EX-99.1 2 pcber20230421.htm EX-99.1 Document

Exhibit 99.1
pcbbancorpa.jpg
PCB Bancorp Reports Earnings of $10.3 million for Q1 2023
Los Angeles, California - April 21, 2023 - PCB Bancorp (the “Company”) (NASDAQ: PCB), the holding company of PCB Bank (the “Bank”), today reported net income of $10.3 million, or $0.70 per diluted common share, for the first quarter of 2023, compared with $8.7 million, or $0.58 per diluted common share, for the previous quarter and $10.2 million, or $0.67 per diluted common share, for the year-ago quarter.
Q1 2023 Highlights
•Net income totaled $10.3 million, or $0.70 per diluted common share, for the current quarter;
•Adopted Current Expected Credit Losses (“CECL”) accounting standard effective January 1, 2023, resulting in a cumulative effect adjustment to the allowance for credit losses (“ACL”)(1) of $2.7 million;
•Recorded a provision (reversal) for credit losses(1),(2) of $(2.8) million for the current quarter compared with $1.1 million for the previous quarter and $(1.2) million for the year-ago quarter;
•ACL to loans held-for-investment ratio was 1.18% at March 31, 2023 compared with 1.22% at December 31, 2022 and 1.22% at March 31, 2022;
•Net interest income was $22.4 million for the current quarter compared with $24.3 million for the previous quarter and $20.0 million for the year-ago quarter. Net interest margin was 3.79% for the current quarter compared with 4.15% for the previous quarter and 3.87% for the year-ago quarter;
•Gain on sale of loans was $1.3 million for the current quarter compared with $759 thousand for the previous quarter and $3.8 million for the year-ago quarter;
•Total assets were $2.50 billion at March 31, 2023, an increase of $80.5 million, or 3.3%, from $2.42 billion at December 31, 2022 and an increase of $300.8 million, or 13.7%, from $2.20 billion at March 31, 2022;
•Loans held-for-investment were $2.09 billion at March 31, 2023, an increase of $46.4 million, or 2.3%, from $2.05 billion at December 31, 2022 and an increase of $349.5 million, or 20.1%, from $1.74 billion at March 31, 2022;
•Total deposits were $2.14 billion at March 31, 2023, an increase of $95.7 million, or 4.7%, from $2.05 billion at December 31, 2022 and an increase of $231.3 million, or 12.1%, from $1.91 billion at March 31, 2022; and
•Completed the repurchase program that was announced on July 28, 2022. Repurchased and retired 747,938 shares of common stock at a weighted-average price of $18.15 under this program.
“Our 2023 first quarter results, highlighted by our strong earnings, continued strong capital position, stable deposit balance, and disciplined credit culture, contributed to the steadfast value of our franchise,” stated Henry Kim, President and Chief Executive Officer. “We did not experience any meaningful deposit outflows immediately following the closure of regional banks. Instead, during the quarter, our deposit balances increased $95.7 million, of which, $25.7 million represented an increase in retail deposits.”
“Despite ongoing economic uncertainty, we began the year with another solid quarterly financial results highlighted by $10.3 million net income, or $0.70 per diluted shares, a 2.8% increase in tangible common equity per share to $18.72 from year-end, and a common equity tier 1 capital ratio of 16.03% at the bank level.”
“Although recent bank failures may disrupt the banking industry for a period of time, we are seeing this as an opportunity for our franchise to differentiate itself and provide a sanctuary to customers to put their trust in PCB and in the community banks. Our customers can rely on our ample liquidity and strong capital to withstand any economic uncertainty, and we are well-positioned to accommodate our customers’ lending and deposit needs,” concluded Kim.
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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 on this report
(2)    Provision for credit losses on off-balance sheet credit exposures of $57 thousand and $2 thousand, respectively, for the previous and year-ago quarters were recorded in Other Expense on Consolidated Statements of Income (Unaudited).
1

Financial Highlights (Unaudited)
($ in thousands, except per share data)
Three Months Ended
3/31/202312/31/2022
% Change
3/31/2022
% Change
Net income$10,297 $8,702 18.3 %$10,240 0.6 %
Diluted earnings per common share$0.70 $0.58 20.7 %$0.67 4.5 %
Net interest income$22,414 $24,265 (7.6)%$19,993 12.1 %
Provision (reversal) for credit losses (1)
(2,778)1,149 NM(1,191)133.2 %
Noninterest income3,021 2,389 26.5 %5,286 (42.8)%
Noninterest expense13,754 13,115 4.9 %12,071 13.9 %
Return on average assets (2)
1.69 %1.44 %1.92 %
Return on average shareholders’ equity (2)
12.46 %10.31 %16.01 %
Return on average tangible common equity (“TCE”) (2),(3)
15.70 %12.99 %16.01 %
Net interest margin (2)
3.79 %4.15 %3.87 %
Efficiency ratio (4)
54.08 %49.20 %47.75 %
($ in thousands, except per share data)3/31/202312/31/2022% Change3/31/2022% Change
Total assets
$2,500,524 $2,420,036 3.3 %$2,199,742 13.7 %
Net loans held-for-investment
2,067,748 2,021,121 2.3 %1,721,757 20.1 %
Total deposits
2,141,689 2,045,983 4.7 %1,910,379 12.1 %
Book value per common share (5)
$23.56 $22.94 $17.47 
TCE per common share (3)
$18.72 $18.21 $17.47 
Tier 1 leverage ratio (consolidated)
13.90 %14.33 %12.22 %
Total shareholders’ equity to total assets13.47 %13.86 %11.87 %
TCE to total assets (3), (6)
10.71 %11.00 %11.87 %
(1)Provision for credit losses on off-balance sheet credit exposures of $57 thousand and $2 thousand, respectively, for the previous and year-ago quarters 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.


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
($ in thousands)3/31/202312/31/2022
% Change
3/31/2022% Change
Interest income/expense on
Loans
$31,229 $28,786 8.5 %$20,190 54.7 %
Investment securities
1,102 957 15.2 %476 131.5 %
Other interest-earning assets
2,205 1,833 20.3 %228 867.1 %
Total interest-earning assets
34,536 31,576 9.4 %20,894 65.3 %
Interest-bearing deposits
11,913 7,295 63.3 %850 1,301.5 %
Borrowings
209 16 1,206.3 %51 309.8 %
Total interest-bearing liabilities
12,122 7,311 65.8 %901 1,245.4 %
Net interest income
$22,414 $24,265 (7.6)%$19,993 12.1 %
Average balance of
Loans
$2,072,415 $2,004,220 3.4 %$1,773,376 16.9 %
Investment securities
142,079 134,066 6.0 %123,230 15.3 %
Other interest-earning assets
186,809 182,018 2.6 %198,918 (6.1)%
Total interest-earning assets
$2,401,303 $2,320,304 3.5 %$2,095,524 14.6 %
Interest-bearing deposits
$1,410,812 $1,269,739 11.1 %$1,034,012 36.4 %
Borrowings
15,811 1,739 809.2 %10,400 52.0 %
Total interest-bearing liabilities
$1,426,623 $1,271,478 12.2 %$1,044,412 36.6 %
Total funding (1)
$2,114,198 $2,043,110 3.5 %$1,885,038 12.2 %
Annualized average yield/cost of 
Loans
6.11 %5.70 %4.62 %
Investment securities
3.15 %2.83 %1.57 %
Other interest-earning assets
4.79 %4.00 %0.46 %
Total interest-earning assets5.83 %5.40 %4.04 %
Interest-bearing deposits
3.42 %2.28 %0.33 %
Borrowings
5.36 %3.65 %1.99 %
Total interest-bearing liabilities3.45 %2.28 %0.35 %
Net interest margin3.79 %4.15 %3.87 %
Cost of total funding (1)
2.33 %1.42 %0.19 %
Supplementary information
Net accretion of discount on loans$671 $869 (22.8)%$908 (26.1)%
Net amortization of deferred loan fees$175 $167 4.8 %$1,165 (85.0)%
(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 an increase in overall interest rates on loans from the rising interest rate environment.
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:
3/31/202312/31/20223/31/2022
% to Total LoansWeighted-Average Contractual Rate% to Total LoansWeighted-Average Contractual Rate% to Total LoansWeighted-Average Contractual Rate
Fixed rate loans
23.4 %4.64 %23.2 %4.51 %26.7 %4.25 %
Hybrid rate loans
39.0 %4.51 %39.1 %4.40 %31.5 %4.07 %
Variable rate loans
37.6 %8.26 %37.7 %7.86 %41.8 %4.14 %
Investment Securities. The increases in average yield for the current quarter compared with the previous and year-ago quarters were primarily due to a decrease in net amortization of premiums on securities and higher yield on newly purchased investment securities.

3

Other Interest-Earning Assets. The increases in average yield for the current quarter compared with the previous and year-ago quarters were primarily due to an increased interest rate on cash held at the Federal Reserve Bank (“FRB”) account.
Interest-Bearing Deposits. The increases in average cost for the current quarter compared with the previous and year-ago quarters were primarily due to an increase in market rates.
Provision (Reversal) for Credit Losses
The following table presents a composition of provision (reversal) for credit losses for the periods indicated:
Three Months Ended
($ in thousands)3/31/202312/31/2022
% Change
3/31/2022
% Change
Provision (reversal) for credit losses on loans$(2,417)$1,149 NM$(1,191)102.9 %
Provision (reversal) for credit losses on off-balance sheet credit exposure (1)
(361)57 NM2 NM
Total provision (reversal) for credit losses$(2,778)$1,206 NM$(1,189)133.6 %
(1)Provision for credit losses on off-balance sheet credit exposures for previous and year-ago quarters were recorded in Other Expense on Consolidated Statements of Income (Unaudited).
On January 1, 2023, the Company adopted the provisions of ASC 326 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 on this report. See CECL Adoption and Allowance for Credit Losses sections included in the Balance Sheet discussion for additional information.
The reversal for credit losses for the current quarter was primarily due to net recoveries of $1.1 million and decreases in classified and nonaccrual loans during the current quarter.
Noninterest Income
The following table presents the components of noninterest income for the periods indicated:
Three Months Ended
($ in thousands)3/31/202312/31/2022
% Change
3/31/2022
% Change
Gain on sale of loans
$1,309 $759 72.5 %$3,777 (65.3)%
Service charges and fees on deposits
344 352 (2.3)%303 13.5 %
Loan servicing income
860 734 17.2 %700 22.9 %
Bank-owned life insurance income180 181 (0.6)%172 4.7 %
Other income
328 363 (9.6)%334 (1.8)%
Total noninterest income
$3,021 $2,389 26.5 %$5,286 (42.8)%
Gain on Sale of Loans. The following table presents information on gain on sale of loans for the periods indicated:
Three Months Ended
($ in thousands)3/31/202312/31/2022% Change3/31/2022% Change
Gain on sale of SBA loans
Sold loan balance
$27,133 $17,448 55.5 %$39,683 (31.6)%
Premium received
2,041 1,102 85.2 %4,206 (51.5)%
Gain recognized
1,309 759 72.5 %3,777 (65.3)%
Loan Servicing Income. The following table presents information on loan servicing income for the periods indicated:
Three Months Ended
($ in thousands)3/31/202312/31/2022
% Change
3/31/2022
% Change
Loan servicing income
Servicing income received
$1,284 $1,284 — %$1,230 4.4 %
Servicing assets amortization
(424)(550)(22.9)%(530)(20.0)%
Loan servicing income$860 $734 17.2 %$700 22.9 %
Underlying loans at end of period
$540,502 $531,095 1.8 %$531,183 1.8 %
The Company services SBA loans and certain residential property loans that are sold to the secondary market.
4

Noninterest Expense
The following table presents the components of noninterest expense for the periods indicated:
Three Months Ended
($ in thousands)3/31/202312/31/2022% Change3/31/2022% Change
Salaries and employee benefits
$8,928 $7,879 13.3 %$8,595 3.9 %
Occupancy and equipment
1,896 1,897 (0.1)%1,397 35.7 %
Professional fees
732 607 20.6 %403 81.6 %
Marketing and business promotion
372 724 (48.6)%207 79.7 %
Data processing
412 434 (5.1)%404 2.0 %
Director fees and expenses
180 176 2.3 %169 6.5 %
Regulatory assessments
155 159 (2.5)%141 9.9 %
Other expense1,079 1,239 (12.9)%755 42.9 %
Total noninterest expense
$13,754 $13,115 4.9 %$12,071 13.9 %
Salaries and Employee Benefits. The increase for the current quarter compared with the previous quarter was primarily due to increases in salaries and other employee benefit expense, including bonus and vacation accruals, from an increase in number of employees, as well as annual merit increases, partially offset by a decrease in incentives tied to sales of Loan Production Offices (“LPO”) originated SBA loans. 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 decreases in bonus accrual and incentives tied to the sales of LPO originated SBA loans. The number of full-time equivalent employees was 276, 272 and 256 as of March 31, 2023, December 31, 2022 and March 31, 2022, respectively.
Occupancy and Equipment. The increase for the current quarter compared with the year-ago quarter was primarily due to 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.
Professional Fees. The increases for the current quarter and year were primarily due to an increase in internal audit fees.
Marketing and Business Promotion. The decreases for the current quarter compared with the previous quarter was primarily due to the larger marketing activities and advertisements for the Bank's name change to PCB Bank and new branch openings during the previous quarter.
Other Expense. The decrease for the current quarter compared with the previous quarter was primarily due to an increased office expense for the new branches during the previous quarter. The increase for the current quarter compared with the year-ago quarter was primarily due to increases in office expenses, other loan related expenses and armed guard expenses from the branch network expansion. Provision for credit losses on off-balance credit exposures of $57 thousand and $2 thousand was included in other expense for the previous and year-ago quarters, respectively, while the current quarter provision was included in provision (reversal) for credit losses.
5

Balance Sheet (Unaudited)
Total assets were $2.50 billion at March 31, 2023, an increase of $80.5 million, or 3.3%, from $2.42 billion at December 31, 2022 and an increase of $300.8 million, or 13.7%, from $2.20 billion at March 31, 2022. The increase for the current quarter was primarily due to increases in cash and cash equivalents and loans held-for-investment, partially offset by a decrease in loans held-for-sale.
CECL Adoption
On January 1, 2023, the Company adopted the provisions of ASC 326 through the application of the modified retrospective transition approach. The initial adjustment to the ACL is reflective of expected lifetime credit losses associated with the composition of financial assets within in the scope of ASC 326 as of January 1, 2023, as well as management’s current expectation of future economic conditions. The following table summarizes the initial adjustment to the ACL as of January 1, 2023:
($ in thousands)Pre-ASC 326 AdoptionImpact of ASC 326 AdoptionAs Reported Under ASC 326
Assets
Commercial real estate loans$15,536 $(610)$14,926 
Commercial and industrial loans5,502 4,344 9,846 
Consumer loans3,904 (2,667)1,237 
Total ACL on loans24,942 1,067 26,009 
Deferred tax assets3,115 788 3,903 
Liabilities
ACL on off-balance sheet credit exposures (1)
$299 $1,607 $1,906 
Shareholders’ equity
Retained earnings$127,181 $(1,886)$125,295 
(1)ACL on off-balance sheet credit exposures was recorded in Accrued Interest Payable and Other Liabilities on Consolidated Balance Sheets (Unaudited).
In conjunction with the adoption of ASC 326, the Company made an accounting policy election not to measure an ACL on accrued interest receivables. When accrued interest receivable is deemed to be uncollectable, the Company promptly reverses such balances through current period interest income in the period they are deemed uncollectable. Additionally, the Company has also elected not to include the balance of accrued interest receivable in the amortized cost basis of financial assets within the scope of ASC 326. Accrued interest receivable will continue to be presented separately in the Consolidated Balance Sheets.
The measurement of the ACL on loans is performed by collectively evaluating loans with similar risk characteristics using a discounted cash flow approach. The discounted cash flow methodology incorporates a probability of default (“PD”) and loss given default (“LGD”) model, as well as reasonable and supportable forecasts, and generates estimate of the contractual cash flows that are not expected to be collected over the life of the loan.
As a part of the adoption of ASC 326, the Company reviewed loan segmentation and revised certain loan segmentations 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 report, loan segments on loan related disclosures for prior period comparisons are revised accordingly in order to be comparable to the Company’s new loan segmentations.
6

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)3/31/202312/31/2022% Change3/31/2022% Change
Commercial real estate:
Commercial property$780,282 $772,020 1.1 %$646,764 20.6 %
Business property521,965 526,513 (0.9)%536,107 (2.6)%
Multifamily127,012 124,751 1.8 %96,630 31.4 %
Construction15,930 17,054 (6.6)%9,522 67.3 %
Total commercial real estate1,445,189 1,440,338 0.3 %1,289,023 12.1 %
Commercial and industrial267,674 249,250 7.4 %217,048 23.3 %
Consumer:
Residential mortgage356,967 333,726 7.0 %215,132 65.9 %
Other consumer22,612 22,749 (0.6)%21,752 4.0 %
Total consumer379,579 356,475 6.5 %236,884 60.2 %
Loans held-for-investment2,092,442 2,046,063 2.3 %1,742,955 20.1 %
Loans held-for-sale14,352 22,811 (37.1)%18,340 (21.7)%
Total loans
$2,106,794 $2,068,874 1.8 %$1,761,295 19.6 %
The increase in loans held-for-investment for the current quarter was primarily due to new funding and advances on lines of credit of $189.6 million and purchases of residential mortgage loans of $15.7 million, partially offset by pay-downs and pay-offs of $159.0 million.
The decrease in loans held-for-sale for the current quarter was primarily due to sales of $27.1 million and pay-downs and pay-offs of $4.1 million, partially offset by new funding of $22.7 million.
The following table presents a composition of off-balance sheet credit exposure as of the dates indicated:
($ in thousands)3/31/202312/31/2022% Change3/31/2022% Change
Commercial property$6,811 $7,006 (2.8)%$8,319 (18.1)%
Business property12,307 8,396 46.6 %10,518 17.0 %
Multifamily4,500 4,500 — %5,500 (18.2)%
Construction16,563 18,211 (9.0)%6,528 153.7 %
Commercial and industrial279,543 254,668 9.8 %179,366 55.9 %
Other consumer399 692 (42.3)%1,080 (63.1)%
Total commitments to extend credit320,123 293,473 9.1 %211,311 51.5 %
Letters of credit5,400 5,392 0.1 %5,505 (1.9)%
Total off-balance sheet credit exposure$325,523 $298,865 8.9 %$216,816 50.1 %
Allowance for Credit Losses
The following table presents activities in ACL for the periods indicated:
Three Months Ended
($ in thousands)3/31/202312/31/2022% Change3/31/2022% Change
ACL on loans
Balance at beginning of period$24,942 $23,761 5.0 %$22,381 11.4 %
Impact of ASC 326 adoption1,067 — NM— NM
Charge-offs— (28)(100.0)%(12)(100.0)%
Recoveries1,102 60 1,736.7 %20 5,410.0 %
Provision (reversal) for credit losses on loans(2,417)1,149 NM(1,191)102.9 %
Balance at end of period$24,694 $24,942 (1.0)%$21,198 16.5 %
Percentage to loans held-for-investment at end of period1.18 %1.22 %1.22 %
ACL on off-balance sheet credit exposure (1)
Balance at beginning of period$299 $242 23.6 %$214 39.7 %
Impact of ASC 326 adoption1,607 — NM— NM
Provision (reversal) for credit losses on off-balance sheet credit exposure(361)57 NM2 NM
Balance at end of period$1,545 $299 416.7 %$216 615.3 %
(1)ACL on off-balance sheet credit exposures was recorded in Accrued Interest Payable and Other Liabilities on Consolidated Balance Sheets (Unaudited).
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)3/31/202312/31/2022% Change3/31/2022% Change
Nonaccrual loans
Commercial real estate:
Commercial property$— $— — %$166 (100.0)%
Business property2,904 2,985 (2.7)%567 412.2 %
Total commercial real estate2,904 2,985 (2.7)%733 296.2 %
Commercial and industrial11 — — %199 (94.5)%
Consumer:
Residential mortgage— 372 (100.0)%461 (100.0)%
Other consumer45 3 1,400.0 %25 80.0 %
Total consumer45 375 (88.0)%486 (90.7)%
Total nonaccrual loans held-for-investment
2,960 3,360 (11.9)%1,418 108.7 %
Loans past due 90 days or more and still accruing
— — — %— — %
Non-performing loans (“NPLs”) held-for-investment2,960 3,360 (11.9)%1,418 108.7 %
NPLs held-for-sale— 4,000 (100.0)%— — %
Total NPLs2,960 7,360 (59.8)%1,418 108.7 %
Other real estate owned (“OREO”)
— — — %— — %
Non-performing assets (“NPAs”)
$2,960 $7,360 (59.8)%$1,418 108.7 %
Loans past due and still accruing
Past due 30 to 59 days
$779 $47 1,557.4 %$119 554.6 %
Past due 60 to 89 days
13 87 (85.1)%1 1,200.0 %
Past due 90 days or more
— — — %— — %
Total loans past due and still accruing
$792 $134 491.0 %$120 560.0 %
Special mention loans$5,527 $6,857 (19.4)%$5,562 (0.6)%
Classified assets
Classified loans held-for-investment$6,060 $6,211 (2.4)%$5,377 12.7 %
Classified loans held-for-sale— 4,000 (100.0)%— — %
OREO
— — — %— — %
Classified assets
$6,060 $10,211 (40.7)%$5,377 12.7 %
NPLs held-for-investment to loans held-for-investment0.14 %0.16 %0.08 %
NPAs to total assets
0.12 %0.30 %0.06 %
Classified assets to total assets
0.24 %0.42 %0.24 %
During the current quarter, NPLs held-for-sale of $4.0 million were paid-off.
8

Investment Securities
Total investment securities were $144.7 million at March 31, 2023, an increase of $2.8 million, or 2.0%, from $141.9 million at December 31, 2022 and an increase of $13.3 million, or 10.1%, from $131.3 million at March 31, 2022. The increase for the current quarter was primarily due to purchases of $4.9 million and a fair value increase of $2.0 million, partially offset by principal pay-downs and calls of $4.1 million and net premium amortization of $57 thousand.
Deposits
The following table presents the Company’s deposit mix as of the dates indicated:
3/31/202312/31/20223/31/2022
($ in thousands)Amount% to TotalAmount% to TotalAmount% to Total
Noninterest-bearing demand deposits
$653,970 30.5 %$734,989 35.9 %$891,797 46.7 %
Interest-bearing deposits
Savings
7,584 0.4 %8,579 0.4 %15,037 0.8 %
NOW
15,696 0.7 %11,405 0.6 %17,543 0.9 %
Retail money market accounts
436,906 20.3 %494,749 24.1 %431,057 22.5 %
Brokered money market accounts
1 0.1 %8 0.1 %1 0.1 %
Retail time deposits of
$250,000 or less
356,049 16.6 %295,354 14.4 %246,100 12.8 %
More than $250,000
454,464 21.3 %353,876 17.3 %173,844 9.1 %
State and brokered time deposits
217,019 10.1 %147,023 7.2 %135,000 7.1 %
Total interest-bearing deposits
1,487,719 69.5 %1,310,994 64.1 %1,018,582 53.3 %
Total deposits
$2,141,689 100.0 %$2,045,983 100.0 %$1,910,379 100.0 %
Estimated total deposits not covered by deposit insurance$1,019,689 47.6 %$1,062,111 51.9 %$1,015,255 53.1 %
The decrease in noninterest-bearing demand deposits was primarily due to strong deposit market competition and the migration of noninterest-bearing demand deposits to money market accounts and time deposits attributable to the rising market rates. To retain existing and attract new customers, the Bank offers competitive rates on deposit products in the rising interest rate environment.
The increase in retail time deposits for the current quarter was primarily due to new accounts of $300.3 million, renewals of the matured accounts of $117.4 million and balance increases of $6.9 million, partially offset by matured and closed accounts of $263.3 million.
Liquidity
The following table presents a summary of the Company’s liquidity position as of March 31, 2023:
($ in thousands)3/31/202312/31/2022% Change
Cash and cash equivalents
$190,519 $147,031 29.6 %
Cash and cash equivalents to total assets
7.6 %6.1 %
Available borrowing capacity
FHLB advances
$604,999 $561,745 7.7 %
Federal Reserve Discount Window
29,776 23,902 24.6 %
Overnight federal funds lines
65,000 65,000 — %
Total
$699,775 $650,647 7.6 %
Total available borrowing capacity to total assets
28.0 %26.9 %
During the current quarter, the Company increased cash and cash equivalents by $43.5 million, or 29.6%, to $190.5 million and available borrowing capacity by $49.1 million, or 7.6%, to $699.8 million. As of March 31, 2023, the Company's cash and cash equivalents and available borrowing capacity cover approximately 87.3% of deposits not covered by deposit insurance compared to 75.1% at December 31, 2022.
9

Shareholders’ Equity
Shareholders’ equity was $336.8 million at March 31, 2023, an increase of $1.4 million, or 0.4%, from $335.4 million at December 31, 2022 and an increase of $75.8 million, or 29.0%, from $261.1 million at March 31, 2022. The increase for the current quarter was primarily due to net income, partially offset by cash dividends declared on common stock of $2.2 million and repurchase of 385,381 shares of common stock at a weighted-average price of $17.76, totaling $6.8 million.
Stock Repurchase
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. 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 current quarter. 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.
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:
3/31/202312/31/20223/31/2022Well Capitalized Requirements
PCB Bancorp
Common tier 1 capital (to risk-weighted assets)
13.09 %13.29 %14.77 %N/A
Total capital (to risk-weighted assets)
17.61 %17.83 %15.97 %N/A
Tier 1 capital (to risk-weighted assets)
16.37 %16.62 %14.77 %N/A
Tier 1 capital (to average assets)
13.90 %14.33 %12.22 %N/A
PCB Bank
Common tier 1 capital (to risk-weighted assets)
16.03 %16.30 %14.43 %6.5 %
Total capital (to risk-weighted assets)
17.27 %17.52 %15.63 %10.0 %
Tier 1 capital (to risk-weighted assets)
16.03 %16.30 %14.43 %8.0 %
Tier 1 capital (to average assets)
13.62 %14.05 %11.94 %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)
3/31/202312/31/2022% Change3/31/2022% Change
Assets
Cash and due from banks
$25,801 $23,202 11.2 %$19,693 31.0 %
Interest-bearing deposits in other financial institutions164,718 123,829 33.0 %230,519 (28.5)%
Total cash and cash equivalents
190,519 147,031 29.6 %250,212 (23.9)%
Securities available-for-sale, at fair value
144,665 141,863 2.0 %131,345 10.1 %
Loans held-for-sale
14,352 22,811 (37.1)%18,340 (21.7)%
Loans held-for-investment2,092,442 2,046,063 2.3 %1,742,955 20.1 %
Allowance for credit losses on loans(24,694)(24,942)(1.0)%(21,198)16.5 %
Net loans held-for-investment
2,067,748 2,021,121 2.3 %1,721,757 20.1 %
Premises and equipment, net
6,473 6,916 (6.4)%3,106 108.4 %
Federal Home Loan Bank and other bank stock
10,183 10,183 — %8,577 18.7 %
Bank-owned life insurance30,244 30,064 0.6 %29,530 2.4 %
Deferred tax assets, net
3,753 3,115 20.5 %11,895 (68.4)%
Servicing assets
7,345 7,347 — %7,533 (2.5)%
Operating lease assets
5,854 6,358 (7.9)%6,511 (10.1)%
Accrued interest receivable
7,998 7,472 7.0 %5,050 58.4 %
Other assets
11,390 15,755 (27.7)%5,886 93.5 %
Total assets
$2,500,524 $2,420,036 3.3 %$2,199,742 13.7 %
Liabilities
Deposits
Noninterest-bearing demand
$653,970 $734,989 (11.0)%$891,797 (26.7)%
Savings, NOW and money market accounts
460,187 514,741 (10.6)%463,638 (0.7)%
Time deposits of $250,000 or less
513,068 382,377 34.2 %281,100 82.5 %
Time deposits of more than $250,000
514,464 413,876 24.3 %273,844 87.9 %
Total deposits
2,141,689 2,045,983 4.7 %1,910,379 12.1 %
Federal Home Loan Bank advances
— 20,000 (100.0)%10,000 (100.0)%
Operating lease liabilities
6,238 6,809 (8.4)%7,176 (13.1)%
Accrued interest payable and other liabilities
15,767 11,802 33.6 %11,129 41.7 %
Total liabilities
2,163,694 2,084,594 3.8 %1,938,684 11.6 %
Commitments and contingent liabilities
Shareholders’ equity
Preferred stock69,141 69,141 — %— — %
Common stock143,356 149,631 (4.2)%155,614 (7.9)%
Retained earnings
133,415 127,181 4.9 %109,142 22.2 %
Accumulated other comprehensive loss, net(9,082)(10,511)(13.6)%(3,698)145.6 %
Total shareholders’ equity
336,830 335,442 0.4 %261,058 29.0 %
Total liabilities and shareholders’ equity
$2,500,524 $2,420,036 3.3 %$2,199,742 13.7 %
Outstanding common shares
14,297,870 14,625,474 14,944,663 
Book value per common share (1)
$23.56 $22.94 $17.47 
TCE per common share (2)
$18.72 $18.21 $17.47 
Total loan to total deposit ratio
98.37 %101.12 %92.20 %
Noninterest-bearing deposits to total deposits
30.54 %35.92 %46.68 %
(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
3/31/202312/31/2022% Change3/31/2022% Change
Interest and dividend income
Loans, including fees$31,229 $28,786 8.5 %$20,190 54.7 %
Investment securities1,102 957 15.2 %476 131.5 %
Other interest-earning assets2,205 1,833 20.3 %228 867.1 %
Total interest income34,536 31,576 9.4 %20,894 65.3 %
Interest expense
Deposits11,913 7,295 63.3 %850 1,301.5 %
Other borrowings209 16 1,206.3 %51 309.8 %
Total interest expense
12,122 7,311 65.8 %901 1,245.4 %
Net interest income
22,414 24,265 (7.6)%19,993 12.1 %
Provision (reversal) for credit losses(2,778)1,149 NM(1,191)133.2 %
Net interest income after provision (reversal) for credit losses25,192 23,116 9.0 %21,184 18.9 %
Noninterest income
Gain on sale of loans
1,309 759 72.5 %3,777 (65.3)%
Service charges and fees on deposits
344 352 (2.3)%303 13.5 %
Loan servicing income
860 734 17.2 %700 22.9 %
Bank-owned life insurance income180 181 (0.6)%172 4.7 %
Other income
328 363 (9.6)%334 (1.8)%
Total noninterest income
3,021 2,389 26.5 %5,286 (42.8)%
Noninterest expense
Salaries and employee benefits
8,928 7,879 13.3 %8,595 3.9 %
Occupancy and equipment
1,896 1,897 (0.1)%1,397 35.7 %
Professional fees
732 607 20.6 %403 81.6 %
Marketing and business promotion
372 724 (48.6)%207 79.7 %
Data processing
412 434 (5.1)%404 2.0 %
Director fees and expenses
180 176 2.3 %169 6.5 %
Regulatory assessments
155 159 (2.5)%141 9.9 %
Other expense1,079 1,239 (12.9)%755 42.9 %
Total noninterest expense
13,754 13,115 4.9 %12,071 13.9 %
Income before income taxes
14,459 12,390 16.7 %14,399 0.4 %
Income tax expense
4,162 3,688 12.9 %4,159 0.1 %
Net income
$10,297 $8,702 18.3 %$10,240 0.6 %
Earnings per common share
Basic
$0.71 $0.59 $0.69 
Diluted
$0.70 $0.58 $0.67 
Average common shares
Basic
14,419,155 14,700,010 14,848,014 
Diluted
14,574,929 14,904,106 15,141,693 
Dividend paid per common share
$0.15 $0.15 $0.15 
Return on average assets (1)
1.69 %1.44 %1.92 %
Return on average shareholders’ equity (1)
12.46 %10.31 %16.01 %
Return on average TCE (1), (2)
15.70 %12.99 %16.01 %
Efficiency ratio (3)
54.08 %49.20 %47.75 %
(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
3/31/202312/31/20223/31/2022
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)
$2,072,415 $31,229 6.11 %$2,004,220 $28,786 5.70 %$1,773,376 $20,190 4.62 %
Mortgage-backed securities
97,578 683 2.84 %90,346 585 2.57 %84,223 307 1.48 %
Collateralized mortgage obligation
26,743 256 3.88 %25,570 221 3.43 %18,242 48 1.07 %
SBA loan pool securities
9,027 82 3.68 %9,545 71 2.95 %10,095 38 1.53 %
Municipal bonds (2)
4,221 34 3.27 %4,050 33 3.23 %5,632 36 2.59 %
Corporate bonds4,510 47 4.23 %4,555 47 4.09 %5,038 47 3.78 %
Other interest-earning assets
186,809 2,205 4.79 %182,018 1,833 4.00 %198,918 228 0.46 %
Total interest-earning assets
2,401,303 34,536 5.83 %2,320,304 31,576 5.40 %2,095,524 20,894 4.04 %
Noninterest-earning assets
Cash and due from banks21,155 21,139 20,385 
ACL on loans(26,757)(23,800)(22,377)
Other assets
75,175 78,069 67,600 
Total noninterest-earning assets
69,573 75,408 65,608 
Total assets
$2,470,876 $2,395,712 $2,161,132 
Liabilities and Shareholders’ Equity
Interest-bearing liabilities
Deposits
NOW and money market accounts
$485,962 3,445 2.87 %$540,312 2,852 2.09 %$431,981 313 0.29 %
Savings
8,099 5 0.25 %10,692 3 0.11 %15,644 2 0.05 %
Time deposits
916,751 8,463 3.74 %718,735 4,440 2.45 %586,387 535 0.37 %
Total interest-bearing deposits
1,410,812 11,913 3.42 %1,269,739 7,295 2.28 %1,034,012 850 0.33 %
Other borrowings15,811 209 5.36 %1,739 16 3.65 %10,400 51 1.99 %
Total interest-bearing liabilities
1,426,623 12,122 3.45 %1,271,478 7,311 2.28 %1,044,412 901 0.35 %
Noninterest-bearing liabilities
Noninterest-bearing demand
687,575 771,632 840,626 
Other liabilities
21,509 17,770 16,727 
Total noninterest-bearing liabilities
709,084 789,402 857,353 
Total liabilities
2,135,707 2,060,880 1,901,765 
Total shareholders’ equity
335,169 334,832 259,367 
Total liabilities and shareholders’ equity
$2,470,876 $2,395,712 $2,161,132 
Net interest income
$22,414 $24,265 $19,993 
Net interest spread (3)
2.38 %3.12 %3.69 %
Net interest margin (4)
3.79 %4.15 %3.87 %
Total deposits
$2,098,387 $11,913 2.30 %$2,041,371 $7,295 1.42 %$1,874,638 $850 0.18 %
Total funding (5)
$2,114,198 $12,122 2.33 %$2,043,110 $7,311 1.42 %$1,885,038 $901 0.19 %
(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.



14

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

Adjusted ACL on loans to loans held-for-investment ratio
Adjusted ACL on loans to loans held-for-investment ratio is calculated by removing SBA PPP loans from loans held-for-investment from the ACL on loans to loans held-for-investment ratio calculation. Management believed this non-GAAP measure enhanced comparability to prior periods and provided supplemental information regarding the Company’s credit trends; however, this non-GAAP measure had become less significant as most of SBA PPP loan balance were forgiven or paid off during 2022. 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 table provides reconciliations of this non-GAAP measure with financial measure defined by GAAP.
($ in thousands)3/31/202312/31/20223/31/2022
Loans held-for-investment(a)$2,092,442 $2,046,063 $1,742,955 
Less: SBA PPP loans(b)1,100 1,197 22,926 
Loans held-for-investment, excluding SBA PPP loans(c)=(a)-(b)$2,091,342 $2,044,866 $1,720,029 
ACL on Loans(d)$24,694 $24,942 $21,198 
ACL on loans to loans held-for-investment ratio(d)/(a)1.18 %1.22 %1.22 %
Adjusted ACL on loans to loans held-for-investment ratio(d)/(c)1.18 %1.22 %1.23 %
Return on average tangible common equity, tangible common equity per common share and tangible common equity to total assets ratios
The Company's TCE is calculated by subtracting preferred stock from stockholders’ equity. The Company does not have any intangible assets for the presented periods. Return on average TCE, TCE per common share, and TCE to total assets constitute supplemental financial information determined by methods other than in accordance with GAAP. These non-GAAP measures are used by management in its analysis of the Company's performance. This disclosure should not be viewed as a substitute for results determined in accordance with GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies. The following tables provide reconciliations of the non-GAAP measures with financial measures defined by GAAP.
($ in thousands)
Three Months Ended
3/31/202312/31/20223/31/2022
Average total shareholders' equity(a)$335,169 $334,832 $259,367 
Less: average preferred stock(b)69,141 69,141 — 
Average TCE(c)=(a)-(b)$266,028 $265,691 $259,367 
Net income(d)$10,297 $8,702 $10,240 
Return on average shareholder's equity (1)
(d)/(a)12.46 %10.31 %16.01 %
Return on average TCE (1)
(d)/(c)15.70 %12.99 %16.01 %
(1) Annualized.
($ in thousands, except per share data)3/31/202312/31/20223/31/2022
Total shareholders' equity(a)$336,830 $335,442 $261,058 
Less: preferred stock(b)69,141 69,141 — 
TCE(c)=(a)-(b)$267,689 $266,301 $261,058 
Outstanding common shares
(d)14,297,870 14,625,474 14,944,663 
Book value per common share(a)/(d)$23.56 $22.94 $17.47 
TCE per common share(c)/(d)$18.72 $18.21 $17.47 
Total assets(e)$2,500,524 $2,420,036 $2,199,742 
Total shareholders' equity to total assets(a)/(e)13.47 %13.86 %11.87 %
TCE to total assets(c)/(e)10.71 %11.00 %11.87 %
15