CommerceWest Bank Announces Record Profitability, Loan, Deposit and Asset Levels for the Year

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Date: 03.03.2018

CommerceWest Bank(OTCBB: CWBK) The Bank took a charge to tax expense of $528,000 in the fourth quarter of 2017 for the impact of the change in tax rates resulting from the enactment of the Tax Cuts and Jobs Act ("TCJA") on December 22, 2017.  Net income for the three months ended December 31, 2017 excluding this charge was $1,601,000 or $0.40 per common share, compared with net income of $1,319,000 or $0.32 per common share for the three months ended December 31, 2016, an EPS increase of 25%.  Net income for the twelve months ended December 31, 2017 excluding this charge was $5,533,000 or $1.36 per common share, compared with net income of $4,830,000 or $1.16 per common share for the twelve months ended December 31, 2016, an EPS increase of 17%.

The Bank reported net income for the three months ended December 31, 2017 including the charge for the impact of the change in tax rates of $1,073,000 or $0.27 per common share, compared with net income of $1,319,000 or $0.32 per common share for the three months ended December 31, 2016, an EPS decrease of 16%.  Net income for the twelve months ended December 31, 2017, including the charge for the impact of the change in tax rates, was $5,005,000 or $1.23 per common share, compared with net income of $4,830,000 or $1.16 per common share for the twelve months ended December 31, 2016, an EPS increase of 6%.

Key Financial Results for the three months ended December 31, 2017:

  • Interest income up 8%
  • Non-interest income up 8%
  • Net income up 21% excluding impact of change in tax law
  • EPS up 27% excluding impact of change in tax law
  • Efficiency ratio of 56.20%
  • 28% deposit growth year over year
  • 25% asset growth year over year

Key Financial Results for the twelve months ended December 31, 2017:

  • Interest income up 9%
  • Net interest income up 6%
  • Non-interest expense down 2%
  • Net income up 15% excluding impact of change in tax law
  • EPS up 17% excluding impact of change in tax law
  • Return on Equity up 14% excluding impact of change in tax law
  • Efficiency ratio of 54.26%

Mr. Ivo Tjan, Chairman and CEO commented on the financial results, "The Bank had solid financial performance in 2017.  We achieved record profitability, deposit, loan and asset growth for the year.  We demonstrated our commitment to long term shareholder value by returning millions of dollars in capital through stock repurchases and dividends." Mr. Tjan commented further, "The economic backdrop is favorable, and tax reform legislation enacted late last year has provided us with an opportunity to accelerate investments in our business, our people, and our communities; which will result in creating strong shareholder value.  We are optimistic about our future and the momentum going into 2018.  The Bank has assembled the most talented group of individuals in the history of our company and our future is bright."

Total assets increased $152.9 million as of December 31, 2017, an increase of 25% as compared to the same period one year ago. Total loans increased $10.3 million as of December 31, 2017, an increase of 3% over the prior year.   While loan production has been solid, the Bank has experienced a heightened level of loan prepayments during 2017.  Cash and due from banks increased $113.6 million or 61% from the prior year.  Total investment securities increased $27.2 million, an increase of 66% from the prior year.

Total deposits increased $152.6 million as of December 31, 2017, an increase of 28% from December 31, 2016.  Non-interest-bearing deposits increased $79.0 million as of December 31, 2017, an increase of 31% over the prior year.  Interest bearing deposits increased $73.5 million as of December 31, 2017, an increase of 25% over the prior period. 

Stockholders' equity on December 31, 2017 was $60.2 million, a decrease of 2% as compared to stockholders' equity of $61.1 million a year ago.

Interest income was $5,452,000 for the three months ended December 31, 2017 as compared to $5,070,000 for the three months ended December 31, 2016, an increase of 8%.  Interest income was $20,844,000 for the twelve months ended December 31, 2017 as compared to $19,139,000 for the twelve months ended December 31, 2016, an increase of 9%.  Interest expense was $570,000 for the three months ended December 31, 2017 as compared to $294,000 for the three months ended December 31, 2016, an increase of 94%.  Interest expense was $1,742,000 for the twelve months ended December 31, 2017 as compared to $1,124,000 for the twelve months ended December 31, 2016, an increase of 55%.

Net interest income for the three months ended December 31, 2017 was $4,882,000 as compared to $4,776,000 for the three months ended December 31, 2016, an increase of 2%.  Net interest income for the twelve months ended December 31, 2017 was $19,102,000 as compared to $18,015,000 for the twelve months ended December 31, 2016, an increase of 6%.   The net interest margin decreased for the three months ended December 31, 2017.  It decreased from 4.08% in 2016 to 3.68% in 2017, a decrease of 10%.  The net interest margin decreased for the twelve months ended December 31, 2017. It decreased from 4.14% in 2016 to 3.93% in 2017, a decrease of 5%.

Provision for loan losses for the three months ended December 31, 2017was $225,000 compared to $50,000 for the three months ended December 31, 2016, an increase of 350%.  Provision for loan losses for the twelve months ended December 31, 2017 was $1,255,000 compared to $225,000 for the twelve months ended December 31, 2016, an increase of 458%. 

Non-interest income for the three months ended December 31, 2017 was $686,000 compared to $636,000 for the same period last year, an increase of 8%.  Non-interest income for the twelve months ended December 31, 2017 was $2,832,000 compared to $2,399,000 for the same period last year, an increase of 18%.  The Bank collected approximately $784,000 in prepayment penalty fee income on loans during the twelve months ended December 31, 2017 as compared to $155,000 for the twelve months ended December 31, 2016.

Non-interest expense for the three months ended December 31, 2017 was $3,205,000 compared to $3,218,000 for the same period last year, a decrease of less than one percent.  Non-interest expense for the twelve months ended December 31, 2017 was $12,162,000 compared to $12,360,000 for the same period last year, a decrease of 2%.

The Bank's efficiency ratio for the three months ended December 31, 2017was 56.20% compared to 59.91% in 2016, which represents a decrease of 6%.   The Bank's efficiency ratio for the twelve months ended December 31, 2017 was 54.26% compared to 60.00% in 2016, which represents a decrease of 10%.  The efficiency ratio illustrates, that for every dollar the Bank made for the twelve-month period ending December 31, 2017, the Bank spent $0.54 to make it, as compared to $0.60 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 December 31, 2017, the tier 1 leverage ratio was 9.87%, the common equity tier 1 capital ratio was 12.53%, the tier 1 risk based capital ratio was 12.53%, and the total risk-based capital ratio was 13.48%.

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 bankingmobile banking, lines of credit, working capital loans, commercial real estate loans, SBA loans, and cash 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. 

http://markets.businessinsider.com/news/stocks/commercewest-bank-announces-record-profitability-loan-deposit-and-asset-levels-for-the-year-1014496098

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