CW Bancorp (OTCQX: CWBK), the parent company (“the Company”) of CommerceWest Bank (the “Bank”), reported consolidated net income for the fourth quarter of 2023 of $3,545,000 or $1.12 per diluted share as compared to $4,521,000 or $1.32 per diluted share for the fourth quarter of 2022, an EPS decrease of 15%. The consolidated net income for the twelve months ended December 31, 2023 was $17,611,000 or $5.39 per diluted share as compared to $17,361,000 or $5.00 per diluted share for the twelve months ended December 31, 2022, an EPS increase of 8%.

Key Financial Results for the three months ended December 31, 2023:

• Interest Income of $12.9 million, up 10%
• Net interest margin of 3.88%, up 4%
• ALLL to total loans ratio of 1.59%
• Bank tier 1 leverage ratio of 12.09% and total risk-based capital ratio of 19.82%
• 56 quarters of consecutive profits

Key Financial Results for the twelve months ended December 31, 2023:

• Record EPS of $5.39, up 8%
• Record net income of $17.6 million, up 1%
• Record ROA of 1.58%, up 9%
• Net interest income of $40.7 million, up 9%
• Net interest margin of 3.87%, up 16%
• No outstanding FRB or FHLB borrowings

Mr. Ivo A. Tjan, Chairman and CEO, said, “Our Company produced strong 2023 financial results on the backdrop of a very challenging year for the banking industry. This is a testament to our team’s dedication and strategic initiatives. These numbers reflect our commitment to the business community and focus on creating shareholder value.”

Total assets decreased 9% as compared to the same period one year ago. Total loans decreased 9% from the prior year. The Bank remains prudent and conservative about credit quality. As a result, the Bank did not add significantly to the portfolio in 2023. This gave management an opportunity to de-lever the Bank, rolling off higher cost funds and containing interest expense. Cash and due from banks decreased 12% from the prior year. Total investment securities decreased 8% from the prior year.

Total deposits, as of December 31, 2023, decreased 11% from December 31, 2022. Non-interest-bearing deposits decreased 6% from the prior year. Interest bearing deposits decreased 15% from the prior year.

Interest income was $12,964,000 for the three months ended December 31, 2023, as compared to $11,768,000 for the three months ended December 31, 2022, an increase of 10%. Interest expense was $3,167,000 for the three months ended December 31, 2023, as compared to $1,877,000 for the three months ended December 31, 2022, an increase of 69%. Interest expense was up for the quarter due to the continued rise in the cost of deposits.

Interest income was $52,185,000 for the twelve months ended December 31, 2023, as compared to $41,320,000 for the twelve months ended December 31, 2022, an increase of 26%. Interest expense was $11,468,000 for the twelve months ended December 31, 2023, as compared to $3,997,000 for the twelve months ended December 31, 2022, an increase of 187%. Interest expense was up for the twelve months ended December 31, 2023 due to the rising cost of deposits.

Net interest income, for the three months ended December 31, 2023, was $9,797,000 as compared to $9,891,000 for the three months ended December 31, 2022, a decrease of 1%. The net interest margin increased for the three months ended December 31, 2023. It increased from 3.74% in 2022 to 3.88% in 2023, an increase of 4%. Net interest income, for the twelve months ended December 31, 2023, was $40,717,000 compared to $37,323,000 for the twelve months ended December 31, 2022, an increase of 9%. The net interest margin increased for the twelve months ended December 31, 2023. It increased from 3.34% in 2022 to 3.87% in 2023, an increase of 16%.

The Bank had no provision for credit losses during the three months ended December 31, 2023, compared to provision for credit losses of $400,000 for the three months ended December 31, 2022. Provision for credit losses for the twelve months ended December 31, 2023, was a negative $1,326,000 compared to provision for credit losses of $1,200,000 for the twelve months ended December 31, 2022. The negative provision for credit losses in 2023 was primarily due to a $3 million recovery on a previously charged off loan recognized in Q3 2023. The allowance for loan losses to total loans ratio increased from 1.37% as of December 31, 2022 to 1.59% as of December 31, 2023.

Non-interest income, for the three months ended December 31, 2023, was $1,549,000 compared to $1,589,000 for the same period last year, a decrease of 3%. Non-interest income, for the twelve months ended December 31, 2023, was $6,381,000 compared to $6,062,000 for the same period last year, an increase of 5%.

Non-interest expense, for the three months ended December 31, 2023, was $6,367,000 compared to $4,835,000 for the same period last year, an increase of 32%. Non-interest expense, for the twelve months ended December 31, 2023, was $24,087,000 compared to $18,083,000 for the same period last year, an increase of 33%.

The efficiency ratio, for the three months ended December 31, 2023, was 55.82% compared to 41.76% in 2022, which represents an increase of 34%. The efficiency ratio illustrates that for every dollar made for the three-month period ending December 31, 2023, it cost $0.5582 to make it, as compared to $0.4176 one year ago. The efficiency ratio, for the twelve months ended December 31, 2023, was 50.14% compared to 41.30% in 2022, which represents an increase of 21%.

Capital ratios for the Bank remain above the levels required for a “well capitalized” institution as designated by regulatory agencies. As of December 31, 2023, the tier 1 leverage ratio was 12.09%, the common equity tier 1 capital ratio was 18.56%, the tier 1 risk-based capital ratio was 18.56% and the total risk-based capital ratio was 19.82%.

CommerceWest Bank is determined to redefine banking for small and medium sized businesses by delivering on customized products and services. Founded in 2001 and headquartered in Irvine, California, the Bank serves businesses throughout the state of California with our digital banking platform. By employing a strategically selected team of experienced professionals, we will provide flexibility, create a complete, safe and sound banking experience for each client. We provide a wide range of commercial banking services, including remote deposit solution, NetBanker 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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