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Oakland’s Community Bank Of The Bay Was City’s First “Public Bank”

The call for an Oakland Public Bank is interesting, because it seems to ignore the very existence of Oakland’s first “Public Bank”, Community Bank Of The Bay. As the bank’s website reports…

Community Bank of the Bay (OTCBB: CBYAA) was founded in 1996 in Oakland to serve the credit needs of historically underserved businesses in the San Francisco Bay Area. Locally owned and operated, the bank invests in the economic vitality, community spirit, and future of Oakland. With exceptional local market expertise and broad industry knowledge, the bank brings value to customers and their community.

It started with many of the same objectives as the proponents of a public bank for Oakland list today. Read this from the website of the Friends of The Oakland Public Bank:

The Public Bank of Oakland will:

Get Oakland out from under the control of nonlocal big banks
Reduce the cost of lending and borrowing for the City of Oakland and nearby communities that make use of the Bank
Solve the problem of millions of dollars in cash that the cannabis industry cannot legally deposit in private banks
Bring jobs, affordable housing, new small businesses and worker cooperatives, infrastructure, credit, and independence to our city

And this interview I conducted with a member of Friends of The Oakland Public Bank at 2017 Oaktoberfest…

See the similarities (with the exception of cannabis)? What’s going on here?

Well, I think it has to do with a first, a pattern of lack of communication and lack of inquiry into what we have in Oakland. Second, a kind of assumption on the part of the framers of an idea that they were the first to come up with it. Third, a kind of prejudice against anything or anyone in Oakland that has done something in the past, done by people younger and newer to Oakland. Again, the assumption that they’re the first. Finally, there’s frustration with the regulations of private banks with respect to the cannabis industry.

But the fact is Community Bank Of The Bay was started in 1996 and for the same reasons that have led to the call for a public bank today. I worked as Oakland Mayor Elihu Harris’ Economic Advisor at the time, and remember the meetings and discussions around the then new public bank. And I recall the problems.

The original Community Bank Of The Bay was to exist via City funding. But one problem no one considered at the time was that the City of Oakland was essentially getting into the banking business and lacked the necessary fiscal and legal protections that would stop the general fund from being used as a backstop for the very existence of the bank. In other words, taxpayers forking over city money to save the bank from financial ruin, for whatever reason.

Now, we’re a full generation removed from Community Bank Of The Bay’s original story, and so with the rapid flow of information today, people have forgotten much more than they realize and new Oaklanders are handicapped by lack of information.

The Community Bank Of The Bay restructured itself to survive as a free-standing bank but with the same “public bank” style objectives. What we all learned was the very system of banking in America prohibits the kind of public bank people have called for.

I think what’s really needed is an Oakland grant program for those who need help – not so much a public bank. Oakland’s problem is we tend to give money with a string, what’s called a “loan”, rather than just make an investment in someone. This problem always happens when the subject is someone black who needs financial assistance. But if the person’s white, we call it an “angel investment,” and not a loan. See?

It’s that kind of nuttiness that has created Oakland’s racial wealth imbalance to this day. And I’m sorry, Kiva is not the answer. Don’t get me started.

Here is the latest financial report on the modern Community Bank Of The Bay of Oakland Friends of the Oakland Public Bank, take note.

OAKLAND, Calif., July 26, 2018 (GLOBE NEWSWIRE) — Community Bank of the Bay (CBYAA), a San Francisco Bay Area commercial bank with full service offices in Oakland, Danville and San Mateo, reported unaudited financial results for its quarter ending June 30, 2018.

2018 Second-Quarter Financial Highlights

Net income for the quarter ending June 30, 2018 totaled $998 thousand, an increase of $470 thousand from the prior quarter, and an increase of $590 thousand, or 144.6 percent, from the same quarter a year ago. Earnings per common share totaled $0.15 in the second quarter of 2018, compared to $0.08 in the prior quarter and $0.06 in the same quarter a year ago. Earnings in the second quarter benefited from $445 thousand of SBA premium income and a $233 Bank Enterprise Award from the Community Development Fund of the US Treasury.

Total assets at June 30, 2018 were $373 million, an increase of $41.0 million, or 12.3 percent, from the prior quarter, and an increase of $86.3 million, or 30.1 percent, from a year ago. Average earning assets for the quarter reached $336.1 million, an increase of $34.6 million, or 11.5 percent, compared with the prior quarter, and an increase of $71.4 million, or 27.0 percent, from the same quarter a year ago.

Deposits totaled $318.2 million at June 30, 2018 and were up $34.8 million, or 12.3 percent, from the prior quarter, and up $68.9 million, or 27.6 percent, from a year ago. 72 percent of second quarter deposit growth was in non-interest bearing demand deposit accounts.

Loans totaled $295.8 million at June 30, 2018, an increase of $35.1 million, or 13.5 percent, from the prior quarter, and an increase of $95.1 million, or 47.4 percent, compared to the same quarter a year ago. During the last twelve months secured commercial real estate lending, including owner-occupied increased $49 million and unsecured commercial and industrial lending increased $22.8 million.

Non-performing assets increased $517 thousand to $2.2 million in the second quarter and now represents 0.74 percent of total loans. The allowance for loan losses represents 1.24 percent of total loans at quarter end.

Net interest margin for the second quarter totaled 3.98 percent compared with 4.02 percent for the prior quarter and 3.82 percent in the same quarter a year ago. The decrease from the prior quarter primarily relates to an overall increase in deposit costs, while the improvement from the same quarter a year ago is primarily due to the increase in earning assets.

Total equity as of June 30, 2018 of $39.2 million increased $1.0 million, or 2.7 percent, from the prior quarter. The Bank’s capital levels are well above FDIC “Well Capitalized” standards as of June 30, 2018, with a total capital ratio of 14.16 percent, a tier 1 capital ratio of 12.92 percent, and a common equity tier 1 capital ratio of 11.58 percent. Total equity includes $4.1 million of Preferred Stock that the Bank expects to redeem in the coming year. If Preferred Stock were to have been redeemed at quarter end the total capital ratio would have been approximately 12.82 percent.

Book value per common share totaled $5.29 as of June 30, 2018, an increase of 6.6 percent from the same quarter one year ago.

“The Bank recorded another exceptional quarter of quality deposit and loan growth. Since raising $12 million of new capital in March 2017 we have grown the bank by almost $100 million. This higher level of earning assets is now starting to translate to increased profitability and we are eagerly looking forward to the second half of the year,” said William S. Keller, President, and Chief Executive Officer. “We also note that our recent Bank Enterprise Award marks the seventeenth year in which the Bank has received this award from the Community Development Financial Institutions Fund of the US Treasury. This particular Award was for 2016 activities and the Fund expects to announce its 2017 Awards before the end of this calendar year. The Bank’s consistent recognition by the CDFI Fund is confirmation that we remain true to our mission of enhancing the economic development and sustainability of the communities we serve.”

About Community Bank of the Bay

Community Bank of the Bay is headquartered in Oakland and serves the financial needs of closely held businesses and professional service firms, as well as their owner-operators and non-profit organizations throughout the San Francisco Bay Area. Community Bank of the Bay is a member of the FDIC, an SBA Preferred Lender, and a CDARS depository institution, with offices in Oakland, Danville and San Mateo. It is also California’s first FDIC-insured certified Community Development Financial Institution and one of only four now operating in the Northern California market. The bank is recognized for establishing the Bay Area Green Fund to provide dedicated financing to sustainable businesses and projects and supports environmentally responsible values. Additional information on the bank is available online at www.BankCBB.com.

Forward-Looking Statements

This release may contain forward-looking statements, such as, among others, statements about plans, expectations and goals concerning growth and improvement. Forward-looking statements are subject to risks and uncertainties. Such risks and uncertainties may include but are not necessarily limited to fluctuations in interest rates, inflation, government regulations and general economic conditions, including the real estate market in California and other factors beyond the Bank’s control. Such risks and uncertainties could cause results for subsequent interim periods or for the entire year to differ materially from those indicated. Readers should not place undue reliance on the forward-looking statements, which reflect management’s view only as of the date hereof. The Bank does not undertake, and specifically disclaims, any obligation to update or revise any forward-looking statements, whether to reflect new information, future events, or otherwise, except as required by law.

Stay tuned.

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