IRVINE, Calif.--(BUSINESS WIRE)--CommerceWest Bank (OTCBB: CWBK) reported net income for the three months ended March 31, 2020 of $1,123,000 or $0.30 per common share, compared with net income of $1,878,000 or $0.48 per common share for the three months ended March 31, 2019, an EPS decrease of 38%. Net Income reflected provision for loan losses of $2.143 million for the quarter, up $2.013 million from the same period one year ago. The negative impact of this increased provision was $0.40 per common share.
Key Financial Results for the three months ended March 31, 2020:
- Pre-tax pre-provision income up 35%
- Interest expense decreased by 30%
- Total asset growth of 11%
- Total deposit growth of 12%
- Total loan growth of 12%
- Efficiency ratio of 49.02%
- Loan loss reserve ratio up 31%
- Strong Capital Ratios
- 41 quarters of consecutive profits
Mr. Ivo Tjan, Chairman and CEO stated, “The Bank had another solid quarter increasing year over year pre-tax pre-provision income by 35%. We lowered interest expense by 30%, increased noninterest income by 71% and reduced non-interest expense by 2%. The Bank achieved double digit growth in deposits, loans, and total assets. The current global pandemic has impacted our economy and due to the uncertainty, we believe it is prudent to increase provision levels now to a ratio of 1.64%; up 31% year over year. We continue to maintain strong liquidity with over $400 million in total liquidity resources at the end of the quarter.” Mr. Tjan continued, “We are proud of the amazing men and women who work for our company. I consider them to be 'Heroes' in this COVID-19 crisis by saving thousands of jobs in our community with the PPP program, while working tirelessly every day 7 days a week.”
Total assets increased $64.9 million as of March 31, 2020, an increase of 11% as compared to the same period one year ago. Total loans increased $48.2 million as of March 31, 2020, an increase of 12% over the prior year. Cash and due from banks increased $11.9 million or 14% from the prior year. Total investment securities increased $6.1 million, an increase of 9% from the prior year.
Total deposits increased $62.9 million as of March 31, 2020, an increase of 12% from March 31, 2019. Non-interest-bearing deposits increased $71.1 million as of March 31, 2020, an increase of 30% over the prior year. Interest bearing deposits decreased $8.1 million as of March 31, 2020, a decrease of 3% over the prior period.
Interest income was $6,251,000 for the three months ended March 31, 2020 as compared to $6,239,000 for the three months ended March 31, 2019, an increase of less than one percent. Interest expense was $769,000 for the three months ended March 31, 2020 as compared to $1,094,000 for the three months ended March 31, 2019, a decrease of 30%.
Net interest income for the three months ended March 31, 2020 was $5,482,000 as compared to $5,145,000 for the three months ended March 31, 2019, an increase of 7%. The net interest margin increased for the three months ended March 31, 2020. It increased from 3.92% in 2019 to 3.96% in 2020, an increase of 1%.
Provision for loan losses for the three months ended March 31, 2020 was $2,143,000 compared to $130,000 for the three months ended March 31, 2019, an increase of 1,548%. The allowance for loan losses to total loans ratio increased from 1.25% as of March 31, 2019 to 1.64% as of March 31, 2020, an increase of 31%.
Non-interest income for the three months ended March 31, 2020 was $1,149,000 compared to $673,000 for the same period last year, an increase of 71%. The Bank has added new clients that process high volumes of transactions which has increased the Bank’s fee income.
Non-interest expense for the three months ended March 31, 2020 was $3,289,000 compared to $3,350,000 for the same period last year, a decrease of 2%.
The Bank’s efficiency ratio for the three months ended March 31, 2020 was 49.02% compared to 57.84% in 2019, which represents a decrease of 15%. The efficiency ratio illustrates that for every dollar the Bank made for the three-month period ending March 31, 2020, the Bank spent $0.49 to make it, as compared to $0.58 one year ago.
Capital ratios for the Bank remain well above the levels required for a “well capitalized” institution as designated by regulatory agencies. As of March 31, 2020, the tier 1 leverage ratio was 9.82%, the common equity tier 1 capital ratio was 11.63%, the tier 1 risk based capital ratio was 11.63%, and the total risk-based capital ratio was 12.88%.
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 concierge services, remote deposit solution, online banking, mobile banking, lines of credit, 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.
| FIRST QUARTER REPORT - MARCH 31, 2020 (Unaudited) | ||||||||||||||
| % | ||||||||||||||
| BALANCE SHEET | Increase | |||||||||||||
| (dollars in thousands) | March 31, 2020 | March 31, 2019 | (Decrease) | |||||||||||
| ASSETS | ||||||||||||||
| Cash and due from banks | $ |
98,797 |
|
$ |
86,858 |
|
14 |
% |
||||||
| Investments - available for sale |
|
70,115 |
|
|
64,047 |
|
9 |
% |
||||||
| Loans |
|
454,916 |
|
|
406,708 |
|
12 |
% |
||||||
| Less allowance for loan losses |
|
(7,473 |
) |
|
(5,098 |
) |
47 |
% |
||||||
| Loans, net |
|
447,443 |
|
|
401,610 |
|
11 |
% |
||||||
| Bank premises and equipment, net |
|
694 |
|
|
1,336 |
|
-48 |
% |
||||||
| Other assets |
|
20,143 |
|
|
18,375 |
|
10 |
% |
||||||
| Total assets | $ |
637,192 |
|
$ |
572,226 |
|
11 |
% |
||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||
| Non-interest bearing deposits | $ |
307,262 |
|
$ |
236,196 |
|
30 |
% |
||||||
| Interest bearing deposits |
|
259,860 |
|
|
267,991 |
|
-3 |
% |
||||||
| Total deposits |
|
567,122 |
|
|
504,187 |
|
12 |
% |
||||||
| Other liabilities |
|
6,458 |
|
|
6,500 |
|
-1 |
% |
||||||
|
573,580 |
|
|
510,687 |
|
12 |
% |
|||||||
| Stockholders' equity |
|
63,612 |
|
|
61,539 |
|
3 |
% |
||||||
| Total liabilities and stockholders' equity | $ |
637,192 |
|
$ |
572,226 |
|
11 |
% |
||||||
| Shares outstanding at end of period |
|
3,568,199 |
|
|
3,699,488 |
|
||||||||
| Book value per share | $ |
17.24 |
|
$ |
16.49 |
|
||||||||
| Allowance for loan losses to total loans |
|
1.64 |
% |
|
1.25 |
% |
||||||||
| Non-performing assets (non-accrual loans & OREO) | $ |
53 |
|
$ |
2,029 |
|
||||||||
| CAPITAL RATIOS: | ||||||||||||||
| Tier 1 leverage ratio |
|
9.82 |
% |
|
10.19 |
% |
||||||||
| Common equity tier 1 capital ratio |
|
11.63 |
% |
|
12.76 |
% |
||||||||
| Tier 1 risk-based capital ratio |
|
11.63 |
% |
|
12.76 |
% |
||||||||
| Total risk-based capital ratio |
|
12.88 |
% |
|
13.94 |
% |
||||||||
| STATEMENT OF EARNINGS | Three Months Ended | Increase | |||||||||||
| (dollars in thousands except share and per share data) | March 31, 2020 | March 31, 2019 | (Decrease) | ||||||||||
| INTEREST INCOME | |||||||||||||
| Loans | $ |
5,438 |
|
$ |
5,179 |
|
5 |
% |
|||||
| Investments - available for sale |
|
479 |
|
|
434 |
|
10 |
% |
|||||
| Fed funds sold and other |
|
334 |
|
|
626 |
|
-47 |
% |
|||||
| Total interest income |
|
6,251 |
|
|
6,239 |
|
0 |
% |
|||||
| INTEREST EXPENSE | |||||||||||||
| Deposits |
|
765 |
|
|
1,094 |
|
-30 |
% |
|||||
| Other borrowed money |
|
4 |
|
|
- |
|
100 |
% |
|||||
| Total interest expense |
|
769 |
|
|
1,094 |
|
-30 |
% |
|||||
| NET INTEREST INCOME BEFORE LOAN LOSS PROVISION |
|
5,482 |
|
|
5,145 |
|
7 |
% |
|||||
| PROVISION FOR LOAN LOSSES |
|
2,143 |
|
|
130 |
|
1548 |
% |
|||||
| NET INTEREST INCOME AFTER LOAN LOSS PROVISION |
|
3,339 |
|
|
5,015 |
|
-33 |
% |
|||||
| NON-INTEREST INCOME |
|
1,149 |
|
|
673 |
|
71 |
% |
|||||
| NON-INTEREST EXPENSE |
|
3,289 |
|
|
3,350 |
|
-2 |
% |
|||||
| EARNINGS BEFORE INCOME TAXES |
|
1,199 |
|
|
2,338 |
|
-49 |
% |
|||||
| INCOME TAXES |
|
76 |
|
|
460 |
|
-83 |
% |
|||||
| NET INCOME | $ |
1,123 |
|
$ |
1,878 |
|
-40 |
% |
|||||
| Basic earnings per share | $ |
0.31 |
|
$ |
0.51 |
|
-39 |
% |
|||||
| Diluted earnings per share | $ |
0.30 |
|
$ |
0.48 |
|
-38 |
% |
|||||
| Return on Assets |
|
0.76 |
% |
|
1.35 |
% |
-44 |
% |
|||||
| Return on Equity |
|
6.85 |
% |
|
12.58 |
% |
-46 |
% |
|||||
| Return on Tangible Equity |
|
7.18 |
% |
|
13.25 |
% |
-46 |
% |
|||||
| Efficiency Ratio |
|
49.02 |
% |
|
57.84 |
% |
-15 |
% |
|||||
| Net Interest Margin |
|
3.96 |
% |
|
3.92 |
% |
1 |
% |
|||||
