Community West Bancshares
Annual Report 2021

Plain-text annual report

Community West Bancshares Let’s work together ANNUAL REPORT 2021 The year 2021 was filled with both challenges and victories, and was a great success for Community West Bank. Throughout the year, our work at the bank was filled with ongoing challenges related to the COVID-19 pandemic and recession, resulting in remote work, cost cutting and employee shortages. It has been a difficult time for everyone. We thank our outstanding team of bankers for working together, undeterred, to provide the exceptional service clients expect from Community West Bank. Their efforts, day in and day out, paved the way to make 2021 our bank’s most successful year ever. Contributing to success was our continued participation in the SBA’s Paycheck Protection Program (PPP). Our focus on delivering an exceptional client experience throughout the PPP process, from the initial loan origination to the forgiveness process, is helping to bring in new business clients. As of December 31, 2021, we had 93 PPP loans totaling $21.3 million remaining on our balance sheet from both the first and second rounds of funding and have $536,000 remaining in net unrecognized fees related to PPP loans that will be recognized as income through amortization or once the loans are paid off or forgiven by the SBA. As these loans are forgiven, we will use the liquidity to pursue new lending opportunities as well as focus on further reduction in funding costs. We delivered excellent full year 2021 financial results, highlighted by strong organic loan growth, record loan production and solid revenue growth. Net income was another record at $13.1 million, or $1.50 per share, an increase of 58% com- pared to $8.2 million, or $0.97 per share in 2020. Total loans, excluding PPP loans, increased $82.7 million, or 10.5%, compared to December 31, 2020. Total assets ended the year at $1.16 billion, up $182 million from 2020. Deposits grew by $184 million and non-interest deposits increased by $29 million. Notable credit quality progress was made in 2021, with past-due and delinquent loans at all-time lows, and non-accrual loans fell to $565,000, an 85% reduction from 2020, and another all-time low. Our performance ratios of return on assets and return on equity are at all-time highs, at 13.68% and 1.21% respectively – by far our bank’s best results to date. In April 2021, Community West Bank was awarded a “Super Premier Perfor- mance” rating by The Findley Reports. For over 50 years, Findley has recognized the financial performance of banking institutions in California and the western United States. Community West Bank is rated 5-star Superior by Bauer Financial. And Community West was named to Piper Sandler’s Bank and Thrift Sm-All Stars – Class of 2021. This award recog- nized Community West as one of the top 35 best performing small capitalization institutions from a list of publicly traded banks and thrifts in the U.S. with market capitalizations less than $2.5 billion. It is an honor to be recognized so favorably. With seven branch offices – from Oxnard in the south to Paso Robles in the north – Community West Bank is the largest publicly traded and only com- munity bank headquartered and serving all of Ventura, Santa Barbara and San Luis Obispo counties. As one of the last remaining community banks along California’s Central Coast, we believe we are operating from a position of strength and we will continue to work to create value for our shareholders, our clients and our communities. We appreciate the support from you, our shareholders, as we expand Community West Bank’s capabilities in providing personal service and trusted advice to our clients. William R. Peeples Chairman of the Board Martin E. Plourd Chief Executive Officer Community Involvement Hundreds of hours are volunteered annually by Community West Bank employees to non-profit organizations in the communities in which they live and work. And our bank provides donations, sponsorships and grants to non-profits throughout the Central Coast, from Ventura County to Paso Robles. Please refer to the Community Involvement section of this annual report. Community West Bank provides financing to businesses and families throughout California’s Central Coast, supporting job creation, economic vitality and vibrant local communities. The past two years have been challenging for our clients and com- munities – public health and safety has become a primary concern during the pandemic, lives have been disrupted, work and school adjusted to remote access, jobs were lost and many businesses have had difficulty remaining open. Our bank is proud to step up in times of need to offer resources which support the communities we serve. A number of local business clients which have been able to keep their doors open – and serving their clients – are featured in this publication. Community West Bank first opened its doors in 1989 as Goleta National Bank, with a single office at 5827 Hollister Avenue, and has grown to seven full-service banking offices throughout Ventura, San- ta Barbara and San Luis Obispo counties. What makes Community West Bank different is not so much what we do, but why we do it. The Founders of our bank had a simple and enduring vision: To serve our community and customers like no other bank. We remain committed to that vision – being the bank of choice in the communities we serve – and firmly believe that local deposits should be put to work locally. We focus on four core competencies: Relationship Banking Manufactured Home Lending Agricultural Lending Government Guaranteed Lending Please check us out at www.CommunityWestBank.com. Relationship Banking “Let’s Work Together” is our bank slogan and is central to the way Community West Bank does business. Our experienced banking managers, loan officers and staff offer personal service and local knowledge to assist with each client’s specific financial needs. Community West Bank has developed an understanding for the special needs of our business clients, and we are better able to make well guided local lending decisions based on firsthand 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 banking services and deposit accounts are designed to contribute to the smooth and efficient operation of our clients’ businesses. Community West Bank provides a full range of convenient and secure treasury management services, including mobile banking apps for businesses and personal customers, payment processing services, payroll services, positive pay, lockbox services, remote deposit capture, ACH processing, business credit cards and online banking with bill pay. What sets us apart is the level of personal service, flexibility and attention to detail our bankers provide to clients. It was true when Goleta National Bank first opened its doors over 30 years ago and remains true at Community West Bank today. That is the foundation for our continued success. Manufactured Home Lending For over 20 years, Community West Bank has been a premier manufactured home loans lender throughout Santa Barbara, Ventura and San Luis Obispo counties and in coastal California communities from San Diego to San Francisco. For those who are purchasing a manufactured home, we offer financing to fit their needs and a staff who focuses exclusively on manufactured home financing. We have developed strong relationships with California’s manufactured home dealers to bet- ter serve the new home market. Manufactured home loans are retained in the bank’s portfo- lio and Community West Bank holds more than 2,000 manufactured home loans—a portfolio of over $295 million—in more than 330 well-maintained California mobile home parks. Agricultural Lending Community West Bank supports farm, ranch and agribusiness clients with Farmer Mac mortgage loans, offering long-term fixed rates for land acquisition, loans to refinance existing debt and financing for capital improvements. We understand that the challenges faced by agricultural clients are different from our other business clients, and require expertise, dedication and experience from their bankers. Community West Bank has dedicated staff and resources focused on serving agricultural clients throughout California. Our goal is to encourage growth throughout the agricultural sector – on California’s Central Coast and statewide. A commitment to responsive personal service makes us stand out from other banks. We take pride in the portfolio of very satisfied clients who have managed to make their Ag businesses thrive with the funding they received from us. Government Guaranteed Lending Community West Bank offers U.S. Small Business Administration (SBA) loan programs, as well as the U.S. Department of Agriculture (USDA) Business & Industry loan program for businesses in rural areas. In 2022, we will enhance our focus on providing SBA 7(a) financ- ing to local businesses. Since 1989, Community West Bank has provided growing businesses with over $700 million in funding for commercial space, expansion and capital improvements through government guaranteed lending programs, earning the “Preferred Lender” designation by the SBA. This special status allows us to expedite the processing of loan applications for rapid closing with in-house approvals. We work together. A defining characteristic of a community bank is being a reliable resource, supporting the financial needs of clients – in challenging times as well as in good times. Local businesses of all sizes and types have struggled throughout the COVID pandemic. In 2021, Community West Bank highlighted in television ads clients who successfully kept their businesses open, serving their own customers. We salute their commitment to serving our communities, and are proud to work with our business clients when they need us most. Community Involvement Community West Bank employees proudly support non-profit and community organizations throughout Ventura, Santa Barbara and San Luis Obispo counties. 805 AgKids Affordable Housing Paso Robles Goleta Lions Club Goleta Rotary Club Santa Barbara Community Animal Services Santa Barbara County Animal Services Alpha Resource Center of Santa Barbara Goleta Valley Community Center Santa Barbara Courthouse Legacy Goleta Valley Cottage Hospital Foundation Foundation American Cancer Society American Heart Association BioMedley Boys & Girls Clubs Boy Scouts, Los Padres Council Cal Lutheran University Care for Paws Central Coast Alliance United for Sustainable Economy Central Coast Economic Forecast Grower Shipper Association Habitat for Humanity Housing Trust Fund of Santa Barbara County Interface Children’s Program Legal Aid of Santa Barbara Lobero Theater Los Alamos Valley Men’s Club Make A Wish Ventura County Child Development Resources of Ventura Marian Regional Medical Center County Children’s Creative Project Foundation Meals That Connect City of Oxnard – Cinco de Mayo Committee Museum of Ventura County City of Oxnard – Fiesta Patrias Committee National Association of Women Business Clinicas del Camino Real COLAB Ventura County Commemorative Air Force Community Health Centers of the Central Coast Cottage Hospital Foundation Court Appointed Special Advocates of SLO County (CASA) Dos Pueblos Little League El Camino Homeless Organization (ECHO) Elite Pup Training Fairview Gardens Owners (NAWBO) North County Rape Crisis and Child Protection Center North San Luis Obispo County Concert Association Old Spanish Days Fiesta One805.org Paso Robles Chamber of Commerce Paso Robles Housing Authority Paso Robles Pioneer Day Paso Robles Rotary Club Foundation Rotary Club San Luis Obispo Daybreak Food Bank Coalition of San Luis Obispo Salvation Army Santa Barbara Family YMCA Santa Barbara Foresters Santa Barbara Historical Museum Santa Barbara Police Foundation Santa Barbara South Coast Chamber of Commerce Santa Barbara Zoological Gardens Scholarship Foundation of Santa Barbara Science and Engineering Council of Santa Barbara Solvang Senior Center South Coast Railroad Museum St. Vincent’s Success Charities Teacher’s Fund Temple Beth Torah Toy Bank of Greater Paso Robles Transitions Mental Health Association UCSB Advisory Board UCSB Economic Forecast Project United Boys & Girls Clubs of Santa Barbara County United Way Santa Barbara Unity Shoppe Ventura County Arts Events Ventura County Contractors Association Ventura County Medical Resource County Food From the Heart Food Share Inc. French Hospital Foundation Gala Pride & Diversity Center San Luis Obispo Chamber of Commerce Foundation San Luis Obispo Museum of Art Vitalant Blood Services San Luis Obispo Safe Ride Westmont College Foundation Santa Barbara Carriage and Western Young Professionals Networking Group Art Museum 2021 Financials Snapshot Year Ended December 31, 2021 2020 2019 2018 2017 (in thousands, except per share amounts) $46,078 $43,854 $45,739 $42,631 $37,391 3,704 42,374 (181) 42,555 3,753 27,995 18,313 5,212 $13,101 $1.53 8,568 $1.50 8,723 $11.72 7,265 36,589 1,223 35,366 3,912 27,523 11,755 3,510 $8,245 $0.97 8,473 $0.97 8,543 $10.50 11,382 34,357 (165) 34,522 3,607 26,755 11,374 3,411 7,963 $0.94 8,472 $0.93 8,579 $9.68 881,679 847,383 766,846 8,988 33,643 14 33,629 2,628 26,039 10,218 2,809 7,409 $0.89 8,288 $0.88 8,451 $8.92 759,552 877,291 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 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 1,157,052 950,131 975,435 766,185 913,870 750,934 716,006 1,055,677 886,428 831,892 801,140 Total stockholders' equity 101,375 89,007 81,978 76,151 Selected Financial and Liquidity Ratios: Return on average stockholders' equity Return on average assets Equity to assets ratio Community Banking Leverage Ratio Tier 1 leverage ratio Common Equity Tier 1 ratio Tier 1 risk-based capital ratio Total risk-based capital ratio 13.68% 1.21% 8.76% N/A 8.56% 11.02% 11.02% 12.19% 9.70% 0.85% 9.12% 9.29% 9.57% 11.40% 11.40% 12.65% 10.15% 0.91% 8.97% — 9.33% 10.60% 10.60% 11.73% 10.02% 0.88% 8.68% — 8.96% 10.10% 10.10% 11.26% 4,729 32,662 411 32,251 2,757 24,545 10,463 5,548 4,915 $0.60 8,146 $0.57 8,589 $8.55 726,189 833,315 699,684 763,245 70,070 7.16% 0.64% 8.41% — 8.72% 9.96% 9.96% 11.17% Board of Directors William R. Peeples Chairman of the Board, Community West Bancshares Private Investor Martin E. Plourd Chief Executive Officer Robert H. Bartlein Chairman of the Board, Community West Bank President and CEO, Bartlein & Co. Dana L. Boutain Certified Public Accountant Managing Director, CBIZ Suzanne Chadwick Retired Bank Executive 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 Christopher R. Raffo Farmer and Former Community Bank Equity Broker Kirk B. Stovesand Certified Public Accountant Partner, Walpole & Co. Celina L. Zacarias Senior Director of Community & Government Relations California State University Channel Islands Corporate Headquarters Goleta Oxnard Paso Robles Management Team Executive Management Team Senior Management Team Locations Martin E. Plourd Chief Executive Officer William F. Filippin President Chief Credit Officer Richard Pimentel Executive Vice President Chief Financial Officer T. Joseph Stronks Executive Vice President Chief Operating Officer Chief Risk Officer Jean Blois Director Emeritus, Former Mayor City of Goleta Jason Bietz Senior Vice President Regional President Clay Dickens Senior Vice President Senior Loan Consultant Luis Garcia-Moreira Senior Vice President Treasury Management Manager James Gray Senior Vice President Manufactured Housing Division Manager Laura Maffei Senior Vice President Regional Agriculture Loan Manager Janie Marlborough Senior Vice President Director of Credit Risk Management Kevin Moon Senior Vice President Director of Marketing & Product Development Jennifer Ofner Senior Vice President Director of Human Resources Brian Schwabecher Senior Vice President Chief Banking Officer Michael Will Senior Vice President Director of Legal and Asset Resolution Corporate Information Investor Relations Contact Martin E. Plourd Transfer Agent & Registrar Computershare Trust Company 462 South 4th Street, Suite 1600 Louisville KY 40202 Independent Auditors RSM US LLP 44 Montgomery Street, Suite 3900 San Francisco, CA 94104 Corporate Headquarters 445 Pine Avenue Goleta, CA 93117 (805) 692-5821 www.communitywest.com Branches Goleta 5827 Hollister Avenue Goleta, CA 93117 (805) 683-4944 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 Corporate Counsel Duane Morris LLP 865 S. Figueroa Street, Suite 3100 Los Angeles, CA 90017-5450 Annual Meeting The Annual Meeting of Shareholders of Community West Bancshares will be held on May 26, 2022 at 6:30pm PDT at La Cumbre Country Club, 4015 Via Laguna, Santa Barbara, CA. Paso Robles San Luis Obispo Santa Barbara Santa Maria Ventura Executive Management Team Martin E. Plourd Chief Executive Officer William F. Filippin President Chief Credit Officer T. Joseph Stronks Executive Vice President Chief Operating Officer Chief Risk Officer Richard Pimentel Executive Vice President Chief Financial Officer Corporate Headquarters 445 Pine Avenue Goleta, CA 93117 (805) 692-5821 Fax (805) 692-5835 www.communitywest.com { a 

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