CommerceWest Bank Reports Q3 2020 Net Income up 93% from Q2 2020, Record Total Assets of $938 Million and Zero Non-Performing Loans

IRVINE, Calif.--()--CommerceWest Bank (OTC:CWBK) reported net income for the three months ended September 30, 2020 of $1,975,000 or $0.54 a share as compared to $1,017,000 or $0.28 a share for the three months ended June 30, 2020, an EPS increase of 93%. Net income for the three months ended September 30, 2020 was $1,975,000 or $0.54 per common share, compared with net income of $2,016,000 or $0.52 per common share for the three months ended September 30, 2019 an EPS increase of 4%. Net income for the nine months ended September 30, 2020 was $4,115,000 or $1.12 per common share, compared with net income of $6,094,000 or $1.71 per common share for the nine months ended September 30, 2019, an EPS decrease of 35%.

Key Financial Results for the three months ended September 30, 2020:

  • Pre-tax pre-provision income up 33%
  • Interest expense down 69%
  • Cost of funds down 80%
  • Net interest income up 18%
  • Non-interest income up 28%
  • Efficiency ratio of 46.35%
  • 43 quarters of consecutive profits
  • Zero nonperforming loans

Key Financial Results for the nine months ended September 30, 2020:

  • Pre-tax pre-provision income up 34%
  • Interest expense down 54%
  • Net interest income up 12%
  • Non-interest income up 43%
  • Loan growth of $174 million, up 39%
  • Deposit growth of $301 million, up 53%
  • Total asset growth of $303 million, up 48%
  • Record total assets of $938 million
  • ALLL to total loans ratio (net of PPP loans) of 1.89%
  • Noninterest-bearing deposits as percent of total deposits at 54%

Mr. Ivo Tjan, Chairman and CEO said, “Our team delivered another quarter of strong results during a period of uncertainty. We continue to exceed our client’s expectations, actively manage credit risk and control our operating expenses. We produced our highest pre-tax pre-provision income in the history of the company. Our fortress balance sheet and business model continue to be sources of economic strength for our business community, employees and shareholders.”

Total assets increased $302.6 million as of September 30, 2020, an increase of 48% as compared to the same period one year ago. Total loans increased $173.6 million as of September 30, 2020, an increase of 39% over the prior year. Cash and due from banks increased $125.6 million or 111% from the prior year. Total investment securities increased $4.7 million, an increase of 7% from the prior year.

Total deposits increased $301.0 million as of September 30, 2020, an increase of 53% from September 30, 2019. Non-interest-bearing deposits increased $176.7 million as of September 30, 2020, an increase of 61% over the prior year. Interest bearing deposits increased $124.3 million as of September 30, 2020, an increase of 45% over the prior period.

Interest income was $6,656,000 for the three months ended September 30, 2020 as compared to $6,486,000 for the three months ended September 30, 2019, an increase of 3.0%. Interest income was $19,475,000 for the nine months ended September 30, 2020 as compared to $19,386,000 for the nine months ended September 30, 2019, an increase of less than one percent. Interest expense was $361,000 for the three months ended September 30, 2020 as compared to $1,157,000 for the three months ended September 30, 2019, a decrease of 69%. Interest expense was $1,560,000 for the nine months ended September 30, 2020 as compared to $3,398,000 for the nine months ended September 30, 2019, a decrease of 54%.

Net interest income for the three months ended September 30, 2020 was $6,295,000 as compared to $5,329,000 for the three months ended September 30, 2019, an increase of 18%. The net interest margin decreased for the three months ended September 30, 2020. It decreased from 3.78% in 2019 to 2.90% in 2020, a decrease of 23%. 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 nine months ended September 30, 2020 was $17,915,000 as compared to $15,988,000 for the nine months ended September 30, 2019, an increase of 12%. The net interest margin decreased for the nine months ended September 30, 2020. It decreased from 3.91% in 2019 to 3.29% in 2020, a decrease of 16%.

Provision for loan losses for the three months ended September 30, 2020 was $1,250,000 compared to $210,000 for the three months ended September 30, 2019, an increase of 495%. Provision for loan losses for the nine months ended September 30, 2020 was $5,843,000 compared to $520,000 for the nine months ended September 30, 2019, an increase of 1024%. The allowance for loan losses (net of PPP loans) to total loans ratio increased from 1.25% as of September 30, 2019 to 1.89% as of September 30, 2020, an increase of 51%.

Non-interest income for the three months ended September 30, 2020 was $1,161,000 compared to $910,000 for the same period last year, an increase of 28%. Non-interest income for the nine months ended September 30, 2020 was $3,232,000 compared to $2,262,000 for the same period last year, an increase of 43%.

Non-interest expense for the three months ended September 30, 2020 was $3,492,000 compared to $3,253,000 for the same period last year, an increase of 7%. Non-interest expense for the nine months ended September 30, 2020 was $10,038,000 compared to $9,929,000 for the same period last year, a decrease of 1%.

The Bank’s efficiency ratio for the three months ended September 30, 2020 was 46.35% compared to 51.62% in 2019, which represents a decrease of 10%. The efficiency ratio illustrates that for every dollar the Bank made for the three-month period ending September 30, 2020, the Bank spent $0.46 to make it, as compared to $0.52 one year ago.The Bank’s efficiency ratio for the nine months ended September 30, 2020 was 46.91% compared to 54.12% in 2019, which represents a decrease of 13%.

Capital ratios for the Bank remain above the levels required for a “well capitalized” institution as designated by regulatory agencies. As of September 30, 2020, the tier 1 leverage ratio was 6.53%, the common equity tier 1 capital ratio was 11.44%, the tier 1 risk-based capital ratio was 11.44% and the total risk-based capital ratio was 12.69%.

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.

THIRD QUARTER REPORT - SEPTEMBER 30, 2020 (Unaudited)
BALANCE SHEET
(dollars in thousands)
September 30, 2020 September 30, 2019

%
Increase
(Decrease)

 
ASSETS
Cash and due from banks

$

238,537

 

$

112,934

 

111

%

Investments - available for sale

 

71,899

 

 

67,199

 

7

%

 
Loans

 

614,432

 

 

440,818

 

39

%

Less allowance for loan losses

 

(8,543

)

 

(5,493

)

56

%

Loans, net

 

605,889

 

 

435,325

 

39

%

 
Bank premises and equipment, net

 

562

 

 

1,013

 

-45

%

Other assets

 

20,854

 

 

18,719

 

11

%

Total assets

$

937,741

 

$

635,190

 

48

%

 
LIABILITIES AND STOCKHOLDERS' EQUITY
Non-interest bearing deposits

$

466,301

 

$

289,619

 

61

%

Interest bearing deposits

 

399,420

 

 

275,106

 

45

%

Total deposits

 

865,721

 

 

564,725

 

53

%

Other liabilities

 

6,385

 

 

6,700

 

-5

%

 

872,106

 

 

571,425

 

53

%

Stockholders' equity

 

65,635

 

 

63,765

 

3

%

Total liabilities and stockholders' equity

$

937,741

 

$

635,190

 

48

%

 
Shares outstanding at end of period

 

3,531,996

 

 

3,636,048

 

Book value per share

$

17.70

 

$

17.07

 

Total loans to total deposits

 

70.97

%

 

78.06

%

ALLL to total loans (net of PPP loans)

 

1.89

%

 

1.25

%

Nonperforming assets (non-accrual loans & OREO)

$

-

 

$

71

 

 
CAPITAL RATIOS:
Tier 1 leverage ratio

 

6.53

%

 

9.81

%

Common equity tier 1 capital ratio

 

11.44

%

 

12.10

%

Tier 1 risk-based capital ratio

 

11.44

%

 

12.10

%

Total risk-based capital ratio

 

12.69

%

 

13.28

%

STATEMENT OF EARNINGS
(dollars in thousands except share and per share data)
Three Months Ended Increase Nine Months Ended Increase
Sept 30, 2020 Sept 30, 2019 (Decrease) Sept 30, 2020 Sept 30, 2019 (Decrease)
 
INTEREST INCOME
Loans

$

5,944

 

$

5,509

 

8

%

$

17,454

 

$

16,530

 

6

%

Investments - available for sale

 

450

 

 

452

 

0

%

 

1,382

 

 

1,339

 

3

%

Fed funds sold and other

 

262

 

 

525

 

-50

%

 

639

 

 

1,517

 

-58

%

Total interest income

 

6,656

 

 

6,486

 

3

%

 

19,475

 

 

19,386

 

0.5

%

 
INTEREST EXPENSE
Deposits

 

361

 

 

1,157

 

-69

%

 

1,556

 

 

3,398

 

-54

%

Other borrowed money

 

-

 

 

-

 

-

 

 

4

 

 

-

 

Total interest expense

 

361

 

 

1,157

 

-69

%

 

1,560

 

 

3,398

 

-54

%

 
NET INTEREST INCOME BEFORE LOAN LOSS PROVISION

 

6,295

 

 

5,329

 

18

%

 

17,915

 

 

15,988

 

12

%

 
PROVISION FOR LOAN LOSSES

 

1,250

 

 

210

 

495

%

 

5,843

 

 

520

 

1024

%

 
NET INTEREST INCOME AFTER LOAN LOSS PROVISION

 

5,045

 

 

5,119

 

-1

%

 

12,072

 

 

15,468

 

-22

%

 
NON-INTEREST INCOME

 

1,161

 

 

910

 

28

%

 

3,232

 

 

2,262

 

43

%

 
NON-INTEREST EXPENSE

 

3,492

 

 

3,253

 

7

%

 

10,038

 

 

9,929

 

1

%

 
EARNINGS BEFORE INCOME TAXES

 

2,714

 

 

2,776

 

-2

%

 

5,266

 

 

7,801

 

-32

%

 
INCOME TAXES

 

739

 

 

760

 

-3

%

 

1,151

 

 

1,707

 

-33

%

 
 
NET INCOME

$

1,975

 

$

2,016

 

-2

%

$

4,115

 

$

6,094

 

-32

%

 
Basic earnings per share

$

0.56

 

$

0.55

 

2

%

$

1.15

 

$

1.80

 

-36

%

Diluted earnings per share

$

0.54

 

$

0.52

 

4

%

$

1.12

 

$

1.71

 

-35

%

Return on Assets

 

0.86

%

 

1.33

%

-35

%

 

0.71

%

 

1.40

%

-49

%

Return on Equity

 

11.99

%

 

12.50

%

-4

%

 

8.42

%

 

13.04

%

-35

%

Return on Tangible Equity

 

12.53

%

 

13.13

%

-5

%

 

8.84

%

 

13.71

%

-36

%

Efficiency Ratio

 

46.35

%

 

51.62

%

-10

%

 

46.91

%

 

54.12

%

-13

%

Cost of Funds

 

0.17

%

 

0.87

%

-80

%

 

0.30

%

 

0.89

%

-66

%

Net Interest Margin

 

2.90

%

 

3.78

%

-23

%

 

3.29

%

 

3.91

%

-16

%

 

Contacts

Bank Contact
CommerceWest Bank
Mr. Ivo A. Tjan, CEO
Telephone: (866) 521-CWBK
E-mail: InvestorRelations@cwbk.com
Website: www.cwbk.com
"Bank on the Difference"

Contacts

Bank Contact
CommerceWest Bank
Mr. Ivo A. Tjan, CEO
Telephone: (866) 521-CWBK
E-mail: InvestorRelations@cwbk.com
Website: www.cwbk.com
"Bank on the Difference"