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CW Bancorp Reports Q2 2023 EPS of $1.27, ROA 1.45% and ROTE of 23.85%

IRVINE, Calif., July 28, 2023--(BUSINESS WIRE)--CW Bancorp (OTCQX: CWBK), the parent company ("the Company") of CommerceWest Bank (the "Bank") reported consolidated net income for the second quarter of 2023 of $4,214,000 or $1.27 per diluted share as compared to $4,186,000 or $1.20 per diluted share for the second quarter of 2022, an EPS increase of 6% and net income for the six months ended June 30, 2023 of $8,832,000 or $2.64 per diluted share as compared to $8,244,000 or $2.35 per diluted share for the six months ended June 30, 2022, an EPS increase of 12%.

Key Financial Results for the three months ended June 30, 2023:

  • EPS of $1.27, up 6%

  • ROA of 1.45%, up 4%

  • Net interest income up 14%

  • Net interest margin of 3.79% up 18%

  • Efficiency ratio of 49.83%

  • ALLL to total loans ratio (net of PPP loans) of 1.49%

  • Liquid funds to total deposits ratio of 20%

  • No outstanding FRB or FHLB borrowings

  • Non-interest bearing deposits to total deposits of 59%

  • Bank tier 1 leverage ratio of 10.79% and total risk-based capital ratio of 19.20%

  • 54 quarters of consecutive profits

Key Financial Results for the six months ended June 30, 2023:

  • EPS of $2.64, up 12%

  • Net income growth of 7%

  • ROTE of 25.49%, up 3%

  • ROA of 1.57%, up 18%

  • Net interest income up 15%

  • Net interest margin up 27%

  • Efficiency ratio of 46.43%

Mr. Ivo Tjan, Chairman and CEO commented, "The Company delivered another solid quarter of performance with double digit net interest income growth, strong on balance sheet liquidity, and strong capital ratios." Mr. Tjan continued, "The economy has proven to be more resilient than anticipated which is good news for the Bank and for our clients. There are some potential headwinds ahead, with the continued war in Ukraine, unprecedented quantitative tightening, and stubborn core inflation. We remain cautiously optimistic as we continue to maintain a fortress balance sheet approach. Our bank’s business model was built to last and has been a source of economic strength for the communities we serve. I continue to be especially proud of our team members, who have stepped up every day to provide the best level of service to our clients."

Total assets decreased $29.5 million as of June 30, 2023, a decrease of 2% as compared to the same period one year ago. Total loans decreased $55.0 million as of June 30, 2023, a decrease of 7% from the prior year. Excluding PPP loans, total loans decreased $45.7 million as of June 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 $57.6 million or 29% over the prior year. Total investment securities decreased $29.3 million, a decrease of 16% from the prior year.

Total deposits decreased $40.5 million as of June 30, 2023, a decrease of 4% from June 30, 2022. The Bank’s 2022 business objectives included deleveraging the Bank in order to strengthen capital ratios in anticipation of a recession. Non-interest-bearing deposits decreased $70.6 million as of June 30, 2023, a decrease of 10% from the prior year. Interest bearing deposits increased $30.1 million as of June 30, 2023, an increase of 7% over the prior year.

Interest income was $13,513,000 for the three months ended June 30, 2023, as compared to $9,720,000 for the three months ended June 30, 2022, an increase of 39%. Interest expense was $3,113,000 for the three months ended June 30, 2023, as compared to $629,000 for the three months ended June 30, 2022, an increase of 395%. Interest expense was up for the quarter due to the rising cost of deposits.

Interest income was $25,517,000 for the six months ended June 30, 2023, as compared to $18,892,000 for the six months ended June 30, 2022, an increase of 35%. Interest expense was $5,258,000 for the six months ended June 30, 2023, as compared to $1,265,000 for the six months ended June 30, 2022, an increase of 316%. Interest expense was up for the first half of 2023 due to the rising cost of deposits.

Net interest income for the three months ended June 30, 2023, was $10,400,000 as compared to $9,091,000 for the three months ended June 30, 2022, an increase of 14%. The net interest margin increased for the three months ended June 30, 2023. It increased from 3.22% in 2022 to 3.79% in 2023, an increase of 18%. Net interest income for the six months ended June 30, 2023, was $20,259,000 as compared to $17,627,000 for the six months ended June 30, 2022, an increase of 15%. The net interest margin increased for the six months ended June 30, 2023. It increased from 3.03% in 2022 to 3.85% in 2023, an increase of 27%.

Provision for credit losses for the three months ended June 30, 2023, was $99,000 compared to $375,000 for the three months ended June 30, 2022. Provision for credit losses for the six months ended June 30, 2023, was $174,000 compared to $500,000 for the six months ended June 30, 2022. The allowance for loan losses (net of PPP loans) to total loans ratio increased from 1.29% as of June 30, 2022, to 1.49% as of June 30, 2023.

Non-interest income for the three months ended June 30, 2023, was $1,662,000 compared to $1,515,000 for the same period last year, an increase of 10%. Non-interest income for the six months ended June 30, 2023, was $2,915,000 compared to $2,909,000 for the same period last year, an increase of less than one percent.

Non-interest expense for the three months ended June 30, 2023, was $6,041,000 compared to $4,404,000 for the same period last year, an increase of 37%. Non-interest expense for the six months ended June 30, 2023, was $10,908,000 compared to $8,590,000 for the same period last year, an increase of 27%.

The efficiency ratio for the three months ended June 30, 2023, was 49.83% compared to 41.14% in 2022, which represents an increase of 21%. The efficiency ratio illustrates that for every dollar made for the three-month period ending June 30, 2023, it cost $0.4983 to make it, as compared to $0.4114 one year ago. The efficiency ratio for the six months ended June 30, 2023, was 46.43% compared to 41.43% in 2022, which represents an increase of 12%.

Capital ratios for the Bank remain above the levels required for a "well capitalized" institution as designated by regulatory agencies. As of June 30, 2023, the tier 1 leverage ratio was 10.79%, the common equity tier 1 capital ratio was 17.94%, the tier 1 risk-based capital ratio was 17.94% and the total risk-based capital ratio was 19.20%.

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.

SECOND QUARTER REPORT - JUNE 30, 2023 (Unaudited)

CW BANCORP

%

CONSOLIDATED BALANCE SHEET

Increase

(dollars in thousands)

June 30, 2023

June 30, 2022

(Decrease)

ASSETS

Cash and due from banks

$

255,499

$

197,912

29

%

Securities available for sale

102,357

130,597

-22

%

Securities held-to-maturity

50,686

51,750

-2

%

Loans (PPP loans $4,472 and $13,736 at 2023 and 2022, respectively)

747,272

802,284

-7

%

Less allowance for loan losses

(11,042

)

(10,210

)

8

%

Loans, net

736,230

792,074

-7

%

Bank premises and equipment, net

4,683

5,460

-14

%

Other assets

31,930

33,120

-4

%

Total assets

$

1,181,385

$

1,210,913

-2

%

LIABILITIES AND STOCKHOLDERS' EQUITY

Non-interest bearing deposits

$

609,859

$

680,488

-10

%

Interest bearing deposits

431,494

401,408

7

%

Total deposits

1,041,353

1,081,896

-4

%

Subordinated debenture

50,000

50,000

0

%

Other liabilities

16,370

12,746

28

%

1,107,723

1,144,642

-3

%

Stockholders' equity

73,662

66,271

11

%

Total liabilities and stockholders' equity

$

1,181,385

$

1,210,913

-2

%

Shares outstanding at end of period

3,235,711

3,371,667

Book value per share

$

26.18

$

22.48

Total loans to total deposits

71.76

%

74.16

%

ALLL to total loans (net of PPP loans)

1.49

%

1.29

%

Nonperforming assets (non-accrual loans & OREO)

$

3,182

$

19

COMMERCEWEST BANK CAPITAL RATIOS:

Tier 1 leverage ratio

10.79

%

9.81

%

Common equity tier 1 capital ratio

17.94

%

15.19

%

Tier 1 risk-based capital ratio

17.94

%

15.19

%

Total risk-based capital ratio

19.20

%

16.44

%

CW BANCORP

CONSOLIDATED STATEMENT OF INCOME (Unaudited)

Three Months Ended

Increase

For the Six Months Ended

Increase

(dollars in thousands except share and per share data)

June 30, 2023

June 30, 2022

(Decrease)

June 30, 2023

June 30, 2022

(Decrease)

INTEREST INCOME

Loans

$

9,978

$

8,184

22

%

$

19,882

$

16,126

23

%

Investments

1,027

1,110

-7

%

2,185

2,088

5

%

Fed funds sold and other

2,508

426

489

%

3,450

678

409

%

Total interest income

13,513

9,720

39

%

25,517

18,892

35

%

INTEREST EXPENSE

Deposits

2,644

159

1563

%

4,311

325

1226

%

Subordinated debenture

469

469

0

%

938

938

0

%

Other borrowings

-

1

-

9

2

350

%

Total interest expense

3,113

629

395

%

5,258

1,265

316

%

NET INTEREST INCOME BEFORE CREDIT LOSS PROVISION

10,400

9,091

14

%

20,259

17,627

15

%

PROVISION FOR CREDIT LOSSES

99

375

-74

%

174

500

-65

%

Non-interest income:

NET INTEREST INCOME AFTER CREDIT LOSS PROVISION

10,301

8,716

18

%

20,085

17,127

17

%

NON-INTEREST INCOME

Service Charges and Fees on Deposits

1,318

1,149

15

%

2,409

2,141

13

%

Loss on Sale of AFS Securities

-

-

-

(166

)

-

-

Other Fees

344

366

-6

%

672

768

-13

%

NON-INTEREST EXPENSE

6,041

4,404

37

%

10,908

8,590

27

%

EARNINGS BEFORE INCOME TAXES

5,922

5,827

2

%

12,092

11,446

6

%

INCOME TAXES

1,708

1,641

4

%

3,260

3,202

2

%

NET INCOME

$

4,214

$

4,186

1

%

$

8,832

$

8,244

7

%

Basic earnings per share

$

1.29

$

1.23

5

%

$

2.69

$

2.41

12

%

Diluted earnings per share

$

1.27

$

1.20

6

%

$

2.64

$

2.35

12

%

Return on Assets

1.45

%

1.39

%

4

%

1.57

%

1.33

%

18

%

Return on Equity

22.87

%

24.76

%

-8

%

24.42

%

23.74

%

3

%

Return on Tangible Equity

23.85

%

25.93

%

-8

%

25.49

%

24.82

%

3

%

Efficiency Ratio

49.83

%

41.14

%

21

%

46.43

%

41.43

%

12

%

CW BANCORP

CONSOLIDATED AVERAGE BALANCE SHEET and YIELD ANALYSIS

Three Months Ended June 30,

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

$

187,693

$

2,396

5.12

%

$

159,229

$

351

0.88

%

Investment Securities (1)

155,438

1,088

2.81

%

182,926

1,208

2.65

%

Loans

757,153

9,978

5.29

%

796,615

8,184

4.12

%

FHLB & Other Stocks

6,983

112

6.43

%

6,115

75

4.92

%

Total interest-earning assets

1,107,267

13,574

4.92

%

1,144,885

9,818

3.44

%

Noninterest-earning assets

61,242

64,204

Total assets

$

1,168,509

$

1,209,089

INTEREST EARNING LIABILITIES

Interest Bearing Deposits

$

437,694

$

2,644

2.42

%

$

426,084

$

159

0.15

%

Other Borrowings

-

-

-

1,341

1

0.30

%

Subordinated Debenture

50,000

469

3.75

%

50,000

469

3.75

%

Total interest-earning liabilities

487,694

3,113

2.56

%

477,425

629

0.53

%

Noninterest-earning liabilities

Demand Deposits

593,612

651,306

Other Liabilities

13,271

12,533

Shareholders' Equity

73,932

67,825

Total liabilities and shareholder's equity

$

1,168,509

$

1,209,089

Net Interest Spread

$

10,461

2.36

%

$

9,189

2.91

%

Net Interest Margin

3.79

%

3.22

%

Total Deposits

$

1,031,306

$

2,644

1.03

%

$

1,077,390

$

159

0.06

%

Total Funding Costs

$

1,081,306

$

3,113

1.15

%

$

1,128,731

$

629

0.22

%

(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

Six Months Ended June 30,

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

$

130,527

$

3,232

4.99

%

$

211,612

$

554

0.53

%

Investment Securities (1)

164,012

2,338

2.87

%

180,311

2,288

2.56

%

Loans

768,619

19,882

5.22

%

790,223

16,126

4.12

%

FHLB & Other Stocks

6,745

218

6.52

%

5,209

124

4.80

%

Total interest-earning assets

1,069,903

25,670

4.84

%

1,187,355

19,092

3.24

%

Noninterest-earning assets

61,144

62,333

Total assets

$

1,131,047

$

1,249,688

INTEREST EARNING LIABILITIES

Interest Bearing Deposits

$

409,825

$

4,311

2.12

%

$

454,800

$

325

0.14

%

Other Borrowings

365

9

4.97

%

675

2

0.60

%

Subordinated Debenture

50,000

938

3.75

%

50,000

938

3.75

%

Total interest-earning liabilities

460,190

5,258

2.30

%

505,475

1,265

0.50

%

Noninterest-earning liabilities

Demand Deposits

584,658

661,272

Other Liabilities

13,259

12,902

Shareholders' Equity

72,940

70,039

Total liabilities and shareholder's equity

$

1,131,047

$

1,249,688

Net Interest Spread

$

20,412

2.54

%

$

17,827

2.74

%

Net Interest Margin

3.85

%

3.03

%

Total Deposits

$

994,483

$

4,311

0.87

%

$

1,116,072

$

325

0.06

%

Total Funding Costs

$

1,044,848

$

5,258

1.01

%

$

1,166,747

$

1,265

0.22

%

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

View source version on businesswire.com: https://www.businesswire.com/news/home/20230728633153/en/

Contacts

Bancorp Contact
Mr. Ivo A. Tjan, CEO
Ms. Leeann Cochran, CFO
Telephone: (866) 521-CWBK
E-mail: InvestorRelations@cwbk.com
Website: www.cwbk.com
"Bank on the Difference"