Community West Bank(CWBC) - 2023 Q3 - Quarterly Report

Financial Performance - Net interest income for Q3 2023 was $10.5 million, down from $11.9 million in Q3 2022[292] - Net interest margin decreased to 3.98% in Q3 2023 from 4.39% in Q3 2022[293] - Return on average assets was 0.83% for Q3 2023, compared to 1.25% for Q3 2022[295] - The Company reported a net income of $2.252 million for the three months ended September 30, 2023, a decrease of 35.2% from $3.478 million in the same period of 2022[301] - Basic earnings per share for the three months ended September 30, 2023, were $0.25, down from $0.40 in the prior year, representing a decline of 37.5%[301] - Net income for Q3 2023 was $2.3 million, or $0.25 per diluted share, down from $3.5 million, or $0.39 per diluted share in Q3 2022[318] Assets and Liabilities - Cash and cash equivalents increased by $75.9 million to $140.6 million as of September 30, 2023, from $64.7 million at December 31, 2022[296] - Total assets rose by $48.8 million to $1.14 billion at September 30, 2023, compared to $1.09 billion at December 31, 2022[297] - Loans held for investment remained stable at $934.2 million as of September 30, 2023, compared to $934.3 million at December 31, 2022[322] - Total contractual obligations amount to $346.8 million, including time deposits of $251.6 million and FHLB advances of $90 million[362] Income and Expenses - Non-interest income in-scope of ASC 606 was $506 thousand for Q3 2023, compared to $216 thousand for Q3 2022[285] - Total non-interest income for the nine months ended September 30, 2023, was $2.989 million, down from $3.214 million for the same period in 2022[285] - Total non-interest income increased by $209 thousand in Q3 2023, primarily due to a $278 thousand gain from the valuation of repossessed assets[336] - Total non-interest expenses increased by $3.4 million to $26.1 million for the nine months ended September 30, 2023, compared to $22.7 million for the same period in 2022[338] - Salaries and employee benefits rose by $1.1 million due to wage competition and increased benefit costs during the first nine months of 2023[338] - Professional services expenses increased by $755 thousand due to higher accounting and consulting costs related to internal control testing and strategic initiatives[338] Interest and Credit Losses - Interest income for the three months ended September 30, 2023, was $14.553 million, an increase of 15% from $12.654 million in the same period of 2022[301] - Total interest expense rose significantly to $4.034 million for the three months ended September 30, 2023, compared to $731 thousand in the same period of 2022, marking an increase of 451%[301] - The provision for credit losses was $43 thousand for the three months ended September 30, 2023, down from $298 thousand in the same period of 2022, indicating a decrease of 85.5%[309] - Provision for credit losses was $43 thousand in Q3 2023, significantly lower than $298 thousand in Q3 2022[319] Capital Ratios - The Tier 1 leverage ratio improved to 10.84% as of September 30, 2023, compared to 10.34% at December 31, 2022[320] - Return on average common equity decreased to 7.72% in Q3 2023 from 12.65% in Q3 2022[321] - CWB's total capital ratio as of September 30, 2023, is 13.27%, exceeding the minimum requirement of 8.00%[365] - The Tier 1 capital ratio stands at 12.09%, above the minimum requirement of 6.00%[365] - Common Equity Tier 1 capital ratio is also at 12.09%, surpassing the minimum requirement of 4.50%[365] - The leverage ratio is reported at 10.84%, exceeding the minimum requirement of 4.00%[365] Mergers and Acquisitions - The company announced a merger agreement with Central Valley Community Bancorp, expected to close in Q2 2024[287] - The Company is in the process of an all-stock merger with Central Valley Community Bancorp, pending regulatory and shareholder approvals[373] Regulatory and Market Environment - The Company anticipates continued market volatility due to inflation, rising interest rates, and geopolitical conflicts[370] - Future changes in laws and regulations may materially affect the Company's business and earnings[367] Internal Controls - The management has confirmed that there were no changes in internal control over financial reporting during the quarter ended September 30, 2023[372] - Disclosure controls and procedures are deemed effective as of the end of the reporting period[371]