Community West Bancshares
Annual Report 2018

Plain-text annual report

Community West Bancshares COUNT ON C O M M U N I T Y 2018 ANNUAL REPORT COUNT ON COMMITMENT Record earnings and continued expansion highlight 2018 Community West Bank is uniquely positioned to serve the families and businesses which make up the vibrant, diverse and beautiful communities along California’s Central Coast. As many other homegrown community banks have been acquired or merged over the past decade throughout our tri- county area, Community West Bank stands alone as the largest publicly traded and only community bank headquartered and serving communities in Ventura, Santa Barbara and San Luis Obispo counties. Our communities have not been without significant challenges. The enormous Thomas Fire in December, 2017, followed by devastating mudslides a month later, adversely impacted residents and local businesses in northern Ventura County and southern Santa Barbara County. Tragically, the Hill Fire and Woolsey Fire broke out in November, 2018, destroying homes and businesses in Ventura and Northern Los Angeles counties, further testing the resilience of the communities served by our Bank. We all hope that the threat of year-round wildfires of unprecedented scale, affecting so many of our friends and neighbors in well- established and densely populated areas of California, is not a sign of the new “normal”. Yet even with these challenges, the Bank moved forward. One of the highlights in 2018 was the opening of our Paso Robles branch office on October 15, our second full-service banking office to open in San Luis Obispo County in the last two years, and the eighth Community West Bank branch overall. We now serve communities along a 200 mile stretch of Highway 101, through the heart of a market area that spans from Westlake Village in the south to Paso Robles in the north. Key financial indicators of our success are listed below. 2018 net income topped $7.4 million, up 50.7% from $4.9 million in 2017. Total assets grew 5.2% to $877.3 million at December 31, 2018, from $833.3 million a year earlier. Total deposits increased to $716.0 million or 2.3% from $699.7 million on December 31, 2017, and more importantly was our core deposit growth of 11.9% to $505.9 million at December 31, 2018 compared to $452.2 million at December 31, 2017 reducing the Bank’s reliance on wholesale funding. Additionally, total loans increased $33.6 million to $768.2 million at December 31, 2018, compared to $734.6 million at December 31, 2017. Commercial Real Estate loans outstanding were up 3.2% from year ago levels to $365.8 million and comprise 47.6% of the total loan portfolio. Manufactured Housing loans were up 10.8% from year-ago levels to $247.1 million and represent 32.2% of total loans. Commercial loans increased 6.3% from year-ago levels to $118.5 million and represent 15.4% of the total loan portfolio. For the year, 2018 net interest margin was 4.07% compared to 4.34% in 2017. Lower corporate tax rates and the ongoing market strength of our local economies contributed to our earnings growth in 2018, and the outlook remains positive for the year ahead. This solid base provides Community West Bank with opportunities to continue growing our franchise by providing the responsive, personal-service approach to offering the financing, deposit products and treasury management services that our clients prefer. In April 2018, Community West Bank was awarded a “Premier” rating by The Findley Reports. For 50 years, The Findley Reports has been recognizing the financial performance of banking institutions in California and the Western United States. In making their selections, The Findley Reports focuses on four ratios: growth, return on beginning equity, net operating income as a percentage of average assets, and loan losses as a percentage of gross loans. 2019 marks a significant milestone, as we celebrate the 30th anniversary of our Bank. Originally established as Goleta National Bank, our Founders had these simple but powerful ideas: to serve our customers better, and to serve our community like no other bank. What makes us different is not so much what we do, but why we do it. Today, as Community West Bank, our purpose remains the same as it was when first opening our doors in August, 1989: to be the bank of choice, providing an unparalleled experience for our customers, employees and community. That’s our Vision, and that’s what makes Community West Bank special. Community West Bank is truly well positioned to serve our communities like no other bank, providing financial services and trusted advice with the “high-touch” personal service our clients and prospects desire and deserve. We appreciate the continued support from you, our shareholders, as we pursue our growth opportunities. William R. Peeples Chairman of the Board Martin E. Plourd President and Chief Executive Officer COUNT ON RELATIONSHIPS 2019 marks the 30th anniversary for Community West Bank! We opened our doors as Goleta National Bank in 1989 with a single office at 5827 Hollister Avenue, which is still the home of our Goleta branch. Community West Bank has grown to eight full-service banking offices, with our Paso Robles branch opening in October, 2018. Over the past few years, we have also opened new branch offices in Oxnard, San Luis Obispo and Santa Maria, and are now the only community bank headquartered on California’s Central Coast with offices throughout Ventura, Santa Barbara and San Luis Obispo counties. We are committed to being the bank of choice in all of the communities we serve, from Westlake Village to Paso Robles. We believe that local deposits should be put to work locally, and our employees are committed to supporting the communities in which they live and work, donating their time and talents to nonprofit and community organizations. Clients count on experienced Community West Bank relationship managers, community banking managers and staff to provide personal service and local market knowledge to assist them with the financing, treasury management and deposit services they require. Community West Bank is large enough to accommodate sophisticated financing needs while maintaining the flexibility of a responsive, locally owned and managed community bank. For more information, please check us out at www.CommunityWestBank.com. RELATIONSHIP BANKING “Let’s Work Together” is our bank motto, and accurately summarizes the way Community West Bank strives to serve clients. Our outstanding team of professionals are true community bankers, committed to working with our business and personal customers to help them prosper. We proudly offer exceptional service throughout our communities – to individuals, families, businesses, nonprofit organizations and public entities. Count on Community West Bankers to provide the financing, deposit services, convenient treasury management and trusted advice businesses need, offered with the personal care that sets us apart from larger, non-local banks. It’s the way our bankers deliver those services, every day, with an uncommon level of attention to detail, that builds trust and close banking relationships with our clients. BUSINESS FINANCING AND TREASURY MANAGEMENT SERVICES Community West Bank has developed a strong understanding and appreciation for the specific needs of our business clients, making us better able to provide well guided local lending decisions based on knowledge of the communities we serve. From revolving lines of credit, term loans and commercial real estate financing, to agribusiness financing, equipment loans and SBA loans, we offer the right financing solutions for local businesses. Our background and experience in tailoring financing to fit business goals is what makes us different. Safe, secure and accurate, our business banking services can contribute significantly to the smooth and efficient operation of local businesses. Community West Bank provides a full range of treasury management services, including mobile banking, payment processing services, payroll processing services, remote deposit capture, ACH processing, positive pay, lockbox services, business credit cards and online banking with bill pay. Our bankers work closely with clients to tailor these services to fit their businesses. COUNT ON OPPORTUNITY AGRICULTURAL LENDING Community West Bank supports agricultural and agribusiness clients with financing, from agricultural mortgage loans for land acquisition, to refinancing existing debt and loans for capital improvements. Understanding that the challenges confronting agricultural businesses are different from our other business clients, we provide the expertise, dedication and experience they need from their banker. We are an approved lender for Farmer Mac, offering long term fixed rates, and have been the predominant USDA Farm Service Agency lender under the Farm Ownership Program for the past 6 years in a row. Community West Bank has dedicated staff and resources focused on the opportunities afforded by these programs to serve the agricultural sector throughout California. GOVERNMENT GUARANTEED LENDING Over the years, Community West Bank has provided our business clients with over $700 million in funding for commercial space, expansion and capital improvements through government guaranteed lending programs. Our bank has earned the “Preferred Lender” designation by the U.S. Small Business Administration (SBA), which allows us to expedite the processing of SBA loan applications with in-house approvals and rapid loan closings. For more than two decades, Community West Bank has offered SBA loan programs, as well as the U.S. Department of Agriculture (USDA) Business & Industry loan program for businesses in rural areas. MANUFACTURED HOME LENDING For 18 years, Community West Bank has been the premier manufactured home lender in Santa Barbara County while we have steadily increased our market share in Ventura and San Luis Obispo counties. We lend in coastal California communities from San Diego to San Francisco, and have developed strong relationships with California’s top four largest manufactured home dealers in order to focus on the new home market. Manufactured home loans are retained in the bank’s portfolio and currently have a delinquency rate of less than 1%. At the end of 2018, Community West Bank held more than 1,900 manufactured home loans in over 300 mobile home parks. COUNT ON COMMUNITY INVOLVEMENT Community West Bank, and our employees, proudly support non-profit and community organizations throughout Ventura, Santa Barbara and San Luis Obispo counties. Alpha Resource Center of Santa Food Bank Coalition of San Luis Obispo County Food From the Heart French Hospital Foundation GenSpan Foundation Goleta Lions Club Goleta Lemon Festival Goleta Old Town Association Goleta Rotary Club Goleta Valley Chamber of Commerce Goleta Valley Historical Society Grower-Shipper Association of Central California Greater Conejo Valley Chamber of Commerce Habitat for Humanity IBEW Local 952 Kellogg Elementary School Legal Aid Foundation of SB County Lifewater International Meals That Connect Montecito Union School Montessori Center School MOXI Science Museum National Association of Women Business Owners Barbara American Heart Association Arthritis Foundation Boys & Girls Club of North SLO County Bucket Brigade Buena Girls Soccer California Farm Bureau California High School Rodeo Association California Lutheran University California Society of CPAs California Women for Agriculture Central Coast Alliance United for Sustainable Economy Central Coast Economic Forecast Central Coast Veterans Helping Veterans Center for Urban Agriculture Child Abuse Listening Mediation (CALM) Chumash Reservation Coastal Housing Partnership Cottage Hospital Foundation Clinicas del Camino Real Community Action Commission of Santa Barbara County Coastal Housing Partnership Court Appointed Special Advocates of SLO County Dog Adoption and Welfare Group Dos Pueblos Little League Economic Vitality Corporation of SLO County Fiestas Patrias Neal Taylor Nature Center North County Rape Crisis and Child Scholarship Foundation of Santa Barbara Protection Center Science and Engineering Council of Oakheart Country Music Festival Old Spanish Days Oxnard Fire Explorers Page Youth Center Paso Robles Downtown Main Street Santa Barbara Shelter Box USA Soroptimist International St. Vincent’s Santa Barbara Transitions Mental Health Association Paso Robles Chamber of Commerce Paso Robles Uptown Park People’s Self-Help Housing Rebozo Festival Rotary Club of Paso Robles Rotary Club of Westlake Village San Marcos High School Santa Barbara Association of Realtors Santa Barbara Athletic Roundtable Santa Barbara County Veterans Stand Down Santa Barbara Elks Lodge Santa Barbara Family YMCA Santa Barbara Foresters Santa Barbara Historical Museum Santa Maria Elks Club Rodeo Santa Maria Police Council Association Temple Beth Torah UCSB Economic Forecast Project United Boys & Girls Clubs of Santa Barbara County United Blood Services United Way Unity Shoppe Ventura County Arts Events Ventura County Bar Association Ventura County Coalition of Labor, Agriculture and Business Ventura County Contractors Association Ventura County Legal Aid Ventura County Medical Resource Foundation Westmont College Foundation 2018 FINANCIALS SNAPSHOT Results of Operations: Interest income Interest expense Net interest income Provision (credit) for loan losses Net interest income after provision for loan losses Non-interest income Non-interest expenses Income before income taxes Provision (benefit) for income taxes Net income Dividends and accretion on preferred stock Discount on partial redemption of preferred stock YEAR ENDED DECEMBER 31, 2018 2017 2016 2015 2014 (in thousands, except per share amounts) $42,631 $37,391 $32,216 $30,222 $28,004 8,988 33,643 14 33,629 2,628 26,039 10,218 2,809 7,409 - - 4,729 3,127 32,662 29,089 411 32,251 2,757 24,545 10,463 5,548 4,915 - - (48) 29,137 2,253 22,548 8,842 3,613 5,229 - - 2,516 27,706 (2,274) 29,980 2,309 27,281 5,008 2,138 2,870 445 (129) 3,275 24,729 (5,135) 29,864 2,197 20,081 11,980 4,934 7,046 937 (159) Net income available to common stockholders $7,409 $4,915 $5,229 $2,554 $6,268 Per Share Data: Income per common share - basic Weighted average shares outstanding - basic Income per common share - diluted Weighted average shares outstanding - diluted Book value per common share Selected Balance Sheet Data: Net loans Total assets Total deposits Total liabilities Total stockholders' equity Selected Financial and Liquidity Ratios: Return on average stockholders' equity Return on average assets Equity to assets ratio Tier 1 leverage ratio Common Equity Tier 1 ratio Tier 1 risk-based capital ratio Total risk-based capital ratio $0.89 8,288 $0.88 8,451 $8.92 759,552 877,291 716,006 801,140 76,151 10.02% 0.88% 8.77% 8.96% 10.10% 10.10% 11.26% $0.60 8,146 $0.57 8,589 $8.55 $0.64 8,114 $0.62 8,444 $8.07 $0.31 8,203 $0.30 8,491 $7.55 $0.77 8,141 $0.75 8,505 $7.31 726,189 623,355 536,546 487,256 833,315 710,572 621,213 557,318 699,684 612,236 544,338 477,084 763,245 645,236 559,269 490,311 70,070 65,336 61,944 67,007 7.16% 0.64% 8.96% 8.72% 9.96% 9.96% 11.17% 8.19% 0.81% 9.91% 9.64% 10.57% 10.57% 11.80% 4.34% 0.49% 11.23% 10.11% 12.12% 12.12% 13.37% 10.42% 1.25% 12.02% 11.86% - 14.94% 16.19% CORPORATE & BRANCH LOCATIONS GOLETA 5827 Hollister Avenue Goleta, CA 93117 (805) 683-4944 CORPORATE HEADQUARTERS 445 Pine Avenue, Goleta, CA 93117 (805) 692-5821 www.communitywest.com OXNARD 300 E. Esplanade Drive Oxnard, CA 93036 (805) 597-4140 PASO ROBLES 541 Spring Street Paso Robles, CA 93446 (805) 597-7778 SAN LUIS OBISPO 4464 Broad Street San Luis Obispo, CA 93401 (805) 597-3655 SANTA BARBARA 1501 State Street Santa Barbara, CA 93101 (805) 962-7420 SANTA MARIA 122 E. Betteravia Road Santa Maria, CA 93454 (805) 938-1690 VENTURA 1463 S. Victoria Avenue Ventura, CA 93003 (805) 650-1901 WESTLAKE VILLAGE 951 S. Westlake Boulevard Westlake Village, CA 91361 (805) 494-5172 BOARD OF DIRECTORS William R. Peeples Chairman of the Board, Community West Bancshares Private Investor Martin E. Plourd President and Chief Executive Officer Robert H. Bartlein Chairman of the Board, Community West Bank President & CEO, Bartlein & Co. Jean W. Blois Independent Consultant Former Mayor, City of Goleta Dana L. Boutain Certified Public Accountant Managing Director, CBIZ Tom L. Dobyns Retired Bank CEO John D. Illgen Modeling and Simulation Consultant James W. Lokey Retired Bank Chairman and CEO Shereef Moharram Attorney Partner, Price, Postel & Parma LLP Kirk B. Stovesand Certified Public Accountant Partner, Walpole & Co. CORPORATE INFORMATION EXECUTIVE MANAGEMENT TEAM SENIOR MANAGEMENT TEAM Martin E. Plourd President and CEO William F. Filippin Executive Vice President Chief Banking Officer T. Joseph Stronks Executive Vice President Chief Operating Officer Susan C. Thompson Executive Vice President Chief Financial Officer Paul S. Ulrich Executive Vice President Chief Credit Officer Investor Relations Contact Martin E. Plourd Annual Meeting The Annual Meeting of Shareholders of Community West Bancshares will be held on May 23, 2019 at 6:30 pm PDT at the La Cumbre Country Club, 4015 Via Laguna, Santa Barbara, CA Transfer Agent & Registrar Computershare Trust Co., NA 250 Royall Street Canton, MA 02021 Independent Auditors RSM US LLP 300 South Fourth Street Las Vegas, NV 89101 Corporate Counsel Duane Morris LLP 865 S. Figueroa Street, Suite 3100 Los Angeles, CA 90017-5450 Jonathan Apilado Senior Vice President Controller Jason Bietz Regional President Clay Dickens Senior Vice President Senior Loan Consultant Luis Garcia-Moreira Senior Vice President Cash Management Manager James D. Gray Senior Vice President Manufactured Home Division Manager Seth Harvey Senior Vice President Senior Credit Officer Cynthia M. Hooper Senior Vice President Loan Servicing Department Manager Chris Lem Senior Vice President Compliance Manager Laura Maffei Senior Vice President Regional Agriculture Loan Manager Janie Marlborough Senior Vice President Credit Policy and Risk Officer Kevin W. Moon Senior Vice President Director of Marketing and Product Development Jennifer Ofner Senior Vice President Director of Human Resources Brian Schwabecher Regional President Michael Will Senior Vice President Staff Attorney CORPORATE HEADQUARTERS 445 Pine Avenue Goleta, CA 93117 (805) 692-5821 (805) 692-5835 Fax www.communitywest.com 

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