Headline: Community Bank of the Bay declared safe and sound

Publication: Press Release October 28th, 2004

Dateline: Thursday, October 28th, 2004

OAKLAND, Calif. – The Federal Deposit Insurance Corp. and the California Department of Financial Institutions have both released Oakland’s Community Bank of the Bay from the conditions of Cease and Desist orders they placed on the bank in August 2002, Community Bank President Brian Garrett said today.

“This is great news for us,” Garrett proclaimed. “It means we have turned the situation around and we’re moving in the right direction. The severest problems of the past have been eliminated. We can now focus on growth through new products and services, and become even more active serving the needs of our customers and our community.

Community Bank can now participate in programs that offer benefits for customers that the bank could not have offered under the conditions of the C&Ds. These include participation in U.S. Small Business Administration and Federal Home Loan Bank and similar state loan programs. Also the release will mean a reduction in expenses and regulatory burden for the bank related to additional monitoring that had been required to meet the conditions of the C&Ds.

Community Bank was founded in 1996 as the first community development bank in California. For six years the bank suffered severe losses, stemming from problem loans, unsafe and unsound banking practices, and governance issues.

Garrett was hired to turn things around, a new management team was recruited and an entirely new board of directors has been seated, with Dick Kahler – a veteran East Bay banker – as its chair.

As required by the Cease and Desist orders, all policies and internal procedures of the bank had to be reviewed and, in most cases, strengthened and tightened up. Over the course of the last three years, more than $1.2 million in previously charged-off loans were recovered. The bank has also significantly refocused its lending and investments on Oakland-area customers only. Today the bank has no delinquent loans outstanding and the number of accounts that the FDIC classifies as “criticized loans” has been significantly reduced to well below rates common to similar-sized banks.

The bank has signed a Memorandum of Understanding with the FDIC and the State of California establishing some standard operating conditions that the bank has agreed to adhere to while the Memorandum of Understanding is in effect.

Recently Community Bank won permission to sell more stock (CBYAA.OB) and easily raised an additional $5.5 million from investors. In fact the offer was so popular that the issue was oversubscribed and more than $1.5 million had to be returned.

Community Bank of the Bay is located at 1750 Broadway, on top of the 19th Street BART Station, with free parking. On Sept. 30, 2004, the bank had $30 million in deposits and reported $37 million in total assets.

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