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Community West Bancshares Earns $1.5 Million, or $0.18 Per Diluted Share, in 1Q19; Highlighted by Demand Deposit Growth and Margin Stabilization; Increases Quarterly Cash Dividend by 10%to $0.055 Per Common Share

GOLETA, Calif., April 26, 2019 (GLOBE NEWSWIRE) -- Community West Bancshares (Community West or the Company), (CWBC), parent company of Community West Bank (Bank), today reported earnings of $1.5 million, or $0.18 per diluted share, for the first quarter of 2019 (1Q19), compared to $1.4 million, or $0.16 per diluted share, in 4Q18, and $1.8 million, or $0.21 per diluted share, in 1Q18.

“Our first quarter 2019 results were a direct reflection of our ongoing strategy to grow core deposits and lower our cost of funds,” stated Martin E. Plourd, President and Chief Executive Officer.  “We have spent the last three years expanding our branch structure organically in an effort to take advantage of market disruptions within our three-county footprint.  Although the costs associated with this expansion have impacted earnings, we are now seeing positive results of our efforts and remain intensely focused on growing our core deposits, exiting wholesale funding and improving future earnings.”

First Quarter 2018 Financial Highlights

  • Net income was $1.5 million, or $0.18 per diluted share, in 1Q19, compared to $1.4 million, or $0.16 per diluted share in 4Q18, and compared to $1.8 million, or $0.21 per diluted share in 1Q18.
  • Total demand deposits increased $44.0 million to $422.6 million at March 31, 2019, compared to $378.6 million at December 31, 2018, and increased $45.7 million compared to $376.9 million at March 31, 2018. 
  • Total loans increased to $770.1 million at March 31, 2019, compared to $768.2 million at December 31, 2018, and increased $24.3 million compared to $745.8 million at March 31, 2018. 
  • Net interest margin increased for 1Q19 to 3.99%, compared to 3.97% for 4Q18 and decreased from 4.25% for 1Q18.
  • Book value per common share increased to $9.05 at March 31, 2019, compared to $8.92 at December 31, 2018, and $8.73 at March 31, 2018. 
  • Net nonaccrual loans decreased to $3.3 million at March 31, 2019, compared to $3.4 million at December 31, 2018, and $4.2 million at March 31, 2018.  The Bank had no foreclosed assets at March 31, 2019.
  • The Bank continues to be well-capitalized per banking regulations with its total capital ratio at 10.76%, its Tier 1 capital ratio at 9.62%, and Tier 1 leverage ratio at 8.63% at March 31, 2019.

Income Statement
First quarter net interest income was $8.2 million, compared to $8.4 million in both 4Q18 and 1Q18.  Non-interest income was $604,000 in 1Q19, compared to $660,000 in 4Q18 and $639,000 in 1Q18.

“Our net interest margin stabilized in the first quarter as a result of our efforts to decrease wholesale funding and reduce our cost of funds,” said Susan C. Thompson, Executive Vice President and Chief Financial Officer.  First quarter net interest margin was 3.99% compared to 3.97% in 4Q18, and 4.25% in 1Q18. 

Non-interest expenses totaled $6.7 million in 1Q19, compared to $6.8 million in the preceding quarter and $6.5 million in the prior year first quarter.  The year over year increase reflects increased salary and employee benefits as a result of the Bank’s expansion. 

Balance Sheet
Total loans increased to $770.1 million at March 31, 2019, compared to $768.2 million at December 31, 2018, and increased $24.3 million compared to $745.8 million at March 31, 2018.  

Commercial real estate loans outstanding (which include SBA 504, construction and land) were up 1.9% from year ago levels to $369.2 million at March 31, 2019 and comprise 47.9% of the total loan portfolio.  Manufactured housing loans were up 8.5% from year ago levels to $248.7 million and represent 32.3% of total loans.  Commercial loans (which include agriculture) increased 5.7% from year ago levels to $116.1 million and represent 15.1% of the total loan portfolio.

Total deposits increased $18.7 million, or 2.6% to $734.7 million at March 31, 2019, compared to $716.0 million at December 31, 2018, and increased $24.7 million, or 3.5% compared to $710.0 million at March 31, 2018.  Non-interest bearing demand deposits increased $27.3 million to $135.5 million at March 31, 2019 compared to $108.2 million at December 31, 2018, and increased $17.3 million compared to $118.2 million at March 31, 2018.  Interest-bearing demand deposits increased $16.7 million to $287.1 million compared to $270.4 million at December 31, 2018, and increased $28.4 million compared to $258.7 million at March 31, 2018.  Certificates of deposit which include broker deposits decreased $25.8 million to $297.0 million at March 31, 2019 compared to $322.8 million at December 31, 2018, and decreased $21.8 million compared to $318.8 million at March 31, 2018.

“Growing core deposits to fund our loan growth and reduce our funding costs has been the primary goal of the company over the last several quarters,” said Plourd.  “We expect this growth to continue as we continue to gain market share from the disruption in our markets and our new branches mature.”

Total assets were $882.4 million at March 31, 2019, compared to $877.3 million at December 31, 2018 and increased $16.7 million, or 1.9%, compared to $865.7 million at March 31, 2018.  Stockholders’ equity increased to $76.5 million at March 31, 2019, compared to $76.2 million at December 31, 2018, and $71.7 million at March 31, 2018.  Book value per common share increased to $9.05 at March 31, 2019, compared to $8.92 at December 31, 2018, and $8.73 at March 31, 2018. 

Credit Quality
“Credit quality remained stable during the first quarter with net nonaccrual loans down to $3.3 million, or 0.42% of total loans,” said Thompson. 

Due to net recoveries and change in the loan portfolio composition, Community West recorded a credit to the provision for loan losses of $57,000.  This compares to a provision for loan losses of $238,000 in 4Q18 and a credit to the provision of $144,000 in 1Q18.  The allowance for loan losses including the reserve for undisbursed loans was $8.7 million at March 31, 2019, or 1.20% of total loans held for investment, compared to 1.21% at December 31, 2018, and 1.22% a year ago.  Net nonaccrual loans improved to $3.3 million at March 31, 2019, compared to $3.4 million at December 31, 2018, and $4.2 million at March 31, 2018.  

At March 31, 2019, net nonaccrual loans consisted of $2.6 million of commercial loans including commercial agriculture, $0.2 million of manufactured housing loans, $0.2 million of home equity loans, $0.1 million of SBA loans, and $0.1 million of commercial real estate loans.

There were no other assets acquired through foreclosure as of March 31, 2019, or at December 31, 2018.  This compares to other assets acquired through foreclosure of $233,000 a year ago. 

Cash Dividend Declared
The Company’s Board of Directors declared a cash dividend of $0.055 per common share, payable May 31, 2019 to common shareholders of record on May 10, 2019.  The current annualized yield, based on the closing price of CWBC shares of $10.18 on March 31, 2018, was 2.11%.

Company Overview
Community West Bancshares is a financial services company with headquarters in Goleta, California. The Company is the holding company for Community West Bank, the largest publicly traded community bank serving California’s Central Coast area of Ventura, Santa Barbara and San Luis Obispo counties.  Community West Bank has eight full-service California branch banking offices in Goleta, Santa Barbara, Santa Maria, Ventura, Westlake Village, San Luis Obispo, Oxnard and Paso Robles.  The principal business activities of the Company are Relationship banking, Manufactured Housing lending and Government Guaranteed lending.

Industry Accolades
In April 2019, Community West was awarded a “Premier” rating by The Findley Reports.  For 51 years, The Findley Reports has been recognizing the financial performance of banking institutions in California and the Western United States.  In making their selections, The Findley Reports focuses on these four ratios: growth, return on beginning equity, net operating income as a percentage of average assets, and loan losses as a percentage of gross loans.

Safe Harbor Disclosure
This release contains forward-looking statements that reflect management's current views of future events and operations.  These forward-looking statements are based on information currently available to the Company as of the date of this release.  It is important to note that these forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including, but not limited to, the ability of the Company to implement its strategy and expand its lending operations.


 
COMMUNITY WEST BANCSHARES
CONDENSED CONSOLIDATED INCOME STATEMENTS
(unaudited)
(in 000's, except per share data)
             
    Three Months Ended
    March 31,   December 31,   March 31,
      2019       2018     2018  
             
Interest income            
Loans, including fees   $   10,541     $   10,582   $   9,651  
Investment securities and other       484         459       337  
Total interest income       11,025         11,041       9,988  
Interest expense            
Deposits       2,444         2,329       1,443  
Other borrowings       358         358       195  
Total interest expense       2,802         2,687       1,638  
Net interest income       8,223         8,354       8,350  
Provision (credit) for loan losses       (57 )       238       (144 )
Net interest income after provision for loan losses       8,280         8,116       8,494  
Non-interest income            
Other loan fees       258         350       296  
Document processing fees       87         122       117  
Service charges       139         108       116  
Other       120         80       110  
Total non-interest income       604         660       639  
Non-interest expenses            
Salaries and employee benefits        4,381         3,991       4,149  
Occupancy, net       782         829       784  
Professional services       381         425       304  
Data processing       224         233       212  
Depreciation        213         212       167  
FDIC assessment       170         223       214  
Advertising and marketing       129         198       170  
Stock-based compensation       95         194       116  
Other        342         542       417  
Total non-interest expenses       6,717         6,847       6,533  
Income before provision for income taxes       2,167         1,929       2,600  
Provision for income taxes       657         570       786  
Net income   $   1,510     $   1,359   $   1,814  
Earnings per share:            
Basic   $   0.18     $   0.16   $   0.22  
Diluted   $   0.18     $   0.16   $   0.21  
             

 

COMMUNITY WEST BANCSHARES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in 000's, except per share data)
             
    March 31,   December 31,   March 31,
      2019       2018       2018  
             
Cash and cash equivalents   $   1,907     $   2,983     $   3,473  
Interest-earning deposits in other financial institutions       51,499         53,932         65,336  
Investment securities       31,562         32,353         34,988  
Loans:            
Commercial       116,103         118,518         109,819  
Commercial real estate       369,206         365,809         362,197  
SBA       18,070         19,077         24,989  
Manufactured housing       248,669         247,114         229,194  
Single family real estate       11,611         11,261         10,609  
HELOC       6,585         6,756         9,483  
Other       (178 )       (292 )       (514 )
Total loans       770,066         768,243         745,777  
             
Loans, net            
Held for sale       46,995         48,355         52,767  
Held for investment       723,071         719,888         693,010  
Less: Allowance for loan losses       (8,648 )       (8,691 )       (8,458 )
Net held for investment       714,423         711,197         684,552  
NET LOANS       761,418         759,552         737,319  
             
Other assets       36,008         28,471         24,573  
             
TOTAL ASSETS   $   882,394     $   877,291     $   865,689  
             
Deposits            
Non-interest-bearing demand   $   135,495     $   108,161     $   118,206  
Interest-bearing demand       287,095         270,431         258,717  
Savings       15,128         14,641         14,347  
Certificates of deposit ($250,000 or more)       91,580         93,439         81,690  
Other certificates of deposit       205,431         229,334         237,077  
Total deposits       734,729         716,006         710,037  
Other borrowings       52,750         75,000         76,843  
Other liabilities       18,462         10,134         7,098  
TOTAL LIABILITIES       805,941         801,140         793,978  
             
Stockholders' equity       76,453         76,151         71,711  
             
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY            
  $   882,394     $   877,291     $   865,689  
             
Common shares outstanding       8,450         8,533         8,216  
             
Book value per common share   $   9.05     $   8.92     $   8.73  
             

 

ADDITIONAL FINANCIAL INFORMATION          
(Dollars in thousands except per share amounts)(Unaudited)          
  Three Months Ended   Three Months Ended   Three Months Ended
PERFORMANCE MEASURES AND RATIOS Mar. 31, 2019   Dec. 31, 2018   Mar. 31, 2018
Return on average common equity    7.99 %     7.06 %     10.30 %
Return on average assets    0.71 %     0.63 %     0.91 %
Efficiency ratio   76.10 %     75.96 %     72.68 %
Net interest margin   3.99 %     3.97 %     4.25 %
           
  Three Months Ended   Three Months Ended   Three Months Ended
AVERAGE BALANCES Mar. 31, 2019   Dec. 31, 2018   Mar. 31, 2018
Average assets $   859,682     $   852,892     $   812,698  
Average earning assets     834,944         834,259         788,835  
Average total loans     768,253         764,411         736,628  
Average deposits     716,954         717,205         702,376  
Average common equity     76,681         76,334         71,433  
           
EQUITY ANALYSIS Mar. 31, 2019   Dec. 31, 2018   Mar. 31, 2018
Total common equity $   76,453     $   76,151     $   71,711  
Common stock outstanding     8,450         8,533         8,216  
           
Book value per common share $   9.05     $   8.92     $   8.73  
           
ASSET QUALITY Mar. 31, 2019   Dec. 31, 2018   Mar. 31, 2018
Nonaccrual loans, net $   3,257     $   3,378     $   4,220  
Nonaccrual loans, net/total loans   0.42 %     0.44 %     0.57 %
Other assets acquired through foreclosure, net $   -      $   -      $   233  
           
Nonaccrual loans plus other assets acquired through foreclosure, net $   3,257     $   3,378     $   4,453  
Nonaccrual loans plus other assets acquired through foreclosure, net/total assets   0.37 %     0.39 %     0.51 %
Net loan (recoveries)/charge-offs in the quarter $   (14 )   $   66     $   (182 )
Net (recoveries)/charge-offs in the quarter/total loans    (0.00 %)     0.01 %     (0.02 %)
           
Allowance for loan losses $   8,648     $   8,691     $   8,458  
Plus: Reserve for undisbursed loan commitments     87         73         101  
Total allowance for credit losses $   8,735     $   8,764     $   8,559  
Allowance for loan losses/total loans held for investment   1.20 %     1.21 %     1.22 %
Allowance for loan losses/nonaccrual loans, net   265.52 %     257.28 %     200.43 %
           
Community West Bank *          
Tier 1 leverage ratio   8.63 %     8.57 %     8.96 %
Tier 1 capital ratio   9.62 %     9.67 %     10.19 %
Total capital ratio   10.76 %     10.82 %     11.38 %
           
INTEREST SPREAD ANALYSIS Mar. 31, 2019   Dec. 31, 2018   Mar. 31, 2018
Yield on total loans   5.56 %     5.49 %     5.31 %
Yield on investments   3.55 %     2.52 %     2.73 %
Yield on interest earning deposits   2.22 %     2.70 %     1.36 %
Yield on earning assets   5.36 %     5.25 %     5.08 %
           
Cost of interest-bearing deposits   1.64 %     1.52 %     0.99 %
Cost of total deposits   1.38 %     1.29 %     0.83 %
Cost of borrowings   2.91 %     2.87 %     2.50 %
Cost of interest-bearing liabilities   1.74 %     1.63 %     1.07 %
           
* Capital ratios are preliminary until the Call Report is filed.          
           


Contact: Susan C. Thompson, EVP & CFO
805.692.5821
www.communitywestbank.com