Community West Bancshares, parent company of Community West Bank, has reported a net earnings loss of $252,000, or 4 cents per share diluted, for the second quarter ended June 30, compared with net income of $1,252,000, or 21 cents per share diluted, for the same quarter last year.
For the six months ended June 30, the company reported net income of $745,000, or 12 cents per share diluted, compared with $2,078,000, or 34 cents per share diluted, for the same period last year.
Net interest income for the comparative quarter ended June 30 decreased $191,000, primarily because the decline in the net interest margin, which decreased 72 basis points, to 3.73 percent for the second quarter from 4.45 percent last year, exceeded the net interest income related to the company’s new business.
Total interest income for the comparative quarter ended June 30 decreased $244,000.
Interest expense on deposits for the comparative three-month period decreased $102,000. An $885,000 decrease is attributed to lower interest rates and is partially offset by a $783,000 increase attributed to interest-bearing deposit growth. Interest expense on borrowings increased $49,000, which represents a $120,000 increase related to volume offset by $71,000 attributed to lower interest rates.
The company recorded a $2,531,000 loan loss provision for the second quarter compared with $63,000) for the quarter last year, reflecting management’s assessment of increased credit risk for the company related to the California and national economic slowdown. The heightened provision is primarily a result of increased qualitative factors, which reflect the aforementioned economic circumstances. However, nonperforming loans decreased from $15.5 million at Dec. 31, 2007 to $10.3 million at June 30.
Noninterest income increased $238,000 for the quarter from last year, primarily from a gain on sale of a real estate owned property.
The company’s total assets increased $37.8 million to $647.7 million at June 30 compared with $609.9 million at Dec. 31, 2007. Net loans increased $30 million and combined liquid assets and investment securities increased by a net of $3.6 million.
The board of directors announced it has eliminated this quarter’s dividend. “In light of the near-term economic and capital-raising environment, the company is focused on preserving capital, and we believe this is a prudent decision and is the best course for our shareholders over the long term,” company Chairman William Peeples said.
“While we are not pleased with the bottom line results, we believe our core business lines are still performing well and allows us to prudently set aside ample loan loss reserves while maintaining a strong capital level,” CEO and President Lynda Nahra. “We believe that the action the company has taken in increasing reserves is appropriate in light of the current challenging economic environment.”
Community West Bancshares is a financial services company with headquarters in Goleta. Community West Bank, which has five full-service California branch banking offices, in Goleta, Ventura, Santa Maria, Santa Barbara and Westlake Village.
Charles Baltuskonis represents Community West Bank.