GOLETA, Calif., April 24, 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 $1.8 million in the first quarter of 2015 (1Q15) compared to $2.2 million in the fourth quarter of 2014 (4Q14) and $1.4 million in the first quarter a year ago (1Q14). First quarter pretax income increased to $3.0 million, compared to $2.4 million in the first quarter a year ago.
"Community West's first quarter accomplishments were a good start to the year as we continue to successfully strengthen our balance sheet and deliver sustainable profitability," said Martin E. Plourd, President and Chief Executive Officer. "Our financial results for the quarter again show strong operating results, improving asset quality trends and year-over-year loan and deposit growth. We continue to position the Bank for future growth by strengthening our balance sheet, liquidity and capital base and exploring all growth opportunities."
1Q15 Financial Highlights
- Net income was $1.8 million in 1Q15, compared to $1.4 million in 1Q14.
- Net interest margin was 4.65% in 1Q15, a 13 basis point improvement compared to 4Q14 and unchanged compared to 1Q14.
- Non-interest expenses decreased 13.6% to $4.8 million in 1Q15, compared to $5.5 million in 1Q14.
- The efficiency ratio improved to 69.84% in 1Q15, from 83.71% in 1Q14.
- Total deposits increased 11.0% to $495.7 million at March 31, 2015, compared to $446.5 million a year ago.
- Net loans increased 2.7% to $485.8 million at March 31, 2015, compared to $473.1 million a year earlier.
- Nonaccrual loans, net, decreased to $10.5 million at March 31, 2015, compared to $15.7 million a year ago.
- Other assets acquired through foreclosure totaled $320,000 at March 31, 2015, a decrease of 91.5% compared to $3.8 million a year earlier.
- The Company redeemed $1.0 million of its preferred stock during 1Q15, leaving a remaining balance of $5,995,000.
- Book value per common share increased 11.9% to $7.50 at March 31, 2015, compared to $6.70 a year ago.
- Community West Bank's capital ratios continue to be strong with its total risk-based capital ratio at 15.77% and Tier 1 leverage ratio at 11.72% at March 31, 2015.
Including $121,000 of preferred stock dividends and discount on partial redemptions, the net income available to common stockholders was $1.6 million, or $0.19 per diluted share, in 1Q15 compared to $2.0 million, or $0.24 per diluted share, in 4Q14 and $1.2 million, or $0.15 per diluted share, in 1Q14.
Credit Quality
"Our focus on improving asset quality was evident again during the quarter, with net nonaccrual loans declining modestly compared to last quarter," said Plourd. "As a result of strong asset quality, including the solid loan loss reserves already in place, we recorded a negative provision for loan losses in the last five quarters and net recoveries in four of the past five quarters." The negative loan loss provision was $968,000 in 1Q15, compared to $1.6 million in 4Q14, and $1.4 million in the first quarter a year ago. Net loan recoveries were $366,000 in 1Q15compared to $216,000 in 4Q14 and $519,000 in 1Q14.
The total allowance for loan losses was $7.3 million at March 31, 2015, or 1.69% of total loans held for investment, compared to 1.84% at December 31, 2014, and 2.71% a year ago. Nonaccrual loans, net, were $10.5 million, or 2.13% of total loans at March 31, 2015, compared to $11.0 million, or 2.23% of total loans, three months earlier, and decreased 33.1% compared to $15.7 million, or 3.25% of total loans, a year ago.
Of the $10.5 million in net nonaccrual loans, $2.9 million were commercial loans, $2.9 million were commercial real estate loans, $1.7 million were manufactured housing loans, $1.7 million were SBA loans, $724,000 were SBA 504 1st loans, $460,000 were single family real estate loans and $85,000 were home equity line of credit loans.
Other assets acquired through foreclosure totaled $320,000 at March 31, 2015, a decrease of 91.5% compared to $3.8 million a year earlier. Nonaccrual loans plus other assets acquired through foreclosure, net of SBA/USDA guarantees, totaled $10.8 million, or 1.89% of total assets, at March 31, 2015, compared to $11.2 million, or 2.0% of total assets, three months earlier and $17.3 million, or 3.15% of total assets, a year ago.
Income Statement
"Our net interest margin continues to benefit from our higher than industry average loan yields," said Charles G. Baltuskonis, Executive Vice President and Chief Financial Officer. Community West's first quarter net interest margin improved 13 basis points to 4.65%, compared to 4.52% in 4Q14 and remained unchanged compared to 1Q14.
First quarter net interest income was $6.4 million, a modest increase compared to $6.3 million in the preceding quarter and a 4.4% increase compared to $6.1 million in 1Q14. Non-interest income was $480,000 in 1Q15 compared to $471,000 in 4Q14 and $518,000 in 1Q14.
Community West's first quarter non-interest expenses were up slightly to $4.8 million compared to $4.6 million in 4Q14 but decreased 13.6% when compared to $5.5 million in 1Q14. The decrease in non-interest expenses for the year over year quarter 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. Community West's first quarter efficiency ratio was 69.84%, compared to 68.56% in 4Q14 and 83.71% in 1Q14.
Balance Sheet
"While the loan portfolio had increased activity, total loans were down compared to the prior quarter end due to some large payoffs. However, year-over-year net loans increased 2.7%," said Baltuskonis. Net loans were $485.8 million at March 31, 2015, compared to $487.3 million at December 31, 2014, and $473.1 million a year ago. Manufactured housing loans were down 0.6% from year ago levels to $169.8 million and represent 34.4% of total loans. Commercial real estate loans outstanding were up 7.5% from year ago levels to $163.2 million at March 31, 2015, and comprise 33.1% of the total loan portfolio. Commercial loans increased 10.0% from year ago levels to $73.9 million and represent 15.0% of the total loan portfolio and SBA loans decreased 15.8% from a year ago to $57.7 million and represent 11.7% of the total loan portfolio.
Deposits totaled $495.7 million at March 31, 2015, a 3.9% increase compared to $477.1 million at December 31, 2014 and an 11.0% increase compared to $446.5 million a year ago. Non-interest-bearing deposit accounts increased 33.3% to $71.3 million at March 31, 2015, compared to $53.5 million a year earlier, and interest-bearing deposit accounts increased 3.4% to $265.0 million at March 31, 2015, compared to $256.3 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 $394.3 million at March 31, 2015 and comprise 79.5% of total deposits, compared to $356.5 million, or 79.8% of total deposits, a year ago.
Community West's total assets increased 4.0% to $572.3 million at March 31, 2015, compared to $550.3 million at March 31, 2014. Stockholders' equity was $67.5 million at March 31, 2015, compared to $67.0 million at December 31, 2014, and $70.5 million a year ago. Book value per common share was $7.50 at March 31, 2015 compared to $7.31 at December 31, 2014, and $6.70 a year ago.
Announces Partial Redemption of Preferred Stock
In furtherance of its previously announced Preferred Stock Repayment Strategy, the Company redeemed another $317,000 of its 9% Cumulative Perpetual Preferred Stock, Series A, on March 20, 2015, leaving a remaining balance of $5,995,000. 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 $0.03 Per Common Share
The Company's Board of Directors declared a quarterly cash dividend of $0.03 per common share, which is a 50% increase compared to the previous quarter. The dividend will be payable May 28, 2015, to common shareholders of record on May 11, 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 | |||
| March 31, | December 31, | March 31, | |
| 2015 | 2014 | 2014 | |
| Interest income | |||
| Loans, including fees | $ 6,712 | $ 6,798 | $ 6,761 |
| Investment securities and other | 305 | 220 | 200 |
| Total interest income | 7,017 | 7,018 | 6,961 |
| Interest expense | |||
| Deposits | 605 | 624 | 642 |
| Other borrowings and convertible debt | 61 | 88 | 237 |
| Total interest expense | 666 | 712 | 879 |
| Net interest income | 6,351 | 6,306 | 6,082 |
| Provision for credit losses | (968) | (1,575) | (1,371) |
| Net interest income after provision for credit losses | 7,319 | 7,881 | 7,453 |
| Non-interest income | |||
| Other loan fees | 175 | 184 | 175 |
| Document processing fees | 92 | 97 | 78 |
| Service charges | 73 | 69 | 72 |
| Gains from loan sales, net | 36 | 36 | 65 |
| Other | 104 | 85 | 128 |
| Total non-interest income | 480 | 471 | 518 |
| Non-interest expenses | |||
| Salaries and employee benefits | 3,115 | 2,846 | 3,227 |
| Occupancy, net | 445 | 475 | 439 |
| Professional services | 248 | 384 | 360 |
| Data processing | 119 | 145 | 172 |
| Depreciation | 91 | 86 | 75 |
| Loan servicing and collection | 89 | 259 | 265 |
| Advertising and marketing | 80 | 179 | 121 |
| FDIC assessment | 71 | 85 | 80 |
| Stock options | 42 | 38 | 211 |
| Net (gain) loss on sales/write-downs of foreclosed real estate and repossessed assets | (1) | (267) | 40 |
| Other | 472 | 416 | 535 |
| Total non-interest expenses | 4,771 | 4,646 | 5,525 |
| Income before provision for income taxes | 3,028 | 3,706 | 2,446 |
| Income taxes | 1,258 | 1,520 | 1,004 |
| Net Income | 1,770 | 2,186 | 1,442 |
| Dividends and accretion on preferred stock | 140 | 159 | 273 |
| Discount on partial redemption of preferred stock | (19) | (15) | -- |
| Net income available to common stockholders | $ 1,649 | $ 2,042 | $ 1,169 |
| Earnings per share: | |||
| Basic | $ 0.20 | $ 0.25 | $ 0.15 |
| Diluted | $ 0.19 | $ 0.24 | $ 0.15 |
| COMMUNITY WEST BANCSHARES | |||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||
| (unaudited) | |||
| (in 000's, except per share data) | |||
| March 31, | December 31, | March 31, | |
| 2015 | 2014 | 2014 | |
| Cash and cash equivalents | $ 1,689 | $ 1,631 | $ 1,945 |
| Time and interest-earning deposits in other financial institutions | 33,857 | 17,427 | 17,204 |
| Investment securities | 31,054 | 30,641 | 29,602 |
| Loans: | |||
| Commercial | 73,938 | 74,792 | 67,237 |
| Commercial real estate | 163,163 | 159,432 | 151,793 |
| SBA | 57,718 | 61,963 | 68,542 |
| Manufactured housing | 169,752 | 169,662 | 170,754 |
| Single family real estate | 15,349 | 15,744 | 10,646 |
| HELOC | 13,130 | 13,481 | 15,056 |
| Other | 26 | 59 | 451 |
| Total loans | 493,076 | 495,133 | 484,479 |
| Loans, net | |||
| Held for sale | 63,724 | 66,759 | 65,931 |
| Held for investment | 429,352 | 428,374 | 418,548 |
| Less: Allowance | (7,275) | (7,877) | (11,356) |
| Net held for investment | 422,077 | 420,497 | 407,192 |
| NET LOANS | 485,801 | 487,256 | 473,123 |
| Other assets | 19,870 | 20,363 | 28,383 |
| TOTAL ASSETS | $ 572,271 | $ 557,318 | $ 550,257 |
| Deposits | |||
| Non-interest-bearing demand | $ 71,278 | $ 57,364 | $ 53,470 |
| Interest-bearing demand | 265,000 | 275,631 | 256,329 |
| Savings | 15,283 | 15,265 | 16,161 |
| CDs over 100K | 132,396 | 115,588 | 107,217 |
| CDs under 100K | 11,713 | 13,236 | 13,348 |
| Total Deposits | 495,670 | 477,084 | 446,525 |
| Other borrowings | 5,000 | 10,000 | 30,000 |
| Other liabilities | 4,098 | 3,227 | 3,270 |
| TOTAL LIABILITIES | 504,768 | 490,311 | 479,795 |
| Stockholders' equity | 67,503 | 67,007 | 70,462 |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 572,271 | $ 557,318 | $ 550,257 |
| Shares outstanding | 8,204 | 8,203 | 8,184 |
| Book value per common share | $ 7.50 | $ 7.31 | $ 6.70 |
| ADDITIONAL FINANCIAL INFORMATION | |||
| (Dollars in thousands except per share amounts)(Unaudited) | |||
| Quarter Ended | Quarter Ended | Quarter Ended | |
| PERFORMANCE MEASURES AND RATIOS | Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2014 |
| Return on average common equity | 11.78% | 14.70% | 10.97% |
| Return on average assets | 1.27% | 1.54% | 1.07% |
| Efficiency ratio | 69.84% | 68.56% | 83.71% |
| Net interest margin | 4.65% | 4.52% | 4.65% |
| Quarter Ended | Quarter Ended | Quarter Ended | |
| AVERAGE BALANCES | Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2014 |
| Average assets | $ 564,336 | $ 564,634 | $ 545,777 |
| Average earning assets | 553,940 | 553,564 | 530,811 |
| Average total loans | 493,959 | 497,211 | 476,341 |
| Average deposits | 481,531 | 480,878 | 442,119 |
| Average equity (including preferred stock) | 67,218 | 66,041 | 68,891 |
| Average common equity (excluding preferred stock) | 60,934 | 58,984 | 53,291 |
| EQUITY ANALYSIS | Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2014 |
| Total equity | $ 67,503 | $ 67,007 | $ 70,462 |
| Less: senior preferred stock | 5,995 | 7,014 | 15,600 |
| Total common equity | $ 61,508 | $ 59,993 | $ 54,862 |
| Common stock outstanding | 8,204 | 8,203 | 8,184 |
| Book value per common share | $ 7.50 | $ 7.31 | $ 6.70 |
| ASSET QUALITY | Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2014 |
| Nonaccrual loans, net | $ 10,482 | $ 11,027 | $ 15,722 |
| Nonaccrual loans, net/total loans | 2.13% | 2.23% | 3.25% |
| Other assets acquired through foreclosure | $ 320 | $ 137 | $ 3,781 |
| Less: SBA/USDA-guaranteed amounts | 0 | 0 | 2,165 |
| Other assets acquired through foreclosure, net | $ 320 | $ 137 | $ 1,616 |
| Nonaccrual loans plus other assets acquired through foreclosure, net | $ 10,802 | $ 11,164 | $ 17,338 |
| Nonaccrual loans plus other assets acquired through foreclosure, net/total assets | 1.89% | 2.00% | 3.15% |
| Net loan (recoveries)/charge-offs in the quarter | $ (366) | $ (216) | $ (519) |
| Net (recoveries)/charge-offs in the quarter/total loans | -0.07% | -0.04% | -0.11% |
| Allowance for loan losses | $ 7,275 | $ 7,877 | $ 11,356 |
| Plus: Reserve for undisbursed loan commitments | 37 | 39 | 61 |
| Total allowance for credit losses | $ 7,312 | $ 7,916 | $ 11,417 |
| Total allowance for loan losses/total loans held for investment | 1.69% | 1.84% | 2.71% |
| Total allowance for loan losses/nonaccrual loans | 69.40% | 71.43% | 72.23% |
| Community West Bank * | |||
| Tier 1 leverage ratio | 11.72% | 11.64% | 12.36% |
| Tier 1 risk-based capital ratio | 14.51% | 14.66% | 15.25% |
| Total risk-based capital ratio | 15.77% | 15.91% | 16.52% |
| INTEREST SPREAD ANALYSIS | Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2014 |
| Yield on total loans | 5.51% | 5.43% | 5.76% |
| Yield on investments | 3.48% | 2.34% | 2.38% |
| Yield on interest earning deposits | 0.30% | 0.35% | 0.22% |
| Yield on earning assets | 5.14% | 5.03% | 5.32% |
| Cost of interest-bearing deposits | 0.58% | 0.59% | 0.67% |
| Cost of total deposits | 0.51% | 0.51% | 0.59% |
| Cost of FHLB advances | 2.06% | 2.50% | 2.80% |
| Cost of interest-bearing liabilities | 0.63% | 0.65% | 0.85% |
| * Capital ratios are preliminary until the Call Report is filed. | |||