GOLETA, Calif., July 28, 2017 (GLOBE NEWSWIRE) -- Community West Bancshares (Community West or the Company), (NASDAQ:CWBC), parent company of Community West Bank (Bank), today reported net income increased 14.7% to $1.6 million, or $0.18 per diluted share, in the second quarter of 2017 (2Q17) compared to $1.4 million, or $0.16 per diluted share, in the first quarter of 2017 (1Q17) and increased 38.3% compared to $1.1 million, or $0.13 per diluted share, in the second quarter of 2016 (2Q16). 

In the first six months of 2017 net income increased 20.9% to $2.9 million, or $0.34 per diluted share, compared to $2.4 million, or $0.29 per diluted share, in the first six months of 2016.

"Although we have been focused on organically growing our franchise (opening in San Luis Obispo last November, Oxnard in January, and a loan production office in Paso Robles in June 2017) we've concurrently delivered improved operating results," stated Martin E. Plourd, President and Chief Executive Officer.  "The strong year-over-year loan growth of 21% together with 28% non-interest-bearing deposits growth was a result of our expansion.  We remain focused on competing for business in our local markets and expanding our franchise throughout California's Central Coast.  We also appreciate the continued support of our shareholders as we pursue these market share growth opportunities."

Second Quarter 2017 Financial Highlights
  • Net income was $1.6 million, or $0.18 per diluted share. 
  • Net interest margin was 4.39%.
  • Net loans increased $24.1 million to $684.8 million at June 30, 2017, compared to $660.8 million three months earlier and increased $120.0 million compared to $564.8 million a year ago.
  • Non-interest-bearing deposits increased 28.2% to $107.0 million at June 30, 2017, compared to $83.5 million a year ago.
  • Book value per common share increased to $8.36 at June 30, 2017, compared to $7.81 a year ago. 
  • The Bank continues to be well-capitalized per banking regulations with its total risk-based capital ratio at 11.62% and Tier 1 leverage ratio at 9.23% at June 30, 2017.
  • Annualized return on average assets was 0.83%.
  • Annualized return on average common equity was 9.20%.

Income Statement

"Our net interest margin, although contracting slightly during the quarter, still remains above industry averages due to our higher loan yields," said Susan C. Thompson, Executive Vice President and Chief Financial Officer.  Second quarter net interest margin was 4.39% compared to 4.45% in 1Q17 and 4.47% in 2Q16.  In the first six months of 2017, Community West's net interest margin was 4.42% compared to 4.46% in the first six months of 2016.

Net interest income for 2Q17 was $8.0 million, a 3.4% increase compared to $7.8 million in the preceding quarter and a 16.5% increase compared to $6.9 million in 2Q16.

Non-interest income increased 8.7% to $697,000 in 2Q17, compared to $641,000 in 1Q17 and increased 20.8% compared to $577,000 in 2Q16, primarily due to increased loan volumes. 

Second quarter non-interest expenses totaled $6.0 million, compared to $5.9 million in 1Q17 and $5.5 million in 2Q16.  The increase is largely due to costs associated with the expansion of the Bank's Northern region, and the addition of the Oxnard location in the Southern region. 

Balance Sheet

Total assets were $785.0 million at June 30, 2017, a 4.9% increase compared to three months earlier and a 22.2% increase compared to $642.6 million one year ago. 

"The loan portfolio continues to benefit from a strong regional economy and demand for our diverse lending products," said Plourd.  "The commercial real estate loan portfolio and manufactured housing portfolio generated the most increases during the current quarter."

Net loans increased 3.1% to $684.8 million at June 30, 2017, compared to $660.8 million at March 31, 2017, and increased 21.2% compared to $564.8 million a year ago.  Commercial real estate loans outstanding were up 53.0% from year ago levels to $317.8 million at June 30, 2017, and comprise 45.9% of the total loan portfolio.  Manufactured housing loans were up 11.0% from year ago levels to $209.1 million and represent 30.2% of total loans.  Commercial loans increased 4.7% from year ago levels to $111.7 million and represent 16.1% of the total loan portfolio and SBA loans decreased 15.8% from a year ago to $34.7 million and represent 5.0% of the total loan portfolio.

Deposits increased 4.7% to $670.3 million at June 30, 2017, compared to $640.1 million at March 31, 2017, and increased 18.6% compared to $565.2 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 $463.6 million at June 30, 2017 and comprise 69.1% of total deposits, compared to $419.1 million, or 73.9% of total deposits, a year ago. 

Stockholders' equity was $68.2 million at June 30, 2017, compared to $66.6 million at March 31, 2017, and $63.2 million a year ago.  Book value per common share improved to $8.36 at June 30, 2017, compared to $8.22 at March 31, 2017, and $7.81 a year ago. 

Credit Quality

"Due to another quarter of robust loan growth, we recorded a provision for loan losses for the fifth consecutive quarter," said Plourd.  The loan loss provision was $120,000 in 2Q17, compared to $144,000 in 1Q17, and $61,000 in 2Q16.  Net loan recoveries were $88,000 in 2Q17 compared to $177,000 in 1Q17 and $148,000 in 2Q16.

The allowance for loan losses was $8.0 million at June 30, 2017, or 1.27% of total loans held for investment, compared to 1.28% at March 31, 2017, and 1.37% a year ago.  Net nonaccrual loans decreased 13.6% to $2.0 million, or 0.29% of total loans at June 30, 2017, compared to $2.3 million, or 0.34% of total loans, three months earlier, and decreased 50.2% compared to $4.0 million, or 0.70% of total loans, a year ago.

Of the $2.0 million in net nonaccrual loans, $560,000 were manufactured housing loans, $527,000 were commercial loans, $263,000 were home equity loans, $203,000 were SBA 504 1st loans, $183,000 were single family real estate loans, $144,000 were commercial real estate loans and $108,000 were SBA 7A loans.

Other assets acquired through foreclosure totaled $362,000 at June 30, 2017, compared to $145,000 three months earlier and $129,000 a year earlier.   

Cash Dividend Declared

The Company's Board of Directors declared a quarterly cash dividend of $0.04 per common share, payable August 31, 2017 to common shareholders of record on August 14, 2017.  The current annualized yield, based on the closing price of CWBC shares of $10.10 on June 30, 2017, was 1.6%.

Stock Repurchase ProgramOn August 31, 2015, the Company announced that the Board of Directors authorized a common stock repurchase program of up to $3.0 million.  As of June 30, 2017, 187,569 shares (none in 2Q17) had been cumulatively repurchased (last repurchase was in 3Q16) 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, 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 seven full-service California branch banking offices, in Goleta, Santa Barbara, Santa Maria, Ventura, Westlake Village, San Luis Obispo and Oxnard and a loan production office in Paso Robles. The principal business activities of the Company are Relationship business banking, Manufactured Housing lending and Government Guaranteed lending.

Industry Accolades

In April 2017, Community West was awarded a "Super Premier" rating by The Findley Reports, the highest ranking for a community bank.  For 50 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.

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   Six Months Ended  
    June 30,   March 31,   June 30,   June 30,   June 30,  
     2017    2017     2016      2017     2016    
                       
Interest income                      
Loans, including fees   $   8,788   $   8,442   $   7,414     $   17,230   $   14,589    
Investment securities and other       278       261       260         539       529    
Total interest income       9,066       8,703       7,674         17,769       15,118    
Interest expense                      
Deposits       941       858       704         1,799       1,355    
Other borrowings and convertible debt       89       71       73         160       145    
Total interest expense       1,030       929       777         1,959       1,500    
Net interest income       8,036       7,774       6,897         15,810       13,618    
Provision (credit) for loan losses       120       144       61         264       (186 )  
Net interest income after provision for loan losses       7,916       7,630       6,836         15,546       13,804    
Non-interest income                      
Other loan fees       342       303       282         645       557    
Document processing fees       151       133       136         284       251    
Service charges       112       96       102         208       192    
Other       92       109       57         201       156    
Total non-interest income       697       641       577         1,338       1,156    
Non-interest expenses                      
Salaries and employee benefits        3,796       3,931       3,494         7,727       6,946    
Occupancy, net       686       645       581         1,331       1,067    
Professional services       299       179       278         478       457    
Advertising and marketing       195       156       212         351       293    
Depreciation        188       163       175         351       324    
FDIC assessment       179       110       99         289       196    
Data processing       165       168       169         333       340    
Stock-based compensation       87       84       84         171       164    
Loan servicing and collection       55       106       (89 )       161       90    
Other        357       381       503         738       965    
Total non-interest expenses       6,007       5,923       5,506         11,930       10,842    
Income before provision for income taxes       2,606       2,348       1,907         4,954       4,118    
Provision for income taxes       1,050       992       782         2,042       1,710    
Net income   $   1,556   $   1,356   $   1,125     $   2,912   $   2,408    
Earnings per share:                      
Basic   $   0.19   $   0.17   $   0.14     $   0.36   $   0.30    
Diluted   $   0.18   $   0.16   $   0.13     $   0.34   $   0.29    
                       

 
COMMUNITY WEST BANCSHARES                  
CONDENSED CONSOLIDATED BALANCE SHEETS                  
(unaudited)                  
(in 000's, except per share data)                  
                   
    June 30,   March 31,   June 30,   December 31,  
      2017       2017       2016       2016    
                   
Cash and cash equivalents   $   1,919     $   1,811     $   2,665     $   2,401    
Time and interest-earning deposits in other financial institutions       36,085         28,366         24,604         31,715    
Investment securities       39,326         35,389         30,782         31,683    
Loans:                  
Commercial       111,655         103,581         106,650         105,290    
Commercial real estate       317,793         303,795         207,664         272,142    
SBA       34,670         37,036         41,176         36,488    
Manufactured housing       209,119         202,332         188,315         194,222    
Single family real estate       10,161         11,728         17,203         12,750    
HELOC       9,974         10,462         10,803         10,292    
Other       (542 )       (388 )       43         (365 )  
Total loans       692,830         668,546         571,854         630,819    
                   
Loans, net                  
Held for sale       60,933         59,811         60,086         61,416    
Held for investment       631,897         608,735         511,768         569,403    
Less: Allowance for loan losses       (7,994 )       (7,785 )       (7,028 )       (7,464 )  
Net held for investment       623,903         600,950         504,740         561,939    
NET LOANS       684,836         660,761         564,826         623,355    
                   
Other assets       22,806         21,973         19,747         21,418    
                   
TOTAL ASSETS   $   784,972     $   748,300     $   642,624     $   710,572    
                   
Deposits                  
Non-interest-bearing demand   $   107,049     $   102,553     $   83,524     $   100,372    
Interest-bearing demand       262,475         262,008         250,036         253,023    
Savings       14,011         14,072         14,173         14,007    
Certificates of deposit ($250,000 or more)       82,156         80,293         74,622         77,509    
Other certificates of deposit       204,589         181,204         142,829         167,325    
Total deposits       670,280         640,130         565,184         612,236    
Other borrowings       41,800         37,000         10,500         29,000    
Other liabilities       4,676         4,603         3,702         4,000    
  TOTAL LIABILITIES       716,756         681,733         579,386         645,236    
                   
Stockholders' equity       68,216         66,567         63,238         65,336    
                   
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                  
  $   784,972     $   748,300     $   642,624     $   710,572    
                   
Shares outstanding       8,160         8,103         8,098         8,096    
                   
Book value per common share   $   8.36     $   8.22     $   7.81     $   8.07    
                   

 
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, 2017   Mar. 31, 2017   Jun. 30, 2016   Jun. 30, 2017 Jun. 30, 2016  
Return on average common equity    9.20 %     8.28 %     7.15 %     8.75 %   7.69 %  
Return on average assets    0.83 %     0.76 %     0.72 %     0.80 %   0.78 %  
Efficiency ratio   68.79 %     70.39 %     73.67 %     69.57 %   73.39 %  
Net interest margin   4.39 %     4.45 %     4.47 %     4.42 %   4.46 %  
                   
  Three Months Ended   Three Months Ended   Three Months Ended   Six Months Ended  
AVERAGE BALANCES Jun. 30, 2017   Mar. 31, 2017   Jun. 30, 2016   Jun. 30, 2017 Jun. 30, 2016  
Average assets $   747,790     $   721,630     $   631,318     $   734,782   $   624,808    
Average earning assets     735,041         708,751         620,125         721,969       613,999    
Average total loans     672,677         650,784         558,841         661,791       551,198    
Average deposits     646,316         626,876         553,943         636,650       547,241    
Average common equity     67,820         66,381         63,277         67,105       62,958    
                   
EQUITY ANALYSIS Jun. 30, 2017   Mar. 31, 2017   Jun. 30, 2016        
Total common equity $   68,216     $   66,567     $   63,238          
Common stock outstanding     8,160         8,103         8,098          
                   
Book value per common share $   8.36     $   8.22     $   7.81          
                   
ASSET QUALITY Jun. 30, 2017   Mar. 31, 2017   Jun. 30, 2016        
Nonaccrual loans, net $   1,988     $   2,302     $   3,988          
Nonaccrual loans, net/total loans   0.29 %     0.34 %     0.70 %        
Other assets acquired through foreclosure, net $   362     $   145     $   129          
                   
Nonaccrual loans plus other assets acquired through foreclosure, net $   2,350     $   2,447     $   4,117          
Nonaccrual loans plus other assets acquired through foreclosure, net/total assets   0.30 %     0.33 %     0.64 %        
Net loan (recoveries)/charge-offs in the quarter $   (88 )   $   (177 )   $   (148 )        
Net (recoveries)/charge-offs in the quarter/total loans    (0.01 %)     (0.03 %)     (0.03 %)        
                   
Allowance for loan losses $   7,994     $   7,785     $   7,028          
Plus: Reserve for undisbursed loan commitments     99         113         89          
Total allowance for credit losses $   8,093     $   7,898     $   7,117          
Allowance for loan losses/total loans held for investment   1.27 %     1.28 %     1.37 %        
Allowance for loan losses/nonaccrual loans, net   402.11 %     338.18 %     176.23 %        
                   
Community West Bank *                  
Tier 1 leverage ratio   9.23 %     9.41 %     10.53 %        
Tier 1 capital ratio   10.39 %     10.38 %     12.28 %        
Total capital ratio   11.62 %     11.60 %     13.53 %        
                   
INTEREST SPREAD ANALYSIS Jun. 30, 2017   Mar. 31, 2017   Jun. 30, 2016        
Yield on total loans   5.24 %     5.26 %     5.34 %        
Yield on investments   2.31 %     2.48 %     2.57 %        
Yield on interest earning deposits   0.83 %     0.74 %     0.46 %        
Yield on earning assets   4.95 %     4.98 %     4.98 %        
                   
Cost of interest-bearing deposits   0.69 %     0.66 %     0.59 %        
Cost of total deposits   0.58 %     0.56 %     0.51 %        
Cost of borrowings   1.22 %     1.20 %     2.80 %        
Cost of interest-bearing liabilities   0.72 %     0.68 %     0.64 %        
                   
* Capital ratios are preliminary until the Call Report is filed.                  

 
Contact:Susan C.Thompson, EVP & CFO805.692.5821www.communitywestbank.com