CWBC 10-Q Quarter ended March 31, 2020

California		77-0446957
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

445 Pine Avenue, Goleta, California		93117
(Address of principal executive offices)		(Zip Code)

Large accelerated filer ☐		Accelerated filer ☐
Non-accelerated filer ☐ (Do not check if a smaller reporting company)		Smaller reporting company ☒
Emerging growth company ☐

Index			Page
Part I.  Financial Information
	Item 1 – Financial Statements
		Consolidated Balance Sheets as of March 31, 2020 (unaudited) and December 31, 2019	2
		Consolidated Income Statements for the three months ended March 31, 2020 and 2019 (unaudited)	3
		Consolidated Statements of Comprehensive Income for the three months ended March 31, 2020 and 2019 (unaudited)	4
		Consolidated Statement of Stockholders’ Equity for the three months ended March 31, 2020 and 2019 (unaudited)	5
		Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and 2019 (unaudited)	6
		Notes to Unaudited Consolidated Financial Statements	7
	The financial statements included in this Form 10-Q should be read in conjunction with Community West Bancshares’ Annual Report on Form 10-K for the fiscal year ended December 31, 2019.
	Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations		34
	Item 3 – Quantitative and Qualitative Disclosures About Market Risk		51
	Item 4 – Controls and Procedures		51
Part II. Other Information
	Item 1 – Legal Proceedings		52
	Item 1A – Risk Factors		52
	Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds		53
	Item 3 – Defaults Upon Senior Securities		53
	Item 4 – Mine Safety Disclosures		53
	Item 5 – Other Information		53
	Item 6 – Exhibits		54
Signatures			54

Item 1.

Financial Statements

		March 31, 2020				December 31, 2019
		(unaudited)
		(in thousands, except share amounts)
Assets:
Cash and due from banks		$	3,000			$	2,536
Federal funds sold			2				3
Interest-earning demand in other financial institutions			86,663				80,122
Cash and cash equivalents			89,665				82,661
Investment securities - available-for-sale, at fair value; amortized cost of $18,226 at March 31, 2020 and $19,382 at December 31, 2019			18,059				19,264
Investment securities - held-to-maturity, at amortized cost; fair value of $6,019 at March 31, 2020 and $6,302 at December 31, 2019			5,739				6,132
Investment securities - measured at fair value; amortized cost of $66 at March 31, 2020 and December 31, 2019.			111				167
Federal Home Loan Bank stock, at cost			2,970				2,714
Federal Reserve Bank stock, at cost			1,373				1,373
Loans:
Held for sale, at lower of cost or fair value			39,458				42,046
Held for investment, net of allowance for loan losses of $9,167 at March 31, 2020 and $8,717 at December 31, 2019			733,371				724,800
Total loans			772,829				766,846
Other assets acquired through foreclosure, net			2,707				2,524
Premises and equipment, net			7,501				7,655
Other assets			24,254				24,534
Total assets		$	925,208			$	913,870
Liabilities:
Deposits:
Non-interest-bearing demand		$	121,293			$	110,843
Interest-bearing demand			286,736				314,278
Savings			16,016				15,689
Certificates of deposit ($250,000 or more)			93,615				96,431
Other certificates of deposit			193,939				213,693
Total deposits			711,599				750,934
Other borrowings			115,000				65,000
Other liabilities			15,448				15,958
Total liabilities			842,047				831,892
Commitments and Contingencies (Note 12)
Stockholders’ equity:
Common stock — no par value, 60,000,000 shares authorized; 8,472,463 shares issued and outstanding at March 31, 2020 and 8,472,463 at December 31, 2019			42,671				42,586
Retained earnings			40,602				39,470
Accumulated other comprehensive (loss)			(112	)			(78	)
Total stockholders’ equity			83,161				81,978
Total liabilities and stockholders’ equity		$	925,208			$	913,870

		Three Months Ended March 31,
		2020				2019
Interest income:		(in thousands, except per share amounts)
Loans, including fees		$	10,664			$	10,541
Investment securities and other			311				484
Total interest income			10,975				11,025
Interest expense:
Deposits			2,122				2,444
Other borrowings			390				358
Total interest expense			2,512				2,802
Net interest income			8,463				8,223
(Credit) provision for loan losses			392				(57	)
Net interest income after provision for loan losses			8,071				8,280
Non-interest income:
Other loan fees			341				258
Gains from loan sales, net			190				—
Document processing fees			124				87
Service charges			134				139
Other			161				120
Total non-interest income			950				604
Non-interest expenses:
Salaries and employee benefits			4,398				4,381
Occupancy, net			758				782
Professional services			383				381
Data processing			283				224
Depreciation			208				213
FDIC assessment			144				170
Advertising and marketing			153				129
Stock based compensation			85				95
Other			317				342
Total non-interest expenses			6,729				6,717
Income before provision for income taxes			2,292				2,167
Provision for income taxes			694				657
Net income		$	1,598			$	1,510
Earnings per share:
Basic		$	0.19			$	0.18
Diluted		$	0.19			$	0.18
Weighted average number of common shares outstanding:
Basic			8,472				8,491
Diluted			8,579				8,604
Dividends declared per common share		$	0.055			$	0.050

		Three Months Ended March 31,
		2020				2019
		(in thousands)
Net income		$	1,598			$	1,510
Other comprehensive (loss) income, net:
Unrealized (loss) income on securities available-for-sale (AFS), net (tax effect of $14 and $(5) for each respective period presented)			(34	)			7
Net other comprehensive (loss) income			(34	)			7
Comprehensive income		$	1,564			$	1,517

Three Months Ended March 31, 2020		Common Stock								Accumulated Other Comprehensive				Retained				Total Stockholders’
		Shares				Amount				Income (Loss)				Earnings				Equity
		(in thousands)
Balance, December 31, 2019:			8,472			$	42,586			$	(78	)		$	39,470			$	81,978
Net income			—				—				—				1,598				1,598
Exercise of stock options			—				—				—				—				—
Stock based compensation			—				85				—				—				85
Common stock repurchase			—				—				—				—				—
Dividends on common stock			—				—				—				(466	)			(466	)
Other comprehensive (loss), net			—				—				(34	)			—				(34	)
Balance, March 31, 2020			8,472			$	42,671			$	(112	)		$	40,602			$	83,161

Three Months Ended March 31, 2019		Common Stock								Accumulated Other Comprehensive				Retained				Total Stockholders’
		Shares				Amount				Income (Loss)				Earnings				Equity
		(in thousands)
Balance, December 31, 2018:			8,533			$	42,964			$	(141	)		$	33,328			$	76,151
Net income			—				—				—				1,510				1,510
Exercise of stock options			6				43				—				—				43
Stock based compensation			—				95				—				—				95
Common stock repurchase			(89	)			(929	)			—				—				(929	)
Dividends on common stock			—				—				—				(424	)			(424	)
Other comprehensive income, net			—				—				7				—				7
Balance, March 31, 2019			8,450			$	42,173			$	(134	)		$	34,414			$	76,453

		Three Months Ended March 31,
		2020				2019
		(in thousands)
Cash flows from operating activities:
Net income		$	1,598			$	1,510
Adjustments to reconcile net income to cash provided by operating activities:
Provision (credit) for loan losses			392				(57	)
Depreciation			208				213
Stock based compensation			85				95
Deferred income taxes			226				212
Net accretion of discounts and premiums for investment securities			29				20
(Gains) Losses on:
Sale of loans, net			(190	)			—
Sale of assets, net			—				7
Loans originated for sale and principal collections, net			2,588				1,360
Changes in:
Investment securities held at fair value			56				(24	)
Other assets			(113	)			401
Other liabilities			(282	)			(22	)
Servicing assets, net			(124	)			8
Net cash provided by operating activities			4,473				3,723
Cash flows from investing activities:
Principal pay downs and maturities of available-for-sale securities			1,136				582
Principal pay downs and maturities of held-to-maturity securities			385				225
Loan originations and principal collections, net			(8,879	)			(3,169	)
Purchase of restricted stock, net			(256	)			—
Purchase of premises and equipment, net			(54	)			(33	)
Net cash used in investing activities			(7,668	)			(2,395	)
Cash flows from financing activities:
Net (decrease) increase in deposits			(39,335	)			18,723
Net increase (decrease) in borrowings			50,000				(22,250	)
Exercise of stock options			—				43
Cash dividends paid on common stock			(466	)			(424	)
Common stock repurchase			—				(929	)
Net cash provided (used) by financing activities			10,199				(4,837	)
Net increase cash and cash equivalents			7,004				(3,509	)
Cash and cash equivalents at beginning of period			82,661				56,915
Cash and cash equivalents at end of period		$	89,665			$	53,406
Supplemental disclosure:
Cash paid during the period for:
Interest		$	2,134			$	2,521
Non-cash investing and financing activity:
Transfers to other assets acquired through foreclosure, net			106				—
Operating lease right-of-use asset			—				8,350
Operating lease liability			—				8,350

1.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

•

Commercial Real Estate, Commercial, Commercial Agriculture, SBA, HELOC, Single Family Residential, and Consumer – Migration analysis combined with risk rating is used to determine the required ALL for all non-impaired loans.  In addition, the migration results are adjusted based upon qualitative factors that affect the specific portfolio category.  Reserves on impaired loans are determined based upon the individual characteristics of the loan.

•

Manufactured Housing – The ALL is calculated on the basis of loss history and risk rating, which is primarily a function of delinquency.  In addition, the loss results are adjusted based upon qualitative factors that affect this specific portfolio.

•

The expected future cash flows are estimated and then discounted at the effective interest rate.

•

The value of the underlying collateral net of selling costs.  Selling costs are estimated based on industry standards, the Company’s actual experience or actual costs incurred as appropriate.  When evaluating real estate collateral, the Company typically uses appraisals or valuations, no more than twelve months old at time of evaluation.  When evaluating non-real estate collateral securing the loan, the Company will use audited financial statements or appraisals no more than twelve months old at time of evaluation.  Additionally, for both real estate and non-real estate collateral, the Company may use other sources to determine value as deemed appropriate.

•

The loan’s observable market price.

•

Concentrations of credit

•

Trends in volume, maturity, and composition of loans

•

Volume and trend in delinquency, nonaccrual, and classified assets

•

Economic conditions

•

Geographic distance

•

Policy and procedures or underwriting standards

•

Staff experience and ability

•

Value of underlying collateral

•

Competition, legal, or regulatory environment

•

Results of outside exams and quality of loan review and Board oversight

2.	INVESTMENT SECURITIES

		March 31, 2020
		Amortized Cost				Gross Unrealized Gains				Gross Unrealized (Losses)				Fair Value
Securities available-for-sale		(in thousands)
U.S. government agency notes		$	7,513			$	—			$	(51	)		$	7,462
U.S. government agency collateralized mortgage obligations (“CMO”)			10,713				27				(143	)			10,597
Total		$	18,226			$	27			$	(194	)		$	18,059
Securities held-to-maturity
U.S. government agency mortgage backed securities (“MBS”)		$	5,739			$	280			$	—			$	6,019
Total		$	5,739			$	280			$	—			$	6,019
Securities measured at fair value
Equity securities: Farmer Mac class A stock		$	66			$	45			$	—			$	111
Total		$	66			$	45			$	—			$	111

		December 31, 2019
		Amortized Cost				Gross Unrealized Gains				Gross Unrealized (Losses)				Fair Value
Securities available-for-sale		(in thousands)
U.S. government agency notes		$	8,112			$	—			$	(64	)		$	8,048
U.S. government agency collateralized mortgage obligations (“CMO”)			11,270				23				(77	)			11,216
Total		$	19,382			$	23			$	(141	)		$	19,264
Securities held-to-maturity
U.S. government agency mortgage backed securities (“MBS”)		$	6,132			$	189			$	(19	)		$	6,302
Total		$	6,132			$	189			$	(19	)		$	6,302
Securities measured at fair value
Equity securities: Farmer Mac class A stock		$	66			$	101			$	—			$	167
Total		$	66			$	101			$	—			$	167

		March 31, 2020
		Less than One Year								One to Five Years								Five to Ten Years								Over Ten Years								Total
		Amount				Yield				Amount				Yield				Amount				Yield				Amount				Yield				Amount				Yield
Securities available-for-sale		(dollars in thousands)
U.S. government agency notes		$	—				—			$	1,073				2.1	%		$	6,389				2.6	%		$	—				—			$	7,462				2.5	%
U.S. government agency CMO			516				2.3	%			8,773				1.4	%			1,308				1.4	%			—				—				10,597				1.4	%
Total		$	516				2.3	%		$	9,846				1.4	%		$	7,697				2.4	%		$	—				—			$	18,059				1.9	%
Securities held-to-maturity
U.S. government agency MBS		$	—				—			$	4,963				3.2	%		$	—				0.0	%		$	776				3.6	%		$	5,739				3.3	%
Total		$	—				—			$	4,963				3.2	%		$	—				0.0	%		$	776				3.6	%		$	5,739				3.3	%
Securities measured at fair value
Farmer Mac class A stock		$	—				—			$	—				—			$	—				—			$	—				—			$	111				—
Total		$	—				—			$	—				—			$	—				—			$	—				—			$	111				—

		December 31, 2019
		Less than One Year								One to Five Years								Five to Ten Years								Over Ten Years								Total
		Amount				Yield				Amount				Yield				Amount				Yield				Amount				Yield				Amount				Yield
Securities available-for-sale		(dollars in thousands)
U.S. government agency notes		$	—				—			$	1,094				2.3	%		$	6,954				2.8	%		$	—				—			$	8,048				2.8	%
U.S. government agency CMO			—				—				3,766				2.1	%			6,121				2.3	%			1,329				2.4	%			11,216				2.3	%
Total		$	—				—			$	4,860				2.2	%		$	13,075				2.6	%		$	1,329				2.4	%		$	19,264				2.5	%
Securities held-to-maturity
U.S. government agency MBS		$	—				—			$	2,465				4.2	%		$	2,887				2.9	%		$	780				3.6	%		$	6,132				3.5	%
Total		$	—				—			$	2,465				4.2	%		$	2,887				2.9	%		$	780				3.6	%		$	6,132				3.5	%
Securities measured at fair value
Farmer Mac class A stock		$	—				—			$	—				—			$	—				—			$	—				—			$	167				—
Total		$	—				—			$	—				—			$	—				—			$	—				—			$	167				—

		March 31,								December 31,
		2020								2019
		Amortized Cost				Estimated Fair Value				Amortized Cost				Estimated Fair Value
Securities available-for-sale		(in thousands)
Due in one year or less		$	505			$	516			$	—			$	—
After one year through five years			9,930				9,846				4,884				4,860
After five years through ten years			7,791				7,697				13,121				13,075
After ten years			—				—				1,377				1,329
Total		$	18,226			$	18,059			$	19,382			$	19,264
Securities held-to-maturity
Due in one year or less		$	—			$	—			$	—			$	—
After one year through five years			4,963				5,119				2,465				2,565
After five years through ten years			—				—				2,887				2,892
After ten years			776				900				780				845
Total		$	5,739			$	6,019			$	6,132			$	6,302
Securities measured at fair value
Farmer Mac class A stock		$	66			$	111			$	66			$	167
Total		$	66			$	111			$	66			$	167

		March 31, 2020
		Less Than Twelve Months								More Than Twelve Months								Total
		Gross Unrealized Losses				Fair Value				Gross Unrealized Losses				Fair Value				Gross Unrealized Losses				Fair Value
Securities available-for-sale		(in thousands)
U.S. government agency notes		$	2			$	1,117			$	49			$	6,344			$	51			$	7,461
U.S. government agency CMO			18				2,075				125				6,524				143				8,599
Total		$	20			$	3,192			$	174			$	12,868			$	194			$	16,060
Securities held-to-maturity
U.S. Government-agency MBS		$	—			$	—			$	—			$	—			$	—			$	—
Total		$	—			$	—			$	—			$	—			$	—			$	—
Securities measured at fair value
Farmer Mac class A stock		$	—			$	—			$	—			$	—			$	—			$	—
Total		$	—			$	—			$	—			$	—			$	—			$	—

		December 31, 2019
		Less Than Twelve Months								More Than Twelve Months								Total
		Gross Unrealized Losses				Fair Value				Gross Unrealized Losses				Fair Value				Gross Unrealized Losses				Fair Value
Securities available-for-sale		(in thousands)
U.S. government agency notes		$	3			$	1,126			$	61			$	6,922			$	64			$	8,048
U.S. government agency CMO			25				5,275				52				2,264				77				7,539
Total		$	28			$	6,401			$	113			$	9,186			$	141			$	15,587
Securities held-to-maturity
U.S. Government-agency MBS		$	—			$	—			$	19			$	2,139			$	19			$	2,139
Total		$	—			$	—			$	19			$	2,139			$	19			$	2,139
Securities measured at fair value
Farmer Mac class A stock		$	—			$	—			$	—			$	—			$	—			$	—
Total		$	—			$	—			$	—			$	—			$	—			$	—

3.	LOANS HELD FOR SALE

4.	LOANS HELD FOR INVESTMENT

		March 31, 2020				December 31, 2019
		(in thousands)
Manufactured housing		$	263,484			$	257,247
Commercial real estate			391,207				385,642
Commercial			68,271				69,843
SBA			4,019				4,429
HELOC			4,196				4,531
Single family real estate			11,357				11,845
Consumer			71				94
			742,605				733,631
Allowance for loan losses			(9,167	)			(8,717	)
Deferred fees, net			(14	)			(58	)
Discount on SBA loans			(53	)			(56	)
Total loans held for investment, net		$	733,371			$	724,800

		March 31, 2020
		Current				30-59 Days Past Due				60-89 Days Past Due				Over 90 Days Past Due				Total Past Due				Nonaccrual				Total				Recorded Investment Over 90 Days and Accruing
		(in thousands)
Manufactured housing		$	262,159			$	362			$	34			$	—			$	396			$	929			$	263,484			$	—
Commercial real estate:
Commercial real estate			329,864				—				—				—				—				84				329,948				—
SBA 504 1st trust deed			21,450				—				—				—				—				—				21,450				—
Land			4,862				—				—				—				—				—				4,862				—
Construction			34,947				—				—				—				—				—				34,947				—
Commercial			66,725				1				—				—				1				1,545				68,271				—
SBA			3,644				—				17				—				17				358				4,019				—
HELOC			4,196				—				—				—				—				—				4,196				—
Single family real estate			11,331				26				—				—				26				—				11,357				—
Consumer			71				—				—				—				—				—				71				—
Total		$	739,249			$	389			$	51			$	—			$	440			$	2,916			$	742,605			$	—

		December 31, 2019
		Current				30-59 Days Past Due				60-89 Days Past Due				Over 90 Days Past Due				Total Past Due				Nonaccrual				Total				Recorded Investment Over 90 Days and Accruing
		(in thousands)
Manufactured housing		$	256,251			$	156			$	246			$	—			$	402			$	594			$	257,247			$	—
Commercial real estate:
Commercial real estate			327,255				—				—				—				—				84				327,339				—
SBA 504 1st trust deed			17,151				1,401				—				—				1,401				—				18,552				—
Land			4,457				—				—				—				—				—				4,457				—
Construction			35,294				—				—				—				—				—				35,294				—
Commercial			68,224				—				—				—				—				1,619				69,843				—
SBA			3,935				112				—				—				112				382				4,429				—
HELOC			4,531				—				—				—				—				—				4,531				—
Single family real estate			11,813				32				—				—				32				—				11,845				—
Consumer			94				—				—				—				—				—				94				—
Total		$	729,005			$	1,701			$	246			$	—			$	1,947			$	2,679			$	733,631			$	—

		Three Months Ended March 31,
		2020				2019
		(in thousands)
Beginning balance		$	8,717			$	8,691
Charge-offs			—				(17	)
Recoveries			58				31
Net recoveries			58				14
Provision (credit)			392				(57	)
Ending balance		$	9,167			$	8,648

		For the Three Months Ended March 31,
		Manufactured Housing				Commercial Real Estate				Commercial				SBA				HELOC				Single Family Real Estate				Consumer				Total
2020		(in thousands)
Beginning balance		$	2,184			$	5,217			$	1,162			$	32			$	27			$	92			$	3			$	8,717
Charge-offs			—				—				—				—				—				—				—				—
Recoveries			6				20				27				3				2				—				—				58
Net recoveries			6				20				27				3				2				—				—				58
Provision (credit)			174				247				(25	)			(6	)			(2	)			4				—				392
Ending balance		$	2,364			$	5,484			$	1,164			$	29			$	27			$	96			$	3			$	9,167
2019
Beginning balance		$	2,196			$	5,028			$	1,210			$	79			$	90			$	88			$	—			$	8,691
Charge-offs			—				—				(17	)			—				—				—				—				(17	)
Recoveries			6				—				19				5				1				—				—				31
Net recoveries			6				—				2				5				1				—				—				14
Provision (credit)			(14	)			30				7				(40	)			(43	)			3				—				(57	)
Ending balance		$	2,188			$	5,058			$	1,219			$	44			$	48			$	91			$	—			$	8,648

		Manufactured Housing				Commercial Real Estate				Commercial				SBA				HELOC				Single Family Real Estate				Consumer				Total Loans
Loans Held for Investment as of March 31, 2020:		(in thousands)
Recorded Investment:
Impaired loans with an allowance recorded		$	5,327			$	—			$	—			$	—			$	—			$	465			$	—			$	5,792
Impaired loans with no allowance recorded			2,467				316				1,694				357				—				1,848				—				6,682
Total loans individually evaluated for impairment			7,794				316				1,694				357				—				2,313				—				12,474
Loans collectively evaluated for impairment			255,690				390,891				66,577				3,662				4,196				9,044				71				730,131
Total loans held for investment		$	263,484			$	391,207			$	68,271			$	4,019			$	4,196			$	11,357			$	71			$	742,605
Unpaid Principal Balance
Impaired loans with an allowance recorded		$	5,327			$	—			$	—			$	—			$	—			$	465			$	—			$	5,792
Impaired loans with no allowance recorded			3,336				382				1,950				718				—				1,848				—				8,234
Total loans individually evaluated for impairment			8,663				382				1,950				718				—				2,313				—				14,026
Loans collectively evaluated for impairment			255,690				390,891				66,577				3,662				4,196				9,044				71				730,131
Total loans held for investment		$	264,353			$	391,273			$	68,527			$	4,380			$	4,196			$	11,357			$	71			$	744,157
Related Allowance for Credit Losses
Impaired loans with an allowance recorded		$	324			$	—			$	—			$	—			$	—			$	17			$	—			$	341
Impaired loans with no allowance recorded			—				—				—				—				—				—				—				—
Total loans individually evaluated for impairment			324				—				—				—				—				17				—				341
Loans collectively evaluated for impairment			2,040				5,484				1,164				29				27				79				3				8,826
Total loans held for investment		$	2,364			$	5,484			$	1,164			$	29			$	27			$	96			$	3			$	9,167

		Manufactured Housing				Commercial Real Estate				Commercial				SBA				HELOC				Single Family Real Estate				Consumer				Total Loans
Loans Held for Investment as of December 31, 2019:		(in thousands)
Recorded Investment:
Impaired loans with an allowance recorded		$	5,702			$	—			$	—			$	—			$	—			$	470			$	—			$	6,172
Impaired loans with no allowance recorded			2,296				318				1,802				382				—				1,858				—				6,656
Total loans individually evaluated for impairment			7,998				318				1,802				382				—				2,328				—				12,828
Loans collectively evaluated for impairment			249,249				385,324				68,041				4,047				4,531				9,517				94				720,803
Total loans held for investment		$	257,247			$	385,642			$	69,843			$	4,429			$	4,531			$	11,845			$	94			$	733,631
Unpaid Principal Balance
Impaired loans with an allowance recorded		$	5,702			$	—			$	—			$	—			$	—			$	470			$	—			$	6,172
Impaired loans with no allowance recorded			3,134				384				2,156				736				—				1,858				—				8,268
Total loans individually evaluated for impairment			8,836				384				2,156				736				—				2,328				—				14,440
Loans collectively evaluated for impairment			249,249				385,324				68,041				4,047				4,531				9,517				94				720,803
Total loans held for investment		$	258,085			$	385,708			$	70,197			$	4,783			$	4,531			$	11,845			$	94			$	735,243
Related Allowance for Credit Losses
Impaired loans with an allowance recorded		$	334			$	—			$	—			$	—			$	—			$	18			$	—			$	352
Impaired loans with no allowance recorded			—				—				—				—				—				—				—				—
Total loans individually evaluated for impairment			334				—				—				—				—				18				—				352
Loans collectively evaluated for impairment			1,850				5,217				1,162				32				27				74				3				8,365
Total loans held for investment		$	2,184			$	5,217			$	1,162			$	32			$	27			$	92			$	3			$	8,717

		March 31, 2020				December 31, 2019
		(in thousands)
Impaired loans with a specific valuation allowance under ASC 310		$	5,792			$	6,172
Impaired loans without a specific valuation allowance under ASC 310			6,682				6,656
Total impaired loans		$	12,474			$	12,828
Valuation allowance related to impaired loans		$	341			$	352

		March 31, 2020				December 31, 2019
		(in thousands)
Manufactured housing		$	7,794			$	7,998
Commercial real estate :
Commercial real estate			84				84
SBA 504 1st trust deed			232				234
Land			—				—
Construction			—				—
Commercial			1,694				1,802
SBA			357				382
HELOC			—				—
Single family real estate			2,313				2,328
Consumer			—				—
Total		$	12,474			$	12,828

		Three Months Ended March 31,
		2020								2019
		Average Investment in Impaired Loans				Interest Income				Average Investment in Impaired Loans				Interest Income
		(in thousands)
Manufactured housing		$	7,923			$	135			$	10,386			$	166
Commercial real estate:
Commercial real estate			84				—				98				—
SBA 504 1st trust deed			234				4				239				4
Land			—				—				—				—
Construction			—				—				—				—
Commercial			1,754				2				7,573				43
SBA			371				—				790				—
HELOC			—				—				193				5
Single family real estate			2,329				31				2,618				34
Consumer			—				—				—				—
Total		$	12,695			$	172			$	21,897			$	252

		March 31, 2020				December 31, 2019
		(in thousands)
Nonaccrual loans		$	2,916			$	2,679
Government guaranteed portion of loans included above		$	272			$	290
Troubled debt restructured loans, gross		$	10,451			$	10,774
Loans 30 through 89 days past due with interest accruing		$	440			$	1,947
Loans 90 days or more past due with interest accruing		$	—			$	—
Allowance for loan losses to gross loans held for investment			1.23	%			1.19	%

		March 31, 2020				December 31, 2019
		(in thousands)
Manufactured housing		$	929			$	594
Commercial real estate:
Commercial real estate			84				84
SBA 504 1st trust deed			—				—
Land			—				—
Construction			—				—
Commercial			1,545				1,619
SBA			358				382
HELOC			—				—
Single family real estate			—				—
Consumer			—				—
Total		$	2,916			$	2,679

		March 31, 2020
		Pass				Special Mention				Substandard				Doubtful				Total
		(in thousands)
Manufactured housing		$	262,356			$	—			$	1,128			$	—			$	263,484
Commercial real estate:
Commercial real estate			326,383				1,926				1,639				—				329,948
SBA 504 1st trust deed			20,815				338				296				—				21,449
Land			4,862				—				—				—				4,862
Construction			32,856				—				2,091				—				34,947
Commercial			65,060				1,010				1,611				—				67,681
SBA			2,891				—				294				—				3,185
HELOC			4,196				—				—				—				4,196
Single family real estate			11,352				—				5				—				11,357
Consumer			71				—				—				—				71
Total, net			730,842				3,274				7,064				—				741,180
Government guarantee			—				—				1,425				—				1,425
Total		$	730,842			$	3,274			$	8,489			$	—			$	742,605

		December 31, 2019
		Pass				Special Mention				Substandard				Doubtful				Total
		(in thousands)
Manufactured housing		$	256,430			$	—			$	817			$	—			$	257,247
Commercial real estate:
Commercial real estate			323,748				3,507				84				—				327,339
SBA 504 1st trust deed			18,250				—				302				—				18,552
Land			4,457				—				—				—				4,457
Construction			33,280				—				2,014				—				35,294
Commercial			66,525				170				1,619				—				68,314
SBA			2,379				28				1,154								3,561
HELOC			4,531				—				—				—				4,531
Single family real estate			11,840				—				5				—				11,845
Consumer			94				—				—				—				94
Total, net			721,534				3,705				5,995			$	—				731,234
Government guarantee			—				1,530				867				—				2,397
Total		$	721,534			$	5,235			$	6,862			$	—			$	733,631

		For the Three Months Ended March 31, 2020
		Number of Loans				Pre- Modification Recorded Investment				Post Modification Recorded Investment				Balance of Loans with Rate Reduction				Balance of Loans with Term Extension				Effect on Allowance for Loan Losses
		(dollars in thousands)
Manufactured housing			1			$	56			$	56			$	56			$	56			$	1
Total			1			$	56			$	56			$	56			$	56			$	1

		For the Three Months Ended March 31, 2019
		Number of Loans				Pre- Modification Recorded Investment				Post Modification Recorded Investment				Balance of Loans with Rate Reduction				Balance of Loans with Term Extension				Effect on Allowance for Loan Losses
		(dollars in thousands)
SBA			1			$	48			$	48			$	48			$	—			$	—
Total			1			$	48			$	48			$	48			$	—			$	—

5.	OTHER ASSETS ACQUIRED THROUGH FORECLOSURE

		Three Months Ended March 31,
		2020				2019
		(in thousands)
Balance, beginning of period		$	2,524			$	—
Additions			106				—
Proceeds from dispositions			—				—
Gain (loss) on foreclosed assets, net			77				—
Third-party portion of writedown/loss			—				—
Balance, end of period		$	2,707			$	—

6.	FAIR VALUE MEASUREMENT

•

Level 1— Observable quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

•

Level 2— Observable quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, matrix pricing or model-based valuation techniques where all significant assumptions are observable, either directly or indirectly in the market.

•

Level 3— Model-based techniques where all significant assumptions are not observable, either directly or indirectly, in the market.  These unobservable assumptions reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability.  Valuation techniques may include use of discounted cash flow models and similar techniques.

		Fair Value Measurements at the End of the Reporting Period Using:
March 31, 2020		Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)				Fair Value
Assets:		(in thousands)
Investment securities measured at fair value		$	111			$	—			$	—			$	111
Investment securities available-for-sale			—				18,059				—				18,059
Interest only strips			—				—				38				38
Servicing assets			—				—				970				970
Total		$	111			$	18,059			$	1,008			$	19,178

		Fair Value Measurements at the End of the Reporting Period Using:
December 31, 2019		Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)				Fair Value
Assets:		(in thousands)
Investment securities measured at fair value		$	167			$	—			$	—			$	167
Investment securities available-for-sale			—				19,264				—				19,264
Interest only strips			—				—				41				41
Servicing assets			—				—				846				846
Total		$	167			$	19,264			$	887			$	20,318

						Fair Value Measurements at the End of the Reporting Period Using:
		Total				Quoted Prices in Active Markets for Identical Assets (Level 1)				Active Markets for Similar Assets (Level 2)				Unobservable Inputs (Level 3)
		(in thousands)
March 31, 2020:
Impaired loans		$	2,506			$	—			$	2,506			$	—
Loans held for sale			42,942				—				42,942				—
Foreclosed real estate and repossessed assets			2,707				—				2,707				—
Total		$	48,155			$	—			$	48,155			$	—

						Fair Value Measurements at the End of the Reporting Period Using:
		Total				Quoted Prices in Active Markets for Identical Assets (Level 1)				Active Markets for Similar Assets (Level 2)				Unobservable Inputs (Level 3)
		(in thousands)
December 31, 2019:
Impaired loans		$	2,334			$	—			$	2,334			$	—
Loans held for sale			42,900				—				42,900				—
Foreclosed real estate and repossessed assets			2,524				—				2,524				—
Total		$	47,758			$	—			$	47,758			$	—

		March 31, 2020
		Carrying				Fair Value
		Amount				Level 1				Level 2				Level 3				Total
Financial assets:		(in thousands)
Cash and cash equivalents		$	89,665			$	89,665			$	—			$	—			$	89,665
FRB and FHLB stock			4,343				—				4,343				—				4,343
Investment securities			23,909				111				24,078				—				24,189
Loans, net			772,829				—				767,822				9,395				777,217
Financial liabilities:
Deposits			711,599				—				752,858				—				752,858
Other borrowings			115,000				—				105,674				—				105,674

		December 31, 2019
		Carrying				Fair Value
		Amount				Level 1				Level 2				Level 3				Total
Financial assets:		(in thousands)
Cash and cash equivalents		$	82,661			$	82,661			$	—			$	—			$	82,661
FRB and FHLB stock			4,087				—				4,087				—				4,087
Investment securities			25,563				167				25,399				—				25,566
Loans, net			766,846				—				752,287				9,907				762,194
Financial liabilities:
Deposits			750,934				—				751,398				—				751,398
Other borrowings			65,000				—				65,236				—				65,236

7.	OTHER BORROWINGS

8.	STOCKHOLDERS’ EQUITY

		Three Months Ended March 31,
		2020				2019
		Unrealized holding gains (losses) on AFS
		(in thousands)
Beginning balance		$	(78	)		$	(141	)
Other comprehensive income before reclassifications			(34	)			7
Amounts reclassified from accumulated other comprehensive income			—				—
Net current-period other comprehensive income			(34	)			7
Ending Balance		$	(112	)		$	(134	)

9.	CAPITAL REQUIREMENT

		Total Capital (To Risk- Weighted Assets)				Tier 1 Capital (To Risk- Weighted Assets)				Common Equity Tier 1 (To Risk- Weighted Assets)				Leverage Ratio/Tier 1 Capital (To Average Assets)				Community Banking Leverage Ratio
March 31, 2020
CWB’s actual regulatory ratios			11.60	%			10.42	%			10.42	%			9.21	%			9.21	%
Minimum capital requirements			8.00	%			6.00	%			4.50	%			4.00	%			8.00	%
Well-capitalized requirements			10.00	%			8.00	%			6.50	%			N/A				9.00	%
Minimum capital requirements including fully-phased in capital conservation buffer			10.50	%			8.50	%			7.00	%			N/A				N/A

		Total Capital (To Risk- Weighted Assets)				Tier 1 Capital (To Risk- Weighted Assets)				Common Equity Tier 1 (To Risk- Weighted Assets)				Leverage Ratio/Tier 1 Capital (To Average Assets)
December 31, 2019
CWB’s actual regulatory ratios			11.41	%			10.28	%			10.28	%			9.06	%
Minimum capital requirements			8.00	%			6.00	%			4.50	%			4.00	%
Well-capitalized requirements			10.00	%			8.00	%			6.50	%			N/A
Minimum capital requirements including fully-phased in capital conservation buffer			10.50	%			8.50	%			7.00	%			N/A

10.	REVENUE RECOGNITION

Non-interest income		Three Months Ended March 31,
		2020				2019
In-scope of Topic 606:		(in thousands)
Service charges on deposit accounts		$	120			$	125
Exchange fees and other service charges			40				35
Non-interest income (in-scope of Topic 606)			160				160
Non-interest income (out-of-scope of Topic 606)			790				444
Total		$	950			$	604

		Three Months Ended March 31,
		2020				2019
Lease cost:		(in thousands)
Operating lease cost			277				303
Sublease income			—				—
Total lease cost			277				303
Other information
Cash paid for amounts included in the measurement of lease liabilities			—				—
Operating cash flows from operating leases			274				293
Weighted average remaining lease term - operating leases		9.52 Years				10.63 years
Weighted average discount rate - operating leases			3.24	%			3.25	%

		March 31,
		2020				2019
		(in thousands)
2019		$	—			$	881
2020			741				1,104
2021			884				975
2022			779				873
2023			705				802
2024			713				813
Thereafter			3,291				4,227
Total future minimum lease payments		$	7,113			$	9,675
Less remaining imputed interest			1,021				1,552
Total lease liabilities		$	6,092			$	8,123

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

•

general economic conditions, either nationally or locally in some or all areas in which business is conducted, or conditions in the real estate or securities markets or the banking industry which could affect liquidity in the capital markets, the volume of loan origination, deposit flows, real estate values, the levels of non-interest income and the amount of loan losses;

•

changes in existing loan portfolio composition and credit quality, and changes in loan loss requirements;

•

legislative or regulatory changes which may adversely affect the Company’s business;

•

the water shortage in certain areas of California and its impact on the economy;

•

the Company’s success in implementing its new business initiatives, including expanding its product line, adding new branches and successfully building its brand image;

•

changes in interest rates which may reduce or increase net interest margin and net interest income;

•

increases in competitive pressure among financial institutions or non-financial institutions;

•

technological changes which may be more difficult to implement or more expensive than anticipated;

•

changes in borrowing facilities, capital markets and investment opportunities which may adversely affect the business;

•

changes in accounting principles, policies or guidelines which may cause conditions to be perceived differently;

•

litigation or other matters before regulatory agencies, whether currently existing or commencing in the future, which may delay the occurrence or non-occurrence of events longer than anticipated;

•

the ability to originate loans with attractive terms and acceptable credit quality;

•

the ability to attract and retain key members of management;

•

the ability to realize cost efficiencies;

•

a failure or breach of our operational or security systems or infrastructure;

•

a return of recessionary conditions could result in increases in our level of non-performing loans and/or reduce demand for our products and services; and

•

risks related to health epidemics.

•

Net income was $1.6 million, or $0.19 per diluted share, in 1Q20, compared to $2.7 million, or $0.32 per diluted share in 4Q19, and $1.5 million, or $0.18 per diluted share in 1Q19.

•

Provision for loan losses was $392,000 for the quarter, compared to a credit for loan losses of ($210,000) for 4Q19, and a credit for loan losses of ($57,000) for 1Q19.

•

Net interest margin of 3.97% for 1Q20, compared to 4.07% for 4Q19 and 3.99% for 1Q19.

•

Total deposits decreased to $711.6 million at March 31, 2020, compared to $750.9 million at December 31, 2019, and $734.7 million at March 31, 2019.

•

Total demand deposits represented 57.3% of total deposits at March 31, 2020. Non-interest-bearing demand deposits increased $10.5 million to $121.3 million compared to $110.8 million at December 31, 2019 and decreased $14.2 million compared to $135.5 million at March 31, 2019.

•

Total loans increased $6.4 million during the quarter to $782.0 million at March 31, 2020 compared to $775.6 million at December 31, 2019, and increased $11.9 million compared to $770.1 million at March 31, 2019.

•

Book value per common share increased to $9.82 at March 31, 2020, compared to $9.68 at December 31, 2019, and $9.05 at March 31, 2019.

•

Net non-accrual loans of $2.6 million at March 31, 2020, compared to $2.4 million at December 31, 2019, and $3.3 million at March 31, 2019.

•

Other assets acquired through foreclosure, net was $2.7 million at March 31, 2020, compared to $2.5 million at December 31, 2019, and zero at March 31, 2019.

		Three Months Ended March 31,
		2020				2019
		(dollars in thousands)
Net income		$	1,598			$	1,510
Basic earnings per share			0.19				0.18
Diluted earnings per share			0.19				0.18
Total assets			925,208				882,394
Total loans			772,829				761,418
Total deposits			711,599				734,729
Total stockholders’ equity			83,161				76,453
Book value per common share			9.82				9.05
Net interest margin			3.97	%			3.99	%
Return on average assets			0.73	%			0.71	%
Return on average stockholders’ equity			7.76	%			7.99	%

		Three Months Ended March 31,								Increase
		2020				2019				(Decrease)
Consolidated Income Statement Data:		(dollars in thousands)
Interest income		$	10,975			$	11,025			$	(50	)
Interest expense			2,512				2,802				(290	)
Net interest income			8,463				8,223				240
Credit (provision) for loan losses			392				(57	)			449
Net interest income after provision for loan losses			8,071				8,280				(209	)
Non-interest income			950				604				346
Non-interest expenses			6,729				6,717				12
Income before income taxes			2,292				2,167				125
Provision for income taxes			694				657				37
Net income		$	1,598			$	1,510			$	88
Income per share - basic		$	0.19			$	0.18			$	0.01
Income per share - diluted		$	0.19			$	0.18			$	0.01

		Three Months Ended March 31,
		2020												2019
		Average Balance				Interest				Average Yield/Cost (2)				Average Balance				Interest				Average Yield/Cost (2)
Interest-Earning Assets		(in thousands)
Federal funds sold and interest-earning deposits		$	41,470			$	126				1.22	%		$	30,505			$	167				2.22	%
Investment securities			29,057				185				2.56	%			36,186				317				3.55	%
Loans (1)			787,537				10,664				5.45	%			768,253				10,541				5.56	%
Total earnings assets			858,064				10,975				5.14	%			834,944				11,025				5.36	%
Nonearning Assets
Cash and due from banks			3,053												3,172
Allowance for loan losses			(8,880	)											(8,740	)
Other assets			34,181												30,308
Total assets		$	886,418											$	859,684
Interest-Bearing Liabilities
Interest-bearing demand deposits			283,209				719				1.02	%			284,120				831				1.19	%
Savings deposits			15,707				30				0.77	%			15,219				31				0.83	%
Time deposits			301,399				1,373				1.83	%			304,042				1,582				2.11	%
Total interest-bearing deposits			600,315				2,122				1.42	%			603,381				2,444				1.64	%
Other borrowings			68,571				390				2.29	%			49,942				358				2.91	%
Total interest-bearing liabilities			668,886				2,512				1.51	%			653,323				2,802				1.74	%
Noninterest-Bearing Liabilities
Noninterest-bearing demand deposits			117,890												113,572
Other liabilities			16,827												16,106
Stockholders’ equity			82,815												76,683
Total Liabilities and Stockholders’ Equity		$	886,418											$	859,684
Net interest income and margin (3)						$	8,463				3.97	%						$	8,223				3.99	%
Net interest spread (4)											3.63	%											3.62	%

(1)	Includes nonaccrual loans.

(2)	Annualized.

(3)	Net interest margin is computed by dividing net interest income by total average earning assets.

(4)	Net interest spread represents average yield earned on interest-earning assets less the average rate paid on interest-bearing liabilities.

		Three Months Ended March 31, 2020 versus 2019
		Increase (Decrease) Due to Changes in (1)
		Volume				Rate				Total
		(in thousands)
Interest income:
Federal funds sold and interest-earning deposits		$	33			$	(74	)		$	(41	)
Investment securities			(46	)			(86	)			(132	)
Loans, net			262				(139	)			123
Total interest income			249				(299	)			(50	)
Interest expense:
Interest-bearing demand deposits			(2	)			(110	)			(112	)
Savings deposits			1				(2	)			(1	)
Time deposits			(12	)			(197	)			(209	)
Short-term borrowings			106				(74	)			32
Total interest expense			93				(383	)			(290	)
Net increase		$	156			$	84			$	240

(1)

Changes due to both volume and rate have been allocated to volume changes.

		For the Three Months Ended March 31,
		Manufactured Housing				Commercial Real Estate				Commercial				SBA				HELOC				Single Family Real Estate				Consumer				Total
2020		(in thousands)
Beginning balance		$	2,184			$	5,217			$	1,162			$	32			$	27			$	92			$	3			$	8,717
Charge-offs			—				—				—				—				—				—				—				—
Recoveries			6				20				27				3				2				—				—				58
Net (charge-offs) recoveries			6				20				27				3				2				—				—				58
Provision (credit)			174				247				(25	)			(6	)			(2	)			4				—				392
Ending balance		$	2,364			$	5,484			$	1,164			$	29			$	27			$	96			$	3			$	9,167
2019
Beginning balance		$	2,196			$	5,028			$	1,210			$	79			$	90			$	88			$	—			$	8,691
Charge-offs			—				—				(17	)			—				—				—				—				(17	)
Recoveries			6				—				19				5				1				—				—				31
Net (charge-offs) recoveries			6				—				2				5				1				—				—				14
Provision (credit)			(14	)			30				7				(40	)			(43	)			3				—				(57	)
Ending balance		$	2,188			$	5,058			$	1,219			$	44			$	48			$	91			$	—			$	8,648

		Three Months Ended March 31,								Increase
		2020				2019				(Decrease)
		(in thousands)
Other loan fees		$	341			$	258			$	83
Gains from loan sales, net			190				—				190
Document processing fees			124				87				37
Service charges			134				139				(5	)
Other			161				120				41
Total non-interest income		$	950			$	604			$	346

		Three Months Ended March 31,								Increase
		2020				2019				(Decrease)
		(in thousands)
Non-interest expenses:
Salaries and employee benefits		$	4,398			$	4,381			$	17
Occupancy, net			758				782				(24	)
Professional services			383				381				2
Data processing			283				224				59
Depreciation			208				213				(5	)
FDIC assessment			144				170				(26	)
Advertising and marketing			153				129				24
Stock based compensation			85				95				(10	)
Other			317				342				(25	)
Total non-interest expenses		$	6,729			$	6,717			$	12

		March 31, 2020				December 31, 2019				Increase (Decrease)				Percent Increase (Decrease)
		(dollars in thousands)
Cash and cash equivalents		$	89,665			$	82,661			$	7,004				8.5	%
Investment securities available-for-sale			18,059				19,264				(1,205	)			(6.3	)%
Investment securities held-to-maturity			5,739				6,132				(393	)			(6.4	)%
Loans - held for sale			39,458				42,046				(2,588	)			(6.2	)%
Loans - held for investment, net			733,371				724,800				8,571				1.2	%
Total assets			925,208				913,870				11,338				1.2	%
Total deposits			711,599				750,934				(39,335	)			(5.2	)%
Other borrowings			115,000				65,000				50,000				76.9	%
Total stockholder’s equity			83,161				81,978				1,183				1.4	%

		March 31, 2020				December 31, 2019
		(in thousands)
Manufactured housing		$	263,484			$	257,247
Commercial real estate			391,207				385,642
Commercial			68,271				69,843
SBA			4,019				4,429
HELOC			4,196				4,531
Single family real estate			11,357				11,845
Consumer			71				94
Total loans held for investment, gross			742,605				733,631
Allowance for loan losses			(9,167	)			(8,717	)
Deferred costs, net			(14	)			(58	)
Discount on SBA loans			(53	)			(56	)
Total loans held for investment, net		$	733,371			$	724,800

		March 31, 2020				December 31, 2019
		(in thousands)
Nonaccrual loans (net of government guaranteed portion)		$	2,644			$	2,389
Troubled debt restructured loans, gross			10,451				10,774
Nonaccrual loans (net of government guaranteed portion) to gross loans			0.34	%			0.31	%
Net charge-offs (recoveries) (annualized) to average loans			(0.03	)%			(0.02	)%
Allowance for loan losses to nonaccrual loans (net of government guaranteed portion)			347	%			365	%
Allowance for loan losses to gross loans			1.23	%			1.19	%

		March 31, 2020				December 31, 2019
		(in thousands)
Total nonaccrual loans		$	2,916			$	2,679
Government guaranteed portion of loans included above			(272	)			(290	)
Total nonaccrual loans, without guarantees		$	2,644			$	2,389
Troubled debt restructured loans, gross		$	10,451			$	10,774
Loans 30 through 89 days past due with interest accruing		$	440			$	1,947
Loans 90 days or more past due with interest accruing		$	—			$	—
Allowance for loan losses to gross loans held for investment			1.23	%			1.19	%

		Manufactured Housing				Commercial Real Estate				Commercial				SBA				HELOC				Single Family Real Estate				Consumer				Total Loans
Impaired Loans as of March 31, 2020:		(in thousands)
Recorded Investment:
Impaired loans with an allowance recorded		$	5,327			$	—			$	—			$	—			$	—			$	465			$	—			$	5,792
Impaired loans with no allowance recorded			2,467				316				1,694				357				—				1,848				—				6,682
Total loans individually evaluated for impairment			7,794				316				1,694				357				—				2,313				—				12,474
Related Allowance for Credit Losses
Impaired loans with an allowance recorded			324				—				—				—				—				17				—				341
Impaired loans with no allowance recorded			—				—				—				—				—				—				—				—
Total loans individually evaluated for impairment			324				—				—				—				—				17				—				341
Total impaired loans, net		$	7,470			$	316			$	1,694			$	357			$	—			$	2,296			$	—			$	12,133

		Manufactured Housing				Commercial Real Estate				Commercial				SBA				HELOC				Single Family Real Estate				Consumer				Total Loans
Impaired Loans as of December 31, 2019:		(in thousands)
Recorded Investment:
Impaired loans with an allowance recorded		$	5,702			$	—			$	—			$	—			$	—			$	470			$	—			$	6,172
Impaired loans with no allowance recorded			2,296				318				1,802				382				—				1,858				—				6,656
Total loans individually evaluated for impairment			7,998				318				1,802				382				—				2,328				—				12,828
Related Allowance for Credit Losses
Impaired loans with an allowance recorded			334				—				—				—				—				18				—				352
Impaired loans with no allowance recorded			—				—				—				—				—				—				—				—
Total loans individually evaluated for impairment			334				—				—				—				—				18				—				352
Total impaired loans, net		$	7,664			$	318			$	1,802			$	382			$	—			$	2,310			$	—			$	12,476

		At March 31, 2020												At December 31, 2019
		Nonaccrual Balance				%				Percent of Total Loans				Nonaccrual Balance				%				Percent of Total Loans
		(dollars in thousands)
Manufactured housing		$	929				31.86	%			0.13	%		$	594				22.17	%			0.08	%
Commercial real estate			84				2.88	%			0.01	%			84				3.14	%			0.01	%
Commercial			1,545				52.98	%			0.21	%			1,619				60.43	%			0.21	%
SBA			358				12.28	%			0.05	%			382				14.26	%			0.05	%
HELOC			—				0.00	%			0.00	%			—				0.00	%			0.00	%
Single family real estate			—				0.00	%			0.00	%			—				0.00	%			0.00	%
Consumer			—				—				—				—				—				—
Total nonaccrual loans		$	2,916				100.00	%			0.40	%		$	2,679				100.00	%			0.35	%

		Three Months Ended March 31,
		2020				2019
Allowance for loan losses:		(in thousands)
Balance at beginning of period		$	8,717			$	8,691
Provisions charged to operating expenses:
Manufactured housing			174				(14	)
Commercial real estate			247				30
Commercial			(25	)			7
SBA			(6	)			(40	)
HELOC			(2	)			(43	)
Single family real estate			4				3
Consumer			—				—
Total Provision (credit)			392				(57	)
Recoveries of loans previously charged-off:
Manufactured housing			6				6
Commercial real estate			20				—
Commercial			27				19
SBA			3				5
HELOC			2				1
Single family real estate			—				—
Consumer			—				—
Total recoveries			58				31
Loans charged-off:
Manufactured housing			—				—
Commercial real estate			—				—
Commercial			—				17
SBA			—				—
HELOC			—				—
Single family real estate			—				—
Consumer			—				—
Total charged-off			—				17
Net charge-offs (recoveries)			(58	)			(14	)
Balance at end of period		$	9,167			$	8,648

		March 31, 2020
		Number of Loans				Loan Balance (1)				Percent				Percent of Total Loans
		(dollars in thousands)
Manufactured housing			2			$	97				1.00	%			0.01	%
Commercial real estate			6				6,206				64.11	%			0.80	%
Commercial			6				2,600				26.86	%			0.34	%
SBA			4				772				7.98	%			0.10	%
HELOC			—				—				0.00	%			0.00	%
Single family real estate			1				5				0.05	%			0.00	%
Total			19			$	9,680				100.00	%			1.25	%

(1)	Of the $9.7 million of potential problem loans, $2.1 million are guaranteed by government agencies.

		December 31, 2019
		Number of Loans				Loan Balance (1)				Percent				Percent of Total Loans
		(dollars in thousands)
Manufactured housing			2			$	163				1.92	%			0.02	%
Commercial real estate			5				5,824				68.60	%			0.75	%
Commercial			2				1,699				20.01	%			0.22	%
SBA			5				799				9.41	%			0.10	%
HELOC			—				—				0.00	%			0.00	%
Single family real estate			1				5				0.06	%			0.00	%
Total			15			$	8,490				100.00	%			1.09	%

(1)	Of the $8.5 million of potential problem loans, $2.1 million are guaranteed by government agencies.

		March 31, 2020				December 31, 2019
		(in thousands)
U.S. government agency notes		$	7,462			$	8,048
U.S. government agency mortgage backed securities (“MBS”)			5,739				6,132
U.S. government agency collateralized mortgage obligations (“CMO”)			10,597				11,216
Equity securities: Farmer Mac class A stock			111				167
Total		$	23,909			$	25,563

		Three Months Ended March 31,
		2020				2019
		(in thousands)
Balance, beginning of period		$	2,524			$	—
Additions			106				—
Proceeds from dispositions			—				—
Gain (loss) on foreclosed assets, net			77				—
Third-party portion of writedown/loss			—				—
Balance, end of period		$	2,707			$	—

		March 31, 2020				December 31, 2019				Increase (Decrease)				Percent Increase (Decrease)
		(dollars in thousands)
Non-interest bearing demand deposits		$	121,293			$	110,843			$	10,450				9.4	%
Interest-bearing demand deposits			286,736				314,278				(27,542	)			(8.8	)%
Savings			16,016				15,689				327				2.1	%
Certificates of deposit ($250,000 or more)			93,615				96,431				(2,816	)			(2.9	)%
Other certificates of deposit			193,939				213,693				(19,754	)			(9.2	)%
Total deposits		$	711,599			$	750,934			$	(39,335	)			(5.2	)%

Liquidity and Capital Resources

		Total Capital (To Risk- Weighted Assets)				Tier 1 Capital (To Risk- Weighted Assets)				Common Equity Tier 1 (To Risk- Weighted Assets)				Leverage Ratio/Tier 1 Capital (To Average Assets)				Community Banking Leverage Ratio
March 31, 2020
CWB’s actual regulatory ratios			11.60	%			10.42	%			10.42	%			9.21	%			9.21	%
Minimum capital requirements			8.00	%			6.00	%			4.50	%			4.00	%			8.00	%
Well-capitalized requirements			10.00	%			8.00	%			6.50	%			N/A				9.00	%
Minimum capital requirements including fully-phased in capital conservation buffer			10.50	%			8.50	%			7.00	%			N/A				N/A

		Total Capital (To Risk- Weighted Assets)				Tier 1 Capital (To Risk- Weighted Assets)				Common Equity Tier 1 (To Risk- Weighted Assets)				Leverage Ratio/Tier 1 Capital (To Average Assets)
December 31, 2019
CWB’s actual regulatory ratios			11.41	%			10.28	%			10.28	%			9.06	%
Minimum capital requirements			8.00	%			6.00	%			4.50	%			4.00	%
Well-capitalized requirements			10.00	%			8.00	%			6.50	%			N/A
Minimum capital requirements including fully-phased in capital conservation buffer (2019)			10.50	%			8.50	%			7.00	%			N/A

Supervision and Regulation

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 4.

CONTROLS AND PROCEDURES

ITEM 1.

LEGAL PROCEEDINGS

ITEM 1A.

RISK FACTORS

•

demand for our products and services may decline, making it difficult to grow assets and income;

•

if the economy is unable to substantially reopen, and high levels of unemployment continue for an extended period of time, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income;

•

collateral for loans, especially real estate, may decline in value, which could cause loan losses to increase;

•

our allowance for loan losses may have to be increased if borrowers experience financial difficulties beyond forbearance periods, which will adversely affect our net income;

•

the net worth and liquidity of our loan guarantors may decline,  impairing their ability to honor commitments to us;

•

as the result of the decline in the Federal Reserve Board’s target federal funds rate, the yield on our assets may decline to greater extent than the cost of interest-bearing liabilities, reducing our net interest margin and spread and reducing our income;

•

a material decrease in net income or a net loss over several quarters could result in a decrease in the rate of our quarterly cash dividend;

•

we rely on third party vendors for certain services and the unavailability of a critical service due to the COVID-19 outbreak could have an adverse effect on us; and

•

Federal Deposit Insurance Corporation premiums may increase if the agency experiences additional resolution costs.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

ITEM 4.

MINE SAFETY DISCLOSURES

ITEM 5.

OTHER INFORMATION

ITEM 6.

EXHIBITS

Exhibit Number
31.1	Certification of Chief Executive Officer of the Registrant pursuant to Rule 13a-14(a) or Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended.
31.2	Certification of Chief Financial Officer of the Registrant pursuant to Rule 13a-14(a) or Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended.
32.1*	Certification of Chief Executive Officer and Chief Financial Officer of the Registrant pursuant to Rule 13a-14(b) or Rule 15d-14(b), promulgated under the Securities Exchange Act of 1934, as Amended, and 18 U.S.C. 1350.
10.50	Salary Continuation Agreement, dated May 1, 2020, between Community West Bank and Timothy Stronks.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase

*

This certification is furnished to, but shall not be deemed filed, with the Commission.  This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange  Act of 1934, except to the extent that the Registrant specifically incorporates it by reference.

Date: May 8, 2020	BY: /s/ Susan C. Thompson
	Susan C. Thompson
	Executive Vice President and Chief Financial Officer
	On Behalf of Registrant and as a Duly Authorized Officer
	and as Principal Financial and Accounting Officer

Exhibit Number
31.1	Certification of Chief Executive Officer of the Registrant pursuant to Rule 13a-14(a) or Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended.
31.2	Certification of Chief Financial Officer of the Registrant pursuant to Rule 13a-14(a) or Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended.
32.1*	Certification of Chief Executive Officer and Chief Financial Officer of the Registrant pursuant to Rule 13a-14(b) or Rule 15d-14(b), promulgated under the Securities Exchange Act of 1934, as amended, and 18 U.S.C. 1350.
10.50	Salary Continuation Agreement, dated May 1, 2020, between Community West Bank and Timothy Stronks.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase

*

This certification is furnished to, but shall not be deemed filed, with the Commission.  This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange  Act of 1934, except to the extent that the Registrant specifically incorporates it by reference.