Executive Summary

Q4 2023 EPS was $0.50, down sequentially from $0.54 in Q3 and down year-over-year from $0.65; net income was $5.893M, reflecting lower net interest income and higher non-interest expense, partially offset by stronger non-interest income and a lower tax rate .
Asset quality remained exemplary with zero non-performing assets, modest net recoveries ($170K), and allowance coverage of 1.14% of loans; NIM ticked up 5 bps sequentially to 3.52% as cost of deposits eased to 0.87% from 0.90% in Q3 .
Expense pressure was the main headwind: non-interest expense rose to $14.854M (+22% YoY), driven by professional services (including ~$581K merger costs in Q4), salaries/benefits accruals, regulatory assessments, and occupancy/equipment tied to banking center investments .
The Board declared a $0.12 dividend and confirmed all regulatory approvals for the merger with Community West Bancshares, targeting an April 1, 2024 close pending shareholder approval—an important near-term catalyst alongside stabilizing NIM and zero NPAs .

What Went Well and What Went Wrong

What Went Well
- Asset quality: zero NPAs, net loan recoveries of $170K; risk ratings improved with special mention loans down to $9.0M from $24.7M in Q3 .
- Margin stabilization and funding mix: NIM rose to 3.52% (from 3.47% in Q3) and cost of total deposits declined to 0.87% (from 0.90%), aided by deposit mix and disciplined pricing .
- Non-interest income strength: total non-interest income rose to $2.267M (+$1.297M YoY) on gains from asset sales and smaller securities losses .
- CEO quote: “...strengthened commercial management and exceptional client service enhanced lending performance in Q4… we expect [the merger] to bring further shareholder value in a stabilizing 2024 economy.” — James J. Kim, President & CEO .
What Went Wrong
- Expense pressure: non-interest expense increased to $14.854M (+$2.702M YoY), with notable increases in professional services (incl. ~$581K merger expense in Q4), salaries/benefits accruals, regulatory assessments, and occupancy/equipment tied to new/relocated centers .
- Net interest income headwind YoY: NII before provision fell to $20.115M (from $21.993M in Q4’22), as rising deposit costs (0.87% vs 0.09% YoY) offset asset yield gains despite sequential improvement in NIM .
- Deposit compression YoY: period-end deposits declined 2.76% YoY to $2.042B; average non-interest-bearing deposits fell to 46.61% of total in Q4 (from 50.42% YoY) .

Financial Results

Quarterly P&L (USD $ Thousands unless noted)

Metric	Q2 2023	Q3 2023	Q4 2023
Net Interest Income (before provision)	20,205	20,527	20,115
(Credit) Provision for Credit Losses	(343)	186	(168)
Non-Interest Income	1,594	1,583	2,267
Non-Interest Expense	13,805	13,436	14,854
Pre-Tax Income	8,337	8,488	7,696
Provision for Income Taxes	2,055	2,098	1,803
Net Income	6,282	6,390	5,893
Diluted EPS ($)	0.54	0.54	0.50
Effective Tax Rate (%)	24.65%	24.72%	23.43%

YoY Comparison (USD $ Thousands unless noted)

Metric	Q4 2022	Q4 2023
Net Interest Income (before provision)	21,993	20,115
(Credit) Provision for Credit Losses	500	(168)
Non-Interest Income	970	2,267
Non-Interest Expense	12,152	14,854
Net Income	7,633	5,893
Diluted EPS ($)	0.65	0.50

Margins & Funding

Metric	Q2 2023	Q3 2023	Q4 2023
Net Interest Margin (FTE)	3.46%	3.47%	3.52%
Cost of Total Deposits	0.88%	0.90%	0.87%
Loan-to-Deposit Ratio	57.07%	59.35%	63.22%

Balance Sheet & Credit (Period-End)

Metric	Q4 2022	Q3 2023	Q4 2023
Total Assets ($)	2,422,519	2,435,359	2,433,426
Total Deposits ($)	2,099,649	2,148,842	2,041,612
Loans, Net ($)	1,245,456	1,259,877	1,276,144
Allowance for Credit Losses / Loans	0.86%	1.22%	1.14%
Non-Performing Assets / Assets	—%	—%	—%

Segment/KPI Breakdowns

Loan Portfolio Mix (Period-End)

Loan Type ($ Thousands)	Dec 31, 2022	%	Dec 31, 2023	%
Commercial & Industrial	141,197	11.2%	105,466	8.2%
Agricultural Production	37,007	2.9%	33,556	2.6%
CRE – Owner Occupied	194,663	15.5%	215,146	16.7%
CRE – Non-Owner Occupied	464,809	37.1%	539,522	41.9%
Farmland	119,648	9.5%	120,674	9.3%
Multi-Family	24,586	2.0%	61,307	4.7%
1–4 Family (Closed-End)	93,510	7.4%	96,558	7.5%
1–4 Family (Revolving)	30,071	2.4%	27,648	2.1%
Consumer	40,252	3.2%	55,606	4.3%
Total Gross Loans	1,256,304	100.0%	1,290,797	100.0%

Deposit Mix (Period-End)

Deposit Type ($ Thousands)	Dec 31, 2022	%	Dec 31, 2023	%
NOW	324,089	15.4%	251,334	12.3%
MMA	435,783	20.8%	497,043	24.4%
Time	67,923	3.2%	162,085	7.9%
Savings	215,287	10.3%	179,609	8.8%
Total Interest-Bearing	1,043,082	49.7%	1,090,071	53.4%
Non-Interest Bearing	1,056,567	50.3%	951,541	46.6%
Total Deposits	2,099,649	100.0%	2,041,612	100.0%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Dividend per share	Q1 2024 payout	$0.12 (recent quarters)	$0.12 declared (payable Feb 16, 2024)	Maintained
Merger timeline	Close date	N/A	All regulatory approvals received; shareholder votes Feb 8, 2024; expected close April 1, 2024	New timeline disclosed

Note: No formal quantitative revenue/margin/expense guidance was provided in Q4 materials .

Earnings Call Themes & Trends

Note: No Q4 2023 earnings call transcript was available; themes derived from company press releases.

Topic	Previous Mentions (Q2 2023)	Previous Mentions (Q3 2023)	Current Period (Q4 2023)	Trend
Deposit costs & NIM	Cost of deposits rose to 0.88%; NIM fell to 3.46% QoQ	Cost 0.90%; NIM 3.47%	Cost 0.87%; NIM 3.52%	Stabilizing NIM; easing deposit cost
Credit quality	Zero NPAs; net recoveries $22K	Zero NPAs; small net charge-offs $199K	Zero NPAs; net recoveries $170K; risk rating mix improved	Strong and improving
Operating expenses	Higher salaries/benefits; non-recurring professional fees	Professional/legal fees (merger, CECL); FDIC assessments	Professional fees up incl. ~$581K merger; occupancy/equipment higher	Elevated but merger-related
Growth & footprint	Investing in banking centers; relationship growth focus	New banking centers; Bakersfield entry	Continued banking center investments (relocations/opening)	Ongoing investment
Liquidity	Strong on/off-balance sheet sources	Liquidity sources robust, BTFP access	Liquidity ~$1.17B total sources; cash/cash equivalents $53.7M	Robust
Strategic M&A	—	Announced merger with Community West (Oct 10)	All approvals received; timeline set (Apr 1 close expected)	Advancing to close

Management Commentary

“The Company’s 44-year track record of sustained performance and its strong capital position created opportunity for franchise growth in 2023… strengthened commercial management and exceptional client service enhanced lending performance in Q4.” — James J. Kim, President & CEO .
“The merger… has received all customary regulatory approvals and final preparations for an April 1, 2024 closing are underway… we expect to bring further shareholder value in a stabilizing 2024 economy.” — James J. Kim, President & CEO .

Q&A Highlights

No earnings call transcript was available for Q4 2023; commentary and disclosures are taken from the 8-K press release and accompanying exhibits .

Estimates Context

S&P Global consensus estimates for Q4 2023 were unavailable for CVCY at the time of this analysis; therefore, we cannot provide official SPGI-based comparisons.*
Third-party source: Zacks reported a consensus EPS of $0.52 vs. actual $0.50, implying a modest miss (−$0.02) .
*Values retrieved from S&P Global (estimates unavailable).

Key Takeaways for Investors

Margin and funding stabilization are emerging: NIM improved sequentially and cost of deposits declined, suggesting funding pressures may be peaking—supportive for 2024 NII trajectory if deposit mix holds .
Expense line is the swing factor near term; Q4 included non-recurring merger costs and accrual true-ups—watch for normalization post-close and synergy capture to improve the efficiency ratio from 65% in Q4 .
Asset quality is a differentiator: zero NPAs and net recoveries, plus improved criticized loan balances, lower reserve volatility risk and underpin capital resilience (Tier 1 leverage 9.18%) .
Balance sheet remix continues: deposit betas rose YoY (shift to MMA/time), but sequential cost moderation is encouraging; maintaining NIBDDA near mid-40% remains a priority to protect NIM .
Liquidity is ample with ~$1.17B total sources, positioning the bank to navigate deposit flows and fund loan growth prudently .
Merger with Community West is a primary 1H24 catalyst; approvals are in place and closing is expected April 1, 2024, with potential scale, footprint expansion, and revenue/cost synergies to follow .
Dividend maintained at $0.12 signals confidence in capital and earnings stability through the integration period .

Community West Bancshares (CVCY)·Q4 2023 Earnings Summary