PCB Bancorp Reports Earnings of $9.1 million for Q2 2022 and Announces Name Change of its Subsidiary, Pacific City Bank, to PCB Bank

Rhea-AI Summary

PCB Bancorp (NASDAQ: PCB) reported Q2 2022 net income of $9.1 million, or $0.60 per diluted share, down from $10.2 million in Q1 2022. Total assets rose to $2.34 billion, a 6.6% increase from Q1 2022. The bank reversed $109K in loan losses this quarter, a significant decline from the $1.2 million reversal in the previous quarter. Net interest income increased to $21.4 million with a net interest margin of 4.01%. Total deposits also grew by 4.6% to $2.00 billion. Effective August 25, 2022, Pacific City Bank will be rebranded as PCB Bank.

Positive

• Total assets increased by 6.6% to $2.34 billion.
• Net interest income rose to $21.4 million, a 6.8% increase quarter-over-quarter.
• Deposits grew by 4.6% to $2.00 billion.
• Net interest margin improved to 4.01%, up from 3.87% in Q1.

Negative

• Net income decreased by 11.2% from Q1 2022.
• Gain on sale of loans fell to $2.0 million, down 46% from Q1.

LOS ANGELES--(BUSINESS WIRE)-- PCB Bancorp (the “Company”) (NASDAQ: PCB), the holding company of Pacific City Bank (the “Bank”), today reported net income of $9.1 million, or $0.60 per diluted common share, for the second quarter of 2022, compared with $10.2 million, or $0.67 per diluted common share, for the previous quarter and $9.8 million, or $0.64 per diluted common share, for the year-ago quarter.

The Company also announced that the Bank will change its name to PCB Bank, effective August 25, 2022. In addition, the Company introduced a new logo, which will also be utilized by the Bank after its name change.

Q2 2022 Highlights

• Net income totaled $9.1 million, or $0.60 per diluted common share, for the current quarter;
  • The Company recorded a reversal for loan losses of $109 thousand for the current quarter compared with $1.2 million for the previous quarter and $934 thousand for the year-ago quarter.
  • Allowance for loan losses (“Allowance”) to loans held-for-investment⁽¹⁾ ratio was 1.15% at June 30, 2022 compared with 1.22% at March 31, 2022, 1.29% at December 31, 2021 and 1.45% at June 30, 2021. Adjusted Allowance to loans held-for-investment ratio⁽²⁾ was 1.15% at June 30, 2022 compared with 1.23% at March 31, 2022, 1.34% at December 31, 2021 and 1.62% at June 30, 2021.
  • Net interest income was $21.4 million for the current quarter compared with $20.0 million for the previous quarter and $19.0 million for the year-ago quarter. Net interest margin was 4.01% for the current quarter compared with 3.87% for the previous quarter and 3.83% for the year-ago quarter.
  • Gain on sale of loans was $2.0 million for the current quarter compared with $3.8 million for the previous quarter and $4.0 million for the year-ago quarter.

• Total assets were $2.34 billion at June 30, 2022, an increase of $144.8 million, or 6.6%, from $2.20 billion at March 31, 2022, an increase of $194.8 million, or 9.1%, from $2.15 billion at December 31, 2021, and an increase of $284.6 million, or 13.8%, from $2.06 billion at June 30, 2021;

• Loans held-for-investment were $1.83 billion at June 30, 2022, an increase of $90.1 million, or 5.2%, from $1.74 billion at March 31, 2022, an increase of $100.8 million, or 5.8%, from $1.73 billion at December 31, 2021, and an increase of $113.4 million, or 6.6%, from $1.72 billion at June 30, 2021;
  • SBA PPP loans totaled $1.6 million, $22.9 million, $65.3 million, and $181.0 million at June 30, 2022, March 31, 2022, December 31, 2021, and June 30, 2021, respectively.
  • The Company had no loans under modified terms related to COVID-19 at June 30, 2022, March 31, 2022, and December 31, 2021. Loans under modified terms related to the COVID-19 pandemic totaled $16.2 million at June 30, 2021.

• Total deposits were $2.00 billion at June 30, 2022, an increase of $87.2 million, or 4.6%, from $1.91 billion at March 31, 2022, an increase of $130.5 million, or 7.0%, from $1.87 billion at December 31, 2021, and an increase of $200.0 million, or 11.1%, from $1.80 billion at June 30, 2021; and

• On May 24, 2022, the Company issued 69,141 shares of preferred stock in exchange for a capital investment of $69.1 million from the U.S. Department of Treasury (the “Treasury”) under the Emergency Capital Investment Program (“ECIP”).

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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.

“We are pleased with another solid financial performance for the second quarter of 2022,” stated Henry Kim, President and Chief Executive Officer. “We continued to maintain an asset-sensitive balance sheet and executed another quarterly performance of a well-balanced deposit and loan growth combined with a record net interest income.”

“During the second quarter of 2022, our deposits increased at an annualized rate of 18% and we funded $161 million in loans held-for-investment, resulting in a 26% annualized growth rate, excluding SBA PPP loans. Our outstanding credit quality continued as demonstrated by our non-performing assets to loans held-for-investment ratio of 0.09% and classified assets to total assets ratio of 0.20%. Our net interest margin expanded 14 basis points quarter-over-quarter to 4.01% for the second quarter while we maintained our efficiency rate at 49%.”

“As we look ahead to the second half of this year, in spite of the challenging economic outlook ahead, we will remain opportunistic with our strong capital position and continue to invest in our franchise value by expanding our footprint. We are on schedule to open two new full-service branches in Dallas, Texas and a new full-service branch in Palisades Park, New Jersey during the third quarter of this year,” concluded Kim.

Financial Highlights (Unaudited)

($ in thousands, except per share data)		Three Months Ended																		Six Months Ended
		6/30/2022				3/31/2022				% Change			6/30/2021				% Change			6/30/2022				6/30/2021				% Change
Net income		$	9,092			$	10,240			(11.2	)%		$	9,844			(7.6	)%		$	19,332			$	18,404			5.0	%
Diluted earnings per common share		$	0.60			$	0.67			(10.4	)%		$	0.64			(6.3	)%		$	1.27			$	1.19			6.7	%
Net interest income		$	21,351			$	19,993			6.8	%		$	18,996			12.4	%		$	41,344			$	36,815			12.3	%
Reversal for loan losses			(109	)			(1,191	)		(90.8	)%			(934	)		(88.3	)%			(1,300	)			(2,081	)		(37.5	)%
Noninterest income			3,648				5,286			(31.0	)%			5,151			(29.2	)%			8,934				8,008			11.6	%
Noninterest expense			12,245				12,071			1.4	%			11,139			9.9	%			24,316				20,808			16.9	%
Return on average assets (1)			1.65	%			1.92	%						1.96	%						1.78	%			1.85	%
Return on average shareholders’ equity (1)			12.48	%			16.01	%						16.49	%						14.13	%			15.59	%
Return on average tangible common equity (“TCE”) (2)			13.85	%			16.01	%						16.49	%						14.92	%			15.59	%
Net interest margin (1)			4.01	%			3.87	%						3.83	%						3.94	%			3.77	%
Efficiency ratio (3)			48.98	%			47.75	%						46.13	%						48.36	%			46.42	%

($ in thousands, except per share data)		6/30/2022				3/31/2022				% Change			12/31/2021				% Change			6/30/2021				% Change
Total assets		$	2,344,560			$	2,199,742			6.6	%		$	2,149,735			9.1	%		$	2,060,003			13.8	%
Net loans held-for-investment			1,811,939				1,721,757			5.2	%			1,709,824			6.0	%			1,694,767			6.9	%
Total deposits			1,997,607				1,910,379			4.6	%			1,867,134			7.0	%			1,797,648			11.1	%
Book value per common share (4)		$	22.36			$	17.47						$	17.24						$	16.09
TCE per common share (2)		$	17.73			$	17.47						$	17.24						$	16.09
Tier 1 leverage ratio (consolidated)			15.37	%			12.22	%						12.11	%						11.76	%
Total shareholders’ equity to total assets			14.26	%			11.87	%						11.92	%						11.60	%
TCE to total assets (2), (5)			11.31	%			11.87	%						11.92	%						11.60	%

(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.

COVID-19 Pandemic

The ongoing COVID-19 pandemic, and governmental and societal responses thereto, have had a severe impact on global economic and market conditions. The U.S. government has enacted a number of monetary and fiscal policies to provide fiscal stimulus and relief in order to mitigate the impact of the COVID-19 pandemic. However, the COVID-19 pandemic continues to be a challenge to public health, including the emergence of new variants, and impact global economic and market conditions, including global supply chain disruptions and high inflation.

Since the beginning of the crisis, the Company has taken a number of steps to protect the safety of its employees and to support its customers. The Company has enabled its staff to work remotely and established safety measures within its bank premises and branches for both employees and customers. In order to support its customers, the Company has been in close contact with them, assessing the level of impact on their businesses, and putting a process in place to evaluate each client’s specific situation and provide relief programs where appropriate, including SBA PPP loans and loan modifications related to the COVID-19 pandemic.

At this time, the Company cannot estimate the long term impact of the COVID-19 pandemic, but these conditions are expected to continue to impact its business, results of operations, and financial condition negatively.

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)		6/30/2022				3/31/2022				% Change			6/30/2021				% Change			6/30/2022				6/30/2021				% Change
Interest income/expense on
Loans		$	21,243			$	20,190			5.2	%		$	19,511			8.9	%		$	41,433			$	38,255			8.3	%
Investment securities			668				476			40.3	%			375			78.1	%			1,144				735			55.6	%
Other interest-earning assets			535				228			134.6	%			165			224.2	%			763				319			139.2	%
Total interest-earning assets			22,446				20,894			7.4	%			20,051			11.9	%			43,340				39,309			10.3	%
Interest-bearing deposits			1,041				850			22.5	%			1,000			4.1	%			1,891				2,311			(18.2	)%
Borrowings			54				51			5.9	%			55			(1.8	)%			105				183			(42.6	)%
Total interest-bearing liabilities			1,095				901			21.5	%			1,055			3.8	%			1,996				2,494			(20.0	)%
Net interest income		$	21,351			$	19,993			6.8	%		$	18,996			12.4	%		$	41,344			$	36,815			12.3	%
Average balance of
Loans		$	1,804,368			$	1,773,376			1.7	%		$	1,691,704			6.7	%		$	1,788,958			$	1,666,808			7.3	%
Investment securities			135,324				123,230			9.8	%			132,249			2.3	%			129,310				128,073			1.0	%
Other interest-earning assets			195,633				198,918			(1.7	)%			164,710			18.8	%			197,267				176,864			11.5	%
Total interest-earning assets		$	2,135,325			$	2,095,524			1.9	%		$	1,988,663			7.4	%		$	2,115,535			$	1,971,745			7.3	%
Interest-bearing deposits		$	1,001,424			$	1,034,012			(3.2	)%		$	1,026,937			(2.5	)%		$	1,017,629			$	1,040,316			(2.2	)%
Borrowings			11,132				10,400			7.0	%			19,012			(41.4	)%			10,768				47,128			(77.2	)%
Total interest-bearing liabilities		$	1,012,556			$	1,044,412			(3.1	)%		$	1,045,949			(3.2	)%		$	1,028,397			$	1,087,444			(5.4	)%
Total funding (1)		$	1,902,247			$	1,885,038			0.9	%		$	1,766,054			7.7	%		$	1,893,691			$	1,751,346			8.1	%
Annualized average yield/cost of
Loans			4.72	%			4.62	%						4.63	%						4.67	%			4.63	%
Investment securities			1.98	%			1.57	%						1.14	%						1.78	%			1.16	%
Other interest-earning assets			1.10	%			0.46	%						0.40	%						0.78	%			0.36	%
Total interest-earning assets			4.22	%			4.04	%						4.04	%						4.13	%			4.02	%
Interest-bearing deposits			0.42	%			0.33	%						0.39	%						0.37	%			0.45	%
Borrowings			1.95	%			1.99	%						1.16	%						1.97	%			0.78	%
Total interest-bearing liabilities			0.43	%			0.35	%						0.40	%						0.39	%			0.46	%
Net interest margin			4.01	%			3.87	%						3.83	%						3.94	%			3.77	%
Cost of total funding (1)			0.23	%			0.19	%						0.24	%						0.21	%			0.29	%
Supplementary information
Net accretion of discount on loans		$	907			$	908			(0.1	)%		$	1,012			(10.4	)%		$	1,815			$	1,757			3.3	%
Net amortization of deferred loan fees		$	606			$	1,165			(48.0	)%		$	1,459			(58.5	)%		$	1,771			$	2,679			(33.9	)%

(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:

		6/30/2022						3/31/2022						12/31/2021						6/30/2021
		% 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		24.5	%		4.35	%		26.7	%		4.25	%		28.4	%		3.98	%		33.9	%		3.56	%
Hybrid rate loans		37.0	%		4.11	%		31.5	%		4.07	%		29.1	%		4.16	%		22.5	%		4.52	%
Variable rate loans		38.5	%		5.12	%		41.8	%		4.14	%		42.5	%		3.95	%		43.6	%		3.99	%

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.

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 deposits and the 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 compared with the previous and year-ago quarters were primarily due to an increase in market rates. The decrease in average cost for the current year-to-date period compared with the previous year-to-date period was primarily due to the lower interest rates on time deposits opened throughout 2021.

Borrowings. The increase in average cost for the current quarter compared with the year-ago quarter was primarily due to matured borrowings with lower interest rates during 2021. At June 30, 2022, the Company had no FHLB advances.

Reversal for Loan Losses

Reversal for loan losses was $109 thousand for the current quarter compared with $1.2 million for the previous quarter and $934 thousand for the year-ago quarter. For the current and previous year-to-date periods, reversal for loan losses was $1.3 million and $2.1 million, respectively. The reversals for the current quarter and year-to-date period were primarily due to a decrease in qualitative adjustment factor allocations related to economic implications of the COVID-19 pandemic. The Company recorded net charge-offs (recoveries) of $18 thousand for the current quarter compared with $(8) thousand for the previous quarter and $(309) thousand for the year-ago quarter. For the current and previous year-to-date periods, the Company recorded net charge-offs (recoveries) of $10 thousand and $(460) thousand, respectively.

Adjusted Allowance to loans held-for-investment ratio⁽¹⁾ was 1.15%, 1.23%, 1.34%, and 1.62% at June 30, 2022, March 31, 2022, December 31, 2021, and June 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															Six Months Ended
($ in thousands)		6/30/2022			3/31/2022			% Change			6/30/2021			% Change			6/30/2022			6/30/2021			% Change
Gain on sale of loans		$	2,039		$	3,777		(46.0	)%		$	3,967		(48.6	)%		$	5,816		$	5,289		10.0	%
Service charges and fees on deposits			330			303		8.9	%			302		9.3	%			633			595		6.4	%
Loan servicing income			755			700		7.9	%			545		38.5	%			1,455			1,427		2.0	%
Bank-owned life insurance income			175			172		1.7	%			—		—	%			347			—		—	%
Other income			349			334		4.5	%			337		3.6	%			683			697		(2.0	)%
Total noninterest income		$	3,648		$	5,286		(31.0	)%		$	5,151		(29.2	)%		$	8,934		$	8,008		11.6	%

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)		6/30/2022			3/31/2022			% Change			6/30/2021			% Change			6/30/2022			6/30/2021			% Change
Gain on sale of SBA loans
Sold loan balance		$	38,442		$	39,683		(3.1	)%		$	34,107		12.7	%		$	78,125		$	45,026		73.5	%
Premium received			2,600			4,206		(38.2	)%			4,172		(37.7	)%			6,806			5,481		24.2	%
Gain recognized			2,039			3,777		(46.0	)%			3,954		(48.4	)%			5,816			5,149		13.0	%
Gain on sale of residential property loans
Sold loan balance		$	—		$	—		—	%		$	1,615		(100.0	)%		$	—		$	9,522		(100.0	)%
Gain recognized			—			—		—	%			13		(100.0	)%			—			140		(100.0	)%

The decrease in gain on sale of SBA loans was primarily due to reduced premiums received in the secondary market.

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

		Three Months Ended																		Six Months Ended
($ in thousands)		6/30/2022				3/31/2022				% Change			6/30/2021				% Change			6/30/2022				6/30/2021				% Change
Loan servicing income
Servicing income received		$	1,287			$	1,230			4.6	%		$	1,124			14.5	%		$	2,517			$	2,397			5.0	%
Servicing assets amortization			(532	)			(530	)		0.4	%			(579	)		(8.1	)%			(1,062	)			(970	)		9.5	%
Loan servicing income		$	755			$	700			7.9	%		$	545			38.5	%		$	1,455			$	1,427			2.0	%
Underlying loans at end of period		$	537,990			$	531,183			1.3	%		$	492,130			9.3	%		$	537,990			$	492,130			9.3	%

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															Six Months Ended
($ in thousands)		6/30/2022			3/31/2022			% Change			6/30/2021			% Change			6/30/2022			6/30/2021			% Change
Salaries and employee benefits		$	8,125		$	8,595		(5.5	)%		$	7,125		14.0	%		$	16,720		$	13,307		25.6	%
Occupancy and equipment			1,537			1,397		10.0	%			1,388		10.7	%			2,934			2,759		6.3	%
Professional fees			642			403		59.3	%			658		(2.4	)%			1,045			1,152		(9.3	)%
Marketing and business promotion			310			207		49.8	%			516		(39.9	)%			517			654		(20.9	)%
Data processing			441			404		9.2	%			396		11.4	%			845			773		9.3	%
Director fees and expenses			182			169		7.7	%			151		20.5	%			351			289		21.5	%
Regulatory assessments			147			141		4.3	%			179		(17.9	)%			288			387		(25.6	)%
Other expense			861			755		14.0	%			726		18.6	%			1,616			1,487		8.7	%
Total noninterest expense		$	12,245		$	12,071		1.4	%		$	11,139		9.9	%		$	24,316		$	20,808		16.9	%

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

Total loan origination cost included in salaries and employee benefits were $461 thousand, $365 thousand, and $399 thousand for the current, previous, and year-ago quarters, respectively, and $826 thousand and $1.4 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 271, 256, and 248 as of June 30, 2022, March 31, 2022, and June 30, 2021, respectively.

Professional Fees. The increase for the current quarter compared with the previous quarter was primarily to increases in internal audit and other professional fees. The decrease for the current year-to-date period compared with the previous year-to-date period was primarily due to a decrease in internal audit fees.

Marketing and Business Promotion. The increase for the current quarter compared with the previous quarter was primarily due to increases in marketing activities and advertisement. The decreases for the current quarter and year-to-date period compared with the same periods of 2021 were primarily due to a decrease in advertisement, partially offset by an increase in marketing activities.

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. The decrease for the current quarter and year-to-date periods compared with the same periods of 2021 were primarily due to a decrease in assessment rate.

Balance Sheet (Unaudited)

Total assets were $2.34 billion at June 30, 2022, an increase of $144.8 million, or 6.6%, from $2.20 billion at March 31, 2022, an increase of $194.8 million, or 9.1%, from $2.15 billion at December 31, 2021, and an increase of $284.6 million, or 13.8%, from $2.06 billion at June 30, 2021. The increases for the current quarter and year-to-date period were primarily due to increases in cash and cash equivalents, securities available-for-sale, and loans held-for-investment, supported by an increase in deposits and the ECIP capital investment.

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)		6/30/2022			3/31/2022			% Change			12/31/2021			% Change			6/30/2021			% Change
Real estate loans
Commercial property		$	1,204,142		$	1,150,101		4.7	%		$	1,105,843		8.9	%		$	997,918		20.7	%
Residential property			258,259			215,132		20.0	%			209,485		23.3	%			196,983		31.1	%
SBA property			131,420			129,400		1.6	%			129,661		1.4	%			124,251		5.8	%
Construction			12,595			9,522		32.3	%			8,252		52.6	%			13,475		(6.5	)%
Commercial and industrial loans
Commercial term			73,885			69,836		5.8	%			73,438		0.6	%			74,503		(0.8	)%
Commercial lines of credit			111,916			107,406		4.2	%			100,936		10.9	%			90,286		24.0	%
SBA commercial term			16,985			16,880		0.6	%			17,640		(3.7	)%			19,614		(13.4	)%
SBA PPP			1,583			22,926		(93.1	)%			65,329		(97.6	)%			181,019		(99.1	)%
Other consumer loans			22,225			21,752		2.2	%			21,621		2.8	%			21,607		2.9	%
Loans held-for-investment			1,833,010			1,742,955		5.2	%			1,732,205		5.8	%			1,719,656		6.6	%
Loans held-for-sale			9,627			18,340		(47.5	)%			37,026		(74.0	)%			11,255		(14.5	)%
Total loans		$	1,842,637		$	1,761,295		4.6	%		$	1,769,231		4.1	%		$	1,730,911		6.5	%

The increase in loans held-for-investment for the current quarter was primarily due to new funding of $160.9 million and advances on lines of credit of $40.1 million, partially offset by pay-downs and pay-offs of $110.9 million. The increase for the current year-to-date period was primarily due to new funding of $278.9 million and advances of lines of credit of $69.3 million, partially offset by pay-downs and pay-offs of $247.3 million. SBA PPP loans of $21.3 million and $63.7 million were paid off through regular payments or forgiveness from SBA during the current quarter and year-to-date period, respectively.

The decrease in loans held-for-sale for the current quarter was primarily due to sales of $38.4 million, partially offset by new funding of $29.9 million. The decrease for the current year-to-date period was primarily due to sales of $78.1 million, partially offset by new funding of $51.1 million.

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

($ in thousands)		6/30/2022			3/31/2022			% Change			12/31/2021			% Change			6/30/2021			% Change
Real estate loans
Commercial property		$	20,425		$	21,195		(3.6	)%		$	20,194		1.1	%		$	15,277		33.7	%
SBA property			4,265			3,142		35.7	%			3,068		39.0	%			6,191		(31.1	)%
Construction			12,080			6,528		85.0	%			5,180		133.2	%			6,233		93.8	%
Commercial and industrial loans
Commercial term			2,347			2,674		(12.2	)%			1,097		113.9	%			2,950		(20.4	)%
Commercial lines of credit			218,850			175,742		24.5	%			169,000		29.5	%			164,648		32.9	%
SBA commercial term			383			950		(59.7	)%			149		157.0	%			—		—	%
Other consumer loans			1,086			1,080		0.6	%			595		82.5	%			118		820.3	%
Total commitments to extend credit		$	259,436		$	211,311		22.8	%		$	199,283		30.2	%		$	195,417		32.8	%

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)		6/30/2022				3/31/2022				% Change			12/31/2021				% Change			6/30/2021				% Change
Nonaccrual loans
Real estate loans
Residential property		$	450			$	461			(2.4	)%		$	—			—	%		$	—			—	%
SBA property			564				733			(23.1	)%			746			(24.4	)%			781			(27.8	)%
Commercial and industrial loans
SBA commercial term			185				199			(7.0	)%			213			(13.1	)%			600			(69.2	)%
Other consumer loans			24				25			(4.0	)%			35			(31.4	)%			65			(63.1	)%
Total nonaccrual loans held-for-investment			1,223				1,418			(13.8	)%			994			23.0	%			1,446			(15.4	)%
Loans past due 90 days or more and still accruing			—				—			—	%			—			—	%			—			—	%
Non-performing loans (“NPLs”)			1,223				1,418			(13.8	)%			994			23.0	%			1,446			(15.4	)%
Other real estate owned (“OREO”)			808				—			—	%			—			—	%			—			—	%
Non-performing assets (“NPAs”)		$	2,031			$	1,418			43.2	%		$	994			104.3	%		$	1,446			40.5	%
Loans past due and still accruing
Past due 30 to 59 days		$	682			$	119			473.1	%		$	549			24.2	%		$	227			200.4	%
Past due 60 to 89 days			—				1			(100.0	)%			5			(100.0	)%			—			—	%
Past due 90 days or more			—				—			—	%			—			—	%			—			—	%
Total loans past due and still accruing		$	682			$	120			468.3	%			554			23.1	%		$	227			200.4	%
Troubled debt restructurings (“TDRs”)
Accruing TDRs		$	555			$	565			(1.8	)%		$	576			(3.6	)%		$	605			(8.3	)%
Nonaccrual TDRs			10				15			(33.3	)%			17			(41.2	)%			30			(66.7	)%
Total TDRs		$	565			$	580			(2.6	)%		$	593			(4.7	)%		$	635			(11.0	)%
Special mention loans		$	6,313			$	5,562			13.5	%		$	18,092			(65.1	)%		$	18,238			(65.4	)%
Classified assets
Classified loans		$	3,980			$	5,377			(26.0	)%		$	5,168			(23.0	)%		$	9,666			(58.8	)%
OREO			808				—			—	%			—			—	%			—			—	%
Classified assets		$	4,788			$	5,377			(11.0	)%		$	5,168			(7.4	)%		$	9,666			(50.5	)%
NPLs to loans held-for-investment			0.07	%			0.08	%						0.06	%						0.08	%
NPAs to total assets			0.09	%			0.06	%						0.05	%						0.07	%
Classified assets to total assets			0.20	%			0.24	%						0.24	%						0.47	%

Loan Modifications Related to the COVID-19 Pandemic

The Company had provided modifications, including interest only payments or payment deferrals, to customers that were adversely affected by the COVID-19 pandemic. The loan modifications met all criteria under the Coronavirus Aid, Relief, and Economic Security Act. Therefore, the modified loans were not considered TDRs. As of June 30, 2022 and March 31, 2022, the Company had no loans under modified terms related to the COVID-19 pandemic. Total loans under modified terms related to the COVID-19 pandemic totaled $16.2 million at June 30, 2021.

The Company had classified the loans that were granted modifications related to the COVID-19 pandemic in excess of 6 months on a cumulative basis as special mention or classified. Special mention and classified loans included $4.0 million and $1.5 million, respectively, at June 30, 2022, $4.1 million and $2.7 million, respectively, at March 31, 2022, $15.6 million and $2.7 million, respectively, December 31, 2021, and $16.4 million and $6.2 million, respectively, at June 30, 2021, of the loans that were granted such modifications.

Investment Securities

Total investment securities were $139.1 million at June 30, 2022, an increase of $7.7 million, or 5.9%, from $131.3 million at March 31, 2022, an increase of $15.9 million, or 12.9%, from $123.2 million at December 31, 2021, and an increase of $3.6 million, or 2.6%, from $135.5 million at June 30, 2021. The increase for the current quarter was primarily due to purchases of $18.1 million, partially offset by principal pay-downs and calls of $6.2 million, a fair value decrease of $4.1 million, and net premium amortization of $97 thousand. The increase for the current year-to-date period was primarily due to purchases of $38.0 million, partially offset by principal pay-downs and calls of $12.3 million, a fair value decrease of $9.6 million, and net premium amortization of $232 thousand.

Deposits

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

		6/30/2022						3/31/2022						12/31/2021						6/30/2021
($ in thousands)		Amount			% to Total			Amount			% to Total			Amount			% to Total			Amount			% to Total
Noninterest-bearing demand deposits		$	988,454		49.5	%		$	891,797		46.7	%		$	830,383		44.5	%		$	795,741		44.3	%
Interest-bearing deposits
Savings			14,686		0.7	%			15,037		0.8	%			16,299		0.9	%			11,671		0.6	%
NOW			18,881		0.9	%			17,543		0.9	%			20,185		1.1	%			21,725		1.2	%
Retail money market accounts			458,605		22.9	%			431,057		22.5	%			386,041		20.5	%			358,575		19.9	%
Brokered money market accounts			1		0.1	%			1		0.1	%			1		0.1	%			4		0.1	%
Retail time deposits of
$250,000 or less			235,956		11.8	%			246,100		12.8	%			256,956		13.8	%			271,531		15.1	%
More than $250,000			186,024		9.3	%			173,844		9.1	%			172,269		9.2	%			173,401		9.6	%
State and brokered time deposits			95,000		4.8	%			135,000		7.1	%			185,000		9.9	%			165,000		9.2	%
Total interest-bearing deposits			1,009,153		50.5	%			1,018,582		53.3	%			1,036,751		55.5	%			1,001,907		55.7	%
Total deposits		$	1,997,607		100.0	%		$	1,910,379		100.0	%		$	1,867,134		100.0	%		$	1,797,648		100.0	%

The increases in noninterest-bearing demand deposits and retail money market accounts for the current quarter and year-to-date period were primarily due to the overall liquid deposit market.

The increase in retail time deposits for the current quarter was primarily due to new accounts of $68.8 million, renewals of the matured accounts of $154.0 million and balance increases of $4.4 million, partially offset by matured and closed accounts of $225.2 million. The decrease for the current year was primarily due to matured and closed accounts of $413.7 million, partially offset by new accounts of $99.4 million, renewals of the matured accounts of $297.6 million and balance increases of $9.5 million.

Liquidity

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

($ in thousands)		6/30/2022
Cash and cash equivalents		$	299,910
Cash and cash equivalents to total assets			12.8	%
Available borrowing capacity
FHLB advances		$	549,920
Federal Reserve Discount Window			21,955
Overnight federal funds lines			65,000
Total		$	636,875
Total available borrowing capacity to total assets			27.2	%

Shareholders’ Equity

Shareholders’ equity was $334.4 million at June 30, 2022, an increase of $73.3 million, or 28.1%, from $261.1 million at March 31, 2022, an increase of $78.1 million, or 30.5%, from $256.3 million at December 31, 2021, and an increase of $95.4 million, or 39.9%, from $238.9 million at June 30, 2021. The increases for the current quarter and year-to-date period were primarily due to net income and issuance of preferred stock (as discussed below), partially offset by cash dividends declared on common stock and a decrease in accumulated other comprehensive income (loss). The Company declared cash dividends of $2.2 million and $4.5 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.

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 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. Dividends will be payable quarterly in arrears on March 15, June 15, September 15, and December 15.

The Series C Preferred Stock may be redeemed at the option of the Company on or after the fifth anniversary of issuance (or earlier in the event of loss of regulatory capital treatment), subject to the approval of the appropriate federal banking regulator and in accordance with the federal banking agencies’ regulatory capital regulations.

Established by the Consolidated Appropriations Act, 2021, the ECIP was created to encourage low- and moderate-income community financial institutions and minority depository institutions to provide loans, grants, and forbearance for small businesses, minority-owned businesses, and consumers, especially low-income and underserved communities, including persistent poverty counties, that may be disproportionately impacted by the economic effect of the COVID-19 pandemic by providing direct and indirect capital investments in low- and moderate-income community financial institutions.

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 dates indicated:

		6/30/2022			3/31/2022			12/31/2021			6/30/2021			Well Capitalized Requirements
PCB Bancorp
Common tier 1 capital (to risk-weighted assets)		14.44	%		14.77	%		14.79	%		15.17	%		N/A
Total capital (to risk-weighted assets)		19.25	%		15.97	%		16.04	%		16.43	%		N/A
Tier 1 capital (to risk-weighted assets)		18.11	%		14.77	%		14.79	%		15.17	%		N/A
Tier 1 capital (to average assets)		15.37	%		12.22	%		12.11	%		11.76	%		N/A
Pacific City Bank
Common tier 1 capital (to risk-weighted assets)		17.79	%		14.43	%		14.48	%		14.88	%		6.5	%
Total capital (to risk-weighted assets)		18.92	%		15.63	%		15.73	%		16.13	%		10.0	%
Tier 1 capital (to risk-weighted assets)		17.79	%		14.43	%		14.48	%		14.88	%		8.0	%
Tier 1 capital (to average assets)		15.09	%		11.94	%		11.85	%		11.53	%		5.0	%

Name Change of Pacific City Bank to PCB Bank

On August 25, 2022, the Pacific City Bank will change its name to PCB Bank. In addition, the Company introduced a new logo, which will also be utilized by the Bank after its name change. In accordance with the name change, the Bank will update its website, branch signage and marketing collateral.

“As we continued to grow and expand our national presence, we felt that now is a good time to announce our new name which is better suited to the broad geographic reach of our institution now and in the future,” stated Henry Kim, President and Chief Executive Officer.

About PCB Bancorp

PCB Bancorp is the bank holding company for Pacific City 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)
		6/30/2022				3/31/2022				% Change			12/31/2021				% Change			6/30/2021				% Change
Assets
Cash and due from banks		$	23,125			$	19,693			17.4	%		$	15,222			51.9	%		$	18,417			25.6	%
Interest-bearing deposits in other financial institutions			276,785				230,519			20.1	%			188,063			47.2	%			156,204			77.2	%
Total cash and cash equivalents			299,910				250,212			19.9	%			203,285			47.5	%			174,621			71.7	%
Securities available-for-sale, at fair value			139,067				131,345			5.9	%			123,198			12.9	%			135,479			2.6	%
Loans held-for-sale			9,627				18,340			(47.5	)%			37,026			(74.0	)%			11,255			(14.5	)%
Loans held-for-investment			1,833,010				1,742,955			5.2	%			1,732,205			5.8	%			1,719,656			6.6	%
Allowance for loan losses			(21,071	)			(21,198	)		(0.6	)%			(22,381	)		(5.9	)%			(24,889	)		(15.3	)%
Net loans held-for-investment			1,811,939				1,721,757			5.2	%			1,709,824			6.0	%			1,694,767			6.9	%
Premises and equipment, net			3,633				3,106			17.0	%			3,098			17.3	%			3,576			1.6	%
Federal Home Loan Bank and other bank stock			10,183				8,577			18.7	%			8,577			18.7	%			8,577			18.7	%
Other real estate owned, net			808				—			—	%			—			—	%			—			—	%
Bank-owned life insurance			29,705				29,530			0.6	%			29,358			1.2	%			—			—	%
Deferred tax assets, net			11,869				11,895			(0.2	)%			10,824			9.7	%			7,892			50.4	%
Servicing assets			7,716				7,533			2.4	%			7,269			6.1	%			6,482			19.0	%
Operating lease assets			6,512				6,511			—	%			6,786			(4.0	)%			6,595			(1.3	)%
Accrued interest receivable			5,212				5,050			3.2	%			5,368			(2.9	)%			6,741			(22.7	)%
Other assets			8,379				5,886			42.4	%			5,122			63.6	%			4,018			108.5	%
Total assets		$	2,344,560			$	2,199,742			6.6	%		$	2,149,735			9.1	%		$	2,060,003			13.8	%
Liabilities
Deposits
Noninterest-bearing demand		$	988,454			$	891,797			10.8	%		$	830,383			19.0	%		$	795,741			24.2	%
Savings, NOW and money market accounts			492,173				463,638			6.2	%			422,526			16.5	%			391,975			25.6	%
Time deposits of $250,000 or less			270,956				281,100			(3.6	)%			341,956			(20.8	)%			336,531			(19.5	)%
Time deposits of more than $250,000			246,024				273,844			(10.2	)%			272,269			(9.6	)%			273,401			(10.0	)%
Total deposits			1,997,607				1,910,379			4.6	%			1,867,134			7.0	%			1,797,648			11.1	%
Federal Home Loan Bank advances			—				10,000			(100.0	)%			10,000			(100.0	)%			10,000			(100.0	)%
Operating lease liabilities			7,067				7,176			(1.5	)%			7,444			(5.1	)%			7,338			(3.7	)%
Accrued interest payable and other liabilities			5,511				11,129			(50.5	)%			8,871			(37.9	)%			6,076			(9.3	)%
Total liabilities			2,010,185				1,938,684			3.7	%			1,893,449			6.2	%			1,821,062			10.4	%
Commitments and contingent liabilities
Shareholders’ equity
Preferred stock			69,141				—			—	%			—			—	%			—			—	%
Common stock			155,842				155,614			0.1	%			154,992			0.5	%			154,796			0.7	%
Retained earnings			115,992				109,142			6.3	%			101,140			14.7	%			83,002			39.7	%
Accumulated other comprehensive income (loss), net			(6,600	)			(3,698	)		NM				154			NM				1,143			NM
Total shareholders’ equity			334,375				261,058			28.1	%			256,286			30.5	%			238,941			39.9	%
Total liabilities and shareholders’ equity		$	2,344,560			$	2,199,742			6.6	%		$	2,149,735			9.1	%		$	2,060,003			13.8	%
Outstanding common shares			14,956,760				14,944,663							14,865,825							14,854,315
Book value per common share (1)		$	22.36			$	17.47						$	17.24						$	16.09
TCE per common share (2)		$	17.73			$	17.47						$	17.24						$	16.09
Total loan to total deposit ratio			92.24	%			92.20	%						94.76	%						96.29	%
Noninterest-bearing deposits to total deposits			49.48	%			46.68	%						44.47	%						44.27	%

(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
		6/30/2022				3/31/2022				% Change			6/30/2021				% Change			6/30/2022				6/30/2021				% Change
Interest and dividend income
Loans, including fees		$	21,243			$	20,190			5.2	%		$	19,511			8.9	%		$	41,433			$	38,255			8.3	%
Investment securities			668				476			40.3	%			375			78.1	%			1,144				735			55.6	%
Other interest-earning assets			535				228			134.6	%			165			224.2	%			763				319			139.2	%
Total interest income			22,446				20,894			7.4	%			20,051			11.9	%			43,340				39,309			10.3	%
Interest expense
Deposits			1,041				850			22.5	%			1,000			4.1	%			1,891				2,311			(18.2	)%
Other borrowings			54				51			5.9	%			55			(1.8	)%			105				183			(42.6	)%
Total interest expense			1,095				901			21.5	%			1,055			3.8	%			1,996				2,494			(20.0	)%
Net interest income			21,351				19,993			6.8	%			18,996			12.4	%			41,344				36,815			12.3	%
Reversal for loan losses			(109	)			(1,191	)		(90.8	)%			(934	)		(88.3	)%			(1,300	)			(2,081	)		(37.5	)%
Net interest income after reversal for loan losses			21,460				21,184			1.3	%			19,930			7.7	%			42,644				38,896			9.6	%
Noninterest income
Gain on sale of loans			2,039				3,777			(46.0	)%			3,967			(48.6	)%			5,816				5,289			10.0	%
Service charges and fees on deposits			330				303			8.9	%			302			9.3	%			633				595			6.4	%
Loan servicing income			755				700			7.9	%			545			38.5	%			1,455				1,427			2.0	%
Bank-owned life insurance income			175				172			1.7	%			—			—	%			347				—			—	%
Other income			349				334			4.5	%			337			3.6	%			683				697			(2.0	)%
Total noninterest income			3,648				5,286			(31.0	)%			5,151			(29.2	)%			8,934				8,008			11.6	%
Noninterest expense
Salaries and employee benefits			8,125				8,595			(5.5	)%			7,125			14.0	%			16,720				13,307			25.6	%
Occupancy and equipment			1,537				1,397			10.0	%			1,388			10.7	%			2,934				2,759			6.3	%
Professional fees			642				403			59.3	%			658			(2.4	)%			1,045				1,152			(9.3	)%
Marketing and business promotion			310				207			49.8	%			516			(39.9	)%			517				654			(20.9	)%
Data processing			441				404			9.2	%			396			11.4	%			845				773			9.3	%
Director fees and expenses			182				169			7.7	%			151			20.5	%			351				289			21.5	%
Regulatory assessments			147				141			4.3	%			179			(17.9	)%			288				387			(25.6	)%
Other expense			861				755			14.0	%			726			18.6	%			1,616				1,487			8.7	%
Total noninterest expense			12,245				12,071			1.4	%			11,139			9.9	%			24,316				20,808			16.9	%
Income before income taxes			12,863				14,399			(10.7	)%			13,942			(7.7	)%			27,262				26,096			4.5	%
Income tax expense			3,771				4,159			(9.3	)%			4,098			(8.0	)%			7,930				7,692			3.1	%
Net income		$	9,092			$	10,240			(11.2	)%		$	9,844			(7.6	)%		$	19,332			$	18,404			5.0	%
Earnings per common share
Basic		$	0.61			$	0.69						$	0.65						$	1.29			$	1.20
Diluted		$	0.60			$	0.67						$	0.64						$	1.27			$	1.19
Average common shares
Basic			14,883,768				14,848,014							15,115,561							14,865,990				15,249,210
Diluted			15,122,452				15,141,693							15,309,873							15,138,493				15,425,308
Dividend paid per common share		$	0.15			$	0.15						$	0.10						$	0.30			$	0.20
Return on average assets (1)			1.65	%			1.92	%						1.96	%						1.78	%			1.85	%
Return on average shareholders’ equity (1)			12.48	%			16.01	%						16.49	%						14.13	%			15.59	%
Return on average TCE (1), (2)			13.85	%			16.01	%						16.49	%						14.92	%			15.59	%
Efficiency ratio (3)			48.98	%			47.75	%						46.13	%						48.36	%			46.42	%

(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
		6/30/2022										3/31/2022										6/30/2021
		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)		$	1,804,368			$	21,243		4.72	%		$	1,773,376			$	20,190		4.62	%		$	1,691,704			$	19,511		4.63	%
Mortgage-backed securities			88,032				416		1.90	%			84,223				307		1.48	%			92,732				233		1.01	%
Collateralized mortgage obligation			25,929				125		1.93	%			18,242				48		1.07	%			22,929				54		0.94	%
SBA loan pool securities			11,164				43		1.54	%			10,095				38		1.53	%			10,828				51		1.89	%
Municipal bonds (2)			5,347				37		2.78	%			5,632				36		2.59	%			5,760				37		2.58	%
Corporate bonds			4,852				47		3.89	%			5,038				47		3.78	%			—				—		—	%
Other interest-earning assets			195,633				535		1.10	%			198,918				228		0.46	%			164,710				165		0.40	%
Total interest-earning assets			2,135,325				22,446		4.22	%			2,095,524				20,894		4.04	%			1,988,663				20,051		4.04	%
Noninterest-earning assets
Cash and due from banks			20,801										20,385										19,080
Allowance for loan losses			(21,204	)									(22,377	)									(25,559	)
Other assets			73,137										67,600										36,605
Total noninterest-earning assets			72,734										65,608										30,126
Total assets		$	2,208,059									$	2,161,132									$	2,018,789
Liabilities and Shareholders’ Equity
Interest-bearing liabilities
Deposits
NOW and money market accounts		$	464,829				430		0.37	%		$	431,981				313		0.29	%		$	400,314				317		0.32	%
Savings			14,989				2		0.05	%			15,644				2		0.05	%			11,588				1		0.03	%
Time deposits			521,606				609		0.47	%			586,387				535		0.37	%			615,035				682		0.44	%
Total interest-bearing deposits			1,001,424				1,041		0.42	%			1,034,012				850		0.33	%			1,026,937				1,000		0.39	%
Other borrowings			11,132				54		1.95	%			10,400				51		1.99	%			19,012				55		1.16	%
Total interest-bearing liabilities			1,012,556				1,095		0.43	%			1,044,412				901		0.35	%			1,045,949				1,055		0.40	%
Noninterest-bearing liabilities
Noninterest-bearing demand			889,691										840,626										720,105
Other liabilities			13,677										16,727										13,287
Total noninterest-bearing liabilities			903,368										857,353										733,392
Total liabilities			1,915,924										1,901,765										1,779,341
Total shareholders’ equity			292,135										259,367										239,448
Total liabilities and shareholders’ equity		$	2,208,059									$	2,161,132									$	2,018,789
Net interest income						$	21,351									$	19,993									$	18,996
Net interest spread (3)									3.79	%									3.69	%									3.64	%
Net interest margin (4)									4.01	%									3.87	%									3.83	%
Total deposits		$	1,891,115			$	1,041		0.22	%		$	1,874,638			$	850		0.18	%		$	1,747,042			$	1,000		0.23	%
Total funding (5)		$	1,902,247			$	1,095		0.23	%		$	1,885,038			$	901		0.19	%		$	1,766,054			$	1,055		0.24	%

(1)		Total loans include both loans held-for-sale and loans held-for-investment, net of deferred loan fees and costs.
(2)		The yield on municipal bonds has not been computed on a tax-equivalent basis.
(3)		Net interest spread is calculated by subtracting average rate on interest-bearing liabilities from average yield on interest-earning assets.
(4)		Net interest margin is calculated by dividing annualized net interest income by average interest-earning assets.
(5)		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)
		Six Months Ended
		6/30/2022										6/30/2021
		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)		$	1,788,958			$	41,433		4.67	%		$	1,666,808			$	38,255		4.63	%
Mortgage-backed securities			86,138				723		1.69	%			87,140				448		1.04	%
Collateralized mortgage obligation			22,106				173		1.58	%			23,903				111		0.94	%
SBA loan pool securities			10,633				81		1.54	%			11,248				103		1.85	%
Municipal bonds (2)			5,489				73		2.68	%			5,782				73		2.55	%
Corporate bonds			4,944				94		3.83	%			—				—		—	%
Other interest-earning assets			197,267				763		0.78	%			176,864				319		0.36	%
Total interest-earning assets			2,115,535				43,340		4.13	%			1,971,745				39,309		4.02	%
Noninterest-earning assets
Cash and due from banks			20,594										19,076
Allowance for loan losses			(21,787	)									(26,211	)
Other assets			70,384										38,481
Total noninterest-earning assets			69,191										31,346
Total assets		$	2,184,726									$	2,003,091
Liabilities and Shareholders’ Equity
Interest-bearing liabilities
Deposits
NOW and money market accounts		$	448,496				743		0.33	%		$	403,948				650		0.32	%
Savings			15,315				4		0.05	%			11,101				2		0.04	%
Time deposits			553,818				1,144		0.42	%			625,267				1,659		0.54	%
Total interest-bearing deposits			1,017,629				1,891		0.37	%			1,040,316				2,311		0.45	%
Other borrowings			10,768				105		1.97	%			47,128				183		0.78	%
Total interest-bearing liabilities			1,028,397				1,996		0.39	%			1,087,444				2,494		0.46	%
Noninterest-bearing liabilities
Noninterest-bearing demand			865,294										663,902
Other liabilities			15,194										13,618
Total noninterest-bearing liabilities			880,488										677,520
Total liabilities			1,908,885										1,764,964
Total shareholders’ equity			275,841										238,127
Total liabilities and shareholders’ equity		$	2,184,726									$	2,003,091
Net interest income						$	41,344									$	36,815
Net interest spread (3)									3.74	%									3.56	%
Net interest margin (4)									3.94	%									3.77	%
Total deposits		$	1,882,923			$	1,891		0.20	%		$	1,704,218			$	2,311		0.27	%
Total funding (5)		$	1,893,691			$	1,996		0.21	%		$	1,751,346			$	2,494		0.29	%

(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)			6/30/2022				3/31/2022				12/31/2021				6/30/2021
Loans held-for-investment	(a)		$	1,833,010			$	1,742,955			$	1,732,205			$	1,719,656
Less: SBA PPP loans	(b)			1,583				22,926				65,329				181,019
Loans held-for-investment, excluding SBA PPP loans	(c)=(a)-(b)		$	1,831,427			$	1,720,029			$	1,666,876			$	1,538,637
Allowance	(d)		$	21,071			$	21,198			$	22,381			$	24,889
Allowance to loans held-for-investment ratio	(d)/(a)			1.15	%			1.22	%			1.29	%			1.45	%
Adjusted Allowance to loans held-for-investment ratio	(d)/(c)			1.15	%			1.23	%			1.34	%			1.62	%

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												Six Months Ended
			6/30/2022				3/31/2022				6/30/2021				6/30/2022				6/30/2021
Average total shareholders' equity	(a)		$	292,135			$	259,367			$	239,448			$	275,841			$	238,127
Less: average preferred stock	(b)			28,872				—				—				14,516				—
Average TCE	(c)=(a)-(b)		$	263,263			$	259,367			$	239,448			$	261,325			$	238,127
Net income	(d)		$	9,092			$	10,240			$	9,844			$	19,332			$	18,404
Return on average shareholder's equity (1)	(d)/(a)			12.48	%			16.01	%			16.49	%			14.13	%			15.59	%
Return on average TCE (1)	(d)/(c)			13.85	%			16.01	%			16.49	%			14.92	%			15.59	%
(1) Annualized.

($ in thousands, except per share data)			6/30/2022				3/31/2022				12/31/2021				6/30/2021
Total shareholders' equity	(a)		$	334,375			$	261,058			$	256,286			$	238,941
Less: preferred stock	(b)			69,141				—				—				—
TCE	(c)=(a)-(b)		$	265,234			$	261,058			$	256,286			$	238,941
Outstanding common shares	(d)			14,956,760				14,944,663				14,865,825				14,854,315
Book value per common share	(a)/(d)		$	22.36			$	17.47			$	17.24			$	16.09
TCE per common share	(c)/(d)		$	17.73			$	17.47			$	17.24			$	16.09
Total assets	(e)		$	2,344,560			$	2,199,742			$	2,149,735			$	2,060,003
Total shareholders' equity to total assets	(a)/(e)			14.26	%			11.87	%			11.92	%			11.60	%
TCE to total assets	(c)/(e)			11.31	%			11.87	%			11.92	%			11.60	%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220728005118/en/

Timothy Chang

Executive Vice President & Chief Financial Officer

213-210-2000

Source: PCB Bancorp

FAQ

What were PCB Bancorp's earnings in Q2 2022?

PCB Bancorp reported net income of $9.1 million, or $0.60 per diluted share, for Q2 2022.

How much did total assets increase for PCB Bancorp in Q2 2022?

Total assets increased by 6.6% to $2.34 billion in Q2 2022.

What is the net interest margin reported by PCB Bancorp?

PCB Bancorp reported a net interest margin of 4.01% for Q2 2022.

When is Pacific City Bank changing its name to PCB Bank?

Pacific City Bank will officially change its name to PCB Bank on August 25, 2022.