CW Bancorp (OTCQX: CWBK), the parent company (“the Company”) of CommerceWest Bank (the “Bank”) reported consolidated net income for the second quarter of 2023 of $4,214,000 or $1.27 per diluted share as compared to $4,186,000 or $1.20 per diluted share for the second quarter of 2022, an EPS increase of 6% and net income for the six months ended June 30, 2023 of $8,832,000 or $2.64 per diluted share as compared to $8,244,000 or $2.35 per diluted share for the six months ended June 30, 2022, an EPS increase of 12%.
Key Financial Results for the three months ended June 30, 2023:
- EPS of $1.27, up 6%
- ROA of 1.45%, up 4%
- Net interest income up 14%
- Net interest margin of 3.79% up 18%
- Efficiency ratio of 49.83%
- ALLL to total loans ratio (net of PPP loans) of 1.49%
- Liquid funds to total deposits ratio of 20%
- No outstanding FRB or FHLB borrowings
- Non-interest bearing deposits to total deposits of 59%
- Bank tier 1 leverage ratio of 10.79% and total risk-based capital ratio of 19.20%
- 54 quarters of consecutive profits
Key Financial Results for the six months ended June 30, 2023:
- EPS of $2.64, up 12%
- Net income growth of 7%
- ROTE of 25.49%, up 3%
- ROA of 1.57%, up 18%
- Net interest income up 15%
- Net interest margin up 27%
- Efficiency ratio of 46.43%
Mr. Ivo Tjan, Chairman and CEO commented, “The Company delivered another solid quarter of performance with double digit net interest income growth, strong on balance sheet liquidity, and strong capital ratios.” Mr. Tjan continued, “The economy has proven to be more resilient than anticipated which is good news for the Bank and for our clients. There are some potential headwinds ahead, with the continued war in Ukraine, unprecedented quantitative tightening, and stubborn core inflation. We remain cautiously optimistic as we continue to maintain a fortress balance sheet approach. Our bank’s business model was built to last and has been a source of economic strength for the communities we serve. I continue to be especially proud of our team members, who have stepped up every day to provide the best level of service to our clients.”
Total assets decreased $29.5 million as of June 30, 2023, a decrease of 2% as compared to the same period one year ago. Total loans decreased $55.0 million as of June 30, 2023, a decrease of 7% from the prior year. Excluding PPP loans, total loans decreased $45.7 million as of June 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 $57.6 million or 29% over the prior year. Total investment securities decreased $29.3 million, a decrease of 16% from the prior year.
Total deposits decreased $40.5 million as of June 30, 2023, a decrease of 4% from June 30, 2022. The Bank’s 2022 business objectives included deleveraging the Bank in order to strengthen capital ratios in anticipation of a recession. Non-interest-bearing deposits decreased $70.6 million as of June 30, 2023, a decrease of 10% from the prior year. Interest bearing deposits increased $30.1 million as of June 30, 2023, an increase of 7% over the prior year.
Interest income was $13,513,000 for the three months ended June 30, 2023, as compared to $9,720,000 for the three months ended June 30, 2022, an increase of 39%. Interest expense was $3,113,000 for the three months ended June 30, 2023, as compared to $629,000 for the three months ended June 30, 2022, an increase of 395%. Interest expense was up for the quarter due to the rising cost of deposits.
Interest income was $25,517,000 for the six months ended June 30, 2023, as compared to $18,892,000 for the six months ended June 30, 2022, an increase of 35%. Interest expense was $5,258,000 for the six months ended June 30, 2023, as compared to $1,265,000 for the six months ended June 30, 2022, an increase of 316%. Interest expense was up for the first half of 2023 due to the rising cost of deposits.
Net interest income for the three months ended June 30, 2023, was $10,400,000 as compared to $9,091,000 for the three months ended June 30, 2022, an increase of 14%. The net interest margin increased for the three months ended June 30, 2023. It increased from 3.22% in 2022 to 3.79% in 2023, an increase of 18%. Net interest income for the six months ended June 30, 2023, was $20,259,000 as compared to $17,627,000 for the six months ended June 30, 2022, an increase of 15%. The net interest margin increased for the six months ended June 30, 2023. It increased from 3.03% in 2022 to 3.85% in 2023, an increase of 27%.
Provision for credit losses for the three months ended June 30, 2023, was $99,000 compared to $375,000 for the three months ended June 30, 2022. Provision for credit losses for the six months ended June 30, 2023, was $174,000 compared to $500,000 for the six months ended June 30, 2022. The allowance for loan losses (net of PPP loans) to total loans ratio increased from 1.29% as of June 30, 2022, to 1.49% as of June 30, 2023.
Non-interest income for the three months ended June 30, 2023, was $1,662,000 compared to $1,515,000 for the same period last year, an increase of 10%. Non-interest income for the six months ended June 30, 2023, was $2,915,000 compared to $2,909,000 for the same period last year, an increase of less than one percent.
Non-interest expense for the three months ended June 30, 2023, was $6,041,000 compared to $4,404,000 for the same period last year, an increase of 37%. Non-interest expense for the six months ended June 30, 2023, was $10,908,000 compared to $8,590,000 for the same period last year, an increase of 27%.
The efficiency ratio for the three months ended June 30, 2023, was 49.83% compared to 41.14% in 2022, which represents an increase of 21%. The efficiency ratio illustrates that for every dollar made for the three-month period ending June 30, 2023, it cost $0.4983 to make it, as compared to $0.4114 one year ago. The efficiency ratio for the six months ended June 30, 2023, was 46.43% compared to 41.43% in 2022, which represents an increase of 12%.
Capital ratios for the Bank remain above the levels required for a “well capitalized” institution as designated by regulatory agencies. As of June 30, 2023, the tier 1 leverage ratio was 10.79%, the common equity tier 1 capital ratio was 17.94%, the tier 1 risk-based capital ratio was 17.94% and the total risk-based capital ratio was 19.20%.
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.
| SECOND QUARTER REPORT - JUNE 30, 2023 (Unaudited) | |||||||||||
| CW BANCORP | % | ||||||||||
| CONSOLIDATED BALANCE SHEET | Increase | ||||||||||
| (dollars in thousands) | June 30, 2023 | June 30, 2022 | (Decrease) | ||||||||
| ASSETS | |||||||||||
| Cash and due from banks | $ |
255,499 |
|
$ |
197,912 |
|
29 |
% |
|||
| Securities available for sale |
|
102,357 |
|
|
130,597 |
|
-22 |
% |
|||
| Securities held-to-maturity |
|
50,686 |
|
|
51,750 |
|
-2 |
% |
|||
| Loans (PPP loans $4,472 and $13,736 at 2023 and 2022, respectively) |
|
747,272 |
|
|
802,284 |
|
-7 |
% |
|||
| Less allowance for loan losses |
|
(11,042 |
) |
|
(10,210 |
) |
8 |
% |
|||
| Loans, net |
|
736,230 |
|
|
792,074 |
|
-7 |
% |
|||
| Bank premises and equipment, net |
|
4,683 |
|
|
5,460 |
|
-14 |
% |
|||
| Other assets |
|
31,930 |
|
|
33,120 |
|
-4 |
% |
|||
| Total assets | $ |
1,181,385 |
|
$ |
1,210,913 |
|
-2 |
% |
|||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
| Non-interest bearing deposits | $ |
609,859 |
|
$ |
680,488 |
|
-10 |
% |
|||
| Interest bearing deposits |
|
431,494 |
|
|
401,408 |
|
7 |
% |
|||
| Total deposits |
|
1,041,353 |
|
|
1,081,896 |
|
-4 |
% |
|||
| Subordinated debenture |
|
50,000 |
|
|
50,000 |
|
0 |
% |
|||
| Other liabilities |
|
16,370 |
|
|
12,746 |
|
28 |
% |
|||
|
1,107,723 |
|
|
1,144,642 |
|
-3 |
% |
||||
| Stockholders' equity |
|
73,662 |
|
|
66,271 |
|
11 |
% |
|||
| Total liabilities and stockholders' equity | $ |
1,181,385 |
|
$ |
1,210,913 |
|
-2 |
% |
|||
| Shares outstanding at end of period |
|
3,235,711 |
|
|
3,371,667 |
|
|||||
| Book value per share | $ |
26.18 |
|
$ |
22.48 |
|
|||||
| Total loans to total deposits |
|
71.76 |
% |
|
74.16 |
% |
|||||
| ALLL to total loans (net of PPP loans) |
|
1.49 |
% |
|
1.29 |
% |
|||||
| Nonperforming assets (non-accrual loans & OREO) | $ |
3,182 |
|
$ |
19 |
|
|||||
| COMMERCEWEST BANK CAPITAL RATIOS: | |||||||||||
| Tier 1 leverage ratio |
|
10.79 |
% |
|
9.81 |
% |
|||||
| Common equity tier 1 capital ratio |
|
17.94 |
% |
|
15.19 |
% |
|||||
| Tier 1 risk-based capital ratio |
|
17.94 |
% |
|
15.19 |
% |
|||||
| Total risk-based capital ratio |
|
19.20 |
% |
|
16.44 |
% |
|||||
| CW BANCORP | ||||||||||||||||||||||
| CONSOLIDATED STATEMENT OF INCOME (Unaudited) | Three Months Ended | Increase | For the Six Months Ended | Increase | ||||||||||||||||||
| (dollars in thousands except share and per share data) | June 30, 2023 | June 30, 2022 | (Decrease) | June 30, 2023 | June 30, 2022 | (Decrease) | ||||||||||||||||
| INTEREST INCOME | ||||||||||||||||||||||
| Loans | $ |
9,978 |
|
$ |
8,184 |
|
22 |
% |
$ |
19,882 |
|
$ |
16,126 |
|
23 |
% |
||||||
| Investments |
|
1,027 |
|
|
1,110 |
|
-7 |
% |
|
2,185 |
|
|
2,088 |
|
5 |
% |
||||||
| Fed funds sold and other |
|
2,508 |
|
|
426 |
|
489 |
% |
|
3,450 |
|
|
678 |
|
409 |
% |
||||||
| Total interest income |
|
13,513 |
|
|
9,720 |
|
39 |
% |
|
25,517 |
|
|
18,892 |
|
35 |
% |
||||||
| INTEREST EXPENSE | ||||||||||||||||||||||
| Deposits |
|
2,644 |
|
|
159 |
|
1563 |
% |
|
4,311 |
|
|
325 |
|
1226 |
% |
||||||
| Subordinated debenture |
|
469 |
|
|
469 |
|
0 |
% |
|
938 |
|
|
938 |
|
0 |
% |
||||||
| Other borrowings |
|
- |
|
|
1 |
|
- |
|
|
9 |
|
|
2 |
|
350 |
% |
||||||
| Total interest expense |
|
3,113 |
|
|
629 |
|
395 |
% |
|
5,258 |
|
|
1,265 |
|
316 |
% |
||||||
| NET INTEREST INCOME BEFORE CREDIT LOSS PROVISION |
|
10,400 |
|
|
9,091 |
|
14 |
% |
|
20,259 |
|
|
17,627 |
|
15 |
% |
||||||
| PROVISION FOR CREDIT LOSSES |
|
99 |
|
|
375 |
|
-74 |
% |
|
174 |
|
|
500 |
|
-65 |
% |
||||||
| Non-interest income: | ||||||||||||||||||||||
| NET INTEREST INCOME AFTER CREDIT LOSS PROVISION |
|
10,301 |
|
|
8,716 |
|
18 |
% |
|
20,085 |
|
|
17,127 |
|
17 |
% |
||||||
| NON-INTEREST INCOME | ||||||||||||||||||||||
| Service Charges and Fees on Deposits |
|
1,318 |
|
|
1,149 |
|
15 |
% |
|
2,409 |
|
|
2,141 |
|
13 |
% |
||||||
| Loss on Sale of AFS Securities |
|
- |
|
|
- |
|
- |
|
|
(166 |
) |
|
- |
|
- |
|
||||||
| Other Fees |
|
344 |
|
|
366 |
|
-6 |
% |
|
672 |
|
|
768 |
|
-13 |
% |
||||||
| NON-INTEREST EXPENSE |
|
6,041 |
|
|
4,404 |
|
37 |
% |
|
10,908 |
|
|
8,590 |
|
27 |
% |
||||||
| EARNINGS BEFORE INCOME TAXES |
|
5,922 |
|
|
5,827 |
|
2 |
% |
|
12,092 |
|
|
11,446 |
|
6 |
% |
||||||
| INCOME TAXES |
|
1,708 |
|
|
1,641 |
|
4 |
% |
|
3,260 |
|
|
3,202 |
|
2 |
% |
||||||
| NET INCOME | $ |
4,214 |
|
$ |
4,186 |
|
1 |
% |
$ |
8,832 |
|
$ |
8,244 |
|
7 |
% |
||||||
| Basic earnings per share | $ |
1.29 |
|
$ |
1.23 |
|
5 |
% |
$ |
2.69 |
|
$ |
2.41 |
|
12 |
% |
||||||
| Diluted earnings per share | $ |
1.27 |
|
$ |
1.20 |
|
6 |
% |
$ |
2.64 |
|
$ |
2.35 |
|
12 |
% |
||||||
| Return on Assets |
|
1.45 |
% |
|
1.39 |
% |
4 |
% |
|
1.57 |
% |
|
1.33 |
% |
18 |
% |
||||||
| Return on Equity |
|
22.87 |
% |
|
24.76 |
% |
-8 |
% |
|
24.42 |
% |
|
23.74 |
% |
3 |
% |
||||||
| Return on Tangible Equity |
|
23.85 |
% |
|
25.93 |
% |
-8 |
% |
|
25.49 |
% |
|
24.82 |
% |
3 |
% |
||||||
| Efficiency Ratio |
|
49.83 |
% |
|
41.14 |
% |
21 |
% |
|
46.43 |
% |
|
41.43 |
% |
12 |
% |
||||||
| CW BANCORP | ||||||||||||||||||
| CONSOLIDATED AVERAGE BALANCE SHEET and YIELD ANALYSIS | ||||||||||||||||||
| Three Months Ended June 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 | $ |
187,693 |
$ |
2,396 |
5.12 |
% |
$ |
159,229 |
$ |
351 |
0.88 |
% |
||||||
| Investment Securities (1) |
|
155,438 |
|
1,088 |
2.81 |
% |
|
182,926 |
|
1,208 |
2.65 |
% |
||||||
| Loans |
|
757,153 |
|
9,978 |
5.29 |
% |
|
796,615 |
|
8,184 |
4.12 |
% |
||||||
| FHLB & Other Stocks |
|
6,983 |
|
112 |
6.43 |
% |
|
6,115 |
|
75 |
4.92 |
% |
||||||
| Total interest-earning assets |
|
1,107,267 |
|
13,574 |
4.92 |
% |
|
1,144,885 |
|
9,818 |
3.44 |
% |
||||||
| Noninterest-earning assets |
|
61,242 |
|
64,204 |
||||||||||||||
| Total assets | $ |
1,168,509 |
$ |
1,209,089 |
||||||||||||||
| INTEREST EARNING LIABILITIES | ||||||||||||||||||
| Interest Bearing Deposits | $ |
437,694 |
$ |
2,644 |
2.42 |
% |
$ |
426,084 |
$ |
159 |
0.15 |
% |
||||||
| Other Borrowings |
|
- |
|
- |
- |
|
|
1,341 |
|
1 |
0.30 |
% |
||||||
| Subordinated Debenture |
|
50,000 |
|
469 |
3.75 |
% |
|
50,000 |
|
469 |
3.75 |
% |
||||||
| Total interest-earning liabilities |
|
487,694 |
|
3,113 |
2.56 |
% |
|
477,425 |
|
629 |
0.53 |
% |
||||||
| Noninterest-earning liabilities | ||||||||||||||||||
| Demand Deposits |
|
593,612 |
|
651,306 |
||||||||||||||
| Other Liabilities |
|
13,271 |
|
12,533 |
||||||||||||||
| Shareholders' Equity |
|
73,932 |
|
67,825 |
||||||||||||||
| Total liabilities and shareholder's equity | $ |
1,168,509 |
$ |
1,209,089 |
||||||||||||||
| Net Interest Spread | $ |
10,461 |
2.36 |
% |
$ |
9,189 |
2.91 |
% |
||||||||||
| Net Interest Margin | 3.79 |
% |
3.22 |
% |
||||||||||||||
| Total Deposits | $ |
1,031,306 |
$ |
2,644 |
1.03 |
% |
$ |
1,077,390 |
$ |
159 |
0.06 |
% |
||||||
| Total Funding Costs | $ |
1,081,306 |
$ |
3,113 |
1.15 |
% |
$ |
1,128,731 |
$ |
629 |
0.22 |
% |
||||||
| (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 | ||||||||||||||||||
| Six Months Ended June 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 | $ |
130,527 |
$ |
3,232 |
4.99 |
% |
$ |
211,612 |
$ |
554 |
0.53 |
% |
||||||
| Investment Securities (1) |
|
164,012 |
|
2,338 |
2.87 |
% |
|
180,311 |
|
2,288 |
2.56 |
% |
||||||
| Loans |
|
768,619 |
|
19,882 |
5.22 |
% |
|
790,223 |
|
16,126 |
4.12 |
% |
||||||
| FHLB & Other Stocks |
|
6,745 |
|
218 |
6.52 |
% |
|
5,209 |
|
124 |
4.80 |
% |
||||||
| Total interest-earning assets |
|
1,069,903 |
|
25,670 |
4.84 |
% |
|
1,187,355 |
|
19,092 |
3.24 |
% |
||||||
| Noninterest-earning assets |
|
61,144 |
|
62,333 |
||||||||||||||
| Total assets | $ |
1,131,047 |
$ |
1,249,688 |
||||||||||||||
| INTEREST EARNING LIABILITIES | ||||||||||||||||||
| Interest Bearing Deposits | $ |
409,825 |
$ |
4,311 |
2.12 |
% |
$ |
454,800 |
$ |
325 |
0.14 |
% |
||||||
| Other Borrowings |
|
365 |
|
9 |
4.97 |
% |
|
675 |
|
2 |
0.60 |
% |
||||||
| Subordinated Debenture |
|
50,000 |
|
938 |
3.75 |
% |
|
50,000 |
|
938 |
3.75 |
% |
||||||
| Total interest-earning liabilities |
|
460,190 |
|
5,258 |
2.30 |
% |
|
505,475 |
|
1,265 |
0.50 |
% |
||||||
| Noninterest-earning liabilities | ||||||||||||||||||
| Demand Deposits |
|
584,658 |
|
661,272 |
||||||||||||||
| Other Liabilities |
|
13,259 |
|
12,902 |
||||||||||||||
| Shareholders' Equity |
|
72,940 |
|
70,039 |
||||||||||||||
| Total liabilities and shareholder's equity | $ |
1,131,047 |
$ |
1,249,688 |
||||||||||||||
| Net Interest Spread | $ |
20,412 |
2.54 |
% |
$ |
17,827 |
2.74 |
% |
||||||||||
| Net Interest Margin | 3.85 |
% |
3.03 |
% |
||||||||||||||
| Total Deposits | $ |
994,483 |
$ |
4,311 |
0.87 |
% |
$ |
1,116,072 |
$ |
325 |
0.06 |
% |
||||||
| Total Funding Costs | $ |
1,044,848 |
$ |
5,258 |
1.01 |
% |
$ |
1,166,747 |
$ |
1,265 |
0.22 |
% |
||||||
| (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/20230728633153/en/
Contacts
Bancorp Contact
Mr. Ivo A. Tjan, CEO
Ms. Leeann Cochran, CFO
Telephone: (866) 521-CWBK
E-mail: InvestorRelations@cwbk.com
Website: www.cwbk.com
"Bank on the Difference"
