EX-99.1 2 pcber20221027.htm EX-99.1 Document

Exhibit 99.1

pcbbancorpb.jpg
PCB Bancorp Reports Earnings of $7.0 million for Q3 2022
Los Angeles, California - October 27, 2022 - PCB Bancorp (the “Company”) (NASDAQ: PCB), the holding company of PCB Bank (the “Bank”), today reported net income of $7.0 million, or $0.46 per diluted common share, for the third quarter of 2022, compared with $9.1 million, or $0.60 per diluted common share, for the previous quarter and $11.0 million, or $0.73 per diluted common share, for the year-ago quarter.
Q3 2022 Highlights
•Net income totaled $7.0 million, or $0.46 per diluted common share, for the current quarter;
◦The Company recorded a provision (reversal) for loan losses of $3.8 million for the current quarter compared with $(109) thousand for the previous quarter and $(1.1) million for the year-ago quarter.
◦Allowance for loan losses (“Allowance”) to loans held-for-investment(1) ratio was 1.21% at September 30, 2022 compared with 1.15% at June 30, 2022, 1.29% at December 31, 2021 and 1.39% at September 30, 2021. Adjusted Allowance to loans held-for-investment ratio(2) was 1.21% at September 30, 2022 compared with 1.15% at June 30, 2022, 1.34% at December 31, 2021 and 1.48% at September 30, 2021.
◦Net interest income was $24.0 million for the current quarter compared with $21.4 million for the previous quarter and $20.2 million for the year-ago quarter. Net interest margin was 4.25% for the current quarter compared with 4.01% for the previous quarter and 3.93% for the year-ago quarter.
◦Gain on sale of loans was $1.4 million for the current quarter compared with $2.0 million for the previous quarter and $4.3 million for the year-ago quarter.
•Total assets were $2.33 billion at September 30, 2022, a decrease of $17.5 million, or 0.7%, from $2.34 billion at June 30, 2022, but an increase of $177.3 million, or 8.2%, from $2.15 billion at December 31, 2021 and an increase of $222.4 million, or 10.6%, from $2.10 billion at September 30, 2021;
•Loans held-for-investment were $1.96 billion at September 30, 2022, an increase of $126.2 million, or 6.9%, from $1.83 billion at June 30, 2022, an increase of $227.0 million, or 13.1%, from $1.73 billion at December 31, 2021, and an increase of $251.4 million, or 14.7%, from $1.71 billion at September 30, 2021;
•Total deposits were $1.98 billion at September 30, 2022, a decrease of $19.5 million, or 1.0%, from $2.00 billion at June 30, 2022, but an increase of $111.0 million, or 5.9%, from $1.87 billion at December 31, 2021 and an increase of $145.4 million, or 7.9%, from $1.83 billion at September 30, 2021;
•The Company announced a repurchase program on July 28, 2022 for the repurchase up to 5% of outstanding common stock. As of September 30, 2022, the Company repurchased and retired 119,941 shares of common stock for an aggregate cost of $2.2 million; and
•The Bank changed its name from Pacific City Bank to PCB Bank and opened 2 new full-service branches in Dallas, Texas and Palisades Park, New Jersey.
“We are pleased to announce our continued solid financial performance for the third quarter of 2022,” stated Henry Kim, President and Chief Executive Officer. “We funded $172 million in loans held-for-investment during the third quarter, resulting in a loan balance increase of 6.9% quarter-over-quarter or 13.1% year-to-date. Compared with the second quarter of 2022, our net interest margin expanded 24 basis points to 4.25% and our net interest income increased 12.5% to $24.0 million for the third quarter. In keeping with our expansion strategic initiative to increase the value of our franchise, we successfully opened two new full-service branches in Dallas, Texas, and Palisades Park, New Jersey during the third quarter of 2022.”
“As we look ahead into the fourth quarter of this year, we will continue to remain opportunistic with our strong capital position and invest in our long-term franchise value by strategically expanding our footprint. We are on schedule to open one more full-service branch in Carrollton, Texas during the fourth quarter of this year,” concluded Kim.
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(1)     Loans held-for-investment are presented net of deferred fees and costs in this press release.
(2)     Adjusted Allowance to loans held-for-investment ratio is a non-GAAP measure, which excludes U.S. Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) loans from loans held-for-investment. See “Non-GAAP Measures” for reconciliation of this measure to its most comparable GAAP measure.
1

Financial Highlights (Unaudited)
($ in thousands, except per share data)
Three Months Ended
Nine Months Ended
9/30/20226/30/2022
% Change
9/30/2021
% Change
9/30/20229/30/2021% Change
Net income$6,953 $9,092 (23.5)%$11,023 (36.9)%$26,285 $29,427 (10.7)%
Diluted earnings per common share$0.46 $0.60 (23.3)%$0.73 (37.0)%$1.73 $1.92 (9.9)%
Net interest income$24,023 $21,351 12.5 %$20,227 18.8 %$65,367 $57,042 14.6 %
Provision (reversal) for loan losses3,753 (109)NM(1,053)NM2,453 (3,134)NM
Noninterest income3,176 3,648 (12.9)%5,588 (43.2)%12,110 13,596 (10.9)%
Noninterest expense13,695 12,245 11.8 %11,232 21.9 %38,011 32,040 18.6 %
Return on average assets (1)
1.19 %1.65 %2.11 %1.58 %1.94 %
Return on average shareholders’ equity (1)
8.16 %12.48 %17.98 %11.84 %16.40 %
Return on average tangible common equity (“TCE”) (2)
10.25 %13.85 %17.98 %13.31 %16.40 %
Net interest margin (1)
4.25 %4.01 %3.93 %4.05 %3.82 %
Efficiency ratio (3)
50.35 %48.98 %43.51 %49.06 %45.36 %
($ in thousands, except per share data)9/30/20226/30/2022% Change12/31/2021% Change9/30/2021% Change
Total assets
$2,327,051 $2,344,560 (0.7)%$2,149,735 8.2 %$2,104,699 10.6 %
Net loans held-for-investment
1,935,476 1,811,939 6.8 %1,709,824 13.2 %1,684,071 14.9 %
Total deposits
1,978,098 1,997,607 (1.0)%1,867,134 5.9 %1,832,666 7.9 %
Book value per common share (4)
$22.40 $22.36 $17.24 $16.68 
TCE per common share (2)
$17.75 $17.73 $17.24 $16.68 
Tier 1 leverage ratio (consolidated)
14.74 %15.37 %12.11 %11.91 %
Total shareholders’ equity to total assets14.30 %14.26 %11.92 %11.76 %
TCE to total assets (2), (5)
11.33 %11.31 %11.92 %11.76 %
(1)Ratios are presented on an annualized basis.
(2)Non-GAAP. See “Non-GAAP Measures” for reconciliation of this measure to its most comparable GAAP measure.
(3)Calculated by dividing noninterest expense by the sum of net interest income and noninterest income.
(4)Calculated by dividing total shareholders’ equity by the number of outstanding common shares.
(5)The Company did not have any intangible asset component for the presented periods.



2

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)9/30/20226/30/2022
% Change
9/30/2021% Change9/30/20229/30/2021% Change
Interest income/expense on
Loans
$24,835 $21,243 16.9 %$20,537 20.9 %$66,268 $58,792 12.7 %
Investment securities
806 668 20.7 %437 84.4 %1,950 1,172 66.4 %
Other interest-earning assets
1,194 535 123.2 %194 515.5 %1,957 513 281.5 %
Total interest-earning assets
26,835 22,446 19.6 %21,168 26.8 %70,175 60,477 16.0 %
Interest-bearing deposits
2,798 1,041 168.8 %885 216.2 %4,689 3,196 46.7 %
Borrowings
14 54 (74.1)%56 (75.0)%119 239 (50.2)%
Total interest-bearing liabilities
2,812 1,095 156.8 %941 198.8 %4,808 3,435 40.0 %
Net interest income
$24,023 $21,351 12.5 %$20,227 18.8 %$65,367 $57,042 14.6 %
Average balance of
Loans
$1,905,366 $1,804,368 5.6 %$1,715,106 11.1 %$1,828,187 $1,683,084 8.6 %
Investment securities
137,363 135,324 1.5 %136,874 0.4 %132,023 131,039 0.8 %
Other interest-earning assets
200,367 195,633 2.4 %188,137 6.5 %198,311 180,663 9.8 %
Total interest-earning assets
$2,243,096 $2,135,325 5.0 %$2,040,117 9.9 %$2,158,521 $1,994,786 8.2 %
Interest-bearing deposits
$1,137,739 $1,001,424 13.6 %$1,000,332 13.7 %$1,058,105 $1,026,842 3.0 %
Borrowings
2,033 11,132 (81.7)%18,152 (88.8)%7,824 37,363 (79.1)%
Total interest-bearing liabilities
$1,139,772 $1,012,556 12.6 %$1,018,484 11.9 %$1,065,929 $1,064,205 0.2 %
Total funding (1)
$1,965,134 $1,902,247 3.3 %$1,812,649 8.4 %$1,917,766 $1,772,005 8.2 %
Annualized average yield/cost of 
Loans
5.17 %4.72 %4.75 %4.85 %4.67 %
Investment securities
2.33 %1.98 %1.27 %1.97 %1.20 %
Other interest-earning assets
2.36 %1.10 %0.41 %1.32 %0.38 %
Total interest-earning assets4.75 %4.22 %4.12 %4.35 %4.05 %
Interest-bearing deposits
0.98 %0.42 %0.35 %0.59 %0.42 %
Borrowings
2.73 %1.95 %1.22 %2.03 %0.86 %
Total interest-bearing liabilities0.98 %0.43 %0.37 %0.60 %0.43 %
Net interest margin4.25 %4.01 %3.93 %4.05 %3.82 %
Cost of total funding (1)
0.57 %0.23 %0.21 %0.34 %0.26 %
Supplementary information
Net accretion of discount on loans$867 $907 (4.4)%$932 (7.0)%$2,682 $2,689 (0.3)%
Net amortization of deferred loan fees$243 $606 (59.9)%$1,983 (87.7)%$2,014 $4,662 (56.8)%
(1)Total funding is the sum of interest-bearing liabilities and noninterest-bearing deposits. The cost of total funding is calculated as annualized total interest expense divided by average total funding.

3

Loans. The increases in average yield for the current quarter and year-to-date period were primarily due to an increase in overall interest rates on loans from the rising interest rate environment, partially offset by a decrease in net amortization of deferred loan fees from the decreased amount of SBA PPP loan payoffs.
The following table presents a composition of total loans by interest rate type accompanied with the weighted-average contractual rates as of the dates indicated:
9/30/20226/30/202212/31/20219/30/2021
% to Total LoansWeighted-Average Contractual Rate% to Total LoansWeighted-Average Contractual Rate% to Total LoansWeighted-Average Contractual Rate% to Total LoansWeighted-Average Contractual Rate
Fixed rate loans
24.0 %4.43 %24.5 %4.35 %28.4 %3.98 %29.9 %3.86 %
Hybrid rate loans
38.0 %4.23 %37.0 %4.11 %29.1 %4.16 %26.4 %4.28 %
Variable rate loans
38.0 %6.75 %38.5 %5.12 %42.5 %3.95 %43.7 %3.96 %
Investment Securities. The increases in average yield for the current quarter and year-to-date period were primarily due to a decrease in net amortization of premiums on mortgage-backed securities and collateralized mortgage obligations and higher yield on newly purchased investment securities.
Other Interest-Earning Assets. The increases in average yield for the current quarter and year-to-date period were primarily due to an increased interest rate on cash held at the Federal Reserve Bank (“FRB”) account. The increases in average balance for the current quarter and year-to-date period compared with the same periods of 2021 were primarily due to an increase in average balance of deposits and the Emergency Capital Investment Program (“ECIP”) capital investment, partially offset by an increase in loans. The Company maintains most of its cash at the FRB account.
Interest-Bearing Deposits. The increases in average cost for the current quarter and year-to-date period were primarily due to an increase in market rates.
Provision (reversal) for Loan Losses
Provision (reversal) for loan losses was $3.8 million for the current quarter compared with $(109) thousand for the previous quarter and $(1.1) million for the year-ago quarter. For the current and previous year-to-date periods, provision (reversal) for loan losses was $2.5 million and $(3.1) million, respectively. The increase in provision for loan losses was primarily due to increases in gross loan balance, and qualitative adjustment factors related to current economic condition and increased charge-offs during the current quarter.
The Company recorded net charge-offs of $1.1 million for the current quarter compared with $18 thousand for the previous quarter and $29 thousand for the year-ago quarter. For the current and previous year-to-date periods, the Company recorded net charge-offs (recoveries) of $1.1 million and $(431) thousand, respectively.
Adjusted Allowance to loans held-for-investment ratio(1) was 1.21%, 1.15%, 1.34%, and 1.48% at September 30, 2022, June 30, 2022, December 31, 2021, and September 30, 2021, respectively.
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(1)     Adjusted Allowance to loans held-for-investment ratio is a non-GAAP measure, which excludes SBA PPP loans from loans held-for-investment. See “Non-GAAP Measures” for reconciliation of this measure to its most comparable GAAP measure.
4

Noninterest Income
The following table presents the components of noninterest income for the periods indicated:
Three Months Ended
Nine Months Ended
($ in thousands)9/30/20226/30/2022
% Change
9/30/2021
% Change
9/30/20229/30/2021
% Change
Gain on sale of loans
$1,415 $2,039 (30.6)%$4,269 (66.9)%$7,231 $9,558 (24.3)%
Service charges and fees on deposits
341 330 3.3 %292 16.8 %974 887 9.8 %
Loan servicing income
780 755 3.3 %655 19.1 %2,235 2,082 7.3 %
Bank-owned life insurance income178 175 1.7 %— — %525 — — %
Other income
462 349 32.4 %372 24.2 %1,145 1,069 7.1 %
Total noninterest income
$3,176 $3,648 (12.9)%$5,588 (43.2)%$12,110 $13,596 (10.9)%
Gain on Sale of Loans. The following table presents information on gain on sale of loans for the periods indicated:
Three Months Ended
Nine Months Ended
($ in thousands)9/30/20226/30/2022% Change9/30/2021% Change9/30/20229/30/2021% Change
Gain on sale of SBA loans
Sold loan balance
$27,313 $38,442 (29.0)%$45,048 (39.4)%$105,438 $90,074 17.1 %
Premium received
2,036 2,600 (21.7)%4,879 (58.3)%8,842 10,360 (14.7)%
Gain recognized
1,407 2,039 (31.0)%4,263 (67.0)%7,223 9,412 (23.3)%
Gain on sale of residential property loans
Sold loan balance
$858 $— — %$301 185.0 %$858 $9,823 (91.3)%
Gain recognized
8 — — %2 300.0 %8 142 (94.4)%
Loan Servicing Income. The following table presents information on loan servicing income for the periods indicated:
Three Months Ended
Nine Months Ended
($ in thousands)9/30/20226/30/2022
% Change
9/30/2021
% Change
9/30/20229/30/2021
% Change
Loan servicing income
Servicing income received
$1,302 $1,287 1.2 %$1,180 10.3 %$3,819 $3,577 6.8 %
Servicing assets amortization
(522)(532)(1.9)%(525)(0.6)%(1,584)(1,495)6.0 %
Loan servicing income$780 $755 3.3 %$655 19.1 %$2,235 $2,082 7.3 %
Underlying loans at end of period
$538,904 $537,990 0.2 %$511,930 5.3 %$538,904 $511,930 5.3 %
The Company services SBA loans and certain residential property loans that are sold to the secondary market.

5

Noninterest Expense
The following table presents the components of noninterest expense for the periods indicated:
Three Months Ended
Nine Months Ended
($ in thousands)9/30/20226/30/2022% Change9/30/2021% Change9/30/20229/30/2021% Change
Salaries and employee benefits
$8,457 $8,125 4.1 %$7,606 11.2 %$25,177 $20,913 20.4 %
Occupancy and equipment
1,650 1,537 7.4 %1,399 17.9 %4,584 4,158 10.2 %
Professional fees
587 642 (8.6)%422 39.1 %1,632 1,574 3.7 %
Marketing and business promotion
909 310 193.2 %416 118.5 %1,426 1,070 33.3 %
Data processing
427 441 (3.2)%391 9.2 %1,272 1,164 9.3 %
Director fees and expenses
179 182 (1.6)%144 24.3 %530 433 22.4 %
Regulatory assessments
150 147 2.0 %12 1,150.0 %438 399 9.8 %
Other expense1,336 861 55.2 %842 58.7 %2,952 2,329 26.7 %
Total noninterest expense
$13,695 $12,245 11.8 %$11,232 21.9 %$38,011 $32,040 18.6 %
Salaries and Employee Benefits. The increases for the current quarter compared with the previous and year-ago quarters were primarily due to increases in salaries and other employee benefit expense from the increased number of employees, partially offset by a decrease in incentives tied to the sales of Loan Production Offices (“LPO”) originated SBA loans and an increase in loan origination cost, which offsets the recognition of salaries. The increase for the current year-to-date period compared with the previous year-to-date period was due to increases in salaries, other employee benefit expense, the incentives tied to sales of LPO originated SBA loans, and a decrease in loan origination cost.
Total loan origination cost included in salaries and employee benefits were $488 thousand, $461 thousand, and $421 thousand for the current, previous, and year-ago quarters, respectively, and $1.3 million and $1.8 million for the current and previous year-to-date periods, respectively. The Company recognized a higher loan origination cost for the previous year-to-date period primarily due to the SBA PPP loan production in the first quarter of 2021. The number of full-time equivalent employees was 274, 271, and 249 as of September 30, 2022, June 30, 2022, and September 30, 2021, respectively.
Occupancy and Equipment. The increases for the current quarter and year-to-date period were primarily due to new branch openings. The Company opened 2 new branches in Dallas, Texas and Palisades Park, New Jersey during the current quarter and plans to open one more branch in Carrollton, Texas during the fourth quarter of 2022.
Marketing and Business Promotion. The increases for the current quarter and year-to-date period were primarily due to increases in marketing activities and advertisement for the Bank's name change to PCB Bank, and new branch openings.
Director Fees and Expenses. The increases for the current quarter and year-to-date periods compared with the same periods of 2021 were primarily due to a new director appointed during the fourth quarter of 2021.
Regulatory Assessments. During the year-ago quarter, an adjustment was made for the assessment rate decrease.
Other Expense. The increases for the current quarter and year-to-date period were primarily due to an increase in office expense for the new branches and a legal settlement of $150 thousand for the current quarter.
6

Balance Sheet (Unaudited)
Total assets were $2.33 billion at September 30, 2022, a decrease of $17.5 million, or 0.7%, from $2.34 billion at June 30, 2022, but an increase of $177.3 million, or 8.2%, from $2.15 billion at December 31, 2021 and an increase of $222.4 million, or 10.6%, from $2.10 billion at September 30, 2021. The decrease for the current quarter was primarily due to decreases in cash and cash equivalents and securities available-for-sale, partially offset by increases in loans held-for-sale and loans held-for-investment. The increase for the current year-to-date period was primarily due to increases in loans held-for-investment and securities available-for-sale, partially offset by decreases in cash and cash equivalents and loans held-for-sale.
Loans
The following table presents a composition of total loans (includes both loans held-for-sale and loans held-for-investment) as of the dates indicated:
($ in thousands)9/30/20226/30/2022% Change12/31/2021% Change9/30/2021% Change
Real estate loans
Commercial property
$1,271,781 $1,204,142 5.6 %$1,105,843 15.0 %$1,054,351 20.6 %
Residential property
297,506 258,259 15.2 %209,485 42.0 %201,635 47.5 %
SBA property
136,088 131,420 3.6 %129,661 5.0 %127,845 6.4 %
Construction
14,592 12,595 15.9 %8,252 76.8 %6,572 122.0 %
Commercial and industrial loans
Commercial term
80,225 73,885 8.6 %73,438 9.2 %74,390 7.8 %
Commercial lines of credit
117,960 111,916 5.4 %100,936 16.9 %101,456 16.3 %
SBA commercial term
16,542 16,985 (2.6)%17,640 (6.2)%18,338 (9.8)%
SBA PPP
1,309 1,583 (17.3)%65,329 (98.0)%101,901 (98.7)%
Other consumer loans
23,234 22,225 4.5 %21,621 7.5 %21,390 8.6 %
Loans held-for-investment
1,959,237 1,833,010 6.9 %1,732,205 13.1 %1,707,878 14.7 %
Loans held-for-sale
18,982 9,627 97.2 %37,026 (48.7)%29,020 (34.6)%
Total loans
$1,978,219 $1,842,637 7.4 %$1,769,231 11.8 %$1,736,898 13.9 %
The increase in loans held-for-investment for the current quarter was primarily due to new funding of $171.9 million and advances on lines of credit of $42.0 million, partially offset by pay-downs and pay-offs of $86.6 million. The increase for the current year-to-date period was primarily due to new funding of $450.8 million and advances of lines of credit of $111.3 million, partially offset by pay-downs and pay-offs of $333.9 million. SBA PPP loans of $274 thousand and $64.0 million were paid off through regular payments or forgiveness from SBA during the current quarter and year-to-date period, respectively.
The increase in loans held-for-sale for the current quarter was primarily due to new funding of $37.1 million, partially offset by sales of $27.7 million. The decrease for the current year-to-date period was primarily due to sales of $105.8 million, partially offset by new funding of $88.2 million.
The following table presents a composition of commitments to extend credit as of the dates indicated:
($ in thousands)9/30/20226/30/2022% Change12/31/2021% Change9/30/2021% Change
Real estate loans
Commercial property
$18,400 $20,425 (9.9)%$20,194 (8.9)%$17,873 2.9 %
SBA property
3,730 4,265 (12.5)%3,068 21.6 %4,747 (21.4)%
Construction
11,093 12,080 (8.2)%5,180 114.2 %9,478 17.0 %
Commercial and industrial loans
Commercial term
2,027 2,347 (13.6)%1,097 84.8 %1,455 39.3 %
Commercial lines of credit
254,738 218,850 16.4 %169,000 50.7 %156,411 62.9 %
SBA commercial term
572 383 49.3 %149 283.9 %245 133.5 %
Other consumer loans
847 1,086 (22.0)%595 42.4 %130 551.5 %
Total commitments to extend credit
$291,407 $259,436 12.3 %$199,283 46.2 %$190,339 53.1 %

7

Credit Quality
The following table presents a summary of non-performing loans, non-performing assets and classified assets as of the dates indicated:
($ in thousands)9/30/20226/30/2022% Change12/31/2021% Change9/30/2021% Change
Nonaccrual loans
Real estate loans
Commercial property
$2,444 $— — %$— — %$— — %
Residential property
372 450 (17.3)%— — %— — %
SBA property
552 564 (2.1)%746 (26.0)%766 (27.9)%
Commercial and industrial loans
Commercial term
3 — — %— — %— — %
Commercial lines of credit
4,000 — — %— — %— — %
SBA commercial term
— 185 (100.0)%213 (100.0)%314 (100.0)%
Other consumer loans
25 24 4.2 %35 (28.6)%33 (24.2)%
Total nonaccrual loans held-for-investment
7,396 1,223 504.7 %994 644.1 %1,113 564.5 %
Loans past due 90 days or more and still accruing
— — — %— — %3 (100.0)%
Non-performing loans (“NPLs”)
7,396 1,223 504.7 %994 644.1 %1,116 562.7 %
Other real estate owned (“OREO”)
— 808 (100.0)%— — %— — %
Non-performing assets (“NPAs”)
$7,396 $2,031 264.2 %$994 644.1 %$1,116 562.7 %
Loans past due and still accruing
Past due 30 to 59 days
$215 $682 (68.5)%$549 (60.8)%$292 (26.4)%
Past due 60 to 89 days
195 — — %5 3,800.0 %— — %
Past due 90 days or more
— — — %— — %3 (100.0)%
Total loans past due and still accruing
$410 $682 (39.9)%554 (26.0)%$295 39.0 %
Troubled debt restructurings (“TDRs”)
Accruing TDRs
$542 $555 (2.3)%$576 (5.9)%$589 (8.0)%
Nonaccrual TDRs
7 10 (30.0)%17 (58.8)%26 (73.1)%
Total TDRs
$549 $565 (2.8)%$593 (7.4)%$615 (10.7)%
Special mention loans$5,986 $6,313 (5.2)%$18,092 (66.9)%$17,315 (65.4)%
Classified assets
Classified loans
$10,293 $3,980 158.6 %$5,168 99.2 %$5,345 92.6 %
OREO
— 808 (100.0)%— — %— — %
Classified assets
$10,293 $4,788 115.0 %$5,168 99.2 %$5,345 92.6 %
NPLs to loans held-for-investment
0.38 %0.07 %0.06 %0.07 %
NPAs to total assets
0.32 %0.09 %0.05 %0.05 %
Classified assets to total assets
0.44 %0.20 %0.24 %0.25 %
The decrease in special mention loans for the current year-to-date period was primarily due to improvements of 2 loans with an aggregated carrying value of $11.3 million at December 31, 2021. The increases in nonaccrual commercial property loans and commercial lines of credit, and classified loans for the current quarter were primarily due to downgrades of loans to a single credit relationship.
Investment Securities
Total investment securities were $129.4 million at September 30, 2022, a decrease of $9.7 million, or 6.95%, from $139.1 million at June 30, 2022 and a decrease of $3.7 million, or 2.8%, from $133.1 million at September 30, 2021, but an increase of $6.2 million, or 5.03%, from $123.2 million at December 31, 2021. The decrease for the current quarter was primarily due to principal pay-downs and calls of $6.4 million, a fair value decrease of $6.3 million, and net premium amortization of $75 thousand, partially offset by purchases of $3.1 million. The increase for the current year-to-date period was primarily due to purchases of $41.1 million, partially offset by principal pay-downs and calls of $18.8 million, a fair value decrease of $15.8 million, and net premium amortization of $307 thousand.

8

Deposits
The following table presents the Company’s deposit mix as of the dates indicated:
9/30/20226/30/202212/31/20219/30/2021
($ in thousands)Amount% to TotalAmount% to TotalAmount% to TotalAmount% to Total
Noninterest-bearing demand deposits
$809,842 40.9 %$988,454 49.5 %$830,383 44.5 %$832,240 45.4 %
Interest-bearing deposits
Savings
13,028 0.7 %14,686 0.7 %16,299 0.9 %13,294 0.7 %
NOW
17,550 0.9 %18,881 0.9 %20,185 1.1 %20,461 1.1 %
Retail money market accounts
522,412 26.4 %458,605 22.9 %386,041 20.5 %376,333 20.5 %
Brokered money market accounts
10,010 0.5 %1 0.1 %1 0.1 %4 0.1 %
Retail time deposits of
$250,000 or less
236,864 12.0 %235,956 11.8 %256,956 13.8 %262,207 14.3 %
More than $250,000
239,271 12.1 %186,024 9.3 %172,269 9.2 %163,127 8.9 %
State and brokered time deposits
129,121 6.5 %95,000 4.8 %185,000 9.9 %165,000 9.0 %
Total interest-bearing deposits
1,168,256 59.1 %1,009,153 50.5 %1,036,751 55.5 %1,000,426 54.6 %
Total deposits
$1,978,098 100.0 %$1,997,607 100.0 %$1,867,134 100.0 %$1,832,666 100.0 %
The decrease in noninterest-bearing demand deposits for the current quarter was primarily due to strong deposit market competition and the migration of large amount of noninterest-bearing demand deposits to money market accounts and time deposits attributable to the rising market rates. To remain competitive in this rising interest rate environment, the Bank started to offer higher rates on deposit products to retain and attract new customers.
The increase in retail time deposits for the current quarter was primarily due to new accounts of $152.8 million, renewals of the matured accounts of $182.6 million and balance increases of $6.3 million, partially offset by matured and closed accounts of $287.7 million. The increase for the current year-to-date period was primarily due to new accounts of $252.2 million, renewals of the matured accounts of $480.2 million and balance increases of $15.8 million, partially offset by matured and closed accounts of $701.4 million.
Liquidity
The following table presents a summary of the Company’s liquidity position as of September 30, 2022:
($ in thousands)9/30/2022
Cash and cash equivalents
$154,038 
Cash and cash equivalents to total assets
6.6 %
Available borrowing capacity
FHLB advances
$586,125 
Federal Reserve Discount Window
29,065 
Overnight federal funds lines
65,000 
Total
$680,190 
Total available borrowing capacity to total assets
29.2 %

9

Shareholders’ Equity
Shareholders’ equity was $332.7 million at September 30, 2022, a decrease of $1.7 million, or 0.5%, from $334.4 million at June 30, 2022, but an increase of $76.4 million, or 29.8%, from $256.3 million at December 31, 2021 and an increase of $85.1 million, or 34.4%, from $247.6 million at September 30, 2021. The decrease for the current quarter and year-to-date period were primarily due to cash dividends declared on common stock, an increase in accumulated other comprehensive loss, and repurchase of common stock, partially offset by net income. The increase for the current year-to-date period was primarily due to net income and issuance of preferred stock (as discussed below), partially offset by cash dividends declared on common stock, repurchase of common stock and an increase in accumulated other comprehensive loss. The Company declared cash dividends of $2.2 million and $6.7 million for the current quarter and year-to-date period, respectively.
Stock Repurchase
On April 8, 2021, the Company’s Board of Directors approved a repurchase program authorizing the repurchase of up to 5% of the Company’s outstanding common stock as of the date of the board meeting, which represented 775,000 shares, through September 7, 2021. The Company repurchased and retired 680,269 shares of common stock totaling $10.9 million at a weighted-average price of $15.99 per share under this program.
On July 28, 2022, the Company’s Board of Directors approved a repurchase program authorizing for the repurchase of up to 5% of the Company’s outstanding common stock as of the date of the board meeting, which represented 747,938 shares, through February 1, 2023. The Company repurchased and retired 119,941 shares of common stock at a weighted-average price of $18.75 per share, totaling $2.2 million under this repurchase program as of September 30, 2022.
Issuance of Preferred Stock Under the Emergency Capital Investment Program
On May 24, 2022, the Company issued 69,141 shares of Senior Non-Cumulative Perpetual Preferred Stock, Series C, liquidation preference of $1,000 per share (“Series C Preferred Stock”) for the capital investment of $69.1 million from the U.S. Treasury under the Emergency Capital Investment Program (“ECIP”). ECIP investment is treated as tier 1 capital for regulatory capital purposes.
The Series C Preferred Stock bears no dividend for the first 24 months following the investment date. Thereafter, the dividend rate will be adjusted based on the lending growth criteria listed in the terms of the ECIP investment with an annual dividend rate up to 2%. After the tenth anniversary of the investment date, the dividend rate will be fixed based on average annual amount of lending in years 2 through 10.
Capital Ratios
Based on changes to the Federal Reserve’s definition of a “Small Bank Holding Company” that increased the threshold to $3 billion in assets in August 2018, the Company is not currently subject to separate minimum capital measurements. At such time as the Company reaches the $3 billion asset level, it will again be subject to capital measurements independent of the Bank. For comparison purposes, the Company’s ratios are included in following discussion. The following table presents capital ratios for the Company and the Bank as of the dates indicated:
9/30/20226/30/202212/31/20219/30/2021Well Capitalized Requirements
PCB Bancorp
Common tier 1 capital (to risk-weighted assets)
13.69 %14.44 %14.79 %15.07 %N/A
Total capital (to risk-weighted assets)
18.34 %19.25 %16.04 %16.32 %N/A
Tier 1 capital (to risk-weighted assets)
17.14 %18.11 %14.79 %15.07 %N/A
Tier 1 capital (to average assets)
14.74 %15.37 %12.11 %11.91 %N/A
PCB Bank
Common tier 1 capital (to risk-weighted assets)
16.82 %17.79 %14.48 %14.76 %6.5 %
Total capital (to risk-weighted assets)
18.02 %18.92 %15.73 %16.01 %10.0 %
Tier 1 capital (to risk-weighted assets)
16.82 %17.79 %14.48 %14.76 %8.0 %
Tier 1 capital (to average assets)
14.47 %15.09 %11.85 %11.66 %5.0 %
10

About PCB Bancorp
PCB Bancorp is the bank holding company for PCB Bank, a California state chartered bank, offering a full suite of commercial banking services to small to medium-sized businesses, individuals and professionals, primarily in Southern California, and predominantly in Korean-American and other minority communities.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements. These forward-looking statements represent plans, estimates, objectives, goals, guidelines, expectations, intentions, projections and statements of our beliefs concerning future events, business plans, objectives, expected operating results and the assumptions upon which those statements are based. Forward-looking statements include without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and are typically identified with words such as “may,” “could,” “should,” “will,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “aim,” “intend,” “plan,” or words or phases of similar meaning. We caution that the forward-looking statements are based largely on our expectations and are subject to a number of known and unknown risks and uncertainties that are subject to change based on factors which are, in many instances, beyond our control, including but not limited to general economic uncertainty in the United States and abroad, the impact of inflation, changes in interest rates (including actions taken by the Federal Reserve to address inflation), deposit flows, and real estate values, and their corresponding impact on our customers, and the network and data incident discovered on August 30, 2021. These and other important factors are detailed in various securities law filings made periodically by the Company, copies of which are available from the Company without charge. Actual results, performance or achievements could differ materially from those contemplated, expressed, or implied by the forward-looking statements. Any forward-looking statements presented herein are made only as of the date of this press release, and we do not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise, except as required by law.
Contact:
Timothy Chang
Executive Vice President & Chief Financial Officer
213-210-2000

11

PCB Bancorp and Subsidiary
Consolidated Balance Sheets (Unaudited)
($ in thousands, except share and per share data)
9/30/20226/30/2022% Change12/31/2021% Change9/30/2021% Change
Assets
Cash and due from banks
$22,252 $23,125 (3.8)%$15,222 46.2 %$19,688 13.0 %
Interest-bearing deposits in other financial institutions131,786 276,785 (52.4)%188,063 (29.9)%195,285 (32.5)%
Total cash and cash equivalents
154,038 299,910 (48.6)%203,285 (24.2)%214,973 (28.3)%
Securities available-for-sale, at fair value
129,401 139,067 (7.0)%123,198 5.0 %133,102 (2.8)%
Loans held-for-sale
18,982 9,627 97.2 %37,026 (48.7)%29,020 (34.6)%
Loans held-for-investment1,959,237 1,833,010 6.9 %1,732,205 13.1 %1,707,878 14.7 %
Allowance for loan losses
(23,761)(21,071)12.8 %(22,381)6.2 %(23,807)(0.2)%
Net loans held-for-investment
1,935,476 1,811,939 6.8 %1,709,824 13.2 %1,684,071 14.9 %
Premises and equipment, net
4,671 3,633 28.6 %3,098 50.8 %3,306 41.3 %
Federal Home Loan Bank and other bank stock
10,183 10,183 — %8,577 18.7 %8,577 18.7 %
Other real estate owned, net
— 808 (100.0)%— — %— — %
Bank-owned life insurance29,883 29,705 0.6 %29,358 1.8 %— — %
Deferred tax assets, net
12,135 11,869 2.2 %10,824 12.1 %7,519 61.4 %
Servicing assets
7,627 7,716 (1.2)%7,269 4.9 %7,009 8.8 %
Operating lease assets
6,897 6,512 5.9 %6,786 1.6 %7,164 (3.7)%
Accrued interest receivable
6,070 5,212 16.5 %5,368 13.1 %5,494 10.5 %
Other assets
11,688 8,379 39.5 %5,122 128.2 %4,464 161.8 %
Total assets
$2,327,051 $2,344,560 (0.7)%$2,149,735 8.2 %$2,104,699 10.6 %
Liabilities
Deposits
Noninterest-bearing demand
$809,842 $988,454 (18.1)%$830,383 (2.5)%$832,240 (2.7)%
Savings, NOW and money market accounts
563,000 492,173 14.4 %422,526 33.2 %410,092 37.3 %
Time deposits of $250,000 or less
305,985 270,956 12.9 %341,956 (10.5)%327,207 (6.5)%
Time deposits of more than $250,000
299,271 246,024 21.6 %272,269 9.9 %263,127 13.7 %
Total deposits
1,978,098 1,997,607 (1.0)%1,867,134 5.9 %1,832,666 7.9 %
Federal Home Loan Bank advances
— — — %10,000 (100.0)%10,000 (100.0)%
Operating lease liabilities
7,402 7,067 4.7 %7,444 (0.6)%7,862 (5.9)%
Accrued interest payable and other liabilities
8,832 5,511 60.3 %8,871 (0.4)%6,573 34.4 %
Total liabilities
1,994,332 2,010,185 (0.8)%1,893,449 5.3 %1,857,101 7.4 %
Commitments and contingent liabilities
Shareholders’ equity
Preferred stock69,141 69,141 — %— — %— — %
Common stock153,890 155,842 (1.3)%154,992 (0.7)%154,618 (0.5)%
Retained earnings
120,699 115,992 4.1 %101,140 19.3 %92,248 30.8 %
Accumulated other comprehensive income (loss), net(11,011)(6,600)66.8 %154 NM732 NM
Total shareholders’ equity
332,719 334,375 (0.5)%256,286 29.8 %247,598 34.4 %
Total liabilities and shareholders’ equity
$2,327,051 $2,344,560 (0.7)%$2,149,735 8.2 %$2,104,699 10.6 %
Outstanding common shares
14,853,140 14,956,760 14,865,825 14,841,626 
Book value per common share (1)
$22.40 $22.36 $17.24 $16.68 
TCE per common share (2)
$17.75 $17.73 $17.24 $16.68 
Total loan to total deposit ratio
100.01 %92.24 %94.76 %94.77 %
Noninterest-bearing deposits to total deposits
40.94 %49.48 %44.47 %45.41 %
(1)The ratios are calculated by dividing total shareholders’ equity by the number of outstanding common shares. The Company did not have any intangible equity components for the presented periods.
(2)Non-GAAP. See “Non-GAAP Measures” for reconciliation of this measure to its most comparable GAAP measure.
12

PCB Bancorp and Subsidiary
Consolidated Statements of Income (Unaudited)
($ in thousands, except share and per share data)
Three Months Ended
Nine Months Ended
9/30/20226/30/2022% Change9/30/2021% Change9/30/20229/30/2021% Change
Interest and dividend income
Loans, including fees$24,835 $21,243 16.9 %$20,537 20.9 %$66,268 $58,792 12.7 %
Investment securities806 668 20.7 %437 84.4 %1,950 1,172 66.4 %
Other interest-earning assets1,194 535 123.2 %194 515.5 %1,957 513 281.5 %
Total interest income26,835 22,446 19.6 %21,168 26.8 %70,175 60,477 16.0 %
Interest expense
Deposits2,798 1,041 168.8 %885 216.2 %4,689 3,196 46.7 %
Other borrowings14 54 (74.1)%56 (75.0)%119 239 (50.2)%
Total interest expense
2,812 1,095 156.8 %941 198.8 %4,808 3,435 40.0 %
Net interest income
24,023 21,351 12.5 %20,227 18.8 %65,367 57,042 14.6 %
Provision (reversal) for loan losses3,753 (109)NM(1,053)NM2,453 (3,134)NM
Net interest income after provision (reversal) for loan losses20,270 21,460 (5.5)%21,280 (4.7)%62,914 60,176 4.5 %
Noninterest income
Gain on sale of loans
1,415 2,039 (30.6)%4,269 (66.9)%7,231 9,558 (24.3)%
Service charges and fees on deposits
341 330 3.3 %292 16.8 %974 887 9.8 %
Loan servicing income
780 755 3.3 %655 19.1 %2,235 2,082 7.3 %
Bank-owned life insurance income178 175 1.7 %— — %525 — — %
Other income
462 349 32.4 %372 24.2 %1,145 1,069 7.1 %
Total noninterest income
3,176 3,648 (12.9)%5,588 (43.2)%12,110 13,596 (10.9)%
Noninterest expense
Salaries and employee benefits
8,457 8,125 4.1 %7,606 11.2 %25,177 20,913 20.4 %
Occupancy and equipment
1,650 1,537 7.4 %1,399 17.9 %4,584 4,158 10.2 %
Professional fees
587 642 (8.6)%422 39.1 %1,632 1,574 3.7 %
Marketing and business promotion
909 310 193.2 %416 118.5 %1,426 1,070 33.3 %
Data processing
427 441 (3.2)%391 9.2 %1,272 1,164 9.3 %
Director fees and expenses
179 182 (1.6)%144 24.3 %530 433 22.4 %
Regulatory assessments
150 147 2.0 %12 1,150.0 %438 399 9.8 %
Other expense1,336 861 55.2 %842 58.7 %2,952 2,329 26.7 %
Total noninterest expense
13,695 12,245 11.8 %11,232 21.9 %38,011 32,040 18.6 %
Income before income taxes
9,751 12,863 (24.2)%15,636 (37.6)%37,013 41,732 (11.3)%
Income tax expense
2,798 3,771 (25.8)%4,613 (39.3)%10,728 12,305 (12.8)%
Net income
$6,953 $9,092 (23.5)%$11,023 (36.9)%$26,285 $29,427 (10.7)%
Earnings per common share
Basic
$0.47 $0.61 $0.74 $1.76 $1.94 
Diluted
$0.46 $0.60 $0.73 $1.73 $1.92 
Average common shares
Basic
14,877,879 14,883,768 14,779,707 14,869,997 15,090,989 
Diluted
15,088,089 15,122,452 15,031,558 15,126,863 15,298,065 
Dividend paid per common share
$0.15 $0.15 $0.12 $0.45 $0.32 
Return on average assets (1)
1.19 %1.65 %2.11 %1.58 %1.94 %
Return on average shareholders’ equity (1)
8.16 %12.48 %17.98 %11.84 %16.40 %
Return on average TCE (1), (2)
10.25 %13.85 %17.98 %13.31 %16.40 %
Efficiency ratio (3)
50.35 %48.98 %43.51 %49.06 %45.36 %
(1)Ratios are presented on an annualized basis.
(2)Non-GAAP. See “Non-GAAP Measures” for reconciliation of this measure to its most comparable GAAP measure.
(3)The ratios are calculated by dividing noninterest expense by the sum of net interest income and noninterest income.
13

PCB Bancorp and Subsidiary
Average Balance, Average Yield, and Average Rate (Unaudited)
($ in thousands)
Three Months Ended
9/30/20226/30/20229/30/2021
Average BalanceInterest Income/ Expense
Avg. Yield/Rate(6)
Average BalanceInterest Income/ Expense
Avg. Yield/Rate(6)
Average BalanceInterest Income/ Expense
Avg. Yield/Rate(6)
Assets
Interest-earning assets
Total loans (1)
$1,905,366 $24,835 5.17 %$1,804,368 $21,243 4.72 %$1,715,106 $20,537 4.75 %
Mortgage-backed securities
93,546 518 2.20 %88,032 416 1.90 %95,908 278 1.15 %
Collateralized mortgage obligation
24,090 151 2.49 %25,929 125 1.93 %22,534 57 1.00 %
SBA loan pool securities
10,435 56 2.13 %11,164 43 1.54 %10,390 45 1.72 %
Municipal bonds (2)
4,491 34 3.00 %5,347 37 2.78 %5,759 36 2.48 %
Corporate bonds4,801 47 3.88 %4,852 47 3.89 %2,283 21 3.65 %
Other interest-earning assets
200,367 1,194 2.36 %195,633 535 1.10 %188,137 194 0.41 %
Total interest-earning assets
2,243,096 26,835 4.75 %2,135,325 22,446 4.22 %2,040,117 21,168 4.12 %
Noninterest-earning assets
Cash and due from banks20,609 20,801 19,915 
Allowance for loan losses
(21,117)(21,204)(24,854)
Other assets
76,851 73,137 35,187 
Total noninterest-earning assets
76,343 72,734 30,248 
Total assets
$2,319,439 $2,208,059 $2,070,365 
Liabilities and Shareholders’ Equity
Interest-bearing liabilities
Deposits
NOW and money market accounts
$577,975 1,375 0.94 %$464,829 430 0.37 %$387,661 291 0.30 %
Savings
14,990 2 0.05 %14,989 2 0.05 %12,806 2 0.06 %
Time deposits
544,774 1,421 1.03 %521,606 609 0.47 %599,865 592 0.39 %
Total interest-bearing deposits
1,137,739 2,798 0.98 %1,001,424 1,041 0.42 %1,000,332 885 0.35 %
Other borrowings2,033 14 2.73 %11,132 54 1.95 %18,152 56 1.22 %
Total interest-bearing liabilities
1,139,772 2,812 0.98 %1,012,556 1,095 0.43 %1,018,484 941 0.37 %
Noninterest-bearing liabilities
Noninterest-bearing demand
825,362 889,691 794,165 
Other liabilities
16,057 13,677 14,531 
Total noninterest-bearing liabilities
841,419 903,368 808,696 
Total liabilities
1,981,191 1,915,924 1,827,180 
Total shareholders’ equity
338,248 292,135 243,185 
Total liabilities and shareholders’ equity
$2,319,439 $2,208,059 $2,070,365 
Net interest income
$24,023 $21,351 $20,227 
Net interest spread (3)
3.77 %3.79 %3.75 %
Net interest margin (4)
4.25 %4.01 %3.93 %
Total deposits
$1,963,101 $2,798 0.57 %$1,891,115 $1,041 0.22 %$1,794,497 $885 0.20 %
Total funding (5)
$1,965,134 $2,812 0.57 %$1,902,247 $1,095 0.23 %$1,812,649 $941 0.21 %
(1)Total loans include both loans held-for-sale and loans held-for-investment, net of deferred loan fees and costs.
(2)The yield on municipal bonds has not been computed on a tax-equivalent basis.
(3)Net interest spread is calculated by subtracting average rate on interest-bearing liabilities from average yield on interest-earning assets.
(4)Net interest margin is calculated by dividing annualized net interest income by average interest-earning assets.
(5)Total funding is the sum of interest-bearing liabilities and noninterest-bearing deposits. The cost of total funding is calculated as annualized total interest expense divided by average total funding.
(6)Annualized.


14

PCB Bancorp and Subsidiary
Average Balance, Average Yield, and Average Rate (Unaudited)
($ in thousands)
Nine Months Ended
9/30/20229/30/2021
Average BalanceInterest Income/ Expense
Avg. Yield/Rate(6)
Average BalanceInterest Income/ Expense
Avg. Yield/Rate(6)
Assets
Interest-earning assets
Total loans (1)
$1,828,187 $66,268 4.85 %$1,683,084 $58,792 4.67 %
Mortgage-backed securities
88,634 1,241 1.87 %90,095 726 1.08 %
Collateralized mortgage obligation
22,775 324 1.90 %23,442 168 0.96 %
SBA loan pool securities
10,566 137 1.73 %10,959 148 1.81 %
Municipal bonds (2)
5,152 107 2.78 %5,774 109 2.52 %
Corporate bonds4,896 141 3.85 %769 21 3.65 %
Other interest-earning assets
198,311 1,957 1.32 %180,663 513 0.38 %
Total interest-earning assets
2,158,521 70,175 4.35 %1,994,786 60,477 4.05 %
Noninterest-earning assets
Cash and due from banks20,599 19,359 
Allowance for loan losses
(21,561)(25,753)
Other assets
72,563 37,371 
Total noninterest-earning assets
71,601 30,977 
Total assets
$2,230,122 $2,025,763 
Liabilities and Shareholders’ Equity
Interest-bearing liabilities
Deposits
NOW and money market accounts
$492,130 2,118 0.58 %$398,459 941 0.32 %
Savings
15,205 6 0.05 %11,676 4 0.05 %
Time deposits
550,770 2,565 0.62 %616,707 2,251 0.49 %
Total interest-bearing deposits
1,058,105 4,689 0.59 %1,026,842 3,196 0.42 %
Other borrowings7,824 119 2.03 %37,363 239 0.86 %
Total interest-bearing liabilities
1,065,929 4,808 0.60 %1,064,205 3,435 0.43 %
Noninterest-bearing liabilities
Noninterest-bearing demand
851,837 707,800 
Other liabilities
15,485 13,925 
Total noninterest-bearing liabilities
867,322 721,725 
Total liabilities
1,933,251 1,785,930 
Total shareholders’ equity
296,871 239,833 
Total liabilities and shareholders’ equity
$2,230,122 $2,025,763 
Net interest income
$65,367 $57,042 
Net interest spread (3)
3.75 %3.62 %
Net interest margin (4)
4.05 %3.82 %
Total deposits
$1,909,942 $4,689 0.33 %$1,734,642 $3,196 0.25 %
Total funding (5)
$1,917,766 $4,808 0.34 %$1,772,005 $3,435 0.26 %
(1)Total loans include both loans held-for-sale and loans held-for-investment, net of deferred loan fees and costs.
(2)The yield on municipal bonds has not been computed on a tax-equivalent basis.
(3)Net interest spread is calculated by subtracting average rate on interest-bearing liabilities from average yield on interest-earning assets.
(4)Net interest margin is calculated by dividing annualized net interest income by average interest-earning assets.
(5)Total funding is the sum of interest-bearing liabilities and noninterest-bearing deposits. The cost of total funding is calculated as annualized total interest expense divided by average total funding.
(6)Annualized.


15

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

Adjusted allowance for loan losses to loans held-for-investment ratio
Adjusted Allowance to loans held-for-investment ratio is calculated by removing SBA PPP loans from loans held-for-investment from the Allowance to loans held-for-investment ratio calculation. The SBA launched the PPP to provide a direct incentive for small businesses to keep their workers on the payroll in response to the COVID-19 pandemic. The SBA guarantees 100% of the PPP loans made to eligible borrowers, and the loans are eligible to be forgiven if certain conditions are met, at which point the SBA will make payments to the Bank for the forgiven amounts. The SBA guarantee on PPP loans cannot be separated from the loan and therefore is not a separate unit of account. The Company considered the SBA guarantee in the Allowance evaluation and determined that it is not required to reserve an Allowance on SBA PPP loans. Management believes this non-GAAP measure enhances comparability to prior periods and provide supplemental information regarding the Company’s credit trends. This disclosure should not be viewed as a substitute for results determined in accordance with GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies. The following tables provide reconciliations of the non-GAAP measure with financial measure defined by GAAP.
($ in thousands)9/30/20226/30/202212/31/20219/30/2021
Loans held-for-investment(a)$1,959,237 $1,833,010 $1,732,205 $1,707,878 
Less: SBA PPP loans(b)1,309 1,583 65,329 101,901 
Loans held-for-investment, excluding SBA PPP loans(c)=(a)-(b)$1,957,928 $1,831,427 $1,666,876 $1,605,977 
Allowance(d)$23,761 $21,071 $22,381 $23,807 
Allowance to loans held-for-investment ratio(d)/(a)1.21 %1.15 %1.29 %1.39 %
Adjusted Allowance to loans held-for-investment ratio(d)/(c)1.21 %1.15 %1.34 %1.48 %
Return on average tangible common equity, tangible common equity per common share and tangible common equity to total assets ratios
The Company's TCE is calculated by subtracting preferred stock from stockholders’ equity. The Company does not have any intangible assets for the presented periods. Return on average TCE, TCE per common share, and TCE to total assets constitute supplemental financial information determined by methods other than in accordance with GAAP. These non-GAAP measures are used by management in its analysis of the Company's performance. This disclosure should not be viewed as a substitute for results determined in accordance with GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies. The following tables provide reconciliations of the non-GAAP measures with financial measures defined by GAAP.
($ in thousands)
Three Months Ended
Nine Months Ended
9/30/20226/30/20229/30/20219/30/20229/30/2021
Average total shareholders' equity(a)$338,248 $292,135 $243,185 $296,871 $239,833 
Less: average preferred stock(b)69,141 28,872 — 32,924 — 
Average TCE(c)=(a)-(b)$269,107 $263,263 $243,185 $263,947 $239,833 
Net income(d)$6,953 $9,092 $11,023 $26,285 $29,427 
Return on average shareholder's equity (1)
(d)/(a)8.16 %12.48 %17.98 %11.84 %16.40 %
Return on average TCE (1)
(d)/(c)10.25 %13.85 %17.98 %13.31 %16.40 %
(1) Annualized.
($ in thousands, except per share data)9/30/20226/30/202212/31/20219/30/2021
Total shareholders' equity(a)$332,719 $334,375 $256,286 $247,598 
Less: preferred stock(b)69,141 69,141 — — 
TCE(c)=(a)-(b)$263,578 $265,234 $256,286 $247,598 
Outstanding common shares
(d)14,853,140 14,956,760 14,865,825 14,841,626 
Book value per common share(a)/(d)$22.40 $22.36 $17.24 $16.68 
TCE per common share(c)/(d)$17.75 $17.73 $17.24 $16.68 
Total assets(e)$2,327,051 $2,344,560 $2,149,735 $2,104,699 
Total shareholders' equity to total assets(a)/(e)14.30 %14.26 %11.92 %11.76 %
TCE to total assets(c)/(e)11.33 %11.31 %11.92 %11.76 %
16