GOLETA, Calif, July 29, 2016 (GLOBE NEWSWIRE) -- Community West Bancshares (Community West or the Company), (NASDAQ:CWBC), parent company of Community West Bank (Bank), today reported net income of $1.1 million in the second quarter of 2016 (2Q16) compared to net income of $1.3 million in the first quarter of 2016 (1Q16) and a net loss of $2.3 million in the second quarter of 2015 (2Q15).

In the first six months of the year, Community West reported net income of $2.4 million compared to a net loss of $572,000 in the first six months of 2015.  Excluding the net loan litigation settlement, Community West's net income for the second quarter and the six-month period in 2015 would have been $1.9 million and $3.6 million, respectively. (See "NON-GAAP FINANCIAL INFORMATION")

"Our momentum during the first half of the year has been fueled by robust loan and deposit growth, and continued improvements in credit quality," stated Martin E. Plourd, President and Chief Executive Officer. "Our results reflect the investment in our future, with new branches in San Luis Obispo and Oxnard scheduled to open later this year, as well as the relocation of our Santa Maria branch. With the consolidation among banks in our market areas in recent years, we continue to offer responsive and flexible service from a locally-owned and operated bank."

2Q16 Financial Highlights
  • Nonaccrual loans, net, decreased 49.4% to $4.0 million, or 0.70% of net loans at June 30, 2016, compared to $7.9 million, or 1.53% of net loans, a year ago, representing the lowest level since 3Q07.
  • Net income available to common stockholders for 2Q16 was $1.1 million, or $0.13 per diluted share. 
  • Annualized return on average assets was 0.72%.
  • Annualized return on average common equity was 7.15%.
  • Net interest margin was 4.47%.
  • Net loans increased 10.3% to $564.8 million at June 30, 2016, compared to $511.9 million a year ago.
  • Non-interest-bearing deposits increased 15.5% to $83.5 million at June 30, 2016, compared to $72.3 million a year ago.
  • Book value per common share was $7.81 at June 30, 2016, compared to $7.19 a year ago. 
  • The Bank continues to be well-capitalized per banking regulations with its total risk-based capital ratio at 13.53% and Tier 1 leverage ratio at 10.53% at June 30, 2016.
  • Received approval to open a full-service branch office in Oxnard.

Income Statement

"Higher than industry average loan yields and periodic loan interest recoveries continue to contribute to our net interest margin remaining in the mid-4% range," said Charles G. Baltuskonis, Executive Vice President and Chief Financial Officer.  Second quarter net interest margin was 4.47% compared to 4.45% in 1Q16 and 5.08% in 2Q15.  In 2Q15, 51 basis points of the asset yields were attributable to two large past due loan relationships which were paid in full.  In the first six months of 2016, the net interest margin was 4.46%.  In the first six months of 2015, the same two loans contributed 26 basis points to the asset yields.

Net interest income for 2Q16 was $6.9 million, a 3.0% increase compared to $6.7 million in the preceding quarter and a 2.8% decrease compared to $7.1 million in 2Q15.  Year-to-date, net interest income increased to $13.6 million compared to $13.5 million in the same period a year ago.  Non-interest income was $577,000 in 2Q16, a slight decrease compared to $579,000 in 1Q16 and a 21.7% decrease compared to $737,000 in 2Q15.  In the first six months of 2016, non-interest income was $1.2 million, which was relatively unchanged compared to the first six months of 2015.

Non-interest expenses totaled $5.5 million in 2Q16, compared to $5.3 million in 1Q16.  The increase compared to the preceding quarter is largely due to the business development of the Bank's Northern region, consisting of San Luis Obispo and north Santa Barbara counties.  In the second quarter of 2015, we settled a claim for $7.2 million, net, and, primarily as a result of this settlement, Community West's 2Q15 non-interest expenses totaled $12.4 million and non-interest expenses for the first six months of 2015 totaled $17.2 million.  Excluding this one-time settlement, non-interest expenses would have been approximately $5.2 million in 2Q15 and would have been approximately $10.0 million for the first six months of 2015.  (See "NON-GAAP FINANCIAL INFORMATION")  Year-to-date non-interest expenses were $10.8 million compared to $17.2 million in the like period a year ago.

Balance Sheet

Total assets were $642.6 million at June 30, 2016, a 3.2% increase compared to three months earlier and a 9.4% increase compared to one year ago.  Net loans increased 4.6% to $564.8 million at June 30, 2016, compared to $540.2 million at March 31, 2016, and increased 10.3% compared to $511.9 million a year ago.  Commercial real estate loans outstanding were up 21.2% from year ago levels to $207.7 million at June 30, 2016, and comprise 36.3% of the total loan portfolio.  Manufactured housing loans were up 10.2% from year ago levels to $188.3 million and represent 32.9% of total loans.  Commercial loans increased 14.0% from year ago levels to $106.7 million and represent 18.7% of the total loan portfolio and SBA loans decreased 22.8% from a year ago to $41.2 million and represent 7.2% of the total loan portfolio.

Deposits totaled $565.2 million at June 30, 2016, up 3.5% compared to $546.1 million at March 31, 2016 and grew 12.9% compared to $500.6 million a year earlier.  Core deposits, defined as non-interest-bearing checking, interest-bearing checking, money market accounts, savings accounts and retail certificates of deposit totaled $424.5 million at June 30, 2016 and comprise 75.1% of total deposits, compared to $392.8 million, or 78.5% of total deposits, a year ago. 

Stockholders' equity was $63.2 million at June 30, 2016, compared to $62.4 million at March 31, 2016, and $64.5 million a year ago.  Book value per common share improved to $7.81 at June 30, 2016 compared to $7.71 at March 31, 2016, and $7.19 a year ago. 

Credit Quality

"Asset quality continues to improve and is now better than the average for both national banks and banks of our size.  Due to robust loan growth, especially during the end of the quarter, we recorded a provision for loan losses during the second quarter," said Plourd.  The loan loss provision was $61,000 in 2Q16, compared to a negative loan loss provision of $247,000 in 1Q16, and a negative provision of $584,000 in 2Q15.  Net loan recoveries were $148,000 in 2Q16 compared to $150,000 in 1Q16 and $552,000 in 2Q15.

The allowance for loan losses was $7.0 million at June 30, 2016, or 1.37% of total loans held for investment, compared to 1.41% at March 31, 2016, and 1.60% a year ago.  Net nonaccrual loans decreased 16.7% to $4.0 million, or 0.70% of total loans at June 30, 2016, compared to $4.8 million, or 0.88% of total loans, three months earlier, and decreased 49.4% compared to $7.9 million, or 1.53% of total loans, a year ago. 

Of the $4.0 million in net nonaccrual loans, $1.2 million were manufactured housing loans, $966,000 were SBA 504 1st loans, $852,000 were commercial real estate loans, $541,000 were home equity loans, $224,000 were SBA loans and $199,000 were single family real estate loans.

Other assets acquired through foreclosure totaled $129,000 at June 30, 2016, compared to $176,000 three months earlier and $267,000 a year earlier.  Nonaccrual loans plus other assets acquired through foreclosure, net of SBA/USDA guarantees, totaled $4.1 million, or 0.64% of total assets, at June 30, 2016, compared to $5.0 million, or 0.80% of total assets, three months earlier and $8.2 million, or 1.40% of total assets, a year ago. 

Cash Dividend Declared

The Company's Board of Directors declared a quarterly cash dividend of $0.035 per common share, payable August 31, 2016 to common shareholders of record on August 12, 2016.

Stock Repurchase ProgramOn August 31, 2015, the Company announced that the Board of Directors authorized a common stock repurchase program of up to $3 million.  During 2Q16, the Company bought back 30,530 shares.  As of June 30, 2016, 141,783 shares had been repurchased at an average price of $7.08 per share.

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, which has five full-service California branch banking offices, in Goleta, Santa Barbara, Santa Maria, Ventura and Westlake Village and one loan production office in San Luis Obispo. The principal business activities of the Company are Relationship business banking, Manufactured Housing lending and SBA lending.

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   Six Months Ended
    June 30,   March 31,   June 30,   June 30, June 30,
      2016       2016       2015       2016     2015  
                   
Interest income                  
Loans, including fees   $   7,414     $   7,175     $   7,410     $   14,589   $   14,122  
Investment securities and other       260         269         285         529       590  
Total interest income       7,674         7,444         7,695         15,118       14,712  
Interest expense                  
Deposits       704         651         569         1,355       1,174  
Other borrowings and convertible debt       73         72         15         145       76  
Total interest expense       777         723         584         1,500       1,250  
Net interest income       6,897         6,721         7,111         13,618       13,462  
Provision for loan losses       61         (247 )       (584 )       (186 )     (1,552 )
Net interest income after provision for loan losses       6,836         6,968         7,695         13,804       15,014  
Non-interest income                  
Other loan fees       282         275         370         557       545  
Document processing fees       136         115         131         251       223  
Service charges       102         90         87         192       160  
Other       57         99         149         156       289  
Total non-interest income       577         579         737         1,156       1,217  
Non-interest expenses                  
Salaries and employee benefits        3,494         3,452         3,202         6,946       6,317  
Occupancy, net       581         486         487         1,067       932  
Professional services       278         179         276         457       524  
Advertising and marketing       212         81         152         293       232  
Depreciation        175         149         96         324       187  
Data processing       169         171         134         340       253  
FDIC assessment       99         97         82         196       153  
Stock-based compensation       84         80         218         164       260  
Loan servicing and collection       (89 )       179         182         90       271  
Loan litigation settlement, net       -         -         7,153         -       7,153  
Other        503         462         399         965       870  
Total non-interest expenses       5,506         5,336         12,381         10,842       17,152  
Income (loss) before provision for income taxes       1,907         2,211         (3,949 )       4,118       (921 )
Provision for income taxes       782         928         (1,607 )       1,710       (349 )
Net income (loss)       1,125         1,283         (2,342 )       2,408       (572 )
Dividends and accretion on preferred stock        -         -         136         -       276  
Discount on partial redemption of preferred stock       -         -         (110 )       -       (129 )
Net income (loss) available (attributable) to common stockholders   $   1,125     $   1,283     $   (2,368 )   $   2,408   $   (719 )
Earnings per share:                  
Basic   $   0.14     $   0.16     $   (0.29 )   $   0.30   $   (0.09 )
Diluted   $   0.13     $   0.16     $   (0.29 )   $   0.29   $   (0.09 )
                   

 
COMMUNITY WEST BANCSHARES                    
CONDENSED CONSOLIDATED BALANCE SHEETS                    
(unaudited)                    
(in 000's, except per share data)                    
                     
    June 30,   March 31,   June 30,   December 31,    
      2016       2016       2015       2015      
                     
Cash and cash equivalents   $   2,665     $   2,499     $   1,379     $   2,789      
Time and interest-earning deposits in other financial institutions       24,604         26,538         22,008         32,829      
Investment securities       30,782         35,633         31,940         30,466      
Loans:                    
Commercial       106,650         107,386         93,582         107,510      
Commercial real estate       207,664         185,458         171,258         179,491      
SBA       41,176         42,890         53,381         47,880      
Manufactured housing       188,315         182,018         170,860         177,891      
Single family real estate       17,203         17,919         18,215         19,073      
HELOC       10,803         10,885         11,226         10,934      
Other       43         425         595         683      
Total loans       571,854         546,981         519,117         543,462      
                     
Loans, net                    
Held for sale       60,086         61,897         65,484         64,488      
Held for investment       511,768         485,084         453,633         478,974      
Less: Allowance for loan losses       (7,028 )       (6,819 )       (7,243 )       (6,916 )    
Net held for investment       504,740         478,265         446,390         472,058      
NET LOANS       564,826         540,162         511,874         536,546      
                     
Other assets       19,747         17,923         20,073         18,583      
                     
TOTAL ASSETS   $   642,624     $   622,755     $   587,274     $   621,213      
                     
Deposits                    
Non-interest-bearing demand   $   83,524     $   70,587     $   72,256     $   76,469      
Interest-bearing demand       250,036         250,404         251,238         250,509      
Savings       14,173         14,294         14,312         13,690      
Certificates of deposit ($250,000 or more)       74,622         67,995         44,694         66,722      
Other certificates of deposit       142,829         142,795         118,097         136,948      
Total deposits       565,184         546,075         500,597         544,338      
Other borrowings       10,500         10,500         20,000         10,500      
Other liabilities       3,702         3,741         2,129         4,431      
TOTAL LIABILITIES       579,386         560,316         522,726         559,269      
                     
Stockholders' equity       63,238         62,439         64,548         61,944      
                     
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                    
  $   642,624     $   622,755     $   587,274     $   621,213      
                     
Shares outstanding       8,098         8,103         8,204         8,206      
                     
Book value per common share   $   7.81     $   7.71     $   7.19     $   7.55      
                     

 
ADDITIONAL FINANCIAL INFORMATION                
(Dollars in thousands except per share amounts)(Unaudited)                
  Three Months Ended   Three Months Ended   Three Months Ended   Six Months Ended
PERFORMANCE MEASURES AND RATIOS Jun. 30, 2016   Mar. 31, 2016   Jun. 30, 2015   Jun. 30, 2016 Jun. 30, 2015
Return on average common equity    7.15 %     8.23 %     -15.07 %     7.69 %   -1.87 %
Return on average assets    0.72 %     0.83 %     -1.64 %     0.78 %   -0.20 %
Efficiency ratio   73.67 %     73.10 %     157.64 %     73.39 %   116.83 %
Net interest margin   4.47 %     4.45 %     5.08 %     4.46 %   4.87 %
                 
  Three Months Ended   Three Months Ended   Three Months Ended   Six Months Ended
AVERAGE BALANCES Jun. 30, 2016   Mar. 31, 2016   Jun. 30, 2015   Jun. 30, 2016 Jun. 30, 2015
Average assets $   631,318     $   618,283     $   572,077     $   624,808   $   568,198  
Average earning assets     620,125         607,872         561,447         613,999       557,714  
Average total loans     558,841         543,555         496,691         551,198       495,333  
Average deposits     553,943         540,539         493,414         547,241       487,506  
Average equity (including preferred stock)     63,277         62,678         68,322         62,958       67,773  
Average common equity (excluding preferred stock)     63,277         62,678         62,336         62,958       61,639  
                 
EQUITY ANALYSIS Jun. 30, 2016   Mar. 31, 2016   Jun. 30, 2015      
Total equity $   63,238     $   62,439     $   64,548        
Less: senior preferred stock     -          -          (5,574 )      
Total common equity $   63,238     $   62,439     $   58,974        
                 
Common stock outstanding     8,098         8,103         8,204        
Book value per common share $   7.81     $   7.71     $   7.19        
                 
ASSET QUALITY Jun. 30, 2016   Mar. 31, 2016   Jun. 30, 2015      
Nonaccrual loans, net $   3,988     $   4,807     $   7,949        
Nonaccrual loans, net/total loans   0.70 %     0.88 %     1.53 %      
Other assets acquired through foreclosure, net $   129     $   176     $   267        
                 
Nonaccrual loans plus other assets acquired through foreclosure, net $   4,117     $   4,983     $   8,216        
Nonaccrual loans plus other assets acquired through foreclosure, net/total assets   0.64 %     0.80 %     1.40 %      
Net loan (recoveries)/charge-offs in the quarter $   (148 )   $   (150 )   $   (552 )      
Net (recoveries)/charge-offs in the quarter/total loans    -0.03 %     -0.30 %     -0.11 %      
                 
Allowance for loan losses $   7,028     $   6,819     $   7,243        
Plus: Reserve for undisbursed loan commitments     89         74         40        
Total allowance for credit losses $   7,117     $   6,893     $   7,283        
Allowance for loan losses/total loans held for investment   1.37 %     1.41 %     1.60 %      
Allowance for loan losses/nonaccrual loans, net   176.23 %     141.86 %     91.12 %      
                 
Community West Bank *                
Tier 1 leverage ratio   10.53 %     10.55 %     11.06 %      
Tier 1 risk-based capital ratio   12.28 %     12.59 %     13.14 %      
Total risk-based capital ratio   13.53 %     13.84 %     14.40 %      
                 
INTEREST SPREAD ANALYSIS Jun. 30, 2016   Mar. 31, 2016   Jun. 30, 2015      
Yield on total loans   5.34 %     5.31 %     5.98 %      
Yield on investments   2.57 %     2.58 %     2.98 %      
Yield on interest earning deposits   0.46 %     0.57 %     0.32 %      
Yield on earning assets   4.98 %     4.93 %     5.50 %      
                 
Cost of interest-bearing deposits   0.59 %     0.56 %     0.54 %      
Cost of total deposits   0.51 %     0.48 %     0.46 %      
Cost of borrowings   2.80 %     2.76 %     0.94 %      
Cost of interest-bearing liabilities   0.64 %     0.61 %     0.55 %      
                 
* Capital ratios are preliminary until the Call Report is filed.                

 
NON-GAAP FINANCIAL INFORMATION        
(Unaudited)        
  Three Months Ended   Six Months Ended  
NON-GAAP PERFORMANCE MEASURES Jun. 30, 2015   Jun. 30, 2015  
Return on average common equity, excluding loan litigation settlement, net (1)   12.02 %     11.90 %  
Return on average assets, excluding loan litigation settlement, net (1)   1.31 %     1.29 %  
Efficiency ratio, excluding loan litigation settlement, net (2)   66.62 %     68.12 %  
         
         
NON-GAAP EARNINGS PER SHARE        
Basic (3) $   0.22     $   0.43    
Diluted (3) $   0.22     $   0.41    
         
         
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES        
(Unaudited)        
  Three Months Ended   Six Months Ended  
  Jun. 30, 2015   Jun. 30, 2015  
  (in thousands)  
Net income $   (2,342 )   $   (572 )  
Loan litigation settlement, net     7,153         7,153    
Tax effect on loan litigation settlement, net     (2,943 )       (2,943 )  
Net income, excluding loan litigation settlement, net (3) $   1,868     $   3,638    
         
         
  Three Months Ended   Six Months Ended  
  Jun. 30, 2015   Jun. 30, 2015  
  (in thousands)  
Total non-interest expenses $   12,381     $   17,152    
Loan litigation settlement, net     (7,153 )       (7,153 )  
Total non-interest expenses, excluding loan litigation settlement, net (3) $   5,228     $   9,999    
         
(1) The Company believes these non-GAAP ratios provide a useful metric with which to analyze and evaluate the financial condition of the Company
(2) The Company believes this non-GAAP ratio provides a useful metric to measure the operating efficiency of the Company  
(3) The Company believes these non-GAAP measurements are a key indicator of the ongoing earnings power of the Company  

 
Contact: Charles G. Baltuskonis, EVP & CFO805.692.5821www.communitywestbank.com