Regulators scrutinize Community West
Community West Bancshares faces a new order from regulators that limits its ability to pay out dividends, sell stock or incur new debts without the prior approval of the federal banking overseers.
The parent of Community West Bank also agreed with the Federal Reserve Bank of San Francisco on April 23 that the Goleta firm must develop a plan for raising its capital levels and maintaining cash flow.
The newest order comes less than three months after Community West came under a similar agreement with the Office of the Comptroller of the Currency. Under that order, the bank agreed to a three-year plan to keep a tier-one leverage ratio of at least 9 percent of assets and a total risk-based ratio of at least 12 percent. As of the end of 2011, those ratios stood at 8.26 percent and 11.8 percent, respectively.
The mid-sized community bank, with assets of about $633 million, reported a 2011 loss of $10.5 million, a trend that runs counter to the generally higher levels of profitability at other community banks in the Tri-Counties. It has not yet reported first-quarter results.
In an April 24 filing with the U.S. Securities and Exchange Commission, Community West said that “without admitting or denying any of the alleged charges of unsafe or unsound banking practices and any violations of law,” it is “taking corrective actions” to remedy the alleged transgressions.
In its agreement with the Federal Reserve Bank of San Francisco, the lender agrees to submit quarterly progress reports to the regulator.
Community West’s shares dropped 3.6 percent to $2.40 in morning trading after the Fed agreement was disclosed.