Community West Bancshares Reports Q3 Results

Community West Bancshares (Company) (NASDAQ:CWBC), parent company of Community West Bank, today reported net income of $69,000 for the quarter ended September 30, 2009 (2009 Q3), compared to net income of $675,000 for the quarter ended September 30, 2008 (2008 Q3). For the nine months ended September 30, 2009, the Company reported a net loss of $(5,860,000) compared to net income of $1,420,000 for the nine months ended September 30, 2008. Net income per diluted share available to common shareholders, after the preferred stock dividends, was $(.03) for 2009 Q3 compared to $.11 for 2008 Q3.

Net Interest Income

Net interest income for the comparative quarter ended September 30, 2009 increased by $1,137,000, as the Company's net interest margin increased by 52 basis points, to 4.12% for 2009 Q3 from 3.60% for 2008 Q3.

Total interest income for the comparative quarter ended September 30, 2009 decreased by $958,000. A $1,321,000 decrease is attributed to lower interest rates and is partially offset by a $363,000 increase attributed to loan growth.

Interest expense on deposits for the comparative quarter decreased by $1,769,000. $1,641,000 of the decrease is attributed to lower interest rates. Interest expense on borrowings decreased $326,000, primarily due to lower interest rates.

Provision for Loan Losses

The Company recorded a $2,592,000 loan loss provision in 2009 Q3, reflecting the detailed evaluation of its loan portfolio in the context of the overall challenging economic environment which has persisted for the last year. While a substantial part of the deterioration and downgrades to specific loans in its portfolio was recognized in 2009 Q1, there continues to be ongoing credit problems primarily relating to business loans, elevating the component of the allowance calculation related to historical loan losses. In general, the Company has experienced elevated levels of loan losses over the past year thereby resulting in a significantly higher allowance requirement. The migration of the losses through the loan portfolio resulted in a calculated increase in the allowance from $7.3 million at December 31, 2008 to $13.3 million at September 30, 2009. This increase is directly related to the effect of historical loan losses on our estimate of losses inherent in the portfolio as of the balance sheet dates and does not necessarily reflect expected future losses. In addition, non-accrual loans slightly increased from $16.9 million at December 31, 2008 to $17.8 million at September 30, 2009.

Non-Interest Income and Non-Interest Expenses

Non-interest income decreased by $232,000 in 2009 Q3 compared to 2008 Q3, primarily because 2008 Q3 included gains on loan sales.

Non-interest expenses were flat in the comparative quarters. While salaries and employee benefits decreased by $498,000, this was offset primarily by an increase of $301,000 in the FDIC deposit insurance assessment and expenses related to disposals of foreclosed assets and an increase in the reserve on undisbursed loans.

BALANCE SHEET

The Company's total assets increased $17.4 million to $674.4 million at September 30, 2009 compared to $657.0 million at December 31, 2008. Net loans increased by $12.1 million and combined liquid assets and investment securities decreased by a net of $1.1 million.

On the funding side, as of September 30, 2009, deposits increased by $54.3 million while FHLB and FRB advances decreased by $30.0 million compared to December 31, 2008.

CAPITAL

As of September 30, 2009, the Company had $60.3 million in total shareholders' equity, or 8.95% of consolidated total assets, and book value per common share was $7.75. The Company and Community West Bank continue to operate at capital levels in excess of the "well capitalized" benchmarks.

COMMENTS FROM PRESIDENT AND CHIEF EXECUTIVE OFFICER

Lynda J. Nahra, President and Chief Executive Officer, noted: "Our 2009 ongoing margin improvement and Q1 cost reductions continue to enhance our positive operating earnings. With the banking and operating environment still unsettled, our resources are remaining focused on credit quality and our overall balance sheet strength."

COMPANY OVERVIEW

Community West Bancshares is a financial services company with headquarters in Goleta, California. The Company is the holding company for Community West Bank, which has five full-service California branch banking offices, in Goleta, Ventura, Santa Maria, Santa Barbara and Westlake Village. The principal business activities of the Company are Relationship banking, Mortgage lending and SBA lending.

Safe Harbor Disclosure

This release contains forward-looking statements that reflect management's current views of future events and operations. These forward-looking statements are based on information currently available to the Company as of the date of this release. It is important to note that these forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including, but not limited to, the ability of the Company to implement its strategy and expand its lending operations.

COMMUNITY WEST BANCSHARES
CONDENSED CONSOLIDATED INCOME STATEMENTS
(unaudited)
(in 000's, except per share data)
                                                            Quarter Ended              Nine Months Ended
                                                            September 30,              September 30,
                                                            2009           2008        2009           2008
Interest income                                             $  10,378      $  11,336   $  30,795      $  34,727
Interest expense                                               3,467          5,562       11,887         16,989
Net interest income                                            6,911          5,774       18,908         17,738
Provision for loan losses                                      2,592          652         15,890         3,856
Net interest income (loss) after provision for loan losses     4,319          5,122       3,018          13,882
Non-interest income                                            966            1,198       3,389          4,252
Non-interest expenses                                          5,165          5,154       16,355         15,647
Income (loss) before income taxes                              120            1,166       (9,948  )      2,487
Provision (benefit) for income taxes                           51             491         (4,088  )      1,067
NET INCOME (LOSS)                                           $  69          $  675      $  (5,860  )   $  1,420
Preferred stock dividends                                      261            -           784            -
NET INCOME (LOSS) AVAILABLE TO
COMMON SHAREHOLDERS                                         $  (192    )   $  675      $  (6,644  )   $  1,420
Earnings (loss) per common share:
Basic                                                       $  (0.03   )   $  0.11     $  (1.12   )   $  0.24
Diluted                                                        (0.03   )      0.11        (1.12   )      0.24
Weighted average shares:
Basic                                                          5,915          5,915       5,915          5,912
Diluted                                                        5,915          5,918       5,915          5,955
Selected average balance sheet items
Average assets                                              $  676,625     $  651,732  $  673,820     $  638,788
Average gross loans                                            606,066        577,682     603,802        565,942
Average deposits                                               504,029        491,533     492,316        472,942

COMMUNITY WEST BANCSHARES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in 000's, except per share data)
                                                           September 30       December 31
                                                           2009               2008
Cash and cash equivalents                                  $    8,679         $    12,253
Interest-earning deposits in other financial institutions       832                812
Investment securities                                           40,411             37,975
Loans:
Held for sale                                                   99,611             131,786
Held for investment                                             506,835            456,630
Less: Allowance                                                 (13,274 )          (7,341  )
Net held for investment                                         493,561            449,289
NET LOANS                                                       593,172            581,075
Other assets                                                    31,258             24,866
TOTAL ASSETS                                               $    674,352       $    656,981
Deposits                                                   $    529,697       $    475,439
FHLB and FRB advances                                           80,000             110,000
Other liabilities                                               4,331              4,924
TOTAL LIABILITIES                                               614,028            590,363
Stockholders' equity                                            60,324             66,618
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
                                                           $    674,352       $    656,981
Shares outstanding                                              5,915              5,915
Book value per common share                                $    7.75          $    8.84
Non-accrual loans, net                                     $    17,770        $    16,903

SOURCE: Community West Bancshares

Community West Bancshares 
Charles G. Baltuskonis, EVP/CFO 
805-692-5821 
cbaltuskonis@communitywestbank.com 
www.communitywest.com

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