SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): September 7, 2001
Community West Bancshares
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(Exact Name of Registrant as Specified in its Charter)
California 000-23575 77-0446957
---------------------------- ------------------- -----------------------
(State or Other Jurisdiction (Commission File (IRS Employer
of Incorporation) Number) Identification Number)
445 Pine Avenue, Goleta, California, 93117
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(Address of Principal Executive Offices) (Zip Code)
(805) 692-1862
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(Registrant's Telephone Number, Including Area Code)
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
Exhibit Index at Page: 2
Total No. of Pages: 7
ITEM 2. DISPOSITION OF ASSETS
Community West Bancshares (the "Registrant") filed a Current Report on Form
8-K dated August 24, 2001 to report the sale of its subsidiary, Palomar
Community Bank to Centennial First Financial Services (OTCBB:CFFX). This
Current Report on Form 8-K is being submitted to provide and exhibit pro forma
financial statements for informational purposes and to comply with SEC
guidelines.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Not applicable
(b) Pro Forma Financial Information
Introduction to Unaudited Pro Forma Consolidated Financial Statements
Unaudited Pro Form Consolidated Balance Sheet as of June 30, 2001
Notes to Unaudited Pro Forma Consolidated Balance Sheet
Unaudited Pro Forma Consolidated Statement of Operations for the year ended
December 31, 2000
Unaudited Pro Forma Consolidated Statement of Operations for the six months
ended June 30, 2001
Notes to Unaudited Pro Forma Consolidated Statement of Operations
(c) Not applicable
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SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: September 7, 2001 COMMUNITY WEST BANCSHARES
By: /s/ Lynda Pullon Radke
-------------------------
Lynda Pullon Radke
Senior Vice President and
Chief Financial Officer
INTRODUCTION TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS REFLECTING
THE DISPOSITION OF ASSETS
The following unaudited pro forma consolidated balance sheet was prepared
from the unaudited consolidated balance sheet of Community West Bancshares for
the six months ended June 30, 2001.
The following unaudited pro forma consolidated statements of operations
were prepared from the audited consolidated statement of operations of Community
West Bancshares for the year ended December 31, 2000 and from the unaudited
consolidated statement of operations of Community West Bancshares for the six
months ended June 30, 2001.
The asset disposition of Palomar Community Bank is assumed to have occurred
on June 30, 2001 for the unaudited pro forma consolidated balance sheet and
statement of operations and for the statement of operations year ended December
31, 2000. To conform with SEC guidance with regards to pro forma presentation,
the pro forma statements of operations for the year ended December 31, 2000 and
June 30, 2001 do not reflect asset impairments, gain or losses associated with
the disposition of Palomar Community Bank. The impairment charge reflected in
the audited December 31, 2000 statement of operations has been eliminated to
arrive at the unaudited pro forma consolidated statement of operations for the
year ended December 31, 2000.
The unaudited pro forma consolidated financial statements are for
informational purposes and do not provide guarantees of future performance. The
following unaudited consolidated pro forma financial statements should be read
in conjunction with the accompanying notes. The pro forma financial statements
are based on Community West Bancshares Annual Report on Form 10-K for the year
ended December 31, 2000, and Quarterly Report on Form 10Q for the six months
ended June 30, 2001.
3
The following is a preliminary calculation of the estimated impact to the
statement of operations resulting in the disposition of Palomar Community Bank:
Community West
Bancshares
Cash Proceeds $ 10,500,000.00
Less: Net book value of equity disposed of $ (7,320,691.00)
Less: Net other comprehensive income $ (14,461.00)
Less: Estimated goodwill, net of accumulated amortization $ (3,341,746.00)
----------------
Estimated gain before income taxes $ (176,898.00)
----------------
Less: Estimated income taxes $ (1,000,000.00)
----------------
Estimated loss $ (1,176,898.00)
----------------
4
COMMUNITY WEST BANCSHARES
UNAUDITED PRO FORMA
CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 2001
Community West Bancshares Pro Forma Adjustments
Consolidated
--------------------------- ------------------------
ASSETS
Cash and due from banks $ 7,940,790 $ 10,500,000 (a)
(1,941,472) (b)
Federal funds sold 21,347,553 (11,867,553) (b)
--------------------------- ------------------------
Cash and cash equivalents 29,288,343 (3,309,025)
Time deposits in other financial institutions 3,555,000 (2,769,000) (b)
Federal Reserve Bank and Federal Home Loan Bank stock, at cost 1,084,173 (309,100) (b)
Investment securities held-to-maturity 400,260
Investment securities available-for-sale 3,239,699 (3,239,699) (b)
Interest only strips, at fair value 9,292,441
Loans:
Held for sale, at lower of cost or fair market value 43,701,233
Securitized loans, net of allowance for loan losses 165,409,777
Held for investment, net of allowance for loan losses 132,248,871 (54,683,641) (b)
Servicing assets 2,676,015
Other real estate owned, net 237,852
Premises and equipment, net 3,648,143 (244,822) (b)
Intangible assets, net 3,341,746 (3,341,746) (c)
Accrued interest receiveable and other assets 9,871,702 (962,397) (b)
--------------------------- ------------------------
TOTAL ASSETS $ 407,594,995 $ (68,859,430)
=========================== ========================
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits:
Noninterest-bearing demand $ 40,921,236 $ (9,988,348) (b)
Interest-bearing demand 35,701,052 (16,702,406) (b)
Savings 16,916,494 (5,537,989) (b)
Time certificates of $100,000 or more 79,183,888 (8,587,699) (b)
Other time certificates 74,519,667 (26,595,369) (b)
--------------------------- ------------------------
TOTAL DEPOSITS 247,242,337 (67,411,811)
Bonds payable in connections with securitized loans,
net of issuance costs 111,158,454
Other borrowings 5,500,000
Accrued interest payable and other liabilities 4,040,919 (1,270,721) (b)
--------------------------- ------------------------
TOTAL LIABILITIES 367,941,710 (68,682,532)
--------------------------- ------------------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock 31,443,599 (12,485,348) (b)
Retained earnings 8,595,485 1,822,911 (b)
10,500,000 (a)
Accumulated other comprehensive gain (loss) 14,461 (14,461) (b)
--------------------------- ------------------------
TOTAL STOCKHOLDERS' EQUITY 40,053,545 (176,898)
--------------------------- ------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 407,995,255 $ (68,859,430)
=========================== ========================
Community West Bancshares
Pro Forma Consolidated
---------------------------
ASSETS
Cash and due from banks $16,499,318
Federal funds sold 9,480,000
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Cash and cash equivalents 25,979,318
Time deposits in other financial institutions 786,000
Federal Reserve Bank and Federal Home Loan Bank stock, at cost 775,073
Investment securities held-to-maturity 400,260
Investment securities available-for-sale -
Interest only strips, at fair value 9,292,441
Loans:
Held for sale, at lower of cost or fair market value 43,701,233
Securitized loans, net of allowance for loan losses 165,409,777
Held for investment, net of allowance for loan losses 77,565,230
Servicing assets 2,676,015
Other real estate owned, net 237,852
Premises and equipment, net 3,403,321
Intangible assets, net -
Accrued interest receiveable and other assets 8,909,305
---------------------------
TOTAL ASSETS $ 338,735,565
===========================
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits:
Noninterest-bearing demand $ 30,932,888
Interest-bearing demand 18,998,646
Savings 11,378,505
Time certificates of $100,000 or more 70,596,189
Other time certificates 47,924,298
---------------------------
TOTAL DEPOSITS 179,830,526
Bonds payable in connections with securitized loans,
net of issuance costs 111,158,454
Other borrowings 5,500,000
Accrued interest payable and other liabilities 2,770,198
---------------------------
TOTAL LIABILITIES 299,259,178
---------------------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock 18,958,251
Retained earnings
20,918,396
Accumulated other comprehensive gain (loss) -
---------------------------
TOTAL STOCKHOLDERS' EQUITY 39,876,647
---------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 339,135,825
===========================
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
December 2000, the Registrant entered into a definitive agreement to sell its
subsidiary, Palomar Community Bank for $10.5 in cash.
The transaction closed in August of 2001. Pursuant to pro forma presentation
guidelines, the unaudited pro forma consolidated balance sheet as of June 30,
2001 is presented as if the transaction had occurred on June 30, 2001.
The following adjustments have been made to the unaudited pro forma consolidated
balance sheet:
(a) To record the sale proceeds of
$10,500,000 for the sale of Palomar
Community Bank
(b) Elimination of Palomar Community Bank
assets/liabilities and equity
(c) To record the write-off of goodwill
associated with Palomar Community Bank,
net of accumulated amortization
5
COMMUNITY WEST BANCSHARES
PRO FORMA CONSOLIDATED
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2000
Community West Less: Palomar Pro Forma Community West
Bancshares Community Bank (a) Adjustments Bancshares
Consolidated Pro Forma
--------------- ------------------- ------------- ----------------
INTEREST INCOME:
Loans, including fees $ 49,765,279 $ (5,050,612) $ 44,714,667
Federal funds sold 1,405,179 (320,401) 1,084,778
Investment securities 497,495 (388,724) 108,771
Time deposits in other financial institutions 113,236 (113,236) -
--------------- ------------------- ------------- ----------------
Total interest income 51,781,189 (5,872,973) - 45,908,216
--------------- ------------------- ------------- ----------------
INTEREST EXPENSE:
Deposits 11,334,050 (2,530,653) 8,803,397
Bonds payable and other borrowings 14,726,064 - 14,726,064
--------------- ------------------- ------------- ----------------
Total interest expense 26,060,114 (2,530,653) - 23,529,461
--------------- ------------------- ------------- ----------------
NET INTEREST INCOME 25,721,075 (3,342,320) - 22,378,755
--------------- ------------------- ------------- ----------------
PROVISION FOR LOAN LOSSES 6,793,812 (210,232) 6,583,580
--------------- ------------------- ------------- ----------------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 18,927,263 (3,132,088) - 15,795,175
--------------- ------------------- ------------- ----------------
OTHER INCOME:
Gains from loan sales, net 7,491,243 (45,333) - 7,445,910
Income from sale of interest in subsidiary 2,080,000 - 2,080,000
Loan servicing fees 2,790,151 (87,574) 2,702,577
Other loan fees - sold or brokered loans 1,825,703 (77,913) 1,747,790
Document processing fees 1,116,556 - 1,116,556
Service charges 559,142 (80,495) 478,647
Gain from sale of servicing asset 186,531 (186,531) -
Other income 234,052 (59,683) 174,369
--------------- ------------------- ------------- ----------------
Total other income 16,283,378 (537,529) - 15,745,849
--------------- ------------------- ------------- ----------------
OTHER EXPENSES:
Salaries and employee benefits 15,241,058 (1,366,784) 13,874,274
Occupancy expenses 2,401,450 (299,406) 2,102,044
Depreciation expenses 1,517,218 (121,208) 1,396,010
Other operating expenses 3,288,969 (241,654) 3,047,315
Loan servicing and collection expense 2,325,770 - 2,325,770
Professional services 949,416 (127,193) 822,223
Advertising expense 705,566 (93,085) 612,481
Data processing/ATM processing 345,173 (211,361) 133,812
Postage & freight 294,994 (32,097) 262,897
Office supply expense 391,022 (48,456) 342,566
Amortization of intangible assets 404,099 (391,708) 12,391
Impairment of goodwill 2,110,303 (2,110,303) 2,110,303 b) 2,110,303
--------------- ------------------- ------------- ----------------
Total other expenses 29,975,038 (5,043,255) 2,110,303 27,042,086
--------------- ------------------- ------------- ----------------
INCOME BEFORE PROVISION (BENEFIT FROM) 5,235,603 1,373,638 $ (2,110,303) $ 4,498,938
--------------- ------------------- ============= ================
FOR INCOME TAXES
PROVISION (BENEFIT FROM) FOR INCOME TAXES $ 2,538,466 $ (450,800) $ - $ 2,087,666
=============== =================== ============= ================
NET INCOME $ 2,697,137 $ 1,824,438 $ (2,110,303) $ 2,411,272
=============== =================== ============= ================
EARNINGS PER SHARE - BASIC $ 0.44 $ 0.39
=============== ================
EARNINGS PER SHARES - DILUTED $ 0.43 $ 0.39
=============== ================
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COMMUNITY WEST BANCSHARES
PRO FORMA CONSOLIDATED
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2001
Community West Less: Palomar Pro Forma Community West
Bancshares Community Bank (a) Adjustments Bancshares
Consolidated Pro Forma Consolidated
---------------- ------------------- ------------ ------------------------
INTEREST INCOME:
Loans, including fees $ 20,621,184 $ (2,437,861) $ 18,183,323
Federal funds sold 730,544 (356,650) 373,894
Investment securities 211,569 (143,556) 68,013
Time deposits in other financial institutions 69,325 (53,578) 15,747
---------------- ------------------- ------------ ------------------------
Total interest income 21,632,622 (2,991,645) - 18,640,977
---------------- ------------------- ------------ ------------------------
INTEREST EXPENSE:
Deposits 5,460,884 (1,170,744) 4,290,140
Bonds payable and other borrowings 5,583,630 - 5,583,630
---------------- ------------------- ------------ ------------------------
Total interest expense 11,044,514 (1,170,744) - 9,873,770
---------------- ------------------- ------------ ------------------------
NET INTEREST INCOME 10,588,108 (1,820,901) - 8,767,207
---------------- ------------------- ------------ ------------------------
PROVISION FOR LOAN LOSSES 5,003,117 (115,214) 4,887,903
---------------- ------------------- ------------ ------------------------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 5,584,991 (1,705,687) - 3,879,304
---------------- ------------------- ------------ ------------------------
OTHER INCOME:
Gains from loan sales, net 3,417,806 (1,720) - 3,416,086
Loan servicing fees 1,950,128 (2,130) 1,947,998
Loan origination fees - sold or brokered items 1,573,360 (48,228) 1,525,132
Document processing fees 922,818 - 922,818
Service charges 330,841 (53,995) 276,846
Other income 657,367 (32,676) 624,691
Proceeds from legal settlement 7,000,000 - 7,000,000
---------------- ------------------- ------------ ------------------------
Total other income 15,852,320 (138,749) - 15,713,571
---------------- ------------------- ------------ ------------------------
OTHER EXPENSES:
Salaries and employee benefits 8,795,184 (710,779) 8,084,405
Occupancy expenses 1,832,747 (223,834) 1,608,913
Other operating expenses 1,303,522 (200,001) 1,103,521
Professional services 594,094 (36,828) 557,266
Loan servicing and collection expense 583,445 - 583,445
Advertising expense 311,456 (54,612) 256,844
Data processing/ATM processing 206,347 (104,021) 102,326
Postage & freight 181,284 (26,540) 154,744
Office supply expense 183,428 (27,060) 156,368
Amortization of intangible assets 142,384 (142,384) -
Professional expenses associated with
legal settlement 2,392,000 - 2,392,000
---------------- ------------------- ------------ ------------------------
Total other expenses 16,525,891 (1,526,059) - 14,999,832
---------------- ------------------- ------------ ------------------------
INCOME BEFORE PROVISION (BENEFIT FROM) $ 4,911,420 $ (318,377) $ - $ 4,593,043
================ =================== ============ ========================
FOR INCOME TAXES
PROVISION (BENEFIT FROM) FOR INCOME TAXES $ (146,685) $ (176,700) $ - $ (323,385)
================ =================== ============ ========================
NET INCOME $ 5,058,105 $ (141,677) $ - $ 4,916,428
================ =================== ============ ========================
EARNINGS PER SHARE - BASIC $ 0.83 $ 0.81
================ ========================
EARNINGS PER SHARES - DILUTED $ 0.83 $ 0.80
================ ========================
The unaudited pro forma consolidated statement of operations for the year ended
December 31, 2000, and the six months ended June 30, 2001 are presented
as if the disposition of Palomar Community Bank had taken place on January 1,
2000.
In accordance with SEC guidelines the impairment writedown accounted for year
ending 2000, has been eliminated from the December 31, 2000 statement of
operations. Any operational income subsequent to the period ending December 31,
2000 has been identified and reflected in these pro forma statements of
operations.
The following adjustments have been made to the unaudited pro forma consolidated
statement of operations:
(a) To eliminate Palomar Community Bank
income from operations
(b) Elimination of the impairment of
goodwill relating to Palomar Community
Bank
7