Community bank addresses often ignored market

“We’re just making profits off clients that the big banks won’t pursue. I won’t say that they’ve rejected them. They’re just not pursuing them,” he said.

But for Community Bank of the Bay, that has a Peninsula branch in San Mateo, the regional financial institution specializes in nonprofits and small businesses that provide critical services to their communities, such as those not traditionally financially rewarded in the same way as private sector endeavors. And its relocation to a larger office in San Mateo is in part a testament to how well business has been, Roach said.

The bank also operates in Oakland, Danville and San Jose, and began specializing in such a market about a decade ago. The company recently secured a $119 million investment from the U.S. Department of Transportation, which was available mainly to community development banks that demonstrated a strong track record working with low-income communities and minority populations.

Roach said such banks play a crucial role in communities, as they are familiar with the areas in ways corporate institutions aren’t, such as having the regional knowledge to understand the needs of the East Palo Alto versus Palo Alto communities are starkly different, for instance. But one of the common problems their clients face is related to high rental costs, he said.

The Alameda County Homeless Center, for example, was faced with the dilemma of possibly cutting the number of lawyers on its team, that helps homeless veterans navigate the complicated process of accessing their benefits. Securing a loan at a larger institution would have been significantly more cumbersome, said Roach – who previously worked at Bank of America – as the complexities paired with the relatively small transaction value wouldn’t have been worth the effort.

“At Bank of America, if it was under $10 million, you were just like, ‘that’s not worth my time.’ They’re going to get in trouble if they have a rule about that, but that’s how it worked. I was on the sales side, and the incentive plans just didn’t draw you to small transactions,” he said.

But with the staggeringly high commercial vacancy rates, there are silver linings for such nonprofit clients who are now looking to take advantage of properties previously inaccessible to them. Assuming their funding sources are stable, he said the Community Bank of the Bay would make those loans “all day long.”

Roach joined the Community Bank of the Bay team almost 10 years ago after seeing the entrepreneurial zest in the work environment of his wife, who worked at a crowdfunding startup. He was intrigued by the idea of building something from scratch and problem-solving in a way that wasn’t available in his role at Bank of America, he said.

“When I was there, you had all these sales goals and all that, and I certainly did that, but you weren’t presented weekly with a problem that someone had that you were trying to solve. It was just like, ‘I need this big loan, and Wells [Fargo] is going to quote this. Can you quote something lower?’” he said.

The new San Mateo office is now located on 400 S. El Camino Real. Go to bankcbb.com for more information.

alyse@smdailyjournal.com

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