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Community West Bancshares has a market cap of $19.3 million; its shares were traded at around $3.25 with and P/S ratio of 0.4.
Highlight of Business Operations:For 3Q10, net income was $1.0 million compared to net income of $69,000 for 3Q09.
On August 9, 2010, the Company announced the completion of its previously announced offering of $8,085,000 convertible subordinated debentures. The debentures pay interest at 9% until conversion, redemption or maturity and will mature on August 9, 2020. The debentures may be redeemed by the Company after January 1, 2014. Prior to maturity or redemption, the debentures can be converted into common stock at the election of the holder at $3.50 per share if converted on or prior to July 1, 2013, $4.50 per share between July 2, 2013 and July 1, 2016 and $6.00 per share from July 2, 2016 until maturity or redemption.
Net interest income increased by $397,000 for 3Q10 compared to 3Q09. Total interest income declined by $651,000. Average interest-earning assets experienced a decline of $19.2 million for 3Q10 compared to 3Q09 along with a lower yield of 5.98% compared to 6.19% for 3Q09. The decline in interest income was offset by a reduction in interest expense of $1.0 million from $3.5 million for 3Q09 to $2.4 million for 3Q10. Rates paid on interest- bearing liabilities dropped from 2.38% for 3Q09 to 1.67% for 3Q10, a reduction of 0.71%.
The provision for loan losses declined to $1.5 million for 3Q10 compared to $2.6 million for 3Q09. A decline of $777,000 in net charge-offs for 3Q10 compared to 3Q09 contributed to the lower provision.
Included in the Company s held-for-investment portfolio is the category “Other installment” which consists primarily of home equity lines of credit (HELOC) loans. Guidance issued by the SEC characterized these types of loans as higher-risk. The HELOC portfolio of $20.5 million consists of credits secured by residential real estate in Santa Barbara and Ventura counties. In 3Q10, there were no charge-offs in this portfolio. As of September 30, 2010, none of the portfolio is past due and 0.6% was on non-accrual status. The allowance for loan losses for this portfolio is $467,000, or 2.3%. The Company believes that, overall, this portfolio is adequately supported by real estate collateral.
Non-interest expenses remained relatively flat at $5.0 million for 3Q10 compared to $5.2 million for 3Q09, a decline of 2.5%, as efforts to control these costs remain a priority for the Company.
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