Community West Bancshares Earns $2.7 Million, or $0.32 Per Diluted Share, in 4Q19, and $8.0 Million, or $0.93 Per Diluted Share for The Year, Declares Quarterly Cash Dividend of $0.055 Per Common Share

Friday, 24. January 2020 15:00

GOLETA, Calif., Jan. 24, 2020 (GLOBE NEWSWIRE) -- Community West Bancshares (Community West or the Company), (NASDAQ: CWBC), parent company of Community West Bank (Bank), today reported net income increased to $2.7 million, or $0.32 per diluted share, for the fourth quarter of 2019 (4Q19), compared to $2.2 million, or $0.25 per diluted share, in 3Q19, and $1.4 million, or $0.16 per diluted share, in 4Q18. For the full year 2019, net income increased 7.5% to $8.0 million, or $0.93 per diluted share, compared to $7.4 million, or $0.88 per diluted share, in 2018.

“We ended the year producing solid earnings for the fourth quarter and full year of 2019, highlighted by top-line revenue growth, steady year-over-year loan and deposit growth, and above industry-average net interest margin of 4.07% for the fourth quarter of 2019,” said Martin E. Plourd, President and Chief Executive Officer.  “Although the growth of the bank has slowed in 2019, our performance metrics improved at quarter-end.  Return on average assets, return on average common equity and our efficiency ratio all improved as we continue to deepen our presence throughout California’s Central Coast of Ventura, Santa Barbara and San Luis Obispo Counties, with our long-term goal to deliver consistent earnings performance for our shareholders.  We anticipate loan growth to remain muted in 2020 and will look to profitable lines of business, within our bank’s risk tolerance.”

Fourth Quarter 2019 Financial Highlights:

  • Net income was $2.7 million, or $0.32 per diluted share, in 4Q19, compared to $2.2 million, or $0.25 per diluted share in 3Q19, and $1.4 million, or $0.16 per diluted share in 4Q18.
  • Net interest margin of 4.07% for 4Q19, compared to 4.10% for 3Q19 and 3.97% for 4Q18.
  • Total deposits were $750.9 million at December 31, 2019, compared to $761.7 million at September 30, 2019, and increased compared to $716.0 million at December 31, 2018.
  • Total demand deposits represented 56.6% of total deposits at December 31, 2019.
  • Total loans decreased $13.9 million during the quarter to $775.6 million at December 31, 2019, compared to $789.5 million at September 30, 2019, and increased compared to $768.2 million at December 31, 2018. 
  • Book value per common share increased to $9.68 at December 31, 2019, compared to $9.40 at September 30, 2019, and $8.92 at December 31, 2018. 
  • Provision (credit) for loan losses was ($210,000) for the quarter, compared to a credit for loan losses of ($75,000) for 3Q19, and a provision for loan losses of $238,000 for 4Q18.
  • Total risked based capital improved to 11.41% for the Bank at December 31, 2019, compared to 11.18% at September 30, 2019 and 10.83% at December 31, 2018.
  • Net nonaccrual loans improved to $2.4 million at December 31, 2019, compared to $5.5 million at September 30, 2019, and $3.4 million at December 31, 2018.
  • Other assets acquired through foreclosure, net was $2.5 million at December 31, 2019, compared to $317,000 at September 30, 2019, and zero at December 31, 2018.

Income Statement

Net interest income was $8.8 million in 4Q19 and 3Q19 and increased compared to $8.4 million in 4Q18.  For 4Q19, net interest income benefited from a net decrease in the cost of funds.  For the year, net interest income increased to $34.4 million, compared to $33.6 million in 2018. 

“A key component of our business strategy was to grow non-interest income.  Additionally with the disruption in the agriculture industry we shifted our agriculture lending from on-balance sheet products to making agriculture loans that could be sold,” said Plourd.  “This shift resulted in loan sale gains of $765,000 during the quarter. While we anticipate continued focus on this strategy in future quarters, we don’t anticipate the same level of activity and resulting gains as we experienced in 4Q19.”  Non-interest income increased to $1.7 million in 4Q19, compared to $647,000 in 3Q19 and $660,000 in 4Q18.  Non-interest income was $3.6 million for the year 2019, compared to $2.6 million in 2018. 

“Our reduced cost of funds rate has helped to sustain our net interest margin year-over-year despite the three interest rate reductions during the second half of 2019,” said Susan C. Thompson, Executive Vice President and Chief Financial Officer.  Fourth quarter net interest margin was 4.07%, compared to 4.10% in 3Q19, and improved 13 basis points compared to 3.97% in 4Q18.  For the year, the net interest margin was 4.06%, compared to 4.07% in 2018.

Non-interest expenses totaled $6.8 million in 4Q19, compared to $6.5 million in the preceding quarter and $6.8 million in 4Q18.  For the full year 2019, non-interest expense was $26.8 million, compared to $26.0 million in 2018. 

Balance Sheet

“We have been actively managing both sides of the balance sheet, adhering to strict underwriting standards with loan originations and replacing higher cost funding,” said Thompson.  Total assets increased modestly to $913.9 million at December 31, 2019, compared to $903.3 million at September 30, 2019 and increased $36.6 million, or 4.2%, compared to $877.3 million at December 31, 2018.  Total loans decreased to $775.6 million at December 31, 2019, compared to $789.5 million at September 30, 2019, and increased modestly compared to $768.2 million at December 31, 2018.  

Commercial real estate loans outstanding (which include SBA 504, construction and land) were up 5.4% from year ago levels to $385.6 million at December 31, 2019 and comprise 49.7% of the total loan portfolio.  Manufactured housing loans were up 4.1% from year ago levels to $257.2 million and represent 33.2% of total loans.  Commercial loans (which include agriculture loans) were down 14.4% from year ago levels to $101.5 million and represent 13.1% of the total loan portfolio.

Total deposits decreased to $750.9 million at December 31, 2019, compared to $761.7 million at September 30, 2019, and increased $34.9 million, or 4.9% compared to $716.0 million at December 31, 2018.  Non-interest-bearing demand deposits decreased $3.6 million to $110.8 million at December 31, 2019 compared to $114.4 million at September 30, 2019 and increased $2.6 million compared to $108.2 million at December 30, 2018.  Interest-bearing demand deposits decreased to $314.3 million compared to $333.7 million at September 30, 2019 but increased $43.9 million compared to $270.4 million at December 31, 2018.  Certificates of deposit, which include broker deposits increased $12.0 million during the quarter to $310.1 million at December 31, 2019 compared to $298.1 million at September 30, 2019 and decreased $12.6 million compared to $322.8 million at December 31, 2018 as the Company divests itself from higher priced funding.

Stockholders’ equity increased to $82.0 million at December 31, 2019, compared to $79.6 million at September 30, 2019, and $76.2 million at December 31, 2018.  Book value per common share increased to $9.68 at December 31, 2019, compared to $9.40 at September 30, 2019, and $8.92 at December 31, 2018. 

Credit Quality

The Company recorded a credit to its provision for loan losses of ($210,000) in 4Q19.  This compares to a credit to the provision for loan losses of ($75,000) in 3Q19 and a provision for loan losses of $238,000 in 4Q18.  The allowance for loan losses, including the reserve for undisbursed loans, was $8.8 million, or 1.19% of total loans held for investment, at December 31, 2019.  Net nonaccrual loans plus net other assets acquired through foreclosure were $4.9 million at December 31, 2019, compared to $5.8 million at September 30, 2019, and $3.4 million at December 31, 2018.  

Net nonaccrual loans totaled $2.4 million at December 31, 2019, compared to $5.5 million at September 30, 2019 and $3.4 million a year ago.  Of the $2.4 million of net nonaccrual loans at December 31, 2019, $1.6 million were commercial loans, $0.6 million were manufactured housing loans, $0.1 million were SBA loans, and $0.1 million were commercial real estate loans.

There was $2.5 million in other assets acquired through foreclosure as of December 31, 2019.  This compares to $317,000 of other assets acquired through foreclosure at September 30, 2019, and no other assets acquired through foreclosure a year prior. 

Cash Dividend Declared

The Company’s Board of Directors declared a cash dividend of $0.055 per common share, payable February 28, 2020 to common shareholders of record on February 11, 2020.  The current annualized yield, based on the closing price of CWBC shares of $11.10 on December 31, 2019, was 1.94%.

Stock Repurchase Program

The Company repurchased a total of 99,983 shares during the first three quarters of 2019 and did not repurchase any shares of its common stock in the fourth quarter of 2019, leaving $1.4 million available under the previously announced repurchase program.

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 eight full-service California branch banking offices in Goleta, Santa Barbara, Santa Maria, Ventura, Westlake Village, San Luis Obispo, Oxnard and Paso Robles.  The principal business activities of the Company are Relationship Banking, Manufactured Housing lending and Government Guaranteed lending.

Industry Accolades

In April 2019, Community West was awarded a “Premier” rating by The Findley Reports.  For 51 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.

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,
   2019   2019   2018  2019   2018
           
Interest income          
Loans, including fees $11,136  $11,306  $10,582 $43,890  $40,865
Investment securities and other  492   413   459  1,849   1,766
Total interest income  11,628   11,719   11,041  45,739   42,631
Interest expense          
Deposits  2,413   2,615   2,329  10,055   7,702
Other borrowings  377   306   358  1,327   1,286
Total interest expense  2,790   2,921   2,687  11,382   8,988
Net interest income  8,838   8,798   8,354  34,357   33,643
Provision (credit) for loan losses  (210)  (75)  238  (165)  14
Net interest income after provision for loan losses  9,048   8,873   8,116  34,522   33,629
Non-interest income          
Other loan fees  500   302   350  1,383   1,348
Gains from loan sales, net  765   -   -  765   -
Service charges  160   129   108  567   459
Document processing fees  116   96   122  423   489
Other  123   120   80  469   332
Total non-interest income  1,664   647   660  3,607   2,628
Non-interest expenses          
Salaries and employee benefits  4,141   4,254   3,991  17,094   16,329
Occupancy, net  750   788   829  3,088   3,132
Professional services  552   341   425  1,679   1,356
Data processing  236   215   233  876   852
Depreciation  214   219   212  864   764
Advertising and marketing  228   187   198  774   685
FDIC assessment  118   (15)  223  427   770
Stock-based compensation  100   90   194  382   478
Other  475   385   542  1,571   1,673
Total non-interest expenses  6,814   6,464   6,847  26,755   26,039
Income before provision for income taxes  3,898   3,056   1,929  11,374   10,218
Provision for income taxes  1,179   902   570  3,411   2,809
Net income $2,719  $2,154  $1,359 $7,963  $7,409
Earnings per share:          
Basic $0.32  $0.25  $0.16 $0.94  $0.89
Diluted $0.32  $0.25  $0.16 $0.93  $0.88
           



COMMUNITY WEST BANCSHARES      
CONDENSED CONSOLIDATED BALANCE SHEETS      
(unaudited)      
(in 000's, except per share data)      
       
  December 31, September 30, December 31,
   2019   2019   2018 
       
Cash and interest-earning deposits in other financial institutions $82,661  $56,347  $56,915 
Investment securities  25,563   28,707   32,353 
Loans:      
Commercial  101,485   110,153   118,518 
Commercial real estate  385,642   392,288   365,809 
SBA  14,777   17,018   19,077 
Manufactured housing  257,247   253,229   247,114 
Single family real estate  11,668   11,936   11,261 
HELOC  4,531   4,847   6,756 
Other  213   (14)  (292)
Total loans  775,563   789,457   768,243 
       
Loans, net      
Held for sale  42,046   44,816   48,355 
Held for investment  733,517   744,641   719,888 
Less: Allowance for loan losses  (8,717)  (8,868)  (8,691)
Net held for investment  724,800   735,773   711,197 
NET LOANS  766,846   780,589   759,552 
       
Other assets  38,800   37,609   28,471 
       
TOTAL ASSETS $913,870  $903,252  $877,291 
       
Deposits      
Non-interest-bearing demand $110,843  $114,366  $108,161 
Interest-bearing demand  314,278   333,679   270,431 
Savings  15,689   15,481   14,641 
Certificates of deposit ($250,000 or more)  96,431   90,298   93,439 
Other certificates of deposit  213,693   207,848   229,334 
Total deposits  750,934   761,672   716,006 
Other borrowings  65,000   45,000   75,000 
Other liabilities  15,958   16,984   10,134 
  TOTAL LIABILITIES  831,892   823,656   801,140 
       
Stockholders' equity  81,978   79,596   76,151 
       
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY      
 $913,870  $903,252  $877,291 
       
Common shares outstanding  8,472   8,467   8,533 
       
Book value per common share $9.68  $9.40  $8.92 
       



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 RATIOSDecember 31, 2019 September 30, 2019 December 31, 2018 December 31, 2019 December 31, 2018
Return on average common equity 13.35%  10.85%  7.06%  10.15%  10.02%
Return on average assets 1.21%  0.97%  0.63%  0.91%  0.88%
Efficiency ratio 64.88%  68.44%  75.96%  70.47%  71.79%
Net interest margin 4.07%  4.10%  3.97%  4.06%  4.07%
          
 Three Months Ended Three Months Ended Three Months Ended Twelve Months Ended
AVERAGE BALANCESDecember 31, 2019 September 30, 2019 December 31, 2018 December 31, 2019 December 31, 2018
Average assets$887,902  $877,505  $852,892  $872,509  $842,468 
Average earning assets 862,350   850,948   834,259   846,673   826,292 
Average total loans 779,698   788,965   764,411   778,745   751,775 
Average deposits 725,029   735,545   717,205   726,022   714,651 
Average common equity 80,825   78,763   76,334   78,437   73,906 
          
EQUITY ANALYSISDecember 31, 2019 September 30, 2019 December 31, 2018    
Total common equity$81,978  $79,596  $76,151     
Common stock outstanding 8,472   8,467   8,533     
          
Book value per common share$9.68  $9.40  $8.92     
          
ASSET QUALITYDecember 31, 2019 September 30, 2019 December 31, 2018    
Nonaccrual loans, net$2,389  $5,476  $3,378     
Nonaccrual loans, net/total loans 0.31%  0.69%  0.44%    
Other assets acquired through foreclosure, net$2,524  $317  $-     
          
Nonaccrual loans plus other assets acquired through foreclosure, net$4,913  $5,793  $3,378     
Nonaccrual loans plus other assets acquired through foreclosure, net/total assets 0.54%  0.64%  0.39%    
Net loan (recoveries)/charge-offs in the quarter$(58) $(69) $66     
Net (recoveries)/charge-offs in the quarter/total loans (0.01%)  (0.01%)  0.01%    
          
Allowance for loan losses$8,717  $8,868  $8,691     
Plus: Reserve for undisbursed loan commitments 85   81   73     
Total allowance for credit losses$8,802  $8,949  $8,764     
Allowance for loan losses/total loans held for investment 1.19%  1.19%  1.21%    
Allowance for loan losses/nonaccrual loans, net 364.88%  161.94%  257.28%    
          
Community West Bank *         
Tier 1 leverage ratio 9.06%  9.02%  8.57%    
Tier 1 capital ratio 10.28%  10.04%  9.68%    
Total capital ratio 11.41%  11.18%  10.83%    
          
INTEREST SPREAD ANALYSISDecember 31, 2019 September 30, 2019 December 31, 2018    
Yield on total loans 5.67%  5.69%  5.49%    
Yield on investments 3.47%  3.06%  2.52%    
Yield on interest earning deposits 1.66%  2.14%  2.70%    
Yield on earning assets 5.35%  5.46%  5.25%    
          
Cost of interest-bearing deposits 1.57%  1.69%  1.52%    
Cost of total deposits 1.32%  1.41%  1.29%    
Cost of borrowings 2.31%  2.64%  2.87%    
Cost of interest-bearing liabilities 1.64%  1.76%  1.63%    
          
* Capital ratios are preliminary until the Call Report is filed.         


Contact:                          

Susan C. Thompson, EVP & CFO
805.692.5821
www.communitywestbank.com

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