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PCB Bancorp Reports Earnings of $8.7 million for Q4 2022 and $35.0 million for 2022

PCB Bancorp (the “Company”) (NASDAQ: PCB), the holding company of PCB Bank (the “Bank”), today reported net income of $8.7 million, or $0.58 per diluted common share, for the fourth quarter of 2022, compared with $7.0 million, or $0.46 per diluted common share, for the previous quarter and $10.7 million, or $0.70 per diluted common share, for the year-ago quarter. For 2022, net income was $35.0 million, or $2.31 per diluted common share, compared with $40.1 million, or $2.62 per diluted common share, for the previous year.

Q4 2022 and Full Year Highlights

  • Net income totaled $8.7 million, or $0.58 per diluted common share, for the current quarter and $35.0 million, or $2.31 per diluted common share, for the current year;
    • The Company recorded a provision (reversal) for loan losses of $1.1 million for the current quarter compared with $3.8 million for the previous quarter and $(1.5) million for the year-ago quarter. For the current year, provision (reversal) for loan losses was $3.6 million compared with $(4.6) million for the previous year.
    • Allowance for loan losses (“Allowance”) to loans held-for-investment(1) ratio was 1.22% at December 31, 2022 compared with 1.21% at September 30, 2022 and 1.29% at December 31, 2021. Adjusted Allowance to loans held-for-investment ratio(2) was 1.22% at December 31, 2022 compared with 1.21% at September 30, 2022 and 1.34% at December 31, 2021.
    • Net interest income was $24.3 million for the current quarter compared with $24.0 million for the previous quarter and $20.1 million for the year-ago quarter. Net interest margin was 4.15% for the current quarter compared with 4.25% for the previous quarter and 3.87% for the year-ago quarter. For the current year, net interest income and net interest margin were $89.6 million and 4.08%, respectively, compared with $77.1 million and 3.83%, respectively, for the previous year.
    • Gain on sale of loans was $759 thousand for the current quarter compared with $1.4 million for the previous quarter and $3.4 million for the year-ago quarter. For the current year, gain on sale of loans was $8.0 million compared with $12.9 million for the previous year.
  • Total assets were $2.42 billion at December 31, 2022, an increase of $93.0 million, or 4.0%, from $2.33 billion at September 30, 2022 and an increase of $270.3 million, or 12.6%, from $2.15 billion at December 31, 2021.
  • Loans held-for-investment were $2.05 billion at December 31, 2022, an increase of $86.8 million, or 4.4%, from $1.96 billion at September 30, 2022 and an increase of $313.9 million, or 18.1%, from $1.73 billion at December 31, 2021;
  • Total deposits were $2.05 billion at December 31, 2022, an increase of $67.9 million, or 3.4%, from $1.98 billion at September 30, 2022 and an increase of $178.8 million, or 9.6%, from $1.87 billion at December 31, 2021;
  • The Company opened 1 new full-service branch in Carrollton, Texas; and
  • As of December 31, 2022, the Company repurchased and retired 362,557 shares of common stock for an aggregate cost of $6.7 million under the repurchase program announced on July 28, 2022. 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.

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

(1)

Loans held-for-investment are presented net of deferred fees and costs in this press release.

(2)

Adjusted Allowance to loans held-for-investment ratio is a non-GAAP measure, which excludes U.S. Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) loans from loans held-for-investment. See “Non-GAAP Measures” for reconciliation of this measure to its most comparable GAAP measure.

“We are pleased to announce another solid financial performance for the fourth quarter of 2022 to close out the year,” stated Henry Kim, President and Chief Executive Officer. “For the fourth quarter, we achieve a well-balance loan held-for-investment portfolio growth of $86.8 million, or 17.6% annualized, that contributed to further diversification, sound deposit balance growth of $67.9 million, or 13.6% annualized, in spite of the ongoing challenges in the deposit market due to competition and rising market interest rate environment, and a record net interest income of $24.3 million.”

“During the 2022 fourth quarter, we successfully executed several key strategic plans of expanding our branch network in Texas by opening a full service branch in Carrollton to complement our Dallas branch that opened in September 2022, maintaining our exceptional credit quality by being proactive with our borrowers, and actively continuing our stock repurchase program.”

“As we look ahead of 2023 and beyond, our strong balance sheet combined with our exceptionally robust capital position will provide us with the capacity to maneuver through potential uncertain economic environment ahead. We remain entirely committed to helping for the success of our customers and increase the shareholder value through disciplined growth.”

Financial Highlights (Unaudited)

($ in thousands, except per share data)

 

Three Months Ended

 

Year Ended

 

12/31/2022

 

9/30/2022

 

% Change

 

12/31/2021

 

% Change

 

12/31/2022

 

12/31/2021

 

% Change

Net income

 

$

8,702

 

 

$

6,953

 

 

25.2

%

 

$

10,676

 

 

(18.5

) %

 

$

34,987

 

 

$

40,103

 

 

(12.8

) %

Diluted earnings per common share

 

$

0.58

 

 

$

0.46

 

 

26.1

%

 

$

0.70

 

 

(17.1

) %

 

$

2.31

 

 

$

2.62

 

 

(11.8

) %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

$

24,265

 

 

$

24,023

 

 

1.0

%

 

$

20,095

 

 

20.8

%

 

$

89,632

 

 

$

77,137

 

 

16.2

%

Provision (reversal) for loan losses

 

 

1,149

 

 

 

3,753

 

 

(69.4

) %

 

 

(1,462

)

 

NM

 

 

 

3,602

 

 

 

(4,596

)

 

NM

 

Noninterest income

 

 

2,389

 

 

 

3,176

 

 

(24.8

) %

 

 

4,838

 

 

(50.6

) %

 

 

14,499

 

 

 

18,434

 

 

(21.3

) %

Noninterest expense

 

 

13,115

 

 

 

13,695

 

 

(4.2

) %

 

 

11,168

 

 

17.4

%

 

 

51,126

 

 

 

43,208

 

 

18.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (1)

 

 

1.44

%

 

 

1.19

%

 

 

 

 

2.01

%

 

 

 

 

1.54

%

 

 

1.96

%

 

 

Return on average shareholders’ equity (1)

 

 

10.31

%

 

 

8.16

%

 

 

 

 

16.84

%

 

 

 

 

11.42

%

 

 

16.52

%

 

 

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

 

 

12.99

%

 

 

10.25

%

 

 

 

 

16.84

%

 

 

 

 

13.23

%

 

 

16.52

%

 

 

Net interest margin (1)

 

 

4.15

%

 

 

4.25

%

 

 

 

 

3.87

%

 

 

 

 

4.08

%

 

 

3.83

%

 

 

Efficiency ratio (3)

 

 

49.20

%

 

 

50.35

%

 

 

 

 

44.79

%

 

 

 

 

49.10

%

 

 

45.21

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands, except per share data)

 

12/31/2022

 

9/30/2022

 

% Change

 

12/31/2021

 

% Change

Total assets

 

$

2,420,036

 

 

$

2,327,051

 

 

4.0

%

 

$

2,149,735

 

 

12.6

%

Net loans held-for-investment

 

 

2,021,121

 

 

 

1,935,476

 

 

4.4

%

 

 

1,709,824

 

 

18.2

%

Total deposits

 

 

2,045,983

 

 

 

1,978,098

 

 

3.4

%

 

 

1,867,134

 

 

9.6

%

Book value per common share (4)

 

$

22.94

 

 

$

22.40

 

 

 

 

$

17.24

 

 

 

TCE per common share (2)

 

$

18.21

 

 

$

17.75

 

 

 

 

$

17.24

 

 

 

Tier 1 leverage ratio (consolidated)

 

 

14.33

%

 

 

14.74

%

 

 

 

 

12.11

%

 

 

Total shareholders’ equity to total assets

 

 

13.86

%

 

 

14.30

%

 

 

 

 

11.92

%

 

 

TCE to total assets (2), (5)

 

 

11.00

%

 

 

11.33

%

 

 

 

 

11.92

%

 

 

 

 

 

 

 

 

 

 

 

 

 

(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)

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

(4)

Calculated by dividing total shareholdersequity by the number of outstanding common shares.

(5)

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

 

Year Ended

($ in thousands)

 

12/31/2022

 

9/30/2022

 

% Change

 

12/31/2021

 

% Change

 

12/31/2022

 

12/31/2021

 

% Change

Interest income/expense on

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

$

28,786

 

 

$

24,835

 

 

15.9

%

 

$

20,363

 

 

41.4

%

 

$

95,054

 

 

$

79,155

 

 

20.1

%

Investment securities

 

 

957

 

 

 

806

 

 

18.7

%

 

 

441

 

 

117.0

%

 

 

2,907

 

 

 

1,613

 

 

80.2

%

Other interest-earning assets

 

 

1,833

 

 

 

1,194

 

 

53.5

%

 

 

191

 

 

859.7

%

 

 

3,790

 

 

 

704

 

 

438.4

%

Total interest-earning assets

 

 

31,576

 

 

 

26,835

 

 

17.7

%

 

 

20,995

 

 

50.4

%

 

 

101,751

 

 

 

81,472

 

 

24.9

%

Interest-bearing deposits

 

 

7,295

 

 

 

2,798

 

 

160.7

%

 

 

847

 

 

761.3

%

 

 

11,984

 

 

 

4,043

 

 

196.4

%

Borrowings

 

 

16

 

 

 

14

 

 

14.3

%

 

 

53

 

 

(69.8

) %

 

 

135

 

 

 

292

 

 

(53.8

) %

Total interest-bearing liabilities

 

 

7,311

 

 

 

2,812

 

 

160.0

%

 

 

900

 

 

712.3

%

 

 

12,119

 

 

 

4,335

 

 

179.6

%

Net interest income

 

$

24,265

 

 

$

24,023

 

 

1.0

%

 

$

20,095

 

 

20.8

%

 

$

89,632

 

 

$

77,137

 

 

16.2

%

Average balance of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

$

2,004,220

 

 

$

1,905,366

 

 

5.2

%

 

$

1,758,421

 

 

14.0

%

 

$

1,872,557

 

 

$

1,702,073

 

 

10.0

%

Investment securities

 

 

134,066

 

 

 

137,363

 

 

(2.4

) %

 

 

128,650

 

 

4.2

%

 

 

132,538

 

 

 

130,437

 

 

1.6

%

Other interest-earning assets

 

 

182,018

 

 

 

200,367

 

 

(9.2

) %

 

 

175,468

 

 

3.7

%

 

 

194,205

 

 

 

179,353

 

 

8.3

%

Total interest-earning assets

 

$

2,320,304

 

 

$

2,243,096

 

 

3.4

%

 

$

2,062,539

 

 

12.5

%

 

$

2,199,300

 

 

$

2,011,863

 

 

9.3

%

Interest-bearing deposits

 

$

1,269,739

 

 

$

1,137,739

 

 

11.6

%

 

$

1,008,027

 

 

26.0

%

 

$

1,111,449

 

 

$

1,022,099

 

 

8.7

%

Borrowings

 

 

1,739

 

 

 

2,033

 

 

(14.5

) %

 

 

13,315

 

 

(86.9

) %

 

 

6,290

 

 

 

31,302

 

 

(79.9

) %

Total interest-bearing liabilities

 

$

1,271,478

 

 

$

1,139,772

 

 

11.6

%

 

$

1,021,342

 

 

24.5

%

 

$

1,117,739

 

 

$

1,053,401

 

 

6.1

%

Total funding (1)

 

$

2,043,110

 

 

$

1,965,134

 

 

4.0

%

 

$

1,845,846

 

 

10.7

%

 

$

1,949,360

 

 

$

1,790,617

 

 

8.9

%

Annualized average yield/cost of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

 

5.70

%

 

 

5.17

%

 

 

 

 

4.59

%

 

 

 

 

5.08

%

 

 

4.65

%

 

 

Investment securities

 

 

2.83

%

 

 

2.33

%

 

 

 

 

1.36

%

 

 

 

 

2.19

%

 

 

1.24

%

 

 

Other interest-earning assets

 

 

4.00

%

 

 

2.36

%

 

 

 

 

0.43

%

 

 

 

 

1.95

%

 

 

0.39

%

 

 

Total interest-earning assets

 

 

5.40

%

 

 

4.75

%

 

 

 

 

4.04

%

 

 

 

 

4.63

%

 

 

4.05

%

 

 

Interest-bearing deposits

 

 

2.28

%

 

 

0.98

%

 

 

 

 

0.33

%

 

 

 

 

1.08

%

 

 

0.40

%

 

 

Borrowings

 

 

3.65

%

 

 

2.73

%

 

 

 

 

1.58

%

 

 

 

 

2.15

%

 

 

0.93

%

 

 

Total interest-bearing liabilities

 

 

2.28

%

 

 

0.98

%

 

 

 

 

0.35

%

 

 

 

 

1.08

%

 

 

0.41

%

 

 

Net interest margin

 

 

4.15

%

 

 

4.25

%

 

 

 

 

3.87

%

 

 

 

 

4.08

%

 

 

3.83

%

 

 

Cost of total funding (1)

 

 

1.42

%

 

 

0.57

%

 

 

 

 

0.19

%

 

 

 

 

0.62

%

 

 

0.24

%

 

 

Supplementary information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net accretion of discount on loans

 

$

869

 

 

$

867

 

 

0.2

%

 

$

815

 

 

6.6

%

 

$

3,551

 

 

$

3,504

 

 

1.3

%

Net amortization of deferred loan fees

 

$

167

 

 

$

243

 

 

(31.3

) %

 

$

1,434

 

 

(88.4

) %

 

$

2,181

 

 

$

6,096

 

 

(64.2

) %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 were primarily due to an increase in overall interest rates on loans from the rising interest rate environment, partially offset by a decrease in 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:

 

 

12/31/2022

 

9/30/2022

 

12/31/2021

 

 

% to Total

Loans

 

Weighted-Average

Contractual Rate

 

% to Total

Loans

 

Weighted-Average

Contractual Rate

 

% to Total

Loans

 

Weighted-Average

Contractual Rate

Fixed rate loans

 

23.2

%

 

4.51

%

 

24.0

%

 

4.43

%

 

28.4

%

 

3.98

%

Hybrid rate loans

 

39.1

%

 

4.40

%

 

38.0

%

 

4.23

%

 

29.1

%

 

4.16

%

Variable rate loans

 

37.7

%

 

7.86

%

 

38.0

%

 

6.75

%

 

42.5

%

 

3.95

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment Securities. The increases in average yield for the current quarter and year were primarily due to a decrease in net amortization of premiums on mortgage-backed securities and collateralized mortgage obligations and higher yield on newly purchased investment securities.

Other Interest-Earning Assets. The increases in average yield for the current quarter and year were primarily due to an increased interest rate on cash held at the Federal Reserve Bank (“FRB”) account. The increases in average balance for the current quarter and year compared with the same periods of 2021 were primarily due to an increase in average balance of deposits and the Emergency Capital Investment Program (“ECIP”) capital investment, partially offset by an increase in loans. The Company maintains most of its cash at the FRB account.

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

Provision (reversal) for Loan Losses

Provision (reversal) for loan losses was $1.1 million for the current quarter compared with $3.8 million for the previous quarter and $(1.5) million for the year-ago quarter. For the current and previous years, provision (reversal) for loan losses was $3.6 million and $(4.6) million, respectively. The additional provision for loan losses for the current quarter was primarily due to an increase in gross loan balance. For the current year, the additional provision for loan losses was primarily due to an increase in gross loan balance and changes in qualitative adjustment factors related to current economic conditions.

The Company recorded net charge-offs (recoveries) of $(32) thousand for the current quarter compared with $1.1 million for the previous quarter and $(36) thousand for the year-ago quarter. For the current and previous years, the Company recorded net charge-offs (recoveries) of $1.0 million and $(467) thousand, respectively.

Adjusted Allowance to loans held-for-investment ratio(1) was 1.22%, 1.21% and 1.34% at December 31, 2022, September 30, 2022 and December 31, 2021, respectively.

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

(1)

Adjusted Allowance to loans held-for-investment ratio is a non-GAAP measure, which excludes SBA PPP loans from loans held-for-investment. See “Non-GAAP Measures” for reconciliation of this measure to its most comparable GAAP measure.

Noninterest Income

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

 

 

Three Months Ended

 

Year Ended

($ in thousands)

 

12/31/2022

 

9/30/2022

 

% Change

 

12/31/2021

 

% Change

 

12/31/2022

 

12/31/2021

 

% Change

Gain on sale of loans

 

$

759

 

$

1,415

 

(46.4

) %

 

$

3,374

 

(77.5

) %

 

$

7,990

 

$

12,932

 

(38.2

) %

Service charges and fees on deposits

 

 

352

 

 

341

 

3.2

%

 

 

308

 

14.3

%

 

 

1,326

 

 

1,195

 

11.0

%

Loan servicing income

 

 

734

 

 

780

 

(5.9

) %

 

 

688

 

6.7

%

 

 

2,969

 

 

2,770

 

7.2

%

Bank-owned life insurance income

 

 

181

 

 

178

 

1.7

%

 

 

108

 

67.6

%

 

 

706

 

 

108

 

553.7

%

Other income

 

 

363

 

 

462

 

(21.4

) %

 

 

360

 

0.8

%

 

 

1,508

 

 

1,429

 

5.5

%

Total noninterest income

 

$

2,389

 

$

3,176

 

(24.8

) %

 

$

4,838

 

(50.6

) %

 

$

14,499

 

$

18,434

 

(21.3

) %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

Three Months Ended

 

Year Ended

($ in thousands)

 

12/31/2022

 

9/30/2022

 

% Change

 

12/31/2021

 

% Change

 

12/31/2022

 

12/31/2021

 

% Change

Gain on sale of SBA loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sold loan balance

 

$

17,448

 

$

27,313

 

(36.1

) %

 

$

36,765

 

(52.5

) %

 

$

122,886

 

$

126,839

 

(3.1

) %

Premium received

 

 

1,102

 

 

2,036

 

(45.9

) %

 

 

3,683

 

(70.1

) %

 

 

9,944

 

 

14,043

 

(29.2

) %

Gain recognized

 

 

759

 

 

1,407

 

(46.1

) %

 

 

3,363

 

(77.4

) %

 

 

7,982

 

 

12,775

 

(37.5

) %

Gain on sale of residential property loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sold loan balance

 

$

 

$

858

 

(100.0

) %

 

$

559

 

(100.0

) %

 

$

858

 

$

10,382

 

(91.7

) %

Gain recognized

 

 

 

 

8

 

(100.0

) %

 

 

9

 

(100.0

) %

 

 

8

 

 

151

 

(94.7

) %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Company also sold certain commercial property loans of $3.4 million and $8.6 million during the year-ago quarter and previous year, respectively.

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

 

 

Three Months Ended

 

Year Ended

($ in thousands)

 

12/31/2022

 

9/30/2022

 

% Change

 

12/31/2021

 

% Change

 

12/31/2022

 

12/31/2021

 

% Change

Loan servicing income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Servicing income received

 

$

1,284

 

 

$

1,302

 

 

(1.4

) %

 

$

1,202

 

 

6.8

%

 

$

5,103

 

 

$

4,779

 

 

6.8

%

Servicing assets amortization

 

 

(550

)

 

 

(522

)

 

5.4

%

 

 

(514

)

 

7.0

%

 

 

(2,134

)

 

 

(2,009

)

 

6.2

%

Loan servicing income

 

$

734

 

 

$

780

 

 

(5.9

) %

 

$

688

 

 

6.7

%

 

$

2,969

 

 

$

2,770

 

 

7.2

%

Underlying loans at end of period

 

$

531,095

 

 

$

538,904

 

 

(1.4

) %

 

$

519,706

 

 

2.2

%

 

$

531,095

 

 

$

519,706

 

 

2.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Year Ended

($ in thousands)

 

12/31/2022

 

9/30/2022

 

% Change

 

12/31/2021

 

% Change

 

12/31/2022

 

12/31/2021

 

% Change

Salaries and employee benefits

 

$

7,879

 

$

8,457

 

(6.8

) %

 

$

7,061

 

11.6

%

 

$

33,056

 

$

27,974

 

18.2

%

Occupancy and equipment

 

 

1,897

 

 

1,650

 

15.0

%

 

 

1,417

 

33.9

%

 

 

6,481

 

 

5,575

 

16.3

%

Professional fees

 

 

607

 

 

587

 

3.4

%

 

 

585

 

3.8

%

 

 

2,239

 

 

2,159

 

3.7

%

Marketing and business promotion

 

 

724

 

 

909

 

(20.4

) %

 

 

586

 

23.5

%

 

 

2,150

 

 

1,656

 

29.8

%

Data processing

 

 

434

 

 

427

 

1.6

%

 

 

408

 

6.4

%

 

 

1,706

 

 

1,572

 

8.5

%

Director fees and expenses

 

 

176

 

 

179

 

(1.7

) %

 

 

161

 

9.3

%

 

 

706

 

 

594

 

18.9

%

Regulatory assessments

 

 

159

 

 

150

 

6.0

%

 

 

138

 

15.2

%

 

 

597

 

 

537

 

11.2

%

Other expense

 

 

1,239

 

 

1,336

 

(7.3

) %

 

 

812

 

52.6

%

 

 

4,191

 

 

3,141

 

33.4

%

Total noninterest expense

 

$

13,115

 

$

13,695

 

(4.2

) %

 

$

11,168

 

17.4

%

 

$

51,126

 

$

43,208

 

18.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and Employee Benefits. The decrease for the current quarter compared with the previous quarter was primarily due to decreases in bonus and vacation accruals, and incentives tied to the sales of Loan Production Offices (“LPO”) originated SBA loans, partially offset by a decrease in loan origination cost, which offsets the recognition of salaries. The increases for the current quarter and year compared with the same periods of 2021 were primarily due to increases in salaries and other employee benefit expense from the increased number of employees and a decrease in loan origination cost, partially offset by a decrease the incentives tied to sales of LPO originated SBA loans.

Total loan origination cost included in salaries and employee benefits were $345 thousand, $488 thousand and $435 thousand for the current, previous and year-ago quarters, respectively, and $1.7 million and $2.2 million for the current and previous years, respectively. The Company recognized a higher loan origination cost for the previous year primarily due to the SBA PPP loan production in the first quarter of 2021. The number of full-time equivalent employees was 272, 274 and 248 as of December 31, 2022, September 30, 2022 and December 31, 2021, respectively.

Occupancy and Equipment. The increases for the current quarter and year were primarily due to new branch openings. The Company opened 3 new full-service branches in Dallas and Carrollton, Texas and Palisades Park, New Jersey during the current year.

Professional Fees. The increases for the current quarter and year were primarily due to the additional legal expenses associated with the on-going legal matters related to the 2021 Network and Data Incident, partially offset by a decrease in internal audit fees.

Marketing and Business Promotion. The increases for the current year was primarily due to increases in marketing activities and advertisement for the Bank's name change to PCB Bank and new branch openings.

Director Fees and Expenses. The increases for the current quarter and year compared with the same periods of 2021 were primarily due to a new director appointed during the fourth quarter of 2021.

Other Expense. The increases for the current quarter and year compared with the same periods of 2021 were primarily due to an increase in office expense for the new branches. The decrease for the current quarter compared with the previous quarter was primarily due to a legal settlement of $150 thousand for the previous quarter.

Balance Sheet (Unaudited)

Total assets were $2.42 billion at December 31, 2022, an increase of $93.0 million, or 4.0%, from $2.33 billion at September 30, 2022 and an increase of $270.3 million, or 12.6%, from $2.15 billion at December 31, 2021. The increase for the current quarter was primarily due to increases in cash and cash equivalents, securities available-for-sale, loans held-for-sale and loans held-for-investment. The increase for the current year was primarily due to increases in loans held-for-investment and securities available-for-sale, partially offset by decreases in cash and cash equivalents and loans held-for-sale.

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)

 

12/31/2022

 

9/30/2022

 

% Change

 

12/31/2021

 

% Change

Real estate loans

 

 

 

 

 

 

 

 

 

 

Commercial property

 

$

1,288,392

 

$

1,271,781

 

1.3

%

 

$

1,105,843

 

16.5

%

Residential property

 

 

333,726

 

 

297,506

 

12.2

%

 

 

209,485

 

59.3

%

SBA property

 

 

134,892

 

 

136,088

 

(0.9

) %

 

 

129,661

 

4.0

%

Construction

 

 

17,054

 

 

14,592

 

16.9

%

 

 

8,252

 

106.7

%

Commercial and industrial loans

 

 

 

 

 

 

 

 

 

 

Commercial term

 

 

77,700

 

 

80,225

 

(3.1

) %

 

 

73,438

 

5.8

%

Commercial lines of credit

 

 

154,142

 

 

117,960

 

30.7

%

 

 

100,936

 

52.7

%

SBA commercial term

 

 

16,211

 

 

16,542

 

(2.0

) %

 

 

17,640

 

(8.1

) %

SBA PPP

 

 

1,197

 

 

1,309

 

(8.6

) %

 

 

65,329

 

(98.2

) %

Other consumer loans

 

 

22,749

 

 

23,234

 

(2.1

) %

 

 

21,621

 

5.2

%

Loans held-for-investment

 

 

2,046,063

 

 

1,959,237

 

4.4

%

 

 

1,732,205

 

18.1

%

Loans held-for-sale

 

 

22,811

 

 

18,982

 

20.2

%

 

 

37,026

 

(38.4

) %

Total loans

 

$

2,068,874

 

$

1,978,219

 

4.6

%

 

$

1,769,231

 

16.9

%

 

 

 

 

 

 

 

 

 

 

 

The increase in loans held-for-investment for the current quarter was primarily due to new funding of $181.1 million and advances on lines of credit of $51.1 million, partially offset by pay-downs and pay-offs of $141.4 million. The increase for the current year was primarily due to new funding of $631.9 million and advances of lines of credit of $162.4 million, partially offset by pay-downs and pay-offs of $474.8 million. SBA PPP loans of $112 thousand and $64.1 million were paid off through regular payments or forgiveness from SBA during the current quarter and year, respectively.

The increase in loans held-for-sale for the current quarter was primarily due to new funding of $17.3 million and transfer of $4.0 million from loans held-for-investment, partially offset by sales of $17.4 million. The decrease for the current year was primarily due to sales of $123.7 million, partially offset by new funding of $105.6 million and transfer of $4.5 million from loans held-for-investment.

The following table presents a composition of commitments to extend credit as of the dates indicated:

($ in thousands)

 

12/31/2022

 

9/30/2022

 

% Change

 

12/31/2021

 

% Change

Real estate loans

 

 

 

 

 

 

 

 

 

 

Commercial property

 

$

16,172

 

$

18,400

 

(12.1

) %

 

$

20,194

 

(19.9

) %

SBA property

 

 

3,730

 

 

3,730

 

%

 

 

3,068

 

21.6

%

Construction

 

 

18,211

 

 

11,093

 

64.2

%

 

 

5,180

 

251.6

%

Commercial and industrial loans

 

 

 

 

 

 

 

 

 

 

Commercial term

 

 

139

 

 

2,027

 

(93.1

) %

 

 

1,097

 

(87.3

) %

Commercial lines of credit

 

 

254,295

 

 

254,738

 

(0.2

) %

 

 

169,000

 

50.5

%

SBA commercial term

 

 

234

 

 

572

 

(59.1

) %

 

 

149

 

57.0

%

Other consumer loans

 

 

692

 

 

847

 

(18.3

) %

 

 

595

 

16.3

%

Total commitments to extend credit

 

$

293,473

 

$

291,407

 

0.7

%

 

$

199,283

 

47.3

%

 

 

 

 

 

 

 

 

 

 

 

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)

 

12/31/2022

 

9/30/2022

 

% Change

 

12/31/2021

 

% Change

Nonaccrual loans

 

 

 

 

 

 

 

 

 

 

Real estate loans

 

 

 

 

 

 

 

 

 

 

Commercial property

 

$

2,400

 

 

$

2,444

 

 

(1.8

) %

 

$

 

 

%

Residential property

 

 

372

 

 

 

372

 

 

%

 

 

 

 

%

SBA property

 

 

585

 

 

 

552

 

 

6.0

%

 

 

746

 

 

(21.6

) %

Commercial and industrial loans

 

 

 

 

 

 

 

 

 

 

Commercial term

 

 

 

 

 

3

 

 

(100.0

) %

 

 

 

 

%

Commercial lines of credit

 

 

 

 

 

4,000

 

 

(100.0

) %

 

 

 

 

%

SBA commercial term

 

 

 

 

 

 

 

%

 

 

213

 

 

(100.0

) %

Other consumer loans

 

 

3

 

 

 

25

 

 

(88.0

) %

 

 

35

 

 

(91.4

) %

Total nonaccrual loans held-for-investment

 

 

3,360

 

 

 

7,396

 

 

(54.6

) %

 

 

994

 

 

238.0

%

Loans past due 90 days or more and still accruing

 

 

 

 

 

 

 

%

 

 

 

 

%

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

 

 

3,360

 

 

 

7,396

 

 

(54.6

) %

 

 

994

 

 

238.0

%

NPLs held-for-sale

 

 

4,000

 

 

 

 

 

%

 

 

 

 

%

Total NPLs

 

 

7,360

 

 

 

7,396

 

 

(0.5

) %

 

 

994

 

 

640.4

%

Other real estate owned (“OREO”)

 

 

 

 

 

 

 

%

 

 

 

 

%

Non-performing assets (“NPAs”)

 

$

7,360

 

 

$

7,396

 

 

(0.5

) %

 

$

994

 

 

640.4

%

Loans past due and still accruing

 

 

 

 

 

 

 

 

 

 

Past due 30 to 59 days

 

$

47

 

 

$

215

 

 

(78.1

) %

 

$

549

 

 

(91.4

) %

Past due 60 to 89 days

 

 

87

 

 

 

195

 

 

(55.4

) %

 

 

5

 

 

1,640.0

%

Past due 90 days or more

 

 

 

 

 

 

 

%

 

 

 

 

%

Total loans past due and still accruing

 

$

134

 

 

$

410

 

 

(67.3

) %

 

 

554

 

 

(75.8

) %

Troubled debt restructurings (“TDRs”)

 

 

 

 

 

 

 

 

 

Accruing TDRs

 

$

534

 

 

$

542

 

 

(1.5

) %

 

$

576

 

 

(7.3

) %

Nonaccrual TDRs

 

 

 

 

 

7

 

 

(100.0

) %

 

 

17

 

 

(100.0

) %

Total TDRs

 

$

534

 

 

$

549

 

 

(2.7

) %

 

$

593

 

 

(9.9

) %

Special mention loans

 

$

6,857

 

 

$

5,986

 

 

14.6

%

 

$

18,092

 

 

(62.1

) %

Classified assets

 

 

 

 

 

 

 

 

 

Classified loans held-for-investment

 

$

6,211

 

 

$

10,293

 

 

(39.7

) %

 

$

5,168

 

 

20.2

%

Classified loans held-for-sale

 

 

4,000

 

 

 

 

 

%

 

 

 

 

%

OREO

 

 

 

 

 

 

 

%

 

 

 

 

%

Classified assets

 

$

10,211

 

 

$

10,293

 

 

(0.8

) %

 

$

5,168

 

 

97.6

%

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

 

 

0.16

%

 

 

0.38

%

 

 

 

 

0.06

%

 

 

NPAs to total assets

 

 

0.30

%

 

 

0.32

%

 

 

 

 

0.05

%

 

 

Classified assets to total assets

 

 

0.42

%

 

 

0.44

%

 

 

 

 

0.24

%

 

 

 

 

 

 

 

 

 

 

 

 

 

During the current quarter, nonaccrual commercial lines of credit of $4.0 million were transferred to loan held-for-sale. The decrease in special mention loans for the current year was primarily due to improvements of 2 loans with an aggregated carrying value of $11.3 million at December 31, 2021.

Investment Securities

Total investment securities were $141.9 million at December 31, 2022, an increase of $12.5 million, or 9.6%, from $129.4 million at September 30, 2022 and an increase of $18.7 million, or 15.2%, from $123.2 million at December 31, 2021. The increase for the current quarter was primarily due to purchases of $16.3 million and a fair value increase of $711 thousand, partially offset by principal pay-downs and calls of $4.5 million and net premium amortization of $60 thousand. The increase for the current year was primarily due to purchases of $57.4 million, partially offset by principal pay-downs and calls of $23.2 million, a fair value decrease of $15.1 million and net premium amortization of $367 thousand.

Deposits

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

 

 

12/31/2022

 

9/30/2022

 

12/31/2021

($ in thousands)

 

Amount

 

% to

Total

 

Amount

 

% to

Total

 

Amount

 

% to

Total

Noninterest-bearing demand deposits

 

$

734,989

 

35.9

%

 

$

809,842

 

40.9

%

 

$

830,383

 

44.5

%

Interest-bearing deposits

 

 

 

 

 

 

 

 

 

 

 

 

Savings

 

 

8,579

 

0.4

%

 

 

13,028

 

0.7

%

 

 

16,299

 

0.9

%

NOW

 

 

11,405

 

0.6

%

 

 

17,550

 

0.9

%

 

 

20,185

 

1.1

%

Retail money market accounts

 

 

494,749

 

24.2

%

 

 

522,412

 

26.4

%

 

 

386,041

 

20.5

%

Brokered money market accounts

 

 

8

 

%

 

 

10,010

 

0.5

%

 

 

1

 

0.1

%

Retail time deposits of

 

 

 

 

 

 

 

 

 

 

 

 

$250,000 or less

 

 

295,354

 

14.4

%

 

 

236,864

 

12.0

%

 

 

256,956

 

13.8

%

More than $250,000

 

 

353,876

 

17.3

%

 

 

239,271

 

12.1

%

 

 

172,269

 

9.2

%

State and brokered time deposits

 

 

147,023

 

7.2

%

 

 

129,121

 

6.5

%

 

 

185,000

 

9.9

%

Total interest-bearing deposits

 

 

1,310,994

 

64.1

%

 

 

1,168,256

 

59.1

%

 

 

1,036,751

 

55.5

%

Total deposits

 

$

2,045,983

 

100.0

%

 

$

1,978,098

 

100.0

%

 

$

1,867,134

 

100.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

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 remain competitive in this rising interest rate environment, the Bank started to offer higher rates on deposit products to retain and attract new customers.

The increase in retail time deposits for the current quarter was primarily due to new accounts of $384.5 million, renewals of the matured accounts of $122.6 million and balance increases of $7.6 million, partially offset by matured and closed accounts of $341.6 million. The increase for the current year was primarily due to new accounts of $636.7 million, renewals of the matured accounts of $602.9 million and balance increases of $23.4 million, partially offset by matured and closed accounts of $1.04 billion.

Liquidity

The following table presents a summary of the Company’s liquidity position as of December 31, 2022:

($ in thousands)

 

12/31/2022

Cash and cash equivalents

 

$

147,031

 

Cash and cash equivalents to total assets

 

 

6.1

%

 

 

 

Available borrowing capacity

 

 

FHLB advances

 

$

581,745

 

Federal Reserve Discount Window

 

 

23,902

 

Overnight federal funds lines

 

 

65,000

 

Total

 

$

670,647

 

Total available borrowing capacity to total assets

 

 

27.7

%

 

 

 

Shareholders’ Equity

Shareholders’ equity was $335.4 million at December 31, 2022, an increase of $2.7 million, or 0.8%, from $332.7 million at September 30, 2022 and an increase of $79.2 million, or 30.9%, from $256.3 million at December 31, 2021. 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 common stock of $4.5 million. The increase for the current year was primarily due to net income and issuance of preferred stock of $69.1 million (as discussed below), partially offset by cash dividends declared on common stock of $8.9 million, repurchase of common stock of $6.7 million and an increase in accumulated other comprehensive loss of $10.7 million.

Stock Repurchase

On April 8, 2021, the Company’s Board of Directors approved a repurchase program authorizing the repurchase of up to 5% of the Company’s outstanding common stock as of the date of the board meeting, which represented 775,000 shares, through September 7, 2021. The Company repurchased and retired 680,269 shares of common stock totaling $10.9 million at a weighted-average price of $15.99 per share under this program.

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 repurchased and retired 362,557 shares of common stock at a weighted-average price of $18.57 per share, totaling $6.7 million under this repurchase program as of December 31, 2022.

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:

 

 

12/31/2022

 

9/30/2022

 

12/31/2021

 

Well Capitalized

Requirements

PCB Bancorp

 

 

 

 

 

 

 

 

Common tier 1 capital (to risk-weighted assets)

 

13.29

%

 

13.69

%

 

14.79

%

 

N/A

 

Total capital (to risk-weighted assets)

 

17.83

%

 

18.34

%

 

16.04

%

 

N/A

 

Tier 1 capital (to risk-weighted assets)

 

16.62

%

 

17.14

%

 

14.79

%

 

N/A

 

Tier 1 capital (to average assets)

 

14.33

%

 

14.74

%

 

12.11

%

 

N/A

 

PCB Bank

 

 

 

 

 

 

 

 

Common tier 1 capital (to risk-weighted assets)

 

16.30

%

 

16.82

%

 

14.48

%

 

6.5

%

Total capital (to risk-weighted assets)

 

17.52

%

 

18.02

%

 

15.73

%

 

10.0

%

Tier 1 capital (to risk-weighted assets)

 

16.30

%

 

16.82

%

 

14.48

%

 

8.0

%

Tier 1 capital (to average assets)

 

14.05

%

 

14.47

%

 

11.85

%

 

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)

 

 

12/31/2022

 

9/30/2022

 

% Change

 

12/31/2021

 

% Change

Assets

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

23,202

 

 

$

22,252

 

 

4.3

%

 

$

15,222

 

 

52.4

%

Interest-bearing deposits in other financial institutions

 

 

123,829

 

 

 

131,786

 

 

(6.0

) %

 

 

188,063

 

 

(34.2

) %

Total cash and cash equivalents

 

 

147,031

 

 

 

154,038

 

 

(4.5

) %

 

 

203,285

 

 

(27.7

) %

Securities available-for-sale, at fair value

 

 

141,863

 

 

 

129,401

 

 

9.6

%

 

 

123,198

 

 

15.2

%

Loans held-for-sale

 

 

22,811

 

 

 

18,982

 

 

20.2

%

 

 

37,026

 

 

(38.4

) %

Loans held-for-investment

 

 

2,046,063

 

 

 

1,959,237

 

 

4.4

%

 

 

1,732,205

 

 

18.1

%

Allowance for loan losses

 

 

(24,942

)

 

 

(23,761

)

 

5.0

%

 

 

(22,381

)

 

11.4

%

Net loans held-for-investment

 

 

2,021,121

 

 

 

1,935,476

 

 

4.4

%

 

 

1,709,824

 

 

18.2

%

Premises and equipment, net

 

 

6,916

 

 

 

4,671

 

 

48.1

%

 

 

3,098

 

 

123.2

%

Federal Home Loan Bank and other bank stock

 

 

10,183

 

 

 

10,183

 

 

%

 

 

8,577

 

 

18.7

%

Bank-owned life insurance

 

 

30,064

 

 

 

29,883

 

 

0.6

%

 

 

29,358

 

 

2.4

%

Deferred tax assets, net

 

 

3,115

 

 

 

12,135

 

 

(74.3

) %

 

 

10,824

 

 

(71.2

) %

Servicing assets

 

 

7,347

 

 

 

7,627

 

 

(3.7

) %

 

 

7,269

 

 

1.1

%

Operating lease assets

 

 

6,358

 

 

 

6,897

 

 

(7.8

) %

 

 

6,786

 

 

(6.3

) %

Accrued interest receivable

 

 

7,472

 

 

 

6,070

 

 

23.1

%

 

 

5,368

 

 

39.2

%

Other assets

 

 

15,755

 

 

 

11,688

 

 

34.8

%

 

 

5,122

 

 

207.6

%

Total assets

 

$

2,420,036

 

 

$

2,327,051

 

 

4.0

%

 

$

2,149,735

 

 

12.6

%

Liabilities

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing demand

 

$

734,989

 

 

$

809,842

 

 

(9.2

) %

 

$

830,383

 

 

(11.5

) %

Savings, NOW and money market accounts

 

 

514,741

 

 

 

563,000

 

 

(8.6

) %

 

 

422,526

 

 

21.8

%

Time deposits of $250,000 or less

 

 

382,377

 

 

 

305,985

 

 

25.0

%

 

 

341,956

 

 

11.8

%

Time deposits of more than $250,000

 

 

413,876

 

 

 

299,271

 

 

38.3

%

 

 

272,269

 

 

52.0

%

Total deposits

 

 

2,045,983

 

 

 

1,978,098

 

 

3.4

%

 

 

1,867,134

 

 

9.6

%

Federal Home Loan Bank advances

 

 

20,000

 

 

 

 

 

%

 

 

10,000

 

 

100.0

%

Operating lease liabilities

 

 

6,809

 

 

 

7,402

 

 

(8.0

) %

 

 

7,444

 

 

(8.5

) %

Accrued interest payable and other liabilities

 

 

11,802

 

 

 

8,832

 

 

33.6

%

 

 

8,871

 

 

33.0

%

Total liabilities

 

 

2,084,594

 

 

 

1,994,332

 

 

4.5

%

 

 

1,893,449

 

 

10.1

%

Commitments and contingent liabilities

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

 

 

 

 

 

Preferred stock

 

 

69,141

 

 

 

69,141

 

 

%

 

 

 

 

%

Common stock

 

 

149,631

 

 

 

153,890

 

 

(2.8

) %

 

 

154,992

 

 

(3.5

) %

Retained earnings

 

 

127,181

 

 

 

120,699

 

 

5.4

%

 

 

101,140

 

 

25.7

%

Accumulated other comprehensive income (loss), net

 

 

(10,511

)

 

 

(11,011

)

 

(4.5

) %

 

 

154

 

 

NM

 

Total shareholders’ equity

 

 

335,442

 

 

 

332,719

 

 

0.8

%

 

 

256,286

 

 

30.9

%

Total liabilities and shareholders’ equity

 

$

2,420,036

 

 

$

2,327,051

 

 

4.0

%

 

$

2,149,735

 

 

12.6

%

 

 

 

 

 

 

 

 

 

 

 

Outstanding common shares

 

 

14,625,474

 

 

 

14,853,140

 

 

 

 

 

14,865,825

 

 

 

Book value per common share (1)

 

$

22.94

 

 

$

22.40

 

 

 

 

$

17.24

 

 

 

TCE per common share (2)

 

$

18.21

 

 

$

17.75

 

 

 

 

$

17.24

 

 

 

Total loan to total deposit ratio

 

 

101.12

%

 

 

100.01

%

 

 

 

 

94.76

%

 

 

Noninterest-bearing deposits to total deposits

 

 

35.92

%

 

 

40.94

%

 

 

 

 

44.47

%

 

 

 

 

 

 

 

 

 

 

 

 

 

(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

 

Year Ended

 

 

12/31/2022

 

9/30/2022

 

% Change

 

12/31/2021

 

% Change

 

12/31/2022

 

12/31/2021

 

% Change

Interest and dividend income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

 

$

28,786

 

 

$

24,835

 

 

15.9

%

 

$

20,363

 

 

41.4

%

 

$

95,054

 

 

$

79,155

 

 

20.1

%

Investment securities

 

 

957

 

 

 

806

 

 

18.7

%

 

 

441

 

 

117.0

%

 

 

2,907

 

 

 

1,613

 

 

80.2

%

Other interest-earning assets

 

 

1,833

 

 

 

1,194

 

 

53.5

%

 

 

191

 

 

859.7

%

 

 

3,790

 

 

 

704

 

 

438.4

%

Total interest income

 

 

31,576

 

 

 

26,835

 

 

17.7

%

 

 

20,995

 

 

50.4

%

 

 

101,751

 

 

 

81,472

 

 

24.9

%

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

7,295

 

 

 

2,798

 

 

160.7

%

 

 

847

 

 

761.3

%

 

 

11,984

 

 

 

4,043

 

 

196.4

%

Other borrowings

 

 

16

 

 

 

14

 

 

14.3

%

 

 

53

 

 

(69.8

) %

 

 

135

 

 

 

292

 

 

(53.8

) %

Total interest expense

 

 

7,311

 

 

 

2,812

 

 

160.0

%

 

 

900

 

 

712.3

%

 

 

12,119

 

 

 

4,335

 

 

179.6

%

Net interest income

 

 

24,265

 

 

 

24,023

 

 

1.0

%

 

 

20,095

 

 

20.8

%

 

 

89,632

 

 

 

77,137

 

 

16.2

%

Provision (reversal) for loan losses

 

 

1,149

 

 

 

3,753

 

 

(69.4

) %

 

 

(1,462

)

 

NM

 

 

 

3,602

 

 

 

(4,596

)

 

NM

 

Net interest income after provision (reversal) for loan losses

 

 

23,116

 

 

 

20,270

 

 

14.0

%

 

 

21,557

 

 

7.2

%

 

 

86,030

 

 

 

81,733

 

 

5.3

%

Noninterest income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on sale of loans

 

 

759

 

 

 

1,415

 

 

(46.4

) %

 

 

3,374

 

 

(77.5

) %

 

 

7,990

 

 

 

12,932

 

 

(38.2

) %

Service charges and fees on deposits

 

 

352

 

 

 

341

 

 

3.2

%

 

 

308

 

 

14.3

%

 

 

1,326

 

 

 

1,195

 

 

11.0

%

Loan servicing income

 

 

734

 

 

 

780

 

 

(5.9

) %

 

 

688

 

 

6.7

%

 

 

2,969

 

 

 

2,770

 

 

7.2

%

Bank-owned life insurance income

 

 

181

 

 

 

178

 

 

1.7

%

 

 

108

 

 

67.6

%

 

 

706

 

 

 

108

 

 

553.7

%

Other income

 

 

363

 

 

 

462

 

 

(21.4

) %

 

 

360

 

 

0.8

%

 

 

1,508

 

 

 

1,429

 

 

5.5

%

Total noninterest income

 

 

2,389

 

 

 

3,176

 

 

(24.8

) %

 

 

4,838

 

 

(50.6

) %

 

 

14,499

 

 

 

18,434

 

 

(21.3

) %

Noninterest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

7,879

 

 

 

8,457

 

 

(6.8

) %

 

 

7,061

 

 

11.6

%

 

 

33,056

 

 

 

27,974

 

 

18.2

%

Occupancy and equipment

 

 

1,897

 

 

 

1,650

 

 

15.0

%

 

 

1,417

 

 

33.9

%

 

 

6,481

 

 

 

5,575

 

 

16.3

%

Professional fees

 

 

607

 

 

 

587

 

 

3.4

%

 

 

585

 

 

3.8

%

 

 

2,239

 

 

 

2,159

 

 

3.7

%

Marketing and business promotion

 

 

724

 

 

 

909

 

 

(20.4

) %

 

 

586

 

 

23.5

%

 

 

2,150

 

 

 

1,656

 

 

29.8

%

Data processing

 

 

434

 

 

 

427

 

 

1.6

%

 

 

408

 

 

6.4

%

 

 

1,706

 

 

 

1,572

 

 

8.5

%

Director fees and expenses

 

 

176

 

 

 

179

 

 

(1.7

) %

 

 

161

 

 

9.3

%

 

 

706

 

 

 

594

 

 

18.9

%

Regulatory assessments

 

 

159

 

 

 

150

 

 

6.0

%

 

 

138

 

 

15.2

%

 

 

597

 

 

 

537

 

 

11.2

%

Other expense

 

 

1,239

 

 

 

1,336

 

 

(7.3

) %

 

 

812

 

 

52.6

%

 

 

4,191

 

 

 

3,141

 

 

33.4

%

Total noninterest expense

 

 

13,115

 

 

 

13,695

 

 

(4.2

) %

 

 

11,168

 

 

17.4

%

 

 

51,126

 

 

 

43,208

 

 

18.3

%

Income before income taxes

 

 

12,390

 

 

 

9,751

 

 

27.1

%

 

 

15,227

 

 

(18.6

) %

 

 

49,403

 

 

 

56,959

 

 

(13.3

) %

Income tax expense

 

 

3,688

 

 

 

2,798

 

 

31.8

%

 

 

4,551

 

 

(19.0

) %

 

 

14,416

 

 

 

16,856

 

 

(14.5

) %

Net income

 

$

8,702

 

 

$

6,953

 

 

25.2

%

 

$

10,676

 

 

(18.5

) %

 

$

34,987

 

 

$

40,103

 

 

(12.8

) %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.59

 

 

$

0.47

 

 

 

 

$

0.72

 

 

 

 

$

2.35

 

 

$

2.66

 

 

 

Diluted

 

$

0.58

 

 

$

0.46

 

 

 

 

$

0.70

 

 

 

 

$

2.31

 

 

$

2.62

 

 

 

Average common shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

14,700,010

 

 

 

14,877,879

 

 

 

 

 

14,799,973

 

 

 

 

 

14,833,191

 

 

 

15,017,637

 

 

 

Diluted

 

 

14,904,106

 

 

 

15,088,089

 

 

 

 

 

15,093,351

 

 

 

 

 

15,076,348

 

 

 

15,253,820

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividend paid per common share

 

$

0.15

 

 

$

0.15

 

 

 

 

$

0.12

 

 

 

 

$

0.60

 

 

$

0.44

 

 

 

Return on average assets (1)

 

 

1.44

%

 

 

1.19

%

 

 

 

 

2.01

%

 

 

 

 

1.54

%

 

 

1.96

%

 

 

Return on average shareholders’ equity (1)

 

 

10.31

%

 

 

8.16

%

 

 

 

 

16.84

%

 

 

 

 

11.42

%

 

 

16.52

%

 

 

Return on average TCE (1), (2)

 

 

12.99

%

 

 

10.25

%

 

 

 

 

16.84

%

 

 

 

 

13.23

%

 

 

16.52

%

 

 

Efficiency ratio (3)

 

 

49.20

%

 

 

50.35

%

 

 

 

 

44.79

%

 

 

 

 

49.10

%

 

 

45.21

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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

 

 

12/31/2022

 

9/30/2022

 

12/31/2021

 

 

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)

 

$

2,004,220

 

 

$

28,786

 

5.70

%

 

$

1,905,366

 

 

$

24,835

 

5.17

%

 

$

1,758,421

 

 

$

20,363

 

4.59

%

Mortgage-backed securities

 

 

90,346

 

 

 

585

 

2.57

%

 

 

93,546

 

 

 

518

 

2.20

%

 

 

88,501

 

 

 

263

 

1.18

%

Collateralized mortgage obligation

 

 

25,570

 

 

 

221

 

3.43

%

 

 

24,090

 

 

 

151

 

2.49

%

 

 

20,233

 

 

 

53

 

1.04

%

SBA loan pool securities

 

 

9,545

 

 

 

71

 

2.95

%

 

 

10,435

 

 

 

56

 

2.13

%

 

 

9,199

 

 

 

41

 

1.77

%

Municipal bonds (2)

 

 

4,050

 

 

 

33

 

3.23

%

 

 

4,491

 

 

 

34

 

3.00

%

 

 

5,698

 

 

 

37

 

2.58

%

Corporate bonds

 

 

4,555

 

 

 

47

 

4.09

%

 

 

4,801

 

 

 

47

 

3.88

%

 

 

5,019

 

 

 

47

 

3.72

%

Other interest-earning assets

 

 

182,018

 

 

 

1,833

 

4.00

%

 

 

200,367

 

 

 

1,194

 

2.36

%

 

 

175,468

 

 

 

191

 

0.43

%

Total interest-earning assets

 

 

2,320,304

 

 

 

31,576

 

5.40

%

 

 

2,243,096

 

 

 

26,835

 

4.75

%

 

 

2,062,539

 

 

 

20,995

 

4.04

%

Noninterest-earning assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

 

21,139

 

 

 

 

 

 

 

20,609

 

 

 

 

 

 

 

20,618

 

 

 

 

 

Allowance for loan losses

 

 

(23,800

)

 

 

 

 

 

 

(21,117

)

 

 

 

 

 

 

(23,835

)

 

 

 

 

Other assets

 

 

78,069

 

 

 

 

 

 

 

76,851

 

 

 

 

 

 

 

52,512

 

 

 

 

 

Total noninterest-earning assets

 

 

75,408

 

 

 

 

 

 

 

76,343

 

 

 

 

 

 

 

49,295

 

 

 

 

 

Total assets

 

$

2,395,712

 

 

 

 

 

 

$

2,319,439

 

 

 

 

 

 

$

2,111,834

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOW and money market accounts

 

$

540,312

 

 

 

2,852

 

2.09

%

 

$

577,975

 

 

 

1,375

 

0.94

%

 

$

406,343

 

 

 

301

 

0.29

%

Savings

 

 

10,692

 

 

 

3

 

0.11

%

 

 

14,990

 

 

 

2

 

0.05

%

 

 

14,161

 

 

 

2

 

0.06

%

Time deposits

 

 

718,735

 

 

 

4,440

 

2.45

%

 

 

544,774

 

 

 

1,421

 

1.03

%

 

 

587,523

 

 

 

544

 

0.37

%

Total interest-bearing deposits

 

 

1,269,739

 

 

 

7,295

 

2.28

%

 

 

1,137,739

 

 

 

2,798

 

0.98

%

 

 

1,008,027

 

 

 

847

 

0.33

%

Other borrowings

 

 

1,739

 

 

 

16

 

3.65

%

 

 

2,033

 

 

 

14

 

2.73

%

 

 

13,315

 

 

 

53

 

1.58

%

Total interest-bearing liabilities

 

 

1,271,478

 

 

 

7,311

 

2.28

%

 

 

1,139,772

 

 

 

2,812

 

0.98

%

 

 

1,021,342

 

 

 

900

 

0.35

%

Noninterest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing demand

 

 

771,632

 

 

 

 

 

 

 

825,362

 

 

 

 

 

 

 

824,504

 

 

 

 

 

Other liabilities

 

 

17,770

 

 

 

 

 

 

 

16,057

 

 

 

 

 

 

 

14,511

 

 

 

 

 

Total noninterest-bearing liabilities

 

 

789,402

 

 

 

 

 

 

 

841,419

 

 

 

 

 

 

 

839,015

 

 

 

 

 

Total liabilities

 

 

2,060,880

 

 

 

 

 

 

 

1,981,191

 

 

 

 

 

 

 

1,860,357

 

 

 

 

 

Total shareholders’ equity

 

 

334,832

 

 

 

 

 

 

 

338,248

 

 

 

 

 

 

 

251,477

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

2,395,712

 

 

 

 

 

 

$

2,319,439

 

 

 

 

 

 

$

2,111,834

 

 

 

 

 

Net interest income

 

 

 

$

24,265

 

 

 

 

 

$

24,023

 

 

 

 

 

$

20,095

 

 

Net interest spread (3)

 

 

 

 

 

3.12

%

 

 

 

 

 

3.77

%

 

 

 

 

 

3.69

%

Net interest margin (4)

 

 

 

 

 

4.15

%

 

 

 

 

 

4.25

%

 

 

 

 

 

3.87

%

Total deposits

 

$

2,041,371

 

 

$

7,295

 

1.42

%

 

$

1,963,101

 

 

$

2,798

 

0.57

%

 

$

1,832,531

 

 

$

847

 

0.18

%

Total funding (5)

 

$

2,043,110

 

 

$

7,311

 

1.42

%

 

$

1,965,134

 

 

$

2,812

 

0.57

%

 

$

1,845,846

 

 

$

900

 

0.19

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Total loans include both loans held-for-sale and loans held-for-investment, net of deferred loan fees and costs.

(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)

 

 

Year Ended

 

 

12/31/2022

 

12/31/2021

 

 

Average

Balance

 

Interest Income

/Expense

 

Avg.

Yield/Rate

 

Average

Balance

 

Interest Income

/Expense

 

Avg.

Yield/Rate

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets

 

 

 

 

 

 

 

 

 

 

 

 

Total loans (1)

 

$

1,872,557

 

 

$

95,054

 

5.08

%

 

$

1,702,073

 

 

$

79,155

 

4.65

%

Mortgage-backed securities

 

 

89,066

 

 

 

1,826

 

2.05

%

 

 

89,693

 

 

 

989

 

1.10

%

Collateralized mortgage obligation

 

 

23,479

 

 

 

545

 

2.32

%

 

 

22,633

 

 

 

221

 

0.98

%

SBA loan pool securities

 

 

10,309

 

 

 

208

 

2.02

%

 

 

10,515

 

 

 

189

 

1.80

%

Municipal bonds (2)

 

 

4,874

 

 

 

140

 

2.87

%

 

 

5,755

 

 

 

146

 

2.54

%

Corporate bonds

 

 

4,810

 

 

 

188

 

3.91

%

 

 

1,841

 

 

 

68

 

3.69

%

Other interest-earning assets

 

 

194,205

 

 

 

3,790

 

1.95

%

 

 

179,353

 

 

 

704

 

0.39

%

Total interest-earning assets

 

 

2,199,300

 

 

 

101,751

 

4.63

%

 

 

2,011,863

 

 

 

81,472

 

4.05

%

Noninterest-earning assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

 

20,735

 

 

 

 

 

 

 

19,676

 

 

 

 

 

Allowance for loan losses

 

 

(22,125

)

 

 

 

 

 

 

(25,270

)

 

 

 

 

Other assets

 

 

73,951

 

 

 

 

 

 

 

41,187

 

 

 

 

 

Total noninterest-earning assets

 

 

72,561

 

 

 

 

 

 

 

35,593

 

 

 

 

 

Total assets

 

$

2,271,861

 

 

 

 

 

 

$

2,047,456

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

NOW and money market accounts

 

$

504,275

 

 

 

4,970

 

0.99

%

 

$

400,446

 

 

 

1,242

 

0.31

%

Savings

 

 

14,068

 

 

 

9

 

0.06

%

 

 

12,302

 

 

 

6

 

0.05

%

Time deposits

 

 

593,106

 

 

 

7,005

 

1.18

%

 

 

609,351

 

 

 

2,795

 

0.46

%

Total interest-bearing deposits

 

 

1,111,449

 

 

 

11,984

 

1.08

%

 

 

1,022,099

 

 

 

4,043

 

0.40

%

Other borrowings

 

 

6,290

 

 

 

135

 

2.15

%

 

 

31,302

 

 

 

292

 

0.93

%

Total interest-bearing liabilities

 

 

1,117,739

 

 

 

12,119

 

1.08

%

 

 

1,053,401

 

 

 

4,335

 

0.41

%

Noninterest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing demand

 

 

831,621

 

 

 

 

 

 

 

737,216

 

 

 

 

 

Other liabilities

 

 

16,061

 

 

 

 

 

 

 

14,073

 

 

 

 

 

Total noninterest-bearing liabilities

 

 

847,682

 

 

 

 

 

 

 

751,289

 

 

 

 

 

Total liabilities

 

 

1,965,421

 

 

 

 

 

 

 

1,804,690

 

 

 

 

 

Total shareholders’ equity

 

 

306,440

 

 

 

 

 

 

 

242,766

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

2,271,861

 

 

 

 

 

 

$

2,047,456

 

 

 

 

 

Net interest income

 

 

 

$

89,632

 

 

 

 

 

$

77,137

 

 

Net interest spread (3)

 

 

 

 

 

3.55

%

 

 

 

 

 

3.64

%

Net interest margin (4)

 

 

 

 

 

4.08

%

 

 

 

 

 

3.83

%

Total deposits

 

$

1,943,070

 

 

$

11,984

 

0.62

%

 

$

1,759,315

 

 

$

4,043

 

0.23

%

Total funding (5)

 

$

1,949,360

 

 

$

12,119

 

0.62

%

 

$

1,790,617

 

 

$

4,335

 

0.24

%

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Total loans include both loans held-for-sale and loans held-for-investment, net of deferred loan fees and costs.

(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) </