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): October 25, 2019
Commission File Number: 000-23575
COMMUNITY WEST BANCSHARES
(Exact name of registrant as specified in its charter)
California | 77-0446957 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
445 Pine Avenue, Goleta, California | 93117 |
(Address of principal executive offices) | (Zip code) |
(805) 692-5821
(Registrant's telephone number, including area code)
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. [ ]
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common Stock | CWBC | NASDAQ |
Item 2.02. Results of Operations and Financial Condition.
On October 25, 2019, the Company issued a Press Release announcing financial results for the quarter and year to date ended September 30, 2019. 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 October 25, 2019, titled “Community West Bancshares Earns $2.2 Million, or $0.25 Per Diluted Share, in 3Q19; Results Highlighted by Net Interest Margin Expansion; Declares Quarterly Cash Dividend of $0.055 Per Common Share.”
(b)Pro forma financial statements. – not applicable
(c)Shell Company Transactions. – not applicable
(d)Exhibits
SIGNATURES
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: October 25, 2019 | By: | /s/ Susan C. Thompson |
Susan C. Thompson | ||
Executive Vice President and Chief Financial Officer | ||
EXHIBIT 99.1
Community West Bancshares Earns $2.2 Million, or $0.25 Per Diluted Share, in 3Q19; Results Highlighted by Net Interest Margin Expansion; Declares Quarterly Cash Dividend of $0.055 Per Common Share
GOLETA, Calif., Oct. 25, 2019 (GLOBE NEWSWIRE) -- Community West Bancshares (Community West or the Company), (NASDAQ: CWBC), parent company of Community West Bank (Bank), today reported earnings of $2.2 million, or $0.25 per diluted share, for the third quarter of 2019 (3Q19), compared to $1.6 million, or $0.18 per diluted share, in 2Q19, and $2.4 million, or $0.27 per diluted share, in 3Q18.
In the first nine months of 2019, net income was $5.2 million, or $0.61 per diluted share, compared to $6.1 million, or $0.69 per diluted share, in the first nine months of 2018.
“We delivered solid third quarter results, fueled by growing revenues and an expanding net interest margin,” stated Martin E. Plourd, President and Chief Executive Officer. “Loan growth remains steady, with a 5% increase in the loan portfolio compared to a year ago, and strong total demand deposits, which increased 20% year-over-year as we continue to improve our core funding position. We will continue to focus on high quality earnings growth, while managing our operating efficiencies and expanding our brand throughout California’s Central Coast.”
Third Quarter 2019 Financial Highlights:
Income Statement
Third quarter net interest income increased to $8.8 million, compared to $8.5 million in 2Q19 and $8.6 million in 3Q18. For 3Q19, net interest income benefited by both collection of interest on previously impaired loans and a net decrease in the cost of funds. In the first nine months of 2019, net interest income was $25.5 million, compared to $25.3 million in the first nine months of 2018.
Non-interest income was $647,000 in 3Q19, compared to $692,000 in 2Q19 and $641,000 in 3Q18. Non-interest income was $1.9 million in the first nine months of 2019, compared to $2.0 million in the first nine months of 2018.
“The continued improvement in the margin for the current quarter was due, in part, to our on-going efforts to reduce our cost of funds,” said Susan C. Thompson, Executive Vice President and Chief Financial Officer. Third quarter net interest margin improved to 4.10%, from 4.07% in 2Q19, and 4.02% in 3Q18. In the first nine months of 2019, the net interest margin was 4.06%, compared to 4.11% in the prior year period.
Non-interest expenses totaled $6.5 million in 3Q19, compared to $6.8 million in the preceding quarter and $6.4 million in 3Q18. In the first nine months of 2019, non-interest expense was $19.9 million, compared to $19.2 million in the first nine months of 2018.
Balance Sheet
Total loans increased modestly to $789.5 million at September 30, 2019, compared to $788.9 million at June 30, 2019, and increased $35.8 million, or 4.7%, compared to $753.7 million at September 30, 2018.
Commercial real estate loans outstanding (which include SBA 504, construction and land) were up 11.1% from year ago levels to $392.3 million at September 30, 2019 and comprise 49.7% of the total loan portfolio. Manufactured housing loans were up 5.5% from year ago levels to $253.2 million and represent 32.1% of total loans. Commercial loans (which include agriculture loans) were down 7.6% from year ago levels to $110.2 million and represent 13.9% of the total loan portfolio.
Total deposits decreased slightly to $761.7 million at September 30, 2019, compared to $765.1 million at June 30, 2019, and increased $41.8 million, or 5.8% compared to $719.9 million at September 30, 2018. Non-interest-bearing demand deposits increased $1.9 million, or 1.7% to $114.4 million at September 30, 2019 compared to $112.5 million at June 30, 2019 and increased $8.8 million compared to $105.6 million at September 30, 2018. Interest-bearing demand deposits decreased to $333.7 million compared to $343.8 million at June 30, 2019 but increased $66.6 million compared to $267.0 million at September 30, 2018. Certificates of deposit, which include broker deposits increased $5.6 million to $298.1 million at September 30, 2019 compared to $292.5 million at June 30, 2019 and decreased $34.8 million compared to $332.9 million at September 30, 2018 as the Company divests itself from wholesale funding.
Total assets were $903.3 million at September 30, 2019, compared to $905.6 million at June 30, 2019 and increased $48.6 million, or 5.7%, compared to $854.7 million at September 30, 2018. Stockholders’ equity increased to $79.6 million at September 30, 2019, compared to $77.8 million at June 30, 2019, and $75.6 million at September 30, 2018. Book value per common share increased to $9.40 at September 30, 2019, compared to $9.19 at June 30, 2019, and $9.13 at September 30, 2018.
Credit Quality
The Company recorded a credit to its provision for loan losses of ($75,000) in 3Q19. This compares to a provision for loan losses of $177,000 in 2Q19 and credit to the provision for loan losses of ($197,000) in 3Q18. The allowance for loan losses, including the reserve for undisbursed loans, was $8.9 million at September 30, 2019, or 1.19% of total loans held for investment, compared to 1.20% at June 30, 2019, and 1.21% a year ago. Net nonaccrual loans plus net other assets acquired through foreclosure were $5.8 million at September 30, 2019, compared to $4.1 million at June 30, 2019, and $3.8 million at September 30, 2018.
At September 30, 2019, net nonaccrual loans consisted of $4.7 million of commercial loans including commercial agriculture, $0.3 million of manufactured housing loans, $0.4 million of SBA loans, and $0.1 million of commercial real estate loans.
There was $317,000 in other assets acquired through foreclosure as of September 30, 2019. This compares to $1.1 million of other assets acquired through foreclosure at June 30, 2019, and no other assets acquired through foreclosure a year ago.
Cash Dividend Declared
The Company’s Board of Directors declared a cash dividend of $0.055 per common share, payable November 29, 2019 to common shareholders of record on November 14, 2019. The current annualized yield, based on the closing price of CWBC shares of $9.89 on September 30, 2019, was 2.17%.
Stock Repurchase Program
The Company, under the Board of Directors authorized common stock repurchase program of up to $4.5 million, bought back 10,233 shares during 3Q19. As of September 30, 2019, 350,189 shares had been repurchased at an average price of $8.71 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 eight full-service California branch banking offices in Goleta, Santa Barbara, Santa Maria, Ventura, Westlake Village, San Luis Obispo, Oxnard and Paso Robles. The principal business activities of the Company are Relationship Banking, Manufactured Housing lending and Government Guaranteed lending.
Industry Accolades
In April 2019, Community West was awarded a “Premier” rating by The Findley Reports. For 51 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.
COMMUNITY WEST BANCSHARES | ||||||||||||||||||
CONDENSED CONSOLIDATED INCOME STATEMENTS | ||||||||||||||||||
(unaudited) | ||||||||||||||||||
(in 000's, except per share data) | ||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||
September 30, | June 30, | September 30, | September 30, | September 30, | ||||||||||||||
2019 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||
Interest income | ||||||||||||||||||
Loans, including fees | $ | 11,306 | $ | 10,907 | $ | 10,612 | $ | 32,754 | $ | 30,283 | ||||||||
Investment securities and other | 413 | 460 | 589 | 1,357 | 1,307 | |||||||||||||
Total interest income | 11,719 | 11,367 | 11,201 | 34,111 | 31,590 | |||||||||||||
Interest expense | ||||||||||||||||||
Deposits | 2,615 | 2,583 | 2,222 | 7,642 | 5,373 | |||||||||||||
Other borrowings | 306 | 286 | 351 | 950 | 928 | |||||||||||||
Total interest expense | 2,921 | 2,869 | 2,573 | 8,592 | 6,301 | |||||||||||||
Net interest income | 8,798 | 8,498 | 8,628 | 25,519 | 25,289 | |||||||||||||
Provision (credit) for loan losses | (75 | ) | 177 | (197 | ) | 45 | (224 | ) | ||||||||||
Net interest income after provision for loan losses | 8,873 | 8,321 | 8,825 | 25,474 | 25,513 | |||||||||||||
Non-interest income | ||||||||||||||||||
Other loan fees | 302 | 323 | 379 | 883 | 998 | |||||||||||||
Service charges | 129 | 139 | 113 | 407 | 351 | |||||||||||||
Document processing fees | 96 | 124 | 120 | 307 | 367 | |||||||||||||
Other | 120 | 106 | 29 | 346 | 252 | |||||||||||||
Total non-interest income | 647 | 692 | 641 | 1,943 | 1,968 | |||||||||||||
Non-interest expenses | ||||||||||||||||||
Salaries and employee benefits | 4,254 | 4,318 | 4,147 | 12,953 | 12,338 | |||||||||||||
Occupancy, net | 788 | 768 | 778 | 2,338 | 2,303 | |||||||||||||
Professional services | 341 | 405 | 326 | 1,127 | 931 | |||||||||||||
Data processing | 215 | 201 | 201 | 640 | 619 | |||||||||||||
Depreciation | 219 | 218 | 199 | 650 | 552 | |||||||||||||
Advertising and marketing | 187 | 230 | 154 | 546 | 487 | |||||||||||||
FDIC assessment | (15 | ) | 154 | 169 | 309 | 547 | ||||||||||||
Stock-based compensation | 90 | 97 | 81 | 282 | 284 | |||||||||||||
Other | 385 | 369 | 347 | 1,096 | 1,131 | |||||||||||||
Total non-interest expenses | 6,464 | 6,760 | 6,402 | 19,941 | 19,192 | |||||||||||||
Income before provision for income taxes | 3,056 | 2,253 | 3,064 | 7,476 | 8,289 | |||||||||||||
Provision for income taxes | 902 | 673 | 695 | 2,232 | 2,239 | |||||||||||||
Net income | $ | 2,154 | $ | 1,580 | $ | 2,369 | $ | 5,244 | $ | 6,050 | ||||||||
Earnings per share: | ||||||||||||||||||
Basic | $ | 0.25 | $ | 0.19 | $ | 0.29 | $ | 0.62 | $ | 0.73 | ||||||||
Diluted | $ | 0.25 | $ | 0.18 | $ | 0.27 | $ | 0.61 | $ | 0.69 | ||||||||
COMMUNITY WEST BANCSHARES | ||||||||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||||||||
(unaudited) | ||||||||||||||||
(in 000's, except per share data) | ||||||||||||||||
September 30, | June 30, | September 30, | December 31, | |||||||||||||
2019 | 2019 | 2018 | 2018 | |||||||||||||
Cash and interest-earning deposits in other financial institutions | $ | 56,347 | $ | 57,181 | $ | 47,753 | $ | 56,915 | ||||||||
Investment securities | 28,707 | 30,414 | 33,421 | 32,353 | ||||||||||||
Loans: | ||||||||||||||||
Commercial | 110,153 | 108,599 | 119,270 | 118,518 | ||||||||||||
Commercial real estate | 392,288 | 391,293 | 353,136 | 365,809 | ||||||||||||
SBA | 17,018 | 17,560 | 21,057 | 19,077 | ||||||||||||
Manufactured housing | 253,229 | 253,250 | 240,010 | 247,114 | ||||||||||||
Single family real estate | 11,936 | 11,575 | 11,153 | 11,261 | ||||||||||||
HELOC | 4,847 | 6,696 | 9,446 | 6,756 | ||||||||||||
Other | (14 | ) | (65 | ) | (331 | ) | (292 | ) | ||||||||
Total loans | 789,457 | 788,908 | 753,741 | 768,243 | ||||||||||||
Loans, net | ||||||||||||||||
Held for sale | 44,816 | 45,447 | 50,944 | 48,355 | ||||||||||||
Held for investment | 744,641 | 743,461 | 702,797 | 719,888 | ||||||||||||
Less: Allowance for loan losses | (8,868 | ) | (8,887 | ) | (8,519 | ) | (8,691 | ) | ||||||||
Net held for investment | 735,773 | 734,574 | 694,278 | 711,197 | ||||||||||||
NET LOANS | 780,589 | 780,021 | 745,222 | 759,552 | ||||||||||||
Other assets | 37,609 | 37,951 | 28,313 | 28,471 | ||||||||||||
TOTAL ASSETS | $ | 903,252 | $ | 905,567 | $ | 854,709 | $ | 877,291 | ||||||||
Deposits | ||||||||||||||||
Non-interest-bearing demand | $ | 114,366 | $ | 112,463 | $ | 105,580 | $ | 108,161 | ||||||||
Interest-bearing demand | 333,679 | 343,841 | 267,046 | 270,431 | ||||||||||||
Savings | 15,481 | 16,264 | 14,385 | 14,641 | ||||||||||||
Certificates of deposit ($250,000 or more) | 90,298 | 90,170 | 92,934 | 93,439 | ||||||||||||
Other certificates of deposit | 207,848 | 202,373 | 239,997 | 229,334 | ||||||||||||
Total deposits | 761,672 | 765,111 | 719,942 | 716,006 | ||||||||||||
Other borrowings | 45,000 | 46,000 | 50,000 | 75,000 | ||||||||||||
Other liabilities | 16,984 | 16,627 | 9,210 | 10,134 | ||||||||||||
TOTAL LIABILITIES | 823,656 | 827,738 | 779,152 | 801,140 | ||||||||||||
Stockholders' equity | 79,596 | 77,829 | 75,557 | 76,151 | ||||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 903,252 | $ | 905,567 | $ | 854,709 | $ | 877,291 | ||||||||
Common shares outstanding | 8,467 | 8,465 | 8,275 | 8,533 | ||||||||||||
Book value per common share | $ | 9.40 | $ | 9.19 | $ | 9.13 | $ | 8.92 | ||||||||
ADDITIONAL FINANCIAL INFORMATION | |||||||||||||||||||
(Dollars in thousands except per share amounts)(Unaudited) | |||||||||||||||||||
Three Months Ended | Three Months Ended | Three Months Ended | Nine Months Ended | ||||||||||||||||
PERFORMANCE MEASURES AND RATIOS | September 30, 2019 | June 30, 2019 | September 30, 2018 | September 30, 2019 | September 30, 2018 | ||||||||||||||
Return on average common equity | 10.85 | % | 8.18 | % | 12.57 | % | 9.03 | % | 11.07 | % | |||||||||
Return on average assets | 0.97 | % | 0.73 | % | 1.08 | % | 0.81 | % | 96.00 | % | |||||||||
Efficiency ratio | 68.44 | % | 73.56 | % | 69.07 | % | 72.61 | % | 70.41 | % | |||||||||
Net interest margin | 4.10 | % | 4.07 | % | 4.02 | % | 4.06 | % | 4.11 | % | |||||||||
Three Months Ended | Three Months Ended | Three Months Ended | Nine Months Ended | ||||||||||||||||
AVERAGE BALANCES | September 30, 2019 | June 30, 2019 | September 30, 2018 | September 30, 2019 | September 30, 2018 | ||||||||||||||
Average assets | $ | 877,505 | $ | 864,583 | $ | 867,174 | $ | 867,322 | $ | 838,955 | |||||||||
Average earning assets | 850,948 | 838,104 | 852,083 | 841,391 | 823,607 | ||||||||||||||
Average total loans | 788,965 | 777,828 | 755,146 | 778,425 | 747,518 | ||||||||||||||
Average deposits | 735,545 | 726,366 | 734,391 | 726,356 | 713,790 | ||||||||||||||
Average common equity | 78,763 | 77,432 | 74,799 | 77,633 | 73,087 | ||||||||||||||
EQUITY ANALYSIS | September 30, 2019 | June 30, 2019 | September 30, 2018 | ||||||||||||||||
Total common equity | $ | 79,596 | $ | 77,829 | $ | 75,557 | |||||||||||||
Common stock outstanding | 8,467 | 8,465 | 8,275 | ||||||||||||||||
Book value per common share | $ | 9.40 | $ | 9.19 | $ | 9.13 | |||||||||||||
ASSET QUALITY | September 30, 2019 | June 30, 2019 | September 30, 2018 | ||||||||||||||||
Nonaccrual loans, net | $ | 5,476 | $ | 3,016 | $ | 3,755 | |||||||||||||
Nonaccrual loans, net/total loans | 0.69 | % | 0.38 | % | 0.50 | % | |||||||||||||
Other assets acquired through foreclosure, net | $ | 317 | $ | 1,074 | $ | - | |||||||||||||
Nonaccrual loans plus other assets acquired through foreclosure, net | $ | 5,793 | $ | 4,090 | $ | 3,755 | |||||||||||||
Nonaccrual loans plus other assets acquired through foreclosure, net/total assets | 0.64 | % | 0.45 | % | 0.44 | % | |||||||||||||
Net loan (recoveries)/charge-offs in the quarter | $ | (69 | ) | $ | (62 | ) | $ | (94 | ) | ||||||||||
Net (recoveries)/charge-offs in the quarter/total loans | (0.01 | %) | (0.01 | %) | (0.01 | %) | |||||||||||||
Allowance for loan losses | $ | 8,868 | $ | 8,887 | $ | 8,519 | |||||||||||||
Plus: Reserve for undisbursed loan commitments | 81 | 81 | 80 | ||||||||||||||||
Total allowance for credit losses | $ | 8,949 | $ | 8,968 | $ | 8,599 | |||||||||||||
Allowance for loan losses/total loans held for investment | 1.19 | % | 1.20 | % | 1.21 | % | |||||||||||||
Allowance for loan losses/nonaccrual loans, net | 161.94 | % | 294.66 | % | 226.87 | % | |||||||||||||
Community West Bank * | |||||||||||||||||||
Tier 1 leverage ratio | 9.02 | % | 8.66 | % | 8.23 | % | |||||||||||||
Tier 1 capital ratio | 10.04 | % | 9.53 | % | 9.64 | % | |||||||||||||
Total capital ratio | 11.18 | % | 10.67 | % | 10.79 | % | |||||||||||||
INTEREST SPREAD ANALYSIS | September 30, 2019 | June 30, 2019 | September 30, 2018 | ||||||||||||||||
Yield on total loans | 5.69 | % | 5.62 | % | 5.58 | % | |||||||||||||
Yield on investments | 3.06 | % | 3.89 | % | 3.77 | % | |||||||||||||
Yield on interest earning deposits | 2.14 | % | 1.89 | % | 1.54 | % | |||||||||||||
Yield on earning assets | 5.46 | % | 5.44 | % | 5.22 | % | |||||||||||||
Cost of interest-bearing deposits | 1.69 | % | 1.70 | % | 1.41 | % | |||||||||||||
Cost of total deposits | 1.41 | % | 1.43 | % | 1.20 | % | |||||||||||||
Cost of borrowings | 2.64 | % | 2.64 | % | 2.79 | % | |||||||||||||
Cost of interest-bearing liabilities | 1.76 | % | 1.76 | % | 1.51 | % | |||||||||||||
* Capital ratios are preliminary until the Call Report is filed. |
Contact:
Susan C. Thompson, EVP & CFO
805.692.5821
www.communitywestbank.com