financial market news about silicon valley bank

Highlights Include:

  • Net interest income increased 19.4% year-over-year, as strong loan and investment income was partially offset by higher funding costs
  • Net income declined due mainly to the nonrecurring writeoff of a debt investment and higher personnel expenses
  • Total assets, total deposits, investment securities, and net loans all increased over prior-year levels

IRVINE, CALIF. (May 25, 2023) – Commercial Bank of California (“CBC” or “Bank”), a BauerFinancial Four-Star Excellent Bank, today reported net income of $2.9 million for the first quarter of 2023, a decline from the $3.5 million earned in the first quarter of 2022.

Reflecting the increase in earning assets compared to the prior year, net interest income for the first quarter of 2023 was $16.3 million, an increase of $2.7 million over the $13.6 million total for the comparable period in 2022.  CBC recorded provisions of $1.1 milion to its allowance for credit losses during the first quarter of 2023, consisting of a non-recurring provision of $750,000 relating to the writeoff of the subordinated debt of a failed bank, and a provision of $350,000 largely due to loan portfolio growth.  The credit loss provision was $250,000 in the first quarter of 2022.  Credit quality across the Bank remains observably strong despite the disquieting economic circumstances.   Other operating income declined from $4.2 million in the first quarter of 2022 to $3.6 million in 2023’s comparable period, as higher payment processing fee income was erased by lower gains on sales of SBA loans and a slight decline in service charges and fees.  Other operating expenses were $14.8 million in the first quarter of 2023, an increase from 2022’s first quarter total of $12.7 million.  The operating expense increase was due to a substantial rise in personnel expenses, moderated by reductions in occupancy and other expenses. On a non-GAAP basis, excluding the one-time write off of the subordinated debt, the 2023 net income would have been $3.4 million. 

Over the twelve months ended March 31, 2023, CBC’s total assets grew by $226.0 million, or 11.5%, to $2.2 billion, compared to total assets of $2.0 billion at this time one year ago.  Net loans rose to $1.5 billion at March 31, 2023 from $1.2 billion at March 31, 2022, an increase of 28.1%.  Deposits slightly increased by $28 million, totaling $1.82 billion and $1.79 billion at March 31, 2023 and 2022, respectively.  Borrowings were $200 million and zero at March 31, 2023 and 2022, respectively.  The increase was primarily used to fund loan growth and strengthen on-balance sheet liquidity. Total capital at March 31, 2023 was $154.7 million compared to $155.8 million a year ago.  The slight change primarily reflected the retention of earnings from CBC’s continued profitability, more than offset by a significant increase in accumulated other comprehensive loss, resulting from declines in the market value of available-for-sale securities as a direct result of the rapid increase in interest rates over the past year.  The Bank’s capital ratios continue to be well above all applicable regulatory standards for well-capitalized status, the highest category of capital strength established by banking regulators.  CBC’s Tier 1 Leverage Ratio stood at 8.10% as of March 31, 2023.

Ash Patel, President and Chief Executive Officer, commented: “While the situation remains fluid,  the recent turmoil in the banking system shows signs of stabilizing.  After the Federal Reserve’s most recent rate hike, market rates appear to have plateaued, and many market participants are anticipating declining rates later this year and building this assumption into their decision making.  This is reducing pressure on the more vulnerable elements of the banking system, and a stable banking industry benefits us all.  The recent turmoil reinforces our long-held beliefs on the importance of relationships and prudent financial management.  Since the beginning of the turmoil, CBC has worked closely with its clients to help insulate them from the uncertainties that existed.  Others found CBC to be the safe haven they were looking for after other institutions experienced problems.  New and old clients alike benefited from CBC’s well-established practice of maintaining high liquidity to protect against possible deposit outflows, including the maintenance of credit facilities with the Federal Reserve, Federal Home Loan Bank, and other contingent funding sources.  We’ve said it before, but it bears repeating:  one of the benefits of being a privately-held financial institution is that we don’t have to sacrifice safety for profitability, and the same benefits accrue to our clients.  CBC’s balance sheet remains well-positioned to deal with today’s economic environment and whatever changes emerge in the future.”

He continued:  “Despite the modest decline in first quarter profitability, overall we are satisfied with CBC’s progress and operating results.  We expect the factors that adversely impacted earnings to be nonrecurring, one-time events.  Our expectations are based on the pillars of continued growth in earning assets, robust expansion of net interest income, and solid asset quality that have always been the basis of our success.  At the same time, CBC will continue its efforts to expand revenues and manage expenses to maintain our positive momentum and further increase our financial strength.”

Mr. Patel concluded:  “Thanks to our hallmark financial strength, CBC and its clients are in position to capitalize on the opportunities that are an inevitable byproduct of periods of stress like those of the recent past.  Of course, CBC’s bright future would not be possible without the solid foundation that you represent.  We thank our clients, team members, and friends for their undiminished loyalty and support.”

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. “Four-Star Excellent 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.


($000’s omitted)March 31, 2023March 31, 2022
Cash and due from banks$11,273$34,699
Interest bearing deposits with banks144,891260,586
Federal funds sold
Cash and cash equivalents156,164295,285
Investment securities434,320415,799
Less:  allowance for loan and lease losses18,11817,377
Loans, net1,522,2381,188,142
Premises and equipment – net11,16613,608
Other real estate owned
Accrued interest receivable and other assets74,26959,346
Total assets$2,198,157$1,972,180


($000’s omitted)March 31, 2023March 31, 2022
Non-interest bearing demand deposits$846,043$915,134
Interest bearing demand deposits233,83495,207
Savings and money market deposits592,956732,370
Time deposits147,22749,466
Total deposits1,820,0601,792,177
Accrued interest payable and other liabilities23,36524,174
Total liabilities$2,043,425$1,816,351
Stated capital121,012120,430
Retained earnings65,55748,682
Accumulated other comprehensive income-31,837-13,283
Total capital$154,732$155,829
Total liabilities and capital$2,198,157$1,972,180


($000’s omitted)Three Months Ended
March 31, 2023
Three Months Ended
March 31, 2022
Interest on loans$20,331$13,535
Interest on deposits with banks2,004215
Interest on investment securities2,8161,270
Other interest income146124
Total interest income25,29715,144
Interest on deposits7,6361,504
Interest on other borrowings1,3792
Total interest expense9,0151,506
Net interest income16,28213,638
Provision for credit losses1,098250
Net interest income after provision for credit losses15,18413,388
Bank service charges and fees282307
Payment processing fee income2,7112,581
Other income6501,346
Other operating income3,6434,234
Salaries and related benefits10,7048,375
Occupancy expenses9511,072
Other expenses3,1233,231
Total other operating expenses14,77812,678
Income before provision for income taxes4,0494,944
Provision for income taxes1,1681,404
Net income$2,881$3,540
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.

Nicole Inal