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Community West Bancshares Earns $2.7 Million, or $0.32 Per Diluted Share, in 4Q19, and $8.0 Million, or $0.93 Per Diluted Share for The Year, Declares Quarterly Cash Dividend of $0.055 Per Common Share

GOLETA, Calif., Jan. 24, 2020 (GLOBE NEWSWIRE) -- Community West Bancshares (Community West or the Company), (CWBC), parent company of Community West Bank (Bank), today reported net income increased to $2.7 million, or $0.32 per diluted share, for the fourth quarter of 2019 (4Q19), compared to $2.2 million, or $0.25 per diluted share, in 3Q19, and $1.4 million, or $0.16 per diluted share, in 4Q18. For the full year 2019, net income increased 7.5% to $8.0 million, or $0.93 per diluted share, compared to $7.4 million, or $0.88 per diluted share, in 2018.

“We ended the year producing solid earnings for the fourth quarter and full year of 2019, highlighted by top-line revenue growth, steady year-over-year loan and deposit growth, and above industry-average net interest margin of 4.07% for the fourth quarter of 2019,” said Martin E. Plourd, President and Chief Executive Officer.  “Although the growth of the bank has slowed in 2019, our performance metrics improved at quarter-end.  Return on average assets, return on average common equity and our efficiency ratio all improved as we continue to deepen our presence throughout California’s Central Coast of Ventura, Santa Barbara and San Luis Obispo Counties, with our long-term goal to deliver consistent earnings performance for our shareholders.  We anticipate loan growth to remain muted in 2020 and will look to profitable lines of business, within our bank’s risk tolerance.”

Fourth Quarter 2019 Financial Highlights:

  • Net income was $2.7 million, or $0.32 per diluted share, in 4Q19, compared to $2.2 million, or $0.25 per diluted share in 3Q19, and $1.4 million, or $0.16 per diluted share in 4Q18.
  • Net interest margin of 4.07% for 4Q19, compared to 4.10% for 3Q19 and 3.97% for 4Q18.
  • Total deposits were $750.9 million at December 31, 2019, compared to $761.7 million at September 30, 2019, and increased compared to $716.0 million at December 31, 2018.
  • Total demand deposits represented 56.6% of total deposits at December 31, 2019.
  • Total loans decreased $13.9 million during the quarter to $775.6 million at December 31, 2019, compared to $789.5 million at September 30, 2019, and increased compared to $768.2 million at December 31, 2018. 
  • Book value per common share increased to $9.68 at December 31, 2019, compared to $9.40 at September 30, 2019, and $8.92 at December 31, 2018. 
  • Provision (credit) for loan losses was ($210,000) for the quarter, compared to a credit for loan losses of ($75,000) for 3Q19, and a provision for loan losses of $238,000 for 4Q18.
  • Total risked based capital improved to 11.41% for the Bank at December 31, 2019, compared to 11.18% at September 30, 2019 and 10.83% at December 31, 2018.
  • Net nonaccrual loans improved to $2.4 million at December 31, 2019, compared to $5.5 million at September 30, 2019, and $3.4 million at December 31, 2018.
  • Other assets acquired through foreclosure, net was $2.5 million at December 31, 2019, compared to $317,000 at September 30, 2019, and zero at December 31, 2018.

Income Statement

Net interest income was $8.8 million in 4Q19 and 3Q19 and increased compared to $8.4 million in 4Q18.  For 4Q19, net interest income benefited from a net decrease in the cost of funds.  For the year, net interest income increased to $34.4 million, compared to $33.6 million in 2018. 

“A key component of our business strategy was to grow non-interest income.  Additionally with the disruption in the agriculture industry we shifted our agriculture lending from on-balance sheet products to making agriculture loans that could be sold,” said Plourd.  “This shift resulted in loan sale gains of $765,000 during the quarter. While we anticipate continued focus on this strategy in future quarters, we don’t anticipate the same level of activity and resulting gains as we experienced in 4Q19.”  Non-interest income increased to $1.7 million in 4Q19, compared to $647,000 in 3Q19 and $660,000 in 4Q18.  Non-interest income was $3.6 million for the year 2019, compared to $2.6 million in 2018. 

“Our reduced cost of funds rate has helped to sustain our net interest margin year-over-year despite the three interest rate reductions during the second half of 2019,” said Susan C. Thompson, Executive Vice President and Chief Financial Officer.  Fourth quarter net interest margin was 4.07%, compared to 4.10% in 3Q19, and improved 13 basis points compared to 3.97% in 4Q18.  For the year, the net interest margin was 4.06%, compared to 4.07% in 2018.

Non-interest expenses totaled $6.8 million in 4Q19, compared to $6.5 million in the preceding quarter and $6.8 million in 4Q18.  For the full year 2019, non-interest expense was $26.8 million, compared to $26.0 million in 2018. 

Balance Sheet

“We have been actively managing both sides of the balance sheet, adhering to strict underwriting standards with loan originations and replacing higher cost funding,” said Thompson.  Total assets increased modestly to $913.9 million at December 31, 2019, compared to $903.3 million at September 30, 2019 and increased $36.6 million, or 4.2%, compared to $877.3 million at December 31, 2018.  Total loans decreased to $775.6 million at December 31, 2019, compared to $789.5 million at September 30, 2019, and increased modestly compared to $768.2 million at December 31, 2018.  

Commercial real estate loans outstanding (which include SBA 504, construction and land) were up 5.4% from year ago levels to $385.6 million at December 31, 2019 and comprise 49.7% of the total loan portfolio.  Manufactured housing loans were up 4.1% from year ago levels to $257.2 million and represent 33.2% of total loans.  Commercial loans (which include agriculture loans) were down 14.4% from year ago levels to $101.5 million and represent 13.1% of the total loan portfolio.

Total deposits decreased to $750.9 million at December 31, 2019, compared to $761.7 million at September 30, 2019, and increased $34.9 million, or 4.9% compared to $716.0 million at December 31, 2018.  Non-interest-bearing demand deposits decreased $3.6 million to $110.8 million at December 31, 2019 compared to $114.4 million at September 30, 2019 and increased $2.6 million compared to $108.2 million at December 30, 2018.  Interest-bearing demand deposits decreased to $314.3 million compared to $333.7 million at September 30, 2019 but increased $43.9 million compared to $270.4 million at December 31, 2018.  Certificates of deposit, which include broker deposits increased $12.0 million during the quarter to $310.1 million at December 31, 2019 compared to $298.1 million at September 30, 2019 and decreased $12.6 million compared to $322.8 million at December 31, 2018 as the Company divests itself from higher priced funding.

Stockholders’ equity increased to $82.0 million at December 31, 2019, compared to $79.6 million at September 30, 2019, and $76.2 million at December 31, 2018.  Book value per common share increased to $9.68 at December 31, 2019, compared to $9.40 at September 30, 2019, and $8.92 at December 31, 2018. 

Credit Quality

The Company recorded a credit to its provision for loan losses of ($210,000) in 4Q19.  This compares to a credit to the provision for loan losses of ($75,000) in 3Q19 and a provision for loan losses of $238,000 in 4Q18.  The allowance for loan losses, including the reserve for undisbursed loans, was $8.8 million, or 1.19% of total loans held for investment, at December 31, 2019.  Net nonaccrual loans plus net other assets acquired through foreclosure were $4.9 million at December 31, 2019, compared to $5.8 million at September 30, 2019, and $3.4 million at December 31, 2018.  

Net nonaccrual loans totaled $2.4 million at December 31, 2019, compared to $5.5 million at September 30, 2019 and $3.4 million a year ago.  Of the $2.4 million of net nonaccrual loans at December 31, 2019, $1.6 million were commercial loans, $0.6 million were manufactured housing loans, $0.1 million were SBA loans, and $0.1 million were commercial real estate loans.

There was $2.5 million in other assets acquired through foreclosure as of December 31, 2019.  This compares to $317,000 of other assets acquired through foreclosure at September 30, 2019, and no other assets acquired through foreclosure a year prior. 

Cash Dividend Declared

The Company’s Board of Directors declared a cash dividend of $0.055 per common share, payable February 28, 2020 to common shareholders of record on February 11, 2020.  The current annualized yield, based on the closing price of CWBC shares of $11.10 on December 31, 2019, was 1.94%.

Stock Repurchase Program

The Company repurchased a total of 99,983 shares during the first three quarters of 2019 and did not repurchase any shares of its common stock in the fourth quarter of 2019, leaving $1.4 million available under the previously announced repurchase program.

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     Twelve Months Ended
    December 31,   September 30,   December 31,   December 31,   December 31,
      2019       2019       2018     2019       2018
                     
Interest income                    
Loans, including fees   $ 11,136     $ 11,306     $ 10,582   $ 43,890     $ 40,865
Investment securities and other     492       413       459     1,849       1,766
Total interest income     11,628       11,719       11,041     45,739       42,631
Interest expense                    
Deposits     2,413       2,615       2,329     10,055       7,702
Other borrowings     377       306       358     1,327       1,286
Total interest expense     2,790       2,921       2,687     11,382       8,988
Net interest income     8,838       8,798       8,354     34,357       33,643
Provision (credit) for loan losses     (210 )     (75 )     238     (165 )     14
Net interest income after provision for loan losses     9,048       8,873       8,116     34,522       33,629
Non-interest income                    
Other loan fees     500       302       350     1,383       1,348
Gains from loan sales, net     765       -       -     765       -
Service charges     160       129       108     567       459
Document processing fees     116       96       122     423       489
Other     123       120       80     469       332
Total non-interest income     1,664       647       660     3,607       2,628
Non-interest expenses                    
Salaries and employee benefits     4,141       4,254       3,991     17,094       16,329
Occupancy, net     750       788       829     3,088       3,132
Professional services     552       341       425     1,679       1,356
Data processing     236       215       233     876       852
Depreciation     214       219       212     864       764
Advertising and marketing     228       187       198     774       685
FDIC assessment     118       (15 )     223     427       770
Stock-based compensation     100       90       194     382       478
Other     475       385       542     1,571       1,673
Total non-interest expenses     6,814       6,464       6,847     26,755       26,039
Income before provision for income taxes     3,898       3,056       1,929     11,374       10,218
Provision for income taxes     1,179       902       570     3,411       2,809
Net income   $ 2,719     $ 2,154     $ 1,359   $ 7,963     $ 7,409
Earnings per share:                    
Basic   $ 0.32     $ 0.25     $ 0.16   $ 0.94     $ 0.89
Diluted   $ 0.32     $ 0.25     $ 0.16   $ 0.93     $ 0.88
                     



COMMUNITY WEST BANCSHARES            
CONDENSED CONSOLIDATED BALANCE SHEETS            
(unaudited)            
(in 000's, except per share data)            
             
    December 31,   September 30,   December 31,
      2019       2019       2018  
             
Cash and interest-earning deposits in other financial institutions   $ 82,661     $ 56,347     $ 56,915  
Investment securities     25,563       28,707       32,353  
Loans:            
Commercial     101,485       110,153       118,518  
Commercial real estate     385,642       392,288       365,809  
SBA     14,777       17,018       19,077  
Manufactured housing     257,247       253,229       247,114  
Single family real estate     11,668       11,936       11,261  
HELOC     4,531       4,847       6,756  
Other     213       (14 )     (292 )
Total loans     775,563       789,457       768,243  
             
Loans, net            
Held for sale     42,046       44,816       48,355  
Held for investment     733,517       744,641       719,888  
Less: Allowance for loan losses     (8,717 )     (8,868 )     (8,691 )
Net held for investment     724,800       735,773       711,197  
NET LOANS     766,846       780,589       759,552  
             
Other assets     38,800       37,609       28,471  
             
TOTAL ASSETS   $ 913,870     $ 903,252     $ 877,291  
             
Deposits            
Non-interest-bearing demand   $ 110,843     $ 114,366     $ 108,161  
Interest-bearing demand     314,278       333,679       270,431  
Savings     15,689       15,481       14,641  
Certificates of deposit ($250,000 or more)     96,431       90,298       93,439  
Other certificates of deposit     213,693       207,848       229,334  
Total deposits     750,934       761,672       716,006  
Other borrowings     65,000       45,000       75,000  
Other liabilities     15,958       16,984       10,134  
  TOTAL LIABILITIES     831,892       823,656       801,140  
             
Stockholders' equity     81,978       79,596       76,151  
             
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY            
  $ 913,870     $ 903,252     $ 877,291  
             
Common shares outstanding     8,472       8,467       8,533  
             
Book value per common share   $ 9.68     $ 9.40     $ 8.92  
             



ADDITIONAL FINANCIAL INFORMATION                  
(Dollars in thousands except per share amounts)(Unaudited)                  
  Three Months Ended   Three Months Ended   Three Months Ended   Twelve Months Ended
PERFORMANCE MEASURES AND RATIOS December 31, 2019   September 30, 2019   December 31, 2018   December 31, 2019   December 31, 2018
Return on average common equity   13.35 %     10.85 %     7.06 %     10.15 %     10.02 %
Return on average assets   1.21 %     0.97 %     0.63 %     0.91 %     0.88 %
Efficiency ratio   64.88 %     68.44 %     75.96 %     70.47 %     71.79 %
Net interest margin   4.07 %     4.10 %     3.97 %     4.06 %     4.07 %
                   
  Three Months Ended   Three Months Ended   Three Months Ended   Twelve Months Ended
AVERAGE BALANCES December 31, 2019   September 30, 2019   December 31, 2018   December 31, 2019   December 31, 2018
Average assets $ 887,902     $ 877,505     $ 852,892     $ 872,509     $ 842,468  
Average earning assets   862,350       850,948       834,259       846,673       826,292  
Average total loans   779,698       788,965       764,411       778,745       751,775  
Average deposits   725,029       735,545       717,205       726,022       714,651  
Average common equity   80,825       78,763       76,334       78,437       73,906  
                   
EQUITY ANALYSIS December 31, 2019   September 30, 2019   December 31, 2018        
Total common equity $ 81,978     $ 79,596     $ 76,151          
Common stock outstanding   8,472       8,467       8,533          
                   
Book value per common share $ 9.68     $ 9.40     $ 8.92          
                   
ASSET QUALITY December 31, 2019   September 30, 2019   December 31, 2018        
Nonaccrual loans, net $ 2,389     $ 5,476     $ 3,378          
Nonaccrual loans, net/total loans   0.31 %     0.69 %     0.44 %        
Other assets acquired through foreclosure, net $ 2,524     $ 317     $ -          
                   
Nonaccrual loans plus other assets acquired through foreclosure, net $ 4,913     $ 5,793     $ 3,378          
Nonaccrual loans plus other assets acquired through foreclosure, net/total assets   0.54 %     0.64 %     0.39 %        
Net loan (recoveries)/charge-offs in the quarter $ (58 )   $ (69 )   $ 66          
Net (recoveries)/charge-offs in the quarter/total loans   (0.01 %)     (0.01 %)     0.01 %        
                   
Allowance for loan losses $ 8,717     $ 8,868     $ 8,691          
Plus: Reserve for undisbursed loan commitments   85       81       73          
Total allowance for credit losses $ 8,802     $ 8,949     $ 8,764          
Allowance for loan losses/total loans held for investment   1.19 %     1.19 %     1.21 %        
Allowance for loan losses/nonaccrual loans, net   364.88 %     161.94 %     257.28 %        
                   
Community West Bank *                  
Tier 1 leverage ratio   9.06 %     9.02 %     8.57 %        
Tier 1 capital ratio   10.28 %     10.04 %     9.68 %        
Total capital ratio   11.41 %     11.18 %     10.83 %        
                   
INTEREST SPREAD ANALYSIS December 31, 2019   September 30, 2019   December 31, 2018        
Yield on total loans   5.67 %     5.69 %     5.49 %        
Yield on investments   3.47 %     3.06 %     2.52 %        
Yield on interest earning deposits   1.66 %     2.14 %     2.70 %        
Yield on earning assets   5.35 %     5.46 %     5.25 %        
                   
Cost of interest-bearing deposits   1.57 %     1.69 %     1.52 %        
Cost of total deposits   1.32 %     1.41 %     1.29 %        
Cost of borrowings   2.31 %     2.64 %     2.87 %        
Cost of interest-bearing liabilities   1.64 %     1.76 %     1.63 %        
                   
* Capital ratios are preliminary until the Call Report is filed.                  


Contact:                          

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