REDDING, Calif., Oct. 23, 2015 (GLOBE NEWSWIRE) — Randall S. Eslick, President and Chief Executive Officer of Bank of Commerce Holdings (NASDAQ:BOCH) (the “Company”), a $990.7 million asset bank holding company and parent company of Redding Bank of Commerce (the “Bank”), today announced financial results for the quarter and the nine months ended September 30, 2015. Net income available to common shareholders for the quarter ended September 30, 2015 was $2.5 million or $0.18 per share – diluted, compared with $1.2 million or $0.09 per share – diluted for the same period of 2014. Net income available to common shareholders for the nine months ended September 30, 2015 was $6.6 million or $0.49 per share – diluted compared with $3.9 million or $0.29 per share – diluted for the same period of 2014.
Financial highlights for the third quarter of 2015:
- Net income available to common shareholders of $2.5 million for the three months ended September 30, 2015 was an improvement of $1.3 million (102%) over $1.2 million net income available to common shareholders earned during the third quarter of 2014, and an improvement of $135 thousand (6%) over $2.3 million available to common shareholders earned during the previous quarter.
- Return on average assets improved to 0.99% in the third quarter of 2015 compared to 0.49% in the same quarter of 2014.
- Return on average equity improved to 9.12% in the third quarter of 2015 compared to 4.76% in the same quarter of 2014.
- Nonperforming assets at September 30, 2015 totaled $17.1 million, a decrease of $7.8 million (31%) compared to September 30, 2014, and a decrease of $1.2 million (27% annualized) compared to June 30, 2015.
- Gross loans at September 30, 2015 totaled $718.5 million, an increase of $18.7 million (11% annualized) since June 30, 2015.
- Continuing improved asset quality resulted in no additional provision for loan and lease losses during the third quarter.
- The Company’s book value per share increased to $6.64 per common share at September 30, 2015 from $6.17 per common share at September 30, 2014 (8%) and $6.48 at June 30, 2015 (10% annualized).
- The Company’s net interest margin improved to 3.62% for the quarter ended September 30, 2015 from 3.43% for the third quarter of 2014.
Financial highlights for the nine months ended September 30, 2015:
- Net income available to common shareholders of $6.6 million for the nine months ended September 30, 2015 was an improvement of $2.7 million (69%) over $3.9 million net income available to common shareholders earned during the nine months ended September 30, 2014.
- Return on average assets for the nine months ended September 30, 2015 improved to 0.89% compared to 0.54% for the same period in 2014.
- Return on average equity for the nine months ended September 30, 2015 improved to 8.27% compared to 5.10% for the same period in 2014.
- Nonperforming assets at September 30, 2015 totaled $17.1 million, a decrease of $5.1 million (31% annualized) compared to December 31, 2014.
- Gross loans at September 30, 2015 totaled $718.5 million, an increase of $57.6 million (12% annualized) since December 31, 2014.
- Net loan loss recoveries of $71 thousand combined with continuing improved asset quality resulted in no additional provision for loan and lease losses during the first nine months of 2015.
- The Company’s book value per share increased to $6.64 per common share at September 30, 2015 from $6.29 per common share at December 31, 2014 (7% annualized).
- The Company’s net interest margin improved to 3.68% for the nine months ended September 30, 2015 from 3.57% for the year ended December 31, 2014.
- The Company’s efficiency ratio improved to 65.4% during the first nine months of 2015 compared to 70.1% during the same period in 2014.
Randall S. Eslick, President and CEO commented: “We are pleased with the successes our employees are achieving throughout the bank. Deposit growth, loan growth, improved asset quality and ongoing expense control are the basis of our enhanced profitability.”
SBLF Series B Preferred Stock
We are actively considering various debt alternatives to fully fund the redemption of the $20 million of SBLF preferred stock and have made application to the Company’s primary regulator, the Federal Reserve Bank of San Francisco for permission to do so. If the Company’s Series B Preferred Stock remains outstanding beyond December 2015, the dividend rate will increase from its current 1% to 5%, and in April 2016 to 9%.
Forward-Looking Statements
This quarterly press release includes forward-looking information, which is subject to the “safe harbor” created by the Securities Act of 1933, and Securities Act of 1934. These forward-looking statements (which involve the Company’s plans, beliefs and goals, refer to estimates or use similar terms) involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties include, but are not limited to, the following factors:
- Competitive pressure in the banking industry and changes in the regulatory environment
- Changes in the interest rate environment and volatility of rate sensitive assets and liabilities
- A decline in the health of the economy nationally or regionally which could reduce the demand for loans or reduce the value of real estate collateral securing most of the Company’s loans
- Credit quality deterioration which could cause an increase in the provision for loan and lease losses
- Asset/Liability matching risks and liquidity risks
- Changes in the securities markets
For additional information concerning risks and uncertainties related to the Company and its operations please refer to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014 and under the heading: “Risk Factors” and subsequent reports on Form 10-Q and current reports on Form 8-K. Readers are cautioned not to place undue reliance on these forward-looking statements. The Company undertakes no obligation and specifically disclaims any obligation, to revise or publicly release the results of any revision or update to these forward-looking statements to reflect events or circumstances that occur after the date the statements were made.
| TABLE 1 | |||||
| SELECTED FINANCIAL INFORMATION – UNAUDITED | |||||
| (amounts in thousands except per share data) | |||||
| For The Three Months Ended | For The Nine Months Ended | ||||
| Net income, average assets and | September 30, | June 30, | September 30, | ||
| average shareholders’ equity | 2015 | 2014 | 2015 | 2015 | 2014 |
| Income available to common shareholders | $ 2,475 | $ 1,223 | $ 2,340 | $ 6,566 | $ 3,894 |
| Average total assets | $ 992,034 | $ 984,047 | $ 993,815 | $ 988,303 | $ 970,001 |
| Average shareholders’ equity | $ 107,704 | $ 101,947 | $ 106,198 | $ 106,186 | $ 102,112 |
| Selected performance ratios | |||||
| Return on average assets | 0.99% | 0.49% | 0.94% | 0.89% | 0.54% |
| Return on average equity | 9.12% | 4.76% | 8.84% | 8.27% | 5.10% |
| Efficiency ratio | 60.17% | 66.96% | 64.61% | 65.41% | 70.09% |
| Share and per share amounts | |||||
| Weighted average shares – basic | 13,340 | 13,294 | 13,338 | 13,327 | 13,536 |
| Weighted average shares – diluted | 13,377 | 13,339 | 13,370 | 13,358 | 13,582 |
| Earnings per share – basic | $ 0.18 | $ 0.09 | $ 0.18 | $ 0.49 | $ 0.29 |
| Earnings per share – diluted | $ 0.18 | $ 0.09 | $ 0.18 | $ 0.49 | $ 0.29 |
| At September 30, | At June 30, | ||||
| Share and per share amounts | 2015 | 2014 | 2015 | ||
| Common shares outstanding (1) | 13,374 | 13,298 | 13,364 | ||
| Book value per common share | $ 6.64 | $ 6.17 | $ 6.48 | ||
| Capital ratios | |||||
| Bank of Commerce Holdings | |||||
| Common equity tier 1 capital ratio (2) | 9.96% | n/a | 9.96% | ||
| Tier 1 capital ratio | 13.25% | 14.74% | 13.33% | ||
| Total capital ratio | 14.50% | 15.99% | 14.58% | ||
| Tier 1 leverage ratio | 11.98% | 12.17% | 11.76% | ||
| Redding Bank of Commerce | |||||
| Common equity tier 1 capital ratio (2) | 13.20% | n/a | 13.27% | ||
| Tier 1 capital ratio | 13.20% | 14.68% | 13.27% | ||
| Total capital ratio | 14.45% | 15.93% | 14.52% | ||
| Tier 1 leverage ratio | 11.95% | 12.13% | 11.75% | ||
| (1) Includes unvested restricted shares issued in accordance with the Banks equity incentive plan. | |||||
| (2) As of January 1, 2015, common equity tier 1 capital ratio is a new ratio requirement under the Basel III Capital Rules and represents the sum of the common equity tier 1 elements, minus regulatory adjustments and deductions divided by risk weighted assets. | |||||
The Company and the Bank continue to meet all capital adequacy requirements to which they are subject. The decline in capital ratios during the current quarter as compared to the same period a year ago is primarily due to repayment of junior subordinated debentures during the fourth quarter of 2014 and a change in the calculation of the risk-weighted average assets in accordance with Basel III.
BALANCE SHEET OVERVIEW
As of September 30, 2015, the Company had total consolidated assets of $990.7 million, gross loans of $718.5 million, allowance for loan and lease losses (“ALLL”) of $10.9 million, total deposits of $779.5 million, and shareholders’ equity of $108.7 million.
| TABLE 2 | ||||||||
| LOAN BALANCES BY TYPE – UNAUDITED | ||||||||
| (amounts in thousands) | ||||||||
| At September 30, | At June 30, | |||||||
| % of | % of | Change | % of | |||||
| 2015 | Total | 2014 | Total | Amount | % | 2015 | Total | |
| Commercial | $ 144,749 | 20% | $ 156,620 | 24% | $ (11,871) | (8)% | $ 143,088 | 20% |
| Real estate – construction and land development | 29,701 | 4 | 25,579 | 4 | 4,122 | 16% | 27,858 | 4 |
| Real estate – commercial non-owner occupied | 237,597 | 34 | 214,970 | 33 | 22,627 | 11% | 236,173 | 34 |
| Real estate – commercial owner occupied | 151,762 | 21 | 110,527 | 17 | 41,235 | 37% | 138,183 | 20 |
| Real estate – residential – ITIN | 50,162 | 7 | 53,805 | 8 | (3,643) | (7)% | 51,249 | 7 |
| Real estate – residential – 1-4 family mortgage | 12,185 | 2 | 13,779 | 2 | (1,594) | (12)% | 12,209 | 2 |
| Real estate – residential – equity lines | 45,733 | 6 | 45,050 | 7 | 683 | 2% | 46,463 | 7 |
| Consumer and other | 46,644 | 6 | 29,365 | 5 | 17,279 | 59% | 44,551 | 6 |
| Gross loans | 718,533 | 100% | 649,695 | 100% | 68,838 | 11% | 699,774 | 100% |
| Deferred fees and costs | 718 | 184 | 534 | 403 | ||||
| Loans, net of deferred fees and costs | 719,251 | 649,879 | 69,372 | 700,177 | ||||
| Allowance for loan and lease losses | (10,891) | (10,400) | (491) | (11,402) | ||||
| Net loans | $ 708,360 | $ 639,479 | $ 68,881 | $ 688,775 | ||||
| Average yield on loans during the quarter | 4.70% | 4.62% | 0.08 | 4.74% | ||||
The Company recorded gross loan balances of $718.5 million at September 30, 2015, compared with $649.7 million and $699.8 million at September 30, 2014 and June 30, 2015, respectively, an increase of $68.8 million and $18.7 million, respectively. The increase in gross loans compared to the same period a year ago was driven by strong organic loan originations and the purchase of wholesale loan pools. During the three months ended September 30, 2015, the Company purchased $7.5 million in consumer loan pools. During the twelve-month period ended September 30, 2015, the Company purchased $28.1 million and $6.5 million in consumer and commercial real estate investor loan pools, respectively. The Bank’s deferred fees and costs increased during the current quarter compared to the prior quarter as a result of increased loan production and implementation of an updated loan origination cost study.
The decrease in the ALLL in the current quarter compared to the prior quarter resulted from net loan charge offs of $511 thousand. As a result of continued improved asset quality, no additional provision for loan and lease losses was deemed necessary during the current quarter. See table 8 for additional detail of the ALLL.
| TABLE 3 | ||||||||
| CASH, CASH EQUIVALENTS, AND INVESTMENT SECURITIES – UNAUDITED | ||||||||
| (amounts in thousands) | ||||||||
| At September 30, | At June 30, | |||||||
| % of | % of | Change | % of | |||||
| 2015 | Total | 2014 | Total | Amount | % | 2015 | Total | |
| Cash and due from banks | $ 8,564 | 5% | $ 12,581 | 5% | $ (4,017) | (32)% | $ 11,115 | 5% |
| Interest-bearing deposits in other banks | 16,745 | 8 | 33,842 | 12 | (17,097) | (51)% | 21,681 | 9 |
| Total cash and cash equivalents | 25,309 | 12 | 46,423 | 17 | (21,114) | (45)% | 32,796 | 14 |
| Investment securities: | ||||||||
| U.S. government and agencies | 3,998 | 2 | 7,825 | 3 | (3,827) | (49)% | 5,314 | 2 |
| Obligations of state and political subdivisions | 57,453 | 26 | 57,161 | 20 | 292 | 1% | 51,324 | 23 |
| Residential mortgage backed securities and collateralized mortgage obligations | 34,058 | 16 | 46,498 | 17 | (12,440) | (27)% | 37,776 | 16 |
| Corporate securities | 36,560 | 17 | 39,717 | 15 | (3,157) | (8)% | 33,501 | 15 |
| Commercial mortgage backed securities | 9,266 | 4 | 11,100 | 4 | (1,834) | (17)% | 9,467 | 4 |
| Other asset backed securities | 15,974 | 7 | 27,078 | 10 | (11,104) | (41)% | 23,381 | 10 |
| Total investment securities – AFS | 157,309 | 72 | 189,379 | 69 | (32,070) | (17)% | 160,763 | 70 |
| Obligations of state and political subdivisions – HTM | 36,093 | 16 | 36,888 | 14 | (795) | (2)% | 36,655 | 16 |
| Total investment securities – AFS and HTM | 193,402 | 88 | 226,267 | 83 | (32,865) | (19)% | 197,418 | 86 |
| Total cash, cash equivalents and investment securities | $ 218,711 | 100% | $ 272,690 | 100% | $ (53,979) | (20)% | $ 230,214 | 100% |
| Average yield on interest bearing due from banks and investment securities during the quarter | 2.46% | 2.42% | 0.04 | 2.59% | ||||
As of September 30, 2015, the Company maintained noninterest-bearing cash positions at the Federal Reserve Bank and correspondent banks in the amount of $8.6 million. The Company also held interest-bearing deposits in the amount of $16.7 million.
Available-for-sale investment securities totaled $157.3 million at September 30, 2015, compared with $189.4 million and $160.8 million at September 30, 2014 and June 30, 2015, respectively. The Company’s available-for-sale investment portfolio provides the Company a secondary source of liquidity to fund other higher yielding asset opportunities, such as loan originations and wholesale loan purchases. During the third quarter of 2015, the Company purchased 25 securities with a par value of $26.8 million and weighted average yield of 2.18% and sold 21 securities with a par value of $23.8 million and weighted average yield of 2.57%. The sales activity resulted in $137 thousand in net realized gains for the three months ended September 30, 2015. During the three months ended September 30, 2015, the Company received $6.1 million in proceeds from principal payments, calls and maturities within the available-for-sale investment securities portfolio. Average quarterly securities balances and weighted average tax equivalent yields at September 30, 2015 and 2014 were $191.4 million and 3.40% compared to $221.9 million and 3.49%, respectively.
During the current quarter, the Company’s securities transactions were focused on improving credit quality and continuing to shorten the effective duration of the portfolio in anticipation of rising interest rates. Management will continue to actively seek out opportunities to reduce the overall effective duration of the portfolio and accelerate cash flows, while also improving credit quality and liquidity. This strategy could entail absorbing small losses and slightly reduced yields within the portfolio to meet longer term objectives.
At September 30, 2015, the Company’s net unrealized gains on available-for-sale investment securities were $1.6 million compared with $1.8 million and $1.5 million at September 30, 2014 and June 30, 2015, respectively. The increase in net unrealized gains during the current quarter resulted primarily from increases in the fair value of the Company’s municipal bond portfolio, as a result of decreases in interest rates.
| TABLE 4 | ||||||||
| DEPOSITS BY TYPE – UNAUDITED | ||||||||
| (amounts in thousands) | ||||||||
| At September 30, | At June 30, | |||||||
| % of | % of | Change | % of | |||||
| 2015 | Total | 2014 | Total | Amount | % | 2015 | Total | |
| Demand – noninterest bearing | $ 162,437 | 21% | $ 151,684 | 20% | $ 10,753 | 7% | $ 151,640 | 20% |
| Demand – interest bearing | 295,209 | 38 | 265,308 | 35 | 29,901 | 11% | 276,103 | 36 |
| Total demand | 457,646 | 59 | 416,992 | 55 | 40,654 | 10% | 427,743 | 56 |
| Savings | 93,367 | 12 | 91,589 | 12 | 1,778 | 2% | 93,500 | 12 |
| Total non-maturing deposits | 551,013 | 71 | 508,581 | 67 | 42,432 | 8% | 521,243 | 68 |
| Certificates of deposit | 228,492 | 29 | 258,939 | 33 | (30,447) | (12)% | 238,796 | 32 |
| Total deposits | $ 779,505 | 100% | $ 767,520 | 100% | $ 11,985 | 2% | $ 760,039 | 100% |
| Average rate on interest bearing deposits during the quarter | 0.49% | 0.53% | (0.04) | 0.50% | ||||
Total deposits at September 30, 2015, increased $12.0 million or 2% to $779.5 million compared to September 30, 2014, and increased $19.5 million or 3% compared to June 30, 2015. Total non-maturing deposits increased $42.4 million or 8% compared to the same date a year ago and increased $29.8 million or 6% compared to June 30, 2015. Certificates of deposit decreased $30.4 million or 12% compared to the same date a year ago and decreased $10.3 million or 4% compared to June 30, 2015. Management intends to continue to reduce reliance on certificates of deposit as a funding source.
| TABLE 5 | |||
| WHOLESALE AND BROKERED DEPOSITS – UNAUDITED | |||
| (amounts in thousands) | |||
| At September 30, | At June 30, | ||
| 2015 | 2014 | 2015 | |
| CDARS / ICS reciprocal deposits | $ 67,825 | $ 66,431 | $ 58,628 |
| Third party brokered time deposits | 17,505 | 13,550 | 17,502 |
| Brokered deposits per Call Report | 85,330 | 79,981 | 76,130 |
| Online listing service time deposits | 61,141 | 68,011 | 63,328 |
| Total wholesale and brokered deposits | $ 146,471 | $ 147,992 | $ 139,458 |
In accordance with regulatory Call Report instructions, the Bank will file (or has filed) quarterly Call Reports which list brokered deposits of $85.3 million, $80.0 million and $76.1 million at September 30, 2015, September 30, 2014 and June 30, 2015, respectively. These amounts include reciprocal deposits obtained through the CDARS and ICS programs, which management does not consider to be brokered.
INCOME STATEMENT OVERVIEW
| TABLE 6 | |||||||
| SUMMARY INCOME STATEMENT – UNAUDITED | |||||||
| (amounts in thousands, except per share data) | |||||||
| For The Three Months Ended | |||||||
| September 30, | Change | June 30, | Change | ||||
| 2015 | 2014 | Amount | % | 2015 | Amount | % | |
| Interest income | $ 9,732 | $ 9,102 | $ 630 | 7% | $ 9,763 | $ (31) | 0% |
| Interest expense | 1,277 | 1,154 | 123 | 11% | 1,168 | 109 | 9% |
| Net interest income | 8,455 | 7,948 | 507 | 6% | 8,595 | (140) | (2)% |
| Provision for loan and lease losses | — | 1,050 | (1,050) | (100)% | — | — | 0% |
| Noninterest income | 808 | 671 | 137 | 20% | 881 | (73) | (8)% |
| Noninterest expense | 5,574 | 5,771 | (197) | (3)% | 6,122 | (548) | (9)% |
| Income before provision for income taxes | 3,689 | 1,798 | 1,891 | 105% | 3,354 | 335 | 10% |
| Provision for income taxes | 1,164 | 525 | 639 | 122% | 964 | 200 | 21% |
| Net income | 2,525 | 1,273 | 1,252 | 98% | 2,390 | 135 | 6% |
| Less: Preferred dividends | 50 | 50 | — | 0% | 50 | — | 0% |
| Income available to common shareholders | $ 2,475 | $ 1,223 | $ 1,252 | 102% | $ 2,340 | $ 135 | 6% |
| Basic earnings per share | $ 0.18 | $ 0.09 | $ 0.09 | 100% | $ 0.18 | $ — | 0% |
| Average basic shares | 13,340 | 13,294 | 46 | 0% | 13,338 | 2 | 0% |
| Diluted earnings per share | $ 0.18 | $ 0.09 | $ 0.09 | 100% | $ 0.18 | $ — | 0% |
| Average diluted shares | 13,377 | 13,339 | 38 | 0% | 13,370 | 7 | 0% |
| Dividends declared per common share | $ 0.03 | $ 0.03 | $ — | 0% | $ 0.03 | $ — | 0% |
Third Quarter of 2015 Compared With Third Quarter of 2014
Net income available to common shareholders for the third quarter of 2015 increased $1.3 million over the third quarter of 2014. In the current quarter, net interest income was $507 thousand higher, the provision for loan and lease losses was $1.1 million lower, noninterest income was $137 thousand higher and noninterest expense was $197 thousand lower. These positive changes were partially offset by an increase in income tax expense of $639 thousand.
Net Interest Income
Net interest income increased $507 thousand over a year previous. Interest income for the three months ended September 30, 2015 increased $630 thousand or 7% to $9.7 million, which reflects the increase in average earning assets and the reallocation of lower yielding assets into higher yielding loans. Interest expense for the three months ended September 30, 2015 increased $123 thousand or 11% to $1.3 million. Interest expense on deposits declined $77 thousand and interest expense on other borrowings decreased $47 thousand, but interest on the Bank’s Federal Home Loan Bank of San Francisco borrowings increased $247 thousand due to the net settlement expense associated with the Bank’s active interest rate swap.
In 2011, to mitigate interest rate and market risks, the Bank entered into four forward starting interest rate swaps to hedge interest rate risk associated with variable rate Federal Home Loan Bank of San Francisco borrowings. The hedges converted the LIBOR based floating rate of interest on the $75.0 million Federal Home Loan Bank of San Francisco borrowings to fixed interest rates. The fixed rates adjust each August and were/are 0.94% at August 2013, 1.84% at August 2014, 2.64% at August 2015 and 3.22% at August 2016. During the third quarter of 2014, the net cost of the Bank’s Federal Home Loan Bank of San Francisco borrowings was also reduced when hedge gains from a previous set of interest rate swaps were reclassified out of other comprehensive income into earnings as a reduction of interest expense.
Interest expense on other borrowings, primarily junior subordinated debentures was $47 thousand and $94 thousand for the third quarter of 2015 and 2014, respectively. At September 30, 2014 the Company had $5.1 million of junior subordinated debentures that carried a rate of LIBOR plus 3.30% and $10.3 million of junior subordinated debentures with a rate of LIBOR plus 1.58%. During December of 2014, the Company repaid the $5.1 million of junior subordinated debentures resulting in a decrease in interest on other borrowings in 2015.
Noninterest Income
Noninterest income for the three months ended September 30, 2015 increased $137 thousand compared to the same period a year ago. During the quarter ended September 30, 2015 the Company recorded net gains on sale of available-for-sale investment securities of $137 thousand compared to a net gains of $32 thousand for the same period a year ago.
Noninterest Expense
Noninterest expense for the three months ended September 30, 2015 decreased $197 thousand compared to the same period a year ago. During the quarter ended September 30, 2015 salaries and related benefits decreased $312 thousand as a result of increased deferred loan origination costs. In the current period, professional services fees are $54 thousand higher than a year earlier.
Income Tax Provision
During the three months ended September 30, 2015, the Company recorded a provision for income tax expense of $1.2 million compared with $525 thousand for the same period a year ago. While pre-tax income has continued to increase, the company’s anticipated tax credits (from qualified low income housing investments) and tax exempt income (from municipal bonds and BOLI) have not increased. As these items comprise an ever decreasing percentage of pre-tax income, the Company’s income tax provision as a percent of pre-tax income increases.
Third Quarter of 2015 Compared With Second Quarter of 2015
Net income available to common shareholders for the third quarter of 2015 increased $135 thousand over the second quarter of 2015. In the current quarter, net interest income decreased by $140 thousand, noninterest income decreased by $73 thousand and noninterest expense decreased by $548 thousand. These net positive changes were partially offset by an income tax provision that was higher by $200 thousand.
Net Interest Income
Net interest income decreased $140 thousand over a quarter previous. Interest income for the three months ended September 30, 2015 decreased $31 thousand to $9.7 million. The decrease in interest income was due to a decrease of $1.0 million in average interest earning assets and a decrease of six basis points on the tax equivalent yield of those assets partially offset by the benefit of a quarter that was one day longer than the second quarter of 2015. Interest expense for the three months ended September 30, 2015 increased $109 thousand or 9% to $1.3 million compared to the prior quarter. This increase was primarily due to increased interest expense on Federal Home Loan Bank of San Francisco borrowings.
Noninterest Income
Noninterest income for the three months ended September 30, 2015 decreased $73 thousand compared to the prior quarter. Net gains recognized on the sale of available-for-sale investment securities during the current quarter increased by $76 thousand to $137 thousand compared to a $61 thousand net gain in the prior quarter. During the current quarter the Bank recognized $31 thousand in gain on sale of other real estate owned compared to a loss of $9 thousand in the prior quarter. There was also a $205 thousand special dividend on Federal Home Loan Bank of San Francisco stock included in other noninterest income during the three months ended June 30, 2015.
Noninterest Expense
Noninterest expense for the three months ended September 30, 2015 decreased $548 thousand compared to the prior quarter. During the quarter ended September 30, 2015 salaries and related benefits decreased $367 thousand as a result of increased deferred loan origination costs. In the current period, professional services fees are $105 thousand lower than in the prior quarter.
Income Tax Provision
During the three months ended September 30, 2015, the Company recorded a provision for income tax expense of $1.2 million compared with provision for income tax expense of $964 thousand for the prior quarter. The increase in the current quarter is due to increased taxable income.
Earnings Per Share
Diluted earnings per share were $0.18 for the three months ended September 30, 2015 compared with $0.09 for the same period a year ago, and $0.18 for the prior period. Earnings per share increased during the three months ended September 30, 2015 compared to the same period a year ago as a result of increased net income.
| TABLE 7 | |||||
| NET INTEREST SPREAD AND MARGIN – UNAUDITED | |||||
| (amounts in thousands) | |||||
| For the Three Months Ended | |||||
| September 30, | Change | June 30, | Change | ||
| 2015 | 2014 | Amount | 2015 | Amount | |
| Tax equivalent yield on average interest earning assets | 4.29% | 4.07% | 0.22 | 4.35% | (0.06) |
| Rate on average interest bearing liabilities | 0.71% | 0.63% | (0.08) | 0.65% | (0.06) |
| Net interest spread – tax equivalent basis | 3.58% | 3.44% | 0.14 | 3.70% | (0.12) |
| Net interest margin – nominal | 3.62% | 3.43% | 0.19 | 3.71% | (0.09) |
| Net interest margin – tax equivalent basis | 3.75% | 3.57% | 0.18 | 3.85% | (0.10) |
| Average earning assets | $ 927,547 | $ 918,361 | $ 9,186 | $ 928,578 | $ (1,031) |
| Average interest bearing liabilities | $ 709,958 | $ 723,062 | $ (13,104) | $ 723,288 | $ (13,330) |
The net interest margin (net interest income as a percentage of average interest earning assets) on a fully tax-equivalent basis was 3.75% for the three months ended September 30, 2015, an increase of 18 basis points as compared to the same period a year ago. The increase in net interest margin resulted from a 22 basis point increase in tax-equivalent yield on average earning assets offset by a four basis point increase in interest expense to fund average earning assets. The tax equivalent net interest margin decreased 10 basis points as compared to the prior quarter. The decrease in net interest margin resulted from a six basis point decrease in tax-equivalent yield on average earning assets and a four basis point increase in interest expense to fund average earning assets. Maintaining our net interest margin in a historically low interest rate environment and while confronted with known increased Federal Home Loan Bank of San Francisco borrowing costs will be challenging in the foreseeable future. Management will continue to reallocate the asset mix into higher yielding assets by pursuing organic loan growth, and actively managing the investment securities portfolio within our accepted risk tolerance.
| TABLE 8 | |||||
| ALLOWANCE FOR LOAN AND LEASE LOSSES ROLL FORWARD AND IMPAIRED LOAN TOTALS – UNAUDITED | |||||
| (amounts in thousands) | |||||
| For The Three Months Ended | |||||
| September 30, | June 30, | March 31, | December 31, | September 30, | |
| 2015 | 2015 | 2015 | 2014 | 2014 | |
| Beginning balance | $ 11,402 | $ 11,296 | $ 10,820 | $ 10,400 | $ 9,882 |
| Provision for loan and lease losses charged to expense | — | — | — | 675 | 1,050 |
| Loans charged off | (779) | (711) | (179) | (374) | (585) |
| Loan loss recoveries | 268 | 817 | 655 | 119 | 53 |
| Ending balance | $ 10,891 | $ 11,402 | $ 11,296 | $ 10,820 | $ 10,400 |
| At September 30, | At June 30, | At March 31, | At December 31, | At September 30, | |
| 2015 | 2015 | 2015 | 2014 | 2014 | |
| Nonaccrual loans: | |||||
| Commercial | $ 2,506 | $ 3,170 | $ 3,908 | $ 5,112 | $ 7,065 |
| Real estate – commercial non-owner occupied | 5,154 | 6,532 | 7,103 | 8,318 | 8,518 |
| Real estate – commercial owner occupied | 1,928 | 1,079 | 1,079 | 1,378 | 1,378 |
| Real estate – residential – ITIN | 4,228 | 4,375 | 4,645 | 4,647 | 5,281 |
| Real estate – residential – 1-4 family mortgage | 1,669 | 1,693 | 1,720 | 2,135 | 2,157 |
| Real estate – residential – equity lines | 23 | 24 | 24 | 24 | 89 |
| Consumer and other | 33 | 34 | 34 | 35 | — |
| Total nonaccrual loans | 15,541 | 16,907 | 18,513 | 21,649 | 24,488 |
| Accruing troubled debt restructured loans: | |||||
| Commercial | 56 | 10 | 1,004 | 1,485 | 1,585 |
| Real estate – commercial non-owner occupied | 828 | 832 | 836 | 839 | 844 |
| Real estate – commercial owner occupied | — | 849 | 854 | 859 | 863 |
| Real estate – residential – ITIN | 5,423 | 5,303 | 5,421 | 5,462 | 5,222 |
| Real estate – residential – equity lines | 563 | 569 | 574 | 579 | 584 |
| Total accruing troubled debt restructured loans | 6,870 | 7,563 | 8,689 | 9,224 | 9,098 |
| All other accruing impaired loans | 494 | 530 | 533 | 535 | 757 |
| Total impaired loans | $ 22,905 | $ 25,000 | $ 27,735 | $ 31,408 | $ 34,343 |
| Gross loans outstanding at period end | $ 718,533 | $ 699,774 | $ 699,229 | $ 660,898 | $ 649,695 |
| Allowance for loan and lease losses as a percent of: | |||||
| Gross loans | 1.52% | 1.63% | 1.62% | 1.64% | 1.60% |
| Nonaccrual loans | 70.08% | 67.44% | 61.02% | 49.98% | 42.47% |
| Impaired loans | 47.55% | 45.61% | 40.73% | 34.45% | 30.28% |
| Nonaccrual loans to gross loans | 2.16% | 2.42% | 2.65% | 3.28% | 3.77% |
The Company realized net loan charge offs of $511 thousand in the current quarter compared with net loan loss recoveries of $106 thousand in the prior quarter and net loan charge offs of $532 thousand for the same period a year ago.
The Company continues to monitor credit quality, and adjust the ALLL to ensure that the ALLL is maintained at a level that is adequate to cover estimated credit losses in the loan and lease portfolio. The Company made no provision for loan and lease losses during the first three quarters of 2015 compared to a provision of $2.5 million during the first three quarters of 2014. The Company’s ALLL as a percentage of gross loans was 1.52% as of September 30, 2015 compared to 1.60% as of September 30, 2014 and 1.63% as of June 30, 2015. Based on the Bank’s ALLL methodology, which uses criteria such as risk weighting and historical loss rates, and given the ongoing improvements in asset quality, management believes the Company’s ALLL is adequate at September 30, 2015. There is, however, no assurance that future loan and lease losses will not exceed the levels provided for in the ALLL and could possibly result in additional charges to the provision for loan and lease losses.
At September 30, 2015, the recorded investment in loans classified as impaired totaled $22.9 million, with a corresponding valuation allowance of $789 thousand compared to impaired loans of $34.3 million with a corresponding valuation allowance of $1.2 million at September 30, 2014 and impaired loans of $25.0 million, with a corresponding valuation allowance of $1.3 million at June 30, 2015. The valuation allowance on impaired loans represents the impairment reserves on performing restructured loans, other accruing loans, and nonaccrual loans.
| TABLE 9 | |||||
| PERIOD END TROUBLED DEBT RESTRUCTURINGS – UNAUDITED | |||||
| (amounts in thousands) | |||||
| At September 30, | At June 30, | At March 31, | At December 31, | At September 30, | |
| 2015 | 2015 | 2015 | 2014 | 2014 | |
| Nonaccrual | $ 11,149 | $ 12,354 | $ 12,695 | $ 14,230 | $ 16,556 |
| Accruing | 6,870 | 7,563 | 8,689 | 9,224 | 9,098 |
| Total troubled debt restructurings | $ 18,019 | $ 19,917 | $ 21,384 | $ 23,454 | $ 25,654 |
| Percentage of total gross loans | 2.51% | 2.85% | 3.06% | 3.55% | 3.95% |
Loans are reported as a troubled debt restructuring when the Bank grants a concession(s) to a borrower experiencing financial difficulties that it would not otherwise consider. Examples of such concessions include a reduction in the loan rate, forgiveness of principal or accrued interest, extending the maturity date(s) significantly, or providing a lower interest rate than would be normally available for a transaction of similar risk. As a result of these concessions, restructured loans are impaired as the Bank will not collect all amounts due, either principal or interest, in accordance with the terms of the original loan agreement. Impairment reserves on non-collateral dependent restructured loans are measured by calculating the present value of expected future cash flows of the restructured loans, discounted at the effective interest rate of the original loan agreement. These impairment reserves are recognized as a specific component to be provided for in the ALLL.
During the three months ended September 30, 2015, the Company restructured two loans to grant payment deferrals and one loan to grant rate and maturity modifications. The loans were classified as troubled debt restructurings and placed on nonaccrual status. As of September 30, 2015, the Company had 121 restructured loans that qualified as troubled debt restructurings, of which 102 were performing according to their restructured terms.
| TABLE 10 | |||||
| NONPERFORMING ASSETS – UNAUDITED | |||||
| (amounts in thousands) | |||||
| At September 30, | At June 30, | At March 31, | At December 31, | At September 30, | |
| 2015 | 2015 | 2015 | 2014 | 2014 | |
| Total nonaccrual loans | $ 15,541 | $ 16,907 | $ 18,513 | $ 21,649 | $ 24,488 |
| 90 days past due and still accruing | 52 | 54 | 30 | 23 | — |
| Total nonperforming loans | 15,593 | 16,961 | 18,543 | 21,672 | 24,488 |
| Other real estate owned | 1,525 | 1,405 | 1,502 | 502 | 393 |
| Total nonperforming assets | $ 17,118 | $ 18,366 | $ 20,045 | $ 22,174 | $ 24,881 |
| Nonperforming loans to gross loans | 2.17% | 2.42% | 2.65% | 3.28% | 3.77% |
| Nonperforming assets to total assets | 1.73% | 1.87% | 2.03% | 2.22% | 2.54% |
At September 30, 2015, September 30, 2014 and June 30, 2015, the recorded investment in OREO was $1.5 million, $393 thousand and $1.4 million, respectively. The September 30, 2015 OREO balance consists of 11 properties, of which four are 1-4 family residential real estate in the amount of $361 thousand, six are nonfarm nonresidential properties in the amount of $993 thousand and one is an undeveloped commercial property in the amount of $170 thousand.
| TABLE 11 | |||||
| UNAUDITED CONSOLIDATED | |||||
| BALANCE SHEET | |||||
| (amounts in thousands, except per share data) | |||||
| At September 30, | At September 30, | Change | At June 30, | ||
| 2015 | 2014 | $ | % | 2015 | |
| Assets: | |||||
| Cash and due from banks | $ 8,564 | $ 12,581 | $ (4,017) | (32)% | $ 11,115 |
| Interest-bearing deposits in other banks | 16,745 | 33,842 | (17,097) | (51)% | 21,681 |
| Total cash and cash equivalents | 25,309 | 46,423 | (21,114) | (45)% | 32,796 |
| Securities available-for-sale, at fair value | 157,309 | 189,379 | (32,070) | (17)% | 160,763 |
| Securities held-to-maturity, at amortized cost | 36,093 | 36,888 | (795) | (2)% | 36,655 |
| Loans, net of deferred fees and costs | 719,251 | 649,879 | 69,372 | 11% | 700,177 |
| Allowance for loan and lease losses | (10,891) | (10,400) | (491) | 5% | (11,402) |
| Net loans | 708,360 | 639,479 | 68,881 | 11% | 688,775 |
| Premises and equipment, net | 11,112 | 12,510 | (1,398) | (11)% | 11,342 |
| Other real estate owned | 1,525 | 393 | 1,132 | 288% | 1,405 |
| Life insurance | 22,326 | 21,675 | 651 | 3% | 22,168 |
| Deferred taxes | 10,638 | 10,314 | 324 | 3% | 10,648 |
| Other assets | 18,057 | 20,696 | (2,639) | (13)% | 18,503 |
| Total assets | $ 990,729 | $ 977,757 | $ 12,972 | 1% | $ 983,055 |
| Liabilities and shareholders’ equity: | |||||
| Demand – noninterest bearing | $ 162,437 | $ 151,684 | $ 10,753 | 7% | $ 151,640 |
| Demand – interest bearing | 295,209 | 265,308 | 29,901 | 11% | 276,103 |
| Savings | 93,367 | 91,589 | 1,778 | 2% | 93,500 |
| Certificates of deposit | 228,492 | 258,939 | (30,447) | (12)% | 238,796 |
| Total deposits | 779,505 | 767,520 | 11,985 | 2% | 760,039 |
| Federal Home Loan Bank of San Francisco borrowings | 75,000 | 75,000 | — | 0% | 90,000 |
| Junior subordinated debentures | 10,310 | 15,465 | (5,155) | (33)% | 10,310 |
| Other liabilities | 17,239 | 17,812 | (573) | (3)% | 16,156 |
| Total liabilities | 882,054 | 875,797 | 6,257 | 1% | 876,505 |
| Shareholders’ equity: | |||||
| Preferred stock | 19,931 | 19,931 | — | 0% | 19,931 |
| Common stock | 24,180 | 23,874 | 306 | 1% | 24,144 |
| Retained earnings | 65,232 | 58,633 | 6,599 | 11% | 63,158 |
| Accumulated other comprehensive loss, net of tax | (668) | (478) | (190) | 40% | (683) |
| Total shareholders’ equity | 108,675 | 101,960 | 6,715 | 7% | 106,550 |
| Total liabilities and shareholders’ equity | $ 990,729 | $ 977,757 | $ 12,972 | 1% | $ 983,055 |
| Total interest earning assets | $ 927,773 | $ 908,204 | $ 19,569 | 2% | $ 917,756 |
| Shares outstanding | 13,374 | 13,298 | 13,364 | ||
| Book value per share | $ 6.64 | $ 6.17 | $ 6.48 | ||
| TABLE 12 | |||||||
| UNAUDITED | |||||||
| INCOME STATEMENT | |||||||
| (amounts in thousands, except per share data) | |||||||
| For The Three Months Ended | For The Nine Months Ended | ||||||
| September 30, | Change | June 30, | September 30, | ||||
| 2015 | 2014 | $ | % | 2015 | 2015 | 2014 | |
| Interest income: | |||||||
| Interest and fees on loans | $ 8,357 | $ 7,350 | $ 1,007 | 14% | $ 8,304 | $ 24,572 | $ 21,632 |
| Interest on securities | 743 | 1,001 | (258) | (26)% | 801 | 2,489 | 3,230 |
| Interest on tax-exempt securities | 592 | 629 | (37) | (6)% | 602 | 1,793 | 1,916 |
| Interest on deposits in other banks | 40 | 122 | (82) | (67)% | 56 | 167 | 386 |
| Total interest income | 9,732 | 9,102 | 630 | 7% | 9,763 | 29,021 | 27,164 |
| Interest expense: | |||||||
| Interest on demand deposits | 116 | 123 | (7) | (6)% | 107 | 339 | 362 |
| Interest on savings deposits | 53 | 59 | (6) | (10)% | 55 | 162 | 173 |
| Interest on certificates of deposit | 586 | 650 | (64) | (10)% | 594 | 1,771 | 1,985 |
| Interest on Federal Home Loan Bank of | 475 | 228 | 247 | 108% | 363 | 1,187 | 52 |
| San Francisco borrowings | |||||||
| Interest on other borrowings | 47 | 94 | (47) | (50)% | 49 | 143 | 281 |
| Total interest expense | 1,277 | 1,154 | 123 | 11% | 1,168 | 3,602 | 2,853 |
| Net interest income | 8,455 | 7,948 | 507 | 6% | 8,595 | 25,419 | 24,311 |
| Provision for loan and lease losses | — | 1,050 | (1,050) | (100)% | — | — | 2,500 |
| Net interest income after provision for loan and lease losses | 8,455 | 6,898 | 1,557 | 23% | 8,595 | 25,419 | 21,811 |
| Noninterest income: | |||||||
| Service charges on deposit accounts | 52 | 50 | 2 | 4% | 52 | 153 | 135 |
| Payroll and benefit processing fees | 138 | 127 | 11 | 9% | 130 | 416 | 371 |
| Earnings on cash surrender value – life insurance | 158 | 171 | (13) | (8)% | 159 | 482 | 459 |
| Gain (loss) on investment securities, net | 137 | 32 | 105 | 328% | 61 | 413 | (252) |
| Other income | 323 | 291 | 32 | 11% | 479 | 1,079 | 2,458 |
| Total noninterest income | 808 | 671 | 137 | 20% | 881 | 2,543 | 3,171 |
| TABLE 12 – CONTINUED | |||||||
| UNAUDITED | |||||||
| INCOME STATEMENT | |||||||
| (amounts in thousands, except per share data) | |||||||
| For The Three Months Ended | For The Nine Months Ended | ||||||
| September 30, | Change | June 30, | September 30, | ||||
| 2015 | 2014 | $ | % | 2015 | 2015 | 2014 | |
| Noninterest expense: | |||||||
| Salaries and related benefits | 3,208 | 3,520 | (312) | (9)% | 3,575 | 10,693 | 10,664 |
| Occupancy and equipment | 714 | 749 | (35) | (5)% | 709 | 2,157 | 2,069 |
| Write down of other real estate owned | — | — | — | 0% | — | — | 290 |
| Federal Deposit Insurance Corporation insurance premium | 159 | 204 | (45) | (22)% | 178 | 544 | 584 |
| Data processing fees | 243 | 226 | 17 | 8% | 251 | 736 | 656 |
| Professional service fees | 337 | 283 | 54 | 19% | 442 | 1,167 | 817 |
| Other expenses | 913 | 789 | 124 | 16% | 967 | 2,992 | 4,182 |
| Total noninterest expense | 5,574 | 5,771 | (197) | (3)% | 6,122 | 18,289 | 19,262 |
| Income before provision for income taxes | 3,689 | 1,798 | 1,891 | 105% | 3,354 | 9,673 | 5,720 |
| Provision for income taxes | 1,164 | 525 | 639 | 122% | 964 | 2,957 | 1,676 |
| Net income | $ 2,525 | $ 1,273 | $ 1,252 | 98% | $ 2,390 | $ 6,716 | $ 4,044 |
| Less: Preferred dividends | 50 | 50 | — | 0% | 50 | 150 | 150 |
| Income available to common shareholders | $ 2,475 | $ 1,223 | $ 1,252 | 102% | $ 2,340 | $ 6,566 | $ 3,894 |
| Basic earnings per share | $ 0.18 | $ 0.09 | $ 0.09 | 100% | $ 0.18 | $ 0.49 | $ 0.29 |
| Average basic shares | 13,340 | 13,294 | 46 | 0% | 13,338 | 13,327 | 13,536 |
| Diluted earnings per share | $ 0.18 | $ 0.09 | $ 0.09 | 100% | $ 0.18 | $ 0.49 | $ 0.29 |
| Average diluted shares | 13,377 | 13,339 | 38 | 0% | 13,370 | 13,358 | 13,582 |
| TABLE 13 | |||||
| UNAUDITED CONDENSED CONSOLIDATED | |||||
| YEAR TO DATE AVERAGE BALANCE SHEETS | |||||
| (amounts in thousands) | |||||
| For the Nine Months Ended | For the Twelve Months Ended | ||||
| September 30, | September 30, | December 31, | December 31, | December 31, | |
| 2015 | 2014 | 2014 | 2013 | 2012 | |
| Earning assets: | |||||
| Loans | $ 694,082 | $ 614,494 | $ 625,166 | $ 612,780 | $ 642,200 |
| Taxable securities | 124,199 | 150,157 | 147,916 | 157,486 | 135,615 |
| Tax exempt securities | 76,755 | 84,560 | 83,973 | 92,854 | 81,714 |
| Interest-bearing deposits in other banks | 28,021 | 63,034 | 56,465 | 43,342 | 48,712 |
| Average earning assets | 923,057 | 912,245 | 913,520 | 906,462 | 908,241 |
| Cash and due from banks | 10,832 | 10,903 | 11,246 | 10,624 | 10,125 |
| Premises and equipment, net | 11,738 | 11,984 | 12,105 | 10,337 | 9,567 |
| Other assets | 42,676 | 34,869 | 36,936 | 26,431 | 24,249 |
| Average total assets | $ 988,303 | $ 970,001 | $ 973,807 | $ 953,854 | $ 952,182 |
| Liabilities and shareholders’ equity: | |||||
| Demand – noninterest bearing | $ 151,567 | $ 135,338 | $ 139,792 | $ 122,011 | $ 115,091 |
| Demand – interest bearing | 276,446 | 270,594 | 272,383 | 244,125 | 203,342 |
| Savings | 92,565 | 91,484 | 91,108 | 92,502 | 89,789 |
| Certificates of deposit | 242,569 | 260,962 | 259,445 | 248,350 | 285,574 |
| Total deposits | 763,147 | 758,378 | 762,728 | 706,988 | 693,796 |
| Repurchase agreements | — | — | — | 5,780 | 14,246 |
| Federal Home Loan Bank of San Francisco borrowings | 91,941 | 78,388 | 77,534 | 107,603 | 110,374 |
| Junior subordinated debentures | 10,310 | 15,465 | 15,239 | 15,465 | 15,465 |
| Other liabilities | 16,719 | 15,658 | 15,934 | 11,825 | 7,033 |
| Average total liabilities | 882,117 | 867,889 | 871,435 | 847,661 | 840,914 |
| Shareholders’ equity | 106,186 | 102,112 | 102,372 | 106,193 | 111,268 |
| Average liabilities & shareholders’ equity | $ 988,303 | $ 970,001 | $ 973,807 | $ 953,854 | $ 952,182 |
| TABLE 14 | |||||
| UNAUDITED CONDENSED CONSOLIDATED | |||||
| QUARTERLY AVERAGE BALANCE SHEETS | |||||
| (amounts in thousands) | |||||
| For the Three Months Ended | |||||
| September 30, | June 30, | March 31, | December 31, | September 30, | |
| 2015 | 2015 | 2015 | 2014 | 2014 | |
| Earning assets: | |||||
| Loans | $ 705,762 | $ 703,008 | $ 673,120 | $ 656,834 | $ 631,674 |
| Taxable securities | 115,165 | 121,110 | 136,557 | 141,265 | 138,355 |
| Tax exempt securities | 76,190 | 76,772 | 77,316 | 82,231 | 83,503 |
| Interest-bearing deposits in other banks | 30,430 | 27,688 | 25,893 | 36,971 | 64,829 |
| Average earning assets | 927,547 | 928,578 | 912,886 | 917,301 | 918,361 |
| Cash and due from banks | 11,355 | 10,833 | 10,295 | 12,263 | 12,320 |
| Premises and equipment, net | 11,265 | 11,767 | 12,195 | 12,464 | 12,551 |
| Other assets | 41,867 | 42,637 | 43,540 | 43,072 | 40,815 |
| Average total assets | $ 992,034 | $ 993,815 | $ 978,916 | $ 985,100 | $ 984,047 |
| Liabilities and shareholders’ equity: | |||||
| Demand – noninterest bearing | $ 158,232 | $ 147,442 | $ 148,923 | $ 153,007 | $ 142,426 |
| Demand – interest bearing | 284,508 | 268,784 | 275,954 | 277,692 | 270,395 |
| Savings | 93,230 | 93,291 | 91,152 | 89,992 | 91,556 |
| Certificates of deposit | 235,551 | 245,573 | 246,707 | 254,943 | 260,592 |
| Total deposits | 771,521 | 755,090 | 762,736 | 775,634 | 764,969 |
| Federal Home Loan Bank of San Francisco borrowings | 86,359 | 105,330 | 84,111 | 75,000 | 85,054 |
| Junior subordinated debentures | 10,310 | 10,310 | 10,310 | 14,568 | 15,465 |
| Other liabilities | 16,140 | 16,887 | 17,141 | 16,751 | 16,612 |
| Average total liabilities | 884,330 | 887,617 | 874,298 | 881,953 | 882,100 |
| Shareholders’ equity | 107,704 | 106,198 | 104,618 | 103,147 | 101,947 |
| Average liabilities & shareholders’ equity | $ 992,034 | $ 993,815 | $ 978,916 | $ 985,100 | $ 984,047 |
About Bank of Commerce Holdings
Bank of Commerce Holdings is a bank holding company headquartered in Redding, California and is the parent company for Redding Bank of Commerce which operates under two separate names: Redding Bank of Commerce and Sacramento Bank of Commerce, a division of Redding Bank of Commerce. The Bank is an FDIC insured California banking corporation providing commercial banking and financial services through four offices located in Northern California. The Bank opened on October 22, 1982. The Company’s common stock is listed on the NASDAQ Global Market and trades under the symbol “BOCH”.
Investment firms making a market in BOCH stock are:
| Raymond James Financial | McAdams Wright Ragen, Inc. |
| John T. Cavender | Joey Warmenhoven |
| 555 Market Street | 1211 SW Fifth Avenue, Suite 1400 |
| San Francisco, CA 94105 | Portland, OR 97204 |
| (800) 346-5544 | (866) 662-0351 |
| Sandler O’Neill + Partners, L.P. | Stifel Nicolaus |
| Brian Sullivan | Perry Wright |
| 1251 Avenue of the Americas, 6th Floor | 1255 East Street, Suite 100 |
| New York, NY 10022 | Redding, CA 96001 |
| (212) 466-8022 | (530) 244-7199 |
CONTACT: Randall S. Eslick, President and
Chief Executive Officer
Telephone Direct (530) 722-3900
Samuel D. Jimenez, Executive Vice President
and Chief Operating Officer
Telephone Direct (530) 722-3952
James A. Sundquist, Executive Vice President
and Chief Financial Officer
Telephone Direct (530) 722-3908
Andrea Schneck, Vice President
and Senior Administrative Officer
Telephone Direct (530) 722-3959