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Tuesday, January 26, 2010
Community West Bancshares Reports Fourth Quarter Results, Highlighted by Net Interest Margin Expansion, Credit Quality Stabilization and Strong Deposit Growth
Goleta, California, January 26, 2010: Community West Bancshares (NASDAQ: CWBC), parent company of Community West Bank, today reported net income of $97,000 for the fourth quarter of 2009, compared to $61,000 in the fourth quarter a year ago. For the full year, Community West reported a net loss of $5.8 million, compared to net income of $1.5 million for 2008. The loan loss provision for the year was $18.7 million compared to $5.3 million in 2008.
“Community West posted a solid quarter with respect to strong deposit growth, controlled operating costs, an expanding net interest margin, and stabilization in credit quality,” stated Lynda J. Nahra, President and Chief Executive Officer. “The ongoing margin improvement, along with cost reductions we implemented at the beginning of 2009, continues to enhance our positive operating earnings. While we continued to see stress in our lending environment, overall asset quality improved with reductions in nonaccrual loans and other real estate owned.”
Fourth Quarter 2009 Highlights
- Net interest margin improved 6 basis points to 4.18% compared to 3Q09, and improved 69 basis points compared to 4Q08.
- Nonperforming loans decreased by $1.6 million from the prior quarter to $16.2 million, or 2.62% of total loans.
- Nonperforming assets improved to 2.63% of total assets compared to 3.12% in the previous quarter.
- Allowance for loan losses increased to 2.67% of total loans held for investment and 85% of non-performing loans compared to 2.62% of total loans held for investment and 75% of non-performing loans in the previous quarter.
- Total deposits increased by 12% with interest bearing demand deposits more than doubling.
- The efficiency ratio improved to 63.4 % from 65.6% in 3Q09 and 76.1% in 4Q08.
For the fourth quarter of 2009, including the $262,000 preferred stock dividend, the net loss available to common shareholders was $165,000, or $0.03 per diluted share, compared to net income available to common shareholders of $26,000, or $0.00 per diluted share in the fourth quarter a year ago. For the full year, the net loss available to common shareholders was $6.8 million, or $1.15 per diluted share, compared to net income available to common shareholders of $1.4 million, or $0.24 per diluted share a year ago.
Credit Quality
“Credit quality stabilized during the fourth quarter with nonperforming loans declining $1.6 million during the quarter to $16.2 million, or 2.62% of total loans at year end, compared to $17.8 million or 2.93% of total loans three months earlier,” said Nahra. “Additionally, other real estate owned (OREO) decreased substantially during the quarter, further reducing nonperforming assets.” OREO and other repossessed assets declined to $1.8 million at December 31, 2009 compared to $3.3 million three months earlier and up from $1.1 million a year ago.
Nonperforming assets were $18.0 million, or 2.63% of total assets at December 31, 2009, compared to $21.1 million, or 3.12% at the end of the preceding quarter, and $18.0 million, or 2.75% a year ago. Nonperforming assets include all nonperforming loans and OREO.
The loan loss provision was $2.8 million during the fourth quarter of 2009 compared to $2.6 million in the preceding quarter and $1.4 million in the fourth quarter a year ago. For the year, the loan loss provision was $18.7 million compared to $5.3 million in 2008. The allowance for loan losses totaled $13.7 million at quarter-end, equal to 2.67% of total loans held for investment, compared to 2.62% at September 30, 2009 and 1.61% at December 31, 2008.
Net charge-offs were $2.3 million for the fourth quarter and $2.7 million for the preceding quarter. In the fourth quarter a year ago, net charge-offs totaled $566,000. Net charge-offs for the full year in 2009 were $12.3 million compared to $2.3 million in 2008.
Balance Sheet
“The modest increase in total loans is generated from an increase in real estate loans offsetting declines in commercial and SBA loans,” said Charles G. Baltuskonis, EVP and Chief Financial Officer. Net loans increased 4% on a year-over-year basis to $603 million as of December 31, 2009.
Real estate loans outstanding increased 16% to $202 million at December 31, 2009, compared to $175 million a year ago. Real estate loans now comprise 33% of the total loan portfolio, compared to 30% a year earlier. Manufactured housing loans increased 3% from year ago levels to $196 million and represent 32% of total loans.
Commercial loans were down 17% compared to a year ago and now represent 10% of the total loan portfolio and SBA loans increased 5% from a year ago and now represent 22% of the total loan portfolio. Other installment loans increased 15% from year ago levels and now represent 3% of the total loan portfolio.
Total assets increased 4% to $684 million at December 31, 2009, compared to $657 million a year earlier. Total deposits increased 12% to $531 million at December 31, 2009. Core deposits increased substantially to $246 million at year-end, compared to $107 million a year earlier while certificates of deposit decreased to $285 million, from $368 million a year earlier.
Shareholders’ equity was $60.3 million at December 31, 2009, compared to $66.6 million a year earlier. Book value per common share was $7.74 at year-end compared to $8.84 a year ago.
Net Interest Margin
Community West’s net interest margin was 4.18% for the fourth quarter of 2009, a six basis point improvement compared to the preceding quarter and a 69 basis point improvement compared to a year ago. “Our strong net interest margin is driven by a continued decline in funding costs and our success in building core deposits,” said Baltuskonis. For 2009 the net interest margin improved 19 basis points to 3.91% from 3.72% in 2008.
Income Statement Review
Net interest income for the fourth quarter increased 27% to $7.1 million compared to $5.6 million for the fourth quarter of 2008. Non-interest income increased 24% to $1.0 million for the quarter, compared to $829,000 for the fourth quarter a year ago. The increase in non-interest income was primarily due to a $200,000 increase in loan fees compared to the year ago quarter.
Non-interest expenses were $5.1 million in the fourth quarter of 2009, compared to $4.9 million, in the fourth quarter of 2008. “While we had another good quarter of managing controllable operating expenses, collection and legal costs, including charges related to acquire real estate, remained high,” said Baltuskonis.
For the full year, net interest income increased 11% to $26.0 million, compared to $23.3 million in 2008. Non-interest income was $4.4 million in 2009 compared to $5.1 million in 2008. The decrease in non-interest income for the year was largely due to a $655,000 decrease in gain on sale of loans over the prior year.
Non-interest expenses increased to $21.5 million in 2009 compared to $20.5 million in 2008. The decrease in salaries and employment benefits of $1.5 million was offset by the $1.2 million increase in FDIC assessment as well as additional charges related to non-performing loans.
The efficiency ratio improved to 63.4 % in the fourth quarter of 2009 from 65.6% in the prior quarter and 76.1% in the fourth quarter a year ago. For the year, the efficiency ratio improved to 70.7% from 72.3% in 2008, reflecting ongoing efforts to improve operations and control costs. The efficiency ratio, calculated by dividing noninterest expense by net interest income and noninterest income, measures overhead costs as a percentage of total revenues.
Capital Management
Community West Bank continues to meet the well capitalized thresholds for regulatory purposes with a Total risk-based capital ratio of 12.20%, Tier 1 risk-based capital ratio of 10.93% and Tier 1 leverage ratio of 8.81% at December 31, 2009.
Attachments:
SEE ENTIRE PRESS RELEASE | ADDITIONAL FINANCIAL INFORMATION
Company Profile
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, Ventura, Santa Maria, Santa Barbara and Westlake Village. The principal business activities of the Company are Relationship banking, Mortgage lending and SBA lending.
Safe Harbor
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.
Contact Information
Charles G. Baltuskonis, EVP & CFO
(805) 692-5821
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