SOURCE: CommerceWest Bank

October 19, 2007 08:07 ET

CommerceWest Bank Reports Record Quarterly Earnings

IRVINE, CA--(Marketwire - October 19, 2007) - CommerceWest Bank (OTCBB: CWBK) reported record earnings for the three months ended September 30, 2007 of $907,000 or $0.29 per basic common share and $0.27 per diluted common share, compared with net income of $820,000 or $0.26 per basic common share and $0.24 per diluted common share for the three months ended September 30, 2006. Net income for the nine months ended September 30, 2007 was $2,473,000 or $0.78 per basic common share and $0.73 per diluted common share, compared with net income of $1,962,000 or $0.62 per basic common share and $0.58 per diluted common share for the nine months ended September 30, 2006.

"The Bank had a spectacular quarterly result," stated Chairman and CEO, Ivo A. Tjan. "In light of the current economic environment, the Bank's results are quite impressive. The Bank has developed a business model that has stayed focused on banking businesses. We have not varied from that model in the six year history of the Bank, (by offering consumer, construction or residential loan products), and our financial results demonstrate the success of what we do."

Financial performance highlights for the quarter ended September 30, 2007 included:

--  Record net income of $907,000 for the three months ended September 30,
    2007 as compared to $820,000 for the three months ended September 30, 2006,
    an increase of 10.6%.
    
--  Earnings per basic common share for the three months ended September
    30, 2007 were $0.29 compared to $0.26 in 2006, an increase of 10.5%.
    Earnings per diluted common share for the three months ended September 30,
    2007 were $0.27 compared to $0.24 in 2006, an increase of 9.9%.
    
--  Return on average assets for the three months ended September 30, 2007
    was 1.61% compared to 1.63% in 2006, a decrease of 1.2%.
    
--  Total loan growth of 15.2%, $143.9 million as of September 30, 2007 as
    compared to $125.0 million one year ago, an increase of $18.9 million.
    

Financial Performance highlights for the nine months ended September 30, 2007 included:

--  Net income of $2,473,000 for the nine months ended September 30, 2007
    as compared to $1,962,000 for the nine months ended September 30, 2006, an
    increase of 26.0%.
    
--  Earnings per basic common share for the nine months ended September
    30, 2007 were $0.78 compared to $0.62 in 2006, an increase of 25.5%.
    Earnings per diluted common share for the nine months ended September 30,
    2007 were $0.73 compared to $0.58 in 2006, an increase of 25.0%.
    
--  Gross revenue of $13.5 million for the nine months ended September 30,
    2007 compared to $11.3 million in 2006, an increase of 19.8%.
    
--  Return on average equity for the nine months ended September 30, 2007
    was 11.07% compared to 10.03% in 2006, an increase of 10.4%.
    
--  The Bank's efficiency ratio for the nine months ended September 30,
    2007 was 55.41% compared to 58.05% in 2006, which represents a decrease of
    4.5%.
    

Interest income was $4,054,000 for the quarter ended September 30, 2007 as compared to $3,696,000 for the quarter ended September 30, 2006, an increase of 9.7%. Interest income was $11,968,000 for the nine months ended September 30, 2007 as compared to $9,793,000 for the nine months ended September 30, 2006, an increase of 22.2%. Net interest income before provision for loan losses for the three months ended September 30, 2007 was $2,706,000, an increase of $13,000 or 0.5%, compared to the same period in 2006. This increase resulted from a $358,000 increase in interest income, offset by a $345,000 increase in interest expense. Net interest income before provision for loan losses for the nine months ended September 30, 2007 was $7,876,000, an increase of $580,000 or 7.9%, compared to the same period in 2006. This increase resulted from a $2,175,000 increase in interest income, offset by a $1,595,000 increase in interest expense.

"We have had the same challenges as other Banks in our market," said Chief Financial Officer, Leeann M. Cochran, "with rising cost of funds, increased competition for deposits and commercial and industrial loans, as well as a tough environment to find quality credits. In spite of all these challenges, our team has done an outstanding job of sustaining growth."

The net interest margin declined for the third quarter of 2007, which decreased from 5.75% in 2006 to 5.05% in 2007, a 70 basis point or 12.2% decrease. The net interest margin for the nine months ended September 30, 2007 was 4.93% as compared to 5.81% for the prior period, an 88 basis point or 15.1% decrease. The net interest margin improved from the three months ended June 30, 2007, from 4.87% to 5.05% for the three months ended September 30, 2007, an increase of 18 basis points, or 3.7%.

Non-interest income for the quarter ended September 30, 2007 was $516,000 as compared to $549,000 for the quarter ended September 30, 2006, a decrease of 6.0%. Non-interest income for the nine months ended September 30, 2007 was $1,565,000 compared to $1,504,000 for the same period last year, an increase of 4.1%. Gross revenue was $4,570,000 for the quarter ended September 30, 2007 as compared to $4,245,000 for the quarter ended September 30, 2006, an increase of 7.7%. Gross revenue was $13,533,000 for the nine months ended September 30, 2007 as compared to $11,297,000 for the nine months ended September 30, 2006, an increase of 19.8%.

Non-interest expense for the quarter ended September 30, 2007 was $1,738,000 as compared to $1,736,000 for the quarter ended September 30, 2006, an increase of 0.1%. Non-interest expense for the nine months ended September 30, 2007 was $5,231,000 compared to $5,108,000 for the same period last year, an increase of 2.4%.

"Managing expense growth is a very important discipline at CommerceWest Bank," says CEO Mr. Tjan. "The fact that we have grown the bank's gross revenue 19.8% for the nine months ended September 30, 2007 and contained expenses (non-interest expense growth was 2.4% for the nine months ended September 30, 2007), is a key component of our financial success and demonstrates the strength of our business model."

Loan growth for the period ended September 30, 2007 was $18.9 million, an increase of 15.2% over the prior year. Deposit growth for the period ended September 30, 2007 was $10.5 million, an increase of 5.8% over the period ended September 30, 2006. The Bank's allowance for loan losses as a percent of total loans was 1.41% on September 30, 2007 as compared to 1.33% on September 30, 2006, an increase of 6.0%.

Return on assets was 1.61% for the quarter ended September 30, 2007 compared to 1.63% for the quarter ended September 30, 2006, a decrease of 1.2%. Return on assets was 1.45% for the nine months ended September 30, 2007 compared to 1.44% for the nine months ended September 30, 2006, an increase of 0.7%.

Return on equity was 11.76% for the quarter ended September 30, 2007 compared to 11.94% for the quarter ended September 30, 2006, a decrease of 1.5%. Return on equity was 11.07% for the nine months ended September 30, 2007 compared to 10.03% for the nine months ended September 30, 2006, an increase of 10.4%.

The Bank's efficiency ratio for the three months ended September 30, 2007 was 53.92% compared to 53.55% in 2006, which represents an increase of 0.7%. The Bank's efficiency ratio for the nine months ended September 30, 2007 was 55.41% compared to 58.05% in 2006, which represents a decrease of 4.5%. The efficiency ratio illustrates that, for every dollar the Bank made for the nine month period ending September 30, 2007, the Bank spent $0.55 to make it, as compared to $0.58 one year ago.

Capital ratios for the Bank remain above the levels required for a "well capitalized" institution as designated by regulatory agencies.

CommerceWest Bank is headquartered at 2111 Business Center Drive in Irvine, CA, with Regional Business Centers in Orange County at 4685 MacArthur Court in Newport Beach, CA, in the Inland Empire at 1611 Pomona Road in Corona, CA and in the South Los Angeles area at 19300 South Hamilton Avenue in Gardena, CA. We offer a wide range of commercial banking services, including full cash management, concierge services, remote deposit solutions, CTS, full-service internet banking, lines of credit, term loans, nationwide commercial real estate lending, SBA lending and mortgage, title, and escrow 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.

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.

THIRD QUARTER REPORT - SEPTEMBER 30, 2007 (Unaudited)

BALANCE SHEET                                   September 30,    Increase
(dollars in thousands)                         2007     2006    (Decrease)
                                              -------  -------  ----------

ASSETS
Cash and due from banks                         7,449    9,567       -22.1%
Securities                                     65,415   60,261         8.6%
Federal funds sold                              4,210   16,350       -74.3%

Loans                                         143,944  124,980        15.2%
  Less allowance for loan losses               (2,027)  (1,660)       22.1%
                                              -------  -------
Loans, net                                    141,917  123,320        15.1%

Bank premises and equipment, net                  885      910        -2.7%
Other assets                                    9,736    9,181         6.0%
                                              -------  -------
     Total assets                             229,612  219,589         4.6%
                                              =======  =======

LIABILITIES AND STOCKHOLDERS' EQUITY
Non-interest bearing deposits                  73,288   78,970        -7.2%
Interest bearing deposits                     118,092  101,890        15.9%
                                              -------  -------
     Total deposits                           191,380  180,860         5.8%
Total borrowings                                5,500    6,500       -15.4%
Other liabilities                               1,488    4,714       -68.4%
                                              -------  -------
                                              198,368  192,074         3.3%
Stockholders' equity                           31,244   27,515        13.6%
                                              -------  -------
     Total liabilities and stockholders'
      equity                                  229,612  219,589         4.6%
                                              =======  =======



STATEMENT OF EARNINGS                        3 Months Ended      Increase
(dollars in thousands except share and    Sept 30,   Sept 30,
 per share data)                            2007       2006     (Decrease)
                                          ---------  ---------  ----------

Interest income                               4,054      3,696         9.7%
Interest expense                              1,348      1,003        34.4%
                                          ---------  ---------
Net interest income                           2,706      2,693         0.5%
Provision for loan losses                        39        135       -71.1%
Service charges on deposit accounts             355        316        12.3%
Other non-interest income                       161        233       -30.9%
Other non-interest expense                    1,738      1,736         0.1%
                                          ---------  ---------
Earnings before income taxes                  1,445      1,371         5.4%
Income taxes                                    538        551        -2.4%
                                          ---------  ---------
Net earnings                                    907        820        10.6%
                                          =========  =========

Actual common shares outstanding at end
 of period                                3,172,768  3,168,268         0.1%
Average common shares outstanding         3,172,768  3,168,268         0.1%
Average common shares & equivalents
 outstanding                              3,375,425  3,354,440         0.6%
Basic earnings per share                  $    0.29  $    0.26        10.5%
Diluted earnings per share                $    0.27  $    0.24         9.9%
Return on Assets (annualized)                  1.61%      1.63%       -1.2%
Return on Equity (annualized)                 11.76%     11.94%       -1.5%
Efficiency Ratio                              53.92%     53.55%        0.7%


STATEMENT OF EARNINGS                        9 Months Ended      Increase
(dollars in thousands except share and    Sept 30,   Sept 30,
 per share data)                            2007       2006     (Decrease)
                                          ---------  ---------  ----------

Interest income                              11,968      9,793        22.2%
Interest expense                              4,092      2,497        63.9%
                                          ---------  ---------
Net interest income                           7,876      7,296         7.9%
Provision for loan losses                       312        435       -28.3%
Service charges on deposit accounts           1,036        907        14.2%
Other non-interest income                       529        597       -11.4%
Other non-interest expense                    5,231      5,108         2.4%
                                          ---------  ---------
Earnings before income taxes                  3,898      3,257        19.7%
Income taxes                                  1,425      1,295        10.0%
                                          ---------  ---------
Net earnings                                  2,473      1,962        26.0%
                                          =========  =========

Actual common shares outstanding at end
 of period                                3,172,768  3,168,268         0.1%
Average common shares outstanding         3,172,768  3,158,529         0.5%
Average common shares & equivalents
 outstanding                              3,389,800  3,361,651         0.8%
Basic earnings per share                  $    0.78  $    0.62        25.5%
Diluted earnings per share                $    0.73  $    0.58        25.0%
Return on Assets (annualized)                  1.45%      1.44%        0.7%
Return on Equity (annualized)                 11.07%     10.03%       10.4%
Efficiency Ratio                              55.41%     58.05%       -4.5%



                                               Sept 30,   Sept 30,
SELECTED RATIOS                                 2007       2006
                                              ---------  ---------

Tier 1 leverage capital ratio                     14.21%     14.12%
Tier 1 risk-based capital ratio                   17.29%     17.25%
Total risk-based capital ratio                    18.48%     18.35%
Allowance for loan losses as a % of total
 loans                                             1.41%      1.33%
Gross nonperforming assets as a % of total
 loans                                             0.15%      0.14%
Net chargeoffs (annualized) as a % of total
 loans                                             0.02%      0.00%
Net interest margin                                4.93%      5.81%

Contact Information

  • Bank Contact
    CommerceWest Bank, N.A.
    Mr. Ivo A. Tjan
    CEO
    Ms. Leeann M. Cochran
    CFO
    Telephone: (949) 251-6959
    Facsimile: (949) 251-6957
    E-mail: Email Contact or Email Contact
    Website: www.cwbk.com
    "Bank on the Difference"