Headline: FDIC said to lift cease and desist order for Oakland bank

Publication: San Francisco Business Times

Dateline: Wednesday, October 27, 2004

The Federal Deposit Insurance Corp. lifted its cease and desist order this week against Oakland-based Community Bank of the Bay, sources said.

The bank will continue to operate under a memorandum of understanding, but the FDIC's latest move is an important sign that the bank's management is making progress in righting the ship.

The regulatory move also increases the prospects that the bank will soon turn an eye toward expansion, including the possibility of opening a second branch.

Community Bank of the Bay, which has never had a profitable quarter, has taken several steps to strengthen its performance. A new management team headed by Brian Garrett was brought on board in September 2002. Late last year, Richard Kahler, a widely respected Bay Area banker, joined the bank as chairman. Community Bank has cleaned up its once-troubled loan portfolio and focused on the basics of banking as well.

"We have introduced a disciplined credit culture and significantly improved credit quality," Garrett said upon Kahler taking the chairman's post.

As CEO, Garrett has been encouraging his loan officers to focus on bringing in more small business borrowers in a strategy he's called "hitting singles rather than trying to hit for the fences."

Earlier this year, the bank raised $5 million in an oversubscribed equity offering. The shares were offered at $3.50 and changed hands this week at $6.50 each.

The infusion of capital was a critical step in the bank's recovery.

"Regulators think of capital like jam," Garrett once quipped. "They like it best when it's put on thick and spread all over."