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CW

Community West Bancshares (CWBC)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 EPS of $0.41 missed consensus $0.48; “revenue” (net interest income after provision + non-interest income) was $33.06M, below consensus $35.83M, driven by a sharp increase in provision for credit losses tied to loan growth and a weaker macro forecast * .
  • Net interest margin expanded for the fifth consecutive quarter to 4.10% (4.04% in Q1; 3.95% in Q4), while cost of total deposits declined to 1.43%, supporting core spread resiliency .
  • Gross loans grew $52.5M (+2.2% q/q) and deposits grew $66.0M (+2.3% q/q), reflecting stable funding and relationship depth across Central California .
  • Board declared a $0.12 dividend and adopted a new share repurchase program up to 3% (~573,915 shares), providing incremental capital return and potential EPS accretion .
  • Stock narrative pivot: positive NIM and lower deposit costs vs. cautious credit stance (higher provision, rising substandard loans), with merger synergies aiding efficiency (62.51% Q2 ratio) .

What Went Well and What Went Wrong

What Went Well

  • Net interest margin rose to 4.10% with cost of deposits down to 1.43%; efficiency improved to 62.51%, signaling operational discipline and spread resilience .
  • Management highlighted continued momentum: “five consecutive quarters of increasing net interest margin… cost of deposits declined… Gross loans and total deposits increased” — CFO, Shannon Livingston .
  • Capital remains strong (Tier 1 leverage 9.48%; CET1 11.42%; Total RBC 13.89%), enabling dividend continuity and a new 3% buyback program .

What Went Wrong

  • Provision for credit losses rose to $2.61M vs a small credit in Q1, pressured by loan growth and deteriorating economic forecasts, reducing net income q/q to $7.8M from $8.3M .
  • Non-interest income fell 9.5% q/q on lower loan servicing and equity fair value adjustments, softening topline against estimates .
  • Credit metrics mixed: substandard loans increased to $59.1M (vs $47.6M in Q1), and nonperforming assets ticked slightly (0.19% of assets), prompting a higher ACL/loans ratio at 1.20% .

Financial Results

Revenue and EPS vs Prior Periods and Consensus

MetricQ2 2024Q4 2024Q1 2025Q2 2025Consensus (Q2 2025)
Revenue ($USD Millions)$20.63 $33.10 $34.83 $33.06 $35.83*
Diluted EPS ($USD)$(0.33) $0.36 $0.44 $0.41 $0.48*

Notes:

  • Revenue is defined here consistent with S&P Global “Revenue Consensus Mean”: net interest income after provision + total non-interest income (e.g., Q2 2025 = $30.69M + $2.36M = $33.06M) .
  • Consensus estimates marked with an asterisk; Values retrieved from S&P Global.

Margins and Profitability

MetricQ2 2024Q4 2024Q1 2025Q2 2025
Net Interest Margin (%)3.65% 3.95% 4.04% 4.10%
Efficiency Ratio (%)93.58% 67.55% 67.38% 62.51%
ROAA (Annualized) (%)(0.73)% 0.78% 0.94% 0.88%
ROAE (Annualized) (%)(7.39)% 7.55% 8.97% 8.30%

Segment and Balance Composition (Selected)

Loans ($USD Thousands)Dec 31, 2024 AmountDec 31, 2024 %Jun 30, 2025 AmountJun 30, 2025 %
Commercial & Industrial$143,422 6.1% $159,055 6.5%
CRE – Non-owner Occupied$913,165 39.1% $938,865 39.0%
Manufactured Housing$322,263 13.8% $326,463 13.6%
Total Gross Loans$2,334,221 100.0% $2,399,387 100.0%
Allowance for Credit Losses$(25,803) —$(28,722) —
Deposits ($USD Thousands)Dec 31, 2024 AmountDec 31, 2024 %Jun 30, 2025 AmountJun 30, 2025 %
Interest-bearing Total$1,929,953 66.3% $1,959,550 65.5%
Non-interest-bearing$980,824 33.7% $1,035,371 34.5%
Total Deposits$2,910,777 —$2,994,921 —

KPIs

KPIQ2 2024Q1 2025Q2 2025
Gross Loans ($USD Millions)$2,256.6 $2,346.9 $2,399.4
Total Deposits ($USD Millions)$2,869.3 $2,928.9 $2,994.9
Cost of Total Deposits (%)1.71% 1.45% 1.43%
Avg Non-Interest Bearing Deposits (% of avg total)37.36% 34.30% 34.48%
ACL / Loans (%)1.11% 1.11% 1.20%
Non-performing Assets / Assets (%)0.08% 0.20% 0.19%
Efficiency Ratio (%)93.58% 67.38% 62.51%
Tier 1 Leverage (Bancorp) (%)9.14% 9.36% 9.48%
Tangible Book Value/Share ($)$12.89 $13.96 $14.34

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per shareQ3 2025 payable Aug 15$0.12 (Q1 2025 dividend) $0.12 (Q3 payable Aug 15; record Aug 1) Maintained
Share Repurchase ProgramFrom Jul 22, 2025 onwardNoneUp to 3% of outstanding shares (~573,915) New
Financial guidance (revenue, margins, OpEx, tax)FY25/Q3Not providedNot providedMaintained (no formal guidance)

Earnings Call Themes & Trends

Note: No earnings call transcript was available in our document corpus; themes below reflect prepared remarks in press releases.

TopicPrevious Mentions (Q4 2024 and Q1 2025)Current Period (Q2 2025)Trend
Net Interest MarginNIM improved to 3.95% in Q4; 4.04% in Q1, sequential improvement noted .NIM 4.10%; “five consecutive quarters of increasing NIM,” per CFO .Improving
Deposit Costs/MixCost of deposits decreased to 1.49% in Q4; 1.45% in Q1; avg NIBD ~34–36% .Cost of deposits 1.43%; avg NIBD 34.48%; strengthened client relationships .Improving
Credit Provision/QualityQ4 provision $1.22M; Q1 small credit; substandard loans $44.3M→$47.6M .Provision $2.61M due to loan growth and macro forecasts; substandard up to $59.1M; ACL/loans to 1.20% .Tightening credit stance
Merger SynergiesOne-year anniversary acknowledged; improving efficiency; merger-related costs declining .CFO notes “strength of expanded team, synergies on both revenue and expense,” supporting momentum .Executing/integration benefits
Macro/Tariffs/PolicyQ1 remarks cited “shifting tariff policies” and volatility .Q2 CEO cites persistent inflation, evolving federal policy, and trade tensions .Ongoing headwinds
Liquidity/CapitalStrong liquidity sources, TCEP/share rising; capital ratios solid .Liquidity $1.315B available; Tier 1 leverage 9.48%; continued dividend/buyback .Stable/strong

Management Commentary

  • CEO (James J. Kim): “Midway through 2025, the economic environment and business climate remains uncertain… Despite these headwinds, the Company remains well-positioned, supported by a strong deposit base, prudent credit management and robust levels of capital and liquidity.”
  • CFO (Shannon Livingston): “We’re proud of the Company’s continued momentum, reflected in five consecutive quarters of increasing net interest margin… cost of deposits declined… Gross loans and total deposits increased… Overall, Company results reflect a positive trajectory and operational strength.”
  • CEO (Q1 context): “Even amid capital market volatility driven by shifting tariff policies, our team’s unwavering focus on client success continues to define and differentiate us.”

Q&A Highlights

  • The Q2 2025 earnings call transcript was not available; no Q&A content could be reviewed. Analysis is based on the full Q2 press release and 8-K exhibits .

Estimates Context

  • EPS: $0.41 vs consensus $0.48 — miss; driven by higher provision ($2.61M) despite stronger NIM and lower deposit costs **[1127371_0001628280-25-035202_cwbc6302025earningsrelease.htm:1]***.
  • Revenue: $33.06M vs consensus $35.83M — miss; sequentially down due to provision dynamics and lower non-interest income **[1127371_0001628280-25-035202_cwbc6302025earningsrelease.htm:14]***.
  • Prior quarter context: Q1 2025 EPS $0.44 vs $0.46 consensus; Revenue $34.83M vs $34.74M consensus (roughly in line to slight beat) *.
  • Implication: Street may modestly trim near-term EPS and “revenue” (post-provision) assumptions to reflect a more conservative credit outlook, while maintaining improving NIM trajectory **[1127371_0001628280-25-035202_cwbc6302025earningsrelease.htm:1]***.

Notes:

  • Consensus estimates marked with an asterisk; Values retrieved from S&P Global.

Key Takeaways for Investors

  • Core spread strength: NIM trending up to 4.10% and deposit costs edging down support underlying margin resilience even as credit provisioning normalizes .
  • Credit caution warranted: Provision rose materially on loan growth and macro assumptions; substandard loans increased — monitor credit migration and ACL coverage (1.20% of loans) .
  • Balance sheet growth with stable funding: Loans +2.2% q/q; deposits +2.3% q/q; NIBD mix ~34.5% underpins funding stability .
  • Capital return signals: Dividend maintained ($0.12) and new 3% buyback provide flexibility for EPS accretion amid integration synergies .
  • Efficiency improving: 62.51% ratio indicates realized cost discipline and merger synergy capture, a lever for medium-term ROE improvement .
  • Valuation sensitivity: Near-term estimate resets likely after an EPS/revenue miss; watch Street revisions and management’s credit commentary trajectory *.
  • Macro watchlist: Inflation/policy/trade tensions cited by management — keep an eye on regional CRE and consumer portfolios for early stress indicators .

Values retrieved from S&P Global for consensus/actual “Revenue” and EPS marked with an asterisk.