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

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.

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