GOLETA, Calif., July 25, 2013 (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 $2.1 million in the second quarter of 2013 (2Q13) compared to $1.1 million in the first quarter of 2013 (1Q13) and a net loss of $591,000 in the second quarter a year ago (2Q12). In the first six months of the year, Community West earned $3.2 million compared to $228,000 in the first six months of 2012.
"We were profitable for the fourth consecutive quarter and have made progress with operating efficiencies while keeping a strong net interest margin," stated Martin E. Plourd, President and Chief Executive Officer. "Credit quality metrics have stabilized, with total nonaccrual loans at just over half the levels that they were as of March 31, 2012, and our capital ratios continue to strengthen. As we look forward, we continue to focus on growing the Bank operations and increasing our lending outreach in the communities we serve."
2Q13 Financial Highlights
- Net income of $2.1 million.
- Earnings of $0.23 per diluted share.
- Net interest margin continued to be strong and was 4.81% in 2Q13, compared to 4.78% in both 1Q13 and 2Q12.
- Nonaccrual loans were $20.7 million at June 30, 2013, compared to $19.7 million at March 31, 2013 and $32.8 million at June 30, 2012.
- Net real estate owned (REO) and repossessed assets, after subtracting the USDA/SBA guarantees, totaled $1.5 million at June 30, 2013, compared to $1.9 million at March 31, 2013 and $2.1 million at June 30, 2012.
- The total allowance for loan losses equaled 3.14% of total loans held for investment at June 30, 2013, compared to 3.54% at March 31, 2013 and 3.59% a year ago.
- Community West Bank's capital ratios continue to strengthen - Total risk-based capital ratio was 16.10% and Tier 1 leverage ratio was 11.65% at June 30, 2013, an increase compared to a Total risk-based capital ratio of 15.63% and Tier 1 leverage ratio of 11.34% at March 31, 2013. The Bank's regulatory agreement requires that ratios of 12% and 9%, respectively, be maintained.
Including $262,000 of dividends and accretion on preferred stock, the net income available to common stockholders was $1.9 million, or $0.23 per diluted share, in 2Q13 compared to net income available to common stockholders of $827,000, or $0.11 per diluted share, in 1Q13 and a net loss to common stockholders of $859,000, or $0.14 per diluted share, in 2Q12. Book value per common share was $5.98 at June 30, 2013, compared to $6.41 at March 31, 2013 and $5.87 at June 30, 2012. The decrease was attributable to the increased outstanding shares from Debenture conversions.
"Community West's key credit quality metrics have improved over the last year, including further progress during the current quarter, while our reserve levels remain substantial," said Plourd. As a result of substantial reserves already in place representing 3.14% of total loans outstanding, as well as declining net charge-offs, Community West released $1.1 million in reserves during the second quarter of 2013 due to improved historical experience. This compares to $196,000 released in 1Q13 and a $1.9 million increase in the reserve recorded in 2Q12.
The allowance for loan losses totaled $12.5 million at June 30, 2013, equal to 3.14% of total loans held for investment, compared to 3.54% at March 31, 2013 and 3.59% a year ago.
Nonaccrual loans totaled $20.7 million, or 4.48% of total loans at June 30, 2013 compared to $19.7 million, or 4.32% of total loans, at March 31, 2013, and $32.8 million, or 6.66% of total loans, a year ago. The modest increase in nonaccrual loans compared to the preceding quarter end was primarily due to one loan relationship for $2.6 million placed on nonaccrual status near quarter end even though it was current on all payments and believed to be fully secured as of June 30, 2013.
Of the $20.7 million in nonaccrual loans, $11.7 million (56.8%) were commercial real estate loans, $5.8 million (28.1%) were manufactured housing loans, $1.8 million (8.6%) were SBA loans, $565,000 (2.7%) were commercial loans, $557,000 (2.7%) were other installment loans and $226,000 (1.1%) were home equity line of credit loans.
REO and repossessed assets stood at $4.1 million at June 30, 2013 compared to $4.4 million three months earlier and $2.3 million a year earlier. This amount consists of $3.6 million in REO and $500,000 from repossessed manufactured housing loans. REO consists of three properties for which $2.6 million is guaranteed by the SBA/USDA. Nonaccrual loans plus REO and repossessed assets, net of SBA/USDA guarantees, totaled $22.1 million, or 4.1% of total assets, at June 30, 2013 compared to $21.6 million, or 4.1% of total assets, three months earlier and $34.9 million, or 6.1% of total assets, a year ago.
Net charge-offs continued to improve and totaled $410,000 in 2Q13 compared to net charge-offs of $318,000 in 1Q13 and net charge-offs of $1.2 million in 2Q12.
Community West's second quarter net interest income was $5.9 million compared to $5.8 million in 1Q13 and $6.6 million in 2Q12. The second quarter net interest margin improved three basis points to 4.81%, compared to 4.78% in both 1Q13 and in 2Q12. In the first six months of the year, the net interest margin was 4.79% compared to 4.63% in the first six months of 2012.
Non-interest income was $802,000 in 2Q13 compared to $767,000 in 1Q13 and $513,000 in 2Q12. In the first six months of 2013 non-interest income was $1.6 million compared to $2.4 million in the first six months of 2012, which included a $1.2 million gain on sale of loans.
Second quarter operating or non-interest expenses improved to $5.6 million compared to $5.7 million in 1Q13 and $5.8 million in 2Q12. Year-to-date non-interest expenses were $11.3 million compared to $11.4 million in the first six months of 2012. Salaries and employee benefits increased due to the additions to staff, primarily lenders and credit administration, and the 2013 payroll tax increase.
"While net loan growth has been flat in recent quarters, we are encouraged by new loan originations in the pipeline. We expect to see moderate loan growth in the second half of 2013," said Charles G. Baltuskonis, Executive Vice President and Chief Financial Officer.
Net loans were $448.4 million at June 30, 2013 compared to $442.4 million at March 31, 2013 and $477.2 million a year ago. Commercial real estate loans outstanding were down 4.4% from year ago levels to $138.4 million at June 30, 2013 and comprise 30.0% of the total loan portfolio. Manufactured housing loans were down 6.0% from year ago levels to $172.4 million and represent 37.4% of total loans. SBA loans decreased 13.6% from a year ago to $78.6 million and represent 17.1% of the total loan portfolio and commercial loans increased 13.9% from year ago levels to $42.7 million and represent 9.3% of the total loan portfolio.
"While total deposits were flat during the quarter, non-interest-bearing deposit accounts increased 8.6% compared to the prior quarter end. We continue to change the deposit mix by focusing on growing low cost deposits and letting higher cost interest-bearing certificates of deposit run off," said Baltuskonis.
Non-interest-bearing deposit accounts increased 8.6% to $53.1 million at June 30, 2013 compared to $48.9 million three months earlier. Non-interest-bearing deposits were $51.3 million a year ago. Interest-bearing deposit accounts decreased to $257.8 million at the end of June, compared to $264.0 million at March 31, 2013 and $280.6 million a year ago. Total deposits were $434.9 million at June 30, 2013 compared to $434.0 million at March 31, 2013 and $478.3 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 $356.7 million at June 30, 2013 compared to $359.2 million at March 31, 2013, and $380.8 million a year ago.
Total assets were $536.1 million at June 30, 2013 compared to $533.1 million at March 31, 2013, and $573.0 million a year ago. Stockholders' equity improved to $62.1 million at June 30, 2013, compared to $54.1 million at March 31, 2012 and $50.4 million at June 30, 2012. Book value per common share was $5.98 at June 30, 2013, compared to $6.41 at March 31, 2013 and $5.87 at June 30, 2012.
Convertible Subordinated Debentures
On August 9, 2010, the Company completed an offering of $8,085,000 convertible subordinated debentures (Debentures). The Debentures pay interest at 9% until conversion, redemption or maturity and will mature on August 9, 2020. The Debentures may be redeemed by the Company after January 1, 2014. Prior to maturity or redemption, the Debentures were convertible into common stock at the election of the holder at $3.50 per share if converted on or prior to July 1, 2013 and, subsequently, at $4.50 per share between July 2, 2013 and July 1, 2016 and $6.00 per share from July 2, 2016 until maturity or redemption.
On or before June 30, 2013, $6,418,000 of the Debentures was converted into common stock, leaving a Debenture balance of $1,667,000 as of June 30, 2013. Common shares outstanding were 7,800,155 as of June 30, 2013.
On July 1, 2013, an additional $222,000 of the Debentures was converted into common stock, leaving a Debenture balance of $1,445,000 as of July 1, 2013. Common shares outstanding were 7,864,385 as of July 25, 2013.
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.
The Company is prohibited from paying dividends on its common or preferred stock without the prior approval of the Federal Reserve Board (FRB). The FRB denied the paying of the $195,000 dividend payments on the preferred shares that were due on May 15, 2012, August 15, 2012, November 15, 2012, February 15, 2013 and May 15, 2013. Such amounts continue to be accrued as incurred and deducted from capital.
On December 11, 2012, the U.S. Treasury sold its shares of the Company's perpetual preferred stock in a non-public offering as part of a modified Dutch auction. The Treasury also sold at auction on June 6, 2013 its warrant to purchase up to 521,158 shares of the Company's common stock at $4.49 per share.
Safe Harbor Disclosure
This release contains forward-looking statements that reflect management's current views of future events and operations. These forward-looking statements are based on information currently available to the Company as of the date of this release. It is important to note that these forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including, but not limited to, the ability of the Company to implement its strategy and expand its lending operations.
|COMMUNITY WEST BANCSHARES|
|CONDENSED CONSOLIDATED INCOME STATEMENTS|
|(in 000's, except per share data)|
|Three Months Ended||Six Months Ended|
|June 30,||March 31,||June 30,||June 30,||June 30,|
|Loans, including fees||$ 6,850||$ 6,794||$ 7,830||$ 13,644||$ 15,912|
|Investment securities and other||175||170||204||345||443|
|Total interest income||7,025||6,964||8,034||13,989||16,355|
|Other borrowings and convertible debt||401||407||425||808||953|
|Total interest expense||1,161||1,166||1,477||2,327||3,270|
|Net interest income||5,864||5,798||6,557||11,662||13,085|
|Provision for credit losses||(1,084)||(196)||1,900||(1,280)||3,883|
|Net interest income after provision for credit losses||6,948||5,994||4,657||12,942||9,202|
|Other loan fees||385||230||295||615||545|
|Gains from loan sales, net||111||161||58||272||1,155|
|Document processing fees||145||110||82||255||174|
|Loan servicing, net||24||75||(76)||99||75|
|Total non-interest income||802||767||513||1,569||2,401|
|Salaries and employee benefits||3,371||3,514||2,742||6,885||5,627|
|Occupancy expense, net||458||455||419||913||914|
|Loan servicing and collection||347||253||422||600||891|
|Advertising and marketing||187||93||102||280||159|
|Net loss on sales/write-downs of foreclosed real estate and repossessed assets||22||84||371||106||780|
|Total non-interest expenses||5,624||5,672||5,761||11,296||11,375|
|Income (loss) before provision for income taxes||2,126||1,089||(591)||3,215||228|
|Income tax expense||--||--||--||--||--|
|Net Income (loss)||$ 2,126||$ 1,089||$ (591)||$ 3,215||$ 228|
|Dividends and accretion on preferred stock||262||262||268||524||530|
|Net income (loss) available to common stockholders||$ 1,864||$ 827||$ (859)||$ 2,691||$ (302)|
|Earnings (loss) per common share:|
|Basic||$ 0.30||$ 0.14||$ (0.14)||$ 0.44||$ (0.05)|
|Diluted||$ 0.23||$ 0.11||$ (0.14)||$ 0.35||$ (0.05)|
|COMMUNITY WEST BANCSHARES|
|CONDENSED CONSOLIDATED BALANCE SHEETS|
|(in 000's, except per share data)|
|June 30,||March 31,||June 30,||December 31,|
|Cash and cash equivalents||$ 34,072||$ 35,689||$ 28,438||$ 27,891|
|Time and interest-earning deposits in other financial institutions||3,311||3,537||4,187||3,653|
|Commercial real estate||138,393||132,009||144,799||126,676|
|Single family real estate||9,873||9,096||11,469||9,945|
|Mortgage loans held for sale||1,526||2,312||3,593||8,223|
|Held for sale||64,133||61,753||62,070||68,694|
|Held for investment||396,673||394,603||430,594||394,971|
|Net held for investment||384,217||380,653||415,148||380,507|
|TOTAL ASSETS||$ 536,098||$ 533,123||$ 573,013||$ 532,101|
|Non-interest-bearing demand||$ 53,124||$ 48,920||$ 51,296||$ 53,605|
|CDs over 100K||94,397||90,708||113,407||80,710|
|CDs under 100K||13,292||13,726||16,841||14,088|
|TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY||$ 536,098||$ 533,123||$ 573,013||$ 532,101|
|Book value per common share||$ 5.98||$ 6.41||$ 5.87||$ 6.29|
|ADDITIONAL FINANCIAL INFORMATION|
|(Dollars in thousands except per share amounts)(Unaudited)|
|Quarter Ended||Quarter Ended||Quarter Ended||Six Months Ended|
|PERFORMANCE MEASURES AND RATIOS||Jun. 30, 2013||Mar. 31, 2013||Jun. 30, 2012||Jun. 30, 2013||Jun. 30, 2012|
|Return on average common equity||21.15%||11.46%||-6.71%||16.57%||1.28%|
|Return on average assets||1.60%||0.83%||-0.41%||1.22%||0.08%|
|Net interest margin||4.81%||4.78%||4.78%||4.79%||4.63%|
|Quarter Ended||Quarter Ended||Quarter Ended||Six Months Ended|
|AVERAGE BALANCES||Jun. 30, 2013||Mar. 31, 2013||Jun. 30, 2012||Jun. 30, 2013||Jun. 30, 2012|
|Average assets||$ 530,607||$ 524,572||$ 583,443||$ 527,694||$ 607,487|
|Average earning assets||489,278||492,304||551,239||490,868||568,831|
|Average total loans||456,783||460,741||509,505||458,751||525,144|
|Average equity (including preferred stock)||55,632||53,363||50,360||54,170||50,785|
|Average common equity (excluding preferred stock)||40,201||37,998||35,220||38,805||35,667|
|EQUITY ANALYSIS||Jun. 30, 2013||Mar. 31, 2013||Jun. 30, 2012|
|Total equity||$ 62,086||$ 54,070||$ 50,378|
|Less: senior preferred stock||15,475||15,408||15,214|
|Total common equity||$ 46,611||$ 38,662||$ 35,164|
|Common stock outstanding||7,800||6,033||5,990|
|Book value per common share||$ 5.98||$ 6.41||$5.87|
|ASSET QUALITY||Jun. 30, 2013||Mar. 31, 2013||Jun. 30, 2012|
|Nonaccrual loans||$ 20,660||$ 19,707||$ 32,790|
|Nonaccrual loans/total loans||4.48%||4.32%||6.66%|
|REO and repossessed assets||$ 4,100||$ 4,389||$ 2,292|
|Less: SBA/USDA-guaranteed amounts||2,640||2,481||$ 230|
|Net REO and repossessed assets||$ 1,460||$ 1,908||$ 2,062|
|Nonaccrual loans plus net REO||22,120||21,615||$ 34,852|
|Nonaccrual loans plus net REO/total assets||4.13%||4.05%||6.08%|
|Net loan charge-offs in the quarter||$ 410||$ 318||$ 1,159|
|Net charge-offs in the quarter/total loans||0.09%||0.07%||0.24%|
|Allowance for loan losses||$ 12,456||$ 13,950||$ 15,446|
|Plus: Reserve for undisbursed loan commitments||76||90||181|
|Total allowance for credit losses||$ 12,532||$ 14,040||$ 15,627|
|Total allowance for loan losses/total loans held for investment||3.14%||3.54%||3.59%|
|Total allowance for loan losses/nonaccrual loans||60.29%||70.79%||47.11%|
|Community West Bancshares|
|Tier 1 leverage ratio||11.71%||10.29%||8.62%|
|Tier 1 risk-based capital ratio||15.00%||13.12%||11.24%|
|Total risk-based capital ratio||16.68%||16.27%||14.27%|
|Community West Bank|
|Tier 1 leverage ratio||11.65%||11.34%||9.38%|
|Tier 1 risk-based capital ratio||14.83%||14.35%||12.13%|
|Total risk-based capital ratio||16.10%||15.63%||13.41%|
|INTEREST SPREAD ANALYSIS||Jun. 30, 2013||Mar. 31, 2013||Jun. 30, 2012|
|Yield on interest-bearing deposits||0.80%||0.82%||0.97%|
|Yield on total loans||6.01%||5.98%||6.18%|
|Yield on investments||2.40%||2.44%||2.25%|
|Yield on earning assets||5.76%||5.74%||5.86%|
|Cost of deposits||0.80%||0.72%||0.87%|
|Cost of FHLB advances||2.93%||2.92%||2.93%|
|Cost of interest-bearing liabilities||1.11%||1.14%||1.24%|
CONTACT: Charles G. Baltuskonis, EVP & CFO 805.692.5821 www.communitywestbank.comSource:Community West Bancshares