EX-99.1 2 pcber20201027.htm EX-99.1

Exhibit 99.1

PCB Bancorp Reports Earnings of $3.4 million for Q3 2020

Los Angeles, California - October 27, 2020 - PCB Bancorp (the “Company”) (NASDAQ: PCB), the holding company of Pacific City Bank (the “Bank”), today reported net income of $3.4 million, or $0.22 per diluted common share for the third quarter of 2020, compared with $3.4 million, or $0.22 per diluted common share, for the previous quarter and $6.8 million, or $0.42 per diluted common share, for the year-ago quarter.

Q3 2020 Highlights

•Net income totaled $3.4 million or $0.22 per diluted common share;

◦The Company recorded a provision for loan losses of $4.3 million primarily due to an increase in the economic uncertainty due to the COVID-19 pandemic.

◦Allowance for loan losses to total loans held-for-investment ratio was 1.55% at September 30, 2020 compared with 1.30% at June 30, 2020 and 0.94% at September 30, 2019. Excluding U.S. Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) loans, allowance for loan losses to total loans held-for-investment ratio was 1.70% and 1.43% at September 30, 2020 and June 30, 2020, respectively.

◦Net interest margin was 3.43% for the third quarter of 2020 compared with 3.22% for the previous quarter and 4.11% for the year-ago quarter.

•Total assets were $2.02 billion at September 30, 2020, an increase of $410 thousand from $2.02 billion at June 30, 2020, an increase of $274.9 million, or 15.7%, from $1.75 billion at December 31, 2019, and an increase of $321.7 million, or 18.9%, from $1.70 billion at September 30, 2019;

•Loans held-for-investment, net of deferred costs (fees), were $1.58 billion at September 30, 2020, an increase of $25.2 million, or 1.6%, from $1.55 billion at June 30, 2020, an increase of $128.0 million, or 8.8%, from $1.45 billion at December 31, 2019, and an increase of $189.0 million, or 13.6%, from $1.39 billion at September 30, 2019;

◦SBA PPP loans totaled $136.4 million and $133.7 million at September 30, 2020 and June 30, 2020, respectively.

◦Loans with modifications related to COVID-19 totaled $171.6 million at September 30, 2020 compared with $484.0 million at June 30, 2020.

•Total deposits were $1.65 billion at September 30, 2020, an increase of $177 thousand from $1.65 billion at June 30, 2020, an increase of $167.8 million, or 11.3%, from $1.48 billion at December 31, 2019, and an increase of $214.8 million, or 15.0%, from $1.43 billion at September 30, 2019;

•The consent order with the Federal Deposit Insurance Corporation (“FDIC”) and California Department of Financial Protection and Innovation (“CDFPI”, formerly California Department of Business Oversight) related to the Bank's Bank Secrecy Act and Anti-Money Laundering (“BSA/AML”) compliance was terminated; and

•The Company declared and paid a cash dividend of $0.10 per common share for the third quarter of 2020 compared with $0.10 per common share for the second quarter of 2020 and $0.06 per common share for the third quarter of 2019.

“We continued to successfully manage the challenging environment as evidenced by earning $3.4 million of net income while building additional $4.3 million of allowance for loan losses related to the economic impact of the COVID-19 pandemic in the third quarter to bring it to 1.70% of total loans held-for-investment, excluding SBA PPP loans,” commented Henry Kim, President and Chief Executive Officer. “We expanded our net interest margin to 3.43% in the third quarter compared with 3.22% in the second quarter primarily by reducing 0.25% in cost of total interest-bearing liabilities. In addition, we continued to gradually reduce our excess liquidity that was accumulated at the onset of the COVID-19 pandemic.”

“Our asset quality remained stable as we continued to help navigate our borrowers manage through the impact of the COVID-19 pandemic. Our loans with modifications related to the COVID-19 pandemic decreased to 11.9% of total loans held-for-investment at September 30, 2020 compared with 34.1% at June 30, 2020.”

“During the quarter, the FDIC and CDFPI also terminated the consent order related to the Bank’s BSA/AML compliance program by our successful resolution of the deficiencies and enhancement of our program. We believe we are successfully managing the current challenging environment and remain confident in our strategy to continue supporting our customers while delivering consistent financial performance.”

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Financial Highlights (Unaudited)

($ in thousands, except per share data)						Three Months Ended																																																						Nine Months Ended
									9/30/2020						6/30/2020						% Change						9/30/2019						% Change						9/30/2020						9/30/2019						% Change
Net income						$	3,449					$	3,367					2.4		%				$	6,785					(49.2)		%				$	10,388					$	19,950					(47.9)		%
Diluted earnings per common share						$	0.22					$	0.22					—		%				$	0.42					(47.6)		%				$	0.67					$	1.23					(45.5)		%
Net interest income						$	16,853					$	15,363					9.7		%				$	17,529					(3.9)		%				$	48,782					$	52,374					(6.9)		%
Provision (reversal) for loan losses						4,326						3,855						12.2		%				(102)						NM						11,077						207						5251.2		%
Noninterest income						2,272						2,918						(22.1)		%				2,802						(18.9)		%				7,216						8,265						(12.7)		%
Noninterest expense						9,886						9,696						2.0		%				10,777						(8.3)		%				30,149						32,050						(5.9)		%
Return on average assets (1)						0.69		%				0.69		%										1.55		%										0.73		%				1.55		%
Return on average shareholders’ equity (1), (2)						5.98		%				5.98		%										12.02		%										6.10		%				12.15		%
Net interest margin (1)						3.43		%				3.22		%										4.11		%										3.49		%				4.16		%
Efficiency ratio (3)						51.69		%				53.04		%										53.01		%										53.84		%				52.85		%

($ in thousands, except per share data)						9/30/2020						6/30/2020						% Change						12/31/2019						% Change						9/30/2019						% Change
Total assets						$	2,021,187					$	2,020,777					—		%				$	1,746,328					15.7		%				$	1,699,446					18.9		%
Net loans held-for-investment						1,554,258						1,533,341						1.4		%				1,436,451						8.2		%				1,376,736						12.9		%
Total deposits						1,647,107						1,646,930						—		%				1,479,307						11.3		%				1,432,262						15.0		%
Book value per common share (2), (4)						$	14.91					$	14.78					0.9		%				$	14.44					3.3		%				$	14.30					4.3		%
Tier 1 leverage ratio (consolidated)						11.40		%				11.49		%										13.23		%										12.87		%
Total shareholders’ equity to total assets (2)						11.35		%				11.24		%										12.99		%										13.22		%

(1)Ratios are presented on an annualized basis.

(2)The Company did not have any intangible equity components for the presented periods.

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

(4)The ratios are calculated by dividing total shareholders’ equity by the number of outstanding common shares.

COVID-19 Pandemic

The ongoing COVID-19 pandemic, and governmental and societal responses thereto, have had a severe impact on recent global economic and market conditions, including significant disruption of, and volatility in, financial markets; global supply chain disruptions; and the institution of social distancing and shelter-in-place requirements that have resulted in temporary closures of many businesses, lost revenues, and increased unemployment throughout the U.S., but also specifically in California, where most of the Company’s operations and a large majority of its customers are located.

Since the beginning of the crisis, the Company has taken a number of steps to protect the safety of its employees and to support its customers. The Company has enabled its staff to work remotely and established safety measures within its bank premises and branches for both employees and customers.

In order to support its customers, the Company has been in close contact with its customers, assessing the level of impact on their businesses, and putting a process in place to evaluate each client’s specific situation and provide relief programs where appropriate. SBA PPP loans totaled $136.4 million (1,614 loans) and loans with modifications related to the COVID-19 pandemic totaled $171.6 million (154 loan customers) as of September 30, 2020.

In addition, the Company has been monitoring its liquidity and capital closely. As of September 30, 2020, the Company maintained $257.4 million, or 12.7% of total assets, of cash and cash equivalents and $419.9 million, or 20.8% of total assets, of available borrowing capacity. All regulatory capital ratios were also well above the regulatory well capitalized requirements as of September 30, 2020, while establishing additional allowance for loan losses of $4.3 million and $11.1 million, respectively, for the current quarter and year for the increase in risks associated with economic and business conditions as a result of the COVID-19 pandemic.

At this time, the Company cannot estimate the long term impact of the COVID-19 pandemic, but these conditions impacted and are expected to impact its business, results of operations, and financial condition negatively.

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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)						9/30/2020						6/30/2020						% Change						9/30/2019						% Change						9/30/2020						9/30/2019						% Change
Interest income/expense on:
Loans						$	18,938					$	18,273					3.6		%				$	21,876					(13.4)		%				$	57,617					$	64,779					(11.1)		%
Investment securities						515						539						(4.5)		%				978						(47.3)		%				1,698						3,133						(45.8)		%
Other interest-earning assets						167						161						3.7		%				833						(80.0)		%				938						2,757						(66.0)		%
Total interest-earning assets						19,620						18,973						3.4		%				23,687						(17.2)		%				60,253						70,669						(14.7)		%
Interest-bearing deposits						2,599						3,409						(23.8)		%				6,060						(57.1)		%				11,000						17,925						(38.6)		%
Borrowings						168						201						(16.4)		%				98						71.4		%				471						370						27.3		%
Total interest-bearing liabilities						2,767						3,610						(23.4)		%				6,158						(55.1)		%				11,471						18,295						(37.3)		%
Net interest income						$	16,853					$	15,363					9.7		%				$	17,529					(3.9)		%				$	48,782					$	52,374					(6.9)		%
Average balance of:
Loans						$	1,564,704					$	1,554,011					0.7		%				$	1,396,437					12.0		%				$	1,524,628					$	1,372,704					11.1		%
Investment securities						128,212						120,336						6.5		%				161,528						(20.6)		%				122,371						165,638						(26.1)		%
Other interest-earning assets						260,426						245,447						6.1		%				135,774						91.8		%				221,698						143,616						54.4		%
Total interest-earning assets						$	1,953,342					$	1,919,794					1.7		%				$	1,693,739					15.3		%				$	1,868,697					$	1,681,958					11.1		%
Interest-bearing deposits						$	1,063,962					$	1,109,307					(4.1)		%				$	1,126,376					(5.5)		%				$	1,100,855					$	1,128,606					(2.5)		%
Borrowings						130,000						130,330						(0.3)		%				20,326						539.6		%				95,276						26,820						255.2		%
Total interest-bearing liabilities						$	1,193,962					$	1,239,637					(3.7)		%				$	1,146,702					4.1		%				$	1,196,131					$	1,155,426					3.5		%
Total funding (1)						$	1,746,217					$	1,713,812					1.9		%				$	1,488,560					17.3		%				$	1,661,765					$	1,481,130					12.2		%
Annualized average yield/cost of:
Loans						4.81		%				4.73		%										6.22		%										5.05		%				6.31		%
Investment securities						1.60		%				1.80		%										2.40		%										1.85		%				2.53		%
Other interest-earning assets						0.26		%				0.26		%										2.43		%										0.57		%				2.57		%
Total interest-earning assets						4.00		%				3.97		%										5.55		%										4.31		%				5.62		%
Interest-bearing deposits						0.97		%				1.24		%										2.13		%										1.33		%				2.12		%
Borrowings						0.51		%				0.62		%										1.91		%										0.66		%				1.84		%
Total interest-bearing liabilities						0.92		%				1.17		%										2.13		%										1.28		%				2.12		%
Net interest margin						3.43		%				3.22		%										4.11		%										3.49		%				4.16		%
Cost of total funding (1)						0.63		%				0.85		%										1.64		%										0.92		%				1.65		%
Supplementary information
Net accretion of discount on loans included in interest on loans						$	743					$	530					40.2		%				$	1,031					(27.9)		%				$	2,301					$	3,083					(25.4)		%
Net amortization of deferred loan fees (costs)						$	1,218					$	649					87.7		%				$	118					932.2		%				$	1,988					$	327					508.0		%

(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 increase in average balance for the current quarter and year compared with the same periods of 2019 was primarily due to the SBA PPP loan production in the previous quarter as well as an increase in commercial property loans. The increase in average yield for the current quarter compared with the previous quarter was primarily due to an increase in net accretion of discount on loans from the increase in loan payoffs and an increase in amortization of net deferred fees on SBA PPP loans. The decreases in average yield for the current quarter and year compared with the same periods of 2019 were primarily due to the lower market rates, the low interest rate on SBA PPP loans, and a decrease in net accretion of discount.

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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:

						9/30/2020																		6/30/2020																		12/31/2019																		9/30/2019
						% to Total Loans						Weighted-Average Contractual Rate						% to Total Loans						Weighted-Average Contractual Rate						% to Total Loans						Weighted-Average Contractual Rate						% to Total Loans						Weighted-Average Contractual Rate
Fixed rate loans						40.6		%				4.12		%				38.4		%				4.18		%				28.2		%				5.29		%				24.2		%				5.40		%
Hybrid rate loans						12.2		%				4.98		%				13.3		%				4.99		%				15.2		%				5.03		%				16.3		%				5.04		%
Variable rate loans						47.2		%				4.10		%				48.3		%				4.11		%				56.6		%				5.51		%				59.5		%				5.88		%

Investment Securities. The decrease in average yield for the current quarter compared with the previous quarter was primarily due to new investment securities purchased under the lower market rates. The decreases in average yield for the current quarter and year compared with the same periods of 2019 were primarily due to the new investment securities purchased, as well as sales of securities available-for-sale of $32.8 million with a weighted-average book yield of 3.02% during the fourth quarter of 2019. During the current quarter and year, and past 12-month period, the Company purchased investment securities of $12.2 million, $36.6 million and $42.4 million, respectively.

Other Interest-Earning Assets. The decreases in average yield for the current quarter and year compared with the same periods of 2019 were primarily due to the lower market rates. The increases in average balance for the current quarter and year compared with the same periods of 2019 were primarily due to increases in deposits and other borrowings during the current quarter and year as the Company maintains most of its cash at the Federal Reserve Bank account. See the balance change discussion for the current quarter in “Deposits” under the “Balance Sheet” discussion.

Interest-Bearing Deposits. The decreases in average cost for the current quarter and year were primarily due to the continuing decreases in market rates.

Borrowings. The Company maintained a higher balance of Federal Home Loan Bank (“FHLB”) advances during the current year as a part of the Company’s liquidity management. At September 30, 2020, the Company had a total outstanding FHLB advances of $130.0 million with a weighted-average rate of 0.51%.

Provision (reversal) for Loan Losses

Provision (reversal) for loan losses was $4.3 million for the current quarter compared with $3.9 million for the previous quarter and $(102) thousand for the year-ago quarter. For the nine months ended September 30, 2020 and 2019, provision for loan losses was $11.1 million and $207 thousand, respectively. The provision was primarily driven by the increase in risks associated with economic and business conditions as a result of the COVID-19 pandemic, which required an additional provision for loan losses of $4.3 million and $11.1 million for the current quarter and year, respectively. The Company recorded net charge-offs of $28 thousand for the current quarter compared with $281 thousand for the previous quarter and $132 thousand for the year-ago quarter. For the nine months ended September 30, 2020 and 2019, the Company recorded net charge-offs of $911 thousand and $280 thousand, respectively.

The following table presents allowance for loan losses to total loans held-for-investment ratio for the dates indicated:

						9/30/2020						6/30/2020						12/31/2019						9/30/2019
Total loans held-for-investment						$	1,578,804					$	1,553,589					$	1,450,831					$	1,389,830
Less: SBA PPP loans						136,418						133,675						—						—
Total loans held-for-investment, excluding SBA PPP loans						$	1,442,386					$	1,419,914					$	1,450,831					$	1,389,830
Allowance for loan losses						$	24,546					$	20,248					$	14,380					$	13,094
Allowance for loan losses to total loans held-for-investment						1.55		%				1.30		%				0.99		%				0.94		%
Allowance for loan losses to total loans held-for-investment, excluding SBA PPP loans						1.70		%				1.43		%				0.99		%				0.94		%

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Noninterest Income

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

						Three Months Ended																																																						Nine Months Ended
($ in thousands)						9/30/2020						6/30/2020						% Change						9/30/2019						% Change						9/30/2020						9/30/2019						% Change
Gain on sale of loans						$	821					$	1,498					(45.2)		%				$	1,540					(46.7)		%				$	3,044					$	4,551					(33.1)		%
Service charges and fees on deposits						280						275						1.8		%				405						(30.9)		%				945						1,137						(16.9)		%
Loan servicing income						856						902						(5.1)		%				534						60.3		%				2,312						1,657						39.5		%
Other income						315						243						29.6		%				323						(2.5)		%				915						920						(0.5)		%
Total noninterest income						$	2,272					$	2,918					(22.1)		%				$	2,802					(18.9)		%				$	7,216					$	8,265					(12.7)		%

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)						9/30/2020						6/30/2020						% Change						9/30/2019						% Change						9/30/2020						9/30/2019						% Change
Gain on sale of SBA loans
Sold loan balance						$	8,582					$	27,066					(68.3)		%				$	22,186					(61.3)		%				$	47,363					$	72,537					(34.7)		%
Premium received						917						2,042						(55.1)		%				2,061						(55.5)		%				4,015						6,288						(36.1)		%
Gain recognized						689						1,448						(52.4)		%				1,498						(54.0)		%				2,841						4,487						(36.7)		%
Gain on sale of residential property loans
Sold loan balance						$	16,585					$	6,118					171.1		%				$	4,661					255.8		%				$	24,782					$	7,432					233.4		%
Gain recognized						132						50						164.0		%				42						214.3		%				203						64						217.2		%

The Company maintained SBA loans held-for-sale of $26.8 million and residential property loans held-for-sale of $4.0 million at September 30, 2020. All of these loans held-for-sale were sold subsequent to the balance sheet date.

Loan Servicing Income. The Company services SBA loans and certain residential property loans that are sold to the secondary market. The increases for current quarter and year compared with the same period of 2019 were primarily due to a decrease in servicing asset amortization from a lower loan payoffs. The following table presents information on loan servicing income for the periods indicated.

						Three Months Ended																																																						Nine Months Ended
($ in thousands)						9/30/2020						6/30/2020						% Change						9/30/2019						% Change						9/30/2020						9/30/2019						% Change
Loan servicing income:
Servicing income received						$	1,244					$	1,294					(3.9)		%				$	1,195					4.1		%				$	3,696					$	3,532					4.6		%
Servicing assets amortization						(388)						(392)						(1.0)		%				(661)						(41.3)		%				(1,384)						(1,875)						(26.2)		%
Loan servicing income						$	856					$	902					(5.1)		%				$	534					60.3		%				$	2,312					$	1,657					39.5		%
Underlying loans at end of period						$	484,651					$	494,000					(1.9)		%				$	493,923					(1.9)		%				$	484,651					$	493,923					(1.9)		%

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Noninterest Expense

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

						Three Months Ended																																																						Nine Months Ended
($ in thousands)						9/30/2020						6/30/2020						% Change						9/30/2019						% Change						9/30/2020						9/30/2019						% Change
Salaries and employee benefits						$	6,438					$	5,761					11.8		%				$	6,901					(6.7)		%				$	18,750					$	20,123					(6.8)		%
Occupancy and equipment						1,416						1,400						1.1		%				1,408						0.6		%				4,196						4,128						1.6		%
Professional fees						325						509						(36.1)		%				664						(51.1)		%				1,631						2,108						(22.6)		%
Marketing and business promotion						193						548						(64.8)		%				292						(33.9)		%				920						1,049						(12.3)		%
Data processing						373						366						1.9		%				348						7.2		%				1,097						1,004						9.3		%
Director fees and expenses						125						107						16.8		%				188						(33.5)		%				453						562						(19.4)		%
Regulatory assessments						267						242						10.3		%				—						—		%				728						425						71.3		%
Other expenses						749						763						(1.8)		%				976						(23.3)		%				2,374						2,651						(10.4)		%
Total noninterest expense						$	9,886					$	9,696					2.0		%				$	10,777					(8.3)		%				$	30,149					$	32,050					(5.9)		%

Salaries and Employee Benefits. The increase for the current quarter compared with the previous quarter was primarily due to a direct loan origination cost of $1.1 million related to SBA PPP loan production during the previous quarter, which offsets the recognition of salaries and benefits expense, partially offset by a decrease in vacation accrual. The decrease for the current quarter compared with the year-ago quarter was primarily due to a decrease in bonus accrual, partially offset by increases in wages and other employee benefits. The decrease for the current year compared with the previous year was primarily due to the increase in direct loan origination cost related to the SBA PPP loan production and a decrease in bonus accrual, partially offset by increases in wages, other employee benefits, and vacation accrual.

Professional Fees. The decreases for the current quarter and year compared with the same periods of 2019 were primarily due to a decrease in expenses related to the BSA/AML compliance enhancements. During the current quarter, the consent order related to the Bank's BSA/AML was terminated.

Marketing and business promotion. The decrease for the current quarter compared with the previous quarter was primarily due to a decrease in advertisement.

Regulatory Assessments. The increases for the current quarter and year compared with the same periods of 2019 were primarily due to a small bank credit received from the FDIC during the year-ago quarter, as well as an increase in balance sheet. The Company would have recognized regulatory assessments expense of $228 thousand without the small bank credit for the year-ago quarter

6

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Balance Sheet (Unaudited)

Loans

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

($ in thousands)						9/30/2020						6/30/2020						% Change						12/31/2019						% Change						9/30/2019						% Change
Real estate loans:
Commercial property						$	853,708					$	813,409					5.0		%				$	803,014					6.3		%				$	759,881					12.3		%
Residential property						212,804						223,923						(5.0)		%				235,046						(9.5)		%				236,382						(10.0)		%
SBA property						128,038						122,675						4.4		%				129,837						(1.4)		%				126,347						1.3		%
Construction						19,803						20,432						(3.1)		%				19,164						3.3		%				17,175						15.3		%
Commercial and industrial loans:
Commercial term						90,867						98,936						(8.2)		%				103,380						(12.1)		%				105,433						(13.8)		%
Commercial lines of credit						92,222						96,339						(4.3)		%				111,768						(17.5)		%				95,997						(3.9)		%
SBA commercial term						23,011						22,650						1.6		%				25,332						(9.2)		%				25,326						(9.1)		%
SBA PPP						136,418						133,675						2.1		%				—						—		%				—						—		%
Other consumer loans						21,933						21,550						1.8		%				23,290						(5.8)		%				23,289						(5.8)		%
Loans held-for-investment						1,578,804						1,553,589						1.6		%				1,450,831						8.8		%				1,389,830						13.6		%
Loans held-for-sale						30,878						4,102						652.8		%				1,975						1,463.4		%				1,583						1,850.6		%
Total loans						$	1,609,682					$	1,557,691					3.3		%				$	1,452,806					10.8		%				$	1,391,413					15.7		%

The increase in loans held-for-investment for the current quarter was primarily due to new funding of $61.0 million and advances on lines of credit of $20.5 million, partially offset by pay-downs and pay-offs of $56.1 million. The increase for the current year was primarily due to new funding of $295.3 million and advances on lines of credit of $77.0 million, partially offset by pay-downs and pay-offs of $242.3 million.

The increase in loans held-for-sale for the current quarter was primarily due to new funding of $51.9 million, partially offset by sales of $25.2 million. The increase for the current year was primarily due to new funding of $100.5 million, partially offset by sales of $72.1 million.

The following table presents a composition of commitments to extend credit as of the dates indicated:

($ in thousands)						9/30/2020						6/30/2020						% Change						12/31/2019						% Change						9/30/2019						% Change
Real estate loans:
Commercial property						$	17,621					$	16,962					3.9		%				$	15,836					11.3		%				$	17,519					0.6		%
SBA property						—						220						(100.0)		%				1,405						(100.0)		%				1,523						(100.0)		%
Construction						15,366						16,451						(6.6)		%				11,557						33.0		%				10,254						49.9		%
Commercial and industrial loans:
Commercial term						1,000						1,000						—		%				1,243						(19.5)		%				1,826						(45.2)		%
Commercial lines of credit						173,080						159,753						8.3		%				140,690						23.0		%				139,412						24.2		%
SBA commercial term						—						—						—		%				762						(100.0)		%				391						(100.0)		%
Other consumer loans						75						45						66.7		%				115						(34.8)		%				25						200.0		%
Total commitments to extend credit						$	207,142					$	194,431					6.5		%				$	171,608					20.7		%				$	170,950					21.2		%

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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)						9/30/2020						6/30/2020						% Change						12/31/2019						% Change						9/30/2019						% Change
Nonaccrual loans:
Real estate loans:
SBA property						$	923					$	1,351					(31.7)		%				$	442					108.8		%				$	1,441					(35.9)		%
Commercial and industrial loans:
Commercial lines of credit						1,525						1,968						(22.5)		%				1,888						(19.2)		%				327						366.4		%
SBA commercial term						378						381						(0.8)		%				159						137.7		%				68						455.9		%
Other consumer loans						67						70						(4.3)		%				48						39.6		%				7						857.1		%
Total nonaccrual loans held-for-investment						2,893						3,770						(23.3)		%				2,537						14.0		%				1,843						57.0		%
Loans past due 90 days or more and still accruing						699						696						0.4		%				287						143.6		%				—						—		%
Non-performing loans (“NPLs”)						3,592						4,466						(19.6)		%				2,824						27.2		%				1,843						94.9		%
Other real estate owned (“OREO”)						376						376						—		%				—						—		%				—						—		%
Non-performing assets (“NPAs”)						$	3,968					$	4,842					(18.1)		%				$	2,824					40.5		%				$	1,843					115.3		%
Loans past due and still accruing:
Past due 30 to 59 days						$	298					$	311					(4.2)		%				$	893					(66.6)		%				$	664					(55.1)		%
Past due 60 to 89 days						3						113						(97.3)		%				925						(99.7)		%				59						(94.9)		%
Past due 90 days or more						699						696						0.4		%				287						143.6		%				—						—		%
Total loans past due and still accruing						$	1,000					$	1,120					(10.7)		%				2,105						(52.5)		%				$	723					38.3		%
Troubled debt restructurings (“TDRs”):
Accruing TDRs						$	649					$	669					(3.0)		%				$	700					(7.3)		%				$	713					(9.0)		%
Nonaccrual TDRs						38						40						(5.0)		%				121						(68.6)		%				249						(84.7)		%
Total TDRs						$	687					$	709					(3.1)		%				$	821					(16.3)		%				$	962					(28.6)		%
Criticized loans						$	4,746					$	71					6,584.5		%				$	1,783					166.2		%				$	1,763					169.2		%
Classified assets
Classified loans						$	4,860					$	5,809					(16.3)		%				$	8,862					(45.2)		%				$	7,878					(38.3)		%
OREO						376						376						—		%				—						—		%				—						—		%
Classified assets						$	5,236					$	6,185					(15.3)		%				$	8,862					(40.9)		%				$	7,878					(33.5)		%
NPLs to loans held-for-investment						0.23		%				0.29		%										0.19		%										0.13		%
NPAs to total assets						0.20		%				0.24		%										0.16		%										0.11		%
Classified assets to total assets						0.26		%				0.31		%										0.51		%										0.46		%

The Company had a residential property loan past due 90 days or more and still accruing at September 30, 2020 and June 30, 2020, which management believes that the loan is well secured and the Bank is in the process of collection.

Loan Modifications Related to the COVID-19 Pandemic

The Company provided modifications, including interest only payments or payment deferrals, to customers that were adversely affected by the COVID-19 pandemic. The loan modifications met all criteria under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) Act. Therefore, the modified loans were not considered TDRs. The following table presents a summary of loans with modifications related to the COVID-19 pandemic by portfolio segment as of September 30, 2020:

						Modification Type																								Weighted-Average Contractual Rate						Accrued Interest Receivable
($ in thousands)						Payment Deferment						Interest Only						Total
Real estate loans:
Commercial property						$	135,165					$	2,397					$	137,562					4.49		%				$	3,048
Residential property						19,233						—						19,233						4.91		%				519
Commercial and industrial loans:
Commercial term						11,797						2,960						14,757						4.29		%				309
SBA commercial term						—						72						72						5.25		%				1
Total						$	166,195					$	5,429					$	171,624					4.52		%				$	3,877

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Investment Securities

During the previous quarter, the Company transferred securities held-to-maturity to securities available-for-sale as a part of the Company’s liquidity management plan in response to the COVID-19 pandemic. The Company transferred all of securities held-to-maturity of $18.8 million to securities available-for-sale, which resulted in a pre-tax increase to accumulated other comprehensive income of $787 thousand.

Total investment securities were $129.0 million at September 30, 2020, an increase of $933 thousand, or 0.7%, from $128.0 million at June 30, 2020 and an increase of $11.3 million, or 9.6%, from $117.7 million at December 31, 2019, but a decrease of $27.2 million, or 17.4%, from $156.2 million at September 30, 2019.

The increase for the current quarter was primarily due to purchases of $12.2 million, partially offset by principal pay-downs and calls of $11.1 million and net premium amortization of $243 thousand. The increase for the current year was primarily due to purchases of $36.6 million and an increase in fair value of securities available-for-sale of $2.8 million, partially offset by principal pay-downs and calls of $27.6 million and net premium amortization of $656 thousand.

Deposits

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

						9/30/2020																		6/30/2020																		12/31/2019																		9/30/2019
($ in thousands)						Amount						% to Total						Amount						% to Total						Amount						% to Total						Amount						% to Total
Noninterest-bearing demand deposits						$	576,086					35.0		%				$	551,415					33.5		%				$	360,039					24.3		%				$	353,448					24.7		%
Interest-bearing deposits:
Savings						11,124						0.7		%				8,258						0.5		%				6,492						0.4		%				8,206						0.6		%
NOW						21,726						1.3		%				21,173						1.3		%				17,673						1.2		%				16,108						1.1		%
Retail money market accounts						344,939						20.9		%				339,444						20.6		%				307,980						20.8		%				307,663						21.5		%
Brokered money market accounts						30,001						1.9		%				10						0.1		%				30,034						2.0		%				10,003						0.7		%
Retail time deposits of:
$250,000 or less						312,171						18.9		%				347,382						21.0		%				405,004						27.5		%				417,549						29.1		%
More than $250,000						167,208						10.2		%				170,180						10.3		%				199,726						13.5		%				206,785						14.4		%
Time deposits from internet rate service providers						31,852						1.9		%				37,068						2.3		%				—						—		%				—						—		%
State and brokered time deposits						152,000						9.2		%				172,000						10.4		%				152,359						10.3		%				112,500						7.9		%
Total interest-bearing deposits						1,071,021						65.0		%				1,095,515						66.5		%				1,119,268						75.7		%				1,078,814						75.3		%
Total deposits						$	1,647,107					100.0		%				$	1,646,930					100.0		%				$	1,479,307					100.0		%				$	1,432,262					100.0		%

The increase in noninterest-bearing demand deposits for the current quarter was primarily due to the deposit increases from customers with SBA PPP loans and SBA Economic Injury Disaster Loans, as well as the overall liquid deposit market. A total of $117.3 million of SBA PPP loans were funded through the Bank's noninterest-bearing demand deposits and deposit customers also received $93.5 million of SBA Economic Injury Disaster Loans during the past 6-month period.

The decrease in retail time deposits for the current quarter was primarily due to matured and closed accounts of $157.4 million, partially offset by new accounts of $24.1 million and renewals of the matured accounts of $91.9 million. The decrease in retail time deposits for the current year was primarily due to matured and closed accounts of $515.5 million, partially offset by new accounts of $73.8 million and renewals of the matured accounts of $305.1 million.

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Liquidity

The following table presents a summary of the Company’s liquidity position as of September 30, 2020:

($ in thousands)						9/30/2020
Cash and cash equivalents						$	257,382
Cash and cash equivalents to total assets						12.7		%
Available borrowing capacity:
FHLB advances						$	321,067
Federal Reserve Discount Window						33,801
Overnight federal funds lines						65,000
Total						$	419,868
Total available borrowing capacity to total assets						20.8		%

Shareholders’ Equity

Shareholders’ equity was $229.3 million at September 30, 2020, an increase of $2.1 million, or 0.9%, from $227.2 million at June 30, 2020, an increase of $2.5 million, or 1.1%, from $226.8 million at December 31, 2019, and an increase of $4.7 million, or 2.1%, from $224.6 million at September 30, 2019. The increase for the current quarter was primarily due to net income, partially offset by cash dividend declared on common stock of $1.5 million. The increase for the current year was primarily due to net income and an increase in accumulated other comprehensive income, partially offset by repurchases of common stock of $6.5 million (repurchased and retired 428,474 shares) and cash dividend declared on common stock of $4.6 million.

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 dates indicated:

						9/30/2020						6/30/2020						12/31/2019						9/30/2019						Well Capitalized Requirements
PCB Bancorp
Common tier 1 capital (to risk-weighted assets)						15.60		%				15.83		%				15.87		%				16.30		%				N/A
Total capital (to risk-weighted assets)						16.86		%				17.09		%				16.90		%				17.27		%				N/A
Tier 1 capital (to risk-weighted assets)						15.60		%				15.83		%				15.87		%				16.30		%				N/A
Tier 1 capital (to average assets)						11.40		%				11.49		%				13.23		%				12.87		%				N/A
Pacific City Bank
Common tier 1 capital (to risk-weighted assets)						15.34		%				15.58		%				15.68		%				16.11		%				6.5		%
Total capital (to risk-weighted assets)						16.60		%				16.83		%				16.71		%				17.08		%				10.0		%
Tier 1 capital (to risk-weighted assets)						15.34		%				15.58		%				15.68		%				16.11		%				8.0		%
Tier 1 capital (to average assets)						11.21		%				11.30		%				13.06		%				12.72		%				5.0		%

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About PCB Bancorp

PCB Bancorp, formerly known as Pacific City Financial Corporation, is the bank holding company for Pacific City 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 our borrowers' actual payment performance as loan deferrals related to the COVID-19 pandemic expire, changes to statutes, regulations, or regulatory policies or practices as a result of, or in response to COVID-19 pandemic, including the potential adverse impact of loan modifications and payment deferrals implemented consistent with recent regulatory guidance, and the general economic uncertainty caused by the COVID-19 pandemic, and government and societal responses thereto. 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

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PCB Bancorp and Subsidiary

Consolidated Balance Sheets (Unaudited)

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

						9/30/2020						6/30/2020						% Change						12/31/2019						% Change						9/30/2019						% Change
Assets
Cash and due from banks						$	13,572					$	18,255					(25.7)		%				$	17,808					(23.8)		%				$	22,546					(39.8)		%
Interest-bearing deposits in financial institutions						243,810						289,348						(15.7)		%				128,420						89.9		%				99,366						145.4		%
Total cash and cash equivalents						257,382						307,603						(16.3)		%				146,228						76.0		%				121,912						111.1		%
Securities available-for-sale, at fair value						128,982						128,049						0.7		%				97,566						32.2		%				134,602						(4.2)		%
Securities held-to-maturity						—						—						—		%				20,154						(100.0)		%				21,601						(100.0)		%
Total investment securities						128,982						128,049						0.7		%				117,720						9.6		%				156,203						(17.4)		%
Loans held-for-sale						30,878						4,102						652.8		%				1,975						1,463.4		%				1,583						1,850.6		%
Loans held-for-investment, net of deferred loan costs (fees)						1,578,804						1,553,589						1.6		%				1,450,831						8.8		%				1,389,830						13.6		%
Allowance for loan losses						(24,546)						(20,248)						21.2		%				(14,380)						70.7		%				(13,094)						87.5		%
Net loans held-for-investment						1,554,258						1,533,341						1.4		%				1,436,451						8.2		%				1,376,736						12.9		%
Premises and equipment, net						4,355						4,542						(4.1)		%				3,760						15.8		%				4,008						8.7		%
Federal Home Loan Bank and other bank stock						8,447						8,447						—		%				8,345						1.2		%				8,345						1.2		%
Other real estate owned, net						376						376						—		%				—						—		%				—						—		%
Deferred tax assets, net						7,454						6,347						17.4		%				5,288						41.0		%				3,389						119.9		%
Servicing assets						6,166						6,399						(3.6)		%				6,798						(9.3)		%				6,899						(10.6)		%
Operating lease assets						7,329						7,843						(6.6)		%				8,991						(18.5)		%				9,561						(23.3)		%
Accrued interest receivable						11,246						9,498						18.4		%				5,136						119.0		%				4,906						129.2		%
Other assets						4,314						4,230						2.0		%				5,636						(23.5)		%				5,904						(26.9)		%
Total assets						$	2,021,187					$	2,020,777					—		%				$	1,746,328					15.7		%				$	1,699,446					18.9		%
Liabilities
Deposits:
Noninterest-bearing demand						$	576,086					$	551,415					4.5		%				$	360,039					60.0		%				$	353,448					63.0		%
Savings, NOW and money market accounts						407,790						368,885						10.5		%				362,179						12.6		%				341,980						19.2		%
Time deposits of $250,000 or less						406,023						466,450						(13.0)		%				467,363						(13.1)		%				440,049						(7.7)		%
Time deposits of more than $250,000						257,208						260,180						(1.1)		%				289,726						(11.2)		%				296,785						(13.3)		%
Total deposits						1,647,107						1,646,930						—		%				1,479,307						11.3		%				1,432,262						15.0		%
Federal Home Loan Bank advances						130,000						130,000						—		%				20,000						550.0		%				20,000						550.0		%
Operating lease liabilities						8,204						8,758						(6.3)		%				9,990						(17.9)		%				10,574						(22.4)		%
Accrued interest payable and other liabilities						6,537						7,856						(16.8)		%				10,197						(35.9)		%				11,967						(45.4)		%
Total liabilities						1,791,848						1,793,544						(0.1)		%				1,519,494						17.9		%				1,474,803						21.5		%
Commitments and contingent liabilities
Shareholders’ equity
Common stock, no par value						163,960						163,759						0.1		%				169,221						(3.1)		%				169,224						(3.1)		%
Retained earnings						63,443						61,532						3.1		%				57,670						10.0		%				54,768						15.8		%
Accumulated other comprehensive income (loss), net						1,936						1,942						(0.3)		%				(57)						NM						651						197.4		%
Total shareholders’ equity						229,339						227,233						0.9		%				226,834						1.1		%				224,643						2.1		%
Total liabilities and shareholders’ equity						$	2,021,187					$	2,020,777					—		%				$	1,746,328					15.7		%				$	1,699,446					18.9		%
Outstanding common shares						15,379,538						15,377,935												15,707,016												15,710,287
Book value per common share (1)						$	14.91					$	14.78											$	14.44											$	14.30
Total loan to total deposit ratio						97.73		%				94.58		%										98.21		%										97.15		%
Noninterest-bearing deposits to total deposits						34.98		%				33.48		%										24.34		%										24.68		%

(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.

12

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PCB Bancorp and Subsidiary

Consolidated Statements of Income (Unaudited)

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

						Three Months Ended																																																						Nine Months Ended
						9/30/2020						6/30/2020						% Change						9/30/2019						% Change						9/30/2020						9/30/2019						% Change
Interest income:
Interest and fees on loans						$	18,938					$	18,273					3.6		%				$	21,876					(13.4)		%				$	57,617					$	64,779					(11.1)		%
Interest on investment securities						515						539						(4.5)		%				978						(47.3)		%				1,698						3,133						(45.8)		%
Interest and dividend on other interest-earning assets						167						161						3.7		%				833						(80.0)		%				938						2,757						(66.0)		%
Total interest income						19,620						18,973						3.4		%				23,687						(17.2)		%				60,253						70,669						(14.7)		%
Interest expense:
Interest on deposits						2,599						3,409						(23.8)		%				6,060						(57.1)		%				11,000						17,925						(38.6)		%
Interest on other borrowings						168						201						(16.4)		%				98						71.4		%				471						370						27.3		%
Total interest expense						2,767						3,610						(23.4)		%				6,158						(55.1)		%				11,471						18,295						(37.3)		%
Net interest income						16,853						15,363						9.7		%				17,529						(3.9)		%				48,782						52,374						(6.9)		%
Provision (reversal) for loan losses						4,326						3,855						12.2		%				(102)						NM						11,077						207						5,251.2		%
Net interest income after provision (reversal) for loan losses						12,527						11,508						8.9		%				17,631						(28.9)		%				37,705						52,167						(27.7)		%
Noninterest income:
Gain on sale of loans						821						1,498						(45.2)		%				1,540						(46.7)		%				3,044						4,551						(33.1)		%
Service charges and fees on deposits						280						275						1.8		%				405						(30.9)		%				945						1,137						(16.9)		%
Loan servicing income						856						902						(5.1)		%				534						60.3		%				2,312						1,657						39.5		%
Other income						315						243						29.6		%				323						(2.5)		%				915						920						(0.5)		%
Total noninterest income						2,272						2,918						(22.1)		%				2,802						(18.9)		%				7,216						8,265						(12.7)		%
Noninterest expense:
Salaries and employee benefits						6,438						5,761						11.8		%				6,901						(6.7)		%				18,750						20,123						(6.8)		%
Occupancy and equipment						1,416						1,400						1.1		%				1,408						0.6		%				4,196						4,128						1.6		%
Professional fees						325						509						(36.1)		%				664						(51.1)		%				1,631						2,108						(22.6)		%
Marketing and business promotion						193						548						(64.8)		%				292						(33.9)		%				920						1,049						(12.3)		%
Data processing						373						366						1.9		%				348						7.2		%				1,097						1,004						9.3		%
Director fees and expenses						125						107						16.8		%				188						(33.5)		%				453						562						(19.4)		%
Regulatory assessments						267						242						10.3		%				—						—		%				728						425						71.3		%
Other expenses						749						763						(1.8)		%				976						(23.3)		%				2,374						2,651						(10.4)		%
Total noninterest expense						9,886						9,696						2.0		%				10,777						(8.3)		%				30,149						32,050						(5.9)		%
Income before income taxes						4,913						4,730						3.9		%				9,656						(49.1)		%				14,772						28,382						(48.0)		%
Income tax expense						1,464						1,363						7.4		%				2,871						(49.0)		%				4,384						8,432						(48.0)		%
Net income						$	3,449					$	3,367					2.4		%				$	6,785					(49.2)		%				$	10,388					$	19,950					(47.9)		%
Earnings per common share
Basic						$	0.22					$	0.22											$	0.43											$	0.67					$	1.25
Diluted						$	0.22					$	0.22											$	0.42											$	0.67					$	1.23
Average shares
Basic						15,343,888						15,337,405												15,816,269												15,395,475						15,943,603
Diluted						15,377,531						15,373,655												16,099,598												15,466,207						16,231,848
Dividend paid per common share						$	0.10					$	0.10											$	0.06											$	0.20					$	0.17
Return on average assets (1)						0.69		%				0.69		%										1.55		%										0.73		%				1.55		%
Return on average shareholders’ equity (1), (2)						5.98		%				5.98		%										12.02		%										6.10		%				12.15		%
Efficiency ratio (3)						51.69		%				53.04		%										53.01		%										53.84		%				52.85		%

(1)Ratios are presented on an annualized basis.

(2)The Company did not have any intangible equity components for the presented periods.

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

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PCB Bancorp and Subsidiary

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

($ in thousands)

						Three Months Ended
						9/30/2020																														6/30/2020																														9/30/2019
						Average Balance						Interest Income/ Expense						Avg. Yield/Rate						Average Balance						Interest Income/ Expense						Avg. Yield/Rate						Average Balance						Interest Income/ Expense						Avg. Yield/Rate
Assets
Interest-earning assets:
Total loans (1)						$	1,564,704					$	18,938					4.81		%				$	1,554,011					$	18,273					4.73		%				$	1,396,437					$	21,876					6.22		%
Mortgage-backed securities						75,832						339						1.78		%				63,692						317						2.00		%				84,052						521						2.46		%
Collateralized mortgage obligation						33,393						82						0.98		%				37,745						122						1.30		%				50,891						286						2.23		%
SBA loan pool securities						12,996						57						1.74		%				13,189						62						1.89		%				20,751						133						2.54		%
Municipal bonds (2)						5,991						37						2.46		%				5,710						38						2.68		%				5,834						38						2.58		%
Other interest-earning assets						260,426						167						0.26		%				245,447						161						0.26		%				135,774						833						2.43		%
Total interest-earning assets						1,953,342						19,620						4.00		%				1,919,794						18,973						3.97		%				1,693,739						23,687						5.55		%
Noninterest-earning assets:
Cash and cash equivalents						17,094																		16,031																		18,927
Allowance for loan losses						(21,268)																		(17,320)																		(13,273)
Other assets						42,446																		37,959																		35,564
Total noninterest-earning assets						38,272																		36,670																		41,218
Total assets						$	1,991,614																	$	1,956,464																	$	1,734,957
Liabilities and Shareholders’ Equity
Interest-bearing liabilities:
Deposits:
NOW and money market accounts						$	365,093					391						0.43		%				$	371,992					548						0.59		%				$	351,581					1,432						1.62		%
Savings						9,517						2						0.08		%				6,966						3						0.17		%				7,043						6						0.34		%
Time deposits						689,352						2,206						1.27		%				730,349						2,858						1.57		%				767,752						4,622						2.39		%
Total interest-bearing deposits						1,063,962						2,599						0.97		%				1,109,307						3,409						1.24		%				1,126,376						6,060						2.13		%
Federal Home Loan Bank advances						130,000						168						0.51		%				130,330						201						0.62		%				20,326						98						1.91		%
Total interest-bearing liabilities						1,193,962						2,767						0.92		%				1,239,637						3,610						1.17		%				1,146,702						6,158						2.13		%
Noninterest-bearing liabilities
Noninterest-bearing demand						552,255																		474,175																		341,858
Other liabilities						15,934																		16,198																		22,465
Total noninterest-bearing liabilities						568,189																		490,373																		364,323
Total liabilities						1,762,151																		1,730,010																		1,511,025
Total shareholders’ equity						229,463																		226,454																		223,932
Total liabilities and shareholders’ equity						$	1,991,614																	$	1,956,464																	$	1,734,957
Net interest income												$	16,853																	$	15,363																	$	17,529
Net interest spread (3)																		3.08		%																2.80		%																3.42		%
Net interest margin (4)																		3.43		%																3.22		%																4.11		%
Total deposits						$	1,616,217					$	2,599					0.64		%				$	1,583,482					$	3,409					0.87		%				$	1,468,234					$	6,060					1.64		%
Total funding (5)						$	1,746,217					$	2,767					0.63		%				$	1,713,812					$	3,610					0.85		%				$	1,488,560					$	6,158					1.64		%

(1)Total loans include both loans held-for-sale and loans held-for-investment, net of deferred loan costs (fees).

(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.

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PCB Bancorp and Subsidiary

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

($ in thousands)

						Nine Months Ended
						9/30/2020																														9/30/2019
						Average Balance						Interest Income/ Expense						Avg. Yield/Rate						Average Balance						Interest Income/ Expense						Avg. Yield/Rate
Assets
Interest-earning assets:
Total loans (1)						$	1,524,628					$	57,617					5.05		%				$	1,372,704					$	64,779					6.31		%
Mortgage-backed securities						65,713						985						2.00		%				85,452						1,629						2.55		%
Collateralized mortgage obligation						37,500						402						1.43		%				52,927						969						2.45		%
SBA loan pool securities						13,351						198						1.98		%				21,392						420						2.62		%
Municipal bonds (2)						5,807						113						2.60		%				5,867						115						2.62		%
Other interest-earning assets						221,698						938						0.57		%				143,616						2,757						2.57		%
Total interest-earning assets						1,868,697						60,253						4.31		%				1,681,958						70,669						5.62		%
Noninterest-earning assets:
Cash and cash equivalents						17,324																		18,650
Allowance for loan losses						(17,676)																		(13,185)
Other assets						38,255																		35,370
Total noninterest-earning assets						37,903																		40,835
Total assets						$	1,906,600																	$	1,722,793
Liabilities and Shareholders’ Equity
Interest-bearing liabilities:
Deposits:
NOW and money market accounts						$	367,222					2,058						0.75		%				$	322,917					3,903						1.62		%
Savings						7,706						8						0.14		%				8,214						28						0.46		%
Time deposits						725,927						8,934						1.64		%				797,475						13,994						2.35		%
Total interest-bearing deposits						1,100,855						11,000						1.33		%				1,128,606						17,925						2.12		%
Federal Home Loan Bank advances						95,276						471						0.66		%				26,820						370						1.84		%
Total interest-bearing liabilities						1,196,131						11,471						1.28		%				1,155,426						18,295						2.12		%
Noninterest-bearing liabilities
Noninterest-bearing demand						465,634																		325,704
Other liabilities						17,493																		22,077
Total noninterest-bearing liabilities						483,127																		347,781
Total liabilities						1,679,258																		1,503,207
Total shareholders’ equity						227,342																		219,586
Total liabilities and shareholders’ equity						$	1,906,600																	$	1,722,793
Net interest income												$	48,782																	$	52,374
Net interest spread (3)																		3.03		%																3.50		%
Net interest margin (4)																		3.49		%																4.16		%
Total deposits						$	1,566,489					$	11,000					0.94		%				$	1,454,310					$	17,925					1.65		%
Total funding (5)						$	1,661,765					$	11,471					0.92		%				$	1,481,130					$	18,295					1.65		%

(1)Total loans include both loans held-for-sale and loans held-for-investment, net of deferred loan costs (fees).

(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.

15