Community West Margin Expands for a Tenth Straight Quarter

The Tip Desk · November 8, 2026 · 3 min read

Third-quarter 2026 net interest income before provision was $53.34 million as fully tax-equivalent NIM reached 4.65%; merger expenses and a $6.62 million legal settlement expense weighed on GAAP net income of $8.07 million, or $0.30 a share.

Community West Bancshares (CWBC), the parent of Community West Bank, reported net interest income before provision of $53.34 million for the three months ended September 30, 2026, up 4.8% from $50.91 million in the second quarter, the first full quarter following the United Security Bancshares merger. Year-over-year net interest income was up 52.7% from $34.94 million. Merger expenses and a $6.62 million legal settlement expense weighed on GAAP net income of $8.07 million, or $0.30 a share.

Fully tax-equivalent net interest margin expanded 9 bps to 4.65%, the tenth consecutive quarter of expansion, after a 26 bps move to 4.56% in the second quarter. The company attributed the latest lift to a higher yield on interest-earning assets of 5.94% versus 5.62% a year earlier, a lower cost of total deposits, and about 38 bps of fair-value mark accretion.

GAAP net income was $8.07 million, or $0.30 a share, compared with $2.70 million, or $0.10 a share, in the second quarter. Comparable net income excluding merger costs, a $6.62 million legal settlement, and securities losses was $17.79 million, or $0.66 a share, versus $12.31 million, or $0.45 a share, in the second quarter. Annualized return on average assets was 0.65%; excluding those non-core items it was 1.41%.

The second quarter had been weighed by merger expenses, a $5.90 million net realized loss on sales and calls of securities, and a $5.64 million provision. In the third quarter the provision fell to $578,000, and non-interest income swung to $4.68 million from a $1.97 million loss, on $1.68 million of loan-sale gains and only $19,000 of securities losses.

Gross loans rose only 0.54%, or $19.1 million, after a 38.91% step-up in the second quarter when USB loans were added. Average loans including non-accrual rose $73.6 million to $3.58 billion. The effective yield on average loans was 6.73%.

Total deposits increased 2.45%, or $101.0 million, after a 31.13% rise in the second quarter. Brokered deposits fell $107.5 million, or 24.53%; the company said stronger core deposit growth and a stronger liquidity position reduced the need for that funding. Excluding the brokered decline, total deposits rose 5.66% versus June 30. Average non-interest-bearing demand deposits were 34.82% of total average deposits.

Total cost of deposits fell to 1.27% from 1.31% in the second quarter. The company said the USB deposit mix and organic growth that allowed brokered deposits to mature drove the decline.

Non-interest expense was $46.17 million, including the $6.62 million one-time legal settlement that resolved litigation related to a former depositor, and $7.17 million of merger and acquisition expense. The comparable efficiency ratio improved to 55.80% from 57.25%.

Capital at September 30, 2026 included a 9.69% Tier 1 leverage ratio, 11.14% CET1, 11.26% Tier 1 risk-based, and 13.28% total risk-based. Tangible book value was $15.34 a share. The board declared a $0.12 cash dividend. Chief Financial Officer Shannon Livingston said the company looks forward to moving beyond merger-related expenses into a more normalized fourth quarter.