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CW Bancorp Reports 2023 Full Year Record Earnings of $17.6 million, Record EPS of $5.39 and Record ROA of 1.58%

CW Bancorp (OTCQX: CWBK), the parent company (“the Company”) of CommerceWest Bank (the “Bank”), reported consolidated net income for the fourth quarter of 2023 of $3,545,000 or $1.12 per diluted share as compared to $4,521,000 or $1.32 per diluted share for the fourth quarter of 2022, an EPS decrease of 15%. The consolidated net income for the twelve months ended December 31, 2023 was $17,611,000 or $5.39 per diluted share as compared to $17,361,000 or $5.00 per diluted share for the twelve months ended December 31, 2022, an EPS increase of 8%.

Key Financial Results for the three months ended December 31, 2023:

  • Interest Income of $12.9 million, up 10%
  • Net interest margin of 3.88%, up 4%
  • ALLL to total loans ratio of 1.59%
  • Bank tier 1 leverage ratio of 12.09% and total risk-based capital ratio of 19.82%
  • 56 quarters of consecutive profits

Key Financial Results for the twelve months ended December 31, 2023:

  • Record EPS of $5.39, up 8%
  • Record net income of $17.6 million, up 1%
  • Record ROA of 1.58%, up 9%
  • Net interest income of $40.7 million, up 9%
  • Net interest margin of 3.87%, up 16%
  • No outstanding FRB or FHLB borrowings

Mr. Ivo A. Tjan, Chairman and CEO, said, “Our Company produced strong 2023 financial results on the backdrop of a very challenging year for the banking industry. This is a testament to our team’s dedication and strategic initiatives. These numbers reflect our commitment to the business community and focus on creating shareholder value.”

Total assets decreased 9% as compared to the same period one year ago. Total loans decreased 9% from the prior year. The Bank remains prudent and conservative about credit quality. As a result, the Bank did not add significantly to the portfolio in 2023. This gave management an opportunity to de-lever the Bank, rolling off higher cost funds and containing interest expense. Cash and due from banks decreased 12% from the prior year. Total investment securities decreased 8% from the prior year.

Total deposits, as of December 31, 2023, decreased 11% from December 31, 2022. Non-interest-bearing deposits decreased 6% from the prior year. Interest bearing deposits decreased 15% from the prior year.

Interest income was $12,964,000 for the three months ended December 31, 2023, as compared to $11,768,000 for the three months ended December 31, 2022, an increase of 10%. Interest expense was $3,167,000 for the three months ended December 31, 2023, as compared to $1,877,000 for the three months ended December 31, 2022, an increase of 69%. Interest expense was up for the quarter due to the continued rise in the cost of deposits.

Interest income was $52,185,000 for the twelve months ended December 31, 2023, as compared to $41,320,000 for the twelve months ended December 31, 2022, an increase of 26%. Interest expense was $11,468,000 for the twelve months ended December 31, 2023, as compared to $3,997,000 for the twelve months ended December 31, 2022, an increase of 187%. Interest expense was up for the twelve months ended December 31, 2023 due to the rising cost of deposits.

Net interest income, for the three months ended December 31, 2023, was $9,797,000 as compared to $9,891,000 for the three months ended December 31, 2022, a decrease of 1%. The net interest margin increased for the three months ended December 31, 2023. It increased from 3.74% in 2022 to 3.88% in 2023, an increase of 4%. Net interest income, for the twelve months ended December 31, 2023, was $40,717,000 compared to $37,323,000 for the twelve months ended December 31, 2022, an increase of 9%. The net interest margin increased for the twelve months ended December 31, 2023. It increased from 3.34% in 2022 to 3.87% in 2023, an increase of 16%.

The Bank had no provision for credit losses during the three months ended December 31, 2023, compared to provision for credit losses of $400,000 for the three months ended December 31, 2022. Provision for credit losses for the twelve months ended December 31, 2023, was a negative $1,326,000 compared to provision for credit losses of $1,200,000 for the twelve months ended December 31, 2022. The negative provision for credit losses in 2023 was primarily due to a $3 million recovery on a previously charged off loan recognized in Q3 2023. The allowance for loan losses to total loans ratio increased from 1.37% as of December 31, 2022 to 1.59% as of December 31, 2023.

Non-interest income, for the three months ended December 31, 2023, was $1,549,000 compared to $1,589,000 for the same period last year, a decrease of 3%. Non-interest income, for the twelve months ended December 31, 2023, was $6,381,000 compared to $6,062,000 for the same period last year, an increase of 5%.

Non-interest expense, for the three months ended December 31, 2023, was $6,367,000 compared to $4,835,000 for the same period last year, an increase of 32%. Non-interest expense, for the twelve months ended December 31, 2023, was $24,087,000 compared to $18,083,000 for the same period last year, an increase of 33%.

The efficiency ratio, for the three months ended December 31, 2023, was 55.82% compared to 41.76% in 2022, which represents an increase of 34%. The efficiency ratio illustrates that for every dollar made for the three-month period ending December 31, 2023, it cost $0.5582 to make it, as compared to $0.4176 one year ago. The efficiency ratio, for the twelve months ended December 31, 2023, was 50.14% compared to 41.30% in 2022, which represents an increase of 21%.

Capital ratios for the Bank remain above the levels required for a “well capitalized” institution as designated by regulatory agencies. As of December 31, 2023, the tier 1 leverage ratio was 12.09%, the common equity tier 1 capital ratio was 18.56%, the tier 1 risk-based capital ratio was 18.56% and the total risk-based capital ratio was 19.82%.

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.

FOURTH QUARTER REPORT - December 31, 2023 (Unaudited)
 
CW BANCORP %
CONSOLIDATED BALANCE SHEET Increase
(dollars in thousands) Dec 31, 2023 Dec 31, 2022 (Decrease)
 
ASSETS
Cash and due from banks

$

387,464

 

$

438,433

 

-12

%

Securities available for sale

 

110,812

 

 

124,682

 

-11

%

Securities held-to-maturity

 

50,610

 

 

51,613

 

-2

%

 
Loans

 

724,444

 

 

794,383

 

-9

%

Less allowance for loan losses

 

(11,533

)

 

(10,892

)

6

%

Loans, net

 

712,911

 

 

783,491

 

-9

%

 
Bank premises and equipment, net

 

4,405

 

 

5,053

 

-13

%

Other assets

 

35,567

 

 

34,574

 

3

%

Total assets

$

1,301,769

 

$

1,437,846

 

-9

%

 
LIABILITIES AND STOCKHOLDERS' EQUITY
Non-interest bearing deposits

$

548,149

 

$

584,722

 

-6

%

Interest bearing deposits

 

610,340

 

 

719,348

 

-15

%

Total deposits

 

1,158,489

 

 

1,304,070

 

-11

%

 
Subordinated debenture

 

50,000

 

 

50,000

 

0

%

Other liabilities

 

14,419

 

 

14,156

 

2

%

 

1,222,908

 

 

1,368,226

 

-11

%

Stockholders' equity

 

78,861

 

 

69,620

 

13

%

Total liabilities and stockholders' equity

$

1,301,769

 

$

1,437,846

 

-9

%

 
Shares outstanding at end of period

 

3,096,360

 

 

3,314,358

 

Book value per share

$

28.41

 

$

24.57

 

Total loans to total deposits

 

62.53

%

 

60.92

%

ALLL to total loans

 

1.59

%

 

1.37

%

Nonperforming assets (non-accrual loans & OREO)

$

4,144

 

$

522

 

 
COMMERCEWEST BANK CAPITAL RATIOS:
Tier 1 leverage ratio

 

12.09

%

 

11.01

%

Common equity tier 1 capital ratio

 

18.56

%

 

15.57

%

Tier 1 risk-based capital ratio

 

18.56

%

 

15.57

%

Total risk-based capital ratio

 

19.82

%

 

16.82

%

 
CW BANCORP
CONSOLIDATED STATEMENT OF INCOME (Unaudited) Three Months Ended Increase For the Twelve Months Ended Increase
(dollars in thousands except share and per share data) Dec 31, 2023 Dec 31, 2022 (Decrease) Dec 31, 2023 Dec 31, 2022 (Decrease)
 
INTEREST INCOME
Loans

$

10,146

 

$

9,543

 

6

%

$

40,017

 

$

34,566

 

16

%

Investments

 

1,109

 

 

1,173

 

-5

%

 

4,309

 

 

4,343

 

-1

%

Fed funds sold and other

 

1,709

 

 

1,052

 

62

%

 

7,859

 

 

2,411

 

226

%

Total interest income

 

12,964

 

 

11,768

 

10

%

 

52,185

 

 

41,320

 

26

%

 
INTEREST EXPENSE
Deposits

 

2,698

 

 

1,406

 

92

%

 

9,584

 

 

2,114

 

353

%

Subordinated debenture

 

469

 

 

469

 

0

%

 

1,875

 

 

1,875

 

0

%

Other borrowings

 

-

 

 

2

 

-100

%

 

9

 

 

8

 

13

%

Total interest expense

 

3,167

 

 

1,877

 

69

%

 

11,468

 

 

3,997

 

187

%

 
NET INTEREST INCOME BEFORE CREDIT LOSS PROVISION

 

9,797

 

 

9,891

 

-1

%

 

40,717

 

 

37,323

 

9

%

 
PROVISION FOR CREDIT LOSSES

 

-

 

 

400

 

-100

%

 

(1,326

)

 

1,200

 

-211

%

Non-interest income:
 
NET INTEREST INCOME AFTER CREDIT LOSS PROVISION

 

9,797

 

 

9,491

 

3

%

 

42,043

 

 

36,123

 

16

%

 
NON-INTEREST INCOME
Service Charges and Fees on Deposits

 

1,197

 

 

1,137

 

5

%

 

5,088

 

 

4,475

 

14

%

Loss on Sale of AFS Securities

 

-

 

 

-

 

-

 

 

(166

)

 

-

 

-

 

Other Fees

 

352

 

 

452

 

-22

%

 

1,459

 

 

1,587

 

-8

%

 
NON-INTEREST EXPENSE

 

6,367

 

 

4,835

 

32

%

 

24,087

 

 

18,083

 

33

%

 
EARNINGS BEFORE INCOME TAXES

 

4,979

 

 

6,245

 

-20

%

 

24,337

 

 

24,102

 

1

%

 
INCOME TAXES

 

1,434

 

 

1,724

 

-17

%

 

6,726

 

 

6,741

 

0

%

 
 
NET INCOME

$

3,545

 

$

4,521

 

-22

%

$

17,611

 

$

17,361

 

1

%

 
Basic earnings per share

$

1.13

 

$

1.36

 

-17

%

$

5.46

 

$

5.14

 

6

%

Diluted earnings per share

$

1.12

 

$

1.32

 

-15

%

$

5.39

 

$

5.00

 

8

%

Return on Assets

 

1.33

%

 

1.60

%

-17

%

 

1.58

%

 

1.45

%

9

%

Return on Equity

 

18.91

%

 

26.73

%

-29

%

 

23.85

%

 

24.99

%

-5

%

Return on Tangible Equity

 

19.72

%

 

28.01

%

-30

%

 

24.88

%

 

26.14

%

-5

%

Efficiency Ratio

 

55.82

%

 

41.76

%

34

%

 

50.14

%

 

41.30

%

21

%

 
CW BANCORP
CONSOLIDATED AVERAGE BALANCE SHEET and YIELD ANALYSIS
 
Three Months Ended December 31,

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

$

114,418

$

1,571

5.45

%

$

96,413

$

934

3.84

%

Investment Securities (1)

 

155,688

 

 

1,168

 

2.98

%

 

175,914

 

 

1,270

 

2.86

%

Loans

 

729,798

 

 

10,146

 

5.52

%

 

782,021

 

 

9,543

 

4.84

%

FHLB & Other Stocks

 

7,100

 

 

138

 

7.71

%

 

6,504

 

 

118

 

7.20

%

Total interest-earning assets

 

1,007,004

 

 

13,023

 

5.13

%

 

1,060,852

 

 

11,865

 

4.44

%

 
Noninterest-earning assets

 

53,211

 

 

59,420

 

Total assets

$

1,060,215

 

$

1,120,272

 

 
 
INTEREST EARNING LIABILITIES
Interest Bearing Deposits

$

377,481

 

$

2,698

 

2.84

%

$

382,777

 

$

1,406

 

1.46

%

Other Borrowings

 

-

 

 

-

 

-

 

 

283

 

 

2

 

2.80

%

Subordinated Debenture

 

50,000

 

 

469

 

3.75

%

 

50,000

 

 

469

 

3.75

%

Total interest-earning liabilities

 

427,481

 

 

3,167

 

2.94

%

 

433,060

 

 

1,877

 

1.72

%

 
Noninterest-earning liabilities
Demand Deposits

 

543,772

 

 

605,804

 

Other Liabilities

 

14,576

 

 

14,309

 

Shareholders' Equity

 

74,386

 

 

67,099

 

Total liabilities and shareholder's equity

$

1,060,215

 

$

1,120,272

 

 
Net Interest Spread

$

9,856

 

2.19

%

$

9,988

 

2.72

%

Net Interest Margin

3.88

%

3.74

%

 
Total Deposits

$

921,253

 

$

2,698

 

1.16

%

$

988,581

 

$

1,406

 

0.56

%

Total Funding Costs

$

971,253

 

$

3,167

 

1.29

%

$

1,038,864

 

$

1,877

 

0.72

%

(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
 
Twelve Months Ended December 31,

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

$

141,213

$

7,366

5.22

%

$

154,008

$

2,038

1.32

%

Investment Securities (1)

 

159,280

 

 

4,582

 

2.88

%

 

179,684

 

 

4,739

 

2.64

%

Loans

 

751,757

 

 

40,017

 

5.32

%

 

791,090

 

 

34,566

 

4.37

%

FHLB & Other Stocks

 

6,924

 

 

493

 

7.12

%

 

5,862

 

 

373

 

6.36

%

Total interest-earning assets

 

1,059,174

 

 

52,458

 

4.95

%

 

1,130,644

 

 

41,716

 

3.69

%

 
Noninterest-earning assets

 

56,858

 

 

64,021

 

Total assets

$

1,116,032

 

$

1,194,665

 

 
 
INTEREST EARNING LIABILITIES
Interest Bearing Deposits

$

399,390

 

$

9,584

 

2.40

%

$

421,452

 

$

2,114

 

0.50

%

Other Borrowings

 

181

 

 

9

 

4.97

%

 

529

 

 

8

 

1.51

%

Subordinated Debenture

 

50,000

 

 

1,875

 

3.75

%

 

50,000

 

 

1,875

 

3.75

%

Total interest-earning liabilities

 

449,571

 

 

11,468

 

2.55

%

 

471,981

 

 

3,997

 

0.85

%

 
Noninterest-earning liabilities
Demand Deposits

 

578,427

 

 

639,800

 

Other Liabilities

 

14,191

 

 

13,415

 

Shareholders' Equity

 

73,843

 

 

69,469

 

Total liabilities and shareholder's equity

$

1,116,032

 

$

1,194,665

 

 
Net Interest Spread

$

40,990

 

2.40

%

$

37,719

 

2.84

%

Net Interest Margin

3.87

%

3.34

%

 
Total Deposits

$

977,817

 

$

9,584

 

0.98

%

$

1,061,252

 

$

2,114

 

0.20

%

Total Funding Costs

$

1,027,998

 

$

11,468

 

1.12

%

$

1,111,781

 

$

3,997

 

0.36

%

(1) Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate

 

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