Goleta-based Community West Bancshares, parent company of Community West Bank, reported a loss of $2.3 million in the second quarter of 2015 following a $7.2 million loan settlement. The company recorded a profit of $1.7 million in the same period last year.
“Community West’s second quarter results included solid loan and deposit growth and strong top-line results,” President and CEO Martin Plourd said in a news release. “We are making meaningful progress in building our franchise, and we believe that we are well positioned in our marketplace to continue to grow. Our results for the quarter again showed strong operating results (excluding the net loan litigation settlement), improving asset quality trends, including a substantial decrease in nonaccrual loans, and year-over-year loan and deposit growth. We continue to position the bank for future growth by strengthening our balance sheet, liquidity and capital base and exploring all growth opportunities.”
Total deposits for the quarter increased 6 percent to $500.6 million, compared to $472.3 million a year ago. Net loans increased 5.7 percent to $511.9 million, compared to $484.1 million a year earlier.
Foreclosure assets on the bank’s balance sheet totaled $267,000, a decrease of 56.2 percent compared to $610,000 a year earlier. Community West also redeemed $421,000 of its preferred stock during the second quarter, leaving a remaining balance of about $5.6 million.
The bank’s second quarter non-interest expenses were up significantly to about $12.4 million from around $5 million in the second quarter of last year.
The $7.2 million settlement resolved the litigation regarding residential mortgage loans sold to Residential Funding Company, the real estate investment firm. Excluding the settlement, Community West’s net income for the second quarter would have been $1.9 million.
The bank closed its real estate lending division on Aug. 14 to concentrate on commercial lending and manufactured-home mortgages, Plourd said. The company did not specify if any employees were impacted.
“With the increasing costs of regulatory compliance in residential real estate lending, along with lower anticipated volumes, increased competition and projected increasing interest rates, we decided to focus on our core strengths in commercial lending and manufactured-home mortgages,” he said in a statement.
Veteran community banker James W. Lokey was appointed on June 29 to the Community West board to strengthen the Goleta-based bank’s push into San Luis Obispo County.