Commercial Bank of California’s Growth & Profitability Continue in Third Quarter of 2024
Highlights Include:
- Total assets, deposits, and loans all increased over prior-year levels to new highs
- Net interest income increased year-over-year to highest nine-month net interest income in CBC’s history
- Completion of Community Bank of the Bay merger brings greater access and banking expertise to Northern and Southern California
IRVINE, CALIF. (December 12, 2024) – Commercial Bank of California (“CBC” or “Bank”), a BauerFinancial Four-Star Excellent Bank, today reported net income of $15.5 million for the first nine months of 2024, a strong increase from the $10.1 million recorded in the initial nine months of 2023. For the third quarter of 2024, the Bank’s net income was $5.4 million, compared to net income of $3.8 million for the same period of 2023. The 2024 results do not reflect the impact of the previously-announced merger with Community Bank of the Bay, which was completed on November 1, 2024.
Net interest income for the first nine months of 2024 increased by 19.7%, or $9.7 million, to $59.3 million from $49.6 million in the prior year-to-date period. The increase was primarily due to growth in earning assets and an 11 basis point expansion of net interest margin. Provisions for credit losses were $2.4 million thus far in 2024 compared to $4.2 million for the first nine months of 2023; the 2023 figure was comparatively high 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 have generally remained strong thus far in 2024, reflecting a disciplined and selective approach to lending as well as strong client relationships and a proactive approach to credit management.
Net income for the third quarter of 2024 grew 7.4% to $5.4 mllion from $5.0 million in 2024’s second quarter, primarily driven by higher revenues from payments services, SBA loan sales and other noninterest income, with a smaller contribution from reduced noninterest expenses due mainly to disciplined expense control. Net interest income and credit loss provision were all slightly less favorable in the third quarter of 2024 than in the immediately preceding period.
CBC’s total assets at September 30, 2024 of $2.5 billion were $276.7 million, or 12.3%, above the total assets of $2.3 billion on the same date in 2023. Net loans climbed to $1.8 billion at September 30, 2024 from $1.6 billion on the corresponding date in 2023, an increase of $158.2 million, or 9.9%. Deposits advanced to $2.1 billion at the end of 2024’s third quarter from $1.8 billion at September 30, 2023, an increase of $242.5 million or 13.3%. Deposits attributable to CBC’s payment processing division were the principal driver of the Bank’s retail deposit growth, reflecting expanded marketing efforts and the ongoing rise in contactless and online payments. CBC’s regional offices contributed a growth of $85.2 million to interest-bearing demand and money market deposits. For a balance-sheet liquidity enhancement, brokered CDs increased by $122 million over the past twelve months.
Total capital at September 30, 2024 was $194.5 million, compared to $154.5 million at the same point in 2023. The increase reflects the retention of earnings from CBC’s continued profitability and a 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 third quarter of the year. Once again, our results were driven by growth in earning assets and net interest margin, leading to continued expansion of net interest income, all built on a foundation of solid asset quality. These factors will remain the focus of our efforts in the future. As before, of course, there is always room for improvement. For that reason, we will continue our efforts to enhance revenues and control expenses to augment our earnings growth. We will also seek ways to refine our balance sheet structure to maximize our financial strength and flexibility. CBC remains well-positioned for the current economic environment, and we expect to thrive regardless of future developments. Both we and our clients look forward to the future’s emerging opportunities.
“We are also delighted to report that CBC’s previously-announced merger with Bay Community Bancorp and its subsidiary, Community Bank of the Bay, was completed effective November 1, 2024. While the transaction closed after the end of the third quarter of 2024 and thus is not reflected in our quarterly results, the synergies between our organizations are beginning to emerge. The combination of the two banks brings CBC’s total assets to over $3.5 billion, and adds four new locations in the greater San Francisco Bay area to our Southern California locations. We remain impressed by the caliber of Community Bank of the Bay’s clients and staff, and we are honored to welcome them to the greater CBC family. Now the real work begins, as we complete the system conversions and other actions that will forge our two institutions into one. But we are already sharing our joint banking expertise with clients and prospects in California’s two largest banking markets.”
Mr. Patel concluded: “While we are gratified by CBC’s increasing accomplishments, neither those successes nor our bright future would be possible without the continued loyalty and support of our clients, team members, and friends. We offer our sincere thanks for all you have contributed to making our achievements a reality.”
About Commercial Bank of California
Commercial Bank of California is a full-service bank and diversified financial services company serving businesses, professionals, and communities in the greater Los Angeles and San Francisco Bay areas of California. 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 banking needs is available at www.cbcal.com.
STATEMENTS OF CONDITION (UNAUDITED)
| ($000’s omitted) | Sept. 30, 2024 | Sept. 30, 2023 | ||
|---|---|---|---|---|
| ASSETS: | ||||
| Cash and due from banks | $ | 14,252 | $ | 7,951 |
| Interest bearing deposits with banks | 251,373 | 109,607 | ||
| Federal funds sold | – | – | ||
| Cash and cash equivalents | 265,625 | 117,558 | ||
| Investment securities | 413,033 | 439,388 | ||
| Loans | 1,781,788 | 1,623,082 | ||
| Less: allowance for loan and lease losses | 19,874 | 19,399 | ||
| Loans, net | 1,761,914 | 1,603,683 | ||
| Premises and equipment – net | 7,371 | 9,946 | ||
| Other real estate owned | – | – | ||
| Accrued interest receivable and other assets | 83,596 | 84,256 | ||
| Total assets | $ | 2,531,539 | $ | 2,254,831 |
LIABILITIES AND CAPITAL:
| ($000’s omitted) | Sept. 30, 2024 | Sept. 30, 2023 | ||
|---|---|---|---|---|
| Non-interest bearing demand deposits | $ | 864,706 | $ | 825,091 |
| Interest bearing demand deposits | 240,600 | 266,626 | ||
| Savings and money market deposits | 779,888 | 668,682 | ||
| Time deposits | 176,821 | 59,144 | ||
| Total deposits | 2,062,015 | 1,819,543 | ||
| Fed funds purchased | 230 | – | ||
| Other borrowings | 244,978 | 250,000 | ||
| Accrued interest payable and other liabilities | 29,768 | 30,739 | ||
| Total liabilities | $ | 2,336,991 | $ | 2,100,282 |
| Stated capital | 123,393 | 121,918 | ||
| Retained earnings | 93,305 | 72,774 | ||
| Accumulated other comprehensive income | –22,150 | -40,143 | ||
| Total capital | $ | 194,548 | $ | 154,549 |
| Total liabilities and capital | $ | 2,531,539 | $ | 2,254,831 |
STATEMENTS OF OPERATIONS (UNAUDITED)
| ($000’s omitted) | Nine Months Ended Sept. 30, 2024 |
Nine Months Ended Sept. 30, 2023 |
||
|---|---|---|---|---|
| Interest on loans | $ | 80,221 | $ | 64,687 |
| Interest on deposits with banks | 13,309 | 6,535 | ||
| Interest on investment securities | 9,537 | 8,626 | ||
| Other interest income | 819 | 550 | ||
| Total interest income | 103,886 | 80,398 | ||
| Interest on deposits | 34,374 | 24,704 | ||
| Interest on other borrowings | 10,217 | 6,140 | ||
| Total interest expense | 44,591 | 30,844 | ||
| Net interest income | 59,295 | 49,554 | ||
| Provision for loan losses | 2,383 | 4,232 | ||
| Net interest income after provision for loan losses | 56,912 | 45,322 | ||
| Bank service charges and fees | 889 | 856 | ||
| Payment processing fee income | 13,700 | 11,241 | ||
| Other income | -1,826 | 60 | ||
| Other operating income | 12,763 | 12,157 | ||
| Salaries and related benefits | 31,142 | 29,800 | ||
| Occupancy expenses | 2,761 | 3,040 | ||
| Other expenses | 13,492 | 10,499 | ||
| Total other operating expenses | 47,395 | 43,339 | ||
| Income before provision for income taxes | 22,280 | 14,140 | ||
| Provision for income taxes | 6,774 | 4,043 | ||
| Net income | $ | 15,506 | $ | 10,097 |
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
