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. | |||||