EX-99.1 2 newsrelease.htm PRESS RELEASE Community West Bancshares Reports First Quarter Results, Highlighted by Continued Net Interest Margin Expansion

EXHIBIT 99.1

Community West Bancshares Reports First Quarter Results, Highlighted by Continued Net Interest Margin Expansion

GOLETA, Calif., April 20, 2010 (GLOBE NEWSWIRE) -- Community West Bancshares (Nasdaq:CWBC), parent company of Community West Bank, today reported net income of $51,000 in the first quarter of 2010, compared to a net loss of $6.7 million in the first quarter of 2009. The loan loss provision in the quarter was $3.1 million compared to $12.6 million in the first quarter a year ago.

"Our underlying business performance for the quarter was strong and reflects overall operating improvements compared to the first quarter a year ago," stated Lynda J. Nahra, President and Chief Executive Officer. "Substantial core deposit growth and continued changes in the mix of our funding over the past several quarters resulted in a significant expansion of our net interest margin during the quarter, which increased by 30 basis points to 4.48% compared to the prior quarter and 92 basis points compared to the first quarter of 2009. The ongoing margin improvement, along with cost reductions implemented at the beginning of 2009, continued to enhance our positive operating earnings. We continued to operate in a challenging lending environment and, while we are encouraged with the progress we are making, we are taking every opportunity to further strengthen our credit quality."

First Quarter 2010 Highlights

  • Net interest margin improved 30 basis points to 4.48% compared to 4Q09, and improved 92 basis points compared to 1Q09.
  • Total deposits increased by 11.4% compared to a year ago with core deposits up 116%.
  • The efficiency ratio improved to 61.1% from 63.4% in 4Q09 and 83.8% in 1Q09.
  • Nonperforming loans totaled $17.7 million, or 2.93% of total loans.
  • Allowance for loan losses increased to 2.84% of total loans held for investment compared to 2.67% of total loans held for investment in the previous quarter.

"We are pleased with the improvement in our operational results compared to the year ago quarter," said Nahra. "We expect to return to a more normalized level of profitability as we move through this credit cycle."  In the first quarter of 2010, including the $262,000 preferred stock dividend, the net loss applicable to common stockholders was $211,000, or $0.04 per diluted share, compared to a net loss applicable to common stockholders of $7.0 million, or $1.18 per diluted share, in the first quarter a year ago. 

Credit Quality

"The economy continues to impact the loan portfolio," said Nahra. "As a result, the provision for loan losses, while less than the same quarter a year ago, remained high in the first quarter of the year, reflecting significant, though moderating, levels of non-performing loans and net charge-offs."

Nonperforming loans increased $1.5 million during the quarter to $17.7 million, or 2.93% of total loans at March 31, 2010, compared to $16.2 million or 2.62% of total loans three months earlier and $8.7 million, or 1.45% of total loans a year ago. Real estate owned and repossessed assets totaled $3.7 million at March 31, 2010 compared to $1.8 million at December 31, 2009 and $3.0 million a year ago.

Of the $17.7 million in total nonperforming loans, $8.3 million or 47.2% were real estate loans, $5.8 million or 32.7% were SBA loans, $1.2 million or 7.0% were manufactured housing loans, $2.2 million or 12.3% were commercial loans and $148,000 or 0.8% were other installment loans.

Community West's loan loss provision was $3.1 million in the first quarter of 2010 compared to $2.8 million in the preceding quarter and $12.6 million in the first quarter a year ago.  The allowance for loan losses totaled $14.4 million at quarter-end, equal to 2.84% of total loans held for investment, compared to 2.67% at December 31, 2009 and 2.69% at March 31, 2009.

Net charge-offs were $2.4 million in the first quarter and $2.3 million for the preceding quarter. In the first quarter a year ago, net charge-offs totaled $6.5 million. 

Balance Sheet

"While total loan balances increased slightly from a year ago they have declined compared to the previous quarter as demand for commercial and SBA loans have been modest," said Charles G. Baltuskonis, EVP and Chief Financial Officer. Net loans were $588.5 million at March 31, 2010 compared to $603.4 million at December 31, 2009 and $585.7 million a year ago. 

Real estate loans outstanding increased 6.3% to $190.7 million at March 31, 2010, compared to $179.4 million a year ago. Real estate loans comprise 31.6% of the total loan portfolio, compared to 29.9% a year earlier. Manufactured housing loans increased 3.3% from year ago levels to $197.3 million and represent 32.7% of total loans.  Commercial loans were down 20.5% compared to a year ago and now represent 9.6% of the total loan portfolio and SBA loans decreased 1.8% from a year ago and now represent 22.6% of the total loan portfolio.  Other installment loans increased 19.5% from year ago levels and now represent 3.5% of the total loan portfolio. 

Assets totaled $677.7 million at March 31, 2010, compared to $669.8 million a year earlier. Total deposits increased 11.4% to $540.1 million at March 31, 2010 compared to $485.0 million a year earlier.  Non-interest-bearing accounts were $39.6 million at the end of the first quarter compared to $34.4 million a year ago. Interest-bearing accounts nearly tripled to $221.1 million compared to $78.6 million a year ago.  Core deposits, defined as non-interest-bearing, interest-bearing and savings accounts, more than doubled to $280.9 million at quarter-end, compared to $130.1 million a year earlier while certificates of deposit decreased 27.0% over the same period to $259.2 million, compared to $354.9 million a year earlier. 

"Our deposit franchise had another strong quarter and has allowed us to substantially lower our cost of deposits and funding," said Baltuskonis.  Stockholders' equity was $60.2 million at March 31, 2010, compared to $59.8 million a year earlier. Book value per common share was $7.70 at March 31, 2010 compared to $7.68 a year ago.

Income Statement Review

"Our net interest margin, which improved 92 basis points from the first quarter a year ago, was driven by a continued decline in funding costs and our success in building core deposits," said Baltuskonis. Net interest income in the first quarter of 2010 increased 26.6% to $7.3 million compared to $5.8 million in the first quarter of 2009.  Non-interest income was $839,000 in the first quarter, compared to $1.2 million in the first quarter a year ago.  

Non-interest expenses were $5.0 million in the first quarter of 2010, compared to $5.8 million in the first quarter of 2009. "We have made progress in improving core operating efficiency as manageable operating expenses have reduced steadily over the past year. However, we anticipate collection costs and charges related to problem assets to remain higher than normal for some time," said Baltuskonis.  

The efficiency ratio improved to 61.1 % in the first quarter of 2010 from 63.4% in the prior quarter and 83.8% in the first quarter a year ago, reflecting ongoing efforts to improve operations and control costs.

Capital Management

Community West Bancshares continues to meet the well capitalized thresholds for regulatory purposes with a Total risk-based capital ratio of 12.40%, Tier 1 risk-based capital ratio of 11.13% and Tier 1 leverage ratio of 8.78% at March 31, 2010. 

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 STATEMENTS OF OPERATIONS  
(unaudited)        
(in 000's, except per share data)        
         
    Three Months Ended
    March 31, December 31, March 31,
    2010 2009 2009
         
Interest income    $ 9,942  $ 10,108  $ 10,217
Interest expense    2,647  3,058  4,454
Net interest income    7,295  7,050  5,763
Provision for loan losses    3,074  2,788  12,555
Net interest income (loss) after provision for loan losses    4,221  4,262  (6,792)
Non-interest income    839  1,029  1,168
Non-interest expenses    4,971  5,124  5,807
         
Income (loss) before income taxes    89  167  (11,431)
Provision (benefit) for income taxes    38  70  (4,702)
         
NET INCOME (LOSS)    $ 51  $ 97  $ (6,729)
         
Preferred stock dividends    262  262  261
         
NET LOSS APPLICABLE TO COMMON STOCKHOLDERS      $ (211)   $ (165)  $ (6,990)
         
         
Loss per common share:        
Basic    $ (0.04)  $ (0.03)  $ (1.18)
Diluted    (0.04)  (0.03)  (1.18)
         
Weighted average shares:        
Basic    5,915  5,915  5,915
Diluted    5,915  5,915  5,915
   
COMMUNITY WEST BANCSHARES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)    
(in 000's, except per share data)  
       
  March 31, December 31, March 31,
  2010 2009 2009
       
Cash and cash equivalents  $ 14,812  $ 5,511  $ 12,820
Interest-earning deposits in other financial institutions  475  640  591
Investment securities  37,745  40,348  39,241
Loans:      
 Commercial  57,795  61,810  72,739
 Real estate  190,724  202,400  179,370
 SBA  136,048  139,118  138,575
 Manufactured housing  197,267  195,656  190,860
 Other installment  21,057  18,189  17,619
Total loans  602,891  617,173  599,163
       
Loans, net      
 Held for sale  95,976  102,574  99,581
 Held for investment  506,915  514,599  499,582
 Less: Allowance  (14,409)  (13,733)  (13,414)
 Net held for investment  492,506  500,866  486,168
 NET LOANS  588,482  603,440  585,749
       
Other assets  36,152  34,277  31,407
       
 TOTAL ASSETS  $677,666  $684,216  $669,808
       
Deposits      
 Non-interest-bearing   $ 39,566  $ 37,703  $ 34,354
 Interest-bearing  221,116  191,905  78,596
 Savings  20,181  16,396  17,142
 CDs over 100K  179,803  173,594  178,331
 CDs under 100K  79,433  111,794  176,592
Total Deposits  540,099  531,392  485,015
FHLB and FRB advances  74,000  89,000  120,000
Other liabilities  3,385  3,517  5,015
 TOTAL LIABILITIES  617,484  623,909  610,030
       
Stockholders' equity  60,182  60,307  59,778
       
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $677,666 $684,216  $669,808
       
       
Shares outstanding  5,915  5,915  5,915
       
Book value per common share  $ 7.70  $ 7.74  $ 7.68
   
ADDITIONAL FINANCIAL INFORMATION
(Dollars in thousands except per share amounts)(Unaudited)
  Quarter Ended
PERFORMANCE MEASURES AND RATIOS Mar. 31, 2010 Dec. 31, 2009 Mar. 31, 2009
Return on average common equity  0.44% 0.83% -51.78%
Return on average assets  0.03% 0.06% -4.00%
Efficiency ratio 61.11% 63.42% 83.78%
Net interest margin 4.48% 4.18% 3.56%
       
  Quarter Ended
AVERAGE BALANCES Mar. 31, 2010 Dec. 31, 2009 Mar. 31, 2009
Average assets  $682,062  $681,201  $672,740
Average earning assets  660,939  669,248  656,178
Average total loans  610,137  611,512  599,574
Average deposits  535,137  531,453  484,930
Average equity (including preferred stock)  61,009  61,187  66,305
Average common equity (excluding preferred stock)  46,439  46,683  51,984
       
EQUITY ANALYSIS Mar. 31, 2010 Dec. 31, 2009 Mar. 31, 2009
Total equity  $ 60,182  $ 60,307  $ 59,778
Less: senior preferred stock  14,607  14,540  14,340
Total common equity  $ 45,575  $ 45,767  $ 45,438
       
Common stock outstanding  5,915  5,915  5,915
Book value per common share  $ 7.70  $ 7.74  $ 7.68
       
ASSET QUALITY Mar. 31, 2010 Dec. 31, 2009 Mar. 31, 2009
Nonperforming loans (NPLs)  $ 17,655  $ 16,177  $ 8,714
Nonperforming loans/total loans 2.93% 2.62% 1.45%
REO and repossessed assets  $ 3,700  $ 1,822  $ 3,042
Less: SBA-guaranteed amounts  $ 1,196  $ 181  $ 233
Net REO and repossessed assets  $ 2,504  $ 1,641  $ 2,809
       
Nonperforming assets, net  $ 20,159  $ 17,818  $ 11,523
Nonperforming assets/total assets 2.97% 2.60% 1.72%
Net loan charge-offs in the quarter  $ 2,398  $ 2,329  $ 6,482
Net charge-offs in the quarter/total loans  0.40% 0.38% 1.08%
       
Allowance for loan losses  $ 14,409  $ 13,733  $ 13,414
Plus: Allowance for undisbursed loan commitments  370  501  401
Total allowance for credit losses  $ 14,779  $ 14,234  $ 13,815
Total allowance for loan losses/total loans held for investment 2.84% 2.67% 2.69%
Total allowance for loan losses/nonperforming loans 82% 85% 154%
       
Tier 1 leverage ratio 8.78% 8.81% 8.86%
Tier 1 risk-based capital ratio 11.13% 10.93% 11.13%
Total risk-based capital ratio 12.40% 12.20% 12.40%
       
  Quarter Ended
INTEREST SPREAD ANALYSIS Mar. 31, 2010 Dec. 31, 2009 Mar. 31, 2009
Yield on interest-bearing deposits 1.69% 1.92% 3.03%
Yield on total loans 6.34% 6.29% 6.60%
Yield on investments 3.54% 3.37% 4.09%
Yield on earning assets 6.10% 5.99% 6.31%
       
Cost of deposits 1.56% 1.77% 2.81%
Cost of FHLB advances 3.19% 3.65% 4.28%
Cost of Federal Reserve borrowings 0.50% 0.50% 0.50%
Cost of interest-bearing liabilities 1.85% 2.10% 3.18%
CONTACT:  Community West Bancshares
          Charles G. Baltuskonis, EVP & CFO
          805.692.5281
          www.communitywestbank.com