Irvine, California – October 26, 2023 – 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”