Central Valley(US:CVCY)2025-04-21 20:02Financial Highlights and Overview Community West Bancshares reported strong Q1 2025 financial results, demonstrating significant growth in profitability and maintaining robust capital positions First Quarter 2025 Financial Highlights Community West Bancshares reported strong Q1 2025 results, showcasing significant year-over-year and sequential growth in net income and EPS, alongside an increased net interest margin, loan growth, and robust capital Q1 2025 Key Financial Results (in millions) | Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Net Income | $8.3 | $6.9 | $3.7 | | Diluted EPS | $0.44 | $0.36 | $0.31 | | Net Interest Margin | 4.04% | 3.95% | 3.42% | | Gross Loans (QoQ Growth) | $12.7 | - | - | - The cost of deposits decreased to 1.45% for Q1 2025 from 1.49% in Q4 20245 - Capital ratios remain strong with a Tier 1 Leverage Ratio of 9.36% and a Total Risk-Based Capital Ratio of 13.82% as of March 31, 20255 - The Board of Directors declared a quarterly cash dividend of $0.12 per common share, payable on May 16, 20255 - Management attributes the strong performance to the team's focus on client success, conservative business practices, and sequential improvements in earnings and net interest margin, building on the momentum from the largest merger in the company's history one year ago4 Results of Operations This section details the company's operational performance, including net interest income, non-interest income, and non-interest expenses, highlighting key drivers of profitability Overview of Operations and Profitability The company's Q1 2025 net income significantly increased to $8.3 million, driven by higher net interest income, a credit provision for credit losses, and increased non-interest income, leading to substantial year-over-year improvements in ROAE and ROAA Profitability Metrics (in thousands) | Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Net Income | $8,293 | $6,895 | $3,676 | | Diluted EPS | $0.44 | $0.36 | $0.31 | | Return on Average Equity (ROAE) | 8.97% | 7.55% | 7.08% | | Return on Average Assets (ROAA) | 0.94% | 0.78% | 0.61% | - The company provides non-GAAP measures to exclude merger and conversion-related costs, which management believes provides a better analysis of core operating results. For Q1 2025, comparable non-GAAP net income was $8.5 million, or $0.45 per diluted share78 Net Interest Income and Margin Net interest income grew 68.7% year-over-year to $32.2 million in Q1 2025, driven by loan growth and an expanded net interest margin of 4.04%, with merger-related fair value accretion contributing 25 basis points to NIM Net Interest Margin and Components (in thousands) | Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Net Interest Income | $32,182 | $32,024 | $19,073 | | Net Interest Margin (FTE) | 4.04% | 3.95% | 3.42% | | Yield on Interest Earning Assets | 5.65% | 5.59% | 4.58% | | Cost of Total Deposits | 1.45% | 1.49% | 0.98% | - The year-over-year increase in average loans was primarily due to the merger consummated on April 1, 202412 - Net interest income in Q1 2025 benefited by approximately $2.05 million (25 basis points) from the net accretion of fair value marks related to the merger13 Non-Interest Income Total non-interest income reached $2.6 million in Q1 2025, increasing 59.6% year-over-year due to the merger and absence of security sale losses, with sequential growth driven by favorable fair value adjustments Non-Interest Income Components (in thousands) | Component | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Service charges | $502 | $456 | $384 | | Interchange fees | $516 | $436 | $405 | | Other income | $815 | $584 | $622 | | Total Non-Interest Income | $2,611 | $2,303 | $1,636 | Non-Interest Expense Non-interest expense totaled $23.5 million in Q1 2025, increasing 53.1% year-over-year primarily due to the merger, with a slight sequential rise driven by higher salaries, professional services, and IT investments Non-Interest Expense Components (in thousands) | Component | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Salaries and employee benefits | $12,959 | $12,670 | $8,638 | | Occupancy and equipment | $2,827 | $2,826 | $1,543 | | Information technology | $1,902 | $1,712 | $1,021 | | Merger and acquisition expense | $276 | $467 | $383 | | Total Non-Interest Expenses | $23,470 | $23,188 | $15,333 | - The quarter-over-quarter increase was driven by annual resets in payroll taxes, one-time severance payments, increased audit/consulting fees, and investments to enhance digital products18 Balance Sheet and Liquidity Analysis This section provides an overview of the company's balance sheet, including asset and liability composition, loan and deposit trends, and its robust liquidity position Balance Sheet Summary As of March 31, 2025, total assets reached $3.55 billion, reflecting a slight increase from year-end 2024 and significant year-over-year growth primarily due to the April 2024 merger Key Balance Sheet Items (in thousands) | Item | March 31, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Assets | $3,553,086 | $3,521,771 | | Gross Loans | $2,346,897 | $2,334,221 | | Total Deposits | $2,928,938 | $2,910,777 | | Total Shareholders' Equity | $371,937 | $362,685 | Loan and Deposit Composition At Q1 2025, the loan portfolio was predominantly real estate loans (74.8%), while total deposits increased slightly, with non-interest-bearing deposits decreasing to 34.6% of the total, indicating a shift in deposit mix Loan Portfolio Composition as of March 31, 2025 (in thousands) | Loan Type | Amount | % of Total | | :--- | :--- | :--- | | Commercial | $174,781 | 7.4% | | Real estate | $1,755,841 | 74.8% | | Consumer | $414,391 | 17.7% | | Total Gross Loans | $2,346,897 | 100.0% | Deposit Composition as of March 31, 2025 (in thousands) | Deposit Type | Amount | % of Total | | :--- | :--- | :--- | | Non-interest bearing | $1,012,548 | 34.6% | | Interest-bearing | $1,916,390 | 65.4% | | Total Deposits | $2,928,938 | 100.0% | Liquidity The company maintains a strong liquidity position with total available sources of $1.28 billion as of March 31, 2025, comprising cash, unpledged securities, and significant borrowing availability to meet customer demand Liquidity Sources (in thousands) | Source | March 31, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $148,392 | $120,398 | | Unpledged investment securities | $361,254 | $403,669 | | FHLB borrowing availability | $589,261 | $576,556 | | Unsecured lines of credit availability | $110,000 | $110,000 | | Total | $1,282,983 | $1,284,317 | Credit Quality This section analyzes the company's credit quality, including loan loss allowances, net charge-offs/recoveries, and the distribution of loan risk ratings Credit Quality Analysis Credit quality remained stable in Q1 2025, marked by net loan recoveries of $125,000 and an unchanged allowance for credit losses at 1.11% of total loans, despite a slight increase in substandard loans - The allowance for credit losses (ACL) as a percentage of total loans was 1.11% at both March 31, 2025, and December 31, 202428 - The company recorded net loan recoveries of $125,000 in Q1 2025, compared to net charge-offs of $525,000 in Q1 202427 Loan Risk Rating (% of Total) | Rating | March 31, 2025 | Dec 31, 2024 | March 31, 2024 | | :--- | :--- | :--- | :--- | | Pass | 97.3% | 97.4% | 98.1% | | Special mention | 0.7% | 0.7% | 0.4% | | Substandard | 2.0% | 1.9% | 1.6% | Shareholder and Company Information This section covers the company's recent cash dividend declaration and provides an overview of its corporate structure following the recent merger Cash Dividend and Company Overview The company declared a quarterly cash dividend of $0.12 per share and provided an overview of its corporate structure following the April 1, 2024 merger with Central Valley Community Bancorp - On April 16, 2025, the Board of Directors declared a regular quarterly cash dividend of $0.12 per share, payable on May 16, 2025, to shareholders of record as of May 2, 202529 - Effective April 1, 2024, Central Valley Community Bancorp merged with Community West Bancshares. The surviving entities were renamed Community West Bancshares and Community West Bank30 Consolidated Financial Statements This section presents the company's unaudited consolidated financial statements, including balance sheets, income statements, selected ratios, and average balance schedules Consolidated Balance Sheets The unaudited consolidated balance sheet as of March 31, 2025, reports total assets of $3.55 billion, total liabilities of $3.18 billion, and total shareholders' equity of $371.9 million, with key assets including $2.32 billion in net loans Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total cash and cash equivalents | $148,392 | $120,398 | | Loans, net | $2,320,802 | $2,308,418 | | Total assets | $3,553,086 | $3,521,771 | | Total deposits | $2,928,938 | $2,910,777 | | Total liabilities | $3,181,149 | $3,159,086 | | Total shareholders' equity | $371,937 | $362,685 | Consolidated Statements of Income The unaudited consolidated income statement for Q1 2025 shows a net income of $8.29 million, derived from $45.1 million in total interest income and $13.0 million in total interest expense, yielding $32.2 million in net interest income Consolidated Income Statement Highlights (in thousands) | Account | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Net interest income | $32,182 | $32,024 | $19,073 | | (Credit) Provision for credit losses | ($41) | $1,224 | $575 | | Total non-interest income | $2,611 | $2,303 | $1,636 | | Total non-interest expenses | $23,470 | $23,188 | $15,333 | | Net income | $8,293 | $6,895 | $3,676 | Selected Ratios and Quarterly Data This section presents key performance and financial ratios over the last five quarters, highlighting trends in profitability, credit quality, capital adequacy, and operational efficiency, demonstrating a strong recovery since mid-2024 Five-Quarter Selected Ratios | Ratio | Mar 31, 2025 | Dec 31, 2024 | Mar 31, 2024 | | :--- | :--- | :--- | :--- | | Allowance for credit losses to total loans | 1.11% | 1.11% | 1.14% | | Net interest margin (FTE) | 4.04% | 3.95% | 3.42% | | Return on average assets (ROAA) | 0.94% | 0.78% | 0.61% | | Return on average equity (ROAE) | 8.97% | 7.55% | 7.08% | | Efficiency ratio | 67.38% | 67.55% | 74.04% | | Tier 1 leverage - Bancorp | 9.36% | 9.17% | 9.34% | Schedule of Average Balances and Yields This schedule details average asset and liability balances for Q1 2025 and prior quarters, showing an average loan yield of 6.69% and an average cost of interest-bearing liabilities of 2.48%, contributing to a net interest margin of 4.04% Average Balances, Yields, and Rates (Q1 2025) (in thousands) | Category | Average Balance | Average Rate | | :--- | :--- | :--- | | Total interest-earning assets | $3,263,483 | 5.65% | | Loans | $2,327,832 | 6.69% | | Total interest-bearing liabilities | $2,115,718 | 2.48% | | Total interest-bearing deposits | $1,909,556 | 2.21% | | Net interest margin | - | 4.04% |