Central Valley(CVCY) - 2025 Q1 - Quarterly Report

PART 1: FINANCIAL INFORMATION Item 1: Financial Statements (Unaudited) This section presents Community West Bancshares' unaudited consolidated financial statements for Q1 2025, including Balance Sheets, Income, Equity, and Cash Flows, with detailed accounting notes Consolidated Balance Sheets As of March 31, 2025, total assets reached $3.55 billion, up from $3.52 billion, with liabilities at $3.18 billion and shareholders' equity at $372.2 million Consolidated Balance Sheet Highlights (USD in thousands) | Account | March 31, 2025 (USD in thousands) | December 31, 2024 (USD in thousands) | | :--- | :--- | :--- | | Total Assets | $3,553,086 | $3,521,771 | | Total Cash and Cash Equivalents | $148,392 | $120,398 | | Loans, net | $2,320,802 | $2,308,418 | | Total Deposits | $2,928,678 | $2,910,777 | | Total Liabilities | $3,180,889 | $3,159,086 | | Total Shareholders' Equity | $372,197 | $362,685 | Consolidated Statements of Income For Q1 2025, net income rose to $8.3 million (EPS $0.44) from $3.7 million (EPS $0.31) in Q1 2024, driven by a substantial increase in net interest income to $32.2 million Q1 2025 vs Q1 2024 Income Statement (USD in thousands, except per-share data) | Metric | Q1 2025 (USD in thousands) | Q1 2024 (USD in thousands) | | :--- | :--- | :--- | | Total Interest Income | $45,138 | $25,627 | | Net Interest Income | $32,182 | $19,073 | | Net Income | $8,293 | $3,676 | | Diluted EPS | $0.44 | $0.31 | | Cash Dividend per Share | $0.12 | $0.12 | Consolidated Statements of Cash Flows For Q1 2025, net cash from operating activities was $11.1 million, investing provided $0.8 million, and financing $16.1 million, resulting in a $28.0 million net increase in cash and cash equivalents Cash Flow Summary for Three Months Ended March 31 (USD in thousands) | Cash Flow Activity | 2025 (USD in thousands) | 2024 (USD in thousands) | | :--- | :--- | :--- | | Net Cash from Operating Activities | $11,067 | $4,023 | | Net Cash from Investing Activities | $804 | $27,919 | | Net Cash from Financing Activities | $16,123 | $(24,711) | | Net Increase in Cash | $27,994 | $7,231 | | Cash at End of Period | $148,392 | $60,959 | Notes to Consolidated Financial Statements The notes detail accounting policies and financial components, including the April 2024 merger that created $43 million in goodwill, and cover investment/loan portfolios, ACL, deposits, borrowings, and fair value measurements - Effective April 1, 2024, Central Valley Community Bancorp merged with Community West Bancshares, accounted for using the acquisition method, resulting in $43.05 million of goodwill[37][41] - The company's loan portfolio is concentrated in commercial real estate, which constitutes the majority of its lending activities, and it operates as one reportable segment: banking operations[30] - On April 16, 2025, the Board of Directors declared a $0.12 per share cash dividend[133] Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses Q1 2025 financial performance, highlighting $8.3 million net income and a 4.04% net interest margin, covering the April 2024 merger's impact, net interest income, credit quality, non-interest items, and overall financial condition, with strong capital ratios Financial Highlights For Q1 2025, the company reported strong financial results, with net income of $8.3 million (EPS $0.44), a 4.04% net interest margin, total assets of $3.55 billion, and robust capital ratios including a 9.36% Tier 1 Leverage Ratio Key Performance Metrics - Q1 2025 (USD) | Metric | Value | | :--- | :--- | | Net Income | $8.3 million | | Diluted EPS | $0.44 | | Net Interest Margin | 4.04% | | Total Assets | $3.55 billion | | Total Gross Loans | $2.35 billion | | Total Deposits | $2.9 billion | | Tier 1 Leverage Ratio | 9.36% | | Total Risk-Based Capital Ratio | 13.82% | Results of Operations Net income for Q1 2025 was $8.3 million, up from $3.7 million in Q1 2024, primarily due to a 68.7% increase in net interest income to $32.2 million post-merger, alongside rises in non-interest income and expenses Net Interest Income and Margin (Q1 2025 vs Q1 2024, USD in thousands) | Metric | Q1 2025 (USD in thousands) | Q1 2024 (USD in thousands) | | :--- | :--- | :--- | | Net Interest Income (tax-equivalent) | $32,530 | $19,445 | | Net Interest Margin (tax-equivalent) | 4.04% | 3.42% | | Yield on Earning Assets | 5.65% | 4.58% | | Cost of Interest-Bearing Liabilities | 2.48% | 2.11% | - The increase in net interest income was significantly impacted by the April 1, 2024 merger, which added a substantial volume of loans and deposits[155][165] Non-Interest Income & Expense Changes (Q1 2025 vs Q1 2024, USD in thousands) | Category | Q1 2025 (USD in thousands) | Q1 2024 (USD in thousands) | % Change | | :--- | :--- | :--- | :--- | | Total Non-Interest Income | $2,611 | $1,636 | 59.6% | | Total Non-Interest Expense | $23,470 | $15,333 | 53.1% | Financial Condition As of March 31, 2025, total assets were $3.55 billion, with gross loans at $2.35 billion (56.3% in commercial real estate) and deposits at $2.93 billion; nonperforming assets were $6.9 million, and shareholders' equity reached $372.2 million, indicating strong capital and liquidity - Total gross loans increased by $12.7 million (0.54%) during Q1 2025 to $2.35 billion[184] - A concentration exists in commercial real estate loans, representing 56.3% of the total loan portfolio as of March 31, 2025[185] Capital Ratios (Company) | Ratio | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Tier 1 Leverage Ratio | 9.36% | 9.18% | | CET 1 Ratio | 11.39% | 12.78% | | Tier 1 Risk-Based Capital | 11.57% | 13.07% | | Total Risk-Based Capital | 13.82% | 16.08% | Item 3: Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate risk, managed by ALCO to minimize exposure of net interest margin and equity to rate changes; as of March 31, 2025, risk was within policy, with a 100 bps rate increase projected to raise net interest income by 2.46% in year one, and a 100 bps decrease lowering it by 2.26% Interest Rate Sensitivity Analysis (Estimated Change in Net Interest Income) | Rate Shift (bps) | Year 1 Change | Year 2 Change | | :--- | :--- | :--- | | +400 | 2.93% | 4.33% | | +200 | 2.38% | 3.30% | | +100 | 2.46% | 3.31% | | -100 | (2.26)% | (3.46)% | | -200 | (3.71)% | (5.74)% | - The company manages interest rate risk by structuring assets and liabilities to correlate the effects of rate changes, with the ALCO and Board reviewing this exposure at least quarterly[213][214] Item 4: Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of the quarter-end, ensuring timely information for SEC filings, with no material changes to internal controls over financial reporting during the period - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[216] - No changes in internal controls over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[217] PART II: OTHER INFORMATION Item 1: Legal Proceedings The company is subject to ordinary course legal proceedings and claims, but management believes the ultimate liability will not materially affect its financial position or results - The company reports no material legal proceedings outside the ordinary course of business[107][219] Item 1A: Risk Factors No material changes have occurred to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024 - No material changes from the risk factors disclosed in the 2024 Form 10-K have been reported[220] Item 2: Unregistered Sales of Equity Securities and Use of Proceeds The company had nothing to report under this item for the period - None to report[221] Item 6: Exhibits This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications, XBRL data files, and incorporates by reference articles of incorporation and bylaws from previous filings - Exhibits filed include CEO and CFO certifications (31.1, 31.2, 32.1, 32.2) and XBRL interactive data files[225]