Goleta-based Community West Bancshares, parent company of Community West Bank, today announced that it has reached a settlement with Residential Funding Company.
The June 8 settlement resolves the litigation between the two financial firms concerning residential mortgage loans sold to RFC.
Under the settlement, Community West Bank has agreed to pay RFC $7.5 million, which will fully resolve the case against the company, according to a press release from the bank.
“After extensive consideration of the relevant issues, including the costs involved, we believe that this settlement resolves the uncertainties inherent in complex litigation, eliminates any additional exposure and puts this issue behind us,” Robert Bartlein, Community West Bank chairman, said in the release.
With some insurance recovery, the bank expects the settlement to reduce second quarter net income by about $4.2 million and to reduce earnings per share and book value per share by $0.51.
“We believe that this settlement is in the best interest of shareholders and allows us to move forward and focus our efforts on the future,” Community West Bank President and CEO Martin Plourd said in the release. “We are making solid progress in building our franchise and we believe that we are well positioned in our market place to continue to grow.”
According to the bank, the case was just one of many filed by RFC against various banks still pending in courts in New York and Minnesota.