updated 1/20/2011 9:16:31 AM ET 2011-01-20T14:16:31

GOLETA, Calif., Jan. 20, 2011 (GLOBE NEWSWIRE) -- Community West Bancshares ("Community West"), (Nasdaq:CWBC), parent company of Community West Bank, today reported net income of $1.1 million in the fourth quarter of 2010 (4Q10), compared to net income of $97,000 in the fourth quarter a year ago (4Q09). The loan loss provision in 4Q10 was $1.3 million compared to $2.8 million in 4Q09. For the full year, Community West reported net income of $2.1 million, compared to a net loss of $5.8 million for 2009. The loan loss provision for all of 2010 was $8.7 million compared to $18.7 million in 2009.

"We are extremely pleased by our positive operating results in 2010," stated Lynda J. Nahra, President and Chief Executive Officer. "We have improved across all areas of the Bank and continue to benefit from strong core earnings, net interest margin expansion and stabilizing asset quality. Our net interest income and noninterest income both increased during the fourth quarter compared to the fourth quarter a year ago, while our provision for loan losses has decreased. Additionally, our nonperforming loans declined during the quarter and remain at workable levels."

2010 Financial Highlights

  • Net income applicable to common stockholders was $795,000, or $0.11 per diluted common share in 4Q10.
  • For the year, net income applicable to common stockholders was $1.0 million, or $0.18 per diluted common share.
  • Net interest margin was 4.57% in 4Q10, a 39 basis point improvement compared to 4Q09.
  • For the year, net interest margin was 4.50%, a 59 basis point improvement compared to 2009.
  • Core deposits increased by 29.5% compared to a year ago.
  • Nonperforming loans were $12.7 million, or 2.13% of total loans at 12/31/10, compared to $15.1 million, or 2.51% of total loans, at 9/30/10.
  • The total allowance for loan losses/total loans held for investment was 2.60% at 12/31/10 compared to 2.64% at 9/30/10.
  • Community West Bank's Total risk-based capital ratio was 12.87%, Tier 1 risk-based capital ratio was 11.61% and Tier 1 leverage ratio was 9.24% at 12/31/10.

In 4Q10, including the $262,000 preferred stock dividends, the net income applicable to common stockholders was $795,000, or $0.11 per diluted share, compared to a net loss applicable to common stockholders of $165,000, or $0.03 per diluted share, in 4Q09. For the full year, the net income applicable to common stockholders was $1,044,000, or $0.18 per diluted share, compared to a net loss applicable to common stockholders of $6.8 million, or $1.15 per diluted share, a year ago. 

Income Statement Review

"Improvement in our funding costs led to continued net interest margin expansion," said Charles G. Baltuskonis, EVP and Chief Financial Officer. In 4Q10, the net interest margin was 4.57% compared to 4.49% in 3Q10 and 4.18% in 4Q09. For the full year, the net interest margin increased 59 basis points to 4.50% from 3.91% in 2009. 

Fourth quarter net interest income increased 5.6% to $7.4 million compared to $7.1 million in 4Q09. For the year, net interest income increased 12.8% to $29.3 million compared to $26.0 million a year ago. Non-interest income increased 18.6% to $1.2 million in 4Q10, compared to $1.0 million in 4Q09. For the year, there was a modest decline in loan servicing fees due to lower SBA sold loan balances and lack of new loan sales.

Non-interest expenses were $5.6 million in 4Q10, compared to $5.1 million in 4Q09. The increase in operating costs was primarily attributable to higher costs related to problem credits. For the year, non-interest expenses improved 2.3% to $21.0 million compared to $21.5 million for 2009. 

For 2010, the efficiency ratio improved by 11.2% to 63.5% compared to 71.0% a year ago.

Credit Quality

Nonperforming loans totaled $12.7 million, or 2.13% of total loans at December 31, 2010, compared to $15.1 million or 2.51% of total loans three months earlier and $16.2 million, or 2.62% of total loans a year ago. Real estate owned and repossessed assets totaled $8.5 million at December 31, 2010 compared to $5.5 million at September 30, 2010 and $1.8 million a year ago. Of the $12.7 million in total nonperforming loans, $5.9 million or 46.7% were real estate loans, $4.2 million or 33.0% were SBA loans, $1.9 million or 15.1% were manufactured housing loans, $602,000 or 4.8% were commercial loans and $52,000 or 0.4% were other installment loans.

"The decrease in the provision for loan losses was the direct result of the improving asset quality trends as well as real estate valuations stabilizing," said Nahra. The loan loss provision was $1.3 million in 4Q10 compared to $1.5 million in 3Q10 and $2.8 million in 4Q09. The allowance for loan losses totaled $13.3 million at year-end, equal to 2.60% of total loans held for investment, compared to 2.64% at September 30, 2010 and 2.67% a year ago.

Community West had net charge-offs of $1.4 million in 4Q10 compared to $2.0 million in 3Q10 and $2.3 million in 4Q09. 

Balance Sheet

Total loans decreased from a year ago as loan demand has softened, particularly in the commercial and SBA loan sectors. Total loans were $593.9 million at December 31, 2010 compared to $617.2 million a year ago. 

Real estate loans outstanding decreased 4.9%, or $9.9 million, from year ago levels to $192.5 million at December 31, 2010, and comprise 32.4% of the total loan portfolio. Manufactured housing loans were down slightly from year ago levels to $194.7 million and represent 32.8% of total loans. Commercial loans were down 7.2% compared to a year ago and now represent 9.7% of the total loan portfolio and SBA loans decreased 7.5% from a year ago and now represent 21.7% of the total loan portfolio. Other installment loans increased 13.5% from year ago levels and represent 3.5% of the total loan portfolio. 

"Our deposit strategy is focused on the growth of core and business deposits while reducing our reliance on wholesale funding," said Baltuskonis. "As a result, core deposits grew $14.0 million for the quarter and $72.6 million for the year." 

Total deposits were $529.9 million at December 31, 2010 compared to $531.4 million a year earlier. Non-interest-bearing accounts were $35.8 million at December 31, 2010 compared to $37.7 million a year ago. Interest-bearing accounts increased 36.8% to $262.4 million compared to $191.9 million a year ago. Core deposits, defined as non-interest-bearing, interest-bearing and savings accounts, increased 29.5% to $318.6 million at year-end, compared to $246.0 million a year earlier while certificates of deposit decreased 26.0% over the same period to $211.3 million, compared to $285.4 million a year earlier.

Total assets were $667.6 million at year-end, compared to $684.2 million a year earlier. Stockholders' equity was $61.6 million at year-end, compared to $60.3 million a year earlier and book value per common share was $7.92 at year-end compared to $7.74 a year earlier.

Capital Management

In August, Community West completed its public offering of $8,085,000 of 9% convertible subordinated debentures. Proceeds from the offering further strengthened the capital position of the Company and support its strategic growth opportunities. 

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 Twelve Months Ended 
  December 31,

2010
September 30,

2010
December 31,

2009
December 31,

2010
December 31,

2009
           
Interest income  $ 9,862  $ 9,727  $ 10,108  $ 39,234  $ 40,903
Interest expense  2,419  2,419  3,058  9,957  14,945
Net interest income  7,443  7,308  7,050  29,277  25,958
Provision for loan losses  1,279  1,518  2,788  8,743  18,678
Net interest income after

provision for loan losses
 6,164  5,790  4,262  20,534  7,280
Non-interest income  1,220  1,023  1,029  4,015  4,418
Non-interest expenses  5,588  5,035  5,124  20,991  21,479
           
Income (Loss) before income taxes  1,796  1,778  167  3,558  (9,781)
Provision for income taxes  739  733  70  1,467  (4,018)
           
NET INCOME (LOSS)  $ 1,057  $ 1,045  $ 97  $ 2,091  $ (5,763)
           
Preferred stock dividends  262  261  262  1,047  1,046
           
NET INCOME (LOSS) APPLICABLE

TO COMMON SHAREHOLDERS
 $ 795  $ 784  $ (165)  $ 1,044  $ (6,809)
           
Earnings (Loss) per common share:        
Basic  $ 0.13  $ 0.13  $ (0.03)  $ 0.18  $ (1.15)
Diluted  0.11  0.12  (0.03)  0.18  (1.15)
 
COMMUNITY WEST BANCSHARES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in 000's, except per share data)
       
  December 31,

2010
September 30,

2010
December 31,

2009
       
Cash and cash equivalents  $ 6,226  $ 12,332  $ 5,511
Interest-earning deposits in other financial institutions  290  475  640
Investment securities  40,235  39,186  40,348
Loans:      
Commercial  57,369  55,120  61,810
Commercial real estate  173,906  175,700  180,688
SBA  128,721  131,366  139,113
Manufactured housing  194,682  196,451  195,656
Single family real estate  13,739  13,873  14,821
HELOC  20,273  20,544  17,902
Consumer  379  363  287
Mortgage loans held for sale  4,865  7,223  6,896
Total loans  593,934  600,640  617,173
       
Loans, net      
Held for sale  82,320  93,643  102,574
Held for investment  511,614  506,997  514,599
Less: Allowance  (13,302)  (13,395)  (13,733)
Net held for investment  498,312  493,602  500,866
NET LOANS  580,632  587,245  603,440
       
Other assets  40,221  37,232  34,277
       
TOTAL ASSETS  $ 667,604  $ 676,470  $ 684,216
       
Deposits      
Non-interest-bearing   $ 35,767  $ 39,140  $ 37,703
Interest-bearing  262,431  246,576  191,905
Savings  20,371  18,848  16,396
CDs over 100K  163,118  170,130  173,594
CDs under 100K  48,206  60,979  111,794
Total Deposits  529,893  535,673  531,392
Other borrowings  72,081  76,085  89,000
Other liabilities  3,988  3,930  3,517
TOTAL LIABILITIES  605,962  615,688  623,909
       
Stockholders' equity  61,642  60,782  60,307
       
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $ 667,604  $ 676,470  $ 684,216
       
Shares outstanding  5,916  5,915  5,915
       
Book value per common share  $ 7.92  $ 7.78  $ 7.74
 
ADDITIONAL FINANCIAL INFORMATION
(Dollars in thousands except per share amounts)(Unaudited)
  Quarter Ended Quarter Ended Quarter Ended Twelve Months Ended
PERFORMANCE MEASURES AND RATIOS Dec. 31, 2010 Sep. 30, 2010 Dec. 31, 2009 Dec. 31, 2010 Dec. 31, 2009
Return on average common equity  8.98% 9.03% 0.83% 4.50% -12.02%
Return on average assets  0.63% 0.62% 0.06% 0.31% -0.85%
Efficiency ratio 64.50% 60.44% 63.42% 63.05% 71.00%
Net interest margin 4.57% 4.49% 4.18% 4.50% 3.91%
           
  Quarter Ended Quarter Ended Quarter Ended Twelve Months Ended
AVERAGE BALANCES Dec. 31, 2010 Sep. 30, 2010 Dec. 31, 2009 Dec. 31, 2010 Dec. 31, 2009
Average assets  $ 676,475  $ 673,932  $ 681,201  $ 676,776  $ 675,672
Average earning assets  646,180  645,765  669,248  650,448  663,151
Average total loans  599,071  600,234  611,512  603,141  605,741
Average deposits  535,258  536,616  531,453  537,454  502,173
Average equity (including preferred stock)  61,837  60,975  61,187  61,132  62,353
Average common equity (excluding preferred stock)  47,074  46,278  46,683  46,464  47,947
           
EQUITY ANALYSIS Dec. 31, 2010 Sep. 30, 2010 Dec. 31, 2009    
Total equity  $ 61,642  $ 60,782  $ 60,307    
Less: senior preferred stock  14,807  14,740  14,540    
Total common equity  $ 46,835  $ 46,042  $ 45,767    
           
Common stock outstanding  5,916  5,915  5,915    
Book value per common share  $ 7.92  $ 7.78  $ 7.74    
           
ASSET QUALITY Dec. 31, 2010 Sep. 30, 2010 Dec. 31, 2009    
Nonperforming loans (NPLs)  $ 12,671  $ 15,104  $ 16,177    
Nonperforming loans/total loans 2.13% 2.51% 2.62%    
REO and repossessed assets  $ 8,478  $ 5,466  $ 1,822    
Less: SBA-guaranteed amounts  $ 1,725  $ 1,435  $ 181    
           
Net REO and repossessed assets  $ 6,753  $ 4,031  $ 1,641    
Nonperforming assets (net)  $ 19,424  $ 19,135  $ 17,818    
Nonperforming assets/total assets 2.91% 2.83% 2.60%    
Net loan charge-offs in the quarter  $ 1,372  $ 1,960  $ 2,329    
Net charge-offs in the quarter/total loans  0.23% 0.33% 0.38%    
           
Allowance for loan losses  $ 13,302  $ 13,395  $ 13,733    
Plus: Allowance for undisbursed loan commitments  194  208  501    
Total allowance for credit losses  $ 13,496  $ 13,603  $ 14,234    
Total allowance for loan losses/total loans held for investment 2.60% 2.64% 2.67%    
Total allowance for loan losses/nonperforming loans 105% 89% 85%    
           
Community West Bancshares          
Tier 1 leverage ratio 9.08% 8.98% 8.81%    
Tier 1 risk-based capital ratio 11.40% 11.25% 10.93%    
Total risk-based capital ratio 14.16% 14.02% 12.20%    
           
Community West Bank          
Tier 1 leverage ratio 9.24% 9.09% 8.69%    
Tier 1 risk-based capital ratio 11.61% 11.38% 10.78%    
Total risk-based capital ratio 12.87% 12.65% 12.05%    
           
INTEREST SPREAD ANALYSIS Dec. 31, 2010 Sep. 30, 2010 Dec. 31, 2009    
Yield on interest-bearing deposits 1.42% 1.44% 1.92%    
Yield on total loans 6.33% 6.21% 6.29%    
Yield on investments 2.60% 2.96% 3.37%    
Yield on earning assets 6.06% 5.98% 5.99%    
           
Cost of deposits 1.31% 1.34% 1.77%    
Cost of FHLB advances 2.75% 2.83% 3.65%    
Cost of Federal Reserve borrowings 0.00% 0.00% 0.50%    
Cost of interest-bearing liabilities 1.68% 1.67% 2.10%    
CONTACT: Charles G. Baltuskonis, EVP & CFO
         805.692.5821
         www.communitywestbank.com

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