Community West BancsharesCWBC
Community West Bancshares Stock Compensation Disclosure
EQUITY-BASED COMPENSATION
In May 2025, the Company adopted the Community West Bancshares 2025 Omnibus Incentive Plan (2025 Plan). The plan provides for awards in the form of stock options, restricted stock, restricted stock units, and other types of awards. The plan also allows for performance awards that may be in the form of cash or shares of the Company’s common stock. With respect to stock options and restricted stock or units, the exercise price in the case of stock options and the grant value in the case of restricted stock may not be less than the fair market value at the date of the award. The options and awards under the plan expire on dates determined by the Board of Directors, but not later than ten years from the date of grant. The vesting period for stock options and restricted stock rights is determined by the Board of Directors and ranges to five years. The maximum number of shares that can be issued with respect to all awards under the plan is 500,000. Currently under the 2025 Plan, 500,000 shares remain reserved for future grants as of December 31, 2025.
Share-based compensation cost recognized was $1,158,000, $879,000, and $858,000 for the years ended December 31, 2025, 2024, and 2023, respectively. The recognized tax benefit for the exercise of stock options resulted in the recognition of $78,000, $81,000, and $0 for the years ended December 31, 2025, 2024, and 2023, respectively.
Stock Option Awards
The Company bases the fair value of the stock options granted on the date of grant using a Black-Scholes Merton option pricing model that uses assumptions based on expected option life and the level of estimated forfeitures, expected stock volatility, risk free interest rate, and dividend yield. The expected term and level of estimated forfeitures of the Company’s stock options are based on the Company’s own historical experience. Stock volatility is based on the historical volatility of the Company’s stock. The risk-free interest rate is based on the U. S. Treasury yield curve for the periods within the contractual life of the stock options in effect at the time of grant. The compensation cost for stock options granted is based on the weighted average grant date fair value per share.
A summary of the combined activity of the stock option activity during the years then ended is presented below (dollars in thousands, except per-share amounts):
| Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value | |||||||||||||||||||||||
| Options outstanding at December 31, 2023 | — | $ | — | — | $ | — | ||||||||||||||||||||
| Issued through acquisition | 390,462 | $ | 13.23 | |||||||||||||||||||||||
| Granted | — | $ | — | |||||||||||||||||||||||
| Exercised | (37,289) | $ | 12.47 | |||||||||||||||||||||||
| Forfeited | (54,510) | $ | 13.80 | |||||||||||||||||||||||
| Options outstanding at December 31, 2024 | 298,663 | $ | 13.22 | 3.49 | $ | 1,837,658 | ||||||||||||||||||||
| Granted | — | $ | — | |||||||||||||||||||||||
| Exercised | (101,434) | $ | 10.78 | |||||||||||||||||||||||
| Forfeited or swapped | (14,019) | $ | 11.86 | |||||||||||||||||||||||
| Options outstanding at December 31, 2025 | 183,210 | $ | 14.36 | 3.97 | $ | 1,491,504 | ||||||||||||||||||||
The significant assumptions used to estimate fair value of the issued options at the time of the acquisition included: risk free rate 4.35%; dividend rate 4.31%, expected volatility 46.95%, and a weighted average expected term of 4.92 years in 2024. The weighted average grant date fair value per share was $9.58 for shares granted in 2024. No options were granted in 2025 and 2023.
Information related to the stock option plan during each year follows (in thousands):
2025 | 2024 | 2023 | ||||||||||||||||||
| Intrinsic value of options exercised | $ | 912 | $ | 282 | $ | — | ||||||||||||||
| Cash received from options exercised | $ | 1,093 | $ | 465 | $ | — | ||||||||||||||
| Excess tax benefit realized for option exercises | $ | 78 | $ | 81 | $ | — | ||||||||||||||
As of December 31, 2025, there is no unrecognized compensation cost related to stock options granted under all Plans. All options are fully vested and exercisable.
Restricted Stock Awards
The 2025 Plan provides for the issuance of restricted common stock to directors and officers and common stock awards based on the achievement of performance goals as determined by the Board of Directors or in accordance with executive employment agreements. Restricted common stock grants typically vest over a to five-year period. Restricted common stock is subject to forfeiture if employment terminates prior to vesting. The cost of these awards is recognized over the vesting period of the awards based on the fair value of our common stock on the date of the grant.
The shares awarded to employees and directors under the restricted stock agreements vest on applicable vesting dates only to the extent the recipient of the shares is then an employee or a director of the Company or one of its subsidiaries, and each recipient will forfeit all of the shares that have not vested on the date his or her employment or service is terminated.
The following table summarizes restricted stock activity for the years ended as follows:
| Shares | Weighted Average Grant Date Fair Value | |||||||||||||
| Nonvested outstanding shares at January 1, 2023 | 46,706 | $ | 17.28 | |||||||||||
| Granted | 69,692 | $ | 15.86 | |||||||||||
| Vested | (40,387) | $ | 17.90 | |||||||||||
| Forfeited | (878) | $ | 15.79 | |||||||||||
| Nonvested outstanding shares at December 31, 2023 | 75,133 | $ | 15.65 | |||||||||||
| Granted | 72,360 | $ | 16.93 | |||||||||||
| Vested | (46,339) | $ | 15.02 | |||||||||||
| Forfeited | (3,658) | $ | 15.96 | |||||||||||
| Nonvested outstanding shares at December 31, 2024 | 97,496 | $ | 16.89 | |||||||||||
| Granted | 79,033 | $ | 17.76 | |||||||||||
| Vested | (57,214) | $ | 16.39 | |||||||||||
| Forfeited | (1,880) | $ | 16.41 | |||||||||||
| Nonvested outstanding shares at December 31, 2025 | 117,435 | $ | 17.73 | |||||||||||
The shares awarded to employees and directors under the restricted stock agreements vest on applicable vesting dates only to the extent the recipient of the shares is then an employee or a director of the Company or one of its subsidiaries. Each recipient will forfeit all of the shares that have not vested on the date his or her employment or service is terminated. As of December 31, 2025, there were 117,435 shares of restricted stock that are nonvested and expected to vest.
As of December 31, 2025, there was $1,354,000 of total unrecognized compensation cost related to nonvested restricted common stock. Restricted stock compensation expense is recognized on a straight-line basis over the vesting period. This cost is expected to be recognized over a weighted average remaining period of 2.13 years and will be adjusted for subsequent changes in estimated forfeitures.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 11, 2026 | Showing above |
| 2024 | Mar 17, 2025 | |
| 2023 | Mar 15, 2024 | |
| 2022 | Mar 9, 2023 | |
| 2021 | Mar 9, 2022 | |
| 2020 | Mar 10, 2021 | |
| 2019 | Mar 6, 2020 | |
| 2018 | Mar 8, 2019 | |
| 2017 | Mar 14, 2018 | |
| 2016 | Mar 29, 2017 | |
| 2015 | Mar 15, 2016 | |
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.