8-K
PCB BANCORP (PCB)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d)
of The Securities Exchange Act of 1934
Date of Report (Date of earliest event Reported): April 22, 2021
PCB BANCORP
(Exact name of registrant as specified in its charter)
| California<br><br>(State or other jurisdiction of<br><br>incorporation) | 001-38621<br><br>(Commission<br><br>File Number) | 20-8856755<br><br>(I.R.S. Employer<br><br>Identification No.) |
|---|---|---|
| 3701 Wilshire Boulevard, Suite 900<br><br>Los Angeles, California<br><br>(Address of principal offices) | 90010<br><br>(Zip Code) |
Registrant’s telephone number, including area code: (213) 210-2000
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common stock, no par value | PCB | Nasdaq Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒
Item 2.02 Results of Operations and Financial Condition.
On April 22, 2021, PCB Bancorp, a California corporation (the “Company”), issued a press release concerning its unaudited results for the first quarter of 2021. A copy of the press release is attached as Exhibit 99.1 to this Current Report and is incorporated herein by reference.
The information in this report set forth under this Item 2.02 shall not be treated as “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as expressly stated by specific reference in such filing.
Item 7.01 Regulation FD Disclosure.
Attached as Exhibit 99.2, and incorporated herein by reference, is a copy of an investor presentation that may be utilized by management at future discussions with investors.
Item 8.01 Other Events.
On April 22, 2021, its Board of Directors declared a quarterly cash dividend of $0.10 per common share. The dividend will be paid on or about May 14, 2021, to shareholders of record as of the close of business on May 7, 2021. A copy of the press release is attached as Exhibit 99.1 to this Current Report and is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
99.1 Press release of PCB Bancorp, issued April 22, 2021
99.2 Investor presentation of PCB Bancorp concerning the unaudited results for the first quarter of 2021
EXHIBIT INDEX
| Exhibit No. | Description |
|---|---|
| 99.1 | Press Release of PCB Bancorp, issuedApril22, 2021 |
| 99.2 | Investor presentation of PCB Bancorp concerning the unaudited results for thefirstquarter of 2021 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| PCB Bancorp | ||
|---|---|---|
| Date: | April 22, 2021 | /s/ Timothy Chang |
| Timothy Chang | ||
| Executive Vice President and Chief Financial Officer |
4
Document
Exhibit 99.1
PCB Bancorp Reports Earnings of $8.6 million for Q1 2021 and Declares $0.10 Quarterly Cash Dividend
Los Angeles, California - April 22, 2021 - PCB Bancorp (the “Company”) (NASDAQ: PCB), the holding company of Pacific City Bank (the “Bank”), today reported net income of $8.6 million, or $0.55 per diluted common share for the first quarter of 2021, compared with $5.8 million, or $0.38 per diluted common share, for the previous quarter and $3.6 million, or $0.23 per diluted common share, for the year-ago quarter.
Q1 2021 Highlights
•Net income totaled $8.6 million or $0.55 per diluted common share;
◦The Company recorded a provision (reversal) for loan losses of $(1.1) million for the current quarter compared with $2.1 million for the previous quarter and $2.9 million for the year-ago quarter.
◦Allowance for loan losses to total loans held-for-investment ratio was 1.51% at March 31, 2021 compared with 1.67% at December 31, 2020 and 1.15% at March 31, 2020. Excluding U.S. Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) loans, allowance for loan losses to total loans held-for-investment ratio was 1.74% and 1.83% at March 31, 2021 and December 31, 2020, respectively.
◦Net interest margin was 3.70% for the first quarter of 2021 compared with 3.64% for the previous quarter and 3.85% for the year-ago quarter.
•Total assets were $2.05 billion at March 31, 2021, an increase of $127.8 million, or 6.6%, from $1.92 billion at December 31, 2020 and an increase of $250.7 million, or 13.9%, from $1.80 billion at March 31, 2020;
•Loans held-for-investment, net of deferred costs (fees), were $1.69 billion at March 31, 2021, an increase of $102.3 million, or 6.5%, from $1.58 billion at December 31, 2020 and an increase of $234.9 million, or 16.2%, from $1.45 billion at March 31, 2020;
◦SBA PPP loans totaled $218.7 million and $135.7 million at March 31, 2021 and December 31, 2020, respectively. During the current quarter, the Company funded $104.3 million of SBA PPP loans.
◦Loans under modified terms related to COVID-19 totaled $19.8 million and $36.1 million at March 31, 2021 and December 31, 2020, respectively.
•Total deposits were $1.75 billion at March 31, 2021, an increase of $158.9 million from $1.59 billion at December 31, 2020 and an increase of $276.3 million, or 18.7%, from $1.48 billion at March 31, 2020;
•Announced a repurchase program on April 8, 2021 for the repurchase up to 5% of outstanding common stock, which represented 775,000 shares, through September 7, 2021; and
•Declared a cash dividend of $0.10 per share on April 22, 2021. This represents the 25th consecutive quarterly dividend paid by PCB Bancorp.
“We are pleased to announce a record quarter driven by strong core income, positive credit trends and an improving economic outlook that resulted in a release of loan loss reserves,” said Henry Kim, President and Chief Executive Officer. “Our allowance to loan losses remain robust at 1.74% excluding SBA PPP loans and we continue to successfully reduce our cost of deposits resulting an expansion of net interest margin to 3.70% compared with 3.64% in the fourth quarter of 2020. This solid performance is the result of our dedicated team of people who reached out to the customers at the height of the pandemic to genuinely serve and to find solutions to their unprecedented situations.”
“Our 2021 first quarter results reflect our sound underwriting and our focus on relationship banking. We are well prepared to expand on this successful momentum as the economy continues to reopen and look forward to the remainder of this year.”
Financial Highlights (Unaudited)
| ( in thousands, except per share data) | Three Months Ended | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 12/31/2020 | % Change | 3/31/2020 | % Change | ||||||||||||||
| Net income | $ | 8,560 | $ | 5,787 | 47.9 | % | $ | 3,572 | 139.6 | % | |||||||
| Diluted earnings per common share | $ | 0.55 | $ | 0.38 | 44.7 | % | $ | 0.23 | 139.1 | % | |||||||
| Net interest income | $ | 17,819 | $ | 17,407 | 2.4 | % | $ | 16,566 | 7.6 | % | |||||||
| Provision (reversal) for loan losses | (1,147) | 2,142 | (153.5) | % | 2,896 | (139.6) | % | ||||||||||
| Noninterest income | 2,857 | 4,524 | (36.8) | % | 2,026 | 41.0 | % | ||||||||||
| Noninterest expense | 9,669 | 11,550 | (16.3) | % | 10,567 | (8.5) | % | ||||||||||
| Return on average assets (1) | 1.75 | % | 1.19 | % | 0.81 | % | |||||||||||
| Return on average shareholders’ equity (1), (2) | 14.66 | % | 9.92 | % | 6.35 | % | |||||||||||
| Net interest margin (1) | 3.70 | % | 3.64 | % | 3.85 | % | |||||||||||
| Efficiency ratio (3) | 46.76 | % | 52.67 | % | 56.84 | % |
All values are in US Dollars.
| ($ in thousands, except per share data) | 3/31/2021 | 12/31/2020 | % Change | 3/31/2020 | % Change | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Total assets | $ | 2,050,672 | $ | 1,922,853 | 6.6 | % | $ | 1,799,937 | 13.9 | % | |||
| Net loans held-for-investment | 1,660,402 | 1,557,068 | 6.6 | % | 1,434,364 | 15.8 | % | ||||||
| Total deposits | 1,753,771 | 1,594,851 | 10.0 | % | 1,477,442 | 18.7 | % | ||||||
| Book value per common share (2), (4) | $ | 15.53 | $ | 15.19 | 2.2 | % | $ | 14.58 | 6.5 | % | |||
| Tier 1 leverage ratio (consolidated) | 12.03 | % | 11.94 | % | 12.57 | % | |||||||
| Total shareholders’ equity to total assets (2) | 11.72 | % | 12.16 | % | 12.45 | % |
(1)Ratios are presented on an annualized basis.
(2)The Company did not have any intangible equity components for the presented periods.
(3)The ratios are calculated by dividing noninterest expense by the sum of net interest income and noninterest income.
(4)The ratios are calculated by dividing total shareholders’ equity by the number of outstanding common shares.
COVID-19 Pandemic
The ongoing COVID-19 pandemic, and governmental and societal responses thereto, have had a severe impact on recent global economic and market conditions, including significant disruption of, and volatility in, financial markets; global supply chain disruptions; and the institution of social distancing and shelter-in-place requirements that have resulted in temporary closures of many businesses, lost revenues, and increased unemployment throughout the U.S., but also specifically in California, where most of the Company’s operations and a large majority of its customers are located.
Since the beginning of the crisis, the Company has taken a number of steps to protect the safety of its employees and to support its customers. The Company has enabled its staff to work remotely and established safety measures within its bank premises and branches for both employees and customers.
In order to support its customers, the Company has been in close contact with its customers, assessing the level of impact on their businesses, and putting a process in place to evaluate each client’s specific situation and provide relief programs where appropriate. SBA PPP loans totaled $218.7 million (2,249 loans) and loans under modified terms related to the COVID-19 pandemic totaled $19.8 million (18 loan customers) as of March 31, 2021. The Company had received SBA PPP forgiveness of $23.7 million for 440 SBA PPP loans as of March 31, 2021. On January 13, 2021, SBA began accepting applications for second draw PPP loans and the Company had funded $104.3 million (1,072 loans) as of March 31, 2021. The Company is accepting applications and will continue to receive applications as long as funding remains available.
In addition, the Company has been monitoring its liquidity and capital closely. As of March 31, 2021, the Company maintained $211.8 million, or 10.3% of total assets, of cash and cash equivalents and $540.1 million, or 26.3% of total assets, of available borrowing capacity. All regulatory capital ratios were also well above the regulatory well capitalized requirements as of March 31, 2021.
At this time, the Company cannot estimate the long term impact of the COVID-19 pandemic, but these conditions impacted and are expected to impact its business, results of operations, and financial condition negatively.
Result of Operations (Unaudited)
Net Interest Income and Net Interest Margin
The following table presents the components of net interest income for the periods indicated:
| Three Months Ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | 3/31/2021 | 12/31/2020 | % Change | 3/31/2020 | % Change | ||||||||
| Interest income/expense on | |||||||||||||
| Loans | $ | 18,744 | $ | 18,929 | (1.0) | % | $ | 20,406 | (8.1) | % | |||
| Investment securities | 360 | 429 | (16.1) | % | 644 | (44.1) | % | ||||||
| Other interest-earning assets | 154 | 150 | 2.7 | % | 610 | (74.8) | % | ||||||
| Total interest-earning assets | 19,258 | 19,508 | (1.3) | % | 21,660 | (11.1) | % | ||||||
| Interest-bearing deposits | 1,311 | 1,958 | (33.0) | % | 4,992 | (73.7) | % | ||||||
| Borrowings | 128 | 143 | (10.5) | % | 102 | 25.5 | % | ||||||
| Total interest-bearing liabilities | 1,439 | 2,101 | (31.5) | % | 5,094 | (71.8) | % | ||||||
| Net interest income | $ | 17,819 | $ | 17,407 | 2.4 | % | $ | 16,566 | 7.6 | % | |||
| Average balance of | |||||||||||||
| Loans | $ | 1,641,634 | $ | 1,592,705 | 3.1 | % | $ | 1,454,727 | 12.8 | % | |||
| Investment securities | 123,851 | 123,785 | 0.1 | % | 118,502 | 4.5 | % | ||||||
| Other interest-earning assets | 189,153 | 187,592 | 0.8 | % | 158,793 | 19.1 | % | ||||||
| Total interest-earning assets | $ | 1,954,638 | $ | 1,904,082 | 2.7 | % | $ | 1,732,022 | 12.9 | % | |||
| Interest-bearing deposits | $ | 1,053,845 | $ | 1,050,369 | 0.3 | % | $ | 1,129,699 | (6.7) | % | |||
| Borrowings | 75,556 | 91,467 | (17.4) | % | 25,117 | 200.8 | % | ||||||
| Total interest-bearing liabilities | $ | 1,129,401 | $ | 1,141,836 | (1.1) | % | $ | 1,154,816 | (2.2) | % | |||
| Total funding (1) | $ | 1,736,477 | $ | 1,691,758 | 2.6 | % | $ | 1,524,334 | 13.9 | % | |||
| Annualized average yield/cost of | |||||||||||||
| Loans | 4.63 | % | 4.73 | % | 5.64 | % | |||||||
| Investment securities | 1.18 | % | 1.38 | % | 2.19 | % | |||||||
| Other interest-earning assets | 0.33 | % | 0.32 | % | 1.55 | % | |||||||
| Total interest-earning assets | 4.00 | % | 4.08 | % | 5.03 | % | |||||||
| Interest-bearing deposits | 0.50 | % | 0.74 | % | 1.78 | % | |||||||
| Borrowings | 0.69 | % | 0.62 | % | 1.63 | % | |||||||
| Total interest-bearing liabilities | 0.52 | % | 0.73 | % | 1.77 | % | |||||||
| Net interest margin | 3.70 | % | 3.64 | % | 3.85 | % | |||||||
| Cost of total funding (1) | 0.34 | % | 0.49 | % | 1.34 | % | |||||||
| Supplementary information | |||||||||||||
| Net accretion of discount on loans | $ | 745 | $ | 991 | (24.8) | % | $ | 858 | (13.2) | % | |||
| Net amortization of deferred loan fees (costs) | $ | 1,220 | $ | 913 | 33.6 | % | $ | 121 | 908.3 | % |
(1)Total funding is the sum of interest-bearing liabilities and noninterest-bearing deposits. The cost of total funding is calculated as annualized total interest expense divided by average total funding.
Loans. The decrease in average yield for the current quarter compared with the previous quarter was primarily due to an increase in SBA PPP loans and a decrease in net accretion of discount on loans, partially offset by an increase in net amortization of deferred loan fees from the increased SBA PPP loan production. The decrease in average yield for the current quarter compared with the year-ago quarter was primarily due to the increase in SBA PPP loans, partially offset by the increase in net amortization of deferred loan fees.
The following table presents a composition of total loans by interest rate type accompanied with the weighted-average contractual rates as of the dates indicated:
| 3/31/2021 | 12/31/2020 | 3/31/2020 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| % to Total Loans | Weighted-Average Contractual Rate | % to Total Loans | Weighted-Average Contractual Rate | % to Total Loans | Weighted-Average Contractual Rate | ||||||||
| Fixed rate loans | 36.3 | % | 3.44 | % | 31.7 | % | 3.86 | % | 30.2 | % | 5.19 | % | |
| Hybrid rate loans | 19.3 | % | 4.77 | % | 20.8 | % | 4.82 | % | 14.6 | % | 5.01 | % | |
| Variable rate loans | 44.4 | % | 4.04 | % | 47.5 | % | 4.06 | % | 55.2 | % | 4.41 | % |
Investment Securities. The decreases in average yield for the current quarter compared with the previous and year-ago quarters were primarily due to new investment securities purchased at lower market rates and an increase in premium amortization. During the current quarter and past 12-months period, the Company purchased investment securities of $20.2 million and $52.1 million, respectively.
Other Interest-Earning Assets. The decrease in average yield for the current quarter compared with the year-ago quarter was primarily due to the lower market rates. The increase in average balance for the current quarter compared with the year-ago quarter was primarily due to an increase in deposits and other borrowings as the Company maintains most of its cash at the Federal Reserve Bank account. For additional detail, please see the discussion for the current quarter in “Deposits” under the “Balance Sheet” discussion.
Interest-Bearing Deposits. The decreases in average cost for the current quarter compared with the previous and year-ago quarters were primarily due to the continuing decreases in market rates.
Borrowings. The increase in average cost for the current quarter compared with the previous quarter was primarily due to matured borrowings with lower interest rates during the current quarter. During the current quarter, a FHLB advance of $40.0 million with a rate of 0.59% matured. At March 31, 2021, the Company had a total outstanding FHLB advances of $40.0 million with a weighted-average rate of 0.76%.
Provision (reversal) for Loan Losses
Provision (reversal) for loan losses was $(1.1) million for the current quarter compared with $2.1 million for the previous quarter and $2.9 million for the year-ago quarter. The reversal for the current quarter was primarily due to improvement in historical loss factors and qualitative adjustment factors reflecting general economic condition. The Company recorded net charge-offs (recoveries) of $(151) thousand for the current quarter compared with $178 thousand for the previous quarter and $601 thousand for the year-ago quarter.
The following table presents allowance for loan losses to total loans held-for-investment ratio for the dates indicated:
| ($ in thousands) | 3/31/2021 | 12/31/2020 | 3/31/2020 | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Total loans held-for-investment | $ | 1,685,916 | $ | 1,583,578 | $ | 1,451,038 | |||
| Less: SBA PPP loans | 218,709 | 135,654 | — | ||||||
| Total loans held-for-investment, excluding SBA PPP loans | $ | 1,467,207 | $ | 1,447,924 | $ | 1,451,038 | |||
| Allowance for loan losses | $ | 25,514 | $ | 26,510 | $ | 16,674 | |||
| Allowance for loan losses to total loans held-for-investment | 1.51 | % | 1.67 | % | 1.15 | % | |||
| Allowance for loan losses to total loans held-for-investment, excluding SBA PPP loans | 1.74 | % | 1.83 | % | 1.15 | % |
Noninterest Income
The following table presents the components of noninterest income for the periods indicated:
| Three Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | 3/31/2021 | 12/31/2020 | % Change | 3/31/2020 | % Change | |||||
| Gain on sale of loans | $ | 1,322 | $ | 3,483 | (62.0) | % | $ | 725 | 82.3 | % |
| Service charges and fees on deposits | 293 | 311 | (5.8) | % | 390 | (24.9) | % | |||
| Loan servicing income | 882 | 398 | 121.6 | % | 554 | 59.2 | % | |||
| Other income | 360 | 332 | 8.4 | % | 357 | 0.8 | % | |||
| Total noninterest income | $ | 2,857 | $ | 4,524 | (36.8) | % | $ | 2,026 | 41.0 | % |
Gain on Sale of Loans. The following table presents information on gain on sale of loans for the periods indicated:
| Three Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | 3/31/2021 | 12/31/2020 | % Change | 3/31/2020 | % Change | |||||
| Gain on sale of SBA loans | ||||||||||
| Sold loan balance | $ | 10,919 | $ | 42,413 | (74.3) | % | $ | 11,715 | (6.8) | % |
| Premium received | 1,309 | 4,441 | (70.5) | % | 1,056 | 24.0 | % | |||
| Gain recognized | 1,195 | 3,197 | (62.6) | % | 704 | 69.7 | % | |||
| Gain on sale of residential property loans | ||||||||||
| Sold loan balance | $ | 8,279 | $ | 27,139 | (69.5) | % | $ | 2,079 | 298.2 | % |
| Gain recognized | 127 | 286 | (55.6) | % | 21 | 504.8 | % |
The decrease in gain on sale of SBA loans compared with the previous quarter was primarily due to a higher sales volume in the previous quarter from the SBA loans held-for-sale of $26.8 million at September 30, 2020. The decrease in gain on sale of residential property loans was primarily due to the sales of residential property loans held-for-sale of $4.0 million at September 30, 2020 and an increased origination resulted from a higher demand for refinancing from the lower market rates during the previous quarter.
Loan Servicing Income. The following table presents information on loan servicing income for the periods indicated:
| Three Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | 3/31/2021 | 12/31/2020 | % Change | 3/31/2020 | % Change | |||||
| Loan servicing income | ||||||||||
| Servicing income received | $ | 1,273 | $ | 961 | 32.5 | % | $ | 1,158 | 9.9 | % |
| Servicing assets amortization | (391) | (563) | (30.6) | % | (604) | (35.3) | % | |||
| Loan servicing income | $ | 882 | $ | 398 | 121.6 | % | $ | 554 | 59.2 | % |
| Underlying loans at end of period | $ | 492,981 | $ | 498,795 | (1.2) | % | $ | 478,748 | 3.0 | % |
The Company services SBA loans and certain residential property loans that are sold to the secondary market. The increases for the current quarter compared with the previous and year-ago quarters were primarily due to an increase in servicing income received and a decrease in servicing asset amortization from a decrease in loan payoffs.
Noninterest Expense
The following table presents the components of noninterest expense for the periods indicated:
| Three Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | 3/31/2021 | 12/31/2020 | % Change | 3/31/2020 | % Change | |||||
| Salaries and employee benefits | $ | 6,182 | $ | 7,397 | (16.4) | % | $ | 6,551 | (5.6) | % |
| Occupancy and equipment | 1,371 | 1,424 | (3.7) | % | 1,380 | (0.7) | % | |||
| Professional fees | 494 | 625 | (21.0) | % | 797 | (38.0) | % | |||
| Marketing and business promotion | 138 | 440 | (68.6) | % | 179 | (22.9) | % | |||
| Data processing | 377 | 375 | 0.5 | % | 358 | 5.3 | % | |||
| Director fees and expenses | 138 | 146 | (5.5) | % | 221 | (37.6) | % | |||
| Regulatory assessments | 208 | 250 | (16.8) | % | 219 | (5.0) | % | |||
| Other expenses | 761 | 893 | (14.8) | % | 862 | (11.7) | % | |||
| Total noninterest expense | $ | 9,669 | $ | 11,550 | (16.3) | % | $ | 10,567 | (8.5) | % |
Salaries and Employee Benefits. The decrease for the current quarter compared with the previous quarter was primarily due to direct loan origination cost of $750 thousand related to SBA PPP loan production, which offsets the recognition of salaries and benefits expense, and decreases in bonus accrual and other employee benefits during the current quarter. Compared with the year-ago quarter, the decrease was primarily due to the SBA PPP loan direct loan origination cost and a decrease in other employee benefits, partially offset by an increase in bonus accrual.
Professional Fees. The decrease for the current quarter compared with the previous quarter was primarily due to increased other professional fees during the previous quarter as a part of the year-end processes. Compared with the year-ago quarter, the decrease was primarily due to a decrease in expenses related to the Bank’s Bank Secrecy Act and Anti-Money Laundering (“BSA/AML”) compliance enhancements. The consent order related to the BSA/AML compliance was terminated on September 30, 2020.
Marketing and business promotion. The decrease for the current quarter compared with the previous quarter was primarily due to the year-end promotion during the previous quarter and a decrease in advertisement. The decrease for the current quarter compared with the year-ago quarter was primarily due to fewer marketing activities related to the COVID-19 pandemic.
Regulatory Assessments. The decreases for the current quarter compared with the previous and year-ago quarters were primarily due to a decrease in the assessment base as SBA PPP loans are excluded from the assessment base.
Balance Sheet (Unaudited)
Total assets were $2.05 billion at March 31, 2021, an increase of $127.8 million, or 6.6%, from $1.92 billion at December 31, 2020 and an increase of $250.7 million, or 13.9%, from $1.80 billion at March 31, 2020. The increase for the current quarter was primarily due to increases in loans held-for-investment, cash and cash equivalents, and investment securities. The increase in cash and cash equivalents for the current quarter was primarily due to an increase in deposits, partially offset by increases in loans held-for-investment and investment securities and a decrease in other borrowings.
Loans
The following table presents a composition of total loans (includes both loans held-for-sale and loans held-for-investment, net of deferred costs (fees)) as of the dates indicated:
| ($ in thousands) | 3/31/2021 | 12/31/2020 | % Change | 3/31/2020 | % Change | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| Real estate loans | ||||||||||
| Commercial property | $ | 922,536 | $ | 880,736 | 4.7 | % | $ | 812,484 | 13.5 | % |
| Residential property | 190,990 | 198,431 | (3.7) | % | 227,492 | (16.0) | % | |||
| SBA property | 125,989 | 126,570 | (0.5) | % | 125,322 | 0.5 | % | |||
| Construction | 13,151 | 15,199 | (13.5) | % | 19,178 | (31.4) | % | |||
| Commercial and industrial loans | ||||||||||
| Commercial term | 80,361 | 87,250 | (7.9) | % | 101,943 | (21.2) | % | |||
| Commercial lines of credit | 91,970 | 96,087 | (4.3) | % | 116,873 | (21.3) | % | |||
| SBA commercial term | 21,078 | 21,878 | (3.7) | % | 24,745 | (14.8) | % | |||
| SBA PPP | 218,709 | 135,654 | 61.2 | % | — | — | % | |||
| Other consumer loans | 21,132 | 21,773 | (2.9) | % | 23,001 | (8.1) | % | |||
| Loans held-for-investment | 1,685,916 | 1,583,578 | 6.5 | % | 1,451,038 | 16.2 | % | |||
| Loans held-for-sale | 3,569 | 1,979 | 80.3 | % | 16,191 | (78.0) | % | |||
| Total loans | $ | 1,689,485 | $ | 1,585,557 | 6.6 | % | $ | 1,467,229 | 15.1 | % |
The increase in loans held-for-investment for the current quarter was primarily due to new funding of $190.4 million and advances on lines of credit of $27.8 million, partially offset by pay-downs and pay-offs of $115.4 million. SBA PPP loan production contributed significantly to the Company’s loan growth for the current quarter.
The increase in loans held-for-sale for the current quarter was primarily due to new funding of $20.4 million, partially offset by sales of $19.2 million.
The following table presents a composition of commitments to extend credit as of the dates indicated:
| ($ in thousands) | 3/31/2021 | 12/31/2020 | % Change | 3/31/2020 | % Change | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| Real estate loans | ||||||||||
| Commercial property | $ | 20,003 | $ | 21,016 | (4.8) | % | $ | 14,393 | 39.0 | % |
| SBA property | 3,677 | 540 | 580.9 | % | 421 | 773.4 | % | |||
| Construction | 13,588 | 13,986 | (2.8) | % | 17,761 | (23.5) | % | |||
| Commercial and industrial loans | ||||||||||
| Commercial term | 1,000 | 1,000 | — | % | 1,034 | (3.3) | % | |||
| Commercial lines of credit | 168,381 | 156,870 | 7.3 | % | 143,228 | 17.6 | % | |||
| SBA commercial term | — | — | — | % | 912 | (100.0) | % | |||
| Other consumer loans | 96 | 84 | 14.3 | % | 38 | 152.6 | % | |||
| Total commitments to extend credit | $ | 206,745 | $ | 193,496 | 6.8 | % | $ | 177,787 | 16.3 | % |
Credit Quality
The following table presents a summary of non-performing loans, non-performing assets and classified assets as of the dates indicated:
| ($ in thousands) | 3/31/2021 | 12/31/2020 | % Change | 3/31/2020 | % Change | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Nonaccrual loans | |||||||||||||
| Real estate loans | |||||||||||||
| Commercial property | $ | — | $ | 524 | (100.0) | % | $ | — | — | % | |||
| Residential property | — | 189 | (100.0) | % | — | — | % | ||||||
| SBA property | 841 | 885 | (5.0) | % | $ | 1,461 | (42.4) | % | |||||
| Commercial and industrial loans | |||||||||||||
| Commercial lines of credit | — | 904 | (100.0) | % | 2,182 | (100.0) | % | ||||||
| SBA commercial term | 568 | 595 | (4.5) | % | 430 | 32.1 | % | ||||||
| Other consumer loans | 52 | 66 | (21.2) | % | 10 | 420.0 | % | ||||||
| Total nonaccrual loans held-for-investment | 1,461 | 3,163 | (53.8) | % | 4,083 | (64.2) | % | ||||||
| Loans past due 90 days or more and still accruing | — | — | — | % | — | — | % | ||||||
| Non-performing loans (“NPLs”) | 1,461 | 3,163 | (53.8) | % | 4,083 | (64.2) | % | ||||||
| Other real estate owned (“OREO”) | 2,336 | 1,401 | 66.7 | % | 376 | 521.3 | % | ||||||
| Non-performing assets (“NPAs”) | $ | 3,797 | $ | 4,564 | (16.8) | % | $ | 4,459 | (14.8) | % | |||
| Loans past due and still accruing | |||||||||||||
| Past due 30 to 59 days | $ | 56 | $ | 302 | (81.5) | % | $ | 1,584 | (96.5) | % | |||
| Past due 60 to 89 days | 52 | 36 | 44.4 | % | 46 | 13.0 | % | ||||||
| Past due 90 days or more | — | — | — | % | — | — | % | ||||||
| Total loans past due and still accruing | $ | 108 | $ | 338 | (68.0) | % | $ | 1,630 | (93.4) | % | |||
| Troubled debt restructurings (“TDRs”) | |||||||||||||
| Accruing TDRs | $ | 620 | $ | 634 | (2.2) | % | $ | 679 | (8.7) | % | |||
| Nonaccrual TDRs | 33 | 5 | 560.0 | % | 145 | (77.2) | % | ||||||
| Total TDRs | $ | 653 | $ | 639 | 2.2 | % | $ | 824 | (20.8) | % | |||
| Special mention loans | $ | 17,997 | $ | 16,461 | 9.3 | % | $ | 72 | 24,895.8 | % | |||
| Classified assets | |||||||||||||
| Classified loans | $ | 7,090 | $ | 10,130 | (30.0) | % | $ | 6,519 | 8.8 | % | |||
| OREO | 2,336 | 1,401 | 66.7 | % | 376 | 521.3 | % | ||||||
| Classified assets | $ | 9,426 | $ | 11,531 | (18.3) | % | $ | 6,895 | 36.7 | % | |||
| NPLs to loans held-for-investment | 0.09 | % | 0.20 | % | 0.28 | % | |||||||
| NPAs to total assets | 0.19 | % | 0.24 | % | 0.25 | % | |||||||
| Classified assets to total assets | 0.46 | % | 0.60 | % | 0.38 | % |
The increase in special mention was primarily due to downgrades of loans under modified terms related to the COVID-19 pandemic. Loans that are granted modifications related to the COVID-19 pandemic in excess of 6 months, on a cumulative basis, are classified as special mention or classified.
Special mention loans included $16.4 million and $14.9 million of loans under modified terms related to the COVID-19 pandemic at March 31, 2021 and December 31, 2020, respectively. The special mention loans under modified terms related to the COVID-19 pandemic included 2 commercial property loans totaling $11.9 million, 4 commercial term loans totaling $4.3 million, and a SBA property loan of $252 thousand at March 31, 2021.
Classified loans included $1.2 million and $1.9 million of loans under modified terms related to the COVID-19 pandemic at March 31, 2021 and December 31, 2020, respectively.
Loan Modifications Related to the COVID-19 Pandemic
The Company provided modifications, including interest only payments or payment deferrals, to customers that were adversely affected by the COVID-19 pandemic. The loan modifications met all criteria under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). Therefore, the modified loans were not considered TDRs. Total loans under modified terms related to the COVID-19 pandemic were $19.8 million at March 31, 2021, a decrease of $16.3 million, or 45.1%, from $36.1 million at December 31, 2020 and a decrease of $464.2 million, or 95.9%, from $484.0 million at June 30, 2020.
The following table presents a summary of loans under modified terms related to the COVID-19 pandemic by portfolio segment as of March 31, 2021:
| Modification Type | Weighted-Average Contractual Rate | Accrued Interest Receivable | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | Payment Deferment | Interest Only Payment | Total | |||||||
| Real estate loans | ||||||||||
| Commercial property | $ | — | $ | 11,830 | $ | 11,830 | 3.59 | % | $ | 77 |
| Residential property | 349 | — | 349 | 3.25 | % | 5 | ||||
| SBA property | — | 1,627 | 1,627 | 4.94 | % | 27 | ||||
| Commercial and industrial loans | ||||||||||
| Commercial term | — | 5,506 | 5,506 | 3.88 | % | 92 | ||||
| SBA commercial term | — | 513 | 513 | 5.50 | % | 3 | ||||
| Total | $ | 349 | $ | 19,476 | $ | 19,825 | 3.82 | % | $ | 204 |
Investment Securities
Total investment securities were $127.1 million at March 31, 2021, an increase of $6.6 million, or 5.5%, from $120.5 million at December 31, 2020 and an increase of $8.8 million, or 7.5%, from $118.3 million at March 31, 2020.
The increase for the current quarter was primarily due to purchases of $20.2 million, partially offset by principal pay-downs and calls of $11.8 million and net premium amortization of $310 thousand.
On June 30, 2020, the Company transferred securities held-to-maturity to securities available-for-sale as a part of the Company’s liquidity management plan in response to the COVID-19 pandemic. The Company transferred all of securities held-to-maturity of $18.8 million to securities available-for-sale, which resulted in a pre-tax increase to accumulated other comprehensive income of $787 thousand.
Deposits
The following table presents the Company’s deposit mix as of the dates indicated:
| 3/31/2021 | 12/31/2020 | 3/31/2020 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | Amount | % to Total | Amount | % to Total | Amount | % to Total | |||||||
| Noninterest-bearing demand deposits | $ | 715,719 | 40.8 | % | $ | 538,009 | 33.7 | % | $ | 394,084 | 26.7 | % | |
| Interest-bearing deposits | |||||||||||||
| Savings | 11,271 | 0.6 | % | 10,481 | 0.7 | % | 6,569 | 0.4 | % | ||||
| NOW | 19,380 | 1.1 | % | 21,604 | 1.4 | % | 18,608 | 1.3 | % | ||||
| Retail money market accounts | 381,704 | 21.7 | % | 351,739 | 22.0 | % | 338,850 | 22.9 | % | ||||
| Brokered money market accounts | 4 | 0.1 | % | 25,002 | 1.6 | % | 10,006 | 0.7 | % | ||||
| Retail time deposits of | |||||||||||||
| $250,000 or less | 276,232 | 15.8 | % | 299,431 | 18.7 | % | 362,408 | 24.5 | % | ||||
| More than $250,000 | 166,845 | 9.5 | % | 168,683 | 10.6 | % | 176,970 | 12.0 | % | ||||
| Time deposits from internet rate service providers | 17,616 | 1.0 | % | 24,902 | 1.6 | % | 5,447 | 0.4 | % | ||||
| State and brokered time deposits | 165,000 | 9.4 | % | 155,000 | 9.7 | % | 164,500 | 11.1 | % | ||||
| Total interest-bearing deposits | 1,038,052 | 59.2 | % | 1,056,842 | 66.3 | % | 1,083,358 | 73.3 | % | ||||
| Total deposits | $ | 1,753,771 | 100.0 | % | $ | 1,594,851 | 100.0 | % | $ | 1,477,442 | 100.0 | % |
The increase in noninterest-bearing demand deposits for the current year was primarily due to the overall liquid deposit market. During the current quarter, a total of $91.4 million of SBA PPP loans were funded through the Bank’s noninterest-bearing demand deposits and deposit customers also received $10.1 million of SBA Economic Injury Disaster Loans.
The decrease in retail time deposits for the current quarter was primarily due to matured and closed accounts of $195.6 million, partially offset by new accounts of $31.6 million and renewals of the matured accounts of $136.2 million.
Liquidity
The following table presents a summary of the Company’s liquidity position as of March 31, 2021:
| ($ in thousands) | 3/31/2021 | ||
|---|---|---|---|
| Cash and cash equivalents | $ | 211,780 | |
| Cash and cash equivalents to total assets | 10.3 | % | |
| Available borrowing capacity | |||
| FHLB advances | $ | 440,705 | |
| Federal Reserve Discount Window | 34,373 | ||
| Overnight federal funds lines | 65,000 | ||
| Total | $ | 540,078 | |
| Total available borrowing capacity to total assets | 26.3 | % |
Shareholders’ Equity
Shareholders’ equity was $240.3 million at March 31, 2021, an increase of $6.5 million, or 2.8%, from $233.8 million at December 31, 2020 and an increase of $16.1 million, or 7.2%, from $224.1 million at March 31, 2020. The increase for the current quarter was primarily due to net income, partially offset by a cash dividend declared on common stock of $1.5 million.
Capital Ratios
Based on changes to the Federal Reserve’s definition of a “Small Bank Holding Company” that increased the threshold to $3 billion in assets in August 2018, the Company is not currently subject to separate minimum capital measurements. At such time as the Company reaches the $3 billion asset level, it will again be subject to capital measurements independent of the Bank. For comparison purposes, the Company’s ratios are included in following discussion. The following table presents capital ratios for the Company and the Bank as of dates indicated:
| 3/31/2021 | 12/31/2020 | 3/31/2020 | Well Capitalized Requirements | |||||
|---|---|---|---|---|---|---|---|---|
| PCB Bancorp | ||||||||
| Common tier 1 capital (to risk-weighted assets) | 15.92 | % | 15.97 | % | 15.53 | % | N/A | |
| Total capital (to risk-weighted assets) | 17.17 | % | 17.22 | % | 16.71 | % | N/A | |
| Tier 1 capital (to risk-weighted assets) | 15.92 | % | 15.97 | % | 15.53 | % | N/A | |
| Tier 1 capital (to average assets) | 12.03 | % | 11.94 | % | 12.57 | % | N/A | |
| Pacific City Bank | ||||||||
| Common tier 1 capital (to risk-weighted assets) | 15.62 | % | 15.70 | % | 15.28 | % | 6.5 | % |
| Total capital (to risk-weighted assets) | 16.88 | % | 16.95 | % | 16.47 | % | 10.0 | % |
| Tier 1 capital (to risk-weighted assets) | 15.62 | % | 15.70 | % | 15.28 | % | 8.0 | % |
| Tier 1 capital (to average assets) | 11.81 | % | 11.74 | % | 12.37 | % | 5.0 | % |
Declaration of Quarterly Cash Dividend
On April 22, 2021, the Company’s Board of Directors declared a quarterly cash dividend of $0.10 per common share. The dividend will be paid on or about May 14, 2021, to shareholders of record as of the close of business on May 7, 2021.
About PCB Bancorp
PCB Bancorp, formerly known as Pacific City Financial Corporation, is the bank holding company for Pacific City Bank, a California state chartered bank, offering a full suite of commercial banking services to small to medium-sized businesses, individuals and professionals, primarily in Southern California, and predominantly in Korean-American and other minority communities.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements. These forward-looking statements represent plans, estimates, objectives, goals, guidelines, expectations, intentions, projections and statements of our beliefs concerning future events, business plans, objectives, expected operating results and the assumptions upon which those statements are based. Forward-looking statements include without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and are typically identified with words such as “may,” “could,” “should,” “will,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “aim,” “intend,” “plan,” or words or phases of similar meaning. We caution that the forward-looking statements are based largely on our expectations and are subject to a number of known and unknown risks and uncertainties that are subject to change based on factors which are, in many instances, beyond our control, including but not limited to our borrowers’ actual payment performance as loan deferrals related to the COVID-19 pandemic expire, changes to statutes, regulations, or regulatory policies or practices as a result of, or in response to the COVID-19 pandemic, including the potential adverse impact of loan modifications and payment deferrals implemented consistent with recent regulatory guidance, and the general economic uncertainty caused by the COVID-19 pandemic, and government and societal responses thereto. These and other important factors are detailed in various securities law filings made periodically by the Company, copies of which are available from the Company without charge. Actual results, performance or achievements could differ materially from those contemplated, expressed, or implied by the forward-looking statements. Any forward-looking statements presented herein are made only as of the date of this press release, and we do not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise, except as required by law.
Contact:
Timothy Chang
Executive Vice President & Chief Financial Officer
213-210-2000
PCB Bancorp and Subsidiary
Consolidated Balance Sheets (Unaudited)
($ in thousands, except share and per share data)
| 3/31/2021 | 12/31/2020 | % Change | 3/31/2020 | % Change | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Assets | |||||||||||||
| Cash and due from banks | $ | 16,764 | $ | 19,605 | (14.5) | % | $ | 14,880 | 12.7 | % | |||
| Interest-bearing deposits in other financial institutions | 195,016 | 174,493 | 11.8 | % | 174,039 | 12.1 | % | ||||||
| Total cash and cash equivalents | 211,780 | 194,098 | 9.1 | % | 188,919 | 12.1 | % | ||||||
| Securities available-for-sale, at fair value | 127,114 | 120,527 | 5.5 | % | 98,568 | 29.0 | % | ||||||
| Securities held-to-maturity | — | — | — | % | 19,711 | (100.0) | % | ||||||
| Total investment securities | 127,114 | 120,527 | 5.5 | % | 118,279 | 7.5 | % | ||||||
| Loans held-for-sale | 3,569 | 1,979 | 80.3 | % | 16,191 | (78.0) | % | ||||||
| Loans held-for-investment, net of deferred loan costs (fees) | 1,685,916 | 1,583,578 | 6.5 | % | 1,451,038 | 16.2 | % | ||||||
| Allowance for loan losses | (25,514) | (26,510) | (3.8) | % | (16,674) | 53.0 | % | ||||||
| Net loans held-for-investment | 1,660,402 | 1,557,068 | 6.6 | % | 1,434,364 | 15.8 | % | ||||||
| Premises and equipment, net | 3,774 | 4,048 | (6.8) | % | 4,797 | (21.3) | % | ||||||
| Federal Home Loan Bank and other bank stock | 8,447 | 8,447 | — | % | 8,345 | 1.2 | % | ||||||
| Other real estate owned, net | 2,336 | 1,401 | 66.7 | % | 376 | 521.3 | % | ||||||
| Deferred tax assets, net | 8,170 | 8,120 | 0.6 | % | 5,140 | 58.9 | % | ||||||
| Servicing assets | 6,253 | 6,400 | (2.3) | % | 6,358 | (1.7) | % | ||||||
| Operating lease assets | 7,145 | 7,616 | (6.2) | % | 8,393 | (14.9) | % | ||||||
| Accrued interest receivable | 7,523 | 9,334 | (19.4) | % | 4,706 | 59.9 | % | ||||||
| Other assets | 4,159 | 3,815 | 9.0 | % | 4,069 | 2.2 | % | ||||||
| Total assets | $ | 2,050,672 | $ | 1,922,853 | 6.6 | % | $ | 1,799,937 | 13.9 | % | |||
| Liabilities | |||||||||||||
| Deposits | |||||||||||||
| Noninterest-bearing demand | $ | 715,719 | $ | 538,009 | 33.0 | % | $ | 394,084 | 81.6 | % | |||
| Savings, NOW and money market accounts | 412,359 | 408,826 | 0.9 | % | 374,033 | 10.2 | % | ||||||
| Time deposits of $250,000 or less | 358,848 | 379,333 | (5.4) | % | 442,355 | (18.9) | % | ||||||
| Time deposits of more than $250,000 | 266,845 | 268,683 | (0.7) | % | 266,970 | — | % | ||||||
| Total deposits | 1,753,771 | 1,594,851 | 10.0 | % | 1,477,442 | 18.7 | % | ||||||
| Federal Home Loan Bank advances | 40,000 | 80,000 | (50.0) | % | 80,000 | (50.0) | % | ||||||
| Operating lease liabilities | 7,935 | 8,455 | (6.2) | % | 9,349 | (15.1) | % | ||||||
| Accrued interest payable and other liabilities | 8,703 | 5,759 | 51.1 | % | 9,021 | (3.5) | % | ||||||
| Total liabilities | 1,810,409 | 1,689,065 | 7.2 | % | 1,575,812 | 14.9 | % | ||||||
| Commitments and contingent liabilities | |||||||||||||
| Shareholders’ equity | |||||||||||||
| Common stock, no par value | 164,698 | 164,140 | 0.3 | % | 163,532 | 0.7 | % | ||||||
| Retained earnings | 74,707 | 67,692 | 10.4 | % | 59,702 | 25.1 | % | ||||||
| Accumulated other comprehensive income, net | 858 | 1,956 | (56.1) | % | 891 | (3.7) | % | ||||||
| Total shareholders’ equity | 240,263 | 233,788 | 2.8 | % | 224,125 | 7.2 | % | ||||||
| Total liabilities and shareholders’ equity | $ | 2,050,672 | $ | 1,922,853 | 6.6 | % | $ | 1,799,937 | 13.9 | % | |||
| Outstanding common shares | 15,468,242 | 15,385,878 | 15,370,086 | ||||||||||
| Book value per common share (1) | $ | 15.53 | $ | 15.19 | $ | 14.58 | |||||||
| Total loan to total deposit ratio | 96.33 | % | 99.42 | % | 99.31 | % | |||||||
| Noninterest-bearing deposits to total deposits | 40.81 | % | 33.73 | % | 26.67 | % |
(1)The ratios are calculated by dividing total shareholders’ equity by the number of outstanding common shares. The Company did not have any intangible equity components for the presented periods.
PCB Bancorp and Subsidiary
Consolidated Statements of Income (Unaudited)
($ in thousands, except share and per share data)
| Three Months Ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 3/31/2021 | 12/31/2020 | % Change | 3/31/2020 | % Change | |||||||||
| Interest and dividend income | |||||||||||||
| Loans, including fees | $ | 18,744 | $ | 18,929 | (1.0) | % | $ | 20,406 | (8.1) | % | |||
| Investment securities | 360 | 429 | (16.1) | % | 644 | (44.1) | % | ||||||
| Other interest-earning assets | 154 | 150 | 2.7 | % | 610 | (74.8) | % | ||||||
| Total interest income | 19,258 | 19,508 | (1.3) | % | 21,660 | (11.1) | % | ||||||
| Interest expense | |||||||||||||
| Deposits | 1,311 | 1,958 | (33.0) | % | 4,992 | (73.7) | % | ||||||
| Other borrowings | 128 | 143 | (10.5) | % | 102 | 25.5 | % | ||||||
| Total interest expense | 1,439 | 2,101 | (31.5) | % | 5,094 | (71.8) | % | ||||||
| Net interest income | 17,819 | 17,407 | 2.4 | % | 16,566 | 7.6 | % | ||||||
| Provision (reversal) for loan losses | (1,147) | 2,142 | (153.5) | % | 2,896 | (139.6) | % | ||||||
| Net interest income after provision (reversal) for loan losses | 18,966 | 15,265 | 24.2 | % | 13,670 | 38.7 | % | ||||||
| Noninterest income | |||||||||||||
| Gain on sale of loans | 1,322 | 3,483 | (62.0) | % | 725 | 82.3 | % | ||||||
| Service charges and fees on deposits | 293 | 311 | (5.8) | % | 390 | (24.9) | % | ||||||
| Loan servicing income | 882 | 398 | 121.6 | % | 554 | 59.2 | % | ||||||
| Other income | 360 | 332 | 8.4 | % | 357 | 0.8 | % | ||||||
| Total noninterest income | 2,857 | 4,524 | (36.8) | % | 2,026 | 41.0 | % | ||||||
| Noninterest expense | |||||||||||||
| Salaries and employee benefits | 6,182 | 7,397 | (16.4) | % | 6,551 | (5.6) | % | ||||||
| Occupancy and equipment | 1,371 | 1,424 | (3.7) | % | 1,380 | (0.7) | % | ||||||
| Professional fees | 494 | 625 | (21.0) | % | 797 | (38.0) | % | ||||||
| Marketing and business promotion | 138 | 440 | (68.6) | % | 179 | (22.9) | % | ||||||
| Data processing | 377 | 375 | 0.5 | % | 358 | 5.3 | % | ||||||
| Director fees and expenses | 138 | 146 | (5.5) | % | 221 | (37.6) | % | ||||||
| Regulatory assessments | 208 | 250 | (16.8) | % | 219 | (5.0) | % | ||||||
| Other expenses | 761 | 893 | (14.8) | % | 862 | (11.7) | % | ||||||
| Total noninterest expense | 9,669 | 11,550 | (16.3) | % | 10,567 | (8.5) | % | ||||||
| Income before income taxes | 12,154 | 8,239 | 47.5 | % | 5,129 | 137.0 | % | ||||||
| Income tax expense | 3,594 | 2,452 | 46.6 | % | 1,557 | 130.8 | % | ||||||
| Net income | $ | 8,560 | $ | 5,787 | 47.9 | % | $ | 3,572 | 139.6 | % | |||
| Earnings per common share | |||||||||||||
| Basic | $ | 0.55 | $ | 0.38 | $ | 0.23 | |||||||
| Diluted | $ | 0.55 | $ | 0.38 | $ | 0.23 | |||||||
| Average common shares | |||||||||||||
| Basic | 15,384,343 | 15,350,742 | 15,505,699 | ||||||||||
| Diluted | 15,533,608 | 15,392,355 | 15,700,144 | ||||||||||
| Dividend paid per common share | $ | 0.10 | $ | 0.10 | $ | 0.10 | |||||||
| Return on average assets (1) | 1.75 | % | 1.19 | % | 0.81 | % | |||||||
| Return on average shareholders’ equity (1), (2) | 14.66 | % | 9.92 | % | 6.35 | % | |||||||
| Efficiency ratio (3) | 46.76 | % | 52.67 | % | 56.84 | % |
(1)Ratios are presented on an annualized basis.
(2)The Company did not have any intangible equity components for the presented periods.
(3)The ratios are calculated by dividing noninterest expense by the sum of net interest income and noninterest income.
PCB Bancorp and Subsidiary
Average Balance, Average Yield, and Average Rate (Unaudited)
($ in thousands)
| Three Months Ended | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 3/31/2021 | 12/31/2020 | 3/31/2020 | ||||||||||||||||
| Average Balance | Interest Income/ Expense | Avg. Yield/Rate | Average Balance | Interest Income/ Expense | Avg. Yield/Rate | Average Balance | Interest Income/ Expense | Avg. Yield/Rate | ||||||||||
| Assets | ||||||||||||||||||
| Interest-earning assets | ||||||||||||||||||
| Total loans (1) | $ | 1,641,634 | $ | 18,744 | 4.63 | % | $ | 1,592,705 | $ | 18,929 | 4.73 | % | $ | 1,454,727 | $ | 20,406 | 5.64 | % |
| Mortgage-backed securities | 81,486 | 215 | 1.07 | % | 76,787 | 275 | 1.42 | % | 57,503 | 329 | 2.30 | % | ||||||
| Collateralized mortgage obligation | 24,888 | 57 | 0.93 | % | 28,743 | 60 | 0.83 | % | 41,408 | 198 | 1.92 | % | ||||||
| SBA loan pool securities | 11,673 | 52 | 1.81 | % | 12,432 | 57 | 1.82 | % | 13,872 | 79 | 2.29 | % | ||||||
| Municipal bonds (2) | 5,804 | 36 | 2.52 | % | 5,823 | 37 | 2.53 | % | 5,719 | 38 | 2.67 | % | ||||||
| Other interest-earning assets | 189,153 | 154 | 0.33 | % | 187,592 | 150 | 0.32 | % | 158,793 | 610 | 1.55 | % | ||||||
| Total interest-earning assets | 1,954,638 | 19,258 | 4.00 | % | 1,904,082 | 19,508 | 4.08 | % | 1,732,022 | 21,660 | 5.03 | % | ||||||
| Noninterest-earning assets | ||||||||||||||||||
| Cash and cash equivalents | 19,072 | 18,188 | 18,850 | |||||||||||||||
| Allowance for loan losses | (26,870) | (25,699) | (14,399) | |||||||||||||||
| Other assets | 40,377 | 42,755 | 34,312 | |||||||||||||||
| Total noninterest-earning assets | 32,579 | 35,244 | 38,763 | |||||||||||||||
| Total assets | $ | 1,987,217 | $ | 1,939,326 | $ | 1,770,785 | ||||||||||||
| Liabilities and Shareholders’ Equity | ||||||||||||||||||
| Interest-bearing liabilities | ||||||||||||||||||
| Deposits | ||||||||||||||||||
| NOW and money market accounts | $ | 407,623 | 333 | 0.33 | % | $ | 383,507 | 327 | 0.34 | % | $ | 364,604 | 1,119 | 1.23 | % | |||
| Savings | 10,609 | 1 | 0.04 | % | 11,037 | 1 | 0.04 | % | 6,614 | 3 | 0.18 | % | ||||||
| Time deposits | 635,613 | 977 | 0.62 | % | 655,825 | 1,630 | 0.99 | % | 758,481 | 3,870 | 2.05 | % | ||||||
| Total interest-bearing deposits | 1,053,845 | 1,311 | 0.50 | % | 1,050,369 | 1,958 | 0.74 | % | 1,129,699 | 4,992 | 1.78 | % | ||||||
| Federal Home Loan Bank advances | 75,556 | 128 | 0.69 | % | 91,467 | 143 | 0.62 | % | 25,117 | 102 | 1.63 | % | ||||||
| Total interest-bearing liabilities | 1,129,401 | 1,439 | 0.52 | % | 1,141,836 | 2,101 | 0.73 | % | 1,154,816 | 5,094 | 1.77 | % | ||||||
| Noninterest-bearing liabilities | ||||||||||||||||||
| Noninterest-bearing demand | 607,076 | 549,922 | 369,518 | |||||||||||||||
| Other liabilities | 13,950 | 15,412 | 20,365 | |||||||||||||||
| Total noninterest-bearing liabilities | 621,026 | 565,334 | 389,883 | |||||||||||||||
| Total liabilities | 1,750,427 | 1,707,170 | 1,544,699 | |||||||||||||||
| Total shareholders’ equity | 236,790 | 232,156 | 226,086 | |||||||||||||||
| Total liabilities and shareholders’ equity | $ | 1,987,217 | $ | 1,939,326 | $ | 1,770,785 | ||||||||||||
| Net interest income | $ | 17,819 | $ | 17,407 | $ | 16,566 | ||||||||||||
| Net interest spread (3) | 3.48 | % | 3.35 | % | 3.26 | % | ||||||||||||
| Net interest margin (4) | 3.70 | % | 3.64 | % | 3.85 | % | ||||||||||||
| Total deposits | $ | 1,660,921 | $ | 1,311 | 0.32 | % | $ | 1,600,291 | $ | 1,958 | 0.49 | % | $ | 1,499,217 | $ | 4,992 | 1.34 | % |
| Total funding (5) | $ | 1,736,477 | $ | 1,439 | 0.34 | % | $ | 1,691,758 | $ | 2,101 | 0.49 | % | $ | 1,524,334 | $ | 5,094 | 1.34 | % |
(1)Total loans include both loans held-for-sale and loans held-for-investment, net of deferred loan costs (fees).
(2)The yield on municipal bonds has not been computed on a tax-equivalent basis.
(3)Net interest spread is calculated by subtracting average rate on interest-bearing liabilities from average yield on interest-earning assets.
(4)Net interest margin is calculated by dividing annualized net interest income by average interest-earning assets.
(5)Total funding is the sum of interest-bearing liabilities and noninterest-bearing deposits. The cost of total funding is calculated as annualized total interest expense divided by average total funding.
14
pcbinvestordeckq121
Earnings Results First Quarter 2021 April 22, 2021
Safe Harbor Statement your Partner • Choice • Bank | 2 This presentation (and oral statements made regarding the subject of this presentation) contains certain “forward- looking statements” that are based on various facts and derived utilizing numerous important assumptions and are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements include information about our future financial performance, business and growth strategy, projected plans and objectives, as well as projections of macroeconomic and industry trends, which are inherently unreliable due to the multiple factors that impact economic trends, and any such variations may be material. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “plans” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward-looking in nature and not historical facts, although not all forward-looking statements include the foregoing. Forward-looking statements are based on management’s current expectations and involve risks and uncertainties that could cause actual results to differ materially from the Company’s historical results or those described in our forward-looking statements. PCB Bancorp disclaims any obligation to update any forward-looking statement. This presentation contains certain non-GAAP financial measures intended to supplement, not substitute for, comparable GAAP measures. Reconciliations of non-GAAP financial measures to GAAP financial measures are provided at the end of this presentation. Numbers in the presentation may not sum due to rounding.
your Partner • Choice • Bank | 3 Introduction
Franchise Footprint your Partner • Choice • Bank | 4 • Servicing 6 of top 10 Korean-American MSAs in the U.S. through our branches and LPOs (1) (1) Based on total population projected for 2018 by S&P Global Market Intelligence.
Equity Information your Partner • Choice • Bank | 5 (1) Retrospectively adjusted for 10% stock dividend payouts on February 22, 2016 and January 15, 2017 As of April 20, 2021 Ticker PCB Market Cap $221.2 million Price Per Share $14.27 52 Week Range $7.97 - $16.31 Dividend Yield (Dividend Payout Ratio) 2.80% (29.21% 2Q20-1Q21) Number of Shares 15,497,649 $ 0 .0 2 5 $ 0 .0 2 5 $ 0 .0 2 5 $ 0 .0 2 7 $ 0 .0 2 7 $ 0 .0 2 7 $ 0 .0 2 7 $ 0 .0 3 0 $ 0 .0 3 0 $ 0 .0 3 0 $ 0 .0 3 0 $ 0 .0 3 0 $ 0 .0 3 0 $ 0 .0 3 0 $ 0 .0 3 0 $ 0 .0 5 0 $ 0 .0 6 0 $ 0 .0 6 0 $ 0 .0 8 0 $ 0 .1 0 0 $ 0 .1 0 0 $ 0 .1 0 0 $ 0 .1 0 0 $ 0 .1 0 0 $ 0 .1 0 0 0.0 00 0.0 20 0.0 40 0.0 60 0.0 80 0.1 00 0.1 20 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 67% 20% Historical Quarterly Cash Dividend Per Share (1) (1) 33% 25% Stock Repurchase Announced on April 8, 2021 to repurchase up to 5% of outstanding stocks, which represents 775,000 shares, through September 7, 2021.
Historical Performance your Partner • Choice • Bank | 6 $1.03 $1.19 $1.34 $1.45 $1.58 $1.69 0.0 00 0.2 00 0.4 00 0.6 00 0.8 00 1.0 00 1.2 00 1.4 00 1.6 00 1.8 00 2016 2017 2018 2019 2020 Mar-21 Held-For-Investment Loans ($bn) $1.09 $1.25 $1.44 $1.48 $1.59 $1.75 0.0 00 0.2 00 0.4 00 0.6 00 0.8 00 1.0 00 1.2 00 1.4 00 1.6 00 1.8 00 2.0 00 2016 2017 2018 2019 2020 Mar-21 Deposits ($bn) $14.0 $16.4 $24.3 $24.1 $16.2 $8.6 0.0 00 5.0 00 10. 000 15. 000 20. 000 25. 000 30. 000 2016 2017 2018 2019 2020 03/21 YTD Net Income ($mm) $1.11 $1.21 $1.65 $1.49 $1.04 $0.55 0.0 00 0.2 00 0.4 00 0.6 00 0.8 00 1.0 00 1.2 00 1.4 00 1.6 00 1.8 00 2016 2017 2018 2019 2020 03/21 YTD Diluted Earnings Per Share CAGR +11.3% CAGR +9.9%
Historical Performance your Partner • Choice • Bank | 7 1.25% 1.22% 1.53% 1.40% 0.84% 1.75% 0.0 0% 0.2 0% 0.4 0% 0.6 0% 0.8 0% 1.0 0% 1.2 0% 1.4 0% 1.6 0% 1.8 0% 2.0 0% 2016 2017 2018 2019 2020 03/21 YTD Return on Average Assets 12.47% 12.00% 14.26% 10.88% 7.08% 14.66% 0.0 00 0.0 20 0.0 40 0.0 60 0.0 80 0.1 00 0.1 20 0.1 40 0.1 60 2016 2017 2018 2019 2020 03/21 YTD Return on Average Equity 54.9% 52.0% 52.8% 52.3% 53.5% 46.8% 0.4 20 0.4 40 0.4 60 0.4 80 0.5 00 0.5 20 0.5 40 0.5 60 2016 2017 2018 2019 2020 03/21 YTD Efficiency Ratio 4.18% 4.22% 4.23% 4.11% 3.53% 3.70% 0.0 30 0.0 32 0.0 34 0.0 36 0.0 38 0.0 40 0.0 42 0.0 44 2016 2017 2018 2019 2020 03/21 YTD Net Interest Margin (1) Annualized (1)
COVID-19 Update your Partner • Choice • Bank | 8 As of March 31, 2021 o SBA PPP Loans • 2,249 loans with aggregated carrying value of $218.7 million • Second round PPP: 1,072 loans with aggregated contractual loan balance of $108.6 million (carrying value: $104.3 million) o Loan Modification Related to COVID-19 • 18 customers for aggregated loan balance of $19.8 million o Allowance for Loan Losses • Established 1.51% of total loans held-for-investment (1.74% excluding SBA PPP loans) o Liquidity • Maintained cash and cash equivalents of $211.8 million, or 10.3% of total assets • Maintained available borrowing capacity of $540.1 million, or 26.3% of total assets o Capital • Bank’s Tier 1 leverage capital ratio of 11.81% and CET 1 capital ratio of 15.62%
your Partner • Choice • Bank | 9 Recent Financial Performance
1Q21 Highlights your Partner • Choice • Bank | 10 As of or For the Quarter Ended ($ in thousands except per share data) 03/31/21 12/31/20 03/31/20 Income Statement Summary: Interest Income $ 19,258 $ 19,508 $ 21,660 Interest Expense 1,439 2,101 5,094 Net Interest Income 17,819 17,407 16,566 Noninterest Income 2,857 4,524 2,026 Noninterest Expense 9,669 11,550 10,567 Provision for Loan Losses (1,147) 2,142 2,896 Pretax Income 12,154 8,239 5,129 Income Tax Expense 3,594 2,452 1,557 Net Income 8,560 5,787 3,572 Diluted Earnings Per Share (“EPS”) $ 0.55 $ 0.38 $ 0.23 Selected Balance Sheet Items: Loans held-for-investment (“HFI”) $ 1,685,916 $ 1,583,578 $ 1,451,038 Loans held-for-sale (“HFS”) 3,569 1,979 16,191 Total Deposits 1,753,771 1,594,851 1,477,442 Total Assets 2,050,672 1,922,853 1,799,937 Shareholders’ Equity 240,263 233,788 224,125 Key Metrics: Book Value (“BV”) Per Share $ 15.53 $ 15.19 $ 14.58 Return on Average Assets (“ROAA”) (1) 1.75% 1.19% 0.81% Return on Average Equity (“ROAE”) (1) 14.66% 9.92% 6.35% Net Interest Margin (“NIM”) 3.70% 3.64% 3.85% Efficiency Ratio 46.76% 52.67% 56.84% o Recorded a reversal for loan losses of $1.1 million in 1Q21 primarily due to improvement in historical loss factors and qualitative adjustment factors reflecting general economic condition o Allowance for loan losses to HFI loans ratio was 1.51% at March 31, 2021 compared with 1.67% at December 31, 2020. Excluding PPP loans, the ratio was 1.74% and 1.83% at March 31, 2021 and December 31, 2020, respectively o Declared cash dividend of $0.10 per share in 1Q21 o SBA PPP loans totaled $218.7 million (2,249 loans), net of deferred fees and costs o Loans with modifications related to the COVID-19 pandemic totaled $19.8 million (18 customers) (1) Annualized.
Commercial Property - Owner Occupied 27% Commercial Property - Non-Owner Occupied 37% Commercial and Industrial 11% SBA PPP 13% Residential Property 11% Other Consumer 1% HFI Loan Composition Loan Overview your Partner • Choice • Bank | 11 $899 $904 $953 $957 $956 $1,002 $1,023 $1,062 $232 $227 $240 $244 $218 $206 $205 $193 $241 $236 $235 $227 $224 $213 $198 $191 $24 $23 $23 $23 $22 $22 $22 $21$134 $136 $136 $219 $1,396 $1,390 $1,451 $1,451 $1,554 $1,579 $1,584 $1,686 0 200 400 600 800 1,00 0 1,20 0 1,40 0 1,60 0 1,80 0 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 HFI Loan Trend Commercial Property Commercial and Industrial Residential Property Other Consumer SBA PPP ($ in millions) March 31, 2021 YoY +16.2% $584 $565 $580 $587 $590 $619 $629 $636 250% 242% 244% 249% 247% 257% 256% 251% -380.0% -280.0% -180.0% -80.0% 20.0 % 120 .0% 220 .0% 320 .0% 420 .0% 300 .0 350 .0 400 .0 450 .0 500 .0 550 .0 600 .0 650 .0 700 .0 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Commercial Real Estate (1) Loan Trend CRE Loans % to the Bank's Total Risk-Based Capital ($ in millions) (1) Per regulatory definitions in the Commercial Real Estate (“CRE”) Concentration Guidance
Fixed (WA Rate: 4.80%) 27% Variable (WA Rate: 4.04%) 51% Hybrid (WA Rate: 4.77%) 22% Interest Rate Mix (2) $45 $25 $50 $29 $21 $52 $32 $49 $31 $20 $33 $19 $19 $22 $24 $23 $83 $65 $87 $57 $25 $53 $45 $51 6.02% 5.92% 5.20% 5.20% 4.15% 4.14% 3.94% 4.02% -3.00% -2.00% -1.00% 0.00 % 1.00 % 2.00 % 3.00 % 4.00 % 5.00 % 6.00 % 0.0 20.0 40.0 60.0 80.0 100 .0 120 .0 140 .0 160 .0 180 .0 200 .0 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 New Production (1),(2) by Rate Type Fixed Hybrid Variable WA Rate Loan Interest Rate Mix your Partner • Choice • Bank | 12(1) Total commitment basis (2) Excluding SBA PPP loans. March 31, 2021($ in millions) 16% 17% 20% 22% 24% 25% 25% 27% 22% 23% 23% 23% 23% 23% 23% 22% 62% 60% 57% 55% 53% 52% 52% 51% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100 % Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Interest Rate Mix Trend (2) Fixed Hybrid Variable
SBA PPP Loans your Partner • Choice • Bank | 13 Unpaid Principal Balance (“UPB”) Remaining Balance of ($ in thousands) # of Loans Carrying Value 2-Year Maturity 5-Year Maturity Origination Fee Origination Cost Funded in 2020 $50K or Under 736 $ 14,696 $ 13,457 $ 1,266 $ 315 $ 287 Between $50K and $150K 249 21,232 21,069 472 368 59 Between $150K and $350K 125 28,035 28,235 259 488 30 Between $350K and $2MM 64 42,053 42,002 486 451 16 $2MM or More 3 8,401 8,427 0 27 1 Total 1,177 $ 114,417 $ 113,190 $ 2,483 $ 1,649 $ 393 Summary of SBA PPP loans as of March 31, 2021: Summary of relationships of SBA PPP loan customers as of March 31, 2021: SBA PPP Loans Demand Deposit Accounts (“DDAs”) ($ in thousands) # of Loans UPB Mar-21 Mar-20 Change Existing relationships 1,953 $ 202,427 $ 275,863 $ 135,470 $ 140,393 New customers with new DDA relationships 140 16,182 7,213 0 7,213 No other relationships 156 5,621 0 0 0 Total 2,249 $ 224,230 $ 283,076 $ 135,470 $ 147,606 Funded in 2021 $50K or Under 618 $ 12,302 $ 0 $ 13,309 $ 1,416 $ 410 Between $50K and $150K 283 24,154 0 25,143 1,174 185 Between $150K and $350K 98 21,191 0 22,163 1,037 64 Between $350K and $2MM 72 44,702 0 45,942 1,287 47 $2MM or More 1 1,943 0 2,000 58 1 Total 1,072 $ 104,292 $ 0 $ 108,557 $ 4,972 $ 707
Loan Modification your Partner • Choice • Bank | 14 Currently Modified Previously ModifiedCarrying Value Weighted-Average ($ in thousands) Payment Deferment (1) Interest Only Payment Total Interest Rate Loan-to- Value (1) Accrued Interest Receivable Carrying Value Accrued Interest Receivable Commercial property $ 0 $ 11,830 $ 11,830 3.59% 45.6% $ 77 $ 356,265 $ 2,510 SBA property 0 1,627 1,627 4.94% 73.8% 27 2,576 29 Commercial term 0 5,506 5,506 3.88% 92 41,379 100 SBA commercial term 0 513 513 5.50% 3 1,341 7 Residential property 349 0 349 3.25% 51.4% 5 37,070 760 Other consumer 0 0 0 0.00% 0 1,116 3 Total $ 349 $ 19,476 $ 19,825 3.82% $ 204 $ 438,196 $ 3,409 0 Summary of loans with modifications related to the COVID-19 pandemic: Summary of modification expiration: (1) Collateral value at origination (2) Payment deferment of both principal and interest As of March 31, 2021 During the Month of ($ in thousands) Apr-21 May-21 Jun-21 Jul-21 Aug-21 Total Commercial property $ 0 $ 0 $ 0 $ 8,984 $ 2,846 $ 11,830 SBA property 1,627 0 0 0 0 1,627 Commercial term 0 1,085 795 3,626 0 5,506 SBA commercial term 513 0 0 0 0 513 Residential property 349 0 0 0 0 349 Total $ 2,489 $ 1,085 $ 795 $ 12,610 $ 2,846 $ 19,825
Loan Modification your Partner • Choice • Bank | 15 Migration of loans with modifications related to the COVID-19 pandemic: From December 31, 2020 to March 31, 2021 ($ in thousands) Dec-20 Early Termination Expired Re- Modification New Modification Modification Type Change Amortization Mar-21 Commercial property Payment deferment (1) $ 9,688 $ 0 (8,983) 8,983 $ 0 (8,983) (705) $ 0 Interest only payment 14,444 0 (13,129) 2,846 0 8,983 (1,314) 11,830 SBA property 4,192 (2,576) 0 0 0 0 11 1,627 Commercial term Payment deferment (1) 2,462 0 (2,461) 2,461 0 (2,461) (1) 0 Interest only payment 3,065 0 0 0 0 2,461 (20) 5,506 SBA commercial term 1,841 (1,338) 0 0 0 0 10 513 Residential property 425 (423) 0 0 349 0 (2) 347 Total $ 36,117 $ (3,914) $ (24,996) $ 14,290 $ 349 $ 0 $ (2,021) $ 19,825 HFI loans $ 1,583,578 $ 1,685,916 SBA PPP loans 135,654 218,709 HFI loans, excluding SBA PPP loans $ 1,447,826 $ 1,467,207 Total modified loans to HFI loans, excluding SBA PPP loans 2.5% 1.4% (1) Payment deferment of both principal and interest
Credit Quality your Partner • Choice • Bank | 16 $1.8 $1.8 $2.8 $4.5 $4.8 $4.0 $4.6 $3.8 0.0 1.0 2.0 3.0 4.0 5.0 6.0 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Non-Performing Assets (“NPAs”) 0.11% 0.11% 0.16% 0.25% 0.24% 0.20% 0.24% 0.19% 0.0 0% 0.0 5% 0.1 0% 0.1 5% 0.2 0% 0.2 5% 0.3 0% Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 NPAs to Total Assets 0.96% 0.94% 0.99% 1.15% 1.30% 1.55% 1.67% 1.51% 0.0 0% 0.2 0% 0.4 0% 0.6 0% 0.8 0% 1.0 0% 1.2 0% 1.4 0% 1.6 0% 1.8 0% 2.0 0% Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Allowance (1) to HFI Loans 1.83% (2) 933% 710% 509% 408% 453% 683% 838% 1746% 0% 200 % 400 % 600 % 800 % 100 0% 120 0% 140 0% 160 0% 180 0% 200 0% Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Allowance (1) to Non-Performing Loans (1) Allowance for Loan Losses (2) Excluding SBA PPP loans ($ in millions) 1.43% (2) 1.70% (2) 1.74% (2)
Loan Concentration your Partner • Choice • Bank | 17 Real Estate Loans – Commercial By Property Type as of March 31, 2021 Total Loans With Modification Related to COVID-19 ($ in thousands) Carrying Value % to Total LTV(1) Carrying Value % to Total % to Property Type Total LTV(1) Industrial $ 202,788 19.1% 50.6% $ 0 Retail (More Than 50%) 183,230 17.3% 50.2% 0 Mixed Use 122,873 11.6% 45.5% 0 Gas Station 77,949 7.3% 54.2% 0 Office 72,548 6.8% 53.7% 2,846 21.1% 3.9% 56.4% Motel / Hotel 71,303 6.7% 51.3% 9,236 68.7% 13.0% 43.0% Apartments 68,302 6.4% 47.4% 0 Medical 60,392 5.7% 54.0% 0 Car Wash 28,403 2.7% 49.8% 0 Golf Course 28,019 2.6% 49.6% 0 Auto (Sales, Repair, & etc.) 23,374 2.2% 50.7% 0 Church 16,609 1.6% 49.6% 0 Spa, Sauna, & other self-care 16,236 1.5% 57.2% 744 5.5% 4.6% 75.4% Condominium (Commercial) 15,711 1.5% 47.8% 0 Construction 13,151 1.2% 61.2% 0 Supermarket 10,329 1.0% 63.6% 0 Other 50,459 4.8% 47.3% 631 4.7% 1.3% 74.7% Total $ 1,061,676 100.0% 50.6% $ 13,457 100.0% 1.3% 49.3% Real Estate Loans – Residential as of March 31, 2021 (1) Collateral value at origination Total Loans With Modification Related to COVID-19 ($ in thousands) Carrying Value LTV(1) FICO Carrying Value % to Total LTV(1) FICO Residential Property $ 190,990 56.3% 755 $ 349 0.2% 51.4% 809
Loan Concentration your Partner • Choice • Bank | 18 Commercial and Industrial Loans – By Industry Type as of March 31, 2021 Total, Excluding SBA PPP Loans Loans with Modification Related to COVID-19 SBA PPP Loans ($ in thousands) Carrying Value % to Total Carrying Value % to Total % to Industry Type Total Carrying Value % to Total General Manufacturing & Wholesale Trade $ 62,845 32.5% $ 0 $ 51,180 23.3% Food Services 33,694 17.4% 843 14.0% 2.5% 73,625 33.7% Retail Trade 29,712 15.4% 15 0.2% 0.1% 17,740 8.1% Professional, Scientific, & Technical Services 15,571 8.1% 0 14,073 6.4% Real Estate Related 14,923 7.7% 0 12,013 5.5% Other Services 9,041 4.7% 4,075 67.8% 45.1% 15,952 7.3% Health Care & Social Assistance 7,413 3.8% 0 6,033 2.8% Entertainment & Recreation 5,997 3.1% 0 2,978 1.4% Finance & Insurance 4,482 2.3% 0 3,472 1.6% Transportation & Warehousing 4,241 2.2% 669 11.1% 15.8% 8,482 3.9% All Other 5,490 2.8% 417 6.9% 7.6% 13,161 6.0% Total $ 193,409 100.0% $ 6,019 100.0% 3.1% $ 218,709 100.0%
Loan Concentration your Partner • Choice • Bank | 19 Geographic Concentration as of March 31, 2021 Real Estate - Commercial Real Estate – Residential Commercial & Industrial, Excluding SBA PPP SBA PPP ($ in thousands) Carrying Value % to Total Carrying Value % to Total Carrying Value % to Total Carrying Value % to Total California $ 893,531 84.2% $ 186,457 97.6% $ 163,161 84.3% $ 169,270 77.2% New Jersey 34,976 3.3% 4,533 2.4% 12,663 6.5% 10,744 4.9% New York 40,377 3.8% 0 4,571 2.4% 10,914 5.0% Washington 32,185 3.0% 0 553 0.3% 1,259 0.6% Texas 17,748 1.7% 0 3,635 1.9% 5,006 2.3% Nevada 12,884 1.2% 0 1,231 0.6% 4,824 2.2% Georgia 3,501 0.3% 0 1,156 0.6% 4,703 2.2% Illinois 2,967 0.3% 0 1,458 0.8% 2,021 0.9% Colorado 4,549 0.4% 0 669 0.3% 143 0.1% Virginia 3,397 0.3% 0 231 0.1% 1,562 0.7% Maryland 1,749 0.2% 0 1,292 0.7% 1,237 0.6% Oregon 2,420 0.2% 0 167 0.1% 774 0.4% Pennsylvania 2,788 0.3% 0 18 0.1% 55 0.1% Other States 8,604 0.8% 0 2,604 1.3% 6,197 2.8% Total $ 1,061,676 100.0% $ 190,990 100.0% $ 193,409 100.0% $ 218,709 100.0%
Credit Quality vs. Peers (1) your Partner • Choice • Bank | 20 1.75% 0.97% 0.74% 0.65% 0.31% 0.27% 0.22% 0.13% 0.09% 0.0 0% 0.2 0% 0.4 0% 0.6 0% 0.8 0% 1.0 0% 1.2 0% 1.4 0% 1.6 0% 1.8 0% 2.0 0% Hanmi Hope Peer Group $1 to $3BN Woori America US Metro CBB PCB Shinhan America Open NPAs / (Total Loans + OREO) (2) 2.30% 2.26% 1.38% 0.54% 0.46% 0.0 0% 0.5 0% 1.0 0% 1.5 0% 2.0 0% 2.5 0% Hanmi Hope CBB Open PCB Classified Assets to Total Assets (3) (1) Korean-American banks operating in Southern California (2) Source: UBPR (3) Source: Press release concerning financial performance March 31, 2021 Peer Data as of December 31, 2020 March 31, 2021 Peer Data as of December 31, 2020
Deposit Overview your Partner • Choice • Bank | 21 $1,081 $1,124 $1,103 $1,097 $1,126 $1,305 $1,298 $1,246 $1,422 75% 78% 77% 74% 76% 79% 79% 78% 81% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 500 600 700 800 900 1,00 0 1,10 0 1,20 0 1,30 0 1,40 0 1,50 0 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Core Deposits (1) Core Deposits % to Total Deposits Noninterest DDA 41% Retail Other Interest- Bearing 24% Retail Time Deposits 25% Internet Time Deposits 1% State and Brokered Deposits 9% Deposit Composition (1) Core Deposits are not presented in accordance with U.S. generally accepted accounting principles (“GAAP”). See “Non-GAAP measure” for a reconciliation of this measure to its most comparable GAAP measure. $340 $353 $360 $394 $551 $576 $538 $716 $331 $332 $332 $364 $369 $378 $384 $412 $658 $624 $605 $539 $518 $479 $468 $443 $5 $37 $32 $25 $18 $118 $123 $182 $175 $172 $182 $180 $165 $1,447 $1,432 $1,479 $1,477 $1,647 $1,647 $1,595 $1,754 - 200 400 600 800 1,00 0 1,20 0 1,40 0 1,60 0 1,80 0 2,00 0 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Deposit Trend Noninterest DDA Retail Other Interest-Bearing Retail Time Deposits Internet Time Deposits State and Brokered Deposits YoY +18.7% ($ in millions) ($ in millions) March 31, 2021
Maturity Schedule your Partner • Choice • Bank | 22 Time Deposits as of March 31, 2021 Retail Time Deposits Internet Time Deposits State and Brokered Time Deposits Total ($ in thousands) Amount WA Rate Amount WA Rate Amount WA Rate Amount WA Rate Less Than 3 Month $ 103,509 0.77% $ 17,616 0.73% $ 100,000 0.11% $ 221,124 0.47% 3 to 6 Month 105,812 0.63% 0 0 105,812 0.63% 6 to 9 Month 83,936 0.51% 0 15,000 0.05% 98,936 0.44% 9 to 12 Month 138,082 0.51% 0 50,000 0.05% 188,082 0.39% More than 12 Month 11,738 1.87% 0 0 11,738 1.87% Total $ 443,077 0.63% $ 24,902 0.73% $ 165,000 0.08% $ 625,693 0.49% FHLB Advances as of March 31, 2021 FHLB Advances ($ in thousands) Amount WA Rate Less Than 3 Month $ 30,000 0.32% 3 to 6 Month 0 6 to 9 Month 0 9 to 12 Month 0 More than 12 Month 10,000 2.07% Total $ 40,000 0.76%
Profitability your Partner • Choice • Bank | 23 $6.6 $6.8 $4.2 $3.6 $3.4 $3.4 $5.8 $8.6 $9.8 $9.6 $10.0 $8.0 $8.6 $9.2 $10.4 $11.0 (1 .0) 1.0 3.0 5.0 7.0 9.0 11.0 13.0 15.0 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 Net Income PTPP 1.52% 1.55% 0.96% 0.81% 0.69% 0.69% 1.19% 1.75% 2.25% 2.18% 2.32% 1.82% 1.76% 1.85% 2.13% 2.25% 0.0 0% 0.5 0% 1.0 0% 1.5 0% 2.0 0% 2.5 0% 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 ROAA Adjusted ROAA $0.40 $0.42 $0.26 $0.23 $0.22 $0.22 $0.38 $0.55 $0.60 $0.59 $0.63 $0.51 $0.56 $0.60 $0.67 $0.71 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 Diluted EPS Adjusted Diluted EPS 12.01% 12.02% 7.25% 6.35% 5.98% 5.98% 9.92% 14.66% 17.76% 16.93% 17.44% 14.28% 15.25% 16.02% 17.79% 18.85% 0.0 0% 2.0 0% 4.0 0% 6.0 0% 8.0 0% 10. 00% 12. 00% 14. 00% 16. 00% 18. 00% 20. 00% 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 ROAE Adjusted ROAE ($ in millions) Net Income & PTPP(1) Income Diluted EPS & Adjusted Diluted EPS(1) ROAA & Adjusted ROAA(1) ROAE & Adjusted ROAE(1) (1) PTPP (Pre-Tax Pre-Provision) income, and adjusted EPS, ROAA and ROAE for PTPP are not presented in accordance with GAAP. See “Non-GAAP measure” for reconciliations of these measures to their most comparable GAAP measure.
Noninterest Income your Partner • Choice • Bank | 24 $29.2 $22.2 $27.1 $11.7 $27.1 $8.6 $42.4 $10.9 9.1% 9.3% 7.6% 9.0% 7.5% 10.7% 10.5% 12.0% 6.5% 6.8% 5.3% 6.0% 5.3% 8.0% 7.5% 10.9% -20.0% -15.0% -10.0% -5.0% 0.0 % 5.0 % 10. 0% -5.00 5.0 0 15. 00 25. 00 35. 00 45. 00 55. 00 65. 00 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 SBA Loan Sale Trend SBA Loan Sold $ Premium % Gain % ($ in millions) ($ in millions) $35.1 $30.6 $37.9 $30.0 $10.7 $40.1 $25.3 $19.2 0.0 0 5.0 0 10. 00 15. 00 20. 00 25. 00 30. 00 35. 00 40. 00 45. 00 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 SBA 7(a) Loan Production (1) $1.2 $1.3 $1.4 $1.3 $1.4 $1.5 $1.0 $1.5 $1.9 $1.5 $1.4 $0.7 $1.5 $0.8 $3.5 $1.3 62% 55% 62% 36% 51% 36% 77% 46% 0% 10% 20% 30% 40% 50% 60% 70% 80% 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 Noninterest Income Trend Gain on Sale of AFS Securities Gain on Sale of Loans All Other Income Gain % to Total (1) Total commitment basis ($ in millions) $0.8
Noninterest Expense your Partner • Choice • Bank | 25 $6.6 $6.9 $6.0 $6.6 $5.8 $6.4 $7.4 $6.2 $4.4 $3.9 $4.3 $4.0 $3.9 $3.5 $4.2 $3.5 2.52% 2.48% 2.40% 2.39% 1.98% 1.99% 2.38% 1.95% 0.0 0% 0.5 0% 1.0 0% 1.5 0% 2.0 0% 2.5 0% 3.0 0% - 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 Noninterest Expense Trend Compensation All Other Expenses % to Average Total Assets 53.0% 53.0% 50.7% 56.8% 53.0% 51.7% 52.7% 46.8% 62.5% 61.9% 62.1% 64.1% 61.2% 60.4% 60.4% 0.00 % 10.0 0% 20.0 0% 30.0 0% 40.0 0% 50.0 0% 60.0 0% 70.0 0% 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 Efficiency Ratio (2) PCB Peer Average 248 249 255 259 251 252 246 246 235 240 245 250 255 260 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Number of FTE(3) Employees (1) (1) Annualized (2) Source: Peer $1 to $3 billion per UBPR (3) Full-time equivalent ($ in millions)
Net Interest Margin your Partner • Choice • Bank | 26 6.39% 6.22% 5.85% 5.64% 4.73% 4.81% 4.73% 4.63% 4.17% 4.11% 3.96% 3.85% 3.22% 3.43% 3.64% 3.70% 2.17% 2.13% 1.99% 1.77% 1.17% 0.92% 0.73% 0.52% 1.69% 1.64% 1.53% 1.34% 0.85% 0.63% 0.49% 0.34% 0.00 % 1.00 % 2.00 % 3.00 % 4.00 % 5.00 % 6.00 % 7.00 % 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 Yield & Cost (1) Loan Yield NIM Cost of Int-Bearing Liab Cost of Funds (1) Annualized
Capital Ratios & BV Per Share your Partner • Choice • Bank | 27 11.81% 15.62% 15.62% 16.88% 5.00% 6.50% 8.00% 10.00% 0.00 % 2.00 % 4.00 % 6.00 % 8.00 % 10.0 0% 12.0 0% 14.0 0% 16.0 0% 18.0 0% Tier 1 Leverage CET 1 Capital Tier 1 Capital Total Capital Bank Regulatory Capital Ratios Actual Minimum Requirement For Well-Capitalized $13.98 $14.30 $14.44 $14.58 $14.78 $14.91 $15.19 $15.53 13.0 0 13.5 0 14.0 0 14.5 0 15.0 0 15.5 0 16.0 0 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 BV Per Share March 31, 2021 12.94% 13.22% 12.99% 12.45% 11.24% 11.35% 12.16% 11.72% 10.0 0% 10.5 0% 11.0 0% 11.5 0% 12.0 0% 12.5 0% 13.0 0% 13.5 0% Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Total Equity to Total Assets (1) (1) The Company did not have any intangible equity components for the presented periods.
Non-GAAP Measures your Partner • Choice • Bank | 28 Core Deposits Core Deposits are a non-GAAP measure that we use to measure the portion of our total deposits that are thought to be more stable, lower cost and reprice less frequently on average in a rising rate environment. We calculate core deposits as total deposits less time deposits greater than $250,000 and brokered deposits. Management tracks its core deposits because management believes it is a useful measure to help assess the Company’s deposit base and, among other things, potential volatility therein. Pre-Tax Pre-Provision Income, and Adjusted ROAA, ROAE and Diluted EPS for PTPP PTPP income, and adjusted ROAA, ROAE and Diluted EPS are non-GAAP measures that we use to measure the Company’s performance and believe these presentations provide useful supplemental information, and a clearer understanding of the Company’s performance. We calculated PTPP income as net income excluding income tax provision and provision for loan losses. Management believes the non-GAAP measures enhance investors’ understanding of the Company’s business and performance. These measures are also useful in understanding performance trends and facilitate comparisons with the performance of other financial institutions. The limitations associated with operating measures are the risk that persons might disagree as to the appropriateness of items comprising these measures and that different companies might calculate these measures differently
Non-GAAP Measures your Partner • Choice • Bank | 29 The following table reconciles core deposits to total deposits to its most comparable GAAP measure: ($ in thousands) 06/30/19 09/30/19 12/31/19 03/31/20 06/30/20 09/30/20 12/31/20 03/31/21 Total Deposits $ 1,446,526 $ 1,432,262 $ 1,479,307 $ 1,477,442 $ 1,646,930 $ 1,647,107 $ 1,594,851 $ 1,753,772 Less: Time Deposits Greater Than $250K (284,780) (296,785) (289,726) (266,970) (260,180) (257,208) (268,683) (266,845) Less: Brokered Deposits (27,510) (32,503) (92,393) (84,506) (82,010) (92,001) (80,002) (65,004) Core Deposits $ 1,124,236 $ 1,102,974 $ 1,097,188 $ 1,125,966 $ 1,304,740 $ 1,297,898 $ 1,246,166 $ 1,421,923 Core Deposits to Total Deposits 77.7% 77.0% 74.2% 76.2% 79.2% 78.8% 78.1% 81.1%
Non-GAAP Measures your Partner • Choice • Bank | 30 The following table reconciles PTPP income, and adjusted ROAA, ROAE and diluted EPS for PTPP to their most comparable GAAP measures: (1) Annualized. ($ in thousands) 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 Net Income $ 6,601 $ 6,785 $ 4,158 $ 3,572 $ 3,367 $ 3,449 $ 5,787 $ 8,560 Add: Provision (rever for Loan Losses 394 (102) 4,030 2,896 3,855 4,326 2,142 (1,147) Add: Income Tax Provision 2,767 2,871 1,811 1,557 1,363 1,464 2,452 3,594 PTPP Income (Non-GAAP) $ 9,762 $ 9,554 $ 9,999 $ 8,025 $ 8,585 $ 9,239 $ 10,381 $ 11,007 Average Total Assets $ 1,742,584 $ 1,734,957 $ 1,710,370 $ 1,770,785 $ 1,956,464 $ 1,991,614 $ 1,939,326 $ 1,987,217 ROAA (1) 1.52% 1.55% 0.96% 0.81% 0.69% 0.69% 1.19% 1.75% Adjusted ROAA (Non-GAAP)(1) 2.25% 2.18% 2.32% 1.82% 1.76% 1.85% 2.13% 2.25% Average Total Shareholders' Equity $ 220,486 $ 223,932 $ 227,472 $ 226,086 $ 226,454 $ 229,463 $ 232,156 $ 236,790 ROAE (1) 12.01% 12.02% 7.25% 6.35% 5.98% 5.98% 9.92% 14.66% Adjusted ROAE (Non-GAAP)(1) 17.76% 16.93% 17.44% 14.28% 15.25% 16.02% 17.79% 18.85% Net Income $ 6,601 $ 6,785 $ 4,158 $ 3,572 $ 3,367 $ 3,449 $ 5,787 $ 8,560 Less: Income Allocated to Participating Securities 0 0 (10) (9) (8) (8) (11) (33) Net Income Allocated to Common Stock 6,601 6,785 4,148 3,563 3,359 3,441 5,776 8,527 Add: Provision for Loan Losses 394 (102) 4,030 2,896 3,855 4,326 2,142 (1,147) Add: Income Tax Provision 2,767 2,871 1,811 1,557 1,363 1,464 2,452 3,594 PTPP Income Allocated to Common Stock $ 9,762 $ 9,554 $ 9,989 $ 8,016 $ 8,577 $ 9,231 $ 10,370 $ 10,974 WA common shares outstanding, diluted 16,330,039 16,099,598 15,948,793 15,700,144 15,373,655 15,377,531 15,392,355 15,533,608 Diluted EPS $ 0.40 $ 0.42 $ 0.26 $ 0.23 $ 0.22 $ 0.22 $ 0.38 $ 0.55 Adjusted Diluted EPS (Non-GAAP) $ 0.60 $ 0.59 $ 0.63 $ 0.51 $ 0.56 $ 0.60 $ 0.67 $ 0.71 (a) (b) (c) (a)/(c) (b)/(c) (d) (a)/(d) (b)/(d) (e) (f) (g) (e)/(g) (f)/(g)