GOLETA, Calif., July 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 of $1.7 million in the second quarter of 2014 (2Q14) compared to $1.4 million in the first quarter of 2014 (1Q14) and $2.1 million in the second quarter a year ago (2Q13). In the first six months of 2014, Community West earned $3.1 million compared to $3.2 million in the first six months a year ago.
Pretax income was $5.4 million for the first six months of 2014 compared to $3.2 million for the first six months a year ago. The net income for the comparative periods was virtually the same, however, due to the Company's tax position in 2013, there was no income tax expense recorded.
"Community West's second quarter success was fueled by ongoing improvements in credit quality coupled with solid loan and deposit growth," stated Martin E. Plourd, President and Chief Executive Officer. "We have seen improvements across all areas of our operations during the first six months of the year and continue to benefit from a healthy net interest margin. The improvement in operating efficiencies enhances our profitability. We remain focused on expanding our banking franchise and refining our marketing outreach in the communities we serve while continuing to increase shareholder value."
2Q14 Financial Highlights
- Net income was $1.7 million.
- Earnings of $0.18 per diluted share.
- Net interest margin was 4.55% in 2Q14, compared to 4.65% in 1Q14 and 4.53% in 2Q13.
- Net loans increased 8.0% to $484.1 million, compared to $448.4 million a year earlier.
- Nonaccrual loans were $15.8 million at June 30, 2014, compared to $15.7 million at March 31, 2014 and $20.7 million a year ago.
- The total allowance for loan losses equaled 2.48% of total loans held for investment at June 30, 2014, compared to 2.71% at March 31, 2014 and 3.14% a year ago.
- Redeemed $7,804,000 of 9% cumulative perpetual preferred stock Series A, leaving remaining balance of $7,796,000.
- Community West Bank's capital ratios continue to be strong - Total risk-based capital ratio was 15.30% and Tier 1 leverage ratio was 11.13% at June 30, 2014.
Including $329,000 of preferred stock dividends, and a discount on partial redemption of preferred stock of $144,000, the net income available to common stockholders was $1.5 million, or $0.18 per diluted share, in 2Q14 compared to $1.2 million, or $0.15 per diluted share, in 1Q14 and $1.9 million, or $0.23 per diluted share, in 2Q13.
Credit Quality
"Most asset quality metrics continue to stabilize and/or improve, with real estate owned decreasing and nonaccrual loans unchanged during the quarter," said Plourd. "As asset quality continues to improve, we recorded a negative provision for loan losses of $1.0 million in 2Q14, compared to a negative provision of $1.4 million in 1Q14, and a negative provision of $1.1 million in the second quarter a year ago." Contributing to the 2Q14 allowance reduction were net loan recoveries of $151,000, compared to net loan recoveries of $519,000 in 1Q14 and net loan charge-offs of $410,000 in 2Q13.
Community West's allowance for loan losses totaled $10.5 million at June 30, 2014, equal to 2.48% of total loans held for investment, compared to 2.71% at March 31, 2014, and 3.14% a year ago. Nonaccrual loans were $15.8 million, or 3.19% of total loans at June 30, 2014, compared to $15.7 million, or 3.25% of total loans, three months earlier, and $20.7 million, or 4.48% of total loans, a year ago.
Of the $15.8 million in nonaccrual loans, $5.8 million (37.0%) were manufactured housing loans, $3.5 million (22.0%) were commercial loans, $2.5 million (16.0%) were commercial real estate loans, $1.7 million (10.5%) were SBA loans, $1.1 million (6.8%) were SBA 504 1st loans, $636,000 (4.0%) were single family real estate loans and $575,000 (3.7%) were home equity line of credit loans.
REO and repossessed assets decreased 83.9% to $610,000 at June 30, 2014, compared to $3.8 million three months earlier and decreased 85.1% compared to $4.1 million a year earlier. Nonaccrual loans plus REO and repossessed assets, net of SBA/USDA guarantees, totaled $16.4 million, or 2.9% of total assets, at June 30, 2014, compared to $17.3 million, or 3.2% of total assets, three months earlier and $22.1 million, or 4.1% of total assets, a year ago.
Income Statement
Community West's second quarter net interest income increased 6.6% to $6.3 million compared to $5.9 million in the second quarter a year ago, and increased 3.1% compared to $6.1 million three months earlier. In the first six months of 2014, Community West's net interest income increased 5.7% to $12.4 million compared to $11.7 million in the first six months of 2013.
"Despite continued pressure on our loan yields, our net interest margin remains well above peer levels due to higher than industry average yields on our loan mix," said Charles G. Baltuskonis, Executive Vice President and Chief Financial Officer. Community West's second quarter net interest margin remained strong at 4.55%, compared to 4.65% in 1Q14 and 4.53%in 2Q13. Year-to-date, the net interest margin improved five basis points to 4.60% compared to 4.55% in the same period a year ago. The net interest margin for the SNL Bank and Thrift Index, comprised of 440 banks at the end of the first quarter of 2014, was 2.83%. "Similar to most financial institutions, the Bank will experience some future pressure on loan yields if the current low-interest rate environment persists," added Baltuskonis.
Non-interest income was $656,000 in 2Q14 compared to $518,000 in 1Q14 and $836,000 in 2Q13. In the first six months of the year, non-interest income was $1.2 million compared to $1.6 million in the first six months of 2013.
Second quarter non-interest expenses were $5.0 million, an 8.9% decrease compared to $5.5 million in 1Q14 and an 11.4% decrease compared to $5.7 million in 2Q13. In the first six months of the year, non-interest expenses decreased 7.1% to $10.6 million compared to $11.4 million in the first six months of 2013. The decrease in non-interest expenses for the quarter and year-to-date period is in part due to the improved credit metrics, which resulted in the decline in loan collection expenses and costs associated with real estate owned.
Balance Sheet
Total assets increased 4.0% to $557.7 million at June 30, 2014, compared to $536.1 million a year ago. Total assets were $550.3 million at March 31, 2014.
"The loan pipeline has been fairly active in 2014 within the commercial loans and commercial real estate loan sectors. As a result, net loans increased 2.3% at June 30, 2014, compared to three months earlier and increased 8.0% compared to a year earlier," said Baltuskonis. Net loans were $484.1 million at June 30, 2014, compared to $473.1 million at March 31, 2014, and $448.4 million a year ago. Commercial real estate loans outstanding were up 14.6% from year ago levels to $158.6 million at June 30, 2014, and comprise 32.1% of the total loan portfolio. Manufactured housing loans were down 1.0% from year ago levels to $170.7 million and represent 34.5% of total loans. SBA loans decreased 14.7% from a year ago to $67.1 million and represent 13.6% of the total loan portfolio and commercial loans increased 62.1% from year ago levels to $69.1 million and represent 14.0% of the total loan portfolio.
Total deposits increased 5.8% to $472.3 million at June 30, 2014, compared to $446.5 million at March 31, 2014, and increased 8.6 % compared to $434.9 million a year ago. Non-interest-bearing deposit accounts increased 6.2% to $56.8 million at June 30, 2014, compared to $53.5 million at March 30, 2014, and increased 6.9% from $53.1 million a year ago. Interest-bearing deposit accounts increased 7.4% to $275.4 million at June 30, 2014, compared to $256.3 million three months earlier, and were up 6.8% compared to $257.8 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 $380.0 million at June 30, 2014 and comprise 80.4% of total deposits, compared to $356.5 million, or 79.8% of total deposits, at March 31, 2014, and $356.6 million, or 82.0% of total deposits, a year ago.
Stockholders' equity was $64.3 million at June 30, 2014, compared to $70.5 million at March 31, 2014, and $62.1 million a year ago. Book value per common share was $6.90 at June 30, 2014, compared to $6.70 at March 31, 2014, and $5.98 a year ago.
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 | Six Months Ended | ||||
| June 30, | March 31, | June 30, | June 30, | June 30, | |
| 2014 | 2014 | 2013 | 2014 | 2013 | |
| Interest income | |||||
| Loans, including fees | $ 6,911 | $ 6,761 | $ 6,850 | $ 13,672 | $ 13,644 |
| Investment securities and other | 211 | 200 | 194 | 411 | 376 |
| Total interest income | 7,122 | 6,961 | 7,044 | 14,083 | 14,020 |
| Interest expense | |||||
| Deposits | 688 | 642 | 760 | 1,330 | 1,519 |
| Other borrowings and convertible debt | 161 | 237 | 401 | 398 | 808 |
| Total interest expense | 849 | 879 | 1,161 | 1,728 | 2,327 |
| Net interest income | 6,273 | 6,082 | 5,883 | 12,355 | 11,693 |
| Provision for credit losses | (1,011) | (1,371) | (1,084) | (2,382) | (1,280) |
| Net interest income after provision for credit losses | 7,284 | 7,453 | 6,967 | 14,737 | 12,973 |
| Non-interest income | |||||
| Other loan fees | 266 | 175 | 385 | 441 | 615 |
| Document processing fees | 116 | 78 | 145 | 194 | 255 |
| Service Charges | 71 | 72 | 85 | 143 | 170 |
| Loan servicing, net | 63 | 32 | 24 | 95 | 99 |
| Gains from loan sales, net | 28 | 65 | 111 | 93 | 272 |
| Other | 112 | 96 | 86 | 208 | 197 |
| Total non-interest income | 656 | 518 | 836 | 1,174 | 1,608 |
| Non-interest expenses | |||||
| Salaries and employee benefits | 3,193 | 3,227 | 3,355 | 6,420 | 6,854 |
| Occupancy, net | 459 | 439 | 458 | 898 | 913 |
| Professional services | 371 | 360 | 290 | 731 | 605 |
| Advertising and marketing | 179 | 121 | 187 | 300 | 280 |
| Loan servicing and collection | 134 | 265 | 347 | 399 | 600 |
| Data processing | 109 | 172 | 125 | 281 | 275 |
| FDIC assessment | 90 | 80 | 261 | 170 | 526 |
| Depreciation | 81 | 75 | 74 | 156 | 148 |
| Stock options | 30 | 211 | 16 | 241 | 31 |
| Net (gain) loss on sales/write-downs of foreclosed real | |||||
| estate and repossessed assets | (190) | 40 | 75 | (150) | 176 |
| Other | 575 | 535 | 489 | 1,110 | 958 |
| Total non-interest expenses | 5,031 | 5,525 | 5,677 | 10,556 | 11,366 |
| Income before provision for income taxes | 2,909 | 2,446 | 2,126 | 5,355 | 3,215 |
| Income taxes | 1,203 | 1,004 | -- | 2,207 | -- |
| Net Income | 1,706 | 1,442 | 2,126 | 3,148 | 3,215 |
| Dividends and accretion on preferred stock | 329 | 273 | 262 | 602 | 524 |
| Discount on partial redemption of preferred stock | (144) | -- | -- | (144) | -- |
| Net income available to common stockholders | $ 1,521 | $ 1,169 | $ 1,864 | $ 2,690 | $ 2,691 |
| Earnings per share: | |||||
| Basic | $ 0.19 | $ 0.15 | $ 0.30 | $ 0.33 | $ 0.44 |
| Diluted | $ 0.18 | $ 0.15 | $ 0.23 | $ 0.33 | $ 0.35 |
| COMMUNITY WEST BANCSHARES | ||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||
| (unaudited) | ||||
| (in 000's, except per share data) | ||||
| June 30, | March 31, | June 30, | December 31, | |
| 2014 | 2014 | 2013 | 2013 | |
| Cash and cash equivalents | $ 1,807 | $ 1,945 | $ 1,023 | $ 1,472 |
| Time and interest-earning deposits in other financial institutions | 15,695 | 17,204 | 36,360 | 18,105 |
| Investment securities | 30,030 | 29,602 | 25,671 | 28,160 |
| Loans: | ||||
| Commercial | 69,149 | 67,237 | 42,658 | 62,420 |
| Commercial real estate | 158,594 | 151,793 | 138,393 | 142,678 |
| SBA | 67,119 | 68,542 | 78,648 | 71,352 |
| Manufactured housing | 170,712 | 170,754 | 172,365 | 172,055 |
| Single family real estate | 13,696 | 10,646 | 9,873 | 10,150 |
| HELOC | 15,179 | 15,056 | 17,036 | 15,418 |
| Other | 109 | 451 | 1,833 | 140 |
| Total loans | 494,558 | 484,479 | 460,806 | 474,213 |
| Loans, net | ||||
| Held for sale | 70,530 | 65,931 | 64,133 | 64,399 |
| Held for investment | 424,028 | 418,548 | 396,673 | 409,814 |
| Less: Allowance | (10,496) | (11,356) | (12,456) | (12,208) |
| Net held for investment | 413,532 | 407,192 | 384,217 | 397,606 |
| NET LOANS | 484,062 | 473,123 | 448,350 | 462,005 |
| Other assets | 26,147 | 28,383 | 24,694 | 29,258 |
| TOTAL ASSETS | $ 557,741 | $ 550,257 | $ 536,098 | $ 539,000 |
| Deposits | ||||
| Non-interest-bearing demand | $ 56,796 | $ 53,470 | $ 53,124 | $ 52,461 |
| Interest-bearing demand | 275,418 | 256,329 | 257,785 | 258,445 |
| Savings | 15,917 | 16,161 | 16,273 | 16,158 |
| CDs over 100K | 110,170 | 107,217 | 94,397 | 95,979 |
| CDs under 100K | 13,993 | 13,348 | 13,292 | 13,092 |
| Total Deposits | 472,294 | 446,525 | 434,871 | 436,135 |
| Other borrowings | 18,000 | 30,000 | 35,667 | 31,442 |
| Other liabilities | 3,167 | 3,270 | 3,474 | 3,867 |
| TOTAL LIABILITIES | 493,461 | 479,795 | 474,012 | 471,444 |
| Stockholders' equity | 64,280 | 70,462 | 62,086 | 67,556 |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 557,741 | $ 550,257 | $ 536,098 | $ 539,000 |
| Shares outstanding | 8,190 | 8,184 | 7,800 | 7,867 |
| Book value per common share | $ 6.90 | $ 6.70 | $ 5.98 | $ 6.60 |
| 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, 2014 | Mar. 31, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 |
| Return on average common equity | 12.30% | 10.97% | 21.21% | 11.65% | 16.71% |
| Return on average assets | 1.21% | 1.07% | 1.61% | 1.14% | 1.23% |
| Efficiency ratio | 72.61% | 83.71% | 84.37% | 78.02% | 85.38% |
| Net interest margin | 4.55% | 4.65% | 4.53% | 4.60% | 4.55% |
| Quarter Ended | Quarter Ended | Quarter Ended | Six Months Ended | ||
| AVERAGE BALANCES | Jun. 30, 2014 | Mar. 31, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 |
| Average assets | $ 567,147 | $ 545,777 | $ 530,607 | $ 556,521 | $ 527,694 |
| Average earning assets | 552,653 | 530,811 | 520,991 | 541,791 | 518,751 |
| Average total loans | 489,338 | 476,341 | 456,783 | 482,875 | 458,751 |
| Average deposits | 469,963 | 442,119 | 430,770 | 456,118 | 428,600 |
| Average equity (including preferred stock) | 70,469 | 68,891 | 55,632 | 69,684 | 54,170 |
| Average common equity (excluding preferred stock) | 55,641 | 53,291 | 40,201 | 54,472 | 38,805 |
| EQUITY ANALYSIS | Jun. 30, 2014 | Mar. 31, 2014 | Jun. 30, 2013 | ||
| Total equity | $ 64,280 | $ 70,462 | $ 62,086 | ||
| Less: senior preferred stock | 7,796 | 15,600 | 15,475 | ||
| Total common equity | $ 56,484 | $ 54,862 | $ 46,611 | ||
| Common stock outstanding | 8,190 | 8,184 | 7,800 | ||
| Book value per common share | $ 6.90 | $ 6.70 | $ 5.98 | ||
| ASSET QUALITY | Jun. 30, 2014 | Mar. 31, 2014 | Jun. 30, 2013 | ||
| Nonaccrual loans | $ 15,772 | $ 15,722 | $ 20,660 | ||
| Nonaccrual loans/total loans | 3.19% | 3.25% | 4.48% | ||
| REO and repossessed assets | $ 610 | $ 3,781 | $ 4,100 | ||
| Less: SBA/USDA-guaranteed amounts | 0 | 2,165 | 2,640 | ||
| Net REO and repossessed assets | $ 610 | $ 1,616 | $ 1,460 | ||
| Nonaccrual loans plus net REO | $ 16,382 | $ 17,338 | $ 22,120 | ||
| Nonaccrual loans plus net REO/total assets | 2.94% | 3.15% | 4.13% | ||
| Net loan (recoveries)/charge-offs in the quarter | $ (151) | $ (519) | $ 410 | ||
| Net (recoveries)/charge-offs in the quarter/total loans | -0.03% | -0.11% | 0.09% | ||
| Allowance for loan losses | $ 10,496 | $ 11,356 | $ 12,456 | ||
| Plus: Reserve for undisbursed loan commitments | 57 | 61 | 76 | ||
| Total allowance for credit losses | $ 10,553 | $ 11,417 | $ 12,532 | ||
| Total allowance for loan losses/total loans held for investment | 2.48% | 2.71% | 3.14% | ||
| Total allowance for loan losses/nonaccrual loans | 66.55% | 72.23% | 60.29% | ||
| Community West Bancshares | |||||
| Tier 1 leverage ratio | 11.35% | 12.94% | 11.71% | ||
| Tier 1 risk-based capital ratio | 14.30% | 15.96% | 15.00% | ||
| Total risk-based capital ratio | 15.57% | 17.23% | 16.68% | ||
| Community West Bank | |||||
| Tier 1 leverage ratio | 11.13% | 12.36% | 11.65% | ||
| Tier 1 risk-based capital ratio | 14.03% | 15.25% | 14.83% | ||
| Total risk-based capital ratio | 15.30% | 16.52% | 16.10% | ||
| INTEREST SPREAD ANALYSIS | Jun. 30, 2014 | Mar. 31, 2014 | Jun. 30, 2013 | ||
| Yield on total loans | 5.66% | 5.76% | 6.01% | ||
| Yield on investments | 2.28% | 2.38% | 2.40% | ||
| Yield on interest-earning deposits | 0.31% | 0.22% | 0.23% | ||
| Yield on earning assets | 5.17% | 5.32% | 5.42% | ||
| Cost of interest-bearing deposits | 0.66% | 0.67% | 0.80% | ||
| Cost of total deposits | 0.59% | 0.59% | 0.71% | ||
| Cost of FHLB advances | 2.79% | 2.80% | 2.93% | ||
| Cost of interest-bearing liabilities | 0.78% | 0.85% | 1.11% | ||