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

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	%

 

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