PCB Bancorp Reports Earnings of $7.0 million for Q3 2022

Rhea-AI Summary

PCB Bancorp (NASDAQ: PCB) reported net income of $7.0 million, or $0.46 per diluted share for Q3 2022, down from $9.1 million in Q2 2022 and $11.0 million in Q3 2021. The bank's net interest income rose to $24.0 million, a 12.5% increase quarter-over-quarter. The provision for loan losses was $3.8 million, compared to a reversal of $109,000 in the previous quarter. Total assets decreased slightly to $2.33 billion, while loans held-for-investment increased by 6.9%. PCB Bank opened two new branches and announced plans for future expansion.

Positive

• Net interest income increased by 12.5% to $24.0 million quarter-over-quarter.
• Loans held-for-investment grew by 6.9% from the previous quarter.
• Effective management of loan losses with a provision of only $3.8 million.

Negative

• Net income decreased by 23.5% from the previous quarter.
• Total assets declined by 0.7% from the prior quarter.
• Noninterest income fell by 12.9% from the previous quarter.

LOS ANGELES--(BUSINESS WIRE)-- PCB Bancorp (the “Company”) (NASDAQ: PCB), the holding company of PCB Bank (the “Bank”), today reported net income of $7.0 million, or $0.46 per diluted common share, for the third quarter of 2022, compared with $9.1 million, or $0.60 per diluted common share, for the previous quarter and $11.0 million, or $0.73 per diluted common share, for the year-ago quarter.

Q3 2022 Highlights

• Net income totaled $7.0 million, or $0.46 per diluted common share, for the current quarter;
  • The Company recorded a provision (reversal) for loan losses of $3.8 million for the current quarter compared with $(109) thousand for the previous quarter and $(1.1) million for the year-ago quarter.
  • Allowance for loan losses (“Allowance”) to loans held-for-investment⁽¹⁾ ratio was 1.21% at September 30, 2022 compared with 1.15% at June 30, 2022, 1.29% at December 31, 2021 and 1.39% at September 30, 2021. Adjusted Allowance to loans held-for-investment ratio⁽²⁾ was 1.21% at September 30, 2022 compared with 1.15% at June 30, 2022, 1.34% at December 31, 2021 and 1.48% at September 30, 2021.
  • Net interest income was $24.0 million for the current quarter compared with $21.4 million for the previous quarter and $20.2 million for the year-ago quarter. Net interest margin was 4.25% for the current quarter compared with 4.01% for the previous quarter and 3.93% for the year-ago quarter.
  • Gain on sale of loans was $1.4 million for the current quarter compared with $2.0 million for the previous quarter and $4.3 million for the year-ago quarter.

• Total assets were $2.33 billion at September 30, 2022, a decrease of $17.5 million, or 0.7%, from $2.34 billion at June 30, 2022, but an increase of $177.3 million, or 8.2%, from $2.15 billion at December 31, 2021 and an increase of $222.4 million, or 10.6%, from $2.10 billion at September 30, 2021;
• Loans held-for-investment were $1.96 billion at September 30, 2022, an increase of $126.2 million, or 6.9%, from $1.83 billion at June 30, 2022, an increase of $227.0 million, or 13.1%, from $1.73 billion at December 31, 2021, and an increase of $251.4 million, or 14.7%, from $1.71 billion at September 30, 2021;
• Total deposits were $1.98 billion at September 30, 2022, a decrease of $19.5 million, or 1.0%, from $2.00 billion at June 30, 2022, but an increase of $111.0 million, or 5.9%, from $1.87 billion at December 31, 2021 and an increase of $145.4 million, or 7.9%, from $1.83 billion at September 30, 2021;
• The Company announced a repurchase program on July 28, 2022 for the repurchase up to 5% of outstanding common stock. As of September 30, 2022, the Company repurchased and retired 119,941 shares of common stock for an aggregate cost of $2.2 million; and
• The Bank changed its name from Pacific City Bank to PCB Bank and opened 2 new full-service branches in Dallas, Texas and Palisades Park, New Jersey.

“We are pleased to announce our continued solid financial performance for the third quarter of 2022,” stated Henry Kim, President and Chief Executive Officer. “We funded $172 million in loans held-for-investment during the third quarter, resulting in a loan balance increase of 6.9% quarter-over-quarter or 13.1% year-to-date. Compared with the second quarter of 2022, our net interest margin expanded 24 basis points to 4.25% and our net interest income increased 12.5% to $24.0 million for the third quarter. In keeping with our expansion strategic initiative to increase the value of our franchise, we successfully opened two new full-service branches in Dallas, Texas, and Palisades Park, New Jersey during the third quarter of 2022.”

“As we look ahead into the fourth quarter of this year, we will continue to remain opportunistic with our strong capital position and invest in our long-term franchise value by strategically expanding our footprint. We are on schedule to open one more full-service branch in Carrollton, Texas during the fourth quarter of this year,” concluded Kim.

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(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.

Financial Highlights (Unaudited)

($ in thousands, except per share data)		Three Months Ended																		Nine Months Ended
		9/30/2022				6/30/2022				% Change			9/30/2021				% Change			9/30/2022				9/30/2021				% Change
Net income		$	6,953			$	9,092			(23.5	)%		$	11,023			(36.9	)%		$	26,285			$	29,427			(10.7	)%
Diluted earnings per common share		$	0.46			$	0.60			(23.3	)%		$	0.73			(37.0	)%		$	1.73			$	1.92			(9.9	)%
Net interest income		$	24,023			$	21,351			12.5	%		$	20,227			18.8	%		$	65,367			$	57,042			14.6	%
Provision (reversal) for loan losses			3,753				(109	)		NM				(1,053	)		NM				2,453				(3,134	)		NM
Noninterest income			3,176				3,648			(12.9	)%			5,588			(43.2	)%			12,110				13,596			(10.9	)%
Noninterest expense			13,695				12,245			11.8	%			11,232			21.9	%			38,011				32,040			18.6	%
Return on average assets (1)			1.19	%			1.65	%						2.11	%						1.58	%			1.94	%
Return on average shareholders’ equity (1)			8.16	%			12.48	%						17.98	%						11.84	%			16.40	%
Return on average tangible common equity (“TCE”) (2)			10.25	%			13.85	%						17.98	%						13.31	%			16.40	%
Net interest margin (1)			4.25	%			4.01	%						3.93	%						4.05	%			3.82	%
Efficiency ratio (3)			50.35	%			48.98	%						43.51	%						49.06	%			45.36	%

($ in thousands, except per share data)		9/30/2022				6/30/2022				% Change			12/31/2021				% Change			9/30/2021				% Change
Total assets		$	2,327,051			$	2,344,560			(0.7	)%		$	2,149,735			8.2	%		$	2,104,699			10.6	%
Net loans held-for-investment			1,935,476				1,811,939			6.8	%			1,709,824			13.2	%			1,684,071			14.9	%
Total deposits			1,978,098				1,997,607			(1.0	)%			1,867,134			5.9	%			1,832,666			7.9	%
Book value per common share (4)		$	22.40			$	22.36						$	17.24						$	16.68
TCE per common share (2)		$	17.75			$	17.73						$	17.24						$	16.68
Tier 1 leverage ratio (consolidated)			14.74	%			15.37	%						12.11	%						11.91	%
Total shareholders’ equity to total assets			14.30	%			14.26	%						11.92	%						11.76	%
TCE to total assets (2), (5)			11.33	%			11.31	%						11.92	%						11.76	%

(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 shareholders’ equity 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																		Nine Months Ended
($ in thousands)		9/30/2022				6/30/2022				% Change			9/30/2021				% Change			9/30/2022				9/30/2021				% Change
Interest income/expense on
Loans		$	24,835			$	21,243			16.9	%		$	20,537			20.9	%		$	66,268			$	58,792			12.7	%
Investment securities			806				668			20.7	%			437			84.4	%			1,950				1,172			66.4	%
Other interest-earning assets			1,194				535			123.2	%			194			515.5	%			1,957				513			281.5	%
Total interest-earning assets			26,835				22,446			19.6	%			21,168			26.8	%			70,175				60,477			16.0	%
Interest-bearing deposits			2,798				1,041			168.8	%			885			216.2	%			4,689				3,196			46.7	%
Borrowings			14				54			(74.1	)%			56			(75.0	)%			119				239			(50.2	)%
Total interest-bearing liabilities			2,812				1,095			156.8	%			941			198.8	%			4,808				3,435			40.0	%
Net interest income		$	24,023			$	21,351			12.5	%		$	20,227			18.8	%		$	65,367			$	57,042			14.6	%
Average balance of
Loans		$	1,905,366			$	1,804,368			5.6	%		$	1,715,106			11.1	%		$	1,828,187			$	1,683,084			8.6	%
Investment securities			137,363				135,324			1.5	%			136,874			0.4	%			132,023				131,039			0.8	%
Other interest-earning assets			200,367				195,633			2.4	%			188,137			6.5	%			198,311				180,663			9.8	%
Total interest-earning assets		$	2,243,096			$	2,135,325			5.0	%		$	2,040,117			9.9	%		$	2,158,521			$	1,994,786			8.2	%
Interest-bearing deposits		$	1,137,739			$	1,001,424			13.6	%		$	1,000,332			13.7	%		$	1,058,105			$	1,026,842			3.0	%
Borrowings			2,033				11,132			(81.7	)%			18,152			(88.8	)%			7,824				37,363			(79.1	)%
Total interest-bearing liabilities		$	1,139,772			$	1,012,556			12.6	%		$	1,018,484			11.9	%		$	1,065,929			$	1,064,205			0.2	%
Total funding (1)		$	1,965,134			$	1,902,247			3.3	%		$	1,812,649			8.4	%		$	1,917,766			$	1,772,005			8.2	%
Annualized average yield/cost of
Loans			5.17	%			4.72	%						4.75	%						4.85	%			4.67	%
Investment securities			2.33	%			1.98	%						1.27	%						1.97	%			1.20	%
Other interest-earning assets			2.36	%			1.10	%						0.41	%						1.32	%			0.38	%
Total interest-earning assets			4.75	%			4.22	%						4.12	%						4.35	%			4.05	%
Interest-bearing deposits			0.98	%			0.42	%						0.35	%						0.59	%			0.42	%
Borrowings			2.73	%			1.95	%						1.22	%						2.03	%			0.86	%
Total interest-bearing liabilities			0.98	%			0.43	%						0.37	%						0.60	%			0.43	%
Net interest margin			4.25	%			4.01	%						3.93	%						4.05	%			3.82	%
Cost of total funding (1)			0.57	%			0.23	%						0.21	%						0.34	%			0.26	%
Supplementary information
Net accretion of discount on loans		$	867			$	907			(4.4	)%		$	932			(7.0	)%		$	2,682			$	2,689			(0.3	)%
Net amortization of deferred loan fees		$	243			$	606			(59.9	)%		$	1,983			(87.7	)%		$	2,014			$	4,662			(56.8	)%

(1)

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

Loans. The increases in average yield for the current quarter and year-to-date period 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:

		9/30/2022				6/30/2022				12/31/2021				9/30/2021
		% 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		24.0%		4.43%		24.5%		4.35%		28.4%		3.98%		29.9%		3.86%
Hybrid rate loans		38.0%		4.23%		37.0%		4.11%		29.1%		4.16%		26.4%		4.28%
Variable rate loans		38.0%		6.75%		38.5%		5.12%		42.5%		3.95%		43.7%		3.96%

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 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-to-date period 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-to-date period 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-to-date period were primarily due to an increase in market rates.

Provision (reversal) for Loan Losses

Provision (reversal) for loan losses was $3.8 million for the current quarter compared with $(109) thousand for the previous quarter and $(1.1) million for the year-ago quarter. For the current and previous year-to-date periods, provision (reversal) for loan losses was $2.5 million and $(3.1) million, respectively. The increase in provision for loan losses was primarily due to increases in gross loan balance, and qualitative adjustment factors related to current economic condition and increased charge-offs during the current quarter.

The Company recorded net charge-offs of $1.1 million for the current quarter compared with $18 thousand for the previous quarter and $29 thousand for the year-ago quarter. For the current and previous year-to-date periods, the Company recorded net charge-offs (recoveries) of $1.1 million and $(431) thousand, respectively.

Adjusted Allowance to loans held-for-investment ratio⁽¹⁾ was 1.21%, 1.15%, 1.34%, and 1.48% at September 30, 2022, June 30, 2022, December 31, 2021, and September 30, 2021, respectively.

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(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															Nine Months Ended
($ in thousands)		9/30/2022			6/30/2022			% Change			9/30/2021			% Change			9/30/2022			9/30/2021			% Change
Gain on sale of loans		$	1,415		$	2,039		(30.6	)%		$	4,269		(66.9	)%		$	7,231		$	9,558		(24.3	)%
Service charges and fees on deposits			341			330		3.3	%			292		16.8	%			974			887		9.8	%
Loan servicing income			780			755		3.3	%			655		19.1	%			2,235			2,082		7.3	%
Bank-owned life insurance income			178			175		1.7	%			—		—	%			525			—		—	%
Other income			462			349		32.4	%			372		24.2	%			1,145			1,069		7.1	%
Total noninterest income		$	3,176		$	3,648		(12.9	)%		$	5,588		(43.2	)%		$	12,110		$	13,596		(10.9	)%

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

		Three Months Ended															Nine Months Ended
($ in thousands)		9/30/2022			6/30/2022			% Change			9/30/2021			% Change			9/30/2022			9/30/2021			% Change
Gain on sale of SBA loans
Sold loan balance		$	27,313		$	38,442		(29.0	)%		$	45,048		(39.4	)%		$	105,438		$	90,074		17.1	%
Premium received			2,036			2,600		(21.7	)%			4,879		(58.3	)%			8,842			10,360		(14.7	)%
Gain recognized			1,407			2,039		(31.0	)%			4,263		(67.0	)%			7,223			9,412		(23.3	)%
Gain on sale of residential property loans
Sold loan balance		$	858		$	—		—	%		$	301		185.0	%		$	858		$	9,823		(91.3	)%
Gain recognized			8			—		—	%			2		300.0	%			8			142		(94.4	)%

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

		Three Months Ended																		Nine Months Ended
($ in thousands)		9/30/2022				6/30/2022				% Change			9/30/2021				% Change			9/30/2022				9/30/2021				% Change
Loan servicing income
Servicing income received		$	1,302			$	1,287			1.2	%		$	1,180			10.3	%		$	3,819			$	3,577			6.8	%
Servicing assets amortization			(522	)			(532	)		(1.9	)%			(525	)		(0.6	)%			(1,584	)			(1,495	)		6.0	%
Loan servicing income		$	780			$	755			3.3	%		$	655			19.1	%		$	2,235			$	2,082			7.3	%
Underlying loans at end of period		$	538,904			$	537,990			0.2	%		$	511,930			5.3	%		$	538,904			$	511,930			5.3	%

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															Nine Months Ended
($ in thousands)		9/30/2022			6/30/2022			% Change			9/30/2021			% Change			9/30/2022			9/30/2021			% Change
Salaries and employee benefits		$	8,457		$	8,125		4.1	%		$	7,606		11.2	%		$	25,177		$	20,913		20.4	%
Occupancy and equipment			1,650			1,537		7.4	%			1,399		17.9	%			4,584			4,158		10.2	%
Professional fees			587			642		(8.6	)%			422		39.1	%			1,632			1,574		3.7	%
Marketing and business promotion			909			310		193.2	%			416		118.5	%			1,426			1,070		33.3	%
Data processing			427			441		(3.2	)%			391		9.2	%			1,272			1,164		9.3	%
Director fees and expenses			179			182		(1.6	)%			144		24.3	%			530			433		22.4	%
Regulatory assessments			150			147		2.0	%			12		1,150.0	%			438			399		9.8	%
Other expense			1,336			861		55.2	%			842		58.7	%			2,952			2,329		26.7	%
Total noninterest expense		$	13,695		$	12,245		11.8	%		$	11,232		21.9	%		$	38,011		$	32,040		18.6	%

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

Total loan origination cost included in salaries and employee benefits were $488 thousand, $461 thousand, and $421 thousand for the current, previous, and year-ago quarters, respectively, and $1.3 million and $1.8 million for the current and previous year-to-date periods, respectively. The Company recognized a higher loan origination cost for the previous year-to-date period primarily due to the SBA PPP loan production in the first quarter of 2021. The number of full-time equivalent employees was 274, 271, and 249 as of September 30, 2022, June 30, 2022, and September 30, 2021, respectively.

Occupancy and Equipment. The increases for the current quarter and year-to-date period were primarily due to new branch openings. The Company opened 2 new branches in Dallas, Texas and Palisades Park, New Jersey during the current quarter and plans to open one more branch in Carrollton, Texas during the fourth quarter of 2022.

Marketing and Business Promotion. The increases for the current quarter and year-to-date period were 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-to-date periods compared with the same periods of 2021 were primarily due to a new director appointed during the fourth quarter of 2021.

Regulatory Assessments. During the year-ago quarter, an adjustment was made for the assessment rate decrease.

Other Expense. The increases for the current quarter and year-to-date period were primarily due to an increase in office expense for the new branches and a legal settlement of $150 thousand for the current quarter.

Balance Sheet (Unaudited)

Total assets were $2.33 billion at September 30, 2022, a decrease of $17.5 million, or 0.7%, from $2.34 billion at June 30, 2022, but an increase of $177.3 million, or 8.2%, from $2.15 billion at December 31, 2021 and an increase of $222.4 million, or 10.6%, from $2.10 billion at September 30, 2021. The decrease for the current quarter was primarily due to decreases in cash and cash equivalents and securities available-for-sale, partially offset by increases in loans held-for-sale and loans held-for-investment. The increase for the current year-to-date period 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)		9/30/2022			6/30/2022			% Change			12/31/2021			% Change			9/30/2021			% Change
Real estate loans
Commercial property		$	1,271,781		$	1,204,142		5.6	%		$	1,105,843		15.0	%		$	1,054,351		20.6	%
Residential property			297,506			258,259		15.2	%			209,485		42.0	%			201,635		47.5	%
SBA property			136,088			131,420		3.6	%			129,661		5.0	%			127,845		6.4	%
Construction			14,592			12,595		15.9	%			8,252		76.8	%			6,572		122.0	%
Commercial and industrial loans
Commercial term			80,225			73,885		8.6	%			73,438		9.2	%			74,390		7.8	%
Commercial lines of credit			117,960			111,916		5.4	%			100,936		16.9	%			101,456		16.3	%
SBA commercial term			16,542			16,985		(2.6	)%			17,640		(6.2	)%			18,338		(9.8	)%
SBA PPP			1,309			1,583		(17.3	)%			65,329		(98.0	)%			101,901		(98.7	)%
Other consumer loans			23,234			22,225		4.5	%			21,621		7.5	%			21,390		8.6	%
Loans held-for-investment			1,959,237			1,833,010		6.9	%			1,732,205		13.1	%			1,707,878		14.7	%
Loans held-for-sale			18,982			9,627		97.2	%			37,026		(48.7	)%			29,020		(34.6	)%
Total loans		$	1,978,219		$	1,842,637		7.4	%		$	1,769,231		11.8	%		$	1,736,898		13.9	%

The increase in loans held-for-investment for the current quarter was primarily due to new funding of $171.9 million and advances on lines of credit of $42.0 million, partially offset by pay-downs and pay-offs of $86.6 million. The increase for the current year-to-date period was primarily due to new funding of $450.8 million and advances of lines of credit of $111.3 million, partially offset by pay-downs and pay-offs of $333.9 million. SBA PPP loans of $274 thousand and $64.0 million were paid off through regular payments or forgiveness from SBA during the current quarter and year-to-date period, respectively.

The increase in loans held-for-sale for the current quarter was primarily due to new funding of $37.1 million, partially offset by sales of $27.7 million. The decrease for the current year-to-date period was primarily due to sales of $105.8 million, partially offset by new funding of $88.2 million.

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

($ in thousands)		9/30/2022			6/30/2022			% Change			12/31/2021			% Change			9/30/2021			% Change
Real estate loans
Commercial property		$	18,400		$	20,425		(9.9	)%		$	20,194		(8.9	)%		$	17,873		2.9	%
SBA property			3,730			4,265		(12.5	)%			3,068		21.6	%			4,747		(21.4	)%
Construction			11,093			12,080		(8.2	)%			5,180		114.2	%			9,478		17.0	%
Commercial and industrial loans
Commercial term			2,027			2,347		(13.6	)%			1,097		84.8	%			1,455		39.3	%
Commercial lines of credit			254,738			218,850		16.4	%			169,000		50.7	%			156,411		62.9	%
SBA commercial term			572			383		49.3	%			149		283.9	%			245		133.5	%
Other consumer loans			847			1,086		(22.0	)%			595		42.4	%			130		551.5	%
Total commitments to extend credit		$	291,407		$	259,436		12.3	%		$	199,283		46.2	%		$	190,339		53.1	%

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)		9/30/2022				6/30/2022				% Change			12/31/2021				% Change			9/30/2021				% Change
Nonaccrual loans
Real estate loans
Commercial property		$	2,444			$	—			—	%		$	—			—	%		$	—			—	%
Residential property			372				450			(17.3	) %			—			—	%			—			—	%
SBA property			552				564			(2.1	) %			746			(26.0	)%			766			(27.9	)%
Commercial and industrial loans
Commercial term			3				—			—	%			—			—	%			—			—	%
Commercial lines of credit			4,000				—			—	%			—			—	%			—			—	%
SBA commercial term			—				185			(100.0	)%			213			(100.0	)%			314			(100.0	)%
Other consumer loans			25				24			4.2	%			35			(28.6	)%			33			(24.2	)%
Total nonaccrual loans held-for-investment			7,396				1,223			504.7	%			994			644.1	%			1,113			564.5	%
Loans past due 90 days or more and still accruing			—				—			—	%			—			—	%			3			(100.0	)%
Non-performing loans (“NPLs”)			7,396				1,223			504.7	%			994			644.1	%			1,116			562.7	%
Other real estate owned (“OREO”)			—				808			(100.0	)%			—			—	%			—			—	%
Non-performing assets (“NPAs”)		$	7,396			$	2,031			264.2	%		$	994			644.1	%		$	1,116			562.7	%
Loans past due and still accruing
Past due 30 to 59 days		$	215			$	682			(68.5	)%		$	549			(60.8	)%		$	292			(26.4	)%
Past due 60 to 89 days			195				—			—	%			5			3,800.0	%			—			—	%
Past due 90 days or more			—				—			—	%			—			—	%			3			(100.0	)%
Total loans past due and still accruing		$	410			$	682			(39.9	)%			554			(26.0	)%		$	295			39.0	%
Troubled debt restructurings (“TDRs”)
Accruing TDRs		$	542			$	555			(2.3	)%		$	576			(5.9	)%		$	589			(8.0	)%
Nonaccrual TDRs			7				10			(30.0	)%			17			(58.8	)%			26			(73.1	)%
Total TDRs		$	549			$	565			(2.8	)%		$	593			(7.4	)%		$	615			(10.7	)%
Special mention loans		$	5,986			$	6,313			(5.2	)%		$	18,092			(66.9	)%		$	17,315			(65.4	)%
Classified assets
Classified loans		$	10,293			$	3,980			158.6	%		$	5,168			99.2	%		$	5,345			92.6	%
OREO			—				808			(100.0	)%			—			—	%			—			—	%
Classified assets		$	10,293			$	4,788			115.0	%		$	5,168			99.2	%		$	5,345			92.6	%
NPLs to loans held-for-investment			0.38	%			0.07	%						0.06	%						0.07	%
NPAs to total assets			0.32	%			0.09	%						0.05	%						0.05	%
Classified assets to total assets			0.44	%			0.20	%						0.24	%						0.25	%

The decrease in special mention loans for the current year-to-date period was primarily due to improvements of 2 loans with an aggregated carrying value of $11.3 million at December 31, 2021. The increases in nonaccrual commercial property loans and commercial lines of credit, and classified loans for the current quarter were primarily due to downgrades of loans to a single credit relationship.

Investment Securities

Total investment securities were $129.4 million at September 30, 2022, a decrease of $9.7 million, or 6.95%, from $139.1 million at June 30, 2022 and a decrease of $3.7 million, or 2.8%, from $133.1 million at September 30, 2021, but an increase of $6.2 million, or 5.03%, from $123.2 million at December 31, 2021. The decrease for the current quarter was primarily due to principal pay-downs and calls of $6.4 million, a fair value decrease of $6.3 million, and net premium amortization of $75 thousand, partially offset by purchases of $3.1 million. The increase for the current year-to-date period was primarily due to purchases of $41.1 million, partially offset by principal pay-downs and calls of $18.8 million, a fair value decrease of $15.8 million, and net premium amortization of $307 thousand.

Deposits

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

		9/30/2022						6/30/2022						12/31/2021						9/30/2021
($ in thousands)		Amount			% to Total			Amount			% to Total			Amount			% to Total			Amount			% to Total
Noninterest-bearing demand deposits		$	809,842		40.9	%		$	988,454		49.5	%		$	830,383		44.5	%		$	832,240		45.4	%
Interest-bearing deposits
Savings			13,028		0.7	%			14,686		0.7	%			16,299		0.9	%			13,294		0.7	%
NOW			17,550		0.9	%			18,881		0.9	%			20,185		1.1	%			20,461		1.1	%
Retail money market accounts			522,412		26.4	%			458,605		22.9	%			386,041		20.5	%			376,333		20.5	%
Brokered money market accounts			10,010		0.5	%			1		0.1	%			1		0.1	%			4		0.1	%
Retail time deposits of
$250,000 or less			236,864		12.0	%			235,956		11.8	%			256,956		13.8	%			262,207		14.3	%
More than $250,000			239,271		12.1	%			186,024		9.3	%			172,269		9.2	%			163,127		8.9	%
State and brokered time deposits			129,121		6.5	%			95,000		4.8	%			185,000		9.9	%			165,000		9.0	%
Total interest-bearing deposits			1,168,256		59.1	%			1,009,153		50.5	%			1,036,751		55.5	%			1,000,426		54.6	%
Total deposits		$	1,978,098		100.0	%		$	1,997,607		100.0	%		$	1,867,134		100.0	%		$	1,832,666		100.0	%

The decrease in noninterest-bearing demand deposits for the current quarter was primarily due to strong deposit market competition and the migration of large amount 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 $152.8 million, renewals of the matured accounts of $182.6 million and balance increases of $6.3 million, partially offset by matured and closed accounts of $287.7 million. The increase for the current year-to-date period was primarily due to new accounts of $252.2 million, renewals of the matured accounts of $480.2 million and balance increases of $15.8 million, partially offset by matured and closed accounts of $701.4 million.

Liquidity

The following table presents a summary of the Company’s liquidity position as of September 30, 2022:

($ in thousands)		9/30/2022
Cash and cash equivalents		$	154,038
Cash and cash equivalents to total assets			6.6	%
Available borrowing capacity
FHLB advances		$	586,125
Federal Reserve Discount Window			29,065
Overnight federal funds lines			65,000
Total		$	680,190
Total available borrowing capacity to total assets			29.2	%

Shareholders’ Equity

Shareholders’ equity was $332.7 million at September 30, 2022, a decrease of $1.7 million, or 0.5%, from $334.4 million at June 30, 2022, but an increase of $76.4 million, or 29.8%, from $256.3 million at December 31, 2021 and an increase of $85.1 million, or 34.4%, from $247.6 million at September 30, 2021. The decrease for the current quarter and year-to-date period were primarily due to cash dividends declared on common stock, an increase in accumulated other comprehensive loss, and repurchase of common stock, partially offset by net income. The increase for the current year-to-date period was primarily due to net income and issuance of preferred stock (as discussed below), partially offset by cash dividends declared on common stock, repurchase of common stock and an increase in accumulated other comprehensive loss. The Company declared cash dividends of $2.2 million and $6.7 million for the current quarter and year-to-date period, respectively.

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. The Company repurchased and retired 119,941 shares of common stock at a weighted-average price of $18.75 per share, totaling $2.2 million under this repurchase program as of September 30, 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:

		9/30/2022		6/30/2022		12/31/2021		9/30/2021		Well Capitalized Requirements
PCB Bancorp
Common tier 1 capital (to risk-weighted assets)		13.69 %		14.44 %		14.79 %		15.07 %		N/A
Total capital (to risk-weighted assets)		18.34 %		19.25 %		16.04 %		16.32 %		N/A
Tier 1 capital (to risk-weighted assets)		17.14 %		18.11 %		14.79 %		15.07 %		N/A
Tier 1 capital (to average assets)		14.74 %		15.37 %		12.11 %		11.91 %		N/A
PCB Bank
Common tier 1 capital (to risk-weighted assets)		16.82 %		17.79 %		14.48 %		14.76 %		6.5 %
Total capital (to risk-weighted assets)		18.02 %		18.92 %		15.73 %		16.01 %		10.0 %
Tier 1 capital (to risk-weighted assets)		16.82 %		17.79 %		14.48 %		14.76 %		8.0 %
Tier 1 capital (to average assets)		14.47 %		15.09 %		11.85 %		11.66 %		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)
		9/30/2022				6/30/2022				% Change			12/31/2021				% Change			9/30/2021				% Change
Assets
Cash and due from banks		$	22,252			$	23,125			(3.8	)%		$	15,222			46.2	%		$	19,688			13.0	%
Interest-bearing deposits in other financial institutions			131,786				276,785			(52.4	)%			188,063			(29.9	)%			195,285			(32.5	)%
Total cash and cash equivalents			154,038				299,910			(48.6	)%			203,285			(24.2	)%			214,973			(28.3	)%
Securities available-for-sale, at fair value			129,401				139,067			(7.0	)%			123,198			5.0	%			133,102			(2.8	)%
Loans held-for-sale			18,982				9,627			97.2	%			37,026			(48.7	) %			29,020			(34.6	)%
Loans held-for-investment			1,959,237				1,833,010			6.9	%			1,732,205			13.1	%			1,707,878			14.7	%
Allowance for loan losses			(23,761	)			(21,071	)		12.8	%			(22,381	)		6.2	%			(23,807	)		(0.2	)%
Net loans held-for-investment			1,935,476				1,811,939			6.8	%			1,709,824			13.2	%			1,684,071			14.9	%
Premises and equipment, net			4,671				3,633			28.6	%			3,098			50.8	%			3,306			41.3	%
Federal Home Loan Bank and other bank stock			10,183				10,183			—	%			8,577			18.7	%			8,577			18.7	%
Other real estate owned, net			—				808			(100.0	)%			—			—	%			—			—	%
Bank-owned life insurance			29,883				29,705			0.6	%			29,358			1.8	%			—			—	%
Deferred tax assets, net			12,135				11,869			2.2	%			10,824			12.1	%			7,519			61.4	%
Servicing assets			7,627				7,716			(1.2	)%			7,269			4.9	%			7,009			8.8	%
Operating lease assets			6,897				6,512			5.9	%			6,786			1.6	%			7,164			(3.7	)%
Accrued interest receivable			6,070				5,212			16.5	%			5,368			13.1	%			5,494			10.5	%
Other assets			11,688				8,379			39.5	%			5,122			128.2	%			4,464			161.8	%
Total assets		$	2,327,051			$	2,344,560			(0.7	)%		$	2,149,735			8.2	%		$	2,104,699			10.6	%
Liabilities
Deposits
Noninterest-bearing demand		$	809,842			$	988,454			(18.1	)%		$	830,383			(2.5	)%		$	832,240			(2.7	)%
Savings, NOW and money market accounts			563,000				492,173			14.4	%			422,526			33.2	%			410,092			37.3	%
Time deposits of $250,000 or less			305,985				270,956			12.9	%			341,956			(10.5	)%			327,207			(6.5	)%
Time deposits of more than $250,000			299,271				246,024			21.6	%			272,269			9.9	%			263,127			13.7	%
Total deposits			1,978,098				1,997,607			(1.0	)%			1,867,134			5.9	%			1,832,666			7.9	%
Federal Home Loan Bank advances			—				—			—	%			10,000			(100.0	)%			10,000			(100.0	)%
Operating lease liabilities			7,402				7,067			4.7	%			7,444			(0.6	)%			7,862			(5.9	)%
Accrued interest payable and other liabilities			8,832				5,511			60.3	%			8,871			(0.4	)%			6,573			34.4	%
Total liabilities			1,994,332				2,010,185			(0.8	)%			1,893,449			5.3	%			1,857,101			7.4	%
Commitments and contingent liabilities
Shareholders’ equity
Preferred stock			69,141				69,141			—	%			—			—	%			—			—	%
Common stock			153,890				155,842			(1.3	)%			154,992			(0.7	)%			154,618			(0.5	)%
Retained earnings			120,699				115,992			4.1	%			101,140			19.3	%			92,248			30.8	%
Accumulated other comprehensive income (loss), net			(11,011	)			(6,600	)		66.8	%			154			NM				732			NM
Total shareholders’ equity			332,719				334,375			(0.5	)%			256,286			29.8	%			247,598			34.4	%
Total liabilities and shareholders’ equity		$	2,327,051			$	2,344,560			(0.7	)%		$	2,149,735			8.2	%		$	2,104,699			10.6	%
Outstanding common shares			14,853,140				14,956,760							14,865,825							14,841,626
Book value per common share (1)		$	22.40			$	22.36						$	17.24						$	16.68
TCE per common share (2)		$	17.75			$	17.73						$	17.24						$	16.68
Total loan to total deposit ratio			100.01	%			92.24	%						94.76	%						94.77	%
Noninterest-bearing deposits to total deposits			40.94	%			49.48	%						44.47	%						45.41	%

(1)		The ratios are calculated by dividing total shareholders’ equity by the number of outstanding common shares. The Company did not have any intangible equity components for the presented periods.
(2)		Non-GAAP. See “Non-GAAP Measures” for reconciliation of this measure to its most comparable GAAP measure.

PCB Bancorp and Subsidiary
Consolidated Statements of Income (Unaudited)
($ in thousands, except share and per share data)
		Three Months Ended																		Nine Months Ended
		9/30/2022				6/30/2022				% Change			9/30/2021				% Change			9/30/2022				9/30/2021				% Change
Interest and dividend income
Loans, including fees		$	24,835			$	21,243			16.9	%		$	20,537			20.9	%		$	66,268			$	58,792			12.7	%
Investment securities			806				668			20.7	%			437			84.4	%			1,950				1,172			66.4	%
Other interest-earning assets			1,194				535			123.2	%			194			515.5	%			1,957				513			281.5	%
Total interest income			26,835				22,446			19.6	%			21,168			26.8	%			70,175				60,477			16.0	%
Interest expense
Deposits			2,798				1,041			168.8	%			885			216.2	%			4,689				3,196			46.7	%
Other borrowings			14				54			(74.1	)%			56			(75.0	)%			119				239			(50.2	)%
Total interest expense			2,812				1,095			156.8	%			941			198.8	%			4,808				3,435			40.0	%
Net interest income			24,023				21,351			12.5	%			20,227			18.8	%			65,367				57,042			14.6	%
Provision (reversal) for loan losses			3,753				(109	)		NM				(1,053	)		NM				2,453				(3,134	)		NM
Net interest income after provision (reversal) for loan losses			20,270				21,460			(5.5	)%			21,280			(4.7	)%			62,914				60,176			4.5	%
Noninterest income
Gain on sale of loans			1,415				2,039			(30.6	)%			4,269			(66.9	)%			7,231				9,558			(24.3	)%
Service charges and fees on deposits			341				330			3.3	%			292			16.8	%			974				887			9.8	%
Loan servicing income			780				755			3.3	%			655			19.1	%			2,235				2,082			7.3	%
Bank-owned life insurance income			178				175			1.7	%			—			—	%			525				—			—	%
Other income			462				349			32.4	%			372			24.2	%			1,145				1,069			7.1	%
Total noninterest income			3,176				3,648			(12.9	)%			5,588			(43.2	)%			12,110				13,596			(10.9	)%
Noninterest expense
Salaries and employee benefits			8,457				8,125			4.1	%			7,606			11.2	%			25,177				20,913			20.4	%
Occupancy and equipment			1,650				1,537			7.4	%			1,399			17.9	%			4,584				4,158			10.2	%
Professional fees			587				642			(8.6	)%			422			39.1	%			1,632				1,574			3.7	%
Marketing and business promotion			909				310			193.2	%			416			118.5	%			1,426				1,070			33.3	%
Data processing			427				441			(3.2	)%			391			9.2	%			1,272				1,164			9.3	%
Director fees and expenses			179				182			(1.6	)%			144			24.3	%			530				433			22.4	%
Regulatory assessments			150				147			2.0	%			12			1,150.0	%			438				399			9.8	%
Other expense			1,336				861			55.2	%			842			58.7	%			2,952				2,329			26.7	%
Total noninterest expense			13,695				12,245			11.8	%			11,232			21.9	%			38,011				32,040			18.6	%
Income before income taxes			9,751				12,863			(24.2	)%			15,636			(37.6	)%			37,013				41,732			(11.3	)%
Income tax expense			2,798				3,771			(25.8	)%			4,613			(39.3	)%			10,728				12,305			(12.8	)%
Net income		$	6,953			$	9,092			(23.5	)%		$	11,023			(36.9	)%		$	26,285			$	29,427			(10.7	)%
Earnings per common share
Basic		$	0.47			$	0.61						$	0.74						$	1.76			$	1.94
Diluted		$	0.46			$	0.60						$	0.73						$	1.73			$	1.92
Average common shares
Basic			14,877,879				14,883,768							14,779,707							14,869,997				15,090,989
Diluted			15,088,089				15,122,452							15,031,558							15,126,863				15,298,065
Dividend paid per common share		$	0.15			$	0.15						$	0.12						$	0.45			$	0.32
Return on average assets (1)			1.19	%			1.65	%						2.11	%						1.58	%			1.94	%
Return on average shareholders’ equity (1)			8.16	%			12.48	%						17.98	%						11.84	%			16.40	%
Return on average TCE (1), (2)			10.25	%			13.85	%						17.98	%						13.31	%			16.40	%
Efficiency ratio (3)			50.35	%			48.98	%						43.51	%						49.06	%			45.36	%

(1)		Ratios are presented on an annualized basis.
(2)		Non-GAAP. See “Non-GAAP Measures” for reconciliation of this measure to its most comparable GAAP measure.
(3)		The ratios are calculated by dividing noninterest expense by the sum of net interest income and noninterest income.

PCB Bancorp and Subsidiary
Average Balance, Average Yield, and Average Rate (Unaudited)
($ in thousands)
		Three Months Ended
		9/30/2022										6/30/2022										9/30/2021
		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)		$	1,905,366			$	24,835		5.17	%		$	1,804,368			$	21,243		4.72	%		$	1,715,106			$	20,537		4.75	%
Mortgage-backed securities			93,546				518		2.20	%			88,032				416		1.90	%			95,908				278		1.15	%
Collateralized mortgage obligation			24,090				151		2.49	%			25,929				125		1.93	%			22,534				57		1.00	%
SBA loan pool securities			10,435				56		2.13	%			11,164				43		1.54	%			10,390				45		1.72	%
Municipal bonds (2)			4,491				34		3.00	%			5,347				37		2.78	%			5,759				36		2.48	%
Corporate bonds			4,801				47		3.88	%			4,852				47		3.89	%			2,283				21		3.65	%
Other interest-earning assets			200,367				1,194		2.36	%			195,633				535		1.10	%			188,137				194		0.41	%
Total interest-earning assets			2,243,096				26,835		4.75	%			2,135,325				22,446		4.22	%			2,040,117				21,168		4.12	%
Noninterest-earning assets
Cash and due from banks			20,609										20,801										19,915
Allowance for loan losses			(21,117	)									(21,204	)									(24,854	)
Other assets			76,851										73,137										35,187
Total noninterest-earning assets			76,343										72,734										30,248
Total assets		$	2,319,439									$	2,208,059									$	2,070,365
Liabilities and Shareholders’ Equity
Interest-bearing liabilities
Deposits
NOW and money market accounts		$	577,975				1,375		0.94	%		$	464,829				430		0.37	%		$	387,661				291		0.30	%
Savings			14,990				2		0.05	%			14,989				2		0.05	%			12,806				2		0.06	%
Time deposits			544,774				1,421		1.03	%			521,606				609		0.47	%			599,865				592		0.39	%
Total interest-bearing deposits			1,137,739				2,798		0.98	%			1,001,424				1,041		0.42	%			1,000,332				885		0.35	%
Other borrowings			2,033				14		2.73	%			11,132				54		1.95	%			18,152				56		1.22	%
Total interest-bearing liabilities			1,139,772				2,812		0.98	%			1,012,556				1,095		0.43	%			1,018,484				941		0.37	%
Noninterest-bearing liabilities
Noninterest-bearing demand			825,362										889,691										794,165
Other liabilities			16,057										13,677										14,531
Total noninterest-bearing liabilities			841,419										903,368										808,696
Total liabilities			1,981,191										1,915,924										1,827,180
Total shareholders’ equity			338,248										292,135										243,185
Total liabilities and shareholders’ equity		$	2,319,439									$	2,208,059									$	2,070,365
Net interest income						$	24,023									$	21,351									$	20,227
Net interest spread (3)									3.77	%									3.79	%									3.75	%
Net interest margin (4)									4.25	%									4.01	%									3.93	%
Total deposits		$	1,963,101			$	2,798		0.57	%		$	1,891,115			$	1,041		0.22	%		$	1,794,497			$	885		0.20	%
Total funding (5)		$	1,965,134			$	2,812		0.57	%		$	1,902,247			$	1,095		0.23	%		$	1,812,649			$	941		0.21	%

(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)
		Nine Months Ended
		9/30/2022										9/30/2021
		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)		$	1,828,187			$	66,268		4.85	%		$	1,683,084			$	58,792		4.67	%
Mortgage-backed securities			88,634				1,241		1.87	%			90,095				726		1.08	%
Collateralized mortgage obligation			22,775				324		1.90	%			23,442				168		0.96	%
SBA loan pool securities			10,566				137		1.73	%			10,959				148		1.81	%
Municipal bonds (2)			5,152				107		2.78	%			5,774				109		2.52	%
Corporate bonds			4,896				141		3.85	%			769				21		3.65	%
Other interest-earning assets			198,311				1,957		1.32	%			180,663				513		0.38	%
Total interest-earning assets			2,158,521				70,175		4.35	%			1,994,786				60,477		4.05	%
Noninterest-earning assets
Cash and due from banks			20,599										19,359
Allowance for loan losses			(21,561	)									(25,753	)
Other assets			72,563										37,371
Total noninterest-earning assets			71,601										30,977
Total assets		$	2,230,122									$	2,025,763
Liabilities and Shareholders’ Equity
Interest-bearing liabilities
Deposits
NOW and money market accounts		$	492,130				2,118		0.58	%		$	398,459				941		0.32	%
Savings			15,205				6		0.05	%			11,676				4		0.05	%
Time deposits			550,770				2,565		0.62	%			616,707				2,251		0.49	%
Total interest-bearing deposits			1,058,105				4,689		0.59	%			1,026,842				3,196		0.42	%
Other borrowings			7,824				119		2.03	%			37,363				239		0.86	%
Total interest-bearing liabilities			1,065,929				4,808		0.60	%			1,064,205				3,435		0.43	%
Noninterest-bearing liabilities
Noninterest-bearing demand			851,837										707,800
Other liabilities			15,485										13,925
Total noninterest-bearing liabilities			867,322										721,725
Total liabilities			1,933,251										1,785,930
Total shareholders’ equity			296,871										239,833
Total liabilities and shareholders’ equity		$	2,230,122									$	2,025,763
Net interest income						$	65,367									$	57,042
Net interest spread (3)									3.75	%									3.62	%
Net interest margin (4)									4.05	%									3.82	%
Total deposits		$	1,909,942			$	4,689		0.33	%		$	1,734,642			$	3,196		0.25	%
Total funding (5)		$	1,917,766			$	4,808		0.34	%		$	1,772,005			$	3,435		0.26	%

(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
Non-GAAP Measures
($ in thousands)

Adjusted allowance for loan losses to loans held-for-investment ratio

Adjusted Allowance to loans held-for-investment ratio is calculated by removing SBA PPP loans from loans held-for-investment from the Allowance to loans held-for-investment ratio calculation. The SBA launched the PPP to provide a direct incentive for small businesses to keep their workers on the payroll in response to the COVID-19 pandemic. The SBA guarantees 100% of the PPP loans made to eligible borrowers, and the loans are eligible to be forgiven if certain conditions are met, at which point the SBA will make payments to the Bank for the forgiven amounts. The SBA guarantee on PPP loans cannot be separated from the loan and therefore is not a separate unit of account. The Company considered the SBA guarantee in the Allowance evaluation and determined that it is not required to reserve an Allowance on SBA PPP loans. Management believes this non-GAAP measure enhances comparability to prior periods and provide supplemental information regarding the Company’s credit trends. This disclosure should not be viewed as a substitute for results determined in accordance with GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies. The following tables provide reconciliations of the non-GAAP measure with financial measure defined by GAAP.

($ in thousands)			9/30/2022				6/30/2022				12/31/2021				9/30/2021
Loans held-for-investment	(a)		$	1,959,237			$	1,833,010			$	1,732,205			$	1,707,878
Less: SBA PPP loans	(b)			1,309				1,583				65,329				101,901
Loans held-for-investment, excluding SBA PPP loans	(c)=(a)-(b)		$	1,957,928			$	1,831,427			$	1,666,876			$	1,605,977
Allowance	(d)		$	23,761			$	21,071			$	22,381			$	23,807
Allowance to loans held-for-investment ratio	(d)/(a)			1.21	%			1.15	%			1.29	%			1.39	%
Adjusted Allowance to loans held-for-investment ratio	(d)/(c)			1.21	%			1.15	%			1.34	%			1.48	%

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

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

($ in thousands)			Three Months Ended												Nine Months Ended
			9/30/2022				6/30/2022				9/30/2021				9/30/2022				9/30/2021
Average total shareholders' equity	(a)		$	338,248			$	292,135			$	243,185			$	296,871			$	239,833
Less: average preferred stock	(b)			69,141				28,872				—				32,924				—
Average TCE	(c)=(a)-(b)		$	269,107			$	263,263			$	243,185			$	263,947			$	239,833
Net income	(d)		$	6,953			$	9,092			$	11,023			$	26,285			$	29,427
Return on average shareholder's equity (1)	(d)/(a)			8.16	%			12.48	%			17.98	%			11.84	%			16.40	%
Return on average TCE (1)	(d)/(c)			10.25	%			13.85	%			17.98	%			13.31	%			16.40	%
(1) Annualized.

($ in thousands, except per share data)			9/30/2022				6/30/2022				12/31/2021				9/30/2021
Total shareholders' equity	(a)		$	332,719			$	334,375			$	256,286			$	247,598
Less: preferred stock	(b)			69,141				69,141				—				—
TCE	(c)=(a)-(b)		$	263,578			$	265,234			$	256,286			$	247,598
Outstanding common shares	(d)			14,853,140				14,956,760				14,865,825				14,841,626
Book value per common share	(a)/(d)		$	22.40			$	22.36			$	17.24			$	16.68
TCE per common share	(c)/(d)		$	17.75			$	17.73			$	17.24			$	16.68
Total assets	(e)		$	2,327,051			$	2,344,560			$	2,149,735			$	2,104,699
Total shareholders' equity to total assets	(a)/(e)			14.30	%			14.26	%			11.92	%			11.76	%
TCE to total assets	(c)/(e)			11.33	%			11.31	%			11.92	%			11.76	%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20221027005113/en/

Timothy Chang

Executive Vice President & Chief Financial Officer

213-210-2000

Source: PCB Bancorp

FAQ

What was PCB Bancorp's net income for Q3 2022?

PCB Bancorp reported a net income of $7.0 million for Q3 2022.

How did PCB Bancorp perform in terms of net interest income in Q3 2022?

PCB Bancorp's net interest income rose to $24.0 million in Q3 2022, a 12.5% increase from the previous quarter.

What changes occurred in PCB Bancorp's loans held-for-investment in Q3 2022?

Loans held-for-investment increased by 6.9% from the previous quarter.

What was the provision for loan losses reported by PCB Bancorp in Q3 2022?

PCB Bancorp recorded a provision for loan losses of $3.8 million in Q3 2022.

How did PCB Bancorp's total assets change in Q3 2022?

Total assets decreased by 0.7% to $2.33 billion in Q3 2022.