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CW

Community West Bancshares (CVCY)·Q1 2024 Earnings Summary

Executive Summary

  • Q1 2024 earnings compressed: net income $3.676M and diluted EPS $0.31 vs $5.893M and $0.50 in Q4 2023 and $6.970M and $0.59 in Q1 2023, driven by higher deposit costs and elevated non-interest expenses including merger-related items .
  • Net interest margin declined to 3.42% from 3.52% in Q4 2023, while cost of total deposits rose to 0.98% from 0.87% sequentially, reflecting funding cost pressure despite higher loan yields .
  • Credit quality remained clean: no non-performing assets; net loan charge-offs were $0.525M; ACL/loans stayed at 1.14% .
  • Capital ratios remained robust (Total RBC 16.25%; CET1 12.94%), and a $0.12 dividend was declared payable May 17, 2024 to holders of record on May 3, 2024 .
  • Potential stock catalysts: completion of the Community West Bancshares merger on April 1 (new corporate name and NASDAQ: CWBC), with combined financials beginning in Q2 2024 reporting; ongoing clean credit performance .

What Went Well and What Went Wrong

What Went Well

  • Clean asset quality: “There were no non-performing assets” in Q1; ACL/loans steady at 1.14% with low delinquency balances ($2.028M >30 days) and modest charge-offs ($0.525M) .
  • Strong capital and liquidity: Tier 1 leverage 9.34% (Bancorp); Total Risk-Based Capital 16.25%; primary/secondary liquidity sources of ~$1.196B at 3/31/24 .
  • Strategic milestone: merger with Community West completed April 1; management emphasized cultural fit and expanded franchise reach, which may support future growth (“transformative period… largest acquisition in 44 years”) .

What Went Wrong

  • Margin pressure and earnings decline: NIM fell to 3.42% from 3.52% in Q4; net income dropped to $3.676M from $5.893M, as deposit costs rose and non-interest expenses increased .
  • Funding cost headwinds: cost of total deposits rose to 0.98% in Q1 vs 0.87% in Q4 and 0.20% in Q1 2023, driven by money market and time deposit volume/rate increases .
  • Elevated operating expenses: total non-interest expenses increased to $15.333M vs $13.205M in Q1 2023, reflecting merger and acquisition expense ($0.383M), higher salaries/benefits, and regulatory assessments .

Financial Results

MetricQ3 2023Q4 2023Q1 2024
Total Interest Income ($USD Millions)$26.47 $25.82 $25.63
Net Interest Income Before Provision ($USD Millions)$20.53 $20.12 $19.07
Net Income ($USD Millions)$6.39 $5.89 $3.68
Diluted EPS ($USD)$0.54 $0.50 $0.31
Net Interest Margin (FTE) (%)3.47% 3.52% 3.42%

Segment breakdown – Loans (Amounts $USD Millions; % of Total)

Loan TypeDec 31, 2023 AmountDec 31, 2023 %Mar 31, 2024 AmountMar 31, 2024 %
C&I$105.47 8.2% $86.92 6.8%
Agricultural Production$33.56 2.6% $24.98 1.9%
CRE – Owner Occupied$215.15 16.7% $209.78 16.3%
CRE – Non-Owner Occupied$539.52 41.9% $560.49 43.6%
Farmland$120.67 9.3% $117.02 9.1%
Multifamily$61.31 4.7% $61.99 4.8%
1–4 Family (Closed-end)$96.56 7.5% $95.58 7.4%
1–4 Family (Revolving)$27.65 2.1% $29.44 2.3%
Consumer$55.61 4.3% $69.89 5.4%
Total Gross Loans$1,290.80 100.0% $1,286.61 100.0%

Deposit composition (Amounts $USD Millions; % of Total)

CategoryDec 31, 2023 AmountDec 31, 2023 %Mar 31, 2024 AmountMar 31, 2024 %
NOW$251.33 12.3% $234.18 11.5%
Money Market$497.04 24.4% $537.25 26.4%
Time Deposits$162.09 7.9% $174.13 8.6%
Savings$179.61 8.8% $174.52 8.6%
Interest-Bearing Total$1,090.07 53.4% $1,120.07 55.1%
Non-Interest Bearing$951.54 46.6% $911.18 44.9%
Total Deposits$2,041.61 100.0% $2,031.25 100.0%

KPIs

KPIQ3 2023Q4 2023Q1 2024
Cost of Total Deposits (%)0.90% 0.87% 0.98%
Return on Avg Assets (%)1.02% 0.98% 0.61%
Return on Avg Equity (%)13.60% 12.78% 7.08%
Efficiency Ratio (%)59.66% 64.98% 70.07%
Loan-to-Deposit Ratio (%)59.35% 63.22% 63.34%
Avg NIB Deposits / Total Deposits (%)44.54% 46.61% 45.30%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Formal financial guidance (revenue, margins, OpEx, tax rate)FY/QuarterNone provided None provided Maintained (no guidance)
Dividend per common shareQ1 2024$0.12 (Q4 2023) $0.12 payable May 17; record May 3 Maintained
Merger reportingQ2 2024N/ACombined companies begin reporting in Q2 2024 New disclosure

Earnings Call Themes & Trends

Note: No Q1 2024 earnings call transcript was found in our document catalog; themes are drawn from company earnings releases.

TopicPrevious Mentions (Q3 & Q4)Current Period (Q1 2024)Trend
Deposit CostsRose to 0.90% (Q3); fell to 0.87% (Q4) Rose to 0.98% Increasing sequentially
Net Interest Margin3.47% (Q3); 3.52% (Q4) 3.42% Down sequentially
Credit QualityZero NPAs; NCOs modest; ACL/loans 1.14% (Q4) Zero NPAs; $0.525M NCOs; ACL/loans 1.14% Stable, clean with light losses
Regulatory Assessments/ExpensesHigher FDIC and professional/legal expenses (merger, CECL) FDIC assessment higher; merger expense $0.383M; salaries/benefits up Elevated
Merger/StrategicAnnounced Community West acquisition (Oct) Closed April 1; combined reporting starts Q2 Transition to integration

Management Commentary

  • “The first quarter of 2024 represented a transformative period for our Company as the April 1 completion of our largest acquisition in 44 years was finalized.” — James J. Kim, President & CEO .
  • “Our merger with Community West Bancshares and Bank not only united two great companies with complementary cultures, but inspired the adoption of their name and ticker symbol (NASDAQ: CWBC) to better reflect our expanded Central California territory.” — James J. Kim .
  • “We celebrate our new identity and fortified team, and look forward to maximizing our geographic, fiscal and relationship growth Company-wide.” — James J. Kim .

Q&A Highlights

No Q1 2024 earnings call transcript was available in our document sources; no Q&A highlights or clarifications to report [ListDocuments returned none for earnings-call-transcript for CVCY in period].

Estimates Context

  • Wall Street consensus from S&P Global for CVCY was unavailable due to missing company mapping; attempting CWBC returned a daily request limit error, so estimate comparisons are not provided. Values would have been retrieved from S&P Global if available.

Key Takeaways for Investors

  • Earnings headwinds are primarily funding-cost driven: cost of total deposits increased to 0.98%, squeezing NIM to 3.42% and pushing the efficiency ratio to 70.07% .
  • Despite margin pressure, credit remains pristine (no NPAs) with manageable charge-offs ($0.525M) and ACL coverage steady at 1.14%, supporting downside protection .
  • Capital strength (Total RBC 16.25%; CET1 12.94%) and ample liquidity (~$1.196B combined sources) underpin dividend continuity and strategic flexibility .
  • Loan mix continues to tilt toward CRE non-owner occupied (43.6% of loans), while C&I and ag production declined sequentially; consumer grew to 5.4%—watch CRE credit and funding dynamics in integration .
  • Deposit mix shows higher interest-bearing share (55.1%) and lower NIB proportion (44.9%), sustaining cost pressure until rates or client behavior shift .
  • Completion of the merger and combined reporting in Q2 could be a narrative catalyst, with synergy realization and integration expenses the key swing factors for profitability trajectory .
  • Near term, watch sequential NIM/cost-of-deposits trend and non-interest expense normalization post-merger; medium term thesis hinges on integration execution, deposit mix stabilization, and preserving clean credit .

Additional Data (Prior Quarters Reference)

  • Q4 2023: Net income $5.893M; diluted EPS $0.50; NIM 3.52%; dividend $0.12; zero NPAs .
  • Q3 2023: Net income $6.390M; diluted EPS $0.54; NIM 3.47%; deposit cost 0.90%; zero NPAs .