CW Bancorp Reports Q4 2020 Record Total Assets of $1.3 Billion up 49% and Record Quarterly Earnings of $4.9 million up 135% and Funds $390 million in Main Street Lending Program

Rhea-AI Summary

CW Bancorp (OTC: CWBK) reported a net income of $4,976,000 ($1.37 per share) for Q4 2020, a 149% increase from $2,114,000 ($0.55 per share) in Q4 2019. For the full year 2020, net income was $9,091,000 ($2.48 per share), up 16% from $8,208,000 ($2.14 per share) in 2019. The bank funded $390 million in MSLP loans, achieved record net income and loan growth of 34%. Key metrics include non-interest income up 356% and an efficiency ratio improvement to 47.16%. Overall, CW Bancorp showed strong financial performance amidst market challenges.

Positive

• Net income for Q4 2020 increased by 149% to $4,976,000.
• Full-year net income grew by 16% to $9,091,000.
• Record loan growth of 34% with total loans at $150 million.
• Non-interest income surged by 356% in Q4 2020.
• Efficiency ratio improved to 47.16%, a decrease of 11% year-over-year.

Negative

• Net interest margin decreased from 3.75% in 2019 to 3.51% in 2020.
• Provision for loan losses increased by 658% to $6,593,000 for the full year.
• Non-interest expenses rose by 35% in Q4 2020 compared to the previous year.

CW Bancorp (OTC: CWBK), the holding company of CommerceWest Bank reported net income for the fourth quarter of 2020 of $4,976,000 or $1.37 a share as compared to $2,114,000 or $0.55 a share for the fourth quarter of 2019, an EPS increase of 149%. Net income for the full year of 2020 was $9,091,000 or $2.48 per common share, compared with net income of $8,208,000 or $2.14 per common share for the full year of 2019, an EPS increase of 16%.

Key Financial Results for the three months ended December 31, 2020:

• Funded $390 million in MSLP loans (#1 in the state of California)
• Record loan funding of $430 million
• Record net income up 135%
• Record EPS up 149%
• Record ROTE of 30.04% up 122%
• Interest expense down 67%
• Cost of funds of 0.15%, down 83%
• Net interest income up 44%
• Non-interest income up 356%
• Zero nonperforming loans
• 44 quarters of consecutive profits

Key Financial Results for the twelve months ended December 31, 2020:

• Record pre-tax pre-provision income up 63%
• Record net income up 11%
• Record EPS up 16%
• Record ROTE of 14.49% up 6%
• Record efficiency ratio of 47.16%
• Record total assets of $1.320 billion
• Record deposit growth of $431 million, up 53%
• Record loan growth of $150 million, up 34%
• Non-interest income up 131%
• Net interest income up 20%
• Interest expense down 57%
• Cost of funds of 0.26%, down 69%
• ALLL to total loans ratio (net of PPP loans) of 1.93%
• Noninterest-bearing deposits as percent of total deposits at 51%

Mr. Ivo Tjan, Chairman and CEO, said, “The Bank funded $390 million in MSLP loans during the fourth quarter. We considered this a great privilege to help preserve many businesses and their employees during these unprecedented times; including funding nearly $200 million of PPP loans in 2020. Our company achieved record revenue, record profitability, record asset size, while maintaining strong credit quality; with a fortress balance sheet built to last during an unprecedented pandemic and economic downturn.”

Mr. Tjan continued, “The Bank produced record pretax pre-provision income of $18.8 million, up 63% and ending the year with the strongest financial results in the history of the company. We had $1.3 billion in total assets, quarterly earnings of $4.9 million with record deposit and loan funding in 2020. I want to sincerely thank our team of mighty CommerceWest Bankers who executed the strategy and supported our clients and our community during a very challenging year.”

Total assets increased $437 million as of December 31, 2020, an increase of 49% as compared to the same period one year ago. Total loans increased $150 million as of December 31, 2020, an increase of 34% over the prior year. Cash and due from banks increased $280 million or 78% from the prior year. Total investment securities increased $8.9 million, an increase of 13% from the prior year.

Total deposits increased $430.7 million as of December 31, 2020, an increase of 53% from December 31, 2019. Non-interest-bearing deposits increased $369.5 million as of December 31, 2020, an increase of 138% over the prior year. Interest bearing deposits increased $61.2 million as of December 31, 2020, an increase of 11% over the prior period.

Interest income was $8,434,000 for the three months ended December 31, 2020 as compared to $6,649,000 for the three months ended December 31, 2019, an increase of 27.0%. There were $56 million in loans forgiven by the SBA during the fourth quarter. This resulted in an additional $1.3 million in deferred fees being recognized as income for the quarter. Interest income was $27,909,000 for the twelve months ended December 31, 2020 as compared to $26,035,000 for the twelve months ended December 31, 2019, an increase of 7.2%. Interest expense was $336,000 for the three months ended December 31, 2020 as compared to $1,007,000 for the three months ended December 31, 2019, a decrease of 67%. Interest expense was $1,896,000 for the twelve months ended December 31, 2020 as compared to $4,405,000 for the twelve months ended December 31, 2019, a decrease of 57%.

Net interest income for the three months ended December 31, 2020 was $8,098,000 as compared to $5,642,000 for the three months ended December 31, 2019, an increase of 44%. The net interest margin decreased for the three months ended December 31, 2020. It decreased from 3.75% in 2019 to 3.51% in 2020, a decrease of 6%. Net interest income for the twelve months ended December 31, 2020 was $26,013,000 as compared to $21,630,000 for the twelve months ended December 31, 2019, an increase of 20%. The net interest margin decreased for the twelve months ended December 31, 2020. It decreased from 3.86% in 2019 to 3.35% in 2020, a decrease of 13%.

Provision for loan losses for the three months ended December 31, 2020 was $750,000 compared to $350,000 for the three months ended December 31, 2019, an increase of 114%. Provision for loan losses for the twelve months ended December 31, 2020 was $6,593,000 compared to $870,000 for the twelve months ended December 31, 2019, an increase of 658%. The allowance for loan losses (net of PPP loans) to total loans ratio increased from 1.31% as of December 31, 2019 to 1.93% as of December 31, 2020, an increase of 47%.

Non-interest income for the three months ended December 31, 2020 was $4,049,000 compared to $888,000 for the same period last year, an increase of 356%. The sale of the MSLP loans resulted in gains on loans sold of $2.9 million for the quarter. Non-interest income for the twelve months ended December 31, 2020 was $7,281,000 compared to $3,151,000 for the same period last year, an increase of 131%.

Non-interest expense for the three months ended December 31, 2020 was $4,416,000 compared to $3,265,000 for the same period last year, an increase of 35%. Non-interest expense for the twelve months ended December 31, 2020 was $14,454,000 compared to $13,195,000 for the same period last year, an increase of 10%.

The Bank’s efficiency ratio for the three months ended December 31, 2020 was 47.74% compared to 49.33% in 2019, which represents a decrease of 3%. The efficiency ratio illustrates that for every dollar the Bank made for the three-month period ending December 31, 2020, the Bank spent $0.48 to make it, as compared to $0.49 one year ago.

The Bank’s efficiency ratio for the twelve months ended December 31, 2020 was 47.16% compared to 52.85% in 2019, which represents a decrease of 11%.

Capital ratios for the Bank remain above the levels required for a “well capitalized” institution as designated by regulatory agencies. As of December 31, 2020, the tier 1 leverage ratio was 6.49%, the common equity tier 1 capital ratio was 11.35%, the tier 1 risk-based capital ratio was 11.35% and the total risk-based capital ratio was 12.61%.

CommerceWest Bank is a California based full service business bank with a unique vision and culture of focusing exclusively on the business community by delivering on customized products and services. Founded in 2001 and headquartered in Irvine, California. The Bank serves businesses throughout the state of California. We provide a wide range of commercial banking services, including, remote deposit solution, 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, 2020 (Unaudited)
								%
BALANCE SHEET								Increase
(dollars in thousands)		December 31, 2020			December 31, 2019			(Decrease)
ASSETS
Cash and due from banks		$ 640,103			$ 359,645			78	%
Investments - available for sale		77,413			68,491			13	%
Loans		591,433			441,147			34	%
Less allowance for loan losses		(9,358	)		(5,785	)		62	%
Loans, net		582,075			435,362			34	%
Bank premises and equipment, net		584			815			-28	%
Other assets		20,287			19,136			6	%
Total assets		$ 1,320,462			$ 883,449			49	%
LIABILITIES AND STOCKHOLDERS' EQUITY
Non-interest bearing deposits		$ 637,947			$ 268,435			138	%
Interest bearing deposits		604,534			543,293			11	%
Total deposits		1,242,481			811,728			53	%
Other liabilities		7,773			6,864			13	%
		1,250,254			818,592			53	%
Stockholders' equity		70,208			64,857			8	%
Total liabilities and stockholders' equity		$ 1,320,462			$ 883,449			49	%
Shares outstanding at end of period		3,531,996			3,631,752
Book value per share		$ 18.91			$ 17.62
Total loans to total deposits		47.60	%		54.35	%
ALLL to total loans (net of PPP loans)		1.93	%		1.31	%
Nonperforming assets (non-accrual loans & OREO)		$ -			$ 58
CAPITAL RATIOS:
Tier 1 leverage ratio		6.49	%		9.67	%
Common equity tier 1 capital ratio		11.35	%		11.17	%
Tier 1 risk-based capital ratio		11.35	%		11.17	%
Total risk-based capital ratio		12.61	%		12.29	%

STATEMENT OF EARNINGS		Three Months Ended				Increase			Twelve Months Ended				Increase
(dollars in thousands except share and per share data)		Dec 31, 2020		Dec 31, 2019		(Decrease)			Dec 31, 2020		Dec 31, 2019		(Decrease)
INTEREST INCOME
Loans		$ 7,665		$ 6,113		25%			$ 25,119		$ 22,305		13%
Investments - available for sale		459		460		0%			1,841		1,799		2%
Fed funds sold and other		310		76		308%			949		1,931		-51%
Total interest income		8,434		6,649		27%			27,909		26,035		7.2%
INTEREST EXPENSE
Deposits		336		1,007		-67%			1,892		4,405		-57%
Other borrowed money		-		-		-			4		-
Total interest expense		336		1,007		-67%			1,896		4,405		-57%
NET INTEREST INCOME BEFORE LOAN LOSS PROVISION		8,098		5,642		44%			26,013		21,630		20%
PROVISION FOR LOAN LOSSES		750		350		114%			6,593		870		658%
NET INTEREST INCOME AFTER LOAN LOSS PROVISION		7,348		5,292		39%			19,420		20,760		-6%
NON-INTEREST INCOME		4,049		888		356%			7,281		3,151		131%
NON-INTEREST EXPENSE		4,416		3,265		35%			14,454		13,195		10%
EARNINGS BEFORE INCOME TAXES		6,981		2,915		139%			12,247		10,716		14%
INCOME TAXES		2,005		801		150%			3,156		2,508		26%
NET INCOME		$ 4,976		$ 2,114		135%			$ 9,091		$ 8,208		11%
Basic earnings per share		$ 1.41		$ 0.58		143%			$ 2.55		$ 2.24		14%
Diluted earnings per share		$ 1.37		$ 0.55		149%			$ 2.48		$ 2.14		16%
Return on Assets		2.02%		1.35%		49%			1.10%		1.39%		-21%
Return on Equity		29.37%		12.94%		127%			13.82%		13.02%		6%
Return on Tangible Equity		30.04%		13.55%		122%			14.49%		13.67%		6%
Efficiency Ratio		47.74%		49.33%		-3%			47.16%		52.85%		-11%
Cost of Funds		0.15%		0.87%		-83%			0.26%		0.85%		-69%
Net Interest Margin		3.51%		3.75%		-6%			3.35%		3.86%		-13%

 

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FAQ

What were CW Bancorp's earnings for Q4 2020?

CW Bancorp reported earnings of $4,976,000, or $1.37 per share, for Q4 2020.

How did CW Bancorp perform in 2020 compared to 2019?

In 2020, CW Bancorp's net income was $9,091,000, up 16% from $8,208,000 in 2019.

What was the record loan growth for CW Bancorp in 2020?

CW Bancorp achieved a record loan growth of 34%, equating to $150 million.

How much did non-interest income increase for CW Bancorp in Q4 2020?

Non-interest income for CW Bancorp surged by 356% in Q4 2020.

What was the efficiency ratio for CW Bancorp in 2020?

The efficiency ratio for CW Bancorp improved to 47.16% for the year ended December 31, 2020.