Community West Bancshares Inc. in Goleta, Calif., is closing its four out-of state Small Business Administration lending offices as part of a broad restructuring plan aimed at reducing risk and improving the company's overall health.
The $633 million-asset Community West lost $8.6 million last quarter and in January its bank unit was hit with an enforcement order from its federal regulator that requires it to bolster its capital ratios and improve oversight of its loan portfolio.
On Wednesday, the company laid out a plan to deal with its problems, which include limiting SBA lending to its core markets in California, expanding its commercial and agricultural lending and examining its dozens of vendor relationships for potential cost savings.
In an interview, President and Chief Executive Martin E. Plourd said that closing the SBA offices in Utah, Colorado, Washington and Oregon, would free it from distractions and costs that come with operating in multiple states. He said, for example, that whenever it forecloses in a property in another state it must hire consultants and legal counsel who are familiar with that state's laws, which drive up Community West's expenses.
Plourd, who was named president and CEO in November after serving for several months on an interim basis, said he is also eyeing a broad range of other cost-cutting measures, but he stressed that the company has no plans to close any of its five branches.
On the revenue side, Plourd said that he has not yet set specific growth targets, but he noted that California's diverse economy presents ample opportunity for Community West to expand its portfolio of agricultural and commercial and industrial loans.
"This is a state where you can make loans on everything from potato chips to computer chips," Plourd said.
To help in his effort to return Community West to health, Plourd has brought in longtime California banker Michael Phlaum as senior vice president and community banking officer.
Plourd and Phlaum worked together at Rabobank and its predecessor, Valley Independent Bank, in the late 1990s and early 2000s, where Phlaum was a senior executive focused on C&I and agribusiness lending. More recently, Phlaum was head of consumer product development at Kinecta Federal Credit Union in Manhattan Beach, Calif.
"Michael is a solid leader with broad experience in strategic initiatives, sales management, branch administration, product management and operations," Plourd said in a news release.