FINANCE: Meruelo-backed bank makes northward push
By Pat Maio Friday, November 2, 2018
CBC Bancorp, the holding company for the newly private Commercial Bank of California, has big growth plans for Los Angeles County.
The Irvine-based bank, which entered the L.A. market and went public in 2016 through a reverse merger with Brentwood-based National Bank of California, was taken private earlier this year by a group of investors, which includes Alex Meruelo, a longtime L.A. investor and entrepreneur. It is now on an ambitious growth track, with expansion already underway in downtown headed by Claudia Bodan, who joined Commercial Bank as executive vice president and market president for Los Angeles County Sept. 17.
Bodan is currently overseeing the buildout of CBC’s Commercial Bank of California L.A. headquarters on the 10th floor of its main office in downtown, located at 915 Wilshire Blvd.
“We already ran out of space,” said Bodan, a former Bank of America Corp. market manager. “I’d expect we’ll become a $100-million-in-assets (institution), three to five years from now.”
Since CBC Bancorp went private in May, the bank has hired 38 people to handle payments and accounting, commercial and small business lending, monitor suspicious money transactions and for business development. Growth has come at such a quickened pace that the bank recently signed a lease at 515 S. Flower St., for offices on the 18th and 19th floors. Bodan said more hires are coming.
Commercial Bank has plans over the next year to open offices in Pasadena and San Gabriel. There’s even the possibility, according to Commercial Bank of California Chief Executive Ash Patel, of going into Ontario, considered ground zero for growth in neighboring San Bernardino County, and of major banking rival CVB Financial Corp., parent of Citizens Business Bank.
The Commercial Bank outpost downtown will manage branches in the Fairfax District, Sherman Oaks and Santa Monica.
“We wanted an L.A. County-based bank because of the revitalization going on here, the Staples Center, football. We want this to be a SoCal bank,” Patel said.
Meruelo, who has a 90 percent stake in CBC Bancorp, also owns an empire of construction companies, real estate, Spanish-language radio and television stations, and hotels and casinos in Reno and Las Vegas. Meruelo is the son of Cuban immigrants and got his start three decades ago with a chain of La Pizza Loca Inc. restaurants that served mostly Latino neighborhoods.
The other majority owner in the bank is William Lyon, who founded the Orange County homebuilding firm William Lyon Homes. He has a 5 percent position, with others, including Patel, owning the remaining 5 percent.
Patel explains that the bank went private in May following an internal reorganization.
The bank’s profit last year grew 44 percent to $4.32 million while net assets have grown more than 9 percent to $950 million from $869 million at the end of 2017. It also has more than $700 million in deposits.
Patel joined Commercial Bank of California in 2013. Earlier, he had founded Premier Commercial Bank in Anaheim in 2001 and served as president and chief operating officer until its sale to Encino-based California United Bankfor $38 million in 2012.
Patel said in an interview that there are no plans to sell CBC Bancorp.
“We have no exit strategy,” said Patel, who visits the Wilshire headquarters every Wednesday to help oversee the L.A. expansion. “We are trying to create a bank where profit is a byproduct, not the purpose.”
While the focus is on organic growth, Patel said the institution may make strategic acquisitions, perhaps as high as $50 million in value. One area of interest is so-called fintech businesses. The use of smartphones for mobile banking, investing services and cryptocurrency are examples of technologies aiming to make financial services more accessible to the public.
“The finance industry is ripe for disruption with technologies,” Patel said. “We are opportunistic. The goal is to organically grow, but we are poised to grow with our capital partners.”
Areas of possible acquisition could come in the areas of merchant-card or payment processing.
The typical Commercial Bank customer is between 55 and 70 years old and owns a private business that generates between $5 million and $50 million. Industries the bank serves include nursing, hospitality, construction, professional services, wholesale manufacturing or distributorships, and title and escrow. Roughly 80 percent of its lending portfolio is tied up in real estate, but it plans to build in the direction of wholesale manufacturing in the L.A. market, according to Patel.
He said that one positive effect of President Donald Trump’spush to impose higher tariffs on Chinese imports is the possibility that it sparks a manufacturing renaissance in the United States.
“This is a good thing for community banks like us,” he said. “With commercial real estate slowing down, we’re seeing manufacturing on the upswing.”