IRVINE, Calif.--(BUSINESS WIRE)--CommerceWest Bank (OTCBB: CWBK) reported pre-tax pre-provision income of $3,803,000 for the three months ended June 30, 2020 up 33% as compared to the same period one year ago and $7,145,000 for the six months ended June 30, 2020 up 34% as compared to the six months ended June 30, 2019. Net income reflected provision for loan losses of $2,450,000 for the quarter, up $2,270,000 from the same period one year ago. Net income for the six months ended June 30, 2020 reflected provision for loan losses of $4,593,000, up $4,283,000 from the same period one year ago. Net income for the three months ended June 30, 2020 was $1,017,000 or $0.28 per common share, compared with net income of $2,200,000 or $0.57 per common share for the three months ended June 30, 2019 an EPS decrease of 51%. Net income for the six months ended June 30, 2020 was $2,140,000 or $0.58 per common share, compared with net income of $4,078,000 or $1.06 per common share for the six months ended June 30, 2019, an EPS decrease of 45%.
Key Financial Results for the three months ended June 30, 2020:
- Pre-tax pre-provision income up 33%
- Interest expense down 63%
- Cost of funds down 74%
- Net interest income up 11%
- Non-interest income up 36%
- Non-interest expense down 2%
- Record efficiency ratio of 45.51%
- Strong capital ratios with total risk-based capital at 14.34%
- 42 quarters of consecutive profits
- Zero nonperforming loans
Key Financial Results for the six months ended June 30, 2020:
- Pre-tax pre-provision income up 34%
- Interest expense down 47%
- Net interest income up 9%
- Non-interest income up 53%
- Non-interest expense down 2%
- Record loan growth of $195 million, up 47%
- Record deposit growth of $326 million, up 63%
- Record total asset growth of $327 million, up 56%
- Record total assets of $912 million
- ALLL to total loans ratio of 1.63%
- Noninterest-bearing deposits as percent of total deposits at 53%
- Loan to deposit ratio of 73%
Mr. Ivo Tjan, Chairman and CEO, stated, “The Bank had a remarkable quarter. We had record loan growth of $194.7 million and record deposit growth of $325.9 million. The core business metrics were solid, with net interest income up 11% for the quarter and up 9% for the year. Non-interest income was up 36% for the quarter and up 53% for the year. We achieved these milestones while being mindful of costs, with non-interest expense reductions of 2% for both the quarter and year.” Mr. Tjan added, “The team funded $163.0 million in PPP loans to Californians in the second quarter. Our team is very proud of our efforts to assist our clients and our community. Pre-tax pre-provision earnings were solid, up 33% for the quarter and 34% for the year. However, with continued uncertainty regarding the economic recovery of California, we believe that it is prudent to continue to build reserves. We remain cautious and realistic in our approach as economic indicators still present downside risks for the second half of the year. Our company is well positioned with strong capital ratios, strong earnings power and an unlevered balance sheet to attract new business clients looking for a strong banking partner.”
Total assets increased $327.1 million as of June 30, 2020, an increase of 56% as compared to the same period one year ago. Total loans increased $194.7 million as of June 30, 2020, an increase of 47% over the prior year. The Bank added $163 million of PPP loans and recorded the related deferred fees of approximately $4.6 million during the second quarter. The Bank sold one loan during the quarter and recorded a related write down against the allowance for loans losses totaling $3.0 million. Cash and due from banks increased $130.8 million or 148% from the prior year. Total investment securities increased $4.2 million, an increase of 7% from the prior year.
Total deposits increased $325.9 million as of June 30, 2020, an increase of 63% from June 30, 2019. Non-interest-bearing deposits increased $191.4 million as of June 30, 2020, an increase of 74% over the prior year. Interest bearing deposits increased $134.5 million as of June 30, 2020, an increase of 52% over the prior period.
Interest income was $6,568,000 for the three months ended June 30, 2020 as compared to $6,661,000 for the three months ended June 30, 2019, a decrease of 1.4%. Interest income was $12,819,000 for the six months ended June 30, 2020 as compared to $12,900,000 for the six months ended June 30, 2019, a decrease of 1%. Interest expense was $430,000 for the three months ended June 30, 2020 as compared to $1,147,000 for the three months ended June 30, 2019, a decrease of 63%. Interest expense was $1,199,000 for the six months ended June 30, 2020 as compared to $2,241,000 for the six months ended June 30, 2019, a decrease of 47%.
Net interest income for the three months ended June 30, 2020 was $6,138,000 as compared to $5,514,000 for the three months ended June 30, 2019, an increase of 11%. The net interest margin decreased for the three months ended June 30, 2020. It decreased from 4.03% in 2019 to 3.24% in 2020, a decrease of 20%. This was primarily due to on-boarding $163 million in PPP loans at a rate of 1.0% during the second quarter. Net interest income for the six months ended June 30, 2020 was $11,620,000 as compared to $10,659,000 for the six months ended June 30, 2019, an increase of 9%. The net interest margin decreased for the six months ended June 30, 2020. It decreased from 3.97% in 2019 to 3.54% in 2020, a decrease of 11%.
Provision for loan losses for the three months ended June 30, 2020 was $2,450,000 compared to $180,000 for the three months ended June 30, 2019, an increase of 1261%. Provision for loan losses for the six months ended June 30, 2020 was $4,593,000 compared to $310,000 for the six months ended June 30, 2019, an increase of 1382%. The allowance for loan losses (net of PPP loans) to total loans ratio increased from 1.27% as of June 30, 2019 to 1.63% as of June 30, 2020, an increase of 28%.
Non-interest income for the three months ended June 30, 2020 was $922,000 compared to $679,000 for the same period last year, an increase of 36%. Non-interest income for the six months ended June 30, 2020 was $2,071,000 compared to $1,352,000 for the same period last year, an increase of 53%.
Non-interest expense for the three months ended June 30, 2020 was $3,257,000 compared to $3,326,000 for the same period last year, a decrease of 2%. Non-interest expense for the six months ended June 30, 2020 was $6,546,000 compared to $6,676,000 for the same period last year, also a decrease of 2%.
The Bank’s efficiency ratio for the three months ended June 30, 2020 was 45.51% compared to 53.18% in 2019, which represents a decrease of 14%. The efficiency ratio illustrates that for every dollar the Bank made for the three-month period ending June 30, 2020, the Bank spent $0.46 to make it, as compared to $0.53 one year ago. The Bank’s efficiency ratio for the six months ended June 30, 2020 was 47.21% compared to 55.42% in 2019, which represents a decrease of 15%.
Capital ratios for the Bank remain well above the levels required for a “well capitalized” institution as designated by regulatory agencies. As of June 30, 2020, the tier 1 leverage ratio was 7.26%, the common equity tier 1 capital ratio was 13.08%, the tier 1 risk-based capital ratio was 13.08% and the total risk-based capital ratio was 14.34%.
CommerceWest Bank is a California based full service commercial bank with a unique vision and culture of focusing exclusively on the business community. Founded in 2001 and headquartered in Irvine, California. The Bank serves businesses throughout the state with an emphasis on clients in Orange County, San Diego, Los Angeles, and Riverside Counties. We are a full service business bank and offer a wide range of commercial banking services, including, remote deposit solution, online banking, mobile banking, lines of credit, working capital loans, commercial real estate loans, SBA loans, Main Street Lending Program, 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.
| Second QUARTER REPORT - JUNE 30, 2020 (Unaudited) | ||||||||||
| % | ||||||||||
| BALANCE SHEET | Increase | |||||||||
| (dollars in thousands) | June 30, 2020 | June 30, 2019 | (Decrease) | |||||||
| ASSETS | ||||||||||
| Cash and due from banks | $ |
219,033 |
|
$ |
88,251 |
|
148% |
|||
| Investments - available for sale |
|
69,054 |
|
|
64,823 |
|
7% |
|||
| Loans |
|
611,293 |
|
|
416,618 |
|
47% |
|||
| Less allowance for loan losses |
|
(7,288 |
) |
|
(5,281 |
) |
38% |
|||
| Loans, net |
|
604,005 |
|
|
411,337 |
|
47% |
|||
| Bank premises and equipment, net |
|
606 |
|
|
1,225 |
|
-51% |
|||
| Other assets |
|
19,728 |
|
|
19,732 |
|
0% |
|||
| Total assets | $ |
912,426 |
|
$ |
585,368 |
|
56% |
|||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||
| Non-interest bearing deposits | $ |
448,620 |
|
$ |
257,165 |
|
74% |
|||
| Interest bearing deposits |
|
392,919 |
|
|
258,466 |
|
52% |
|||
| Total deposits |
|
841,539 |
|
|
515,631 |
|
63% |
|||
| Other liabilities |
|
6,676 |
|
|
6,560 |
|
2% |
|||
|
848,215 |
|
|
522,191 |
|
62% |
||||
| Stockholders' equity |
|
64,211 |
|
|
63,177 |
|
2% |
|||
| Total liabilities and stockholders' equity | $ |
912,426 |
|
$ |
585,368 |
|
56% |
|||
| Shares outstanding at end of period |
|
3,536,696 |
|
|
3,696,826 |
|
||||
| Book value per share | $ |
17.34 |
|
$ |
16.75 |
|
||||
| Total loans to total deposits (net of PPP loans) |
|
53.00 |
% |
|
80.82 |
% |
||||
| ALLL to total loans (net of PPP loans) |
|
1.63 |
% |
|
1.27 |
% |
||||
| Nonperforming assets (non-accrual loans & OREO) | $ |
- |
|
$ |
532 |
|
||||
| CAPITAL RATIOS: | ||||||||||
| Tier 1 leverage ratio |
|
7.26 |
% |
|
10.14 |
% |
||||
| Common equity tier 1 capital ratio |
|
13.08 |
% |
|
12.68 |
% |
||||
| Tier 1 risk-based capital ratio |
|
13.08 |
% |
|
12.68 |
% |
||||
| Total risk-based capital ratio |
|
14.34 |
% |
|
13.86 |
% |
||||
| STATEMENT OF EARNINGS | Three Months Ended | Increase | Six Months Ended | Increase | |||||||||||||||||
| (dollars in thousands except share and per share data) | June 30, 2020 | June 30, 2019 | (Decrease) | June 30, 2020 | June 30, 2019 | (Decrease) | |||||||||||||||
| INTEREST INCOME | |||||||||||||||||||||
| Loans | $ |
5,955 |
|
$ |
5,720 |
|
4% |
$ |
11,510 |
|
$ |
11,021 |
|
4% |
|||||||
| Investments - available for sale |
|
453 |
|
|
453 |
|
0% |
|
932 |
|
|
887 |
|
5% |
|||||||
| Fed funds sold and other |
|
160 |
|
|
488 |
|
-67% |
|
377 |
|
|
992 |
|
-62% |
|||||||
| Total interest income |
|
6,568 |
|
|
6,661 |
|
-1% |
|
12,819 |
|
|
12,900 |
|
-1% |
|||||||
| INTEREST EXPENSE | |||||||||||||||||||||
| Deposits |
|
430 |
|
|
1,147 |
|
-63% |
|
1,195 |
|
|
2,241 |
|
-47% |
|||||||
| Other borrowed money |
|
- |
|
|
- |
|
- |
|
4 |
|
|
0 |
|
1293% |
|||||||
| Total interest expense |
|
430 |
|
|
1,147 |
|
-63% |
|
1,199 |
|
|
2,241 |
|
-47% |
|||||||
| NET INTEREST INCOME BEFORE LOAN LOSS PROVISION |
|
6,138 |
|
|
5,514 |
|
11% |
|
11,620 |
|
|
10,659 |
|
9% |
|||||||
| PROVISION FOR LOAN LOSSES |
|
2,450 |
|
|
180 |
|
1261% |
|
4,593 |
|
|
310 |
|
1382% |
|||||||
| NET INTEREST INCOME AFTER LOAN LOSS PROVISION |
|
3,688 |
|
|
5,334 |
|
-31% |
|
7,027 |
|
|
10,349 |
|
-32% |
|||||||
| NON-INTEREST INCOME |
|
922 |
|
|
679 |
|
36% |
|
2,071 |
|
|
1,352 |
|
53% |
|||||||
| NON-INTEREST EXPENSE |
|
3,257 |
|
|
3,326 |
|
-2% |
|
6,546 |
|
|
6,676 |
|
-2% |
|||||||
| EARNINGS BEFORE INCOME TAXES |
|
1,353 |
|
|
2,687 |
|
-50% |
|
2,552 |
|
|
5,025 |
|
-49% |
|||||||
| INCOME TAXES |
|
336 |
|
|
487 |
|
-31% |
|
412 |
|
|
947 |
|
-56% |
|||||||
| NET INCOME | $ |
1,017 |
|
$ |
2,200 |
|
-54% |
$ |
2,140 |
|
$ |
4,078 |
|
-48% |
|||||||
| Basic earnings per share | $ |
0.29 |
|
$ |
0.59 |
|
-51% |
$ |
0.60 |
|
$ |
1.10 |
|
-45% |
|||||||
| Diluted earnings per share | $ |
0.28 |
|
$ |
0.57 |
|
-51% |
$ |
0.58 |
|
$ |
1.06 |
|
-45% |
|||||||
| Return on Assets |
|
0.51 |
% |
|
1.53 |
% |
-67% |
|
0.62 |
% |
|
1.44 |
% |
-57% |
|||||||
| Return on Equity |
|
6.36 |
% |
|
14.04 |
% |
-55% |
|
6.62 |
% |
|
13.33 |
% |
-50% |
|||||||
| Return on Tangible Equity |
|
6.62 |
% |
|
15.04 |
% |
-56% |
|
6.93 |
% |
|
14.02 |
% |
-51% |
|||||||
| Efficiency Ratio |
|
45.51 |
% |
|
53.18 |
% |
-14% |
|
47.21 |
% |
|
55.42 |
% |
-15% |
|||||||
| Cost of Funds |
|
0.24 |
% |
|
0.91 |
% |
-74% |
|
0.39 |
% |
|
0.90 |
% |
-57% |
|||||||
| Net Interest Margin |
|
3.24 |
% |
|
4.03 |
% |
-20% |
|
3.54 |
% |
|
3.97 |
% |
-11% |
|||||||
| Pre-Tax Pre-Provison Income |
|
3,803 |
|
|
2,867 |
|
33% |
|
7,145 |
|
|
5,335 |
|
34% |
|||||||
