PCB Bancorp (the “Company”) (NASDAQ: PCB), the holding company
of Pacific City Bank (the “Bank”), today reported net income of
$4.2 million, or $0.26 per diluted common share for the fourth
quarter of 2019, compared with $6.8 million, or $0.42 per diluted
common share, for the previous quarter and $6.7 million, or $0.41
per diluted common share, for the year-ago quarter.
Q4 2019 Financial Highlights
- Net income totaled $4.2 million or $0.26 per diluted common
share;
- The Company recorded a provision for loan losses of $4.0
million for the fourth quarter of 2019.
- Total assets were $1.75 billion at December 31, 2019, an
increase of $46.9 million, or 2.8%, from $1.70 billion at September
30, 2019, and an increase of $49.3 million, or 2.9%, from $1.70
billion at December 31, 2018;
- Loans held-for-investment, net of deferred costs (fees), were
$1.45 billion at December 31, 2019, an increase of $61.0 million,
or 4.4%, from $1.39 billion at September 30, 2019, and an increase
of $112.1 million, or 8.4%, from $1.34 billion at December 31,
2018;
- Total deposits were $1.48 billion at December 31, 2019, an
increase of $47.0 million, or 3.3%, from $1.43 billion at September
30, 2019, and an increase of $35.6 million, or 2.5%, from $1.44
billion at December 31, 2018;
- The Company completed the publicly announced $6.5 million share
repurchase program in October 2019 (repurchased 396,715 shares of
its common stock since its commencement in March 2019) and the
Board of Directors approved a new repurchase program of $6.5
million to commence shortly following issuance of this press
release and continuing until November 20, 2021; and
- The Company declared a cash dividend of $0.08 per common share
for the fourth quarter of 2019 compared with $0.06 per common share
for the third quarter of 2019 and $0.03 per common share for the
fourth quarter of 2018.
“We are pleased to report a disciplined loan and deposit growth.
During the fourth quarter of 2019, our loan portfolio increased
$61.4 million or 17.6% annualized to $1.45 billion and our deposit
balance increased $47.0 million or 13.1% annualized to $1.48
billion,” stated Henry Kim, President and Chief Executive Officer.
“Our net income decreased $2.6 million to $4.2 million compared
with third quarter of 2019 and the fourth quarter of 2018 primarily
due to a $2.5 million charge-off related to a single credit
relationship.”
Financial Highlights
(Unaudited)
Three Months
Ended
Year Ended
($ in thousands, except per share
data)
12/31/2019
9/30/2019
% Change
12/31/2018
% Change
12/31/2019
12/31/2018
% Change
Net income
$
4,158
$
6,785
(38.7
)%
$
6,732
(38.2
)%
$
24,108
$
24,301
(0.8
)%
Diluted earnings per common share
$
0.26
$
0.42
(38.1
)%
$
0.41
(36.6
)%
$
1.49
$
1.65
(9.7
)%
Net interest income
$
16,660
$
17,529
(5.0
)%
$
17,856
(6.7
)%
$
69,034
$
65,748
5.0
%
Provision (reversal) for loan losses
4,030
(102
)
NM
294
1,270.7
%
4,237
1,231
244.2
%
Noninterest income
3,604
2,802
28.6
%
2,239
61.0
%
11,869
10,454
13.5
%
Noninterest expense
10,265
10,777
(4.8
)%
10,135
1.3
%
42,315
40,226
5.2
%
Return on average assets (1)
0.96
%
1.55
%
1.60
%
1.40
%
1.53
%
Return on average shareholders’ equity
(1), (2)
7.25
%
12.02
%
12.92
%
10.88
%
14.26
%
Net interest margin (1)
3.96
%
4.11
%
4.33
%
4.11
%
4.23
%
Efficiency ratio (3)
50.66
%
53.01
%
50.44
%
52.30
%
52.79
%
($ in thousands, except per
share data)
12/31/2019
9/30/2019
% Change
12/31/2018
% Change
Total assets
$
1,746,328
$
1,699,446
2.8
%
$
1,697,028
2.9
%
Net loans held-for-investment
1,436,451
1,376,736
4.3
%
1,325,515
8.4
%
Total deposits
1,479,307
1,432,262
3.3
%
1,443,753
2.5
%
Book value per common share (2), (4)
$
14.44
$
14.30
1.0
%
$
13.16
9.7
%
Tier 1 leverage ratio (consolidated)
13.23
%
12.87
%
12.60
%
Total shareholders’ equity to total assets
(2)
12.99
%
13.22
%
12.39
%
(1)
Ratios are presented on an annualized
basis.
(2)
The Company did not have any intangible
equity components for the presented periods.
(3)
The ratios are calculated by dividing
noninterest expense by the sum of net interest income and
noninterest income.
(4)
The ratios are calculated by dividing
total shareholders’ equity by the number of outstanding common
shares.
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)
12/31/2019
9/30/2019
% Change
12/31/2018
% Change
12/31/2019
12/31/2018
% Change
Interest income/expense on:
Loans
$
20,888
$
21,876
(4.5
)%
$
21,088
(0.9
)%
$
85,667
$
76,837
11.5
%
Investment securities
823
978
(15.8
)%
1,076
(23.5
)%
3,956
3,724
6.2
%
Other interest-earning assets
565
833
(32.2
)%
1,067
(47.0
)%
3,322
3,138
5.9
%
Total interest-earning assets
22,276
23,687
(6.0
)%
23,231
(4.1
)%
92,945
83,699
11.0
%
Interest-bearing deposits
5,514
6,060
(9.0
)%
5,239
5.2
%
23,439
17,340
35.2
%
Borrowings
102
98
4.1
%
136
(25.0
)%
472
611
(22.7
)%
Total interest-bearing liabilities
5,616
6,158
(8.8
)%
5,375
4.5
%
23,911
17,951
33.2
%
Net interest income
$
16,660
$
17,529
(5.0
)%
$
17,856
(6.7
)%
$
69,034
$
65,748
5.0
%
Average balance of:
Loans
$
1,415,781
$
1,396,437
1.4
%
$
1,319,403
7.3
%
$
1,383,562
$
1,264,166
9.4
%
Investment securities
146,454
161,528
(9.3
)%
165,554
(11.5
)%
160,803
154,266
4.2
%
Other interest-earning assets
108,919
135,774
(19.8
)%
152,894
(28.8
)%
134,870
137,627
(2.0
)%
Total interest-earning assets
$
1,671,154
$
1,693,739
(1.3
)%
$
1,637,851
2.0
%
$
1,679,235
$
1,556,059
7.9
%
Interest-bearing deposits
$
1,097,957
$
1,126,376
(2.5
)%
$
1,100,517
(0.2
)%
$
1,120,880
$
1,053,773
6.4
%
Borrowings
21,141
20,326
4.0
%
30,000
(29.5
)%
25,388
34,904
(27.3
)%
Total interest-bearing liabilities
$
1,119,098
$
1,146,702
(2.4
)%
$
1,130,517
(1.0
)%
$
1,146,268
$
1,088,677
5.3
%
Annualized average yield/cost
of:
Loans
5.85
%
6.22
%
6.34
%
6.19
%
6.08
%
Investment securities
2.23
%
2.40
%
2.58
%
2.46
%
2.41
%
Other interest-earning assets
2.06
%
2.43
%
2.77
%
2.46
%
2.28
%
Total interest-earning assets
5.29
%
5.55
%
5.63
%
5.53
%
5.38
%
Interest-bearing deposits
1.99
%
2.13
%
1.89
%
2.09
%
1.65
%
Borrowings
1.91
%
1.91
%
1.80
%
1.86
%
1.75
%
Total interest-bearing liabilities
1.99
%
2.13
%
1.89
%
2.09
%
1.65
%
Net interest margin
3.96
%
4.11
%
4.33
%
4.11
%
4.23
%
Supplementary information
Net accretion of discount (premium) on
loans included in interest on loans
$
938
$
1,031
(9.0
)%
$
1,340
(30.0
)%
$
4,022
$
4,397
(8.5
)%
Loans. The decreases in average
yield for the current quarter compared with the previous and
year-ago quarters were primarily due to the lower market rates. The
increase in average yield for the current year compared with the
previous year was primarily due to the rising interest rate
environment in 2018 and higher average market rates in 2019. The
Company had benefited from its high proportion of variable rate
loans that had repriced along with such interest rate environment;
however, the Company strategically had increased the proportion of
fixed rate loans throughout the current year in order to
better-position its balance sheet to match the current and
potential future interest rate environment.
The following table presents a composition of total loans by
interest rate type accompanied with the weighted-average
contractual rates as of the dates indicated:
12/31/2019
9/30/2019
12/31/2018
% to Total
Loans
Weighted-
Average
Contractual
Rate
% to Total
Loans
Weighted-
Average
Contractual
Rate
% to Total
Loans
Weighted-
Average
Contractual
Rate
Fixed rate loans
43.4
%
5.20
%
40.5
%
5.26
%
34.4
%
5.13
%
Variable rate loans
56.6
%
5.51
%
59.5
%
5.88
%
65.6
%
6.30
%
Investment Securities. The
decreases in average yield for the current quarter compared with
the previous and year-ago quarters were primarily due to an
increase in premium amortization from a higher prepayment trend in
the current quarter. The increase in average yield for the current
year compared with the previous year was primarily due to
additional purchases of investment securities along with the higher
average market rates in 2019. During the current year, the Company
purchased $14.1 million of investment securities.
Other Interest-Earning Assets. The
average yield on other interest-bearing assets is closely related
to the changes in market rates, as the Company maintains most of
its cash at the Federal Reserve Bank account. The decreases in
average yield for the current quarter compared with the previous
and year-ago quarters were primarily due to the lower market rates.
The increase in average yield for the current year compared with
the previous year was primarily due to the rising interest rate
environment in 2018 and higher average market rates in 2019. The
average balance for the current quarter decreased as loan growth
was mainly supported by the Company’s cash on deposit at the
Federal Reserve Bank.
Interest-Bearing Deposits. The
decrease in average cost for the current quarter compared with the
previous quarter was primarily due to the recent decreases in
market rates; however, the impact was smaller than the change in
average yield on interest-earning assets due to high competition in
the Company’s deposit target markets. The increase in average cost
for the current year compared with the previous year was primarily
due to the higher average market rates in 2019.
Borrowings. The Company had fixed
rate term advances from FHLB of $20.0 million with a weighted
average rate of 1.92% and original maturity terms ranging from 3 to
5 years at December 31, 2019.
Provision (Reversal) for Loan Losses
Provision (reversal) for loan losses was $4.0 million for the
current quarter compared with $(102) thousand for the previous
quarter and $294 thousand for the year-ago quarter. For the current
and previous years, the Company recognized provision for loan
losses of $4.2 million and $1.2 million, respectively. The increase
was primarily due to an increase in charge-offs in the current
quarter with the increase in associated historical loss rates and
organic loan growth for the current quarter.
During the current quarter, due to the borrower's financial
hardship, the Company recorded a charge-off of $2.5 million on a
commercial line of credit, which was originated in 2011, with an
outstanding balance of $4.0 million at the time of charge-off. This
line had an outstanding balance of $1.6 million at December 31,
2019 and the management believes that the remaining outstanding
balance is well collateralized. Due to the increased charge-offs,
the reserve for unfunded commitments also increased to $301
thousand at December 31, 2019 from $146 thousand at September 30,
2019 and $139 thousand at December 31, 2018. Provision for unfunded
loan commitments was $155 thousand for the current quarter compared
with $5 thousand for the previous quarter and $17 thousand for the
year-ago quarter. For the current and previous years, the Company
recognized provision for unfunded loan commitments of $162 thousand
and $18 thousand, respectively.
The Company recorded net charge-offs of $2.7 million for the
current quarter compared with $132 thousand for the previous
quarter and $223 thousand for the year-ago quarter. For the current
and previous years, the Company recorded net charge-offs of $3.0
million and $288 thousand, respectively.
Allowance for loan losses to total loans held-for-investment
ratio was 0.99% at December 31, 2019, 0.94% at September 30, 2019,
and 0.98% at December 31, 2018. The increase in this ratio was
primarily due to an increase in historical loss rates due to the
aforementioned charge-off.
Noninterest Income
The following table presents the components of noninterest
income for the periods indicated:
Three Months
Ended
Year Ended
($ in thousands)
12/31/2019
9/30/2019
% Change
12/31/2018
% Change
12/31/2019
12/31/2018
% Change
Gain on sale of loans
1,445
1,540
(6.2
)%
1,083
33.4
%
5,996
5,560
7.8
%
Gain on sale of securities
available-for-sale
786
—
—
%
—
—
%
786
—
—
%
Service charges and fees on deposits
407
405
0.5
%
398
2.3
%
1,544
1,500
2.9
%
Loan servicing income
652
534
22.1
%
371
75.7
%
2,309
2,160
6.9
%
Other income
314
323
(2.8
)%
387
(18.9
)%
1,234
1,234
—
%
Total noninterest income
$
3,604
$
2,802
28.6
%
$
2,239
61.0
%
$
11,869
$
10,454
13.5
%
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)
12/31/2019
9/30/2019
% Change
12/31/2018
% Change
12/31/2019
12/31/2018
% Change
Gain on sale of SBA loans
Sold loan balance
$
27,072
$
22,186
22.0
%
$
26,158
3.5
%
$
99,609
$
91,700
8.6
%
Premium received
2,067
2,061
0.3
%
1,630
26.8
%
8,355
7,671
8.9
%
Gain recognized
1,428
1,498
(4.7
)%
1,059
34.8
%
5,915
5,278
12.1
%
Gain on sale of residential property
loans
Sold loan balance
$
2,636
$
4,661
(43.4
)%
$
702
275.5
%
$
10,068
$
11,601
(13.2
)%
Gain recognized
17
42
(59.5
)%
6
183.3
%
81
220
(63.2
)%
Gain on sale of other loans
Sold loan balance
$
—
$
—
—
%
$
1,028
(100.0
)%
$
—
$
2,112
(100.0
)%
Gain recognized
—
—
—
%
18
(100.0
)%
—
62
(100.0
)%
Gain on Sale of Securities
Available-For-Sale. The Company sold securities
available-for-sale of $32.8 million during the current quarter.
Service Charges and Fees on
Deposits. The increases were primarily due to increases in
the balance of transaction based deposit accounts.
Loan Servicing Income. The Company
services SBA loans and certain residential property loans that are
sold to the secondary market. The increase for the current quarter
compared with the previous quarter was primarily due to a decrease
in servicing asset amortization due to slow-down of prepayment
speed. The following table presents information on loan servicing
income for the periods indicated.
Three Months
Ended
Year Ended
($ in thousands)
12/31/2019
9/30/2019
% Change
12/31/2018
% Change
12/31/2019
12/31/2018
% Change
Loan servicing income
Servicing income received
$
1,159
$
1,195
(3.0
)%
$
1,206
(3.9
)%
$
4,691
$
4,925
(4.8
)%
Servicing assets amortization
(507
)
(661
)
(23.3
)%
(835
)
(39.3
)%
(2,382
)
(2,765
)
(13.9
)%
Loan servicing income
$
652
$
534
22.1
%
$
371
75.7
%
$
2,309
$
2,160
6.9
%
Underlying loans at end of period
$
498,616
$
493,923
1.0
%
$
506,657
(1.6
)%
$
498,616
$
506,657
(1.6
)%
Noninterest Expense
The following table presents the components of noninterest
expense for the periods indicated:
Three Months
Ended
Year Ended
($ in thousands)
12/31/2019
9/30/2019
% Change
12/31/2018
% Change
12/31/2019
12/31/2018
% Change
Salaries and employee benefits
$
6,016
$
6,901
(12.8
)%
$
6,234
(3.5
)%
$
26,139
$
24,473
6.8
%
Occupancy and equipment
1,417
1,408
0.6
%
1,358
4.3
%
5,545
4,992
11.1
%
Professional fees
622
664
(6.3
)%
452
37.6
%
2,730
2,176
25.5
%
Marketing and business promotion
501
292
71.6
%
526
(4.8
)%
1,550
2,010
(22.9
)%
Data processing
361
348
3.7
%
309
16.8
%
1,365
1,220
11.9
%
Director fees and expenses
189
188
0.5
%
281
(32.7
)%
751
942
(20.3
)%
Regulatory assessments
126
—
—
%
75
68.0
%
551
544
1.3
%
Other expenses
1,033
976
5.8
%
900
14.8
%
3,684
3,869
(4.8
)%
Total noninterest expense
$
10,265
$
10,777
(4.8
)%
$
10,135
1.3
%
$
42,315
$
40,226
5.2
%
Salaries and Employee Benefits. The
decrease for the current quarter compared with the previous quarter
was primarily due to a decrease in bonus accrual of $896 thousand
during the current quarter. The increases for the current quarter
and year compared with the same periods of 2018 were primarily due
to increases in salary and employee benefits, partially offset by a
decrease in bonus accrual of $836 thousand. Overall increases in
salaries and employee benefits were primarily due to the hiring of
new experienced employees with higher salaries in order to support
the expansion of the Company's infrastructure for being a public
company and to enhance the controls and processes on Bank Secrecy
Act and Anti-Money Laundering (“BSA/AML”) compliance.
Occupancy and Equipment. The
increases for the current quarter and year were primarily due to an
establishment of new loan production office in Artesia, California
in December 2018 and an increase in equipment maintenance
expense.
Professional Fees. The decrease for
the current quarter compared with the previous quarter was
primarily due to a decrease in expense related to the Bank's
BSA/AML compliance review, partially offset by increases in audit
and other professional fees. The increases for the current quarter
and year compared with the same periods of 2018 were primarily due
to increases in audit and other professional fees for being a
public company and expense related to enhancement of the Bank's
controls and processes on BSA/AML compliance programs, partially
offset by decreases in legal and professional fees attributed to
the portion of expenses related the Company's initial public
offering in 2018 that were not capitalized.
Director Fees and Expenses. The
decrease was primarily due to a fewer number of directors for the
current year.
Regulatory Assessments. The
increase for the current year compared with the previous year was
primary due to an increase in assessment rate from the consent
order relating to the Bank’s compliance with BSA/AML, partially
offset by a small bank assessment credit from the FDIC during the
current year. The Company would have recognized regulatory
assessments expense of $242 thousand and $228 thousand,
respectively, for the current and previous quarters without the
small bank assessment credit.
Other Expenses. The decrease in the
current year compared with the previous year was primarily due to a
$577 thousand reimbursement paid to the SBA in 2018, partially
offset by increases in other loan related legal and office expenses
as well as an increase in provision for unfunded loan
commitments.
Balance Sheet
(Unaudited)
Loans
The following table presents a composition of total loans
(includes both loans held-for-sale and loans held-for-investment,
net of deferred costs (fees)) as of the dates indicated:
($ in thousands)
12/31/2019
9/30/2019
% Change
12/31/2018
% Change
Real estate loans:
Commercial property
$
803,014
$
759,881
5.7
%
$
709,409
13.2
%
Residential property
235,046
236,382
(0.6
)%
233,816
0.5
%
SBA property
129,837
126,347
2.8
%
120,939
7.4
%
Construction
19,164
17,175
11.6
%
27,323
(29.9
)%
Commercial and industrial loans:
Commercial term
103,380
105,433
(1.9
)%
102,133
1.2
%
Commercial lines of credit
111,768
95,997
16.4
%
91,994
21.5
%
SBA commercial term
25,332
25,326
—
%
27,147
(6.7
)%
Other consumer loans
23,290
23,289
—
%
25,921
(10.2
)%
Loans held-for-investment
1,450,831
1,389,830
4.4
%
1,338,682
8.4
%
Loans held-for-sale
1,975
1,583
24.8
%
5,781
(65.8
)%
Total loans
$
1,452,806
$
1,391,413
4.4
%
$
1,344,463
8.1
%
The increase in loans held-for-investment for the current
quarter was primarily due to new funding of $128.1 million and
advances on lines of credit of $26.6 million, partially offset by
pay-downs and pay-offs of $90.6 million. The increase for the
current year was primarily due to new funding of $381.0 million and
advances on lines of credit of $109.2 million, partially offset by
pay-downs and pay-offs of $373.6 million.
The increase in loans held-for-sale for the current quarter was
primarily due to new funding of $30.1 million, partially offset by
sales of $29.7 million. The decrease in loans held-for-sale for the
current year was primarily due to sales of $109.7 million,
partially offset by new funding of $105.2 million and a loan
transferred from loans held-for-investment of $824 thousand.
Credit Quality
The following table presents compositions of non-performing
loans and non-performing assets as of the dates indicated:
($ in thousands)
12/31/2019
9/30/2019
% Change
12/31/2018
% Change
Nonaccrual loans:
Real estate loans:
Residential property
$
—
$
—
—
%
$
302
(100.0
)%
SBA property
442
1,441
(69.3
)%
540
(18.1
)%
Commercial and industrial loans:
Commercial lines of credit
1,888
327
477.4
%
—
—
%
SBA commercial term
159
68
133.8
%
203
(21.7
)%
Consumer loans
48
7
585.7
%
16
200.0
%
Total nonaccrual loans
held-for-investment
2,537
1,843
37.7
%
1,061
139.1
%
Loans past due 90 days or more and still
accruing
287
—
—
%
—
—
%
Non-performing loans (“NPLs”)
2,824
1,843
53.2
%
1,061
166.2
%
Other real estate owned (“OREO”)
—
—
—
%
—
—
%
Non-performing assets (“NPAs”)
$
2,824
$
1,843
53.2
%
$
1,061
166.2
%
Loans past due and still accruing:
Loans past due 30 to 59 days and still
accruing
$
893
$
664
34.5
%
$
368
142.7
%
Loans past due 60 to 89 days and still
accruing
925
59
1,467.8
%
9
10,177.8
%
Loans past due 90 days or more and still
accruing
287
—
—
%
—
—
%
Total loans past due and still
accruing
$
2,105
$
723
191.1
%
377
458.4
%
Troubled debt restructurings (“TDRs”):
Accruing TDRs
$
700
$
713
(1.8
)%
$
432
62.0
%
Nonaccrual TDRs
121
249
(51.4
)%
131
(7.6
)%
Total TDRs
$
821
$
962
(14.7
)%
$
563
45.8
%
NPLs to loans held-for-investment
0.19
%
0.13
%
0.08
%
NPAs to total assets
0.16
%
0.11
%
0.06
%
The increase of nonaccrual commercial lines of credit was
primarily due to the line with an outstanding balance of $1.6
million, which had the charge-off of $2.5 million during the
current quarter.
The increase of total loans past due and still accruing during
the current quarter was primarily due to two SBA property loans
with an aggregated outstanding balance of $793 thousand and a
residential property loan with a outstanding balance of $698
thousand that became past due during the current quarter. The
Company also had a SBA commercial term loan past due 90 days or
more and still accruing, which management believes that the loan is
well secured and the Bank is in the process of collection.
Classified Assets
Classified loans were $8.9 million at December 31, 2019, an
increase of $984 thousand, or 12.5%, from $7.9 million at September
30, 2019 and an increase of $2.0 million, or 29.1%, from $6.9
million at December 31, 2018.
Classified assets, which consist of classified loans and OREO,
and the classified assets to total assets ratios were $8.9 million
and 0.51%, respectively, at December 31, 2019, $7.9 million and
0.46%, respectively, at September 30, 2019, and $6.9 million and
0.40%, respectively, at December 31, 2018.
Investment Securities
Total investment securities were $117.7 million at December 31,
2019, a decrease of $38.5 million, or 24.6%, from $156.2 million at
September 30, 2019 and a decrease of $51.0 million, or 30.2%, from
$168.8 million at December 31, 2018. The decrease for the current
quarter was primarily due to the sale of $32.8 million of
securities available-for-sale, as well as principal pay-downs and
calls of $10.2 million and net premium amortization of $242
thousand, and a decrease in fair value of securities
available-for-sale of $1.0 million, partially offset by purchases
of $5.7 million. The decrease for the current year was primarily
due to the sale of $32.8 million of securities available-for-sale,
as well as principal pay-downs and calls of $33.7 million and net
premium amortization of $883 thousand, partially offset by
purchases of $14.1 million and an increase in fair value of
securities available-for-sale of $2.3 million.
Deposits
The following table presents deposit mix as of the dates
indicated:
12/31/2019
9/30/2019
12/31/2018
($ in thousands)
Amount
% to Total
Amount
% to Total
Amount
% to Total
Noninterest-bearing demand deposits
$
360,039
24.3
%
$
353,448
24.7
%
$
329,270
22.8
%
Interest-bearing deposits:
NOW
17,673
1.2
%
16,108
1.1
%
24,683
1.7
%
Money market accounts
307,980
20.8
%
307,663
21.5
%
280,733
19.4
%
Savings
6,492
0.4
%
8,206
0.6
%
8,194
0.6
%
Time deposits of $250,000 or less
405,004
27.5
%
417,549
29.1
%
477,134
33.0
%
Time deposits of more than $250,000
199,726
13.5
%
206,785
14.4
%
181,239
12.6
%
State and brokered deposits
182,393
12.3
%
122,503
8.6
%
142,500
9.9
%
Total interest-bearing deposits
1,119,268
75.7
%
1,078,814
75.3
%
1,114,483
77.2
%
Total deposits
$
1,479,307
100.0
%
$
1,432,262
100.0
%
$
1,443,753
100.0
%
The increase for the current quarter was primarily due to new
accounts of $232.0 million and net balance increases of $10.9
million on existing accounts, partially offset by closed accounts
of $195.9 million. The increase for the current year was primarily
due to new accounts of $552.5 million and net balance increases of
$766 thousand on existing accounts, partially offset by closed
accounts of $493.5 million. The Company began utilizing brokered
money market accounts in order to diversify its funding source
during the previous quarter and had a total outstanding balance of
$10.0 million and $30.0 million, respectively, at September 30,
2019 and December 31, 2019.
Operating Lease Assets and Liabilities
On January 1, 2019, the Company adopted Accounting Standard
Update (“ASU”) 2016-02, “Leases (Topic 842),” and all subsequent
ASUs that are related to Topic 842. The Company adopted this ASU
using the optional transition method with a cumulative effect
adjustment to retained earnings without restating prior financial
statements for comparable amounts. As a result, the Company
recognized right-of-use assets and liabilities of $9.6 million and
$10.6 million, respectively, with a cumulative effect adjustment of
$53 thousand to retained earnings at the date of adoption.
Shareholders’ Equity
Shareholders’ equity was $226.8 million at December 31, 2019, an
increase of $2.2 million, or 1.0%, from $224.6 million at September
30, 2019 and an increase of $16.5 million, or 7.9%, from $210.3
million at December 31, 2018. The increase for the current quarter
was primarily due to retention of earnings, an increase in stock
options exercised, partially offset by repurchase of common stock,
cash dividends paid on common stock and a decrease in accumulated
other comprehensive income (loss). The increases for the current
year were primarily due to retention of earnings and increases in
accumulated other comprehensive income and stock options exercised,
partially offset by repurchase of common stock and cash dividends
paid on common stock.
On March 28, 2019, the Company’s Board of Directors approved the
repurchase of up to $6.5 million of the Company’s common stock
through March 27, 2020. The Company completed this program in
October 2019 and had repurchased 396,715 shares.
On November 22, 2019, the Company’s Board of Directors approved
a new $6.5 million stock repurchase program to commence upon the
opening of the Company’s trading window for the first quarter of
2020 and continue through November 20, 2021.
Under the stock repurchase program, the Company may purchase
shares of its common stock through various means such as open
market transactions, including block purchases, and privately
negotiated transactions. The number of shares repurchased and the
timing, manner, price and amount of any repurchases will be
determined at the Company’s discretion. Factors include, but are
not limited to, stock price, trading volume and general market
conditions, along with the Company’s and market’s general business
conditions. The program may be suspended or discontinued at any
time and does not obligate the company to acquire any specific
number of shares of its common stock.
As part of the stock repurchase program, the Company intends to
enter into a trading plan adopted in accordance with Rule 10b5-1 of
the Securities Exchange Act of 1934, as amended. The 10b5-1 trading
plan would permit common stock to be repurchased at a time that the
Company might otherwise be precluded from doing so under insider
trading laws or self-imposed trading restrictions. The 10b5-1
trading plan will be administered by an independent broker and will
be subject to price, market volume and timing restrictions.
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:
12/31/2019
9/30/2019
12/31/2018
PCB Bancorp
Common tier 1 capital (to risk-weighted
assets)
15.87
%
16.30
%
16.28
%
Total capital (to risk-weighted
assets)
16.90
%
17.27
%
17.31
%
Tier 1 capital (to risk-weighted
assets)
15.87
%
16.30
%
16.28
%
Tier 1 capital (to average assets)
13.23
%
12.87
%
12.60
%
Pacific City Bank
Common tier 1 capital (to risk-weighted
assets)
15.68
%
16.11
%
16.19
%
Total capital (to risk-weighted
assets)
16.71
%
17.08
%
17.21
%
Tier 1 capital (to risk-weighted
assets)
15.68
%
16.11
%
16.19
%
Tier 1 capital (to average assets)
13.06
%
12.72
%
12.53
%
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. 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)
12/31/2019
9/30/2019
% Change
12/31/2018
% Change
Assets
Cash and due from banks
$
17,808
$
22,546
(21.0
)%
$
24,121
(26.2
)%
Interest-bearing deposits in financial
institutions
128,420
99,366
29.2
%
138,152
(7.0
)%
Total cash and cash equivalents
146,228
121,912
19.9
%
162,273
(9.9
)%
Securities available-for-sale, at fair
value
97,566
134,602
(27.5
)%
146,991
(33.6
)%
Securities held-to-maturity
20,154
21,601
(6.7
)%
21,760
(7.4
)%
Total investment securities
117,720
156,203
(24.6
)%
168,751
(30.2
)%
Loans held-for-sale
1,975
1,583
24.8
%
5,781
(65.8
)%
Loans held-for-investment, net of deferred
loan costs (fees)
1,450,831
1,389,830
4.4
%
1,338,682
8.4
%
Allowance for loan losses
(14,380
)
(13,094
)
9.8
%
(13,167
)
9.2
%
Net loans held-for-investment
1,436,451
1,376,736
4.3
%
1,325,515
8.4
%
Premises and equipment, net
3,760
4,008
(6.2
)%
4,588
(18.0
)%
Federal Home Loan Bank and other bank
stock
8,345
8,345
—
%
7,433
12.3
%
Deferred tax assets, net
5,288
3,389
56.0
%
3,377
56.6
%
Servicing assets
6,798
6,899
(1.5
)%
7,666
(11.3
)%
Operating lease assets
8,991
9,561
(6.0
)%
—
—
%
Accrued interest receivable and other
assets
10,772
10,810
(0.4
)%
11,644
(7.5
)%
Total assets
$
1,746,328
$
1,699,446
2.8
%
$
1,697,028
2.9
%
Liabilities
Deposits:
Noninterest-bearing demand
$
360,039
$
353,448
1.9
%
$
329,270
9.3
%
Savings, NOW and money market accounts
362,179
341,980
5.9
%
313,610
15.5
%
Time deposits of $250,000 or less
467,363
440,049
6.2
%
519,634
(10.1
)%
Time deposits of more than $250,000
289,726
296,785
(2.4
)%
281,239
3.0
%
Total deposits
1,479,307
1,432,262
3.3
%
1,443,753
2.5
%
Federal Home Loan Bank advances
20,000
20,000
—
%
30,000
(33.3
)%
Operating lease liabilities
9,990
10,574
(5.5
)%
—
—
%
Accrued interest payable and other
liabilities
10,197
11,967
(14.8
)%
12,979
(21.4
)%
Total liabilities
1,519,494
1,474,803
3.0
%
1,486,732
2.2
%
Commitments and contingent liabilities
Shareholders’ equity
Common stock, no par value
169,221
169,224
—
%
174,366
(3.0
)%
Retained earnings
57,670
54,768
5.3
%
37,577
53.5
%
Accumulated other comprehensive income
(loss), net
(57
)
651
(108.8
)%
(1,647
)
(96.5
)%
Total shareholders’ equity
226,834
224,643
1.0
%
210,296
7.9
%
Total liabilities and shareholders’
equity
$
1,746,328
$
1,699,446
2.8
%
$
1,697,028
2.9
%
Outstanding common shares
15,707,016
15,710,287
15,977,754
Book value per common share (1)
$
14.44
$
14.30
$
13.16
Total loan to total deposit ratio
98.21
%
97.15
%
93.12
%
Noninterest-bearing deposits to total
deposits
24.34
%
24.68
%
22.81
%
(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
12/31/2019
9/30/2019
% Change
12/31/2018
% Change
12/31/2019
12/31/2018
% Change
Interest income:
Interest and fees on loans
$
20,888
$
21,876
(4.5
)%
$
21,088
(0.9
)%
$
85,667
$
76,837
11.5
%
Interest on investment
securities
823
978
(15.8
)%
1,076
(23.5
)%
3,956
3,724
6.2
%
Interest and dividend on other
interest-earning assets
565
833
(32.2
)%
1,067
(47.0
)%
3,322
3,138
5.9
%
Total interest income
22,276
23,687
(6.0
)%
23,231
(4.1
)%
92,945
83,699
11.0
%
Interest expense:
Interest on deposits
5,514
6,060
(9.0
)%
5,239
5.2
%
23,439
17,340
35.2
%
Interest on other borrowings
102
98
4.1
%
136
(25.0
)%
472
611
(22.7
)%
Total interest expense
5,616
6,158
(8.8
)%
5,375
4.5
%
23,911
17,951
33.2
%
Net interest income
16,660
17,529
(5.0
)%
17,856
(6.7
)%
69,034
65,748
5.0
%
Provision (reversal) for loan
losses
4,030
(102
)
NM
294
1,270.7
%
4,237
1,231
244.2
%
Net interest income after
provision (reversal) for loan losses
12,630
17,631
(28.4
)%
17,562
(28.1
)%
64,797
64,517
0.4
%
Noninterest income:
Gain on sale of loans
1,445
1,540
(6.2
)%
1,083
33.4
%
5,996
5,560
7.8
%
Gain on sale of securities
available-for-sale
786
—
—
%
—
—
%
786
—
—
%
Service charges and fees on
deposits
407
405
0.5
%
398
2.3
%
1,544
1,500
2.9
%
Servicing income
652
534
22.1
%
371
75.7
%
2,309
2,160
6.9
%
Other income
314
323
(2.8
)%
387
(18.9
)%
1,234
1,234
—
%
Total noninterest income
3,604
2,802
28.6
%
2,239
61.0
%
11,869
10,454
13.5
%
Noninterest expense:
Salaries and employee
benefits
6,016
6,901
(12.8
)%
6,234
(3.5
)%
26,139
24,473
6.8
%
Occupancy and equipment
1,417
1,408
0.6
%
1,358
4.3
%
5,545
4,992
11.1
%
Professional fees
622
664
(6.3
)%
452
37.6
%
2,730
2,176
25.5
%
Marketing and business
promotion
501
292
71.6
%
526
(4.8
)%
1,550
2,010
(22.9
)%
Data processing
361
348
3.7
%
309
16.8
%
1,365
1,220
11.9
%
Director fees and expenses
189
188
0.5
%
281
(32.7
)%
751
942
(20.3
)%
Regulatory assessments
126
—
—
%
75
68.0
%
551
544
1.3
%
Other expenses
1,033
976
5.8
%
900
14.8
%
3,684
3,869
(4.8
)%
Total noninterest expense
10,265
10,777
(4.8
)%
10,135
1.3
%
42,315
40,226
5.2
%
Income before income taxes
5,969
9,656
(38.2
)%
9,666
(38.2
)%
34,351
34,745
(1.1
)%
Income tax expense
1,811
2,871
(36.9
)%
2,934
(38.3
)%
10,243
10,444
(1.9
)%
Net income
$
4,158
$
6,785
(38.7
)%
$
6,732
(38.2
)%
$
24,108
$
24,301
(0.8
)%
Earnings per common share
Basic
$
0.26
$
0.43
$
0.42
$
1.52
$
1.69
Diluted
$
0.26
$
0.42
$
0.41
$
1.49
$
1.65
Average common shares
outstanding
Basic
15,665,010
15,816,269
15,975,387
15,873,383
14,397,075
Diluted
15,948,793
16,099,598
16,244,837
16,172,282
14,691,370
Dividend paid per common
share
$
0.08
$
0.06
$
0.03
$
0.25
$
0.12
Return on average assets (1)
0.96
%
1.55
%
1.60
%
1.40
%
1.53
%
Return on average shareholders’
equity (1), (2)
7.25
%
12.02
%
12.92
%
10.88
%
14.26
%
Efficiency ratio (3)
50.66
%
53.01
%
50.44
%
52.30
%
52.79
%
(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
12/31/2019
9/30/2019
12/31/2018
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)
$
1,415,781
$
20,888
5.85
%
$
1,396,437
$
21,876
6.22
%
$
1,319,403
$
21,088
6.34
%
Mortgage-backed securities
75,121
452
2.39
%
84,052
521
2.46
%
80,967
534
2.62
%
Collateralized mortgage obligation
47,032
216
1.82
%
50,891
286
2.23
%
55,666
359
2.56
%
SBA loan pool securities
18,572
116
2.48
%
20,751
133
2.54
%
23,029
144
2.48
%
Municipal bonds (2)
5,729
39
2.70
%
5,834
38
2.58
%
5,892
39
2.63
%
Other interest-earning assets
108,919
565
2.06
%
135,774
833
2.43
%
152,894
1,067
2.77
%
Total interest-earning assets
1,671,154
22,276
5.29
%
1,693,739
23,687
5.55
%
1,637,851
23,231
5.63
%
Noninterest-earning assets:
Cash and cash equivalents
18,507
18,927
18,882
Allowance for loan losses
(13,232
)
(13,273
)
(12,935
)
Other assets
33,941
35,564
25,972
Total noninterest-earning assets
39,216
41,218
31,919
Total assets
$
1,710,370
$
1,734,957
$
1,669,770
Liabilities and Shareholders’
Equity
Interest-bearing liabilities:
Deposits:
NOW and money market accounts
$
349,282
1,259
1.43
%
$
351,581
1,432
1.62
%
$
301,700
1,110
1.46
%
Savings
7,227
4
0.22
%
7,043
6
0.34
%
8,364
8
0.38
%
Time deposits
741,448
4,251
2.27
%
767,752
4,622
2.39
%
790,453
4,121
2.07
%
Total interest-bearing deposits
1,097,957
5,514
1.99
%
1,126,376
6,060
2.13
%
1,100,517
5,239
1.89
%
Federal Home Loan Bank advances
21,141
102
1.91
%
20,326
98
1.91
%
30,000
136
1.80
%
Total interest-bearing liabilities
1,119,098
5,616
1.99
%
1,146,702
6,158
2.13
%
1,130,517
5,375
1.89
%
Noninterest-bearing liabilities
Noninterest-bearing demand
341,683
341,858
320,232
Other liabilities
22,117
22,465
12,281
Total noninterest-bearing liabilities
363,800
364,323
332,513
Total liabilities
1,482,898
1,511,025
1,463,030
Total shareholders’ equity
227,472
223,932
206,740
Total liabilities and shareholders’
equity
$
1,710,370
$
1,734,957
$
1,669,770
Net interest income
$
16,660
$
17,529
$
17,856
Net interest spread (3)
3.30
%
3.42
%
3.74
%
Net interest margin (4)
3.96
%
4.11
%
4.33
%
Total deposits
$
1,439,640
$
5,514
1.52
%
$
1,468,234
$
6,060
1.64
%
$
1,420,749
$
5,239
1.46
%
Total funding (5)
$
1,460,781
$
5,616
1.53
%
$
1,488,560
$
6,158
1.64
%
$
1,450,749
$
5,375
1.47
%
(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.
PCB Bancorp and Subsidiary
Average Balance, Average Yield, and
Average Rate (Unaudited)
($ in thousands)
Year Ended
12/31/2019
12/31/2018
Average Balance
Interest Income/
Expense
Avg. Yield/ Rate
Average Balance
Interest Income/
Expense
Avg. Yield/ Rate
Assets
Interest-earning assets:
Total loans (1)
$
1,383,562
$
85,667
6.19
%
$
1,264,166
$
76,837
6.08
%
Mortgage-backed securities
82,848
2,081
2.51
%
70,971
1,717
2.42
%
Collateralized mortgage obligation
51,441
1,185
2.30
%
53,312
1,272
2.39
%
SBA loan pool securities
20,681
536
2.59
%
23,671
576
2.43
%
Municipal bonds (2)
5,833
154
2.64
%
6,312
159
2.52
%
Other interest-earning assets
134,870
3,322
2.46
%
137,627
3,138
2.28
%
Total interest-earning assets
1,679,235
92,945
5.53
%
1,556,059
83,699
5.38
%
Noninterest-earning assets:
Cash and cash equivalents
18,614
19,079
Allowance for loan losses
(13,197
)
(12,632
)
Other assets
35,010
26,827
Total noninterest-earning assets
40,427
33,274
Total assets
$
1,719,662
$
1,589,333
Liabilities and Shareholders’
Equity
Interest-bearing liabilities:
Deposits:
NOW and money market accounts
$
329,562
5,162
1.57
%
$
287,131
3,477
1.21
%
Savings
7,965
32
0.40
%
8,613
26
0.30
%
Time deposits
783,353
18,245
2.33
%
758,029
13,837
1.83
%
Total interest-bearing deposits
1,120,880
23,439
2.09
%
1,053,773
17,340
1.65
%
Federal Home Loan Bank advances
25,388
472
1.86
%
34,904
611
1.75
%
Total interest-bearing liabilities
1,146,268
23,911
2.09
%
1,088,677
17,951
1.65
%
Noninterest-bearing liabilities
Noninterest-bearing demand
329,731
319,832
Other liabilities
22,087
10,395
Total noninterest-bearing liabilities
351,818
330,227
Total liabilities
1,498,086
1,418,904
Total shareholders’ equity
221,576
170,429
Total liabilities and shareholders’
equity
$
1,719,662
$
1,589,333
Net interest income
$
69,034
$
65,748
Net interest spread (3)
3.44
%
3.73
%
Net interest margin (4)
4.11
%
4.23
%
Total deposits
$
1,450,611
$
23,439
1.62
%
$
1,373,605
$
17,340
1.26
%
Total funding (5)
$
1,475,999
$
23,911
1.62
%
$
1,408,509
$
17,951
1.27
%
(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/20200123005204/en/
Timothy Chang Executive Vice President & Chief Financial
Officer 213-210-2000
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