Community West Bancshares Reports Decrease in Net Income Amid Merger Costs

Community West Bancshares reported significant financial developments in its latest 10-Q filing for the quarter ending June 30, 2026. The company recorded a net income of $2.7 million, or $0.10 per diluted share, a decrease from $7.8 million, or $0.41 per diluted share, in the same quarter of the previous year. This decline was attributed to increased non-recurring expenses related to the recent merger with United Security Bancshares, which included $7.7 million in merger-related costs and a net loss of $5.9 million from the sale of investment securities. The provision for credit losses also rose sharply to $5.6 million, compared to $2.6 million in the prior year, reflecting the impact of the merger and organic loan growth.

The merger, completed on April 1, 2026, significantly impacted the company's financial position. Total assets surged to $5.03 billion, up 36.4% from $3.69 billion at the end of 2025. Total gross loans increased by 39.5% to $3.54 billion, while total deposits rose by 33.1% to $4.12 billion. The merger added approximately $878 million in loans and $1.1 billion in deposits to the company's balance sheet. The company’s total shareholders’ equity also increased by 48.4% to $607.8 million, driven by retained earnings and the issuance of common stock related to the merger.

Operationally, Community West Bancshares reported a significant increase in its customer base and engagement metrics following the merger. The average number of full-time equivalent employees rose to 418, up from 342 a year earlier, as the company integrated operations and expanded its service offerings. The net interest margin improved to 4.56%, up from 4.10% in the same quarter last year, reflecting effective management of interest-earning assets and liabilities. The company also reported a decrease in the cost of deposits to 1.31%, down from 1.43% in the previous year.

Looking ahead, the company remains focused on integrating the operations of United Security Bancshares and optimizing its loan portfolio. Management expressed confidence in the adequacy of the allowance for credit losses, which stood at $49.4 million, or 1.39% of total loans, as of June 30, 2026. The company anticipates that the strategic repositioning of its investment portfolio will enhance future income, despite the current losses from securities sales. Community West Bancshares declared a cash dividend of $0.12 per share, payable on August 21, 2026, indicating a commitment to returning value to shareholders amidst ongoing operational adjustments.