GOLETA, Calif., July 26, 2019 (GLOBE NEWSWIRE) -- Community West Bancshares (Community West or the Company), (NASDAQ: CWBC), parent company of Community West Bank (Bank), today reported earnings of $1.6 million, or $0.18 per diluted share, for the second quarter of 2019 (2Q19), compared to $1.5 million, or $0.18 per diluted share, in 1Q19, and $1.9 million, or $0.21 per diluted share, in 2Q18.

In the first six months of 2019, net income was $3.1 million, or $0.36 per diluted share, compared to $3.7 million, or $0.42 per diluted share, in the first six months of 2018.

“Our operating performance in the second quarter generated solid net interest income and an improved net interest margin, due to strong loan growth, higher loan yields and an improved asset mix,” stated Martin E. Plourd, President and Chief Executive Officer.  “While our earnings have been impacted by branch expansion costs over these last several quarters, we are now beginning to see the positive results of our efforts, with total demand deposits increasing 24% year-over-year.  With an appreciation for the patience of our shareholders and our recent office expansion completed, our focus moving forward is growing revenue, reducing reliance on expensive non-core funding, and intently rationalizing our non-interest expenses.”

Second Quarter 2019 Financial Highlights:

• Net income was $1.6 million, or $0.18 per diluted share, in 2Q19, compared to $1.5 million, or $0.18 per diluted share in 1Q19, and $1.9 million, or $0.21 per diluted share in 2Q18.
• Net interest margin improved to 4.07% for 2Q19, compared to 3.99% for 1Q19 and compared to 4.06% for 2Q18.
• Total demand deposits increased $33.7 million to $456.3 million at June 30, 2019, compared to $422.6 million at March 31, 2019, and increased $88.4 million compared to $367.9 million at June 30, 2018. 
• Total loans increased $18.8 million to $788.9 million at June 30, 2019, compared to $770.1 million at March 31, 2019, and increased $29.0 million compared to $759.9 million at June 30, 2018. 
• Book value per common share increased to $9.19 at June 30, 2019, compared to $9.05 at March 31, 2019, and $8.90 at June 30, 2018. 
• Provision for loan losses was $177,000 for the quarter, compared to a credit for loan losses of ($57,000) for 1Q19, and provision for loan losses of $117,000 for 2Q18.
• Net nonaccrual loans decreased to $3.0 million at June 30, 2019, compared to $3.3 million at March 31, 2019, and $3.7 million at June 30, 2018.  The Bank had $1.1 million of other real estate owned at June 30, 2019.

Income Statement

Second quarter net interest income increased to $8.5 million, compared to $8.2 million in 1Q19 and $8.3 million in 2Q18.  In the first six months of 2019 net interest income was $16.7 million, which was unchanged compared to the first six months of 2018. 

Non-interest income was $692,000 in 2Q19, compared to $604,000 in 1Q19 and $688,000 in 2Q18.  Non-interest income was $1.3 million in both the first six months of 2019 and 2018.

“Our net interest margin improved eight basis points in the second quarter compared to the preceding quarter as a result of improved yields on earning assets and stabilization in our cost of funds,” said Susan C. Thompson, Executive Vice President and Chief Financial Officer.  Second quarter net interest margin improved to 4.07%, from 3.99% in 1Q19, and 4.06% in 2Q18.  In the first six months of 2019, the net interest margin was 4.03%, compared to 4.15% in the prior year period.

Non-interest expenses totaled $6.8 million in 2Q19, compared to $6.7 million in the preceding quarter and $6.3 million in the prior year second quarter.  In the first six months of 2019, non-interest expense was $13.5 million, compared to $12.8 million in the first six months of 2018.  The year-over-year increase for the six-month period was primarily attributable to the Company’s expansion, including the most recent opening of our full-service branch in Paso Robles in the fourth quarter of 2018.

Balance Sheet

Total loans increased $18.8 million, or 2.4% to $788.9 million at June 30, 2019, compared to $770.1 million at March 31, 2019, and increased $29.0 million, or 3.8%, compared to $759.9 million at June 30, 2018.  

Commercial real estate loans outstanding (which include SBA 504, construction and land) were up 7.3% from year ago levels to $391.3 million at June 30, 2019 and comprise 49.6% of the total loan portfolio.  Manufactured housing loans were up 8.0% from year ago levels to $253.3 million and represent 32.1% of total loans.  Commercial loans (which include agriculture loans) were down 8.2% from year ago levels to $108.6 million and represent 13.8% of the total loan portfolio.

Total deposits increased $30.4 million, or 4.1% to $765.1 million at June 30, 2019, compared to $734.7 million at March 31, 2019, and increased $62.5 million, or 8.9% compared to $702.6 million at June 30, 2018.  Non-interest bearing demand deposits decreased to $112.5 million at June 30, 2019 compared to $135.5 million at March 31, 2019, but increased $5.3 million compared to $107.2 million at June 30, 2018.  Interest-bearing demand deposits increased $56.7 million to $343.8 million compared to $287.1 million at March 31, 2019 and increased $83.1 million compared to $260.7 million at June 30, 2018.  Certificates of deposit which include broker deposits decreased $4.5 million to $292.5 million at June 30, 2019 compared to $297.0 million at March 31, 2019 and decreased $27.7 million compared to $320.2 million at June 30, 2018.

Total assets were $905.6 million at June 30, 2019, compared to $882.4 million at March 31, 2019 and increased $40.4 million, or 4.7%, compared to $865.1 million at June 30, 2018.  Stockholders’ equity increased to $77.8 million at June 30, 2019, compared to $76.5 million at March 31, 2019, and $73.4 million at June 30, 2018.  Book value per common share increased to $9.19 at June 30, 2019, compared to $9.05 at March 31, 2019, and $8.90 at June 30, 2018. 

Credit Quality

Due to strong loan growth in the second quarter, the Company recorded a provision for loan losses of $177,000.  This compares to a credit to the provision for loan losses of ($57,000) in 1Q19 and provision for loan losses of $117,000 in 2Q18.  The allowance for loan losses including the reserve for undisbursed loans was $9.0 million at June 30, 2019, or 1.20% of total loans held for investment, compared to 1.20% at March 31, 2019, and 1.22% a year ago.  Net nonaccrual loans plus net other assets acquired through foreclosure were $4.1 million at June 30, 2019, compared to $3.3 million at March 31, 2019, and $3.9 million at June 30, 2018.  

At June 30, 2019, net nonaccrual loans consisted of $2.3 million of commercial loans including commercial agriculture, $0.3 million of manufactured housing loans, $0.2 million of home equity loans, $0.1 million of SBA loans, and $0.1 million of commercial real estate loans.

There was $1.1 million in other assets acquired through foreclosure as of June 30, 2019.  This compares to no other assets acquired through foreclosure at March 31, 2019, and $213,000 in 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 August 30, 2019 to common shareholders of record on August 13, 2019.  The current annualized yield, based on the closing price of CWBC shares of $9.65 on June 30, 2019, was 2.23%.

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												Six Months Ended
	June 30,				March 31,				June 30,				June 30,				June 30,
	2019				2019				2018				2019				2018
Interest income
Loans, including fees	$	10,907			$	10,541			$	10,020			$	21,448			$	19,671
Investment securities and other		460				484				381				944				718
Total interest income		11,367				11,025				10,401				22,392				20,389
Interest expense
Deposits		2,583				2,444				1,708				5,027				3,151
Other borrowings		286				358				382				644				577
Total interest expense		2,869				2,802				2,090				5,671				3,728
Net interest income		8,498				8,223				8,311				16,721				16,661
Provision (credit) for loan losses		177				(57	)			117				120				(27	)
Net interest income after provision for loan losses		8,321				8,280				8,194				16,601				16,688
Non-interest income
Other loan fees		323				258				323				581				619
Document processing fees		124				87				130				211				247
Service charges		139				139				122				278				238
Other		106				120				113				226				223
Total non-interest income		692				604				688				1,296				1,327
Non-interest expenses
Salaries and employee benefits		4,318				4,381				4,042				8,699				8,191
Occupancy, net		768				782				741				1,550				1,525
Professional services		405				381				301				786				605
Data processing		201				224				206				425				418
Depreciation		218				213				186				431				353
FDIC assessment		154				170				164				324				378
Advertising and marketing		230				129				163				359				333
Stock-based compensation		97				95				87				192				203
Other		369				342				367				711				784
Total non-interest expenses		6,760				6,717				6,257				13,477				12,790
Income before provision for income taxes		2,253				2,167				2,625				4,420				5,225
Provision for income taxes		673				657				758				1,330				1,544
Net income	$	1,580			$	1,510			$	1,867			$	3,090			$	3,681
Earnings per share:
Basic	$	0.19			$	0.18			$	0.23			$	0.37			$	0.45
Diluted	$	0.18			$	0.18			$	0.21			$	0.36			$	0.42

COMMUNITY WEST BANCSHARES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in 000's, except per share data)
	June 30,				March 31,				June 30,				December 31,
		2019				2019				2018				2018
Cash and cash equivalents	$	2,032			$	1,907			$	3,376			$	2,983
Interest-earning deposits in other financial institutions		55,149				51,499				50,986				53,932
Investment securities		30,414				31,562				33,720				32,353
Loans:
Commercial		108,599				116,103				118,263				118,518
Commercial real estate		391,293				369,206				364,679				365,809
SBA		17,560				18,070				22,724				19,077
Manufactured housing		253,250				248,669				234,598				247,114
Single family real estate		11,575				11,611				10,682				11,261
HELOC		6,696				6,585				9,502				6,756
Other		(65	)			(178	)			(558	)			(292	)
Total loans		788,908				770,066				759,890				768,243
Loans, net
Held for sale		45,447				46,995				52,886				48,355
Held for investment		743,461				723,071				707,004				719,888
Less: Allowance for loan losses		(8,887	)			(8,648	)			(8,622	)			(8,691	)
Net held for investment		734,574				714,423				698,382				711,197
NET LOANS		780,021				761,418				751,268				759,552
Other assets		37,951				36,008				25,777				28,471
TOTAL ASSETS	$	905,567			$	882,394			$	865,127			$	877,291
Deposits
Non-interest-bearing demand	$	112,463			$	135,495			$	107,168			$	108,161
Interest-bearing demand		343,841				287,095				260,708				270,431
Savings		16,264				15,128				14,515				14,641
Certificates of deposit ($250,000 or more)		90,170				91,580				88,752				93,439
Other certificates of deposit		202,373				205,431				231,460				229,334
Total deposits		765,111				734,729				702,603				716,006
Other borrowings		46,000				52,750				81,843				75,000
Other liabilities		16,627				18,462				7,233				10,134
TOTAL LIABILITIES		827,738				805,941				791,679				801,140
Stockholders' equity		77,829				76,453				73,448				76,151
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	905,567			$	882,394			$	865,127			$	877,291
Common shares outstanding		8,465				8,450				8,254				8,533
Book value per common share	$	9.19			$	9.05			$	8.90			$	8.92

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	June 30, 2019				March 31, 2019				June 30, 2018				June 30, 2019				June 30, 2018
Return on average common equity		8.18	%			7.99	%			10.26	%			8.09	%			10.28	%
Return on average assets		0.73	%			0.71	%			0.90	%			0.72	%			0.90	%
Efficiency ratio		73.56	%			76.10	%			69.54	%			74.80	%			71.11	%
Net interest margin		4.07	%			3.99	%			4.06	%			4.03	%			4.15	%
	Three Months Ended				Three Months Ended				Three Months Ended				Six Months Ended
AVERAGE BALANCES	June 30, 2019				March 31, 2019				June 30, 2018				June 30, 2019				June 30, 2018
Average assets	$	864,583			$	859,684			$	836,394			$	862,146			$	824,611
Average earning assets		838,104				834,944				820,854				836,533				809,133
Average total loans		777,828				768,253				750,575				773,067				743,640
Average deposits		726,366				716,953				704,251				721,685				703,319
Average common equity		77,432				76,683				72,993				77,059				72,217
EQUITY ANALYSIS	June 30, 2019				March 31, 2019				June 30, 2018
Total common equity	$	77,829			$	76,453			$	73,448
Common stock outstanding		8,465				8,450				8,254
Book value per common share	$	9.19			$	9.05			$	8.90
ASSET QUALITY	June 30, 2019				March 31, 2019				June 30, 2018
Nonaccrual loans, net	$	3,016			$	3,257			$	3,704
Nonaccrual loans, net/total loans		0.38	%			0.42	%			0.49	%
Other assets acquired through foreclosure, net	$	1,074			$	-			$	213
Nonaccrual loans plus other assets acquired through foreclosure, net	$	4,090			$	3,257			$	3,917
Nonaccrual loans plus other assets acquired through foreclosure, net/total assets		0.45	%			0.37	%			0.45	%
Net loan (recoveries)/charge-offs in the quarter	$	(62	)		$	(14	)		$	(47	)
Net (recoveries)/charge-offs in the quarter/total loans		(0.01	%)			0.00	%			(0.01	%)
Allowance for loan losses	$	8,887			$	8,648			$	8,622
Plus: Reserve for undisbursed loan commitments		81				87				97
Total allowance for credit losses	$	8,968			$	8,735			$	8,719
Allowance for loan losses/total loans held for investment		1.20	%			1.20	%			1.22	%
Allowance for loan losses/nonaccrual loans, net		294.66	%			265.52	%			232.78	%
Community West Bank *
Tier 1 leverage ratio		8.66	%			8.63	%			8.88	%
Tier 1 capital ratio		9.53	%			9.62	%			10.10	%
Total capital ratio		10.67	%			10.76	%			11.28	%
INTEREST SPREAD ANALYSIS	June 30, 2019				March 31, 2019				June 30, 2018
Yield on total loans		5.62	%			5.56	%			5.35	%
Yield on investments		3.89	%			3.55	%			2.74	%
Yield on interest earning deposits		1.89	%			2.22	%			1.49	%
Yield on earning assets		5.44	%			5.36	%			5.08	%
Cost of interest-bearing deposits		1.70	%			1.64	%			1.16	%
Cost of total deposits		1.43	%			1.38	%			0.97	%
Cost of borrowings		2.64	%			2.91	%			2.90	%
Cost of interest-bearing liabilities		1.76	%			1.74	%			1.30	%
* Capital ratios are preliminary until the Call Report is filed.

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