Overview of Fourth Quarter and Full-Year 2025 Performance
PCB Bancorp, the holding company for PCB Bank, reported solid full-year earnings growth in 2025 despite a sequential decline in fourth-quarter profitability, reflecting disciplined balance-sheet management, stable margins, controlled expenses, and resilient credit quality in a changing rate environment. For the fourth quarter of 2025, net income available to common shareholders totaled $9.1 million, or $0.64 per diluted common share, compared with $11.3 million, or $0.78 per diluted common share, in the prior quarter and $6.7 million, or $0.46 per diluted common share, in the same period a year earlier. For the full year ended December 31, 2025, net income available to common shareholders increased meaningfully to $37.2 million, or $2.58 per diluted common share, compared with $25.0 million, or $1.74 per diluted common share, in 2024, representing strong year-over-year earnings growth driven by higher net interest income and continued loan expansion.
Key Earnings and Profitability Highlights
During the fourth quarter, PCB Bancorp generated net income of $9.1 million, while full-year net income reached $37.2 million, underscoring the Company’s ability to deliver consistent profitability amid fluctuating interest rates. Net interest income for the quarter totaled $26.6 million, slightly below the prior quarter but significantly higher than the year-ago quarter, while the net interest margin remained stable at 3.28%, unchanged from the previous quarter and up from 3.18% a year earlier. For the full year, net interest income increased to $103.9 million, with a net interest margin of 3.29%, compared with $88.6 million and 3.17%, respectively, in 2024, reflecting higher average loan balances and effective pricing discipline. Return on average assets for the quarter was 1.11% and return on average equity was 9.45%, while full-year ROAA and ROAE improved to 1.15% and 9.93%, respectively, highlighting sustained operating strength.
Provision for Credit Losses and Allowance Coverage
The provision for credit losses for the fourth quarter of 2025 was $1.0 million, compared with a reversal of $381 thousand in the previous quarter and a provision of $2.0 million in the year-ago quarter, primarily reflecting loan growth during the period. For the full year, total provision for credit losses amounted to $4.0 million, compared with $3.4 million in 2024. The allowance for credit losses on loans held-for-investment stood at $33.4 million at December 31, 2025, representing 1.18% of loans held-for-investment, compared with 1.20% at September 30, 2025, and 1.16% at December 31, 2024, indicating stable reserve coverage relative to portfolio size and risk composition.
Loan Growth and Balance-Sheet Expansion
PCB Bancorp continued to experience strong loan demand throughout 2025, with loans held-for-investment reaching $2.82 billion at December 31, 2025, reflecting an increase of $67.9 million, or 2.5%, from the prior quarter and an increase of $191.0 million, or 7.3%, from the prior year. Total loan growth during the fourth quarter was approximately $70 million on an annualized basis, driven primarily by new term loan originations and growth in commercial and industrial lending. Total assets ended the year at $3.28 billion, down modestly from $3.36 billion at September 30, 2025 due mainly to lower cash balances, but up $217.8 million, or 7.1%, from $3.06 billion at December 31, 2024, reflecting continued expansion of the core lending franchise.
Deposit Trends and Funding Strategy
Total deposits were $2.80 billion at December 31, 2025, declining $118.1 million, or 4.1%, from the previous quarter but increasing $179.6 million, or 6.9%, year over year. The quarterly decline was primarily attributable to a planned reduction of approximately $100 million in brokered deposits and an $18 million decrease in retail deposits, as management elected not to aggressively compete for high-cost deposits despite elevated marketplace rates. Noninterest-bearing demand deposits represented approximately 20% of total deposits at year-end, while retail money market balances remained a significant component of the funding base, supporting overall liquidity and margin stability.
Net Interest Income Composition and Margin Stability
Interest income from loans declined modestly on a linked-quarter basis due to lower market rates, but remained higher than the prior-year period, while interest expense decreased as deposit costs began to moderate. Despite recent Federal Open Market Committee rate cuts and lower yields on variable-rate loans, PCB Bancorp effectively maintained its net interest margin at 3.28% during the fourth quarter through disciplined asset-liability management and funding optimization. For the full year, average loan yields declined modestly compared with 2024, but this impact was partially offset by higher average balances, increased discount accretion, and a gradual decline in deposit costs.
Noninterest Income Performance
Noninterest income for the fourth quarter totaled $2.5 million, compared with $3.4 million in the previous quarter and $3.0 million in the year-ago quarter, reflecting lower gains on the sale of SBA loans. For the full year, noninterest income increased to $11.8 million from $11.1 million in 2024, supported by higher annual gains on loan sales, steady service charges on deposits, and consistent bank-owned life insurance income. Gain on sale of loans for the quarter was $648 thousand, while full-year gains reached $4.6 million, reflecting strong SBA loan sale activity despite quarterly variability in transaction timing.
Operating Expense Discipline and Efficiency
Total noninterest expense for the fourth quarter was $15.0 million, up slightly from the previous quarter but well controlled relative to revenue growth, while full-year noninterest expense declined modestly to $59.2 million from $60.0 million in 2024. Salaries and employee benefits increased year over year due to higher bonus accruals, insurance costs, and stock-based compensation, partially offset by deferred loan origination costs. Professional fees declined on a full-year basis following the completion of the Company’s core system conversion in 2024. The efficiency ratio was 51.51% for the fourth quarter and 51.16% for the full year, demonstrating continued operating leverage and cost discipline.
Credit Quality and Asset Quality Metrics
Credit quality remained solid throughout 2025, with nonperforming loans totaling $7.9 million at December 31, 2025, down from $8.2 million at September 30, 2025, though higher than $4.7 million a year earlier, primarily due to a small number of residential mortgage relationships. Nonperforming assets represented 0.24% of total assets, unchanged from the prior quarter, while classified assets declined to $9.2 million, representing 0.28% of total assets. Loans past due 30 to 59 days declined sharply on a year-over-year basis, and there were no loans past due 90 days or more that were still accruing interest, underscoring the overall strength of the loan portfolio.
Capital Position and Shareholder Value
PCB Bancorp maintained strong capital levels at year-end, with a Tier 1 leverage ratio of 11.89% and total shareholders’ equity to total assets of 11.88%. Tangible common equity to total assets stood at 9.78%, reflecting a well-capitalized balance sheet capable of supporting continued growth. Book value per common share increased to $27.41 at December 31, 2025, compared with $25.30 a year earlier, while tangible common equity per share rose to $22.55 from $20.49, demonstrating consistent growth in shareholder value.
Management Commentary and Outlook
Commenting on the results, President and Chief Executive Officer Henry Kim noted that the Company delivered strong full-year earnings and maintained margin stability despite a challenging rate environment and competitive deposit markets. He emphasized that loan demand remains robust heading into 2026, supported by a healthy pipeline, disciplined underwriting, and solid credit performance. Mr. Kim further highlighted that expenses remain well controlled and that the Company is well positioned to navigate ongoing geopolitical uncertainty and domestic economic challenges while continuing to execute its long-term growth strategy.
