GOLETA, Calif., April 24, 2014 (GLOBE NEWSWIRE) -- Community West Bancshares (Community West or the Company), (Nasdaq:CWBC), parent company of Community West Bank (Bank), today reported net income increased 32.4% to $1.4 million in the first quarter of 2014 (1Q14) compared to $1.1 million in the first quarter a year ago (1Q13). Community West's net income in the fourth quarter of 2013 (4Q13) was $3.1 million, which included a $2.8 million tax benefit as a result of the reversal of its deferred tax asset valuation allowance.
"Our first quarter profits were fueled by ongoing improvement in credit quality and solid loan growth, as we continue to focus on expanding our banking franchise in the coastal communities of central California," stated Martin E. Plourd, President and Chief Executive Officer. "The loan portfolio increased 7% compared to a year ago. We continue to strengthen our capital and improve credit quality metrics, while maintaining a strong net interest margin. We will continue to increase and refine our marketing outreach in the communities we serve while focusing on increasing shareholder value."
1Q14 Financial Highlights
- Net income increased 32.4% to $1.4 million from a year ago.
- Earnings increased 36.4% to $0.15 per diluted share from $0.11 per diluted share a year ago.
- Net interest margin improved 25 basis points to 4.65% in 1Q14, compared to 4.40% in 4Q13. The net interest margin was 4.57% in 1Q13.
- Net loans increased 6.9% to $473.1 million, compared to $442.4 million a year earlier.
- Nonaccrual loans were $15.7 million at March 31, 2014, compared to $16.8 million at December 31, 2013 and $19.7 million at March 31, 2013.
- The total allowance for loan losses equaled 2.71% of total loans held for investment at March 31, 2014, compared to 2.98% at December 31, 2013 and 3.54% a year ago.
- Community West Bank's capital ratios continue to be strong - Total risk-based capital ratio was 16.52% and Tier 1 leverage ratio was 12.36% at March 31, 2014.
Including $273,000 of preferred stock dividends, the net income available to common stockholders was $1.2 million, or $0.15 per diluted share, in 1Q14 compared to $2.9 million, or $0.34 per diluted share, in 4Q13 and $827,000, or $0.11 per diluted share, in 1Q13. Book value per common share was $6.70 at March 31, 2014, compared to $6.60 at December 31, 2013, and $6.41 at March 31, 2013.
Credit Quality
"As credit quality metrics continue to improve, and our reserve level remains substantial, we reduced the allowance by $1.4 million during the first quarter of 2014," said Plourd. "In the preceding quarter, we added $899,000 to our reserves, and in 1Q13 we released $196,000 in reserves." Contributing to the 1Q14 allowance reduction were net loan recoveries of $519,000, compared to net loan charge-offs of $345,000 in 4Q13 and net loan charge-offs of $318,000 in 1Q13.
The allowance for loan losses totaled $11.4 million at March 31, 2014, equal to 2.71% of total loans held for investment, compared to 2.98% at December 31, 2013, and 3.54% a year ago. Nonaccrual loans were $15.7 million, or 3.25% of total loans at March 31, 2014, compared to $16.8 million, or 3.55% of total loans, three months earlier, and $19.7 million, or 4.32% of total loans, a year ago.
Of the $15.7 million in nonaccrual loans, $6.3 million (39.8%) were manufactured housing loans, $3.5 million (22.2%) were commercial loans, $2.6 million (16.8%) were commercial real estate loans, $1.7 million (10.9%) were SBA loans, $654,000 (4.2%) were single family real estate loans and, $579,000 (3.7%) were home equity line of credit loans, $254,000 (1.6%) were SBA 504 1st loans and $140,000 (0.9%) were land loans.
REO and repossessed assets totaled $3.8 million at March 31, 2014, which was unchanged from three months earlier. This amount consists of $3.4 million in REO and $0.4 from repossessed manufactured housing loans. REO consists of 2 properties for which $2.2 million is guaranteed by the SBA/USDA. Nonaccrual loans plus REO and repossessed assets, net of SBA/USDA guarantees, totaled $17.3 million, or 3.2% of total assets, at March 31, 2014, compared to $18.4 million, or 3.4% of total assets, three months earlier and $21.6 million, or 4.1% of total assets, a year ago.
Income Statement
Community West's first quarter net interest income increased 4.7% to $6.1 million compared to $5.8 million in both 4Q13 and 1Q13. The first quarter net interest margin remained healthy, and well above its peer group average, at 4.65%, compared to 4.40% in 4Q13 and 4.57% in 1Q13.
"Our net interest margin remains strong primarily because our loan mix provides yields that are above industry average. Consequently, we are able to maintain our net interest margin in the mid-4% range, despite continued pressure on these yields," said Charles G. Baltuskonis, Executive Vice President and Chief Financial Officer.
Non-interest income was $518,000 in 1Q14 compared to $632,000 in 4Q13 and $772,000 in 1Q13. Non-interest expenses were $5.5 million in 1Q14, compared to $5.2 million in 4Q13 and $5.7 million in 1Q13.
Balance Sheet
"The loan pipeline has been active in recent quarters, particularly within the commercial loans and commercial real estate loan sectors. As a result, net loans increased 2.4% at March 31, 2014, compared to three months earlier and increased 6.9% compared to a year earlier," said Plourd. Net loans were $473.1million at March 31, 2014, compared to $462.0 million at December 31, 2013, and $442.4 million a year ago. Commercial real estate loans outstanding were up 15.0% from year ago levels to $151.8 million at March 31, 2014, and comprise 31.3% of the total loan portfolio. Manufactured housing loans were down 2.4% from year ago levels to $170.8 million and represent 35.2% of total loans. SBA loans decreased 14.5% from a year ago to $68.5 million and represent 14.1% of the total loan portfolio and commercial loans increased 66.8% from year ago levels to $67.2 million and represent 13.9% of the total loan portfolio.
Total deposits increased 2.4% to $446.5 million at March 31, 2014, compared to $436.1 million at December 31, 2013, and increased 2.9% compared to $434.0 million a year ago. Non-interest-bearing deposit accounts increased slightly to $53.5 million at March 31, 2014, compared to $52.5 million at December 31, 2013, and a 9% increase from $48.9 million a year ago. Interest-bearing deposit accounts declined slightly to $256.3 million at March 31, 2014, compared to $258.5 million three months earlier, and were down 2.9% compared to $264.0 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 $356.5 million at March 31, 2014, compared to $355.9 million at December 31, 2013, and $359.1 million a year ago.
Total assets increased moderately to $550.3 million at March 31, 2014, compared to $539.0 million at December 31, 2013, and $533.1 million a year ago. Stockholders' equity improved to $70.5 million at March 31, 2014, compared to $67.6 million at December 31, 2013, and $54.1 million a year ago. Book value per common share increased to $6.70 at March 31, 2014, compared to $6.60 at the end of December, and increased 4.5% compared to $6.41 a year earlier.
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 | |||
| March 31, | December 31, | March 31, | |
| 2014 | 2013 | 2013 | |
| Interest income | |||
| Loans, including fees | $ 6,761 | $ 6,556 | $ 6,794 |
| Investment securities and other | 200 | 209 | 182 |
| Total interest income | 6,961 | 6,765 | 6,976 |
| Interest expense | |||
| Deposits | 642 | 678 | 759 |
| Other borrowings and convertible debt | 237 | 280 | 407 |
| Total interest expense | 879 | 958 | 1,166 |
| Net interest income | 6,082 | 5,807 | 5,810 |
| Provision for credit losses | (1,371) | 899 | (196) |
| Net interest income after provision for credit losses | 7,453 | 4,908 | 6,006 |
| Non-interest income | |||
| Other loan fees | 175 | 189 | 230 |
| Document processing fees | 78 | 93 | 110 |
| Gains from loan sales, net | 65 | 27 | 161 |
| Service Charges | 72 | 73 | 85 |
| Loan servicing, net | 32 | 29 | 75 |
| Other | 96 | 221 | 111 |
| Total non-interest income | 518 | 632 | 772 |
| Non-interest expenses | |||
| Salaries and employee benefits | 3,227 | 2,843 | 3,499 |
| Occupancy expense, net | 439 | 449 | 455 |
| Professional services | 360 | 306 | 315 |
| Loan servicing and collection | 265 | 333 | 253 |
| Stock Option Expense | 211 | 16 | 15 |
| Data processing | 172 | 146 | 150 |
| Advertising and marketing | 121 | 138 | 93 |
| FDIC assessment | 80 | 238 | 265 |
| Depreciation | 75 | 74 | 74 |
| Net loss on sales/write-downs of foreclosed real estate | |||
| and repossessed assets | 40 | 113 | 101 |
| Other | 535 | 560 | 469 |
| Total non-interest expenses | 5,525 | 5,216 | 5,689 |
| Income before provision for income taxes | 2,446 | 324 | 1,089 |
| Income tax expense | 1,004 | (2,812) | -- |
| Net Income | $ 1,442 | $ 3,136 | $ 1,089 |
| Dividends and accretion on preferred stock | 273 | 253 | 262 |
| Net income available to common stockholders | $ 1,169 | $ 2,883 | $ 827 |
| Earnings per share: | |||
| Basic | $ 0.15 | $ 0.37 | $ 0.14 |
| Diluted | $ 0.15 | $ 0.34 | $ 0.11 |
| COMMUNITY WEST BANCSHARES | |||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||
| (unaudited) | |||
| (in 000's, except per share data) | |||
| March 31, | December 31, | March 31, | |
| 2014 | 2013 | 2013 | |
| Cash and cash equivalents | $ 1,945 | $ 1,472 | $ 1,027 |
| Time and interest-earning deposits in other financial institutions | 17,204 | 18,105 | 38,199 |
| Investment securities | 29,602 | 28,160 | 23,902 |
| Loans: | |||
| Commercial | 67,237 | 62,420 | 40,311 |
| Commercial real estate | 151,793 | 142,678 | 132,009 |
| SBA | 68,542 | 71,352 | 80,123 |
| Manufactured housing | 170,754 | 172,055 | 174,923 |
| Single family real estate | 10,646 | 10,150 | 9,096 |
| HELOC | 15,056 | 15,418 | 17,318 |
| Other | 451 | 140 | 2,576 |
| Total loans | 484,479 | 474,213 | 456,356 |
| Loans, net | |||
| Held for sale | 65,931 | 64,399 | 61,753 |
| Held for investment | 418,548 | 409,814 | 394,603 |
| Less: Allowance | (11,356) | (12,208) | (13,950) |
| Net held for investment | 407,192 | 397,606 | 380,653 |
| NET LOANS | 473,123 | 462,005 | 442,406 |
| Other assets | 28,383 | 29,258 | 27,589 |
| TOTAL ASSETS | $ 550,257 | $ 539,000 | $ 533,123 |
| Deposits | |||
| Non-interest-bearing demand | $ 53,470 | $ 52,461 | $ 48,920 |
| Interest-bearing demand | 256,329 | 258,445 | 264,044 |
| Savings | 16,161 | 16,158 | 16,621 |
| CDs over 100K | 107,217 | 95,979 | 90,708 |
| CDs under 100K | 13,348 | 13,092 | 13,726 |
| Total Deposits | 446,525 | 436,135 | 434,019 |
| Other borrowings | 30,000 | 31,442 | 41,735 |
| Other liabilities | 3,270 | 3,867 | 3,299 |
| TOTAL LIABILITIES | 479,795 | 471,444 | 479,053 |
| Stockholders' equity | 70,462 | 67,556 | 54,070 |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | |||
| $ 550,257 | $ 539,000 | $ 533,123 | |
| Shares outstanding | 8,184 | 7,867 | 6,033 |
| Book value per common share | $ 6.70 | $ 6.60 | $ 6.41 |
| ADDITIONAL FINANCIAL INFORMATION | |||
| (Dollars in thousands except per share amounts)(Unaudited) | |||
| Quarter Ended | Quarter Ended | Quarter Ended | |
| PERFORMANCE MEASURES AND RATIOS | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2013 |
| Return on average common equity | 10.97% | 25.27% | 11.46% |
| Return on average assets | 1.07% | 2.33% | 0.83% |
| Efficiency ratio | 83.71% | 81.01% | 86.40% |
| Net interest margin | 4.65% | 4.40% | 4.57% |
| Quarter Ended | Quarter Ended | Quarter Ended | |
| AVERAGE BALANCES | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2013 |
| Average assets | $ 545,777 | $ 534,434 | $ 524,572 |
| Average earning assets | 530,811 | 523,706 | 515,927 |
| Average total loans | 476,341 | 458,270 | 460,741 |
| Average deposits | 442,119 | 431,862 | 426,368 |
| Average equity (including preferred stock) | 68,891 | 64,800 | 53,363 |
| Average common equity (excluding preferred stock) | 53,291 | 49,234 | 37,998 |
| EQUITY ANALYSIS | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2013 |
| Total equity | $ 70,462 | $ 67,556 | $ 54,070 |
| Less: senior preferred stock | 15,600 | 15,600 | 15,408 |
| Total common equity | $ 54,862 | $ 51,956 | $ 38,662 |
| Common stock outstanding | 8,184 | 7,867 | 6,033 |
| Book value per common share | $ 6.70 | $ 6.60 | $ 6.41 |
| ASSET QUALITY | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2013 |
| Nonaccrual loans | $ 15,722 | $ 16,837 | $ 19,707 |
| Nonaccrual loans/total loans | 3.25% | 3.55% | 4.32% |
| REO and repossessed assets | $ 3,781 | $ 3,811 | $ 4,389 |
| Less: SBA/USDA-guaranteed amounts | 2,165 | 2,250 | 2,481 |
| Net REO and repossessed assets | $ 1,616 | $ 1,561 | $ 1,908 |
| Nonaccrual loans plus net REO | $ 17,338 | $ 18,398 | 21,615 |
| Nonaccrual loans plus net REO/total assets | 3.15% | 3.41% | 4.05% |
| Net loan (recoveries)/charge-offs in the quarter | $ (519) | $ 345 | $ 318 |
| Net (recoveries)/charge-offs in the quarter/total loans | -0.11% | 0.07% | 0.07% |
| Allowance for loan losses | $ 11,356 | $ 12,208 | $ 13,950 |
| Plus: Reserve for undisbursed loan commitments | 61 | 68 | 90 |
| Total allowance for credit losses | $ 11,417 | $ 12,276 | $ 14,040 |
| Total allowance for loan losses/total loans held for investment | 2.71% | 2.98% | 3.54% |
| Total allowance for loan losses/nonaccrual loans | 72.23% | 72.51% | 70.79% |
| Community West Bancshares | |||
| Tier 1 leverage ratio | 12.94% | 12.68% | 10.29% |
| Tier 1 risk-based capital ratio | 15.96% | 15.65% | 13.12% |
| Total risk-based capital ratio | 17.23% | 17.26% | 16.27% |
| Community West Bank | |||
| Tier 1 leverage ratio | 12.36% | 12.68% | 11.34% |
| Tier 1 risk-based capital ratio | 15.25% | 15.57% | 14.35% |
| Total risk-based capital ratio | 16.52% | 16.84% | 15.63% |
| INTEREST SPREAD ANALYSIS | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2013 |
| Yield on total loans | 5.76% | 5.68% | 5.98% |
| Yield on investments | 2.38% | 2.37% | 2.45% |
| Yield on interest earning deposits | 0.22% | 0.28% | 0.19% |
| Yield on earning assets | 5.32% | 5.12% | 5.48% |
| Cost of interest-bearing deposits | 0.67% | 0.71% | 0.82% |
| Cost of total deposits | 0.59% | 0.62% | 0.72% |
| Cost of FHLB advances | 2.80% | 2.87% | 2.92% |
| Cost of interest-bearing liabilities | 0.85% | 0.92% | 1.14% |