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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