Assets Surpass $700 Million and Book Value Increases to $8.07 per Share

Declares Quarterly Cash Dividend of $0.035 Per Common Share

GOLETA, Calif., Jan. 27, 2017 (GLOBE NEWSWIRE) -- Community West Bancshares (Community West or the Company), (NASDAQ:CWBC), parent company of Community West Bank (Bank), today reported net income of $1.3 million in the fourth quarter of 2016 (4Q16) compared to $1.5 million in the third quarter of 2016 (3Q16) and $1.9 million in the fourth quarter of 2015 (4Q15).  For the full year, Community West reported net income of $5.2 million compared to $2.9 million in 2015. 

"Solid profitability, a healthy net interest margin, improving asset quality and robust loan and deposit growth were the highlights of our 2016 financial results," stated Martin E. Plourd, President and Chief Executive Officer.  "The strength of the economy in our local marketplace continues to sustain and build our community banking franchise with strong on-going demand for our high-service approach to lending and deposit programs.  Our focus in the coming year remains on the local markets and expanding our franchise through organic growth.  The increase in non-interest expenses in 4Q16 compared to 4Q15 is primarily due to additional lenders and staff.  We will continue to invest in our future, with the opening of the San Luis Obispo branch in November 2016, the relocated branch in Santa Maria in January 2017 and the new Oxnard branch scheduled to open next week."

4Q16 Financial Highlights
  • Total loans increased $28.9 million for 4Q16 to $630.8 million at December 31, 2016, and 16.1% compared to $543.5 million a year ago.
  • Total assets surpassed $700 million for the first time in the Company's history and increased 14.4% to $710.6 million at December 31, 2016, compared to $621.2 million a year ago.
  • Nonaccrual loans, net, decreased 52.6% to $2.4 million, or 0.38% of net loans at December 31, 2016, compared to $5.0 million, or 0.92% of net loans, a year ago, representing the lowest level since 3Q07.
  • Net income available to common stockholders for 4Q16 was $1.3 million, or $0.16 per diluted share. 
  • Return on average assets for 2016 was 0.81%.
  • Return on average common equity for 2016 was 8.19%.
  • Net interest margin for 2016 was 4.60%.
  • Non-interest-bearing deposits increased 31.2% to $100.4 million at December 31, 2016, compared to $76.5 million a year ago.
  • Book value per common share increased 6.9% to $8.07 at December 31, 2016, compared to $7.55 a year ago. 
  • The Bank continues to be well-capitalized per banking regulations with its total risk-based capital ratio at 12.27% and Tier 1 leverage ratio at 10.08% at December 31, 2016.

Income Statement

"While we had a modest decrease in the net interest margin during the fourth quarter, we have been able to maintain a net interest margin in the mid-4% range, largely due to our above industry-average loan yields and periodic loan interest recoveries," said Charles G. Baltuskonis, Executive Vice President and Chief Financial Officer.  Fourth quarter net interest margin was 4.63% compared to 4.81% in 3Q16 and 4.90% in 4Q15.  For all of 2016, Community West's net interest margin was 4.60% compared to 4.80% in 2015.   Of the asset yields for all of 2016, eight basis points of asset yields was attributable to one large past due loan relationship that was paid in full and, for all of 2015, 22 basis points were attributable to two large past due loan relationships that were paid in full. 

Net interest income for 4Q16 was $7.8 million, a slight increase compared to $7.7 million in the preceding quarter and a 4.0% increase compared to $7.5 million in 4Q15.  For the year, net interest income increased 5.0% to $29.1 million compared to $27.7 million a year ago.  Non-interest income was $538,000 in 4Q16, a slight decrease compared to $559,000 in 3Q16 and unchanged compared to 4Q15.  For the year, non-interest income was $2.3 million, which was unchanged compared to 2015.

Non-interest expenses totaled $5.9 million in 4Q16, compared to $5.8 million in 3Q16 and $5.1 million in 4Q15.  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.  For all of 2016, noninterest expenses were $22.6 million.  In the second quarter of 2015, Community West settled a claim for $7.1 million, net, which increased non-interest expenses for 2015 to $27.3 million.  Excluding this one-time settlement, non-interest expenses would have been $20.2 million for 2015.  (See page 7 - "Non-GAAP Financial Information")  

Balance Sheet

Net loans increased 4.8% to $623.4 million at December 31, 2016, compared to $594.7 million at September 30, 2016, and increased 16.2% compared to $536.5 million a year ago.  Commercial real estate loans outstanding were up 51.6% from year ago levels to $272.1 million at December 31, 2016, and comprise 43.1% of the total loan portfolio.  Manufactured housing loans were up 9.2% from year ago levels to $194.2 million and represent 30.8% of total loans.  Commercial loans decreased 2.1% from year ago levels to $105.3 million and represent 16.7% of the total loan portfolio and SBA loans decreased 23.8% from a year ago to $36.5 million and represent 5.8% of the total loan portfolio.

Total assets were $710.6 million at December 31, 2016, a 6.9% increase compared to three months earlier and a 14.4% increase compared to one year ago.  Deposits totaled $612.2 million at December 31, 2016, up 3.7% compared to $590.6 million at September 30, 2016, and grew 12.5% compared to $544.3 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 $457.3 million at December 31, 2016 and comprise 74.7% of total deposits, compared to $408.7 million, or 75.1% of total deposits, a year ago. 

Stockholders' equity was $65.3 million at December 31, 2016, compared to $64.2 million at September 30, 2016, and $62.0 million a year ago.  Book value per common share improved to $8.07 at December 31, 2016 compared to $7.93 at September 30, 2016, and $7.55 a year ago. 

Credit Quality

"This year, we were able to cut in half our nonaccrual loans and nonaccrual loans plus other assets acquired through foreclosure, both net of SBA/USDA guarantees, reflecting the hard work of our lenders and the credit management team, as well as the continuing improvement in our local markets," said Plourd.   

The allowance for loan losses was $7.5 million at December 31, 2016, or 1.31% of total loans held for investment, compared to 1.33% at September 30, 2016, and 1.44% a year ago.  Net nonaccrual loans decreased 21.5% to $2.4 million, or 0.38% of total loans at December 31, 2016, compared to $3.0 million, or 0.50% of total loans, three months earlier, and decreased 52.6% compared to $5.0 million, or 0.92% of total loans, a year ago.

Of the $2.4 million in net nonaccrual loans, $799,000 were manufactured housing loans, $712,000 were SBA 504 1st loans, $373,000 were home equity loans, $192,000 were single family real estate loans, $141,000 were commercial real estate loans, $128,000 were SBA loans and $30,000 were commercial loans.

Other assets acquired through foreclosure totaled $137,000 at December 31, 2016, compared to $55,000 three months earlier and $198,000 a year earlier.  Nonaccrual loans plus other assets acquired through foreclosure, net of SBA/USDA guarantees, totaled $2.5 million, or 0.35% of total assets, at December 31, 2016, compared to $3.1 million, or 0.46% of total assets, three months earlier and $5.2 million, or 0.84% of total assets, a year ago. 

"Due to strong loan growth, we recorded a provision for loan losses for the third consecutive quarter," added Plourd.  The loan loss provision was $116,000 in 4Q16, compared to $22,000 in 3Q16, and a credit to provision of $277,000 in 4Q15.  Net loan recoveries were $158,000 in 4Q16 compared to $140,000 in 3Q16 and $181,000 in 4Q15.

Cash Dividend Declared

The Company's Board of Directors declared a quarterly cash dividend of $0.035 per common share, payable February 28, 2017 to common shareholders of record on February 10, 2017.  The current annualized yield, based on the closing price of CWBC shares of $9.24 on December 31, 2016, was 1.5%.

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.  As of December 31, 2016, 187,569 shares (none in 4Q16) 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 six full-service California branch banking offices, in Goleta, Santa Barbara, Santa Maria, Ventura, Westlake Village and 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 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,
      2016       2016     2015       2016     2015  
                   
Interest income                  
Loans, including fees   $   8,280     $   8,228   $   7,886     $   31,097   $   29,139  
Investment securities and other       302         288       249         1,119       1,083  
Total interest income       8,582         8,516       8,135         32,216       30,222  
Interest expense                  
Deposits       763         733       622         2,851       2,383  
Other borrowings and convertible debt       57         74       51         276       133  
Total interest expense       820         807       673         3,127       2,516  
Net interest income       7,762         7,709       7,462         29,089       27,706  
Provision (credit) for loan losses       116         22       (277 )       (48 )     (2,274 )
Net interest income after provision for loan losses       7,646         7,687       7,739         29,137       29,980  
Non-interest income                  
Other loan fees       215         270       225         1,042       1,014  
Document processing fees       115         130       102         496       466  
Service charges       95         105       104         403       372  
Gains from loan sales, net       -         -       15         -       132  
Other       113         54       92         312       325  
Total non-interest income       538         559       538         2,253       2,309  
Non-interest expenses                  
Salaries and employee benefits        3,628         3,809       3,175         14,383       12,904  
Occupancy, net       633         564       519         2,264       1,943  
Data processing       280         173       145         793       533  
Professional services       220         196       257         873       993  
Depreciation        192         162       109         678       399  
Advertising and marketing       169         154       118         616       466  
FDIC assessment       106         74       90         376       342  
Stock-based compensation       77         97       79         338       412  
Loan servicing and collection       11         108       114         209       395  
Net loss (gain) on sales/write-downs of foreclosed real estate              
and repossessed assets       (1 )       7       42         16       10  
Loan litigation settlement, net       -         -       (8 )       -       7,095  
Other        555         492       451         2,002       1,789  
Total non-interest expenses       5,870         5,836       5,091         22,548       27,281  
Income before provision for income taxes       2,314         2,410       3,186         8,842       5,008  
Provision for income taxes       974         929       1,335         3,613       2,138  
Net income       1,340         1,481       1,851         5,229       2,870  
Dividends and accretion on preferred stock        -         -       44         -       445  
Discount on partial redemption of preferred stock       -         -       -         -       (129 )
Net income available to common stockholders   $   1,340     $   1,481   $   1,807     $   5,229   $   2,554  
Earnings per share:                  
Basic   $   0.16     $   0.18   $   0.22     $   0.64   $   0.31  
Diluted   $   0.16     $   0.18   $   0.21     $   0.62   $   0.30  
                   

 
             
COMMUNITY WEST BANCSHARES            
CONDENSED CONSOLIDATED BALANCE SHEETS            
(unaudited)            
(in 000's, except per share data)            
             
    December 31,   September 30,   December 31,
      2016       2016       2015  
             
Cash and cash equivalents   $   2,401     $   2,595     $   2,789  
Time and interest-earning deposits in other financial institutions       31,715         15,164         32,829  
Investment securities       31,683         31,200         30,466  
Loans:            
Commercial       105,290         120,043         107,510  
Commercial real estate       272,142         225,572         179,491  
SBA       36,488         39,295         47,880  
Manufactured housing       194,222         191,946         177,891  
Single family real estate       12,750         14,335         19,073  
HELOC       10,292         10,789         10,934  
Other       (365 )       (78 )       683  
Total loans       630,819         601,902         543,462  
             
Loans, net            
Held for sale       61,416         62,381         64,488  
Held for investment       569,403         539,521         478,974  
Less: Allowance for loan losses       (7,464 )       (7,190 )       (6,916 )
Net held for investment       561,939         532,331         472,058  
NET LOANS       623,355         594,712         536,546  
             
Other assets       21,418         20,865         18,583  
             
TOTAL ASSETS   $   710,572     $   664,536     $   621,213  
             
Deposits            
Non-interest-bearing demand   $   100,372     $   88,024     $   76,469  
Interest-bearing demand       253,023         258,360         250,509  
Savings       14,007         14,388         13,690  
Certificates of deposit ($250,000 or more)       77,509         92,319         66,722  
Other certificates of deposit       167,325         137,510         136,948  
Total deposits       612,236         590,601         544,338  
Other borrowings       29,000         5,500         10,500  
Other liabilities       4,000         4,223         4,431  
  TOTAL LIABILITIES       645,236         600,324         559,269  
             
Stockholders' equity       65,336         64,212         61,944  
             
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY            
  $   710,572     $   664,536     $   621,213  
             
Shares outstanding       8,096         8,094         8,206  
             
Book value per common share   $   8.07     $   7.93     $   7.55  
             

 
                 
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 Dec. 31, 2016   Sep. 30, 2016   Dec. 31, 2015   Dec. 31, 2016 Dec. 31, 2015
Return on average common equity   8.17 %     9.17 %     11.96 %     8.19 %   4.69 %
Return on average assets   0.78 %     0.91 %     1.19 %     0.81 %   0.49 %
Efficiency ratio   70.72 %     70.59 %     63.64 %     71.94 %   90.89 %
Net interest margin   4.63 %     4.81 %     4.90 %     4.60 %   4.80 %
                 
  Three Months Ended   Three Months Ended   Three Months Ended   Twelve Months Ended
AVERAGE BALANCES Dec. 31, 2016   Sep. 30, 2016   Dec. 31, 2015   Dec. 31, 2016 Dec. 31, 2015
Average assets $ 679,201     $ 649,134     $ 614,688     $ 644,549   $ 588,369  
Average earning assets   666,280       637,525       603,921       633,054     577,755  
Average total loans   607,989       581,477       537,917       573,084     513,826  
Average deposits   598,197       571,094       537,269       566,046     509,022  
Average equity (including preferred stock)   65,247       64,260       63,334       63,857     66,076  
Average common equity (excluding preferred stock)   65,247       64,260       61,395       63,857     61,140  
                 
EQUITY ANALYSIS Dec. 31, 2016   Sep. 30, 2016   Dec. 31, 2015      
Total equity $ 65,336     $ 64,212     $ 61,944        
Less: senior preferred stock   -       -       -        
Total common equity $ 65,336     $ 64,212     $ 61,944        
                 
Common stock outstanding   8,096       8,094       8,206        
Book value per common share $ 8.07     $ 7.93     $ 7.55        
                 
ASSET QUALITY Dec. 31, 2016   Sep. 30, 2016   Dec. 31, 2015      
Nonaccrual loans, net $ 2,375     $ 3,026     $ 5,013        
Nonaccrual loans, net/total loans   0.38 %     0.50 %     0.92 %      
Other assets acquired through foreclosure, net $ 137     $ 55     $ 198        
                 
Nonaccrual loans plus other assets acquired through foreclosure, net $ 2,512     $ 3,081     $ 5,211        
Nonaccrual loans plus other assets acquired through foreclosure, net/total assets   0.35 %     0.46 %     0.84 %      
Net loan (recoveries)/charge-offs in the quarter $ (158 )   $ (140 )   $ (181 )      
Net (recoveries)/charge-offs in the quarter/total loans   (0.03 %)     (0.02 %)     (0.03 %)      
                 
Allowance for loan losses $ 7,464     $ 7,190     $ 6,916        
Plus: Reserve for undisbursed loan commitments   125       83       61        
Total allowance for credit losses $ 7,589     $ 7,273     $ 6,977        
Allowance for loan losses/total loans held for investment   1.31 %     1.33 %     1.44 %      
Allowance for loan losses/nonaccrual loans, net   314.27 %     237.61 %     137.96 %      
                 
Community West Bank *                
Tier 1 leverage ratio   10.08 %     10.48 %     10.38 %      
Tier 1 capital ratio   11.04 %     11.83 %     12.45 %      
Total capital ratio   12.27 %     13.08 %     13.70 %      
                 
INTEREST SPREAD ANALYSIS Dec. 31, 2016   Sep. 30, 2016   Dec. 31, 2015      
Yield on total loans   5.42 %     5.63 %     5.82 %      
Yield on investments   3.23 %     3.10 %     2.60 %      
Yield on interest earning deposits   0.43 %     0.45 %     0.32 %      
Yield on earning assets   5.12 %     5.31 %     5.34 %      
                 
Cost of interest-bearing deposits   0.60 %     0.60 %     0.53 %      
Cost of total deposits   0.54 %     0.51 %     0.46 %      
Cost of borrowings   2.00 %     2.82 %     2.31 %      
Cost of interest-bearing liabilities   0.63 %     0.65 %     0.57 %      
                 
* Capital ratios are preliminary until the Call Report is filed.                
                 

 
         
NON-GAAP FINANCIAL INFORMATION        
(Unaudited)        
  Three Months Ended   Tweve Months Ended  
NON-GAAP PERFORMANCE MEASURES Dec. 31, 2015   Dec. 31, 2015  
Return on average common equity, excluding loan litigation settlement, net (1)   11.93 %     11.52 %  
Return on average assets, excluding loan litigation settlement, net (1)   1.19 %     1.20 %  
Efficiency ratio, excluding loan litigation settlement, net (2)   63.74 %     67.25 %  
         
         
NON-GAAP EARNINGS PER SHARE        
Basic (3) $ 0.22     $ 0.82    
Diluted (3) $ 0.21     $ 0.79    
         
         
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES        
(Unaudited)        
  Three Months Ended   Tweve Months Ended  
  Dec. 31, 2015   Dec. 31, 2015  
  (in thousands)  
Net income $ 1,851     $ 2,870    
Loan litigation settlement, net   (8 )     7,095    
Tax effect on loan litigation settlement, net   3       (2,920 )  
Net income, excluding loan litigation settlement, net (3) $ 1,846     $ 7,045    
         
         
  Three Months Ended   Tweve Months Ended  
  Dec. 31, 2015   Dec. 31, 2015  
  (in thousands)  
Total non-interest expenses $ 5,091     $ 27,281    
Loan litigation settlement, net   8       (7,095 )  
Total non-interest expenses, excluding loan litigation settlement, net (3) $ 5,099     $ 20,186    
         
         
(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