Regulatory Capital - The Company and the Bank are subject to certain regulatory capital requirements administered by the Board of Governors of the Federal Reserve System and the FDIC. Failure to meet these minimum capital requirements could result in mandatory or, discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements.

The Company and the Bank each meet specific capital guidelines that involve quantitative measures of their respective assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The Company’s and the Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

The Bank is also subject to additional capital guidelines under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Bank must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the following table. The most recent notification from the FDIC categorized the Bank as well capitalized under these guidelines. Management knows of no conditions or events since that notification that would change the Bank’s category.

Capital ratios are reviewed by Management on a regular basis to ensure that capital exceeds the prescribed regulatory minimums and is adequate to meet our anticipated future needs. For all periods presented, the Bank’s ratios exceed the regulatory definition of well capitalized under the regulatory framework for prompt correct action and the Company’s ratios exceed the required minimum ratios for capital adequacy purposes.

Bank holding companies with consolidated assets of $3 billion or more including banks like Community West Bank must comply with minimum capital ratio requirements which consist of the following: (i) a new common equity Tier 1 capital to total risk weighted assets ratio of 4.5%; (ii) a Tier 1 capital to total risk weighted assets ratio of 6%; (iii) a total capital to total risk weighted assets ratio of 8%; and (iv) a Tier 1 capital to adjusted average total assets (“leverage”) ratio of 4%.

In addition, a “capital conservation buffer” is established which requires maintenance of a minimum of 2.5% of common equity Tier 1 capital to total risk weighted assets in excess of the regulatory minimum capital ratio requirements described above. The 2.5% buffer increases the minimum capital ratios to (i) a common equity Tier 1 capital ratio of 7.0%, (ii) a Tier 1 capital ratio of 8.5%, and (iii) a total capital ratio of 10.5%. If the capital ratio levels of a banking organization fall below the capital conservation buffer amount, the organization will be subject to limitations on (i) the payment of dividends; (ii) discretionary bonus payments; (iii) discretionary payments under Tier 1 instruments; and (iv) engaging in share repurchases.

Management believes that the Company and the Bank met all their capital adequacy requirements as of December 31, 2024 and 2023. There are no conditions or events since those notifications that management believes have changed those categories. The capital ratios for the Company and the Bank are presented in the table below (exclusive of the capital conservation buffer).


(Dollars in thousands)	Actual Ratio				Minimum regulatory requirement (1)
December 31, 2024	Amount		Ratio		Amount		Ratio
Tier 1 Leverage Ratio	$	316,343	9.17	%	$	138,018	4.00	%
Common Equity Tier 1 Ratio (CET 1)	$	311,343	11.15	%	$	125,632	4.50	%
Tier 1 Risk-Based Capital Ratio	$	316,343	11.33	%	$	167,510	6.00	%
Total Risk-Based Capital Ratio	$	379,091	13.58	%	$	223,346	8.00	%

December 31, 2023
Tier 1 Leverage Ratio	$	222,567	9.18	%	$	98,048	4.00	%
Common Equity Tier 1 Ratio (CET 1)	$	217,567	12.78	%	$	75,561	4.50	%
Tier 1 Risk-Based Capital Ratio	$	222,567	13.07	%	$	100,748	6.00	%
Total Risk-Based Capital Ratio	$	273,699	16.08	%	$	134,330	8.00	%
(1) The minimum regulatory requirement threshold includes the capital conservation buffer of 2.50%.

The following table presents the Bank’s regulatory capital ratios as of December 31, 2024 and December 31, 2023, as well as the minimum capital ratios for capital adequacy for the Bank:


(Dollars in thousands)	Actual Ratio				Minimum regulatory requirement (1)
December 31, 2024	Amount		Ratio		Amount		Ratio
Tier 1 Leverage Ratio	$	377,411	11.04	%	$	138,031	4.00	%
Common Equity Tier 1 Ratio (CET 1)	$	377,411	13.54	%	$	125,474	7.00	%
Tier 1 Risk-Based Capital Ratio	$	377,411	13.54	%	$	167,299	8.50	%
Total Risk-Based Capital Ratio	$	405,425	14.54	%	$	223,065	10.50	%

December 31, 2023
Tier 1 Leverage Ratio	$	285,099	11.75	%	$	97,016	4.00	%
Common Equity Tier 1 Ratio (CET 1)	$	285,099	16.76	%	$	76,526	7.00	%
Tier 1 Risk-Based Capital Ratio	$	285,099	16.76	%	$	102,035	8.50	%
Total Risk-Based Capital Ratio	$	301,642	17.74	%	$	136,047	10.50	%
(1) The minimum regulatory requirement threshold includes the capital conservation buffer of 2.50%.

Dividends - During 2024, the Bank declared and paid cash dividends to the Company in the amount of $14,000,000, in connection with cash dividends declared to the Company’s shareholders and holding company expenses as approved by the Company’s Board of Directors. The Company declared and paid a total of $8,230,000 or $0.48 per common share cash dividend to shareholders of record during the year ended December 31, 2024. During the year ended December 31, 2024, the Company repurchased and retired common stock in the amount of $38,000 in connection with amounts withheld for the vesting of equity awards for tax obligations.

During 2023, the Bank declared and paid dividends to the Bank in the amount of $6,963,000 in connection with the senior and subordinated debt proceeds approved by the Company’s Board of Directors. The Company declared and paid a total of $5,657,000 or $0.48 per common share cash dividend to shareholders of record during the year ended December 31, 2023. During the year ended December 31, 2023, the Company repurchased and retired common stock in the amount of $1,000.

During 2022, the Bank and paid cash dividends to the Company in the amount of $38,000,000, in connection with cash dividends declared to the Company’s shareholders and holding company expenses as approved by the Company’s Board of Directors. The Company declared and paid a total of $5,638,000 or $0.48 per common share cash dividend to shareholders of record during the year ended December 31, 2022. During the year ended December 31, 2022, the Company repurchased and retired common stock in the amount of $6,814,000.

The Company’s primary source of income with which to pay cash dividends is dividends from the Bank. The California Financial Code restricts the total amount of dividends payable by a bank at any time without obtaining the prior approval of the California Department of Business Oversight to the lesser of (1) the Bank’s retained earnings or (2) the Bank’s net income for its last three fiscal years, less distributions made to shareholders during the same three-year period. At December 31, 2024, $50,362,000 of the Bank’s retained earnings were free of these restrictions.

A reconciliation of the numerators and denominators of the basic and diluted earnings per common share computations is as follows (in thousands, except share and per-share amounts):


	For the Years Ended December 31,
	2024		2023		2022
Basic Earnings Per Common Share:
Net income	$	7,666	$	25,536	$	26,645


Weighted average shares outstanding	17,077,017		11,728,858		11,715,376
Net income per common share	$	0.45	$	2.17	$	2.27
Diluted Earnings Per Common Share:
Net income	$	7,666	$	25,536	$	26,645


Weighted average shares outstanding	17,077,017		11,728,858		11,715,376
Effect of dilutive stock options and warrants	102,779		24,014		23,698
Weighted average shares of common stock and common stock equivalents	17,179,796		11,752,872		11,739,074
Net income per diluted common share	$	0.45	$	2.17	$	2.27