PCB - PCB Bancorp Reports Earnings of $5.9 million for Q4 2023 and $30.7 million for 2023

January, 25 2024 04:10 PM Pacific City Financial Corporation

PCB Bancorp (the “Company”) (NASDAQ: PCB), the holding company of PCB Bank (the “Bank”), today reported net income of $5.9 million, or $0.41 per diluted common share, for the fourth quarter of 2023, compared with $7.0 million, or $0.49 per diluted common share, for the previous quarter and $8.7 million, or $0.58 per diluted common share, for the year-ago quarter. For 2023, net income was $30.7 million, or $2.12 per diluted common share, compared with $35.0 million and $2.31 per diluted common share, for the previous year.

Q4 2023 and Full Year Highlights

Net income totaled $5.9 million, or $0.41 per diluted common share, for the current quarter and $30.7 million, or $2.12 per diluted common share for the current year;
Recorded a provision for credit losses ^(1),(2) of $1.7 million for the current quarter compared with $751 thousand for the previous quarter and $1.1 million for the year-ago quarter. For the current year, provision (reversal) for the credit losses was $(132) thousand compared with $3.6 million for the previous year;
Allowance for Credit Losses (“ACL”) ⁽¹⁾ on loans to loans held-for-investment ratio was 1.19% at December 31, 2023 compared with 1.18% at September 30, 2023 and 1.22% at December 31, 2022;
Net interest income was $21.9 million for the current quarter compared with $22.4 million for the previous quarter and $24.3 million for the year-ago quarter. Net interest margin was 3.40% for the current quarter compared with 3.57% for the previous quarter and 4.15% for the year-ago quarter. For the current year, net interest income and net interest margin were $88.5 million and 3.57%, respectively, compared with $89.6 million and 4.08%, respectively, for the previous year;
Gain on sale of loans was $803 thousand for the current quarter compared with $689 thousand for the previous quarter and $759 thousand for the year-ago quarter. For the current year, gain on sale of loans was $3.6 million compared with $8.0 million for the previous year;
Total assets were $2.79 billion at December 31, 2023, an increase of $221.5 million, or 8.6%, from $2.57 billion at September 30, 2023, and an increase of $369.5 million, or 15.3%, from $2.42 billion at December 31, 2022;
Loans held-for-investment were $2.32 billion at December 31, 2023, an increase of $155.8 million, or 7.2%, from $2.17 billion at September 30, 2023, and an increase of $277.4 million, or 13.6%, from $2.05 billion at December 31, 2022;
Total deposits were $2.35 billion at December 31, 2023, an increase of $159.5 million, or 7.3%, from $2.19 billion at September 30, 2023, and an increase of $305.6 million, or 14.9%, from $2.05 billion at December 31, 2022; and
The Company repurchased and retired 60,074 shares of common stock during the current quarter. For the current year, the Company repurchased and retired 512,657 shares of common stock.

“We are pleased with our fourth quarter and full-year performance. Our results reflect our solid business strategy of strong relationship banking, which continues to provide strong loan funding opportunities and stable operating performance that has positioned us well to overcome the continued economic uncertainties,” said Henry Kim, President and Chief Executive Officer. “PCB’s performance for the fourth quarter of 2023 benefited from strong loan growth and higher yields on interest-earning assets. However, the continued higher interest rate environment and its effect on our funding costs resulted in moderate compression in net interest margin during the quarter. During the quarter loan balance increased 7.1% to $2.3 billion, deposit balance increased 7.3% to $2.4 billion, and we continue to maintain very strong credit metrics with ACL to loans ratio of 1.19%, and non-performing assets and classified assets to total assets ratios of 0.23% and 0.34%, respectively.”

Mr. Kim added, “As we look ahead in 2024, PCB is well positioned to continue delivering solid results with emphasis on strong balance sheet and sound asset quality with robust capital levels that are above our peers to operate in all economic cycles and changing market conditions.”

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

(1)

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

(2)

Financial Highlights (Unaudited)





($ in thousands, except per share data)

Three Months Ended

Year Ended

12/31/2023

9/30/2023

% Change

12/31/2022

% Change

12/31/2023

12/31/2022

% Change
Net income

$
5,908


$
7,023


(15.9
)%

$
8,702


(32.1
)%

$
30,705


$
34,987


(12.2
)%
Diluted earnings per common share

$
0.41


$
0.49


(16.3
)%

$
0.58


(29.3
)%

$
2.12


$
2.31


(8.2
)%

















Net interest income

$
21,924


$
22,449


(2.3
)%

$
24,265


(9.6
)%

$
88,504


$
89,632


(1.3
)%
Provision (reversal) for credit losses ⁽¹⁾


1,698



751


126.1
%


1,149


47.8
%


(132
)


3,602


NM
Noninterest income


2,503



2,502


—
%


2,389


4.8
%


10,683



14,499


(26.3
)%
Noninterest expense


14,469



14,207


1.8
%


13,115


10.3
%


56,057



51,126


9.6
%

















Return on average assets ⁽²⁾


0.89
%


1.09
%




1.44
%




1.20
%


1.54
%


Return on average shareholders’ equity ⁽²⁾


6.82
%


8.12
%




10.31
%




9.02
%


11.42
%


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


8.54
%


10.17
%




12.99
%




11.31
%


13.23
%


Net interest margin ⁽²⁾


3.40
%


3.57
%




4.15
%




3.57
%


4.08
%


Efficiency ratio ⁽⁴⁾


59.23
%


56.94
%




49.20
%




56.52
%


49.10
%

($ in thousands, except per share data)

12/31/2023

9/30/2023

% Change

12/31/2022

% Change
Total assets

$
2,789,506


$
2,567,974


8.6
%

$
2,420,036


15.3
%
Net loans held-for-investment


2,295,919



2,142,006


7.2
%


2,021,121


13.6
%
Total deposits


2,351,612



2,192,129


7.3
%


2,045,983


14.9
%
Book value per common share ⁽⁵⁾

$
24.46


$
23.87




$
22.94



TCE per common share ⁽³⁾

$
19.62


$
19.05




$
18.21



Tier 1 leverage ratio (consolidated)


13.43
%


13.76
%




14.33
%


Total shareholders’ equity to total assets


12.51
%


13.31
%




13.86
%


TCE to total assets ^{(3), (6)}


10.03
%


10.62
%




11.00
%

(1)

Provision for credit losses on off-balance sheet credit exposures of $57 thousand and $85 thousand, respectively, for the year-ago quarter and previous year were recorded in Other Expense on Consolidated Statements of Income (Unaudited). See Provision (reversal) for credit losses included in the Result of Operations discussion for additional information.

(2)

Ratios are presented on an annualized basis.

(3)

Non-GAAP. See “Non-GAAP Measures” for reconciliation of this measure to its most comparable GAAP measure.

(4)

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

(5)

Calculated by dividing total shareholders ’ equity by the number of outstanding common shares.

(6)

The Company did not have any intangible asset component for the presented periods.

Result of Operations (Unaudited)

Net Interest Income and Net Interest Margin

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



Three Months Ended

Year Ended
($ in thousands)

12/31/2023

9/30/2023

% Change

12/31/2022

% Change

12/31/2023

12/31/2022

% Change
Interest income/expense on
















Loans

$
37,189


$
34,651


7.3
%

$
28,786


29.2
%

$
136,029


$
95,054


43.1
%
Investment securities


1,271



1,170


8.6
%


957


32.8
%


4,679



2,907


61.0
%
Other interest-earning assets


2,491



3,031


(17.8
)%


1,833


35.9
%


10,469



3,790


176.2
%
Total interest-earning assets


40,951



38,852


5.4
%


31,576


29.7
%


151,177



101,751


48.6
%
Interest-bearing deposits


18,728



16,403


14.2
%


7,295


156.7
%


62,165



11,984


418.7
%
Borrowings


299



—


—
%


16


1,768.8
%


508



135


276.3
%
Total interest-bearing liabilities


19,027



16,403


16.0
%


7,311


160.3
%


62,673



12,119


417.1
%
Net interest income

$
21,924


$
22,449


(2.3
)%

$
24,265


(9.6
)%

$
88,504


$
89,632


(1.3
)%
Average balance of
















Loans

$
2,242,457


$
2,137,184


4.9
%

$
2,004,220


11.9
%

$
2,137,851


$
1,872,557


14.2
%
Investment securities


139,227



138,993


0.2
%


134,066


3.8
%


140,596



132,538


6.1
%
Other interest-earning assets


175,336



219,115


(20.0
)%


182,018


(3.7
)%


198,809



194,205


2.4
%
Total interest-earning assets

$
2,557,020


$
2,495,292


2.5
%

$
2,320,304


10.2
%

$
2,477,256


$
2,199,300


12.6
%
Interest-bearing deposits

$
1,650,132


$
1,561,582


5.7
%

$
1,269,739


30.0
%

$
1,538,234


$
1,111,449


38.4
%
Borrowings


21,000



—


—
%


1,739


1,107.6
%


9,192



6,290


46.1
%
Total interest-bearing liabilities

$
1,671,132


$
1,561,582


7.0
%

$
1,271,478


31.4
%

$
1,547,426


$
1,117,739


38.4
%
Total funding ⁽¹⁾

$
2,249,026


$
2,188,320


2.8
%

$
2,043,110


10.1
%

$
2,177,200


$
1,949,360


11.7
%
Annualized average yield/cost of















Loans


6.58
%


6.43
%




5.70
%




6.36
%


5.08
%


Investment securities


3.62
%


3.34
%




2.83
%




3.33
%


2.19
%


Other interest-earning assets


5.64
%


5.49
%




4.00
%




5.27
%


1.95
%


Total interest-earning assets


6.35
%


6.18
%




5.40
%




6.10
%


4.63
%


Interest-bearing deposits


4.50
%


4.17
%




2.28
%




4.04
%


1.08
%


Borrowings


5.65
%


—
%




3.65
%




5.53
%


2.15
%


Total interest-bearing liabilities


4.52
%


4.17
%




2.28
%




4.05
%


1.08
%


Net interest margin


3.40
%


3.57
%




4.15
%




3.57
%


4.08
%


Cost of total funding ⁽¹⁾


3.36
%


2.97
%




1.42
%




2.88
%


0.62
%


Supplementary information
















Net accretion of discount on loans

$
806


$
775


4.0
%

$
869


(7.2
)%

$
3,003


$
3,551


(15.4
)%
Net amortization of deferred loan fees

$
449


$
226


98.7
%

$
167


168.9
%

$
1,097


$
2,181


(49.7
)%

(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 compared with the previous and year-ago quarters were primarily due to increases in overall interest rates on loans from the rising interest rate environment and net amortization of deferred loan fees from the increased amount of prepayment penalties. The increase in average yield for the current year compared with the previous year was primarily due to the increase in overall interest rates on loans, partially offset by decreases in net accretion of discount on loans and net amortization of deferred loan fees from the decreased amount of SBA PPP loan payoffs.

The following table presents a composition of total loans by interest rate type accompanied with the weighted-average contractual rates as of the dates indicated:



12/31/2023

9/30/2023

12/31/2022


% to Total Loans

Weighted-Average Contractual Rate

% to Total Loans

Weighted-Average Contractual Rate

% to Total Loans

Weighted-Average Contractual Rate
Fixed rate loans

21.2
%

4.86
%

22.4
%

4.75
%

23.2
%

4.51
%
Hybrid rate loans

39.0
%

4.93
%

38.8
%

4.71
%

39.1
%

4.40
%
Variable rate loans

39.8
%

8.51
%

38.8
%

8.52
%

37.7
%

7.86
%

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

Other Interest-Earning Assets. The increases in average yield for the current quarter and year were primarily due to an increased interest rate on cash held at the Federal Reserve Bank and an increase in dividend received on Federal Home Loan Bank stock.

Interest-Bearing Deposits. The increases in average cost for the current quarter and year were primarily due to an increase in market rates and the migration of noninterest-bearing demand deposits to interest-bearing deposits attributable to the rising market rates. To retain existing and attract new customers, the Bank offers competitive rates on deposit products.

Provision (Reversal) for Credit Losses

The following table presents a composition of provision (reversal) for credit losses for the periods indicated:



Three Months Ended

Year Ended
($ in thousands)

12/31/2023

9/30/2023

% Change

12/31/2022

% Change

12/31/2023

12/31/2022

% Change
Provision for credit losses on loans

$
1,935


$
822


135.4
%

$
1,149


68.4
%

$
497


$
3,602


(86.2
)%
Provision (reversal) for credit losses on off-balance sheet credit exposure ⁽¹⁾


(237
)


(71
)

233.8
%


57


NM


(629
)


85


NM
Total provision (reversal) for credit losses

$
1,698


$
751


126.1
%

$
1,206


40.8
%

$
(132
)

$
3,687


NM

(1)

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

On January 1, 2023, the Company adopted the provisions of ASC 326, also known as the current expected credit losses (“CECL”) accounting standard, through the application of the modified retrospective transition approach. Provision (reversal) for credit losses and ACL for reporting periods beginning with January 1, 2023 are presented under ASC 326, while prior period comparisons continue to be presented under legacy ASC 450 and ASC 310 in this release. See CECL Adoption and Allowance for Credit Losses sections included in the Balance Sheet section of this release for additional information.

The provision for credit losses on loans for the current quarter was primarily due to an increase in loan held-for-investment.

Noninterest Income

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



Three Months Ended

Year Ended
($ in thousands)

12/31/2023

9/30/2023

% Change

12/31/2022

% Change

12/31/2023

12/31/2022

% Change
Gain on sale of loans

$
803


$
689


16.5
%

$
759


5.8
%

$
3,570


$
7,990


(55.3
)%
Service charges and fees on deposits


391



371


5.4
%


352


11.1
%


1,475



1,326


11.2
%
Loan servicing income


751



851


(11.8
)%


734


2.3
%


3,330



2,969


12.2
%
Bank-owned life insurance income


202



187


8.0
%


181


11.6
%


753



706


6.7
%
Other income


356



404


(11.9
)%


363


(1.9
)%


1,555



1,508


3.1
%
Total noninterest income

$
2,503


$
2,502


—
%

$
2,389


4.8
%

$
10,683


$
14,499


(26.3
)%

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



Three Months Ended

Year Ended
($ in thousands)

12/31/2023

9/30/2023

% Change

12/31/2022

% Change

12/31/2023

12/31/2022

% Change
Gain on sale of SBA loans
















Sold loan balance

$
20,751


$
17,697


17.3
%

$
17,448


18.9
%

$
82,343


$
122,886


(33.0
)%
Premium received


1,250



1,112


12.4
%


1,102


13.4
%


5,612



9,944


(43.6
)%
Gain recognized


803



689


16.5
%


759


5.8
%


3,570



7,982


(55.3
)%
Gain on sale of residential mortgage loans
















Sold loan balance

$
—


$
—


—
%

$
858


(100.0
)%

$
—


$
858


(100.0
)%
Gain recognized


—



—


—
%


8


(100.0
)%


—



8


(100.0
)%

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



Three Months Ended

Year Ended
($ in thousands)

12/31/2023

9/30/2023

% Change

12/31/2022

% Change

12/31/2023

12/31/2022

% Change
Loan servicing income
















Servicing income received

$
1,290


$
1,321


(2.3
)%

$
1,284


0.5
%

$
5,212


$
5,103


2.1
%
Servicing assets amortization


(539
)


(470
)

14.7
%


(550
)

(2.0
)%


(1,882
)


(2,134
)

(11.8
)%
Loan servicing income

$
751


$
851


(11.8
)%

$
734


2.3
%

$
3,330


$
2,969


12.2
%
Underlying loans at end of period

$
532,231


$
536,424


(0.8
)%

$
531,095


0.2
%

$
532,231


$
531,095


0.2
%

The Company services SBA loans and certain residential property loans sold to the secondary market.

Noninterest Expense

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



Three Months Ended

Year Ended
($ in thousands)

12/31/2023

9/30/2023

% Change

12/31/2022

% Change

12/31/2023

12/31/2022

% Change
Salaries and employee benefits

$
8,397


$
8,572


(2.0
)%

$
7,879


6.6
%

$
34,572


$
33,056


4.6
%
Occupancy and equipment


2,145



1,964


9.2
%


1,897


13.1
%


7,924



6,481


22.3
%
Professional fees


898



685


31.1
%


607


47.9
%


3,087



2,239


37.9
%
Marketing and business promotion


772



980


(21.2
)%


724


6.6
%


2,327



2,150


8.2
%
Data processing


393



367


7.1
%


434


(9.4
)%


1,552



1,706


(9.0
)%
Director fees and expenses


207



152


36.2
%


176


17.6
%


756



706


7.1
%
Regulatory assessments


285



281


1.4
%


159


79.2
%


1,103



597


84.8
%
Other expense


1,372



1,206


13.8
%


1,239


10.7
%


4,736



4,191


13.0
%
Total noninterest expense

$
14,469


$
14,207


1.8
%

$
13,115


10.3
%

$
56,057


$
51,126


9.6
%

Salaries and Employee Benefits. The decrease for the current quarter compared with the previous quarter was primarily due to a decrease in vacation accrual, partially offset by increases in salaries and other employee benefit expense, and incentives tied to sales of SBA loans originated at loan production offices. The increase for the current quarter compared with the year-ago quarter was primarily due to increases in salaries and other employee benefit expense, partially offset by a decrease in vacation accrual. The increase for the current year compared with the previous year was primarily due to increases in salaries and other employee benefit expense, partially offset by decreases in bonus and vacation accruals, and incentives tied to sales of SBA loans originated at loan production offices. The number of full-time equivalent employees was 270, 270 and 272 as of December 31, 2023, September 30, 2023 and December 31, 2022, respectively.

Occupancy and Equipment. The increases for the current quarter compared with the previous and year-ago quarters were primarily due to expansions of headquarters and relocation of a regional office and branches. The Company plans to relocate and consolidate a regional office and two branches into one location in Orange County, California in 2024. The increase for the current year compared with the previous year was primarily due to the expansions of headquarters and the relocation of a regional office and branches, as well as 3 new branch openings during the second half of 2022. The Company opened 3 new full-service branches in Dallas and Carrollton, Texas and Palisades Park, New Jersey during the second half of 2022.

Professional Fees. The increases for the current quarter and year were primarily due to increases in consulting and internal audit fees for enhancing internal controls and process, and professional fees related to a planned core system conversion.

Marketing and Business Promotion. The decrease for the current quarter compared with the previous quarter was primarily due to the Company’s 20 ^th anniversary celebration during the previous quarter.

Director Fees and Expenses. The increase for the current quarter compared with the previous quarter was primarily due to additional expenses related to stock options issued to directors during the current quarter.

Regulatory Assessments. The increases for the current quarter and year compared with the same periods of 2022 were due to an increase in FDIC assessment rates. The FDIC increased the initial base deposit insurance assessment rate schedules by two basis points beginning in the first quarterly assessment period of 2023.

Other Expense. The increase for the current quarter compared with the previous quarter was primarily due to increases in office expense and loan related expense. The increase for the current year was primarily due to increases in office expenses and armed guard expenses from the branch network expansion. Provision for credit losses on off-balance credit exposures of $57 thousand and $85 thousand was included in other expense for the year-ago quarter and previous year, respectively, while the provision (reversal) for the current reporting periods beginning January 1, 2023 was included in provision (reversal) for credit losses.

Balance Sheet (Unaudited)

Total assets were $2.79 billion at December 31, 2023, an increase of $221.5 million, or 8.6%, from $2.57 billion at September 30, 2023, and an increase of $369.5 million, or 15.3%, from $2.42 billion at December 31, 2022. The increases for the current quarter and year were primarily due to increases in cash and cash equivalents, loans held-for-investment and operating lease assets. The increase in operating lease assets was primarily due to renewal and additional leases of the Company’s headquarters and a new location for the relocation of a regional office and branches.

CECL Adoption

On January 1, 2023, the Company adopted the provisions of ASC 326 through the application of the modified retrospective transition approach. The initial adjustment to the ACL reflects the expected lifetime credit losses associated with the composition of financial assets within the scope of ASC 326 as of January 1, 2023, as well as management’s current expectation of future economic conditions. The Company recorded a net decrease of $1.9 million to the beginning balance of retained earnings as of January 1, 2023 for the cumulative effect adjustment, reflecting an initial adjustment to the ACL on loans of $1.1 million and the ACL on off-balance sheet credit exposures of $1.6 million, net of related deferred tax assets arising from temporary differences of $788 thousand. As a part of the adoption of ASC 326, the Company reviewed and revised certain loan segments for the Company’s ACL model. See Loan Segments Revision section of this release for a reconciliation of revised loan segments to legacy loan segments, which were utilized before the adoption of ASC 326.

Loans

The following table presents a composition of total loans (includes both loans held-for-sale and loans held-for-investment) as of the dates indicated:

($ in thousands)

12/31/2023

9/30/2023

% Change

12/31/2022

% Change
Commercial real estate:










Commercial property

$
855,270


$
814,547


5.0
%

$
772,020


10.8
%
Business property


558,772



537,351


4.0
%


526,513


6.1
%
Multifamily


132,500



132,558


—
%


124,751


6.2
%
Construction


24,843



19,246


29.1
%


17,054


45.7
%
Total commercial real estate


1,571,385



1,503,702


4.5
%


1,440,338


9.1
%
Commercial and industrial


342,002



279,608


22.3
%


249,250


37.2
%
Consumer:










Residential mortgage


389,420



363,369


7.2
%


333,726


16.7
%
Other consumer


20,645



20,926


(1.3
)%


22,749


(9.2
)%
Total consumer


410,065



384,295


6.7
%


356,475


15.0
%
Loans held-for-investment


2,323,452



2,167,605


7.2
%


2,046,063


13.6
%
Loans held-for-sale


5,155



6,693


(23.0
)%


22,811


(77.4
)%
Total loans

$
2,328,607


$
2,174,298


7.1
%

$
2,068,874


12.6
%

The increase in loans held-for-investment for the current quarter was primarily due to new funding and advances on lines of credit of $468.4 million, partially offset by pay-downs and pay-offs of $312.5 million. The increase for the current year-to-date period was primarily due to new funding and advances on lines of credit of $1.19 billion and purchases of residential mortgage loans of $15.7 million, partially offset by pay-downs and pay-offs of $923.0 million.

The decrease in loans held-for-sale for the current quarter was primarily due to sales of $20.8 million, partially offset by new funding of $19.3 million. The decrease for the current year-to-date was primarily due to sales of $82.3 million and pay-downs and pay-offs of $4.4 million, partially offset by new funding of $69.0 million.

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

($ in thousands)

12/31/2023

9/30/2023

% Change

12/31/2022

% Change
Commercial property

$
11,634


$
9,827


18.4
%

$
7,006


66.1
%
Business property


9,899



8,388


18.0
%


8,396


17.9
%
Multifamily


1,800



1,800


—
%


4,500


(60.0
)%
Construction


23,739



29,293


(19.0
)%


18,211


30.4
%
Commercial and industrial


351,025



283,119


24.0
%


254,668


37.8
%
Other consumer


3,421



271


1,162.4
%


692


394.4
%
Total commitments to extend credit


401,518



332,698


20.7
%


293,473


36.8
%
Letters of credit


6,583



6,083


8.2
%


5,392


22.1
%
Total off-balance sheet credit exposure

$
408,101


$
338,781


20.5
%

$
298,865


36.6
%

Credit Quality

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

($ in thousands)

12/31/2023

9/30/2023

% Change

12/31/2022

% Change
Nonaccrual loans










Commercial real estate:










Commercial property

$
958


$
686


39.7
%

$
—


—
%
Business property


2,865



2,964


(3.3
)%


2,985


(4.0
)%
Total commercial real estate


3,823



3,650


4.7
%


2,985


28.1
%
Commercial and industrial


68



72


(5.6
)%


—


—
%
Consumer:










Residential mortgage


—



—


—
%


372


(100.0
)%
Other consumer


25



8


212.5
%


3


733.3
%
Total consumer


25



8


212.5
%


375


(93.3
)%
Total nonaccrual loans held-for-investment


3,916



3,730


5.0
%


3,360


16.5
%
Loans past due 90 days or more and still accruing


—



—


—
%


—


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


3,916



3,730


5.0
%


3,360


16.5
%
NPLs held-for-sale


—



—


—
%


4,000


(100.0
)%
Total NPLs


3,916



3,730


5.0
%


7,360


(46.8
)%
Other real estate owned (“OREO”)


2,558



—


—
%


—


—
%
Non-performing assets (“NPAs”)

$
6,474


$
3,730


73.6
%

$
7,360


(12.0
)%
Loans past due and still accruing










Past due 30 to 59 days

$
1,394


$
654


113.1
%

$
47


2,866.0
%
Past due 60 to 89 days


34



54


(37.0
)%


87


(60.9
)%
Past due 90 days or more


—



—


—
%


—


—
%
Total loans past due and still accruing

$
1,428


$
708


101.7
%


134


965.7
%
Special mention loans

$
5,156


$
5,281


(2.4
)%

$
6,857


(24.8
)%
Classified assets









Classified loans held-for-investment

$
7,000


$
6,742


3.8
%

$
6,211


12.7
%
Classified loans held-for-sale


—



—


—
%


4,000


(100.0
)%
OREO


2,558



—


—
%


—


—
%
Classified assets

$
9,558


$
6,742


41.8
%

$
10,211


(6.4
)%
NPLs held-for-investment to loans held-for-investment


0.17
%


0.17
%




0.16
%


NPAs to total assets


0.23
%


0.15
%




0.30
%


Classified assets to total assets


0.34
%


0.26
%




0.42
%

During the current quarter, the Company recognized an OREO of $2.6 million by transferring a SBA 7(a) loan, of which its guaranteed portion was previously sold. The Company’s exposure is 25% of the OREO and 75% will be submitted to the SBA upon the sale of property. During the first quarter of 2023, NPLs held-for-sale of $4.0 million were paid-off.

Allowance for Credit Losses

The following table presents activities in ACL for the periods indicated:



Three Months Ended

Year Ended
($ in thousands)

12/31/2023

9/30/2023

% Change

12/31/2022

% Change

12/31/2023

12/31/2022

% Change
ACL on loans
















Balance at beginning of period

$
25,599


$
24,867


2.9
%

$
23,761


7.7
%

$
24,942


$
22,381


11.4
%
Impact of ASC 326 adoption


—



—


NM


—


NM


1,067



—


NM
Charge-offs


(13
)


(112
)

(88.4
)%


(28
)

(53.6
)%


(132
)


(1,199
)

(89.0
)%
Recoveries


12



22


(45.5
)%


60


(80.0
)%


1,159



158


633.5
%
Provision for credit losses on loans


1,935



822


135.4
%


1,149


68.4
%


497



3,602


(86.2
)%
Balance at end of period

$
27,533


$
25,599


7.6
%

$
24,942


10.4
%

$
27,533


$
24,942


10.4
%
Percentage to loans held-for-investment at end of period


1.19
%


1.18
%




1.22
%






1.22
%


ACL on off-balance sheet credit exposure ⁽¹⁾
















Balance at beginning of period

$
1,514


$
1,585


(4.5
)%

$
242


525.6
%

$
299


$
214


39.7
%
Impact of ASC 326 adoption


—



—


NM


—


NM


1,607



—


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


(237
)


(71
)

233.8
%


57


NM


(629
)


85


NM
Balance at end of period

$
1,277


$
1,514


(15.7
)%

$
299


327.1
%

$
1,277


$
299


327.1
%

(1)

ACL on off-balance sheet credit exposures was recorded in Accrued Interest Payable and Other Liabilities on Consolidated Balance Sheets (Unaudited).

Investment Securities

Total investment securities were $143.3 million at December 31, 2023, an increase of $4.1 million, or 2.9%, from $139.2 million at September 30, 2023, and an increase of $1.5 million, or 1.0%, from $141.9 million at December 31, 2022. The increase for the current quarter was primarily due to purchases of $1.3 million and a fair value increase of $6.4 million, partially offset by principal pay-downs and calls of $3.6 million and net premium amortization of $40 thousand. The increase for the current year was primarily due to purchases of $17.3 million and a fair value increase of $2.3 million, partially offset by principal pay-downs and calls of $17.9 million and net premium amortization of $209 thousand.

Deposits

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



12/31/2023

9/30/2023

12/31/2022
($ in thousands)

Amount

% to Total

Amount

% to Total

Amount

% to Total
Noninterest-bearing demand deposits

$
594,673


25.3
%

$
611,021


27.9
%

$
734,989


35.9
%
Interest-bearing deposits












Savings


6,846


0.3
%


6,846


0.3
%


8,579


0.4
%
NOW


16,825


0.7
%


16,076


0.7
%


11,405


0.6
%
Retail money market accounts


397,531


16.8
%


436,115


19.8
%


494,749


24.1
%
Brokered money market accounts


1


0.1
%


1


0.1
%


8


0.1
%
Retail time deposits of












$250,000 or less


456,293


19.4
%


406,407


18.5
%


295,354


14.4
%
More than $250,000


515,702


21.9
%


454,406


20.8
%


353,876


17.3
%
State and brokered time deposits


363,741


15.5
%


261,257


11.9
%


147,023


7.2
%
Total interest-bearing deposits


1,756,939


74.7
%


1,581,108


72.1
%


1,310,994


64.1
%
Total deposits

$
2,351,612


100.0
%

$
2,192,129


100.0
%

$
2,045,983


100.0
%













Estimated total deposits not covered by deposit insurance

$
947,294


40.3
%

$
983,851


44.9
%

$
1,062,111


51.9
%

The decrease in noninterest-bearing demand deposits was primarily due to strong deposit market competition and the migration to interest-bearing deposits attributable to the rising market rates. To retain existing and attract new customers, the Bank offers competitive rates on deposit products.

The increase in retail time deposits for the current quarter was primarily due to new accounts of $188.0 million, renewals of the matured accounts of $264.1 million and balance increases of $9.5 million, partially offset by matured and closed accounts of $350.4 million. The increase for the current year was primarily due to new accounts of $657.0 million, renewals of the matured accounts of $555.3 million and balance increases of $26.7 million, partially offset by matured and closed accounts of $916.2 million.

Liquidity

The following table presents a summary of the Company’s liquidity position as of December 31, 2023:

($ in thousands)

12/31/2023

12/31/2022

% Change
Cash and cash equivalents

$
242,342


$
147,031


64.8
%
Cash and cash equivalents to total assets


8.7
%


6.1
%









Available borrowing capacity






FHLB advances

$
602,976


$
561,745


7.3
%
Federal Reserve Discount Window


528,893



23,902


2,112.8
%
Overnight federal funds lines


65,000



65,000


—
%
Total

$
1,196,869


$
650,647


84.0
%
Total available borrowing capacity to total assets


42.9
%


26.9
%

During the current year, the Company increased cash and cash equivalents by $95.3 million, or 64.8%, to $242.3 million and available borrowing capacity by $546.2 million, or 84.0%, to $1.20 billion. During the current year, the Company began participating in the Borrower-in Custody Program with the Federal Reserve Bank providing additional borrowing capacity. As of December 31, 2023, the Company's cash and cash equivalents and available borrowing capacity covered approximately 151.9% of deposits not covered by deposit insurance compared to 75.1% at December 31, 2022.

Shareholders’ Equity

Shareholders’ equity was $348.9 million at December 31, 2023, an increase of $7.0 million, or 2.1%, from $341.9 million at September 30, 2023, and an increase of $13.4 million, or 4.0%, from $335.4 million at December 31, 2022. The increase for the current quarter was primarily due to net income and a decrease in other comprehensive loss of $4.5 million, partially offset by cash dividends declared on common stock of $2.6 million and repurchase of common stock of $925 thousand. The increase for the current year was primarily due to net income, cash proceeds from exercise of stock options of $1.4 million and a decrease in other comprehensive loss of $1.6 million, partially offset by cash dividend declared on common stock of $9.9 million, repurchase of common stock of $8.8 million, and cumulative effect adjustment upon adoption of ASC 326 of $1.9 million.

Stock Repurchases

On July 28, 2022, the Company’s Board of Directors approved a stock repurchase program authorizing the repurchase of up to 5% of the Company’s outstanding common stock, which represented 747,938 shares, through February 1, 2023. On January 26, 2023, the Company announced the amendment to the repurchase program, which extended the program expiration from February 1, 2023 to February 1, 2024. The Company completed the repurchase program during the first quarter of 2023. Under this repurchase program, the Company repurchased and retired 747,938 shares of common stock at a weighted-average price of $18.15 per share, totaling $13.6 million.

On August 2, 2023, the Company’s Board of Directors approved a new stock repurchase program authorizing the repurchase of up to 5% of the Company’s outstanding common stock, which represented 720,000 shares, through August 2, 2024. The Company repurchased and retired 127,276 shares of common stock at a weighted-average price of $15.58 per share, totaling $2.0 million under this repurchase program through December 31, 2023.

For the current year, the Company repurchased and retired 512,657 shares of common stock at a weighted-average price of $17.22, totaling $8.8 million.

Issuance of Preferred Stock Under the Emergency Capital Investment Program

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

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

Capital Ratios

Based on the Federal Reserve’s Small Bank Holding Company policy, the Company is not currently subject to consolidated minimum capital measurements. At such time as the Company reaches the $3 billion asset level, it will be subject to consolidated capital requirements independent of the Bank. For comparison purposes, the Company’s capital ratios are included in following table, which presents capital ratios for the Company and the Bank as of the dates indicated:



12/31/2023

9/30/2023

12/31/2022

Well Capitalized Requirements
PCB Bancorp








Common tier 1 capital (to risk-weighted assets)

12.23
%

13.07
%

13.29
%

N/A
Total capital (to risk-weighted assets)

16.39
%

17.48
%

17.83
%

N/A
Tier 1 capital (to risk-weighted assets)

15.16
%

16.24
%

16.62
%

N/A
Tier 1 capital (to average assets)

13.43
%

13.76
%

14.33
%

N/A
PCB Bank








Common tier 1 capital (to risk-weighted assets)

14.85
%

15.87
%

16.30
%

6.5
%
Total capital (to risk-weighted assets)

16.07
%

17.11
%

17.52
%

10.0
%
Tier 1 capital (to risk-weighted assets)

14.85
%

15.87
%

16.30
%

8.0
%
Tier 1 capital (to average assets)

13.16
%

13.44
%

14.05
%

5.0
%

About PCB Bancorp

PCB Bancorp is the bank holding company for PCB Bank, a California state chartered bank, offering a full suite of commercial banking services to small to medium-sized businesses, individuals and professionals, primarily in Southern California, and predominantly in Korean-American and other minority communities.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements. These forward-looking statements represent plans, estimates, objectives, goals, guidelines, expectations, intentions, projections and statements of our beliefs concerning future events, business plans, objectives, expected operating results and the assumptions upon which those statements are based. Forward-looking statements include without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and are typically identified with words such as “may,” “could,” “should,” “will,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “aim,” “intend,” “plan,” or words or phases of similar meaning. We caution that the forward-looking statements are based largely on our expectations and are subject to a number of known and unknown risks and uncertainties that are subject to change based on factors which are, in many instances, beyond our control, including but not limited to the health of the national and local economies including the impact to the Company and its customers resulting from changes to, and the level of, inflation and interest rates; the Company’s ability to maintain and grow its deposit base; loan demand and continued portfolio performance; the impact of adverse developments at other banks, including bank failures, that impact general sentiment regarding the stability and liquidity of banks that could affect the Company’s liquidity, financial performance and stock price; changes to valuations of the Company’s assets and liabilities including the allowance for credit losses, earning assets, and intangible assets; changes to the availability of liquidity sources including borrowing lines and the ability to pledge or sell certain assets; the Company's ability to attract and retain skilled employees; customers' service expectations; cyber security risks; the Company's ability to successfully deploy new technology; acquisitions and branch and loan production office expansions; operational risks including the ability to detect and prevent errors and fraud; the effectiveness of the Company’s enterprise risk management framework; costs related to litigation; changes in laws, rules, regulations, or interpretations to which the Company is subject; the effects of severe weather events, pandemics, other public health crises, acts of war or terrorism, and other external events on our business. These and other important factors are detailed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 and other filings the Company makes with the SEC, which are available at the SEC’s Internet site ( http://www.sec.gov ) or from the Company without charge. Actual results, performance or achievements could differ materially from those contemplated, expressed, or implied by the forward-looking statements. Any forward-looking statements presented herein are made only as of the date of this press release, and the Company does not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise, except as required by law.



PCB Bancorp and Subsidiary
Consolidated Balance Sheets (Unaudited)
($ in thousands, except share and per share data)













12/31/2023

9/30/2023

% Change

12/31/2022

% Change
Assets










Cash and due from banks

$
26,518


$
22,691


16.9
%

$
23,202


14.3
%
Interest-bearing deposits in other financial institutions


215,824



169,659


27.2
%


123,829


74.3
%
Total cash and cash equivalents


242,342



192,350


26.0
%


147,031


64.8
%
Securities available-for-sale, at fair value


143,323



139,218


2.9
%


141,863


1.0
%
Loans held-for-sale


5,155



6,693


(23.0
)%


22,811


(77.4
)%
Loans held-for-investment


2,323,452



2,167,605


7.2
%


2,046,063


13.6
%
Allowance for credit losses on loans


(27,533
)


(25,599
)

7.6
%


(24,942
)

10.4
%
Net loans held-for-investment


2,295,919



2,142,006


7.2
%


2,021,121


13.6
%
Premises and equipment, net


5,999



6,229


(3.7
)%


6,916


(13.3
)%
Federal Home Loan Bank and other bank stock


12,716



12,716


—
%


10,183


24.9
%
Other real estate owned, net


2,558



—


NM


—


NM
Bank-owned life insurance


30,817



30,615


0.7
%


30,064


2.5
%
Deferred tax assets, net


—



4,486


(100.0
)%


3,115


(100.0
)%
Servicing assets


6,666



6,920


(3.7
)%


7,347


(9.3
)%
Operating lease assets


18,913



5,626


236.2
%


6,358


197.5
%
Accrued interest receivable


9,468



8,731


8.4
%


7,472


26.7
%
Other assets


15,630



12,384


26.2
%


15,755


(0.8
)%
Total assets

$
2,789,506


$
2,567,974


8.6
%

$
2,420,036


15.3
%
Liabilities










Deposits










Noninterest-bearing demand

$
594,673


$
611,021


(2.7
)%

$
734,989


(19.1
)%
Savings, NOW and money market accounts


421,203



459,038


(8.2
)%


514,741


(18.2
)%
Time deposits of $250,000 or less


760,034



607,664


25.1
%


382,377


98.8
%
Time deposits of more than $250,000


575,702



514,406


11.9
%


413,876


39.1
%
Total deposits


2,351,612



2,192,129


7.3
%


2,045,983


14.9
%
Federal Home Loan Bank advances


39,000



—


NM


20,000


95.0
%
Deferred tax liabilities, net


876



—


NM


—


NM
Operating lease liabilities


20,137



5,852


244.1
%


6,809


195.7
%
Accrued interest payable and other liabilities


29,009



28,141


3.1
%


11,802


145.8
%
Total liabilities


2,440,634



2,226,122


9.6
%


2,084,594


17.1
%
Commitments and contingent liabilities










Shareholders’ equity










Preferred stock


69,141



69,141


—
%


69,141


—
%
Common stock


142,563



143,401


(0.6
)%


149,631


(4.7
)%
Retained earnings


146,092



142,750


2.3
%


127,181


14.9
%
Accumulated other comprehensive loss, net


(8,924
)


(13,440
)

(33.6
)%


(10,511
)

(15.1
)%
Total shareholders’ equity


348,872



341,852


2.1
%


335,442


4.0
%
Total liabilities and shareholders’ equity

$
2,789,506


$
2,567,974


8.6
%

$
2,420,036


15.3
%











Outstanding common shares


14,260,440



14,319,014





14,625,474



Book value per common share ⁽¹⁾

$
24.46


$
23.87




$
22.94



TCE per common share ⁽²⁾

$
19.62


$
19.05




$
18.21



Total loan to total deposit ratio


99.02
%


99.19
%




101.12
%


Noninterest-bearing deposits to total deposits


25.29
%


27.87
%




35.92
%

(1)

The ratios are calculated by dividing total shareholders ’ equity by the number of outstanding common shares. The Company did not have any intangible equity components for the presented periods.

(2)

Non-GAAP. See “Non-GAAP Measures” for reconciliation of this measure to its most comparable GAAP measure.

PCB Bancorp and Subsidiary
Consolidated Statements of Income (Unaudited)
($ in thousands, except share and per share data)







Three Months Ended

Year Ended


12/31/2023

9/30/2023

% Change

12/31/2022

% Change

12/31/2023

12/31/2022

% Change
Interest and dividend income
















Loans, including fees

$
37,189


$
34,651


7.3
%

$
28,786


29.2
%

$
136,029


$
95,054


43.1
%
Investment securities


1,271



1,170


8.6
%


957


32.8
%


4,679



2,907


61.0
%
Other interest-earning assets


2,491



3,031


(17.8
)%


1,833


35.9
%


10,469



3,790


176.2
%
Total interest income


40,951



38,852


5.4
%


31,576


29.7
%


151,177



101,751


48.6
%
Interest expense
















Deposits


18,728



16,403


14.2
%


7,295


156.7
%


62,165



11,984


418.7
%
Other borrowings


299



—


—
%


16


1,768.8
%


508



135


276.3
%
Total interest expense


19,027



16,403


16.0
%


7,311


160.3
%


62,673



12,119


417.1
%
Net interest income


21,924



22,449


(2.3
)%


24,265


(9.6
)%


88,504



89,632


(1.3
)%
Provision (reversal) for credit losses


1,698



751


126.1
%


1,149


47.8
%


(132
)


3,602


NM
Net interest income after provision (reversal) for credit losses


20,226



21,698


(6.8
)%


23,116


(12.5
)%


88,636



86,030


3.0
%
Noninterest income
















Gain on sale of loans


803



689


16.5
%


759


5.8
%


3,570



7,990


(55.3
)%
Service charges and fees on deposits


391



371


5.4
%


352


11.1
%


1,475



1,326


11.2
%
Loan servicing income


751



851


(11.8
)%


734


2.3
%


3,330



2,969


12.2
%
Bank-owned life insurance income


202



187


8.0
%


181


11.6
%


753



706


6.7
%
Other income


356



404


(11.9
)%


363


(1.9
)%


1,555



1,508


3.1
%
Total noninterest income


2,503



2,502


—
%


2,389


4.8
%


10,683



14,499


(26.3
)%
Noninterest expense
















Salaries and employee benefits


8,397



8,572


(2.0
)%


7,879


6.6
%


34,572



33,056


4.6
%
Occupancy and equipment


2,145



1,964


9.2
%


1,897


13.1
%


7,924



6,481


22.3
%
Professional fees


898



685


31.1
%


607


47.9
%


3,087



2,239


37.9
%
Marketing and business promotion


772



980


(21.2
)%


724


6.6
%


2,327



2,150


8.2
%
Data processing


393



367


7.1
%


434


(9.4
)%


1,552



1,706


(9.0
)%
Director fees and expenses


207



152


36.2
%


176


17.6
%


756



706


7.1
%
Regulatory assessments


285



281


1.4
%


159


79.2
%


1,103



597


84.8
%
Other expense


1,372



1,206


13.8
%


1,239


10.7
%


4,736



4,191


13.0
%
Total noninterest expense


14,469



14,207


1.8
%


13,115


10.3
%


56,057



51,126


9.6
%
Income before income taxes


8,260



9,993


(17.3
)%


12,390


(33.3
)%


43,262



49,403


(12.4
)%
Income tax expense


2,352



2,970


(20.8
)%


3,688


(36.2
)%


12,557



14,416


(12.9
)%
Net income

$
5,908


$
7,023


(15.9
)%

$
8,702


(32.1
)%

$
30,705


$
34,987


(12.2
)%

















Earnings per common share
















Basic

$
0.41


$
0.49




$
0.59




$
2.14


$
2.35



Diluted

$
0.41


$
0.49




$
0.58




$
2.12


$
2.31



Average common shares
















Basic


14,223,831



14,294,802





14,700,010





14,301,691



14,822,018



Diluted


14,316,581



14,396,216





14,904,106





14,417,938



15,065,175




















Dividend paid per common share

$
0.18


$
0.18




$
0.15




$
0.69


$
0.60



Return on average assets ⁽¹⁾


0.89
%


1.09
%




1.44
%




1.20
%


1.54
%


Return on average shareholders’ equity ⁽¹⁾


6.82
%


8.12
%




10.31
%




9.02
%


11.42
%


Return on average TCE ^{(1), (2)}


8.54
%


10.17
%




12.99
%




11.31
%


13.23
%


Efficiency ratio ⁽³⁾


59.23
%


56.94
%




49.20
%




56.52
%


49.10
%

(1)

Ratios are presented on an annualized basis.

(2)

Non-GAAP. See “Non-GAAP Measures” for reconciliation of this measure to its most comparable GAAP measure.

(3)

The ratios are calculated by dividing noninterest expense by the sum of net interest income and noninterest income.

PCB Bancorp and Subsidiary
Average Balance, Average Yield, and Average Rate (Unaudited)
($ in thousands)





Three Months Ended


12/31/2023

9/30/2023

12/31/2022


Average Balance

Interest Income/ Expense

Avg. Yield/Rate ⁽⁶⁾

Average Balance

Interest Income/ Expense

Avg. Yield/Rate ⁽⁶⁾

Average Balance

Interest Income/ Expense

Avg. Yield/Rate ⁽⁶⁾
Assets


















Interest-earning assets


















Total loans ⁽¹⁾

$
2,242,457


$
37,189


6.58
%

$
2,137,184


$
34,651


6.43
%

$
2,004,220


$
28,786


5.70
%
Mortgage-backed securities


100,500



855


3.38
%


98,534



750


3.02
%


90,346



585


2.57
%
Collateralized mortgage obligation


23,970



259


4.29
%


24,959



262


4.16
%


25,570



221


3.43
%
SBA loan pool securities


7,453



81


4.31
%


7,842



81


4.10
%


9,545



71


2.95
%
Municipal bonds ⁽²⁾


3,110



29


3.70
%


3,602



30


3.30
%


4,050



33


3.23
%
Corporate bonds


4,194



47


4.45
%


4,056



47


4.60
%


4,555



47


4.09
%
Other interest-earning assets


175,336



2,491


5.64
%


219,115



3,031


5.49
%


182,018



1,833


4.00
%
Total interest-earning assets


2,557,020



40,951


6.35
%


2,495,292



38,852


6.18
%


2,320,304



31,576


5.40
%
Noninterest-earning assets


















Cash and due from banks


23,034







21,298







21,139





ACL on loans


(25,663
)






(24,869
)






(23,800
)




Other assets


87,759







71,512







78,069





Total noninterest-earning assets


85,130







67,941







75,408





Total assets

$
2,642,150






$
2,563,233






$
2,395,712





Liabilities and Shareholders’ Equity


















Interest-bearing liabilities


















Deposits


















NOW and money market accounts

$
450,408



4,418


3.89
%

$
481,341



4,398


3.62
%

$
540,312



2,852


2.09
%
Savings


6,947



4


0.23
%


7,197



4


0.22
%


10,692



3


0.11
%
Time deposits


1,192,777



14,306


4.76
%


1,073,044



12,001


4.44
%


718,735



4,440


2.45
%
Total interest-bearing deposits


1,650,132



18,728


4.50
%


1,561,582



16,403


4.17
%


1,269,739



7,295


2.28
%
Other borrowings


21,000



299


5.65
%


—



—


—
%


1,739



16


3.65
%
Total interest-bearing liabilities


1,671,132



19,027


4.52
%


1,561,582



16,403


4.17
%


1,271,478



7,311


2.28
%
Noninterest-bearing liabilities


















Noninterest-bearing demand


577,894







626,738







771,632





Other liabilities


49,389







31,769







17,770





Total noninterest-bearing liabilities


627,283







658,507







789,402





Total liabilities


2,298,415







2,220,089







2,060,880





Total shareholders’ equity


343,735







343,144







334,832





Total liabilities and shareholders’ equity

$
2,642,150






$
2,563,233






$
2,395,712





Net interest income



$
21,924






$
22,449






$
24,265



Net interest spread ⁽³⁾





1.83
%





2.01
%





3.12
%
Net interest margin ⁽⁴⁾





3.40
%





3.57
%





4.15
%
Total deposits

$
2,228,026


$
18,728


3.33
%

$
2,188,320


$
16,403


2.97
%

$
2,041,371


$
7,295


1.42
%
Total funding ⁽⁵⁾

$
2,249,026


$
19,027


3.36
%

$
2,188,320


$
16,403


2.97
%

$
2,043,110


$
7,311


1.42
%

(1)

Total loans include both loans held-for-sale and loans held-for-investment.

(2)

The yield on municipal bonds has not been computed on a tax-equivalent basis.

(3)

Net interest spread is calculated by subtracting average rate on interest-bearing liabilities from average yield on interest-earning assets.

(4)

Net interest margin is calculated by dividing annualized net interest income by average interest-earning assets.

(5)

(6)

Annualized.

PCB Bancorp and Subsidiary
Average Balance, Average Yield, and Average Rate (Unaudited)
($ in thousands)





Year Ended


12/31/2023

12/31/2022


Average Balance

Interest Income/ Expense

Avg. Yield/Rate

Average Balance

Interest Income/ Expense

Avg. Yield/Rate
Assets












Interest-earning assets












Total loans ⁽¹⁾

$
2,137,851


$
136,029


6.36
%

$
1,872,557


$
95,054


5.08
%
Mortgage-backed securities


98,903



3,001


3.03
%


89,066



1,826


2.05
%
Collateralized mortgage obligation


25,466



1,039


4.08
%


23,479



545


2.32
%
SBA loan pool securities


8,166



325


3.98
%


10,309



208


2.02
%
Municipal bonds ⁽²⁾


3,788



126


3.33
%


4,874



140


2.87
%
Corporate bonds


4,273



188


4.40
%


4,810



188


3.91
%
Other interest-earning assets


198,809



10,469


5.27
%


194,205



3,790


1.95
%
Total interest-earning assets


2,477,256



151,177


6.10
%


2,199,300



101,751


4.63
%
Noninterest-earning assets












Cash and due from banks


21,565







20,735





ACL on loans


(25,495
)






(22,125
)




Other assets


76,433







73,951





Total noninterest-earning assets


72,503







72,561





Total assets

$
2,549,759






$
2,271,861





Liabilities and Shareholders’ Equity












Interest-bearing liabilities












Deposits












NOW and money market accounts

$
470,750



16,190


3.44
%

$
504,275



4,970


0.99
%
Savings


7,499



18


0.24
%


14,068



9


0.06
%
Time deposits


1,059,985



45,957


4.34
%


593,106



7,005


1.18
%
Total interest-bearing deposits


1,538,234



62,165


4.04
%


1,111,449



11,984


1.08
%
Other borrowings


9,192



508


5.53
%


6,290



135


2.15
%
Total interest-bearing liabilities


1,547,426



62,673


4.05
%


1,117,739



12,119


1.08
%
Noninterest-bearing liabilities












Noninterest-bearing demand


629,774







831,621





Other liabilities


32,051







16,061





Total noninterest-bearing liabilities


661,825







847,682





Total liabilities


2,209,251







1,965,421





Total shareholders’ equity


340,508







306,440





Total liabilities and shareholders’ equity

$
2,549,759






$
2,271,861





Net interest income



$
88,504






$
89,632



Net interest spread ⁽³⁾





2.05
%





3.55
%
Net interest margin ⁽⁴⁾





3.57
%





4.08
%
Total deposits

$
2,168,008


$
62,165


2.87
%

$
1,943,070


$
11,984


0.62
%
Total funding ⁽⁵⁾

$
2,177,200


$
62,673


2.88
%

$
1,949,360


$
12,119


0.62
%

(1)

Total loans include both loans held-for-sale and loans held-for-investment.

(2)

The yield on municipal bonds has not been computed on a tax-equivalent basis.

(3)

Net interest spread is calculated by subtracting average rate on interest-bearing liabilities from average yield on interest-earning assets.

(4)

Net interest margin is calculated by dividing annualized net interest income by average interest-earning assets.

(5)

PCB Bancorp and Subsidiary
Loan Segments Revision (Unaudited)
($ in thousands)

As a part of the adoption of ASC 326, the Company reviewed and revised certain loan segments for the Company’s ACL model. Before the adoption of ASC 326, commercial property and SBA property loans were separately presented and represented 63.0% and 6.6% of loans held-for-investment at December 31, 2022, respectively. The Company re-divided these loan segments into commercial property (non-owner occupied), business property (owner occupied) and multifamily loans as these new loan segments are determined to share similar characteristics under the Company’s ACL model. In addition, four loan segments before the adoption of ASC 326 (commercial term loans, commercial lines of credit, SBA term loans and SBA PPP loans), which represented 12.2% of loans held-for-investment at December 31, 2022, are combined into a single loan segment, commercial and industrial loans, as these loans are determined to share similar risk characteristics under the Company’s ACL model. In this release, loan segments on loan related disclosures for prior period comparisons are revised accordingly in order to be comparable to the Company’s new loan segments.

The following table presents a reconciliation of revised loan segments to legacy loan segments, which were utilized before the adoption of ASC 326:

($ in thousands)

12/31/2023

9/30/2023

12/31/2022
Revision for commercial real estate loans






Revised loan segments:






Commercial property

$
855,270


$
814,547


$
772,020

Business property


558,772



537,351



526,513

Multifamily


132,500



132,558



124,751

Total

$
1,546,542


$
1,484,456


$
1,423,284

Legacy loan segments:






Commercial property

$
1,418,693


$
1,354,590


$
1,288,392

SBA property


127,849



129,866



134,892

Total

$
1,546,542


$
1,484,456


$
1,423,284








Revision for commercial and industrial loans






Revised loan segments:






Commercial and industrial

$
342,002


$
279,608


$
249,250

Legacy loan segments:






Commercial term

$
122,513


$
87,892


$
77,700

Commercial lines of credit


201,031



174,585



154,142

SBA commercial term


17,754



16,272



16,211

SBA PPP


704



859



1,197

Total

$
342,002


$
279,608


$
249,250

PCB Bancorp and Subsidiary
Non-GAAP Measures
($ in thousands)

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

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

($ in thousands)



Three Months Ended
Year Ended



12/31/2023

9/30/2023

12/31/2022

12/31/2023

12/31/2022
Average total shareholders' equity

(a)

$
343,735


$
343,144


$
334,832


$
340,508


$
306,440

Less: average preferred stock

(b)


69,141



69,141



69,141



69,141



42,053

Average TCE

(c)=(a)-(b)

$
274,594


$
274,003


$
265,691


$
271,367


$
264,387

Net income

(d)

$
5,908


$
7,023


$
8,702


$
30,705


$
34,987

Return on average shareholder's equity ⁽¹⁾

(d)/(a)


6.82
%


8.12
%


10.31
%


9.02
%


11.42
%
Return on average TCE ⁽¹⁾

(d)/(c)


8.54
%


10.17
%


12.99
%


11.31
%


13.23
%

(1)

Annualized.

($ in thousands, except per share data)



12/31/2023

9/30/2023

12/31/2022
Total shareholders' equity

(a)

$
348,872


$
341,852


$
335,442

Less: preferred stock

(b)


69,141



69,141



69,141

TCE

(c)=(a)-(b)

$
279,731


$
272,711


$
266,301

Outstanding common shares

(d)


14,260,440



14,319,014



14,625,474

Book value per common share

(a)/(d)

$
24.46


$
23.87


$
22.94

TCE per common share

(c)/(d)

$
19.62


$
19.05


$
18.21

Total assets

(e)

$
2,789,506


$
2,567,974


$
2,420,036

Total shareholders' equity to total assets

(a)/(e)


12.51
%


13.31
%


13.86
%
TCE to total assets

(c)/(e)


10.03
%


10.62
%


11.00
%

View source version on businesswire.com: https://www.businesswire.com/news/home/20240125300198/en/

Timothy Chang
Executive Vice President & Chief Financial Officer
213-210-2000

Company Name:	Pacific City Financial Corporation
Stock Symbol:	PCB
Market:	NASDAQ

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