Los Angeles, California - October 24, 2024 - PCB Bancorp (the “Company”) (NASDAQ: PCB), the holding company of PCB Bank (the “Bank”), today reported net income available to common shareholders of $7.5 million, or $0.52 per diluted common share, for the third quarter of 2024, compared with $6.1 million, or $0.43 per diluted common share, for the previous quarter and $7.0 million, or $0.49 per diluted common share, for the year-ago quarter.

•Net income available to common shareholders totaled $7.5 million, or $0.52 per diluted common share;

•Recorded a provision for credit losses of $50 thousand for the current quarter compared with $259 thousand for the previous quarter and $751 thousand for the year-ago quarter;

•Allowance for Credit Losses (“ACL”) on loans to loans held-for-investment ratio was 1.17% at September 30, 2024 compared with 1.17% at June 30, 2024, 1.19% at December 31, 2023 and 1.18% at September 30, 2023;

•Net interest income was $22.7 million for the current quarter compared with $21.7 million for the previous quarter and $22.4 million for the year-ago quarter. Net interest margin was 3.25% for the current quarter compared with 3.16% for the previous quarter and 3.57% for the year-ago quarter;

•Gain on sale of loans was $750 thousand for the current quarter compared with $763 thousand for the previous quarter and $689 thousand for the year-ago quarter;

•Total assets were $2.89 billion at September 30, 2024, an increase of $36.9 million, or 1.3%, from $2.85 billion at June 30, 2024, an increase of $100.3 million, or 3.6%, from $2.79 billion at December 31, 2023 and an increase of $321.9 million, or 12.5%, from $2.57 billion at September 30, 2023;

•Loans held-for-investment were $2.47 billion at September 30, 2024, an increase of $17.1 million, or 0.7%, from $2.45 billion at June 30, 2024, an increase of $142.7 million, or 6.1% from $2.32 billion at December 31, 2023, and an increase of $298.6 million, or 13.8%, from $2.17 billion at September 30, 2023; and

•Total deposits were $2.46 billion at September 30, 2024, an increase of $53.4 million, or 2.2%, from $2.41 billion at June 30, 2024, an increase of $108.1 million, or 4.6%, from $2.35 billion at December 31, 2023, and an increase of $267.6 million, or 12.2%, from $2.19 billion at September 30, 2023.

“PCB’s third quarter was another solid quarter for us, highlighted by a 21.6% increase in net income available to common shareholders to $7.5 million that was benefited from our solid year-over-year loan growth combined with our expanded net interest margin,” said Henry Kim, President and Chief Executive Officer. “Additionally, we continue to maintain strong credit metrics, solid ACL, and robust capital ratios.”

“During the third quarter, our loan balance increased 0.8% to $2.5 billion, deposits increased 2.2% to $2.5 billion, and we maintained our ACL to loan ratio at 1.17%, while reducing our non-performing assets and classified assets to total assets ratios to 0.24% and 0.32%, respectively.”

Mr. Kim added, “As we look ahead to the fourth quarter and next year, our strategic expansion of our footprint and branch network optimizations will provide us with continued strong balance sheet growth with solid financial results.”

(1)Ratios are presented on an annualized basis.

(2)Non-GAAP. See “Non-GAAP Measures” for reconciliation of this measure to its most comparable GAAP measure.

(3)Calculated by dividing noninterest expense by the sum of net interest income and noninterest income.

(4)Calculated by dividing total shareholders’ equity by the number of outstanding common shares.

(5)The Company did not have any intangible asset component for the presented periods.

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

(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 yield for the current quarter was primarily due to a higher average loan rate throughout the current quarter, partially offset by a decrease in net amortization of deferred loan fees. The increase for the current year-to-date period was primarily due to increases in overall interest rates on loans and net amortization of deferred loan fees.

The following table presents a composition of total loans by interest rate type accompanied with the weighted-average contractual rates as of the dates indicated:

On September 18, 2024, the Federal Open Market Committee decreased the Fed Funds rate by 50 bps and this change resulted in an overall decrease in weighted-average contractual rates on variable rate loans in September 2024.

Investment Securities. The increases in average yield for the current quarter and year-to-date periods were primarily due to higher yield on newly purchased investment securities.

Other Interest-Earning Assets. The increases in average yield for the current quarter and year-to-date period compared with the same periods of 2023 were primarily due to increases in interest rate on cash held at the Federal Reserve Bank and dividends received on Federal Home Loan Bank stock.

Interest-Bearing Deposits. The increases in average cost for the current quarter and year-to-date period compared with the same periods of 2023 were primarily due to an increase in market rates.

The following table presents a composition of provision (reversal) for credit losses for the periods indicated:

The provision for credit losses on loans for the current quarter was primarily due to an increase in loans held-for-investment.

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

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

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

The Company services SBA loans and certain residential property loans sold to the secondary market.

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

Salaries and Employee Benefits. The decrease for the current quarter compared with the previous quarter was primarily due to decreases in bonus and vacation accruals. The increase for the current year-to-date period was primarily due to increases in salaries, bonus accrual, incentives tied to sales of SBA loans originated at loan production offices, and other employee benefits, partially offset by a decrease in vacation accrual. The number of full-time equivalent employees was 264, 265 and 270 as of September 30, 2024, June 30, 2024 and September 30, 2023, respectively.

Occupancy and Equipment. The increases for the current quarter and year-to-date period compared with the same periods of 2023 were primarily due to an expansion of headquarters location in the second half of 2023 and a relocation of a regional office and two branches into one location in Orange County, California.

Professional Fees. During the first half of 2024, the Company incurred additional professional fees related to a core system conversion, which was completed in April 2024.

Marketing and Business Promotion. The increase for the current quarter compared with the previous quarter was primarily due

to an increase in advertisements. The decrease for the current quarter and year-to-date period compared with the same periods of 2023 was primarily due to an increase in advertisements in 2023 periods for the Company’s 20th anniversary celebration.

Other Expense. The increase for the year-to-date period was primarily due to a termination charge for the legacy core system of $508 thousand and an expense of $815 thousand for a reimbursement for an SBA loan guarantee previously paid by the SBA on a loan originated in 2014 that subsequently defaulted and was ultimately determined to be ineligible for the SBA guaranty during the previous quarter. The Company has retained a law firm specializing in SBA recovery demands to seek that SBA reconsider the evidence and allow the Company to recoup all or part of the reimbursement.

Total assets were $2.89 billion at September 30, 2024, an increase of $36.9 million, or 1.3%, from $2.85 billion at June 30, 2024, an increase of $100.3 million, or 3.6%, from $2.79 billion at December 31, 2023, and an increase of $321.9 million, or 12.5%, from $2.57 billion at September 30, 2023. The increases for the current quarter and year-to-date period were primarily due to increases in loans held-for-investment and other assets. During the current quarter, the Company invested $5.0 million in a qualified affordable housing project for lower income tenants in California. The recorded investment amount of the investment is included in Other Assets on the Consolidated Balance Sheets (unaudited).

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

The increase in loans held-for-investment for the current quarter was primarily due to new funding and advances on lines of credit of $764.7 million, partially offset by pay-downs and pay-offs of $746.8 million. The increase for the current year-to-date period was primarily due to new funding and advances on lines of credit of $1.83 billion, partially offset by pay-downs and pay-offs of $1.69 billion.

The increase in loans held-for-sale for the current quarter was primarily due to new funding of $15.9 million and a loan transferred from loan held-for-investment of $676 thousand, partially offset by sales of $14.2 million, and pay-downs and pay-offs of $174 thousand. The increase for the current year-to-date period was primarily due to new funding of $48.3 million and a loan transferred from loan held-for-investment of $676 thousand, partially offset by sales of $47.2 million, and pay-downs and pay-offs of $1.8 million.

The following table presents a composition of off-balance sheet credit exposure as of the dates indicated:

The following table presents a summary of non-performing loans and assets, and classified assets as of the dates indicated:

The following table presents activities in ACL for the periods indicated:

On January 1, 2023, the Company adopted the provisions of ASC 326 through the application of the modified retrospective transition approach. The initial adjustment to the ACL reflected the expected lifetime credit losses associated with the composition of financial assets within the scope of ASC 326 as of January 1, 2023, as well as management’s current expectation of future economic conditions. The Company recorded a net decrease of $1.9 million to the beginning balance of retained earnings as of January 1, 2023 for the cumulative effect adjustment, reflecting an initial adjustment to the ACL on loans of $1.1 million and the ACL on off-balance sheet credit exposures of $1.6 million, net of related deferred tax assets arising from temporary differences of $788 thousand.

Total investment securities were $147.6 million at September 30, 2024, a decrease of $374 thousand, or 0.3%, from $148.0 million at June 30, 2024, but an increase of $4.3 million, 3.0%, from $143.3 million at December 31, 2023 and an increase of $8.4 million, or 6.0%, from $139.2 million at September 30, 2023. The decrease for the current quarter was primarily due to principal pay-downs of $5.6 million and net premium amortization of $41 thousand, partially offset by a fair value increase of $5.3 million. The increase for the current year-to-date period was primarily due to purchases of $14.8 million and a fair value increase of $3.5 million, partially offset by principal pay-downs of $13.9 million and net premium amortization of $123 thousand.

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

Total retail deposits were $2.10 billion at September 30, 2024, an increase of $41.4 million, or 2.0%, from $2.06 billion at June 30, 2024, an increase of $116.7 million, or 5.9%, from $1.99 billion at December 31, 2023, and an increase of $173.7 million, or 9.0%, from $1.93 billion at September 30, 2023.

The increase in retail time deposits for the current quarter was primarily due to new accounts of $76.6 million, renewals of the matured accounts of $117.9 million and balance increases of $9.5 million, partially offset by matured and closed accounts of $167.1 million. The increase for the current year-to-date period was primarily due to new accounts of $272.7 million, renewals of the matured accounts of $560.4 million and balance increases of $28.4 million, partially offset by matured and closed accounts of $760.8 million.

The following table presents a summary of the Company’s liquidity position as of the dates indicated:

Shareholders’ equity was $362.3 million at September 30, 2024, an increase of $8.8 million, or 2.5%, from $353.5 million at June 30, 2024, an increase of $13.4 million, or 3.8%, from $348.9 million at December 31, 2023, and an increase of $20.4 million, or 6.0%, from $341.9 million at September 30, 2023. The increase for the current quarter was primarily due to net income and a decrease in accumulated other comprehensive loss of $3.7 million, partially offset by cash dividends declared on common stock of $2.6 million and preferred stock dividends of $346 thousand. The increase for the current year-to-date period was primarily due to net income and a decrease in accumulated other comprehensive loss of $2.5 million, partially offset by cash dividends declared on common stock of $7.7 million, preferred stock dividends of $488 thousand, and repurchase of common stock of $222 thousand.

In 2023, the Company repurchased and retired 512,657 shares of common stock at a weighted-average price of $17.22, totaling $8.8 million. During the current year-to-date period, the Company repurchased and retired 14,947 shares of common stock at a weighted-average price of $14.88, totaling $222 thousand. As of September 30, 2024, the Company is authorized to purchase 577,777 additional shares under its current stock repurchase program, which expires on August 2, 2025.

On May 24, 2022, the Company issued 69,141 shares of Senior Non-Cumulative Perpetual Preferred Stock, Series C, liquidation preference of $1,000 per share (“Series C Preferred Stock”) for the capital investment of $69.1 million from the U.S. Treasury under the Emergency Capital Investment Program (“ECIP”). The ECIP investment is treated as tier 1 capital for regulatory capital purposes.

The Series C Preferred Stock bore no dividend for the first 24 months following the investment date. Thereafter, the dividend rate will be determined quarterly based on the lending growth criteria listed in the terms of the ECIP investment with an annual dividend rate of up to 2%. After the tenth anniversary of the investment date, the dividend rate will be fixed based on the average annual amount of lending in years 2 through 10.

The Company began paying quarterly dividends on the Series C Preferred Stock at an annualized dividend rate of 2% in the second quarter of 2024. The dividends totaled $346 thousand and $488 thousand for the current quarter and year-to-date period, respectively.

Based on the Federal Reserve’s Small Bank Holding Company policy, the Company is not currently subject to consolidated minimum capital measurements. At such time as the Company reaches the $3 billion asset level, it will be subject to consolidated capital requirements independent of the Bank. For comparison purposes, the Company’s capital ratios are included in following table, which presents capital ratios for the Company and the Bank as of the dates indicated:

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 health of the national and local economies including the impact to the Company and its customers resulting from changes to, and the level of, inflation and interest rates; the Company’s ability to maintain and grow its deposit base; loan demand and continued portfolio performance; the impact of adverse developments at other banks, including bank failures, that impact general sentiment regarding the stability and liquidity of banks that could affect the Company’s liquidity, financial performance and stock price; changes to valuations of the Company’s assets and liabilities including the allowance for credit losses, earning assets, and intangible assets; changes to the availability of liquidity sources including borrowing lines and the ability to pledge or sell certain assets; the Company's ability to attract and retain skilled employees; customers' service expectations; cyber security risks; the Company's ability to successfully deploy new technology; acquisitions and branch and loan production office expansions; operational risks including the ability to detect and prevent errors and fraud; the effectiveness of the Company’s enterprise risk management framework; costs related to litigation; changes in laws, rules, regulations, or interpretations to which the Company is subject; the effects of severe weather events, pandemics, other public health crises, acts of war or terrorism, and other external events on our business. These and other important factors are detailed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 and other filings the Company makes with the SEC, which are available at the SEC’s Internet site (http://www.sec.gov) or 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 the Company does 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.

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(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.

(2)Non-GAAP. See “Non-GAAP Measures” for reconciliation of this measure to its most comparable GAAP measure.