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

1/25/24 4:10:00 PM ET

Major Banks

Finance

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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."

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

Financial Highlights (Unaudited)

($ in thousands, except per share data)	Three Months Ended													Year Ended
($ in thousands, except per share data)	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)		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)

	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)		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.

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
($ in thousands)		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/

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Date	Price Target	Rating	Analyst
6/16/2023	$17.00	Neutral	Piper Sandler
4/6/2022		Outperform → Mkt Perform	Raymond James
11/1/2021	$21.00 → $24.00	Outperform	Raymond James

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

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