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Community West Bancshares Earns $2.2 Million, or $0.25 Per Diluted Share, in 3Q19; Results Highlighted by Net Interest Margin Expansion; Declares Quarterly Cash Dividend of $0.055 Per Common Share

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GOLETA, Calif., Oct. 25, 2019 (GLOBE NEWSWIRE) -- Community West Bancshares (Community West or the Company), (NASDAQ:CWBC), parent company of Community West Bank (Bank), today reported earnings of $2.2 million, or $0.25 per diluted share, for the third quarter of 2019 (3Q19), compared to $1.6 million, or $0.18 per diluted share, in 2Q19, and $2.4 million, or $0.27 per diluted share, in 3Q18.

In the first nine months of 2019, net income was $5.2 million, or $0.61 per diluted share, compared to $6.1 million, or $0.69 per diluted share, in the first nine months of 2018.

"We delivered solid third quarter results, fueled by growing revenues and an expanding net interest margin," stated Martin E. Plourd, President and Chief Executive Officer.  "Loan growth remains steady, with a 5% increase in the loan portfolio compared to a year ago, and strong total demand deposits, which increased 20% year-over-year as we continue to improve our core funding position.  We will continue to focus on high quality earnings growth, while managing our operating efficiencies and expanding our brand throughout California's Central Coast."

Third Quarter 2019 Financial Highlights:

  • Net income was $2.2 million, or $0.25 per diluted share, in 3Q19, compared to $1.6 million, or $0.18 per diluted share in 2Q19, and $2.4 million, or $0.27 per diluted share in 3Q18.
  • Net interest margin improved to 4.10% for 3Q19, compared to 4.07% for 2Q19 and 4.02% for 3Q18.
  • Total non-interest expense was $6.5 million in 3Q19, compared to $6.8 million in 2Q19 and $6.4 million in 3Q18.
  • Total demand deposits decreased slightly to $448.0 million at September 30, 2019, compared to $456.3 million at June 30, 2019, and increased $75.4 million compared to $372.6 million at September 30, 2018. 
  • Total loans increased to $789.5 million at September 30, 2019, compared to $788.9 million at June 30, 2019, and increased $35.7 million compared to $753.7 million at September 30, 2018. 
  • Book value per common share increased to $9.40 at September 30, 2019, compared to $9.19 at June 30, 2019, and $9.13 at September 30, 2018. 
  • Provision (credit) for loan losses was ($75,000) for the quarter, compared to a provision for loan losses of $177,000 for 2Q19, and a credit for loan losses of ($197,000) for 3Q18.
  • Total risked based capital improved to 11.18% for the Bank at September 30, 2019, compared to 10.67% at June 30, 2019 and 10.79% at September 30, 2018.
  • Net nonaccrual loans totaled $5.5 million at September 30, 2019, compared to $3.0 million at June 30, 2019, and $3.8 million at September 30, 2018. 
  • Other real estate owned was $317,000 at September 30, 2019, compared to $1.1 million at June 30, 2019, and zero at September 30, 2018.

Income Statement

Third quarter net interest income increased to $8.8 million, compared to $8.5 million in 2Q19 and $8.6 million in 3Q18.  For 3Q19, net interest income benefited by both collection of interest on previously impaired loans and a net decrease in the cost of funds.  In the first nine months of 2019, net interest income was $25.5 million, compared to $25.3 million in the first nine months of 2018. 

Non-interest income was $647,000 in 3Q19, compared to $692,000 in 2Q19 and $641,000 in 3Q18.  Non-interest income was $1.9 million in the first nine months of 2019, compared to $2.0 million in the first nine months of 2018.

"The continued improvement in the margin for the current quarter was due, in part, to our on-going efforts to reduce our cost of funds," said Susan C. Thompson, Executive Vice President and Chief Financial Officer.  Third quarter net interest margin improved to 4.10%, from 4.07% in 2Q19, and 4.02% in 3Q18.  In the first nine months of 2019, the net interest margin was 4.06%, compared to 4.11% in the prior year period.

Non-interest expenses totaled $6.5 million in 3Q19, compared to $6.8 million in the preceding quarter and $6.4 million in 3Q18.  In the first nine months of 2019, non-interest expense was $19.9 million, compared to $19.2 million in the first nine months of 2018. 

Balance Sheet

Total loans increased modestly to $789.5 million at September 30, 2019, compared to $788.9 million at June 30, 2019, and increased $35.8 million, or 4.7%, compared to $753.7 million at September 30, 2018.  

Commercial real estate loans outstanding (which include SBA 504, construction and land) were up 11.1% from year ago levels to $392.3 million at September 30, 2019 and comprise 49.7% of the total loan portfolio.  Manufactured housing loans were up 5.5% from year ago levels to $253.2 million and represent 32.1% of total loans.  Commercial loans (which include agriculture loans) were down 7.6% from year ago levels to $110.2 million and represent 13.9% of the total loan portfolio.

Total deposits decreased slightly to $761.7 million at September 30, 2019, compared to $765.1 million at June 30, 2019, and increased $41.8 million, or 5.8% compared to $719.9 million at September 30, 2018.  Non-interest-bearing demand deposits increased $1.9 million, or 1.7% to $114.4 million at September 30, 2019 compared to $112.5 million at June 30, 2019 and increased $8.8 million compared to $105.6 million at September 30, 2018.  Interest-bearing demand deposits decreased to $333.7 million compared to $343.8 million at June 30, 2019 but increased $66.6 million compared to $267.0 million at September 30, 2018.  Certificates of deposit, which include broker deposits increased $5.6 million to $298.1 million at September 30, 2019 compared to $292.5 million at June 30, 2019 and decreased $34.8 million compared to $332.9 million at September 30, 2018 as the Company divests itself from wholesale funding.

Total assets were $903.3 million at September 30, 2019, compared to $905.6 million at June 30, 2019 and increased $48.6 million, or 5.7%, compared to $854.7 million at September 30, 2018.  Stockholders' equity increased to $79.6 million at September 30, 2019, compared to $77.8 million at June 30, 2019, and $75.6 million at September 30, 2018.  Book value per common share increased to $9.40 at September 30, 2019, compared to $9.19 at June 30, 2019, and $9.13 at September 30, 2018. 

Credit Quality

The Company recorded a credit to its provision for loan losses of ($75,000) in 3Q19.  This compares to a provision for loan losses of $177,000 in 2Q19 and credit to the provision for loan losses of ($197,000) in 3Q18.  The allowance for loan losses, including the reserve for undisbursed loans, was $8.9 million at September 30, 2019, or 1.19% of total loans held for investment, compared to 1.20% at June 30, 2019, and 1.21% a year ago.  Net nonaccrual loans plus net other assets acquired through foreclosure were $5.8 million at September 30, 2019, compared to $4.1 million at June 30, 2019, and $3.8 million at September 30, 2018.  

At September 30, 2019, net nonaccrual loans consisted of $4.7 million of commercial loans including commercial agriculture, $0.3 million of manufactured housing loans, $0.4 million of SBA loans, and $0.1 million of commercial real estate loans.

There was $317,000 in other assets acquired through foreclosure as of September 30, 2019.  This compares to $1.1 million of other assets acquired through foreclosure at June 30, 2019, and no other assets acquired through foreclosure a year ago. 

Cash Dividend Declared

The Company's Board of Directors declared a cash dividend of $0.055 per common share, payable November 29, 2019 to common shareholders of record on November 14, 2019.  The current annualized yield, based on the closing price of CWBC shares of $9.89 on September 30, 2019, was 2.17%.

Stock Repurchase Program
The Company, under the Board of Directors authorized common stock repurchase program of up to $4.5 million, bought back 10,233 shares during 3Q19.  As of September 30, 2019, 350,189 shares had been repurchased at an average price of $8.71 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 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   Nine Months Ended
    September 30,   June 30,   September 30,   September 30,   September 30,
      2019       2019     2018       2019     2018  
                     
Interest income                    
Loans, including fees   $ 11,306     $ 10,907   $ 10,612     $ 32,754   $ 30,283  
Investment securities and other     413       460     589       1,357     1,307  
Total interest income     11,719       11,367     11,201       34,111     31,590  
Interest expense                    
Deposits     2,615       2,583     2,222       7,642     5,373  
Other borrowings     306       286     351       950     928  
Total interest expense     2,921       2,869     2,573       8,592     6,301
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