Executive Summary

Q3 2024 GAAP net income was $3.385M ($0.18 diluted EPS) versus a $6.290M loss in Q2 and $6.390M profit in Q3 2023; non-GAAP comparable EPS was $0.30 versus $0.41 in Q2 and $0.56 in Q3 2023, reflecting ongoing merger-related items and realized securities losses .
Net interest margin expanded to 3.69% from 3.65% in Q2 and 3.47% a year ago as earning-asset yields rose and accretion from acquired loan marks supported core spread .
Operating expense moderated sequentially (GAAP efficiency ratio improved to 88.37% from 93.58%), but remained elevated year-over-year due to integration and added scale post-merger; non-GAAP efficiency ratio was 73.76% vs. 70.76% in Q2, indicating near-term integration costs still weighing on run-rate .
Management guided qualitatively to benefits from merger synergies and infrastructure investments in Q4 and beyond, and maintained the quarterly dividend at $0.12 per share, signaling capital confidence despite integration costs .

What Went Well and What Went Wrong

What Went Well

Net interest margin improved to 3.69% (+4 bps q/q, +22 bps y/y) on higher asset yields and accretion on acquired loans, supporting net interest income growth to $30.214M (+$1.157M q/q, +$9.687M y/y) .
Sequential operating expense reduction (GAAP non-interest expense down $826K q/q) and improved GAAP efficiency ratio (88.37% vs. 93.58% in Q2) as integration costs began to roll off .
CEO highlighted strategic progress: “combining two core bank systems into one” and positioning the bank as a premier Central California community bank; CFO added “With much of the merger-related expenses behind us, we look forward to operating results reflecting the efficiencies and synergies implemented” .

What Went Wrong

Year-over-year expense pressure remained significant: GAAP non-interest expense up $14.241M vs. Q3 2023 (merger and added operating scale), driving GAAP efficiency ratio materially higher vs. prior year .
Continued losses on sale of securities ($1.853M in Q3 and $1.974M in Q2) used to fund loan growth as part of balance sheet repositioning, depressing reported non-interest income .
Deposit mix has shifted toward interest-bearing (63.2% at 9/30 vs. 53.4% at 12/31), with cost of deposits at 1.69% vs. 0.90% a year ago, pressuring funding costs despite modest q/q relief .

Financial Results

Core P&L and Profitability (Q3 2023 → Q2 2024 → Q3 2024)

Metric	Q3 2023	Q2 2024	Q3 2024
Total net revenue ($USD Thousands)	$22,110	$30,457	$31,319
Net interest income ($USD Thousands)	$20,527	$29,057	$30,214
Total non-interest income ($USD Thousands)	$1,583	$1,400	$1,105
Net income (loss) ($USD Thousands)	$6,390	($6,290)	$3,385
Diluted EPS (GAAP) ($USD)	$0.54	($0.33)	$0.18
Diluted EPS (Comparable, non-GAAP) ($USD)	$0.56	$0.41	$0.30
Net interest margin (FTE) (%)	3.47%	3.65%	3.69%
Efficiency ratio (GAAP) (%)	60.77%	93.58%	88.37%
Efficiency ratio (Comparable, non-GAAP) (%)	59.01%	70.76%	73.76%
Cost of total deposits (%)	0.90%	1.71%	1.69%

Notes:

“Total net revenue” defined as Net Interest Income + Total Non-Interest Income, per reported line items .
Non-GAAP EPS and efficiency exclude merger-related items and securities losses per reconciliation .

Balance Sheet Composition

Loan portfolio mix

Loan Type ($USD Thousands)	Dec 31, 2023	Sep 30, 2024
Total commercial	$139,022 (10.8%)	$160,816 (7.0%)
Total real estate	$1,094,327 (84.8%)	$1,726,444 (75.1%)
Total consumer	$55,606 (4.3%)	$407,919 (17.8%)
Net deferred origination costs	$1,842 (0.1%)	$1,964 (0.1%)
Total gross loans	$1,290,797 (100.0%)	$2,297,143 (100.0%)
Allowance for credit losses	$(14,653)	$(24,891)
Total loans	$1,276,144	$2,272,252

Deposit mix

Deposit Category ($USD Thousands)	Dec 31, 2023	Sep 30, 2024
NOW accounts	$251,334 (12.3%)	$344,036 (11.8%)
MMA accounts	$497,043 (24.4%)	$879,445 (30.1%)
Time deposits	$162,085 (7.9%)	$443,932 (15.2%)
Savings deposits	$179,609 (8.8%)	$177,859 (6.1%)
Total interest-bearing	$1,090,071 (53.4%)	$1,845,272 (63.2%)
Non-interest bearing	$951,541 (46.6%)	$1,076,423 (36.8%)
Total deposits	$2,041,612	$2,921,695

KPIs and Capital (Q3 2023 → Q2 2024 → Q3 2024)

KPI	Q3 2023	Q2 2024	Q3 2024
Total assets ($USD Thousands)	$2,435,359	$3,475,764	$3,531,298
Total deposits ($USD Thousands)	$2,148,842	$2,869,300	$2,921,695
Total gross loans ($USD Thousands)	$1,290,797	$2,256,571	$2,297,143
Avg non-interest DDA / total deposits (%)	44.54%	37.36%	37.16%
Non-performing assets ($USD Thousands)	$—	$2,805	$3,250
NPAs / total assets (%)	—%	0.08%	0.09%
Tier 1 leverage (Bancorp) (%)	8.70%	9.14%	9.38%
ROAA (%)	1.02%	(0.73)%	0.38%
ROAE (%)	13.60%	(7.39)%	3.84%
Book value per share ($)	$15.37	$18.49	$19.19

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Operational efficiencies/synergies	2H 2024	“Elevated non-interest expenses expected to continue through Q3 2024… operational efficiencies will commence in the fourth quarter.”	“With much of the merger-related expenses behind us, we look forward to operating results reflecting the efficiencies and synergies implemented over the last two quarters.”	Maintained qualitative timing; constructive tone
Net interest margin trajectory	Near term	NIM increased to 3.65% (Q2) from 3.42% (Q1)	NIM increased to 3.69% (Q3)	Trending higher (reported)
Quarterly dividend per share	Q3 2024	$0.12 declared (payable Aug 16, 2024)	$0.12 declared (payable Nov 22, 2024)	Maintained

No numerical revenue/EPS guidance ranges were provided in the materials .

Earnings Call Themes & Trends

No Q3 2024 earnings call transcript was available in the company filings repository; table reflects press release narrative.

Topic	Previous Mentions (Q1 & Q2)	Current Period (Q3)	Trend
Merger integration	Q1: Largest acquisition completed Apr 1; new identity, synergies ahead . Q2: Expected elevated expenses through Q3; efficiencies to commence in Q4 .	Core systems combined; transformative year; foundation for growth .	Advancing per plan
Balance sheet repositioning	Q2: Selling lower-earning securities to fund loan growth; realized losses .	Continued securities sales ($64.2M YTD), losses realized to fund loan growth .	Ongoing until mix optimized
Margin dynamics	Q1: NIM 3.42% under higher deposit costs . Q2: NIM 3.65% aided by loan-mark accretion .	NIM 3.69% with higher asset yields and accretion .	Improving sequentially
Deposit mix/costs	Q1: Cost of deposits 0.98%; DDA 45.3% . Q2: Cost 1.71%; DDA 37.36% .	Cost 1.69%; DDA 37.16% .	Slight q/q relief; structurally higher vs. 2023
Credit quality	Q1: No NPAs; ACL stable . Q2: NPAs $2.805M from acquired loans .	NPAs $3.250M; net recoveries; ACL 1.08% .	Stable/benign overall

Management Commentary

CEO (James J. Kim): “The current year has been transformative… combining two core bank systems into one… foundation for growth… one of the premier community banks headquartered in Central California” .
CFO (Shannon Livingston): “With much of the merger-related expenses behind us, we look forward to operating results reflecting the efficiencies and synergies implemented over the last two quarters” .
Strategic balance sheet moves: “Proceeds [from securities sales] were used to fund loan growth as part of strategic repositioning of the balance sheet to improve future earnings” .

Q&A Highlights

No Q3 2024 earnings call transcript was found in company filings; therefore, no Q&A highlights are available [ListDocuments returned none for earnings-call-transcript; see search result].

Estimates Context

Wall Street consensus for Q3 2024 EPS and revenue via S&P Global was unavailable due to mapping/limit issues; as a result, beat/miss vs. consensus cannot be assessed at this time (attempted for CVCY mapping and CWBC; daily request limit exceeded).
Given absence of consensus data, investors should focus on sequential recovery in GAAP profitability, NIM expansion, and integration cost trajectory for near-term estimate revisions .

Key Takeaways for Investors

Sequential rebound to GAAP profitability with $3.385M net income and $0.18 EPS, while non-GAAP comparable EPS of $0.30 reflects continued but declining integration noise .
NIM trajectory is favorable (3.69% vs. 3.65% in Q2), supported by higher asset yields and accretion on acquired loans; watch sustainability as accretion fades .
Operating leverage should improve as merger-related expenses roll off; GAAP efficiency ratio improved q/q, and management points to synergies in Q4 and beyond .
Funding costs remain structurally higher (deposit cost 1.69% vs. 0.90% a year ago) with greater interest-bearing mix; modest q/q relief is encouraging but watch mix/price competition .
Balance sheet growth is robust post-merger (loans $2.297B; deposits $2.922B), with liquidity sources totaling ~$1.276B at quarter-end; capital ratios remain strong (Tier 1 leverage 9.38%) .
Credit remains benign (NPAs $3.250M; net recoveries; ACL 1.08%), with acquired portfolio seasoning; monitor early delinquency trends (30+ days $6.5M) .
Dividend maintained at $0.12 per share, underscoring capital confidence amidst integration—supports income investor base .

Community West Bancshares (CVCY)·Q3 2024 Earnings Summary