Community West Bancshares (“Community West”), (NASDAQ: CWBC), parent company of Community West Bank, today reported a loss of $8.6 million in the fourth quarter ended December 31, 2011 (4Q11) compared to net income of $1.1 million in the fourth quarter a year ago (4Q10). Quarter over quarter results were significantly impacted by a $6.7 million valuation allowance against net deferred tax assets and a loan loss provision in 4Q11 of $5.9 million as compared to $1.3 million in 4Q10. For the full year, Community West had a net loss of $10.5 million compared to net income of $2.1 million in 2010. The loan loss provision for 2011 was $14.6 million compared to $8.7 million in 2010.
“In the fourth quarter, we improved our core business by continuing to change the composition of our deposit portfolio, increasing core deposit balances, while effectively managing controllable operating expenses,” stated Martin E. Plourd, President and Chief Executive Officer. “While we are pleased with the progress in all of these areas during the quarter, the continuing high level of non-performing assets and related credit costs have adversely affected our operating results, leading us to conclude that recording a valuation allowance for the deferred tax asset was appropriate at this time. This is a timing, non-cash item, and can be recovered when the Company achieves profits which offset the tax timing differences. Improving our asset quality through aggressive management of our problem assets remains the primary focus for Community West.”
4Q11 Financial Highlights
- Net interest margin was 4.84% in 4Q11, a 46 basis point improvement compared to 3Q11 and a 27 basis point improvement compared to 4Q10. This is primarily due to reversals of loans previously on nonaccrual.
- Core deposits increased by 12.7% compared to a year ago, and now comprise 70.2% of total deposits.
- Nonaccrual loans were $28.7 million, or 5.23% of total loans at December 31, 2011 compared to $36.6 million, or 6.50% of total loans at September 30, 2011.
- The total allowance for loan losses equaled 3.24% of total loans held for investment at December 31, 2011 compared to 2.94% at September 30, 2011 and 2.60% at December 31, 2010.
- Community West Bank’s Total risk-based capital ratio was 11.80%, Tier 1 risk-based capital ratio was 10.53% and Tier 1 leverage ratio was 8.26% at December 31, 2011.
Including $262,000 of preferred stock dividends, the net loss applicable to common stockholders was $8.8 million, or $1.47 per diluted share, in 4Q11 compared to net income applicable to common stockholders of $795,000, or $0.11 per diluted share, in 4Q10. In 2011, including $1.0 million in preferred stock dividends, the net loss applicable to common stockholders was $11.5 million, or $1.93 per diluted share, compared to net income applicable to common stockholders of $1.0 million, or $0.18 per diluted common share, in 2010.