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PCB Bancorp Reports Earnings of $7.0 million for Q3 2023

PCB Bancorp (the “Company”) (NASDAQ: PCB), the holding company of PCB Bank (the “Bank”), today reported net income of $7.0 million, or $0.49 per diluted common share, for the third quarter of 2023, compared with $7.5 million, or $0.52 per diluted common share, for the previous quarter and $7.0 million, or $0.46 per diluted common share, for the year-ago quarter.

Q3 2023 Highlights

  • Net income totaled $7.0 million, or $0.49 per diluted common share, for the current quarter;
  • Recorded a provision for credit losses(1),(2) of $751 thousand for the current quarter compared with $197 thousand for the previous quarter and $3.8 million for the year-ago quarter;
  • Allowance for Credit Losses (“ACL”)(1) on loans to loans held-for-investment ratio was 1.18% at September 30, 2023 compared with 1.17% at June 30, 2023 and 1.21% at September 30, 2022;
  • Net interest income was $22.4 million for the current quarter compared with $21.7 million for the previous quarter and $24.0 million for the year-ago quarter. Net interest margin was 3.57% for the current quarter compared with 3.55% for the previous quarter and 4.25% for the year-ago quarter;
  • Gain on sale of loans was $689 thousand for the current quarter compared with $769 thousand for the previous quarter and $1.4 million for the year-ago quarter;
  • Total assets were $2.57 billion at September 30, 2023, an increase of $11.6 million, or 0.5%, from $2.56 billion at June 30, 2023, an increase of $147.9 million, or 6.1%, from $2.42 billion at December 31, 2022, and an increase of $240.9 million, or 10.4%, from $2.33 billion at September 30, 2022;
  • Loans held-for-investment were $2.17 billion at September 30, 2023, an increase of $45.2 million, or 2.1%, from $2.12 billion at June 30, 2023, an increase of $121.5 million, or 5.9%, from $2.05 billion at December 31, 2022, and an increase of $208.4 million, or 10.6%, from $1.96 billion at September 30, 2022;
  • Total deposits were $2.19 billion at September 30, 2023, an increase of $3.9 million, or 0.2%, from $2.19 billion at June 30, 2023, an increase of $146.1 million, or 7.1%, from $2.05 billion at December 31, 2022, and an increase of $214.0 million, or 10.8%, from $1.98 billion at September 30, 2022; and
  • Announced a stock repurchase program on August 2, 2023 for the repurchase of up to 720,000 shares of the Company’s outstanding common stock through August 2, 2024. During the current quarter, the Company repurchased and retired 67,202 shares of common stock.

“We are pleased with our continued solid earnings, modest loan growth, and a slight increase in net interest margin and net interest income during the third quarter,” said Henry Kim, President and Chief Executive Officer. “Our loan balance increased 2.1% to $2.17 billion, deposit balance remained steady and our asset quality continued to be strong with non-performing assets and classified assets to total assets ratios of 0.15% and 0.26%, respectively.”

Mr. Kim added, “We announced a new stock repurchase program and repurchased 67,202 shares. The Company continued to maintain a strong capital position with the Bank’s tier 1 capital to average assets ratio of 13.44% and the Company’s tangible common equity to total assets ratio of 10.62%. These robust ratios provide us with extensive confidence to maneuver through these uncharted times and enable us to prudently manage our capital to maximize shareholder value.”

Mr. Kim concluded, “This past September, we celebrated our 20th anniversary of PCB Bank. We will continue to build a strong franchise by focusing on maintaining a strong balance sheet and asset quality, disciplined expense management, repurchasing our shares whenever feasible, and maintainable cash dividend.”

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

(1)

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

(2)

Provision (reversal) for credit losses on off-balance sheet credit exposures of $(10) thousand and $28 thousand, respectively, for the year-ago quarter and previous year-to-date period were recorded in Other Expense on Consolidated Statements of Income (Unaudited).

Financial Highlights (Unaudited)

($ in thousands, except per share data)

 

Three Months Ended

 

Nine Months Ended

 

9/30/2023

 

6/30/2023

 

% Change

 

9/30/2022

 

% Change

 

9/30/2023

 

9/30/2022

 

% Change

Net income

 

$

7,023

 

 

$

7,477

 

 

(6.1

)%

 

$

6,953

 

 

1.0

%

 

$

24,797

 

 

$

26,285

 

 

(5.7

)%

Diluted earnings per common share

 

$

0.49

 

 

$

0.52

 

 

(5.8

)%

 

$

0.46

 

 

6.5

%

 

$

1.71

 

 

$

1.73

 

 

(1.2

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

$

22,449

 

 

$

21,717

 

 

3.4

%

 

$

24,023

 

 

(6.6

)%

 

$

66,580

 

 

$

65,367

 

 

1.9

%

Provision (reversal) for credit losses (1)

 

 

751

 

 

 

197

 

 

281.2

%

 

 

3,753

 

 

(80.0

)%

 

 

(1,830

)

 

 

2,453

 

 

NM

Noninterest income

 

 

2,502

 

 

 

2,657

 

 

(5.8

)%

 

 

3,176

 

 

(21.2

)%

 

 

8,180

 

 

 

12,110

 

 

(32.5

)%

Noninterest expense

 

 

14,207

 

 

 

13,627

 

 

4.3

%

 

 

13,695

 

 

3.7

%

 

 

41,588

 

 

 

38,011

 

 

9.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (2)

 

 

1.09

%

 

 

1.19

%

 

 

 

 

1.19

%

 

 

 

 

1.32

%

 

 

1.58

%

 

 

Return on average shareholders’ equity (2)

 

 

8.12

%

 

 

8.82

%

 

 

 

 

8.16

%

 

 

 

 

9.77

%

 

 

11.84

%

 

 

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

 

 

10.17

%

 

 

11.08

%

 

 

 

 

10.25

%

 

 

 

 

12.27

%

 

 

13.31

%

 

 

Net interest margin (2)

 

 

3.57

%

 

 

3.55

%

 

 

 

 

4.25

%

 

 

 

 

3.63

%

 

 

4.05

%

 

 

Efficiency ratio (4)

 

 

56.94

%

 

 

55.91

%

 

 

 

 

50.35

%

 

 

 

 

55.63

%

 

 

49.06

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands, except per share data)

 

9/30/2023

 

6/30/2023

 

% Change

 

12/31/2022

 

% Change

 

9/30/2022

 

% Change

Total assets

 

$

2,567,974

 

 

$

2,556,345

 

 

0.5

%

 

$

2,420,036

 

 

6.1

%

 

$

2,327,051

 

 

10.4

%

Net loans held-for-investment

 

 

2,142,006

 

 

 

2,097,560

 

 

2.1

%

 

 

2,021,121

 

 

6.0

%

 

 

1,935,476

 

 

10.7

%

Total deposits

 

 

2,192,129

 

 

 

2,188,232

 

 

0.2

%

 

 

2,045,983

 

 

7.1

%

 

 

1,978,098

 

 

10.8

%

Book value per common share (5)

 

$

23.87

 

 

$

23.77

 

 

 

 

$

22.94

 

 

 

 

$

22.40

 

 

 

TCE per common share (3)

 

$

19.05

 

 

$

18.94

 

 

 

 

$

18.21

 

 

 

 

$

17.75

 

 

 

Tier 1 leverage ratio (consolidated)

 

 

13.76

%

 

 

13.84

%

 

 

 

 

14.33

%

 

 

 

 

14.74

%

 

 

Total shareholders’ equity to total assets

 

 

13.31

%

 

 

13.32

%

 

 

 

 

13.86

%

 

 

 

 

14.30

%

 

 

TCE to total assets (3), (6)

 

 

10.62

%

 

 

10.61

%

 

 

 

 

11.00

%

 

 

 

 

11.33

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Provision (reversal) for credit losses on off-balance sheet credit exposures of $(10) thousand and $28 thousand, respectively, for the year-ago quarter and previous year-to-date period were recorded in Other Expense on Consolidated Statements of Income (Unaudited). See Provision (reversal) for credit losses included in the Result of Operations discussion for additional information.

(2)

Ratios are presented on an annualized basis.

(3)

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

(4)

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

(5)

Calculated by dividing total 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

 

Nine Months Ended

($ in thousands)

 

9/30/2023

 

6/30/2023

 

% Change

 

9/30/2022

 

% Change

 

9/30/2023

 

9/30/2022

 

% Change

Interest income/expense on

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

$

34,651

 

 

$

32,960

 

 

5.1

%

 

$

24,835

 

 

39.5

%

 

$

98,840

 

 

$

66,268

 

 

49.2

%

Investment securities

 

 

1,170

 

 

 

1,136

 

 

3.0

%

 

 

806

 

 

45.2

%

 

 

3,408

 

 

 

1,950

 

 

74.8

%

Other interest-earning assets

 

 

3,031

 

 

 

2,742

 

 

10.5

%

 

 

1,194

 

 

153.9

%

 

 

7,978

 

 

 

1,957

 

 

307.7

%

Total interest-earning assets

 

 

38,852

 

 

 

36,838

 

 

5.5

%

 

 

26,835

 

 

44.8

%

 

 

110,226

 

 

 

70,175

 

 

57.1

%

Interest-bearing deposits

 

 

16,403

 

 

 

15,121

 

 

8.5

%

 

 

2,798

 

 

486.2

%

 

 

43,437

 

 

 

4,689

 

 

826.4

%

Borrowings

 

 

 

 

 

 

 

%

 

 

14

 

 

(100.0

)%

 

 

209

 

 

 

119

 

 

75.6

%

Total interest-bearing liabilities

 

 

16,403

 

 

 

15,121

 

 

8.5

%

 

 

2,812

 

 

483.3

%

 

 

43,646

 

 

 

4,808

 

 

807.8

%

Net interest income

 

$

22,449

 

 

$

21,717

 

 

3.4

%

 

$

24,023

 

 

(6.6

)%

 

$

66,580

 

 

$

65,367

 

 

1.9

%

Average balance of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

$

2,137,184

 

 

$

2,097,489

 

 

1.9

%

 

$

1,905,366

 

 

12.2

%

 

$

2,102,600

 

 

$

1,828,187

 

 

15.0

%

Investment securities

 

 

138,993

 

 

 

142,136

 

 

(2.2

)%

 

 

137,363

 

 

1.2

%

 

 

141,057

 

 

 

132,023

 

 

6.8

%

Other interest-earning assets

 

 

219,115

 

 

 

213,883

 

 

2.4

%

 

 

200,367

 

 

9.4

%

 

 

206,720

 

 

 

198,311

 

 

4.2

%

Total interest-earning assets

 

$

2,495,292

 

 

$

2,453,508

 

 

1.7

%

 

$

2,243,096

 

 

11.2

%

 

$

2,450,377

 

 

$

2,158,521

 

 

13.5

%

Interest-bearing deposits

 

$

1,561,582

 

 

$

1,527,522

 

 

2.2

%

 

$

1,137,739

 

 

37.3

%

 

$

1,500,523

 

 

$

1,058,105

 

 

41.8

%

Borrowings

 

 

 

 

 

 

 

%

 

 

2,033

 

 

(100.0

)%

 

 

5,212

 

 

 

7,824

 

 

(33.4

)%

Total interest-bearing liabilities

 

$

1,561,582

 

 

$

1,527,522

 

 

2.2

%

 

$

1,139,772

 

 

37.0

%

 

$

1,505,735

 

 

$

1,065,929

 

 

41.3

%

Total funding (1)

 

$

2,188,320

 

 

$

2,155,649

 

 

1.5

%

 

$

1,965,134

 

 

11.4

%

 

$

2,152,993

 

 

$

1,917,766

 

 

12.3

%

Annualized average yield/cost of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

 

6.43

%

 

 

6.30

%

 

 

 

 

5.17

%

 

 

 

 

6.29

%

 

 

4.85

%

 

 

Investment securities

 

 

3.34

%

 

 

3.21

%

 

 

 

 

2.33

%

 

 

 

 

3.23

%

 

 

1.97

%

 

 

Other interest-earning assets

 

 

5.49

%

 

 

5.14

%

 

 

 

 

2.36

%

 

 

 

 

5.16

%

 

 

1.32

%

 

 

Total interest-earning assets

 

 

6.18

%

 

 

6.02

%

 

 

 

 

4.75

%

 

 

 

 

6.01

%

 

 

4.35

%

 

 

Interest-bearing deposits

 

 

4.17

%

 

 

3.97

%

 

 

 

 

0.98

%

 

 

 

 

3.87

%

 

 

0.59

%

 

 

Borrowings

 

 

%

 

 

%

 

 

 

 

2.73

%

 

 

 

 

5.36

%

 

 

2.03

%

 

 

Total interest-bearing liabilities

 

 

4.17

%

 

 

3.97

%

 

 

 

 

0.98

%

 

 

 

 

3.88

%

 

 

0.60

%

 

 

Net interest margin

 

 

3.57

%

 

 

3.55

%

 

 

 

 

4.25

%

 

 

 

 

3.63

%

 

 

4.05

%

 

 

Cost of total funding (1)

 

 

2.97

%

 

 

2.81

%

 

 

 

 

0.57

%

 

 

 

 

2.71

%

 

 

0.34

%

 

 

Supplementary information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net accretion of discount on loans

 

$

775

 

 

$

751

 

 

3.2

%

 

$

867

 

 

(10.6

)%

 

$

2,197

 

 

$

2,682

 

 

(18.1

)%

Net amortization of deferred loan fees

 

$

226

 

 

$

247

 

 

(8.5

)%

 

$

243

 

 

(7.0

)%

 

$

648

 

 

$

2,014

 

 

(67.8

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

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

Loans. The increases in average yield for the current quarter and year-to-date period compared with the same periods of 2022 were primarily due to an increase in overall interest rates on loans from the rising interest rate environment, partially offset by decreases in net accretion of discount on loans and net amortization of deferred loan fees from the decreased amount of SBA PPP loan payoffs.

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

 

 

9/30/2023

 

6/30/2023

 

12/31/2022

 

9/30/2022

 

 

% to Total Loans

 

Weighted-Average Contractual Rate

 

% to Total Loans

 

Weighted-Average Contractual Rate

 

% to Total Loans

 

Weighted-Average Contractual Rate

 

% to Total Loans

 

Weighted-Average Contractual Rate

Fixed rate loans

 

22.4

%

 

4.75

%

 

22.6

%

 

4.64

%

 

23.2

%

 

4.51

%

 

24.0

%

 

4.43

%

Hybrid rate loans

 

38.8

%

 

4.71

%

 

39.2

%

 

4.62

%

 

39.1

%

 

4.40

%

 

38.0

%

 

4.23

%

Variable rate loans

 

38.8

%

 

8.52

%

 

38.2

%

 

8.39

%

 

37.7

%

 

7.86

%

 

38.0

%

 

6.75

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

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

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

Provision (Reversal) for Credit Losses

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

 

 

Three Months Ended

 

Nine Months Ended

($ in thousands)

 

9/30/2023

 

6/30/2023

 

% Change

 

9/30/2022

 

% Change

 

9/30/2023

 

9/30/2022

 

% Change

Provision (reversal) for credit losses on loans

 

$

822

 

 

$

157

 

423.6

%

 

$

3,753

 

 

(78.1

)%

 

$

(1,438

)

 

$

2,453

 

NM

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

 

 

(71

)

 

 

40

 

NM

 

 

(10

)

 

610.0

%

 

 

(392

)

 

 

28

 

NM

Total provision (reversal) for credit losses

 

$

751

 

 

$

197

 

281.2

%

 

$

3,743

 

 

(79.9

)%

 

$

(1,830

)

 

$

2,481

 

NM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

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

On January 1, 2023, the Company adopted the provisions of ASC 326, 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. The reversal for credit losses for the current year-to-date period was primarily due to net recoveries and the improvement in the economic forecast.

Noninterest Income

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

 

 

Three Months Ended

 

Nine Months Ended

($ in thousands)

 

9/30/2023

 

6/30/2023

 

% Change

 

9/30/2022

 

% Change

 

9/30/2023

 

9/30/2022

 

% Change

Gain on sale of loans

 

$

689

 

$

769

 

(10.4

)%

 

$

1,415

 

(51.3

)%

 

$

2,767

 

$

7,231

 

(61.7

)%

Service charges and fees on deposits

 

 

371

 

 

369

 

0.5

%

 

 

341

 

8.8

%

 

 

1,084

 

 

974

 

11.3

%

Loan servicing income

 

 

851

 

 

868

 

(2.0

)%

 

 

780

 

9.1

%

 

 

2,579

 

 

2,235

 

15.4

%

Bank-owned life insurance income

 

 

187

 

 

184

 

1.6

%

 

 

178

 

5.1

%

 

 

551

 

 

525

 

5.0

%

Other income

 

 

404

 

 

467

 

(13.5

)%

 

 

462

 

(12.6

)%

 

 

1,199

 

 

1,145

 

4.7

%

Total noninterest income

 

$

2,502

 

$

2,657

 

(5.8

)%

 

$

3,176

 

(21.2

)%

 

$

8,180

 

$

12,110

 

(32.5

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

Three Months Ended

 

Nine Months Ended

($ in thousands)

 

9/30/2023

 

6/30/2023

 

% Change

 

9/30/2022

 

% Change

 

9/30/2023

 

9/30/2022

 

% Change

Gain on sale of SBA loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sold loan balance

 

$

17,697

 

$

16,762

 

5.6

%

 

$

27,313

 

(35.2

)%

 

$

61,592

 

$

105,438

 

(41.6

)%

Premium received

 

 

1,112

 

 

1,209

 

(8.0

)%

 

 

2,036

 

(45.4

)%

 

 

4,362

 

 

8,842

 

(50.7

)%

Gain recognized

 

 

689

 

 

769

 

(10.4

)%

 

 

1,407

 

(51.0

)%

 

 

2,767

 

 

7,223

 

(61.7

)%

Gain on sale of residential property 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

 

Nine Months Ended

($ in thousands)

 

9/30/2023

 

6/30/2023

 

% Change

 

9/30/2022

 

% Change

 

9/30/2023

 

9/30/2022

 

% Change

Loan servicing income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Servicing income received

 

$

1,321

 

 

$

1,317

 

 

0.3

%

 

$

1,302

 

 

1.5

%

 

$

3,922

 

 

$

3,819

 

 

2.7

%

Servicing assets amortization

 

 

(470

)

 

 

(449

)

 

4.7

%

 

 

(522

)

 

(10.0

)%

 

 

(1,343

)

 

 

(1,584

)

 

(15.2

)%

Loan servicing income

 

$

851

 

 

$

868

 

 

(2.0

)%

 

$

780

 

 

9.1

%

 

$

2,579

 

 

$

2,235

 

 

15.4

%

Underlying loans at end of period

 

$

536,424

 

 

$

539,160

 

 

(0.5

)%

 

$

538,904

 

 

(0.5

)%

 

$

536,424

 

 

$

538,904

 

 

(0.5

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Nine Months Ended

($ in thousands)

 

9/30/2023

 

6/30/2023

 

% Change

 

9/30/2022

 

% Change

 

9/30/2023

 

9/30/2022

 

% Change

Salaries and employee benefits

 

$

8,572

 

$

8,675

 

(1.2

)%

 

$

8,457

 

1.4

%

 

$

26,175

 

$

25,177

 

4.0

%

Occupancy and equipment

 

 

1,964

 

 

1,919

 

2.3

%

 

 

1,650

 

19.0

%

 

 

5,779

 

 

4,584

 

26.1

%

Professional fees

 

 

685

 

 

772

 

(11.3

)%

 

 

587

 

16.7

%

 

 

2,189

 

 

1,632

 

34.1

%

Marketing and business promotion

 

 

980

 

 

203

 

382.8

%

 

 

909

 

7.8

%

 

 

1,555

 

 

1,426

 

9.0

%

Data processing

 

 

367

 

 

380

 

(3.4

)%

 

 

427

 

(14.1

)%

 

 

1,159

 

 

1,272

 

(8.9

)%

Director fees and expenses

 

 

152

 

 

217

 

(30.0

)%

 

 

179

 

(15.1

)%

 

 

549

 

 

530

 

3.6

%

Regulatory assessments

 

 

281

 

 

382

 

(26.4

)%

 

 

150

 

87.3

%

 

 

818

 

 

438

 

86.8

%

Other expense

 

 

1,206

 

 

1,079

 

11.8

%

 

 

1,336

 

(9.7

)%

 

 

3,364

 

 

2,952

 

14.0

%

Total noninterest expense

 

$

14,207

 

$

13,627

 

4.3

%

 

$

13,695

 

3.7

%

 

$

41,588

 

$

38,011

 

9.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and Employee Benefits. The increases for the current quarter and year-to-date period compared with the same periods of 2022 were primarily due to increases in salaries and other employee benefit expense, partially offset by decreases in bonus accruals and incentives tied to sales of SBA loans originated at loan production offices. The number of full-time equivalent employees was 270, 272 and 274 as of September 30, 2023, June 30, 2023 and September 30, 2022, respectively.

Occupancy and Equipment. The increases for the current quarter and year-to-date period compared with the same periods of 2022 were primarily due to new branch openings during the second half of 2022. During the second half of 2022, the Company opened 3 new full-service branches in Dallas and Carrollton, Texas and Palisades Park, New Jersey.

Professional Fees. The increases for the current quarter and year-to-date period compared with the same periods of 2022 were primarily due to increases in audit and consulting fees.

Marketing and Business Promotion. The increase for the current quarter compared with the previous quarter was primarily due to an increase in advertisements and the Company’s 20th anniversary celebration.

Director fees and expenses. The decrease for the current quarter compared with the previous quarter was primarily due to the retirement of a director during the previous quarter.

Regulatory Assessments. The increases for the current quarter and year-to-date period compared with the same periods of 2022 were due to an increase in FDIC assessment rates. During the previous quarter, an adjustment of $113 thousand was made for the first quarter of 2023. The FDIC increased the initial base deposit insurance assessment rate schedules by two basis points beginning in the first quarterly assessment period of 2023.

Other Expense. The increases for the current quarter and year-to-date period were primarily due to increases in office expenses and armed guard expenses attributable to the branch network expansion. Provision (reversal) for credit losses on off-balance credit exposures of $(10) thousand and $28 thousand was included in other expense for the year-ago quarter and previous year-to-date period, 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 $2.57 billion at September 30, 2023, an increase of $11.6 million, or 0.5%, from $2.56 billion at June 30, 2023, an increase of $147.9 million, or 6.1%, from $2.42 billion at December 31, 2022, and an increase of $240.9 million, or 10.4%, from $2.33 billion at September 30, 2022. The increase for the current quarter was primarily due to an increase in loans held-for-investment, partially offset by decreases in cash and cash equivalents and loans held-for-sale. The increase for the year-to-date period was primarily due to increases in cash and cash equivalents and loans held-for-investment, partially offset by a decrease in loans held-for-sale.

CECL Adoption

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

Loans

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

($ in thousands)

 

9/30/2023

 

6/30/2023

 

% Change

 

12/31/2022

 

% Change

 

9/30/2022

 

% Change

Commercial real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial property

 

$

814,547

 

$

793,946

 

2.6

%

 

$

772,020

 

5.5

%

 

$

759,644

 

7.2

%

Business property

 

 

537,351

 

 

533,592

 

0.7

%

 

 

526,513

 

2.1

%

 

 

526,395

 

2.1

%

Multifamily

 

 

132,558

 

 

124,029

 

6.9

%

 

 

124,751

 

6.3

%

 

 

121,830

 

8.8

%

Construction

 

 

19,246

 

 

16,942

 

13.6

%

 

 

17,054

 

12.9

%

 

 

14,592

 

31.9

%

Total commercial real estate

 

 

1,503,702

 

 

1,468,509

 

2.4

%

 

 

1,440,338

 

4.4

%

 

 

1,422,461

 

5.7

%

Commercial and industrial

 

 

279,608

 

 

272,278

 

2.7

%

 

 

249,250

 

12.2

%

 

 

216,036

 

29.4

%

Consumer:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential mortgage

 

 

363,369

 

 

359,655

 

1.0

%

 

 

333,726

 

8.9

%

 

 

297,506

 

22.1

%

Other consumer

 

 

20,926

 

 

21,985

 

(4.8

)%

 

 

22,749

 

(8.0

)%

 

 

23,234

 

(9.9

)%

Total consumer

 

 

384,295

 

 

381,640

 

0.7

%

 

 

356,475

 

7.8

%

 

 

320,740

 

19.8

%

Loans held-for-investment

 

 

2,167,605

 

 

2,122,427

 

2.1

%

 

 

2,046,063

 

5.9

%

 

 

1,959,237

 

10.6

%

Loans held-for-sale

 

 

6,693

 

 

13,065

 

(48.8

)%

 

 

22,811

 

(70.7

)%

 

 

18,982

 

(64.7

)%

Total loans

 

$

2,174,298

 

$

2,135,492

 

1.8

%

 

$

2,068,874

 

5.1

%

 

$

1,978,219

 

9.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The increase in loans held-for-investment for the current quarter was primarily due to new funding and advances on lines of credit of $259.3 million, partially offset by pay-downs and pay-offs of $214.1 million. The increase for the current year-to-date period was primarily due to new funding and advances on lines of credit of $717.0 million and purchases of residential mortgage loans of $15.7 million, partially offset by pay-downs and pay-offs of $611.2 million.

The decrease in loans held-for-sale for the current quarter was primarily due to sales of $17.7 million, partially offset by new funding of $11.5 million. The decrease for the current year-to-date was primarily due to sales of $61.6 million and pay-downs and pay-offs of $4.3 million, partially offset by new funding of $49.8 million.

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

($ in thousands)

 

9/30/2023

 

6/30/2023

 

% Change

 

12/31/2022

 

% Change

 

9/30/2022

 

% Change

Commercial property

 

$

9,827

 

$

11,118

 

(11.6

)%

 

$

7,006

 

40.3

%

 

$

6,283

 

56.4

%

Business property

 

 

8,388

 

 

9,487

 

(11.6

)%

 

 

8,396

 

(0.1

)%

 

 

10,847

 

(22.7

)%

Multifamily

 

 

1,800

 

 

4,500

 

(60.0

)%

 

 

4,500

 

(60.0

)%

 

 

5,000

 

(64.0

)%

Construction

 

 

29,293

 

 

30,865

 

(5.1

)%

 

 

18,211

 

60.9

%

 

 

11,093

 

164.1

%

Commercial and industrial

 

 

283,119

 

 

279,584

 

1.3

%

 

 

254,668

 

11.2

%

 

 

257,337

 

10.0

%

Other consumer

 

 

271

 

 

445

 

(39.1

)%

 

 

692

 

(60.8

)%

 

 

847

 

(68.0

)%

Total commitments to extend credit

 

 

332,698

 

 

335,999

 

(1.0

)%

 

 

293,473

 

13.4

%

 

 

291,407

 

14.2

%

Letters of credit

 

 

6,083

 

 

6,027

 

0.9

%

 

 

5,392

 

12.8

%

 

 

5,096

 

19.4

%

Total off-balance sheet credit exposure

 

$

338,781

 

$

342,026

 

(0.9

)%

 

$

298,865

 

13.4

%

 

$

296,503

 

14.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Credit Quality

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

($ in thousands)

 

9/30/2023

 

6/30/2023

 

% Change

 

12/31/2022

 

% Change

 

9/30/2022

 

% Change

Nonaccrual loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial property

 

$

686

 

 

$

699

 

 

(1.9

)%

 

$

 

 

%

 

$

 

 

%

Business property

 

 

2,964

 

 

 

3,007

 

 

(1.4

)%

 

 

2,985

 

 

(0.7

)%

 

 

2,996

 

 

(1.1

)%

Total commercial real estate

 

 

3,650

 

 

 

3,706

 

 

(1.5

)%

 

 

2,985

 

 

22.3

%

 

 

2,996

 

 

21.8

%

Commercial and industrial

 

 

72

 

 

 

88

 

 

(18.2

)%

 

 

 

 

%

 

 

4,003

 

 

(98.2

)%

Consumer:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential mortgage

 

 

 

 

 

 

 

%

 

 

372

 

 

(100.0

)%

 

 

372

 

 

(100.0

)%

Other consumer

 

 

8

 

 

 

51

 

 

(84.3

)%

 

 

3

 

 

166.7

%

 

 

25

 

 

(68.0

)%

Total consumer

 

 

8

 

 

 

51

 

 

(84.3

)%

 

 

375

 

 

(97.9

)%

 

 

397

 

 

(98.0

)%

Total nonaccrual loans held-for-investment

 

 

3,730

 

 

 

3,845

 

 

(3.0

)%

 

 

3,360

 

 

11.0

%

 

 

7,396

 

 

(49.6

)%

Loans past due 90 days or more and still accruing

 

 

 

 

 

 

 

%

 

 

 

 

%

 

 

 

 

%

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

 

 

3,730

 

 

 

3,845

 

 

(3.0

)%

 

 

3,360

 

 

11.0

%

 

 

7,396

 

 

(49.6

)%

NPLs held-for-sale

 

 

 

 

 

 

 

%

 

 

4,000

 

 

(100.0

)%

 

 

 

 

%

Total NPLs

 

 

3,730

 

 

 

3,845

 

 

(3.0

)%

 

 

7,360

 

 

(49.3

)%

 

 

7,396

 

 

(49.6

)%

Other real estate owned (“OREO”)

 

 

 

 

 

 

 

%

 

 

 

 

%

 

 

 

 

%

Non-performing assets (“NPAs”)

 

$

3,730

 

 

$

3,845

 

 

(3.0

)%

 

$

7,360

 

 

(49.3

)%

 

$

7,396

 

 

(49.6

)%

Loans past due and still accruing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Past due 30 to 59 days

 

$

654

 

 

$

428

 

 

52.8

%

 

$

47

 

 

1,291.5

%

 

$

215

 

 

204.2

%

Past due 60 to 89 days

 

 

54

 

 

 

 

 

%

 

 

87

 

 

(37.9

)%

 

 

195

 

 

(72.3

)%

Past due 90 days or more

 

 

 

 

 

 

 

%

 

 

 

 

%

 

 

 

 

%

Total loans past due and still accruing

 

$

708

 

 

$

428

 

 

65.4

%

 

 

134

 

 

428.4

%

 

$

410

 

 

72.7

%

Special mention loans

 

$

5,281

 

 

$

5,406

 

 

(2.3

)%

 

$

6,857

 

 

(23.0

)%

 

$

5,986

 

 

(11.8

)%

Classified assets

 

 

 

 

 

 

 

 

 

 

 

 

 

Classified loans held-for-investment

 

$

6,742

 

 

$

6,901

 

 

(2.3

)%

 

$

6,211

 

 

8.5

%

 

$

10,293

 

 

(34.5

)%

Classified loans held-for-sale

 

 

 

 

 

 

 

%

 

 

4,000

 

 

(100.0

)%

 

 

 

 

%

OREO

 

 

 

 

 

 

 

%

 

 

 

 

%

 

 

 

 

%

Classified assets

 

$

6,742

 

 

$

6,901

 

 

(2.3

)%

 

$

10,211

 

 

(34.0

)%

 

$

10,293

 

 

(34.5

)%

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

 

 

0.17

%

 

 

0.18

%

 

 

 

 

0.16

%

 

 

 

 

0.38

%

 

 

NPAs to total assets

 

 

0.15

%

 

 

0.15

%

 

 

 

 

0.30

%

 

 

 

 

0.32

%

 

 

Classified assets to total assets

 

 

0.26

%

 

 

0.27

%

 

 

 

 

0.42

%

 

 

 

 

0.44

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Nine Months Ended

($ in thousands)

 

9/30/2023

 

6/30/2023

 

% Change

 

9/30/2022

 

% Change

 

9/30/2023

 

9/30/2022

 

% Change

ACL on loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

24,867

 

 

$

24,694

 

 

0.7

%

 

$

21,071

 

 

18.0

%

 

$

24,942

 

 

$

22,381

 

 

11.4

%

Impact of ASC 326 adoption

 

 

 

 

 

 

 

NM

 

 

 

 

NM

 

 

1,067

 

 

 

 

 

NM

Charge-offs

 

 

(112

)

 

 

(7

)

 

1,500.0

%

 

 

(1,112

)

 

(89.9

)%

 

 

(119

)

 

 

(1,171

)

 

(89.8

)%

Recoveries

 

 

22

 

 

 

23

 

 

(4.3

)%

 

 

49

 

 

(55.1

)%

 

 

1,147

 

 

 

98

 

 

1,070.4

%

Provision (reversal) for credit losses on loans

 

 

822

 

 

 

157

 

 

423.6

%

 

 

3,753

 

 

(78.1

)%

 

 

(1,438

)

 

 

2,453

 

 

NM

Balance at end of period

 

$

25,599

 

 

$

24,867

 

 

2.9

%

 

$

23,761

 

 

7.7

%

 

$

25,599

 

 

$

23,761

 

 

7.7

%

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

 

 

1.18

%

 

 

1.17

%

 

 

 

 

1.22

%

 

 

 

 

 

 

1.22

%

 

 

ACL on off-balance sheet credit exposure (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

1,585

 

 

$

1,545

 

 

2.6

%

 

$

252

 

 

529.0

%

 

$

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

 

 

(71

)

 

 

40

 

 

NM

 

 

(10

)

 

610.0

%

 

 

(392

)

 

 

28

 

 

NM

Balance at end of period

 

$

1,514

 

 

$

1,585

 

 

(4.5

)%

 

$

242

 

 

525.6

%

 

$

1,514

 

 

$

242

 

 

525.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 $139.2 million at September 30, 2023, an increase of $545 thousand, or 0.4%, from $138.7 million at June 30, 2023, a decrease of $2.6 million, or 1.9%, from $141.9 million at December 31, 2022, and an increase of $9.8 million, or 7.6%, from $129.4 million at September 30, 2022. The increase for the current quarter was primarily due to purchases of $10.0 million, partially offset by principal pay-downs and calls of $5.6 million, a fair value decrease of $3.8 million and net premium amortization of $53 thousand. The decrease for the current year-to-date period was primarily due to principal pay-downs and calls of $14.3 million, a fair value decrease of $4.1 million and net premium amortization of $169 thousand, partially offset by purchases of $16.0 million.

Deposits

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

 

 

9/30/2023

 

6/30/2023

 

12/31/2022

 

9/30/2022

($ in thousands)

 

Amount

 

% to Total

 

Amount

 

% to Total

 

Amount

 

% to Total

 

Amount

 

% to Total

Noninterest-bearing demand deposits

 

$

611,021

 

27.9

%

 

$

635,329

 

29.0

%

 

$

734,989

 

35.9

%

 

$

809,842

 

40.9

%

Interest-bearing deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Savings

 

 

6,846

 

0.3

%

 

 

7,504

 

0.3

%

 

 

8,579

 

0.4

%

 

 

13,028

 

0.7

%

NOW

 

 

16,076

 

0.7

%

 

 

16,993

 

0.8

%

 

 

11,405

 

0.6

%

 

 

17,550

 

0.9

%

Retail money market accounts

 

 

436,115

 

19.8

%

 

 

464,655

 

21.1

%

 

 

494,749

 

24.1

%

 

 

522,412

 

26.4

%

Brokered money market accounts

 

 

1

 

0.1

%

 

 

1

 

0.1

%

 

 

8

 

0.1

%

 

 

10,010

 

0.5

%

Retail time deposits of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$250,000 or less

 

 

406,407

 

18.5

%

 

 

392,012

 

17.9

%

 

 

295,354

 

14.4

%

 

 

236,864

 

12.0

%

More than $250,000

 

 

454,406

 

20.8

%

 

 

451,590

 

20.7

%

 

 

353,876

 

17.3

%

 

 

239,271

 

12.1

%

State and brokered time deposits

 

 

261,257

 

11.9

%

 

 

220,148

 

10.1

%

 

 

147,023

 

7.2

%

 

 

129,121

 

6.5

%

Total interest-bearing deposits

 

 

1,581,108

 

72.1

%

 

 

1,552,903

 

71.0

%

 

 

1,310,994

 

64.1

%

 

 

1,168,256

 

59.1

%

Total deposits

 

$

2,192,129

 

100.0

%

 

$

2,188,232

 

100.0

%

 

$

2,045,983

 

100.0

%

 

$

1,978,098

 

100.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Estimated total deposits not covered by deposit insurance

 

$

983,851

 

44.9

%

 

$

1,034,148

 

47.3

%

 

$

1,062,111

 

51.9

%

 

$

1,199,502

 

60.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 $60.8 million, renewals of the matured accounts of $85.1 million and balance increases of $5.3 million, partially offset by matured and closed accounts of $133.9 million. The increase for the current year-to-date period was primarily due to new accounts of $469.0 million, renewals of the matured accounts of $291.3 million and balance increases of $17.1 million, partially offset by matured and closed accounts of $565.8 million.

Liquidity

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

($ in thousands)

 

9/30/2023

 

12/31/2022

 

% Change

Cash and cash equivalents

 

$

192,350

 

 

$

147,031

 

 

30.8

%

Cash and cash equivalents to total assets

 

 

7.5

%

 

 

6.1

%

 

 

 

 

 

 

 

 

 

Available borrowing capacity

 

 

 

 

 

 

FHLB advances

 

$

639,072

 

 

$

561,745

 

 

13.8

%

Federal Reserve Discount Window

 

 

490,633

 

 

 

23,902

 

 

1952.7

%

Overnight federal funds lines

 

 

65,000

 

 

 

65,000

 

 

%

Total

 

$

1,194,705

 

 

$

650,647

 

 

83.6

%

Total available borrowing capacity to total assets

 

 

46.5

%

 

 

26.9

%

 

 

 

 

 

 

 

 

 

During the current year-to-date period, the Company increased cash and cash equivalents by $45.3 million, or 30.8%, to $192.4 million and available borrowing capacity by $544.1 million, or 83.6%, to $1.19 billion. During the current quarter, the Company began participating in the Borrower-in Custody Program with the Federal Reserve Bank providing additional borrowing capacity. As of September 30, 2023, the Company's cash and cash equivalents and available borrowing capacity covered approximately 141.0% of deposits not covered by deposit insurance compared to 75.1% at December 31, 2022.

Shareholders’ Equity

Shareholders’ equity was $341.9 million at September 30, 2023, an increase of $1.4 million, or 0.4%, from $340.4 million at June 30, 2023, an increase of $6.4 million, or 1.9%, from $335.4 million at December 31, 2022, and an increase of $9.1 million, or 2.7%, from $332.7 million at September 30, 2022. The increase for the current quarter was primarily due to net income and cash proceeds from exercise of stock options of $662 thousand, partially offset by cash dividends declared on common stock of $2.6 million, repurchase of common stock of $1.1 million and an increase in other comprehensive loss of $2.7 million. The increase for the current year-to-date period was primarily due to net income and cash proceeds from exercise of stock options of $1.3 million, partially offset by cash dividend declared on common stock of $7.3 million, repurchase of common stock of $7.9 million, an increase in other comprehensive loss of $2.9 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 67,202 shares of common stock at a weighted-average price of $15.75 per share, totaling $1.1 million under this repurchase program through September 30, 2023.

For the current year-to-date period, the Company repurchased and retired 452,583 shares of common stock at a weighted-average price of $17.46, totaling $7.9 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:

 

 

9/30/2023

 

6/30/2023

 

12/31/2022

 

9/30/2022

 

Well Capitalized Requirements

PCB Bancorp

 

 

 

 

 

 

 

 

 

 

Common tier 1 capital (to risk-weighted assets)

 

13.07

%

 

13.12

%

 

13.29

%

 

13.69

%

 

N/A

 

Total capital (to risk-weighted assets)

 

17.48

%

 

17.57

%

 

17.83

%

 

18.34

%

 

N/A

 

Tier 1 capital (to risk-weighted assets)

 

16.24

%

 

16.34

%

 

16.62

%

 

17.14

%

 

N/A

 

Tier 1 capital (to average assets)

 

13.76

%

 

13.84

%

 

14.33

%

 

14.74

%

 

N/A

 

PCB Bank

 

 

 

 

 

 

 

 

 

 

Common tier 1 capital (to risk-weighted assets)

 

15.87

%

 

16.00

%

 

16.30

%

 

16.82

%

 

6.5

%

Total capital (to risk-weighted assets)

 

17.11

%

 

17.23

%

 

17.52

%

 

18.02

%

 

10.0

%

Tier 1 capital (to risk-weighted assets)

 

15.87

%

 

16.00

%

 

16.30

%

 

16.82

%

 

8.0

%

Tier 1 capital (to average assets)

 

13.44

%

 

13.55

%

 

14.05

%

 

14.47

%

 

5.0

%

 

 

 

 

 

 

 

 

 

 

 

About PCB Bancorp

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

Cautionary Note Regarding Forward-Looking Statements

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

PCB Bancorp and Subsidiary

Consolidated Balance Sheets (Unaudited)

($ in thousands, except share and per share data)

 

 

 

9/30/2023

 

6/30/2023

 

% Change

 

12/31/2022

 

% Change

 

9/30/2022

 

% Change

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

22,691

 

 

$

22,159

 

 

2.4

%

 

$

23,202

 

 

(2.2

)%

 

$

22,252

 

 

2.0

%

Interest-bearing deposits in other financial institutions

 

 

169,659

 

 

 

199,987

 

 

(15.2

)%

 

 

123,829

 

 

37.0

%

 

 

131,786

 

 

28.7

%

Total cash and cash equivalents

 

 

192,350

 

 

 

222,146

 

 

(13.4

)%

 

 

147,031

 

 

30.8

%

 

 

154,038

 

 

24.9

%

Securities available-for-sale, at fair value

 

 

139,218

 

 

 

138,673

 

 

0.4

%

 

 

141,863

 

 

(1.9

)%

 

 

129,401

 

 

7.6

%

Loans held-for-sale

 

 

6,693

 

 

 

13,065

 

 

(48.8

)%

 

 

22,811

 

 

(70.7

)%

 

 

18,982

 

 

(64.7

)%

Loans held-for-investment

 

 

2,167,605

 

 

 

2,122,427

 

 

2.1

%

 

 

2,046,063

 

 

5.9

%

 

 

1,959,237

 

 

10.6

%

Allowance for credit losses on loans

 

 

(25,599

)

 

 

(24,867

)

 

2.9

%

 

 

(24,942

)

 

2.6

%

 

 

(23,761

)

 

7.7

%

Net loans held-for-investment

 

 

2,142,006

 

 

 

2,097,560

 

 

2.1

%

 

 

2,021,121

 

 

6.0

%

 

 

1,935,476

 

 

10.7

%

Premises and equipment, net

 

 

6,229

 

 

 

6,394

 

 

(2.6

)%

 

 

6,916

 

 

(9.9

)%

 

 

4,671

 

 

33.4

%

Federal Home Loan Bank and other bank stock

 

 

12,716

 

 

 

12,716

 

 

%

 

 

10,183

 

 

24.9

%

 

 

10,183

 

 

24.9

%

Bank-owned life insurance

 

 

30,615

 

 

 

30,428

 

 

0.6

%

 

 

30,064

 

 

1.8

%

 

 

29,883

 

 

2.4

%

Deferred tax assets, net

 

 

4,486

 

 

 

4,348

 

 

3.2

%

 

 

3,115

 

 

44.0

%

 

 

12,135

 

 

(63.0

)%

Servicing assets

 

 

6,920

 

 

 

7,142

 

 

(3.1

)%

 

 

7,347

 

 

(5.8

)%

 

 

7,627

 

 

(9.3

)%

Operating lease assets

 

 

5,626

 

 

 

5,182

 

 

8.6

%

 

 

6,358

 

 

(11.5

)%

 

 

6,897

 

 

(18.4

)%

Accrued interest receivable

 

 

8,731

 

 

 

8,040

 

 

8.6

%

 

 

7,472

 

 

16.8

%

 

 

6,070

 

 

43.8

%

Other assets

 

 

12,384

 

 

 

10,651

 

 

16.3

%

 

 

15,755

 

 

(21.4

)%

 

 

11,688

 

 

6.0

%

Total assets

 

$

2,567,974

 

 

$

2,556,345

 

 

0.5

%

 

$

2,420,036

 

 

6.1

%

 

$

2,327,051

 

 

10.4

%

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing demand

 

$

611,021

 

 

$

635,329

 

 

(3.8

)%

 

$

734,989

 

 

(16.9

)%

 

$

809,842

 

 

(24.6

)%

Savings, NOW and money market accounts

 

 

459,038

 

 

 

489,153

 

 

(6.2

)%

 

 

514,741

 

 

(10.8

)%

 

 

563,000

 

 

(18.5

)%

Time deposits of $250,000 or less

 

 

607,664

 

 

 

552,160

 

 

10.1

%

 

 

382,377

 

 

58.9

%

 

 

305,985

 

 

98.6

%

Time deposits of more than $250,000

 

 

514,406

 

 

 

511,590

 

 

0.6

%

 

 

413,876

 

 

24.3

%

 

 

299,271

 

 

71.9

%

Total deposits

 

 

2,192,129

 

 

 

2,188,232

 

 

0.2

%

 

 

2,045,983

 

 

7.1

%

 

 

1,978,098

 

 

10.8

%

Federal Home Loan Bank advances

 

 

 

 

 

 

 

%

 

 

20,000

 

 

(100.0

)%

 

 

 

 

%

Operating lease liabilities

 

 

5,852

 

 

 

5,495

 

 

6.5

%

 

 

6,809

 

 

(14.1

)%

 

 

7,402

 

 

(20.9

)%

Accrued interest payable and other liabilities

 

 

28,141

 

 

 

22,207

 

 

26.7

%

 

 

11,802

 

 

138.4

%

 

 

8,832

 

 

218.6

%

Total liabilities

 

 

2,226,122

 

 

 

2,215,934

 

 

0.5

%

 

 

2,084,594

 

 

6.8

%

 

 

1,994,332

 

 

11.6

%

Commitments and contingent liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock

 

 

69,141

 

 

 

69,141

 

 

%

 

 

69,141

 

 

%

 

 

69,141

 

 

%

Common stock

 

 

143,401

 

 

 

143,686

 

 

(0.2

)%

 

 

149,631

 

 

(4.2

)%

 

 

153,890

 

 

(6.8

)%

Retained earnings

 

 

142,750

 

 

 

138,315

 

 

3.2

%

 

 

127,181

 

 

12.2

%

 

 

120,699

 

 

18.3

%

Accumulated other comprehensive loss, net

 

 

(13,440

)

 

 

(10,731

)

 

25.2

%

 

 

(10,511

)

 

27.9

%

 

 

(11,011

)

 

22.1

%

Total shareholders’ equity

 

 

341,852

 

 

 

340,411

 

 

0.4

%

 

 

335,442

 

 

1.9

%

 

 

332,719

 

 

2.7

%

Total liabilities and shareholders’ equity

 

$

2,567,974

 

 

$

2,556,345

 

 

0.5

%

 

$

2,420,036

 

 

6.1

%

 

$

2,327,051

 

 

10.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding common shares

 

 

14,319,014

 

 

 

14,318,890

 

 

 

 

 

14,625,474

 

 

 

 

 

14,853,140

 

 

 

Book value per common share (1)

 

$

23.87

 

 

$

23.77

 

 

 

 

$

22.94

 

 

 

 

$

22.40

 

 

 

TCE per common share (2)

 

$

19.05

 

 

$

18.94

 

 

 

 

$

18.21

 

 

 

 

$

17.75

 

 

 

Total loan to total deposit ratio

 

 

99.19

%

 

 

97.59

%

 

 

 

 

101.12

%

 

 

 

 

100.01

%

 

 

Noninterest-bearing deposits to total deposits

 

 

27.87

%

 

 

29.03

%

 

 

 

 

35.92

%

 

 

 

 

40.94

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

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

(2)

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

PCB Bancorp and Subsidiary

Consolidated Statements of Income (Unaudited)

($ in thousands, except share and per share data)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

9/30/2023

 

6/30/2023

 

% Change

 

9/30/2022

 

% Change

 

9/30/2023

 

9/30/2022

 

% Change

Interest and dividend income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

 

$

34,651

 

 

$

32,960

 

 

5.1

%

 

$

24,835

 

 

39.5

%

 

$

98,840

 

 

$

66,268

 

 

49.2

%

Investment securities

 

 

1,170

 

 

 

1,136

 

 

3.0

%

 

 

806

 

 

45.2

%

 

 

3,408

 

 

 

1,950

 

 

74.8

%

Other interest-earning assets

 

 

3,031

 

 

 

2,742

 

 

10.5

%

 

 

1,194

 

 

153.9

%

 

 

7,978

 

 

 

1,957

 

 

307.7

%

Total interest income

 

 

38,852

 

 

 

36,838

 

 

5.5

%

 

 

26,835

 

 

44.8

%

 

 

110,226

 

 

 

70,175

 

 

57.1

%

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

16,403

 

 

 

15,121

 

 

8.5

%

 

 

2,798

 

 

486.2

%

 

 

43,437

 

 

 

4,689

 

 

826.4

%

Other borrowings

 

 

 

 

 

 

 

%

 

 

14

 

 

(100.0

)%

 

 

209

 

 

 

119

 

 

75.6

%

Total interest expense

 

 

16,403

 

 

 

15,121

 

 

8.5

%

 

 

2,812

 

 

483.3

%

 

 

43,646

 

 

 

4,808

 

 

807.8

%

Net interest income

 

 

22,449

 

 

 

21,717

 

 

3.4

%

 

 

24,023

 

 

(6.6

)%

 

 

66,580

 

 

 

65,367

 

 

1.9

%

Provision (reversal) for credit losses

 

 

751

 

 

 

197

 

 

281.2

%

 

 

3,753

 

 

(80.0

)%

 

 

(1,830

)

 

 

2,453

 

 

NM

Net interest income after provision (reversal) for credit losses

 

 

21,698

 

 

 

21,520

 

 

0.8

%

 

 

20,270

 

 

7.0

%

 

 

68,410

 

 

 

62,914

 

 

8.7

%

Noninterest income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on sale of loans

 

 

689

 

 

 

769

 

 

(10.4

)%

 

 

1,415

 

 

(51.3

)%

 

 

2,767

 

 

 

7,231

 

 

(61.7

)%

Service charges and fees on deposits

 

 

371

 

 

 

369

 

 

0.5

%

 

 

341

 

 

8.8

%

 

 

1,084

 

 

 

974

 

 

11.3

%

Loan servicing income

 

 

851

 

 

 

868

 

 

(2.0

)%

 

 

780

 

 

9.1

%

 

 

2,579

 

 

 

2,235

 

 

15.4

%

Bank-owned life insurance income

 

 

187

 

 

 

184

 

 

1.6

%

 

 

178

 

 

5.1

%

 

 

551

 

 

 

525

 

 

5.0

%

Other income

 

 

404

 

 

 

467

 

 

(13.5

)%

 

 

462

 

 

(12.6

)%

 

 

1,199

 

 

 

1,145

 

 

4.7

%

Total noninterest income

 

 

2,502

 

 

 

2,657

 

 

(5.8

)%

 

 

3,176

 

 

(21.2

)%

 

 

8,180

 

 

 

12,110

 

 

(32.5

)%

Noninterest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

8,572

 

 

 

8,675

 

 

(1.2

)%

 

 

8,457

 

 

1.4

%

 

 

26,175

 

 

 

25,177

 

 

4.0

%

Occupancy and equipment

 

 

1,964

 

 

 

1,919

 

 

2.3

%

 

 

1,650

 

 

19.0

%

 

 

5,779

 

 

 

4,584

 

 

26.1

%

Professional fees

 

 

685

 

 

 

772

 

 

(11.3

)%

 

 

587

 

 

16.7

%

 

 

2,189

 

 

 

1,632

 

 

34.1

%

Marketing and business promotion

 

 

980

 

 

 

203

 

 

382.8

%

 

 

909

 

 

7.8

%

 

 

1,555

 

 

 

1,426

 

 

9.0

%

Data processing

 

 

367

 

 

 

380

 

 

(3.4

)%

 

 

427

 

 

(14.1

)%

 

 

1,159

 

 

 

1,272

 

 

(8.9

)%

Director fees and expenses

 

 

152

 

 

 

217

 

 

(30.0

)%

 

 

179

 

 

(15.1

)%

 

 

549

 

 

 

530

 

 

3.6

%

Regulatory assessments

 

 

281

 

 

 

382

 

 

(26.4

)%

 

 

150

 

 

87.3

%

 

 

818

 

 

 

438

 

 

86.8

%

Other expense

 

 

1,206

 

 

 

1,079

 

 

11.8

%

 

 

1,336

 

 

(9.7

)%

 

 

3,364

 

 

 

2,952

 

 

14.0

%

Total noninterest expense

 

 

14,207

 

 

 

13,627

 

 

4.3

%

 

 

13,695

 

 

3.7

%

 

 

41,588

 

 

 

38,011

 

 

9.4

%

Income before income taxes

 

 

9,993

 

 

 

10,550

 

 

(5.3

)%

 

 

9,751

 

 

2.5

%

 

 

35,002

 

 

 

37,013

 

 

(5.4

)%

Income tax expense

 

 

2,970

 

 

 

3,073

 

 

(3.4

)%

 

 

2,798

 

 

6.1

%

 

 

10,205

 

 

 

10,728

 

 

(4.9

)%

Net income

 

$

7,023

 

 

$

7,477

 

 

(6.1

)%

 

$

6,953

 

 

1.0

%

 

$

24,797

 

 

$

26,285

 

 

(5.7

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.49

 

 

$

0.52

 

 

 

 

$

0.47

 

 

 

 

$

1.73

 

 

$

1.76

 

 

 

Diluted

 

$

0.49

 

 

$

0.52

 

 

 

 

$

0.46

 

 

 

 

$

1.71

 

 

$

1.73

 

 

 

Average common shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

14,294,802

 

 

 

14,271,200

 

 

 

 

 

14,877,879

 

 

 

 

 

14,327,930

 

 

 

14,869,997

 

 

 

Diluted

 

 

14,396,216

 

 

 

14,356,776

 

 

 

 

 

15,088,089

 

 

 

 

 

14,441,960

 

 

 

15,126,863

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividend paid per common share

 

$

0.18

 

 

$

0.18

 

 

 

 

$

0.15

 

 

 

 

$

0.51

 

 

$

0.45

 

 

 

Return on average assets (1)

 

 

1.09

%

 

 

1.19

%

 

 

 

 

1.19

%

 

 

 

 

1.32

%

 

 

1.58

%

 

 

Return on average shareholders’ equity (1)

 

 

8.12

%

 

 

8.82

%

 

 

 

 

8.16

%

 

 

 

 

9.77

%

 

 

11.84

%

 

 

Return on average TCE (1), (2)

 

 

10.17

%

 

 

11.08

%

 

 

 

 

10.25

%

 

 

 

 

12.27

%

 

 

13.31

%

 

 

Efficiency ratio (3)

 

 

56.94

%

 

 

55.91

%

 

 

 

 

50.35

%

 

 

 

 

55.63

%

 

 

49.06

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Ratios are presented on an annualized basis.

(2)

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

(3)

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

PCB Bancorp and Subsidiary

Average Balance, Average Yield, and Average Rate (Unaudited)

($ in thousands)

 

 

 

Three Months Ended

 

 

9/30/2023

 

6/30/2023

 

9/30/2022

 

 

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)

 

$

2,137,184

 

 

$

34,651

 

6.43

%

 

$

2,097,489

 

 

$

32,960

 

6.30

%

 

$

1,905,366

 

 

$

24,835

 

5.17

%

Mortgage-backed securities

 

 

98,534

 

 

 

750

 

3.02

%

 

 

98,971

 

 

 

713

 

2.89

%

 

 

93,546

 

 

 

518

 

2.20

%

Collateralized mortgage obligation

 

 

24,959

 

 

 

262

 

4.16

%

 

 

26,228

 

 

 

262

 

4.01

%

 

 

24,090

 

 

 

151

 

2.49

%

SBA loan pool securities

 

 

7,842

 

 

 

81

 

4.10

%

 

 

8,364

 

 

 

81

 

3.88

%

 

 

10,435

 

 

 

56

 

2.13

%

Municipal bonds (2)

 

 

3,602

 

 

 

30

 

3.30

%

 

 

4,234

 

 

 

33

 

3.13

%

 

 

4,491

 

 

 

34

 

3.00

%

Corporate bonds

 

 

4,056

 

 

 

47

 

4.60

%

 

 

4,339

 

 

 

47

 

4.34

%

 

 

4,801

 

 

 

47

 

3.88

%

Other interest-earning assets

 

 

219,115

 

 

 

3,031

 

5.49

%

 

 

213,883

 

 

 

2,742

 

5.14

%

 

 

200,367

 

 

 

1,194

 

2.36

%

Total interest-earning assets

 

 

2,495,292

 

 

 

38,852

 

6.18

%

 

 

2,453,508

 

 

 

36,838

 

6.02

%

 

 

2,243,096

 

 

 

26,835

 

4.75

%

Noninterest-earning assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

 

21,298

 

 

 

 

 

 

 

20,754

 

 

 

 

 

 

 

20,609

 

 

 

 

 

ACL on loans

 

 

(24,869

)

 

 

 

 

 

 

(24,710

)

 

 

 

 

 

 

(21,117

)

 

 

 

 

Other assets

 

 

71,512

 

 

 

 

 

 

 

71,200

 

 

 

 

 

 

 

76,851

 

 

 

 

 

Total noninterest-earning assets

 

 

67,941

 

 

 

 

 

 

 

67,244

 

 

 

 

 

 

 

76,343

 

 

 

 

 

Total assets

 

$

2,563,233

 

 

 

 

 

 

$

2,520,752

 

 

 

 

 

 

$

2,319,439

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOW and money market accounts

 

$

481,341

 

 

 

4,398

 

3.62

%

 

$

465,564

 

 

 

3,929

 

3.38

%

 

$

577,975

 

 

 

1,375

 

0.94

%

Savings

 

 

7,197

 

 

 

4

 

0.22

%

 

 

7,767

 

 

 

5

 

0.26

%

 

 

14,990

 

 

 

2

 

0.05

%

Time deposits

 

 

1,073,044

 

 

 

12,001

 

4.44

%

 

 

1,054,191

 

 

 

11,187

 

4.26

%

 

 

544,774

 

 

 

1,421

 

1.03

%

Total interest-bearing deposits

 

 

1,561,582

 

 

 

16,403

 

4.17

%

 

 

1,527,522

 

 

 

15,121

 

3.97

%

 

 

1,137,739

 

 

 

2,798

 

0.98

%

Other borrowings

 

 

 

 

 

 

0.00

%

 

 

 

 

 

 

%

 

 

2,033

 

 

 

14

 

2.73

%

Total interest-bearing liabilities

 

 

1,561,582

 

 

 

16,403

 

4.17

%

 

 

1,527,522

 

 

 

15,121

 

3.97

%

 

 

1,139,772

 

 

 

2,812

 

0.98

%

Noninterest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing demand

 

 

626,738

 

 

 

 

 

 

 

628,127

 

 

 

 

 

 

 

825,362

 

 

 

 

 

Other liabilities

 

 

31,769

 

 

 

 

 

 

 

25,234

 

 

 

 

 

 

 

16,057

 

 

 

 

 

Total noninterest-bearing liabilities

 

 

658,507

 

 

 

 

 

 

 

653,361

 

 

 

 

 

 

 

841,419

 

 

 

 

 

Total liabilities

 

 

2,220,089

 

 

 

 

 

 

 

2,180,883

 

 

 

 

 

 

 

1,981,191

 

 

 

 

 

Total shareholders’ equity

 

 

343,144

 

 

 

 

 

 

 

339,869

 

 

 

 

 

 

 

338,248

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

2,563,233

 

 

 

 

 

 

$

2,520,752

 

 

 

 

 

 

$

2,319,439

 

 

 

 

 

Net interest income

 

 

 

$

22,449

 

 

 

 

 

$

21,717

 

 

 

 

 

$

24,023

 

 

Net interest spread (3)

 

 

 

 

 

2.01

%

 

 

 

 

 

2.05

%

 

 

 

 

 

3.77

%

Net interest margin (4)

 

 

 

 

 

3.57

%

 

 

 

 

 

3.55

%

 

 

 

 

 

4.25

%

Total deposits

 

$

2,188,320

 

 

$

16,403

 

2.97

%

 

$

2,155,649

 

 

$

15,121

 

2.81

%

 

$

1,963,101

 

 

$

2,798

 

0.57

%

Total funding (5)

 

$

2,188,320

 

 

$

16,403

 

2.97

%

 

$

2,155,649

 

 

$

15,121

 

2.81

%

 

$

1,965,134

 

 

$

2,812

 

0.57

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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)

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

(6)

Annualized.

PCB Bancorp and Subsidiary

Average Balance, Average Yield, and Average Rate (Unaudited)

($ in thousands)

 

 

 

Nine Months Ended

 

 

9/30/2023

 

9/30/2022

 

 

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)

 

$

2,102,600

 

 

$

98,840

 

6.29

%

 

$

1,828,187

 

 

$

66,268

 

4.85

%

Mortgage-backed securities

 

 

98,364

 

 

 

2,146

 

2.92

%

 

 

88,634

 

 

 

1,241

 

1.87

%

Collateralized mortgage obligation

 

 

25,970

 

 

 

780

 

4.02

%

 

 

22,775

 

 

 

324

 

1.90

%

SBA loan pool securities

 

 

8,406

 

 

 

244

 

3.88

%

 

 

10,566

 

 

 

137

 

1.73

%

Municipal bonds (2)

 

 

4,017

 

 

 

97

 

3.23

%

 

 

5,152

 

 

 

107

 

2.78

%

Corporate bonds

 

 

4,300

 

 

 

141

 

4.38

%

 

 

4,896

 

 

 

141

 

3.85

%

Other interest-earning assets

 

 

206,720

 

 

 

7,978

 

5.16

%

 

 

198,311

 

 

 

1,957

 

1.32

%

Total interest-earning assets

 

 

2,450,377

 

 

 

110,226

 

6.01

%

 

 

2,158,521

 

 

 

70,175

 

4.35

%

Noninterest-earning assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

 

21,069

 

 

 

 

 

 

 

20,599

 

 

 

 

 

ACL on loans

 

 

(25,438

)

 

 

 

 

 

 

(21,561

)

 

 

 

 

Other assets

 

 

72,616

 

 

 

 

 

 

 

72,563

 

 

 

 

 

Total noninterest-earning assets

 

 

68,247

 

 

 

 

 

 

 

71,601

 

 

 

 

 

Total assets

 

$

2,518,624

 

 

 

 

 

 

$

2,230,122

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

NOW and money market accounts

 

$

477,605

 

 

 

11,772

 

3.30

%

 

$

492,130

 

 

 

2,118

 

0.58

%

Savings

 

 

7,684

 

 

 

14

 

0.24

%

 

 

15,205

 

 

 

6

 

0.05

%

Time deposits

 

 

1,015,234

 

 

 

31,651

 

4.17

%

 

 

550,770

 

 

 

2,565

 

0.62

%

Total interest-bearing deposits

 

 

1,500,523

 

 

 

43,437

 

3.87

%

 

 

1,058,105

 

 

 

4,689

 

0.59

%

Other borrowings

 

 

5,212

 

 

 

209

 

5.36

%

 

 

7,824

 

 

 

119

 

2.03

%

Total interest-bearing liabilities

 

 

1,505,735

 

 

 

43,646

 

3.88

%

 

 

1,065,929

 

 

 

4,808

 

0.60

%

Noninterest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing demand

 

 

647,258

 

 

 

 

 

 

 

851,837

 

 

 

 

 

Other liabilities

 

 

26,208

 

 

 

 

 

 

 

15,485

 

 

 

 

 

Total noninterest-bearing liabilities

 

 

673,466

 

 

 

 

 

 

 

867,322

 

 

 

 

 

Total liabilities

 

 

2,179,201

 

 

 

 

 

 

 

1,933,251

 

 

 

 

 

Total shareholders’ equity

 

 

339,423

 

 

 

 

 

 

 

296,871

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

2,518,624

 

 

 

 

 

 

$

2,230,122

 

 

 

 

 

Net interest income

 

 

 

$

66,580

 

 

 

 

 

$

65,367

 

 

Net interest spread (3)

 

 

 

 

 

2.13

%

 

 

 

 

 

3.75

%

Net interest margin (4)

 

 

 

 

 

3.63

%

 

 

 

 

 

4.05

%

Total deposits

 

$

2,147,781

 

 

$

43,437

 

2.70

%

 

$

1,909,942

 

 

$

4,689

 

0.33

%

Total funding (5)

 

$

2,152,993

 

 

$

43,646

 

2.71

%

 

$

1,917,766

 

 

$

4,808

 

0.34

%

 

 

 

 

 

 

 

 

 

 

 

 

 

(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)

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

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)

 

9/30/2023

 

6/30/2023

 

12/31/2022

 

9/30/2022

Revision for commercial real estate loans

 

 

 

 

 

 

 

 

Revised loan segments:

 

 

 

 

 

 

 

 

Commercial property

 

$

814,547

 

$

793,946

 

$

772,020

 

$

759,644

Business property

 

 

537,351

 

 

533,592

 

 

526,513

 

 

526,395

Multifamily

 

 

132,558

 

 

124,029

 

 

124,751

 

 

121,830

Total

 

$

1,484,456

 

$

1,451,567

 

$

1,423,284

 

$

1,407,869

Legacy loan segments:

 

 

 

 

 

 

 

 

Commercial property

 

$

1,354,590

 

$

1,320,110

 

$

1,288,392

 

$

1,271,781

SBA property

 

 

129,866

 

 

131,457

 

 

134,892

 

 

136,088

Total

 

$

1,484,456

 

$

1,451,567

 

$

1,423,284

 

$

1,407,869

 

 

 

 

 

 

 

 

 

Revision for commercial and industrial loans

 

 

 

 

 

 

 

 

Revised loan segments:

 

 

 

 

 

 

 

 

Commercial and industrial

 

$

279,608

 

$

272,278

 

$

249,250

 

$

216,036

Legacy loan segments:

 

 

 

 

 

 

 

 

Commercial term

 

$

87,892

 

$

90,213

 

$

77,700

 

$

80,225

Commercial lines of credit

 

 

174,585

 

 

165,162

 

 

154,142

 

 

117,960

SBA commercial term

 

 

16,272

 

 

15,900

 

 

16,211

 

 

16,542

SBA PPP

 

 

859

 

 

1,003

 

 

1,197

 

 

1,309

Total

 

$

279,608

 

$

272,278

 

$

249,250

 

$

216,036

 

 

 

 

 

 

 

 

 

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

Nine Months Ended

 

 

9/30/2023

 

6/30/2023

 

9/30/2022

 

9/30/2023

 

9/30/2022

Average total shareholders' equity

(a)

 

$

343,144

 

 

$

339,869

 

 

$

338,248

 

 

$

339,423

 

 

$

296,871

 

Less: average preferred stock

(b)

 

 

69,141

 

 

 

69,141

 

 

 

69,141

 

 

 

69,141

 

 

 

32,924

 

Average TCE

(c)=(a)-(b)

 

$

274,003

 

 

$

270,728

 

 

$

269,107

 

 

$

270,282

 

 

$

263,947

 

Net income

(d)

 

$

7,023

 

 

$

7,477

 

 

$

6,953

 

 

$

24,797

 

 

$

26,285

 

Return on average shareholder's equity (1)

(d)/(a)

 

 

8.12

%

 

 

8.82

%

 

 

8.16

%

 

 

9.77

%

 

 

11.84

%

Return on average TCE (1)

(d)/(c)

 

 

10.17

%

 

 

11.08

%

 

 

10.25

%

 

 

12.27

%

 

 

13.31

%

 

 

 

 

 

 

 

 

 

 

 

 

(1) Annualized.

($ in thousands, except per share data)

 

 

9/30/2023

 

6/30/2023

 

12/31/2022

 

9/30/2022

Total shareholders' equity

(a)

 

$

341,852

 

 

$

340,411

 

 

$

335,442

 

 

$

332,719

 

Less: preferred stock

(b)

 

 

69,141

 

 

 

69,141

 

 

 

69,141

 

 

 

69,141

 

TCE

(c)=(a)-(b)

 

$

272,711

 

 

$

271,270

 

 

$

266,301

 

 

$

263,578

 

Outstanding common shares

(d)

 

 

14,319,014

 

 

 

14,318,890

 

 

 

14,625,474

 

 

 

14,853,140

 

Book value per common share

(a)/(d)

 

$

23.87

 

 

$

23.77

 

 

$

22.94

 

 

$

22.40

 

TCE per common share

(c)/(d)

 

$

19.05

 

 

$

18.94

 

 

$

18.21

 

 

$

17.75

 

Total assets

(e)

 

$

2,567,974

 

 

$

2,556,345

 

 

$

2,420,036

 

 

$

2,327,051

 

Total shareholders' equity to total assets

(a)/(e)

 

 

13.31

%

 

 

13.32

%

 

 

13.86

%

 

 

14.30

%

TCE to total assets

(c)/(e)

 

 

10.62

%

 

 

10.61

%

 

 

11.00

%

 

 

11.33

%

 

 

 

 

 

 

 

 

 

 

 

Contacts

Timothy Chang

Executive Vice President & Chief Financial Officer

213-210-2000

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