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PCB Bancorp Reports Earnings of $7.5 Million for Q2 2023

PCB Bancorp (the “Company”) (NASDAQ: PCB), the holding company of PCB Bank (the “Bank”), today reported net income of $7.5 million, or $0.52 per diluted common share, for the second quarter of 2023, compared with $10.3 million, or $0.70 per diluted common share, for the previous quarter and $9.1 million, or $0.60 per diluted common share, for the year-ago quarter.

Q2 2023 Highlights

  • Net income totaled $7.5 million, or $0.52 per diluted common share, for the current quarter;
  • Recorded a provision (reversal) for credit losses(1),(2) of $197 thousand for the current quarter compared with $(2.8) million for the previous quarter and $(109) thousand for the year-ago quarter;
  • Allowance for Credit Losses (“ACL”)(1) on loans to loans held-for-investment ratio was 1.17% at June 30, 2023 compared with 1.18% at March 31, 2023 and 1.15% at June 30, 2022;
  • Net interest income was $21.7 million for the current quarter compared with $22.4 million for the previous quarter and $21.4 million for the year-ago quarter. Net interest margin was 3.55% for the current quarter compared with 3.79% for the previous quarter and 4.01% for the year-ago quarter;
  • Gain on sale of loans was $769 thousand for the current quarter compared with $1.3 million for the previous quarter and $2.0 million for the year-ago quarter;
  • Total assets were $2.56 billion at June 30, 2023, an increase of $55.8 million, or 2.2%, from $2.50 billion at March 31, 2023, an increase of $136.3 million, or 5.6%, from $2.42 billion at December 31, 2022, and an increase of $211.8 million, or 9.0%, from $2.34 billion at June 30, 2022;
  • Loans held-for-investment were $2.12 billion at June 30, 2023, an increase of $30.0 million, or 1.4%, from $2.09 billion at March 31, 2023, an increase of $76.4 million, or 3.7%, from $2.05 billion at December 31, 2022, and an increase of $289.4 million, or 15.8%, from $1.83 billion at June 30, 2022; and
  • Total deposits were $2.19 billion at June 30, 2023, an increase of $46.5 million, or 2.2%, from $2.14 billion at March 31, 2023, an increase of $142.2 million, or 7.0%, from $2.05 billion at December 31, 2022, and an increase of $190.6 million, or 9.5%, from $2.00 billion at June 30, 2022.

“I am pleased with our solid results in the second quarter,” said Henry Kim, President and Chief Executive Officer. “In spite of the challenging macroeconomic environment, our continued focus on maintaining fundamentals in our institution provided stable level of liquidity, robust capital, and strong asset quality.”

“During the second quarter, our cash and cash equivalents to total assets increased to 8.7% of total assets and our deposit balances increased $46.5 million, or 2.2%. Several days after June 30, 2023, we established Borrower-in Custody Program with Federal Reserve Bank that provided an additional borrowing capacity of $268.9 million. Such additional borrowing capacity in combination of other borrowing capacities and cash and cash equivalent would have covered approximately 117.1% of deposits not covered by deposit insurance compared with 91.1% without the additional borrowing capacity at June 30, 2023.”

“Tangible common equity per share increased to $18.94 and our total capital ratio was 17.57%. Our loan balance increased 1.4% to $2.12 billion compared with $2.09 billion at March 31, 2023, and our asset quality continues to be strong with non-performing assets to total asset ratio of 0.15% and classified assets to total assets ratio of 0.27%.”

“Our commitment to deliver exceptional service with precise banking products to our customers and the opportunities to expand our geographical footprint gives us motivation to be excited about our prospects for continued growth in the second half of 2023 and beyond,” concluded Kim.

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

(1)

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

(2)

Provision for credit losses on off-balance sheet credit exposures of $36 thousand and $38 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

 

Six Months Ended

 

6/30/2023

 

3/31/2023

 

% Change

 

6/30/2022

 

% Change

 

6/30/2023

 

6/30/2022

 

% Change

Net income

 

$

7,477

 

 

$

10,297

 

 

(27.4

)%

 

$

9,092

 

 

(17.8

)%

 

$

17,774

 

 

$

19,332

 

 

(8.1

)%

Diluted earnings per common share

 

$

0.52

 

 

$

0.70

 

 

(25.7

)%

 

$

0.60

 

 

(13.3

)%

 

$

1.22

 

 

$

1.27

 

 

(3.9

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

$

21,717

 

 

$

22,414

 

 

(3.1

)%

 

$

21,351

 

 

1.7

%

 

$

44,131

 

 

$

41,344

 

 

6.7

%

Provision (reversal) for credit losses (1)

 

 

197

 

 

 

(2,778

)

 

NM

 

 

 

(109

)

 

NM

 

 

 

(2,581

)

 

 

(1,300

)

 

98.5

%

Noninterest income

 

 

2,657

 

 

 

3,021

 

 

(12.0

)%

 

 

3,648

 

 

(27.2

)%

 

 

5,678

 

 

 

8,934

 

 

(36.4

)%

Noninterest expense

 

 

13,627

 

 

 

13,754

 

 

(0.9

)%

 

 

12,245

 

 

11.3

%

 

 

27,381

 

 

 

24,316

 

 

12.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (2)

 

 

1.19

%

 

 

1.69

%

 

 

 

 

1.65

%

 

 

 

 

1.44

%

 

 

1.78

%

 

 

Return on average shareholders’ equity (2)

 

 

8.82

%

 

 

12.46

%

 

 

 

 

12.48

%

 

 

 

 

10.62

%

 

 

14.13

%

 

 

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

 

 

11.08

%

 

 

15.70

%

 

 

 

 

13.85

%

 

 

 

 

13.35

%

 

 

14.92

%

 

 

Net interest margin (2)

 

 

3.55

%

 

 

3.79

%

 

 

 

 

4.01

%

 

 

 

 

3.67

%

 

 

3.94

%

 

 

Efficiency ratio (4)

 

 

55.91

%

 

 

54.08

%

 

 

 

 

48.98

%

 

 

 

 

54.97

%

 

 

48.36

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands, except per share data)

 

6/30/2023

 

3/31/2023

 

% Change

 

12/31/2022

 

% Change

 

6/30/2022

 

% Change

Total assets

 

$

2,556,345

 

 

$

2,500,524

 

 

2.2

%

 

$

2,420,036

 

 

5.6

%

 

$

2,344,560

 

 

9.0

%

Net loans held-for-investment

 

 

2,097,560

 

 

 

2,067,748

 

 

1.4

%

 

 

2,021,121

 

 

3.8

%

 

 

1,811,939

 

 

15.8

%

Total deposits

 

 

2,188,232

 

 

 

2,141,689

 

 

2.2

%

 

 

2,045,983

 

 

7.0

%

 

 

1,997,607

 

 

9.5

%

Book value per common share (5)

 

$

23.77

 

 

$

23.56

 

 

 

 

$

22.94

 

 

 

 

$

22.36

 

 

 

TCE per common share (3)

 

$

18.94

 

 

$

18.72

 

 

 

 

$

18.21

 

 

 

 

$

17.73

 

 

 

Tier 1 leverage ratio (consolidated)

 

 

13.84

%

 

 

13.90

%

 

 

 

 

14.33

%

 

 

 

 

15.37

%

 

 

Total shareholders’ equity to total assets

 

 

13.32

%

 

 

13.47

%

 

 

 

 

13.86

%

 

 

 

 

14.26

%

 

 

TCE to total assets (3), (6)

 

 

10.61

%

 

 

10.71

%

 

 

 

 

11.00

%

 

 

 

 

11.31

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Provision for credit losses on off-balance sheet credit exposures of $36 thousand and $38 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 shareholdersequity 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

 

Six Months Ended

($ in thousands)

 

6/30/2023

 

3/31/2023

 

% Change

 

6/30/2022

 

% Change

 

6/30/2023

 

6/30/2022

 

% Change

Interest income/expense on

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

$

32,960

 

 

$

31,229

 

 

5.5

%

 

$

21,243

 

 

55.2

%

 

$

64,189

 

 

$

41,433

 

 

54.9

%

Investment securities

 

 

1,136

 

 

 

1,102

 

 

3.1

%

 

 

668

 

 

70.1

%

 

 

2,238

 

 

 

1,144

 

 

95.6

%

Other interest-earning assets

 

 

2,742

 

 

 

2,205

 

 

24.4

%

 

 

535

 

 

412.5

%

 

 

4,947

 

 

 

763

 

 

548.4

%

Total interest-earning assets

 

 

36,838

 

 

 

34,536

 

 

6.7

%

 

 

22,446

 

 

64.1

%

 

 

71,374

 

 

 

43,340

 

 

64.7

%

Interest-bearing deposits

 

 

15,121

 

 

 

11,913

 

 

26.9

%

 

 

1,041

 

 

1,352.5

%

 

 

27,034

 

 

 

1,891

 

 

1,329.6

%

Borrowings

 

 

 

 

 

209

 

 

(100.0

)%

 

 

54

 

 

(100.0

)%

 

 

209

 

 

 

105

 

 

99.0

%

Total interest-bearing liabilities

 

 

15,121

 

 

 

12,122

 

 

24.7

%

 

 

1,095

 

 

1,280.9

%

 

 

27,243

 

 

 

1,996

 

 

1,264.9

%

Net interest income

 

$

21,717

 

 

$

22,414

 

 

(3.1

)%

 

$

21,351

 

 

1.7

%

 

$

44,131

 

 

$

41,344

 

 

6.7

%

Average balance of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

$

2,097,489

 

 

$

2,072,415

 

 

1.2

%

 

$

1,804,368

 

 

16.2

%

 

$

2,085,021

 

 

$

1,788,958

 

 

16.5

%

Investment securities

 

 

142,136

 

 

 

142,079

 

 

%

 

 

135,324

 

 

5.0

%

 

 

142,107

 

 

 

129,310

 

 

9.9

%

Other interest-earning assets

 

 

213,883

 

 

 

186,809

 

 

14.5

%

 

 

195,633

 

 

9.3

%

 

 

200,420

 

 

 

197,267

 

 

1.6

%

Total interest-earning assets

 

$

2,453,508

 

 

$

2,401,303

 

 

2.2

%

 

$

2,135,325

 

 

14.9

%

 

$

2,427,548

 

 

$

2,115,535

 

 

14.7

%

Interest-bearing deposits

 

$

1,527,522

 

 

$

1,410,812

 

 

8.3

%

 

$

1,001,424

 

 

52.5

%

 

$

1,469,490

 

 

$

1,017,629

 

 

44.4

%

Borrowings

 

 

 

 

 

15,811

 

 

(100.0

)%

 

 

11,132

 

 

(100.0

)%

 

 

7,862

 

 

 

10,768

 

 

(27.0

)%

Total interest-bearing liabilities

 

$

1,527,522

 

 

$

1,426,623

 

 

7.1

%

 

$

1,012,556

 

 

50.9

%

 

$

1,477,352

 

 

$

1,028,397

 

 

43.7

%

Total funding (1)

 

$

2,155,649

 

 

$

2,114,198

 

 

2.0

%

 

$

1,902,247

 

 

13.3

%

 

$

2,135,039

 

 

$

1,893,691

 

 

12.7

%

Annualized average yield/cost of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

 

6.30

%

 

 

6.11

%

 

 

 

 

4.72

%

 

 

 

 

6.21

%

 

 

4.67

%

 

 

Investment securities

 

 

3.21

%

 

 

3.15

%

 

 

 

 

1.98

%

 

 

 

 

3.18

%

 

 

1.78

%

 

 

Other interest-earning assets

 

 

5.14

%

 

 

4.79

%

 

 

 

 

1.10

%

 

 

 

 

4.98

%

 

 

0.78

%

 

 

Total interest-earning assets

 

 

6.02

%

 

 

5.83

%

 

 

 

 

4.22

%

 

 

 

 

5.93

%

 

 

4.13

%

 

 

Interest-bearing deposits

 

 

3.97

%

 

 

3.42

%

 

 

 

 

0.42

%

 

 

 

 

3.71

%

 

 

0.37

%

 

 

Borrowings

 

 

%

 

 

5.36

%

 

 

 

 

1.95

%

 

 

 

 

5.36

%

 

 

1.97

%

 

 

Total interest-bearing liabilities

 

 

3.97

%

 

 

3.45

%

 

 

 

 

0.43

%

 

 

 

 

3.72

%

 

 

0.39

%

 

 

Net interest margin

 

 

3.55

%

 

 

3.79

%

 

 

 

 

4.01

%

 

 

 

 

3.67

%

 

 

3.94

%

 

 

Cost of total funding (1)

 

 

2.81

%

 

 

2.33

%

 

 

 

 

0.23

%

 

 

 

 

2.57

%

 

 

0.21

%

 

 

Supplementary information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net accretion of discount on loans

 

$

751

 

 

$

671

 

 

11.9

%

 

$

907

 

 

(17.2

)%

 

$

1,422

 

 

$

1,815

 

 

(21.7

)%

Net amortization of deferred loan fees

 

$

247

 

 

$

175

 

 

41.1

%

 

$

606

 

 

(59.2

)%

 

$

422

 

 

$

1,771

 

 

(76.2

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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-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:

 

 

6/30/2023

 

3/31/2023

 

12/31/2022

 

6/30/2022

 

 

% 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

 

22.6

%

 

4.64

%

 

23.4

%

 

4.64

%

 

23.2

%

 

4.51

%

 

24.5

%

 

4.35

%

Hybrid rate loans

 

39.2

%

 

4.62

%

 

39.0

%

 

4.51

%

 

39.1

%

 

4.40

%

 

37.0

%

 

4.11

%

Variable rate loans

 

38.2

%

 

8.39

%

 

37.6

%

 

8.23

%

 

37.7

%

 

7.86

%

 

38.5

%

 

5.12

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 account.

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

 

Six Months Ended

($ in thousands)

 

6/30/2023

 

3/31/2023

 

% Change

 

6/30/2022

 

% Change

 

6/30/2023

 

6/30/2022

 

% Change

Provision (reversal) for credit losses on loans

 

$

157

 

$

(2,417

)

 

NM

 

 

$

(109

)

 

NM

 

 

$

(2,260

)

 

$

(1,300

)

 

73.8

%

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

 

 

40

 

 

 

(361

)

 

NM

 

 

36

 

 

11.1

%

 

 

(321

)

 

 

38

 

 

NM

 

Total provision (reversal) for credit losses

 

$

197

 

 

$

(2,778

)

 

NM

 

 

$

(73

)

 

NM

 

 

$

(2,581

)

 

$

(1,262

)

 

104.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

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

On January 1, 2023, the Company adopted the provisions of ASC 326 through the application of the modified retrospective transition approach. Provision (reversal) for credit losses and ACL for reporting periods beginning with January 1, 2023 are presented under ASC 326, while prior period comparisons continue to be presented under legacy ASC 450 and ASC 310 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 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

 

Six Months Ended

($ in thousands)

 

6/30/2023

 

3/31/2023

 

% Change

 

6/30/2022

 

% Change

 

6/30/2023

 

6/30/2022

 

% Change

Gain on sale of loans

 

$

769

 

$

1,309

 

(41.3

)%

 

$

2,039

 

(62.3

)%

 

$

2,078

 

$

5,816

 

(64.3

)%

Service charges and fees on deposits

 

 

369

 

 

 

344

 

 

7.3

%

 

 

330

 

 

11.8

%

 

 

713

 

 

 

633

 

 

12.6

%

Loan servicing income

 

 

868

 

 

 

860

 

 

0.9

%

 

 

755

 

 

15.0

%

 

 

1,728

 

 

 

1,455

 

 

18.8

%

Bank-owned life insurance income

 

 

184

 

 

 

180

 

 

2.2

%

 

 

175

 

 

5.1

%

 

 

364

 

 

 

347

 

 

4.9

%

Other income

 

 

467

 

 

 

328

 

 

42.4

%

 

 

349

 

 

33.8

%

 

 

795

 

 

 

683

 

 

16.4

%

Total noninterest income

 

$

2,657

 

 

$

3,021

 

 

(12.0

)%

 

$

3,648

 

 

(27.2

)%

 

$

5,678

 

 

$

8,934

 

 

(36.4

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

Three Months Ended

 

Six Months Ended

($ in thousands)

 

6/30/2023

 

3/31/2023

 

% Change

 

6/30/2022

 

% Change

 

6/30/2023

 

6/30/2022

 

% Change

Gain on sale of SBA loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sold loan balance

 

$

16,762

 

$

27,133

 

(38.2

)%

 

$

38,442

 

(56.4

)%

 

$

43,895

 

$

78,125

 

(43.8

)%

Premium received

 

 

1,209

 

 

 

2,041

 

 

(40.8

)%

 

 

2,600

 

 

(53.5

)%

 

 

3,250

 

 

 

6,806

 

 

(52.2

)%

Gain recognized

 

 

769

 

 

 

1,309

 

 

(41.3

)%

 

 

2,039

 

 

(62.3

)%

 

 

2,078

 

 

 

5,816

 

 

(64.3

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

Three Months Ended

 

Six Months Ended

($ in thousands)

 

6/30/2023

 

3/31/2023

 

% Change

 

6/30/2022

 

% Change

 

6/30/2023

 

6/30/2022

 

% Change

Loan servicing income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Servicing income received

 

$

1,317

 

 

$

1,284

 

 

2.6

%

 

$

1,287

 

 

2.3

%

 

$

2,601

 

 

$

2,517

 

 

3.3

%

Servicing assets amortization

 

 

(449

)

 

 

(424

)

 

5.9

%

 

 

(532

)

 

(15.6

)%

 

 

(873

)

 

 

(1,062

)

 

(17.8

)%

Loan servicing income

 

$

868

 

 

$

860

 

 

0.9

%

 

$

755

 

 

15.0

%

 

$

1,728

 

 

$

1,455

 

 

18.8

%

Underlying loans at end of period

 

$

539,160

 

 

$

540,502

 

 

(0.2

)%

 

$

537,990

 

 

0.2

%

 

$

539,160

 

 

$

537,990

 

 

0.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Six Months Ended

($ in thousands)

 

6/30/2023

 

3/31/2023

 

% Change

 

6/30/2022

 

% Change

 

6/30/2023

 

6/30/2022

 

% Change

Salaries and employee benefits

 

$

8,675

 

$

8,928

 

(2.8

)%

 

$

8,125

 

6.8

%

 

$

17,603

 

$

16,720

 

5.3

%

Occupancy and equipment

 

 

1,919

 

 

 

1,896

 

 

1.2

%

 

 

1,537

 

 

24.9

%

 

 

3,815

 

 

 

2,934

 

 

30.0

%

Professional fees

 

 

772

 

 

 

732

 

 

5.5

%

 

 

642

 

 

20.2

%

 

 

1,504

 

 

 

1,045

 

 

43.9

%

Marketing and business promotion

 

 

203

 

 

 

372

 

 

(45.4

)%

 

 

310

 

 

(34.5

)%

 

 

575

 

 

 

517

 

 

11.2

%

Data processing

 

 

380

 

 

 

412

 

 

(7.8

)%

 

 

441

 

 

(13.8

)%

 

 

792

 

 

 

845

 

 

(6.3

)%

Director fees and expenses

 

 

217

 

 

 

180

 

 

20.6

%

 

 

182

 

 

19.2

%

 

 

397

 

 

 

351

 

 

13.1

%

Regulatory assessments

 

 

382

 

 

 

155

 

 

146.5

%

 

 

147

 

 

159.9

%

 

 

537

 

 

 

288

 

 

86.5

%

Other expense

 

 

1,079

 

 

 

1,079

 

 

%

 

 

861

 

 

25.3

%

 

 

2,158

 

 

 

1,616

 

 

33.5

%

Total noninterest expense

 

$

13,627

 

 

$

13,754

 

 

(0.9

)%

 

$

12,245

 

 

11.3

%

 

$

27,381

 

 

$

24,316

 

 

12.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and Employee Benefits. The decrease for the current quarter compared with the previous quarter was primarily due to decreases in vacation accrual and other employee benefit expenses, partially offset by increases in salaries and bonus accrual. 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 and vacation accruals, and incentives tied to sales of SBA loans originated at loan production offices. The number of full-time equivalent employees was 272, 276 and 271 as of June 30, 2023, March 31, 2023 and June 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. 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 were primarily due to increases in internal audit and consulting fees.

Marketing and Business Promotion. The decreases for the current quarter compared with the previous and year-ago quarters were primarily due to the decreased marketing activities and advertisements.

Regulatory Assessments. The increases in the current quarter and year-to-date period were due to an increase in FDIC assessment rates and an adjustment of $113 thousand made for the previous quarter. 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 compared with the same periods of 2022 were primarily due to increases in office expenses, other loan related expenses and armed guard expenses attributable to the branch network expansion. Provision for credit losses on off-balance credit exposures of $36 thousand and $38 thousand was included in other expense for the year-ago quarter and previous year-to-date period, respectively, while the current quarter and year-to-date period provision was included in provision (reversal) for credit losses.

Balance Sheet (Unaudited)

Total assets were $2.56 billion at June 30, 2023, an increase of $55.8 million, or 2.2%, from $2.50 billion at March 31, 2023, an increase of $136.3 million, or 5.6%, from $2.42 billion at December 31, 2022, and an increase of $211.8 million, or 9.0%, from $2.34 billion at June 30, 2022. The increases for the current quarter and year-to-date period were 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)

 

6/30/2023

 

3/31/2023

 

% Change

 

12/31/2022

 

% Change

 

6/30/2022

 

% Change

Commercial real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial property

 

$

793,946

 

$

780,282

 

1.8

%

 

$

772,020

 

2.8

%

 

$

692,817

 

14.6

%

Business property

 

 

533,592

 

 

 

521,965

 

 

2.2

%

 

 

526,513

 

 

1.3

%

 

 

524,406

 

 

1.8

%

Multifamily

 

 

124,029

 

 

 

127,012

 

 

(2.3

)%

 

 

124,751

 

 

(0.6

)%

 

 

118,339

 

 

4.8

%

Construction

 

 

16,942

 

 

 

15,930

 

 

6.4

%

 

 

17,054

 

 

(0.7

)%

 

 

12,595

 

 

34.5

%

Total commercial real estate

 

 

1,468,509

 

 

 

1,445,189

 

 

1.6

%

 

 

1,440,338

 

 

2.0

%

 

 

1,348,157

 

 

8.9

%

Commercial and industrial

 

 

272,278

 

 

 

267,674

 

 

1.7

%

 

 

249,250

 

 

9.2

%

 

 

204,369

 

 

33.2

%

Consumer:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential mortgage

 

 

359,655

 

 

 

356,967

 

 

0.8

%

 

 

333,726

 

 

7.8

%

 

 

258,259

 

 

39.3

%

Other consumer

 

 

21,985

 

 

 

22,612

 

 

(2.8

)%

 

 

22,749

 

 

(3.4

)%

 

 

22,225

 

 

(1.1

)%

Total consumer

 

 

381,640

 

 

 

379,579

 

 

0.5

%

 

 

356,475

 

 

7.1

%

 

 

280,484

 

 

36.1

%

Loans held-for-investment

 

 

2,122,427

 

 

 

2,092,442

 

 

1.4

%

 

 

2,046,063

 

 

3.7

%

 

 

1,833,010

 

 

15.8

%

Loans held-for-sale

 

 

13,065

 

 

 

14,352

 

 

(9.0

)%

 

 

22,811

 

 

(42.7

)%

 

 

9,627

 

 

35.7

%

Total loans

 

$

2,135,492

 

 

$

2,106,794

 

 

1.4

%

 

$

2,068,874

 

 

3.2

%

 

$

1,842,637

 

 

15.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The increase in loans held-for-investment for the current quarter was primarily due to new funding and advances on lines of credit of $252.8 million, partially offset by pay-downs and pay-offs of $222.8 million. The increase for the current year-to-date period was primarily due to new funding and advances on lines of credit of $457.7 million and purchases of residential mortgage loans of $15.7 million, partially offset by pay-downs and pay-offs of $397.1 million.

The decrease in loans held-for-sale for the current quarter was primarily due to sales of $16.8 million, partially offset by new funding of $15.6 million. The decrease for the current year-to-date was primarily due to sales of $43.9 million and pay-downs and pay-offs of $4.1 million, partially offset by new funding of $38.3 million.

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

($ in thousands)

 

6/30/2023

 

3/31/2023

 

% Change

 

12/31/2022

 

% Change

 

6/30/2022

 

% Change

Commercial property

 

$

11,118

 

$

6,811

 

63.2

%

 

$

7,006

 

58.7

%

 

$

8,587

 

29.5

%

Business property

 

 

9,487

 

 

 

12,307

 

 

(22.9

)%

 

 

8,396

 

 

13.0

%

 

 

10,603

 

 

(10.5

)%

Multifamily

 

 

4,500

 

 

 

4,500

 

 

%

 

 

4,500

 

 

%

 

 

5,500

 

 

(18.2

)%

Construction

 

 

30,865

 

 

 

16,563

 

 

86.3

%

 

 

18,211

 

 

69.5

%

 

 

12,080

 

 

155.5

%

Commercial and industrial

 

 

279,584

 

 

 

279,543

 

 

%

 

 

254,668

 

 

9.8

%

 

 

221,580

 

 

26.2

%

Other consumer

 

 

445

 

 

 

399

 

 

11.5

%

 

 

692

 

 

(35.7

)%

 

 

1,086

 

 

(59.0

)%

Total commitments to extend credit

 

 

335,999

 

 

 

320,123

 

 

5.0

%

 

 

293,473

 

 

14.5

%

 

 

259,436

 

 

29.5

%

Letters of credit

 

 

6,027

 

 

 

5,400

 

 

11.6

%

 

 

5,392

 

 

11.8

%

 

 

4,984

 

 

20.9

%

Total off-balance sheet credit exposure

 

$

342,026

 

 

$

325,523

 

 

5.1

%

 

$

298,865

 

 

14.4

%

 

$

264,420

 

 

29.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Credit Quality

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

($ in thousands)

 

6/30/2023

 

3/31/2023

 

% Change

 

12/31/2022

 

% Change

 

6/30/2022

 

% Change

Nonaccrual loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial property

 

$

699

 

 

$

 

 

%

 

$

 

 

%

 

$

 

 

%

Business property

 

 

3,007

 

 

 

2,904

 

 

3.5

%

 

 

2,985

 

 

0.7

%

 

 

564

 

 

433.2

%

Total commercial real estate

 

 

3,706

 

 

 

2,904

 

 

27.6

%

 

 

2,985

 

 

24.2

%

 

 

564

 

 

557.1

%

Commercial and industrial

 

 

88

 

 

 

11

 

 

700.0

%

 

 

 

 

%

 

 

185

 

 

(52.4

)%

Consumer:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential mortgage

 

 

 

 

 

 

 

%

 

 

372

 

 

(100.0

)%

 

 

450

 

 

(100.0

)%

Other consumer

 

 

51

 

 

 

45

 

 

13.3

%

 

 

3

 

 

1,600.0

%

 

 

24

 

 

112.5

%

Total consumer

 

 

51

 

 

 

45

 

 

13.3

%

 

 

375

 

 

(86.4

)%

 

 

474

 

 

(89.2

)%

Total nonaccrual loans held-for-investment

 

 

3,845

 

 

 

2,960

 

 

29.9

%

 

 

3,360

 

 

14.4

%

 

 

1,223

 

 

214.4

%

Loans past due 90 days or more and still accruing

 

 

 

 

 

 

 

%

 

 

 

 

%

 

 

 

 

%

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

 

 

3,845

 

 

 

2,960

 

 

29.9

%

 

 

3,360

 

 

14.4

%

 

 

1,223

 

 

214.4

%

NPLs held-for-sale

 

 

 

 

 

 

 

%

 

 

4,000

 

 

(100.0

)%

 

 

 

 

%

Total NPLs

 

 

3,845

 

 

 

2,960

 

 

29.9

%

 

 

7,360

 

 

(47.8

)%

 

 

1,223

 

 

214.4

%

Other real estate owned (“OREO”)

 

 

 

 

 

 

 

%

 

 

 

 

%

 

 

808

 

 

(100.0

)%

Non-performing assets (“NPAs”)

 

$

3,845

 

 

$

2,960

 

 

29.9

%

 

$

7,360

 

 

(47.8

)%

 

$

2,031

 

 

89.3

%

Loans past due and still accruing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Past due 30 to 59 days

 

$

428

 

 

$

779

 

 

(45.1

)%

 

$

47

 

 

810.6

%

 

$

682

 

 

(37.2

)%

Past due 60 to 89 days

 

 

 

 

 

13

 

 

(100.0

)%

 

 

87

 

 

(100.0

)%

 

 

 

 

%

Past due 90 days or more

 

 

 

 

 

 

 

%

 

 

 

 

%

 

 

 

 

%

Total loans past due and still accruing

 

$

428

 

 

$

792

 

 

(46.0

)%

 

 

134

 

 

219.4

%

 

$

682

 

 

(37.2

)%

Special mention loans

 

$

5,406

 

 

$

5,527

 

 

(2.2

)%

 

$

6,857

 

 

(21.2

)%

 

$

6,313

 

 

(14.4

)%

Classified assets

 

 

 

 

 

 

 

 

 

 

 

 

 

Classified loans held-for-investment

 

$

6,901

 

 

$

6,060

 

 

13.9

%

 

$

6,211

 

 

11.1

%

 

$

3,980

 

 

73.4

%

Classified loans held-for-sale

 

 

 

 

 

 

 

%

 

 

4,000

 

 

(100.0

)%

 

 

 

 

%

OREO

 

 

 

 

 

 

 

%

 

 

 

 

%

 

 

808

 

 

(100.0

)%

Classified assets

 

$

6,901

 

 

$

6,060

 

 

13.9

%

 

$

10,211

 

 

(32.4

)%

 

$

4,788

 

 

44.1

%

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

 

 

0.18

%

 

 

0.14

%

 

 

 

 

0.16

%

 

 

 

 

0.07

%

 

 

NPAs to total assets

 

 

0.15

%

 

 

0.12

%

 

 

 

 

0.30

%

 

 

 

 

0.09

%

 

 

Classified assets to total assets

 

 

0.27

%

 

 

0.24

%

 

 

 

 

0.42

%

 

 

 

 

0.20

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

During the previous quarter, 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

 

Six Months Ended

($ in thousands)

 

6/30/2023

 

3/31/2023

 

% Change

 

6/30/2022

 

% Change

 

6/30/2023

 

6/30/2022

 

% Change

ACL on loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

24,694

 

 

$

24,942

 

 

(1.0

)%

 

$

21,198

 

 

16.5

%

 

$

24,942

 

 

$

22,381

 

 

11.4

%

Impact of ASC 326 adoption

 

 

 

 

 

1,067

 

 

NM

 

 

 

 

 

NM

 

 

 

1,067

 

 

 

 

 

NM

 

Charge-offs

 

 

(7

)

 

 

 

 

%

 

 

(47

)

 

(85.1

)%

 

 

(7

)

 

 

(59

)

 

(88.1

)%

Recoveries

 

 

23

 

 

 

1,102

 

 

(97.9

)%

 

 

29

 

 

(20.7

)%

 

 

1,125

 

 

 

49

 

 

2,195.9

%

Provision (reversal) for credit losses on loans

 

 

157

 

 

 

(2,417

)

 

NM

 

 

 

(109

)

 

NM

 

 

 

(2,260

)

 

 

(1,300

)

 

73.8

%

Balance at end of period

 

$

24,867

 

 

$

24,694

 

 

0.7

%

 

$

21,071

 

 

18.0

%

 

$

24,867

 

 

$

21,071

 

 

18.0

%

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

 

 

1.17

%

 

 

1.18

%

 

 

 

 

1.15

%

 

 

 

 

 

 

1.15

%

 

 

ACL on off-balance sheet credit exposure (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

1,545

 

 

$

299

 

 

416.7

%

 

$

216

 

 

615.3

%

 

$

299

 

 

$

214

 

 

39.7

%

Impact of ASC 326 adoption

 

 

 

 

 

1,607

 

 

NM

 

 

 

 

 

NM

 

 

 

1,607

 

 

 

 

 

NM

 

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

 

 

40

 

 

 

(361

)

 

NM

 

 

 

36

 

 

11.1

%

 

 

(321

)

 

 

38

 

 

NM

 

Balance at end of period

 

$

1,585

 

 

$

1,545

 

 

2.6

%

 

$

252

 

 

529.0

%

 

$

1,585

 

 

$

252

 

 

529.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 $138.7 million at June 30, 2023, a decrease of $6.0 million, or 4.1%, from $144.7 million at March 31, 2023, a decrease of $3.2 million, or 2.2%, from $141.9 million at December 31, 2022, and a decrease of $394 thousand, or 0.3%, from $139.1 million at June 30, 2022. The decrease for the current quarter was primarily due to principal pay-downs and calls of $4.6 million, a fair value decrease of $2.3 million and net premium amortization of $59 thousand, partially offset by purchases of $1.0 million. The decrease for the current year-to-date period was primarily due to principal pay-downs and calls of $8.7 million, a fair value decrease of $312 thousand and net premium amortization of $116 thousand, partially offset by purchases of $5.9 million.

Deposits

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

 

 

6/30/2023

 

3/31/2023

 

12/31/2022

 

6/30/2022

($ in thousands)

 

Amount

 

% to

Total

 

Amount

 

% to

Total

 

Amount

 

% to

Total

 

Amount

 

% to

Total

Noninterest-bearing demand deposits

 

$

635,329

 

29.0

%

 

$

653,970

 

30.5

%

 

$

734,989

 

35.9

%

 

$

988,454

 

49.5

%

Interest-bearing deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Savings

 

 

7,504

 

 

0.3

%

 

 

7,584

 

 

0.4

%

 

 

8,579

 

 

0.4

%

 

 

14,686

 

 

0.7

%

NOW

 

 

16,993

 

 

0.8

%

 

 

15,696

 

 

0.7

%

 

 

11,405

 

 

0.6

%

 

 

18,881

 

 

0.9

%

Retail money market accounts

 

 

464,655

 

 

21.1

%

 

 

436,906

 

 

20.3

%

 

 

494,749

 

 

24.1

%

 

 

458,605

 

 

22.9

%

Brokered money market accounts

 

 

1

 

 

0.1

%

 

 

1

 

 

0.1

%

 

 

8

 

 

0.1

%

 

 

1

 

 

0.1

%

Retail time deposits of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$250,000 or less

 

 

392,012

 

 

17.9

%

 

 

356,049

 

 

16.6

%

 

 

295,354

 

 

14.4

%

 

 

235,956

 

 

11.8

%

More than $250,000

 

 

451,590

 

 

20.7

%

 

 

454,464

 

 

21.3

%

 

 

353,876

 

 

17.3

%

 

 

186,024

 

 

9.3

%

State and brokered time deposits

 

 

220,148

 

 

10.1

%

 

 

217,019

 

 

10.1

%

 

 

147,023

 

 

7.2

%

 

 

95,000

 

 

4.8

%

Total interest-bearing deposits

 

 

1,552,903

 

 

71.0

%

 

 

1,487,719

 

 

69.5

%

 

 

1,310,994

 

 

64.1

%

 

 

1,009,153

 

 

50.5

%

Total deposits

 

$

2,188,232

 

 

100.0

%

 

$

2,141,689

 

 

100.0

%

 

$

2,045,983

 

 

100.0

%

 

$

1,997,607

 

 

100.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Estimated total deposits not covered by deposit insurance

 

$

1,034,148

 

 

47.3

%

 

$

1,019,689

 

 

47.6

%

 

$

1,062,111

 

 

51.9

%

 

$

1,199,502

 

 

60.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 retain existing and attract new customers, the Bank offers competitive rates on deposit products in the rising interest rate environment.

The increase in retail time deposits for the current quarter was primarily due to new accounts of $107.9 million, renewals of the matured accounts of $88.8 million and balance increases of $4.9 million, partially offset by matured and closed accounts of $168.5 million. The increase for the current year-to-date period was primarily due to new accounts of $408.2 million, renewals of the matured accounts of $206.2 million and balance increases of $11.9 million, partially offset by matured and closed accounts of $431.9 million.

Liquidity

The following table presents a summary of the Company’s liquidity position as of June 30, 2023:

($ in thousands)

 

6/30/2023

 

12/31/2022

 

% Change

Cash and cash equivalents

 

$

222,146

 

 

$

147,031

 

 

51.1

%

Cash and cash equivalents to total assets

 

 

8.7

%

 

 

6.1

%

 

 

 

 

 

 

 

 

 

Available borrowing capacity

 

 

 

 

 

 

FHLB advances

 

$

625,115

 

 

$

561,745

 

 

11.3

%

Federal Reserve Discount Window

 

 

30,285

 

 

 

23,902

 

 

26.7

%

Overnight federal funds lines

 

 

65,000

 

 

 

65,000

 

 

%

Total

 

$

720,400

 

 

$

650,647

 

 

10.7

%

Total available borrowing capacity to total assets

 

 

28.2

%

 

 

26.9

%

 

 

 

 

 

 

 

 

 

During the current year-to-date period, the Company increased cash and cash equivalents by $75.1 million, or 51.1%, to $222.1 million and available borrowing capacity by $69.8 million, or 10.7%, to $720.4 million. As of June 30, 2023, the Company's cash and cash equivalents and available borrowing capacity cover approximately 91.1% of deposits not covered by deposit insurance compared to 75.1% at December 31, 2022.

Shareholders’ Equity

Shareholders’ equity was $340.4 million at June 30, 2023, an increase of $3.6 million, or 1.1%, from $336.8 million at March 31, 2023, an increase of $5.0 million, or 1.5%, from $335.4 million at December 31, 2022, and an increase of $6.0 million, or 1.8%, from $334.4 million at June 30, 2022. The increase for the current quarter was primarily due to net income, partially offset by cash dividends declared on common stock of $2.6 million and an increase in other comprehensive loss of $1.6 million. The increase for the current year-to-date period was primarily due to net income, partially offset by cash dividend declared on common stock of $4.8 million, repurchase of 385,381 shares of common stock at a weighted-average price of $17.76, totaling $6.8 million, and cumulative effect adjustment upon adoption of ASC 326 of $1.9 million.

Stock Repurchase

On July 28, 2022, the Company’s Board of Directors approved a repurchase program authorizing for the repurchase of up to 5% of the Company’s outstanding common stock, 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 previous quarter. Under this repurchase program, the Company repurchased and retired 747,938 shares of common stock at a weighted-average price of $18.15 per share, totaling $13.6 million.

Issuance of Preferred Stock Under the Emergency Capital Investment Program

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

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

Capital Ratios

Based on 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:

 

 

6/30/2023

 

3/31/2023

 

12/31/2022

 

6/30/2022

 

Well

Capitalized

Requirements

PCB Bancorp

 

 

 

 

 

 

 

 

 

 

Common tier 1 capital (to risk-weighted assets)

 

13.12

%

 

13.09

%

 

13.29

%

 

14.44

%

 

N/A

 

Total capital (to risk-weighted assets)

 

17.57

%

 

17.61

%

 

17.83

%

 

19.25

%

 

N/A

 

Tier 1 capital (to risk-weighted assets)

 

16.34

%

 

16.37

%

 

16.62

%

 

18.11

%

 

N/A

 

Tier 1 capital (to average assets)

 

13.84

%

 

13.90

%

 

14.33

%

 

15.37

%

 

N/A

 

PCB Bank

 

 

 

 

 

 

 

 

 

 

Common tier 1 capital (to risk-weighted assets)

 

16.00

%

 

16.03

%

 

16.30

%

 

17.79

%

 

6.5

%

Total capital (to risk-weighted assets)

 

17.23

%

 

17.27

%

 

17.52

%

 

18.92

%

 

10.0

%

Tier 1 capital (to risk-weighted assets)

 

16.00

%

 

16.03

%

 

16.30

%

 

17.79

%

 

8.0

%

Tier 1 capital (to average assets)

 

13.55

%

 

13.62

%

 

14.05

%

 

15.09

%

 

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)

 

 

 

6/30/2023

 

3/31/2023

 

% Change

 

12/31/2022

 

% Change

 

6/30/2022

 

% Change

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

22,159

 

 

$

25,801

 

 

(14.1

)%

 

$

23,202

 

 

(4.5

)%

 

$

23,125

 

 

(4.2

)%

Interest-bearing deposits in other financial institutions

 

 

199,987

 

 

 

164,718

 

 

21.4

%

 

 

123,829

 

 

61.5

%

 

 

276,785

 

 

(27.7

)%

Total cash and cash equivalents

 

 

222,146

 

 

 

190,519

 

 

16.6

%

 

 

147,031

 

 

51.1

%

 

 

299,910

 

 

(25.9

)%

Securities available-for-sale, at fair value

 

 

138,673

 

 

 

144,665

 

 

(4.1

)%

 

 

141,863

 

 

(2.2

)%

 

 

139,067

 

 

(0.3

)%

Loans held-for-sale

 

 

13,065

 

 

 

14,352

 

 

(9.0

)%

 

 

22,811

 

 

(42.7

)%

 

 

9,627

 

 

35.7

%

Loans held-for-investment

 

 

2,122,427

 

 

 

2,092,442

 

 

1.4

%

 

 

2,046,063

 

 

3.7

%

 

 

1,833,010

 

 

15.8

%

Allowance for credit losses on loans

 

 

(24,867

)

 

 

(24,694

)

 

0.7

%

 

 

(24,942

)

 

(0.3

)%

 

 

(21,071

)

 

18.0

%

Net loans held-for-investment

 

 

2,097,560

 

 

 

2,067,748

 

 

1.4

%

 

 

2,021,121

 

 

3.8

%

 

 

1,811,939

 

 

15.8

%

Premises and equipment, net

 

 

6,394

 

 

 

6,473

 

 

(1.2

)%

 

 

6,916

 

 

(7.5

)%

 

 

3,633

 

 

76.0

%

Federal Home Loan Bank and other bank stock

 

 

12,716

 

 

 

10,183

 

 

24.9

%

 

 

10,183

 

 

24.9

%

 

 

10,183

 

 

24.9

%

Other real estate owned, net

 

 

 

 

 

 

 

%

 

 

 

 

%

 

 

808

 

 

(100.0

)%

Bank-owned life insurance

 

 

30,428

 

 

 

30,244

 

 

0.6

%

 

 

30,064

 

 

1.2

%

 

 

29,705

 

 

2.4

%

Deferred tax assets, net

 

 

4,342

 

 

 

3,753

 

 

15.7

%

 

 

3,115

 

 

39.4

%

 

 

11,869

 

 

(63.4

)%

Servicing assets

 

 

7,142

 

 

 

7,345

 

 

(2.8

)%

 

 

7,347

 

 

(2.8

)%

 

 

7,716

 

 

(7.4

)%

Operating lease assets

 

 

5,182

 

 

 

5,854

 

 

(11.5

)%

 

 

6,358

 

 

(18.5

)%

 

 

6,512

 

 

(20.4

)%

Accrued interest receivable

 

 

8,040

 

 

 

7,998

 

 

0.5

%

 

 

7,472

 

 

7.6

%

 

 

5,212

 

 

54.3

%

Other assets

 

 

10,657

 

 

 

11,390

 

 

(6.4

)%

 

 

15,755

 

 

(32.4

)%

 

 

8,379

 

 

27.2

%

Total assets

 

$

2,556,345

 

 

$

2,500,524

 

 

2.2

%

 

$

2,420,036

 

 

5.6

%

 

$

2,344,560

 

 

9.0

%

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing demand

 

$

635,329

 

 

$

653,970

 

 

(2.9

)%

 

$

734,989

 

 

(13.6

)%

 

$

988,454

 

 

(35.7

)%

Savings, NOW and money market accounts

 

 

489,153

 

 

 

460,187

 

 

6.3

%

 

 

514,741

 

 

(5.0

)%

 

 

492,173

 

 

(0.6

)%

Time deposits of $250,000 or less

 

 

552,160

 

 

 

513,068

 

 

7.6

%

 

 

382,377

 

 

44.4

%

 

 

270,956

 

 

103.8

%

Time deposits of more than $250,000

 

 

511,590

 

 

 

514,464

 

 

(0.6

)%

 

 

413,876

 

 

23.6

%

 

 

246,024

 

 

107.9

%

Total deposits

 

 

2,188,232

 

 

 

2,141,689

 

 

2.2

%

 

 

2,045,983

 

 

7.0

%

 

 

1,997,607

 

 

9.5

%

Federal Home Loan Bank advances

 

 

 

 

 

 

 

%

 

 

20,000

 

 

(100.0

)%

 

 

 

 

%

Operating lease liabilities

 

 

5,495

 

 

 

6,238

 

 

(11.9

)%

 

 

6,809

 

 

(19.3

)%

 

 

7,067

 

 

(22.2

)%

Accrued interest payable and other liabilities

 

 

22,207

 

 

 

15,767

 

 

40.8

%

 

 

11,802

 

 

88.2

%

 

 

5,511

 

 

303.0

%

Total liabilities

 

 

2,215,934

 

 

 

2,163,694

 

 

2.4

%

 

 

2,084,594

 

 

6.3

%

 

 

2,010,185

 

 

10.2

%

Commitments and contingent liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock

 

 

69,141

 

 

 

69,141

 

 

%

 

 

69,141

 

 

%

 

 

69,141

 

 

%

Common stock

 

 

143,686

 

 

 

143,356

 

 

0.2

%

 

 

149,631

 

 

(4.0

)%

 

 

155,842

 

 

(7.8

)%

Retained earnings

 

 

138,315

 

 

 

133,415

 

 

3.7

%

 

 

127,181

 

 

8.8

%

 

 

115,992

 

 

19.2

%

Accumulated other comprehensive loss, net

 

 

(10,731

)

 

 

(9,082

)

 

18.2

%

 

 

(10,511

)

 

2.1

%

 

 

(6,600

)

 

62.6

%

Total shareholders’ equity

 

 

340,411

 

 

 

336,830

 

 

1.1

%

 

 

335,442

 

 

1.5

%

 

 

334,375

 

 

1.8

%

Total liabilities and shareholders’ equity

 

$

2,556,345

 

 

$

2,500,524

 

 

2.2

%

 

$

2,420,036

 

 

5.6

%

 

$

2,344,560

 

 

9.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding common shares

 

 

14,318,890

 

 

 

14,297,870

 

 

 

 

 

14,625,474

 

 

 

 

 

14,956,760

 

 

 

Book value per common share (1)

 

$

23.77

 

 

$

23.56

 

 

 

 

$

22.94

 

 

 

 

$

22.36

 

 

 

TCE per common share (2)

 

$

18.94

 

 

$

18.72

 

 

 

 

$

18.21

 

 

 

 

$

17.73

 

 

 

Total loan to total deposit ratio

 

 

97.59

%

 

 

98.37

%

 

 

 

 

101.12

%

 

 

 

 

92.24

%

 

 

Noninterest-bearing deposits to total deposits

 

 

29.03

%

 

 

30.54

%

 

 

 

 

35.92

%

 

 

 

 

49.48

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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

 

Six Months Ended

 

 

6/30/2023

 

3/31/2023

 

% Change

 

6/30/2022

 

% Change

 

6/30/2023

 

6/30/2022

 

% Change

Interest and dividend income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

 

$

32,960

 

 

$

31,229

 

 

5.5

%

 

$

21,243

 

 

55.2

%

 

$

64,189

 

 

$

41,433

 

 

54.9

%

Investment securities

 

 

1,136

 

 

 

1,102

 

 

3.1

%

 

 

668

 

 

70.1

%

 

 

2,238

 

 

 

1,144

 

 

95.6

%

Other interest-earning assets

 

 

2,742

 

 

 

2,205

 

 

24.4

%

 

 

535

 

 

412.5

%

 

 

4,947

 

 

 

763

 

 

548.4

%

Total interest income

 

 

36,838

 

 

 

34,536

 

 

6.7

%

 

 

22,446

 

 

64.1

%

 

 

71,374

 

 

 

43,340

 

 

64.7

%

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

15,121

 

 

 

11,913

 

 

26.9

%

 

 

1,041

 

 

1,352.5

%

 

 

27,034

 

 

 

1,891

 

 

1,329.6

%

Other borrowings

 

 

 

 

 

209

 

 

(100.0

)%

 

 

54

 

 

(100.0

)%

 

 

209

 

 

 

105

 

 

99.0

%

Total interest expense

 

 

15,121

 

 

 

12,122

 

 

24.7

%

 

 

1,095

 

 

1,280.9

%

 

 

27,243

 

 

 

1,996

 

 

1,264.9

%

Net interest income

 

 

21,717

 

 

 

22,414

 

 

(3.1

)%

 

 

21,351

 

 

1.7

%

 

 

44,131

 

 

 

41,344

 

 

6.7

%

Provision (reversal) for credit losses

 

 

197

 

 

 

(2,778

)

 

NM

 

 

 

(109

)

 

NM

 

 

 

(2,581

)

 

 

(1,300

)

 

98.5

%

Net interest income after provision (reversal) for credit losses

 

 

21,520

 

 

 

25,192

 

 

(14.6

)%

 

 

21,460

 

 

0.3

%

 

 

46,712

 

 

 

42,644

 

 

9.5

%

Noninterest income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on sale of loans

 

 

769

 

 

 

1,309

 

 

(41.3

)%

 

 

2,039

 

 

(62.3

)%

 

 

2,078

 

 

 

5,816

 

 

(64.3

)%

Service charges and fees on deposits

 

 

369

 

 

 

344

 

 

7.3

%

 

 

330

 

 

11.8

%

 

 

713

 

 

 

633

 

 

12.6

%

Loan servicing income

 

 

868

 

 

 

860

 

 

0.9

%

 

 

755

 

 

15.0

%

 

 

1,728

 

 

 

1,455

 

 

18.8

%

Bank-owned life insurance income

 

 

184

 

 

 

180

 

 

2.2

%

 

 

175

 

 

5.1

%

 

 

364

 

 

 

347

 

 

4.9

%

Other income

 

 

467

 

 

 

328

 

 

42.4

%

 

 

349

 

 

33.8

%

 

 

795

 

 

 

683

 

 

16.4

%

Total noninterest income

 

 

2,657

 

 

 

3,021

 

 

(12.0

)%

 

 

3,648

 

 

(27.2

)%

 

 

5,678

 

 

 

8,934

 

 

(36.4

)%

Noninterest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

8,675

 

 

 

8,928

 

 

(2.8

)%

 

 

8,125

 

 

6.8

%

 

 

17,603

 

 

 

16,720

 

 

5.3

%

Occupancy and equipment

 

 

1,919

 

 

 

1,896

 

 

1.2

%

 

 

1,537

 

 

24.9

%

 

 

3,815

 

 

 

2,934

 

 

30.0

%

Professional fees

 

 

772

 

 

 

732

 

 

5.5

%

 

 

642

 

 

20.2

%

 

 

1,504

 

 

 

1,045

 

 

43.9

%

Marketing and business promotion

 

 

203

 

 

 

372

 

 

(45.4

)%

 

 

310

 

 

(34.5

)%

 

 

575

 

 

 

517

 

 

11.2

%

Data processing

 

 

380

 

 

 

412

 

 

(7.8

)%

 

 

441

 

 

(13.8

)%

 

 

792

 

 

 

845

 

 

(6.3

)%

Director fees and expenses

 

 

217

 

 

 

180

 

 

20.6

%

 

 

182

 

 

19.2

%

 

 

397

 

 

 

351

 

 

13.1

%

Regulatory assessments

 

 

382

 

 

 

155

 

 

146.5

%

 

 

147

 

 

159.9

%

 

 

537

 

 

 

288

 

 

86.5

%

Other expense

 

 

1,079

 

 

 

1,079

 

 

%

 

 

861

 

 

25.3

%

 

 

2,158

 

 

 

1,616

 

 

33.5

%

Total noninterest expense

 

 

13,627

 

 

 

13,754

 

 

(0.9

)%

 

 

12,245

 

 

11.3

%

 

 

27,381

 

 

 

24,316

 

 

12.6

%

Income before income taxes

 

 

10,550

 

 

 

14,459

 

 

(27.0

)%

 

 

12,863

 

 

(18.0

)%

 

 

25,009

 

 

 

27,262

 

 

(8.3

)%

Income tax expense

 

 

3,073

 

 

 

4,162

 

 

(26.2

)%

 

 

3,771

 

 

(18.5

)%

 

 

7,235

 

 

 

7,930

 

 

(8.8

)%

Net income

 

$

7,477

 

 

$

10,297

 

 

(27.4

)%

 

$

9,092

 

 

(17.8

)%

 

$

17,774

 

 

$

19,332

 

 

(8.1

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.52

 

 

$

0.71

 

 

 

 

$

0.61

 

 

 

 

$

1.24

 

 

$

1.29

 

 

 

Diluted

 

$

0.52

 

 

$

0.70

 

 

 

 

$

0.60

 

 

 

 

$

1.22

 

 

$

1.27

 

 

 

Average common shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

14,271,200

 

 

 

14,419,155

 

 

 

 

 

14,883,768

 

 

 

 

 

14,344,769

 

 

 

14,865,990

 

 

 

Diluted

 

 

14,356,776

 

 

 

14,574,929

 

 

 

 

 

15,122,452

 

 

 

 

 

14,468,981

 

 

 

15,138,493

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividend paid per common share

 

$

0.18

 

 

$

0.15

 

 

 

 

$

0.15

 

 

 

 

$

0.33

 

 

$

0.30

 

 

 

Return on average assets (1)

 

 

1.19

%

 

 

1.69

%

 

 

 

 

1.65

%

 

 

 

 

1.44

%

 

 

1.78

%

 

 

Return on average shareholders’ equity (1)

 

 

8.82

%

 

 

12.46

%

 

 

 

 

12.48

%

 

 

 

 

10.62

%

 

 

14.13

%

 

 

Return on average TCE (1), (2)

 

 

11.08

%

 

 

15.70

%

 

 

 

 

13.85

%

 

 

 

 

13.35

%

 

 

14.92

%

 

 

Efficiency ratio (3)

 

 

55.91

%

 

 

54.08