Community West Bancshares Announces Record 100 Percent Earnings Gain; Six-Month Earnings Results Surpass Performance for All of 1998.

GOLETA, Calif.--(BUSINESS WIRE)--July 21, 1999--

Lew Stone, president and chief executive officer of Community West Bancshares (Nasdaq:CWBC), Wednesday announced record-shattering results: Net income was up more than 100 percent for both the three- and six-month periods ended June 30, 1999, as compared with the prior year.

Net income for the three months ended June 30, 1999, was $2,039,000, or 112.0 percent above the $962,000 for the same period of 1998. For the six months ended June 30, 1999, net income was $3,095,000, vs. $1,516,000 for the first six months of 1998, an increase of 104.2 percent.

Earnings per share on a diluted basis for the three and six months ended June 30, 1999, were 37 cents and 56 cents, as compared with 19 cents and 31 cents for the respective periods of 1998. Book value per share at June 30, 1999, was $4.86, vs. $4.33 at June 30, 1998.

Stone said: "Earnings for the first six months of 1999 are already more than our earnings for all of 1998. And 1998 was a record year for the company.

"The company benefited significantly from the turmoil in the financial markets last year in that the acquisition costs associated with our High Loan To Value (HLTV) mortgage lending has decreased because there is now less competition. These reduced costs allowed us to complete our first securitization of 1999 at much-improved levels from the securitization we completed last December.

"The gain recognized on the completion of the securitization contributed approximately 16 cents per share to earnings for the three and six months ended June 30, 1999. And our overall lending volume has increased 77.0 percent over the first six months of last year.

"The company's record earnings also included an increase in the provision for loan losses in the second quarter to $1,080,000, primarily to reflect the classification of two loans in the commercial portfolio, which were isolated occurrences.

"Our subsidiary, Electronic Paycheck (EP), which provides proprietary technology for the issuance and use of debit cards to make payments and establish loyalty programs, was very active during the second quarter. We have previously announced the signing of two contracts for the use of EP technology.

"Revenue contribution from EP in the early stages of these contracts is modest at this time, but, with two contracts in place to build on, and with the tremendous interest being shown in EP's technology, we have reason to be very optimistic about the revenue streams that are developing for the year 2000 and beyond."

Electronic Paycheck

Since the company acquired a 70 percent interest in EP during the fourth quarter of 1997, EP has continued to develop its proprietary software and card systems. The software, based on Internet protocol, is currently being utilized for payments in the payroll, cruise-line, network-marketing, bill-paying and check-cashing industries.

In addition, EP is now in the testing phase of a process to use its software and cards as part of a national loyalty-card program, whereby customers earn reward points by patronizing participating merchants. EP has recently announced major contracts in the network- marketing and loyalty-card industries.

During the third quarter of this year, EP is expected to announce the development of software that will significantly increase the universe of cards that can be utilized to complete secured transactions via the Internet. EP generates revenues based upon card issuance and ongoing transaction fees.

Doug King, president of Electronic Paycheck, indicated that as EP evolves from a development company to becoming an operational company, additional capital will be required.

King said: "Community West has, in effect, provided us with the venture capital necessary to develop our systems. We are now considering various financing avenues so that we may establish our systems and cards both nationally and internationally."

Stone continued: "Because of the level of financing we believe is required, we anticipate that EP may need to tap the equity markets, possibly in the form of an IPO, although we may very well consider a private placement of EP debt or equity first. The actual timing and nature of any potential offering have not been determined at this time."

Lending Activity

The company, through its two subsidiaries, Goleta National Bank and Palomar Savings, produces a variety of loans that are sold to others, put into securitizations or retained in its own loan portfolio.

The company has developed these revenue sources, which can be "exported" throughout the nation, in order to provide a larger base of potential borrowers and to obtain greater geographic dispersion. The three largest of these loan categories are Small Business Administration loans, residential mortgage loans and HLTV second mortgage loans.

The following table represents loan-origination volumes in each of the categories for the first six months of 1999 and 1998:

                                            1999             1998

     SBA Loans                      $ 25,116,000     $ 15,276,000
     Residential Mortgage Loans      190,962,000      169,130,000
     HLTV Second Mortgage Loans      177,747,000       38,431,000

During the first six months of 1999, the company sold $243 million of whole loans and securitized an additional $122 million of loans. While the recent rise in interest rates has significantly slowed the refinance activity, it appears that it may have a positive effect on the volume of HLTV lending.

"SBA lending has not been affected by the increase in rates," Stone said. "Depending on market volatility, we expect to complete a second loan securitization during the last half of the year; although, if we have a repeat of anything like the world financial crisis of the fourth quarter of last year, we would certainly consider waiting until year 2000."

Community West Bancshares is a technology and financial-services company with headquarters in Goleta. The company has three subsidiaries.

Electronic Paycheck LLC provides proprietary technology platforms for the issuance and use of card technology to make payments and establish loyalty programs, and has the ability to settle transactions via ATM and POS networks, the automated clearinghouse system, and the Internet.

Goleta National Bank has two full-service branches, one in Goleta and one in Ventura, Calif., and loan-production offices located in Alabama, California, Florida, Georgia, South Carolina and Nevada.

Palomar Savings & Loan Association has two full-service branches and a loan-production office, all located in Escondido, Calif.

This release contains forward-looking statements that reflect management's current views of future events and operations. These forward-looking statements are based on information currently available to the company as of the date of this release. It is important to note that these forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including but not limited to the ability of the company or Electronic Paycheck to develop its software and obtain additional capital, and the ability of the company to continue to originate loans and complete its securitizations, and economic events that may affect earnings. The company's actual results may differ materially from those in the forward-looking statements as a result of various important factors, including general economic conditions and "Competition" as described in the company's Dec. 31, 1998, Form 10-K. -0-

                      COMMUNITY WEST BANCSHARES
                         Financial Highlights

                                                June 30,      Dec. 31,
                                                  1999          1998

Total loans                               $200,795,000  $165,935,000
Total deposits                             293,370,000   223,545,000
Total equity                                26,275,000    24,553,000
Total assets                               325,070,000   252,034,000

                                                  Three months ended
                                                       June 30,
                                                  1999          1998

Net interest income                         $4,557,000    $2,936,000
Provision for loan losses                    1,080,000       103,000
Other income                                 7,937,000     3,555,000
Other expense                                7,926,000     4,864,000
Income taxes                                 1,449,000       562,000
Net income                                  $2,039,000    $  962,000
Basic EPS                                   $      .38    $      .20
Diluted EPS                                 $      .37    $      .19
Shares outstanding June 30                   5,409,697     5,349,626
Weighted shares -- basic                     5,372,534     4,832,673
Weighted shares -- diluted                   5,481,814     5,045,492

                                                   Six months ended
                                                       June 30,
                                                  1999          1998

Net interest income                         $7,794,000    $4,815,000
Provision for loan losses                    1,420,000       164,000
Other income                                12,996,000     6,648,000
Other expense                               14,073,000     8,904,000
Income taxes                                 2,202,000       879,000
Net income                                   3,095,000     1,516,000
Basic EPS                                   $      .57    $      .32
Diluted EPS                                 $      .56    $      .31
Shares outstanding June 30                   5,409,697     5,349,626
Weighted shares -- basic                     5,383,622     4,694,798
Weighted shares -- diluted                   5,479,685     4,907,617