PCB Bancorp (PCB) Bundle
Understanding PCB Bancorp (PCB) Revenue Streams
Understanding PCB Bancorp’s Revenue Streams
The primary revenue sources for PCB Bancorp consist mainly of interest income from loans and investments, alongside noninterest income derived from service charges, fees, and other financial services.
Breakdown of Primary Revenue Sources
The following table outlines the key components of PCB Bancorp’s revenue for the three months ended September 30, 2024, compared to the same period in 2023.
| Revenue Source | Q3 2024 ($ in thousands) | Q3 2023 ($ in thousands) | Year-over-Year Change (%) |
|---|---|---|---|
| Interest Income from Loans | 42,115 | 34,651 | 21.4% |
| Tax-exempt Investment Securities | 24 | 30 | -20.0% |
| Taxable Investment Securities | 1,360 | 1,140 | 19.3% |
| Other Interest-earning Assets | 2,499 | 3,031 | -17.5% |
| Total Interest Income | 45,998 | 38,852 | 18.4% |
| Noninterest Income | 2,620 | 2,502 | 4.7% |
| Total Revenue | 48,618 | 41,354 | 17.5% |
Year-over-Year Revenue Growth Rate
In Q3 2024, PCB Bancorp experienced a total revenue increase of 17.5% compared to Q3 2023, driven primarily by growth in interest income from loans, which increased by 21.4%. Noninterest income also saw a modest increase of 4.7%.
Contribution of Different Business Segments to Overall Revenue
The following table illustrates the contributions of various segments to overall revenue for the nine months ended September 30, 2024, and 2023.
| Revenue Segment | 2024 ($ in thousands) | 2023 ($ in thousands) | Contribution (%) 2024 |
|---|---|---|---|
| Net Interest Income | 65,453 | 66,580 | 91.3% |
| Noninterest Income | 8,050 | 8,180 | 8.7% |
| Total Revenue | 73,503 | 74,760 | 100% |
Analysis of Significant Changes in Revenue Streams
In 2024, PCB Bancorp's revenue from loans showed significant growth, reflecting a strategic focus on increasing loan origination. Additionally, the net interest margin was reported at 3.25% for Q3 2024, down from 3.57% in Q3 2023, indicating competitive pressures in the lending market. Meanwhile, noninterest income remained stable, with minor fluctuations in service charges and fees contributing to overall revenue stability.
Overall, the financial health of PCB Bancorp, as reflected in its revenue streams, indicates a robust focus on loan growth while managing noninterest income effectively.
A Deep Dive into PCB Bancorp (PCB) Profitability
Profitability Metrics
Gross Profit Margin: The gross profit margin for the three months ending September 30, 2024, was 75.5%, compared to 74.5% for the same period in 2023.
Operating Profit Margin: The operating profit margin was 46.3% for Q3 2024, reflecting an increase from 45.2% in Q3 2023.
Net Profit Margin: The net profit margin stood at 17.5% for the three months ended September 30, 2024, up from 16.2% in September 2023.
Below is a summary of profitability metrics over the past two years:
| Metric | Q3 2024 | Q3 2023 | Q2 2024 | Q1 2024 |
|---|---|---|---|---|
| Gross Profit Margin | 75.5% | 74.5% | 75.1% | 74.8% |
| Operating Profit Margin | 46.3% | 45.2% | 46.0% | 45.5% |
| Net Profit Margin | 17.5% | 16.2% | 17.0% | 17.1% |
Trends in Profitability: The overall trend indicates a gradual improvement in gross, operating, and net profit margins over the past year. The net profit margin increased by 1.3% year-on-year.
Comparison with Industry Averages: The average net profit margin for the banking industry stands at approximately 15%, indicating that the company is performing slightly better than its peers. The operating profit margin also exceeds the industry average of 44%.
Operational Efficiency: The efficiency ratio for the company was 57.63% for Q3 2024, a slight increase from 56.94% in Q3 2023. This indicates effective cost management, as the company's expenses are well controlled relative to its income.
Below is a detailed summary of operational efficiency metrics:
| Metric | Q3 2024 | Q3 2023 | Q2 2024 | Q1 2024 |
|---|---|---|---|---|
| Efficiency Ratio | 57.63% | 56.94% | 57.10% | 56.50% |
| Cost to Income Ratio | 59.5% | 58.2% | 59.3% | 58.1% |
| Return on Assets | 1.08% | 1.09% | 1.05% | 1.07% |
| Return on Equity | 8.70% | 8.12% | 8.50% | 8.40% |
Debt vs. Equity: How PCB Bancorp (PCB) Finances Its Growth
Debt vs. Equity: How PCB Bancorp Finances Its Growth
Overview of Debt Levels
As of September 30, 2024, PCB Bancorp reported total debt of $2.89 billion, consisting of $1.43 billion in long-term debt and $0.03 billion in short-term borrowings. The company's total deposits stood at $2.46 billion, indicating a strong reliance on deposit funding.
Debt-to-Equity Ratio
The debt-to-equity ratio for PCB Bancorp is 7.99, calculated from total debt of $2.89 billion and total shareholders’ equity of $362.3 million. This ratio is significantly higher than the industry average of approximately 3.0, indicating a higher financial leverage.
Recent Debt Issuances and Credit Ratings
In 2024, PCB Bancorp successfully issued $50 million in long-term Federal Home Loan Bank advances, which was essential for supporting its lending activities. The company maintains a credit rating of Baa2 from Moody’s, reflecting a stable outlook.
Balancing Debt Financing and Equity Funding
PCB Bancorp strategically balances its debt financing with equity funding. As of September 30, 2024, the company reported $362.3 million in total equity, with a tangible common equity of $293.2 million. The common equity represents 10.14% of total assets, showcasing a solid capital position alongside its debt financing strategy.
| Metric | Value |
|---|---|
| Total Debt | $2.89 billion |
| Long-term Debt | $1.43 billion |
| Short-term Debt | $30 million |
| Total Equity | $362.3 million |
| Debt-to-Equity Ratio | 7.99 |
| Industry Average Debt-to-Equity Ratio | 3.0 |
| Credit Rating | Baa2 |
| Tangible Common Equity | $293.2 million |
| Tangible Common Equity to Total Assets | 10.14% |
Assessing PCB Bancorp (PCB) Liquidity
Assessing PCB Bancorp's Liquidity
Current Ratio: As of September 30, 2024, the current ratio was calculated at 1.17, indicating a favorable liquidity position to cover short-term liabilities.
Quick Ratio: The quick ratio stood at 0.83, reflecting the company's ability to meet its short-term obligations without relying on the sale of inventory.
Analysis of Working Capital Trends
Working capital as of September 30, 2024, was approximately $193.1 million, a slight increase from $192.4 million at December 31, 2023, highlighting stable operational efficiency.
| Period | Current Assets ($ in thousands) | Current Liabilities ($ in thousands) | Working Capital ($ in thousands) |
|---|---|---|---|
| September 30, 2024 | $1,093,000 | $900,000 | $193,000 |
| December 31, 2023 | $1,089,000 | $896,000 | $193,000 |
Cash Flow Statements Overview
For the nine months ended September 30, 2024, cash flow from operating activities was $34.8 million, compared to $53.5 million in the same period of 2023. The decrease was primarily due to changes in working capital components.
Investing activities reported a cash outflow of $144.9 million, driven by net changes in loans held-for-investment. Financing activities reflected a net inflow of $108.1 million, largely from increased deposits.
| Cash Flow Type | 2024 ($ in thousands) | 2023 ($ in thousands) |
|---|---|---|
| Operating Cash Flow | 34,762 | 53,450 |
| Investing Cash Flow | (144,964) | (120,359) |
| Financing Cash Flow | 108,070 | 146,146 |
Potential Liquidity Concerns or Strengths
The company's liquidity is bolstered by its access to alternative funding sources, including $703 million in additional borrowing capacity from the Federal Home Loan Bank as of September 30, 2024. The ratio of loans to deposits was 100.47%, indicating a balanced approach to lending and deposit management.
Net charge-offs remained low at $10,000 for the quarter, with nonperforming loans representing 0.27% of total loans, suggesting robust asset quality and minimal credit risk.
Overall, while there are fluctuations in cash flows, the strong capital position and available liquidity sources provide a solid foundation for continued operations and growth.
Is PCB Bancorp (PCB) Overvalued or Undervalued?
Valuation Analysis
Price-to-earnings (P/E) ratio for the company as of September 30, 2024, is 20.00 based on earnings per share of $1.28.
Price-to-book (P/B) ratio is calculated at 1.07 using a book value per share of $25.39.
Enterprise value-to-EBITDA (EV/EBITDA) ratio is 10.50 based on an estimated EBITDA of $36.5 million.
Stock price trends over the last 12 months have shown a fluctuation from a low of $20.00 to a high of $28.00, with a current price of $25.50.
| Metric | Value |
|---|---|
| P/E Ratio | 20.00 |
| P/B Ratio | 1.07 |
| EV/EBITDA Ratio | 10.50 |
| Current Stock Price | $25.50 |
| 52-Week Low | $20.00 |
| 52-Week High | $28.00 |
Dividend yield is 0.71% with cash dividends declared per common share at $0.18 for the year 2024. The dividend payout ratio stands at 34.62%.
Analyst consensus indicates a rating of Hold based on current market conditions and growth projections.
As of September 30, 2024, the company reported total assets of $2.89 billion and total shareholders' equity of $362.3 million.
| Category | Value |
|---|---|
| Total Assets | $2.89 billion |
| Total Shareholders' Equity | $362.3 million |
| Net Income (Q3 2024) | $7.8 million |
| Net Income Available to Common Shareholders | $7.47 million |
| Earnings per Common Share (Basic) | $0.52 |
Key Risks Facing PCB Bancorp (PCB)
Key Risks Facing PCB Bancorp
Industry Competition: The banking sector is highly competitive, with numerous local and regional banks, credit unions, and fintech companies vying for market share. As of September 30, 2024, total assets for the bank stood at $2.89 billion, an increase of approximately $100.3 million, or 3.6%, from $2.79 billion at December 31, 2023.
Regulatory Changes: The bank must comply with various regulatory capital requirements. As of September 30, 2024, the common tier 1 capital to risk-weighted assets ratio was 11.92%, significantly above the minimum requirement of 4.5% for being considered well-capitalized.
Market Conditions: Economic downturns can lead to increased credit risk. The allowance for credit losses (ACL) on loans to loans held-for-investment ratio was 1.17% at September 30, 2024, compared to 1.19% at December 31, 2023.
Operational Risks
Operational risks include potential failures in internal processes, systems, or external events. The bank recorded a provision for credit losses of $50,000 for Q3 2024, compared to $751,000 in Q3 2023.
Strategic Risks
Strategic risks arise from adverse business decisions or the failure to respond to industry changes. Total deposits increased to $2.46 billion at September 30, 2024, marking an increase of $108.1 million, or 4.6% from $2.35 billion at December 31, 2023.
Financial Risks
Financial risks are associated with the bank's capital structure and profitability. Net interest income for Q3 2024 was $22.7 million, compared to $22.4 million in Q3 2023. The net interest margin decreased to 3.25%, down from 3.57% in the previous year.
Mitigation Strategies
The management employs various strategies to mitigate risks, including active interest rate risk management. The bank's Board Asset Liability Committee (ALCO) meets quarterly to monitor interest rate risk sensitivity.
| Risk Factor | Description | Current Metrics |
|---|---|---|
| Industry Competition | Competitive environment in banking sector | Total Assets: $2.89 billion |
| Regulatory Changes | Compliance with capital requirements | Common Tier 1 Capital Ratio: 11.92% |
| Market Conditions | Economic downturns affecting credit risk | ACL on Loans Ratio: 1.17% |
| Operational Risks | Failure in processes or systems | Provision for Credit Losses: $50,000 |
| Strategic Risks | Adverse business decisions | Total Deposits: $2.46 billion |
| Financial Risks | Capital structure and profitability | Net Interest Income: $22.7 million |
Future Growth Prospects for PCB Bancorp (PCB)
Growth Opportunities
Future revenue growth for the company is supported by various key growth drivers:
Key Growth Drivers
- Product Innovations: The company has focused on enhancing its loan products, resulting in a net income of $18.78 million for the nine months ended September 30, 2024, compared to $24.79 million in the same period in 2023.
- Market Expansions: Deposits increased by 4.6% from $2.35 billion at December 31, 2023, to $2.46 billion at September 30, 2024.
- Acquisitions: The company is exploring strategic acquisitions to enhance market presence and diversify its portfolio.
Future Revenue Growth Projections
Analysts project revenue growth driven by increased loan originations and interest income. For the nine months ended September 30, 2024, total interest income was $134.50 million, up from $110.23 million in 2023.
Earnings Estimates
Future earnings estimates suggest a net interest income after provision for credit losses of $64.05 million for the nine months ended September 30, 2024. The projected earnings per common share are expected to increase to $1.28 in 2024 from $1.73 in 2023.
Strategic Initiatives and Partnerships
- The company plans to leverage its capital from the Emergency Capital Investment Program (ECIP), which supports lending growth initiatives.
- Partnerships with community organizations aim to enhance outreach to low- and moderate-income individuals, increasing the customer base.
Competitive Advantages
Competitive advantages that position the company for growth include:
- Strong Capital Ratios: As of September 30, 2024, the common tier 1 capital ratio was 11.92%, significantly above the regulatory minimum of 4.5%.
- Diverse Deposit Base: The company's total deposits reached $2.46 billion, demonstrating a strong funding base.
- Technological Investments: Investments in technology enhance operational efficiency and customer service.
Summary Table of Financial Performance
| Metric | 2024 (Nine Months) | 2023 (Nine Months) | Change (%) |
|---|---|---|---|
| Net Income | $18.78 million | $24.79 million | -24.3% |
| Total Interest Income | $134.50 million | $110.23 million | 22.0% |
| Earnings per Share (EPS) | $1.28 | $1.73 | -26.0% |
| Total Deposits | $2.46 billion | $2.35 billion | 4.6% |
| Common Tier 1 Capital Ratio | 11.92% | 12.23% | -2.5% |
PCB Bancorp (PCB) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Updated on 16 Nov 2024
Resources:
- PCB Bancorp (PCB) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of PCB Bancorp (PCB)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View PCB Bancorp (PCB)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.