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PCB Bancorp Reports Earnings of $8.6 million for Q1 2021 and Declares $0.10 Quarterly Cash Dividend

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PCB Bancorp (the "Company") (NASDAQ: PCB), the holding company of Pacific City Bank (the "Bank"), today reported net income of $8.6 million, or $0.55 per diluted common share for the first quarter of 2021, compared with $5.8 million, or $0.38 per diluted common share, for the previous quarter and $3.6 million, or $0.23 per diluted common share, for the year-ago quarter.

Q1 2021 Highlights

  • Net income totaled $8.6 million or $0.55 per diluted common share;

    • The Company recorded a provision (reversal) for loan losses of $(1.1) million for the current quarter compared with $2.1 million for the previous quarter and $2.9 million for the year-ago quarter.

    • Allowance for loan losses to total loans held-for-investment ratio was 1.51% at March 31, 2021 compared with 1.67% at December 31, 2020 and 1.15% at March 31, 2020. Excluding U.S. Small Business Administration ("SBA") Paycheck Protection Program ("PPP") loans, allowance for loan losses to total loans held-for-investment ratio was 1.74% and 1.83% at March 31, 2021 and December 31, 2020, respectively.

    • Net interest margin was 3.70% for the first quarter of 2021 compared with 3.64% for the previous quarter and 3.85% for the year-ago quarter.

  • Total assets were $2.05 billion at March 31, 2021, an increase of $127.8 million, or 6.6%, from $1.92 billion at December 31, 2020 and an increase of $250.7 million, or 13.9%, from $1.80 billion at March 31, 2020;

  • Loans held-for-investment, net of deferred costs (fees), were $1.69 billion at March 31, 2021, an increase of $102.3 million, or 6.5%, from $1.58 billion at December 31, 2020 and an increase of $234.9 million, or 16.2%, from $1.45 billion at March 31, 2020;

    • SBA PPP loans totaled $218.7 million and $135.7 million at March 31, 2021 and December 31, 2020, respectively. During the current quarter, the Company funded $104.3 million of SBA PPP loans.

    • Loans under modified terms related to COVID-19 totaled $19.8 million and $36.1 million at March 31, 2021 and December 31, 2020, respectively.

  • Total deposits were $1.75 billion at March 31, 2021, an increase of $158.9 million from $1.59 billion at December 31, 2020 and an increase of $276.3 million, or 18.7%, from $1.48 billion at March 31, 2020;

  • Announced a repurchase program on April 8, 2021 for the repurchase up to 5% of outstanding common stock, which represented 775,000 shares, through September 7, 2021; and

  • Declared a cash dividend of $0.10 per share on April 22, 2021. This represents the 25th consecutive quarterly dividend paid by PCB Bancorp.

"We are pleased to announce a record quarter driven by strong core income, positive credit trends and an improving economic outlook that resulted in a release of loan loss reserves," said Henry Kim, President and Chief Executive Officer. "Our allowance to loan losses remain robust at 1.74% excluding SBA PPP loans and we continue to successfully reduce our cost of deposits resulting an expansion of net interest margin to 3.70% compared with 3.64% in the fourth quarter of 2020. This solid performance is the result of our dedicated team of people who reached out to the customers at the height of the pandemic to genuinely serve and to find solutions to their unprecedented situations."

"Our 2021 first quarter results reflect our sound underwriting and our focus on relationship banking. We are well prepared to expand on this successful momentum as the economy continues to reopen and look forward to the remainder of this year."

Financial Highlights (Unaudited)

($ in thousands, except per share data)

Three Months Ended

3/31/2021

12/31/2020

% Change

3/31/2020

% Change

Net income

$

8,560

$

5,787

47.9

%

$

3,572

139.6

%

Diluted earnings per common share

$

0.55

$

0.38

44.7

%

$

0.23

139.1

%

Net interest income

$

17,819

$

17,407

2.4

%

$

16,566

7.6

%

Provision (reversal) for loan losses

(1,147

)

2,142

(153.5

)

%

2,896

(139.6

)

%

Noninterest income

2,857

4,524

(36.8

)

%

2,026

41.0

%

Noninterest expense

9,669

11,550

(16.3

)

%

10,567

(8.5

)

%

Return on average assets (1)

1.75

%

1.19

%

0.81

%

Return on average shareholders’ equity (1), (2)

14.66

%

9.92

%

6.35

%

Net interest margin (1)

3.70

%

3.64

%

3.85

%

Efficiency ratio (3)

46.76

%

52.67

%

56.84

%

($ in thousands, except per share data)

3/31/2021

12/31/2020

% Change

3/31/2020

% Change

Total assets

$

2,050,672

$

1,922,853

6.6

%

$

1,799,937

13.9

%

Net loans held-for-investment

1,660,402

1,557,068

6.6

%

1,434,364

15.8

%

Total deposits

1,753,771

1,594,851

10.0

%

1,477,442

18.7

%

Book value per common share (2), (4)

$

15.53

$

15.19

2.2

%

$

14.58

6.5

%

Tier 1 leverage ratio (consolidated)

12.03

%

11.94

%

12.57

%

Total shareholders’ equity to total assets (2)

11.72

%

12.16

%

12.45

%

(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 shareholdersequity 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 $218.7 million (2,249 loans) and loans under modified terms related to the COVID-19 pandemic totaled $19.8 million (18 loan customers) as of March 31, 2021. The Company had received SBA PPP forgiveness of $23.7 million for 440 SBA PPP loans as of March 31, 2021. On January 13, 2021, SBA began accepting applications for second draw PPP loans and the Company had funded $104.3 million (1,072 loans) as of March 31, 2021. The Company is accepting applications and will continue to receive applications as long as funding remains available.

In addition, the Company has been monitoring its liquidity and capital closely. As of March 31, 2021, the Company maintained $211.8 million, or 10.3% of total assets, of cash and cash equivalents and $540.1 million, or 26.3% of total assets, of available borrowing capacity. All regulatory capital ratios were also well above the regulatory well capitalized requirements as of March 31, 2021.

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.

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)

3/31/2021

12/31/2020

% Change

3/31/2020

% Change

Interest income/expense on

Loans

$

18,744

$

18,929

(1.0

)

%

$

20,406

(8.1

)

%

Investment securities

360

429

(16.1

)

%

644

(44.1

)

%

Other interest-earning assets

154

150

2.7

%

610

(74.8

)

%

Total interest-earning assets

19,258

19,508

(1.3

)

%

21,660

(11.1

)

%

Interest-bearing deposits

1,311

1,958

(33.0

)

%

4,992

(73.7

)

%

Borrowings

128

143

(10.5

)

%

102

25.5

%

Total interest-bearing liabilities

1,439

2,101

(31.5

)

%

5,094

(71.8

)

%

Net interest income

$

17,819

$

17,407

2.4

%

$

16,566

7.6

%

Average balance of

Loans

$

1,641,634

$

1,592,705

3.1

%

$

1,454,727

12.8

%

Investment securities

123,851

123,785

0.1

%

118,502

4.5

%

Other interest-earning assets

189,153

187,592

0.8

%

158,793

19.1

%

Total interest-earning assets

$

1,954,638

$

1,904,082

2.7

%

$

1,732,022

12.9

%

Interest-bearing deposits

$

1,053,845

$

1,050,369

0.3

%

$

1,129,699

(6.7

)

%

Borrowings

75,556

91,467

(17.4

)

%

25,117

200.8

%

Total interest-bearing liabilities

$

1,129,401

$

1,141,836

(1.1

)

%

$

1,154,816

(2.2

)

%

Total funding (1)

$

1,736,477

$

1,691,758

2.6

%

$

1,524,334

13.9

%

Annualized average yield/cost of

Loans

4.63

%

4.73

%

5.64

%

Investment securities

1.18

%

1.38

%

2.19

%

Other interest-earning assets

0.33

%

0.32

%

1.55

%

Total interest-earning assets

4.00

%

4.08

%

5.03

%

Interest-bearing deposits

0.50

%

0.74

%

1.78

%

Borrowings

0.69

%

0.62

%

1.63

%

Total interest-bearing liabilities

0.52

%

0.73

%

1.77

%

Net interest margin

3.70

%

3.64

%

3.85

%

Cost of total funding (1)

0.34

%

0.49

%

1.34

%

Supplementary information

Net accretion of discount on loans

$

745

$

991

(24.8

)

%

$

858

(13.2

)

%

Net amortization of deferred loan fees (costs)

$

1,220

$

913

33.6

%

$

121

908.3

%

(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 decrease in average yield for the current quarter compared with the previous quarter was primarily due to an increase in SBA PPP loans and a decrease in net accretion of discount on loans, partially offset by an increase in net amortization of deferred loan fees from the increased SBA PPP loan production. The decrease in average yield for the current quarter compared with the year-ago quarter was primarily due to the increase in SBA PPP loans, partially offset by the increase in net amortization of deferred loan fees.

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:

3/31/2021

12/31/2020

3/31/2020

% to Total
Loans

Weighted-
Average
Contractual
Rate

% to Total
Loans

Weighted-
Average
Contractual
Rate

% to Total
Loans

Weighted-
Average
Contractual
Rate

Fixed rate loans

36.3

%

3.44

%

31.7

%

3.86

%

30.2

%

5.19

%

Hybrid rate loans

19.3

%

4.77

%

20.8

%

4.82

%

14.6

%

5.01

%

Variable rate loans

44.4

%

4.04

%

47.5

%

4.06

%

55.2

%

4.41

%

Investment Securities. The decreases in average yield for the current quarter compared with the previous and year-ago quarters were primarily due to new investment securities purchased at lower market rates and an increase in premium amortization. During the current quarter and past 12-months period, the Company purchased investment securities of $20.2 million and $52.1 million, respectively.

Other Interest-Earning Assets. The decrease in average yield for the current quarter compared with the year-ago quarter was primarily due to the lower market rates. The increase in average balance for the current quarter compared with the year-ago quarter was primarily due to an increase in deposits and other borrowings as the Company maintains most of its cash at the Federal Reserve Bank account. For additional detail, please see the discussion for the current quarter in "Deposits" under the "Balance Sheet" discussion.

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

Borrowings. The increase in average cost for the current quarter compared with the previous quarter was primarily due to matured borrowings with lower interest rates during the current quarter. During the current quarter, a FHLB advance of $40.0 million with a rate of 0.59% matured. At March 31, 2021, the Company had a total outstanding FHLB advances of $40.0 million with a weighted-average rate of 0.76%.

Provision (reversal) for Loan Losses

Provision (reversal) for loan losses was $(1.1) million for the current quarter compared with $2.1 million for the previous quarter and $2.9 million for the year-ago quarter. The reversal for the current quarter was primarily due to improvement in historical loss factors and qualitative adjustment factors reflecting general economic condition. The Company recorded net charge-offs (recoveries) of $(151) thousand for the current quarter compared with $178 thousand for the previous quarter and $601 thousand for the year-ago quarter.

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

($ in thousands)

3/31/2021

12/31/2020

3/31/2020

Total loans held-for-investment

$

1,685,916

$

1,583,578

$

1,451,038

Less: SBA PPP loans

218,709

135,654

Total loans held-for-investment, excluding SBA PPP loans

$

1,467,207

$

1,447,924

$

1,451,038

Allowance for loan losses

$

25,514

$

26,510

$

16,674

Allowance for loan losses to total loans held-for-investment

1.51

%

1.67

%

1.15

%

Allowance for loan losses to total loans held-for-investment, excluding SBA PPP loans

1.74

%

1.83

%

1.15

%

Noninterest Income

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

Three Months Ended

($ in thousands)

3/31/2021

12/31/2020

% Change

3/31/2020

% Change

Gain on sale of loans

$

1,322

$

3,483

(62.0

)

%

$

725

82.3

%

Service charges and fees on deposits

293

311

(5.8

)

%

390

(24.9

)

%

Loan servicing income

882

398

121.6

%

554

59.2

%

Other income

360

332

8.4

%

357

0.8

%

Total noninterest income

$

2,857

$

4,524

(36.8

)

%

$

2,026

41.0

%

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)

3/31/2021

12/31/2020

% Change

3/31/2020

% Change

Gain on sale of SBA loans

Sold loan balance

$

10,919

$

42,413

(74.3

)

%

$

11,715

(6.8

)

%

Premium received

1,309

4,441

(70.5

)

%

1,056

24.0

%

Gain recognized

1,195

3,197

(62.6

)

%

704

69.7

%

Gain on sale of residential property loans

Sold loan balance

$

8,279

$

27,139

(69.5

)

%

$

2,079

298.2

%

Gain recognized

127

286

(55.6

)

%

21

504.8

%

The decrease in gain on sale of SBA loans compared with the previous quarter was primarily due to a higher sales volume in the previous quarter from the SBA loans held-for-sale of $26.8 million at September 30, 2020. The decrease in gain on sale of residential property loans was primarily due to the sales of residential property loans held-for-sale of $4.0 million at September 30, 2020 and an increased origination resulted from a higher demand for refinancing from the lower market rates during the previous quarter.

Loan Servicing Income. The following table presents information on loan servicing income for the periods indicated:

Three Months Ended

($ in thousands)

3/31/2021

12/31/2020

% Change

3/31/2020

% Change

Loan servicing income

Servicing income received

$

1,273

$

961

32.5

%

$

1,158

9.9

%

Servicing assets amortization

(391

)

(563

)

(30.6

)

%

(604

)

(35.3

)

%

Loan servicing income

$

882

$

398

121.6

%

$

554

59.2

%

Underlying loans at end of period

$

492,981

$

498,795

(1.2

)

%

$

478,748

3.0

%

The Company services SBA loans and certain residential property loans that are sold to the secondary market. The increases for the current quarter compared with the previous and year-ago quarters were primarily due to an increase in servicing income received and a decrease in servicing asset amortization from a decrease in loan payoffs.

Noninterest Expense

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

Three Months Ended

($ in thousands)

3/31/2021

12/31/2020

% Change

3/31/2020

% Change

Salaries and employee benefits

$

6,182

$

7,397

(16.4

)

%

...

$

6,551

(5.6

)

%

Occupancy and equipment

1,371

1,424

(3.7

)

%

1,380

(0.7

)

%

Professional fees

494

625

(21.0

)

%

797

(38.0

)

%

Marketing and business promotion

138

440

(68.6

)

%

179

(22.9

)

%

Data processing

377

375

0.5

%

358

5.3

%

Director fees and expenses

138

146

(5.5

)

%

221

(37.6

)

%

Regulatory assessments

208

250

(16.8

)

%

219

(5.0

)

%

Other expenses

761

893

(14.8

)

%

862

(11.7

)

%

Total noninterest expense

$

9,669

$

11,550

(16.3

)

%

$

10,567

(8.5

)

%

Salaries and Employee Benefits. The decrease for the current quarter compared with the previous quarter was primarily due to direct loan origination cost of $750 thousand related to SBA PPP loan production, which offsets the recognition of salaries and benefits expense, and decreases in bonus accrual and other employee benefits during the current quarter. Compared with the year-ago quarter, the decrease was primarily due to the SBA PPP loan direct loan origination cost and a decrease in other employee benefits, partially offset by an increase in bonus accrual.

Professional Fees. The decrease for the current quarter compared with the previous quarter was primarily due to increased other professional fees during the previous quarter as a part of the year-end processes. Compared with the year-ago quarter, the decrease was primarily due to a decrease in expenses related to the Bank’s Bank Secrecy Act and Anti-Money Laundering ("BSA/AML") compliance enhancements. The consent order related to the BSA/AML compliance was terminated on September 30, 2020.

Marketing and business promotion. The decrease for the current quarter compared with the previous quarter was primarily due to the year-end promotion during the previous quarter and a decrease in advertisement. The decrease for the current quarter compared with the year-ago quarter was primarily due to fewer marketing activities related to the COVID-19 pandemic.

Regulatory Assessments. The decreases for the current quarter compared with the previous and year-ago quarters were primarily due to a decrease in the assessment base as SBA PPP loans are excluded from the assessment base.

Balance Sheet (Unaudited)

Total assets were $2.05 billion at March 31, 2021, an increase of $127.8 million, or 6.6%, from $1.92 billion at December 31, 2020 and an increase of $250.7 million, or 13.9%, from $1.80 billion at March 31, 2020. The increase for the current quarter was primarily due to increases in loans held-for-investment, cash and cash equivalents, and investment securities. The increase in cash and cash equivalents for the current quarter was primarily due to an increase in deposits, partially offset by increases in loans held-for-investment and investment securities and a decrease in other borrowings.

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)

3/31/2021

12/31/2020

% Change

3/31/2020

% Change

Real estate loans

Commercial property

$

922,536

$

880,736

4.7

%

$

812,484

13.5

%

Residential property

190,990

198,431

(3.7

)

%

227,492

(16.0

)

%

SBA property

125,989

126,570

(0.5

)

%

125,322

0.5

%

Construction

13,151

15,199

(13.5

)

%

19,178

(31.4

)

%

Commercial and industrial loans

Commercial term

80,361

87,250

(7.9

)

%

101,943

(21.2

)

%

Commercial lines of credit

91,970

96,087

(4.3

)

%

116,873

(21.3

)

%

SBA commercial term

21,078

21,878

(3.7

)

%

24,745

(14.8

)

%

SBA PPP

218,709

135,654

61.2

%

%

Other consumer loans

21,132

21,773

(2.9

)

%

23,001

(8.1

)

%

Loans held-for-investment

1,685,916

1,583,578

6.5

%

1,451,038

16.2

%

Loans held-for-sale

3,569

1,979

80.3

%

16,191

(78.0

)

%

Total loans

$

1,689,485

$

1,585,557

6.6

%

$

1,467,229

15.1

%

The increase in loans held-for-investment for the current quarter was primarily due to new funding of $190.4 million and advances on lines of credit of $27.8 million, partially offset by pay-downs and pay-offs of $115.4 million. SBA PPP loan production contributed significantly to the Company’s loan growth for the current quarter.

The increase in loans held-for-sale for the current quarter was primarily due to new funding of $20.4 million, partially offset by sales of $19.2 million.

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

($ in thousands)

3/31/2021

12/31/2020

% Change

3/31/2020

% Change

Real estate loans

Commercial property

$

20,003

$

21,016

(4.8

)

%

$

14,393

39.0

%

SBA property

3,677

540

580.9

%

421

773.4

%

Construction

13,588

13,986

(2.8

)

%

17,761

(23.5

)

%

Commercial and industrial loans

Commercial term

1,000

1,000

%

1,034

(3.3

)

%

Commercial lines of credit

168,381

156,870

7.3

%

143,228

17.6

%

SBA commercial term

%

912

(100.0

)

%

Other consumer loans

96

84

14.3

%

38

152.6

%

Total commitments to extend credit

$

206,745

$

193,496

6.8

%

$

177,787

16.3

%

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)

3/31/2021

12/31/2020

% Change

3/31/2020

% Change

Nonaccrual loans

Real estate loans

Commercial property

$

$

524

(100.0

)

%

$

%

Residential property

189

(100.0

)

%

%

SBA property

841

885

(5.0

)

%

$

1,461

(42.4

)

%

Commercial and industrial loans

Commercial lines of credit

904

(100.0

)

%

2,182

(100.0

)

%

SBA commercial term

568

595

(4.5

)

%

430

32.1

%

Other consumer loans

52

66

(21.2

)

%

10

420.0

%

Total nonaccrual loans held-for-investment

1,461

3,163

(53.8

)

%

4,083

(64.2

)

%

Loans past due 90 days or more and still accruing

%

%

Non-performing loans ("NPLs")

1,461

3,163

(53.8

)

%

4,083

(64.2

)

%

Other real estate owned ("OREO")

2,336

1,401

66.7

%

376

521.3

%

Non-performing assets ("NPAs")

$

3,797

$

4,564

(16.8

)

%

$

4,459

(14.8

)

%

Loans past due and still accruing

Past due 30 to 59 days

$

56

$

302

(81.5

)

%

$

1,584

(96.5

)

%

Past due 60 to 89 days

52

36

44.4

%

46

13.0

%

Past due 90 days or more

%

%

Total loans past due and still accruing

$

108

$

338

(68.0

)

%

$

1,630

(93.4

)

%

Troubled debt restructurings ("TDRs")

Accruing TDRs

$

620

$

634

(2.2

)

%

$

679

(8.7

)

%

Nonaccrual TDRs

33

5

560.0

%

145

(77.2

)

%

Total TDRs

$

653

$

639

2.2

%

$

82

(20.8

)

%

Special mention loans

$

17,997

$

16,461

9.3

%

$

72

24,895.8

%

Classified assets

Classified loans

$

7,090

$

10,130

(30.0

)

%

$

6,519

8.8

%

OREO

2,336

1,401

66.7

%

376

521.3

%

Classified assets

$

9,426

$

11,531

(18.3

)

%

$

6,895

36.7

%

NPLs to loans held-for-investment

0.09

%

0.20

%

0.28

%

NPAs to total assets

0.19

%

0.24

%

0.25

%

Classified assets to total assets

0.46

%

0.60

%

0.38

%

The increase in special mention was primarily due to downgrades of loans under modified terms related to the COVID-19 pandemic. Loans that are granted modifications related to the COVID-19 pandemic in excess of 6 months, on a cumulative basis, are classified as special mention or classified.

Special mention loans included $16.4 million and $14.9 million of loans under modified terms related to the COVID-19 pandemic at March 31, 2021 and December 31, 2020, respectively. The special mention loans under modified terms related to the COVID-19 pandemic included 2 commercial property loans totaling $11.9 million, 4 commercial term loans totaling $4.3 million, and a SBA property loan of $252 thousand at March 31, 2021.

Classified loans included $1.2 million and $1.9 million of loans under modified terms related to the COVID-19 pandemic at March 31, 2021 and December 31, 2020, respectively.

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"). Therefore, the modified loans were not considered TDRs. Total loans under modified terms related to the COVID-19 pandemic were $19.8 million at March 31, 2021, a decrease of $16.3 million, or 45.1%, from $36.1 million at December 31, 2020 and a decrease of $464.2 million, or 95.9%, from $484.0 million at June 30, 2020.

The following table presents a summary of loans under modified terms related to the COVID-19 pandemic by portfolio segment as of March 31, 2021:

Modification Type

Weighted-
Average
Contractual
Rate

Accrued
Interest
Receivable

($ in thousands)

Payment
Deferment

Interest Only
Payment

Total

Real estate loans

Commercial property

$

$

11,830

$

11,830

3.59

%

$

77

Residential property

349

349

3.25

%

5

SBA property

1,627

1,627

4.94

%

27

Commercial and industrial loans

Commercial term

5,506

5,506

3.88

%

92

SBA commercial term

513

513

5.50

%

3

Total

$

349

$

19,476

$

19,825

3.82

%

$

204

Investment Securities

Total investment securities were $127.1 million at March 31, 2021, an increase of $6.6 million, or 5.5%, from $120.5 million at December 31, 2020 and an increase of $8.8 million, or 7.5%, from $118.3 million at March 31, 2020.

The increase for the current quarter was primarily due to purchases of $20.2 million, partially offset by principal pay-downs and calls of $11.8 million and net premium amortization of $310 thousand.

On June 30, 2020, 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.

Deposits

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

3/31/2021

12/31/2020

3/31/2020

($ in thousands)

Amount

% to Total

Amount

% to Total

Amount

% to Total

Noninterest-bearing demand deposits

$

715,719

40.8

%

$

538,009

33.7

%

$

394,084

26.7

%

Interest-bearing deposits

Savings

11,271

0.6

%

10,481

0.7

%

6,569

0.4

%

NOW

19,380

1.1

%

21,604

1.4

%

18,608

1.3

%

Retail money market accounts

381,704

21.7

%

351,739

22.0

%

338,850

22.9

%

Brokered money market accounts

4

0.1

%

25,002

1.6

%

10,006

0.7

%

Retail time deposits of

$250,000 or less

276,232

15.8

%

299,431

18.7

%

362,408

24.5

%

More than $250,000

166,845

9.5

%

168,683

10.6

%

176,970

12.0

%

Time deposits from internet rate service providers

17,616

1.0

%

24,902

1.6

%

5,447

0.4

%

State and brokered time deposits

165,000

9.4

%

155,000

9.7

%

164,500

11.1

%

Total interest-bearing deposits

1,038,052

59.2

%

1,056,842

66.3

%

1,083,358

73.3

%

Total deposits

$

1,753,771

100.0

%

$

1,594,851

100.0

%

$

1,477,442

100.0

%

The increase in noninterest-bearing demand deposits for the current year was primarily due to the overall liquid deposit market. During the current quarter, a total of $91.4 million of SBA PPP loans were funded through the Bank’s noninterest-bearing demand deposits and deposit customers also received $10.1 million of SBA Economic Injury Disaster Loans.

The decrease in retail time deposits for the current quarter was primarily due to matured and closed accounts of $195.6 million, partially offset by new accounts of $31.6 million and renewals of the matured accounts of $136.2 million.

Liquidity

The following table presents a summary of the Company’s liquidity position as of March 31, 2021:

($ in thousands)

3/31/2021

Cash and cash equivalents

$

211,780

Cash and cash equivalents to total assets

10.3

%

Available borrowing capacity

FHLB advances

$

440,705

Federal Reserve Discount Window

34,373

Overnight federal funds lines

65,000

Total

$

540,078

Total available borrowing capacity to total assets

26.3

%

Shareholders’ Equity

Shareholders’ equity was $240.3 million at March 31, 2021, an increase of $6.5 million, or 2.8%, from $233.8 million at December 31, 2020 and an increase of $16.1 million, or 7.2%, from $224.1 million at March 31, 2020. The increase for the current quarter was primarily due to net income, partially offset by a cash dividend declared on common stock of $1.5 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:

3/31/2021

12/31/2020

3/31/2020

Well
Capitalized
Requirements

PCB Bancorp

Common tier 1 capital (to risk-weighted assets)

15.92

%

15.97

%

15.53

%

N/A

Total capital (to risk-weighted assets)

17.17

%

17.22

%

16.71

%

N/A

Tier 1 capital (to risk-weighted assets)

15.92

%

15.97

%

15.53

%

N/A

Tier 1 capital (to average assets)

12.03

%

11.94

%

12.57

%

N/A

Pacific City Bank

Common tier 1 capital (to risk-weighted assets)

15.62

%

15.70

%

15.28

%

6.5%

Total capital (to risk-weighted assets)

16.88

%

16.95

%

16.47

%

10.0%

Tier 1 capital (to risk-weighted assets)

15.62

%

15.70

%

15.28

%

8.0%

Tier 1 capital (to average assets)

11.81

%

11.74

%

12.37

%

5.0%

Declaration of Quarterly Cash Dividend

On April 22, 2021, the Company’s Board of Directors declared a quarterly cash dividend of $0.10 per common share. The dividend will be paid on or about May 14, 2021, to shareholders of record as of the close of business on May 7, 2021.

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 the 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.

PCB Bancorp and Subsidiary
Consolidated Balance Sheets (Unaudited)
($ in thousands, except share and per share data)

3/31/2021

12/31/2020

% Change

3/31/2020

% Change

Assets

Cash and due from banks

$

16,764

$

19,605

(14.5

)

%

$

14,880

12.7

%

Interest-bearing deposits in other financial institutions

195,016

174,493

11.8

%

174,039

12.1

%

Total cash and cash equivalents

211,780

194,098

9.1

%

188,919

12.1

%

Securities available-for-sale, at fair value

127,114

120,527

5.5

%

98,568

29.0

%

Securities held-to-maturity

%

19,711

(100.0

)

%

Total investment securities

127,114

120,527

5.5

%

118,279

7.5

%

Loans held-for-sale

3,569

1,979

80.3

%

16,191

(78.0

)

%

Loans held-for-investment, net of deferred loan costs (fees)

1,685,916

1,583,578

6.5

%

1,451,038

16.2

%

Allowance for loan losses

(25,514

)

(26,510

)

(3.8

)

%

(16,674

)

53.0

%

Net loans held-for-investment

1,660,402

1,557,068

6.6

%

1,434,364

15.8

%

Premises and equipment, net

3,774

4,048

(6.8

)

%

4,797

(21.3

)

%

Federal Home Loan Bank and other bank stock

8,447

8,447

%

8,345

1.2

%

Other real estate owned, net

2,336

1,401

66.7

%

376

521.3

%

Deferred tax assets, net

8,170

8,120

0.6

%

5,140

58.9

%

Servicing assets

6,253

6,400

(2.3

)

%

6,358

(1.7

)

%

Operating lease assets

7,145

7,616

(6.2

)

%

8,393

(14.9

)

%

Accrued interest receivable

7,523

9,334

(19.4

)

%

4,706

59.9

%

Other assets

4,159

3,815

9.0

%

4,069

2.2

%

Total assets

$

2,050,672

$

1,922,853

6.6

%

$

1,799,937

13.9

%

Liabilities

Deposits

Noninterest-bearing demand

$

715,719

$

538,009

33.0

%

$

394,084

81.6

%

Savings, NOW and money market accounts

412,359

408,826

0.9

%

374,033

10.2

%

Time deposits of $250,000 or less

358,848

379,333

(5.4

)

%

442,355

(18.9

)

%

Time deposits of more than $250,000

266,845

268,683

(0.7

)

%

266,970

%

Total deposits

1,753,771

1,594,851

10.0

%

1,477,442

18.7

%

Federal Home Loan Bank advances

40,000

80,000

(50.0

)

%

80,000

(50.0

)

%

Operating lease liabilities

7,935

8,455

(6.2

)

%

9,349

(15.1

)

%

Accrued interest payable and other liabilities

8,703

5,759

51.1

%

9,021

(3.5

)

%

Total liabilities

1,810,409

1,689,065

7.2

%

1,575,812

14.9

%

Commitments and contingent liabilities

Shareholders’ equity

Common stock, no par value

164,698

164,140

0.3

%

163,532

0.7

%

Retained earnings

74,707

67,692

10.4

%

59,702

25.1

%

Accumulated other comprehensive income, net

858

1,956

(56.1

)

%

891

(3.7

)

%

Total shareholders’ equity

240,263

233,788

2.8

%

224,125

7.2

%

Total liabilities and shareholders’ equity

$

2,050,672

$

1,922,853

6.6

%

$

1,799,937

13.9

%

Outstanding common shares

15,468,242

15,385,878

15,370,086

Book value per common share (1)

$

15.53

$

15.19

$

14.58

Total loan to total deposit ratio

96.33

%

99.42

%

99.31

%

Noninterest-bearing deposits to total deposits

40.81

%

33.73

%

26.67

%

(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.

PCB Bancorp and Subsidiary
Consolidated Statements of Income (Unaudited)
($ in thousands, except share and per share data)

Three Months Ended

3/31/2021

12/31/2020

% Change

3/31/2020

% Change

Interest and dividend income

Loans, including fees

$

18,744

$

18,929

(1.0

)

%

$

20,406

(8.1

)

%

Investment securities

360

429

(16.1

)

%

644

(44.1

)

%

Other interest-earning assets

154

150

2.7

%

610

(74.8

)

%

Total interest income

19,258

19,508

(1.3

)

%

21,660

(11.1

)

%

Interest expense

Deposits

1,311

1,958

(33.0

)

%

4,992

(73.7

)

%

Other borrowings

128

143

(10.5

)

%

102

25.5

%

Total interest expense

1,439

2,101

(31.5

)

%

5,094

(71.8

)

%

Net interest income

17,819

17,407

2.4

%

16,566

7.6

%

Provision (reversal) for loan losses

(1,147

)

2,142

(153.5

)

%

2,896

(139.6

)

%

Net interest income after provision (reversal) for loan losses

18,966

15,265

24.2

%

13,670

38.7

%

Noninterest income

Gain on sale of loans

1,322

3,483

(62.0

)

%

725

82.3

%

Service charges and fees on deposits

293

311

(5.8

)

%

390

(24.9

)

%

Loan servicing income

882

398

121.6

%

554

59.2

%

Other income

360

332

8.4

%

357

0.8

%

Total noninterest income

2,857

4,524

(36.8

)

%

2,026

41.0

%

Noninterest expense

Salaries and employee benefits

6,182

7,397

(16.4

)

%

6,551

(5.6

)

%

Occupancy and equipment

1,371

1,424

(3.7

)

%

1,380

(0.7

)

%

Professional fees

494

625

(21.0

)

%

797

(38.0

)

%

Marketing and business promotion

138

440

(68.6

)

%

179

(22.9

)

%

Data processing

377

375

0.5

%

358

5.3

%

Director fees and expenses

138

146

(5.5

)

%

221

(37.6

)

%

Regulatory assessments

208

250

(16.8

)

%

219

(5.0

)

%

Other expenses

761

893

(14.8

)

%

862

(11.7

)

%

Total noninterest expense

9,669

11,550

(16.3

)

%

10,567

(8.5

)

%

Income before income taxes

12,154

8,239

47.5

%

5,129

137.0

%

Income tax expense

3,594

2,452

46.6

%

1,557

130.8

%

Net income

$

8,560

$

5,787

47.9

%

$

3,572

139.6

%

Earnings per common share

Basic

$

0.55

$

0.38

$

0.23

Diluted

$

0.55

$

0.38

$

0.23

Average common shares

Basic

15,384,343

15,350,742

15,505,699

Diluted

15,533,608

15,392,355

15,700,144

Dividend paid per common share

$

0.10

$

0.10

$

0.10

Return on average assets (1)

1.75

%

1.19

%

0.81

%

Return on average shareholders’ equity (1), (2)

14.66

%

9.92

%

6.35

%

Efficiency ratio (3)

46.76

%

52.67

%

56.84

%

(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.

PCB Bancorp and Subsidiary
Average Balance, Average Yield, and Average Rate (Unaudited)
($ in thousands)

Three Months Ended

3/31/2021

12/31/2020

3/31/2020

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)

$

1,641,634

$

18,744

4.63

%

$

1,592,705

$

18,929

4.73

%

$

1,454,727

$

20,406

5.64

%

Mortgage-backed securities

81,486

215

1.07

%

76,787

275

1.42

%

57,503

329

2.30

%

Collateralized mortgage obligation

24,888

57

0.93

%

28,743

60

0.83

%

41,408

198

1.92

%

SBA loan pool securities

11,673

52

1.81

%

12,432

57

1.82

%

13,872

79

2.29

%

Municipal bonds (2)

5,804

36

2.52

%

5,823

37

2.53

%

5,719

38

2.67

%

Other interest-earning assets

189,153

154

0.33

%

187,592

150

0.32

%

158,793

610

1.55

%

Total interest-earning assets

1,954,638

19,258

4.00

%

1,904,082

19,508

4.08

%

1,732,022

21,660

5.03

%

Noninterest-earning assets

Cash and cash equivalents

19,072

18,188

18,850

Allowance for loan losses

(26,870

)

(25,699

)

(14,399

)

Other assets

40,377

42,755

34,312

Total noninterest-earning assets

32,579

35,244

38,763

Total assets

$

1,987,217

$

1,939,326

$

1,770,785

Liabilities and Shareholders’ Equity

Interest-bearing liabilities

Deposits

NOW and money market accounts

$

407,623

333

0.33

%

$

383,507

327

0.34

%

$

364,604

1,119

1.23

%

Savings

10,609

1

0.04

%

11,037

1

0.04

%

6,614

3

0.18

%

Time deposits

635,613

977

0.62

%

655,825

1,630

0.99

%

758,481

3,870

2.05

%

Total interest-bearing deposits

1,053,845

1,311

0.50

%

1,050,369

1,958

0.74

%

1,129,699

4,992

1.78

%

Federal Home Loan Bank advances

75,556

128

0.69

%

91,467

143

0.62

%

25,117

102

1.63

%

Total interest-bearing liabilities

1,129,401

1,439

0.52

%

1,141,836

2,101

0.73

%

1,154,816

5,094

1.77

%

Noninterest-bearing liabilities

Noninterest-bearing demand

607,076

549,922

369,518

Other liabilities

13,950

15,412

20,365

Total noninterest-bearing liabilities

621,026

565,334

389,883

Total liabilities

1,750,427

1,707,170

1,544,699

Total shareholders’ equity

236,790

232,156

226,086

Total liabilities and shareholders’ equity

$

1,987,217

$

1,939,326

$

1,770,785

Net interest income

$

17,819

$

17,407

$

16,566

Net interest spread (3)

3.48

%

3.35

%

3.26

%

Net interest margin (4)

3.70

%

3.64

%

3.85

%

Total deposits

$

1,660,921

$

1,311

0.32

%

$

1,600,291

$

1,958

0.49

%

$

1,499,217

$

4,992

1.34

%

Total funding (5)

$

1,736,477

$

1,439

0.34

%

$

1,691,758

$

2,101

0.49

%

$

1,524,334

$

5,094

1.34

%

(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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210422006090/en/

Contacts

Timothy Chang
Executive Vice President & Chief Financial Officer
213-210-2000