Results Driven by 10% Annual Loan Growth and Continued Improvement in Asset Quality Declares Quarterly Cash Dividend of $0.03 Per Common Share

Goleta, California, January 26, 2016 - Community West Bancshares (Community West or the Company), (NASDAQ: CWBC), parent company of Community West Bank (Bank), today reported net income of $1.9 million in the fourth quarter of 2015 (4Q15) compared to net income of $1.6 million in the third quarter (3Q15) and $2.2 million in the fourth quarter a year ago (4Q14). For the full year, Community West reported net income of $2.9 million compared to net income of $7.0 million a year ago. Excluding the $7.1 million net loan litigation settlement, Community West's net income for the year would have been $7.0 million. (See page 8 - 'Non-Gaap Financial Information')

'Loan and deposit growth, solid net interest margin, and continuing credit quality improvement fueled profitability in the fourth quarter,' said Martin E. Plourd, President and Chief Executive Officer. 'We are optimistic about the opportunities for growth in 2016, particularly expanding further into San Luis Obispo County.'

4Q15 Financial Highlights

  • Nonaccrual loans, net, decreased 54.5% to $5.0 million at December 31, 2015, compared to $11.0 million a year ago, representing the lowest level since 3Q07.
  • Net income available to common stockholders for 4Q15 was $1.8 million, or $0.21 per diluted share, compared to $2.0 million, or $0.24 per diluted share, for 4Q14. The 4Q15 results included a provision for loan losses of ($277,000) compared to ($1.6 million) in 4Q14.
  • Annualized return on average assets was 1.19%.
  • Annualized return on average common equity was 11.96%.
  • Net interest margin was 4.90% for 4Q15 compared to 4.52% for 4Q14. One large nonaccrual loan relationship was paid off during the quarter and back interest was recorded, increasing yield on earning assets by 47 basis points.
  • Net loans increased 10.1% to $536.5 million at December 31, 2015, compared to $487.3 million a year earlier.
  • Total deposits increased 14.1% to $544.3 million at December 31, 2015, compared to $477.1 million a year ago.
  • Non-interest bearing deposits increased 33.3% to $76.5 million at December 31, 2015, compared to $57.4 million a year earlier.
  • Other assets acquired through foreclosure remained low at $198,000 at December 31, 2015, compared to $137,000 a year earlier.
  • Book value per common share was $7.55 at December 31, 2015, compared to $7.31 a year ago.
  • Community West Bank's capital ratios continue to be strong with its total risk-based capital ratio at 13.70% and Tier 1 leverage ratio at 10.38% at December 31, 2015.
Including $44,000 of preferred stock dividends, the net income available to common stockholders was $1.8 million, or $0.21 per diluted share, in 4Q15 compared to net income available to common stockholders of $1.5 million, or $0.17 per diluted share, in 3Q15 and net income available to common stockholders of $2.0 million, or $0.24 per diluted share, in 4Q14.

Income Statement

'In addition to higher than industry average loan yields, we had a loan interest recovery during the quarter, which contributed to our strong net interest margin,' said Charles G. Baltuskonis, Executive Vice President and Chief Financial Officer. Fourth quarter net interest margin improved 35 basis points to 4.90% compared to 3Q15 and improved 38 basis points compared to 4Q14. Of the increase in asset yields in 4Q15, 47 basis points was attributable to one nonaccrual lending relationship which was paid in full. For all of 2015, Community West's net interest margin improved 30 basis points to 4.80% compared to 4.50% in 2014.

Community West's fourth quarter net interest income was $7.5 million, a 10.0% increase compared to $6.8 million in the preceding quarter and a 18.3% increase compared to $6.3 million in 4Q14. For the year, net interest income increased 12.0% to $27.7 million compared to $24.7 million a year ago.

Non-interest income was $538,000 in 4Q15 compared to $554,000 in 3Q15 and $471,000 in 4Q14. For the full year, non-interest income increased modestly to $2.3 million compared to $2.2 million in 2014.

Fourth quarter non-interest expenses totaled $5.1 million, compared to $5.0 million in 3Q15 and $4.6 million in 4Q14. For the year, non-interest expenses were $27.3 million compared to $20.1 million a year ago. The year over year increase is primarily a result of the $7.1 million loan litigation settlement in 3Q15. (See page 8 - 'Non-Gaap Financial Information')

Balance Sheet

Net loans increased 2.0% to $536.5 million at December 31, 2015, compared to $526.0 million at September 30, 2015, and increased 10.1% compared to $487.3 million a year ago. Commercial real estate loans outstanding were up 12.6% from year ago levels to $179.5 million at December 31, 2015, and comprise 33.0% of the total loan portfolio. Manufactured housing loans were up 4.9% from year ago levels to $177.9 million and represent 32.7% of total loans. Commercial loans increased 43.7% from year ago levels to $107.5 million and represent 19.8% of the total loan portfolio and SBA loans decreased 22.7% from a year ago to $47.9 million and represent 8.8% of the total loan portfolio.

Deposits totaled $544.3 million at December 31, 2015, up 3.3% compared to $526.8 million at September 30, 2015 and grew 14.1% compared to $477.1 million a year earlier. Non-interest bearing deposit accounts increased 33.3% to $76.5 million at December 31, 2015, compared to $57.4 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 $408.7 million at December 31, 2015 and comprise 75.1% of total deposits, compared to $378.1 million, or 79.3% of total deposits, a year ago.

Community West's total assets were $621.2 million at December 31, 2015, a 3.4% increase compared to three months earlier and a 11.5% increase compared to a year ago. Stockholders' equity declined to $61.9 million at December 31, 2015, compared to $65.9 million at September 30, 2015, and $67.0 million a year ago as preferred stock of $5.6 million was redeemed. (See page 3 - 'Final redemption of preferred stock.') Book value per common share was $7.55 at December 31, 2015 compared to $7.36 at September 30, 2015, and $7.31 a year ago.

Credit Quality

The negative loan loss provision was $277,000 in 4Q15, compared to $445,000 in 3Q15, and $1.6 million in 4Q14. Net loan recoveries were $181,000 in 4Q15 compared to $214,000 in 3Q15 and $216,000 in 4Q14. '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 eight quarters and net loan loss recoveries in seven of the past eight quarters,' added Plourd.

The total allowance for loan losses was $6.9 million at December 31, 2015, or 1.44% of total loans held for investment, compared to 1.50% at September 30, 2015, and 1.84% a year ago. Net nonaccrual loans decreased to $5.0 million, or 0.92% of total loans at December 31, 2015, compared to $5.3 million, or 0.99% of total loans, three months earlier, and decreased 54.5% compared to $11.0 million, or 2.23% of total loans, a year ago.

Of the $5.0 million in net nonaccrual loans, $2.4 million were commercial real estate loans, $1.6 million were manufactured housing loans, $403,000 were SBA loans, $313,000 were home equity line of credit loans, $282,000 were single family real estate loans and $44,000 were commercial loans.

Other assets acquired through foreclosure totaled $198,000 at December 31, 2015, compared to $206,000 three months earlier and $137,000 a year earlier. Nonaccrual loans plus other assets acquired through foreclosure, net of SBA/USDA guarantees, totaled $5.2 million, or 0.84% of total assets, at December 31, 2015, compared to $5.5 million, or 0.91% of total assets, three months earlier and $11.2 million, or 2.00% of total assets, a year ago.

Final Redemption of Preferred Stock

On November 2, 2015, the Company redeemed the remaining $5,574,000 of its 9%, Cumulative Perpetual Preferred Stock, Series A. The Company finalized a $10 million line of credit at a rate of one-month Libor plus 3.75% to assist in paying for this final redemption and use for other future corporate purposes. The Company originally issued 15,600 shares of Fixed Rate Cumulative Perpetual Stock, Series A, to Treasury under the Troubled Asset Relief Program (TARP) Capital Purchase Program. In December 2012, Treasury auctioned the preferred shares to private investors.

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, payable February 29, 2016 to common shareholders of record on February 11, 2016.

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 December 31, 2015, 4,000 shares had been repurchased, leaving outstanding common stock shares of 8,205,858.

Use of Non-GAAP Financial Information

This press release contains both financial measures based on accounting principles generally accepted in the United States ('GAAP') and non-GAAP based financial measures, which are used where management believes it to be helpful in understanding the Company's results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in this press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

CWBC - Community West Bancshares issued this content on 26 January 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 26 January 2016 17:01:03 UTC

Original Document: https://www.communitywestbank.com/about/PRDetails.aspx?PressReleaseID=296