GOLETA, Calif., Oct. 28, 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 $1.5 million in the third quarter of 2016 (3Q16) compared to $1.1 million in the second quarter of 2016 (2Q16) and $1.6 million in the third quarter of 2015 (3Q15). In the first nine months of the year, Community West reported net income of $3.9 million compared to $1.0 million in the first nine months of 2015. Excluding the net loan litigation settlement, Community West's net income for the nine-month period in 2015 would have been $5.2 million. (See "Non-GAAP Financial Information")

"Community West's third quarter results were fueled by robust loan growth, continued improvements in credit quality and a healthy net interest margin," stated Martin E. Plourd, President and Chief Executive Officer. "Our Central Coast markets continue to grow, with commercial real estate projects generating strong demand for business services in our markets. We are taking advantage of this growth by building our relationships with existing clients, as well as developing new client relationships. We will continue to invest in our future, with the new San Luis Obispo branch scheduled to open later this year and the relocated branch in Santa Maria and the new Oxnard branch scheduled to open in early 2017."

3Q16 Financial Highlights
  • Total loans increased $30.0 million for 3Q16 to $601.9 million at September 30, 2016, and 12.9% compared to $533.0 million a year ago.
  • Nonaccrual loans, net, decreased 42.8% to $3.0 million, or 0.50% of net loans at September 30, 2016, compared to $5.3 million, or 0.99% of net loans, a year ago, representing the lowest level since 3Q07.
  • Net income available to common stockholders for 3Q16 was $1.5 million, or $0.18 per diluted share. 
  • Annualized return on average assets was 0.91%.
  • Annualized return on average common equity was 9.17%.
  • Net interest margin was 4.81%.
  • Non-interest-bearing deposits increased 20.4% to $88.0 million at September 30, 2016, compared to $73.1 million a year ago.
  • Book value per common share increased 7.7% to $7.93 at September 30, 2016, compared to $7.36 a year ago. 
  • The Bank continues to be well-capitalized per banking regulations with its total risk-based capital ratio at 13.08% and Tier 1 leverage ratio at 10.48% at September 30, 2016.

Income Statement

"We have been able to maintain a net interest margin in the mid-4% range largely due to our above industry average loan yields, but also supplemented with periodic loan interest recoveries," said Charles G. Baltuskonis, Executive Vice President and Chief Financial Officer. Third quarter net interest margin was 4.81% compared to 4.47% in 2Q16 and 4.55% in 3Q15. Of the increase in asset yields in 3Q16, 39 basis points were attributable to one large past due loan relationship which was paid in full. In the first nine months of 2016 the net interest margin was 4.58% compared to 4.76% in the first nine months of 2015. Of the increase in asset yields in the first nine months of 2016, the same loan contributed 13 basis points. In the first nine months of 2015, 26 basis points of asset yields were attributable to two large past due loan relationships that were paid in full.

Net interest income for 3Q16 was $7.7 million, an 11.6% increase compared to $6.9 million in the preceding quarter and a 13.2% increase compared to $6.8 million in 3Q15. Year-to-date, net interest income increased 5.4% to $21.3 million compared to $20.2 million in the same period a year ago. Non-interest income was $559,000 in 3Q16, a slight decrease compared to $577,000 in 2Q16 and a modest increase compared to $554,000 in 3Q15. In the first nine months of 2016, non-interest income was $1.7 million, compared to $1.8 million the first nine months of 2015.

Non-interest expenses totaled $5.8 million in 3Q16, compared to $5.5 million in 2Q16 and $5.0 million in 3Q15. The increase is largely due to the business development of the Bank's Northern region, consisting of San Luis Obispo and north Santa Barbara counties. Year-to-date noninterest expenses were $16.7 million. In the second quarter of 2015, Community West settled a claim for $7.2 million, net, and, primarily as a result of this settlement, non-interest expenses for the first nine months of 2015 totaled $22.2 million. Excluding this one-time settlement, non-interest expenses would have been approximately $15.1 million for the first nine months of 2015. (See "Non-GAAP Financial Information") 

Balance Sheet

Total assets were $664.5 million at September 30, 2016, a 3.4% increase compared to three months earlier and a 10.6% increase compared to one year ago. Net loans increased 5.3% to $594.7 million at September 30, 2016, compared to $564.8 million at June 30, 2016, and increased 13.1% compared to $526.0 million a year ago. Commercial real estate loans outstanding were up 27.2% from year ago levels to $225.6 million at September 30, 2016, and comprise 37.5% of the total loan portfolio. Manufactured housing loans were up 10.7% from year ago levels to $191.9 million and represent 31.9% of total loans. Commercial loans increased 20.1% from year ago levels to $120.0 million and represent 19.9% of the total loan portfolio and SBA loans decreased 22.0% from a year ago to $39.3 million and represent 6.5% of the total loan portfolio.

Deposits totaled $590.6 million at September 30, 2016, up 4.5% compared to $565.2 million at June 30, 2016, and grew 12.1% compared to $526.8 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 $437.6 million at September 30, 2016 and comprise 74.1% of total deposits, compared to $405.2 million, or 76.9% of total deposits, a year ago. 

Stockholders' equity was $64.2 million at September 30, 2016, compared to $63.2 million at June 30, 2016, and $65.9 million a year ago. Book value per common share improved to $7.93 at September 30, 2016 compared to $7.81 at June 30, 2016, and $7.36 a year ago. 

Credit Quality

"Asset quality improved again this quarter, with net nonaccrual loans and other assets acquired through foreclosure both declining compared to three months earlier," said Plourd. "Our credit metrics remain better than the average for both national banks and banks of our size."

The allowance for loan losses was $7.2 million at September 30, 2016, or 1.33% of total loans held for investment, compared to 1.37% at June 30, 2016, and 1.50% a year ago. Net nonaccrual loans decreased 25.0% to $3.0 million, or 0.50% of total loans at September 30, 2016, compared to $4.0 million, or 0.70% of total loans, three months earlier, and decreased 43.4% compared to $5.3 million, or 0.99% of total loans, a year ago.

Of the $3.0 million in net nonaccrual loans, $1.0 million were manufactured housing loans, $933,000 were SBA 504 1st loans, $536,000 were home equity loans, $223,000 were commercial real estate loans, $195,000 were single family real estate loans and $133,000 were SBA loans.

Other assets acquired through foreclosure totaled $55,000 at September 30, 2016, compared to $129,000 three months earlier and $206,000 a year earlier.  Nonaccrual loans plus other assets acquired through foreclosure, net of SBA/USDA guarantees, totaled $3.1 million, or 0.46% of total assets, at September 30, 2016, compared to $4.1 million, or 0.64% of total assets, three months earlier and $5.5 million, or 0.91% of total assets, a year ago. 

"Due to strong loan growth, we recorded a provision for loan losses for the second consecutive quarter," noted Plourd. The loan loss provision was $22,000 in 3Q16, compared to $61,000 in 2Q16, and a negative provision of $445,000 in 3Q15. Net loan recoveries were $140,000 in 3Q16 compared to $148,000 in 2Q16 and $214,000 in 3Q15.

Cash Dividend Declared

The Company's Board of Directors declared a quarterly cash dividend of $0.035 per common share, payable November 30, 2016 to common shareholders of record on November 14, 2016. The current annualized yield, based on the closing price of CWBC shares of $8.29 on September 30, 2016, was 1.7%.

Stock Repurchase Program

On August 31, 2015, the Company announced that the Board of Directors authorized a common stock repurchase program of up to $3 million. During 3Q16, the Company bought back 45,786 shares. As of September 30, 2016, 187,569 shares had been cumulatively repurchased at an average price of $7.25 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 Government Guaranteed lending.

In September 2016, Community West was named to Sandler O'Neill and Partners Bank and Thrift Sm-All Stars - Class of 2016. This award recognized Community West as one of the top 27 best performing small capitalization institutions from a list of publicly traded banks and thrifts in the U.S. with market capitalizations less than $2.5 billion. In making their selections, Sandler focused on growth, profitability, credit quality and capital strength.

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 BALANCE SHEETS     
(unaudited)     
(in 000's, except per share data)     
                     
    September 30,   June 30,   September 30,   December 31,    
      2016       2016       2015       2015      
                     
Cash and cash equivalents   $   2,595     $   2,665     $   1,876     $   2,789      
Time and interest-earning deposits in other financial institutions       15,164         24,604         21,916         32,829      
Investment securities       31,200         30,782         31,201         30,466      
Loans:                    
Commercial       120,043         106,650         99,871         107,510      
Commercial real estate       225,572         207,664         177,302         179,491      
SBA       39,295         41,176         50,381         47,880      
Manufactured housing       191,946         188,315         173,432         177,891      
Single family real estate       14,335         17,203         20,671         19,073      
HELOC       10,789         10,803         11,134         10,934      
Other       (78 )       43         207         683      
Total loans       601,902         571,854         532,998         543,462      
                     
Loans, net                    
Held for sale       62,381         60,086         65,491         64,488      
Held for investment       539,521         511,768         467,507         478,974      
Less: Allowance for loan losses       (7,190 )       (7,028 )       (7,012 )       (6,916 )    
Net held for investment       532,331         504,740         460,495         472,058      
NET LOANS       594,712         564,826         525,986         536,546      
                     
Other assets       20,865         19,747         20,058         18,583      
                     
TOTAL ASSETS   $   664,536     $   642,624     $   601,037     $   621,213      
                     
Deposits                    
Non-interest-bearing demand   $   88,024     $   83,524     $   73,073     $   76,469      
Interest-bearing demand       258,360         250,036         250,738         250,509      
Savings       14,388         14,173         13,943         13,690      
Certificates of deposit ($250 or more)       92,319         74,622         56,745         66,722      
Other certificates of deposit       137,510         142,829         132,287         136,948      
Total deposits       590,601         565,184         526,786         544,338      
Other borrowings       5,500         10,500         5,000         10,500      
Other liabilities       4,223         3,702         3,339         4,431      
TOTAL LIABILITIES       600,324         579,386         535,125         559,269      
                     
Stockholders' equity       64,212         63,238         65,912         61,944      
                     
                     
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $   664,536     $   642,624     $   601,037     $   621,213      
                     
Shares outstanding       8,094         8,098         8,201         8,206      
                     
Book value per common share   $   7.93     $   7.81     $   7.36     $   7.55      
                     

 
COMMUNITY WEST BANCSHARES 
CONDENSED CONSOLIDATED INCOME STATEMENTS 
(unaudited) 
(in 000's, except per share data) 
                   
    Three Months Ended   Nine Months Ended
    September 30,   June 30,   September 30,   September 30, September 30,
      2016       2016       2015       2016     2015  
                   
Interest income                  
Loans, including fees   $   8,228     $   7,414     $   7,131     $   22,817   $   21,253  
Investment securities and other       288         260         244         817       834  
Total interest income       8,516         7,674         7,375         23,634       22,087  
Interest expense                  
Deposits       733         704         587         2,088       1,761  
Other borrowings and convertible debt       74         73         6         219       82  
Total interest expense       807         777         593         2,307       1,843  
Net interest income       7,709         6,897         6,782         21,327       20,244  
Provision (credit) for loan losses       22         61         (445 )       (164 )     (1,997 )
Net interest income after provision for loan losses       7,687         6,836         7,227         21,491       22,241  
Non-interest income                  
Other loan fees       270         282         244         827       789  
Document processing fees       130         136         141         381       364  
Service charges       100         102         92         292       252  
Other       59         57         77         215       366  
Total non-interest income       559         577         554         1,715       1,771  
Non-interest expenses                  
Salaries and employee benefits        3,809         3,494         3,412         10,755       9,729  
Occupancy, net       564         581         507         1,631       1,439  
Professional services       196         278         212         653       736  
Advertising and marketing       154         212         116         447       348  
Depreciation        162         175         103         486       290  
Data processing       173         169         135         513       388  
FDIC assessment       74         99         99         270       252  
Stock-based compensation       97         84         73         261       333  
Loan servicing and collection       108         (89 )       10         198       281  
Loan litigation settlement, net       -         -         (50 )       -       7,103  
Other        499         503         421         1,464       1,291  
Total non-interest expenses       5,836         5,506         5,038         16,678       22,190  
Income before provision for income taxes       2,410         1,907         2,743         6,528       1,822  
Provision for income taxes       929         782         1,152         2,639       803  
Net income       1,481         1,125         1,591         3,889       1,019  
Dividends and accretion on preferred stock        -         -         125         -       401  
Discount on partial redemption of preferred stock       -         -         -         -       (129 )
Net income available to common stockholders   $   1,481     $   1,125     $   1,466     $   3,889   $   747  
Earnings per share:                  
Basic   $   0.18     $   0.14     $   0.18     $   0.48   $   (0.09 )
Diluted   $   0.18     $   0.13     $   0.17     $   0.46   $   (0.09 )
                   

 
ADDITIONAL FINANCIAL INFORMATION                
(Dollars in thousands except per share amounts)(Unaudited)                
  Three Months Ended   Three Months Ended   Three Months Ended   Nine Months Ended
PERFORMANCE MEASURES AND RATIOS Sep. 30, 2016   Jun. 30, 2016   Sep. 30, 2015   Sep. 30, 2015 Sep. 30, 2015
Return on average common equity    9.17 %     7.15 %     10.54 %     8.19 %   2.23 %
Return on average assets    0.91 %     0.72 %     1.05 %     0.82 %   0.24 %
Efficiency ratio   70.59 %     73.67 %     68.68 %     72.38 %   100.79 %
Net interest margin   4.81 %     4.47 %     4.55 %     4.58 %   4.76 %
                 
  Three Months Ended   Three Months Ended   Three Months Ended   Nine Months Ended
AVERAGE BALANCES Sep. 30, 2016   Jun. 30, 2016   Sep. 30, 2015   Sep. 30, 2016 Sep. 30, 2015
Average assets $   649,134     $   631,318     $   601,776     $   632,946   $   579,501  
Average earning assets     637,525         620,125         591,018         621,899       568,938  
Average total loans     581,477         558,841         526,119         561,365       505,708  
Average deposits     571,094         553,943         523,108         555,250       499,504  
Average equity (including preferred stock)     64,260         63,277         65,478         63,395       66,999  
Average common equity (excluding preferred stock)     64,260         63,277         59,904         63,395       61,054  
                 
EQUITY ANALYSIS Sep. 30, 2016   Jun. 30, 2016   Sep. 30, 2015      
Total equity $   64,212     $   63,238     $   65,912        
Less: senior preferred stock     -          -          (5,574 )      
Total common equity $   64,212     $   63,238     $   60,338        
                 
Common stock outstanding     8,094         8,098         8,201        
Book value per common share $   7.93     $   7.81     $   7.36        
                 
ASSET QUALITY Sep. 30, 2016   Jun. 30, 2016   Sep. 30, 2015      
Nonaccrual loans, net $   3,026     $   3,988     $   5,287        
Nonaccrual loans, net/total loans   0.50 %     0.70 %     0.99 %      
Other assets acquired through foreclosure, net $   55     $   129     $   206        
                 
Nonaccrual loans plus other assets acquired through foreclosure, net $   3,081     $   4,117     $   5,493        
Nonaccrual loans plus other assets acquired through foreclosure, net/total assets   0.46 %     0.64 %     0.91 %      
Net loan (recoveries)/charge-offs in the quarter $   (140 )   $   (148 )   $   (214 )      
Net (recoveries)/charge-offs in the quarter/total loans    -0.02 %     -0.03 %     -0.04 %      
                 
Allowance for loan losses $   7,190     $   7,028     $   7,012        
Plus: Reserve for undisbursed loan commitments     83         89         50        
Total allowance for credit losses $   7,273     $   7,117     $   7,062        
Allowance for loan losses/total loans held for investment   1.33 %     1.37 %     1.50 %      
Allowance for loan losses/nonaccrual loans, net   237.61 %     176.23 %     132.63 %      
                 
Community West Bank *                
Tier 1 leverage ratio   10.48 %     10.53 %     10.73 %      
Tier 1 capital ratio   11.83 %     12.28 %     13.01 %      
Total capital ratio   13.08 %     13.53 %     14.26 %      
                 
INTEREST SPREAD ANALYSIS Sep. 30, 2016   Jun. 30, 2016   Sep. 30, 2015      
Yield on total loans   5.63 %     5.34 %     5.38 %      
Yield on investments   3.10 %     2.57 %     2.52 %      
Yield on interest earning deposits   0.45 %     0.46 %     0.30 %      
Yield on earning assets   5.31 %     4.98 %     4.95 %      
                 
Cost of interest-bearing deposits   0.60 %     0.59 %     0.52 %      
Cost of total deposits   0.51 %     0.51 %     0.45 %      
Cost of borrowings   2.82 %     2.80 %     0.23 %      
Cost of interest-bearing liabilities   0.65 %     0.64 %     0.51 %      
                 
* Capital ratios are preliminary until the Call Report is filed.                

 
NON-GAAP FINANCIAL INFORMATION          
(Unaudited)          
  Three Months Ended   Nine Months Ended    
NON-GAAP PERFORMANCE MEASURES Sep. 30, 2015   Sep. 30, 2015    
Return on average common equity, excluding loan litigation settlement, net (1)   10.34 %     11.39 %    
Return on average assets, excluding loan litigation settlement, net (1)   1.03 %     1.20 %    
Efficiency ratio, excluding loan litigation settlement, net (2)   69.36 %     68.53 %    
           
           
NON-GAAP EARNINGS PER SHARE          
Basic (3) $   0.18     $   0.60      
Diluted (3) $   0.17     $   0.58      
           
           
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES          
(Unaudited)          
  Three Months Ended   Nine Months Ended    
  Sep. 30, 2015   Sep. 30, 2015    
  (in thousands)    
Net income $   1,591     $   1,019      
Loan litigation settlement, net     (50 )       7,103      
Tax effect on loan litigation settlement, net     21         (2,923 )    
Net income, excluding loan litigation settlement, net (3) $   1,562     $   5,199      
           
           
  Three Months Ended   Nine Months Ended    
  Sep. 30, 2015   Sep. 30, 2015    
  (in thousands)    
Total non-interest expenses $   5,038     $   22,190      
Loan litigation settlement, net     50         (7,103 )    
Total non-interest expenses, excluding loan litigation settlement, net (3) $   5,088     $   15,087      
           
           
           
           
(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