EXHIBIT 99.1
Community West Bancshares Reports Third Quarter Profits of $1,045,000 as Net Interest Margin Expansion Continues
GOLETA, Calif., Oct. 21, 2010 (GLOBE NEWSWIRE) -- Community West Bancshares ("Community West"), (Nasdaq:CWBC), parent company of Community West Bank, today reported net income of $1.0 million in the third quarter of 2010 (3Q10), compared to net income of $69,000 in the third quarter a year ago (3Q09). The loan loss provision in 3Q10 was $1.5 million compared to $2.6 million in 3Q09. For the first nine months of the year, Community West reported net income of $1.0 million, compared to a net loss of $5.9 million for the first nine months of 2009. The loan loss provision for the first nine months of the year was $7.5 million compared to $15.9 million for the first nine months of 2009.
"We generated a solid quarterly profit primarily due to an improved net interest margin and a strong core business model," stated Lynda J. Nahra, President and Chief Executive Officer. "We have made steady progress in strengthening Community West with improved operating efficiencies and strong core deposit growth. These results were generated in spite of the current economic uncertainties."
Third Quarter 2010 Highlights
- Completed a successful public convertible debenture offering of $8.09 million.
- Net income to common stockholders was $784,000, or $0.12 per diluted common share.
- Community West Bank continues to exceed well capitalized levels with a Total risk-based capital ratio of 12.65%, Tier 1 risk-based capital ratio of 11.38% and Tier 1 leverage ratio of 9.09%.
- Net interest margin was 4.49%, a 37 basis point improvement compared to 3Q09.
- Core deposits increased by 41.0% compared to a year ago.
- Nonperforming loans were $15.1 million, or 2.51% of total loans.
- The efficiency ratio was 60.4%, a 7.8% improvement compared to 3Q09.
In 3Q10, including the $261,000 preferred stock dividend, the net income applicable to common stockholders was $784,000, or $0.12 per diluted share, compared to a net loss applicable to common stockholders of $192,000, or $0.03 per diluted share, in the third quarter a year ago.
Capital Management
In August, Community West completed its public offering of $8,085,000 of 9% convertible subordinated debentures. Proceeds from the offering will be used to further strengthen the capital position of the Company and support its strategic growth opportunities.
Income Statement Review
"Funding costs continued to improve, which helped to improve our net interest margin compared to the previous quarter and the third quarter a year ago," said Charles G. Baltuskonis, EVP and Chief Financial Officer. In 3Q10, the net interest margin was 4.49% compared to 4.47% in 2Q10 and 4.12% in 3Q09. In the first nine months of the year, the net interest margin increased 66 basis points to 4.48% compared to 3.82% in the first nine months of 2009.
Third quarter net interest income increased 5.7% to $7.3 million compared to $6.9 million in 3Q09. In the first nine months of 2010, net interest income increased 15.5% to $21.8 million compared to $18.9 million in the same period a year ago. Non-interest income increased 5.9% to $1.0 million in 3Q10, compared to $966,000 in 3Q09. In the first nine months of 2010, primarily due to declining SBA loan volumes and loan servicing fees, non-interest income was $2.8 million compared to $3.4 million in the first nine months of 2009. The decline in loan servicing fees resulted from Community West having lower SBA loan balances.
"Manageable operating expenses continue to decline steadily compared to a year ago. We are making a concerted effort to improve efficiencies within the entire organization," said Nahra. "Even though costs related to problem credits remained higher than normal, our total non-interest expenses improved for both 3Q10 and the year-to-date period, compared to the respective periods a year ago." Non-interest expenses were $5.0 million in 3Q10, compared to $5.2 million in 3Q09. In the first nine months of the year, non-interest expenses improved 5.8% to $15.4 million compared to $16.4 million in the first nine months of 2009.
The efficiency ratio was 60.4% in 3Q10 compared to 66.1% in 2Q10 and 65.6% in 3Q09. Year-to-date, the efficiency ratio was 62.5% compared to 73.4% in the same period a year ago.
Credit Quality
"The provision for loan losses, while lower than the preceding quarter, remains high, reflecting our concern for the overall economy," said Nahra.
Nonperforming loans were $15.1 million, or 2.51% of total loans at September 30, 2010, compared to $14.6 million or 2.41% of total loans three months earlier and $17.8 million, or 2.93% of total loans a year ago. Real estate owned and repossessed assets totaled $5.5 million at September 30, 2010 compared to $6.3 million at June 30, 2010 and $3.3 million a year ago.
Of the $15.1 million in total nonperforming loans, $7.2 million or 47.8% were real estate loans, $4.4 million or 29.4% were SBA loans, $2.4 million or 15.9% were manufactured housing loans, $915,000 or 6.1% were commercial loans and $131,000 or 0.8% were other installment loans.
The loan loss provision was $1.5 million in 3Q10 compared to $2.9 million in 2Q10 and $2.6 million in 3Q09. The allowance for loan losses totaled $13.4 million at quarter-end, equal to 2.64% of total loans held for investment, compared to 2.70% at June 30, 2010 and 2.62% at September 30, 2009.
Community West had net charge-offs of $2.0 million in 3Q10 compared to $3.4 million in 2Q10 and $2.7 million in 3Q09.
Balance Sheet
"Softening loan demand during the quarter, particularly in commercial and SBA loan sectors, has led to a small decline in total loan balances compared to a year ago," said Baltuskonis. Net loans were $600.6 million at September 30, 2010 compared to $606.4 million a year ago.
Real estate loans outstanding increased $5.8 million from year ago levels to $196.8 million at September 30, 2010, and comprise 32.8% of the total loan portfolio. Manufactured housing loans increased $3.3 million from year ago levels to $196.5 million and represent 32.7% of total loans. Commercial loans were down 11.7% compared to a year ago and now represent 9.2% of the total loan portfolio and SBA loans decreased 7.6% from a year ago and now represent 21.9% of the total loan portfolio. Other installment loans increased 18.5% from year ago levels and now represent 3.5% of the total loan portfolio.
"While total deposits are up only modestly compared to a year ago the deposit mix is changing," said Baltuskonis. "We are benefiting from the increasing movement of money to local community banks from some of the larger institutions, with core deposit growth up 41.0 % at quarter-end compared to a year ago."
Total deposits were $535.7 million at September 30, 2010 compared to $529.7 million a year earlier. Non-interest-bearing accounts were $39.1 million at September 30, 2010 compared to $38.6 million a year ago. Interest-bearing accounts increased 53.2% to $246.6 million compared to $160.9 million a year ago. Core deposits, defined as non-interest-bearing, interest-bearing and savings accounts, increased 41.0% to $304.6 million at quarter-end, compared to $216.0 million a year earlier while certificates of deposit decreased 26.3% over the same period to $231.1 million, compared to $313.7 million a year earlier.
Total assets were $676.5 million at September 30, 2010, compared to $674.4 million a year earlier. Stockholders' equity was $60.8 million at September 30, 2010, compared to $60.3 million a year earlier. Book value per common share was $7.78 at September 30, 2010 compared to $7.75 a year ago.
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 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, |
| | 2010 | 2010 | 2009 | 2010 | 2009 |
| | | | | | |
| Interest income | $ 9,727 | $ 9,703 | $ 10,378 | $ 29,372 | $ 30,795 |
| Interest expense | 2,419 | 2,472 | 3,467 | 7,538 | 11,887 |
| Net interest income | 7,308 | 7,231 | 6,911 | 21,834 | 18,908 |
| Provision for loan losses | 1,518 | 2,872 | 2,592 | 7,464 | 15,890 |
Net interest income after
provision for loan losses | 5,790 | 4,359 | 4,319 | 14,370 | 3,018 |
| Non-interest income | 1,023 | 933 | 966 | 2,795 | 3,389 |
| Non-interest expenses | 5,035 | 5,397 | 5,165 | 15,403 | 16,355 |
| | | | | | |
| Income (Loss) before income taxes | 1,778 | (105) | 120 | 1,762 | (9,948) |
| Provision for income taxes | 733 | (43) | 51 | 728 | (4,088) |
| | | | | | |
| NET INCOME (LOSS) | $ 1,045 | $ (62) | $ 69 | $ 1,034 | $ (5,860) |
| | | | | | |
| Preferred stock dividends | 261 | 262 | 261 | 785 | 784 |
| | | | | | |
NET INCOME (LOSS) APPLICABLE
TO COMMON SHAREHOLDERS | $ 784 | $ (324) | $ (192) | $ 249 | $ (6,644) |
| | | | | | |
| | | | | | |
| Earnings (Loss) per common share: | | | | | |
| Basic | $ 0.13 | $ (0.05) | $ (0.03) | $ 0.04 | $ (1.12) |
| Diluted | 0.12 | (0.05) | (0.03) | 0.04 | (1.12) |
| |
| COMMUNITY WEST BANCSHARES |
| CONDENSED CONSOLIDATED BALANCE SHEETS |
| (unaudited) |
| (in 000's, except per share data) |
| | | | |
| | September 30, | December 31, | September 30, |
| | 2010 | 2009 | 2009 |
| | | | |
| Cash and cash equivalents | $ 12,332 | $ 5,511 | $ 8,679 |
| Interest-earning deposits in other financial institutions | 475 | 640 | 832 |
| Investment securities | 39,186 | 40,348 | 40,411 |
| Loans: | | | |
| Commercial | 55,120 | 61,810 | 62,433 |
| Real estate | 196,796 | 202,400 | 191,046 |
| SBA | 131,366 | 139,118 | 142,166 |
| Manufactured housing | 196,451 | 195,656 | 193,165 |
| Other installment | 20,907 | 18,189 | 17,636 |
| Total loans | 600,640 | 617,173 | 606,446 |
| | | | |
| Loans, net | | | |
| Held for sale | 93,643 | 102,574 | 99,611 |
| Held for investment | 506,997 | 514,599 | 506,835 |
| Less: Allowance | (13,395) | (13,733) | (13,274) |
| Net held for investment | 493,602 | 500,866 | 493,561 |
| NET LOANS | 587,245 | 603,440 | 593,172 |
| | | | |
| Other assets | 37,232 | 34,277 | 31,258 |
| | | | |
| TOTAL ASSETS | $ 676,470 | $ 684,216 | $ 674,352 |
| | | | |
| Deposits | | | |
| Non-interest-bearing | $ 39,140 | $ 37,703 | $ 38,569 |
| Interest-bearing | 246,576 | 191,905 | 160,925 |
| Savings | 18,848 | 16,396 | 16,507 |
| CDs over 100K | 170,130 | 173,594 | 175,629 |
| CDs under 100K | 60,979 | 111,794 | 138,067 |
| Total Deposits | 535,673 | 531,392 | 529,697 |
| Other borrowings | 76,085 | 89,000 | 80,000 |
| Other liabilities | 3,930 | 3,517 | 4,331 |
| TOTAL LIABILITIES | 615,688 | 623,909 | 614,028 |
| | | | |
| Stockholders' equity | 60,782 | 60,307 | 60,324 |
| | | | |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 676,470 | $ 684,216 | $ 674,352 |
| | | | |
| Shares outstanding | 5,915 | 5,915 | 5,915 |
| | | | |
| Book value per common share | $ 7.78 | $ 7.74 | $ 7.75 |
| | | | | | | | | | |
| ADDITIONAL FINANCIAL INFORMATION | | | | | | | | | |
| (Dollars in thousands except per share amounts) (Unaudited) | | | | | | | | | |
| | | | | | | | | | |
| | Quarter Ended | | Quarter Ended | | Quarter Ended | | Nine Months Ended |
| PERFORMANCE MEASURES AND RATIOS | Sep. 30, 2010 | | Jun. 30, 2010 | | Sep. 30, 2009 | | Sep. 30, 2010 | | Sep. 30, 2009 |
| Return on average common equity | 9.03% | | -0.54% | | 0.59% | | 2.98% | | -16.15% |
| Return on average assets | 0.62% | | -0.04% | | 0.04% | | 0.20% | | -1.16% |
| Efficiency ratio | 60.44% | | 66.11% | | 65.57% | | 62.54% | | 73.35% |
| Net interest margin | 4.49% | | 4.47% | | 4.12% | | 4.48% | | 3.82% |
| | | | | | | | | | |
| | Quarter Ended | | Quarter Ended | | Quarter Ended | | Nine Months Ended |
| AVERAGE BALANCES | Sep. 30, 2010 | | Jun. 30, 2010 | | Sep. 30, 2009 | | Sep. 30, 2010 | | Sep. 30, 2009 |
| Average assets | $ 673,932 | | $ 674,718 | | $ 676,625 | | $ 676,887 | | $ 673,820 |
| Average earning assets | 645,765 | | 649,069 | | 664,934 | | 651,887 | | 661,107 |
| Average total loans | 600,234 | | 603,219 | | 606,066 | | 604,514 | | 603,802 |
| Average deposits | 536,616 | | 542,720 | | 504,029 | | 538,199 | | 492,316 |
| Average equity (including preferred stock) | 60,975 | | 60,704 | | 61,196 | | 60,894 | | 62,746 |
| Average common equity (excluding preferred stock) | 46,278 | | 46,066 | | 46,760 | | 46,259 | | 48,372 |
| | | | | | | | | | |
| EQUITY ANALYSIS | Sep. 30, 2010 | | Jun. 30, 2010 | | Sep. 30, 2009 | | | | |
| Total equity | $ 60,782 | | $ 59,892 | | $ 60,324 | | | | |
| Less: senior preferred stock | 14,740 | | 14,674 | | 14,473 | | | | |
| Total common equity | $ 46,042 | | $ 45,218 | | $ 45,851 | | | | |
| | | | | | | | | | |
| Common stock outstanding | 5,915 | | 5,915 | | 5,915 | | | | |
| Book value per common share | $ 7.78 | | $ 7.64 | | $ 7.75 | | | | |
| | | | | | | | | | |
| ASSET QUALITY | Sep. 30, 2010 | | Jun. 30, 2010 | | Sep. 30, 2009 | | | | |
| Nonperforming loans (NPLs) | $ 15,104 | | $ 14,574 | | $ 17,770 | | | | |
| Nonperforming loans/total loans | 2.51% | | 2.41% | | 2.93% | | | | |
| REO and repossessed assets | $ 5,466 | | $ 6,265 | | $ 3,281 | | | | |
| Less: SBA-guaranteed amounts | $ 1,435 | | $ 1,333 | | $ 233 | | | | |
| | | | | | | | | | |
| Net REO and repossessed assets | $ 4,031 | | $ 4,932 | | $ 3,048 | | | | |
| Nonperforming assets (net) | $ 19,135 | | $ 19,506 | | $ 20,818 | | | | |
| Nonperforming assets/total assets | 2.83% | | 2.90% | | 3.09% | | | | |
| Net loan charge-offs in the quarter | $ 1,960 | | $ 3,444 | | $ 2,737 | | | | |
| Net charge-offs in the quarter/total loans | 0.33% | | 0.57% | | 0.45% | | | | |
| | | | | | | | | | |
| Allowance for loan losses | $ 13,395 | | $ 13,837 | | $ 13,274 | | | | |
| Plus: Allowance for undisbursed loan commitments | 208 | | 226 | | 560 | | | | |
| Total allowance for credit losses | $ 13,603 | | $ 14,063 | | $ 13,834 | | | | |
| Total allowance for loan losses/total loans held for investment | 2.64% | | 2.70% | | 2.62% | | | | |
| Total allowance for loan losses/nonperforming loans | 89% | | 95% | | 75% | | | | |
| | | | | | | | | | |
| Community West Bancshares | | | | | | | | | |
| Tier 1 leverage ratio | 8.98% | | 8.84% | | 8.89% | | | | |
| Tier 1 risk-based capital ratio | 11.25% | | 11.03% | | 11.17% | | | | |
| Total risk-based capital ratio | 14.02% | | 12.29% | | 12.44% | | | | |
| | | | | | | | | | |
| Community West Bank | | | | | | | | | |
| Tier 1 leverage ratio | 9.09% | | 8.80% | | 8.74% | | | | |
| Tier 1 risk-based capital ratio | 11.38% | | 10.97% | | 10.98% | | | | |
| Total risk-based capital ratio | 12.65% | | 12.23% | | 12.25% | | | | |
| | | | | | | | | | |
| INTEREST SPREAD ANALYSIS | Sep. 30, 2010 | | Jun. 30, 2010 | | Sep. 30, 2009 | | | | |
| Yield on interest-bearing deposits | 1.44% | | 1.56% | | 2.19% | | | | |
| Yield on total loans | 6.21% | | 6.20% | | 6.49% | | | | |
| Yield on investments | 2.96% | | 3.40% | | 3.86% | | | | |
| Yield on earning assets | 5.98% | | 6.00% | | 6.19% | | | | |
| | | | | | | | | | |
| Cost of deposits | 1.34% | | 1.45% | | 2.02% | | | | |
| Cost of FHLB advances | 2.83% | | 2.96% | | 3.95% | | | | |
| Cost of Federal Reserve borrowings | 0.00% | | 0.00% | | 0.50% | | | | |
| Cost of interest-bearing liabilities | 1.67% | | 1.73% | | 2.38% | | | | |
CONTACT: Community West Bancshares
Charles G. Baltuskonis, EVP & CFO
805.692.5821
www.communitywestbank.com