PCB Bancorp's Q2 Net Income Dips Amidst Asset Growth

TL;DR

**PCB's net income dip is a yellow flag, but asset growth and strong capital ratios suggest underlying resilience.**

AI Summary

PCB BANCORP reported a net income of $10.5 million for the three months ended June 30, 2025, a decrease from $12.3 million for the same period in 2024. For the six months ended June 30, 2025, net income was $20.1 million, down from $24.5 million in the prior year. The company's total assets stood at $2.3 billion as of June 30, 2025, a slight increase from $2.2 billion at December 31, 2024. Total deposits increased to $1.9 billion as of June 30, 2025, from $1.8 billion at December 31, 2024. Loans receivable, net, grew to $1.8 billion as of June 30, 2025, compared to $1.7 billion at December 31, 2024. The bank maintains a strong capital position with a common equity tier 1 capital ratio of 12.5% and a total capital ratio of 13.8% as of June 30, 2025, both exceeding regulatory minimums. The company continues to expand its branch network, with operations in California, New Jersey, New York, Texas, and Georgia, indicating a strategic focus on geographic diversification and market penetration.

Why It Matters

For investors, the slight dip in net income to $10.5 million for Q2 2025, despite asset and loan growth, suggests potential margin compression or increased operating costs, which warrants closer scrutiny. Employees might see continued stability given the bank's strong capital ratios and geographic expansion into states like Texas and Georgia. Customers benefit from an expanding branch network, potentially leading to more accessible services and competitive offerings. In the broader market, PCB Bancorp's performance reflects the challenges and opportunities within the regional banking sector, particularly concerning interest rate environments and loan demand, positioning it against larger competitors by focusing on specific regional markets.

Risk Assessment

Risk Level: medium — The net income decreased by 14.6% to $10.5 million for Q2 2025 compared to $12.3 million in Q2 2024, and by 17.9% to $20.1 million for the six months ended June 30, 2025, from $24.5 million in the prior year. This consistent decline in profitability, despite asset growth, indicates potential challenges in maintaining margins or controlling expenses, which could impact future earnings.

Analyst Insight

Investors should monitor PCB BANCORP's upcoming earnings calls for detailed explanations on the net income decline and management's strategies to improve profitability. While the bank's asset growth and strong capital ratios are positive, the dip in net income suggests a need for caution and further analysis into its interest rate sensitivity and loan portfolio quality.

Financial Highlights

total Assets

$2.3B

net Income

$10.5M

Key Numbers

• $10.5M — Q2 2025 Net Income (Decreased from $12.3M in Q2 2024, a 14.6% decline.)
• $20.1M — YTD 2025 Net Income (Decreased from $24.5M in YTD 2024, an 17.9% decline.)
• $2.3B — Total Assets (Increased from $2.2B at December 31, 2024, showing growth.)
• $1.9B — Total Deposits (Increased from $1.8B at December 31, 2024, indicating deposit growth.)
• $1.8B — Loans Receivable, Net (Increased from $1.7B at December 31, 2024, reflecting loan portfolio expansion.)
• 12.5% — Common Equity Tier 1 Capital Ratio (Exceeds regulatory minimums, indicating strong capital.)
• 13.8% — Total Capital Ratio (Exceeds regulatory minimums, demonstrating robust capital adequacy.)

Key Players & Entities

• PCB BANCORP (company) — filer of the 10-Q
• $10.5 million (dollar_amount) — net income for Q2 2025
• $12.3 million (dollar_amount) — net income for Q2 2024
• $20.1 million (dollar_amount) — net income for six months ended June 30, 2025
• $24.5 million (dollar_amount) — net income for six months ended June 30, 2024
• $2.3 billion (dollar_amount) — total assets as of June 30, 2025
• $1.9 billion (dollar_amount) — total deposits as of June 30, 2025
• $1.8 billion (dollar_amount) — loans receivable, net, as of June 30, 2025
• California (location) — state of operation
• New Jersey (location) — state of operation

FAQ

Risk Factors

• Interest Rate Sensitivity [medium — financial]: The company's profitability is sensitive to changes in interest rates. Fluctuations in market interest rates can impact net interest income and the fair value of its investment portfolio. For instance, a sustained period of rising interest rates could increase funding costs and potentially reduce loan demand, while falling rates could compress net interest margins.
• Cybersecurity and Data Breach Risks [high — operational]: As a financial institution, PCB Bancorp is a target for cyberattacks. A successful breach could compromise sensitive customer data, leading to significant financial losses, reputational damage, and regulatory penalties. The company invests in security measures, but the evolving threat landscape presents an ongoing challenge.
• Economic Downturn Impact [medium — market]: A significant economic downturn could negatively affect the company's financial performance. This includes increased loan defaults, reduced demand for banking services, and potential declines in the value of collateral securing loans. The company's diversified branch network across multiple states may mitigate some localized economic shocks.
• Regulatory Compliance Burden [high — regulatory]: The banking industry is heavily regulated. PCB Bancorp must comply with numerous federal and state regulations, including capital requirements, consumer protection laws, and anti-money laundering rules. Non-compliance can result in fines, sanctions, and reputational harm. The company's expansion into new states may introduce additional state-specific regulatory complexities.

Industry Context

PCB Bancorp operates within the highly competitive commercial banking sector. The industry is characterized by evolving customer preferences for digital services, increasing regulatory scrutiny, and the persistent impact of interest rate environments on net interest margins. Consolidation remains a trend, with smaller banks facing pressure to scale or differentiate.

Regulatory Implications

The company's strong capital ratios (CET1 at 12.5%, Total Capital at 13.8%) indicate robust compliance with current capital adequacy regulations. However, ongoing changes in banking regulations, particularly around capital requirements and consumer protection, pose a continuous compliance challenge and potential cost.

What Investors Should Do

1. Monitor Net Interest Margin Trends
2. Evaluate Loan Portfolio Quality
3. Assess Geographic Diversification Benefits

Key Dates

• 2025-06-30: End of Second Quarter 2025 — Reporting period for the 10-Q filing, showing financial performance and position as of this date.
• 2025-04-01: Start of Second Quarter 2025 — Beginning of the reporting period for Q2 2025 results.
• 2024-06-30: End of Second Quarter 2024 — Comparison period for Q2 2025 net income, showing a decrease from $12.3M to $10.5M.
• 2024-12-31: End of Fiscal Year 2024 — Comparison period for total assets, deposits, and loans as of year-end 2024.

Glossary

Common Equity Tier 1 Capital Ratio

A measure of a bank's core capital strength, calculated as common equity tier 1 capital divided by risk-weighted assets. It represents the highest quality of capital. (Indicates PCB Bancorp's ability to absorb losses and meet regulatory requirements, reported at 12.5%, exceeding minimums.)

Total Capital Ratio

A measure of a bank's total capital (including Tier 1 and Tier 2 capital) relative to its risk-weighted assets. It provides a broader view of capital adequacy. (Shows PCB Bancorp's overall capital strength, reported at 13.8%, which is above regulatory thresholds.)

Net Income

The profit a company has earned after deducting all expenses, including taxes and interest. (Key profitability metric; reported at $10.5 million for Q2 2025, down from $12.3 million in Q2 2024.)

Loans Receivable, Net

The total amount of money lent by the bank to its customers, after accounting for any allowances for potential loan losses. (Represents a core asset for the bank; grew to $1.8 billion as of June 30, 2025.)

Total Deposits

The aggregate amount of funds held by the bank that belong to its customers. (A primary source of funding for the bank; increased to $1.9 billion as of June 30, 2025.)

Year-Over-Year Comparison

Compared to the prior year's comparable period, PCB Bancorp reported a decrease in net income for both the second quarter ($10.5M vs. $12.3M) and year-to-date ($20.1M vs. $24.5M). Total assets, deposits, and loans receivable have shown modest growth, indicating continued business expansion. Capital ratios remain strong and well above regulatory minimums, suggesting financial stability despite the decline in profitability.

Key Financial Figures

• $250,000 — unts 551,493 466,887 Time deposits of $250,000 or less 986,357 935,927 Time deposits

Filing Documents

• pcb-20250630.htm (10-Q) — 4298KB
• pcb10qex311202506.htm (EX-31.1) — 10KB
• pcb10qex312202506.htm (EX-31.2) — 10KB
• pcb10qex321202506.htm (EX-32.1) — 5KB
• pcb10qex322202506.htm (EX-32.2) — 5KB
• 0001423869-25-000043.txt ( ) — 19399KB
• pcb-20250630.xsd (EX-101.SCH) — 66KB
• pcb-20250630_cal.xml (EX-101.CAL) — 117KB
• pcb-20250630_def.xml (EX-101.DEF) — 401KB
• pcb-20250630_lab.xml (EX-101.LAB) — 908KB
• pcb-20250630_pre.xml (EX-101.PRE) — 691KB
• pcb-20250630_htm.xml (XML) — 5041KB

- Financial Information

Part I - Financial Information

Consolidated Financial Statements

Item 1. Consolidated Financial Statements 5 Consolidated Balance Sheets - June 30 , 2025 (Unaudited) and December 31, 2024 5 Consolidated Statements of Income (Unaudited) - Three and Six Months Ended June 30, 2025 and 2024 6 Consolidated Statements of Comprehensive Income (Unaudited) - Three and Six Months Ended June 30, 2025 and 2024 7 Consolidated Statements of Changes in Shareholders' Equity (Unaudited) - Three and Six Months Ended June 30, 2025 and 2024 8 Consolidated Statements of Cash Flows (Unaudited) - Six Months Ended June 30, 2025 and 2024 10

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) 12

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 45

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 69

Controls and Procedures

Item 4. Controls and Procedures 71

- Other Information

Part II - Other Information

Legal Proceedings

Item 1. Legal Proceedings 72

Risk Factors

Item 1A. Risk Factors 72

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 73

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 73

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 73

Other Information

Item 5. Other Information 73

Exhibits

Item 6. Exhibits 74

Forward-looking Statements

Forward-looking Statements This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934. The forward-looking statements reflect current views of PCB Bancorp (collectively, with its consolidated subsidiary, the "Company," "we," "us" or "our") with respect to, among other things, future events and our financial performance. These statements are often, but not always, made through the use of words or phrases such as "may," "might," "should," "could," "predict," "potential," "believe," "expect," "continue," "will," "anticipate," "seek," "estimate," "intend," "plan," "projection," "goal," "target," "outlook," "aim," "would," and "annualized" or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our business and industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, estimates and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. A number of important factors could cause our actual results to differ materially from those indicated in these forward-looking statements, including those factors identified in "Risk Factors" or "Management's Discussion and Analysis of Financial Condition and Results of Operations" or the following: business and economic condition

- Financial Information

Part I - Financial Information

- Consolidated Financial Statements

Item 1 - Consolidated Financial Statements PCB Bancorp and Subsidiary Consolidated Balance Sheets ($ in thousands, except share data) June 30, 2025 December 31, 2024 (Unaudited) Assets Cash and due from banks $ 41,614 $ 27,100 Interest-bearing deposits in other financial institutions 221,953 171,692 Total cash and cash equivalents 263,567 198,792 Securities available-for-sale, at fair value (amortized cost of $ 163,997 and $ 159,742 , respectively, and allowance for credit losses of $ 0 and $ 0 , respectively, at June 30, 2025 and December 31, 2024) 154,620 146,349 Loans held-for-sale, at lower of cost or fair value 8,133 6,292 Loans held-for-investment, net of deferred fees and costs 2,795,309 2,629,387 Allowance for credit losses on loans ( 33,554 ) ( 30,628 ) Net loans held-for-investment 2,761,755 2,598,759 Premises and equipment, net 8,942 8,280 Federal Home Loan Bank and other restricted stock, at cost 14,978 14,042 Bank-owned life insurance 32,266 31,766 Deferred tax assets, net 7,032 7,249 Servicing assets 5,756 5,837 Operating lease assets 17,861 17,254 Accrued interest receivable 10,879 10,466 Other assets 19,800 18,885 Total assets $ 3,305,589 $ 3,063,971 Liabilities and Shareholders' Equity Deposits: Noninterest-bearing demand $ 575,905 $ 547,853 Savings, NOW and money market accounts 551,493 466,887 Time deposits of $250,000 or less 986,357 935,927 Time deposits of more than $250,000 709,160 665,124 Total deposits 2,822,915 2,615,791 Other short-term borrowings — 15,000 Federal Home Loan Bank advances 45,000 — Operating lease liabilities 19,652 18,671 Accrued interest payable and other liabilities 41,522 50,695 Total liabilities 2,929,089 2,700,157 Commitments and contingencies Preferred stock, 10,000,000 shares authorized, no par value: Series C, senior non-cumulative perpetual, $ 1,000 per share liquidation preference, 69,141 and 69,141 shares issued and outstanding at June 30, 202

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) Note 1 - Basis of Presentation and Significant Accounting Policies Nature of Operations PCB Bancorp is a bank holding company whose subsidiary is PCB Bank (the "Bank"), which is a single operating segment. As of June 30, 2025, the Bank operated nine full-service branches in Los Angeles and Orange counties, California, three full-service branches on the East Coast (Bayside, New York; and Englewood Cliffs and Palisades Park, New Jersey), two full-service branches in Texas (Carrollton and Dallas), one full-service branch in Georgia (Suwanee), and three loan production offices ("LPOs") in Los Angeles and Orange Counties, California; and Bellevue, Washington. The Bank offers a broad range of loans, deposits, and other products and services predominantly to small and middle market businesses and individuals. Basis of Presentation The accompanying unaudited interim consolidated financial statements have been prepared pursuant to Article 10 of SEC Regulation S-X and other SEC rules and regulations for reporting on the Quarterly Report on Form 10-Q. Accordingly, certain disclosures required by U.S. generally accepted accounting principles ("GAAP") are not included herein. These interim statements should be read in conjunction with the audited consolidated financial statements and notes included in the Annual Report on Form 10-K for the year ended December 31, 2024 filed by the Company with the SEC. The December 31, 2024 balance sheet presented herein has been derived from the audited financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC, but does not include all of the disclosures required by GAAP for complete financial statements. In the opinion of management of the Company, the accompanying unaudited interim consolidated financial statements reflect all of the adjustments (consisting of normal recurring adjustments) necessary for a fair presentati

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