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Community West Bancshares Earns $2.2 Million in Fourth Quarter and $7.0 Million in 2014; Declares Quarterly Common Stock Dividend

GOLETA, Calif., Jan. 26, 2015 (GLOBE NEWSWIRE) -- Community West Bancshares (Community West or the Company), (Nasdaq:CWBC), parent company of Community West Bank (Bank), today reported net income of $2.2 million in the fourth quarter of 2014 (4Q14) compared to $1.7 million in the third quarter of 2014 (3Q14) and $3.1 million in the fourth quarter a year ago (4Q13). Community West's results for 4Q13 included a $2.8 million tax benefit as a result of the reversal of its deferred tax asset valuation allowance. Fourth quarter pretax income increased to $3.7 million, compared to $324,000 in the fourth quarter a year ago. For the full year, Community West earned $7.0 million compared to $9.0 million a year ago. Pretax income increased 94% to $12.0 million for 2014 compared to $6.2 million a year ago.

"In 2014, we generated excellent operating results, producing the highest level of pretax profits in our history. We are successfully growing our franchise, expanding the balance sheet and improving the bottom line," stated Martin E. Plourd, President and Chief Executive Officer. "Our financial results for the quarter show strong profitability, improving asset quality trends and year-over-year loan and deposit growth. By focusing on our customers' needs and delivering the banking services that make them more productive, we look to sustain our loan and deposit growth momentum into 2015."

4Q14 Financial Highlights

  • Net income was $2.2 million compared to $3.1 million in 4Q13.
  • Pretax income was $3.7 million, compared to $324,000 in 4Q13.
  • Net interest margin improved to 4.52% in 4Q14, compared to 4.31% in 3Q14 and 4.40% in 4Q13.
  • Non-interest expenses decreased 9.8% to $4.6 million, compared to $5.1 million in 4Q13.
  • The efficiency ratio improved to 68.56% from 81.01% in 4Q13.
  • Total deposits increased 9.4% to $477.1 million at December 31, 2014, compared to $436.1 million a year ago.
  • Net loans increased 5.5% to $487.3 million at December 31, 2014, compared to $462.0 million a year earlier.
  • Nonaccrual loans, net, decreased to $11.0 million at December 31, 2014 compared to $16.8 million a year ago.
  • Other assets acquired through foreclosure decreased 71% to $137,000 at December 31, 2014, compared to $475,000 three months earlier and decreased 96% compared to $3.8 million a year earlier.
  • The Company redeemed $782,000 of preferred stock on October 6, 2014 and, subsequently, $702,000 on January 2, 2015.
  • Book value per common share increased 10.8% to $7.31 at December 31, 2014, compared to $6.60 a year ago.
  • Community West Bank's capital ratios continue to be strong with its total risk-based capital ratio at 15.91% and Tier 1 leverage ratio at 11.64% at December 31, 2014.

Including $144,000 of preferred stock dividends and discount on partial redemptions, the net income available to common stockholders was $2.0 million, or $0.24 per diluted share, in 4Q14 compared to $1.5 million, or $0.18 per diluted share, in 3Q14 and $2.9 million, or $0.34 per diluted share, in 4Q13.

Credit Quality

"As a result of strong asset quality, including the strong loan loss reserves already in place, we recorded a negative provision for loan losses of $1.6 million in 4Q14, compared to a negative provision of $1.2 million in 3Q14, and a provision of $899,000 in the fourth quarter a year ago," said Plourd. During the fourth quarter, Community West had net loan recoveries of $216,000, compared to net charge-offs of $82,000 in 3Q14 and net charge-offs of $345,000 in 4Q13.

The total allowance for loan losses totaled $7.9 million at December 31, 2014, or 1.84% of total loans held for investment, compared to 2.14% at September 30, 2014, and 2.98% a year ago. Nonaccrual loans, net, were $11.0 million, or 2.23% of total loans at December 31, 2014, compared to $10.9 million, or 2.19% of total loans, three months earlier, and decreased 34.5% compared to $16.8 million, or 3.55% of total loans, a year ago.

Of the $11.0 million in net nonaccrual loans, $3.1 million (28.2%) were commercial loans, $3.0 million (27.3%) were commercial real estate loans, $1.7 million (15.5%) were SBA loans, $1.5 million (13.6%) were manufactured housing loans, $1.0 million (9.1%) were SBA 504 1st loans, $609,000 (5.4%) were single family real estate loans and $86,000 (0.9%) were home equity line of credit loans.

Other assets acquired through foreclosure decreased 71.1% to $137,000 at December 31, 2014, compared to $475,000 three months earlier and decreased 96.4% compared to $3.8 million a year earlier. Nonaccrual loans plus other assets acquired through foreclosure, net of SBA/USDA guarantees, totaled $11.2 million, or 2.0% of total assets, at December 31, 2014, compared to $11.4 million, or 2.0% of total assets, three months earlier and $18.4 million, or 3.4% of total assets, a year ago.

Income Statement

"Higher than industry average yields on our loan portfolio led to a solid net interest margin during the quarter, despite the current low-interest rate environment," said Charles G. Baltuskonis, Executive Vice President and Chief Financial Officer. Community West's fourth quarter net interest margin improved 21 basis points to 4.52%, compared to 4.31% in 3Q14 and improved 12 basis points compared to 4.40% in 4Q13. For the full year, the net interest margin was 4.50% compared to 4.51% a year ago.

Fourth quarter net interest income was $6.3 million, a 3.3% increase compared to $6.1 million in the preceding quarter and an 8.6% increase compared to $5.8 million in 4Q13. For the full year, Community West's net interest income increased 5.1% to $24.7 million compared to $23.5 million for 2013. Non-interest income was $471,000 in 4Q14 compared to $552,000 in 3Q14 and $546,000 in 4Q13. In 2014, non-interest income was $2.2 million compared to $2.8 million in 2013.

Fourth quarter non-interest expenses decreased to $4.6 million, down 6.1% compared to $4.9 million in 3Q14 and a 9.8% decrease compared to $5.1 million in 4Q13. In 2014, non-interest expenses decreased 9.0% to $20.1 million compared to $22.1 million in 2013. The decrease in non-interest expenses for the quarter and year is in part due to the improved credit metrics, which resulted in the decline in loan collection expenses and recoveries or gains associated with real estate owned. "In addition, we are focused on controlling overhead costs and improving operating efficiencies," Plourd noted. Community West's fourth quarter efficiency ratio improved to 68.56% from 73.70% in 3Q14 and 81.01% in 4Q13.

Balance Sheet

"The loan pipeline had a relatively flat quarter of activity, primarily due to some large payoffs, but for all of 2014, net loans increased 5.5% year over year," said Baltuskonis. Net loans were $487.3 million at December 31, 2014, compared to $490.0 million at September 30, 2014, and $462.0 million a year ago. Manufactured housing loans were down 1.4% from year ago levels to $169.7 million and represent 34.3% of total loans. Commercial real estate loans outstanding were up 11.7% from year ago levels to $159.4 million at December 31, 2014, and comprise 32.2% of the total loan portfolio. Commercial loans increased 19.9% from year ago levels to $74.8 million and represent 15.1% of the total loan portfolio and SBA loans decreased 13.2% from a year ago to $62.0 million and represent 12.5% of the total loan portfolio.

Total deposits increased 9.4% to $477.1 million at December 31, 2014, compared to $436.1 million a year ago. At September 30, 2014 total deposits were $484.8 million. Non-interest-bearing deposit accounts increased 9.3% to $57.4 million at December 31, 2014, compared to $52.5 million a year earlier, and interest-bearing deposit accounts increased 6.7% to $275.6 million at December 31, 2014, compared to $258.4 million a year ago. Core deposits, defined as non-interest-bearing checking, interest-bearing checking, money market accounts, savings accounts and retail certificates of deposit totaled $378.1 million at December 31, 2014 and comprise 79.2% of total deposits, compared to $355.9 million, or 81.6% of total deposits, a year ago.

Community West's total assets increased 3.4% to $557.3 million at December 31, 2014, compared to $539.0 million at December 31, 2013. Stockholders' equity was $67.0 million at December 31, 2014, compared to $65.8 million at September 30, 2014, and $67.6 million a year ago. Book value per common share was $7.31 at December 31, 2014 compared to $7.07 at September 30, 2014, and $6.60 a year ago.

Announces Partial Redemption of Preferred Stock

In furtherance of its previously announced Preferred Stock Repayment Strategy, the Company redeemed another $702,000 of its 9% Cumulative Perpetual Preferred Stock, Series A, on January 2, 2015, leaving a remaining balance of $6,312,000. The Company's Board of Directors will continue to consider redemptions, and that any such redemptions are subject to regulatory approvals and will be based on the Company's financial condition and results of operations and overall corporate strategy at the time. It is anticipated that any future redemptions would be payable from future earnings.

Declares Cash Dividend of $0.02 Per Common Share

The Company's Board of Directors has declared a quarterly cash dividend of $0.02 per common share. The dividend will be payable February 27, 2015, to common shareholders of record on February 9, 2015.

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 five full-service California branch banking offices, in Goleta, Santa Barbara, Santa Maria, Ventura and Westlake Village. The principal business activities of the Company are Relationship banking, Mortgage lending and SBA lending.

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,
2014 2014 2013 2014 2013
Interest income
Loans, including fees $ 6,798 $ 6,695 $ 6,556 $ 27,166 $ 27,071
Investment securities and other 220 208 209 838 795
Total interest income 7,018 6,903 6,765 28,004 27,866
Interest expense
Deposits 624 709 678 2,663 2,916
Other borrowings and convertible debt 88 126 280 612 1,416
Total interest expense 712 835 958 3,275 4,332
Net interest income 6,306 6,068 5,807 24,729 23,534
Provision for credit losses (1,575) (1,178) 899 (5,135) (1,944)
Net interest income after provision for credit losses 7,881 7,246 4,908 29,864 25,478
Non-interest income
Other loan fees 184 279 189 904 1,033
Document processing fees 97 103 94 394 463
Service charges 69 72 73 284 318
Gains from loan sales, net 36 57 27 186 361
Other 85 41 163 429 656
Total non-interest income 471 552 546 2,197 2,831
Non-interest expenses
Salaries and employee benefits 2,846 2,888 2,827 12,154 12,783
Occupancy, net 475 479 449 1,852 1,814
Professional services 384 436 306 1,551 1,219
Advertising and marketing 179 129 138 608 512
Loan servicing and collection 259 187 333 845 1,444
Data processing 145 144 146 570 549
FDIC assessment 85 83 237 338 1,046
Depreciation 86 82 74 324 300
Stock options 38 29 16 308 59
Net (gain) loss on sales/write-downs of foreclosed real estate and repossessed assets (267) (18) 28 (435) 388
Other 416 440 576 1,966 2,021
Total non-interest expenses 4,646 4,879 5,130 20,081 22,135
Income before provision for income taxes 3,706 2,919 324 11,980 6,174
Income tax expense 1,520 1,207 (2,812) 4,934 (2,812)
Net Income 2,186 1,712 3,136 7,046 8,986
Dividends and accretion on preferred stock 159 176 253 937 1,039
Discount on partial redemption of preferred stock (15) -- -- (159) --
Net income available to common stockholders $ 2,042 $ 1,536 $ 2,883 $ 6,268 $ 7,947
Earnings per share:
Basic $ 0.25 $ 0.19 $ 0.37 $ 0.77 $ 1.13
Diluted $ 0.24 $ 0.18 $ 0.34 $ 0.75 $ 0.98
COMMUNITY WEST BANCSHARES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in 000's, except per share data)
December 31, September 30, December 31,
2014 2014 2013
Cash and cash equivalents $ 1,631 $ 1,486 $ 1,472
Time and interest-earning deposits in other financial institutions 17,427 27,955 18,105
Investment securities 30,641 31,104 28,160
Loans:
Commercial 74,792 72,804 62,420
Commercial real estate 159,432 164,277 142,678
SBA 61,963 62,267 71,352
Manufactured housing 169,662 169,910 172,055
Single family real estate 15,744 14,065 10,150
HELOC 13,481 14,820 15,418
Other 59 1,134 140
Total loans 495,133 499,277 474,213
Loans, net
Held for sale 66,759 67,376 64,399
Held for investment 428,374 431,901 409,814
Less: Allowance (7,877) (9,236) (12,208)
Net held for investment 420,497 422,665 397,606
NET LOANS 487,256 490,041 462,005
Other assets 20,363 21,557 29,258
TOTAL ASSETS $ 557,318 $ 572,143 $ 539,000
Deposits
Non-interest-bearing demand $ 57,364 $ 63,185 $ 52,461
Interest-bearing demand 275,631 277,743 258,445
Savings 15,265 16,218 16,158
CDs over 100K 115,588 113,694 95,979
CDs under 100K 13,236 13,910 13,092
Total Deposits 477,084 484,750 436,135
Other borrowings 10,000 18,000 31,442
Other liabilities 3,227 3,639 3,867
TOTAL LIABILITIES 490,311 506,389 471,444
Stockholders' equity 67,007 65,754 67,556
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 557,318 $ 572,143 $ 539,000
Shares outstanding 8,203 8,203 7,867
Book value per common share $ 7.31 $ 7.07 $ 6.60
ADDITIONAL FINANCIAL INFORMATION
(Dollars in thousands except per share amounts)(Unaudited)
Quarter Ended Quarter Ended Quarter Ended Twelve Months Ended
PERFORMANCE MEASURES AND RATIOS Dec. 31, 2014 Sep. 30, 2014 Dec. 31, 2013 Dec. 31, 2014 Dec. 31, 2013
Return on average common equity 14.70% 11.86% 25.27% 12.51% 20.50%
Return on average assets 1.54% 1.19% 2.33% 1.25% 1.69%
Efficiency ratio 68.56% 73.70% 81.01% 74.58% 83.96%
Net interest margin 4.52% 4.31% 4.40% 4.50% 4.51%
Quarter Ended Quarter Ended Quarter Ended Twelve Months Ended
AVERAGE BALANCES Dec. 31, 2014 Sep. 30, 2014 Dec. 31, 2013 Dec. 31, 2014 Dec. 31, 2013
Average assets $ 564,634 $ 571,895 $ 534,434 $ 562,474 $ 531,338
Average earning assets 553,564 559,156 523,706 549,136 521,870
Average total loans 497,211 495,213 458,270 489,598 457,847
Average deposits 480,878 484,359 431,862 469,477 430,452
Average equity (including preferred stock) 66,041 65,059 64,800 67,600 59,303
Average common equity (excluding preferred stock) 58,984 57,263 49,234 56,313 43,837
EQUITY ANALYSIS Dec. 31, 2014 Sep. 30, 2014 Dec. 31, 2013
Total equity $ 67,007 $ 65,754 $ 67,556
Less: senior preferred stock 7,014 7,796 15,600
Total common equity $ 59,993 $ 57,958 $ 51,956
Common stock outstanding 8,203 8,203 7,867
Book value per common share $ 7.31 $ 7.07 $ 6.60
ASSET QUALITY Dec. 31, 2014 Sep. 30, 2014 Dec. 31, 2013
Nonaccrual loans, net $ 11,027 $ 10,939 $ 16,837
Nonaccrual loans, net/total loans 2.23% 2.19% 3.55%
Other assets acquired through foreclosure $ 137 $ 475 $ 3,811
Less: SBA/USDA-guaranteed amounts 0 0 2,250
Other assets acquired through foreclosure, net $ 137 $ 475 $ 1,561
Nonaccrual loans plus other assets acquired through foreclosure, net $ 11,164 $ 11,414 $ 18,398
Nonaccrual loans plus other assets acquired through foreclosure, net/total assets 2.00% 1.99% 3.41%
Net loan (recoveries)/charge-offs in the quarter $ (216) $ 82 $ 345
Net (recoveries)/charge-offs in the quarter/total loans -0.04% 0.02% 0.07%
Allowance for loan losses $ 7,877 $ 9,236 $ 12,208
Plus: Reserve for undisbursed loan commitments 39 61 68
Total allowance for credit losses $ 7,916 $ 9,297 $ 12,276
Total allowance for loan losses/total loans held for investment 1.84% 2.14% 2.98%
Total allowance for loan losses/nonaccrual loans 71.43% 84.43% 72.51%
Community West Bancshares *
Tier 1 leverage ratio 11.86% 11.51% 12.68%
Tier 1 risk-based capital ratio 14.94% 14.47% 15.65%
Total risk-based capital ratio 16.19% 15.73% 17.26%
Community West Bank *
Tier 1 leverage ratio 11.64% 11.29% 12.68%
Tier 1 risk-based capital ratio 14.66% 14.19% 15.57%
Total risk-based capital ratio 15.91% 15.45% 16.84%
INTEREST SPREAD ANALYSIS Dec. 31, 2014 Sep. 30, 2014 Dec. 31, 2013
Yield on total loans 5.43% 5.36% 5.68%
Yield on investments 2.34% 2.18% 2.37%
Yield on interest earning deposits 0.35% 0.28% 0.28%
Yield on earning assets 5.03% 4.90% 5.12%
Cost of interest-bearing deposits 0.59% 0.67% 0.71%
Cost of total deposits 0.51% 0.58% 0.62%
Cost of FHLB advances 2.50% 2.78% 2.87%
Cost of interest-bearing liabilities 0.65% 0.75% 0.92%
* Capital ratios are preliminary until the Call Report is filed.

CONTACT: Charles G. Baltuskonis, EVP & CFO 805.692.5821 www.communitywestbank.comSource:Community West Bancshares