financial market news about silicon valley bank

Highlights Include:

  • Assets, deposits, investment securities, and loans all increased over prior-year levels
  • Net interest income increased 10.8% year-over-year, the highest six-month net interest income in Bank’s history
  • Liquidity and capital strength remain exemplary, providing the stability and flexibility to deal with changing times

Commercial Bank of California (“CBC” or “Bank”), a BauerFinancial Four-Star Excellent Bank, today reported net income of $10.1 million for the first nine months of 2023, a decrease from the $13.6 million recorded in the first nine months of 2022.  For the third quarter of 2023, the Bank’s net income was $3.8 million, compared to net income of $5.7 million for the same period of 2022. 

Third quarter 2023 net income grew 11.6% to $3.8 mllion from $3.4 million in the preceding second quarter, primarily driven by improvements in net interest income, credit loss provision, and noninterest expenses. Noninterest expenses declined 1.4% quarter-over-quarter due mainly to our disciplined expense control. Third quarter 2023 net interest margin expanded 4 basis points to 2.99%, up from 2.95% in the 2023 second quarter.  The linked quarter net interest income growth and net interest margin expansion reflected higher yields on earning assets, partially offset by a higher cost of funds and a higher average volume of interest-bearing liabilities.

Net interest income for the first nine months of 2023 increased by 4.5%, or $2.2 million, to $49.6 million from $47.4 million in the prior year-to-date period primarily due to growth in earning assets.  Provisions for credit losses totaled $4.2 million for the first nine months of 2023, compared to $1.3 million for the comparable period a year ago, due mainly to a writeoff of a failed bank’s subordinated debt as well as a higher net charge-off on consumer loans. Credit quality and borrower performance generally remained strong thus far in 2023, resulting from our disciplined and selective approach to lending as well as the strength of our strong client relationships and our proactive approach to credit management.

CBC’s total assets at September 30, 2023 of $2.3 billion were $325.4 million, or 16.9%, above the total assets of $1.9 billion on the same date a year ago.  Net loans rose from $1.3 billion at September 30, 2022 to $1.6 billion on the corresponding date in 2023, an increase of $255.5 million, or 19.0%.  Deposits stood at $1.8 billion at September 30, 2023 versus $1.7 billion at the end of 2022’s third quarter, an increase of $76.2 million (4.47%)..  Our regional offices were the source of CBC’s deposit growth over the past twelve months.  Deposits attributable to CBC’s payment processing division remained steady, reflecting expanded marketing efforts and the ongoing rise in contactless and online payments. 

Total capital at September 30, 2023 was $154.4 million, compared to $140.4 million at the same point in 2022.  Total capital for both years was diminished by unrealized losses on investment securities.  CBC’s Tier 1 Leverage Ratio stood at 8.20% as of September 30, 2023, and all of the Bank’s capital ratios continue to exceed the current regulatory standards for well-capitalized institutions, the highest capital category established by banking regulators..

Ash Patel, President and Chief Executive Officer, commented: “I am sure we are all relieved by the continued stability in the banking system after the turbulence of early 2023.  And with the easing of inflationary pressures, there is the possibility that interest rates may begin to decline soon, as the Federal Reserve is able to dial back its disinflation efforts.  For now, however, the high interest rates that originally spawned the turmoil are still with us, and continue to impact CBC, our clients, and the U.S. economy as a whole.  And while the rate of inflation may have declined, the prices of most goods and services have not, which continues to impact the cost of doing business for us all.”

He continued: “Those factors are generally consistent with those of the preceding quarter, so once again CBC’s profitability over the first nine months of 2023 was below that of the same period a year ago.  As our last report indicated, growth in earning assets and the current high interest rates resulted in record interest income, but most of those benefits were offset by higher deposit costs resulting from the current high interest rate environment.  Payments revenues remained strong, but inflation has led to higher salary and other non-interest expenses.  The combined result of these factors was the modest profitability decline that we experienced through the third quarter of 2023.  But as before, the elements that are our hallmarks and the basis of CBC’s success – growth in earning assets, expansion of net interest income, and solid asset quality – continue to drive our results.  Along with our ongoing efforts to expand revenues and manage expenses, those attributes, will enable us to maintain our positive momentum and further increase our financial strength.  CBC remains fundamentally sound and successful, and we expect our profitability to recover with the eventual return of more normal conditions. 

Mr. Patel concluded: “The initial three quarters of 2023 provide ample support for our long-held focus on client relationships and prudent financial management.  CBC’s balance sheet remains well-positioned to deal with today’s economic environment as well as the future changes that are beginning to become evident.  As a result, CBC and its clients have the ability to capitalize on the opportunities that are the inevitable by-product of the recent past.  We thank our clients, team members, and friends for their continued loyalty and support.  CBC’s current success and bright future would not be possible without you.”

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)Sept. 30, 2023Sept. 30, 2022
Cash and due from banks$7,951$12,795
Interest bearing deposits with banks109,60742,562
Federal funds sold
Cash and cash equivalents117,55855,357
Investment securities439,388437,738
Less:  allowance for loan and lease losses19,39917,605
Loans, net1,603,6831,348,176
Premises and equipment – net9,94612,541
Other real estate owned
Accrued interest receivable and other assets84,25675,668
Total assets$2,254,831$1,929,480


($000’s omitted)Sept. 30, 2023Sept. 30, 2022
Non-interest bearing demand deposits$825,091$892,364
Interest bearing demand deposits266,626112,672
Savings and money market deposits668,682697,785
Time deposits59,14440,553
Total deposits1,819,5431,743,374
Accrued interest payable and other liabilities30,73924,677
Total liabilities$2,100,282$1,789,051
Stated capital121,918120,821
Retained earnings72,77458,722
Accumulated other comprehensive income-40,143-39,114
Total capital$154,549$140,429
Total liabilities and capital$2,254,831$1,929,480


($000’s omitted)Nine Months Ended
Sept. 30, 2023
Nine Months Ended
Sept. 30, 2022
Interest on loans$64,687$44,986
Interest on deposits with banks6,5351,393
Interest on investment securities8,6265,936
Other interest income550348
Total interest income80,39852,663
Interest on deposits24,7045,222
Interest on other borrowings6,14012
Total interest expense30,8445,234
Net interest income49,55447,429
Provision for loan losses4,2321,250
Net interest income after provision for loan losses45,32246,179
Bank service charges and fees856878
Payment processing fee income11,24110,361
Other income602,036
Other operating income12,15713,275
Salaries and related benefits20,12317,763
Occupancy expenses3,0403,038
Other expenses10,4999,586
Total other operating expenses43,33940,317
Income before provision for income taxes14,14019,137
Provision for income taxes4,0435,557
Net income$10,097$13,580
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.

Commercial Bank of California
Member FDIC, Equal Housing Lender

Nicole Inal