SOURCE: CommerceWest Bank

July 19, 2006 18:49 ET

CommerceWest Bank Reports Solid Growth and Earnings for Second Quarter 2006

IRVINE, CA -- (MARKET WIRE) -- July 19, 2006 -- CommerceWest Bank (OTCBB: CWBK)

Financial Performance highlights for the current quarter and year include:

--  Net income of $662,000 for the quarter ended June 30, 2006 as compared
    to $501,000 for the quarter ended June 30, 2005, an increase of 32.1%.  Net
    income of $1,213,000 for the six months ended June 30, 2006 as compared to
    $582,000 for the six months ended June 30, 2005, an increase of 108.4%.
    
--  Earnings per basic common share for the six months ended June 30, 2006
    were $0.38 compared to $0.22 in 2005 an increase of 72.7%.  Earnings per
    diluted common share for the six months ended June 30, 2006 were $0.36
    compared to $0.21 in 2005, an increase of 71.4%.
    
--  Return on average assets for the six months ended June 30, 2006 was
    1.41% compared to 0.94% in 2005, an increase of 50.0%.
    
--  Total asset growth of 39.6%, $190.8 million as of June 30, 2006 as
    compared to $136.7 million one year ago, an increase of $54.1 million.
    
--  Total loan growth of 43.8%, $122.5 million as of June 30, 2006 as
    compared to $85.2 million one year ago, an increase of $37.3 million.
    
--  Total deposit growth of 45.5%, $152.1 million as of June 30, 2006
    compared to $104.5 million as of June 30, 2005, an increase of $47.5
    million.
    
--  Net interest margin of 5.96% for the quarter ended June 30, 2006
    compared to 5.45% for the quarter ended June 30, 2005, an increase of 9.4%.
    Net interest margin of 5.92% for the six months ended June 30, 2006
    compared to 5.22% for the six months ended June 30, 2005, an increase of
    13.4%
    
--  The Bank's efficiency ratio for the three months ended June 30, 2006 was
    57.19% compared to 62.29% in 2005, which represents a decrease of 8.2%.
    The Bank's efficiency ratio for the six months ended June 30, 2006 was
    59.40% compared to 64.58% in 2005, which represents a decrease of 8.0%.
    
CommerceWest Bank (OTCBB: CWBK) reported record earnings for the three months ended June 30, 2006 with net income of $662,000 or $0.21 per basic common share and $0.20 per diluted common share, compared with net income of $501,000 or $0.19 per basic common share and $0.18 per diluted common share for the three months ended June 30, 2005. Net income for the six months ended June 30, 2006 was a record $1,213,000 or $0.38 per basic common share and $0.36 per diluted common share, compared with net income of $582,000 or $0.22 per basic common share and $0.21 per diluted common share for the six months ended June 30, 2005. Net income for the six months ended June 30, 2006 produced a return on average assets of 1.41%, compared to 0.94% in 2005, which represents an increase of 50.0%. Return on average equity for the six months ended June 30, 2006 was 9.41% compared to 6.45% in 2005, which represents an increase of 45.9%.

"We are very pleased to announce another outstanding record quarter of earnings and double digit growth in deposits, loans, and overall asset growth. It proves again the strength of our business model and the talented team we have to support it. Our senior management team's focus is to continue delivering myth-like quality services to our clients and concentrate on expanding our market presence in Southern California. We have focused diligently on continuing to improve our efficiency ratio and have achieved one of the lowest ratios in our peer group at 57.19%," said Chairman and CEO Ivo Tjan. "The Inland Empire Regional Business Center opened in March 2005 and the South Bay Regional Business Center opened in October 2005; both reported profitability within 7 to 9 months of inception. We feel there is a big opportunity to expand our client base in these regions, as well as Orange County. The team has achieved outstanding results for the first half of 2006 and we feel confident in our pursuit of consistent double digit growth for the remainder of 2006. We were also recognized this year as 60th out of the 100 fastest growing new businesses in America by PriceWaterhouseCoopers and Entrepreneur Magazine." Ivo Tjan Chairman and CEO continued, "We will continue to focus on delivering shareholder value with our business model and focus on key financial results such as growth in revenue, earnings, EPS, ROA and ROE."

Stock option expense for the quarter ended June 30, 2006 was $74,000. Stock option expense for the six months ended June 30, 2006 was $155,000. Pretax income for the three months ended June 30, 2006 was $1,089,000, an increase of $363,000 or 50.0% from last year's pretax income of $726,000. "A strong net interest margin was responsible for the improved financial performance quarter over quarter," commented Senior Vice President and CFO Leeann Cochran. Pretax income for the six months ended June 30, 2006 was $2,005,000, an increase of $1,198,000 or 148.5% from last year's pretax income of $807,000.

Interest income was $3,197,000 for the quarter ended June 30, 2006 as compared to $2,015,000 for the quarter ended June 30, 2005, an increase of 58.7%. Interest income was $6,046,000 for the six months ended June 30, 2006 as compared to $3,719,000 for the six months ended June 30, 2005, an increase of 62.6%. "The majority of the Bank's loans have rates tied to Prime that adjust immediately with changes in rates. The Bank's loan growth together with the seventeen consecutive rate hikes made by the FOMC have resulted in strong interest income growth for both the quarter and six months ended June 30, 2006. We have managed our balance sheet well and controlled our cost of funds to achieve our targeted net interest margin goals," said Senior Vice President and CFO Leeann Cochran. Non-interest income for the quarter ended June 30, 2006 was $516,000 as compared to $781,000 for the quarter ended June 30, 2005, a decrease of 33.9%. Non-interest income for the six months ended June 30, 2006 was $1,006,000 compared to $1,219,000 for the same period last year, a decrease of 17.50%. The Bank's growth in fees generated from service charges on deposits was offset by reduced wholesale loan referral fees for both the quarter and year-to-date. The Bank raised additional capital in August of 2005 in order to increase the legal lending limit for the Bank; as a result, the Bank has been able to retain loans on its books that it would have had to sell in prior periods. Gross revenue was $3,713,000 for the quarter ended June 30, 2006 as compared to $2,796,000 for the quarter ended June 30, 2005, an increase of 32.8%. Gross revenue was $7,052,000 for the six months ended June 30, 2006 as compared to $4,938,000 for the six months ended June 30, 2005, an increase of 42.8%.

Net interest income before provision for loan losses for the three months ended June 30, 2006 was $2,424,000, an increase of $788,000 or 48.2%, compared to the same period in 2005. This increase resulted from a $1,182,000 increase in interest income, partially offset by a $394,000 increase in interest expense. Net interest income before provision for loan losses for the six months ended June 30, 2006 was $4,671,000, an increase of $1,661,000 or 55.2%, compared to the same period in 2005. This increase resulted from a $2,327,000 increase in interest income, partially offset by a $666,000 increase in interest expense.

The net interest margin remained strong for the second quarter of 2006, which increased from 5.45% in 2005 to 5.96% in 2006, a 51 basis point or 9.4% increase. The net interest margin for the six months ended June 30, 2006 was 5.92% as compared to 5.22% for the prior period, a 70 basis point or 13.4% increase.

Loan growth for the period ended June 30, 2006 was $37.3 million, an increase of 43.8% over the prior period. Deposit growth for the period ended June 30, 2006 was $47.5 million, an increase of 45.5% over the period ended June 30, 2005. The Bank's allowance for loan losses as a percent of total loans was 1.24% on June 30, 2006 as compared to 1.09% on June 30, 2005, an increase of 14.7%.

Return on equity was 10.13% for the quarter ended June 30, 2006 compared to 10.88% for the quarter ended June 30, 2005, a decrease of 6.9%. Return on equity was 9.41% for the six months ended June 30, 2006 compared to 6.45% for the six months ended June 30, 2005, an increase of 45.9%. Return on assets was 1.49% for the quarter ended June 30, 2006 compared to 1.56% for the quarter ended June 30, 2005, a decrease of 4.5%. Return on assets was 1.41% for the six months ended June 30, 2006 compared to 0.94% for the six months ended June 30, 2005, an increase of 50.0%.

Capital ratios for the Bank remain above the levels required for a "well capitalized" institution as designated by regulatory agencies. As of June 30, 2006, the Tier 1 capital ratio, total risk-based capital ratio and leverage ratio was 18.2%, 19.3% and 15.4%, respectively.

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 Bay area at 19300 South Hamilton Avenue in Gardena, CA. We offer a wide range of commercial banking services, including 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 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.

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)
                          Three Months Ended         Six Months Ended
Income Statement Data         June 30,                   June 30,
                      -------------------------  -------------------------
                        2006     2005   Change     2006     2005   Change
                      -------  -------  -------  -------  -------  -------
Interest income       $ 3,197  $ 2,015    58.66% $ 6,046  $ 3,719    62.57%
Interest expense          773      379   103.96    1,375      709    93.94
                      -------  -------  -------  -------  -------  -------
Net interest income     2,424    1,636    48.17    4,671    3,010    55.18
Provision for loan
 losses                   170      186    (8.60)     300      691   (56.58)
Non-interest income       516      781   (33.93)   1,006    1,219   (17.47)
Non-interest expense    1,607    1,505     6.78    3,217    2,731    17.80
                      -------  -------  -------  -------  -------  -------
Pre-tax income before
 stock options          1,163      726    60.19    2,160      807   167.66
Stock option expense       74        0     0.00      155        0     0.00
                      -------  -------  -------  -------  -------  -------
Pre-tax income          1,089      726    50.00    2,005      807   148.45
Income tax expense        427      225    89.78      792      225   252.00
                      -------  -------  -------  -------  -------  -------
Net income            $   662  $   501    32.14%   1,213      582   108.42%
                      =======  =======  -------  =======  =======  -------


Selected Financial
 Ratios

Return on average
 assets                  1.49%    1.56%   (4.49)    1.41%    0.94%   50.00
Return on average
 equity                 10.13%   10.88%   (6.89)    9.41%    6.45%   45.89
Net interest margin      5.96%    5.45%    9.36     5.92%    5.22%   13.41
Efficiency ratio        57.19%   62.29%   (8.19)   59.40%   64.58%   (8.02)


Per Common Share Data

Earnings per share -
 basic                $  0.21  $  0.19    10.53  $  0.38  $  0.22    72.73
Earnings per share -
 diluted              $  0.20  $  0.18    11.11  $  0.36  $  0.21    71.43
Ending shareholders'
 equity                                          $  8.34  $  7.03    18.58


Capital Ratios

Tier 1 risk-based                                  18.19%   17.67%    2.94
Total risk-based                                   19.27%   18.62%    3.49
Leverage                                           15.41%   14.85%    3.77


                            Actual Balances
                          as of June 30, 2006
                      -------------------------
Balance Sheet Data       2006     2005   Change
                      -------  -------  -------

Total assets          190,782  136,688    39.57%
Total loans           122,529   85,234    43.76
Total deposits        152,057  104,527    45.47
Allowance for loan
 losses                 1,525      925    64.86
Investment securities  52,299   41,443    26.20
Shareholders' equity   26,410   18,766    40.73

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
    Email Contact
    Website: www.cwbk.com
    "Bank on the Difference"