2020 First Quarter Financial Report

photo of Ash Patel

2020 First Quarter Financial Report

Ash Patel, President and CEO

Commercial Bank of California Reports Continued Profitable Results for First Quarter of 2020

IRVINE, CALIF. (June 3, 2020) – Commercial Bank of California (“CBC” or “Bank”), a BauerFinancial Five-Star Superior Bank, today reported net income of $1,139,000 for the first quarter of 2020, a decline from the $1,396,000 profit of the first quarter of 2019.  While net interest income increased by $890,000 for the quarter due to growth in earning assets over the past twelve months, sharp declines in interest rates resulting from Federal Reserve action in March to combat the pandemic-related economic downturn began to influence first quarter 2020 results, and are expected to have a greater impact in future periods.  CBC also made a substantial provision to its allowance for loan losses during the first quarter of 2020 as a precaution against potential adverse effects of the pandemic on the payment performance of some Bank borrowers.

At March 31, 2020, the Bank’s total assets were $1.05 billion, compared to $965.5 million at this point a year ago.  Net loans rose from $701.8 million at March 31, 2019 to $821.0 million in 2020.    Deposits totaled $929.9 million at March 31, 2020, up sharply from the $853.8 million total at March 31, 2019.  Total capital at March 31, 2020 was $108.9 million, a solid increase from $98.4 million on the same date in 2019.

The Bank’s capital ratios continue to be well above all regulatory standards for well-capitalized institutions.  CBC’s Tier 1 Leverage Ratio stood at 9.77% as of March 31, 2020.

Ash Patel, President and Chief Executive Officer, commented,  “In times of crisis like the  current pandemic, routine financial reporting loses much of its significance. Far more important is the health and safety of our staff and our valued clients.  We hope that you and all in your circle are staying healthy and persevering in the current situation.”

“But despite the pandemic, life must go on, and it is business as usual at Commercial Bank of California to the fullest extent possible.  CBC offices remain open and ready to serve our clients.  Under the circumstances, we are pleased with CBC’s operating results for the initial quarter of the year as our pre-tax, pre-provision income, grew by 24% over the first quarter of last year, despite the changes in interest rates that have occurred over the past twelve months.  At the same time, many challenges remain, and future results will reflect those challenges.  For now, our growth in assets, loans, and deposits is encouraging.  That balance sheet growth resulted in the substantial increase in net interest income that we enjoyed in 2020’s first quarter, but some portion of those income gains will likely erode once the Federal Reserve’s dramatic rate cuts of March 2020 are fully reflected in our portfolios.  Beyond that challenge, we are continuing our efforts to maintain revenues and control expenses to optimize our operating performance in the current distressed economic environment.”

He continued:  “Since the COVID-19 pandemic first unfolded, CBC has strived to be a source of strength and support to our clients and the communities we serve.  We continue to work closely with borrowers who have been adversely impacted by the pandemic and the economic shutdown that followed.  We implemented numerous fee waivers, and relaxed transaction limitations to the full extent permitted by banking authorities.  We maintained our strong balance sheet position, funding the liquidity needs of our clients who drew down on unfunded commitments during the quarter.  Perhaps most importantly, we were an early and active participant in the SBA’s Paycheck Protection Program loan product.  CBC originated more than 800 PPP loans aggregating over $242.3 million.  Thanks to the hard work and dedication of our lending team, CBC was there with a financial lifeline that helped preserve 823 businesses and countless jobs.  Indeed, whether it was our lenders working nights and weekends to fund PPP loans within the program’s deadlines, our front line team members serving clients in our offices despite the potential health risks, or our IT experts keeping our systems running smoothly to support their CBC teammates working in the office or remotely, CBC has been there to help our clients deal with the immense challenges of the pandemic.  I have never been prouder of the CBC team.”

Mr. Patel concluded:  “In the past, we have noted the importance of maintaining financial strength to deal with economic uncertainty.  The wisdom of that approach has never been more apparent than now.  It has been said that, in order to thrive, one must first survive.  Thanks to our robust capital position and financial strength, the survival of Commercial Bank of California has never been in doubt.   Make no mistake, the months ahead will be challenging ones for CBC and the clients we serve.  But after we all get through this ordeal, when the storm has passed, we will emerge to a bright new era of prosperity.  While our confidence in the future of CBC remains undiminished, we thank 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.

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Financial Highlights

  • Total assets, total deposits, and net loans all increased significantly over prior year levels
  • Net income includes higher provision expense to build reserves in response to COVID-19 Pandemic
  • Over 800 employers received Paycheck Protection Program loans from CBC, helping preserve local businesses and jobs

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.


($000s omitted) March 31, 2020 March 31, 2019
Cash and due from banks $ 6,310 $ 33,563
Interest bearing deposits with banks 88,294 111,868
Fed funds sold 10,000 2,500
Cash and cash equivalents 104,604 147,931
Investment securities 87,799 84,269
Loans 824,980 701,822
Less: allowance for loan and lease losses 11,379 10,149
Loans, net 813,601 691,673
Premises and equipment - net 2,992 3,634
Other real estate owned - -
Accrued interest receivable and other assets 39,660 37,970
Total assets $ 1,048,656 $ 965,477
Non-interest bearing deposits $ 445,183 $ 316,562
Interest bearing demand deposits 54,630 44,782
Savings and money market deposits 390,071 428,745
Time deposits 40,059 63,662
Total deposits 929,943 853,751
Federal Home Loan Bank advances - -
Accrued interest payable and other liabilities 9,825 13,279
Total liabilities 939,768 867,030
Stated capital 83,830 83,830
Retained earnings 23,895 14,974
Accumulated other comprehensive income (loss) 1,163 -357
Total capital 108,888 98,447
Total liabilities and capital $ 1,048,656 $ 965,477


($000's omitted) Three Months Ended March 31, 2020 Three Months Ended March 31, 2019
Interest on loans $ 10,503 $ 9,582
Interest on deposits with banks 436 813
Interest on investment securities 552 582
Other interest income 92 16
Total interest income 11,583 10,993
Interest on deposits 1,289 1,589
Interest on FHLB advances - -
Total interest expense 1,289 1,589
Net interest income 10,294 9,404
Provision for loan losses 1,075 -
Net interest income after provision for loan losses 9,219 9,404
Other operating income 2,331 2,641
Salaries and related benefits 6,751 6,243
Occupancy expenses 1,160 1,103
Other expenses 2,051 2,681
Total other operating expenses 9,962 10,027
Income before provision for income taxes 1,588 2,018
Provision for income taxes 449 622
Net income $ 1,139 $ 1,396