PCB Bancorp Reports Earnings of $3.4 million for Q2 2020
Los Angeles, California - July 23, 2020 - PCB Bancorp (the “Company”) (NASDAQ: PCB), the holding company of Pacific City Bank (the “Bank”), today reported net income of $3.4 million, or $0.22 per diluted common share for the second quarter of 2020, compared with $3.6 million, or $0.23 per diluted common share, for the previous quarter and $6.6 million, or $0.40 per diluted common share, for the year-ago quarter.
Q2 2020 Financial Highlights
•Net income totaled $3.4 million or $0.22 per diluted common share;
◦The Company recorded a provision for loan losses of $3.9 million primarily due to an increase in the economic uncertainty due to the COVID-19 pandemic.
◦Allowance for loan losses to total loans held-for-investment ratio was 1.30% at June 30, 2020 compared with 1.15% at March 31, 2020 and 0.96% at June 30, 2019. Excluding SBA Paycheck Protection Program (“PPP”) loans, allowance for loan losses to total loans held-for-investment ratio was 1.43% at June 30, 2020.
◦Net interest margin was 3.22% for the second quarter of 2020 compared with 3.85% for the previous quarter and 4.17% for the year-ago quarter.
•Total assets were $2.02 billion at June 30, 2020, an increase of $220.8 million, or 12.3%, from $1.80 billion at March 31, 2020, an increase of $274.4 million, or 15.7%, from $1.75 billion at December 31, 2019, and an increase of $294.3 million, or 17.0%, from $1.73 billion at June 30, 2019;
•Loans held-for-investment, net of deferred costs (fees), were $1.55 billion at June 30, 2020, an increase of $102.6 million, or 7.1%, from $1.45 billion at March 31, 2020, an increase of $102.8 million, or 7.1%, from $1.45 billion at December 31, 2019, and an increase of $158.0 million, or 11.3%, from $1.40 billion at June 30, 2019;
◦PPP loans totaled $133.7 million at June 30, 2020.
◦Loans with modifications related to COVID-19 totaled $484.0 million at June 30, 2020.
•Total deposits were $1.65 billion at June 30, 2020, an increase of $169.5 million, or 11.5%, from $1.48 billion at March 31, 2020, an increase of $167.6 million, or 11.3%, from $1.48 billion at December 31, 2019, and an increase of $200.4 million, or 13.9%, from $1.45 billion at June 30, 2019; and
•The Company declared and paid a cash dividend of $0.10 per common share for the second quarter of 2020 compared with $0.10 per common share for the first quarter of 2020 and $0.06 per common share for the second quarter of 2019.
“We earned $3.4 million of net income in the second quarter despite building $3.9 million in loan loss provision related to the economic impact of COVID-19 pandemic,” commented Henry Kim, President and Chief Executive Officer. “During the quarter, we have maintained robust capital ratios and plenty of liquidity by the increase in our deposit balance by $169.5 million, or 11.5%, primarily due to the funding of PPP loans.”
“We continue to maintain procedures to promote the safety of our employees and customers. We remain steadfast in our commitment to assist the communities we serve by helping them through the difficult financial challenges from the ongoing COVID-19 crisis by keeping the dialogue open and extending 1,551 PPP loans totaling $133.7 million to our customers.”
Financial Highlights (Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| ($ in thousands, except per share data) | | Three Months Ended | | | | | | | | | | Six Months Ended | | | | |
| | 6/30/2020 | | 3/31/2020 | | % Change | | 6/30/2019 | | % Change | | 6/30/2020 | | 6/30/2019 | | % Change |
| Net income | | $ | 3,367 | | | $ | 3,572 | | | (5.7) | % | | $ | 6,601 | | | (49.0) | % | | $ | 6,939 | | | $ | 13,165 | | | (47.3) | % |
| Diluted earnings per common share | | $ | 0.22 | | | $ | 0.23 | | | (4.3) | % | | $ | 0.40 | | | (45.0) | % | | $ | 0.45 | | | $ | 0.81 | | | (44.4) | % |
| | | | | | | | | | | | | | | | |
| Net interest income | | $ | 15,363 | | | $ | 16,566 | | | (7.3) | % | | $ | 17,692 | | | (13.2) | % | | $ | 31,929 | | | $ | 34,845 | | | (8.4) | % |
| Provision for loan losses | | 3,855 | | | 2,896 | | | 33.1 | % | | 394 | | | 878.4 | % | | 6,751 | | | 309 | | | 2084.8 | % |
| Noninterest income | | 2,918 | | | 2,026 | | | 44.0 | % | | 3,054 | | | (4.5) | % | | 4,944 | | | 5,463 | | | (9.5) | % |
| Noninterest expense | | 9,696 | | | 10,567 | | | (8.2) | % | | 10,984 | | | (11.7) | % | | 20,263 | | | 21,273 | | | (4.7) | % |
| | | | | | | | | | | | | | | | |
Return on average assets (1) | | 0.69 | % | | 0.81 | % | | | | 1.52 | % | | | | 0.75 | % | | 1.55 | % | | |
Return on average shareholders’ equity (1), (2) | | 5.98 | % | | 6.35 | % | | | | 12.01 | % | | | | 6.17 | % | | 12.22 | % | | |
Net interest margin (1) | | 3.22 | % | | 3.85 | % | | | | 4.17 | % | | | | 3.52 | % | | 4.19 | % | | |
Efficiency ratio (3) | | 53.04 | % | | 56.84 | % | | | | 52.95 | % | | | | 54.95 | % | | 52.78 | % | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| ($ in thousands, except per share data) | | 6/30/2020 | | 3/31/2020 | | % Change | | 12/31/2019 | | % Change | | 6/30/2019 | | % Change |
| Total assets | | $ | 2,020,777 | | | $ | 1,799,937 | | | 12.3 | % | | $ | 1,746,328 | | | 15.7 | % | | $ | 1,726,486 | | | 17.0 | % |
| Net loans held-for-investment | | 1,533,341 | | | 1,434,364 | | | 6.9 | % | | 1,436,451 | | | 6.7 | % | | 1,382,229 | | | 10.9 | % |
| Total deposits | | 1,646,930 | | | 1,477,442 | | | 11.5 | % | | 1,479,307 | | | 11.3 | % | | 1,446,526 | | | 13.9 | % |
Book value per common share (2), (4) | | $ | 14.78 | | | $ | 14.58 | | | 1.4 | % | | $ | 14.44 | | | 2.4 | % | | $ | 13.98 | | | 5.7 | % |
| Tier 1 leverage ratio (consolidated) | | 11.49 | % | | 12.57 | % | | | | 13.23 | % | | | | 12.74 | % | | |
Total shareholders’ equity to total assets (2) | | 11.24 | % | | 12.45 | % | | | | 12.99 | % | | | | 12.94 | % | | |
| | | | | | | | | | | | | | |
(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. Since the launch of PPP, the Company has extended 1,551 PPP loans totaling $133.7 million as of June 30, 2020. The Company also provided modifications, including interest only payments or payment deferrals, to 467 loan customers for the aggregated carrying value of $484.0 million as of June 30, 2020 that are adversely affected by the COVID-19 pandemic.
The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) provided for relief on existing and new SBA loans disbursed prior to September 27, 2020 with the SBA paying six months of principal, interest, and any associated fees on these loans. As of June 30, 2020, the Company had 938 loans for the aggregated carrying value of $140.9 million that are qualified for this relief program.
In addition, the Company has been monitoring its liquidity and capital closely. As of June 30, 2020, the Company maintained $307.6 million, or 15.2% of total assets, of cash and cash equivalents and $425.3 million, or 21.0% of total assets, of available borrowing capacity. All regulatory capital ratios were also well above the regulatory well capitalized requirements as of June 30, 2020.
At this time, the Company cannot estimate the long term impact of the COVID-19 pandemic, but these conditions impacted and are expected to impact its business, results of operations, and financial condition negatively.
Result of Operations (Unaudited)
Net Interest Income and Net Interest Margin
The following table presents the components of net interest income for the periods indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | | | | | | | | | Six Months Ended | | | | |
| ($ in thousands) | | 6/30/2020 | | 3/31/2020 | | % Change | | 6/30/2019 | | % Change | | 6/30/2020 | | 6/30/2019 | | % Change |
| Interest income/expense on: | | | | | | | | | | | | | | | | |
| Loans | | $ | 18,273 | | | $ | 20,406 | | | (10.5) | % | | $ | 21,969 | | | (16.8) | % | | $ | 38,679 | | | $ | 42,903 | | | (9.8) | % |
| Investment securities | | 539 | | | 644 | | | (16.3) | % | | 1,062 | | | (49.2) | % | | 1,183 | | | 2,155 | | | (45.1) | % |
| Other interest-earning assets | | 161 | | | 610 | | | (73.6) | % | | 999 | | | (83.9) | % | | 771 | | | 1,924 | | | (59.9) | % |
| Total interest-earning assets | | 18,973 | | | 21,660 | | | (12.4) | % | | 24,030 | | | (21.0) | % | | 40,633 | | | 46,982 | | | (13.5) | % |
| Interest-bearing deposits | | 3,409 | | | 4,992 | | | (31.7) | % | | 6,200 | | | (45.0) | % | | 8,401 | | | 11,865 | | | (29.2) | % |
| Borrowings | | 201 | | | 102 | | | 97.1 | % | | 138 | | | 45.7 | % | | 303 | | | 272 | | | 11.4 | % |
| Total interest-bearing liabilities | | 3,610 | | | 5,094 | | | (29.1) | % | | 6,338 | | | (43.0) | % | | 8,704 | | | 12,137 | | | (28.3) | % |
| Net interest income | | $ | 15,363 | | | $ | 16,566 | | | (7.3) | % | | $ | 17,692 | | | (13.2) | % | | $ | 31,929 | | | $ | 34,845 | | | (8.4) | % |
| Average balance of: | | | | | | | | | | | | | | | | |
| Loans | | $ | 1,554,011 | | | $ | 1,454,727 | | | 6.8 | % | | $ | 1,378,910 | | | 12.7 | % | | $ | 1,504,369 | | | $ | 1,360,641 | | | 10.6 | % |
| Investment securities | | 120,336 | | | 118,502 | | | 1.5 | % | | 167,991 | | | (28.4) | % | | 119,419 | | | 167,727 | | | (28.8) | % |
| Other interest-earning assets | | 245,447 | | | 158,793 | | | 54.6 | % | | 154,661 | | | 58.7 | % | | 202,120 | | | 147,601 | | | 36.9 | % |
| Total interest-earning assets | | $ | 1,919,794 | | | $ | 1,732,022 | | | 10.8 | % | | $ | 1,701,562 | | | 12.8 | % | | $ | 1,825,908 | | | $ | 1,675,969 | | | 8.9 | % |
| Interest-bearing deposits | | $ | 1,109,307 | | | $ | 1,129,699 | | | (1.8) | % | | $ | 1,143,678 | | | (3.0) | % | | $ | 1,119,503 | | | $ | 1,129,741 | | | (0.9) | % |
| Borrowings | | 130,330 | | | 25,117 | | | 418.9 | % | | 30,166 | | | 332.0 | % | | 77,723 | | | 30,120 | | | 158.0 | % |
| Total interest-bearing liabilities | | $ | 1,239,637 | | | $ | 1,154,816 | | | 7.3 | % | | $ | 1,173,844 | | | 5.6 | % | | $ | 1,197,226 | | | $ | 1,159,861 | | | 3.2 | % |
Total funding (1) | | $ | 1,713,812 | | | $ | 1,524,334 | | | 12.4 | % | | $ | 1,500,657 | | | 14.2 | % | | $ | 1,619,073 | | | $ | 1,477,354 | | | 9.6 | % |
| Annualized average yield/cost of: | | | | | | | | | | | | | | | | |
| Loans | | 4.73 | % | | 5.64 | % | | | | 6.39 | % | | | | 5.17 | % | | 6.36 | % | | |
| Investment securities | | 1.80 | % | | 2.19 | % | | | | 2.54 | % | | | | 1.99 | % | | 2.59 | % | | |
| Other interest-earning assets | | 0.26 | % | | 1.55 | % | | | | 2.59 | % | | | | 0.77 | % | | 2.63 | % | | |
| Total interest-earning assets | | 3.97 | % | | 5.03 | % | | | | 5.66 | % | | | | 4.48 | % | | 5.65 | % | | |
| Interest-bearing deposits | | 1.24 | % | | 1.78 | % | | | | 2.17 | % | | | | 1.51 | % | | 2.12 | % | | |
| Borrowings | | 0.62 | % | | 1.63 | % | | | | 1.83 | % | | | | 0.78 | % | | 1.82 | % | | |
| Total interest-bearing liabilities | | 1.17 | % | | 1.77 | % | | | | 2.17 | % | | | | 1.46 | % | | 2.11 | % | | |
| Net interest margin | | 3.22 | % | | 3.85 | % | | | | 4.17 | % | | | | 3.52 | % | | 4.19 | % | | |
Cost of total funding (1) | | 0.85 | % | | 1.34 | % | | | | 1.69 | % | | | | 1.08 | % | | 1.66 | % | | |
| Supplementary information | | | | | | | | | | | | | | | | |
| Net accretion of discount on loans included in interest on loans | | $ | 530 | | | $ | 1,028 | | | (48.4) | % | | $ | 1,194 | | | (55.6) | % | | $ | 1,558 | | | $ | 2,052 | | | (24.1) | % |
| | | | | | | | | | | | | | | | |
(1)Total funding is the sum of interest-bearing liabilities and noninterest-bearing deposits. The cost of total funding is calculated as annualized total interest expense divided by average total funding.
Loans. The increase in average balance for the current quarter compared with the previous quarter was primarily due to the PPP loans production. The decreases in average yield for the current quarter and year were primarily due to the lower market rates, PPP loans, reset of interest rates on SBA loans, and a decrease in net accretion of discount. The Wall Street Journal prime rate decreased to 3.25% during the previous quarter compared to 4.75% at December 31, 2019 and 5.50% at June 30, 2019. On PPP loans, the Company expects to earn an annualized yield of approximately 2.7% assuming the expected term of 24 months and no prepayments. SBA loans, excluding PPP loans, had a weighted-average contractual rate of 4.67% and 6.17%, respectively, at June 30, 2020 and March 31, 2020. The decreases in net accretion of discount for the current quarter and year were primarily due to a decrease in prepayment speed on SBA loans.
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:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 6/30/2020 | | | | 3/31/2020 | | | | 12/31/2019 | | | | 6/30/2019 | | |
| | % to Total Loans | | Weighted-Average Contractual Rate | | % to Total Loans | | Weighted-Average Contractual Rate | | % to Total Loans | | Weighted-Average Contractual Rate | | % to Total Loans | | Weighted-Average Contractual Rate |
| Fixed rate loans | | 38.4 | % | | 4.18 | % | | 30.2 | % | | 5.19 | % | | 28.2 | % | | 5.29 | % | | 21.2 | % | | 5.40 | % |
| Hybrid rate loans | | 13.3 | % | | 4.99 | % | | 14.6 | % | | 5.01 | % | | 15.2 | % | | 5.03 | % | | 16.6 | % | | 5.03 | % |
| Variable rate loans | | 48.3 | % | | 4.11 | % | | 55.2 | % | | 4.41 | % | | 56.6 | % | | 5.51 | % | | 62.2 | % | | 6.29 | % |
| | | | | | | | | | | | | | | | |
Investment Securities. The decrease in average yield for the current quarter compared with the previous quarter was primarily due to new investment securities purchased under the lower market rates. The decreases in average yield for the current quarter and year compared with the same periods of 2019 were primarily due to new investment securities purchased, as well as sales of securities available-for-sale of $32.8 million with a weighted-average book yield of 3.02% during the forth quarter of 2019. During the current quarter and year, and past 12-month period, the Company purchased investment securities of $16.9 million, $24.4 million and $30.1 million, respectively.
Other Interest-Earning Assets. The decreases in average yield for the current quarter and year were primarily due to the lower market rates. The average balance for the current quarter increased primarily due to increases in deposits and other borrowings during the current quarter as the Company maintains most of its cash at the Federal Reserve Bank account. See the balance change discussion for the current quarter in “Deposits” under the “Balance Sheet” discussion.
Interest-Bearing Deposits. The decreases in average cost for the current quarter and year were primarily due to the continuing decreases in market rates.
Borrowings. The Company maintained a higher balance of Federal Home Loan Bank (“FHLB”) advances during the current quarter as a part of the Company’s liquidity management. At June 30, 2020, the Company had a total outstanding FHLB advances of $130.0 million with a weighted-average rate of 0.51%.
Provision for Loan Losses
Provision for loan losses was $3.9 million for the current quarter compared with $2.9 million for the previous quarter and $394 thousand for the year-ago quarter. For the six months ended June 30, 2020 and 2019, provision for loan losses was $6.8 million and $309 thousand, respectively. The provision was primarily driven by the increase in risks associated with economic and business conditions as a result of the COVID-19 pandemic, which required an additional provision for loan losses of $4.2 million and $6.8 million, respectively, for the current quarter and year. The Company recorded net charge-offs of $281 thousand for the current quarter compared with $602 thousand for the previous quarter and $203 thousand for the year-ago quarter. For the six months ended June 30, 2020 and 2019, the Company recorded net charge-offs of $883 thousand and $148 thousand, respectively. Allowance for loan losses to total loans held-for-investment ratio was 1.30% at June 30, 2020, 1.15% at March 31, 2020, 0.99% at December 31, 2019 and 0.96% at June 30, 2019. Excluding PPP loans, allowance for loan losses to total loans held-for-investment ratio was 1.43% at June 30, 2020.
Noninterest Income
The following table presents the components of noninterest income for the periods indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | | | | | | | | | Six Months Ended | | | | |
| ($ in thousands) | | 6/30/2020 | | 3/31/2020 | | % Change | | 6/30/2019 | | % Change | | 6/30/2020 | | 6/30/2019 | | % Change |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| Gain on sale of loans | | $ | 1,498 | | | $ | 725 | | | 106.6 | % | | $ | 1,891 | | | (20.8) | % | | $ | 2,223 | | | $ | 3,011 | | | (26.2) | % |
| | | | | | | | | | | | | | | | |
| Service charges and fees on deposits | | 275 | | | 390 | | | (29.5) | % | | 368 | | | (25.3) | % | | 665 | | | 732 | | | (9.2) | % |
| Loan servicing income | | 902 | | | 554 | | | 62.8 | % | | 492 | | | 83.3 | % | | 1,456 | | | 1,123 | | | 29.7 | % |
| Other income | | 243 | | | 357 | | | (31.9) | % | | 303 | | | (19.8) | % | | 600 | | | 597 | | | 0.5 | % |
| Total noninterest income | | $ | 2,918 | | | $ | 2,026 | | | 44.0 | % | | $ | 3,054 | | | (4.5) | % | | $ | 4,944 | | | $ | 5,463 | | | (9.5) | % |
| | | | | | | | | | | | | | | | |
Gain on Sale of Loans. The following table presents information on gain on sale of loans for the periods indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | | | | | | | | | Six Months Ended | | | | |
| ($ in thousands) | | 6/30/2020 | | 3/31/2020 | | % Change | | 6/30/2019 | | % Change | | 6/30/2020 | | 6/30/2019 | | % Change |
| Gain on sale of SBA loans | | | | | | | | | | | | | | | | |
| Sold loan balance | | $ | 27,066 | | | $ | 11,715 | | | 131.0 | % | | $ | 29,168 | | | (7.2) | % | | $ | 38,781 | | | $ | 50,351 | | | (23.0) | % |
| Premium received | | 2,042 | | | 1,056 | | | 93.4 | % | | 2,665 | | | (23.4) | % | | 3,098 | | | 4,227 | | | (26.7) | % |
| Gain recognized | | 1,448 | | | 704 | | | 105.7 | % | | 1,884 | | | (23.1) | % | | 2,152 | | | 2,988 | | | (28.0) | % |
| Gain on sale of residential property loans | | | | | | | | | | | | | | | | |
| Sold loan balance | | $ | 6,118 | | | $ | 2,079 | | | 194.3 | % | | $ | 375 | | | 1,531.5 | % | | $ | 8,197 | | | $ | 2,771 | | | 195.8 | % |
| Gain recognized | | 50 | | | 21 | | | 138.1 | % | | 7 | | | 614.3 | % | | 71 | | | 23 | | | 208.7 | % |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Loan Servicing Income. The Company services SBA loans and certain residential property loans that are sold to the secondary market. The increases were primarily due to a decrease in servicing asset amortization from a lower prepayment speed. The following table presents information on loan servicing income for the periods indicated.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | | | | | | | | | Six Months Ended | | | | |
| ($ in thousands) | | 6/30/2020 | | 3/31/2020 | | % Change | | 6/30/2019 | | % Change | | 6/30/2020 | | 6/30/2019 | | % Change |
| Loan servicing income: | | | | | | | | | | | | | | | | |
| Servicing income received | | $ | 1,294 | | | $ | 1,158 | | | 11.7 | % | | $ | 1,190 | | | 8.7 | % | | $ | 2,452 | | | $ | 2,337 | | | 4.9 | % |
| Servicing assets amortization | | (392) | | | (604) | | | (35.1) | % | | (698) | | | (43.8) | % | | (996) | | | (1,214) | | | (18.0) | % |
| Loan servicing income | | $ | 902 | | | $ | 554 | | | 62.8 | % | | $ | 492 | | | 83.3 | % | | $ | 1,456 | | | $ | 1,123 | | | 29.7 | % |
| Underlying loans at end of period | | $ | 494,000 | | | $ | 478,748 | | | 3.2 | % | | $ | 502,124 | | | (1.6) | % | | $ | 494,000 | | | $ | 502,124 | | | (1.6) | % |
| | | | | | | | | | | | | | | | |
Noninterest Expense
The following table presents the components of noninterest expense for the periods indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | | | | | | | | | Six Months Ended | | | | |
| ($ in thousands) | | 6/30/2020 | | 3/31/2020 | | % Change | | 6/30/2019 | | % Change | | 6/30/2020 | | 6/30/2019 | | % Change |
| Salaries and employee benefits | | $ | 5,761 | | | $ | 6,551 | | | (12.1) | % | | $ | 6,600 | | | (12.7) | % | | $ | 12,312 | | | $ | 13,222 | | | (6.9) | % |
| Occupancy and equipment | | 1,400 | | | 1,380 | | | 1.4 | % | | 1,407 | | | (0.5) | % | | 2,780 | | | 2,720 | | | 2.2 | % |
| Professional fees | | 509 | | | 797 | | | (36.1) | % | | 686 | | | (25.8) | % | | 1,306 | | | 1,444 | | | (9.6) | % |
| Marketing and business promotion | | 548 | | | 179 | | | 206.1 | % | | 529 | | | 3.6 | % | | 727 | | | 757 | | | (4.0) | % |
| Data processing | | 366 | | | 358 | | | 2.2 | % | | 338 | | | 8.3 | % | | 724 | | | 656 | | | 10.4 | % |
| Director fees and expenses | | 107 | | | 221 | | | (51.6) | % | | 185 | | | (42.2) | % | | 328 | | | 374 | | | (12.3) | % |
| Regulatory assessments | | 242 | | | 219 | | | 10.5 | % | | 309 | | | (21.7) | % | | 461 | | | 425 | | | 8.5 | % |
| Other expenses | | 763 | | | 862 | | | (11.5) | % | | 930 | | | (18.0) | % | | 1,625 | | | 1,675 | | | (3.0) | % |
| Total noninterest expense | | $ | 9,696 | | | $ | 10,567 | | | (8.2) | % | | $ | 10,984 | | | (11.7) | % | | $ | 20,263 | | | $ | 21,273 | | | (4.7) | % |
| | | | | | | | | | | | | | | | |
Salaries and Employee Benefits. The decrease for the current quarter compared with the previous quarter was primarily due to an increase in direct loan origination cost, which defers the recognition of salaries and benefits expense. PPP loan production incurred direct loan origination cost of approximately $1.1 million. The decreases for the current quarter and year compared with the same periods of 2019 were primarily due to the increase in direct loan origination cost and a decrease in bonus accrual, partially offset by increases in wages, other employee benefits and vacation accrual.
Professional Fees. The decreases for the current quarter and year compared with the same periods of 2019 were primarily due to a decrease in expenses related to the BSA/AML compliance enhancements.
Marketing and business promotion. The increase for the current quarter compared with the previous quarter was primarily due to an increase in advertisement.
Director Fees and Expenses. The Company's Board of Directors temporarily reduced directors fees during the current quarter.
Regulatory Assessments. The decrease for the current quarter compared with the year-ago quarter was primarily due to an adjustment made during the year-ago quarter for the assessment rate increase, partially offset by an increase in balance sheet.
Balance Sheet (Unaudited)
Loans
The following table presents a composition of total loans (includes both loans held-for-sale and loans held-for-investment, net of deferred costs (fees)) as of the dates indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| ($ in thousands) | | 6/30/2020 | | 3/31/2020 | | % Change | | 12/31/2019 | | % Change | | 6/30/2019 | | % Change |
| Real estate loans: | | | | | | | | | | | | | | |
| Commercial property | | $ | 813,409 | | | $ | 812,484 | | | 0.1 | % | | $ | 803,014 | | | 1.3 | % | | $ | 748,526 | | | 8.7 | % |
| Residential property | | 223,923 | | | 227,492 | | | (1.6) | % | | 235,046 | | | (4.7) | % | | 240,630 | | | (6.9) | % |
| SBA property | | 122,675 | | | 125,322 | | | (2.1) | % | | 129,837 | | | (5.5) | % | | 128,208 | | | (4.3) | % |
| Construction | | 20,432 | | | 19,178 | | | 6.5 | % | | 19,164 | | | 6.6 | % | | 22,455 | | | (9.0) | % |
| Commercial and industrial loans: | | | | | | | | | | | | | | |
| Commercial term | | 98,936 | | | 101,943 | | | (2.9) | % | | 103,380 | | | (4.3) | % | | 105,651 | | | (6.4) | % |
| Commercial lines of credit | | 96,339 | | | 116,873 | | | (17.6) | % | | 111,768 | | | (13.8) | % | | 101,531 | | | (5.1) | % |
| SBA commercial term | | 22,650 | | | 24,745 | | | (8.5) | % | | 25,332 | | | (10.6) | % | | 24,762 | | | (8.5) | % |
| SBA PPP | | 133,675 | | | — | | | — | % | | — | | | — | % | | — | | | — | % |
| Other consumer loans | | 21,550 | | | 23,001 | | | (6.3) | % | | 23,290 | | | (7.5) | % | | 23,794 | | | (9.4) | % |
| Loans held-for-investment | | 1,553,589 | | | 1,451,038 | | | 7.1 | % | | 1,450,831 | | | 7.1 | % | | 1,395,557 | | | 11.3 | % |
| Loans held-for-sale | | 4,102 | | | 16,191 | | | (74.7) | % | | 1,975 | | | 107.7 | % | | 440 | | | 832.3 | % |
| Total loans | | $ | 1,557,691 | | | $ | 1,467,229 | | | 6.2 | % | | $ | 1,452,806 | | | 7.2 | % | | $ | 1,395,997 | | | 11.6 | % |
| | | | | | | | | | | | | | |
The increase in loans held-for-investment for the current quarter was primarily due to new funding of $170.4 million and advances on lines of credit of $19.4 million, partially offset by pay-downs and pay-offs of $87.6 million. The increase for the current year was primarily due to new funding of $234.3 million and advances on lines of credit of $56.5 million, partially offset by pay-downs and pay-offs of $186.2 million.
The decrease in loans held-for-sale for the current quarter was primarily due to sales of $33.2 million, partially offset by new funding of $21.9 million. The increase for the current year was primarily due to new funding of $48.6 million, partially offset by sales of $47.0 million.
The following table presents a composition of commitments to extend credit as of the dates indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| ($ in thousands) | | 6/30/2020 | | 3/31/2020 | | % Change | | 12/31/2019 | | % Change | | 6/30/2019 | | % Change |
| Real estate loans: | | | | | | | | | | | | | | |
| Commercial property | | $ | 16,962 | | | $ | 14,393 | | | 17.8 | % | | $ | 15,836 | | | 7.1 | % | | $ | 18,129 | | | (6.4) | % |
| | | | | | | | | | | | | | |
| SBA property | | 220 | | | 421 | | | (47.7) | % | | 1,405 | | | (84.3) | % | | 1,585 | | | (86.1) | % |
| Construction | | 16,451 | | | 17,761 | | | (7.4) | % | | 11,557 | | | 42.3 | % | | 8,166 | | | 101.5 | % |
| Commercial and industrial loans: | | | | | | | | | | | | | | |
| Commercial term | | 1,000 | | | 1,034 | | | (3.3) | % | | 1,243 | | | (19.5) | % | | 3,024 | | | (66.9) | % |
| Commercial lines of credit | | 159,753 | | | 143,228 | | | 11.5 | % | | 140,690 | | | 13.5 | % | | 122,957 | | | 29.9 | % |
| SBA commercial term | | — | | | 912 | | | (100.0) | % | | 762 | | | (100.0) | % | | 574 | | | (100.0) | % |
| | | | | | | | | | | | | | |
| Other consumer loans | | 45 | | | 38 | | | 18.4 | % | | 115 | | | (60.9) | % | | 18 | | | 150.0 | % |
| Total commitments to extend credit | | $ | 194,431 | | | $ | 177,787 | | | 9.4 | % | | $ | 171,608 | | | 13.3 | % | | $ | 154,453 | | | 25.9 | % |
| | | | | | | | | | | | | | |
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) | | 6/30/2020 | | 3/31/2020 | | % Change | | 12/31/2019 | | % Change | | 6/30/2019 | | % Change |
| Nonaccrual loans: | | | | | | | | | | | | | | |
| Real estate loans: | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| SBA property | | $ | 1,351 | | | $ | 1,461 | | | (7.5) | % | | $ | 442 | | | 205.7 | % | | $ | 1,372 | | | (1.5) | % |
| | | | | | | | | | | | | | |
| Commercial and industrial loans: | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Commercial lines of credit | | 1,968 | | | 2,182 | | | (9.8) | % | | 1,888 | | | 4.2 | % | | — | | | — | % |
| SBA commercial term | | 381 | | | 430 | | | (11.4) | % | | 159 | | | 139.6 | % | | 16 | | | 2,281.3 | % |
| Other consumer loans | | 70 | | | 10 | | | 600.0 | % | | 48 | | | 45.8 | % | | 41 | | | 70.7 | % |
| Total nonaccrual loans held-for-investment | | 3,770 | | | 4,083 | | | (7.7) | % | | 2,537 | | | 48.6 | % | | 1,429 | | | 163.8 | % |
| Loans past due 90 days or more and still accruing | | 696 | | | — | | | — | % | | 287 | | | 142.5 | % | | — | | | — | % |
| Non-performing loans (“NPLs”) | | 4,466 | | | 4,083 | | | 9.4 | % | | 2,824 | | | 58.1 | % | | 1,429 | | | 212.5 | % |
| Other real estate owned (“OREO”) | | 376 | | | 376 | | | — | % | | — | | | — | % | | 395 | | | (4.8) | % |
| Non-performing assets (“NPAs”) | | $ | 4,842 | | | $ | 4,459 | | | 8.6 | % | | $ | 2,824 | | | 71.5 | % | | $ | 1,824 | | | 165.5 | % |
| Loans past due and still accruing: | | | | | | | | | | | | | | |
| Past due 30 to 59 days | | $ | 311 | | | $ | 1,584 | | | (80.4) | % | | $ | 893 | | | (65.2) | % | | $ | 804 | | | (61.3) | % |
| Past due 60 to 89 days | | 113 | | | 46 | | | 145.7 | % | | 925 | | | (87.8) | % | | 5 | | | 2,160.0 | % |
| Past due 90 days or more | | 696 | | | — | | | — | % | | 287 | | | 142.5 | % | | — | | | — | % |
| Total loans past due and still accruing | | $ | 1,120 | | | $ | 1,630 | | | (31.3) | % | | 2,105 | | | (46.8) | % | | $ | 809 | | | 38.4 | % |
| Troubled debt restructurings (“TDRs”): | | | | | | | | | | | | | | |
| Accruing TDRs | | $ | 669 | | | $ | 679 | | | (1.5) | % | | $ | 700 | | | (4.4) | % | | $ | 391 | | | 71.1 | % |
| Nonaccrual TDRs | | 40 | | | 145 | | | (72.4) | % | | 121 | | | (66.9) | % | | 131 | | | (69.5) | % |
| Total TDRs | | $ | 709 | | | $ | 824 | | | (14.0) | % | | $ | 821 | | | (13.6) | % | | $ | 522 | | | 35.8 | % |
| Classified assets | | | | | | | | | | | | | | |
| Classified loans | | $ | 5,809 | | | $ | 6,519 | | | (10.9) | % | | $ | 8,862 | | | (34.5) | % | | $ | 7,484 | | | (22.4) | % |
| OREO | | 376 | | | 376 | | | — | % | | — | | | — | % | | 395 | | | (4.8) | % |
| Classified assets | | $ | 6,185 | | | $ | 6,895 | | | (10.3) | % | | $ | 8,862 | | | (30.2) | % | | $ | 7,879 | | | (21.5) | % |
| NPLs to loans held-for-investment | | 0.29 | % | | 0.28 | % | | | | 0.19 | % | | | | 0.10 | % | | |
| NPAs to total assets | | 0.24 | % | | 0.25 | % | | | | 0.16 | % | | | | 0.11 | % | | |
| Classified assets to total assets | | 0.31 | % | | 0.38 | % | | | | 0.51 | % | | | | 0.46 | % | | |
| | | | | | | | | | | | | | |
The Company had a residential property loan past due 90 days or more and still accruing at June 30, 2020, which management believes that the loan is well secured and the Bank is in the process of collection.
Accommodations Related to Loan Modifications from the Effects of 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. In accordance with the CARES Act, these loans will not be considered restructured for the purpose of risk-based capital rules, nor would they be reported as past due or nonaccrual during the period of the modification term.
The following table presents a summary of loans with such modifications as of June 30, 2020:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Modification Type | | | | | | Weighted-Average Contractual Rate | | Accrued Interest Receivable | | |
| ($ in thousands) | | Payment Deferment | | Interest Only | | Total | | | | | | |
| Real estate loans: | | | | | | | | | | | | |
| Commercial property | | $ | 369,716 | | | $ | 9,850 | | | $ | 379,566 | | | 4.60 | % | | $ | 5,123 | | | |
| Residential property | | 44,804 | | | — | | | 44,804 | | | 5.02 | % | | 664 | | | |
| Commercial and industrial loans: | | | | | | | | | | | | |
| Commercial term | | 53,277 | | | 4,882 | | | 58,159 | | | 4.77 | % | | 786 | | | |
| Other consumer loans | | 1,507 | | | — | | | 1,507 | | | 7.28 | % | | 24 | | | |
| Total | | $ | 469,304 | | | $ | 14,732 | | | $ | 484,036 | | | 4.66 | % | | $ | 6,597 | | | |
| | | | | | | | | | | | |
Investment Securities
During the current quarter, 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. Management determined that the COVID-19 pandemic was an extremely remote disaster, which could not have been anticipated when deciding whether it has the positive intent and ability to hold these debt securities to maturity. 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.
Total investment securities were $128.0 million at June 30, 2020, an increase of $9.8 million, or 8.3%, from $118.3 million at March 31, 2020 and an increase of $10.3 million, or 8.8%, from $117.7 million at December 31, 2019 but a decrease of $37.2 million, or 22.5%, from $165.2 million at June 30, 2019.
The increase for the current quarter was primarily due to purchases of $16.9 million and an increase in fair value of securities available-for-sale of $1.5 million, partially offset by principal pay-downs and calls of $8.4 million and net premium amortization of $224 thousand. The increase for the current year was primarily due to purchases of $24.4 million and an increase in fair value of securities available-for-sale of $2.8 million, partially offset by principal pay-downs and calls of $16.5 million and net premium amortization of $413 thousand.
Deposits
The following table presents the Company’s deposit mix as of the dates indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 6/30/2020 | | | | 3/31/2020 | | | | 12/31/2019 | | | | 6/30/2019 | | |
| ($ in thousands) | | Amount | | % to Total | | Amount | | % to Total | | Amount | | % to Total | | Amount | | % to Total |
| Noninterest-bearing demand deposits | | $ | 551,415 | | | 33.5 | % | | $ | 394,084 | | | 26.7 | % | | $ | 360,039 | | | 24.3 | % | | $ | 339,603 | | | 23.5 | % |
| Interest-bearing deposits: | | | | | | | | | | | | | | | | |
| Savings | | 8,258 | | | 0.5 | % | | 6,569 | | | 0.4 | % | | 6,492 | | | 0.4 | % | | 6,844 | | | 0.5 | % |
| NOW | | 21,173 | | | 1.3 | % | | 18,608 | | | 1.3 | % | | 17,673 | | | 1.2 | % | | 12,638 | | | 0.9 | % |
| Retail money market accounts | | 339,444 | | | 20.6 | % | | 338,850 | | | 22.9 | % | | 307,980 | | | 20.8 | % | | 311,865 | | | 21.6 | % |
| Brokered money market accounts | | 10 | | | 0.1 | % | | 10,006 | | | 0.7 | % | | 30,034 | | | 2.0 | % | | 10 | | | 0.1 | % |
| Retail time deposits of: | | | | | | | | | | | | | | | | |
| $250,000 or less | | 347,382 | | | 21.0 | % | | 362,408 | | | 24.5 | % | | 405,004 | | | 27.5 | % | | 453,286 | | | 31.2 | % |
| More than $250,000 | | 170,180 | | | 10.3 | % | | 176,970 | | | 12.0 | % | | 199,726 | | | 13.5 | % | | 204,780 | | | 14.2 | % |
| Time deposits from internet rate service providers | | 37,068 | | | 2.3 | % | | 5,447 | | | 0.4 | % | | — | | | — | % | | — | | | — | % |
| State and brokered time deposits | | 172,000 | | | 10.4 | % | | 164,500 | | | 11.1 | % | | 152,359 | | | 10.3 | % | | 117,500 | | | 8.0 | % |
| Total interest-bearing deposits | | 1,095,515 | | | 66.5 | % | | 1,083,358 | | | 73.3 | % | | 1,119,268 | | | 75.7 | % | | 1,106,923 | | | 76.5 | % |
| Total deposits | | $ | 1,646,930 | | | 100.0 | % | | $ | 1,477,442 | | | 100.0 | % | | $ | 1,479,307 | | | 100.0 | % | | $ | 1,446,526 | | | 100.0 | % |
| | | | | | | | | | | | | | | | |
The increase in noninterest-bearing demand deposits for the current quarter was primarily due to the deposit increases from customers with PPP loans as well as the overall liquid deposit market. Deposits held with customers with PPP loans increased $120.0 million to $270.1 million at June 30, 2020 compared with $150.5 million at March 31, 2020.
The decrease in retail time deposits for the current quarter was primarily due to matured and closed accounts of $117.8 million, partially offset by new accounts of $16.0 million and renewals of the matured accounts of $76.7 million. The decrease in retail time deposits for the current year was primarily due to matured and closed accounts of $353.1 million, partially offset by new accounts of $49.6 million and renewals of the matured accounts of $208.5 million.
Liquidity
The following table presents a summary of the Company’s liquidity position as of June 30, 2020:
| | | | | | | | |
| ($ in thousands) | | 6/30/2020 |
| Cash and cash equivalents | | $ | 307,603 | |
| Cash and cash equivalents to total assets | | 15.2 | % |
| | |
| Available borrowing capacity: | | |
| FHLB advances | | $ | 319,970 | |
| Federal Reserve Discount Window | | 40,346 | |
| Overnight federal funds lines | | 65,000 | |
| Total | | $ | 425,316 | |
| Total available borrowing capacity to total assets | | 21.0 | % |
| | |
Shareholders’ Equity
Shareholders’ equity was $227.2 million at June 30, 2020, an increase of $3.1 million, or 1.4%, from $224.1 million at March 31, 2020, an increase of $399 thousand, or 0.2%, from $226.8 million at December 31, 2019, and an increase of $3.8 million, or 1.7%, from $223.4 million at June 30, 2019. The increase for the current quarter was primarily due to net income for the current quarter and an increase in accumulated other comprehensive income, partially offset by cash dividend declared on common stock of $1.5 million. The increase for the current year was primarily due to net income for the current year and an increase in accumulated other comprehensive income, partially offset by repurchases of common stock of $6.5 million and cash dividend declared on common stock of $3.1 million.
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. The Company completed this program in March 2020 and had repurchased and retired 428,474 shares.
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:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 6/30/2020 | | 3/31/2020 | | 12/31/2019 | | 6/30/2019 |
| PCB Bancorp | | | | | | | | |
| Common tier 1 capital (to risk-weighted assets) | | 15.83 | % | | 15.53 | % | | 15.87 | % | | 16.20 | % |
| Total capital (to risk-weighted assets) | | 17.09 | % | | 16.71 | % | | 16.90 | % | | 17.18 | % |
| Tier 1 capital (to risk-weighted assets) | | 15.83 | % | | 15.53 | % | | 15.87 | % | | 16.20 | % |
| Tier 1 capital (to average assets) | | 11.49 | % | | 12.57 | % | | 13.23 | % | | 12.74 | % |
| Pacific City Bank | | | | | | | | |
| Common tier 1 capital (to risk-weighted assets) | | 15.58 | % | | 15.28 | % | | 15.68 | % | | 16.07 | % |
| Total capital (to risk-weighted assets) | | 16.83 | % | | 16.47 | % | | 16.71 | % | | 17.05 | % |
| Tier 1 capital (to risk-weighted assets) | | 15.58 | % | | 15.28 | % | | 15.68 | % | | 16.07 | % |
| Tier 1 capital (to average assets) | | 11.30 | % | | 12.37 | % | | 13.06 | % | | 12.64 | % |
| | | | | | | | |
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 the 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)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 6/30/2020 | | 3/31/2020 | | % Change | | 12/31/2019 | | % Change | | 6/30/2019 | | % Change |
| Assets | | | | | | | | | | | | | | |
| Cash and due from banks | | $ | 18,255 | | | $ | 14,880 | | | 22.7 | % | | $ | 17,808 | | | 2.5 | % | | $ | 19,080 | | | (4.3) | % |
| Interest-bearing deposits in financial institutions | | 289,348 | | | 174,039 | | | 66.3 | % | | 128,420 | | | 125.3 | % | | 114,205 | | | 153.4 | % |
| Total cash and cash equivalents | | 307,603 | | | 188,919 | | | 62.8 | % | | 146,228 | | | 110.4 | % | | 133,285 | | | 130.8 | % |
| Securities available-for-sale, at fair value | | 128,049 | | | 98,568 | | | 29.9 | % | | 97,566 | | | 31.2 | % | | 142,539 | | | (10.2) | % |
| Securities held-to-maturity | | — | | | 19,711 | | | (100.0) | % | | 20,154 | | | (100.0) | % | | 22,685 | | | (100.0) | % |
| Total investment securities | | 128,049 | | | 118,279 | | | 8.3 | % | | 117,720 | | | 8.8 | % | | 165,224 | | | (22.5) | % |
| Loans held-for-sale | | 4,102 | | | 16,191 | | | (74.7) | % | | 1,975 | | | 107.7 | % | | 440 | | | 832.3 | % |
| Loans held-for-investment, net of deferred loan costs (fees) | | 1,553,589 | | | 1,451,038 | | | 7.1 | % | | 1,450,831 | | | 7.1 | % | | 1,395,557 | | | 11.3 | % |
| Allowance for loan losses | | (20,248) | | | (16,674) | | | 21.4 | % | | (14,380) | | | 40.8 | % | | (13,328) | | | 51.9 | % |
| Net loans held-for-investment | | 1,533,341 | | | 1,434,364 | | | 6.9 | % | | 1,436,451 | | | 6.7 | % | | 1,382,229 | | | 10.9 | % |
| Premises and equipment, net | | 4,542 | | | 4,797 | | | (5.3) | % | | 3,760 | | | 20.8 | % | | 4,334 | | | 4.8 | % |
| Federal Home Loan Bank and other bank stock | | 8,447 | | | 8,345 | | | 1.2 | % | | 8,345 | | | 1.2 | % | | 8,345 | | | 1.2 | % |
| Other real estate owned, net | | 376 | | | 376 | | | — | % | | — | | | — | % | | 395 | | | (4.8) | % |
| Deferred tax assets, net | | 6,347 | | | 5,140 | | | 23.5 | % | | 5,288 | | | 20.0 | % | | 3,241 | | | 95.8 | % |
| Servicing assets | | 6,399 | | | 6,358 | | | 0.6 | % | | 6,798 | | | (5.9) | % | | 7,230 | | | (11.5) | % |
| Operating lease assets | | 7,843 | | | 8,393 | | | (6.6) | % | | 8,991 | | | (12.8) | % | | 10,105 | | | (22.4) | % |
| Accrued interest receivable | | 9,498 | | | 4,706 | | | 101.8 | % | | 5,136 | | | 84.9 | % | | 5,314 | | | 78.7 | % |
| Other assets | | 4,230 | | | 4,069 | | | 4.0 | % | | 5,636 | | | (24.9) | % | | 6,344 | | | (33.3) | % |
| Total assets | | $ | 2,020,777 | | | $ | 1,799,937 | | | 12.3 | % | | $ | 1,746,328 | | | 15.7 | % | | $ | 1,726,486 | | | 17.0 | % |
| Liabilities | | | | | | | | | | | | | | |
| Deposits: | | | | | | | | | | | | | | |
| Noninterest-bearing demand | | $ | 551,415 | | | $ | 394,084 | | | 39.9 | % | | $ | 360,039 | | | 53.2 | % | | $ | 339,603 | | | 62.4 | % |
| Savings, NOW and money market accounts | | 368,885 | | | 374,033 | | | (1.4) | % | | 362,179 | | | 1.9 | % | | 331,357 | | | 11.3 | % |
| Time deposits of $250,000 or less | | 466,450 | | | 442,355 | | | 5.4 | % | | 467,363 | | | (0.2) | % | | 480,786 | | | (3.0) | % |
| Time deposits of more than $250,000 | | 260,180 | | | 266,970 | | | (2.5) | % | | 289,726 | | | (10.2) | % | | 294,780 | | | (11.7) | % |
| Total deposits | | 1,646,930 | | | 1,477,442 | | | 11.5 | % | | 1,479,307 | | | 11.3 | % | | 1,446,526 | | | 13.9 | % |
| Federal Home Loan Bank advances | | 130,000 | | | 80,000 | | | 62.5 | % | | 20,000 | | | 550.0 | % | | 35,000 | | | 271.4 | % |
| Operating lease liabilities | | 8,758 | | | 9,349 | | | (6.3) | % | | 9,990 | | | (12.3) | % | | 11,131 | | | (21.3) | % |
| Accrued interest payable and other liabilities | | 7,856 | | | 9,021 | | | (12.9) | % | | 10,197 | | | (23.0) | % | | 10,429 | | | (24.7) | % |
| Total liabilities | | 1,793,544 | | | 1,575,812 | | | 13.8 | % | | 1,519,494 | | | 18.0 | % | | 1,503,086 | | | 19.3 | % |
| Commitments and contingent liabilities | | | | | | | | | | | | | | |
| Shareholders’ equity | | | | | | | | | | | | | | |
| Common stock, no par value | | 163,759 | | | 163,532 | | | 0.1 | % | | 169,221 | | | (3.2) | % | | 174,135 | | | (6.0) | % |
| Retained earnings | | 61,532 | | | 59,702 | | | 3.1 | % | | 57,670 | | | 6.7 | % | | 48,927 | | | 25.8 | % |
| Accumulated other comprehensive income (loss), net | | 1,942 | | | 891 | | | 118.0 | % | | (57) | | | NM | | 338 | | | 474.6 | % |
| Total shareholders’ equity | | 227,233 | | | 224,125 | | | 1.4 | % | | 226,834 | | | 0.2 | % | | 223,400 | | | 1.7 | % |
| Total liabilities and shareholders’ equity | | $ | 2,020,777 | | | $ | 1,799,937 | | | 12.3 | % | | $ | 1,746,328 | | | 15.7 | % | | $ | 1,726,486 | | | 17.0 | % |
| | | | | | | | | | | | | | |
| Outstanding common shares | | 15,377,935 | | | 15,370,086 | | | | | 15,707,016 | | | | | 15,980,655 | | | |
Book value per common share (1) | | $ | 14.78 | | | $ | 14.58 | | | | | $ | 14.44 | | | | | $ | 13.98 | | | |
| Total loan to total deposit ratio | | 94.58 | % | | 99.31 | % | | | | 98.21 | % | | | | 96.51 | % | | |
| Noninterest-bearing deposits to total deposits | | 33.48 | % | | 26.67 | % | | | | 24.34 | % | | | | 23.48 | % | | |
| | | | | | | | | | | | | | |
(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 | | | | | | | | | | Six Months Ended | | | | |
| | 6/30/2020 | | 3/31/2020 | | % Change | | 6/30/2019 | | % Change | | 6/30/2020 | | 6/30/2019 | | % Change |
| Interest income: | | | | | | | | | | | | | | | | |
| Interest and fees on loans | | $ | 18,273 | | | $ | 20,406 | | | (10.5 | %) | | $ | 21,969 | | | (16.8 | %) | | $ | 38,679 | | | $ | 42,903 | | | (9.8 | %) |
| Interest on investment securities | | 539 | | | 644 | | | (16.3 | %) | | 1,062 | | | (49.2 | %) | | 1,183 | | | 2,155 | | | (45.1 | %) |
| Interest and dividend on other interest-earning assets | | 161 | | | 610 | | | (73.6 | %) | | 999 | | | (83.9 | %) | | 771 | | | 1,924 | | | (59.9 | %) |
| Total interest income | | 18,973 | | | 21,660 | | | (12.4 | %) | | 24,030 | | | (21.0 | %) | | 40,633 | | | 46,982 | | | (13.5 | %) |
| Interest expense: | | | | | | | | | | | | | | | | |
| Interest on deposits | | 3,409 | | | 4,992 | | | (31.7 | %) | | 6,200 | | | (45.0 | %) | | 8,401 | | | 11,865 | | | (29.2 | %) |
| Interest on other borrowings | | 201 | | | 102 | | | 97.1 | % | | 138 | | | 45.7 | % | | 303 | | | 272 | | | 11.4 | % |
| Total interest expense | | 3,610 | | | 5,094 | | | (29.1 | %) | | 6,338 | | | (43.0 | %) | | 8,704 | | | 12,137 | | | (28.3 | %) |
| Net interest income | | 15,363 | | | 16,566 | | | (7.3 | %) | | 17,692 | | | (13.2 | %) | | 31,929 | | | 34,845 | | | (8.4 | %) |
| Provision for loan losses | | 3,855 | | | 2,896 | | | 33.1 | % | | 394 | | | 878.4 | % | | 6,751 | | | 309 | | | 2084.8 | % |
| Net interest income after provision for loan losses | | 11,508 | | | 13,670 | | | (15.8 | %) | | 17,298 | | | (33.5 | %) | | 25,178 | | | 34,536 | | | (27.1 | %) |
| Noninterest income: | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| Gain on sale of loans | | 1,498 | | | 725 | | | 106.6 | % | | 1,891 | | | (20.8 | %) | | 2,223 | | | 3,011 | | | (26.2 | %) |
| | | | | | | | | | | | | | | | |
| Service charges and fees on deposits | | 275 | | | 390 | | | (29.5 | %) | | 368 | | | (25.3 | %) | | 665 | | | 732 | | | (9.2 | %) |
| Loan servicing income | | 902 | | | 554 | | | 62.8 | % | | 492 | | | 83.3 | % | | 1,456 | | | 1,123 | | | 29.7 | % |
| Other income | | 243 | | | 357 | | | (31.9 | %) | | 303 | | | (19.8 | %) | | 600 | | | 597 | | | 0.5 | % |
| Total noninterest income | | 2,918 | | | 2,026 | | | 44.0 | % | | 3,054 | | | (4.5 | %) | | 4,944 | | | 5,463 | | | (9.5 | %) |
| Noninterest expense: | | | | | | | | | | | | | | | | |
| Salaries and employee benefits | | 5,761 | | | 6,551 | | | (12.1 | %) | | 6,600 | | | (12.7 | %) | | 12,312 | | | 13,222 | | | (6.9 | %) |
| Occupancy and equipment | | 1,400 | | | 1,380 | | | 1.4 | % | | 1,407 | | | (0.5 | %) | | 2,780 | | | 2,720 | | | 2.2 | % |
| Professional fees | | 509 | | | 797 | | | (36.1 | %) | | 686 | | | (25.8 | %) | | 1,306 | | | 1,444 | | | (9.6 | %) |
| Marketing and business promotion | | 548 | | | 179 | | | 206.1 | % | | 529 | | | 3.6 | % | | 727 | | | 757 | | | (4.0 | %) |
| Data processing | | 366 | | | 358 | | | 2.2 | % | | 338 | | | 8.3 | % | | 724 | | | 656 | | | 10.4 | % |
| Director fees and expenses | | 107 | | | 221 | | | (51.6 | %) | | 185 | | | (42.2 | %) | | 328 | | | 374 | | | (12.3 | %) |
| Regulatory assessments | | 242 | | | 219 | | | 10.5 | % | | 309 | | | (21.7 | %) | | 461 | | | 425 | | | 8.5 | % |
| Other expenses | | 763 | | | 862 | | | (11.5 | %) | | 930 | | | (18.0 | %) | | 1,625 | | | 1,675 | | | (3.0 | %) |
| Total noninterest expense | | 9,696 | | | 10,567 | | | (8.2 | %) | | 10,984 | | | (11.7 | %) | | 20,263 | | | 21,273 | | | (4.7 | %) |
| Income before income taxes | | 4,730 | | | 5,129 | | | (7.8 | %) | | 9,368 | | | (49.5 | %) | | 9,859 | | | 18,726 | | | (47.4 | %) |
| Income tax expense | | 1,363 | | | 1,557 | | | (12.5 | %) | | 2,767 | | | (50.7 | %) | | 2,920 | | | 5,561 | | | (47.5 | %) |
| Net income | | $ | 3,367 | | | $ | 3,572 | | | (5.7 | %) | | $ | 6,601 | | | (49.0 | %) | | $ | 6,939 | | | $ | 13,165 | | | (47.3 | %) |
| Earnings per common share | | | | | | | | | | | | | | | | |
| Basic | | $ | 0.22 | | | $ | 0.23 | | | | | $ | 0.41 | | | | | $ | 0.45 | | | $ | 0.82 | | | |
| Diluted | | $ | 0.22 | | | $ | 0.23 | | | | | $ | 0.40 | | | | | $ | 0.45 | | | $ | 0.81 | | | |
| Average shares | | | | | | | | | | | | | | | | |
| Basic | | 15,337,405 | | | 15,505,699 | | | | | 16,017,089 | | | | | 15,421,552 | | | 16,008,325 | | | |
| Diluted | | 15,373,655 | | | 15,700,144 | | | | | 16,330,039 | | | | | 15,522,626 | | | 16,303,274 | | | |
| | | | | | | | | | | | | | | | |
| Dividend paid per common share | | $ | 0.10 | | | $ | 0.10 | | | | | $ | 0.06 | | | | | $ | 0.20 | | | $ | 0.11 | | | |
Return on average assets (1) | | 0.69 | % | | 0.81 | % | | | | 1.52 | % | | | | 0.75 | % | | 1.55 | % | | |
Return on average shareholders’ equity (1), (2) | | 5.98 | % | | 6.35 | % | | | | 12.01 | % | | | | 6.17 | % | | 12.22 | % | | |
Efficiency ratio (3) | | 53.04 | % | | 56.84 | % | | | | 52.95 | % | | | | 54.95 | % | | 52.78 | % | | |
| | | | | | | | | | | | | | | | |
(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 | | | | | | | | | | | | | | | | |
| | 6/30/2020 | | | | | | 3/31/2020 | | | | | | 6/30/2019 | | | | |
| | 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) | | $ | 1,554,011 | | | $ | 18,273 | | | 4.73 | % | | $ | 1,454,727 | | | $ | 20,406 | | | 5.64 | % | | $ | 1,378,910 | | | $ | 21,969 | | | 6.39 | % |
| Mortgage-backed securities | | 63,692 | | | 317 | | | 2.00 | % | | 57,503 | | | 329 | | | 2.30 | % | | 87,787 | | | 559 | | | 2.55 | % |
| Collateralized mortgage obligation | | 37,745 | | | 122 | | | 1.30 | % | | 41,408 | | | 198 | | | 1.92 | % | | 53,027 | | | 325 | | | 2.46 | % |
| SBA loan pool securities | | 13,189 | | | 62 | | | 1.89 | % | | 13,872 | | | 79 | | | 2.29 | % | | 21,297 | | | 140 | | | 2.64 | % |
Municipal bonds (2) | | 5,710 | | | 38 | | | 2.68 | % | | 5,719 | | | 38 | | | 2.67 | % | | 5,880 | | | 38 | | | 2.59 | % |
| Other interest-earning assets | | 245,447 | | | 161 | | | 0.26 | % | | 158,793 | | | 610 | | | 1.55 | % | | 154,661 | | | 999 | | | 2.59 | % |
| Total interest-earning assets | | 1,919,794 | | | 18,973 | | | 3.97 | % | | 1,732,022 | | | 21,660 | | | 5.03 | % | | 1,701,562 | | | 24,030 | | | 5.66 | % |
| Noninterest-earning assets: | | | | | | | | | | | | | | | | | | |
| Cash and cash equivalents | | 16,031 | | | | | | | 18,850 | | | | | | | 18,342 | | | | | |
| Allowance for loan losses | | (17,320) | | | | | | | (14,399) | | | | | | | (13,163) | | | | | |
| Other assets | | 37,959 | | | | | | | 34,312 | | | | | | | 35,843 | | | | | |
| Total noninterest-earning assets | | 36,670 | | | | | | | 38,763 | | | | | | | 41,022 | | | | | |
| Total assets | | $ | 1,956,464 | | | | | | | $ | 1,770,785 | | | | | | | $ | 1,742,584 | | | | | |
| Liabilities and Shareholders’ Equity | | | | | | | | | | | | | | | | | | |
| Interest-bearing liabilities: | | | | | | | | | | | | | | | | | | |
| Deposits: | | | | | | | | | | | | | | | | | | |
| NOW and money market accounts | | $ | 371,992 | | | 548 | | | 0.59 | % | | $ | 364,604 | | | 1,119 | | | 1.23 | % | | $ | 323,285 | | | 1,339 | | | 1.66 | % |
| Savings | | 6,966 | | | 3 | | | 0.17 | % | | 6,614 | | | 3 | | | 0.18 | % | | 9,146 | | | 14 | | | 0.61 | % |
| Time deposits | | 730,349 | | | 2,858 | | | 1.57 | % | | 758,481 | | | 3,870 | | | 2.05 | % | | 811,247 | | | 4,847 | | | 2.40 | % |
| Total interest-bearing deposits | | 1,109,307 | | | 3,409 | | | 1.24 | % | | 1,129,699 | | | 4,992 | | | 1.78 | % | | 1,143,678 | | | 6,200 | | | 2.17 | % |
| Federal Home Loan Bank advances | | 130,330 | | | 201 | | | 0.62 | % | | 25,117 | | | 102 | | | 1.63 | % | | 30,166 | | | 138 | | | 1.83 | % |
| Total interest-bearing liabilities | | 1,239,637 | | | 3,610 | | | 1.17 | % | | 1,154,816 | | | 5,094 | | | 1.77 | % | | 1,173,844 | | | 6,338 | | | 2.17 | % |
| Noninterest-bearing liabilities | | | | | | | | | | | | | | | | | | |
| Noninterest-bearing demand | | 474,175 | | | | | | | 369,518 | | | | | | | 326,813 | | | | | |
| Other liabilities | | 16,198 | | | | | | | 20,365 | | | | | | | 21,441 | | | | | |
| Total noninterest-bearing liabilities | | 490,373 | | | | | | | 389,883 | | | | | | | 348,254 | | | | | |
| Total liabilities | | 1,730,010 | | | | | | | 1,544,699 | | | | | | | 1,522,098 | | | | | |
| Total shareholders’ equity | | 226,454 | | | | | | | 226,086 | | | | | | | 220,486 | | | | | |
| Total liabilities and shareholders’ equity | | $ | 1,956,464 | | | | | | | $ | 1,770,785 | | | | | | | $ | 1,742,584 | | | | | |
| Net interest income | | | | $ | 15,363 | | | | | | | $ | 16,566 | | | | | | | $ | 17,692 | | | |
Net interest spread (3) | | | | | | 2.80 | % | | | | | | 3.26 | % | | | | | | 3.49 | % |
Net interest margin (4) | | | | | | 3.22 | % | | | | | | 3.85 | % | | | | | | 4.17 | % |
| Total deposits | | $ | 1,583,482 | | | $ | 3,409 | | | 0.87 | % | | $ | 1,499,217 | | | $ | 4,992 | | | 1.34 | % | | $ | 1,470,491 | | | $ | 6,200 | | | 1.69 | % |
Total funding (5) | | $ | 1,713,812 | | | $ | 3,610 | | | 0.85 | % | | $ | 1,524,334 | | | $ | 5,094 | | | 1.34 | % | | $ | 1,500,657 | | | $ | 6,338 | | | 1.69 | % |
| | | | | | | | | | | | | | | | | | |
(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, Continued (Unaudited)
($ in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Six Months Ended | | | | | | | | | | |
| | 6/30/2020 | | | | | | 6/30/2019 | | | | |
| | Average Balance | | Interest Income/ Expense | | Avg. Yield/Rate | | Average Balance | | Interest Income/ Expense | | Avg. Yield/Rate |
| Assets | | | | | | | | | | | | |
| Interest-earning assets: | | | | | | | | | | | | |
Total loans (1) | | $ | 1,504,369 | | | $ | 38,679 | | | 5.17 | % | | $ | 1,360,641 | | | $ | 42,903 | | | 6.36 | % |
| Mortgage-backed securities | | 60,597 | | | 646 | | | 2.14 | % | | 86,164 | | | 1,108 | | | 2.59 | % |
| Collateralized mortgage obligation | | 39,577 | | | 320 | | | 1.63 | % | | 53,962 | | | 683 | | | 2.55 | % |
| SBA loan pool securities | | 13,531 | | | 141 | | | 2.10 | % | | 21,717 | | | 287 | | | 2.66 | % |
Municipal bonds (2) | | 5,714 | | | 76 | | | 2.67 | % | | 5,884 | | | 77 | | | 2.64 | % |
| Other interest-earning assets | | 202,120 | | | 771 | | | 0.77 | % | | 147,601 | | | 1,924 | | | 2.63 | % |
| Total interest-earning assets | | 1,825,908 | | | 40,633 | | | 4.48 | % | | 1,675,969 | | | 46,982 | | | 5.65 | % |
| Noninterest-earning assets: | | | | | | | | | | | | |
| Cash and cash equivalents | | 17,441 | | | | | | | 18,509 | | | | | |
| Allowance for loan losses | | (15,860) | | | | | | | (13,141) | | | | | |
| Other assets | | 36,136 | | | | | | | 35,215 | | | | | |
| Total noninterest-earning assets | | 37,717 | | | | | | | 40,583 | | | | | |
| Total assets | | $ | 1,863,625 | | | | | | | $ | 1,716,552 | | | | | |
| Liabilities and Shareholders’ Equity | | | | | | | | | | | | |
| Interest-bearing liabilities: | | | | | | | | | | | | |
| Deposits: | | | | | | | | | | | | |
| NOW and money market accounts | | $ | 368,298 | | | 1,667 | | | 0.91 | % | | $ | 308,348 | | | 2,471 | | | 1.62 | % |
| Savings | | 6,790 | | | 6 | | | 0.18 | % | | 8,810 | | | 22 | | | 0.50 | % |
| Time deposits | | 744,415 | | | 6,728 | | | 1.82 | % | | 812,583 | | | 9,372 | | | 2.33 | % |
| Total interest-bearing deposits | | 1,119,503 | | | 8,401 | | | 1.51 | % | | 1,129,741 | | | 11,865 | | | 2.12 | % |
| Federal Home Loan Bank advances | | 77,723 | | | 303 | | | 0.78 | % | | 30,120 | | | 272 | | | 1.82 | % |
| Total interest-bearing liabilities | | 1,197,226 | | | 8,704 | | | 1.46 | % | | 1,159,861 | | | 12,137 | | | 2.11 | % |
| Noninterest-bearing liabilities | | | | | | | | | | | | |
| Noninterest-bearing demand | | 421,847 | | | | | | | 317,493 | | | | | |
| Other liabilities | | 18,281 | | | | | | | 21,880 | | | | | |
| Total noninterest-bearing liabilities | | 440,128 | | | | | | | 339,373 | | | | | |
| Total liabilities | | 1,637,354 | | | | | | | 1,499,234 | | | | | |
| Total shareholders’ equity | | 226,271 | | | | | | | 217,318 | | | | | |
| Total liabilities and shareholders’ equity | | $ | 1,863,625 | | | | | | | $ | 1,716,552 | | | | | |
| Net interest income | | | | $ | 31,929 | | | | | | | $ | 34,845 | | | |
Net interest spread (3) | | | | | | 3.02 | % | | | | | | 3.54 | % |
Net interest margin (4) | | | | | | 3.52 | % | | | | | | 4.19 | % |
| Total deposits | | $ | 1,541,350 | | | $ | 8,401 | | | 1.10 | % | | $ | 1,447,234 | | | $ | 11,865 | | | 1.65 | % |
Total funding (5) | | $ | 1,619,073 | | | $ | 8,704 | | | 1.08 | % | | $ | 1,477,354 | | | $ | 12,137 | | | 1.66 | % |
| | | | | | | | | | | | |
(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.
