Loan interest

Community West Bancshares Profits Rise 27% to $ 3.6 Million | Business


Posted on November 15, 2021
| 5:47 p.m.

Source: Susan C. Thompson for Community West Bancshares

Community West Bancshares reported net income up 27.1% to $ 3.6 million, or $ 0.41 per diluted share, for the third quarter of 2021 (3Q21), from $ 2.9 million, or $ 0.33 per diluted share, for the third quarter of 2020 (3Q20), and was unchanged from the second quarter of 2021 (2Q21).

For the first nine months of 2021, the company reported net income of $ 10.2 million, or $ 1.17 per diluted share, an increase of 81.7% from $ 5.6 million, or $ 0.66 per diluted share, for the first nine months of 2020.

“Our earnings in the third quarter and year-to-date have been strong, fueled by increased net interest income and an expanded balance sheet,” said Martin E. Plourd, CEO.

“The strong revenue generation along with the continued success of our approach with new and existing clients during the quarter resulted in increased revenue and had a significant impact on loan generation with new loan commitments of 62.4% million in 3Q21 to offset the $ 35 million SBA PPP loan forgiveness and deposit growth, ”he said.

“We continue to focus on deploying excess liquidity through increased lending activity, while managing asset quality. With the continued improvement of our local economies, we remain optimistic about growth for the remainder of the year. “

COVID-19 Pandemic and PPP Loan Update:

“Our participation in the SBA PPP program has contributed to our success in the first nine months of 2021, and previously in 2020,” said Plourd. “As of September 30, 2021, we had 166 PPP loans totaling $ 36.1 million remaining on our balance sheet for the first and second rounds of financing. During the third quarter of 2021, $ 35.0 million of PPP loans were canceled by the SBA.

“We recorded $ 1 million of net commission income related to PPP loans in 3Q21, compared to $ 0.9 million of net commission income in 2Q21, and there remains $ 1 million in net commissions. recognized related to PPP loans which will be recognized as revenue through amortization. or once the loans are repaid or canceled by the SBA, ”he said.

“As these loans are canceled, we will use the cash to seek new lending opportunities and focus on further reducing financing costs. “

“During the third quarter of 2021, we remained focused on delivering an exceptional customer experience throughout the PPP forgiveness process, and this approach, along with our clients’ referrals to others, helped attract new customers in the bank, as evidenced by our strong demand deposit. growth during the quarter, ”said William F. Filippin, President of Community West Bank.

Although the company has no deferred loans as of September 30, 2021, it continues to closely monitor loans in the high-risk sector. The sectors most affected are retail, health, hospitality, schools and energy. The company continues to assess loans related to affected industries, and as of September 30, 2021, the bank’s loans to these industries stood at $ 162.7 million, or 18.3% of its loan portfolio of 890 , $ 6 million.

Among the industrial loans selected, $ 1.3 million, or less than 1%, are unrecorded as at September 30, 2021, compared to $ 1.6 million as at September 30, 2020. In addition, among the industrial loans selected, the loans ranked are $ 15.0. million euros, or 9.23% as of September 30, 2021, compared to $ 17.1 million or 9.26% as of September 30, 2020.

Income statement Net interest income improved to $ 10.9 million in 3Q21, compared to $ 10.7 million in 2Q21 and $ 9.6 million in 3Q20. In the first nine months of 2021, net interest income increased 18.3% to $ 31.7 million, from $ 26.8 million in the first nine months of 2020.

The net interest margin was 3.97% in 3Q21, a contraction of 27 basis points from 2Q21 and an improvement of 21 basis points from 3Q20.

“PPP loan repayments and our continued focus on reducing our cost of funds rate contributed to the expansion of the net interest margin in 3Q21 versus 3Q20,” said Susan C. Thompson, CFO. “The decline from the previous quarter was mainly due to a lower return on productive assets in 3Q21 compared to 2Q21. “

The cost of funds for 3Q21 fell five basis points to 0.36% from 0.41% for 2Q21, and improved 30 basis points from 0.66% for 3Q20. PPP loans included commissions representing 25 basis points of the 3Q21 net interest margin and 10 basis points of the 2Q21 net interest margin.

In the first nine months of 2021, the net interest margin increased 32 basis points to 4.13%, compared to the first nine months of 2020.

“Due to the change in loan mix in the third quarter and the positive migration of ‘Monitors’ or worse loan risk rating categories in the loan portfolio, as well as $ 36,000 in net loan recoveries, we have recorded an allowance for loan losses of $ 7,000 during 3Q21, ”said Thompson. “This compares to a loan loss allowance credit of $ 41,000 in 2Q21 and a loan loss allowance of $ 113,000 in 3Q20.

“We believe we are firmly positioned as we navigate the recovery from the residual effects of the pandemic, with loan loss reserves, excluding PPP loans, of 1.24% as of September 30, 2021.”

The board of directors of the company declared a quarterly cash dividend of $ 0.07 per common share, payable on November 30, 2021 to common shareholders of record on November 15, 2021.

On August 27, 2021, the company announced that its board of directors had extended the share repurchase plan until August 31, 2023. The company did not repurchase any shares during the third quarter of 2021, leaving 1 , $ 4 million available as part of the previously announced buyout. program.