PCB Bancorp (the “Company”) (NASDAQ: PCB), the holding company of PCB Bank (the “Bank”), today reported net income of $7.5 million, or $0.52 per diluted common share, for the second quarter of 2023, compared with $10.3 million, or $0.70 per diluted common share, for the previous quarter and $9.1 million, or $0.60 per diluted common share, for the year-ago quarter.
Q2 2023 Highlights
- Net income totaled $7.5 million, or $0.52 per diluted common share, for the current quarter;
- Recorded a provision (reversal) for credit losses(1),(2) of $197 thousand for the current quarter compared with $(2.8) million for the previous quarter and $(109) thousand for the year-ago quarter;
- Allowance for Credit Losses (“ACL”)(1) on loans to loans held-for-investment ratio was 1.17% at June 30, 2023 compared with 1.18% at March 31, 2023 and 1.15% at June 30, 2022;
- Net interest income was $21.7 million for the current quarter compared with $22.4 million for the previous quarter and $21.4 million for the year-ago quarter. Net interest margin was 3.55% for the current quarter compared with 3.79% for the previous quarter and 4.01% for the year-ago quarter;
- Gain on sale of loans was $769 thousand for the current quarter compared with $1.3 million for the previous quarter and $2.0 million for the year-ago quarter;
- Total assets were $2.56 billion at June 30, 2023, an increase of $55.8 million, or 2.2%, from $2.50 billion at March 31, 2023, an increase of $136.3 million, or 5.6%, from $2.42 billion at December 31, 2022, and an increase of $211.8 million, or 9.0%, from $2.34 billion at June 30, 2022;
- Loans held-for-investment were $2.12 billion at June 30, 2023, an increase of $30.0 million, or 1.4%, from $2.09 billion at March 31, 2023, an increase of $76.4 million, or 3.7%, from $2.05 billion at December 31, 2022, and an increase of $289.4 million, or 15.8%, from $1.83 billion at June 30, 2022; and
- Total deposits were $2.19 billion at June 30, 2023, an increase of $46.5 million, or 2.2%, from $2.14 billion at March 31, 2023, an increase of $142.2 million, or 7.0%, from $2.05 billion at December 31, 2022, and an increase of $190.6 million, or 9.5%, from $2.00 billion at June 30, 2022.
“I am pleased with our solid results in the second quarter,” said Henry Kim, President and Chief Executive Officer. “In spite of the challenging macroeconomic environment, our continued focus on maintaining fundamentals in our institution provided stable level of liquidity, robust capital, and strong asset quality.”
“During the second quarter, our cash and cash equivalents to total assets increased to 8.7% of total assets and our deposit balances increased $46.5 million, or 2.2%. Several days after June 30, 2023, we established Borrower-in Custody Program with Federal Reserve Bank that provided an additional borrowing capacity of $268.9 million. Such additional borrowing capacity in combination of other borrowing capacities and cash and cash equivalent would have covered approximately 117.1% of deposits not covered by deposit insurance compared with 91.1% without the additional borrowing capacity at June 30, 2023.”
“Tangible common equity per share increased to $18.94 and our total capital ratio was 17.57%. Our loan balance increased 1.4% to $2.12 billion compared with $2.09 billion at March 31, 2023, and our asset quality continues to be strong with non-performing assets to total asset ratio of 0.15% and classified assets to total assets ratio of 0.27%.”
“Our commitment to deliver exceptional service with precise banking products to our customers and the opportunities to expand our geographical footprint gives us motivation to be excited about our prospects for continued growth in the second half of 2023 and beyond,” concluded Kim.
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(1) | Provision (reversal) for credit losses and ACL for reporting periods beginning with January 1, 2023 are presented under ASC 326, while prior period comparisons continue to be presented under legacy ASC 450 and ASC 310 in this release. | |
(2) | Provision for credit losses on off-balance sheet credit exposures of $36 thousand and $38 thousand, respectively, for the year-ago quarter and previous year-to-date period were recorded in Other Expense on Consolidated Statements of Income (Unaudited). | |
Financial Highlights (Unaudited)
($ in thousands, except per share data) | Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||
6/30/2023 | 3/31/2023 | % Change | 6/30/2022 | % Change | 6/30/2023 | 6/30/2022 | % Change | ||||||||||||||||||||||
Net income | $ | 7,477 | $ | 10,297 | (27.4 | )% | $ | 9,092 | (17.8 | )% | $ | 17,774 | $ | 19,332 | (8.1 | )% | |||||||||||||
Diluted earnings per common share | $ | 0.52 | $ | 0.70 | (25.7 | )% | $ | 0.60 | (13.3 | )% | $ | 1.22 | $ | 1.27 | (3.9 | )% | |||||||||||||
Net interest income | $ | 21,717 | $ | 22,414 | (3.1 | )% | $ | 21,351 | 1.7 | % | $ | 44,131 | $ | 41,344 | 6.7 | % | |||||||||||||
Provision (reversal) for credit losses (1) | 197 | (2,778 | ) | NM | (109 | ) | NM | (2,581 | ) | (1,300 | ) | 98.5 | % | ||||||||||||||||
Noninterest income | 2,657 | 3,021 | (12.0 | )% | 3,648 | (27.2 | )% | 5,678 | 8,934 | (36.4 | )% | ||||||||||||||||||
Noninterest expense | 13,627 | 13,754 | (0.9 | )% | 12,245 | 11.3 | % | 27,381 | 24,316 | 12.6 | % | ||||||||||||||||||
Return on average assets (2) | 1.19 | % | 1.69 | % | 1.65 | % | 1.44 | % | 1.78 | % | |||||||||||||||||||
Return on average shareholders’ equity (2) | 8.82 | % | 12.46 | % | 12.48 | % | 10.62 | % | 14.13 | % | |||||||||||||||||||
Return on average tangible common equity (“TCE”) (2),(3) | 11.08 | % | 15.70 | % | 13.85 | % | 13.35 | % | 14.92 | % | |||||||||||||||||||
Net interest margin (2) | 3.55 | % | 3.79 | % | 4.01 | % | 3.67 | % | 3.94 | % | |||||||||||||||||||
Efficiency ratio (4) | 55.91 | % | 54.08 | % | 48.98 | % | 54.97 | % | 48.36 | % | |||||||||||||||||||
($ in thousands, except per share data) | 6/30/2023 | 3/31/2023 | % Change | 12/31/2022 | % Change | 6/30/2022 | % Change | ||||||||||||||||||
Total assets | $ | 2,556,345 | $ | 2,500,524 | 2.2 | % | $ | 2,420,036 | 5.6 | % | $ | 2,344,560 | 9.0 | % | |||||||||||
Net loans held-for-investment | 2,097,560 | 2,067,748 | 1.4 | % | 2,021,121 | 3.8 | % | 1,811,939 | 15.8 | % | |||||||||||||||
Total deposits | 2,188,232 | 2,141,689 | 2.2 | % | 2,045,983 | 7.0 | % | 1,997,607 | 9.5 | % | |||||||||||||||
Book value per common share (5) | $ | 23.77 | $ | 23.56 | $ | 22.94 | $ | 22.36 | |||||||||||||||||
TCE per common share (3) | $ | 18.94 | $ | 18.72 | $ | 18.21 | $ | 17.73 | |||||||||||||||||
Tier 1 leverage ratio (consolidated) | 13.84 | % | 13.90 | % | 14.33 | % | 15.37 | % | |||||||||||||||||
Total shareholders’ equity to total assets | 13.32 | % | 13.47 | % | 13.86 | % | 14.26 | % | |||||||||||||||||
TCE to total assets (3), (6) | 10.61 | % | 10.71 | % | 11.00 | % | 11.31 | % | |||||||||||||||||
(1) | Provision for credit losses on off-balance sheet credit exposures of $36 thousand and $38 thousand, respectively, for the year-ago quarter and previous year-to-date period were recorded in Other Expense on Consolidated Statements of Income (Unaudited). See Provision (reversal) for credit losses included in the Result of Operations discussion for additional information. | |
(2) | Ratios are presented on an annualized basis. | |
(3) | Non-GAAP. See “Non-GAAP Measures” for reconciliation of this measure to its most comparable GAAP measure. | |
(4) | Calculated by dividing noninterest expense by the sum of net interest income and noninterest income. | |
(5) | Calculated by dividing total shareholders’ equity by the number of outstanding common shares. | |
(6) | The Company did not have any intangible asset component for the presented periods. |
Result of Operations (Unaudited)
Net Interest Income and Net Interest Margin
The following table presents the components of net interest income for the periods indicated:
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||
($ in thousands) | 6/30/2023 | 3/31/2023 | % Change | 6/30/2022 | % Change | 6/30/2023 | 6/30/2022 | ||||||||||||||||||||||
