Commercial Bank of California Reports Continued Strong Growth and Profitability in First Half of 2024
Highlights Include:
- Assets, deposits, and loans all increased over prior-year levels
- Net income rose year-over-year, to the highest six-month net income in CBC’s history
- Liquidity and capital strength remain robust, providing the flexibility to seize opportunities and deal with changing times
IRVINE, CALIF. (August 14, 2024) – Commercial Bank of California (“CBC” or “Bank”), a BauerFinancial Four-Star Excellent Bank, today reported net income of $10.1 million for the first half of 2024, compared to $6.3 million for the first six months of 2023. For the second quarter of 2024, the Bank’s net income was $5.0 million, versus net income of $3.4 million for the same period of 2023. Net interest income for the first six months of 2024 increased by 20.1%, or $6.6 million, from $32.7 million in the first half of 2023 to $39.3 million for the same period in 2024, reflecting a 13-basis point expansion of net interest margin. In addition, revenues were augmented by higher fee income from payment processing activities.
Provisions for credit losses eased to $1.1 million in the first half of 2024, in contrast to the corresponding prior year period, when provisions for credit losses totaled $2.8 million (including credit losses of $750 thousand related to an investment in the subordinated debt of a bank that subsequently failed). The reduced provisions thus far in 2024 reflect the continued strength in credit quality and borrower performance in the period. The first six-month operating results of 2024 include merger-related expenses of $607 thousand in connection with the upcoming acquisition of Bay Community Bancorp. The Bank’s returns on average assets and equity strengthened to 0.8% and 11.7% for the first six months of 2024 from 0.56% and 8.18% for the same period a year ago. Similarly, CBC’s efficiency ratio improved to 65.8% for the first half of 2024 from 70.6% for the same period in 2023.
CBC’s total assets at June 30, 2024 grew by $225.8 million, or 10.0%, to $2.5 billion, compared to total assets of $2.3 billion at this time a year ago. Loans expanded from $1.6 billion at June 30, 2023 to $1.7 billion at June 30, 2024, an increase of $126.4 million, or 8.1%. Deposits increased to $2.0 billion at June 30, 2024 from $1.9 billion on the same date in 2023, an increase of $158.1 million, or 8.5%. CBC’s deposit growth over the past twelve months was attributable both to retail deposits generated by its regional offices (including the specialty deposit group) and to brokered deposits. Noninterest-bearing demand deposits represented 42.6% of total deposits at June 30, 2024, and the loan-to-deposit ratio remained at a healthy 83.7%. Average noninterest-bearing demand deposits of the Bank’s payment processing division continued strong in the current reporting period, reflecting effective marketing and the continuing rise in contactless and online payments.
Total capital at June 30, 2024 was $180.3 million, an increase over the comparable 2023 figure of $157.4 million, due to the retention of earnings from CBC’s continued profitability and a small reduction in unrealized losses on investment securities. CBC’s capital ratios continue to exceed the current standards for well-capitalized institutions, the highest category of capital strength established by banking regulators.
Ash Patel, Chairman, President, and Chief Executive Officer, commented: “We are pleased to report that Commercial Bank of California continued its excellent 2024 performance in the second quarter of the year. Once again, our results reflect the same factors that led to our past success: continued growth in earning assets, leading to continued expansion of net interest income, buttressed by solid asset quality. These factors have long been hallmarks of CBC and its performance in the past, and we will do all we can to maintain them in the future. Despite our success, however, there is always room for improvement. For that reason, CBC will continue to seek ways to expand revenues and manage expenses to bolster our earnings growth. At the same time, we will fine tune our balance sheet structure to enhance our financial strength and flexibility. As before, CBC is well-positioned to manage today’s economic environment and its future evolution, so both we and our clients can benefit from the future’s emerging opportunities.
“CBC’s previously-announced merger with Bay Community Bancorp and its subsidiary, Community Bank of the Bay, appears to be on course for a successful conclusion. As you will recall, this transformative transaction requires the approval of banking regulators and the satisfaction of various pre-closing conditions. All required regulatory applications have been filed with the appropriate agencies, and both institutions are working diligently to satisfy the pre-closing requirements. We continue to be impressed by the caliber of Community Bank of the Bay’s clients and staff, and the synergies between our two organizations remain compelling. At this point we are hopeful that the transaction will be completed by the fourth quarter of this year, when we look forward to sharing our joint banking expertise with a broader set of clients and prospects in California’s two largest banking markets. We will keep you posted on developments relating to this exciting transaction as they occur.”
Mr. Patel concluded: “While we are pleased with CBC’s growing success, we must never lose sight of the fact that the foundation of that success remains the clients, team members, and friends who have provided invaluable support to us along the way. We extend our sincere thanks to you for your continued 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.
STATEMENTS OF CONDITION (UNAUDITED)
| ($000’s omitted) | June 30, 2024 | June 30, 2023 | ||
|---|---|---|---|---|
| ASSETS: | ||||
| Cash and due from banks | $ | 8,013 | $ | 19,122 |
| Interest bearing deposits with banks | 281,614 | 170,997 | ||
| Federal funds sold | – | – | ||
| Cash and cash equivalents | 289,627 | 190,119 | ||
| Investment securities | 418,937 | 422,106 | ||
| Loans | 1,696,255 | 1,569,843 | ||
| Less: allowance for loan and lease losses | 19,015 | 18,918 | ||
| Loans, net | 1,677,240 | 1,550,925 | ||
| Premises and equipment – net | 7,960 | 10,642 | ||
| Other real estate owned | – | – | ||
| Accrued interest receivable and other assets | 85,319 | 79,480 | ||
| Total assets | $ | 2,479,083 | $ | 2,253,272 |
LIABILITIES AND CAPITAL:
| ($000’s omitted) | June 30, 2024 | June 30, 2023 | ||
|---|---|---|---|---|
| Non-interest bearing demand deposits | $ | 862,722 | $ | 870,258 |
| Interest bearing demand deposits | 277,804 | 340,996 | ||
| Savings and money market deposits | 676,484 | 554,250 | ||
| Time deposits | 210,091 | 103,533 | ||
| Total deposits | 2,027,101 | 1,869,037 | ||
| Borrowings | 244,978 | 200,000 | ||
| Accrued interest payable and other liabilities | 26,726 | 26,808 | ||
| Total liabilities | $ | 2,298,805 | $ | 2,095,845 |
| Stated capital | 123,034 | 121,465 | ||
| Retained earnings | 87,927 | 68,968 | ||
| Accumulated other comprehensive income | -30,683 | -33,006 | ||
| Total capital | $ | 180,278 | $ | 157,427 |
| Total liabilities and capital | $ | 2,479,083 | $ | 2,253,272 |
STATEMENTS OF OPERATIONS (UNAUDITED)
| ($000’s omitted) | Six Months Ended June 30, 2024 |
Six Months Ended June 30, 2023 |
||
|---|---|---|---|---|
| Interest on loans | $ | 53,271 | $ | 42,198 |
| Interest on deposits with banks | 7,848 | 4,355 | ||
| Interest on investment securities | 6,474 | 5,616 | ||
| Other interest income | 552 | 335 | ||
| Total interest income | 68,145 | 52,504 | ||
| Interest on deposits | 21,641 | 15,995 | ||
| Interest on other borrowings | 7,237 | 3,810 | ||
| Total interest expense | 28,878 | 19,805 | ||
| Net interest income | 39,267 | 32,699 | ||
| Provision for credit losses | 1,109 | 2,755 | ||
| Net interest income after provision for credit losses | 38,158 | 29,944 | ||
| Bank service charges and fees | 597 | 573 | ||
| Payment processing fee income | 6,747 | 5,820 | ||
| Other income | 524 | 1,649 | ||
| Other operating income | 7,868 | 8,042 | ||
| Salaries and related benefits | 20,605 | 20,123 | ||
| Occupancy expenses | 1,861 | 2,035 | ||
| Other expenses | 8,920 | 7,004 | ||
| Total other operating expenses | 31,386 | 29,162 | ||
| Income before provision for income taxes | 14,640 | 8,824 | ||
| Provision for income taxes | 4,511 | 2,532 | ||
| Net income | $ | 10,129 | $ | 6,292 |
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
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