Community West Bancshares Earns $1.2 Million, or $0.14 Per Diluted Share, in 2Q20; Declares Quarterly Cash Dividend of $0.045 Per Common Share; Provides COVID-19 Response Update

About this update from Community West Bancshares

GOLETA, Calif. , July 24, 2020 (GLOBE NEWSWIRE) -- Community West Bancshares ( Community West or the Company), (NASDAQ: CWBC), parent company of Community West Bank (Bank), today reported net income of $1.2 million , or $0.14 per diluted share, for the second quarter of 2020 (2Q20), compared to $1.6 million , or $0.19 per diluted share, for the first quarter of 2020 (1Q20), and $1.6 million , or $0.18 per diluted share, for the second quarter of 2019 (2Q19). For the first six months of 2020, Community West reported net income of $2.8 million , or $0.32 per diluted share, compared to $3.1 million , or $0.36 per diluted share, for the first six months of 2019. COVID-19 Pandemic Update “Our second quarter earnings were affected by a number of items, including the impact of the Coronavirus pandemic on the economy, and the subsequent increase in our loan loss reserve,” stated Martin E. Plourd , President and Chief Executive Officer. “Highlighting the quarter was net interest income growth and increased core deposits. Additionally, we generated over 500 Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) loans to our customers for $75.1 million during the quarter which had a meaningful impact on loan and related deposit growth. Gross PPP loan fees are estimated to be $2.8 million based on current loan forgiveness expectations. The PPP income will be recorded as loans are repaid.” “The effect of the pandemic on our employees, customers and communities remains our primary concern and we believe the full economic impact has yet to be realized” Plourd continued. “Since the start of the pandemic, we have maintained all branch activity, taking conservative measures to keep our employees, customers, and communities safe. Currently, approximately 40% of our employees are working remotely while keeping our high level of customer service. We are intently focused on assessing the risks in our loan portfolio and working with our customers to minimize losses. We have implemented a loan modification program, in line with regulatory guidance, allowing impacted customers to defer loan payments.” As of June 30, 2020 , requests to defer loan payments totaled approximately $156 million or 18% of the Bank’s total loan portfolio. The industries most heavily impacted include retail, healthcare, hospitality, schools and energy. The Company’s management team has evaluated the loans related to the affected industries and at June 30, 2020 , the Bank’s loans to these industries were $187.3 million which is 21.9% of our $856.0 million loan portfolio. Importantly, of the selected industry loans, $1.7 million or 0.9% are on non-accrual. Also, of the selected industries loans the classified loans are $12.1 Million or 6.5%. Lastly, the Bank has accommodated $81.8 million of these loans with payment deferrals or 43.7% of the selected industries. Additional detail by industry is included in the table below. Sectors Under Focus (Excluding PPP Loans) As of 6/30/20 (in thousands) Ventura /Los Angeles Counties Santa Barbara County San Luis Obispo County Other Loans Outstanding (includes $11 million of guarantees) $ Non-accrual % Non-accrual $ Classified % Classified $ Deferrals % Deferral Healthcare $ 9,135 $ 9,695 $ 27,205 $ 2,431 $ 48,466 $ 1,657 3.42 % $ 2,025 4.18 % $ 14,232 29.36 % Senior/Assted Living Facilities $ 1,695 $ 612 $ 20,779 $ - $ 23,086 $ - 0.00 % $ - 0.00 % $ - 0.00 % Medical Offices $ 5,332 $ 6,609 $ 5,806 $ 1,240 $ 18,987 $ - 0.00 % $ 290 1.53 % $ 10,026 52.80 % General Healthcare $ 2,108 $ 2,474 $ 620 $ 1,191 $ 6,393 $ 1,657 25.92 % $ 1,735 27.14 % $ 4,206 65.79 % Hospitality $ 9,011 $ 16,446 $ 27,941 $ 2,209 $ 55,607 $ 3 0.01 % $ 1,673 3.01 % $ 40,197 72.29 % Lodging $ 3,093 $ 12,497 $ 23,965 $ 1,593 $ 41,148 $ - 0.00 % $ - 0.00 % $ 33,229 80.75 % Restaurants $ 5,918 $ 615 $ 3,976 $ 616 $ 11,125 $ 3 0.03 % $ 1,673 15.04 % $ 6,968 62.63 % RV-Mobile Home Parks $ - $ 3,334 $ - $ - $ 3,334 $ - 0.00 % $ - 0.00 % $ - 0.00 % Retail Commercial Real Estate $ 23,590 $ 16,991 $ 9,980 $ 8,275 $ 58,836 $ 25 0.04 % $ 8,415 14.30 % $ 24,405 41.48 % Retail Services $ 5,242 $ 5,948 $ 6,072 $ 5,724 $ 22,986 $ - 0.00 % $ 19 0.08 % $ 2,844 12.37 % Schools $ - $ 50 $ 1,088 $ 107 $ 1,245 $ - 0.00 % $ - 0.00 % $ - 0.00 % Energy $ 149 $ - $ - $ - $ 149 $ - 0.00 % $ - 0.00 % $ 149 100.00 % Second Quarter 2020 Financial Highlights: Net income was $1.2 million , or $0.14 per diluted share, in 2Q20, compared to $1.6 million , or $0.19 per diluted share in 1Q20, and $1.6 million , or $0.18 per diluted share in 2Q19. Net interest income was $8.8 million for the quarter, compared to $8.5 million for 1Q20, and $8.5 million for 2Q19. Provision for loan losses was $762,000 for the quarter, compared to $392,000 for 1Q20, and $177,000 for 2Q19. The resulting allowance was 1.34% of total loans held for investment at June 30, 2020 (excluding the $75.1 million of PPP loans which are 100% guaranteed by the SBA). Net interest margin was 3.72% for 2Q20, compared to 3.97% for 1Q20, and 4.07% for 2Q19. Total demand deposits increased $96.0 million to $504.0 million at June 30, 2020 , compared to $408.0 million at March 31, 2020 , and increased $47.7 million compared to $456.3 million at June 30, 2019 . Total demand deposits represented 67.2% of total deposits at June 30, 2020 . Non-interest-bearing demand deposits increased $71.5 million to $192.8 million at June 30, 2020 , compared to $121.3 million at March 31, 2020 and increased $80.3 million compared to $112.5 million at June 30, 2019 . Total loans increased $74.0 million during the quarter to $856.0 million at June 30, 2020 , compared to $782.0 million at March 31, 2020 , and increased $67.1 million from $788.9 million at June 30, 2019 . Book value per common share increased to $9.93 at June 30, 2020 , compared to $9.82 at March 31, 2020 , and $9.19 at June 30, 2019 . Total risked-based capital improved to 11.63% for the Bank at June 30, 2020 , compared to 11.60% at March 31, 2020 and 10.67% at June 30, 2019 . Net non-accrual loans of $2.6 million at June 30, 2020 and at March 31, 2020 , compared to $3.0 million at June 30, 2019 . Other assets acquired through foreclosure, net was $2.7 million at June 30, 2020 and at March 31, 2020 , compared to $1.1 million at June 30, 2019 . Income Statement Net interest income was $8.8 million in 2Q20 compared to $8.5 million in 1Q20 and $8.5 million in 2Q19, primarily due to decreased deposit costs. In the first six months of 2020, net interest income increased 3.1% to $17.2 million , compared to $16.7 million in the first six months of 2019. Non-interest income was $640,000 in 2Q20, compared to $950,000 in 1Q20, and $692,000 in 2Q19. Other loan fees were $283,000 for 2Q20 a 17% decline compared to $341,000 for 1Q20, and a 5.2% increase compared to 2Q19. Gain on sale of loans was $97,000 in 2Q20 compared to $190,000 in the preceding quarter. There were no gains on sales of loans in 2Q19. Non-interest income increased 22.7% to $1.6 million in the first six months of 2020 compared to $1.3 million in the first six months of 2019. Second quarter net interest margin was 3.72%, compared to 3.97% in 1Q20, and 4.07% in 2Q19. “The 150-basis point reduction in interest rates in March 2020 and the resulting effect on yields on earning assets contributed to the net interest margin decline during the quarter,” said Susan C. Thompson , Executive Vice President and Chief Financial Officer. In the first six months of 2020, the net interest margin was 3.84%, compared to 4.03% in the prior year period. “While our asset quality at quarter end remained solid, we are being proactive in our approach to the COVID-19 pandemic and its impact on the local economy. Consequently, we booked a $762,000 loan loss provision during the second quarter, which is higher than the provisions booked over the past few years,” said Thompson. The provision for loan losses was $392,000 for 1Q20, and $177,000 for 2Q19. The increase in the current quarter was primarily the result of management’s qualitative adjustment to reflect the estimated losses due to the current economic uncertainties and some growth in the loan portfolio. Non-interest expense totaled $7.0 million in 2Q20, compared to $6.7 million in the preceding quarter and $6.8 million in 2Q19. 2Q20 included some additional pandemic related expenses. In the first six months of 2020, non-interest expense was $13.7 million , compared to $13.5 million in the first six months of 2019. Balance Sheet Total assets increased $135.6 million , or 14.7%, to $1.06 billion at June 30, 2020 , compared to $925.2 million at March 31, 2020 and increased $155.3 million , or 17.1%, compared to $905.6 million at June 30, 2019 . Total loans increased $74.0 million , or 9.5%, to $856.0 million at June 30, 2020 , compared to $782.0 million at March 31, 2020 , and increased $67.1 million , or 8.5% compared to $788.9 million at June 30, 2019 . Commercial real estate loans outstanding (which include SBA 504, construction and land) were up modestly from year ago levels to $392.8 million at June 30, 2020 and comprise 45.9% of the total loan portfolio. Manufactured housing loans were up 5.6% from year ago levels to $267.3 million and represent 31.2% of total loans. SBA PPP loans originated during the second quarter were $75.1 million at June 30, 2020 and represent 8.8% of total loans. Commercial loans (which include agriculture loans) were down 12.4% from year ago levels to $95.1 million and represent 11.1% of the total loan portfolio. The majority of this decrease was in the commercial agriculture portfolio as the Company has switched its production focus from on-balance sheet Federal Service Agency loans with guarantees to off-balance sheet Farmer Mac loans for which we receive servicing income for the life of the loan. Total deposits were $750.2 million at June 30, 2020 , compared to $711.6 million at March 31, 2020 , and $765.1 million at June 30, 2019 . Non-interest-bearing demand deposits increased $71.5 million , or 59.0%, during the quarter to $192.8 million at June 30, 2020 , compared to $121.3 million at March 31, 2020 , and increased $80.3 million , or 71.4%, compared to $112.5 million at June 30, 2019 . Interest-bearing demand deposits increased $24.5 million to $311.3 million at June 30, 2020 , compared to $286.7 million at March 31, 2020 , and decreased $32.6 million compared to $343.8 million at June 30, 2019 . Certificates of deposit, which include brokered deposits, decreased $59.3 million during the quarter to $228.2 million at June 30, 2020 , compared to $287.6 million at March 31, 2020 and decreased $64.3 million compared to $292.5 million at June 30, 2019 . The reduction in deposits was due to divesting of some high-priced municipal funding to lower cost non-deposit funding sources. Stockholders’ equity increased to $84.1 million at June 30, 2020 , compared to $83.2 million at March 31, 2020 , and $77.8 million at June 30, 2019 . Book value per common share increased to $9.93 at June 30, 2020 , compared to $9.82 at March 31, 2020 , and $9.19 at June 30, 2019 . In an effort to be conservative, the Company drew down $10 million on its line of credit in 1Q20, which can be down streamed to the Bank as additional capital if needed in the future. Credit Quality Management is closely monitoring credit metrics and performing stress testing on the Bank’s loan portfolio. In addition, resources have been reallocated to credit administration to closely analyze higher risk segments within the portfolio, monitoring and tracking loan payment deferrals and customer liquidity, and provide timely reporting to management and the Board of Directors. The management team continues to analyze economic conditions in its markets. Based on the Company’s resources, capital levels, current economic climate, and underwriting policies, management expects to be able to manage the economic risks and uncertainties associated with the COVID-19 pandemic and remain adequately capitalized. The Company recorded a provision for loan losses of $762,000 in 2Q20. This compares to a provision for loan losses of $392,000 in 1Q20, and $177,000 in 2Q19. The allowance for loan losses, including the reserve for undisbursed loans, was $10.1 million , or 1.22% of total loans held for investment, at June 30, 2020 . The allowance for loan losses was 1.34% of total loans held for investment at June 30, 2020 when excluding the $75.1 million of PPP loans, which are 100% guaranteed by the SBA. Net non-accrual loans plus net other assets acquired through foreclosure were $5.3 million at June 30, 2020 , which was unchanged from March 31, 2020 . Net non-accrual loans plus net other assets acquired through foreclosure were $4.1 million at June 30, 2019 . Net non-accrual loans totaled $2.6 million at June 30, 2020 , which was unchanged from March 31, 2020 . Net non-accrual loans were $3.0 million a year ago. Of the $2.6 million of net non-accrual loans at June 30, 2020 , $1.5 million were commercial loans, $0.9 million were manufactured housing loans, $0.1 million were SBA loans, and $0.1 million were commercial real estate loans. There was $2.7 million in other assets acquired through foreclosure as of June 30, 2020 and at March 31, 2020 . This compares to $1.1 million of other assets acquired through foreclosure at June 30, 2019 . The majority of this balance relates to one property of $2.5 million . Cash Dividend Declared The Company’s Board of Directors declared a cash dividend of $0.045 per common share, payable August 31, 2020 to common shareholders of record on August 14, 2020 . Stock Repurchase Program The Company did not repurchase shares during the second quarter of 2020, leaving $1.4 million available under the previously announced repurchase program. The Company has suspended its repurchase program until further notice. Company Overview Community West Bancshares is a financial services company with headquarters in Goleta, California . The Company is the holding company for Community West Bank , the largest publicly traded community bank serving California’s Central Coast area of Ventura , Santa Barbara and San Luis Obispo counties. Community West Bank has seven full-service California branch banking offices in Goleta , Santa Barbara , Santa Maria , Ventura , San Luis Obispo , Oxnard and Paso Robles . The principal business activities of the Company are Relationship Banking, Manufactured Housing lending and Government Guaranteed lending. Industry Accolades In April 2020 , Community West was awarded a “Premier” rating by The Findley Reports. For 51 years, The Findley Reports has been recognizing the financial performance of banking institutions in California and the Western United States. In making their selections, The Findley Reports focuses on these four ratios: growth, return on beginning equity, net operating income as a percentage of average assets, and loan losses as a percentage of gross loans. We are also rated 5 star Superior by Bauer Financial. Safe Harbor Disclosure This release contains forward-looking statements that reflect management's current views of future events and operations. These forward-looking statements are based on information currently available to the Company as of the date of this release. It is important to note that these forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including, but not limited to, the ability of the Company to implement its strategy and expand its lending operations. COMMUNITY WEST BANCSHARES CONDENSED CONSOLIDATED INCOME STATEMENTS (unaudited) (in 000's, except per share data) Three Months Ended Six Months Ended June 30 , March 31 , June 30 , June 30 , June 30 , 2020 2020 2019 2020 2019 Interest income Loans, including fees $ 10,585 $ 10,664 $ 10,907 $ 21,249 $ 21,448 Investment securities and other 192 311 460 503 944 Total interest income 10,777 10,975 11,367 21,752 22,392 Deposits 1,500 2,122 2,583 3,622 5,027 Other borrowings 496 390 286 886 644 Total interest expense 1,996 2,512 2,869 4,508 5,671 Net interest income 8,781 8,463 8,498 17,244 16,721 Provision (credit) for loan losses 762 392 177 1,154 120 Net interest income after provision for loan losses 8,019 8,071 8,321 16,090 16,601 Non-interest income Other loan fees 283 341 269 624 476 Gains from loan sales, net 97 190 - 287 - Document processing fees 108 124 124 232 211 Service charges 62 134 139 196 278 Other 90 161 160 251 331 Total non-interest income 640 950 692 1,590 1,296 Non-interest expenses Salaries and employee benefits 4,574 4,398 4,318 8,972 8,699 Occupancy, net 776 758 768 1,534 1,550 Professional services 559 383 405 942 786 Data processing 260 283 201 543 425 Depreciation 206 208 218 414 431 FDIC assessment 133 144 154 277 324 Advertising and marketing 265 153 230 418 359 Stock-based compensation 95 85 97 180 192 Other 135 317 369 452 711 Total non-interest expenses 7,003 6,729 6,760 13,732 13,477 Income before provision for income taxes 1,656 2,292 2,253 3,948 4,420 Provision for income taxes 496 694 673 1,190 1,330 Net income $ 1,160 $ 1,598 $ 1,580 $ 2,758 $ 3,090 Earnings per share: Basic $ 0.14 $ 0.19 $ 0.19 $ 0.33 $ 0.37 Diluted $ 0.14 $ 0.19 $ 0.18 $ 0.32 $ 0.36 COMMUNITY WEST BANCSHARES CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (in 000's, except per share data) June 30 , March 31 , December 31 , June 30 , 2020 2020 2019 2019 Cash and cash equivalents $ 4,679 $ 3,002 $ 2,539 $ 2,038 Interest-earning deposits in other financial institutions 142,823 86,663 80,122 55,143 Investment securities 24,221 23,909 25,563 30,414 Loans: Commercial 95,114 98,365 101,485 108,599 Commercial real estate 392,789 391,207 385,642 391,293 SBA 13,013 13,330 14,777 17,560 Paycheck Protection Program (PPP) 75,149 - - - Manufactured housing 267,343 263,484 257,247 253,250 Single family real estate 11,078 11,191 11,668 11,351 HELOC 3,918 4,196 4,531 6,696 Other (1) (2,375 ) 223 213 159 Total loans 856,029 781,996 775,563 788,908 Loans, net Held for sale 35,090 39,458 42,046 45,447 Held for investment 820,939 742,538 733,517 743,461 Less: Allowance for loan losses (10,008 ) (9,167 ) (8,717 ) (8,887 ) Net held for investment 810,931 733,371 724,800 734,574 NET LOANS 846,021 772,829 766,846 780,021 Other assets 43,103 38,805 38,800 37,951 TOTAL ASSETS $ 1,060,847 $ 925,208 $ 913,870 $ 905,567 Deposits Non-interest-bearing demand $ 192,806 $ 121,293 110,843 $ 112,463 Interest-bearing demand 311,266 286,736 314,278 343,841 Savings 17,862 16,016 15,689 16,264 Certificates of deposit ( $250,000 or more) 86,046 93,615 96,431 90,170 Other certificates of deposit 142,178 193,939 213,693 202,373 Total deposits 750,158 711,599 750,934 765,111 Other borrowings 210,103 115,000 65,000 46,000 Other liabilities 16,493 15,448 15,958 16,627 TOTAL LIABILITIES 976,754 842,047 831892 827,738 Stockholders' equity 84,093 83,161 81,978 77,829 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,060,847 $ 925,208 $ 913,870 $ 905,567 Common shares outstanding 8,472 8,472 8,472 8,465 Book value per common share $ 9.93 $ 9.82 $ 9.68 $ 9.19 (1) Includes consumer, other loans, securitized loans, and deferred fees ADDITIONAL FINANCIAL INFORMATION (Dollars in thousands except per share amounts)(Unaudited) Three Months Ended Three Months Ended Three Months Ended Six Months Ended Six Months Ended PERFORMANCE MEASURES AND RATIOS June 30, 2020 March 31, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Return on average common equity 5.57 % 7.76 % 8.18 % 6.66 % 8.09 % Return on average assets 0.48 % 0.73 % 0.73 % 0.59 % 0.72 % Efficiency ratio 74.33 % 71.49 % 73.56 % 72.91 % 74.80 % Net interest margin 3.72 % 3.97 % 4.07 % 3.84 % 4.03 % Three Months Ended Three Months Ended Three Months Ended Six Months Ended Six Months Ended AVERAGE BALANCES June 30, 2020 March 31, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Average assets $ 978,250 $ 886,418 $ 864,583 $ 932,334 $ 862,146 Average earning assets 949,149 858,064 838,104 903,661 836,533 Average total loans 839,625 787,537 777,828 813,581 773,067 Average deposits 745,644 718,205 726,366 731,925 721,685 Average common equity 83,757 82,815 77,432 83,286 77,059 EQUITY ANALYSIS June 30, 2020 March 31, 2020 June 30, 2019 Total common equity $ 84,093 $ 83,161 $ 77,829 Common stock outstanding 8,472 8,472 8,465 Book value per common share $ 9.93 $ 9.82 $ 9.19 ASSET QUALITY June 30, 2020 March 31, 2020 June 30, 2019 Nonaccrual loans, net $ 2,640 $ 2,644 $ 3,016 Nonaccrual loans, net/total loans 0.31 % 0.34 % 0.38 % Other assets acquired through foreclosure, net $ 2,707 $ 2,707 $ 1,074 Nonaccrual loans plus other assets acquired through foreclosure, net $ 5,347 $ 5,351 $ 4,090 Nonaccrual loans plus other assets acquired through foreclosure, net/total assets 0.50 % 0.58 % 0.45 % Net loan (recoveries)/charge-offs in the quarter $ (79 ) $ (58 ) $ (62 ) Net (recoveries)/charge-offs in the quarter/total loans (0.01 %) (0.01 %) (0.01 %) Allowance for loan losses $ 10,008 $ 9,167 $ 8,887 Plus: Reserve for undisbursed loan commitments 91 76 81 Total allowance for credit losses $ 10,099 $ 9,243 $ 8,968 Allowance for loan losses/total loans held for investment 1.22 % 1.23 % 1.20 % Allowance for loan losses/total loans held for investment excluding PPP loans 1.34 % 1.23 % 1.20 % Allowance for loan losses/nonaccrual loans, net 379.09 % 346.71 % 294.66 % Community West Bank * Community bank leverage ratio 8.94 % 9.21 % N/A Tier 1 leverage ratio 8.94 % 9.21 % 8.66 % Tier 1 capital ratio 10.38 % 10.42 % 9.53 % Total capital ratio 11.63 % 11.60 % 10.67 % INTEREST SPREAD ANALYSIS June 30, 2020 March 31, 2020 June 30, 2019 Yield on total loans 5.07 % 5.45 % 5.62 % Yield on investments 1.88 % 2.56 % 3.89 % Yield on interest earning deposits 0.29 % 1.22 % 1.89 % Yield on earning assets 4.57 % 5.14 % 5.44 % Cost of interest-bearing deposits 1.06 % 1.42 % 1.70 % Cost of total deposits 0.81 % 1.19 % 1.43 % Cost of borrowings 1.50 % 2.29 % 2.64 % Cost of interest-bearing liabilities 1.14 % 1.51 % 1.76 % * Capital ratios are preliminary until the Call Report is filed. Contact: Susan C. Thompson , EVP & CFO805.692.5821 www.communitywestbank.com Source: Community West Bancshares

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