UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14 (a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
---
FILED BY THE REGISTRANT /X/
FILED BY A PARTY OTHER THAN THE REGISTRANT / /
CHECK THE APPROPRIATE BOX:
/ / PRELIMINARY PROXY STATEMENT
/ / CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY ( AS PERMITTED BY RULE
14a-6 (e) (2) )
/X/ DEFINITIVE PROXY STATEMENT
/ / DEFINITIVE ADDITIONAL MATERIALS
/ / SOLICITING MATERIAL PURSUANT TO RULE 14a-11 (c) OR RULE 14a-12
COMMUNITY WEST BANCSHARES
--------------------------------------------------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
--------------------------------------------------------------------------------
(NAME OF PERSON (S) FILING PROXY STATEMENT, IF OTHER THAN REGISTRANT
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/X/ NO FEE REQUIRED.
/ / FEE COMPUTED ON TABLE BELOW PER EXCHANGE ACT RULES 14a-6(I) (1) AND 0-11.
(1) TITLE OF EACH CLASS OF SECURITIES TO WHICH TRANSACTION APPLIES:
---------------------------------------------------------------------
(2) AGGREGATE NUMBER OF SECURITIES TO WHICH TRANSACTION APPLIES:
---------------------------------------------------------------------
(3) PER UNIT PRICE OR OTHER UNDERLYING VALUE OF TRANSACTION COMPUTED
PURSUANT TO EXCHANGE ACT RULE 0-11 (SET FORTH THE AMOUNT ON WHICH THE
FILING FEE IS CALCULATED AND STATE HOW IT WAS DETERMINED:
---------------------------------------------------------------------
(4) PROPOSED MAXIMUM AGGREGATE VALUE OF TRANSACTION:
---------------------------------------------------------------------
(5) TOTAL FEE PAID:
---------------------------------------------------------------------
/ / FEE PAID PREVIOUSLY WITH PRELIMINARY MATERIALS.
/ / CHECK BOX IF ANY PART OF THE FEE IS OFFSET AS PROVIDED BY EXCHANGE ACT
RULE 0-11 (a) (2) AND IDENTIFY THE FILING FOR WHICH THE OFFSETTING FEE WAS PAID
PREVIOUSLY. IDENTIFY THE PREVIOUS FILING BY REGISTRATION STATEMENT NUMBER, OR
THE FORM OR SCHEDULE AND THE DATE OF ITS FILING.
(1) AMOUNT PREVIOUSLY PAID
---------------------------------------------------------------------
(2) FORM, SCHEDULE OR REGISTRATION STATEMENT NUMBER:
---------------------------------------------------------------------
(3) FILING PARTY:
---------------------------------------------------------------------
(4) DATE FILED:
---------------------------------------------------------------------
COMMUNITY WEST BANCSHARES
445 Pine Avenue
Goleta, California 93117-3474
Telephone: (805) 692-5821
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 26, 2005
NOTICE IS HEREBY GIVEN that the 2005 Annual Meeting of Shareholders
(Meeting) of Community West Bancshares (Company) will be held at La Cumbre
Country Club, 4015 Via Laguna, Santa Barbara, California 93110, on Thursday, May
26, 2005, at 6:00 P.M. Pacific Daylight Time, for the purpose of considering
and voting on the following matters:
1. ELECTION OF DIRECTORS. To elect eight persons to the Board of
Directors of the Company (Board) to serve until the 2006 Annual Meeting of
Shareholders and until their successors are elected and have qualified. The
following persons are the Board of Directors' nominees:
Robert H. Bartlein William R. Peeples
Jean W. Blois James R. Sims, Jr.
John D. Illgen Kirk B. Stovesand
Lynda J. Nahra C. Richard Whiston
2. OTHER BUSINESS. Transacting such other business as may properly
come before the Meeting and any adjournment or postponements thereof.
The Proxy Statement that accompanies this Notice contains additional
information regarding the proposals to be considered at the Meeting and
shareholders are encouraged to read it in its entirety.
The Board has fixed the close of business on March 31, 2005 as the record
date for determination of shareholders entitled to notice of, and the right to
vote at, the Meeting.
As set forth in the enclosed Proxy Statement, proxies are being solicited
by and on behalf of the Board. All proposals set forth above are proposals of
the Company. It is expected that these materials will be mailed to shareholders
on or about April 15, 2005.
The Bylaws of the Company provide for the nomination of Directors in the
following manner:
"Nominations for election of members of the board of directors may be
made by the board of directors or by any shareholder of any outstanding
class of capital stock of the corporation entitled to vote for the election
of directors. Notice of intention to make any nominations (other than for
persons named in the notice of the meeting at which such nomination is to
be made) shall be made in writing and shall be delivered or mailed to the
president of the corporation no more than sixty (60) days prior to any
meeting of shareholders called for the election of directors and no more
than ten (10) days after the date the notice of such meeting is sent to
shareholders pursuant to Section 2.4 of these Bylaws; provided, however,
that if ten (10) days notice of such meeting is sent to shareholders, such
notice of intention to nominate must be received by the president of the
corporation not later than the time fixed in the notice of the meeting for
the opening of the meeting. Such notification shall contain the following
information to the extent known to the notifying shareholder: (a) the name
and address of each proposed nominee; (b) the principal occupation of each
proposed nominee; (c) the number of shares of capital stock of the
corporation owned by each proposed nominee; (d) the name and residence
address of the notifying shareholder; (e) the number of shares of capital
stock of the corporation owned by the notifying shareholder; (f) with the
written consent of the proposed nominee, a copy of which shall be
furnished with the notification, whether the proposed nominee has ever been
convicted of or pleaded nolo contendere to any criminal offense involving
dishonesty or breach of trust, filed a petition in bankruptcy or been
adjudged a bankrupt. The notice shall be signed by the nominating
shareholder and by the nominee. Nominations not made in accordance herewith
shall be disregarded by the chairman of the meeting and, upon his
instructions, the inspectors of election shall disregard all votes cast for
each such nominee. The restrictions set forth in this paragraph shall not
apply to nomination of a person to replace a proposed nominee who has died
or otherwise become incapacitated to serve as a director between the last
day for giving notice hereunder and the date of election of directors if
the procedure called for in this paragraph was followed with respect to the
nomination of the proposed nominee. A copy of the preceding paragraph shall
be set forth in the notice to shareholders of any meeting at which
directors are to be elected."
SINCE IMPORTANT MATTERS ARE TO BE CONSIDERED AT THE MEETING, IT IS VERY
IMPORTANT THAT EACH SHAREHOLDER VOTE.
WE URGE YOU TO SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE,
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON. THE ENCLOSED PROXY IS
SOLICITED BY THE BOARD. ANY SHAREHOLDER WHO EXECUTES AND DELIVERS SUCH A PROXY
HAS THE RIGHT TO REVOKE IT AT ANY TIME BEFORE IT IS EXERCISED BY GIVING WRITTEN
NOTICE OF REVOCATION TO THE SECRETARY OF THE COMPANY, BY SUBMITTING PRIOR TO THE
MEETING A PROPERLY EXECUTED PROXY BEARING A LATER DATE OR BY BEING PRESENT AT
THE MEETING AND ELECTING TO VOTE IN PERSON BY ADVISING THE CHAIRMAN OF THE
MEETING OF SUCH ELECTION.
PLEASE INDICATE ON THE PROXY WHETHER OR NOT YOU EXPECT TO ATTEND THE
MEETING SO THAT THE COMPANY CAN ARRANGE FOR ADEQUATE ACCOMMODATIONS.
By Order of the Board of Directors,
John D. Illgen, Secretary
Dated: April 8, 2005
Goleta, California
ANNUAL REPORT ON FORM 10-K
COPIES OF THE COMPANY'S 2004 ANNUAL REPORT ON FORM 10-K, AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION, ARE AVAILABLE UPON REQUEST TO: CHARLES G.
BALTUSKONIS, EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER, COMMUNITY
WEST BANCSHARES, 445 PINE AVENUE, GOLETA, CA 93117-3474, TELEPHONE (805)
692-5821, ON THE COMPANY'S WEBSITE AT WWW.COMMUNITYWEST.COM AND ON THE WEBSITE
OF THE SECURITIES AND EXCHANGE COMMISSION AT WWW.SEC.GOV.
COMMUNITY WEST BANCSHARES
445 PINE AVENUE
GOLETA, CALIFORNIA 93117-3474
--------------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 26, 2005
--------------------------
SOLICITATION AND VOTING OF PROXIES
Community West Bancshares (Company or CWBC) is furnishing this Proxy
Statement to its shareholders in connection with the solicitation by the Board
of Directors (Board) of proxies to be used at the Annual Meeting (Meeting) of
Shareholders, to be held on Thursday, May 26, 2005 at 6:00 P.M. PDT at La Cumbre
Country Club, 4015 Via Laguna, Santa Barbara, California 93110, and at any and
all adjournments and postponements thereof, and, the designated proxyholders
(Proxyholders) are members of the Company's management. Only shareholders of
record (shareholders) on March 31, 2005 (Record Date) are entitled to notice of
and to vote in person or by proxy at the Meeting or any adjournment or
postponement thereof. This Proxy Statement and the enclosed proxy card (Proxy)
first will be mailed to shareholders on or about April 15, 2005. The Company's
Annual Report to Shareholders, including consolidated financial statements for
the year ended December 31, 2004, accompanies this Proxy Statement.
Regardless of the number of shares of Common Stock of the Company (Common
Stock) owned, it is important that the holders of a majority of shares be
represented by proxy or be present in person at the Meeting. Shareholders are
requested to vote by completing the enclosed proxy card and returning it signed
and dated in the enclosed postage-paid envelope. Shareholders are to indicate
their vote in the spaces provided on the proxy card. PROXIES SOLICITED BY THE
BOARD WILL BE VOTED IN ACCORDANCE WITH THE DIRECTIONS GIVEN THEREIN. WHERE NO
INSTRUCTIONS ARE INDICATED, SIGNED PROXY CARDS WILL BE VOTED "FOR ALL NOMINEES"
FOR THE ELECTION OF THE NOMINEES NAMED IN THIS PROXY STATEMENT. If any other
business is properly presented at the Meeting, the Proxy will be voted in
accordance with the recommendations of the Board.
Other than the matters set forth on the attached Notice of the Meeting, the
Board knows of no additional matters that will be presented for consideration at
the Meeting. Execution of a proxy, however, confers to the designated
Proxyholders discretionary authority to vote the shares in accordance with the
recommendations of the Board on such other business, if any, that may properly
come before the Meeting and at any adjournments or postponements thereof,
including whether or not to adjourn the Meeting.
You may revoke your Proxy at any time prior to its exercise by filing a
written notice of revocation with the Secretary of the Company, by delivering to
the Company a duly executed Proxy bearing a later date, or by attending the
Meeting and voting in person. However, if you are a shareholder whose shares
are not registered in your own name, you will need to provide appropriate
documentation from the record holder to vote personally at the Meeting.
The following matters will be considered and voted upon at the Meeting:
1. ELECTION OF DIRECTORS. To elect eight persons to the Board of
Directors of the Company to serve until the 2006 Annual Meeting of Shareholders
and until their successors are elected and have qualified. The following
persons are the Board of Directors' nominees:
Robert H. Bartlein William R. Peeples
Jean W. Blois James R. Sims, Jr.
John D. Illgen Kirk B. Stovesand
Lynda J. Nahra C. Richard Whiston
1
2. OTHER BUSINESS. Transacting such other business as may properly
come before the Meeting and any adjournment or postponements thereof.
This solicitation of proxies is being made by the Board. The expense of
solicitation of proxies for the Meeting will be borne by the Company. It is
anticipated that proxies will be solicited primarily through the use of the
mail. Proxies may also be solicited personally or by telephone by Directors,
officers and employees of the Company, and its wholly-owned subsidiary,
Community West Bank (CWB), formerly Goleta National Bank, without additional
compensation therefor. The Company will also request persons, firms and
corporations holding shares in their names, or in the name of their nominees,
that are beneficially owned by others, to send proxy materials to and obtain
proxies from such beneficial owners and will reimburse such holders for their
reasonable expenses in doing so. The total estimated cost of the solicitation
is $5,000.
VOTING SECURITIES
The securities that may be voted at the Meeting consist of shares of Common
Stock. The close of business on March 31, 2005 has been fixed by the Board as
the Record Date for the determination of shareholders of record entitled to
notice of and to vote at the Meeting and at any adjournment or postponements
thereof. The total number of shares of Common Stock outstanding on the Record
Date was 5,745,014 shares. Each shareholder is entitled to one vote, in person
or by proxy, for each share as of the Record Date, except that in the election
of Directors, each shareholder has the right to cumulate provided that the
candidates' names have been properly placed in nomination prior to commencement
of voting and a shareholder has given notice of their intention to cumulate
votes prior to commencement of voting. Cumulative voting entitles a shareholder
to give one candidate a number of votes equal to the number of Directors to be
elected, multiplied by the number of shares of Common Stock held by that
Shareholder, or to distribute such votes among as many candidates as the
shareholder deems fit. The Company is soliciting authority to cumulate votes in
the election of Directors, and the enclosed Proxy grants discretionary authority
for this purpose. The candidates receiving the highest number of votes, up to
the number of Directors to be elected, will be elected.
Of the shares of Common Stock outstanding on the Record Date, 1,062,084
shares of Common Stock (18.49%) of the issued and outstanding shares of Common
Stock were beneficially owned by Directors and executive officers of the
Company. Such persons have informed the Company that they will vote "FOR" the
election of the nominees to the Board. Under California law and the Company's
Bylaws, a quorum consists of the presence in person or by proxy of a majority of
the shares entitled to vote at the Meeting, and a matter (other than the
election of Directors) voted on by Shareholders will be approved if it receives
the vote of a majority of the shares both present and voting, which shares also
constitute a majority of the required quorum, unless the vote of a greater
number of shares is required. Abstentions and broker non-votes will be included
in the number of shares present at the Meeting and entitled to vote for the
purpose of determining the presence of a quorum. Accordingly, in the event the
number of shares voted affirmatively does not represent a majority of the
required quorum, abstentions and broker non-votes will have the effect of a "no"
vote. Abstentions and broker non-votes do not have the effect of votes in
opposition to any nominee for election of Director.
If you hold Common Stock in "street name" and you fail to instruct your
broker or nominee as to how to vote such Common Stock, your broker or nominee
may, in its discretion, vote such Common Stock "FOR" the election of the Board
nominees.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND EXECUTIVE
OFFICERS
The following table sets forth certain information as of the Record Date,
concerning the beneficial ownership of the Company's outstanding Common Stock by
persons (other than depositories) known to the Company to own more than 5% of
the Company's outstanding Common Stock, by the Company's Directors
2
and executive officers, and by all Directors and executive officers of the
Company as a group. Management is not aware of any change in control of the
Company that has occurred since January 1, 2004, or any arrangement that may, at
a subsequent date, result in a change in control of the Company.
Except as indicated, the address of each of the persons listed below is c/o
Community West Bancshares, 445 Pine Avenue, Goleta, CA.
NUMBER OF SHARES OF NUMBER OF SHARES PERCENT OF CLASS
COMMON STOCK SUBJECT TO VESTED BENEFICIALLY
NAME AND TITLE BENEFICIALLY OWNED(1) STOCK OPTIONS(2) OWNED(2)
------------------------------------------------- --------------------- ------------------ -----------------
CHARLES G. BALTUSKONIS, Executive Vice President 7,600 7,000 *
and Chief Financial Officer, CWBC and CWB
ROBERT H. BARTLEIN, Director, Chairman of the 135,762 13,545 2.59%
Board, CWB
JEAN W. BLOIS, Director 58,824 15,099 1.28%
CYNTHIA M. HOOPER, Senior Vice President, CWB (3) 9,600 11,000 *
JOHN D. ILLGEN, Director 46,956 27,959 1.30%
INVESTORS OF AMERICA LIMITED PARTNERSHIP, FIRST 716,996 - 12.48%
BANKS, INC. AND ALLEN H. BLAKE (4)
BERNARD R. MERRY, Senior Vice President, CWB (3) - 19,000 *
LYNDA J. NAHRA, Director, President and Chief 6,330 51,800 1.00%
Executive Officer, CWBC and CWB
WILLIAM R. PEEPLES, Director, Chairman of the 778,757 - 13.56%
Board, CWBC (5)
JAMES R. SIMS, JR., Director 22,385 27,959 .87%
KIRK B. STOVESAND, Director 2,600 5,000 *
WILLIAM VIANI, Executive Vice President, CWB - 11,000 *
C. RICHARD WHISTON, Director 2,870 5,000 *
ALL DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP 1,062,084 164,362 20.75%
(10 in number) (3)
* Less than .5%
(1) Includes shares beneficially owned, directly and indirectly, together with
associates, except for shares subject to vested stock options and outstanding
warrants. Also includes shares held as trustee and held by or as custodian for
minor children. Unless otherwise noted, all shares are held as community
property under California law or with sole investment and voting power.
(2) Shares subject to options held by Directors or executive officers that are
exercisable within 60 days after the Record Date (vested) are treated as issued
and outstanding for the purpose of computing the percent of the class owned by
such person, but not for the purpose of computing the percent of class owned by
any other person.
(3) This person is not a named executive officer, but is a key officer of the
Company. As such, shares are not included in the line totals for "All Directors
and Executive Officers as a Group".
(4) Address is: 135 North Meramec, Clayton, MO 63105.
Total shares include 568,696 in name of Investors of America Limited
Partnership; 146,300 in name of First Banks, Inc.; and, 2,000 shares in
name of Allen H. Blake.
3
- The securities owned by First Banks, Inc. may be deemed to be
indirectly owned by Allen H. Blake, President and Chief Executive
Officer of First Banks, Inc., and by Investors of America Limited
Partnership, First Securities America, Inc., General Partner. Members
of the Dierberg Family and the Dierberg Family Trusts are shareholders
of First Securities America, Inc. and First Banks, Inc. Allen H. Blake
and Investors of America Limited Partnership disclaim beneficial
ownership of these securities.
- The securities owned by Investors of America Limited Partnership
may be deemed to be indirectly owned by First Banks, Inc. and by Allen
H. Blake, President and Chief Executive Officer of First Banks, Inc.
Members of the Dierberg Family and the Dierberg Family Trusts are
shareholders of First Securities America, Inc., the General Partner of
Investors of America Limited Partnership, and First Banks, Inc. Allen
H. Blake and First Banks, Inc. disclaim beneficial ownership of these
securities.
- The securities owned by Allen H. Blake may be deemed to be
indirectly owned by First Banks, Inc. and Investors of America Limited
Partnership. Allen H. Blake is President and Chief Executive Officer
of First Banks, Inc. Members of the Dierberg Family and the Dierberg
Family Trusts are shareholders of First Banks Inc. and First
Securities America, Inc., the General Partner of Investors of America
Limited Partnership. First Banks, Inc. and Investors of America
Limited Partnership disclaim beneficial ownership of these securities.
(5) Includes 173,922 shares held by Mr. Peeples' spouse, concerning which Mr.
Peeples disclaims beneficial ownership.
PROPOSAL 1
ELECTION OF DIRECTORS
DIRECTORS AND EXECUTIVE OFFICERS
The Company's Bylaws provide that the authorized number of Directors shall
be not less than six nor more than 11, with the exact number of Directors fixed
from time to time by resolution of a majority of the Board or by resolution of
the shareholders. The number of Directors is currently fixed at eight.
At the Meeting, eight persons will be elected to serve as Directors of the
Company until the 2006 Annual Meeting and until their successors are elected and
have qualified. The eight persons named below, all of whom are currently
Directors of the Company, have been nominated by the Board for re-election. A
Proxy that is submitted with the instruction "FOR all nominees listed" or
without instructions will be voted in such a way as to effect the election of
all eight nominees, or as many thereof as possible. In the event that any of
the nominees should be unable to serve as a Director, it is intended that the
Proxy will be voted for the election of such substitute nominees, if any, as
shall be designated by the Board. The Board has no reason to believe that any
of the nominees will be unable or unwilling to serve. Additional nominations
can only be made by complying with the notice provision set forth in the Bylaws
of the Company, an extract of which is included in the Notice of Annual Meeting
of Shareholders accompanying this Proxy Statement. This Bylaw provision is
designed to give the Board advance notice of competing nominations, if any, and
the qualifications of nominees, and may have the effect of precluding
third-party nominations if the notice provisions are not followed.
Pursuant to Nasdaq Stock Market (NASD) Rule 4200 (a) 15, the Board has made
an affirmative determination that the following members of the Board are
"independent" within the meaning of such rule: Robert H. Bartlein, Jean W.
Blois, John D. Illgen, William R. Peeples, James R. Sims, Jr., Kirk B. Stovesand
and C. Richard Whiston. As such, pursuant to NASD Rule 4350 (c) (1), a majority
of the members of the Board and all the members of the Audit Committee are
"independent" as so defined.
4
The following persons have been nominated for election by the Board:
Robert H. Bartlein William R. Peeples
Jean W. Blois James R. Sims, Jr.
John D. Illgen Kirk B. Stovesand
Lynda J. Nahra C. Richard Whiston
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE BOARD OF
DIRECTORS' NOMINEES.
INFORMATION ABOUT THE NOMINEES
ROBERT H. BARTLEIN (AGE 57)
Mr. Bartlein has been a member of the Board of CWBC since its inception in
1997 and a founder and Director of CWB since 1989. Mr. Bartlein serves on
CWBC's Nominating and Corporate Governance Committee and is Chairman of the
Board of CWB, Chairman of the Loan Committee and a member of the Executive
Committee. He is President and CEO of Bartlein & Company, Inc., founded in
1969, which is a property management company with four California offices as
well as offices in other states. He is a graduate of the University of
Wisconsin - Madison, with a degree in Finance, Investments and Banking, and did
post-graduate study at the University of Wisconsin - Milwaukee. Mr. Bartlein is
past President and a Director of the American Lung Association of Santa Barbara
and Ventura Counties.
JEAN W. BLOIS (AGE 77)
Mrs. Blois has been a member of the Board of CWBC since its inception in
1997 and of CWB since 1989. She is Chairman of CWB's Personnel / Compensation
Committee and a member of the Asset / Liability Committee. She co-founded Blois
Construction, Inc. and served in a financial capacity before retirement. She
formed her own consulting firm, Jean to the Rescue. Mrs. Blois graduated with a
BS from the University of California, Berkeley. She served as a Trustee of the
Goleta Union School District for 13 years, a Director of the Goleta Water
District for 10 years and is currently a council member for the City of Goleta
and, in 2005, serves as Mayor.
JOHN D. ILLGEN (AGE 60)
Mr. Illgen has been a member of the Board of CWBC since its inception in
1997 and of CWB since 1989. He is Secretary of the Board of CWBC and a member
of the Nominating and Corporate Governance Committee, Chairman of CWB's Asset /
Liability Committee and a member of the Personnel / Compensation and Compliance
Committees. Mr. Illgen is a Vice President and a Director of Northrop Grumman
Simulation Technologies Corp. (NGC). He was Founder (1988), President and
Chairman of Illgen Simulation Technologies, Inc. until its merger with NGC in
December 2003. Mr. Illgen is a Director of the National Defense Industry
Association and appears on General Alexander Haig's "World Business Review" as
an industry expert in information systems, modeling and simulation. Mr. Illgen
is an honorary member of the Santa Barbara Scholarship Foundation Board and a
Past President (1979-80) of Goleta Rotary Club.
LYNDA J. NAHRA (AGE 54)
Ms. Nahra has been President and Chief Executive Officer of CWB since 2000,
and of CWBC since February 2004, after serving in various positions of
increasing responsibility for CWB since 1997. Ms. Nahra is a member of CWB and
CWBC's Boards and serves on CWB's Loan, Asset / Liability, Compliance,
Management Succession and Disclosure Committees. Her banking career began in
1970 with Bank of America and her banking experience has included management
positions in operations, consumer and commercial lending, sales, private banking
and corporate banking. Ms. Nahra serves as a Director of Women's Economic
Ventures and the Girl Scouts of Tres Condados, is a Finance Committee member for
the Goleta Montessori Center School and the Santa Barbara United Way and is a
member of Montecito Rotary
5
Club. Ms. Nahra's educational background is from California Western University
in San Diego and Pacific Coast Banking School.
WILLIAM R. PEEPLES (AGE 62)
Mr. Peeples is Chairman of the Board of CWBC and a founder and Director of
CWB since 1989. Mr. Peeples is Chairman of CWBC's Audit, Nominating and
Corporate Governance Committees and serves on CWB's Loan, Personnel /
Compensation, Executive and Management Succession Committees. Mr. Peeples
served in various financial capacities, including President and Chief Financial
Officer of Inamed Corporation from 1985 to 1987. He also was a founder and
Chief Financial Officer of Nusil Corporation and Imulok Corporation from 1980 to
1985. Mr. Peeples has been active as a private investor and currently serves as
Managing General Partner of two real estate partnerships. Mr. Peeples holds a
BBA from the University of Wisconsin - Whitewater, and an MBA from Golden Gate
University, Air Force on-base program.
JAMES R. SIMS JR. (AGE 69)
Mr. Sims has been a member of the Board of CWBC since its inception in 1997
and of CWB since 1989. Mr. Sims serves on CWB's Compliance and Audit Committees
and previously served on the Finance Committee. Mr. Sims is a real estate
broker whose career began in 1970 in Santa Barbara. He is a past President of
the Santa Barbara Board of Realtors, Chairman of the Multiple Listing Service
and served in 1984 as Regional Vice President of the California Association of
Realtors. Mr. Sims served on the Santa Barbara Coastal Housing Association
seeking affordable housing and he developed three Residential Care Facilities
for the elderly in Camarillo that he operated until his retirement in 2000.
KIRK B. STOVESAND (AGE 42)
Mr. Stovesand has been a member of the Board of CWBC and CWB since May
2003. Mr. Stovesand serves on CWB's Audit and Asset/Liability Committees and is
Secretary of CWB's Board. He is a partner of Walpole & Co., founded in 1974,
which is a Certified Public Accounting and Consulting firm. Mr. Stovesand has
served on the boards of both for-profit and not-for-profit organizations. He is
a graduate of the University of California Santa Barbara with a degree in
Business Economics. Mr. Stovesand received a Masters Degree in Taxation from
Golden Gate University and a Master Certificate in Global Business Management
from George Washington University. He is a Certified Financial Planner,
certified in mergers and acquisitions, and a member of the American Institute of
Certified Public Accountants.
RICHARD C. WHISTON (AGE 68)
Mr. Whiston has been a member of the Board of CWBC and CWB since June 2004.
He serves on CWBC's Audit Committee and CWB's Loan Committee. Mr. Whiston was a
partner in the Santa Barbara law firm of Mullen, McCaughey & Henzell. He served
from 1983 to 1985 as Principal Deputy General Counsel and as Chief of Legal
Services, U.S. Army, and later returned to private practice of law. Mr. Whiston
was appointed as Principal Deputy Assistant Secretary of the Army for Manpower
and Reserve Affairs in July 2001, and as Special Assistant to the Secretary of
the Army from October 2001 to August 2003. He received a BA and a JD from the
University of California, Berkeley and served in the U.S. Army.
None of the Directors or executive officers of the Company were selected
pursuant to any arrangement or understanding, other than with the Directors and
executive officers of the Company, acting within their capacities as such. The
Company knows of no family relationships between the Directors and executive
officers of the Company, nor do any of the Directors or executive officers of
the Company serve as Directors of any other company which has a class of
securities registered under, or which is subject to the periodic reporting
requirements of, the Securities Exchange Act of 1934 (Exchange Act) or any
investment company registered under the Investment Company Act of 1940.
Officers serve at the discretion of the Board.
6
EXECUTIVE AND CERTAIN OTHER KEY OFFICERS (not members of the Board)
The following sets forth, as of the Record Date, the names and certain
other information concerning executive and certain other key officers of the
Company, in addition to the executive officer who is nominated for election as a
Director.
CHARLES G. BALTUSKONIS (AGE 54)
Mr. Baltuskonis, Executive Vice President and Chief Financial Officer of
CWBC and CWB, has been with the Company since November 2002. He served as
Senior Vice President and Chief Accounting Officer of Mego Financial Corporation
from 1997 to 2002, and Senior Vice President and Controller of TAC Bancshares
from 1995 to 1997. Prior to that, he was Chief Financial Officer of F&C
Bancshares and of First Coastal Corporation and a Senior Manager with the public
accounting firm of Ernst & Young, specializing in services to financial
institutions. Mr. Baltuskonis is a certified public accountant, a member of the
American Institute of Certified Public Accountants and Financial Managers
Society, and holds a BS from Villanova University.
CYNTHIA M. HOOPER (AGE 42)
Ms. Hooper, Senior Vice President, SBA Lending, has been with CWB since
1989. She started at CWB in commercial lending and currently manages the SBA
underwriting and processing unit, which underwrites and processes loans for 15
Preferred Lender territories in nine states. Prior to serving at CWB, she was
in commercial lending at City Commerce Bank. Ms. Hooper is a member of the
National Association of Government Guaranteed Lenders and has served as a
Director of the Goleta Chamber of Commerce.
BERNARD R. MERRY (AGE 57)
Mr. Merry, Senior Vice President, Mortgage, has been with CWB since 1998.
His CWB roles have included HUD Administrator and head of Alternative Mortgage
Products. He was named Mortgage Division Manager in November 2001. Currently,
Mr. Merry oversees CWB's Retail and Wholesale Mortgage Departments. He formerly
was a Vice President for ITT Financial Services for 24 years managing their West
Coast Broker Division and California Real Estate Collection Department. Mr.
Merry worked as a consultant for Option One Mortgage Corporation and as
Assistant Vice President for Cityscape Mortgage Corporation, opening its Western
States operation.
WILLIAM VIANI (AGE 57)
Mr. Viani, Executive Vice President and Credit Administrator of CWB, has
been with the Company since 1996. He has held various positions with CWB, most
recently Senior SBA Loan Officer. Mr. Viani began his banking career with
Crocker National Bank and his experience includes commercial credit, special
assets and corporate banking. From 1993 to 1996, he was with El Camino
National Bank, serving as President and Chief Executive Officer from 1995 to
1996. From 1988 to 1993, he was Senior Lending Officer with Ventura County
National Bank. Mr. Viani is a member of Risk Management Associates and holds a
BS in Economics from Loyola University and an MA from the University of Southern
California.
CERTAIN INFORMATION REGARDING THE BOARD OF DIRECTORS
MEETINGS AND COMMITTEES
The Board met 13 times (12 regular meetings and one special meeting) during
the year ended December 31, 2004, and had the following standing committees that
met during the year: Audit Committee, Personnel / Compensation Committee and
Nominating and Corporate Governance Committee. In addition, the Company's
Directors served on the Board of Directors of CWB, including the various
committees established by that subsidiary. During 2004, none of the Company's
Directors attended less than 75% of the Company's Board meetings and meetings of
committees on which they served. All the Board members attended the 2004 Annual
Meeting of Shareholders.
7
The Audit Committee is composed of four independent Directors: Messrs.
Peeples, Sims, Stovesand and Whiston. This Committee is responsible for review
of all internal and external examination reports and selection of the Company's
independent auditors. The Audit Committee met six times during 2004.
The Nominating and Corporate Governance Committee is composed of three
independent Directors: Messrs. Peeples, Bartlein and Illgen. The Committee is
responsible for recommendations regarding the Board's composition and structure
and policies and processes regarding overall corporate governance. The
Committee met once during 2004.
The Personnel / Compensation Committee is composed of three independent
Directors: Mrs. Blois and Messrs. Illgen and Peeples. The Committee is
responsible for determining executive compensation. This Committee met three
times during 2004.
SHAREHOLDER COMMUNICATION WITH DIRECTORS
Shareholders may communicate directly with the Board by writing to:
William R. Peeples, Chairman of the Board of Directors
Community West Bancshares
445 Pine Avenue
Goleta, CA 93117-3474
DIRECTORS' COMPENSATION
There were no CWBC Director fees paid during 2004.
CWB's non-employee Directors are paid for attendance at Board meetings at
the rate of $1,000 for each regular Board meeting and $200 for each committee
meeting. If a Director attends a meeting by telephone, only 25% of the above
fee is received. Also, in 2004, each non-employee Director, with the exception
of Mr. Whiston, received compensation of $4,000. Mr. Whiston, as a Director for
only part of the year, received $2,000.
AUDIT COMMITTEE REPORT
The Report of the Audit Committee of the Board shall not be deemed filed
under the Securities Act of 1933 (Securities Act) or under the Exchange Act.
The Board maintains an Audit Committee comprised of four of the Company's
Directors, who each met the independence and experience requirements of NASD
Rule 4350 (c) (1). The Audit Committee assists the Board in monitoring the
accounting, auditing and financial reporting practices of the Company. The
Audit Committee operates under a written charter, which was last amended and
ratified on December 16, 2004, and is assessed annually for adequacy by the
Audit Committee. The Charter is attached as Appendix A of this Proxy Statement.
Based on the attributes, education and experience requirements required by
NASD Rule 4350 (d) (2) (A), the requirements set forth in section 407 of the
Sarbanes-Oxley Act of 2002 and associated regulations, the Board has identified
William R. Peeples as an "Audit Committee Financial Expert" as defined under
Item 401 (h) of Regulation S-K, and has determined him to be independent.
Management is responsible for the preparation of the Company's financial
statements and financial reporting process, including its system of internal
controls. In fulfilling its oversight responsibilities, the Audit Committee:
- Reviewed and discussed with management the audited financial
statements contained in the Company's Annual Report on Form 10-K for
fiscal 2004; and
- Obtained from management their representation that the Company's
financial statements have been prepared in accordance with accounting
principles generally accepted in the United States.
8
The Company's independent auditors, Ernst & Young LLP (Ernst), are
responsible for performing an audit of the Company's financial statements in
accordance with the auditing standards generally accepted in the United States
and expressing an opinion on whether the Company's financial statements present
fairly, in all material respects, the Company's financial position and results
of operations for the periods presented and conform with accounting principles
generally accepted in the United States. In fulfilling its oversight
responsibilities, the Audit Committee:
- Discussed with Ernst the matters required to be discussed by
Statement on Auditing Standards No. 61, as amended (Communication with
Audit Committees), and Section 204 of the Sarbanes-Oxley Act of 2002;
and
- Received and discussed with Ernst the written disclosures and the
letter from Ernst required by Independent Standards Board Standard No.
1 (Independence Discussions with Audit Committees), and reviewed and
discussed with Ernst whether the rendering of the non-audit services
provided by them to the Company during fiscal 2004 was compatible with
their independence.
In addition, the Company received a letter from Ernst to the effect that
Ernst's audit of the Company was subject to its quality control system for the
United States accounting and auditing practice to provide reasonable assurance
that the engagement was conducted in compliance with professional standards,
that there was appropriate continuity of Ernst personnel working on the audit
and the availability of national office consultation.
In performing its functions, the Audit Committee acts only in an oversight
capacity. It is not the responsibility of the Audit Committee to determine that
the Company's financial statements are complete and accurate, are presented in
accordance with accounting principles generally accepted in the United States or
present fairly the results of operations of the Company for the periods
presented or that the Company maintains appropriate internal controls. Nor is
it the duty of the Audit Committee to determine that the audit of the Company's
financial statements has been carried out in accordance with generally accepted
auditing standards or that the Company's auditors are independent.
Based upon the reviews and discussions described above, and the report of
Ernst, the Audit Committee has recommended to the Board, and the Board has
approved, that the audited financial statements be included in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 2004 for
filing with the Securities and Exchange Commission.
THE AUDIT COMMITTEE
William R. Peeples, Chairman
James R. Sims, Jr.
Kirk B. Stovesand
C. Richard Whiston
Dated: March 24, 2005
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
The Company's Nominating and Corporate Governance Committee (NCGC
Committee) was established in February 2004 and the committee charter (Charter)
was approved in March 2004. The NCGC Committee, consisting of three independent
Directors, makes recommendations to the Board regarding the Board's composition
and structure, nominations for elections of Directors and policies and processes
regarding principles of corporate governance to ensure the Board's compliance
with its fiduciary duties to the Company and its shareholders. The NCGC
Committee reviews the qualifications of, and recommends to the Board, candidates
as additions, or to fill Board vacancies, if any were to occur during the year.
9
The NCGC Committee will consider, as part of its nomination process, any
director candidate recommended by a shareholder of the Company who follows the
procedures in this Proxy Statement shown under the heading "2006 Shareholder
Proposals". The NCGC Committee will follow the processes in the Charter when
identifying and evaluating overall Board composition and individual nominees to
the Board.
Additional information regarding (i) the NCGC Committee's policy with
regard to the consideration of any Director candidates recommended by security
holders and related procedures to be followed by security holders in submitting
such recommendations, (ii) minimum qualifications of Director candidates, and
(iii) the NCGC Committee's process for identifying and evaluating nominees for
Directors, is incorporated herein by reference to the Charter. A copy of the
Charter is included as Appendix A to the Company's 2004 Proxy Statement, as
filed with the SEC on April 19, 2004, and is available on the SEC's website at
www.sec.gov.
PERSONNEL / COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Personnel / Compensation Committee (PC Committee) is composed of three
Directors: Mrs. Blois, and Messrs. Illgen and Peeples, none of whom served as an
officer of the Company or of its subsidiaries. The Company's executive officers
have represented to the Company that none of them served on the Board or PC
Committee, or in an equivalent capacity, of another entity.
PERSONNEL / COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Report of the PC Committee of the Board shall not be deemed to be filed
under the Securities Act or under the Exchange Act.
The PC Committee was responsible for reviewing and approving the Company's
overall compensation and benefit programs and for administering the compensation
of the Company's executive and senior officers.
The PC Committee's functions and objectives are: (i) to determine the
competitiveness of current base salary, annual incentives and long-term
incentive relative to specific competitive markets for the President; (ii) to
develop a performance review mechanism that has written objectives and goals
which are used to make salary increase determinations; (iii) to develop an
annual incentive plan for senior management; and (iv) to provide guidance to the
Board in its role in establishing objectives regarding executive compensation.
The PC Committee's overall compensation philosophy is as follows: (i) to attract
and retain quality talent which is critical to both short-term and long-term
success; (ii) to reinforce strategic performance objectives through the use of
incentive compensation programs; (iii) to create a mutuality of interest between
executive and senior officers and shareholders through compensation structures
that share the rewards and risks of strategic decision-making; and (iv) to
encourage executives to achieve substantial levels of ownership of stock in the
Company.
The compensation package offered to executive officers consists of a mix of
salary, incentive bonus awards and stock option awards, as well as benefits
under employee benefit plans. Salary levels recommended by the PC Committee are
intended to be consistent and competitive with the practices of comparable
financial institutions and each executive's level of responsibility. The PC
Committee generally utilizes internal and/or external surveys of compensation
paid to executive officers performing similar duties for depository institutions
and their holding companies.
In establishing executive compensation for the Chief Executive Officer of
CWBC and CWB, the PC Committee considered the overall financial condition of the
Company, profitability, asset quality and compliance with rules and regulations.
In determining Ms. Nahra's compensation, the PC Committee used both quantitative
and qualitative criteria. They included estimated (at the time) earnings of just
under $4 million, which was greater than the budget plan and is indicative of
creation of shareholder value; capital strength, as evidenced by the
qualification of CWB as "well capitalized"; continued strong asset quality;
improvements in customer service and compliance; and, the development of other
executive and senior talent in the Company. The PC Committee also considered the
amount of time the executive had been with the
10
Company, performance goals and general industry customs. Generally excluded from
the PC Committee's consideration of incentive bonuses would be income or
expenses resulting from extraordinary or non-recurring events, regulatory
changes, merger or acquisition activity or the imposition of changes in
generally accepted accounting principles.
The PC Committee believes that the Company's compensation program and
compensation levels are effective in attracting, motivating and retaining
outstanding executive and senior officers and that they are consistent with the
Company's immediate and long-term goals.
THE PERSONNEL / COMPENSATION COMMITTEE
Jean W. Blois, Chairman
John D. Illgen
William R. Peeples
Dated: November 18, 2004
EXECUTIVE COMPENSATION
The following table sets forth, for the years ended December 31, 2004, 2003
and 2002, the compensation information for the Company's Chief Executive Officer
and the other four most highly compensated executive officers (collectively, the
Named Executive Officers) and other key officers (Other Key Officers) serving
the Company in 2004.
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------- ------------
SECURITIES
OTHER ANNUAL UNDERLYING (1) ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS COMPENSATION
--------------------------------------- ---- -------- ------- ------------------ ----------- ---------------
LYNDA J. NAHRA, President and Chief 2004 $175,000 $60,000 (2) $ 10,731 - $ 3,885
Executive Officer, CWBC and CWB 2003 165,000 35,000 (2) 7,679 55,000 3,370
2002 142,501 20,000 - - 2,952
CHARLES G. BALTUSKONIS, Executive 2004 135,417 30,000 - 10,000 3,562
Vice President and Chief Financial 2003 125,000 15,000 - 10,000 1,771
Officer, CWBC and CWB 2002 15,625 - - 7,500 -
CYNTHIA M. HOOPER, Senior Vice 2004 114,989 10,000 (3) 3,339 5,000 2,242
President, SBA Loans, CWB 2003 109,375 7,500 - - 1,983
2002 98,797 3,750 - 10,000 2,330
BERNARD R. MERRY, Senior Vice 2004 161,252 7,500 (3) 22,405 5,000 4,242
President, Mortgage Division 2003 159,972 7,500 - - 3,728
Manager, CWB 2002 142,451 9,500 - - 3,222
WILLIAM VIANI, Executive Vice 2004 119,202 15,000 - 5,000 3,554
President and Credit Administrator,
CWB
(1) Amounts represent Company's 401(k) matching contribution plus
group-term life insurance premium.
(2) Amount represents deferrals plus interest on Ms. Nahra's deferred
compensation plan.
(3) Amount represents cash paid in lieu of earned vacation time.
STOCK OPTIONS
In connection with the bank holding company reorganization, the Company
adopted the Community West Bancshares 1997 Stock Option Plan (1997 Plan)
providing for the issuance of up to 842,014 option shares. At the 2003 Annual
Meeting of Shareholders, an additional 450,000 option shares were approved, for
an aggregate total of 1,292,014 option shares. As of the Record Date, 391,401
options had been
11
exercised and options for 531,162 shares were outstanding, leaving 369,451
shares available for future grants.
The following table sets forth certain information regarding stock options
granted by the Company to the Named Executive Officers and Other Key Officers
during 2004:
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term (2)
-------------------------------------------------------- ----------------------------------
Number of Percent of
Securities Total Options
Underlying Granted to Exercise
Options Employees in Price
Name Granted Fiscal Year (1) ($/share) Expiration Date 5% 10%
---------------------- ---------- --------------- ---------- --------------- ---------------- ----------------
Charles G. Baltuskonis 10,000 6.6% $ 8.75 2/2014 $ 55,028 $ 139,452
---------------------- ---------- --------------- ---------- --------------- ---------------- ----------------
Cynthia M. Hooper 5,000 3.3% 8.75 2/2014 27,514 69,726
---------------------- ---------- --------------- ---------- --------------- ---------------- ----------------
Bernard R. Merry 5,000 3.3% 8.75 2/2014 27,514 69,726
---------------------- ---------- --------------- ---------- --------------- ---------------- ----------------
William Viani 5,000 3.3% 8.75 2/2014 27,514 69,726
---------------------- ---------- --------------- ---------- --------------- ---------------- ----------------
(1) The Company issued options to purchase 151,500 shares of Common Stock in
2004. The Company issued no stock appreciation rights in 2004.
(2) Potential realizable value assumes that the common stock appreciates at the
annual rate shown (compounded annually) from the date of grant until the options
expire. These numbers are calculated based on the SEC's requirements and do not
represent an estimate by CWBC of future stock price growth.
The following table sets forth certain information regarding stock options
outstanding at December 31, 2004 for the Named Executive Officers and Other Key
Officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
--------------------------------------------------------------------------------------------------
Number of
Securities
Underlying Value of
Unexercised Unexercised In-the-
Options at Fiscal Money Options at
Year End (# Fiscal Year End (1)
Shares Acquired exercisable/ ($exercisable/
Name on Exercise Value Realized unexercisable) unexercisable)
---------------------- --------------- -------------- ------------------ ---------------------
Lynda J. Nahra - - 41,000 / 41,500 $ 275,170/ $350,170
---------------------- --------------- -------------- ------------------ ---------------------
Charles G. Baltuskonis - - 5,000 / 22,500 $ 40,610/ $142,965
---------------------- --------------- -------------- ------------------ ---------------------
Cynthia M. Hooper - - 7,200 / 11,800 $ 56,984/ $82,196
---------------------- --------------- -------------- ------------------ ---------------------
Bernard R. Merry - - 17,200 / 6,300 $ 78,514/ $32,899
---------------------- --------------- -------------- ------------------ ---------------------
William Viani - - 10,000 / 13,000 $ 87,700/ $79,360
---------------------- --------------- -------------- ------------------ ---------------------
(1) Based on the closing price on the Nasdaq National Market at $13.47 per share
on December 31, 2004.
12
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
(AS OF DECEMBER 31, 2004)
------------------------------------------------------------------------------------------------------------
Number of
securities to be Number of securities
issued upon Weighted-average remaining available for future
exercise of exercise price of issuance under equity
outstanding outstanding compensation plans
options, warrants options, warrants (excluding securities
Plan Category and rights and rights reflected in column (a)
---------------------------------- ------------------ ------------------- -------------------------------
(a) (b) (c)
Plans approved by shareholders 543,307 $ 6.77 372,451
Plans not approved by shareholders - N/A -
Total 543,307 372,451
EMPLOYMENT AND OTHER COMPENSATION AGREEMENTS
Ms. Nahra has an Employment Contract that expires December 31, 2006. As of
July 1, 2003, Ms. Nahra's annual base salary was increased to $175,000. In
addition, she has a deferred compensation account maintained at CWB for her
benefit, to which 6% of her base salary (currently $10,500 per annum) is
credited, along with interest at the then-current CWB six-month certificate of
deposit rate. Ms. Nahra is also eligible for an annual bonus at the sole
discretion of CWB's Board Personnel / Compensation Committee. For 2004, such
bonus amount awarded was $60,000. Ms. Nahra's contract specifies that, in the
event of termination without cause, she would continue to receive salary and
benefits plus deferred compensation for a period of three months. Also, the
contract contains a change of control (as defined) clause whereby, if she is
terminated within one year following such event, she would be entitled to six
months base salary plus deferred compensation.
A former Chief Executive Officer and President of the Company is a party to
an Executive Salary Continuation Agreement (ESC) with the Company dated January
1, 1994. The purpose of the ESC was to provide an incentive for the former
executive's continuing employment with CWB on a long-term basis. The ESC
provides the former executive with a salary continuation benefit of $50,000 per
year for 15 years after retirement. Normal retirement under the ESC was age 61.
The present value of the contractual liability has been recognized in the
Company's audited financial statements. Beginning in March 2004, benefit
payments under the ESC commenced.
PROFIT SHARING AND 401(k) PLAN
The Company has established a 401(k) plan for the benefit of its employees.
Employees are eligible to participate in the plan after three months of
consecutive service. Employees may make contributions to the plan under the
plan's 401(k) component and the Company may make contributions under the plan's
profit sharing component, subject to certain limitations. The Company's
contributions were determined by the Board and amounted to $137,354, $128,776
and $171,467, respectively, in 2004, 2003 and 2002.
STOCK PERFORMANCE GRAPH
The following graph presents the cumulative, five-year total return for the
Company's Common Stock compared with the Nasdaq Total Return Index, a broad
market index of stocks traded on the Nasdaq National Market, and the SNL
Securities Index of banks having under $500 million in total assets, which the
Company believes is representative of peer issuers. The graph assumes an initial
investment of $100 in each of the Company's Common Stock, the securities
underlying the Nasdaq Total Return Index and the securities
13
underlying the SNL Index for Banks on December 31, 1999, and that all dividends
were reinvested. This graph shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act or under the Exchange Act, except to the extent
that the Company specifically incorporates this information by reference, and
shall not otherwise be deemed filed under such Acts.
[GRAPHIC OMITED]
PERIOD ENDED
----------------------------------------------------------
INDEX 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03 12/31/04
-------------------------------------------------------------------------------------
Community West Bancshares 100.00 54.74 84.76 66.25 127.14 192.68
NASDAQ Composite 100.00 60.82 48.16 33.11 49.93 54.49
SNL <$500M Bank Index 100.00 96.47 133.45 170.90 249.47 287.96
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Some of the Directors and executive officers of the Company, as well as the
companies with which such Directors and executive officers are associated, are
customers of and have had banking transactions with CWB in the ordinary course
of business. CWB expects to have such ordinary banking transactions with such
persons in the future. In the opinion of CWB management, all loans and
commitments to lend included in such transactions were made in compliance with
applicable laws on substantially the same terms, including interest rates and
collateral, as those prevailing for comparable transactions with other persons
of similar creditworthiness and did not involve more than a normal risk of
collectibility or present other unfavorable features. Although CWB does not
have any limits on the aggregate amount it would be willing to lend to Directors
and officers as a group, loans to individual Directors and officers must comply
with CWB's internal lending policies and statutory lending limits.
14
1997 STOCK OPTION PLAN
ELIGIBILITY
Full-time employees, officers and Board members of CWBC and subsidiaries,
including CWB, are eligible to receive awards under the Plan at the discretion
of the Board.
As of December 31, 2004, the Plan currently has available unissued and
authorized grants to Directors of options to purchase up to 155,002 shares of
Common Stock.
ADMINISTRATION
The Board, serving as the "Stock Option Committee", administers the Plan.
The Board has the authority to make all determinations and approvals. Members
of the Board receive no additional compensation for their administration of the
Plan.
TERMS OF THE STOCK OPTIONS
The Plan authorizes the issuance to employees of two types of stock-based
awards: "Incentive Stock Options", which are intended to satisfy the definition
of "incentive stock options" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (Code), and "Non-Qualified Stock Options",
which fall outside the requirements of Section 422. Directors who are not
employees of CWBC or its subsidiaries are eligible to receive only Non-Qualified
Stock Options, while employees may, subject to the requirements of the Code,
receive Incentive Stock Options.
In general, the option exercise price for each share covered by an option
equals the fair market value of the Common Stock on the date of grant. If the
recipient owns in excess of 10% of the total combined vesting power of CWBC or
any subsidiary, the exercise price of any Incentive Stock Option must be at
least 110% of the fair market value on the date of grant.
The Board has the discretion to determine the vesting schedule of all
options under the Plan, provided that all options must vest at least 20% per
year over five years from the date of grant.
Stock Options must be exercised by payment in full of the exercise price,
or, with the prior consent of the Board, may be exercised by the delivery of
previously owned shares of Common Stock.
If a plan participant's employment or affiliation as a Director with CWBC
or a subsidiary ceases for any reason other than death, disability or for cause,
the participant's options expire 90 days after the cessation (or any earlier
date when the option's term expires). Vesting ceases at the time the
affiliation ceases. If the participant's affiliation is terminated for cause,
then the participant's options expire 30 days after termination (or any earlier
date when the option's term expires), unless reinstated by the Board. If the
participant dies while employed by CWBC, or during the 90-day period referred to
above, the participant's estate may exercise any options that had vested on the
date of death for a subsequent period of one year. After the disability of a
participant, the participant may exercise options that had vested when the
disability occurred for a subsequent period of one year.
TERMINATION OF STOCK OPTIONS AND THE PLAN
The Plan terminates on January 23, 2007, the tenth anniversary of its
adoption. No option exercised under the plan shall be exercisable for a period
greater than ten years from its date of grant.
INDEPENDENT AUDITORS
The Company's independent auditors for the fiscal year ended December 31,
2004 were Ernst & Young LLP (Ernst). The Company has engaged Ernst as
independent auditors for the fiscal year ending December 31, 2005.
Representatives of Ernst will be invited to attend the Meeting. The Company will
afford the representatives an opportunity to make a statement, should they
desire to do so, and expect that the representatives will be available to
respond to appropriate questions.
15
AUDIT FEES
During the years ended December 31, 2004 and 2003, the aggregate fees
billed by Ernst for the audit of the Company's consolidated financial statements
for such fiscal year and for the review of the Company's interim financial
statements were $150,500 and $140,500, respectively.
AUDIT-RELATED FEES
During the years ended December 31, 2004 and 2003, the aggregate fees
billed by Ernst for other audit-related services were $0 and $22,500,
respectively.
TAX FEES
During the years ended December 31, 2004 and 2003, the aggregate fees
billed by Ernst for professional services related to state and federal tax
compliance and consulting were $32,100 and $84,600, respectively.
OTHER FEES
During the years ended December 31, 2004 and 2003, there were no fees
billed by Ernst for information technology consulting services.
The Audit Committee of the Company reviewed and discussed with Ernst
whether the rendering of the non-audit services provided by them to the Company
during fiscal 2004 was compatible with their independence. The Audit Committee
pre-approves all audit and permissible non-audit services to be provided by
Ernst and the estimated fees for these services.
2006 SHAREHOLDER PROPOSALS
Shareholder proposals to be considered for inclusion in the Proxy Statement
for the Company's 2006 Annual Meeting of Shareholders (2006 Meeting) must be
received by the Company at its offices at 445 Pine Avenue, Goleta, California
93117, no later than December 23, 2005. The proposals must also satisfy the
conditions and procedures prescribed by the Securities and Exchange Commission
(SEC) in Rule 14a-8 for such proposals to be included in the Company's Proxy
Statement for the 2006 Meeting, and must be limited to 500 words. To be
included in the Proxy Statement, the shareholder must be a holder of record or
beneficial owner of at least $2,000 in market value or 1 % of the Company's
securities entitled to be voted on the proposal, and have held the shares for at
least one year and will continue to hold the shares through the date of the 2006
Meeting. Either the proposer, or a representative qualified under California
law to present the proposal on the proposer's behalf, must attend the meeting to
present the proposal. Shareholders may not submit more than one proposal.
Shareholders wanting to recommend names of individuals for possible
nomination to the Board may do so according to the following procedures:
1. Contact the Corporate Secretary to obtain the Board membership
criteria.
2. Make typewritten submission to the Corporate Secretary naming the
proposed candidate and specifically noting how the candidate
meets the criteria as set forth by the Board.
3. Submission must be received 120 days prior to the expected
mailing date of the Proxy Statement.
4. Submitter must prove they are a shareholder of the Company and
have held those shares for at least one year at the time of
submission.
5. If the Submittee is aware of the submission, he or she must sign
a statement indicating such.
6. If the Submittee is not aware of the submission, the Submitter
must explain why.
16
The written submission must be mailed to:
Corporate Secretary
Community West Bancshares
445 Pine Avenue
Goleta, CA 93117-3474
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers (as
defined in regulations promulgated by the SEC thereunder), Directors and persons
who own more than ten percent of the Common Stock to file reports of stock
ownership and changes in stock ownership with the SEC. The officers, Directors
and greater than ten percent shareholders are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of all reports of ownership
furnished to the Company, or written representations that no forms were
necessary, the Company believes that during the last year its officers,
Directors and greater than ten percent beneficial owners complied with all
filing requirements.
OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING
The SEC has in effect a rule governing a company's ability to use
discretionary proxy authority with respect to shareholder proposals that were
not submitted by the shareholders in time to be included in the proxy statement.
As a result, in the event a shareholder proposal is not submitted to the Company
prior to April 8, 2005, the proxies solicited by the Board for the 2005 Annual
Meeting will confer authority on the Proxyholders to vote the shares in
accordance with their best judgment and discretion if the proposal is presented
at the 2005 Annual Meeting without any discussion of the proposal in the Proxy
Statement for such meeting.
The Company's Board knows of no business that will be presented for
consideration at the Meeting other than as stated in the Notice of Annual
Meeting of Shareholders. If however, other matters are properly brought before
the Meeting, it is the intention of the persons named in the accompanying Proxy
to vote the shares represented thereby on such matters in accordance with their
best judgment.
Whether or not you intend to be present at the Meeting, you are urged to
return your proxy card promptly. If you are then present at the Meeting and
wish to vote your shares in person, your original Proxy may be revoked by voting
at the Meeting. However, if you are a shareholder whose shares are not
registered in your own name, you will need the Proxy card obtained from your
recordholder to vote personally at the Meeting.
By Order of the Board of Directors,
COMMUNITY WEST BANCSHARES
William R. Peeples,
Chairman of the Board
Dated: April 8, 2005
Goleta, California
17
APPENDIX A
COMMUNITY WEST BANCSHARES
AUDIT COMMITTEE CHARTER
(Revised December 16, 2004)
The Audit Committee (AC) is appointed by the Board of Directors (Board) to
assist the Board in monitoring: (1) the integrity of the Company's financial
statements, (2) the compliance by the Company with legal and regulatory
requirements, (3) the independence and performance of the Company's registered
public accounting firms performing audit, review or attest services and (4) the
Company's internal audit and control function.
The AC will prepare the report that the Securities and Exchange Commission
(SEC) rules require be included in the Company's annual proxy statement.
The function of the AC is oversight. Management is responsible for the
preparation and integrity of the Company's financial statements. Management, in
conjunction with the internal auditing department, or internal audit function as
it is currently outsourced, is responsible for maintaining appropriate
accounting and financial reporting policies and an appropriate internal control
environment. The independent auditor is responsible for planning and conducting
a proper audit of the Company's annual financial statements, reviewing the
Company's quarterly financial statements prior to the filing of each quarterly
report on Form 10-Q and other procedures.
The members of the AC will meet the independence requirements of NASDAQ and
the rules and regulations of the SEC and no member shall have participated at
any time in the preparation of financial statements of the Company or any
subsidiary during the prior three years. Each member shall be financially
literate and at least one member must have the additional financial
sophistication required by the NASDAQ rules. The members of the AC will be
appointed by the Board on the recommendation of the Chairman of the Board. The
AC will have no fewer than three members.
The AC, in its capacity as a committee of the Board, will be directly
responsible for the appointment, compensation, retention and oversight of the
work of any registered public accounting firm (independent auditor) engaged for
the purpose of preparing or issuing an audit report or performing other audit,
review or attest services for the Company, and each such registered public
accounting firm must report directly to the AC. The AC will be directly
responsible for the resolution of disagreements between management and the
independent auditor regarding financial reporting. The AC will have the
authority to retain independent legal, accounting or other advisors, as it deems
necessary to carry out its duties. The AC may request any officer or employee
of the Company or the Company's outside counsel or independent auditor to attend
an AC meeting. The Company shall provide for appropriate funding, as determined
by the AC, for payment of compensation to any independent auditor engaged for
the purpose of preparing or issuing an audit report or performing other audit,
review or attest services; compensation to any advisors employed by the AC; and,
ordinary administrative expenses that are necessary or appropriate in carrying
out its duties.
The AC will pre-approve all auditing services and permitted non-audit
services and fees to be paid for such services to be performed for the Company
by its independent auditor, subject to the de minimus exceptions for non-audit
services described in Section 10A of the Securities Exchange Act. The AC may
delegate to one or more of its members the authority to grant pre-approvals of
non-audit services and fees. Any such pre-approval will be presented to the
full AC at its next scheduled meeting.
The AC will make regular reports to the Board.
18
The AC, to the extent that it deems necessary or appropriate, will:
FINANCIAL STATEMENT AND DISCLOSURE MATTERS
1. Review and reassess the adequacy of this Charter annually and recommend any
proposed changes to the Board for approval. The revised charter will be
included in the annual proxy statement no less frequently than every three
years.
2. Review the annual audited financial statements with management and the
independent auditor, including disclosures made in management's discussion
and analysis, and recommend to the Board whether the audited financial
statements should be included in the Company's Form 10-K.
3. Review with management and the independent auditor any significant
financial reporting issues and judgments made in connection with the
preparation of the Company's financial statements, including any
significant changes in the Company's selection or application of accounting
principles, any major issues as to the adequacy of the Company's internal
controls and any special steps adopted in light of material control
deficiencies.
4. Review with management and the independent auditor the company's
quarterly financial statements prior to the filing of its Form 10-Q,
including the results of the independent auditors review of the quarterly
financial statements.
5. Review and discuss quarterly reports from the independent auditors on:
a) All critical accounting policies and practices to be used.
b) All alternative treatments of financial information within generally
accepted accounting principles that have been discussed with
management, ramifications of the use of such alternative treatments,
and the treatment preferred by the independent auditor.
c) The matters required to be discussed by Statement on Auditing
Standards Numbers 61 and 90, as they may be amended or supplemented,
relating to the audit or the Company's periodic reports.
d) Other material written communications between the independent auditor
and management, such as any management letters or schedule of
unadjusted differences.
6. Meet periodically with management to review the Company's major
financial risk exposures and the policies and procedures that management
utilizes to monitor and control such exposures.
7. Review with the independent auditor any problems or difficulties the
auditor may have encountered and any management letter provided by the
auditor and the Company's response to that letter. Such reviews should
include:
a) Any difficulties encountered in the course of the audit work,
including any restrictions on the scope of activities or access to
required information.
b) Any changes required in the planned scope of the audit.
c) Any significant disagreements with management.
8. The Committee shall generally discuss the earnings press releases as
well as financial information
19
provided to financial analysts and rating agencies, where applicable.
9. Review disclosures made to the AC by the Company's CEO and CFO during
their certification process for the Form 10-K and Form 10-Q about any
significant deficiencies in the design or operation of internal controls or
material weaknesses therein and any fraud involving management or other
employees who have a significant role in the Company's internal controls.
OVERSIGHT OF THE COMPANY'S RELATIONSHIP WITH ITS INDEPENDENT AUDITORS
10. Review and evaluate the experience and qualifications of the lead
members of each independent auditor's team.
11. Evaluate the performance and independence of each independent auditor,
including considering whether the auditor's quality controls are adequate
and the provision of permitted non-audit services is compatible with
maintaining the auditor's independence. The opinions of management and the
internal auditor shall be taken into consideration as part of this review.
12. Receive and review a report from each independent auditor at least
annually regarding the independent auditor's independence and discuss such
reports with the auditor. Ensure that each independent auditor submits a
formal written statement, as required by the Independence Standard Board
Statement No. 1, as it may be amended or supplemented, delineating all
relationships between the independent auditor and the Company and a formal
written statement of the fees billed by the independent auditor for each of
the categories of services requiring separate disclosure in the annual
proxy statement. The Committee shall be entitled to rely upon the accuracy
of the information provided by the independent auditor with respect to the
services provided and the fees billed for non-audit services. If so
determined by the Audit Committee, recommend that the Board take
appropriate action to satisfy itself of the independence of the auditor.
13. Obtain and review a report from each independent auditor at least
annually regarding the independent auditor's internal quality control
procedures. The report should include any material issues raised by the
most recent internal quality control review or peer review of the firm, or
by any inquiry or investigation by governmental or professional authorities
within the preceding five years respecting one or more independent audits
carried out by the firm, and any steps taken to deal with any such issues.
14. Meet with each independent auditor prior to the audit to review the
planning and staffing of the audit.
15. The Audit Committee shall present its conclusions regarding each
independent auditor to the Board.
OVERSIGHT OF THE COMPANY'S INTERNAL AUDIT FUNCTION
16. Review the appointment and replacement of the staffing for the internal
audit function.
17. Review the reports to management prepared by the internal audit function
and management's responses.
18. Discuss with each independent auditor and management the internal audit
function responsibilities, budget and staffing and any recommended changes
in the planned scope of the internal audits.
COMPLIANCE OVERSIGHT RESPONSIBILITIES
19. Obtain from each independent auditor assurance that Section 10A of the
Securities Exchange Act has not been implicated.
20
20. Obtain reports from management, the Company's internal auditor (if
applicable) and each independent auditor that the Company's subsidiary
affiliated entity is in conformity with applicable regulatory and legal
requirements and the Company's code of ethics.
21. Advise the Board with respect to the Company's policies and procedures
regarding compliance with applicable laws and regulations and with the
Company's code of ethics.
22. Establish procedures for the receipt, retention and treatment of complaints
received by the Company regarding accounting, internal accounting controls
or auditing matters, and the confidential, anonymous submission by
employees of concerns regarding questionable accounting or auditing
matters.
23. Discuss with management and each independent auditor any correspondence
with regulators or governmental agencies and any published reports that
raise material issues regarding the Company's financial statements or
accounting policies.
24. Prepare the report required by the rules of the Securities and Exchange
Commission to be included in the Company's annual proxy statement.
25. Review with appropriate members of management or appropriate legal counsel
legal matters that may have a material impact on the financial statements,
the Company's compliance policies and any material reports or inquiries
received from regulators or governmental agencies.
26. Review and approve all related party transactions required to be disclosed
by Item 404 of Regulation S-K for potential conflicts of interests except
for those related party transactions that have been reviewed and approved
by another independent body of the Board.
27. Meet at least annually with the internal audit function representative or
other members of management, if needed, in separate executive sessions.
While the AC has the responsibilities and powers set forth in this Charter,
it is not the duty of the AC to plan or conduct audits, or to determine that the
Company's financial statements are complete and accurate and are in accordance
with generally accepted accounting principles. This is the responsibility of
management and the independent auditor.
21
COMMUNITY WEST BANCSHARES
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS ON MAY 26, 2005
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Marcy Shewmon and Susan Thompson, or any of
them, agents and proxy of the undersigned, each with full power of substitution,
to attend and act as proxy or proxies of the undersigned at the Annual Meeting
of Shareholders of Community West Bancshares to be held at La Cumbre Country
Club, 4015 Via Laguna, Santa Barbara, California on Thursday, May 26, 2005, at
6:00P.M,. and at any and all adjournments thereof, and to vote as specified
herein the number of shares which the undersigned, if personally present, would
be entitled to vote, as follows:
1. ELECTION OF DIRECTORS:
-----------------------
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
Robert H. Bartlein William R. Peeples
Jean W. Blois James R. Sims, Jr.
John D. Illgen Kirk B. Stovesand.
Lynda J. Nahra C. Richard Whiston
INSTRUCTION: TO WITHHOLD AUTHORITY FOR ANY INDIVIDUAL NOMINEE
WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW:
----------------------------------------------------------------------
2. Other Business. To transact such other business as may properly
come before the Meeting and any adjournment thereof.
PLEASE SIGN AND DATE THE OTHER SIDE
THIS PROXY WILL BE VOTED AS SPECIFIED OR IF NO CHOICE IS SPECIFIED, WILL BE
VOTED FOR THE EIGHT NOMINEES FOR ELECTION (Please sign exactly as name appears.
When shares are held by joint tenants, both should sign. When signing as
attorney, as executor, administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full corporate name by
President or other authorized officer. If a partnership, please sign in
partnership name by authorized person.)
Dated: , 2005
------------------------------ ------------------
(Number of Shares)
------------------------------ -------------------------------
(Please Print Your Name) (Signature)
------------------------------ -------------------------------
(Please Print Your Name) (Signature, if held jointly)
I do [ ] do not [ ] expect to attend the Meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE REVOKED
BY THE SHAREHOLDER DELIVERING IT PRIOR TO ITS EXERCISE BY FILING WITH THE
CORPORATE SECRETARY OF THE COMPANY AN INSTRUMENT REVOKING THIS PROXY OR A DULY
EXECUTED PROXY BEARING A LATER DATE OR BY APPEARING AND VOTING IN PERSON AT THE
MEETING.