CW Bancorp (OTCQX: CWBK), the parent company (“the Company”) of CommerceWest Bank (the “Bank”) reported consolidated net income for the third quarter of 2023 of $5,234,000 or $1.61 per diluted share as compared to $4,595,000 or $1.33 per diluted share for the third quarter of 2022, an EPS increase of 21% and net income for the nine months ended September 30, 2023 of $14,066,000 or $4.26 per diluted share as compared to $12,839,000 or $3.68 per diluted share for the nine months ended September 30, 2022, an EPS increase of 16%.
Key Financial Results for the three months ended September 30, 2023:
- EPS of $1.61, up 21%
- Net income growth of 14%
- ROA of 1.82%, up 16%
- ROTE of 28.83% up 4%
- Net interest income up 9%
- Net interest margin of 3.90% up 8%
- ALLL to total loans ratio (net of PPP loans) of 1.58%
- Bank tier 1 leverage ratio of 11.18% and total risk-based capital ratio of 19.68%
- 55 quarters of consecutive profits
Key Financial Results for the nine months ended September 30, 2023:
- EPS of $4.26, up 16%
- Net income growth of 10%
- ROA of 1.66%, up 18%
- ROTE of 26.64%, up 4%
- Net interest income up 13%
- Net interest margin of 3.87% up 21%
- Liquid funds to total deposits ratio of 12%
- No outstanding FRB or FHLB borrowings
- Non-interest bearing deposits to total deposits of 59%
Mr. Ivo A. Tjan, Chairman and CEO commented, “Our company delivered another quarter of solid earnings results with 21% EPS growth, 14% net income growth and a ROTE of 28.83%.” Mr. Tjan continued, “The Bank continues to maintain a fortress balance sheet that is built to last. With the continuation of inflation, global tensions intensified in recent weeks and higher for longer interest rates, CommerceWest Bank is positioned well to service our clients and businesses in California no matter the environment. I want to thank our talented team for their dedication and determination. They are the Difference.”
Total assets decreased $78.6 million as of September 30, 2023, a decrease of 7% as compared to the same period one year ago. Total loans decreased $52.4 million as of September 30, 2023, a decrease of 7% from the prior year. Excluding PPP loans, total loans decreased $50.3 million as of September 30, 2023, a decrease of 6% as compared to the same period one year ago. The Bank remains prudent and conservative about credit quality. Cash and due from banks increased $3.8 million or 3% over the prior year. Total investment securities decreased $25.6 million, a decrease of 15% from the prior year.
Total deposits decreased $83.7 million as of September 30, 2023, a decrease of 8% from September 30, 2022. Non-interest-bearing deposits decreased $76.0 million as of September 30, 2023, a decrease of 12% from the prior year. Interest bearing deposits decreased $7.8 million as of September 30, 2023, a decrease of 2% over the prior year.
Interest income was $13,704,000 for the three months ended September 30, 2023, as compared to $10,661,000 for the three months ended September 30, 2022, an increase of 29%. Interest expense was $3,044,000 for the three months ended September 30, 2023, as compared to $856,000 for the three months ended September 30, 2022, an increase of 256%. Interest expense was up for the quarter due to the continued rise in the cost of deposits.
Interest income was $39,221,000 for the nine months ended September 30, 2023, as compared to $29,552,000 for the nine months ended September 30, 2022, an increase of 33%. Interest expense was $8,301,000 for the nine months ended September 30, 2023, as compared to $2,120,000 for the nine months ended September 30, 2022, an increase of 292%. Interest expense was up for the nine months ended September 30, 2023 due to the rising cost of deposits.
Net interest income for the three months ended September 30, 2023, was $10,660,000 as compared to $9,805,000 for the three months ended September 30, 2022, an increase of 9%. The net interest margin increased for the three months ended September 30, 2023. It increased from 3.61% in 2022 to 3.90% in 2023, an increase of 8%. Net interest income for the nine months ended September 30, 2023, was $30,920,000 as compared to $27,432,000 for the nine months ended September 30, 2022, an increase of 13%. The net interest margin increased for the nine months ended September 30, 2023. It increased from 3.21% in 2022 to 3.87% in 2023, an increase of 21%.
The Bank reversed $1,500,000 from provision for credit losses during the three months ended September 30, 2023, compared to provision for credit losses of $300,000 for the three months ended September 30, 2022. The Bank received a $3 million recovery on a previously charged of loan. This resulted in an overfunding of the allowance for credit losses that allowed the Bank to reverse provision expense during the quarter. Provision for credit losses for the nine months ended September 30, 2023, was a negative $1,326,000 compared to provision for credit losses of $800,000 for the nine months ended September 30, 2022. The allowance for loan losses (net of PPP loans) to total loans ratio increased from 1.34% as of September 30, 2022, to 1.58% as of September 30, 2023.
Non-interest income for the three months ended September 30, 2023, was $1,918,000 compared to $1,565,000 for the same period last year, an increase of 23%. Non-interest income for the nine months ended September 30, 2023, was $4,832,000 compared to $4,473,000 for the same period last year, an increase of 8%.
Non-interest expense for the three months ended September 30, 2023, was $6,812,000 compared to $4,659,000 for the same period last year, an increase of 46%. Non-interest expense for the nine months ended September 30, 2023, was $17,720,000 compared to $13,249,000 for the same period last year, an increase of 34%.
The efficiency ratio for the three months ended September 30, 2023, was 51.92% compared to 40.63% in 2022, which represents an increase of 28%. The efficiency ratio illustrates that for every dollar made for the three-month period ending September 30, 2023, it cost $0.5192 to make it, as compared to $0.4063 one year ago. The efficiency ratio for the nine months ended September 30, 2023, was 48.35% compared to 41.14% in 2022, which represents an increase of 18%.
Capital ratios for the Bank remain above the levels required for a “well capitalized” institution as designated by regulatory agencies. As of September 30, 2023, the tier 1 leverage ratio was 11.18%, the common equity tier 1 capital ratio was 18.43%, the tier 1 risk-based capital ratio was 18.43% and the total risk-based capital ratio was 19.68%.
CommerceWest Bank is determined to redefine banking for small and medium sized businesses by delivering on customized products and services. Founded in 2001 and headquartered in Irvine, California, the Bank serves businesses throughout the state of California with our digital banking platform. By employing a strategically selected team of experienced professionals, we will provide flexibility, create a complete, safe and sound banking experience for each client. We provide a wide range of commercial banking services, including remote deposit solution, NetBanker online banking, mobile banking, lines of credit, M&A / working capital loans, commercial real estate loans, SBA loans and treasury management services.
Mission Statement: CommerceWest Bank will create a complete banking experience for each client, catering to businesses and their specific banking needs, while accommodating our clients and providing them high-quality, low stress and personally tailored banking and financial services.
Please visit www.cwbk.com to learn more about the bank. “BANK ON THE DIFFERENCE”
Statements concerning future performance, developments or events, expectations for growth and income forecasts, and any other guidance on future periods, constitute forward-looking statements that are subject to a number of risks and uncertainties. Actual results may differ materially from stated expectations. Specific factors include, but are not limited to, loan production, balance sheet management, expanded net interest margin, the ability to control costs and expenses, interest rate changes, financial policies of the United States government and general economic conditions. The Company disclaims any obligation to update any such factors or to publicly announce the results of any revisions to any forward-looking statements contained in this release to reflect future events or developments.
| THIRD QUARTER REPORT - September 30, 2023 (Unaudited) | |||||||||||
| CW BANCORP | % | ||||||||||
| CONSOLIDATED BALANCE SHEET | Increase | ||||||||||
| (dollars in thousands) | Sept 30, 2023 | Sept 30, 2022 | (Decrease) | ||||||||
| ASSETS | |||||||||||
| Cash and due from banks | $ |
151,698 |
|
$ |
147,876 |
|
3 |
% |
|||
| Securities available for sale |
|
100,171 |
|
|
124,758 |
|
-20 |
% |
|||
| Securities held-to-maturity |
|
50,646 |
|
|
51,652 |
|
-2 |
% |
|||
| Loans (PPP loans $2,872 and $4,981 at 2023 and 2022, respectively) |
|
734,016 |
|
|
786,384 |
|
-7 |
% |
|||
| Less allowance for loan losses |
|
(11,530 |
) |
|
(10,491 |
) |
10 |
% |
|||
| Loans, net |
|
722,486 |
|
|
775,893 |
|
-7 |
% |
|||
| Bank premises and equipment, net |
|
4,592 |
|
|
5,255 |
|
-13 |
% |
|||
| Other assets |
|
31,698 |
|
|
34,442 |
|
-8 |
% |
|||
| Total assets | $ |
1,061,291 |
|
$ |
1,139,876 |
|
-7 |
% |
|||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
| Non-interest bearing deposits | $ |
548,107 |
|
$ |
624,102 |
|
-12 |
% |
|||
| Interest bearing deposits |
|
376,502 |
|
|
384,256 |
|
-2 |
% |
|||
| Total deposits |
|
924,609 |
|
|
1,008,358 |
|
-8 |
% |
|||
| Subordinated debenture |
|
50,000 |
|
|
50,000 |
|
0 |
% |
|||
| Other liabilities |
|
13,623 |
|
|
16,509 |
|
-17 |
% |
|||
|
988,232 |
|
|
1,074,867 |
|
-8 |
% |
||||
| Stockholders' equity |
|
73,059 |
|
|
65,009 |
|
12 |
% |
|||
| Total liabilities and stockholders' equity | $ |
1,061,291 |
|
$ |
1,139,876 |
|
-7 |
% |
|||
| Shares outstanding at end of period |
|
3,177,402 |
|
|
3,352,358 |
|
|||||
| Book value per share | $ |
27.50 |
|
$ |
23.52 |
|
|||||
| Total loans to total deposits |
|
79.39 |
% |
|
77.99 |
% |
|||||
| ALLL to total loans (net of PPP loans) |
|
1.58 |
% |
|
1.34 |
% |
|||||
| Nonperforming assets (non-accrual loans & OREO) | $ |
4,177 |
|
$ |
- |
|
|||||
| COMMERCEWEST BANK CAPITAL RATIOS: | |||||||||||
| Tier 1 leverage ratio |
|
11.18 |
% |
|
10.45 |
% |
|||||
| Common equity tier 1 capital ratio |
|
18.43 |
% |
|
15.80 |
% |
|||||
| Tier 1 risk-based capital ratio |
|
18.43 |
% |
|
15.80 |
% |
|||||
| Total risk-based capital ratio |
|
19.68 |
% |
|
17.05 |
% |
|||||
| CW BANCORP | ||||||||||||||||||||||
| CONSOLIDATED STATEMENT OF INCOME (Unaudited) | Three Months Ended | Increase | For the Nine Months Ended | Increase | ||||||||||||||||||
| (dollars in thousands except share and per share data) | Sept 30, 2023 | Sept 30, 2022 | (Decrease) | Sept 30, 2023 | Sept 30, 2022 | (Decrease) | ||||||||||||||||
| INTEREST INCOME | ||||||||||||||||||||||
| Loans | $ |
9,988 |
|
$ |
8,897 |
|
12 |
% |
$ |
29,871 |
|
$ |
25,023 |
|
19 |
% |
||||||
| Investments |
|
1,016 |
|
|
1,083 |
|
-6 |
% |
|
3,200 |
|
|
3,170 |
|
1 |
% |
||||||
| Fed funds sold and other |
|
2,700 |
|
|
681 |
|
296 |
% |
|
6,150 |
|
|
1,359 |
|
353 |
% |
||||||
| Total interest income |
|
13,704 |
|
|
10,661 |
|
29 |
% |
|
39,221 |
|
|
29,552 |
|
33 |
% |
||||||
| INTEREST EXPENSE | ||||||||||||||||||||||
| Deposits |
|
2,575 |
|
|
383 |
|
572 |
% |
|
6,886 |
|
|
708 |
|
873 |
% |
||||||
| Subordinated debenture |
|
469 |
|
|
469 |
|
0 |
% |
|
1,406 |
|
|
1,406 |
|
0 |
% |
||||||
| Other borrowings |
|
- |
|
|
4 |
|
-100 |
% |
|
9 |
|
|
6 |
|
50 |
% |
||||||
| Total interest expense |
|
3,044 |
|
|
856 |
|
256 |
% |
|
8,301 |
|
|
2,120 |
|
292 |
% |
||||||
| NET INTEREST INCOME BEFORE CREDIT LOSS PROVISION |
|
10,660 |
|
|
9,805 |
|
9 |
% |
|
30,920 |
|
|
27,432 |
|
13 |
% |
||||||
| PROVISION FOR CREDIT LOSSES |
|
(1,500 |
) |
|
300 |
|
-600 |
% |
|
(1,326 |
) |
|
800 |
|
-266 |
% |
||||||
| Non-interest income: | ||||||||||||||||||||||
| NET INTEREST INCOME AFTER CREDIT LOSS PROVISION |
|
12,160 |
|
|
9,505 |
|
28 |
% |
|
32,246 |
|
|
26,632 |
|
21 |
% |
||||||
| NON-INTEREST INCOME | ||||||||||||||||||||||
| Service Charges and Fees on Deposits |
|
1,482 |
|
|
1,197 |
|
24 |
% |
|
3,891 |
|
|
3,338 |
|
17 |
% |
||||||
| Loss on Sale of AFS Securities |
|
- |
|
|
- |
|
- |
|
|
(166 |
) |
|
- |
|
- |
|
||||||
| Other Fees |
|
436 |
|
|
368 |
|
18 |
% |
|
1,107 |
|
|
1,135 |
|
-2 |
% |
||||||
| NON-INTEREST EXPENSE |
|
6,812 |
|
|
4,659 |
|
46 |
% |
|
17,720 |
|
|
13,249 |
|
34 |
% |
||||||
| EARNINGS BEFORE INCOME TAXES |
|
7,266 |
|
|
6,411 |
|
13 |
% |
|
19,358 |
|
|
17,856 |
|
8 |
% |
||||||
| INCOME TAXES |
|
2,032 |
|
|
1,816 |
|
12 |
% |
|
5,292 |
|
|
5,017 |
|
5 |
% |
||||||
| NET INCOME | $ |
5,234 |
|
$ |
4,595 |
|
14 |
% |
$ |
14,066 |
|
$ |
12,839 |
|
10 |
% |
||||||
| Basic earnings per share | $ |
1.63 |
|
$ |
1.37 |
|
19 |
% |
$ |
4.32 |
|
$ |
3.78 |
|
14 |
% |
||||||
| Diluted earnings per share | $ |
1.61 |
|
$ |
1.33 |
|
21 |
% |
$ |
4.26 |
|
$ |
3.68 |
|
16 |
% |
||||||
| Return on Assets |
|
1.82 |
% |
|
1.57 |
% |
16 |
% |
|
1.66 |
% |
|
1.41 |
% |
18 |
% |
||||||
| Return on Equity |
|
27.66 |
% |
|
26.55 |
% |
4 |
% |
|
25.53 |
% |
|
24.43 |
% |
5 |
% |
||||||
| Return on Tangible Equity |
|
28.83 |
% |
|
27.79 |
% |
4 |
% |
|
26.64 |
% |
|
25.54 |
% |
4 |
% |
||||||
| Efficiency Ratio |
|
51.92 |
% |
|
40.63 |
% |
28 |
% |
|
48.35 |
% |
|
41.14 |
% |
18 |
% |
||||||
| CW BANCORP | ||||||||||||||||||
| CONSOLIDATED AVERAGE BALANCE SHEET and YIELD ANALYSIS | ||||||||||||||||||
| Three Months Ended September 30, | ||||||||||||||||||
2023 |
2022 |
|||||||||||||||||
| Average Balance | Interest Income / Expense | Yield / Cost | Average Balance | Interest Income / Expense | Yield / Cost | |||||||||||||
| (dollars in thousands) | ||||||||||||||||||
| INTEREST EARNING ASSETS | ||||||||||||||||||
| Int Bearing Due from Banks & FFS | $ |
189,032 |
$ |
2,564 |
5.38 |
% |
$ |
98,275 |
$ |
550 |
2.22 |
% |
||||||
| Investment Securities (1) |
|
153,564 |
|
1,076 |
2.78 |
% |
|
182,218 |
|
1,180 |
2.57 |
% |
||||||
| Loans |
|
740,542 |
|
9,988 |
5.35 |
% |
|
801,866 |
|
8,897 |
4.40 |
% |
||||||
| FHLB & Other Stocks |
|
7,100 |
|
136 |
7.60 |
% |
|
6,504 |
|
131 |
7.99 |
% |
||||||
| Total interest-earning assets |
|
1,090,238 |
|
13,764 |
5.01 |
% |
|
1,088,863 |
|
10,758 |
3.92 |
% |
||||||
| Noninterest-earning assets |
|
52,067 |
|
69,884 |
||||||||||||||
| Total assets | $ |
1,142,305 |
$ |
1,158,747 |
||||||||||||||
| INTEREST EARNING LIABILITIES | ||||||||||||||||||
| Interest Bearing Deposits | $ |
400,765 |
$ |
2,575 |
2.55 |
% |
$ |
394,515 |
$ |
383 |
0.39 |
% |
||||||
| Other Borrowings |
|
- |
|
- |
- |
|
|
489 |
|
4 |
3.25 |
% |
||||||
| Subordinated Debenture |
|
50,000 |
|
469 |
3.75 |
% |
|
50,000 |
|
469 |
3.75 |
% |
||||||
| Total interest-earning liabilities |
|
450,765 |
|
3,044 |
2.68 |
% |
|
445,004 |
|
856 |
0.76 |
% |
||||||
| Noninterest-earning liabilities | ||||||||||||||||||
| Demand Deposits |
|
600,824 |
|
631,554 |
||||||||||||||
| Other Liabilities |
|
15,639 |
|
13,531 |
||||||||||||||
| Shareholders' Equity |
|
75,077 |
|
68,658 |
||||||||||||||
| Total liabilities and shareholder's equity | $ |
1,142,305 |
$ |
1,158,747 |
||||||||||||||
| Net Interest Spread | $ |
10,720 |
2.33 |
% |
$ |
9,902 |
3.16 |
% |
||||||||||
| Net Interest Margin | 3.90 |
% |
3.61 |
% |
||||||||||||||
| Total Deposits | $ |
1,001,589 |
$ |
2,575 |
1.02 |
% |
$ |
1,026,069 |
$ |
383 |
0.15 |
% |
||||||
| Total Funding Costs | $ |
1,051,589 |
$ |
3,044 |
1.15 |
% |
$ |
1,076,558 |
$ |
856 |
0.32 |
% |
||||||
| (1) Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate | ||||||||||||||||||
| CW BANCORP | ||||||||||||||||||
| CONSOLIDATED AVERAGE BALANCE SHEET and YIELD ANALYSIS | ||||||||||||||||||
| Nine Months Ended September 30, | ||||||||||||||||||
2023 |
2022 |
|||||||||||||||||
| Average Balance | Interest Income / Expense | Yield / Cost | Average Balance | Interest Income / Expense | Yield / Cost | |||||||||||||
| (dollars in thousands) | ||||||||||||||||||
| INTEREST EARNING ASSETS | ||||||||||||||||||
| Int Bearing Due from Banks & FFS | $ |
150,242 |
$ |
5,795 |
5.16 |
% |
$ |
173,418 |
$ |
1,104 |
0.85 |
% |
||||||
| Investment Securities (1) |
|
160,491 |
|
3,414 |
2.84 |
% |
|
180,954 |
|
3,469 |
2.56 |
% |
||||||
| Loans |
|
759,157 |
|
29,871 |
5.26 |
% |
|
794,146 |
|
25,023 |
4.21 |
% |
||||||
| FHLB & Other Stocks |
|
6,865 |
|
355 |
6.91 |
% |
|
5,645 |
|
255 |
6.04 |
% |
||||||
| Total interest-earning assets |
|
1,076,755 |
|
39,435 |
4.90 |
% |
|
1,154,163 |
|
29,851 |
3.46 |
% |
||||||
| Noninterest-earning assets |
|
58,086 |
|
65,572 |
||||||||||||||
| Total assets | $ |
1,134,841 |
$ |
1,219,735 |
||||||||||||||
| INTEREST EARNING LIABILITIES | ||||||||||||||||||
| Interest Bearing Deposits | $ |
406,772 |
$ |
6,886 |
2.26 |
% |
$ |
434,484 |
$ |
708 |
0.22 |
% |
||||||
| Other Borrowings |
|
242 |
|
9 |
4.97 |
% |
|
612 |
|
6 |
1.31 |
% |
||||||
| Subordinated Debenture |
|
50,000 |
|
1,406 |
3.75 |
% |
|
50,000 |
|
1,406 |
3.75 |
% |
||||||
| Total interest-earning liabilities |
|
457,014 |
|
8,301 |
2.43 |
% |
|
485,096 |
|
2,120 |
0.58 |
% |
||||||
| Noninterest-earning liabilities | ||||||||||||||||||
| Demand Deposits |
|
590,106 |
|
651,257 |
||||||||||||||
| Other Liabilities |
|
14,061 |
|
13,114 |
||||||||||||||
| Shareholders' Equity |
|
73,660 |
|
70,268 |
||||||||||||||
| Total liabilities and shareholder's equity | $ |
1,134,841 |
$ |
1,219,735 |
||||||||||||||
| Net Interest Spread | $ |
31,134 |
2.47 |
% |
$ |
27,731 |
2.88 |
% |
||||||||||
| Net Interest Margin | 3.87 |
% |
3.21 |
% |
||||||||||||||
| Total Deposits | $ |
996,878 |
$ |
6,886 |
0.92 |
% |
$ |
1,085,741 |
$ |
708 |
0.09 |
% |
||||||
| Total Funding Costs | $ |
1,047,120 |
$ |
8,301 |
1.06 |
% |
$ |
1,136,353 |
$ |
2,120 |
0.25 |
% |
||||||
| (1) Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate | ||||||||||||||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20231026009942/en/
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