Commercial Bank of California Achieves Continued Profitable Results in Second Quarter of 2020

IRVINE, CALIF. (September 15, 2020) – Commercial Bank of California (“CBC” or “Bank”), a BauerFinancial Five-Star Superior Bank, today reported net income of $2,278,000 for the first six months of 2020, a decline from the $3,247,000 profit of the first half of 2019.  For the second quarter of 2020, the Bank achieved net income of $1,139,000, a reduction from the $1,851,000 profit recorded in the same period of 2019.  Net interest income increased by $736,000 for the six-month period due to growth in earning assets over the past year, but these gains were more than offset by CBC’s substantial provisions to its allowance for loan losses during the first half of 2020.  These provisions were made as an abundance of caution against potential adverse effects of the COVID-19 pandemic on the payment performance of some Bank borrowers.

At June 30, 2020, the Bank’s total assets were $1.43 billion, compared to $978.8 million at this point a year ago.  Net loans increased sharply, rising to $1.01 billion at June 30, 2020 from $718.2 million on that date in 2019, an increase of $291.9 million centered in PPP loan funding.  Deposits experienced even more robust growth over the same period, rising from $864.8 million at June 30, 2019 to $1.203 billion at the end of June 2020.  Total capital at June 30, 2020 was $110.8 million, a strong increase from $101.0 million on the same date in 2019.

Ash Patel, President and Chief Executive Officer, commented,  “In tumultuous times like the  current pandemic, the safety of our staff and our valued clients is our paramount concern.  We hope that you, your family, and your associates are staying healthy and persevering in the current situation. 

“In the context of today’s challenging environment, we are generally pleased with CBC’s operating results for the initial six months of the current year.  Our pre-tax, pre-provision income for the first half of 2020 increased by 46% compared to the same period last year.  As noted earlier, CBC has taken this opportunity to to continue to increase its reserves for potential loan losses during the current challenging economic conditions resulting from the pandemic, and these provisions have impacted our bottom-line earnings.  CBC has made a total of $3,575,000 in provisions to our reserve for loan losses thus far in 2020; no such provisions were required through this point in 2019.  While CBC’s credit quality and borrower performance have remained strong, we believe that building reserves against potential adverse changes is the appropriate course of action at the present time.  We note that many other financial institutions are also increasing their reserves in light of the current uncertainties.  Beyond that, we are continuing our efforts to maintain revenues and control expenses to optimize our operating performance in the current distressed economic environment.  CBC’s strong growth in client deposits and earning assets has been encouraging in that regard.”

He added:  “Earlier this year I commented on CBC’s efforts to help our clients in the current environment, including our active participation in the SBA’s Paycheck Protection Program.  We were gratified to fund approximately $240 million in PPP loans to over 825 worthy employers.  As the PPP moves into its debt forgiveness phase, confusing and sometimes contradictory rules are being issued by the SBA on an almost daily basis.  Now is the time for us all to remain patient and tolerant as the PPP forgiveness rules evolve and become clearer.  Rest assured, CBC will be here to help our borrowers navigate the changing rules and arrive at a successful conclusion.”

Mr. Patel concluded:  “The importance of maintaining financial strength to deal with economic uncertainty has long been a steady refrain of my quarterly messages to you.  The wisdom of that approach has never been more apparent than now.  Our robust capital position and financial strength give CBC the resiliency to deal with uncertainty of the present environment, and to capitalize on the opportunities that will exist when we all emerge to a brighter future.  Our confidence in the future of CBC is undiminished, and we remain grateful to our clients, team members, and friends for their loyalty and support during this unprecedented period.”

 

About Commercial Bank of California

Commercial Bank of California is a full-service bank and diversified financial services company serving the business and professional communities of Los Angeles and Orange counties. Recognized as a BauerFinancial, Inc. “Five-Star Superior Bank” for its financial strength and stability, CBC provides the financial expertise of a major bank while maintaining a commitment to personalized service for every CBC client.  More information about CBC’s custom solutions for your business is available at www.cbcal.com.

 

 

 

STATEMENTS OF CONDITION (UNAUDITED)

    
     

($000s omitted)

 

June 30, 2020

 

June 30, 2019

     

ASSETS:

    

Cash and due from banks

$

17,050

$

41,053

Interest bearing deposits with banks

 

262,106

 

99,294

Fed funds sold

 

10,000

 

2,500

Cash and cash equivalents

 

289,156

 

142,847

     

Investment securities

 

87,453

 

73,076

     

Loans

 

1,020,162

 

728,306

Less: allowance for loan and lease losses

 

13,882

 

10,062

Loans, net

 

1,006,280

 

718,244

     

Premises and equipment - net

 

2,948

 

3,456

Other real estate owned

 

-

 

-

Accrued interest receivable and other assets

 

41,307

 

40,132

     

Total assets

$

1,427,144

$

977,755

     

LIABILITIES AND CAPITAL:

    

Non-interest bearing deposits

$

550,471

$

373,328

Interest bearing demand deposits

 

55,396

 

46,026

Savings and money market deposits

 

534,693

 

386,181

Time deposits

 

62,591

 

59,314

     

Total deposits

 

1,203,151

 

864,849

     

Other borrowings

 

103,064

 

-

Accrued interest payable and other liabilities

 

10,138

 

11,933

     

Total liabilities

 

1,316,353

 

876,782

     

Stated capital

 

83,830

 

83,830

Retained earnings

 

25,034

 

16,824

Accumulated other comprehensive income (loss)

 

1,927

 

319

 

    

Total capital

 

110,791

 

100,973

     

Total liabilities and capital

$

1,427,144

$

977,755

 

 

 

 

 

 

 

STATEMENTS OF OPERATIONS (UNAUDITED)

    

 

     

 

  

Six Months Ended

 

Six Months Ended

 

($000's omitted)

 

June 30, 2020

 

June 30, 2019

 

     

 

Interest on loans

$

21,228

$

20,035

 

Interest on deposits with banks

 

516

 

1,667

 

Interest on investment securities

 

1,010

 

1,111

 

Other interest income

 

145

 

176

 

     

 

Total interest income

 

22,899

 

22,989

 

     

 

Interest on deposits

 

2,358

 

3,238

 

Interest on other borrowings

 

54

 

-

 

     

 

Total interest expense

 

2,412

 

3,238

 

     

 

Net interest income

 

20,487

 

19,751

 

     

 

Provision for loan losses

 

3,575

 

-

 

     

 

Net interest income after provision for loan losses

 

16,912

 

19,751

 

     

 

Other operating income

 

4,540

 

5,538

 

     

 

Salaries and related benefits

 

11,513

 

13,015

 

Occupancy expenses

 

2,298

 

2,171

 

Other expenses

 

4,528

 

5,536

 

     

 

Total other operating expenses

 

18,339

 

20,722

 

     

 

Income before provision for income taxes

 

3,113

 

4,567

 

     

 

Provision for income taxes

 

835

 

1,320

 

     

 

Net income

$

2,278

$

3,247

 

 

 

 

 

 

 

 

 

 

 

This report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  All statements, other than statements of historical fact, included herein may constitute forward-looking statements.  Although Commercial Bank of California believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct.  Important factors that could cause actual results to differ materially from Commercial Bank of California’s expectations include fluctuations in interest rates, inflation, government regulations, and economic conditions and competition in the geographic and business areas in which Commercial Bank of California conducts its operations.

 

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