%
909
7.8
%
1,555
1,426
9.0
%
Data processing
367
380
(3.4
)%
427
(14.1
)%
1,159
1,272
(8.9
)%
Director fees and expenses
152
217
(30.0
)%
179
(15.1
)%
549
530
3.6
%
Regulatory assessments
281
382
(26.4
)%
150
87.3
%
818
438
86.8
%
Other expense
1,206
1,079
11.8
%
1,336
(9.7
)%
3,364
2,952
14.0
%
Total noninterest expense
14,207
13,627
4.3
%
13,695
3.7
%
41,588
38,011
9.4
%
Income before income taxes
9,993
10,550
(5.3
)%
9,751
2.5
%
35,002
37,013
(5.4
)%
Income tax expense
2,970
3,073
(3.4
)%
2,798
6.1
%
10,205
10,728
(4.9
)%
Net income
$
7,023
$
7,477
(6.1
)%
$
6,953
1.0
%
$
24,797
$
26,285
(5.7
)%
Earnings per common share
Basic
$
0.49
$
0.52
$
0.47
$
1.73
$
1.76
Diluted
$
0.49
$
0.52
$
0.46
$
1.71
$
1.73
Average common shares
Basic
14,294,802
14,271,200
14,877,879
14,327,930
14,869,997
Diluted
14,396,216
14,356,776
15,088,089
14,441,960
15,126,863
Dividend paid per common share
$
0.18
$
0.18
$
0.15
$
0.51
$
0.45
Return on average assets (1)
1.09
%
1.19
%
1.19
%
1.32
%
1.58
%
Return on average shareholders’ equity (1)
8.12
%
8.82
%
8.16
%
9.77
%
11.84
%
Return on average TCE (1), (2)
10.17
%
11.08
%
10.25
%
12.27
%
13.31
%
Efficiency ratio (3)
56.94
%
55.91
%
50.35
%
55.63
%
49.06
%
(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
9/30/2023
6/30/2023
9/30/2022
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)
$
2,137,184
$
34,651
6.43
%
$
2,097,489
$
32,960
6.30
%
$
1,905,366
$
24,835
5.17
%
Mortgage-backed securities
98,534
750
3.02
%
98,971
713
2.89
%
93,546
518
2.20
%
Collateralized mortgage obligation
24,959
262
4.16
%
26,228
262
4.01
%
24,090
151
2.49
%
SBA loan pool securities
7,842
81
4.10
%
8,364
81
3.88
%
10,435
56
2.13
%
Municipal bonds (2)
3,602
30
3.30
%
4,234
33
3.13
%
4,491
34
3.00
%
Corporate bonds
4,056
47
4.60
%
4,339
47
4.34
%
4,801
47
3.88
%
Other interest-earning assets
219,115
3,031
5.49
%
213,883
2,742
5.14
%
200,367
1,194
2.36
%
Total interest-earning assets
2,495,292
38,852
6.18
%
2,453,508
36,838
6.02
%
2,243,096
26,835
4.75
%
Noninterest-earning assets
Cash and due from banks
21,298
20,754
20,609
ACL on loans
(24,869
)
(24,710
)
(21,117
)
Other assets
71,512
71,200
76,851
Total noninterest-earning assets
67,941
67,244
76,343
Total assets
$
2,563,233
$
2,520,752
$
2,319,439
Liabilities and Shareholders’ Equity
Interest-bearing liabilities
Deposits
NOW and money market accounts
$
481,341
4,398
3.62
%
$
465,564
3,929
3.38
%
$
577,975
1,375
0.94
%
Savings
7,197
4
0.22
%
7,767
5
0.26
%
14,990
2
0.05
%
Time deposits
1,073,044
12,001
4.44
%
1,054,191
11,187
4.26
%
544,774
1,421
1.03
%
Total interest-bearing deposits
1,561,582
16,403
4.17
%
1,527,522
15,121
3.97
%
1,137,739
2,798
0.98
%
Other borrowings
—
—
0.00
%
—
—
—
%
2,033
14
2.73
%
Total interest-bearing liabilities
1,561,582
16,403
4.17
%
1,527,522
15,121
3.97
%
1,139,772
2,812
0.98
%
Noninterest-bearing liabilities
Noninterest-bearing demand
626,738
628,127
825,362
Other liabilities
31,769
25,234
16,057
Total noninterest-bearing liabilities
658,507
653,361
841,419
Total liabilities
2,220,089
2,180,883
1,981,191
Total shareholders’ equity
343,144
339,869
338,248
Total liabilities and shareholders’ equity
$
2,563,233
$
2,520,752
$
2,319,439
Net interest income
$
22,449
$
21,717
$
24,023
Net interest spread (3)
2.01
%
2.05
%
3.77
%
Net interest margin (4)
3.57
%
3.55
%
4.25
%
Total deposits
$
2,188,320
$
16,403
2.97
%
$
2,155,649
$
15,121
2.81
%
$
1,963,101
$
2,798
0.57
%
Total funding (5)
$
2,188,320
$
16,403
2.97
%
$
2,155,649
$
15,121
2.81
%
$
1,965,134
$
2,812
0.57
%
(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
Average Balance, Average Yield, and Average Rate (Unaudited)
($ in thousands)
Nine Months Ended
9/30/2023
9/30/2022
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)
$
2,102,600
$
98,840
6.29
%
$
1,828,187
$
66,268
4.85
%
Mortgage-backed securities
98,364
2,146
2.92
%
88,634
1,241
1.87
%
Collateralized mortgage obligation
25,970
780
4.02
%
22,775
324
1.90
%
SBA loan pool securities
8,406
244
3.88
%
10,566
137
1.73
%
Municipal bonds (2)
4,017
97
3.23
%
5,152
107
2.78
%
Corporate bonds
4,300
141
4.38
%
4,896
141
3.85
%
Other interest-earning assets
206,720
7,978
5.16
%
198,311
1,957
1.32
%
Total interest-earning assets
2,450,377
110,226
6.01
%
2,158,521
70,175
4.35
%
Noninterest-earning assets
Cash and due from banks
21,069
20,599
ACL on loans
(25,438
)
(21,561
)
Other assets
72,616
72,563
Total noninterest-earning assets
68,247
71,601
Total assets
$
2,518,624
$
2,230,122
Liabilities and Shareholders’ Equity
Interest-bearing liabilities
Deposits
NOW and money market accounts
$
477,605
11,772
3.30
%
$
492,130
2,118
0.58
%
Savings
7,684
14
0.24
%
15,205
6
0.05
%
Time deposits
1,015,234
31,651
4.17
%
550,770
2,565
0.62
%
Total interest-bearing deposits
1,500,523
43,437
3.87
%
1,058,105
4,689
0.59
%
Other borrowings
5,212
209
5.36
%
7,824
119
2.03
%
Total interest-bearing liabilities
1,505,735
43,646
3.88
%
1,065,929
4,808
0.60
%
Noninterest-bearing liabilities
Noninterest-bearing demand
647,258
851,837
Other liabilities
26,208
15,485
Total noninterest-bearing liabilities
673,466
867,322
Total liabilities
2,179,201
1,933,251
Total shareholders’ equity
339,423
296,871
Total liabilities and shareholders’ equity
$
2,518,624
$
2,230,122
Net interest income
$
66,580
$
65,367
Net interest spread (3)
2.13
%
3.75
%
Net interest margin (4)
3.63
%
4.05
%
Total deposits
$
2,147,781
$
43,437
2.70
%
$
1,909,942
$
4,689
0.33
%
Total funding (5)
$
2,152,993
$
43,646
2.71
%
$
1,917,766
$
4,808
0.34
%
(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
Loan Segments Revision (Unaudited)
($ in thousands)
As a part of the adoption of ASC 326, the Company reviewed and revised certain loan segments 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 release, loan segments on loan related disclosures for prior period comparisons are revised accordingly in order to be comparable to the Company’s new loan segments.
The following table presents a reconciliation of revised loan segments to legacy loan segments, which were utilized before the adoption of ASC 326:
($ in thousands)
9/30/2023
6/30/2023
12/31/2022
9/30/2022
Revision for commercial real estate loans
Revised loan segments:
Commercial property
$
814,547
$
793,946
$
772,020
$
759,644
Business property
537,351
533,592
526,513
526,395
Multifamily
132,558
124,029
124,751
121,830
Total
$
1,484,456
$
1,451,567
$
1,423,284
$
1,407,869
Legacy loan segments:
Commercial property
$
1,354,590
$
1,320,110
$
1,288,392
$
1,271,781
SBA property
129,866
131,457
134,892
136,088
Total
$
1,484,456
$
1,451,567
$
1,423,284
$
1,407,869
Revision for commercial and industrial loans
Revised loan segments:
Commercial and industrial
$
279,608
$
272,278
$
249,250
$
216,036
Legacy loan segments:
Commercial term
$
87,892
$
90,213
$
77,700
$
80,225
Commercial lines of credit
174,585
165,162
154,142
117,960
SBA commercial term
16,272
15,900
16,211
16,542
SBA PPP
859
1,003
1,197
1,309
Total
$
279,608
$
272,278
$
249,250
$
216,036
PCB Bancorp and Subsidiary
Non-GAAP Measures
($ in thousands)
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 shareholders’ 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. These non-GAAP measures should not be viewed as substitutes for results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP 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
Nine Months Ended
9/30/2023
6/30/2023
9/30/2022
9/30/2023
9/30/2022
Average total shareholders' equity
(a)
$
343,144
$
339,869
$
338,248
$
339,423
$
296,871
Less: average preferred stock
(b)
69,141
69,141
69,141
69,141
32,924
Average TCE
(c)=(a)-(b)
$
274,003
$
270,728
$
269,107
$
270,282
$
263,947
Net income
(d)
$
7,023
$
7,477
$
6,953
$
24,797
$
26,285
Return on average shareholder's equity (1)
(d)/(a)
8.12
%
8.82
%
8.16
%
9.77
%
11.84
%
Return on average TCE (1)
(d)/(c)
10.17
%
11.08
%
10.25
%
12.27
%
13.31
%
(1) Annualized.
($ in thousands, except per share data)
9/30/2023
6/30/2023
12/31/2022
9/30/2022
Total shareholders' equity
(a)
$
341,852
$
340,411
$
335,442
$
332,719
Less: preferred stock
(b)
69,141
69,141
69,141
69,141
TCE
(c)=(a)-(b)
$
272,711
$
271,270
$
266,301
$
263,578
Outstanding common shares
(d)
14,319,014
14,318,890
14,625,474
14,853,140
Book value per common share
(a)/(d)
$
23.87
$
23.77
$
22.94
$
22.40
TCE per common share
(c)/(d)
$
19.05
$
18.94
$
18.21
$
17.75
Total assets
(e)
$
2,567,974
$
2,556,345
$
2,420,036
$
2,327,051
Total shareholders' equity to total assets
(a)/(e)
13.31
%
13.32
%
13.86
%
14.30
%
TCE to total assets
(c)/(e)
10.62
%
10.61
%
11.00
%
11.33
%
View source version on businesswire.com: https://www.businesswire.com/news/home/20231025803263/en/
Timothy Chang Executive Vice President & Chief Financial Officer 213-210-2000
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