IRVINE, Calif., January 31, 2024--(BUSINESS WIRE)--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
Bancorp Contact Mr. Ivo A. Tjan, CEO Ms. Leeann Cochran, CFO Telephone: (866) 521-CWBK E-mail: [email protected] Website: www.cwbk.com "Bank on the Difference"
