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PCB Bancorp Reports Earnings of $10.7 Million for Q4 2021 and $40.1 Million for 2021

PCB Bancorp (the “Company”) (NASDAQ: PCB), the holding company of Pacific City Bank (the “Bank”), today reported net income of $10.7 million, or $0.70 per diluted common share, for the fourth quarter of 2021, compared with $11.0 million, or $0.73 per diluted common share, for the previous quarter and $5.8 million, or $0.38 per diluted common share, for the year-ago quarter. For 2021, net income was $40.1 million, or $2.62 per diluted common share, compared with $16.2 million, or $1.04 per diluted common share, for the previous year.

Q4 2021 and Full Year Highlights

  • Net income totaled $10.7 million, or $0.70 per diluted common share, for the current quarter and $40.1 million, or $2.62 per diluted common share, for the current year;
    • The Company recorded a provision (reversal) for loan losses of $(1.5) million for the current quarter compared with $(1.1) million for the previous quarter and $2.1 million for the year-ago quarter. For the current year, provision (reversal) for loan losses was $(4.6) million compared with $13.2 million for the previous year.
    • Allowance for loan losses to loans held-for-investment(1) ratio was 1.29% at December 31, 2021 compared with 1.39% at September 30, 2021 and 1.67% at December 31, 2020. Adjusted allowance for loan losses to loans held-for-investment ratio(2) was 1.34% at December 31, 2021 compared with 1.48% at September 30, 2021 and 1.83% at December 31, 2020.
    • Net interest income was $20.1 million for the current quarter compared with $20.2 million for the previous quarter and $17.4 million for the year-ago quarter. Net interest margin was 3.87% for the current quarter compared with 3.93% for the previous quarter and 3.64% for the year-ago quarter. For the current year, net interest income and net interest margin were $77.1 million and 3.83%, respectively, compared with $66.2 million and 3.53%, respectively, for the previous year.
    • Gain on sale of loans was $3.4 million for the current quarter compared with $4.3 million for the previous quarter and $3.5 million for the year-ago quarter. For the current year, gain on sale of loans was $12.9 million compared with $6.5 million for the previous year.
  • Total assets were $2.15 billion at December 31, 2021, an increase of $45.0 million, or 2.1%, from $2.10 billion at September 30, 2021 and an increase of $226.9 million, or 11.8%, from $1.92 billion at December 31, 2020;
  • Loans held-for-investment were $1.73 billion at December 31, 2021, an increase of $24.3 million, or 1.4%, from $1.71 billion at September 30, 2021 and an increase of $148.6 million, or 9.4%, from $1.58 billion at December 31, 2020;
    • SBA PPP loans totaled $65.3 million, $101.9 million and $135.7 million at December 31, 2021, September 30, 2021 and December 31, 2020, respectively.
    • The Company had no loans under modified terms related to COVID-19 at December 31, 2021 and September 30, 2021. Loans under modified terms related to the COVID-19 pandemic totaled $36.1 million at December 31, 2020.
  • Total deposits were $1.87 billion at December 31, 2021, an increase of $34.5 million, or 1.9%, from $1.83 billion at September 30, 2021 and an increase of $272.3 million, or 17.1%, from $1.59 billion at December 31, 2020; and
  • Bank-owned life insurance (“BOLI”) of $29.3 million was purchased during the current quarter.

-------------------------------------------------------------------------------------

(1)

Loans held-for-investment are presented net of deferred fees and costs in this press release.

(2)

 

Adjusted allowance for loan losses to loans held-for-investment ratio is a non-GAAP measure, which excludes U.S. Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) loans from loans held-for-investment. See “Non-GAAP Measures” for reconciliation of this measure to its most comparable GAAP measure.

Henry Kim, President and Chief Executive Officer, commented, "We are pleased to announce another tremendous quarter with net income of $10.7 million for the fourth quarter of 2021 and record net income of $40.1 million for the year. Excluding SBA PPP loans, our loans held-for-investment increased $60.9 million, or 15.2% annualized, to $1.67 billion at December 31, 2021 compared with $1.61 billion at September 30, 2021. In addition to such record performances, we managed to improve our outstanding credit quality by reducing the non-performing loans to loans held-for-investment ratio to 0.06% and classified assets to total assets ratio to 0.24%.

“We continue to maintain an exceptional deposit mix consisting of over 44% in noninterest-bearing demand deposits and over 20% in retail money market accounts. In addition to our terrific organic loan growth and deposit mix, we managed to hold our net interest margin and efficiency ratio at 3.87% and 44.8% for the fourth quarter of 2021 and 3.83% and 45.2% for the year, respectively.”

Mr. Kim continued, “As we look ahead, we believe we are on a strong position to deliver another year of solid financial performance, and to carry out our organic growth and strategic expansions. We will remain disciplined in our approach to increase the franchise value and to benefit our shareholders’ return.”

Financial Highlights (Unaudited)

($ in thousands, except per share data)

 

Three Months Ended

 

Year Ended

 

12/31/2021

 

9/30/2021

 

% Change

 

12/31/2020

 

% Change

 

12/31/2021

 

12/31/2020

 

% Change

Net income

 

$

10,676

 

 

$

11,023

 

 

(3.1

)%

 

$

5,787

 

 

84.5

%

 

$

40,103

 

 

$

16,175

 

 

147.9

%

Diluted earnings per common share

 

$

0.70

 

 

$

0.73

 

 

(4.1

)%

 

$

0.38

 

 

84.2

%

 

$

2.62

 

 

$

1.04

 

 

151.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

$

20,095

 

 

$

20,227

 

 

(0.7

)%

 

$

17,407

 

 

15.4

%

 

$

77,137

 

 

$

66,189

 

 

16.5

%

Provision (reversal) for loan losses

 

 

(1,462

)

 

 

(1,053

)

 

38.8

%

 

 

2,142

 

 

(168.3

)%

 

 

(4,596

)

 

 

13,219

 

 

(134.8

)%

Noninterest income

 

 

4,838

 

 

 

5,588

 

 

(13.4

)%

 

 

4,524

 

 

6.9

%

 

 

18,434

 

 

 

11,740

 

 

57.0

%

Noninterest expense

 

 

11,168

 

 

 

11,232

 

 

(0.6

)%

 

 

11,550

 

 

(3.3

)%

 

 

43,208

 

 

 

41,699

 

 

3.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (1)

 

 

2.01

%

 

 

2.11

%

 

 

 

 

1.19

%

 

 

 

 

1.96

%

 

 

0.84

%

 

 

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

 

 

16.84

%

 

 

17.98

%

 

 

 

 

9.92

%

 

 

 

 

16.52

%

 

 

7.08

%

 

 

Net interest margin (1)

 

 

3.87

%

 

 

3.93

%

 

 

 

 

3.64

%

 

 

 

 

3.83

%

 

 

3.53

%

 

 

Efficiency ratio (3)

 

 

44.79

%

 

 

43.51

%

 

 

 

 

52.67

%

 

 

 

 

45.21

%

 

 

53.51

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands, except per share data)

 

12/31/2021

 

9/30/2021

 

% Change

 

12/31/2020

 

% Change

Total assets

 

$

2,149,735

 

 

$

2,104,699

 

 

2.1

%

 

$

1,922,853

 

 

11.8

%

Net loans held-for-investment

 

 

1,709,824

 

 

 

1,684,071

 

 

1.5

%

 

 

1,557,068

 

 

9.8

%

Total deposits

 

 

1,867,134

 

 

 

1,832,666

 

 

1.9

%

 

 

1,594,851

 

 

17.1

%

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

 

$

17.24

 

 

$

16.68

 

 

3.4

%

 

$

15.19

 

 

13.5

%

Tier 1 leverage ratio (consolidated)

 

 

12.11

%

 

 

11.91

%

 

 

 

 

11.94

%

 

 

Total shareholders’ equity to total assets (2)

 

 

11.92

%

 

 

11.76

%

 

 

 

 

12.16

%

 

 

 

 

 

 

 

 

 

 

 

 

 

(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)

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 global economic and market conditions. The U.S. government has enacted a number of monetary and fiscal policies to provide fiscal stimulus and relief in order to mitigate the impact of the COVID-19 pandemic. However, the COVID-19 pandemic continues to be a challenge to public health, including the emergence of new variants, and impact global economic and market conditions, including global supply chain disruptions and high inflation.

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 them, 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, including SBA PPP loans and loan modifications related to the COVID-19 pandemic.

In addition, the Company has been monitoring its liquidity and capital closely. As of December 31, 2021, the Company maintained $203.3 million, or 9.5% of total assets, of cash and cash equivalents and $610.4 million, or 28.4% of total assets, of available borrowing capacity. All regulatory capital ratios were also well above the regulatory well-capitalized requirements as of December 31, 2021.

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

Network and Data Incident

On August 30, 2021, the Bank identified unusual activity on its network. The Bank responded promptly to disable the activity, investigate its source and monitor the Bank’s network. The Bank subsequently became aware of claims that it had been the target of a ransomware attack. On September 7, 2021, the Bank determined that an external actor had illegally accessed and/or acquired certain data on its network. The Bank has been working with third-party forensic investigators to understand the nature and scope of the incident and determine what information may have been accessed and/or acquired and who may have been impacted. The investigation revealed that this incident impacted certain files containing certain Bank customer information. Some of these files contained documents related to loan applications, such as tax returns, Form W-2 information of their employees, and payroll records. The Bank has notified all individuals identified as impacted, consistent with applicable laws. All impacted individuals were offered free Equifax Complete Premier credit monitoring and identify theft protection services. The Bank has notified law enforcement and appropriate authorities of the incident.

On December 16, 2021, a complaint based on the incident was filed in the Los Angeles County Superior Court seeking damages, injunctive relief, and equitable relief. The Bank expresses no opinion on the merits of the Matter and intends to answer, respond, and/or otherwise vigorously defend itself from the claims and causes of action asserted in the complaint to the fullest extent permitted by applicable law. Those defenses will be based in part on the fact that the Bank has implemented security procedures, practices, and a robust information security program pursuant to guidance from financial regulators.

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

 

Year Ended

($ in thousands)

 

12/31/2021

 

9/30/2021

 

% Change

 

12/31/2020

 

% Change

 

12/31/2021

 

12/31/2020

 

% Change

Interest income/expense on

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

$

20,363

 

 

$

20,537

 

 

(0.8

)%

 

$

18,929

 

 

7.6

%

 

$

79,155

 

 

$

76,546

 

 

3.4

%

Investment securities

 

 

441

 

 

 

437

 

 

0.9

%

 

 

429

 

 

2.8

%

 

 

1,613

 

 

 

2,127

 

 

(24.2

)%

Other interest-earning assets

 

 

191

 

 

 

194

 

 

(1.5

)%

 

 

150

 

 

27.3

%

 

 

704

 

 

 

1,088

 

 

(35.3

)%

Total interest-earning assets

 

 

20,995

 

 

 

21,168

 

 

(0.8

)%

 

 

19,508

 

 

7.6

%

 

 

81,472

 

 

 

79,761

 

 

2.1

%

Interest-bearing deposits

 

 

847

 

 

 

885

 

 

(4.3

)%

 

 

1,958

 

 

(56.7

)%

 

 

4,043

 

 

 

12,958

 

 

(68.8

)%

Borrowings

 

 

53

 

 

 

56

 

 

(5.4

)%

 

 

143

 

 

(62.9

)%

 

 

292

 

 

 

614

 

 

(52.4

)%

Total interest-bearing liabilities

 

 

900

 

 

 

941

 

 

(4.4

)%

 

 

2,101

 

 

(57.2

)%

 

 

4,335

 

 

 

13,572

 

 

(68.1

)%

Net interest income

 

$

20,095

 

 

$

20,227

 

 

(0.7

)%

 

$

17,407

 

 

15.4

%

 

$

77,137

 

 

$

66,189

 

 

16.5

%

Average balance of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

$

1,758,421

 

 

$

1,715,106

 

 

2.5

%

 

$

1,592,705

 

 

10.4

%

 

$

1,702,073

 

 

$

1,541,740

 

 

10.4

%

Investment securities

 

 

128,650

 

 

 

136,874

 

 

(6.0

)%

 

 

123,785

 

 

3.9

%

 

 

130,437

 

 

 

122,726

 

 

6.3

%

Other interest-earning assets

 

 

175,468

 

 

 

188,137

 

 

(6.7

)%

 

 

187,592

 

 

(6.5

)%

 

 

179,353

 

 

 

213,124

 

 

(15.8

)%

Total interest-earning assets

 

$

2,062,539

 

 

$

2,040,117

 

 

1.1

%

 

$

1,904,082

 

 

8.3

%

 

$

2,011,863

 

 

$

1,877,590

 

 

7.2

%

Interest-bearing deposits

 

$

1,008,027

 

 

$

1,000,332

 

 

0.8

%

 

$

1,050,369

 

 

(4.0

)%

 

$

1,022,099

 

 

$

1,088,164

 

 

(6.1

)%

Borrowings

 

 

13,315

 

 

 

18,152

 

 

(26.6

)%

 

 

91,467

 

 

(85.4

)%

 

 

31,302

 

 

 

94,319

 

 

(66.8

)%

Total interest-bearing liabilities

 

$

1,021,342

 

 

$

1,018,484

 

 

0.3

%

 

$

1,141,836

 

 

(10.6

)%

 

$

1,053,401

 

 

$

1,182,483

 

 

(10.9

)%

Total funding (1)

 

$

1,845,846

 

 

$

1,812,649

 

 

1.8

%

 

$

1,691,758

 

 

9.1

%

 

$

1,790,617

 

 

$

1,669,303

 

 

7.3

%

Annualized average yield/cost of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

 

4.59

%

 

 

4.75

%

 

 

 

 

4.73

%

 

 

 

 

4.65

%

 

 

4.96

%

 

 

Investment securities

 

 

1.36

%

 

 

1.27

%

 

 

 

 

1.38

%

 

 

 

 

1.24

%

 

 

1.73

%

 

 

Other interest-earning assets

 

 

0.43

%

 

 

0.41

%

 

 

 

 

0.32

%

 

 

 

 

0.39

%

 

 

0.51

%

 

 

Total interest-earning assets

 

 

4.04

%

 

 

4.12

%

 

 

 

 

4.08

%

 

 

 

 

4.05

%

 

 

4.25

%

 

 

Interest-bearing deposits

 

 

0.33

%

 

 

0.35

%

 

 

 

 

0.74

%

 

 

 

 

0.40

%

 

 

1.19

%

 

 

Borrowings

 

 

1.58

%

 

 

1.22

%

 

 

 

 

0.62

%

 

 

 

 

0.93

%

 

 

0.65

%

 

 

Total interest-bearing liabilities

 

 

0.35

%

 

 

0.37

%

 

 

 

 

0.73

%

 

 

 

 

0.41

%

 

 

1.15

%

 

 

Net interest margin

 

 

3.87

%

 

 

3.93

%

 

 

 

 

3.64

%

 

 

 

 

3.83

%

 

 

3.53

%

 

 

Cost of total funding (1)

 

 

0.19

%

 

 

0.21

%

 

 

 

 

0.49

%

 

 

 

 

0.24

%

 

 

0.81

%

 

 

Supplementary information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net accretion of discount on loans

 

$

815

 

 

$

932

 

 

(12.6

)%

 

$

991

 

 

(17.8

)%

 

$

3,504

 

 

$

3,292

 

 

6.4

%

Net amortization of deferred loan fees

 

$

1,434

 

 

$

1,983

 

 

(27.7

)%

 

$

913

 

 

57.1

%

 

$

6,096

 

 

$

2,901

 

 

110.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 a decrease in net deferred loan fee amortization from a lower volume of SBA PPP loans forgiven and a decrease in net accretion of discount on loans attributed to a decrease in loan payoffs. The decreases in average yield for the current quarter and year compared with the same periods of 2020 were primarily due to a decrease in overall interest rates on loans from lower market rates, partially offset by increases in net accretion of discount on loans and 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:

 

 

12/31/2021

 

9/30/2021

 

12/31/2020

 

 

% to Total

Loans

 

Weighted-

Average

Contractual

Rate

 

% to Total

Loans

 

Weighted-

Average

Contractual

Rate

 

% to Total

Loans

 

Weighted-

Average

Contractual

Rate

Fixed rate loans

 

28.4

%

 

3.98

%

 

29.9

%

 

3.86

%

 

31.7

%

 

3.86

%

Hybrid rate loans

 

29.1

%

 

4.16

%

 

26.4

%

 

4.28

%

 

20.8

%

 

4.82

%

Variable rate loans

 

42.5

%

 

3.95

%

 

43.7

%

 

3.96

%

 

47.5

%

 

4.06

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment Securities. The increase in average yield for the current quarter compared with the previous quarter was primarily due to a decrease in net amortization of premiums on mortgage-backed securities and collateralized mortgage obligations. The decreases in average yield for the current quarter and year compared with the same periods of 2020 were primarily due to new investment securities purchased at lower market rates.

Other Interest-Earning Assets. The increase in average yield for the current quarter compared with the previous and year-ago quarters was primarily due to an increase in dividend income on Federal Home Loan Bank (“FHLB”) stock. The decrease in average yield for the current year compared with the previous year was primarily due to lower market rates, partially offset by an increase in dividend income on FHLB stock. The decreases in average balance for the current quarter and year were primarily due to an increase in loans and a purchase of BOLI, partially offset by an increase in deposits. The Company maintains most of its cash at the Federal Reserve Bank account. For additional detail, please see the discussion in “Loans” and “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 decreases in market rates.

Borrowings. The increases in average cost for the current quarter and year compared with the same periods of 2020 were primarily due to matured borrowings with lower interest rates during the current year. Matured FHLB advances totaled $70.0 million with a weighted-average rate of 0.47% for the current year. At December 31, 2021, the Company had a term FHLB advance of $10.0 million with an interest rate of 2.07% that matures on June 29, 2022.

Provision (reversal) for Loan Losses

Provision (reversal) for loan losses was $(1.5) million for the current quarter compared with $(1.1) million for the previous quarter and $2.1 million for the year-ago quarter. For the current and previous years, provision (reversal) for loan losses was $(4.6) million and $13.2 million, respectively. The reversal for the current quarter was primarily due to a decrease in qualitative adjustment factor allocations related to economic implications of the COVID-19 pandemic. The Company recorded net charge-offs (recoveries) of $(36) thousand for the current quarter compared with $30 thousand for the previous quarter and $178 thousand for the year-ago quarter. For the current and previous years, net charge-offs (recoveries) were $(467) thousand and $1.1 million, respectively.

Adjusted allowance for loan losses to loans held-for-investment ratio (1) was 1.34%, 1.48%, and 1.83% at December 31, 2021, September 30, 2021, and December 31, 2020, respectively.

-------------------------------------------------------------------------------------

(1)

Adjusted allowance for loan losses to loans held-for-investment ratio is a non-GAAP measure, which excludes SBA PPP loans from loans held-for-investment. See “Non-GAAP Measures” for reconciliation of this measure to its most comparable GAAP measure.

Noninterest Income

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

 

 

Three Months Ended

 

Year Ended

($ in thousands)

 

12/31/2021

 

9/30/2021

 

% Change

 

12/31/2020

 

% Change

 

12/31/2021

 

12/31/2020

 

% Change

Gain on sale of loans

 

$

3,374

 

$

4,269

 

(21.0

)%

 

$

3,483

 

(3.1

)%

 

$

12,932

 

$

6,527

 

98.1

%

Service charges and fees on deposits

 

 

308

 

 

292

 

5.5

%

 

 

311

 

(1.0

)%

 

 

1,195

 

 

1,256

 

(4.9

)%

Loan servicing income

 

 

688

 

 

655

 

5.0

%

 

 

398

 

72.9

%

 

 

2,770

 

 

2,710

 

2.2

%

Bank-owned life insurance income

 

 

108

 

 

 

NM

 

 

 

NM

 

 

108

 

 

 

NM

Other income

 

 

360

 

 

372

 

(3.2

)%

 

 

332

 

8.4

%

 

 

1,429

 

 

1,247

 

14.6

%

Total noninterest income

 

$

4,838

 

$

5,588

 

(13.4

)%

 

$

4,524

 

6.9

%

 

$

18,434

 

$

11,740

 

57.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on Sale of Loans. The following table presents information on gain on sale of loans for the periods indicated:

 

 

Three Months Ended

 

Year Ended

($ in thousands)

 

12/31/2021

 

9/30/2021

 

% Change

 

12/31/2020

 

% Change

 

12/31/2021

 

12/31/2020

 

% Change

Gain on sale of SBA loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sold loan balance

 

$

36,765

 

$

45,048

 

(18.4

)%

 

$

42,413

 

(13.3

)%

 

$

126,839

 

$

89,776

 

41.3

%

Premium received

 

 

3,683

 

 

4,879

 

(24.5

)%

 

 

4,441

 

(17.1

)%

 

 

14,043

 

 

8,456

 

66.1

%

Gain recognized

 

 

3,363

 

 

4,263

 

(21.1

)%

 

 

3,197

 

5.2

%

 

 

12,775

 

 

6,038

 

111.6

%

Gain on sale of residential property loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sold loan balance

 

$

559

 

$

301

 

85.7

%

 

$

27,139

 

(97.9

)%

 

$

10,382

 

$

51,921

 

(80.0

)%

Gain recognized

 

 

9

 

 

2

 

350.0

%

 

 

286

 

(96.9

)%

 

 

151

 

 

489

 

(69.1

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Company also sold certain commercial property loans of $3.4 million and $8.6 million during the current quarter and year, respectively.

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

 

 

Three Months Ended

 

Year Ended

($ in thousands)

 

12/31/2021

 

9/30/2021

 

% Change

 

12/31/2020

 

% Change

 

12/31/2021

 

12/31/2020

 

% Change

Loan servicing income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Servicing income received

 

$

1,202

 

 

$

1,180

 

 

1.9

%

 

$

961

 

 

25.1

%

 

$

4,779

 

 

$

4,657

 

 

2.6

%

Servicing assets amortization

 

 

(514

)

 

 

(525

)

 

(2.1

)%

 

 

(563

)

 

(8.7

)%

 

 

(2,009

)

 

 

(1,947

)

 

3.2

%

Loan servicing income

 

$

688

 

 

$

655

 

 

5.0

%

 

$

398

 

 

72.9

%

 

$

2,770

 

 

$

2,710

 

 

2.2

%

Underlying loans at end of period

 

$

519,706

 

 

$

511,930

 

 

1.5

%

 

$

498,795

 

 

4.2

%

 

$

519,706

 

 

$

498,795

 

 

4.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 a decrease in servicing asset amortization from a decrease in loan payoffs and an increase in servicing income received. The increase for the current year compared with the previous year was primarily due to an increase in servicing income received, partially offset by an increase in servicing asset amortization from an increase in loan payoffs.

Noninterest Expense

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

 

 

Three Months Ended

 

Year Ended

($ in thousands)

 

12/31/2021

 

9/30/2021

 

% Change

 

12/31/2020

 

% Change

 

12/31/2021

 

12/31/2020

 

% Change

Salaries and employee benefits

 

$

7,061

 

$

7,606

 

(7.2

)%

 

$

7,397

 

(4.5

)%

 

$

27,974

 

$

26,147

 

7.0

%

Occupancy and equipment

 

 

1,417

 

 

1,399

 

1.3

%

 

 

1,424

 

(0.5

)%

 

 

5,575

 

 

5,620

 

(0.8

)%

Professional fees

 

 

585

 

 

422

 

38.6

%

 

 

625

 

(6.4

)%

 

 

2,159

 

 

2,256

 

(4.3

)%

Marketing and business promotion

 

 

586

 

 

416

 

40.9

%

 

 

440

 

33.2

%

 

 

1,656

 

 

1,360

 

21.8

%

Data processing

 

 

408

 

 

391

 

4.3

%

 

 

375

 

8.8

%

 

 

1,572

 

 

1,472

 

6.8

%

Director fees and expenses

 

 

161

 

 

144

 

11.8

%

 

 

146

 

10.3

%

 

 

594

 

 

599

 

(0.8

)%

Regulatory assessments

 

 

138

 

 

12

 

1,050.0

%

 

 

250

 

(44.8

)%

 

 

537

 

 

978

 

(45.1

)%

Other expenses

 

 

812

 

 

842

 

(3.6

)%

 

 

893

 

(9.1

)%

 

 

3,141

 

 

3,267

 

(3.9

)%

Total noninterest expense

 

$

11,168

 

$

11,232

 

(0.6

)%

 

$

11,550

 

(3.3

)%

 

$

43,208

 

$

41,699

 

3.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and Employee Benefits. The decrease for the current quarter compared to the previous quarter was primarily due to a decrease in incentives tied to the sales of Loan Production Offices (“LPO”) originated SBA loans and the incentive paid during the previous quarter for SBA PPP loan production. The increase for the current year compared with the previous year was primarily due to increases in wages, bonus accrual, and increases in incentives for LPO originated SBA loan sales, partially offset by decreases in vacation and stock compensation expense.

Professional Fees. The decrease for the current year compared with the previous year was primarily due to decreases in expenses related to the Bank’s Bank Secrecy Act and Anti-Money Laundering compliance enhancements, partially offset by an increase in audit fees.

Marketing and Business Promotion. The increase for the current quarter compared with the previous quarter was primarily due to the year-end promotion. The increases for the current quarter and year compared with the same periods of 2020 were primarily due to more marketing activities and advertisement for the current quarter and year.

Regulatory Assessments. The increase for the current quarter compared with the previous quarter was primarily due to an prior-period adjustment made during the previous quarter for the assessment rate decrease. The decreases for the current quarter and year compared with the same periods of 2020 were primarily due to a decrease in assessment rate, partially offset by an increase in balance sheet.

Balance Sheet (Unaudited)

Total assets were $2.15 billion at December 31, 2021, an increase of $45.0 million, or 2.1%, from $2.10 billion at September 30, 2021 and an increase of $226.9 million, or 11.8%, from $1.92 billion at December 31, 2020. The increase for the current quarter was primarily due to increases in loans held-for-sale and net loans held-for-investment, and the purchase of BOLI, partially offset by decreases in cash and cash equivalents and investment securities. The increase for the current year was primarily due to increases in loans held-for-investment, loans-held-for-sale, investment securities, and cash and cash equivalents, as well as the purchase of BOLI.

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

($ in thousands)

 

12/31/2021

 

9/30/2021

 

% Change

 

12/31/2020

 

% Change

Real estate loans

 

 

 

 

 

 

 

 

 

 

Commercial property

 

$

1,105,843

 

$

1,054,351

 

4.9

%

 

$

880,736

 

25.6

%

Residential property

 

 

209,485

 

 

201,635

 

3.9

%

 

 

198,431

 

5.6

%

SBA property

 

 

129,661

 

 

127,845

 

1.4

%

 

 

126,570

 

2.4

%

Construction

 

 

8,252

 

 

6,572

 

25.6

%

 

 

15,199

 

(45.7

)%

Commercial and industrial loans

 

 

 

 

 

 

 

 

 

 

Commercial term

 

 

73,438

 

 

74,390

 

(1.3

)%

 

 

87,250

 

(15.8

)%

Commercial lines of credit

 

 

100,936

 

 

101,456

 

(0.5

)%

 

 

96,087

 

5.0

%

SBA commercial term

 

 

17,640

 

 

18,338

 

(3.8

)%

 

 

21,878

 

(19.4

)%

SBA PPP

 

 

65,329

 

 

101,901

 

(35.9

)%

 

 

135,654

 

(51.8

)%

Other consumer loans

 

 

21,621

 

 

21,390

 

1.1

%

 

 

21,773

 

(0.7

)%

Loans held-for-investment

 

 

1,732,205

 

 

1,707,878

 

1.4

%

 

 

1,583,578

 

9.4

%

Loans held-for-sale

 

 

37,026

 

 

29,020

 

27.6

%

 

 

1,979

 

1,770.9

%

Total loans

 

$

1,769,231

 

$

1,736,898

 

1.9

%

 

$

1,585,557

 

11.6

%

 

 

 

 

 

 

 

 

 

 

 

The increase in loans held-for-investment for the current quarter was primarily due to new funding of $120.8 million and advances on lines of credit of $30.0 million, partially offset by pay-downs and pay-offs of $123.1 million. The increase for the current year was primarily due to new funding of $619.7 million and advances on lines of credit of $118.9 million, partially offset by pay-downs and pay-offs of $581.0 million. SBA PPP loans of $37.9 million and $182.7 million were paid off through regular payments or forgiveness from SBA, and related unamortized net deferred fees were recognized through interest income, during the current quarter and year.

The increase in loans held-for-sale for the current quarter was primarily due to new funding of $45.4 million, partially offset by sales of $40.7 million. The increase for the current year was primarily due to new funding of $172.2 million, partially offset by sales of $145.8 million.

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

($ in thousands)

 

12/31/2021

 

9/30/2021

 

% Change

 

12/31/2020

 

% Change

Real estate loans

 

 

 

 

 

 

 

 

 

 

Commercial property

 

$

20,194

 

$

17,873

 

13.0

%

 

$

21,016

 

(3.9

)%

SBA property

 

 

3,068

 

 

4,747

 

(35.4

)%

 

 

540

 

468.1

%

Construction

 

 

5,180

 

 

9,478

 

(45.3

)%

 

 

13,986

 

(63.0

)%

Commercial and industrial loans

 

 

 

 

 

 

 

 

 

 

Commercial term

 

 

1,097

 

 

1,455

 

(24.6

)%

 

 

1,000

 

9.7

%

Commercial lines of credit

 

 

169,000

 

 

156,411

 

8.0

%

 

 

156,870

 

7.7

%

SBA commercial term

 

 

149

 

 

245

 

(39.2

)%

 

 

 

%

Other consumer loans

 

 

595

 

 

130

 

357.7

%

 

 

84

 

608.3

%

Total commitments to extend credit

 

$

199,283

 

$

190,339

 

4.7

%

 

$

193,496

 

3.0

%

 

 

 

 

 

 

 

 

 

 

 

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)

 

12/31/2021

 

9/30/2021

 

% Change

 

12/31/2020

 

% Change

Nonaccrual loans

 

 

 

 

 

 

 

 

 

 

Real estate loans

 

 

 

 

 

 

 

 

 

 

Commercial property

 

$

 

 

$

 

 

%

 

$

524

 

 

(100.0

)%

Residential property

 

 

 

 

 

 

 

%

 

 

189

 

 

(100.0

)%

SBA property

 

 

746

 

 

 

766

 

 

(2.6

)%

 

 

885

 

 

(15.7

)%

Commercial and industrial loans

 

 

 

 

 

 

 

 

 

 

Commercial lines of credit

 

 

 

 

 

 

 

%

 

 

904

 

 

(100.0

)%

SBA commercial term

 

 

213

 

 

 

314

 

 

(32.2

)%

 

 

595

 

 

(64.2

)%

Other consumer loans

 

 

35

 

 

 

33

 

 

6.1

%

 

 

66

 

 

(47.0

)%

Total nonaccrual loans held-for-investment

 

 

994

 

 

 

1,113

 

 

(10.7

)%

 

 

3,163

 

 

(68.6

)%

Loans past due 90 days or more and still accruing

 

 

 

 

 

3

 

 

(100.0

)%

 

 

 

 

%

Non-performing loans (“NPLs”)

 

 

994

 

 

 

1,116

 

 

(10.9

)%

 

 

3,163

 

 

(68.6

)%

Other real estate owned (“OREO”)

 

 

 

 

 

 

 

%

 

 

1,401

 

 

(100.0

)%

Non-performing assets (“NPAs”)

 

$

994

 

 

$

1,116

 

 

(10.9

)%

 

$

4,564

 

 

(78.2

)%

Loans past due and still accruing

 

 

 

 

 

 

 

 

 

 

Past due 30 to 59 days

 

$

549

 

 

$

292

 

 

88.0

%

 

$

302

 

 

81.8

%

Past due 60 to 89 days

 

 

5

 

 

 

 

 

%

 

 

36

 

 

(86.1

)%

Past due 90 days or more

 

 

 

 

 

3

 

 

(100.0

)%

 

 

 

 

%

Total loans past due and still accruing

 

$

554

 

 

$

295

 

 

87.8

%

 

 

338

 

 

63.9

%

Troubled debt restructurings (“TDRs”)

 

 

 

 

 

 

 

 

 

Accruing TDRs

 

$

576

 

 

$

589

 

 

(2.2

)%

 

$

634

 

 

(9.1

)%

Nonaccrual TDRs

 

 

17

 

 

 

26

 

 

(34.6

)%

 

 

5

 

 

240.0

%

Total TDRs

 

$

593

 

 

$

615

 

 

(3.6

)%

 

$

639

 

 

(7.2

)%

Special mention loans

 

$

18,092

 

 

$

17,315

 

 

4.5

%

 

$

16,461

 

 

9.9

%

Classified assets

 

 

 

 

 

 

 

 

 

Classified loans

 

$

5,168

 

 

$

5,345

 

 

(3.3

)%

 

$

10,130

 

 

(49.0

)%

OREO

 

 

 

 

 

 

 

%

 

 

1,401

 

 

(100.0

)%

Classified assets

 

$

5,168

 

 

$

5,345

 

 

(3.3

)%

 

$

11,531

 

 

(55.2

)%

NPLs to loans held-for-investment

 

 

0.06

%

 

 

0.07

%

 

 

 

 

0.20

%

 

 

NPAs to total assets

 

 

0.05

%

 

 

0.05

%

 

 

 

 

0.24

%

 

 

Classified assets to total assets

 

 

0.24

%

 

 

0.25

%

 

 

 

 

0.60

%

 

 

 

 

 

 

 

 

 

 

 

 

 

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. Therefore, the modified loans were not considered TDRs. As of December 31, 2021 and September 30, 2021, the Company had no loans under modified terms related to the COVID-19 pandemic. Total loans under modified terms related to the COVID-19 pandemic totaled $36.1 million at December 31, 2020.

The Company had classified the loans that were granted modifications related to the COVID-19 pandemic in excess of 6 months on a cumulative basis as special mention or classified. Special mention and classified loans included $15.6 million and $2.7 million, respectively, at December 31, 2021, $15.6 million and $2.7 million, respectively, at September 30, 2021, and $14.9 million and $4.2 million, respectively, at December 31, 2020, of the loans that were granted such modifications.

Investment Securities

Total investment securities were $123.2 million at December 31, 2021, a decrease of $9.9 million, or 7.4%, from $133.1 million at September 30, 2021, but an increase of $2.7 million, or 2.2%, from $120.5 million at December 31, 2020. The decrease for the current quarter was primarily due to principal pay-downs and calls of $8.9 million and net premium amortization of $192 thousand. The increase in investment securities for the current year was primarily due to purchases of $47.3 million, partially offset by principal pay-downs and calls of $41.1 million and net premium amortization of $1.0 million.

Deposits

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

 

 

12/31/2021

 

9/30/2021

 

12/31/2020

($ in thousands)

 

Amount

 

% to

Total

 

Amount

 

% to

Total

 

Amount

 

% to

Total

Noninterest-bearing demand deposits

 

$

830,383

 

44.5

%

 

$

832,240

 

45.4

%

 

$

538,009

 

33.7

%

Interest-bearing deposits

 

 

 

 

 

 

 

 

 

 

 

 

Savings

 

 

16,299

 

0.9

%

 

 

13,294

 

0.7

%

 

 

10,481

 

0.7

%

NOW

 

 

20,185

 

1.1

%

 

 

20,461

 

1.1

%

 

 

21,604

 

1.4

%

Retail money market accounts

 

 

386,041

 

20.5

%

 

 

376,333

 

20.5

%

 

 

351,739

 

22.0

%

Brokered money market accounts

 

 

1

 

0.1

%

 

 

4

 

0.1

%

 

 

25,002

 

1.6

%

Retail time deposits of

 

 

 

 

 

 

 

 

 

 

 

 

$250,000 or less

 

 

256,956

 

13.8

%

 

 

262,207

 

14.3

%

 

 

299,431

 

18.7

%

More than $250,000

 

 

172,269

 

9.2

%

 

 

163,127

 

8.9

%

 

 

168,683

 

10.6

%

Time deposits from internet rate service providers

 

 

 

%

 

 

 

%

 

 

24,902

 

1.6

%

State and brokered time deposits

 

 

185,000

 

9.9

%

 

 

165,000

 

9.0

%

 

 

155,000

 

9.7

%

Total interest-bearing deposits

 

 

1,036,751

 

55.5

%

 

 

1,000,426

 

54.6

%

 

 

1,056,842

 

66.3

%

Total deposits

 

$

1,867,134

 

100.0

%

 

$

1,832,666

 

100.0

%

 

$

1,594,851

 

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 year, a total of $93.9 million of SBA PPP loans were funded through the Bank’s noninterest-bearing demand deposits and deposit customers also received $201.1 million of SBA Economic Injury Disaster Loans and SBA Revitalization Funds.

The increase in retail time deposits for the current quarter was primarily due to new accounts of $25.2 million, renewals of the matured accounts of $100.2 million, and balance increases of $4.1 million, partially offset by matured and closed accounts of $125.6 million. The decrease for the current year was primarily due to matured and closed accounts of $583.2 million, partially offset by new accounts of $101.6 million, renewals of the matured accounts of $428.8 million, and balance increases of $13.9 million.

Liquidity

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

($ in thousands)

 

12/31/2021

Cash and cash equivalents

 

$

203,285

 

Cash and cash equivalents to total assets

 

 

9.5

%

 

 

 

Available borrowing capacity

 

 

FHLB advances

 

$

516,158

 

Federal Reserve Discount Window

 

 

29,198

 

Overnight federal funds lines

 

 

65,000

 

Total

 

$

610,356

 

Total available borrowing capacity to total assets

 

 

28.4

%

 

 

 

Shareholders’ Equity

Shareholders’ equity was $256.3 million at December 31, 2021, an increase of $8.7 million, or 3.5%, from $247.6 million at September 30, 2021 and an increase of $22.5 million, or 9.6%, from $233.8 million at December 31, 2020. The increase for the current quarter was primarily due to net income, partially offset by cash dividends declared on common stock of $1.8 million and a decrease in accumulated other comprehensive income. The increase for the current year was primarily due to net income, partially offset by repurchases of common stock of $10.9 million, cash dividends declared on common stock of $6.7 million and a decrease in accumulated other comprehensive income.

Stock Repurchase

On April 8, 2021, the Company’s Board of Directors approved a repurchase program authorizing the repurchase of up to 5% of the Company’s outstanding common stock as of the date of the board meeting, which represented 775,000 shares, through September 7, 2021. The Company repurchased and retired 680,269 shares of common stock totaling $10.9 million at a weighted-average price of $15.99 per share under this program.

Emergency Capital Investment Program

On December 14, 2021, the U.S. Department of Treasury (the “Treasury”) informed the Company that the Treasury has reviewed the Company’s application to receive a capital investment from the Treasury under the Emergency Capital Investment Program (“ECIP”), and that the Company would be eligible to receive an ECIP investment in an amount up to $69,141,000 in the form of non-dilutive Tier 1 senior perpetual preferred capital. The Company has not yet determined whether it will accept the offer to receive the ECIP investment.

If the Company moves forward with pursuing the ECIP investment from the Treasury, the Company would be required to fulfill certain conditions established by the Treasury and would be subject to certain restrictions following its acceptance of the investment.

Established by the Consolidated Appropriations Act, 2021, the ECIP was created to encourage low- and moderate-income community financial institutions and minority depository institutions such as the Bank to augment their efforts to support small businesses and consumers in their communities.

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:

 

 

12/31/2021

 

9/30/2021

 

12/31/2020

 

Well

Capitalized

Requirements

PCB Bancorp

 

 

 

 

 

 

 

 

Common tier 1 capital (to risk-weighted assets)

 

14.79

%

 

15.07

%

 

15.97

%

 

N/A

Total capital (to risk-weighted assets)

 

16.04

%

 

16.32

%

 

17.22

%

 

N/A

Tier 1 capital (to risk-weighted assets)

 

14.79

%

 

15.07

%

 

15.97

%

 

N/A

Tier 1 capital (to average assets)

 

12.11

%

 

11.91

%

 

11.94

%

 

N/A

Pacific City Bank

 

 

 

 

 

 

 

 

Common tier 1 capital (to risk-weighted assets)

 

14.48

%

 

14.76

%

 

15.70

%

 

6.5

%

Total capital (to risk-weighted assets)

 

15.73

%

 

16.01

%

 

16.95

%

 

10.0

%

Tier 1 capital (to risk-weighted assets)

 

14.48

%

 

14.76

%

 

15.70

%

 

8.0

%

Tier 1 capital (to average assets)

 

11.85

%

 

11.66

%

 

11.74

%

 

5.0

%

 

 

 

 

 

 

 

 

 

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)

 

 

 

12/31/2021

 

9/30/2021

 

% Change

 

12/31/2020

 

% Change

Assets

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

15,222

 

 

$

19,688

 

 

(22.7

)%

 

$

19,605

 

 

(22.4

)%

Interest-bearing deposits in other financial institutions

 

 

188,063

 

 

 

195,285

 

 

(3.7

)%

 

 

174,493

 

 

7.8

%

Total cash and cash equivalents

 

 

203,285

 

 

 

214,973

 

 

(5.4

)%

 

 

194,098

 

 

4.7

%

Securities available-for-sale, at fair value

 

 

123,198

 

 

 

133,102

 

 

(7.4

)%

 

 

120,527

 

 

2.2

%

Loans held-for-sale

 

 

37,026

 

 

 

29,020

 

 

27.6

%

 

 

1,979

 

 

1,770.9

%

Loans held-for-investment

 

 

1,732,205

 

 

 

1,707,878

 

 

1.4

%

 

 

1,583,578

 

 

9.4

%

Allowance for loan losses

 

 

(22,381

)

 

 

(23,807

)

 

(6.0

)%

 

 

(26,510

)

 

(15.6

)%

Net loans held-for-investment

 

 

1,709,824

 

 

 

1,684,071

 

 

1.5

%

 

 

1,557,068

 

 

9.8

%

Premises and equipment, net

 

 

3,098

 

 

 

3,306

 

 

(6.3

)%

 

 

4,048

 

 

(23.5

)%

Federal Home Loan Bank and other bank stock

 

 

8,577

 

 

 

8,577

 

 

%

 

 

8,447

 

 

1.5

%

Other real estate owned, net

 

 

 

 

 

 

 

%

 

 

1,401

 

 

(100.0

)%

Bank-owned life insurance

 

 

29,358

 

 

 

 

 

NM

 

 

 

 

NM

Deferred tax assets, net

 

 

10,824

 

 

 

7,519

 

 

44.0

%

 

 

8,120

 

 

33.3

%

Servicing assets

 

 

7,269

 

 

 

7,009

 

 

3.7

%

 

 

6,400

 

 

13.6

%

Operating lease assets

 

 

6,786

 

 

 

7,164

 

 

(5.3

)%

 

 

7,616

 

 

(10.9

)%

Accrued interest receivable

 

 

5,368

 

 

 

5,494

 

 

(2.3

)%

 

 

9,334

 

 

(42.5

)%

Other assets

 

 

5,122

 

 

 

4,464

 

 

14.7

%

 

 

3,815

 

 

34.3

%

Total assets

 

$

2,149,735

 

 

$

2,104,699

 

 

2.1

%

 

$

1,922,853

 

 

11.8

%

Liabilities

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing demand

 

$

830,383

 

 

$

832,240

 

 

(0.2

)%

 

$

538,009

 

 

54.3

%

Savings, NOW and money market accounts

 

 

422,526

 

 

 

410,092

 

 

3.0

%

 

 

408,826

 

 

3.4

%

Time deposits of $250,000 or less

 

 

341,956

 

 

 

327,207

 

 

4.5

%

 

 

379,333

 

 

(9.9

)%

Time deposits of more than $250,000

 

 

272,269

 

 

 

263,127

 

 

3.5

%

 

 

268,683

 

 

1.3

%

Total deposits

 

 

1,867,134

 

 

 

1,832,666

 

 

1.9

%

 

 

1,594,851

 

 

17.1

%

Federal Home Loan Bank advances

 

 

10,000

 

 

 

10,000

 

 

%

 

 

80,000

 

 

(87.5

)%

Operating lease liabilities

 

 

7,444

 

 

 

7,862

 

 

(5.3

)%

 

 

8,455

 

 

(12.0

)%

Accrued interest payable and other liabilities

 

 

8,871

 

 

 

6,573

 

 

35.0

%

 

 

5,759

 

 

54.0

%

Total liabilities

 

 

1,893,449

 

 

 

1,857,101

 

 

2.0

%

 

 

1,689,065

 

 

12.1

%

Commitments and contingent liabilities

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

 

 

 

 

 

Common stock, no par value

 

 

154,992

 

 

 

154,618

 

 

0.2

%

 

 

164,140

 

 

(5.6

)%

Retained earnings

 

 

101,140

 

 

 

92,248

 

 

9.6

%

 

 

67,692

 

 

49.4

%

Accumulated other comprehensive income, net

 

 

154

 

 

 

732

 

 

(79.0

)%

 

 

1,956

 

 

(92.1

)%

Total shareholders’ equity

 

 

256,286

 

 

 

247,598

 

 

3.5

%

 

 

233,788

 

 

9.6

%

Total liabilities and shareholders’ equity

 

$

2,149,735

 

 

$

2,104,699

 

 

2.1

%

 

$

1,922,853

 

 

11.8

%

 

 

 

 

 

 

 

 

 

 

 

Outstanding common shares

 

 

14,865,825

 

 

 

14,841,626

 

 

 

 

 

15,385,878

 

 

 

Book value per common share (1)

 

$

17.24

 

 

$

16.68

 

 

 

 

$

15.19

 

 

 

Total loan to total deposit ratio

 

 

94.76

%

 

 

94.77

%

 

 

 

 

99.42

%

 

 

Noninterest-bearing deposits to total deposits

 

 

44.47

%

 

 

45.41

%

 

 

 

 

33.73

%

 

 

 

 

 

 

 

 

 

 

 

 

 

(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

 

Year Ended

 

 

12/31/2021

 

9/30/2021

 

% Change

 

12/31/2020

 

% Change

 

12/31/2021

 

12/31/2020

 

% Change

Interest and dividend income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

 

$

20,363

 

 

$

20,537

 

 

(0.8

)%

 

$

18,929

 

 

7.6

%

 

$

79,155

 

 

$

76,546

 

 

3.4

%

Investment securities

 

 

441

 

 

 

437

 

 

0.9

%

 

 

429

 

 

2.8

%

 

 

1,613

 

 

 

2,127

 

 

(24.2

)%

Other interest-earning assets

 

 

191

 

 

 

194

 

 

(1.5

)%

 

 

150

 

 

27.3

%

 

 

704

 

 

 

1,088

 

 

(35.3

)%

Total interest income

 

 

20,995

 

 

 

21,168

 

 

(0.8

)%

 

 

19,508

 

 

7.6

%

 

 

81,472

 

 

 

79,761

 

 

2.1

%

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

847

 

 

 

885

 

 

(4.3

)%

 

 

1,958

 

 

(56.7

)%

 

 

4,043

 

 

 

12,958

 

 

(68.8

)%

Other borrowings

 

 

53

 

 

 

56

 

 

(5.4

)%

 

 

143

 

 

(62.9

)%

 

 

292

 

 

 

614

 

 

(52.4

)%

Total interest expense

 

 

900

 

 

 

941

 

 

(4.4

)%

 

 

2,101

 

 

(57.2

)%

 

 

4,335

 

 

 

13,572

 

 

(68.1

)%

Net interest income

 

 

20,095

 

 

 

20,227

 

 

(0.7

)%

 

 

17,407

 

 

15.4

%

 

 

77,137

 

 

 

66,189

 

 

16.5

%

Provision (reversal) for loan losses

 

 

(1,462

)

 

 

(1,053

)

 

38.8

%

 

 

2,142

 

 

(168.3

)%

 

 

(4,596

)

 

 

13,219

 

 

(134.8

)%

Net interest income after provision (reversal) for loan losses

 

 

21,557

 

 

 

21,280

 

 

1.3

%

 

 

15,265

 

 

41.2

%

 

 

81,733

 

 

 

52,970

 

 

54.3

%

Noninterest income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on sale of loans

 

 

3,374

 

 

 

4,269

 

 

(21.0

)%

 

 

3,483

 

 

(3.1

)%

 

 

12,932

 

 

 

6,527

 

 

98.1

%

Service charges and fees on deposits

 

 

308

 

 

 

292

 

 

5.5

%

 

 

311

 

 

(1.0

)%

 

 

1,195

 

 

 

1,256

 

 

(4.9

)%

Loan servicing income

 

 

688

 

 

 

655

 

 

5.0

%

 

 

398

 

 

72.9

%

 

 

2,770

 

 

 

2,710

 

 

2.2

%

Bank-owned life insurance income

 

 

108

 

 

 

 

 

NM

 

 

 

 

NM

 

 

108

 

 

 

 

 

NM

Other income

 

 

360

 

 

 

372

 

 

(3.2

)%

 

 

332

 

 

8.4

%

 

 

1,429

 

 

 

1,247

 

 

14.6

%

Total noninterest income

 

 

4,838

 

 

 

5,588

 

 

(13.4

)%

 

 

4,524

 

 

6.9

%

 

 

18,434

 

 

 

11,740

 

 

57.0

%

Noninterest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

7,061

 

 

 

7,606

 

 

(7.2

)%

 

 

7,397

 

 

(4.5

)%

 

 

27,974

 

 

 

26,147

 

 

7.0

%

Occupancy and equipment

 

 

1,417

 

 

 

1,399

 

 

1.3

%

 

 

1,424

 

 

(0.5

)%

 

 

5,575

 

 

 

5,620

 

 

(0.8

)%

Professional fees

 

 

585

 

 

 

422

 

 

38.6

%

 

 

625

 

 

(6.4

)%

 

 

2,159

 

 

 

2,256

 

 

(4.3

)%

Marketing and business promotion

 

 

586

 

 

 

416

 

 

40.9

%

 

 

440

 

 

33.2

%

 

 

1,656

 

 

 

1,360

 

 

21.8

%

Data processing

 

 

408

 

 

 

391

 

 

4.3

%

 

 

375

 

 

8.8

%

 

 

1,572

 

 

 

1,472

 

 

6.8

%

Director fees and expenses

 

 

161

 

 

 

144

 

 

11.8

%

 

 

146

 

 

10.3

%

 

 

594

 

 

 

599

 

 

(0.8

)%

Regulatory assessments

 

 

138

 

 

 

12

 

 

1,050.0

%

 

 

250

 

 

(44.8

)%

 

 

537

 

 

 

978

 

 

(45.1

)%

Other expenses

 

 

812

 

 

 

842

 

 

(3.6

)%

 

 

893

 

 

(9.1

)%

 

 

3,141

 

 

 

3,267

 

 

(3.9

)%

Total noninterest expense

 

 

11,168

 

 

 

11,232

 

 

(0.6

)%

 

 

11,550

 

 

(3.3

)%

 

 

43,208

 

 

 

41,699

 

 

3.6

%

Income before income taxes

 

 

15,227

 

 

 

15,636

 

 

(2.6

)%

 

 

8,239

 

 

84.8

%

 

 

56,959

 

 

 

23,011

 

 

147.5

%

Income tax expense

 

 

4,551

 

 

 

4,613

 

 

(1.3

)%

 

 

2,452

 

 

85.6

%

 

 

16,856

 

 

 

6,836

 

 

146.6

%

Net income

 

$

10,676

 

 

$

11,023

 

 

(3.1

)%

 

$

5,787

 

 

84.5

%

 

$

40,103

 

 

$

16,175

 

 

147.9

%

Earnings per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.72

 

 

$

0.74

 

 

 

 

$

0.38

 

 

 

 

$

2.66

 

 

$

1.05

 

 

 

Diluted

 

$

0.70

 

 

$

0.73

 

 

 

 

$

0.38

 

 

 

 

$

2.62

 

 

$

1.04

 

 

 

Average common shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

14,799,973

 

 

 

14,779,707

 

 

 

 

 

15,350,742

 

 

 

 

 

15,017,637

 

 

 

15,384,231

 

 

 

Diluted

 

 

15,093,351

 

 

 

15,031,558

 

 

 

 

 

15,392,355

 

 

 

 

 

15,253,820

 

 

 

15,448,892

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividend paid per common share

 

$

0.12

 

 

$

0.12

 

 

 

 

$

0.10

 

 

 

 

$

0.44

 

 

$

0.40

 

 

 

Return on average assets (1)

 

 

2.01

%

 

 

2.11

%

 

 

 

 

1.19

%

 

 

 

 

1.96

%

 

 

0.84

%

 

 

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

 

 

16.84

%

 

 

17.98

%

 

 

 

 

9.92

%

 

 

 

 

16.52

%

 

 

7.08

%

 

 

Efficiency ratio (3)

 

 

44.79

%

 

 

43.51

%

 

 

 

 

52.67

%

 

 

 

 

45.21

%

 

 

53.51

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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

 

 

12/31/2021

 

9/30/2021

 

12/31/2020

 

 

Average

Balance

 

Interest

Income/

Expense

 

Avg.

Yield/

Rate(6)

 

Average

Balance

 

Interest

Income/

Expense

 

Avg.

Yield/

Rate(6)

 

Average

Balance

 

Interest

Income/

Expense

 

Avg.

Yield/

Rate(6)

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total loans (1)

 

$

1,758,421

 

 

$

20,363

 

4.59

%

 

$

1,715,106

 

 

$

20,537

 

4.75

%

 

$

1,592,705

 

 

$

18,929

 

4.73

%

Mortgage-backed securities

 

 

88,501

 

 

 

263

 

1.18

%

 

 

95,908

 

 

 

278

 

1.15

%

 

 

76,787

 

 

 

275

 

1.42

%

Collateralized mortgage obligation

 

 

20,233

 

 

 

53

 

1.04

%

 

 

22,534

 

 

 

57

 

1.00

%

 

 

28,743

 

 

 

60

 

0.83

%

SBA loan pool securities

 

 

9,199

 

 

 

41

 

1.77

%

 

 

10,390

 

 

 

45

 

1.72

%

 

 

12,432

 

 

 

57

 

1.82

%

Municipal bonds (2)

 

 

5,698

 

 

 

37

 

2.58

%

 

 

5,759

 

 

 

36

 

2.48

%

 

 

5,823

 

 

 

37

 

2.53

%

Corporate bonds

 

 

5,019

 

 

 

47

 

3.72

%

 

 

2,283

 

 

 

21

 

3.65

%

 

 

 

 

 

 

%

Other interest-earning assets

 

 

175,468

 

 

 

191

 

0.43

%

 

 

188,137

 

 

 

194

 

0.41

%

 

 

187,592

 

 

 

150

 

0.32

%

Total interest-earning assets

 

 

2,062,539

 

 

 

20,995

 

4.04

%

 

 

2,040,117

 

 

 

21,168

 

4.12

%

 

 

1,904,082

 

 

 

19,508

 

4.08

%

Noninterest-earning assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

20,618

 

 

 

 

 

 

 

19,915

 

 

 

 

 

 

 

18,188

 

 

 

 

 

Allowance for loan losses

 

 

(23,835

)

 

 

 

 

 

 

(24,854

)

 

 

 

 

 

 

(25,699

)

 

 

 

 

Other assets

 

 

52,512

 

 

 

 

 

 

 

35,187

 

 

 

 

 

 

 

42,755

 

 

 

 

 

Total noninterest-earning assets

 

 

49,295

 

 

 

 

 

 

 

30,248

 

 

 

 

 

 

 

35,244

 

 

 

 

 

Total assets

 

$

2,111,834

 

 

 

 

 

 

$

2,070,365

 

 

 

 

 

 

$

1,939,326

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOW and money market accounts

 

$

406,343

 

 

 

301

 

0.29

%

 

$

387,661

 

 

 

291

 

0.30

%

 

$

383,507

 

 

 

327

 

0.34

%

Savings

 

 

14,161

 

 

 

2

 

0.06

%

 

 

12,806

 

 

 

2

 

0.06

%

 

 

11,037

 

 

 

1

 

0.04

%

Time deposits

 

 

587,523

 

 

 

544

 

0.37

%

 

 

599,865

 

 

 

592

 

0.39

%

 

 

655,825

 

 

 

1,630

 

0.99

%

Total interest-bearing deposits

 

 

1,008,027

 

 

 

847

 

0.33

%

 

 

1,000,332

 

 

 

885

 

0.35

%

 

 

1,050,369

 

 

 

1,958

 

0.74

%

Other borrowings

 

 

13,315

 

 

 

53

 

1.58

%

 

 

18,152

 

 

 

56

 

1.22

%

 

 

91,467

 

 

 

143

 

0.62

%

Total interest-bearing liabilities

 

 

1,021,342

 

 

 

900

 

0.35

%

 

 

1,018,484

 

 

 

941

 

0.37

%

 

 

1,141,836

 

 

 

2,101

 

0.73

%

Noninterest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing demand

 

 

824,504

 

 

 

 

 

 

 

794,165

 

 

 

 

 

 

 

549,922

 

 

 

 

 

Other liabilities

 

 

14,511

 

 

 

 

 

 

 

14,531

 

 

 

 

 

 

 

15,412

 

 

 

 

 

Total noninterest-bearing liabilities

 

 

839,015

 

 

 

 

 

 

 

808,696

 

 

 

 

 

 

 

565,334

 

 

 

 

 

Total liabilities

 

 

1,860,357

 

 

 

 

 

 

 

1,827,180

 

 

 

 

 

 

 

1,707,170

 

 

 

 

 

Total shareholders’ equity

 

 

251,477

 

 

 

 

 

 

 

243,185

 

 

 

 

 

 

 

232,156

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

2,111,834

 

 

 

 

 

 

$

2,070,365

 

 

 

 

 

 

$

1,939,326

 

 

 

 

 

Net interest income

 

 

 

$

20,095

 

 

 

 

 

$

20,227

 

 

 

 

 

$

17,407

 

 

Net interest spread (3)

 

 

 

 

 

3.69

%

 

 

 

 

 

3.75

%

 

 

 

 

 

3.35

%

Net interest margin (4)

 

 

 

 

 

3.87

%

 

 

 

 

 

3.93

%

 

 

 

 

 

3.64

%

Total deposits

 

$

1,832,531

 

 

$

847

 

0.18

%

 

$

1,794,497

 

 

$

885

 

0.20

%

 

$

1,600,291

 

 

$

1,958

 

0.49

%

Total funding (5)

 

$

1,845,846

 

 

$

900

 

0.19

%

 

$

1,812,649

 

 

$

941

 

0.21

%

 

$

1,691,758

 

 

$

2,101

 

0.49

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

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

(2)

The yield on municipal bonds has not been computed on a tax-equivalent basis.

(3)

Net interest spread is calculated by subtracting average rate on interest-bearing liabilities from average yield on interest-earning assets.

(4)

Net interest margin is calculated by dividing annualized net interest income by average interest-earning assets.

(5)

Total funding is the sum of interest-bearing liabilities and noninterest-bearing deposits. The cost of total funding is calculated as annualized total interest expense divided by average total funding.

(6)

Annualized.

PCB Bancorp and Subsidiary

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

($ in thousands)

 

 

 

Year Ended

 

 

12/31/2021

 

12/31/2020

 

 

Average

Balance

 

Interest

Income/

Expense

 

Avg.

Yield/

Rate(6)

 

Average

Balance

 

Interest

Income/

Expense

 

Avg.

Yield/

Rate(6)

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets

 

 

 

 

 

 

 

 

 

 

 

 

Total loans (1)

 

$

1,702,073

 

 

$

79,155

 

4.65

%

 

$

1,541,740

 

 

$

76,546

 

4.96

%

Mortgage-backed securities

 

 

89,693

 

 

 

989

 

1.10

%

 

 

68,496

 

 

 

1,260

 

1.84

%

Collateralized mortgage obligation

 

 

22,633

 

 

 

221

 

0.98

%

 

 

35,299

 

 

 

462

 

1.31

%

SBA loan pool securities

 

 

10,515

 

 

 

189

 

1.80

%

 

 

13,120

 

 

 

255

 

1.94

%

Municipal bonds (2)

 

 

5,755

 

 

 

146

 

2.54

%

 

 

5,811

 

 

 

150

 

2.58

%

Corporate bonds

 

 

1,841

 

 

 

68

 

3.69

%

 

 

 

 

 

 

%

Other interest-earning assets

 

 

179,353

 

 

 

704

 

0.39

%

 

 

213,124

 

 

 

1,088

 

0.51

%

Total interest-earning assets

 

 

2,011,863

 

 

 

81,472

 

4.05

%

 

 

1,877,590

 

 

 

79,761

 

4.25

%

Noninterest-earning assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

19,676

 

 

 

 

 

 

 

17,542

 

 

 

 

 

Allowance for loan losses

 

 

(25,270

)

 

 

 

 

 

 

(19,693

)

 

 

 

 

Other assets

 

 

41,187

 

 

 

 

 

 

 

39,385

 

 

 

 

 

Total noninterest-earning assets

 

 

35,593

 

 

 

 

 

 

 

37,234

 

 

 

 

 

Total assets

 

$

2,047,456

 

 

 

 

 

 

$

1,914,824

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

NOW and money market accounts

 

$

400,446

 

 

 

1,242

 

0.31

%

 

$

371,315

 

 

 

2,385

 

0.64

%

Savings

 

 

12,302

 

 

 

6

 

0.05

%

 

 

8,543

 

 

 

9

 

0.11

%

Time deposits

 

 

609,351

 

 

 

2,795

 

0.46

%

 

 

708,306

 

 

 

10,564

 

1.49

%

Total interest-bearing deposits

 

 

1,022,099

 

 

 

4,043

 

0.40

%

 

 

1,088,164

 

 

 

12,958

 

1.19

%

Other borrowings

 

 

31,302

 

 

 

292

 

0.93

%

 

 

94,319

 

 

 

614

 

0.65

%

Total interest-bearing liabilities

 

 

1,053,401

 

 

 

4,335

 

0.41

%

 

 

1,182,483

 

 

 

13,572

 

1.15

%

Noninterest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing demand

 

 

737,216

 

 

 

 

 

 

 

486,820

 

 

 

 

 

Other liabilities

 

 

14,073

 

 

 

 

 

 

 

16,968

 

 

 

 

 

Total noninterest-bearing liabilities

 

 

751,289

 

 

 

 

 

 

 

503,788

 

 

 

 

 

Total liabilities

 

 

1,804,690

 

 

 

 

 

 

 

1,686,271

 

 

 

 

 

Total shareholders’ equity

 

 

242,766

 

 

 

 

 

 

 

228,553

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

2,047,456

 

 

 

 

 

 

$

1,914,824

 

 

 

 

 

Net interest income

 

 

 

$

77,137

 

 

 

 

 

$

66,189

 

 

Net interest spread (3)

 

 

 

 

 

3.64

%

 

 

 

 

 

3.10

%

Net interest margin (4)

 

 

 

 

 

3.83

%

 

 

 

 

 

3.53

%

Total deposits

 

$

1,759,315

 

 

$

4,043

 

0.23

%

 

$

1,574,984

 

 

$

12,958

 

0.82

%

Total funding (5)

 

$

1,790,617

 

 

$

4,335

 

0.24

%

 

$

1,669,303

 

 

$

13,572

 

0.81

%

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

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

(2)

The yield on municipal bonds has not been computed on a tax-equivalent basis.

(3)

Net interest spread is calculated by subtracting average rate on interest-bearing liabilities from average yield on interest-earning assets.

(4)

Net interest margin is calculated by dividing annualized net interest income by average interest-earning assets.

(5)

Total funding is the sum of interest-bearing liabilities and noninterest-bearing deposits. The cost of total funding is calculated as total interest expense divided by average total funding.

(6)

Annualized.

PCB Bancorp and Subsidiary

Non-GAAP Measures

($ in thousands)

 

Adjusted allowance for loan losses to loans held-for-investment ratio

 

Adjusted allowance for loan losses to loans held-for-investment ratio is calculated by removing SBA PPP loans from loans held-for-investment from the allowance for loan losses to loans held-for-investment ratio calculation. The SBA launched the PPP to provide a direct incentive for small businesses to keep their workers on the payroll in response to the COVID-19 pandemic. The SBA guarantees 100% of the PPP loans made to eligible borrowers, and the loans are eligible to be forgiven if certain conditions are met, at which point the SBA will make payments to the Bank for the forgiven amounts. The SBA guarantee on PPP loans cannot be separated from the loan and therefore is not a separate unit of account. The Company considered the SBA guarantee in the allowance for loan losses evaluation and determined that it is not required to reserve an allowance on SBA PPP loans. Management believes this non-GAAP measure enhances comparability to prior periods and provide supplemental information regarding the Company’s credit trends.

 

 

 

 

12/31/2021

 

9/30/2021

 

12/31/2020

Loans held-for-investment

(a)

 

$

1,732,205

 

 

$

1,707,878

 

 

$

1,583,578

 

Less: SBA PPP loans

(b)

 

 

65,329

 

 

 

101,901

 

 

 

135,654

 

Loans held-for-investment, excluding SBA PPP loans

(c)=(a)-(b)

 

$

1,666,876

 

 

$

1,605,977

 

 

$

1,447,924

 

Allowance for loan losses

(d)

 

$

22,381

 

 

$

23,807

 

 

$

26,510

 

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

(d)/(a)

 

 

1.29

%

 

 

1.39

%

 

 

1.67

%

Adjusted allowance for loan losses to loans held-for-investment ratio

(d)/(c)

 

 

1.34

%

 

 

1.48

%

 

 

1.83

%

 

 

 

 

 

 

 

 

 

Contacts

Timothy Chang

Executive Vice President & Chief Financial Officer

213-210-2000

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