GOLETA, Calif., April 28, 2017 (GLOBE NEWSWIRE) -- Community West Bancshares (Community West or the Company), (NASDAQ:CWBC), parent company of Community West Bank (Bank), today reported net income of $1.4 million, or $0.16 per diluted share, in the first quarter of 2017 (1Q17) compared to $1.3 million, or $0.16 per diluted share, in the fourth quarter of 2016 (4Q16) and $1.3 million, or $0.15 per diluted share, the first quarter of 2016 (1Q16).
“We made excellent progress with executing on our growth strategies during the first quarter of 2017,” stated Martin E. Plourd, President and Chief Executive Officer. “During the first quarter we relocated our Santa Maria branch to a better location and opened a new branch in Oxnard. The strong loan growth of 6% was a result of our expansion in San Luis Obispo and Ventura counties. Net income increased nearly 6% year-over-year, despite this investment in growing our franchise. We also maintained a healthy net interest margin, further improved our asset quality and maintained our previous momentum with robust loan growth. We remain focused on competing for business in our local markets and expanding our franchise through organic growth.”
First Quarter 2017 Financial Highlights
- Net income was $1.4 million, or $0.16 per diluted share.
- Return on average assets was 0.76%.
- Return on average common equity was 8.28%.
- Net interest margin was 4.45%.
- Net loans increased 6.0% to $660.8 million at March 31, 2017, compared to $623.4 million three months earlier and increased 22.3% compared to $540.2 million a year ago.
- Total assets increased 20.2% to $748.3 million at March 31, 2017, compared to $622.8 million a year ago.
- Nonaccrual loans, net, decreased 52.1% to $2.3 million, or 0.34% of net loans at March 31, 2017, compared to $4.8 million, or 0.88% of net loans, a year ago, representing the lowest level since 3Q07.
- Non-interest-bearing deposits increased 45.3% to $102.6 million at March 31, 2017, compared to $70.6 million a year ago.
- Book value per common share increased 6.6% to $8.22 at March 31, 2017, compared to $7.71 a year ago.
- The Bank continues to be well-capitalized per banking regulations with its total risk-based capital ratio at 11.60% and Tier 1 leverage ratio at 9.41% at March 31, 2017.
Income Statement
“Our net interest margin remained healthy at 4.45%,” said Susan C. Thompson, Executive Vice President and Chief Financial Officer. First quarter net interest margin was 4.45% compared to 4.63% in 4Q16, which included 12bp of one time interest items, and 4.45% in 1Q16.
Net interest income for 1Q17 was $7.8 million, which was unchanged compared to the preceding quarter and a 15.7% increase compared to $6.7 million in 1Q16. Non-interest income increased 19.1% to $641,000 in 1Q17, compared to $538,000 in 4Q16 and 10.7% compared to $579,000 in 1Q16.
Non-interest expenses totaled $5.9 million in 1Q17, compared to $5.3 million in 1Q16 and unchanged from the preceding quarter. The increase is largely due to costs associated with the business development of the Bank’s Northern region, consisting of San Luis Obispo and north Santa Barbara counties and the addition of the Oxnard location in the Southern region.
Balance Sheet
“The loan portfolio increased again during the quarter, with good production in targeted loan types, including an increase in commercial real estate loans,” said Plourd. “The regional economy remains solid and we continue to see potential for strong loan growth.”
Net loans increased 6.0% to $660.8 million at March 31, 2017, compared to $623.4 million at December 31, 2016, and increased 22.3% compared to $540.2 million a year ago. Commercial real estate loans outstanding were up 63.8% from year ago levels to $303.8 million at March 31, 2017, and comprise 45.4% of the total loan portfolio. Manufactured housing loans were up 11.2% from year ago levels to $202.3 million and represent 30.3% of total loans. Commercial loans decreased 3.5% from year ago levels to $103.6 million and represent 15.5% of the total loan portfolio and SBA loans decreased 13.6% from a year ago to $37.0 million and represent 5.5% of the total loan portfolio.
Total assets were $748.3 million at March 31, 2017, a 5.3% increase compared to $710.6 million three months earlier and a 20.2% increase compared to $622.8 million one year ago. Deposits increased 4.6% to $640.1 million at March 31, 2017, compared to $612.2 million at December 31, 2016, and grew 17.2% compared to $546.1 million a year earlier. Core deposits, defined as non-interest-bearing checking, interest-bearing checking, money market accounts, savings accounts and retail certificates of deposit totaled $456.1 million at March 31, 2017 and comprise 71.2% of total deposits, compared to $405.5 million, or 74.3% of total deposits, a year ago.
Stockholders’ equity was $66.6 million at March 31, 2017, compared to $65.3 million at December 31, 2016, and $62.4 million a year ago. Book value per common share improved to $8.22 at March 31, 2017, compared to $8.07 at December 31, 2016, and $7.71 a year ago.
Credit Quality
“Due to strong loan growth, we recorded a provision for loan losses for the fourth consecutive quarter,” said Plourd. The loan loss provision was $144,000 in 1Q17, compared to $116,000 in 4Q16, and a credit to provision of $247,000 in 1Q16. Net loan recoveries were $177,000 in 1Q17 compared to $158,000 in 4Q16 and $150,000 in 1Q16.
The allowance for loan losses was $7.8 million at March 31, 2017, or 1.28% of total loans held for investment, compared to 1.31% at December 31, 2016, and 1.41% a year ago. Net nonaccrual loans decreased to $2.3 million, or 0.34% of total loans at March 31, 2017, compared to $2.4 million, or 0.38% of total loans, three months earlier, and decreased 52.1% compared to $4.8 million, or 0.88% of total loans, a year ago.
Of the $2.3 million in net nonaccrual loans, $740,000 were manufactured housing loans, $546,000 were commercial loans, $368,000 were home equity loans, $212,000 were SBA 504 1st loans, $188,000 were single family real estate loans, $137,000 were commercial real estate loans and $111,000 were SBA 7A loans.
Other assets acquired through foreclosure totaled $145,000 at March 31, 2017, compared to $137,000 three months earlier and $176,000 a year earlier.
Cash Dividend Declared
The Company’s Board of Directors increased its quarterly cash dividend by 14.3% to $0.04 per common share, payable May 31, 2017 to common shareholders of record on May 12, 2017. The current annualized yield, based on the closing price of CWBC shares of $10.20 on March 31, 2017, was 1.6%.
Stock Repurchase Program
On August 31, 2015, the Company announced that the Board of Directors authorized a common stock repurchase program of up to $3 million. As of March 31, 2017, 187,569 shares (none in 1Q17) had been cumulatively repurchased (last repurchase was in 3Q16) at an average price of $7.25 per share.
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, the largest publicly traded community bank serving California’s Central Coast area of Ventura, Santa Barbara and San Luis Obispo counties. Community West Bank has seven full-service California branch banking offices, in Goleta, Santa Barbara, Santa Maria, Ventura, Westlake Village, San Luis Obispo and Oxnard. The principal business activities of the Company are Relationship business banking, Manufactured Housing lending and Government Guaranteed lending.
Industry Accolades
In April 2017, Community West was awarded a “Super Premier” rating by The Findley Reports, the highest ranking for a community bank. For 50 years, The Findley Reports has been recognizing the financial performance of banking institutions in California and the Western United States. In making their selections, The Findley Reports focuses on these four ratios: growth, return on beginning equity, net operating income as a percentage of average assets, and loan losses as a percentage of gross loans.
In September 2016, Community West was named to Sandler O’Neill and Partners Bank and Thrift Sm-All Stars – Class of 2016. This award recognized Community West as one of the top 27 best performing small capitalization institutions from a list of publicly traded banks and thrifts in the U.S. with market capitalizations less than $2.5 billion. In making their selections, Sandler focused on growth, profitability, credit quality and capital strength.
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, | ||||||||
| 2017 | 2016 | 2016 | ||||||||
| Interest income | ||||||||||
| Loans, including fees | $ | 8,442 | $ | 8,280 | $ | 7,175 | ||||
| Investment securities and other | 261 | 302 | 269 | |||||||
| Total interest income | 8,703 | 8,582 | 7,444 | |||||||
| Interest expense | ||||||||||
| Deposits | 858 | 763 | 651 | |||||||
| Other borrowings and convertible debt | 71 | 57 | 72 | |||||||
| Total interest expense | 929 | 820 | 723 | |||||||
| Net interest income | 7,774 | 7,762 | 6,721 | |||||||
| Provision (credit) for loan losses | 144 | 116 | (247 | ) | ||||||
| Net interest income after provision for loan losses | 7,630 | 7,646 | 6,968 | |||||||
| Non-interest income | ||||||||||
| Other loan fees | 303 | 215 | 275 | |||||||
| Document processing fees | 133 | 115 | 115 | |||||||
| Service charges | 96 | 95 | 90 | |||||||
| Other | 109 | 113 | 99 | |||||||
| Total non-interest income | 641 | 538 | 579 | |||||||
| Non-interest expenses | ||||||||||
| Salaries and employee benefits | 3,931 | 3,628 | 3,452 | |||||||
| Occupancy, net | 645 | 633 | 486 | |||||||
| Professional services | 179 | 220 | 179 | |||||||
| Data processing | 168 | 280 | 171 | |||||||
| Depreciation | 163 | 192 | 149 | |||||||
| Advertising and marketing | 156 | 169 | 81 | |||||||
| FDIC assessment | 110 | 106 | 97 | |||||||
| Loan servicing and collection | 106 | 11 | 179 | |||||||
| Stock-based compensation | 84 | 77 | 80 | |||||||
| Other | 381 | 554 | 462 | |||||||
| Total non-interest expenses | 5,923 | 5,870 | 5,336 | |||||||
| Income before provision for income taxes | 2,348 | 2,314 | 2,211 | |||||||
| Provision for income taxes | 992 | 974 | 928 | |||||||
| Net income | $ | 1,356 | $ | 1,340 | $ | 1,283 | ||||
| Earnings per share: | ||||||||||
| Basic | $ | 0.17 | $ | 0.16 | $ | 0.16 | ||||
| Diluted | $ | 0.16 | $ | 0.16 | $ | 0.15 | ||||
| COMMUNITY WEST BANCSHARES | ||||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||||
| (unaudited) | ||||||||||||
| (in 000's, except per share data) | ||||||||||||
| March 31, | December 31, | March 31, | ||||||||||
| 2017 | 2016 | 2016 | ||||||||||
| Cash and cash equivalents | $ | 1,811 | $ | 2,401 | $ | 2,499 | ||||||
| Time and interest-earning deposits in other financial institutions | 28,366 | 31,715 | 26,538 | |||||||||
| Investment securities | 35,389 | 31,683 | 35,633 | |||||||||
| Loans: | ||||||||||||
| Commercial | 103,581 | 105,290 | 107,386 | |||||||||
| Commercial real estate | 303,795 | 272,142 | 185,458 | |||||||||
| SBA | 37,036 | 36,488 | 42,890 | |||||||||
| Manufactured housing | 202,332 | 194,222 | 182,018 | |||||||||
| Single family real estate | 11,728 | 12,750 | 17,919 | |||||||||
| HELOC | 10,462 | 10,292 | 10,885 | |||||||||
| Other | (388 | ) | (365 | ) | 425 | |||||||
| Total loans | 668,546 | 630,819 | 546,981 | |||||||||
| Loans, net | ||||||||||||
| Held for sale | 59,811 | 61,416 | 61,897 | |||||||||
| Held for investment | 608,735 | 569,403 | 485,084 | |||||||||
| Less: Allowance for loan losses | (7,785 | ) | (7,464 | ) | (6,819 | ) | ||||||
| Net held for investment | 600,950 | 561,939 | 478,265 | |||||||||
| NET LOANS | 660,761 | 623,355 | 540,162 | |||||||||
| Other assets | 21,973 | 21,418 | 17,923 | |||||||||
| TOTAL ASSETS | $ | 748,300 | $ | 710,572 | $ | 622,755 | ||||||
| Deposits | ||||||||||||
| Non-interest-bearing demand | $ | 102,553 | $ | 100,372 | $ | 70,587 | ||||||
| Interest-bearing demand | 262,008 | 253,023 | 250,404 | |||||||||
| Savings | 14,072 | 14,007 | 14,294 | |||||||||
| Certificates of deposit ($250,000 or more) | 80,293 | 77,509 | 67,995 | |||||||||
| Other certificates of deposit | 181,204 | 167,325 | 142,795 | |||||||||
| Total deposits | 640,130 | 612,236 | 546,075 | |||||||||
| Other borrowings | 37,000 | 29,000 | 10,500 | |||||||||
| Other liabilities | 4,603 | 4,000 | 3,741 | |||||||||
| TOTAL LIABILITIES | 681,733 | 645,236 | 560,316 | |||||||||
| Stockholders' equity | 66,567 | 65,336 | 62,439 | |||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||
| $ | 748,300 | $ | 710,572 | $ | 622,755 | |||||||
| Shares outstanding | 8,103 | 8,096 | 8,103 | |||||||||
| Book value per common share | $ | 8.22 | $ | 8.07 | $ | 7.71 | ||||||
| ADDITIONAL FINANCIAL INFORMATION | |||||||||||
| (Dollars in thousands except per share amounts)(Unaudited) | |||||||||||
| Three Months Ended | Three Months Ended | Three Months Ended | |||||||||
| PERFORMANCE MEASURES AND RATIOS | Mar. 31, 2017 | Dec. 31, 2016 | Mar. 31, 2016 | ||||||||
| Return on average common equity | 8.28 | % | 8.17 | % | 8.23 | % | |||||
| Return on average assets | 0.76 | % | 0.78 | % | 0.83 | % | |||||
| Efficiency ratio | 70.39 | % | 70.72 | % | 73.10 | % | |||||
| Net interest margin | 4.45 | % | 4.63 | % | 4.45 | % | |||||
| Three Months Ended | Three Months Ended | Three Months Ended | |||||||||
| AVERAGE BALANCES | Mar. 31, 2017 | Dec. 31, 2016 | Mar. 31, 2016 | ||||||||
| Average assets | $ | 721,630 | $ | 679,201 | $ | 618,283 | |||||
| Average earning assets | 708,751 | 666,280 | 607,872 | ||||||||
| Average total loans | 650,784 | 607,989 | 543,555 | ||||||||
| Average deposits | 626,876 | 598,197 | 540,539 | ||||||||
| Average common equity | 66,381 | 65,247 | 62,678 | ||||||||
| EQUITY ANALYSIS | Mar. 31, 2017 | Dec. 31, 2016 | Mar. 31, 2016 | ||||||||
| Total common equity | $ | 66,567 | $ | 65,336 | $ | 62,439 | |||||
| Common stock outstanding | 8,103 | 8,096 | 8,103 | ||||||||
| Book value per common share | $ | 8.22 | $ | 8.07 | $ | 7.71 | |||||
| ASSET QUALITY | Mar. 31, 2017 | Dec. 31, 2016 | Mar. 31, 2016 | ||||||||
| Nonaccrual loans, net | $ | 2,302 | $ | 2,375 | $ | 4,807 | |||||
| Nonaccrual loans, net/total loans | 0.34 | % | 0.38 | % | 0.88 | % | |||||
| Other assets acquired through foreclosure, net | $ | 145 | $ | 137 | $ | 176 | |||||
| Nonaccrual loans plus other assets acquired through foreclosure, net | $ | 2,447 | $ | 2,512 | $ | 4,983 | |||||
| Nonaccrual loans plus other assets acquired through foreclosure, net/total assets | 0.33 | % | 0.35 | % | 0.80 | % | |||||
| Net loan (recoveries)/charge-offs in the quarter | $ | (177 | ) | $ | (158 | ) | $ | (150 | ) | ||
| Net (recoveries)/charge-offs in the quarter/total loans | (0.03 | %) | (0.03 | %) | (0.03 | %) | |||||
| Allowance for loan losses | $ | 7,785 | $ | 7,464 | $ | 6,819 | |||||
| Plus: Reserve for undisbursed loan commitments | 113 | 125 | 74 | ||||||||
| Total allowance for credit losses | $ | 7,898 | $ | 7,589 | $ | 6,893 | |||||
| Allowance for loan losses/total loans held for investment | 1.28 | % | 1.31 | % | 1.41 | % | |||||
| Allowance for loan losses/nonaccrual loans, net | 338.18 | % | 314.27 | % | 141.86 | % | |||||
| Community West Bank * | |||||||||||
| Tier 1 leverage ratio | 9.41 | % | 10.08 | % | 10.55 | % | |||||
| Tier 1 capital ratio | 10.38 | % | 11.04 | % | 12.59 | % | |||||
| Total capital ratio | 11.60 | % | 12.27 | % | 13.84 | % | |||||
| INTEREST SPREAD ANALYSIS | Mar. 31, 2017 | Dec. 31, 2016 | Mar. 31, 2016 | ||||||||
| Yield on total loans | 5.26 | % | 5.42 | % | 5.31 | % | |||||
| Yield on investments | 2.48 | % | 3.23 | % | 2.58 | % | |||||
| Yield on interest earning deposits | 0.74 | % | 0.43 | % | 0.57 | % | |||||
| Yield on earning assets | 4.98 | % | 5.12 | % | 4.93 | % | |||||
| Cost of interest-bearing deposits | 0.66 | % | 0.60 | % | 0.56 | % | |||||
| Cost of total deposits | 0.56 | % | 0.54 | % | 0.48 | % | |||||
| Cost of borrowings | 1.20 | % | 2.00 | % | 2.76 | % | |||||
| Cost of interest-bearing liabilities | 0.68 | % | 0.63 | % | 0.61 | % | |||||
| * Capital ratios are preliminary until the Call Report is filed. | |||||||||||
Transmitted on Globe Newswire on April 28, 2017 at 6:00 a.m. PDT.