8-K/ACA000-3197777-05391257100 N. Financial Dr., Ste. 101FresnoCA93720559298-1775FALSE000112737100011273712024-06-142024-06-1400011273712024-04-012024-04-01

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: April 1, 2024
(Date of earliest event reported)
COMMUNITY WEST BANCSHARES
(Exact name of registrant as specified in its charter)
CA
(State or other jurisdiction
of incorporation)
000-31977
(Commission File Number)
77-0539125
(IRS Employer
Identification Number)
7100 N. Financial Dr., Ste. 101, Fresno, CA
(Address of principal executive offices)
93720
(Zip Code)
559-298-1775
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, no par valueCWBCNASDAQ
(Title of Each Class)(Trading Symbol)(Name of Each Exchange on which Registered)
Not Applicable
(Former Name or Former Address, if changed since last report)



Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

    Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

    Emerging growth company ☐

    If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act  o


Explanatory Note

This Amendment No. 1 amends the Current Report on Form 8-K filed on April 3, 2024 by Community West Bancshares to include the financial statements and unaudited pro forma condensed financial information referred to in Item 9.01(a) and (b) below relating to the merger of Community West Bancshares (“Community West”) with and into Central Valley Community Bancorp (“Central Valley”).

Item 9.01. Financial Statements and Exhibits

(a) Financial statements of Businesses Acquired
To the extent required by this Item 9.01(a), the Audited Consolidated Financial Statements of Community West for the years ended December 31, 2023 and 2022, the Report of Independent Registered Public Accounting Firm thereon, as well as the accompanying Notes thereto, included in Item 8 of Part II of Community West’s Annual Report on Form 10-K (the “Community West Annual Report” and in Item 15 “Exhibits and Financial Statement Schedules” of Part IV of the Community West Annual Report, as filed with the Securities and Exchange Commission (“SEC”) on April 5, 2024, are incorporated herein by reference.

(b) Pro forma financial information:
The unaudited pro forma condensed consolidated financial statements of Central Valley and Community West, as of and for the year ended December 31, 2023, reflecting the merger are attached hereto as Exhibit 99.1 and incorporated herein by reference.

(d) Exhibits

           




SIGNATURE


Pursuant to the requirements 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.
Dated:June 14, 2024
CENTRAL VALLEY COMMUNITY BANCORP

By:  /s/ Shannon Livingston                 
       Shannon Livingston
       Executive Vice President and Chief Financial Officer



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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

The following unaudited pro forma combined condensed financial information and explanatory notes illustrate the effect of the merger on Community West Bancshares’ (formerly named Central Valley Community Bancorp and referred hereunto as Central Valley) consolidated financial position and results of operations and its subsidiaries and on Community West Bancshares (referred to as Community West) and its subsidiaries based upon the companies’ respective historical consolidated financial positions and results of operations under the acquisition method of accounting with Central Valley treated as the acquirer. The unaudited pro forma combined condensed financial information has been derived from and should be read in conjunction with the historical consolidated financial statements and the related notes of Central Valley and Community West, which are incorporated by reference or provided elsewhere in this joint proxy statement/prospectus.

In accordance with generally accepted accounting principles in the United States of America, or GAAP, the assets and liabilities of Community West will be recorded by Central Valley at their estimated fair values as of the acquisition date. The unaudited pro forma combined condensed balance sheet as of December 31, 2023 gives effect to the merger as if the transaction had occurred on December 31, 2023. The unaudited pro forma combined condensed income statement for the year ended December 31, 2023 assumes the merger took place on January 1, 2023.

The unaudited pro forma combined condensed financial information includes Central Valley’s estimated adjustments to record assets and liabilities of Community West at their respective fair values. These adjustments are subject to change depending on changes in interest rates and the components of assets and liabilities as of the merger date and as additional information becomes available and additional analyses are performed. The final estimates of the fair value of the consideration transferred and the tangible and identifiable intangible assets acquired and liabilities assumed will be determined as of the date the merger is completed. Increases or decreases in the estimated fair values of the net assets acquired as compared with the information shown in the unaudited pro forma combined condensed financial information would change the amount of goodwill and may impact Central Valley’s post combination earnings due to adjustments in yield and/or amortization of the adjusted assets or liabilities. The final adjustments may be materially different from the unaudited pro forma adjustments presented herein.

Central Valley anticipates that the merger with Community West will provide the combined company with financial benefits that include reduced combined operating expenses. The pro forma information, which is intended to illustrate the financial characteristics of the merger and the combined company under one set of assumptions, does not reflect the benefits of expected cost savings or opportunities to earn additional revenue, or all integration costs that may be incurred and, accordingly, should not be considered a prediction of future results. It also does not necessarily reflect what the historical results of the combined company would have been had our companies been combined during the period shown.

The pro forma shareholders’ equity and net income should not be considered indicative of the market value of Central Valley common stock or the actual or future results of operations of Central Valley for any period. Actual results may be materially different than the pro forma information presented.

The unaudited pro forma combined condensed financial statements included herein are presented for informational purposes only and do not necessarily reflect the financial results of the combined company had the companies actually been combined at the beginning of each period presented. As stated above, the adjustments included in these unaudited pro forma combined condensed financial statements are preliminary and may be revised.

The following unaudited pro forma condensed combined financial information and related notes are based on and should be read in conjunction with: (i) the historical audited consolidated financial statements of Central Valley and the related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations


included in Central Valley’s Annual Report on Form 10-K for the year ended December 31, 2023 and (ii) the historical audited consolidated financial statements of Community West and the related notes included in Community West’s Annual Report on Form 10-K for the year ended December 31, 2023.



Unaudited Pro Forma Condensed Combined Balance Sheet
as of December 31, 2023
(Dollars in Thousands)

Central ValleyCommunity WestTransaction AdjustmentsCombined Pro Forma
ASSETS
Cash and due from banks$30,017 $1,471 $— $31,488 
Interest-earning deposits in other banks23,711 70,727 (2,500)(a)91,938 
Total cash and cash equivalents53,728 72,198 (2,500)123,426 
Available-for-sale investment securities597,196 15,232 — 612,428 
Held-to-maturity investment securities302,442 2,135 (171)(b)304,406 
Equity securities6,649 382 — 7,031 
Loans held for sale— 16,648 — 16,648 
Loans held for investment1,290,797 950,824 (53,262)(c)2,188,359 
Allowance for credit losses on loans(14,653)(12,451)729 (d)(26,375)
Loans held for investment, net1,276,144 938,373 (52,533)2,161,984 
Bank premises and equipment, net14,042 5,817 1,078 (e)20,937 
Bank owned life insurance41,572 8,907 — 50,479 
Federal Home Loan Bank stock7,136 4,865 — 12,001 
Goodwill53,777 — 42,261 (f)96,038 
Core deposit intangibles— — 10,019 (g)10,019 
Accrued interest receivable and other assets80,740 22,511 11,476 (h)114,727 
Total assets$2,433,426 $1,087,068 $9,630 $3,530,124 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Non-interest bearing$951,541 $168,603 $— $1,120,144 
Interest bearing1,090,071 684,335 (4,042)(i)1,770,364 
Total deposits2,041,612 852,938 (4,042)2,890,508 
Federal Home Loan Bank advances80,000 100,000 (4,362)(j)175,638 
Senior debt & subordinated debentures69,744 — — 69,744 
Accrued interest payable and other liabilities35,006 17,886 — 52,892 
Total liabilities2,226,362 970,824 (8,404)3,188,782 
Shareholders’ equity:
Common stock62,550 46,614 97,098 (k)206,262 
Retained earnings210,548 70,646 (80,080)(l)201,114 
Accumulated other comprehensive loss(66,034)(1,016)1,016 (m)(66,034)
Total shareholders’ equity207,064 116,244 18,034 341,342 
Total liabilities and shareholders’ equity$2,433,426 $1,087,068 $9,630 $3,530,124 



Unaudited Pro Forma Combined Condensed Consolidated Statement of Earnings
Year Ended December 31, 2023
(In thousands, except per share amounts)

The unaudited pro forma condensed combined statement of income for the year ended December 31, 2023 presents the consolidated financial results as if the merger had occurred on January 1, 2023.

Central ValleyCommunity WestTransaction AdjustmentsCombined Pro Forma
INTEREST INCOME:
Interest and fees on loans$69,803 $52,556 $13,356 (aa)$135,715 
Interest on deposits in other banks3,576 3,700 — 7,276 
Interest and dividends on investment securities29,039 1,266 57 (bb)30,362 
Total interest income102,418 57,522 13,413 173,353 
INTEREST EXPENSE:
Interest on deposits15,527 14,160 2,426 (cc)32,113 
Federal Home Loan Bank advances and other borrowings810 904 2,187 (dd)3,901 
Interest on senior debt and subordinated debentures3,652 51 — 3,703 
Total interest expense19,989 15,115 4,613 39,717 
Net interest income before provision for credit losses82,429 42,407 8,800 133,636 
PROVISION (CREDIT) FOR CREDIT LOSSES309 (395)10,878 (ee)10,792 
Net interest income after provision (credit) for credit losses82,120 42,802 (2,078)122,844 
NON-INTEREST INCOME:
Service charges1,503 626 — 2,129 
Interchange fees1,780 322 — 2,102 
Other income3,737 2,805 — 6,542 
Total non-interest income7,020 3,753 — 10,773 
NON-INTEREST EXPENSES:
Salaries and employee benefits31,367 21,605 2,984 (ff)55,956 
Occupancy and equipment5,726 4,218 58 (gg)10,002 
Professional services3,425 3,728 — 7,153 
Other14,782 6,194 1,186 (hh)22,162 
Total non-interest expenses55,300 35,745 4,228 95,273 
Income before provision for income taxes33,840 10,810 (6,306)38,344 
Provision for income taxes8,304 3,494 (1,864)(ii)9,934 
Net income$25,536 $7,316 $(4,442)$28,410 
Earnings per common share:
Basic earnings per share$2.17 $0.83 $1.51 
Weighted average common shares used in basic computation11,728,858 8,840,524 (1,803,322)(jj)18,766,060 
Diluted earnings per share$2.17 $0.81 $1.48 
Weighted average common shares used in diluted computation11,752,872 8,979,201 (1,551,537)(jj)19,180,536 


Note 1 - Basis of Presentation
The accompanying unaudited pro forma condensed combined financial information and related notes were prepared in accordance with Article 11 of Regulation S-X. The accompanying unaudited pro forma condensed combined balance sheet as of December 31, 2023 combines the historical consolidated balance sheets of Central Valley and Community West, giving effect to the merger as if it had been completed on December 31, 2023. The unaudited pro forma condensed combined statements of income for the year ended December 31, 2023 combine the historical consolidated income statement of Central Valley Community Bancorp (“Central Valley”) and Community West Bancshares (“Community West”), giving effect to the merger as if it had been completed on January 1, 2023. The merger was completed on April 1, 2024. Commensurate with the merger, Central Valley changed its name to Community West Bancshares (“CWBC”).

The unaudited pro forma combined condensed financial information and explanatory notes show the impact on the historical balance sheet and statements of income of Central Valley resulting from the pending Community West merger under the acquisition method of accounting. Acquisition accounting requires that the assets purchased, the identifiable intangibles recognized, the liabilities assumed and non-controlling interest all be reported in the acquirer’s financial statements at their fair value, with any excess of purchase consideration over the net assets being reported as goodwill at the close of business on the transaction date.

Since the transaction is being recorded using the acquisition method of accounting, all loans are recorded at fair value, including adjustments for credit quality, and no allowance for credit losses is carried over to Central Valley’s balance sheet. While the recording of the acquired loans at their fair value will impact the prospective determination of the provision for credit losses and the allowance for credit losses, for purposes of the unaudited pro forma consolidated statements of income for the year ended December 31, 2023, Central Valley assumed no adjustments to the historical amount of Community West’s provision for credit losses.

Note 2 - Accounting Policies and Financial Statement Classifications
The accounting policies of Community West are in the process of being reviewed in detail by Central Valley. Upon completion of such review, conforming adjustments or financial statement reclassifications may be determined.

Note 3 - Merger and Acquisition Integration Costs
In connection with the Community West merger, the plan to integrate the operations of Community West will occur in the second and third quarter of 2024. The specific details of the plan to integrate the operations of Central Valley and Community West will continue to be refined over the next several months, and will include assessing personnel, benefit plans, premises, equipment, and service contracts to determine where Central Valley may take advantage of redundancies. Certain decisions arising from these assessments may involve involuntary termination of employees, vacating leased premises, changing information systems, canceling contracts with certain service providers, selling or otherwise disposing of certain premises, furniture and equipment, and re-assessing a possible deferred tax asset valuation allowance from a potential change in control for tax purposes. Central Valley also expects to incur merger-related costs including professional fees, legal fees, system conversion costs and costs related to communications with customers and others. To the extent there are costs associated with these actions, the cost will be recorded based on the nature of the cost and the timing of these integration actions in the period incurred.

To the extent that such integration costs have been incurred but not recognized in the historical financial statements or are expected to be incurred and are reasonably estimable, those costs were not included in the accompanying unaudited pro forma combined condensed statements of income.

Note 4 - Estimated Annual Cost Savings or Revenue Opportunities
While Central Valley expects to realize cost savings from the Community West merger, the pro forma information, although helpful in illustrating the financial characteristics of the combined company under one set of assumptions, does not reflect the benefits of expected cost savings, opportunities to earn additional revenue, the impact of restructuring and merger-related costs, or other factors that may result as a consequence of the merger and, accordingly, does not attempt to predict or suggest future results. Further, there can be no assurance the cost savings will be achieved in the amount, manner or timing currently contemplated.



Note 5 - Pro Forma Adjustments to Combined Condensed Balance Sheet at December 31, 2023
The following pro forma adjustments have been reflected in the unaudited pro forma combined condensed balance sheet at December 31, 2023. All adjustments are based on current assumptions and valuations, which are subject to change.

(a)Adjustment to cash, deferred taxes and retained earnings for estimated merger-related expenses totaling $2.5 million incurred by Central Valley. This amount was comprised of $1.6 million in estimated investment banking fees, $450 thousand in estimated legal fees not yet incurred as of December 31, 2023 and $450 thousand in other estimated merger-related expenses.
(b)Adjustment to securities classified as held-to-maturity (HTM) to reflect the estimated fair value of the acquired investment securities.
(c)Adjustment to reflect acquired loans at their estimated fair value, including current interest rates, liquidity and credit.
(d)Adjustments to the allowance for credit losses include the following:
Reversal of Community West allowance for credit losses$(12,451)
Provision for estimate of current expected credit losses on non-PCD loans10,900 
Increase in allowance for gross-up of estimated credit losses for purchased credit deteriorated (PCD) loans.822 
Net adjustment to the allowance for credit losses$(729)
(e)Adjustment to reflect the fair value of owned properties.
(f)Purchase goodwill is the sum of Central Valley common stock issued to Community West shareholders and fair value of options assumed less purchase accounting adjustments shown in the Pro Forma Consolidated Balance Sheet, as summarized below (dollars in thousands, except per share data):
Central Valley shares issued to Community West shareholders 7,037,202 
Central Valley issue price per share (as of March 28, 2024)$19.89 
Merger consideration paid$139,970 
Fair value of options assumed3,742 
Total merger consideration$143,712 
Carrying value of Community West net assets at December 31, 2023$116,244 
Fair value adjustments to net assets at December 31, 2023
Held-to-maturity investment securities$(171)
Loans(53,262)
Allowance for loan loss11,629 
Loan servicing asset1,291 
Fixed assets1,078 
Core deposit intangible10,019 
Deferred tax effect of fair value adjustments6,219 
Certificates of deposit4,042 
Borrowings4,362 
Total fair value adjustments(14,793)
Fair value of net assets acquired on December 31, 2023101,451 
Goodwill created from transaction$42,261 
(g)Core deposit intangible adjustment represents estimated fair value of acquired identifiable intangible core deposit asset, calculated as approximately 2.0% of Community West's core deposits.
(h)Purchase adjustment to other assets/deferred taxes of $11.5 million is comprised of a fair value adjustment for loan servicing assets of $1.3 million and an adjustment to deferred taxes related to the provision for credit losses and acquisition accounting adjustments totaling $10.2 million.
(i)Adjustment to deposits to reflect the estimated fair value of certificates of deposits.
(j)Adjustment to borrowings to reflect the estimated fair value of Federal Home Loan Bank advances.
(k)Adjustments to common stock to eliminate Community West common stock, record the issuance of 7,037,202 shares of Central Valley’s common stock for consideration of $140.0 million, and consideration of $3.7 million for the fair value of stock options assumed by Central Valley.
(l)Adjustment to eliminate Community West retained earnings, to record the provision for credit losses on non-PCD acquired loans of $7.7 million, net of tax, and to record merger-related expenses as noted in (a) of $1.8 million, net of tax.
(m)Adjustment to eliminate Community West accumulated other comprehensive loss.



Note 6 - Pro Forma Adjustments to Combined Condensed Statements of Income
The following pro forma adjustments have been reflected in the unaudited pro forma combined condensed statement of income for the year ended December 31, 2023. All adjustments are based on current assumptions and valuations, which are subject to change.

(aa)Net adjustments to interest income of $13.4 million for the year ended December 31, 2023, to eliminate Community West net accretion of deferred fees and costs and record the estimated accretion of the net discount on acquired loans and leases.
(bb)Net adjustments to interest income of $57 thousand for the year ended December 31, 2023, respectively, to eliminate Community West net amortization of security premiums and to record the estimated accretion of the discount on acquired investment securities.
(cc)Adjustment to interest expense on deposits of $2.4 million for the year ended December 31, 2023, respectively, to record the estimated amortization of the deposit discount on acquired certificates of deposit.

 
(dd)Adjustment to interest expense on borrowings $2.2 million for the year ended December 31, 2023, respectively, to reflect the estimated amortization of the borrowings discount on assumed FHLB advances.
(ee)Adjustment to record the provision for allowance for credit losses related to non-PCD acquired loans and unfunded commitments of $10.9 million as of January 1, 2023.
(ff)To record a one-time post-combination expenses of $3.0 million consisting of change-in-control, retention, severance and other separation benefits in connection with certain executive officers and employees of Community West. In addition to retention bonuses and severance benefits for various employees, certain employment agreements included double-trigger provisions that require us to provide these benefits upon a change in control and reduction in responsibilities or termination.
(gg)To record depreciation expense on adjusted values for Community West owned banking centers.
(hh)Adjustment to other noninterest expense to reflect estimated amortization of acquired core deposit intangible of $1.2 million for the year ended December 31, 2023. Such intangibles were assumed to be amortized on a straight-line basis over ten years for purposes of determining the adjustment.
(ii)Adjustment to income tax expense to record the income tax effects of pro forma adjustments at the estimated combined statutory federal and state rate at 29.6%.
(jj)Adjustment to weighted-average shares of Central Valley’s common stock outstanding to eliminate weighted-average shares of Community West common stock outstanding and to reflect the estimated number of share issued of Central Valley’s common stock to holders of Community West’s common stock. Dilutive shares were also adjusted for the dilutive impact of options assumed at merger close.

v3.24.1.1.u2
Cover
Jun. 14, 2024
Apr. 01, 2024
Cover [Abstract]    
Document Type 8-K/A  
Document Period End Date   Apr. 01, 2024
Entity Registrant Name COMMUNITY WEST BANCSHARES  
Entity Incorporation, State or Country Code CA  
Entity File Number 000-31977  
Entity Tax Identification Number 77-0539125  
Entity Address, Address Line One 7100 N. Financial Dr., Ste. 101  
Entity Address, City or Town Fresno  
Entity Address, State or Province CA  
Entity Address, Postal Zip Code 93720  
City Area Code 559  
Local Phone Number 298-1775  
Written Communications false  
Soliciting Material false  
Pre-commencement Tender Offer false  
Pre-commencement Issuer Tender Offer false  
Entity Emerging Growth Company false  
Amendment Flag false  
Entity Central Index Key 0001127371  
Title of 12(b) Security Common Stock, no par value  
Trading Symbol CWBC  
Security Exchange Name NASDAQ  
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