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Community West Bancshares Reports 2008 Q4 Results

^{Published on 2009-01-22 06:32:12, Last Modified on 2009-01-22 06:34:08 - Market Wire}
 

GOLETA, Calif.--([ BUSINESS WIRE ])--Community West Bancshares (Company) (NASDAQ: CWBC), parent company of Community West Bank, today reported net income of $61,000 for the quarter ended December 31, 2008 (2008 Q4), compared to net income of $748,000 for the quarter ended December 31, 2007 (2007 Q4). For the year ended December 31, 2008, the Company reported net income of $1,481,000 compared to $3,789,000 for the year ended December 31, 2007. Net income per diluted share available to common shareholders was $.00 for 2008 Q4 compared to $.12 for 2007 Q4.

Net Interest Income

Net interest income for 2008 Q4 compared to 2007 Q4 decreased by $544,000, primarily because the decline in the net interest margin, which decreased by 72 basis points, to 3.49% for 2008 Q4 from 4.21% for 2007 Q4, exceeded the net interest income related to the Company's new business. The quick decline in interest rates due to the Federal Reserve decisions and subsequent market moves had a greater downward effect on interest income for the short term while the decline in interest expense is spread over a longer period.

Total interest income for 2008 Q4 compared to 2007 Q4 decreased by $1,334,000. A $2,441,000 decrease is attributed to lower interest rates as the prime rate at end of 2008 Q4 was 400 basis points less than at end of 2007 Q4. This is partially offset by a $1,107,000 increase attributed to the comparative growth in interest-earning assets, primarily in the commercial lending, SBA and manufactured housing portfolios.

Interest expense on deposits for 2008 Q4 compared to 2007 Q4 decreased by $574,000. A $1,288,000 decrease is attributed to lower interest rates and is partially offset by a $714,000 increase attributed to interest-bearing deposit growth. Interest expense on borrowings decreased by $216,000.

Provision for Loan Losses

The Company recorded a $1,408,000 loan loss provision for 2008 Q4 compared to $528,000 for 2007 Q4, reflecting management's assessment of credit risk for the Company related to the current California and national economic recession. The heightened provision, particularly related to the year ended December 31, 2008, is primarily a result of increased qualitative factors which reflect the aforementioned economic circumstances. Nonaccrual loans increased from $12.0 million at September 30, 2008 to $16.9 million at December 31, 2008.

Non-Interest Income and Non-Interest Expenses

Non-interest income decreased $227,000 from 2007 Q4 compared to 2008 Q4, primarily due to decreased loan fees.

Non-interest expenses decreased $475,000 from 2007 Q4 compared to 2008 Q4, primarily due to decreased staff expenses and general cost reduction efforts.

BALANCE SHEET

The Company's total assets increased $47.1 million to $657.0 million at December 31, 2008 compared to $609.9 million at December 31, 2007. Net loans increased by $41.9 million and combined liquid assets and investment securities increased by a net of $2.7 million.

On the funding side, as of December 31, 2008, deposits increased by $41.7 million while FHLB advances decreased by $11.0 million compared to December 31, 2007.

CAPITAL

As of December 31, 2008, the Company had $66.6 million in total shareholders' equity, or 10.14% of consolidated total assets, and book value per common share was $8.84. Common shareholders' equity was $52.3 million.

On December 19, 2008, the Company received $15.6 million of capital through the U.S. Treasury's TARP Capital Purchase program.

DIVIDEND POLICY

The Board of Directors announced that they will not pay a dividend this quarter. Currently, the Company is focused on preserving capital due to the turbulence in the financial markets, and will continue to review the dividend policy on a quarterly basis.

COMMENTS FROM PRESIDENT AND CHIEF EXECUTIVE OFFICER

Lynda J. Nahra, President and Chief Executive Officer, noted: "Our Q4 and 2008 results reflect the impact the current recession has had on our economy and our industry. Although the results are disappointing, our excess capital and strong levels of reserves should keep us ahead of future economic challenges."

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, Ventura, Santa Maria, Santa Barbara and Westlake Village. The principal business activities of the Company are Relationship banking, Mortgage lending and SBA lending, with loans originating throughout the country.

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.