In a Nutshell: Commercial Bank of California (CBC) is the third largest bank headquartered in Orange County, California. The bank provides an array of solutions to small businesses. Its payment processing division services various businesses, including publicly traded companies. Employees of CBC complete thousands of hours of community service each year, and the bank is committed to increasing financial literacy in the communities it serves.
Though banks may share similar characteristics, there are also many differences among them. Retail banks offer a range of products and services to meet the needs of the general public. Investment banks primarily serve large corporations, assisting them with more complex banking needs such as merger and acquisition transactions. Commercial banks focus on providing small businesses with banking services.
Commercial Bank of California (CBC), as its name suggests, is a commercial bank. It has $2.5 billion in assets and operates six regional offices in Southern California. We checked in with Ash Patel, CBC’s Chairman, President, and CEO, to learn more about the bank and its focus on small businesses.
Patel said CBC, which has existed for 20 years, is the third largest bank headquartered in Orange County. Commercial Bank of California’s Board of Directors own the bank.
As a commercial bank, CBC does not offer consumer products. Patel said the bank primarily services small businesses and caters to minority-owned businesses.
“The differentiator between Commercial Bank of California and a bank like Bank of America is that we’re not a consumer-oriented, large money center,” Patel said. “We’re minority-owned, and we focus on the community. Our aim is serving small businesses.”
Patel said CBC’s regional managers cater to the small to medium-sized businesses within the bank’s geographic territory.
In addition to offering banking services, CBC also manages a payment processing business that includes credit card and ACH processing.
“Doing both banking as well as payment processing is a differentiator,” Patel said. “It’s a unique value proposition, at the size we are, to be able to offer processing services and banking solutions.”
Products and Guidance to Serve a Variety of Industries
Commercial Bank of California works with businesses across various sectors, including the automotive, eCommerce, education, and healthcare industries.
Patel said the bank works with business clients of different sizes. On the banking side, CBC services customers with annual revenues of at least $500,000 up to $5 million. CBC works with large, publicly traded enterprises for its payments processing operations. Patel said CBC processes about $4 billion monthly for automotive businesses alone.
Patel said that, regardless of a customer’s size or the sector it operates in, CBC guides them with financial literacy programs.
“Financial education and financial literacy are part of our core competencies,” Patel explained. “We have a mandate to provide financial literacy to our small business customers. We hold seminars where we’ll go through material relating to financial literacy. It’s a very big piece of the community service we offer.”
Ash Patel is CBC’s Chairman, President, and CEO.
Patel said CBC’s community service efforts are robust. In aggregate, bank employees spend between 2,000 to 4,000 hours engaging in community service each year.
Commercial Bank of California is committed to meeting the banking needs of minority-owned businesses. Patel said CBC generates between $100 million and $200 million in loans and $100 million in deposits from minority communities annually.
Patel said he considers several factors when measuring CBC’s success.
“In my mind, there are three dimensions to our success,” Patel explained. “There’s everything we do to meet our corporate and social responsibilities. There are the hours of community service we contribute each year. And last but not least, there is profitability.”
The services banks provide extend beyond helping to ensure the success of any one business, Patel said.
“Community banks are critical to the success of our country,” Patel said. “And community banks are relevant to the success of small businesses, which create 80% of the employment opportunities across the country.”
Providing the Rails for Payment Processing
Businesses often require cash infusions to finance growth. Commercial Bank of California offers lending products, including lines of credit and term loans, that suit a business’s financing needs.
The bank participates in the Small Business Administration’s (SBA) 7(a) loan program.
“We probably do $50 million of SBA loans every year,” Patel said. “We’re active participants in both state and federal programs designed to provide funding to small businesses and minority-owned businesses.”
For its payments business, CBC is a third-party processor. The bank isn’t a direct-merchant acquirer, which Patel said means consumers won’t see the Commercial Bank of California name or logo at the point of purchase.Watch onPlay
Although the bank’s name may not be present on a merchant terminal, CBC’s involvement in payment routing is essential to a successful card transaction.
“When a consumer walks into a store and purchases an item with their credit card, they insert their card into the payment terminal — we are not the entity that provides the terminal,” Patel said. “But when the transaction is completed, and the payment goes through the back shop — that’s us. The companies that provide merchant terminals to retailers are our customers. We’re known as the acquiring bank, and we provide the rails through which payments can be processed.”
Persevering to Overcome Economic Conditions
As the U.S. economy continues to stabilize its post-pandemic course, Patel said the current economic environment, which has seen interest rates rise to curb inflation, has caused liquidity challenges for banks. Commercial Bank of California has met those challenges and continues to provide its customers with loans and access to deposits.
“We preserve our liquidity for our customers,” Patel detailed. “Our business involves getting deposits and loaning money out. Both our loan and deposit businesses are very robust. But, at the moment, liquidity is really tight. So we’re being very careful.”
Patel said that, historically, CBC has used its liquidity for customers who need to borrow money. But the current economic environment has caused the bank to shift its strategy.
“In this economic climate, it’s become difficult for banks to be able to match resources and find the necessary cash within the banking system,” Patel said. “The current economic environment causes a removal of excess cash out of the banking system, which creates pressure for banks.”
Patel said banking practices are much different now than they were during the pandemic.
CBC is accessible to its customers.
“During pandemic times, there was free money,” Patel said. “Now, there’s no more free money left. So, we just have to exercise more caution in lending. Small businesses rely on banks for credit, and we’ve been able to generate the deposits to be able to continue to meet our borrowers’ needs.”
Patel said CBC employees are accessible to the bank’s customers, and proactive communication is a hallmark of the financial institution’s success. The bank regularly holds town hall meetings with customers and community members. At the meetings, bank representatives inform attendees of the strength of CBC’s balance sheet and investment portfolio.
In addition to town hall meetings, Patel said he regularly speaks with customers and is available to answer their questions and address any concerns they may have. Regular communication between the bank and its customers can help customers maintain their confidence in CBC, Patel said.
“We are a strong, privately held bank,” Patel said. “And we haven’t experienced the issues that led to the closing of banks in early 2023. We have a lot of customers who come to us because of the safety and soundness we provide as a privately held bank. The currency we trade on, as a bank, is trust.”
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