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Community West Bancshares Earns $1.4 Million in 1Q17; Fueled by Strong Loan Growth of 6% Over The Prior Quarter; Increases Quarterly Cash Dividend by 14% to $0.04 Per Common Share

GOLETA, Calif., April 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 of $1.4 million, or $0.16 per diluted share, in the first quarter of 2017 (1Q17) compared to $1.3 million, or $0.16 per diluted share, in the fourth quarter of 2016 (4Q16) and $1.3 million, or $0.15 per diluted share, the first quarter of 2016 (1Q16).

“We made excellent progress with executing on our growth strategies during the first quarter of 2017,” stated Martin E. Plourd, President and Chief Executive Officer. “During the first quarter we relocated our Santa Maria branch to a better location and opened a new branch in Oxnard. The strong loan growth of 6% was a result of our expansion in San Luis Obispo and Ventura counties. Net income increased nearly 6% year-over-year, despite this investment in growing our franchise. We also maintained a healthy net interest margin, further improved our asset quality and maintained our previous momentum with robust loan growth. We remain focused on competing for business in our local markets and expanding our franchise through organic growth.”

First Quarter 2017 Financial Highlights

  • Net income was $1.4 million, or $0.16 per diluted share.
  • Return on average assets was 0.76%.
  • Return on average common equity was 8.28%.
  • Net interest margin was 4.45%.
  • Net loans increased 6.0% to $660.8 million at March 31, 2017, compared to $623.4 million three months earlier and increased 22.3% compared to $540.2 million a year ago.
  • Total assets increased 20.2% to $748.3 million at March 31, 2017, compared to $622.8 million a year ago.
  • Nonaccrual loans, net, decreased 52.1% to $2.3 million, or 0.34% of net loans at March 31, 2017, compared to $4.8 million, or 0.88% of net loans, a year ago, representing the lowest level since 3Q07.
  • Non-interest-bearing deposits increased 45.3% to $102.6 million at March 31, 2017, compared to $70.6 million a year ago.
  • Book value per common share increased 6.6% to $8.22 at March 31, 2017, compared to $7.71 a year ago.
  • The Bank continues to be well-capitalized per banking regulations with its total risk-based capital ratio at 11.60% and Tier 1 leverage ratio at 9.41% at March 31, 2017.

Income Statement

“Our net interest margin remained healthy at 4.45%,” said Susan C. Thompson, Executive Vice President and Chief Financial Officer. First quarter net interest margin was 4.45% compared to 4.63% in 4Q16, which included 12bp of one time interest items, and 4.45% in 1Q16.

Net interest income for 1Q17 was $7.8 million, which was unchanged compared to the preceding quarter and a 15.7% increase compared to $6.7 million in 1Q16. Non-interest income increased 19.1% to $641,000 in 1Q17, compared to $538,000 in 4Q16 and 10.7% compared to $579,000 in 1Q16.

Non-interest expenses totaled $5.9 million in 1Q17, compared to $5.3 million in 1Q16 and unchanged from the preceding quarter. The increase is largely due to costs associated with the business development of the Bank’s Northern region, consisting of San Luis Obispo and north Santa Barbara counties and the addition of the Oxnard location in the Southern region.

Balance Sheet

“The loan portfolio increased again during the quarter, with good production in targeted loan types, including an increase in commercial real estate loans,” said Plourd. “The regional economy remains solid and we continue to see potential for strong loan growth.”

Net loans increased 6.0% to $660.8 million at March 31, 2017, compared to $623.4 million at December 31, 2016, and increased 22.3% compared to $540.2 million a year ago. Commercial real estate loans outstanding were up 63.8% from year ago levels to $303.8 million at March 31, 2017, and comprise 45.4% of the total loan portfolio. Manufactured housing loans were up 11.2% from year ago levels to $202.3 million and represent 30.3% of total loans. Commercial loans decreased 3.5% from year ago levels to $103.6 million and represent 15.5% of the total loan portfolio and SBA loans decreased 13.6% from a year ago to $37.0 million and represent 5.5% of the total loan portfolio.

Total assets were $748.3 million at March 31, 2017, a 5.3% increase compared to $710.6 million three months earlier and a 20.2% increase compared to $622.8 million one year ago. Deposits increased 4.6% to $640.1 million at March 31, 2017, compared to $612.2 million at December 31, 2016, and grew 17.2% compared to $546.1 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 $456.1 million at March 31, 2017 and comprise 71.2% of total deposits, compared to $405.5 million, or 74.3% of total deposits, a year ago.

Stockholders’ equity was $66.6 million at March 31, 2017, compared to $65.3 million at December 31, 2016, and $62.4 million a year ago. Book value per common share improved to $8.22 at March 31, 2017, compared to $8.07 at December 31, 2016, and $7.71 a year ago.

Credit Quality

“Due to strong loan growth, we recorded a provision for loan losses for the fourth consecutive quarter,” said Plourd. The loan loss provision was $144,000 in 1Q17, compared to $116,000 in 4Q16, and a credit to provision of $247,000 in 1Q16. Net loan recoveries were $177,000 in 1Q17 compared to $158,000 in 4Q16 and $150,000 in 1Q16.

The allowance for loan losses was $7.8 million at March 31, 2017, or 1.28% of total loans held for investment, compared to 1.31% at December 31, 2016, and 1.41% a year ago. Net nonaccrual loans decreased to $2.3 million, or 0.34% of total loans at March 31, 2017, compared to $2.4 million, or 0.38% of total loans, three months earlier, and decreased 52.1% compared to $4.8 million, or 0.88% of total loans, a year ago.

Of the $2.3 million in net nonaccrual loans, $740,000 were manufactured housing loans, $546,000 were commercial loans, $368,000 were home equity loans, $212,000 were SBA 504 1st loans, $188,000 were single family real estate loans, $137,000 were commercial real estate loans and $111,000 were SBA 7A loans.

Other assets acquired through foreclosure totaled $145,000 at March 31, 2017, compared to $137,000 three months earlier and $176,000 a year earlier.

Cash Dividend Declared

The Company’s Board of Directors increased its quarterly cash dividend by 14.3% to $0.04 per common share, payable May 31, 2017 to common shareholders of record on May 12, 2017. The current annualized yield, based on the closing price of CWBC shares of $10.20 on March 31, 2017, was 1.6%.

Stock Repurchase Program

On August 31, 2015, the Company announced that the Board of Directors authorized a common stock repurchase program of up to $3 million. As of March 31, 2017, 187,569 shares (none in 1Q17) 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. 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
March 31, December 31, March 31,
2017 2016 2016
Interest income
Loans, including fees $ 8,442 $ 8,280 $ 7,175
Investment securities and other 261 302 269
Total interest income 8,703 8,582 7,444
Interest expense
Deposits 858 763 651
Other borrowings and convertible debt 71 57 72
Total interest expense 929 820 723
Net interest income 7,774 7,762 6,721
Provision (credit) for loan losses 144 116 (247)
Net interest income after provision for loan losses 7,630 7,646 6,968
Non-interest income
Other loan fees 303 215 275
Document processing fees 133 115 115
Service charges 96 95 90
Other 109 113 99
Total non-interest income 641 538 579
Non-interest expenses
Salaries and employee benefits 3,931 3,628 3,452
Occupancy, net 645 633 486
Professional services 179 220 179
Data processing 168 280 171
Depreciation 163 192 149
Advertising and marketing 156 169 81
FDIC assessment 110 106 97
Loan servicing and collection 106 11 179
Stock-based compensation 84 77 80
Other 381 554 462
Total non-interest expenses 5,923 5,870 5,336
Income before provision for income taxes 2,348 2,314 2,211
Provision for income taxes 992 974 928
Net income $ 1,356 $ 1,340 $ 1,283
Earnings per share:
Basic $ 0.17 $ 0.16 $ 0.16
Diluted $ 0.16 $ 0.16 $ 0.15

COMMUNITY WEST BANCSHARES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in 000's, except per share data)
March 31, December 31, March 31,
2017 2016 2016
Cash and cash equivalents $ 1,811 $ 2,401 $ 2,499
Time and interest-earning deposits in other financial institutions 28,366 31,715 26,538
Investment securities 35,389 31,683 35,633
Loans:
Commercial 103,581 105,290 107,386
Commercial real estate 303,795 272,142 185,458
SBA 37,036 36,488 42,890
Manufactured housing 202,332 194,222 182,018
Single family real estate 11,728 12,750 17,919
HELOC 10,462 10,292 10,885
Other (388) (365) 425
Total loans 668,546 630,819 546,981
Loans, net
Held for sale 59,811 61,416 61,897
Held for investment 608,735 569,403 485,084
Less: Allowance for loan losses (7,785) (7,464) (6,819)
Net held for investment 600,950 561,939 478,265
NET LOANS 660,761 623,355 540,162
Other assets 21,973 21,418 17,923
TOTAL ASSETS $ 748,300 $ 710,572 $ 622,755
Deposits
Non-interest-bearing demand $ 102,553 $ 100,372 $ 70,587
Interest-bearing demand 262,008 253,023 250,404
Savings 14,072 14,007 14,294
Certificates of deposit ($250,000 or more) 80,293 77,509 67,995
Other certificates of deposit 181,204 167,325 142,795
Total deposits 640,130 612,236 546,075
Other borrowings 37,000 29,000 10,500
Other liabilities 4,603 4,000 3,741
TOTAL LIABILITIES 681,733 645,236 560,316
Stockholders' equity 66,567 65,336 62,439
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$ 748,300 $ 710,572 $ 622,755
Shares outstanding 8,103 8,096 8,103
Book value per common share $ 8.22 $ 8.07 $ 7.71

ADDITIONAL FINANCIAL INFORMATION
(Dollars in thousands except per share amounts)(Unaudited)
Three Months Ended Three Months Ended Three Months Ended
PERFORMANCE MEASURES AND RATIOSMar. 31, 2017 Dec. 31, 2016 Mar. 31, 2016
Return on average common equity 8.28% 8.17% 8.23%
Return on average assets 0.76% 0.78% 0.83%
Efficiency ratio 70.39% 70.72% 73.10%
Net interest margin 4.45% 4.63% 4.45%
Three Months Ended Three Months Ended Three Months Ended
AVERAGE BALANCESMar. 31, 2017 Dec. 31, 2016 Mar. 31, 2016
Average assets$ 721,630 $ 679,201 $ 618,283
Average earning assets 708,751 666,280 607,872
Average total loans 650,784 607,989 543,555
Average deposits 626,876 598,197 540,539
Average common equity 66,381 65,247 62,678
EQUITY ANALYSISMar. 31, 2017 Dec. 31, 2016 Mar. 31, 2016
Total common equity$ 66,567 $ 65,336 $ 62,439
Common stock outstanding 8,103 8,096 8,103
Book value per common share$ 8.22 $ 8.07 $ 7.71
ASSET QUALITYMar. 31, 2017 Dec. 31, 2016 Mar. 31, 2016
Nonaccrual loans, net$ 2,302 $ 2,375 $ 4,807
Nonaccrual loans, net/total loans 0.34% 0.38% 0.88%
Other assets acquired through foreclosure, net$ 145 $ 137 $ 176
Nonaccrual loans plus other assets acquired through foreclosure, net$ 2,447 $ 2,512 $ 4,983
Nonaccrual loans plus other assets acquired through foreclosure, net/total assets 0.33% 0.35% 0.80%
Net loan (recoveries)/charge-offs in the quarter$ (177) $ (158) $ (150)
Net (recoveries)/charge-offs in the quarter/total loans (0.03%) (0.03%) (0.03%)
Allowance for loan losses$ 7,785 $ 7,464 $ 6,819
Plus: Reserve for undisbursed loan commitments 113 125 74
Total allowance for credit losses$ 7,898 $ 7,589 $ 6,893
Allowance for loan losses/total loans held for investment 1.28% 1.31% 1.41%
Allowance for loan losses/nonaccrual loans, net 338.18% 314.27% 141.86%
Community West Bank *
Tier 1 leverage ratio 9.41% 10.08% 10.55%
Tier 1 capital ratio 10.38% 11.04% 12.59%
Total capital ratio 11.60% 12.27% 13.84%
INTEREST SPREAD ANALYSISMar. 31, 2017 Dec. 31, 2016 Mar. 31, 2016
Yield on total loans 5.26% 5.42% 5.31%
Yield on investments 2.48% 3.23% 2.58%
Yield on interest earning deposits 0.74% 0.43% 0.57%
Yield on earning assets 4.98% 5.12% 4.93%
Cost of interest-bearing deposits 0.66% 0.60% 0.56%
Cost of total deposits 0.56% 0.54% 0.48%
Cost of borrowings 1.20% 2.00% 2.76%
Cost of interest-bearing liabilities 0.68% 0.63% 0.61%
* Capital ratios are preliminary until the Call Report is filed.

Transmitted on Globe Newswire on April 28, 2017 at 6:00 a.m. PDT.

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

Source:Community West Bancshares