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

EXHIBIT 99.1

Community West Bancshares Earnings Grew 36.4% to $1.5 Million in 3Q16 from 2Q16 Highlighted by Strong Loan Growth, Improved Asset Quality and 4.81% Net Interest Margin; Book Value Per Common Share Increases to $7.93; Declares Quarterly Cash Dividend of $0.035 Per Common Share

GOLETA, Calif., Oct. 28, 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 $1.5 million in the third quarter of 2016 (3Q16) compared to $1.1 million in the second quarter of 2016 (2Q16) and $1.6 million in the third quarter of 2015 (3Q15). In the first nine months of the year, Community West reported net income of $3.9 million compared to $1.0 million in the first nine months of 2015. Excluding the net loan litigation settlement, Community West’s net income for the nine-month period in 2015 would have been $5.2 million. (See “Non-GAAP Financial Information”)

“Community West’s third quarter results were fueled by robust loan growth, continued improvements in credit quality and a healthy net interest margin,” stated Martin E. Plourd, President and Chief Executive Officer. “Our Central Coast markets continue to grow, with commercial real estate projects generating strong demand for business services in our markets. We are taking advantage of this growth by building our relationships with existing clients, as well as developing new client relationships. We will continue to invest in our future, with the new San Luis Obispo branch scheduled to open later this year and the relocated branch in Santa Maria and the new Oxnard branch scheduled to open in early 2017.”

3Q16 Financial Highlights

• Total loans increased $30.0 million for 3Q16 to $601.9 million at September 30, 2016, and 12.9% compared to $533.0 million a year ago.
• Nonaccrual loans, net, decreased 42.8% to $3.0 million, or 0.50% of net loans at September 30, 2016, compared to $5.3 million, or 0.99% of net loans, a year ago, representing the lowest level since 3Q07.
• Net income available to common stockholders for 3Q16 was $1.5 million, or $0.18 per diluted share. 
• Annualized return on average assets was 0.91%.
• Annualized return on average common equity was 9.17%.
• Net interest margin was 4.81%.
• Non-interest-bearing deposits increased 20.4% to $88.0 million at September 30, 2016, compared to $73.1 million a year ago.
• Book value per common share increased 7.7% to $7.93 at September 30, 2016, compared to $7.36 a year ago. 
• The Bank continues to be well-capitalized per banking regulations with its total risk-based capital ratio at 13.08% and Tier 1 leverage ratio at 10.48% at September 30, 2016.

Income Statement

“We have been able to maintain a net interest margin in the mid-4% range largely due to our above industry average loan yields, but also supplemented with periodic loan interest recoveries,” said Charles G. Baltuskonis, Executive Vice President and Chief Financial Officer. Third quarter net interest margin was 4.81% compared to 4.47% in 2Q16 and 4.55% in 3Q15. Of the increase in asset yields in 3Q16, 39 basis points were attributable to one large past due loan relationship which was paid in full. In the first nine months of 2016 the net interest margin was 4.58% compared to 4.76% in the first nine months of 2015. Of the increase in asset yields in the first nine months of 2016, the same loan contributed 13 basis points. In the first nine months of 2015, 26 basis points of asset yields were attributable to two large past due loan relationships that were paid in full.

Net interest income for 3Q16 was $7.7 million, an 11.6% increase compared to $6.9 million in the preceding quarter and a 13.2% increase compared to $6.8 million in 3Q15. Year-to-date, net interest income increased 5.4% to $21.3 million compared to $20.2 million in the same period a year ago. Non-interest income was $559,000 in 3Q16, a slight decrease compared to $577,000 in 2Q16 and a modest increase compared to $554,000 in 3Q15. In the first nine months of 2016, non-interest income was $1.7 million, compared to $1.8 million the first nine months of 2015.

Non-interest expenses totaled $5.8 million in 3Q16, compared to $5.5 million in 2Q16 and $5.0 million in 3Q15. The increase is largely due to the business development of the Bank’s Northern region, consisting of San Luis Obispo and north Santa Barbara counties. Year-to-date noninterest expenses were $16.7 million. In the second quarter of 2015, Community West settled a claim for $7.2 million, net, and, primarily as a result of this settlement, non-interest expenses for the first nine months of 2015 totaled $22.2 million. Excluding this one-time settlement, non-interest expenses would have been approximately $15.1 million for the first nine months of 2015. (See “Non-GAAP Financial Information”) 

Balance Sheet

Total assets were $664.5 million at September 30, 2016, a 3.4% increase compared to three months earlier and a 10.6% increase compared to one year ago. Net loans increased 5.3% to $594.7 million at September 30, 2016, compared to $564.8 million at June 30, 2016, and increased 13.1% compared to $526.0 million a year ago. Commercial real estate loans outstanding were up 27.2% from year ago levels to $225.6 million at September 30, 2016, and comprise 37.5% of the total loan portfolio. Manufactured housing loans were up 10.7% from year ago levels to $191.9 million and represent 31.9% of total loans. Commercial loans increased 20.1% from year ago levels to $120.0 million and represent 19.9% of the total loan portfolio and SBA loans decreased 22.0% from a year ago to $39.3 million and represent 6.5% of the total loan portfolio.

Deposits totaled $590.6 million at September 30, 2016, up 4.5% compared to $565.2 million at June 30, 2016, and grew 12.1% compared to $526.8 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 $437.6 million at September 30, 2016 and comprise 74.1% of total deposits, compared to $405.2 million, or 76.9% of total deposits, a year ago. 

Stockholders’ equity was $64.2 million at September 30, 2016, compared to $63.2 million at June 30, 2016, and $65.9 million a year ago. Book value per common share improved to $7.93 at September 30, 2016 compared to $7.81 at June 30, 2016, and $7.36 a year ago. 

Credit Quality

“Asset quality improved again this quarter, with net nonaccrual loans and other assets acquired through foreclosure both declining compared to three months earlier,” said Plourd. “Our credit metrics remain better than the average for both national banks and banks of our size.”

The allowance for loan losses was $7.2 million at September 30, 2016, or 1.33% of total loans held for investment, compared to 1.37% at June 30, 2016, and 1.50% a year ago. Net nonaccrual loans decreased 25.0% to $3.0 million, or 0.50% of total loans at September 30, 2016, compared to $4.0 million, or 0.70% of total loans, three months earlier, and decreased 43.4% compared to $5.3 million, or 0.99% of total loans, a year ago.

Of the $3.0 million in net nonaccrual loans, $1.0 million were manufactured housing loans, $933,000 were SBA 504 1st loans, $536,000 were home equity loans, $223,000 were commercial real estate loans, $195,000 were single family real estate loans and $133,000 were SBA loans.

Other assets acquired through foreclosure totaled $55,000 at September 30, 2016, compared to $129,000 three months earlier and $206,000 a year earlier.  Nonaccrual loans plus other assets acquired through foreclosure, net of SBA/USDA guarantees, totaled $3.1 million, or 0.46% of total assets, at September 30, 2016, compared to $4.1 million, or 0.64% of total assets, three months earlier and $5.5 million, or 0.91% of total assets, a year ago. 

“Due to strong loan growth, we recorded a provision for loan losses for the second consecutive quarter,” noted Plourd. The loan loss provision was $22,000 in 3Q16, compared to $61,000 in 2Q16, and a negative provision of $445,000 in 3Q15. Net loan recoveries were $140,000 in 3Q16 compared to $148,000 in 2Q16 and $214,000 in 3Q15.

Cash Dividend Declared

The Company’s Board of Directors declared a quarterly cash dividend of $0.035 per common share, payable November 30, 2016 to common shareholders of record on November 14, 2016. The current annualized yield, based on the closing price of CWBC shares of $8.29 on September 30, 2016, was 1.7%.

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. During 3Q16, the Company bought back 45,786 shares. As of September 30, 2016, 187,569 shares had been cumulatively repurchased at an average price of $7.25 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, 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 Government Guaranteed lending.

In September 2016, Community West was named to Sandler O’Neill and Partners Bank and Thrift Sm-All Stars – Class of 2016. This award recognized Community West as one of the top 27 best performing small capitalization institutions from a list of publicly traded banks and thrifts in the U.S. with market capitalizations less than $2.5 billion. In making their selections, Sandler focused on growth, profitability, credit quality and capital strength.

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 BALANCE SHEETS
(unaudited)
(in 000's, except per share data)
	September 30,			June 30,			September 30,			December 31,
		2016			2016			2015			2015
Cash and cash equivalents	$	2,595		$	2,665		$	1,876		$	2,789
Time and interest-earning deposits in other financial institutions		15,164			24,604			21,916			32,829
Investment securities		31,200			30,782			31,201			30,466
Loans:
Commercial		120,043			106,650			99,871			107,510
Commercial real estate		225,572			207,664			177,302			179,491
SBA		39,295			41,176			50,381			47,880
Manufactured housing		191,946			188,315			173,432			177,891
Single family real estate		14,335			17,203			20,671			19,073
HELOC		10,789			10,803			11,134			10,934
Other		(78	)		43			207			683
Total loans		601,902			571,854			532,998			543,462
Loans, net
Held for sale		62,381			60,086			65,491			64,488
Held for investment		539,521			511,768			467,507			478,974
Less: Allowance for loan losses		(7,190	)		(7,028	)		(7,012	)		(6,916	)
Net held for investment		532,331			504,740			460,495			472,058
NET LOANS		594,712			564,826			525,986			536,546
Other assets		20,865			19,747			20,058			18,583
TOTAL ASSETS	$	664,536		$	642,624		$	601,037		$	621,213
Deposits
Non-interest-bearing demand	$	88,024		$	83,524		$	73,073		$	76,469
Interest-bearing demand		258,360			250,036			250,738			250,509
Savings		14,388			14,173			13,943			13,690
Certificates of deposit ($250 or more)		92,319			74,622			56,745			66,722
Other certificates of deposit		137,510			142,829			132,287			136,948
Total deposits		590,601			565,184			526,786			544,338
Other borrowings		5,500			10,500			5,000			10,500
Other liabilities		4,223			3,702			3,339			4,431
TOTAL LIABILITIES		600,324			579,386			535,125			559,269
Stockholders' equity		64,212			63,238			65,912			61,944
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	664,536		$	642,624		$	601,037		$	621,213
Shares outstanding		8,094			8,098			8,201			8,206
Book value per common share	$	7.93		$	7.81		$	7.36		$	7.55

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,
		2016		2016			2015			2016			2015
Interest income
Loans, including fees	$	8,228	$	7,414		$	7,131		$	22,817		$	21,253
Investment securities and other		288		260			244			817			834
Total interest income		8,516		7,674			7,375			23,634			22,087
Interest expense
Deposits		733		704			587			2,088			1,761
Other borrowings and convertible debt		74		73			6			219			82
Total interest expense		807		777			593			2,307			1,843
Net interest income		7,709		6,897			6,782			21,327			20,244
Provision (credit) for loan losses		22		61			(445	)		(164	)		(1,997	)
Net interest income after provision for loan losses		7,687		6,836			7,227			21,491			22,241
Non-interest income
Other loan fees		270		282			244			827			789
Document processing fees		130		136			141			381			364
Service charges		100		102			92			292			252
Other		59		57			77			215			366
Total non-interest income		559		577			554			1,715			1,771
Non-interest expenses
Salaries and employee benefits		3,809		3,494			3,412			10,755			9,729
Occupancy, net		564		581			507			1,631			1,439
Professional services		196		278			212			653			736
Advertising and marketing		154		212			116			447			348
Depreciation		162		175			103			486			290
Data processing		173		169			135			513			388
FDIC assessment		74		99			99			270			252
Stock-based compensation		97		84			73			261			333
Loan servicing and collection		108		(89	)		10			198			281
Loan litigation settlement, net		-		-			(50	)		-			7,103
Other		499		503			421			1,464			1,291
Total non-interest expenses		5,836		5,506			5,038			16,678			22,190
Income before provision for income taxes		2,410		1,907			2,743			6,528			1,822
Provision for income taxes		929		782			1,152			2,639			803
Net income		1,481		1,125			1,591			3,889			1,019
Dividends and accretion on preferred stock		-		-			125			-			401
Discount on partial redemption of preferred stock		-		-			-			-			(129	)
Net income available to common stockholders	$	1,481	$	1,125		$	1,466		$	3,889		$	747
Earnings per share:
Basic	$	0.18	$	0.14		$	0.18		$	0.48		$	(0.09	)
Diluted	$	0.18	$	0.13		$	0.17		$	0.46		$	(0.09	)

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	Sep. 30, 2016			Jun. 30, 2016			Sep. 30, 2015			Sep. 30, 2015			Sep. 30, 2015
Return on average common equity		9.17	%		7.15	%		10.54	%		8.19	%		2.23	%
Return on average assets		0.91	%		0.72	%		1.05	%		0.82	%		0.24	%
Efficiency ratio		70.59	%		73.67	%		68.68	%		72.38	%		100.79	%
Net interest margin		4.81	%		4.47	%		4.55	%		4.58	%		4.76	%
	Three Months Ended			Three Months Ended			Three Months Ended			Nine Months Ended
AVERAGE BALANCES	Sep. 30, 2016			Jun. 30, 2016			Sep. 30, 2015			Sep. 30, 2016			Sep. 30, 2015
Average assets	$	649,134		$	631,318		$	601,776		$	632,946		$	579,501
Average earning assets		637,525			620,125			591,018			621,899			568,938
Average total loans		581,477			558,841			526,119			561,365			505,708
Average deposits		571,094			553,943			523,108			555,250			499,504
Average equity (including preferred stock)		64,260			63,277			65,478			63,395			66,999
Average common equity (excluding preferred stock)		64,260			63,277			59,904			63,395			61,054
EQUITY ANALYSIS	Sep. 30, 2016			Jun. 30, 2016			Sep. 30, 2015
Total equity	$	64,212		$	63,238		$	65,912
Less: senior preferred stock		-			-			(5,574	)
Total common equity	$	64,212		$	63,238		$	60,338
Common stock outstanding		8,094			8,098			8,201
Book value per common share	$	7.93		$	7.81		$	7.36
ASSET QUALITY	Sep. 30, 2016			Jun. 30, 2016			Sep. 30, 2015
Nonaccrual loans, net	$	3,026		$	3,988		$	5,287
Nonaccrual loans, net/total loans		0.50	%		0.70	%		0.99	%
Other assets acquired through foreclosure, net	$	55		$	129		$	206
Nonaccrual loans plus other assets acquired through foreclosure, net	$	3,081		$	4,117		$	5,493
Nonaccrual loans plus other assets acquired through foreclosure, net/total assets		0.46	%		0.64	%		0.91	%
Net loan (recoveries)/charge-offs in the quarter	$	(140	)	$	(148	)	$	(214	)
Net (recoveries)/charge-offs in the quarter/total loans		-0.02	%		-0.03	%		-0.04	%
Allowance for loan losses	$	7,190		$	7,028		$	7,012
Plus: Reserve for undisbursed loan commitments		83			89			50
Total allowance for credit losses	$	7,273		$	7,117		$	7,062
Allowance for loan losses/total loans held for investment		1.33	%		1.37	%		1.50	%
Allowance for loan losses/nonaccrual loans, net		237.61	%		176.23	%		132.63	%
Community West Bank *
Tier 1 leverage ratio		10.48	%		10.53	%		10.73	%
Tier 1 capital ratio		11.83	%		12.28	%		13.01	%
Total capital ratio		13.08	%		13.53	%		14.26	%
INTEREST SPREAD ANALYSIS	Sep. 30, 2016			Jun. 30, 2016			Sep. 30, 2015
Yield on total loans		5.63	%		5.34	%		5.38	%
Yield on investments		3.10	%		2.57	%		2.52	%
Yield on interest earning deposits		0.45	%		0.46	%		0.30	%
Yield on earning assets		5.31	%		4.98	%		4.95	%
Cost of interest-bearing deposits		0.60	%		0.59	%		0.52	%
Cost of total deposits		0.51	%		0.51	%		0.45	%
Cost of borrowings		2.82	%		2.80	%		0.23	%
Cost of interest-bearing liabilities		0.65	%		0.64	%		0.51	%
* Capital ratios are preliminary until the Call Report is filed.

NON-GAAP FINANCIAL INFORMATION
(Unaudited)
	Three Months Ended			Nine Months Ended
NON-GAAP PERFORMANCE MEASURES	Sep. 30, 2015			Sep. 30, 2015
Return on average common equity, excluding loan litigation settlement, net (1)		10.34	%		11.39	%
Return on average assets, excluding loan litigation settlement, net (1)		1.03	%		1.20	%
Efficiency ratio, excluding loan litigation settlement, net (2)		69.36	%		68.53	%
NON-GAAP EARNINGS PER SHARE
Basic (3)	$	0.18		$	0.60
Diluted (3)	$	0.17		$	0.58
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Unaudited)
	Three Months Ended			Nine Months Ended
	Sep. 30, 2015			Sep. 30, 2015
	(in thousands)
Net income	$	1,591		$	1,019
Loan litigation settlement, net		(50	)		7,103
Tax effect on loan litigation settlement, net		21			(2,923	)
Net income, excluding loan litigation settlement, net (3)	$	1,562		$	5,199
	Three Months Ended			Nine Months Ended
	Sep. 30, 2015			Sep. 30, 2015
	(in thousands)
Total non-interest expenses	$	5,038		$	22,190
Loan litigation settlement, net		50			(7,103	)
Total non-interest expenses, excluding loan litigation settlement, net (3)	$	5,088		$	15,087
(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