Community West Bancshares (CWBC, Financial) filed Quarterly Report for the period ended 2009-06-30.
Community West Bancshares is a bank holding company. Through its subsidiaries Goleta National Bank and Palomar Community Bank they are engaged in providing general banking services. They provide commercial and retail financial services including the acceptance of demand savings and time deposits and the origination of commercial U.S. Small Business Administration accounts receivable real estate construction home improvement short term consumer and other installment and term loans. Community West Bancshares has a market cap of $16 million; its shares were traded at around $2.7 with and P/S ratio of 0.3. Community West Bancshares had an annual average earning growth of 2.8% over the past 10 years.
Non-interest income includes gains from sale of loans, loan document fees, service charges on deposit accounts, loan servicing fees and other revenues not derived from interest on earning assets. Total non-interest income decreased by $385,000, or 23.5%, for the second quarter 2009 compared to the same period in 2008. Gain on loan sales declined by $278,000 as no SBA loans were sold in the second quarter 2009 compared to $6.3 million in loans sales for the same period in 2008. Other non-interest income declined $297,000. The second quarter 2008 benefitted from a gain on the sale of other foreclosed assets of $301,000. These declines were partly offset by an increase in loan servicing income of $115,000 and other loan fees of $38,000.
Net interest income increased by $33,000 for the first six months of 2009 compared to 2008. Total interest income declined $3.0 million, or 12.7%, for the period ended June 30, 2009 compared to the same period in 2008. Of this decline, $4.2 million was due to declines in interest rates which were partly offset by an increase of $1.2 million due to growth in volume. The average balance for interest earning assets was $659.2 million for the first six months of 2009 compared to $616.4 for the same period in 2008, an increase of $42.8 million, while the yield declined from 7.63% to 6.25%.
The provision for loan losses increased $10.1 million to $13.3 million for the first six months of 2009 compared to $3.2 million for the same period of 2008. The substantially higher comparable loan loss provision for 2009 reflected the effect of increases in losses on specific credits as well as experienced loss frequency and severity on the allowance calculation. During the first quarter 2009, the Company experienced significant deterioration and downgrades to specific loans in its portfolio, including net charge-offs of $6.5 million, generally related to the current economic circumstances. A major component of the allowance calculation relates to historical loan losses. The Company has experienced elevated levels of loan losses over the past four quarters thereby resulting in a significantly higher allowance requirement. The migration of the losses through the loan portfolio has resulted in a calculated increase in the allowance of $7.3 million at December 31, 2008 to $13.4 million at June 30, 2009. This increase is directly related to increased inherent losses in our loan portfolio and the effect of historical loan loss experience on our estimate of losses inherent in the portfolio as of the balance sheet date and does not necessarily reflect expected future losses.
Non-interest income declined for the first six months of 2009 to $2.4 million from $3.1 million for 2008. Declines of $442,000 in gain on loans sales, $241,000 in other loan fees and $296,000 in other income were partly offset by increases of $271,000 in loan servicing and $67,000 in document processing. There were no sales of SBA loans in the first six months of 2009 compared to $10.0 million in guaranteed loans sales and $1.7 million in unguaranteed over the same period in 2008. Other loan fees declined due to a reduction of referral fees on SBA 504 loans. In 2008, other income benefitted from a net gain on the sale of other foreclosed assets of $301,000. Loan servicing income increased in 2009 primarily due to a reduction of the amortization of the I/O strip and servicing asset due to slower prepayment speeds on serviced SBA loans.
Non-interest expenses increased $697,000, from $10.5 million for the first six months of 2008 to $11.2 million for 2009. The FDIC assessment increased $649,000 and other expenses increased $831,000 and included increases in the reserve on undisbursed loans of $263,000, collection related costs of $241,000, and losses on the sale of other foreclosed assets of $159,000. Partly offsetting these increases was a reduction in salaries and employee benefits of $704,000, primarily resulting in the discontinuation of SBA lending east of the Rockies.
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Community West Bancshares is a bank holding company. Through its subsidiaries Goleta National Bank and Palomar Community Bank they are engaged in providing general banking services. They provide commercial and retail financial services including the acceptance of demand savings and time deposits and the origination of commercial U.S. Small Business Administration accounts receivable real estate construction home improvement short term consumer and other installment and term loans. Community West Bancshares has a market cap of $16 million; its shares were traded at around $2.7 with and P/S ratio of 0.3. Community West Bancshares had an annual average earning growth of 2.8% over the past 10 years.
Highlight of Business Operations:
Net interest income increased by $431,000 for the second quarter 2009 compared to 2008. Total interest income declined by $1.2 million. While average interest earning assets grew to $662.2 million for the second quarter 2009 compared to $625.3 million for the same period in 2008, an increase of $36.9 million, yields declined to 6.18% from 7.32%. The decline in interest income due to rates of $1.7 million was partly offset by the increase of $476,000 due to volume growth.Non-interest income includes gains from sale of loans, loan document fees, service charges on deposit accounts, loan servicing fees and other revenues not derived from interest on earning assets. Total non-interest income decreased by $385,000, or 23.5%, for the second quarter 2009 compared to the same period in 2008. Gain on loan sales declined by $278,000 as no SBA loans were sold in the second quarter 2009 compared to $6.3 million in loans sales for the same period in 2008. Other non-interest income declined $297,000. The second quarter 2008 benefitted from a gain on the sale of other foreclosed assets of $301,000. These declines were partly offset by an increase in loan servicing income of $115,000 and other loan fees of $38,000.
Net interest income increased by $33,000 for the first six months of 2009 compared to 2008. Total interest income declined $3.0 million, or 12.7%, for the period ended June 30, 2009 compared to the same period in 2008. Of this decline, $4.2 million was due to declines in interest rates which were partly offset by an increase of $1.2 million due to growth in volume. The average balance for interest earning assets was $659.2 million for the first six months of 2009 compared to $616.4 for the same period in 2008, an increase of $42.8 million, while the yield declined from 7.63% to 6.25%.
The provision for loan losses increased $10.1 million to $13.3 million for the first six months of 2009 compared to $3.2 million for the same period of 2008. The substantially higher comparable loan loss provision for 2009 reflected the effect of increases in losses on specific credits as well as experienced loss frequency and severity on the allowance calculation. During the first quarter 2009, the Company experienced significant deterioration and downgrades to specific loans in its portfolio, including net charge-offs of $6.5 million, generally related to the current economic circumstances. A major component of the allowance calculation relates to historical loan losses. The Company has experienced elevated levels of loan losses over the past four quarters thereby resulting in a significantly higher allowance requirement. The migration of the losses through the loan portfolio has resulted in a calculated increase in the allowance of $7.3 million at December 31, 2008 to $13.4 million at June 30, 2009. This increase is directly related to increased inherent losses in our loan portfolio and the effect of historical loan loss experience on our estimate of losses inherent in the portfolio as of the balance sheet date and does not necessarily reflect expected future losses.
Non-interest income declined for the first six months of 2009 to $2.4 million from $3.1 million for 2008. Declines of $442,000 in gain on loans sales, $241,000 in other loan fees and $296,000 in other income were partly offset by increases of $271,000 in loan servicing and $67,000 in document processing. There were no sales of SBA loans in the first six months of 2009 compared to $10.0 million in guaranteed loans sales and $1.7 million in unguaranteed over the same period in 2008. Other loan fees declined due to a reduction of referral fees on SBA 504 loans. In 2008, other income benefitted from a net gain on the sale of other foreclosed assets of $301,000. Loan servicing income increased in 2009 primarily due to a reduction of the amortization of the I/O strip and servicing asset due to slower prepayment speeds on serviced SBA loans.
Non-interest expenses increased $697,000, from $10.5 million for the first six months of 2008 to $11.2 million for 2009. The FDIC assessment increased $649,000 and other expenses increased $831,000 and included increases in the reserve on undisbursed loans of $263,000, collection related costs of $241,000, and losses on the sale of other foreclosed assets of $159,000. Partly offsetting these increases was a reduction in salaries and employee benefits of $704,000, primarily resulting in the discontinuation of SBA lending east of the Rockies.
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