Community West Bancshares (CWBC) 8-K Results of Operations and Financial Condition

EXHIBIT 99.1

Community West Bancshares Earns $1.9 Million in Fourth Quarter; Results Driven by 10% Annual Loan Growth and Continued Improvement in Asset Quality; Declares Quarterly Cash Dividend of $0.03 Per Common Share

GOLETA, Calif., Jan. 26, 2016 (GLOBE NEWSWIRE) -- 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.

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 and one loan production office in San Luis Obispo. The principal business activities of the Company are Relationship business banking, Manufactured Housing 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									Twelve Months Ended
	December 31,			September 30,			December 31,			December 31,			December 31,
		2015			2015			2014			2015			2014
Interest income
Loans, including fees	$	7,886		$	7,131		$	6,798		$	29,139		$	27,166
Investment securities and other		249			244			220			1,083			838
Total interest income		8,135			7,375			7,018			30,222			28,004
Interest expense
Deposits		622			587			624			2,383			2,663
Other borrowings and convertible debt		51			6			88			133			612
Total interest expense		673			593			712			2,516			3,275
Net interest income		7,462			6,782			6,306			27,706			24,729
Provision for loan losses		(277	)		(445	)		(1,575	)		(2,274	)		(5,135	)
Net interest income after provision for loan losses		7,739			7,227			7,881			29,980			29,864
Non-interest income
Other loan fees		225			244			184			1,014			904
Document processing fees		102			141			97			466			394
Service charges		99			92			69			351			284
Other		112			77			121			478			615
Total non-interest income		538			554			471			2,309			2,197
Non-interest expenses
Salaries and employee benefits		3,175			3,412			2,846			12,904			12,154
Occupancy, net		519			507			475			1,958			1,852
Professional services		257			212			384			993			1,551
Data processing		145			135			145			533			570
Advertising and marketing		118			116			179			466			608
Depreciation		109			103			86			399			324
Stock based compensation		79			73			38			412			308
FDIC assessment		90			99			85			342			338
Loan servicing and collection		114			10			259			395			845
Loan litigation settlement, net		(8	)		(50	)		-			7,095			-
Other		493			421			149			1,784			1,531
Total non-interest expenses		5,091			5,038			4,646			27,281			20,081
Income before provision for income taxes		3,186			2,743			3,706			5,008			11,980
Provision for income taxes		1,335			1,152			1,520			2,138			4,934
Net Income		1,851			1,591			2,186			2,870			7,046
Dividends and accretion on preferred stock		44			125			159			445			937
Discount on partial redemption of preferred stock		-			-			(15	)		(129	)		(159	)
Net income available to common stockholders	$	1,807		$	1,466		$	2,042		$	2,554		$	6,268
Earnings per share:
Basic	$	0.22		$	0.18		$	0.25		$	0.31		$	0.77
Diluted	$	0.21		$	0.17		$	0.24		$	0.30		$	0.75

COMMUNITY WEST BANCSHARES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in 000's, except per share data)
	December 31,			September 30,			December 31,
		2015			2015			2014
Cash and cash equivalents	$	2,789		$	1,876		$	1,631
Time and interest-earning deposits in other financial institutions		32,829			21,916			17,427
Investment securities		30,466			31,201			30,641
Loans:
Commercial		107,510			99,871			74,792
Commercial real estate		179,491			177,302			159,432
SBA		47,880			50,381			61,963
Manufactured housing		177,891			173,432			169,662
Single family real estate		19,073			20,671			15,744
HELOC		10,934			11,134			13,481
Other		683			207			59
Total loans		543,462			532,998			495,133
Loans, net
Held for sale		64,488			65,491			66,759
Held for investment		478,974			467,507			428,374
Less: Allowance		(6,916	)		(7,012	)		(7,877	)
Net held for investment		472,058			460,495			420,497
NET LOANS		536,546			525,986			487,256
Other assets		18,583			20,058			20,363
TOTAL ASSETS	$	621,213		$	601,037		$	557,318
Deposits
Non-interest-bearing demand	$	76,469		$	73,073		$	57,364
Interest-bearing demand		250,509			250,738			275,631
Savings		13,690			13,943			15,265
Certificates of deposit ($250,000 or more)		66,722			56,745			13,601
Other certificates of deposit		136,948			132,287			115,223
Total deposits		544,338			526,786			477,084
Other borrowings		10,500			5,000			10,000
Other liabilities		4,431			3,339			3,227
TOTAL LIABILITIES		559,269			535,125			490,311
Stockholders' equity		61,944			65,912			67,007
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
	$	621,213		$	601,037		$	557,318
Shares outstanding		8,206			8,201			8,203
Book value per common share	$	7.55		$	7.36		$	7.31

ADDITIONAL FINANCIAL INFORMATION
(Dollars in thousands except per share amounts)(Unaudited)
	Three Months Ended			Three Months Ended			Three Months Ended			Twelve Months Ended
PERFORMANCE MEASURES AND RATIOS	Dec. 31, 2015			Sep. 30, 2015			Dec. 31, 2014			Dec. 31, 2015			Dec. 31, 2014
Return on average common equity		11.96	%		10.54	%		14.70	%		4.69	%		12.51	%
Return on average assets		1.19	%		1.05	%		1.54	%		0.49	%		1.25	%
Efficiency ratio		63.64	%		68.68	%		68.56	%		90.89	%		74.58	%
Net interest margin		4.90	%		4.55	%		4.52	%		4.80	%		4.50	%
	Three Months Ended			Three Months Ended			Three Months Ended			Twelve Months Ended
AVERAGE BALANCES	Dec. 31, 2015			Sep. 30, 2015			Dec. 31, 2014			Dec. 31, 2015			Dec. 31, 2014
Average assets	$	614,688		$	601,776		$	564,634		$	588,369		$	562,474
Average earning assets		603,921			591,018			553,564			577,755			549,136
Average total loans		537,917			526,119			497,211			513,826			489,598
Average deposits		537,269			523,108			480,878			509,022			469,477
Average equity (including preferred stock)		63,334			65,478			66,041			66,076			67,600
Average common equity (excluding preferred stock)		61,395			59,904			58,984			61,140			56,313
EQUITY ANALYSIS	Dec. 31, 2015			Sep. 30, 2015			Dec. 31, 2014
Total equity	$	61,944		$	65,912		$	67,007
Less: senior preferred stock		-			(5,574	)		(7,014	)
Total common equity	$	61,944		$	60,338		$	59,993
Common stock outstanding		8,206			8,201			8,203
Book value per common share	$	7.55		$	7.36		$	7.31
ASSET QUALITY	Dec. 31, 2015			Sep. 30, 2015			Dec. 31, 2014
Nonaccrual loans, net	$	5,013		$	5,287		$	11,027
Nonaccrual loans, net/total loans		0.92	%		0.99	%		2.23	%
Other assets acquired through foreclosure, net	$	198		$	206		$	137
Nonaccrual loans plus other assets acquired through foreclosure, net	$	5,211		$	5,493		$	11,164
Nonaccrual loans plus other assets acquired through foreclosure, net/total assets		0.84	%		0.91	%		2.00	%
Net loan (recoveries)/charge-offs in the quarter	$	(181	)	$	(214	)	$	(216	)
Net (recoveries)/charge-offs in the quarter/total loans		-0.03	%		-0.04	%		-0.04	%
Allowance for loan losses	$	6,916		$	7,012		$	7,877
Plus: Reserve for undisbursed loan commitments		61			50			39
Total allowance for credit losses	$	6,977		$	7,062		$	7,916
Total allowance for loan losses/total loans held for investment		1.44	%		1.50	%		1.84	%
Total allowance for loan losses/nonaccrual loans		137.96	%		132.63	%		71.43	%
Community West Bank *
Tier 1 leverage ratio		10.38	%		10.73	%		11.64	%
Tier 1 risk-based capital ratio		12.45	%		13.15	%		14.66	%
Total risk-based capital ratio		13.70	%		14.40	%		15.91	%
INTEREST SPREAD ANALYSIS	Dec. 31, 2015			Sep. 30, 2015			Dec. 31, 2014
Yield on total loans		5.82	%		5.38	%		5.43	%
Yield on investments		2.60	%		2.52	%		2.34	%
Yield on interest earning deposits		0.32	%		0.30	%		0.35	%
Yield on earning assets		5.34	%		4.95	%		5.03	%
Cost of interest-bearing deposits		0.53	%		0.52	%		0.59	%
Cost of total deposits		0.46	%		0.45	%		0.51	%
Cost of borrowings		2.31	%		0.23	%		2.50	%
Cost of interest-bearing liabilities		0.57	%		0.51	%		0.65	%
* Capital ratios are preliminary until the Call Report is filed.

NON-GAAP FINANCIAL INFORMATION
(Unaudited)
	Three Months Ended			Twelve Months Ended
NON-GAAP PERFORMANCE MEASURES	Dec. 31, 2015			Dec. 31, 2015
Return on average common equity, excluding loan litigation settlement, net (1)		11.93	%		11.52	%
Return on average assets, excluding loan litigation settlement, net (1)		1.19	%		1.20	%
Efficiency ratio, excluding loan litigation settlement, net (2)		63.74	%		67.25	%
NON-GAAP EARNINGS PER SHARE
Basic (3)	$	0.22		$	0.82
Diluted (3)	$	0.21		$	0.79
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Unaudited)
	Three Months Ended			Twelve Months Ended
	Dec. 31, 2015			Dec. 31, 2015
	(in thousands)
Net income	$	1,851		$	2,870
Loan litigation settlement, net		(8	)		7,095
Tax effect on loan litigation settlement, net		3			(2,920	)
Net income, excluding loan litigation settlement, net (3)	$	1,846		$	7,045
	Three Months Ended			Twelve Months Ended
	Dec. 31, 2015			Dec. 31, 2015
	(in thousands)
Total non-interest expenses	$	5,091		$	27,281
Loan litigation settlement, net		8			(7,095	)
Total non-interest expenses, excluding loan litigation settlement, net (3)	$	5,099		$	20,186
(1) The Company believes these non-GAAP ratios provide a useful metric with which to analyze and evaluate the financial condition of the Company
(2) The Company believes this non-GAAP ratio provides a useful metric to measure the operating efficiency of the Company
(3) The Company believes these non-GAAP measurements are a key indicator of the ongoing earnings power of the Company

Contact:
Charles G. Baltuskonis, EVP & CFO
805.692.5821
www.communitywestbank.com