SOURCE: CommerceWest Bank

January 22, 2007 19:11 ET

CommerceWest Bank Reports Continued Record 2006 Earnings and Growth, Revenue Up 44%, Net Income Up 77% and Assets Grew to Over $250 Million

IRVINE, CA -- (MARKET WIRE) -- January 22, 2007 -- CommerceWest Bank (OTCBB: CWBK) -- Financial Performance highlights for the year ended December 31, 2006 included:

--  Record net income of $2,764,000 for the twelve months ended December
    31, 2006 as compared to $1,565,000 for the twelve months ended December 31,
    2005, an increase of 76.6%.
    
--  Record earnings per basic common share for the twelve months ended
    December 31, 2006 were $0.87 compared to $0.56 in 2005, an increase of
    55.4%.  Earnings per diluted common share for the twelve months ended
    December 31, 2006 were $0.82 compared to $0.52 in 2005, an increase of
    57.7%.
    
--  Record gross revenue of $15.8 million for the twelve months ended
    December 31, 2006 compared to $10.9 million in 2005, an increase of 44.1%.
    
--  Return on average assets for the twelve months ended December 31, 2006
    was 1.42% compared to 1.12% in 2005, an increase of 26.8%.
    
--  Return on average equity for the twelve months ended December 31, 2006
    was 10.37% compared to 7.57% in 2005, an increase of 37.0%.
    
--  The Bank's efficiency ratio for the twelve months ended December 31,
    2006 was 56.95% compared to 62.86% in 2005, which represents a decrease of
    9.4%.
    
--  Total asset growth of 41.8%, $251.6 million as of December 31, 2006 as
    compared to $177.5 million one year ago, an increase of $74.1 million.
    
--  Total loan growth of 26.7%, $133.0 million as of December 31, 2006 as
    compared to $105.0 million one year ago, an increase of $28.0 million.
    
--  Total deposit growth of 57.1%, $209.9 million as of December 31, 2006
    compared to $133.6 million as of December 31, 2005, an increase of $76.3
    million.
    
--  Non-interest bearing deposits as a percent of total deposits was
    54.60% as of December 31, 2006 compared to 38.18% as of December 31, 2005,
    an increase of 43.01%.
    
Financial performance highlights for the quarter ended December 31, 2006 included:
--  Net income of $802,000 for the three months ended December 31, 2006 as
    compared to $513,000 for the three months ended December 31, 2005, an
    increase of 56.3%.
    
--  Earnings per basic common share for the three months ended December
    31, 2006 were $0.25 compared to $0.16 in 2005, an increase of 56.3%.
    Earnings per diluted common share for the three months ended December 31,
    2006 were $0.24 compared to $0.15 in 2005, an increase of 60.0%.
    
--  Gross revenue of $4.5 million for the three months ended December 31,
    2006 compared to $3.2 million in 2005, an increase of 39.7%.
    
--  The Bank's efficiency ratio for the three months ended December 31,
    2006 was 53.98% compared to 62.49% in 2005, which represents a decrease of
    13.6%.
    
CommerceWest Bank (OTCBB: CWBK) reported earnings for the three months ended December 31, 2006 of $802,000 or $0.25 per basic common share and $0.24 per diluted common share, compared with net income of $513,000 or $0.16 per basic common share and $0.15 per diluted common share for the three months ended December 31, 2005. Net income for the twelve months ended December 31, 2006 was a record $2,764,000 or $0.87 per basic common share and $0.82 per diluted common share, compared with net income of $1,565,000 or $0.56 per basic common share and $0.52 per diluted common share for the twelve months ended December 31, 2005.

"The financial results for 2006 displayed management's execution of our unique business banking model in its fifth year of operation. We are proud again to say the team has completed the mission and completed it with very strong results. 2006 marked an important year for us, as we begin the second five-year phase of our strategic growth plan. We continue to reassess ourselves and develop new technology, workflows, and processes that enable our employees and clients to save time and be more efficient. Our business model allows each Regional Business Center to be located in different counties or cities, and at the same time, remain in close communication with the corporate office to allow them to execute their growth plans," commented Chairman and CEO Ivo Tjan. "We were focused in 2006 on core deposit growth, which increased 57.1% and especially non-interest bearing accounts, which made up 54.6% of total deposits on December 31, 2006. The bank remains focused on efficiency by diligently containing expenses, increasing revenue and developing new technology, which resulted in only a 15.5% increase in non-interest expense year over year. This was a record year of earnings and a record year in deposit, loan and asset growth. Over the next five years, we want to continue to develop and grow our footprint in California business markets for small and mid size businesses."

Interest income was $3,997,000 for the quarter ended December 31, 2006 as compared to $2,645,000 for the quarter ended December 31, 2005, an increase of 51.1%. Interest income was $13,708,000 for the twelve months ended December 31, 2006 as compared to $8,750,000 for the twelve months ended December 31, 2005, an increase of 56.7%. Net interest income before provision for loan losses for the three months ended December 31, 2006 was $2,736,000, an increase of $716,000 or 35.5%, compared to the same period in 2005. This increase resulted from a $1,352,000 increase in interest income, partially offset by a $636,000 increase in interest expense. Net interest income before provision for loan losses for the twelve months ended December 31, 2006 was $9,951,000, an increase of $3,214,000 or 47.7%, compared to the same period in 2005. This increase resulted from a $4,958,000 increase in interest income, partially offset by a $1,744,000 increase in interest expense.

The net interest margin declined for the fourth quarter of 2006, which decreased from 5.54% in 2005 to 5.08% in 2006, a 46 basis point or 8.3% decrease. The net interest margin for the twelve months ended December 31, 2006 was 5.60% as compared to 5.27% for the prior period, a 33 basis point or 6.3% increase.

Non-interest income for the quarter ended December 31, 2006 was $504,000 as compared to $577,000 for the quarter ended December 31, 2005, a decrease of 12.7%. Non-interest income for the twelve months ended December 31, 2006 was $2,089,000 compared to $2,212,000 for the same period last year, a decrease of 5.6%. Gross revenue was $4,501,000 for the quarter ended December 31, 2006 as compared to $3,222,000 for the quarter ended December 31, 2005, an increase of 39.7%. Gross revenue was $15,798,000 for the twelve months ended December 31, 2006 as compared to $10,962,000 for the twelve months ended December 31, 2005, an increase of 44.1%.

Stock option expense for the quarter ended December 31, 2006 was $106,000. Stock option expense for the twelve months ended December 31, 2006 was $361,000. Pretax income for the three months ended December 31, 2006 was $1,408,000, an increase of $594,000 or 73.0% from last year's pretax income of $814,000. Pretax income for the twelve months ended December 31, 2006 was $4,665,000, an increase of $2,312,000 or 98.3% from last year's pretax income of $2,353,000. Leeann Cochran, Executive Vice President and CFO, commented, "This demonstrates the Bank's ability to grow assets intelligently. We have been able to grow non-interest bearing deposits, $63.6 million or 124.6% year over year, at a time when others in our industry are seeing large deposit outflows. This bodes well for the continued relative strength of the Bank's net interest margin as compared to our peer group."

Loan growth for the period ended December 31, 2006 was $28.0 million, an increase of 26.7% over the prior year. Deposit growth for the period ended December 31, 2006 was $76.3 million, an increase of 57.1% over the period ended December 31, 2005. The Bank's allowance for loan losses as a percent of total loans was 1.31% on December 31, 2006 as compared to 1.17% on December 31, 2005, an increase of 12.2%.

Return on assets was 1.37% for the quarter ended December 31, 2006 compared to 1.22% for the quarter ended December 31, 2005, an increase of 12.3%. Return on assets was 1.42% for the twelve months ended December 31, 2006 compared to 1.12% for the twelve months ended December 31, 2005, an increase of 26.8%.

Return on equity was 11.31% for the quarter ended December 31, 2006 compared to 7.90% for the quarter ended December 31, 2005, an increase of 43.2%. Return on equity was 10.37% for the twelve months ended December 31, 2006 compared to 7.57% for the twelve months ended December 31, 2005, an increase of 37.0%.

The Bank's efficiency ratio for the three months ended December 31, 2006 was 53.98% compared to 62.49% in 2005, which represents a decrease of 13.6%. The Bank's efficiency ratio for the twelve months ended December 31, 2006 was 56.95% compared to 62.86% in 2005, which represents a decrease of 9.4%.

2006 was marked by impressive core deposit growth for CommerceWest Bank. "The launch of the remote deposit solution (RDS) in late 2005 has had a very positive response by our clients and has helped the Bank develop new client relationships as well," said Ivo Tjan, Chairman and CEO. "But of course, what's not to like about making deposits from your desktop? We have one of the largest usages of RDS scanners in California, for a regional bank. The Bank remains committed to creating an efficient working environment for its employees as well as its clients. We went 'paperless' many years ago. The Bank launched E-statements in 2006 and will implement the remote capture solution for all of our Regional Business Centers in the first quarter of 2007."

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, full-service internet banking, lines of credit, term loans, nation wide 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.


                            COMMERCEWEST BANK
                  UNAUDITED FINANCIAL HIGHLIGHTS TABLES

(in 000's except share data)

Income              Three Months Ended           Twelve Months Ended
 Statement Data         December 31,                  December 31,
                ----------------------------  ----------------------------
                  2006      2005     Change     2006      2005     Change
                --------  --------  --------  --------  --------  --------
Interest income $  3,997  $  2,645     51.12% $ 13,708  $  8,750     56.66%
Interest expense   1,261       625    101.76     3,757     2,013     86.64
                --------  --------  --------  --------  --------  --------
Net interest
 income            2,736     2,020     35.45     9,951     6,737     47.71
Provision for
 loan losses          80       160    (50.00)      515       968    (46.80)
Non-interest
 income              504       577    (12.65)    2,089     2,212     (5.56)
Non-interest
 expense           1,646     1,623      1.42     6,499     5,628     15.48
                --------  --------  --------  --------  --------  --------
Pre-tax income
 before stock
 options           1,514       814     86.00     5,026     2,353    113.60
Stock option
 expense             106         0      0.00       361         0      0.00
                --------  --------  --------  --------  --------  --------
Pre-tax income     1,408       814     72.97     4,665     2,353     98.26
Income tax
 expense             606       301    101.33     1,901       788    141.24
                --------  --------  --------  --------  --------  --------
Net income      $    802  $    513     56.34%    2,764     1,565     76.61%
                ========  ========  ========  ========  ========  ========

Per Common Share Data

Earnings per
 share - basic  $   0.25  $   0.16     56.25  $   0.87  $   0.56     55.36
Earnings per
 share -
 diluted        $   0.24  $   0.15     60.00  $   0.82  $   0.52     57.69

Selected Financial Ratios

Return on
 average assets     1.37%     1.22%    12.30      1.42%     1.12%    26.79
Return on
 average equity    11.31%     7.90%    43.16     10.37%     7.57%    36.99
Net interest
 margin             5.08%     5.54%    (8.30)     5.60%     5.27%     6.26
Efficiency
 ratio             53.98%    62.49%   (13.62)    56.95%    62.86%    (9.40)



                        Actual Balances
                   as of December 31, 2006
               -------------------------------
Consolidated
 Balance Sheet   2006       2005       Change
               ---------  ---------  ---------
Assets
Total cash
 and cash
 equivalents   $   9,825  $   6,857      43.28 %
Fed funds sold    13,010      8,810      47.67
Securities
 available for
 sale             87,203     48,686      79.11
Loans            133,034    105,042      26.65
Allowance for
 loan losses       1,740      1,225      42.04
               ---------  ---------  ---------
Net Loans        131,294    103,817      26.47
Other assets      10,279      9,323      10.25
               ---------  ---------  ---------
Total Assets   $ 251,611  $ 177,493      41.76
               =========  =========  =========

Liabilities and Stockholders' Equity
Non-interest
 bearing
 demand        $ 114,583  $  51,007     124.64
Savings and
 NOW               2,850      6,002     (52.52)
Money Market      44,472     43,940       1.21
Time              47,949     32,647      46.87
               ---------  ---------  ---------
  Total
   Deposits      209,854    133,596      57.08
Total
 Borrowings       12,321     18,281     (32.60)
Other
 Liabilities         943        556      69.60
               ---------  ---------  ---------
  Total
   Liabilities   223,118    152,433      46.37
Total
 Stockholders'
 Equity           28,493     25,060      13.70
               ---------  ---------  ---------
Total
 Liabilities
 and
 Stockholders'
 Equity        $ 251,611  $ 177,493      41.76
               =========  =========  =========

Allowance for
 loan losses
 as a percent
 of total
 loans              1.31%      1.17%
Nonperforming
 loans as a
 percent of
 total assets       0.07%      0.00%

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"