UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
Form 8-K
_____________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event Reported): July 27, 2018
COMMUNITY WEST BANCSHARES
(Exact Name of Registrant as Specified in Charter)
California | 000-23575 | 77-0446957 |
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification Number) |
445 Pine Avenue, Goleta, California 93117 |
(Address of Principal Executive Offices) (Zip Code) |
(805) 692-5821
(Registrant's telephone number, including area code)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: | ||
[ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
[ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
[ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
[ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company [ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Item 2.02. Results of Operations and Financial Condition.
On July 27, 2018, the Company issued a Press Release announcing financial results for the quarter and year to date ended June 30, 2018. A copy of the press release is attached as Exhibit 99.1 to this current Report on Form 8-K.
Item 9.01. Financial Statements and Exhibits.
(a) Financial statements. – not applicable The following exhibit is being furnished herewith: 99.1 Press Release dated July 27, 2018, titled “Community West Bancshares Earnings Grow 20% to $1.9 Million in 2Q2018 Over 2017; Book Value Per Common Share Increases to $8.90; Declares Quarterly Cash Dividend of $0.05 Per Common Share.”
(b) Pro forma financial statements. – not applicable
(c) Shell Company Transactions. – not applicable
(d) Exhibits
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
COMMUNITY WEST BANCSHARES | ||
Date: July 27, 2018 | By: | /s/ Susan C. Thompson |
Susan C. Thompson | ||
Executive Vice President and CFO | ||
EXHIBIT 99.1
Community West Bancshares Earnings Grow 20% to $1.9 Million in 2Q18 Over 2Q17; Book Value Per Common Share Increases to $8.90; Declares Quarterly Cash Dividend of $0.05 Per Common Share
GOLETA, Calif., July 27, 2018 (GLOBE NEWSWIRE) -- Community West Bancshares (Community West or the Company), (NASDAQ: CWBC), parent company of Community West Bank (Bank), today reported net income increased 20.0% to $1.9 million, or $0.21 per diluted share, in the second quarter of 2018 (2Q18), compared to $1.6 million, or $0.18 per diluted share in the second quarter of 2017 (2Q17) and increased slightly by 2.9% when compared to the first quarter of 2018 (1Q18).
In the first six months of 2018, net income increased 26.4% to $3.7 million, or $0.42 per diluted share, compared to $2.9 million, or $0.34 per diluted share, in the first six months of 2017.
“In the second quarter we shifted our focus to emphasize core deposit growth which include non-interest bearing checking, interest bearing checking, money market accounts, savings accounts and retail certificates of deposits, gaining 7.3% over the prior year,” stated Martin E. Plourd, President and Chief Executive Officer. “We extended our momentum from the first quarter, producing solid performance metrics including return on average assets of 0.90% and a return on average common equity of 10.26% for the second quarter.”
Second Quarter 2018 Financial Highlights
Income Statement
Net interest income for 2Q18 was $8.3 million, compared to $8.4 million in the preceding quarter and a 3.4% increase compared to $8.0 million in 2Q17. In the first six months of 2018, net interest income increased 5.4% to $16.7 million, compared to $15.8 million in the first six months of 2017.
Non-interest income was $688,000 in 2Q18, compared to $639,000 in 1Q18 and $697,000 in 2Q17. In the first six months of 2018, non-interest income was $1.3 million, which was unchanged compared to the first six months of 2017.
Second quarter net interest margin was 4.06% compared to 4.25% in 1Q18 and 4.39% in 2Q17. In the first six months of the year, net interest margin was 4.15% compared to 4.42% in the first six months a year ago. “The net interest margin continued to compress as the yield curve flattened further in the second quarter,” said Susan C. Thompson, Executive Vice President and Chief Financial Officer.
Non-interest expenses totaled $6.3 million in 2Q18, compared to $6.0 million in 2Q17 and decreased compared to $6.5 million in the preceding quarter. In the first six months of 2018, non-interest expenses totaled $12.8 million, compared to $11.9 million in the first six months of 2017. The year-over-year increase was primarily attributable to an increase in salary and employee benefits as the result of expansion.
Balance Sheet
“Total loans increased 1.9% during the quarter and increased 9.7% year over year, with solid production in commercial real estate, manufactured housing and commercial loans,” said Plourd.
Total loans increased to $759.9 million at June 30, 2018, compared to $745.8 million at March 31, 2018, and increased $67.1 million compared to $692.8 million a year ago. Commercial real estate loans outstanding (which include SBA 504, construction and land) were up 14.8% from year ago levels to $364.7 million at June 30, 2018, and comprise 48.0% of the total loan portfolio. Manufactured housing loans were up 12.2% from year ago levels to $234.6 million and represent 30.9% of total loans. Commercial loans increased 5.9% from year ago levels to $118.3 million and represent 15.6% of the total loan portfolio.
Core deposits totaled $500.2 million at June 30, 2018 and comprise 71.1% of total deposits compared to $485.7 million and 68.4% of total deposits at March 31, 2018 and compared to $463.6 million and 69.1% of total deposits a year ago. A strategic focus for the Company in 2018 is core deposit growth. Total deposits declined modestly to $702.6 million at June 30, 2018, compared to $710.0 million at March 31, 2018, and increased $32.3 million, or 4.8% compared to $670.3 million a year earlier.
Total assets were $865.1 million at June 30, 2018, which was unchanged compared to three months earlier and a $80.2 million, or 10.2% increase compared to $785.0 million one year ago. Stockholders’ equity improved to $73.4 million at June 30, 2018, compared to $71.7 million at March 31, 2018, and $68.2 million a year ago. Book value per common share improved to $8.90 at June 30, 2018, compared to $8.73 at March 31, 2018, and $8.36 a year ago.
Credit Quality
“We had another solid quarter of loan growth and as a result recorded a $117,000 provision for loan losses during the second quarter,” said Thompson. This compares to a negative provision for loan losses of $144,000 in 1Q18 and a provision for loan losses of $120,000 in 2Q17. Net loan recoveries were $47,000 in 2Q18 compared to $182,000 in 1Q18 and $89,000 in 2Q17.
The allowance for loan losses was $8.6 million at June 30, 2018, or 1.22% of total loans held for investment, compared to 1.22% at March 31, 2018, and 1.27% a year ago. Net nonaccrual loans decreased to $3.7 million, or 0.49% of total loans at June 30, 2018, compared to $4.2 million, or 0.57% of total loans, three months earlier, and increased compared to $2.0 million, or 0.29% of total loans, a year ago.
Of the $3.7 million in net nonaccrual loans, $2.1 million were commercial loans primarily from one relationship and not systemic to the portfolio, $527,000 were commercial agricultural loans, $259,000 were manufactured housing loans, $207,000 were home equity loans, $168,000 were single-family real estate loans, $166,000 were SBA 504 1st loans, $160,000 were SBA 7A loans and $112,000 were commercial real estate loans.
Other assets acquired through foreclosure totaled $213,000 at June 30, 2018, compared to $233,000 three months earlier and $362,000 a year ago.
Cash Dividend Declared
The Company’s Board of Directors declared a cash dividend of $0.05 per common share, payable August 31, 2018 to common shareholders of record on August 14, 2018. The current annualized yield, based on the closing price of CWBC shares of $11.80 on June 30, 2018, was 1.7%.
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 and a loan production office in Paso Robles. The principal business activities of the Company are Relationship business banking, Manufactured Housing lending and Government Guaranteed lending.
Industry Accolades
In April 2018, Community West was awarded a “Premier” rating by The Findley Reports. 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.
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.
Contact:
Susan C.Thompson, EVP & CFO
805.692.5821
www.communitywestbank.com
COMMUNITY WEST BANCSHARES | ||||||||||||||||
CONDENSED CONSOLIDATED INCOME STATEMENTS | ||||||||||||||||
(unaudited) | ||||||||||||||||
(in 000's, except per share data) | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | March 31, | June 30, | June 30, | June 30, | ||||||||||||
2018 | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Interest income | ||||||||||||||||
Loans, including fees | $ | 10,020 | $ | 9,651 | $ | 8,788 | $ | 19,671 | $ | 17,230 | ||||||
Investment securities and other | 381 | 337 | 278 | 718 | 539 | |||||||||||
Total interest income | 10,401 | 9,988 | 9,066 | 20,389 | 17,769 | |||||||||||
Interest expense | ||||||||||||||||
Deposits | 1,708 | 1,443 | 941 | 3,151 | 1,799 | |||||||||||
Other borrowings | 382 | 195 | 89 | 577 | 160 | |||||||||||
Total interest expense | 2,090 | 1,638 | 1,030 | 3,728 | 1,959 | |||||||||||
Net interest income | 8,311 | 8,350 | 8,036 | 16,661 | 15,810 | |||||||||||
Provision (credit) for loan losses | 117 | (144 | ) | 120 | (27 | ) | 264 | |||||||||
Net interest income after provision for loan losses | 8,194 | 8,494 | 7,916 | 16,688 | 15,546 | |||||||||||
Non-interest income | ||||||||||||||||
Other loan fees | 323 | 296 | 342 | 619 | 645 | |||||||||||
Document processing fees | 130 | 117 | 151 | 247 | 284 | |||||||||||
Service charges | 122 | 116 | 112 | 238 | 208 | |||||||||||
Other | 113 | 110 | 92 | 223 | 201 | |||||||||||
Total non-interest income | 688 | 639 | 697 | 1,327 | 1,338 | |||||||||||
Non-interest expenses | ||||||||||||||||
Salaries and employee benefits | 4,042 | 4,149 | 3,796 | 8,191 | 7,727 | |||||||||||
Occupancy, net | 741 | 784 | 686 | 1,525 | 1,331 | |||||||||||
Professional services | 301 | 304 | 299 | 605 | 478 | |||||||||||
Data processing | 206 | 212 | 165 | 418 | 333 | |||||||||||
Depreciation | 186 | 167 | 188 | 353 | 351 | |||||||||||
FDIC assessment | 164 | 214 | 179 | 378 | 289 | |||||||||||
Advertising and marketing | 163 | 170 | 195 | 333 | 351 | |||||||||||
Stock-based compensation | 87 | 116 | 87 | 203 | 171 | |||||||||||
Loan servicing and collection | (19 | ) | 70 | 55 | 51 | 161 | ||||||||||
Other | 386 | 347 | 357 | 733 | 738 | |||||||||||
Total non-interest expenses | 6,257 | 6,533 | 6,007 | 12,790 | 11,930 | |||||||||||
Income before provision for income taxes | 2,625 | 2,600 | 2,606 | 5,225 | 4,954 | |||||||||||
Provision for income taxes | 758 | 786 | 1,050 | 1,544 | 2,042 | |||||||||||
Net income | $ | 1,867 | $ | 1,814 | $ | 1,556 | $ | 3,681 | $ | 2,912 | ||||||
Earnings per share: | ||||||||||||||||
Basic | $ | 0.23 | $ | 0.22 | $ | 0.19 | $ | 0.45 | $ | 0.36 | ||||||
Diluted | $ | 0.21 | $ | 0.21 | $ | 0.18 | $ | 0.42 | $ | 0.34 | ||||||
COMMUNITY WEST BANCSHARES | |||||||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||||||||
(unaudited) | |||||||||||||||
(in 000's, except per share data) | |||||||||||||||
June 30, | March 31, | June 30, | December 31, | ||||||||||||
2018 | 2018 | 2017 | 2017 | ||||||||||||
Cash and cash equivalents | $ | 3,385 | $ | 3,473 | $ | 1,919 | $ | 3,651 | |||||||
Time and interest-earning deposits in other financial institutions | 50,977 | 65,336 | 36,085 | 42,218 | |||||||||||
Investment securities | 33,720 | 34,988 | 39,326 | 36,348 | |||||||||||
Loans: | |||||||||||||||
Commercial | 118,263 | 109,819 | 111,655 | 111,459 | |||||||||||
Commercial real estate | 364,679 | 362,197 | 317,793 | 354,617 | |||||||||||
SBA | 22,724 | 24,989 | 34,670 | 26,219 | |||||||||||
Manufactured housing | 234,598 | 229,194 | 209,119 | 223,115 | |||||||||||
Single family real estate | 10,682 | 10,609 | 10,161 | 10,346 | |||||||||||
HELOC | 9,502 | 9,483 | 9,974 | 9,422 | |||||||||||
Other | (558 | ) | (514 | ) | (542 | ) | (569 | ) | |||||||
Total loans | 759,890 | 745,777 | 692,830 | 734,609 | |||||||||||
Loans, net | |||||||||||||||
Held for sale | 52,886 | 52,767 | 60,933 | 55,094 | |||||||||||
Held for investment | 707,004 | 693,010 | 631,897 | 679,515 | |||||||||||
Less: Allowance for loan losses | (8,622 | ) | (8,458 | ) | (7,994 | ) | (8,420 | ) | |||||||
Net held for investment | 698,382 | 684,552 | 623,903 | 671,095 | |||||||||||
NET LOANS | 751,268 | 737,319 | 684,836 | 726,189 | |||||||||||
Other assets | 25,777 | 24,573 | 22,806 | 24,909 | |||||||||||
TOTAL ASSETS | $ | 865,127 | $ | 865,689 | $ | 784,972 | $ | 833,315 | |||||||
Deposits | |||||||||||||||
Non-interest-bearing demand | $ | 107,168 | $ | 118,206 | $ | 107,049 | $ | 108,500 | |||||||
Interest-bearing demand | 260,708 | 258,717 | 262,475 | 256,717 | |||||||||||
Savings | 14,515 | 14,347 | 14,011 | 14,085 | |||||||||||
Certificates of deposit ($250,000 or more) | 88,752 | 81,690 | 82,156 | 81,985 | |||||||||||
Other certificates of deposit | 231,460 | 237,077 | 204,589 | 238,397 | |||||||||||
Total deposits | 702,603 | 710,037 | 670,280 | 699,684 | |||||||||||
Other borrowings | 81,843 | 76,843 | 41,800 | 56,843 | |||||||||||
Other liabilities | 7,233 | 7,098 | 4,676 | 6,718 | |||||||||||
TOTAL LIABILITIES | 791,679 | 793,978 | 716,756 | 763,245 | |||||||||||
Stockholders' equity | 73,448 | 71,711 | 68,216 | 70,070 | |||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 865,127 | $ | 865,689 | $ | 784,972 | $ | 833,315 | |||||||
Shares outstanding | 8,254 | 8,216 | 8,160 | 8,193 | |||||||||||
Book value per common share | $ | 8.90 | $ | 8.73 | $ | 8.36 | $ | 8.55 | |||||||
ADDITIONAL FINANCIAL INFORMATION | |||||||||||||||||||||
(Dollars in thousands except per share amounts)(Unaudited) | |||||||||||||||||||||
Three Months Ended | Three Months Ended | Three Months Ended | Six Months Ended | ||||||||||||||||||
PERFORMANCE MEASURES AND RATIOS | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | ||||||||||||||||
Return on average common equity | 10.26% | 10.30% | 9.20% | 10.28% | 8.75% | ||||||||||||||||
Return on average assets | 0.90% | 0.91% | 0.83% | 0.90% | 0.80% | ||||||||||||||||
Efficiency ratio | 69.53% | 72.68% | 68.79% | 71.10% | 69.57% | ||||||||||||||||
Net interest margin | 4.06% | 4.25% | 4.39% | 4.15% | 4.42% | ||||||||||||||||
Three Months Ended | Three Months Ended | Three Months Ended | Six Months Ended | ||||||||||||||||||
AVERAGE BALANCES | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | ||||||||||||||||
Average assets | $ | 836,394 | $ | 812,698 | $ | 747,790 | $ | 824,611 | $ | 734,782 | |||||||||||
Average earning assets | 820,854 | 797,281 | 735,041 | 809,133 | 721,969 | ||||||||||||||||
Average total loans | 750,575 | 736,628 | 672,677 | 743,640 | 661,791 | ||||||||||||||||
Average deposits | 704,251 | 702,376 | 646,316 | 703,319 | 636,650 | ||||||||||||||||
Average common equity | 72,993 | 71,433 | 67,820 | 72,217 | 67,105 | ||||||||||||||||
EQUITY ANALYSIS | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2017 | ||||||||||||||||||
Total common equity | $ | 73,448 | $ | 71,711 | $ | 68,216 | |||||||||||||||
Common stock outstanding | 8,254 | 8,216 | 8,160 | ||||||||||||||||||
Book value per common share | $ | 8.90 | $ | 8.73 | $ | 8.36 | |||||||||||||||
ASSET QUALITY | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2017 | ||||||||||||||||||
Nonaccrual loans, net | $ | 3,704 | $ | 4,220 | $ | 1,988 | |||||||||||||||
Nonaccrual loans, net/total loans | 0.49% | 0.57% | 0.29% | ||||||||||||||||||
Other assets acquired through foreclosure, net | $ | 213 | $ | 233 | $ | 362 | |||||||||||||||
Nonaccrual loans plus other assets acquired through foreclosure, net | $ | 3,917 | $ | 4,453 | $ | 2,350 | |||||||||||||||
Nonaccrual loans plus other assets acquired through foreclosure, net/total assets | 0.45% | 0.51% | 0.30% | ||||||||||||||||||
Net loan (recoveries)/charge-offs in the quarter | $ | (47 | ) | $ | (182 | ) | $ | (89 | ) | ||||||||||||
Net (recoveries)/charge-offs in the quarter/total loans | (0.01% | ) | (0.02% | ) | (0.01% | ) | |||||||||||||||
Allowance for loan losses | $ | 8,622 | $ | 8,458 | $ | 7,994 | |||||||||||||||
Plus: Reserve for undisbursed loan commitments | 97 | 101 | 99 | ||||||||||||||||||
Total allowance for credit losses | $ | 8,719 | $ | 8,559 | $ | 8,093 | |||||||||||||||
Allowance for loan losses/total loans held for investment | 1.22% | 1.22% | 1.27% | ||||||||||||||||||
Allowance for loan losses/nonaccrual loans, net | 232.78% | 200.43% | 402.11% | ||||||||||||||||||
Community West Bank * | |||||||||||||||||||||
Tier 1 leverage ratio | 8.88% | 8.96% | 9.23% | ||||||||||||||||||
Tier 1 capital ratio | 10.11% | 10.19% | 10.39% | ||||||||||||||||||
Total capital ratio | 11.29% | 11.38% | 11.62% | ||||||||||||||||||
INTEREST SPREAD ANALYSIS | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2017 | ||||||||||||||||||
Yield on total loans | 5.35% | 5.31% | 5.24% | ||||||||||||||||||
Yield on investments | 2.74% | 2.73% | 2.31% | ||||||||||||||||||
Yield on interest earning deposits | 1.49% | 1.36% | 0.83% | ||||||||||||||||||
Yield on earning assets | 5.08% | 5.08% | 4.95% | ||||||||||||||||||
Cost of interest-bearing deposits | 1.16% | 0.99% | 0.69% | ||||||||||||||||||
Cost of total deposits | 0.97% | 0.83% | 0.58% | ||||||||||||||||||
Cost of borrowings | 2.90% | 2.50% | 1.22% | ||||||||||||||||||
Cost of interest-bearing liabilities | 1.30% | 1.07% | 0.72% | ||||||||||||||||||
* Capital ratios are preliminary until the Call Report is filed. |