PCB Bancorp (PCB 4.00%), a California-based community bank focused on small business and consumer clients, released its second quarter 2025 results on July 24, 2025. The bank reported earnings per share of $0.62, beating the analyst estimate of $0.56. Net interest income was $26.0 million, which fell short of the $28.63 million consensus. The quarter saw notable improvements in profitability and operational efficiency, but also some emerging credit quality concerns, especially in consumer lending. Overall, the period reflected strong growth and profit delivery.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS | $0.62 | $0.56 | $0.43 | 44.2% |
| Revenue (Net Interest Income) | $26.0 million | $28.63 million | $21.7 million | 19.6% |
| Net Income Available to Common Shareholders | $9.0 million | $6.1 million | 46.3% | |
| Efficiency Ratio | 50.6% | 62.7% | (12.1) pp | |
| Source: Analyst estimates for the quarter provided by FactSet. |
About PCB Bancorp and Its Business Model
PCB Bancorp operates as a community bank, serving customers in California and several other states through a network of branches. It focuses on commercial real estate loans, business lending, and consumer banking. The bank offers products such as commercial and industrial loans, residential mortgages, and Small Business Administration (SBA) loans. Its customer base is rooted in the Korean-American community but has expanded to broader markets.
In recent years, PCB Bancorp has worked to grow its lending portfolio, expand geographically, and strengthen risk controls. Its success depends on prudent lending, strong credit risk management, and maintaining a stable deposit base.
Quarter in Review: Key Developments and Performance Drivers
The quarter saw continued expansion in the loan portfolio. Loans held-for-investment reached $2.80 billion, up 14.1% from a year earlier. Commercial real estate loans made up 66.7% of total loans as of December 31, 2024. Growth in this area was 15.6% year over year, while commercial and industrial loans increased 18.1% compared to the same period last year. Consumer lending, including residential mortgages, remained relatively flat but was up about 5.7% over the prior year. The bank also opened a full-service branch in Georgia, its first in that state, supporting further geographic diversification.
Fee income was notable, especially from SBA loan sales. The bank sold $26.9 million in SBA loans, nearly double the amount sold in the prior year, and realized $1.5 million in gains, a 92% increase from the previous year and up 65.2% from the prior quarter. The efficiency ratio improved compared to the prior year, reflecting better cost management. The net interest margin, which measures the difference between interest income and interest paid, also improved from the previous year.
Deposit growth was strong, with total deposits reaching $2.82 billion, an increase of 17.3% from the previous year. The proportion of noninterest-bearing deposits, which help keep funding costs low, slipped to 20.4% of the total, compared to 22.6% a year ago. Interest-bearing deposits now make up a larger share of funding. The cost of total funding declined to 3.35%, down from 3.81% in the prior year.
Credit quality metrics showed some areas for attention. The allowance for credit losses rose to 1.20% of loans at June 30, 2025, from 1.17% at June 30, 2024, and the bank increased its provision for credit losses to $1.8 million. Non-performing loans were $8.9 million, or 0.32% of loans held-for-investment, with a sharp increase in nonaccrual residential mortgages, up 402.4% year over year. Classified assets, which are loans flagged as higher risk, nearly doubled compared to the previous quarter. These trends suggest potential headwinds if they continue.
Looking Ahead: Management Outlook and Investor Watch Areas
Management expressed optimism about continued organic growth, highlighting ongoing loan and deposit momentum, a solid liquidity position, and capital ratios well above regulatory minimums. PCB Bancorp did not provide numeric forward guidance for the rest of fiscal 2025. Leadership noted the potential impact of external risks, including inflation and trade uncertainty.
For future quarters, investors should monitor credit quality trends, especially in the residential mortgage portfolio and classified assets. Improvements in margin and efficiency have supported earnings growth, but ongoing credit and funding cost trends will be important to watch.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
