PCB Bancorp(PCB) - 2025 Q2 - Quarterly Results

Q2 2025 Earnings Overview PCB Bancorp reported strong financial results for Q2 2025, marked by significant growth in net income, earnings per share, and total assets Financial Highlights PCB Bancorp achieved strong financial performance in Q2 2025, with significant growth in net income, earnings per share, and total assets, alongside an expanded net interest margin Key Financial Performance Metrics | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Net Income to Common Shareholders | $9.0 million | $7.7 million | $6.1 million | | Diluted EPS | $0.62 | $0.53 | $0.43 | | Net Interest Income | $26.0 million | $24.3 million | $21.7 million | | Net Interest Margin | 3.33% | 3.28% | 3.16% | Balance Sheet Growth | Balance Sheet Item | June 30, 2025 | % Change from March 31, 2025 | % Change from June 30, 2024 | | :--- | :--- | :--- | :--- | | Total Assets | $3.31 billion | +3.8% | +15.9% | | Loans Held-for-Investment | $2.80 billion | +2.5% | +14.1% | | Total Deposits | $2.82 billion | +4.0% | +17.3% | - The company expanded its geographic footprint by opening its first full-service branch in Suwanee, Georgia, as part of its long-term growth strategy[3][4] Results of Operations The company's operational results for Q2 2025 show strong net interest income growth, increased noninterest income, and improved efficiency, despite higher credit loss provisions Net Interest Income and Net Interest Margin Net interest income significantly increased in Q2 2025, driven by strong loan growth and an expanded net interest margin due to lower deposit costs Net Interest Income and Margin Trends | Metric | Q2 2025 ($ in thousands) | Q1 2025 ($ in thousands) | Q2 2024 ($ in thousands) | | :--- | :--- | :--- | :--- | | Net Interest Income | $25,990 | $24,283 | $21,735 | | Net Interest Margin | 3.33% | 3.28% | 3.16% | - The increase in net interest income was driven by a 5.0% QoQ growth in the average balance of loans, which reached $2.78 billion[8] - The average cost of interest-bearing deposits decreased to 4.13% in Q2 2025 from 4.28% in Q1 2025, contributing to the NIM expansion[8][12] Provision for Credit Losses The provision for credit losses totaled $1.8 million in Q2 2025, up from $1.6 million in the prior quarter and $259 thousand in the year-ago quarter, primarily attributed to the growth in loans held-for-investment Provision for Credit Losses Breakdown | Provision for Credit Losses | Q2 2025 ($ in thousands) | Q1 2025 ($ in thousands) | Q2 2024 ($ in thousands) | | :--- | :--- | :--- | :--- | | On Loans | $1,721 | $1,591 | $329 | | On Off-Balance Sheet Exposure | $66 | $7 | $(70) | | Total | $1,787 | $1,598 | $259 | - The provision for credit losses on loans for the current quarter was primarily due to an increase in loans held-for-investment[13] Noninterest Income Noninterest income increased significantly to $3.3 million in Q2 2025, a 27.8% rise from the previous quarter and a 32.7% rise from the same quarter last year, primarily driven by a substantial increase in the gain on sale of loans Noninterest Income Components | Noninterest Income Component | Q2 2025 ($ in thousands) | Q1 2025 ($ in thousands) | Q2 2024 ($ in thousands) | | :--- | :--- | :--- | :--- | | Gain on sale of loans | $1,465 | $887 | $763 | | Loan servicing income | $760 | $725 | $799 | | Other income | $444 | $349 | $323 | | Total Noninterest Income | $3,297 | $2,580 | $2,485 | - The gain on sale of SBA loans recognized in Q2 2025 was $1.47 million from a sold loan balance of $26.9 million, a significant increase from the prior quarter's gain of $887 thousand from a sold balance of $16.6 million[15] Noninterest Expense Noninterest expense remained disciplined in Q2 2025, with a modest increase quarter-over-quarter and a decrease year-over-year, significantly improving the efficiency ratio - The efficiency ratio improved to 50.63% in Q2 2025, compared to 53.88% in Q1 2025 and 62.65% in Q2 2024[5] - Salaries and employee benefits decreased by 2.5% QoQ to $8.8 million, primarily due to lower bonus and vacation accruals and higher deferred loan origination costs[16][17] - Marketing and business promotion expenses increased 145.7% QoQ due to higher advertising, while data processing costs decreased 36.0% YoY following a core system conversion in April 2024[16][19] Balance Sheet Analysis The balance sheet reflects continued growth in loans and deposits, while credit quality metrics show some deterioration, and capital ratios remain strong Loan Portfolio The total loan portfolio grew to $2.80 billion as of June 30, 2025, a 2.3% increase from the prior quarter, primarily driven by new funding in term loans, with commercial real estate loans remaining the largest component Loan Portfolio Composition | Loan Category | 6/30/2025 ($ in thousands) | 3/31/2025 ($ in thousands) | % Change | | :--- | :--- | :--- | :--- | | Total commercial real estate | $1,886,460 | $1,815,147 | 3.9% | | Commercial and industrial | $492,857 | $494,697 | (0.4)% | | Total consumer | $415,992 | $417,766 | (0.4)% | | Loans held-for-investment | $2,795,309 | $2,727,610 | 2.5% | - The quarterly increase in loans held-for-investment was driven by $191.9 million in new term loan funding, partially offset by $111.6 million in pay-downs and pay-offs[23] Credit Quality Credit quality metrics showed some deterioration in Q2 2025, with an increase in non-performing loans and a higher allowance for credit losses Credit Quality Metrics | Credit Quality Metric | 6/30/2025 ($ in thousands) | 3/31/2025 ($ in thousands) | 6/30/2024 ($ in thousands) | | :--- | :--- | :--- | :--- | | Non-performing loans (NPLs) | $8,932 | $6,248 | $7,500 | | NPLs to loans held-for-investment | 0.32% | 0.23% | 0.31% | | Non-performing assets (NPAs) to total assets | 0.27% | 0.20% | 0.26% | | Classified assets | $16,433 | $8,280 | $9,752 | - The Allowance for Credit Losses (ACL) on loans increased to $33.6 million at the end of Q2 2025, up from $31.9 million at the end of Q1 2025[27] Deposits and Liquidity Total deposits grew by 4.0% quarter-over-quarter to $2.82 billion, with noninterest-bearing demand deposits remaining a stable funding source, and the company maintaining a strong liquidity position Deposit Composition | Deposit Type | 6/30/2025 ($ in thousands) | % to Total | | :--- | :--- | :--- | | Noninterest-bearing demand | $575,905 | 20.4% | | Retail money market accounts | $533,032 | 18.7% | | Retail time deposits | $1,204,517 | 42.7% | | State and brokered time deposits | $491,000 | 17.4% | | Total Deposits | $2,822,915 | 100.0% | Liquidity Position | Liquidity Position | 6/30/2025 ($ in thousands) | | :--- | :--- | | Cash and cash equivalents | $263,567 | | Total available borrowing capacity | $1,590,551 | Shareholders' Equity and Capital Shareholders' equity increased in Q2 2025, driven by net income and partially offset by share repurchases and dividends, with all capital ratios remaining well above regulatory requirements - The increase in shareholders' equity for the quarter was primarily due to net income, partially offset by repurchases of common stock ($1.8 million) and cash dividends on common stock ($2.9 million)[32] - Year-to-date, the company repurchased 149,304 shares of common stock for a total of $2.7 million, with 428,473 shares remaining in the current repurchase program expiring on August 2, 2025[33] Consolidated Capital Ratios | Capital Ratio (Consolidated) | 6/30/2025 | Well Capitalized Minimum | | :--- | :--- | :--- | | Common tier 1 capital | 11.14% | N/A | | Tier 1 capital | 13.60% | N/A | | Total capital | 14.84% | N/A | | Tier 1 leverage | 11.81% | N/A | Financial Statements and Non-GAAP Measures This section provides detailed unaudited consolidated financial statements and reconciliations for non-GAAP financial measures used in performance analysis Consolidated Financial Statements This section presents the detailed unaudited consolidated balance sheets, statements of income, and average balance, yield, and rate tables for the specified periods - The report includes the Consolidated Balance Sheets, providing a detailed snapshot of assets, liabilities, and shareholders' equity[40] - The Consolidated Statements of Income detail the company's revenues, expenses, and profitability for the three and six-month periods ended June 30, 2025[42] - Detailed tables analyzing average balances, yields on assets, and costs of liabilities are provided to support the net interest income and margin analysis[44][47] Non-GAAP Reconciliations The company provides reconciliations for several non-GAAP financial measures used by management to analyze performance, including Return on Average Tangible Common Equity (ROATCE), Tangible Common Equity (TCE) per common share, and the ratio of TCE to total assets Non-GAAP Financial Measures Reconciliation | Non-GAAP Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | ROATCE (annualized) | 11.87% | 10.45% | 8.75% | | TCE per common share | $21.44 | $20.97 | $19.95 | | TCE to total assets | 9.30% | 9.48% | 9.97% | - These non-GAAP measures are presented as supplemental information and are calculated by excluding preferred stock from shareholders' equity, as the company had no intangible assets[50]