Central Valley(CVCY) - 2025 Q3 - Quarterly Results

Executive Summary & Financial Highlights This section provides an overview of the company's financial performance for Q3 2025, including key earnings metrics, management commentary, and significant financial highlights Q3 2025 Earnings Overview Community West Bancshares reported a significant increase in net income and diluted EPS for Q3 2025 compared to both the previous quarter and the same period in 2024, alongside a declared quarterly cash dividend | Metric | Q3 2025 | Q3 2024 | | :----------------------- | :---------- | :---------- | | Net Income | $10.873 million | $3.385 million | | Diluted EPS | $0.57 | $0.18 | - The Company declared a $0.12 per common share cash dividend, payable on November 14, 2025, to shareholders of record as of October 31, 2025[2] CEO & CFO Commentary The CEO highlighted the company's solid third-quarter results, reflecting team strength and client trust, with a continued focus on discipline, credit quality, deposit stability, and prudent liquidity. The CFO emphasized record income growth and increasing net interest margin over six consecutive quarters, positioning the company for long-term shareholder value - CEO James J. Kim noted the company's mission-driven approach as a community bank partner, maintaining focus on credit quality, deposit stability, and prudent liquidity management amidst evolving economic conditions[3] - CFO Shannon Livingston reported one of the strongest quarters in recent years, marked by six consecutive quarters of increasing net interest margin and record income growth, attributing success to synergies, discipline, and exceptional service culture[5] Key Financial Highlights The third quarter of 2025 saw significant improvements across key financial metrics, including increased net income, reduced provision for credit losses, growth in loans and deposits, improved net interest margin, and strong capital positions Q3 2025 Financial Highlights (vs. Q2 2025) | Metric | Q3 2025 | Q2 2025 | Change (QoQ) | | :-------------------------------------- | :----------- | :----------- | :----------- | | Net Income | $10.87 million | $7.83 million | +38.8% | | Diluted EPS | $0.57 | $0.41 | +39.0% | | Provision for Credit Losses | $0.667 million | $2.61 million | -74.4% | | Gross Loans Increase | $51.8 million| - | +2.16% | | Total Deposits Increase | $81.0 million| - | +2.70% | | Total Cost of Deposits | 1.39% | 1.43% | -0.04 pp | | Net Interest Margin | 4.20% | 4.10% | +0.10 pp | Capital Ratios as of September 30, 2025 | Capital Ratio | Percentage | | :------------------------ | :--------- | | Tier 1 Leverage Ratio | 9.53% | | Common Equity Tier 1 Ratio| 11.60% | | Tier 1 Risk-Based Capital | 11.78% | | Total Risk-Based Capital | 14.07% | Results of Operations This section analyzes the company's financial performance, focusing on consolidated income, net interest income, non-interest income, and non-interest expenses Consolidated Income Statement Analysis The company's net income significantly increased in Q3 2025 compared to both the prior quarter and the same period last year, driven by higher net interest income, lower provision for credit losses, and increased non-interest income Consolidated Net Income (in millions) | Metric | Q3 2025 | Q2 2025 | Q3 2024 | YTD 2025 | YTD 2024 | | :---------- | :--------- | :--------- | :--------- | :--------- | :--------- | | Net Income | $10.873 | $7.832 | $3.385 | $26.998 | $0.771 | - Net income before income taxes for Q3 2025 was $15.076 million, a substantial increase from $4.160 million in Q3 2024[6] Net Interest Income and Margin Net interest income before provision for credit losses increased significantly year-over-year, primarily due to organic loan growth, an increase in the yield on interest-earning assets, and a decrease in the cost of total deposits, leading to a higher net interest margin Net Interest Income and Margin Trends | Metric | Q3 2025 | Q2 2025 | Q3 2024 | | :----------------------------------------- | :------- | :------- | :------- | | Net Interest Margin (fully tax equivalent) | 4.20% | 4.10% | 3.69% | | Net Interest Income (before provision) | $34.944 million | $33.304 million | $30.214 million | | Yield on Interest Earning Assets | 5.62% | 5.65% | 5.52% | | Cost of Total Deposits | 1.39% | 1.43% | 1.69% | - Net interest income before provision for credit losses increased by $4.730 million or 15.65% year-over-year for Q3 2025[13] - The decrease in the cost of deposits is primarily attributed to rate decreases in money market and time deposit portfolios from both acquired deposits (April 2024 merger) and the Company's existing base[13] Non-Interest Income Analysis Total non-interest income increased significantly quarter-over-quarter and year-to-date, primarily driven by a net gain on death benefits and a substantial reduction in realized losses on investment securities, despite some offsets from lower interchange and loan placement fees year-to-date Non-Interest Income (in millions) | Metric | Q3 2025 | Q2 2025 | % Change (QoQ) | YTD 2025 | YTD 2024 | % Change (YoY) | | :-------------------------- | :------ | :------ | :------------- | :------- | :------- | :------------- | | Total Non-Interest Income | $2.966 | $2.364 | 25.5% | $7.941 | $4.142 | 91.7% | | Gain on proceeds from death benefits | $0.198 | $0 | —% | $0.198 | $0 | —% | | Net realized losses on sales and calls of investment securities | $(0.026) | $(0.015) | 73.3% | $(0.041) | $(4.199) | (99.0)% | - The increase in total non-interest income for Q3 2025 compared to the trailing quarter was primarily driven by a net gain on proceeds from death benefits of $0.198 million and income from CRA investments of $0.273 million[15] - Year-to-date non-interest income growth was largely due to a significant reduction in realized losses on sales and calls of investment securities, decreasing from $4.199 million in 2024 to $0.041 million in 2025[17] Non-Interest Expense Analysis Total non-interest expenses decreased quarter-over-quarter and year-to-date, mainly due to reductions in professional services, data processing, and merger-related expenses, partially offset by increases in salary and employee benefits, occupancy, and information technology Non-Interest Expenses (in millions) | Metric | Q3 2025 | Q2 2025 | % Change (QoQ) | YTD 2025 | YTD 2024 | % Change (YoY) | | :-------------------------- | :------ | :------ | :------------- | :------- | :------- | :------------- | | Total Non-Interest Expenses | $22.167 | $22.296 | (0.6)% | $67.934 | $71.513 | (5.0)% | | Professional services | $0.447 | $0.639 | (30.0)% | $1.950 | $2.187 | (10.8)% | | Data processing expense | $0.748 | $0.855 | (12.5)% | $2.403 | $3.010 | (20.2)% | | Merger and acquisition expense | - | - | - | $0.278 | $9.147 | (97.0)% | | Salaries and employee benefits | $12.525 | $12.260 | 2.2% | $37.744 | $35.800 | 5.4% | - The quarter-over-quarter decrease in non-interest expense was driven by lower professional services, data processing, and information technology costs, partially offset by increased accruals for incentive compensation[18] - The year-to-date decrease in non-interest expenses was primarily due to a significant reduction in non-recurring merger expenses[20] Non-GAAP Financial Measures Reconciliation This section provides a reconciliation of GAAP and non-GAAP financial measures, offering supplemental information for investors to analyze core operating results and facilitate comparisons Reconciliation of GAAP and Non-GAAP Financial Measures The company provides non-GAAP financial measures to offer supplemental information for investors, facilitating analysis of core operating results and comparisons across reporting periods, and for internal budgeting and management Key GAAP vs. Non-GAAP Metrics (in millions, except percentages) | Metric | Q3 2025 (GAAP) | Q3 2025 (Non-GAAP) | Q3 2024 (GAAP) | Q3 2024 (Non-GAAP) | | :---------------------------------------- | :------------- | :----------------- | :------------- | :----------------- | | Net Income | $10.873 | - | $3.385 | - | | Net income before income tax and provision expense | - | $15.743 | - | $3.642 | | Return on average assets (Annualized) | 1.21% | 1.75% | 0.38% | 0.41% | | Return on average equity (Annualized) | 11.25% | 16.29% | 3.84% | 4.13% | | Tangible common equity | - | $292.232 | - | $257.618 | | Tangible common shareholders' equity per share | - | $15.27 | - | $13.60 | - Management uses non-GAAP financial measures to establish budgets and manage the Company's business, believing they provide useful supplemental information to investors[7] Balance Sheet Summary This section provides an overview of the company's balance sheet, detailing asset, loan portfolio, deposit, and liquidity positions Assets Overview Total assets and average assets showed growth, primarily driven by an increase in average gross loans, while average gross investment securities decreased due to sales, calls, and maturities Asset Trends (in millions) | Metric | Sep 30, 2025 | Dec 31, 2024 | % Change (YTD) | | :-------------------------- | :----------- | :----------- | :------------- | | Total Assets | $3,612.264 | $3,521.771 | 2.57% | | Average Assets (Q3) | $3,595.359 | $3,541.444 | 1.52% (YoY) | | Average Gross Investment Securities (Q3) | $818.816 | $895.424 | (8.56)% (YoY) | | Total Average Gross Loans (Q3) | $2,410.272 | $2,278.313 | 6.01% (YoY) | - The decrease in average gross investment securities compared to the prior year was a result of sales, calls, and maturities of available-for-sale (AFS) and held-to-maturity (HTM) securities[22] Loan Portfolio Composition The loan portfolio continued to be dominated by real estate loans, which increased in both absolute terms and as a percentage of total loans, while consumer loans also saw a slight increase Loan Portfolio Composition (in millions) | Loan Type | Sep 30, 2025 Amount | Sep 30, 2025 % of Total | Dec 31, 2024 Amount | Dec 31, 2024 % of Total | | :-------------------------------------- | :------------------ | :---------------------- | :------------------ | :---------------------- | | Total Commercial | $180.795 | 7.3% | $180.745 | 7.7% | | Total Real Estate | $1,848.301 | 75.5% | $1,736.498 | 74.4% | | Total Consumer | $421.178 | 17.2% | $415.102 | 17.8% | | Total Gross Loans | $2,451.142 | 100.0% | $2,334.221 | 100.0% | - Commercial real estate - non-owner occupied loans represent the largest single category, accounting for 39.7% of the total loan portfolio at September 30, 2025[24] Deposit Composition Total deposits increased significantly year-to-date and quarter-over-quarter, with non-interest bearing deposits growing to represent a larger portion of total deposits, indicating improved funding stability Deposit Composition (in millions) | Deposit Type | Sep 30, 2025 Amount | Sep 30, 2025 % of Total | Dec 31, 2024 Amount | Dec 31, 2024 % of Total | | :------------------------ | :------------------ | :---------------------- | :------------------ | :---------------------- |\ | Total Interest-Bearing | $1,984.114 | 64.5% | $1,929.953 | 66.3% | | Non-Interest Bearing | $1,091.817 | 35.5% | $980.824 | 33.7% | | Total Deposits | $3,075.931 | 100.0% | $2,910.777 | 100.0% | - Total average deposits increased by $135.348 million or 4.61% year-over-year for Q3 2025[24] - The ratio of average non-interest bearing deposits to total deposits increased to 35.79% for Q3 2025, up from 34.48% in Q2 2025[24] Liquidity Position The company maintains significant liquidity, with an increase in total available liquidity sources year-to-date, driven by higher FHLB borrowing availability and excess pledged securities, despite a decrease in short-term borrowings Liquidity Sources (in millions) | Liquidity Source | Sep 30, 2025 | Dec 31, 2024 | | :-------------------------------- | :----------- | :----------- | | Cash and cash equivalents | $121.558 | $120.398 | | Unpledged investment securities | $350.057 | $403.669 | | FHLB borrowing availability | $737.720 | $576.556 | | Total Liquidity | $1,407.362 | $1,284.317 | - Short-term borrowings decreased significantly to $20 million at September 30, 2025, from $133.442 million at December 31, 2024[26] Credit Quality This section assesses the company's credit quality, including loan loss provisions, allowance for credit losses, and loan risk ratings Loan Loss Provision and Recoveries The company recorded a provision for loan losses in Q3 2025, a shift from a credit in the prior year, while net loan recoveries decreased year-over-year Provision for Credit Losses and Net Recoveries (in millions) | Metric | Q3 2025 | Q3 2024 | | :---------------------------------------- | :------ | :------ | | Net loan recoveries | $0.075 | $0.162 | | Provision for loan losses | $0.793 | $(0.212) | | Credit to provision for HTM securities | $(0.062) | $(0.219) | | Credit to provision for unfunded commitments | $(0.064) | $(0.087) | - The net recovery ratio was 0.01% for Q3 2025, compared to 0.03% for Q3 2024[27] Allowance for Credit Losses The allowance for credit losses for loans increased year-to-date, reflecting a provision for loan losses and net recoveries, with the company believing the allowance is adequate Allowance for Credit Losses (in millions) | Metric | Sep 30, 2025 | Dec 31, 2024 | | :---------------------------------------- | :----------- | :----------- | | Allowance for credit losses for loans | $29.590 | $25.803 | | Allowance for credit losses as % of total loans | 1.21% | 1.11% | - The net increase in the allowance for credit losses for loans was $3.787 million year-to-date[28] Loan Risk Ratings The majority of the loan portfolio remains in 'Pass' risk rating, though there was an increase in 'Substandard' loans and a slight increase in 'Special mention' loans quarter-over-quarter Loan Risk Rating Composition (in millions) | Loan Risk Rating | Sep 30, 2025 Amount | Sep 30, 2025 % of Total | Jun 30, 2025 Amount | Jun 30, 2025 % of Total | Sep 30, 2024 Amount | Sep 30, 2024 % of Total | | :--------------- | :------------------ | :---------------------- | :------------------ | :---------------------- | :------------------ | :---------------------- | | Pass | $2,359.148 | 96.3% | $2,320.608 | 96.7% | $2,228.707 | 97.0% | | Special mention | $24.925 | 1.0% | $19.706 | 0.8% | $28.799 | 1.3% | | Substandard | $67.069 | 2.7% | $59.073 | 2.5% | $39.637 | 1.7% | Capital and Dividends This section reviews the company's capital adequacy through key ratios and details the latest cash dividend declaration Capital Ratios The company maintained strong capital positions, with all key capital ratios showing slight improvements or stability quarter-over-quarter, indicating continued financial strength Bancorp Capital Ratios | Capital Ratio | Sep 30, 2025 | Jun 30, 2025 | Dec 31, 2024 | | :------------------------ | :----------- | :----------- | :----------- | | Tier 1 Leverage | 9.52% | 9.48% | 9.17% | | Common Equity Tier 1 | 11.60% | 11.42% | 11.15% | | Tier 1 Risk-Based Capital | 11.77% | 11.59% | 11.33% | | Total Risk-Based Capital | 14.07% | 13.89% | 13.58% | Cash Dividend Declaration The Board of Directors declared a regular quarterly cash dividend of $0.12 per share, reflecting the company's well-capitalized status and expectation to maintain adequate capital levels - A regular quarterly cash dividend of $0.12 per share on common stock was declared on October 15, 2025[30] - The dividend is payable on November 14, 2025, to shareholders of record as of October 31, 2025[30] - The Company continues to be well capitalized and expects to maintain adequate capital levels[30] Company Information This section provides essential information about Community West Bancshares, including its overview, board of directors, and contact details Company Overview Community West Bancshares, established in 1979, operates through its subsidiary Community West Bank, providing a range of banking services across Central California with a focus on supporting businesses and communities - Community West Bancshares (NASDAQ: CWBC) and its subsidiary, Community West Bank, are headquartered in Fresno, California[31] - The Bank operates full-service Banking Centers throughout Central California, offering Commercial Lending, Agribusiness, SBA, Residential Construction and Mortgage, Manufactured Housing, Private Banking, and Cash Management[31] Board of Directors The report lists the members of the Company and Bank Board of Directors, including key executive roles such as Chairman, Vice Chairman, CEO, and President - Key board members include Daniel J. Doyle (Chairman), Robert H. Bartlein (Vice Chairman), James J. Kim (CEO of the Company and President and CEO of the Bank), and Martin E. Plourd (President of the Company)[32] Contact Information Contact details for investor and media inquiries are provided, including the Executive Vice President, Chief Financial Officer, and Public Relations - Investor contact: Shannon Livingston, Executive Vice President, Chief Financial Officer, Community West Bancshares (916-235-4617)[51] - Media contact: Debbie Nalchajian-Cohen, Public Relations (559-222-1322)[51] Forward-Looking Statements This section includes a disclaimer regarding forward-looking statements, outlining the inherent risks and uncertainties that could cause actual results to differ materially from projections Disclaimer on Forward-Looking Statements The report contains forward-looking statements subject to various risks and uncertainties that could cause actual results to differ materially from projections, including economic conditions, interest rate changes, credit quality, and regulatory compliance. Readers are cautioned not to place undue reliance on these statements, which are valid only as of their making - Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from projections[35] - Key risks include current and future business, economic and market conditions, inflationary pressures, changes in interest rates, geopolitical developments, credit quality, liquidity issues, and regulatory requirements[35] - The company does not undertake any obligation to update or review any forward-looking statement[36] Financial Statements This section presents the company's detailed financial statements, including consolidated balance sheets, income statements, and key financial ratios Consolidated Balance Sheets The consolidated balance sheets provide a snapshot of the company's financial position, detailing assets, liabilities, and shareholders' equity at various reporting dates Consolidated Balance Sheet Highlights (in millions) | Metric | Sep 30, 2025 | Dec 31, 2024 | Sep 30, 2024 | | :-------------------------- | :----------- | :----------- | :----------- | | Total Assets | $3,612.264 | $3,521.771 | $3,531.298 | | Total Deposits | $3,075.931 | $2,910.777 | $2,921.695 | | Total Liabilities | $3,214.688 | $3,159.086 | $3,167.783 | | Total Shareholders' Equity | $397.576 | $362.685 | $363.515 | Consolidated Statements of Income The consolidated statements of income present the company's financial performance over the three and nine months ended September 30, 2025 and 2024, detailing interest income, interest expense, non-interest income, non-interest expenses, and net income Consolidated Statements of Income Highlights (in millions) | Metric | Q3 2025 | Q3 2024 | YTD 2025 | YTD 2024 | | :---------------------------------------- | :--------- | :--------- | :--------- | :--------- | | Total Interest Income | $46.888 | $45.285 | $138.052 | $114.909 | | Total Interest Expense | $11.944 | $15.071 | $37.621 | $36.566 | | Net Interest Income before provision | $34.944 | $30.214 | $100.431 | $78.343 | | Provision (credit) for credit losses | $0.667 | $(0.518) | $3.239 | $9.889 | | Total Non-Interest Income | $2.966 | $1.105 | $7.941 | $4.142 | | Total Non-Interest Expenses | $22.167 | $27.677 | $67.934 | $71.513 | | Net Income | $10.873 | $3.385 | $26.998 | $0.771 | | Diluted Earnings Per Common Share | $0.57 | $0.18 | $1.42 | $0.05 | Condensed Consolidated Statements of Income (Quarterly) This section provides a condensed view of the company's quarterly income statement, allowing for a quick comparison of performance across recent quarters Condensed Quarterly Income Statement (in millions) | Metric | Sep 30, 2025 | Jun 30, 2025 | Mar 31, 2025 | Dec 31, 2024 | Sep 30, 2024 | | :---------------------------------------- | :----------- | :----------- | :----------- | :----------- | :----------- | | Net interest income | $34.944 | $33.304 | $32.182 | $32.024 | $30.214 | | Provision (credit) for credit losses | $0.667 | $2.613 | $(0.041) | $1.224 | $(0.518) | | Total non-interest income | $2.966 | $2.364 | $2.611 | $2.303 | $1.105 | | Total non-interest expense | $22.167 | $22.296 | $23.470 | $23.188 | $27.677 | | Net income | $10.873 | $7.832 | $8.293 | $6.895 | $3.385 | | Diluted earnings per common share | $0.57 | $0.41 | $0.44 | $0.36 | $0.18 | Selected Ratios This section provides key financial ratios, offering insights into the company's asset quality, profitability, efficiency, and capital adequacy over several quarters Key Financial Ratios | Ratio | Sep 30, 2025 | Jun 30, 2025 | Mar 31, 2025 | Dec 31, 2024 | Sep 30, 2024 | | :---------------------------------------- | :----------- | :----------- | :----------- | :----------- | :----------- | | Allowance for credit losses to total loans| 1.21% | 1.20% | 1.11% | 1.11% | 1.08% | | Non-performing assets to total assets | 0.20% | 0.20% | 0.20% | 0.18% | 0.09% | | Net interest margin | 4.20% | 4.10% | 4.04% | 3.95% | 3.69% | | Return on average assets | 1.21% | 0.88% | 0.94% | 0.78% | 0.38% | | Return on average equity | 11.25% | 8.30% | 8.97% | 7.55% | 3.84% | | Efficiency ratio | 58.47% | 62.51% | 67.38% | 67.55% | 88.37% | | Tier 1 leverage - Bancorp | 9.52% | 9.48% | 9.36% | 9.17% | 9.38% | Schedule of Average Balances and Average Yields and Rates (Quarterly) This schedule details the average balances of interest-earning assets and interest-bearing liabilities, along with their corresponding interest income/expense and average rates for recent quarters, providing a comprehensive view of net interest margin drivers Average Balances and Yields/Rates (Q3 2025 vs Q3 2024) | Metric | Q3 2025 Average Balance (millions) | Q3 2025 Average Rate | Q3 2024 Average Balance (millions) | Q3 2024 Average Rate | | :---------------------------------------- | :---------------------- | :------------------- | :---------------------- | :------------------- | | Total Interest-Earning Assets | $3,333.432 | 5.62% | $3,292.643 | 5.52% | | Total Interest-Bearing Liabilities | $2,063.735 | 2.30% | $2,047.083 | 2.93% | | Net Interest Margin | - | 4.20% | - | 3.69% | - The average interest rate on total interest-bearing deposits decreased from 2.69% in Q3 2024 to 2.17% in Q3 2025[47] Schedule of Average Balances and Average Yields and Rates (Year-to-Date) This schedule provides year-to-date average balances, interest income/expense, and average rates for interest-earning assets and interest-bearing liabilities, facilitating a comparison of performance over longer periods Average Balances and Yields/Rates (YTD Sep 30, 2025 vs YTD Sep 30, 2024) | Metric | YTD 2025 Average Balance (millions) | YTD 2025 Average Rate | YTD 2024 Average Balance (millions) | YTD 2024 Average Rate | | :---------------------------------------- | :----------------------- | :-------------------- | :----------------------- | :-------------------- | | Total Interest-Earning Assets | $3,296.089 | 5.64% | $2,878.474 | 5.38% | | Total Interest-Bearing Liabilities | $2,095.945 | 2.40% | $1,722.415 | 2.83% | | Net Interest Margin | - | 4.12% | - | 3.69% | - Average loans increased significantly year-to-date, from $1,869.985 million in 2024 to $2,367.824 million in 2025, contributing to higher interest income[49]