CWBC: Community West Bancshares, (NASDAQ: CWBC)

Community West Bancshares (Community West or the Company), (NASDAQ: CWBC), parent company of Community West Bank (Bank), recently declared earnings of $2.20M, or $0.250 for each diluted share, for the third quarter of 2k19 (3Q19), contrast to $1.60M, or $0.180 for each diluted share, in 2Q19, and $2.40M, or $0.270 for each diluted share, in 3Q18.

In the first 9.0-months of 2k19, net income was $5.20M, or $0.610 for each diluted share, contrast to $6.10M, or $0.690 for each diluted share, in the first 9.0-months of 2k18.

“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 5.0 percent incline in the loan portfolio contrast to a year ago, and strong total demand deposits, which increased 20.00 percent 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 2k19 Financial Highlights:

  • Net income was $2.20M, or $0.250 for each diluted share, in 3Q19, contrast to $1.60M, or $0.180 for each diluted share in 2Q19, and $2.40M, or $0.270 for each diluted share in 3Q18.
  • Net interest margin improved to 4.10 percent for 3Q19, contrast to 4.070 percent for 2Q19 and 4.020 percent for 3Q18.
  • Total non-interest cost was $6.50M in 3Q19, contrast to $6.80M in 2Q19 and $6.40M in 3Q18.
  • Total demand deposits reduced slightly to $448.00M at September 30, 2k19, contrast to $456.30M at June 30, 2k19, and increased $75.40M contrast to $372.60M at September 30, 2k18.
  • Total loans increased to $789.50M at September 30, 2k19, contrast to $788.90M at June 30, 2k19, and increased $35.70M contrast to $753.70M at September 30, 2k18.
  • Book value for each common share increased to $9.40 at September 30, 2k19, contrast to $9.190 at June 30, 2k19, and $9.130 at September 30, 2k18.
  • Provision (credit) for loan losses was ($75,000.00) for the quarter, contrast to a provision for loan losses of $177,000.00 for 2Q19, and a credit for loan losses of ($197,000.00) for 3Q18.
  • Total risked based capital improved to 11.180 percent for the Bank at September 30, 2k19, contrast to 10.670 percent at June 30, 2k19 and 10.790 percent at September 30, 2k18.
  • Net nonaccrual loans totalled $5.50M at September 30, 2k19, contrast to $3.00M at June 30, 2k19, and $3.80M at September 30, 2k18.
  • Other real estate owned was $317,000.00 at September 30, 2k19, contrast to $1.10M at June 30, 2k19, and zero at September 30, 2k18.

Income Statement

Third quarter net interest income increased to $8.80M, contrast to $8.50M in 2Q19 and $8.60M in 3Q18.  For 3Q19, net interest income benefited by both collection of interest on formerly impaired loans and a net decline in the cost of funds.  In the first 9.0-months of 2k19, net interest income was $25.50M, contrast to $25.30M in the first 9.0-months of 2k18.

Non-interest income was $647,000.00 in 3Q19, contrast to $692,000.00 in 2Q19 and $641,000.00 in 3Q18.  Non-interest income was $1.90M in the first 9.0-months of 2k19, contrast to $2.00M in the first 9.0-months of 2k18.

“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 percent, from 4.070 percent in 2Q19, and 4.020 percent in 3Q18.  In the first 9.0-months of 2k19, the net interest margin was 4.060 percent, contrast to 4.110 percent in the previous year duration.

Non-interest costs totalled $6.50M in 3Q19, contrast to $6.80M in the preceding quarter and $6.40M in 3Q18.  In the first 9.0-months of 2k19, non-interest cost was $19.90M, contrast to $19.20M in the first 9.0-months of 2k18.

Balance Sheet

Total loans increased modestly to $789.50M at September 30, 2k19, contrast to $788.90M at June 30, 2k19, and increased $35.80M, or 4.70 percent, contrast to $753.70M at September 30, 2k18.

Commercial real estate loans outstanding (which include SBA 504, construction and land) were up 11.10 percent from year ago levels to $392.30M at September 30, 2k19 and comprise 49.70 percent of the total loan portfolio.  Manufactured housing loans were up 5.50 percent from year ago levels to $253.20M and represent 32.10 percent of total loans.  Commercial loans (which include agriculture loans) were down 7.60 percent from year ago levels to $110.20M and represent 13.90 percent of the total loan portfolio.

Total deposits reduced slightly to $761.70M at September 30, 2k19, contrast to $765.10M at June 30, 2k19, and increased $41.80M, or 5.80 percent contrast to $719.90M at September 30, 2k18.  Non-interest-bearing demand deposits increased $1.90M, or 1.70 percent to $114.40M at September 30, 2k19 contrast to $112.50M at June 30, 2k19 and increased $8.80M contrast to $105.60M at September 30, 2k18.  Interest-bearing demand deposits reduced to $333.70M contrast to $343.80M at June 30, 2k19 but increased $66.60M contrast to $267.00M at September 30, 2k18.  Certificates of deposit, which include broker deposits increased $5.60M to $298.10M at September 30, 2k19 contrast to $292.50M at June 30, 2k19 and reduced $34.80M contrast to $332.90M at September 30, 2k18 as the Company divests itself from wholesale funding.

Total assets were $903.30M at September 30, 2k19, contrast to $905.60M at June 30, 2k19 and increased $48.60M, or 5.70 percent, contrast to $854.70M at September 30, 2k18.  Stockholders’ equity increased to $79.60M at September 30, 2k19, contrast to $77.80M at June 30, 2k19, and $75.60M at September 30, 2k18.  Book value for each common share increased to $9.400 at September 30, 2k19, contrast to $9.190 at June 30, 2k19, and $9.130 at September 30, 2k18.

Credit Quality

The Company recorded a credit to its provision for loan losses of ($75,000.00) in 3Q19.  This compares to a provision for loan losses of $177,000.00 in 2Q19 and credit to the provision for loan losses of ($197,000.00) in 3Q18.  The allowance for loan losses, counting the reserve for undisbursed loans, was $8.90M at September 30, 2k19, or 1.190 percent of total loans held for investment, contrast to 1.200 percent at June 30, 2k19, and 1.210 percent a year ago.  Net nonaccrual loans plus net other assets attained through foreclosure were $5.80M at September 30, 2k19, contrast to $4.10M at June 30, 2k19, and $3.80M at September 30, 2k18.

At September 30, 2k19, net nonaccrual loans consisted of $4.70M of commercial loans counting commercial agriculture, $0.30M of manufactured housing loans, $0.40M of SBA loans, and $0.10M of commercial real estate loans.

There was $317,000.00 in other assets attained through foreclosure as of September 30, 2k19.  This compares to $1.10M of other assets attained through foreclosure at June 30, 2k19, and no other assets attained through foreclosure a year ago.

Cash Dividend Declared

The Company’s Board of Directors declared a cash dividend of $0.055 for each common share, payable November 29, 2k19 to common shareholders of record on November 14, 2k19.  The current annualized yield, based on the closing price of CWBC shares of $9.890 on September 30, 2k19, was 2.170 percent.

Stock Repurchase Program
The Company, under the Board of Directors authorized common stock repurchase program of up to $4.50M, bought back 10,233 shares throughout 3Q19.  As of September 30, 2k19, 350,189 shares had been repurchased at an average price of $8.710 for each share.