REDDING, Calif., Jan. 20, 2017 (GLOBE NEWSWIRE) -- Randall S. Eslick, President and Chief Executive Officer of Bank of Commerce Holdings (NASDAQ:BOCH) (the “Company”), a $1.1 billion asset bank holding company and parent company of Redding Bank of Commerce (the “Bank”), today announced financial results for the quarter and the year ended December 31, 2016. Net income available to common shareholders for the quarter ended December 31, 2016 was $2.3 million or $0.17 per share – diluted, compared with $1.7 million or $0.13 per share – diluted for the same period of 2015. Net income available to common shareholders for the year ended December 31, 2016 was $5.3 million or $0.39 per share –diluted compared with $8.3 million or $0.62 per share – diluted for the same period of 2015.
Financial highlights for the fourth quarter of 2016:
- Net income available to common shareholders of $2.3 million for the three months ended December 31, 2016 was an increase of $568 thousand (33%) from $1.7 million available to common shareholders earned during the same period in the prior year.
- Return on average assets improved to 0.81% for the fourth quarter of 2016 compared to 0.68% for the same period in the prior year.
- Return on average equity improved to 9.69% for the fourth quarter of 2016 compared to 6.51% for the same period in the prior year.
- Deposits at December 31, 2016 totaled $1.0 billion, an increase of $29.2 million (12% annualized) since September 30, 2016. This growth was centered in core deposits in our Sacramento marketplace.
- Gross loans at December 31, 2016 totaled $804.2 million, an increase of $25.2 million (13% annualized) since September 30, 2016. Most of this growth occurred in our Sacramento marketplace and is the result of investments in our SBA division and in our expanded Sacramento commercial banking group.
- Tangible book value per common share was $6.83 at December 31, 2016 compared to $6.84 at September 30, 2016.
Financial highlights for the year ended December 31, 2016:
- Net income available to common shareholders of $5.3 million for the year ended December 31, 2016 was a decrease of $3.0 million (37%) from $8.3 million available to common shareholders earned during the prior year. Net income for 2016 is negatively impacted by $3.0 million of branch acquisition and balance sheet restructuring costs, a $546 thousand impairment of an investment security and the write-off of a $363 thousand deferred tax asset during prior quarters.
- Return on average assets declined to 0.49% for the year ended December 31, 2016 compared to 0.84% for the prior year.
- Return on average equity declined to 5.68% for the year ended December 31, 2016 compared to 7.83% for the prior year.
- Deposits at December 31, 2016 totaled $1.0 billion, an increase of $200.9 million (25%) since December 31, 2015
- Gross loans at December 31, 2016 totaled $804.2 million, an increase of $87.6 million (12%) since December 31, 2015.
- Nonperforming assets at December 31, 2016 totaled $12.1 million, a decrease of $3.4 million (22%) compared to December 31, 2015.
- Net loan loss recoveries of $364 thousand combined with continuing improved asset quality resulted in no provision for loan and lease losses.
Randall S. Eslick, President and CEO commented: “It has been a very productive year. As a result of the exceptional efforts of our dedicated and talented employees, we are a much improved company from 12 months ago. The acquisition of five new offices, the restructuring of our balance sheet and our significant growth in both loans and core deposits provide a solid foundation for continued success in 2017.”
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 our 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 our 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, 2015 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 Twelve Months Ended | ||||||||||||||||||
| Net income, average assets and | December 31, | September 30, | December 31, | ||||||||||||||||
| average shareholders' equity | 2016 | 2015 | 2016 | 2016 | 2015 | ||||||||||||||
| Income available to common shareholders | $ | 2,297 | $ | 1,729 | $ | 2,366 | $ | 5,259 | $ | 8,295 | |||||||||
| Average total assets | $ | 1,126,034 | $ | 1,005,870 | $ | 1,093,918 | $ | 1,079,750 | $ | 992,731 | |||||||||
| Average total earning assets | $ | 1,051,387 | $ | 940,831 | $ | 1,019,230 | $ | 1,007,793 | $ | 927,536 | |||||||||
| Average shareholders' equity | $ | 94,326 | $ | 105,417 | $ | 93,238 | $ | 92,554 | $ | 105,991 | |||||||||
| Selected performance ratios | |||||||||||||||||||
| Return on average assets | 0.81 | % | 0.68 | % | 0.86 | % | 0.49 | % | 0.84 | % | |||||||||
| Return on average equity | 9.69 | % | 6.51 | % | 10.10 | % | 5.68 | % | 7.83 | % | |||||||||
| Efficiency ratio | 73.15 | % | 73.58 | % | 69.61 | % | 81.88 | % | 67.40 | % | |||||||||
| Share and per share amounts | |||||||||||||||||||
| Weighted average shares - basic | 13,370 | 13,341 | 13,369 | 13,367 | 13,331 | ||||||||||||||
| Weighted average shares - diluted | 13,476 | 13,395 | 13,439 | 13,425 | 13,365 | ||||||||||||||
| Earnings per share - basic | $ | 0.17 | $ | 0.13 | $ | 0.18 | $ | 0.39 | $ | 0.62 | |||||||||
| Earnings per share - diluted | $ | 0.17 | $ | 0.13 | $ | 0.18 | $ | 0.39 | $ | 0.62 | |||||||||
| At December 31, | At September 30, | ||||||||||||||||||
| Share and per share amounts | 2016 | 2015 | 2016 | ||||||||||||||||
| Common shares outstanding (1) | 13,440 | 13,385 | 13,439 | ||||||||||||||||
| Tangible book value per common share | $ | 6.83 | $ | 6.76 | $ | 6.84 | |||||||||||||
| Capital ratios | |||||||||||||||||||
| Bank of Commerce Holdings | |||||||||||||||||||
| Common equity tier 1 capital ratio (2) | 9.43 | % | 10.06 | % | 9.60 | % | |||||||||||||
| Tier 1 capital ratio (2) | 10.42 | % | 11.16 | % | 10.65 | % | |||||||||||||
| Total capital ratio (2) | 12.68 | % | 13.52 | % | 12.96 | % | |||||||||||||
| Tier 1 leverage ratio (2) | 9.13 | % | 10.03 | % | 9.28 | % | |||||||||||||
| Tangible common equity ratio | 8.07 | % | 8.91 | % | 8.30 | % | |||||||||||||
| Redding Bank of Commerce | |||||||||||||||||||
| Common equity tier 1 capital ratio | 12.31 | % | 13.31 | % | 12.62 | % | |||||||||||||
| Tier 1 capital ratio | 12.31 | % | 13.31 | % | 12.62 | % | |||||||||||||
| Total capital ratio | 13.55 | % | 14.56 | % | 13.87 | % | |||||||||||||
| Tier 1 leverage ratio | 10.80 | % | 11.98 | % | 11.03 | % | |||||||||||||
| (1) Includes unvested restricted shares issued in accordance with the Bank's equity incentive plan. | |||||||||||||||||||
| (2) The Company and the Bank continue to meet all capital adequacy requirements to which they are subject. The capital ratios for 2016 were impacted by increased average total assets, the addition of $1.8 million of core deposit intangibles and $665 thousand of goodwill recorded in conjunction with the acquisition of five branches in March of 2016. | |||||||||||||||||||
BALANCE SHEET OVERVIEW
As of December 31, 2016, the Company had total consolidated assets of $1.1 billion, gross loans of $804.2 million, allowance for loan and lease losses (“ALLL”) of $11.5 million, total deposits of $1.0 billion, and shareholders’ equity of $94.3 million.
| TABLE 2 | |||||||||||||||||||||||||||||
| LOAN BALANCES BY TYPE - UNAUDITED | |||||||||||||||||||||||||||||
| (amounts in thousands) | |||||||||||||||||||||||||||||
| At December 31, | At September 30, | ||||||||||||||||||||||||||||
| % of | % of | Change | % of | ||||||||||||||||||||||||||
| 2016 | Total | 2015 | Total | Amount | % | 2016 | Total | ||||||||||||||||||||||
| Commercial | $ | 153,844 | 19 | % | $ | 132,805 | 19 | % | $ | 21,039 | 16 | % | $ | 136,235 | 17 | % | |||||||||||||
| Real estate - construction and land development | 57,771 | 7 | 28,319 | 4 | 29,452 | 104 | % | 48,365 | 6 | ||||||||||||||||||||
| Real estate - commercial non-owner occupied | 287,455 | 36 | 243,374 | 33 | 44,081 | 18 | % | 281,977 | 36 | ||||||||||||||||||||
| Real estate - commercial owner occupied | 151,516 | 19 | 156,299 | 22 | (4,783 | ) | (3 | ) | % | 160,474 | 21 | ||||||||||||||||||
| Real estate - residential - ITIN | 45,566 | 6 | 49,106 | 7 | (3,540 | ) | (7 | ) | % | 46,458 | 6 | ||||||||||||||||||
| Real estate - residential - 1-4 family mortgage | 12,866 | 2 | 13,640 | 2 | (774 | ) | (6 | ) | % | 12,994 | 2 | ||||||||||||||||||
| Real estate - residential - equity lines | 43,512 | 5 | 43,223 | 6 | 289 | 1 | % | 40,139 | 5 | ||||||||||||||||||||
| Consumer and other | 51,681 | 6 | 49,873 | 7 | 1,808 | 4 | % | 52,377 | 7 | ||||||||||||||||||||
| Gross loans | 804,211 | 100 | % | 716,639 | 100 | % | 87,572 | 12 | % | 779,019 | 100 | % | |||||||||||||||||
| Deferred fees and costs | 1,324 | 870 | 454 | 1,155 | |||||||||||||||||||||||||
| Loans, net of deferred fees and costs | 805,535 | 717,509 | 88,026 | 780,174 | |||||||||||||||||||||||||
| Allowance for loan and lease losses | (11,544 | ) | (11,180 | ) | (364 | ) | (11,849 | ) | |||||||||||||||||||||
| Net loans | $ | 793,991 | $ | 706,329 | $ | 87,662 | $ | 768,325 | |||||||||||||||||||||
| Average yield on loans during the quarter | 4.69 | % | 4.61 | % | 0.08 | 4.66 | % | ||||||||||||||||||||||
The Company recorded gross loan balances of $804.2 million at December 31, 2016, compared with $716.6 million and $779.0 million at December 31, 2015 and September 30, 2016, respectively, an increase of $87.6 million and $25.2 million, respectively. The increase in gross loans compared to the same period a year ago and the prior period was driven by organic loan originations in our Sacramento marketplace and is the result of investments in our SBA division and in our expanded Sacramento commercial banking group.
The increase in the ALLL at December 31, 2016 compared to the same date a year ago resulted from net loan loss recoveries. As a result of these net recoveries and continued improved asset quality, no provision for loan and lease losses was deemed necessary during the current quarter or during the prior seven consecutive quarters. See table 8 for additional details of the ALLL.
| TABLE 3 | |||||||||||||||||||||||||||||
| CASH, CASH EQUIVALENTS, AND INVESTMENT SECURITIES - UNAUDITED | |||||||||||||||||||||||||||||
| (amounts in thousands) | |||||||||||||||||||||||||||||
| At December 31, | At September 30, | ||||||||||||||||||||||||||||
| % of | % of | Change | % of | ||||||||||||||||||||||||||
| 2016 | Total | 2015 | Total | Amount | % | 2016 | Total | ||||||||||||||||||||||
| Cash and due from banks | $ | 16,419 | 6 | % | $ | 9,730 | 4 | % | $ | 6,689 | 69 | % | $ | 19,699 | 7 | % | |||||||||||||
| Interest-bearing deposits in other banks | 51,988 | 19 | 41,462 | 17 | 10,526 | 25 | % | 65,431 | 24 | ||||||||||||||||||||
| Total cash and cash equivalents | 68,407 | 25 | 51,192 | 21 | 17,215 | 34 | % | 85,130 | 31 | ||||||||||||||||||||
| Investment securities: | |||||||||||||||||||||||||||||
| U.S. government and agencies | — | 0 | 3,943 | 2 | (3,943 | ) | (100 | ) | % | — | 0 | ||||||||||||||||||
| Obligations of state and political subdivisions | 59,428 | 22 | 61,104 | 25 | (1,676 | ) | (3 | ) | % | 59,952 | 22 | ||||||||||||||||||
| Residential mortgage backed securities and collateralized mortgage obligations | 69,604 | 25 | 32,137 | 13 | 37,467 | 117 | % | 54,046 | 20 | ||||||||||||||||||||
| Corporate securities | 16,116 | 6 | 33,778 | 14 | (17,662 | ) | (52 | ) | % | 16,346 | 6 | ||||||||||||||||||
| Commercial mortgage backed securities | 15,514 | 6 | 12,769 | 5 | 2,745 | 21 | % | 16,254 | 6 | ||||||||||||||||||||
| Other asset backed securities | 14,512 | 5 | 15,299 | 6 | (787 | ) | (5 | ) | % | 9,842 | 4 | ||||||||||||||||||
| Total investment securities - AFS | 175,174 | 64 | 159,030 | 65 | 16,144 | 10 | % | 156,440 | 58 | ||||||||||||||||||||
| Obligations of state and political subdivisions - HTM | 31,187 | 11 | 35,899 | 14 | (4,712 | ) | (13 | ) | % | 31,771 | 11 | ||||||||||||||||||
| Total investment securities - AFS and HTM | 206,361 | 75 | 194,929 | 79 | 11,432 | 6 | % | 188,211 | 69 | ||||||||||||||||||||
| Total cash, cash equivalents and investment securities | $ | 274,768 | 100 | % | $ | 246,121 | 100 | % | $ | 28,647 | 12 | % | $ | 273,341 | 100 | % | |||||||||||||
| Average yield on interest bearing due from banks and investment securities during the quarter | 1.95 | % | 2.51 | % | (0.56 | ) | 2.11 | % | |||||||||||||||||||||
As of December 31, 2016, we maintained noninterest-bearing cash positions of $16.4 million and interest-bearing deposits in the amount of $52.0 million at the Federal Reserve Bank and correspondent banks. During the fourth quarter of 2016, we deployed liquidity provided by the March 2016 branch acquisition and strong organic deposit growth into loan originations and available for sale securities. For the quarter ended December 31, 2016 compared to the prior quarter a $16.7 million decrease in total cash and cash equivalents and $29.2 million from increased total deposits was used to fund a $25.2 million increase in gross loan balances and an $18.7 million increase in available for sale securities.
Available-for-sale investment securities totaled $175.2 million at December 31, 2016, compared with $159.0 million and $156.4 million at December 31, 2015 and September 30, 2016, respectively. Our available-for-sale investment portfolio provides us with a secondary source of liquidity to fund other higher yielding asset opportunities, such as loan originations and wholesale loan purchases. During the fourth quarter of 2016 we purchased 24 securities with a par value of $31.3 million and weighted average yield of 2.16% and sold four securities with a par value of $4.1 million and weighted average yield of 2.64%. The sales activity on available for sale securities resulted in $52.0 thousand in net realized gains. During the same period, we received $6.0 million in proceeds from principal payments, calls and maturities within the available-for-sale investment securities portfolio. Average securities balances and weighted average tax equivalent yields for the quarters ended December 31, 2016 and 2015 were $197.2 million and 3.02% compared to $189.2 million and 3.57%, respectively.
During the second quarter of 2016, we recorded an other-than-temporary impairment of $546 thousand on an investment security. We did not recognize any additional, other-than-temporary impairment losses for the year ended December 31, 2016, or the year ended December 31, 2015.
At December 31, 2016, our net unrealized losses on available-for-sale investment securities were $1.3 million compared with net unrealized gains of $1.6 million and $2.3 million at December 31, 2015 and September 30, 2016, respectively. The decrease in net unrealized gains between September 30, 2016 and December 31, 2016 is primarily due to significant changes in market interest rates over the past three months.
| TABLE 4 | |||||||||||||||||||||||||||||
| DEPOSITS BY TYPE - UNAUDITED | |||||||||||||||||||||||||||||
| (amounts in thousands) | |||||||||||||||||||||||||||||
| At December 31, | At September 30, | ||||||||||||||||||||||||||||
| % of | % of | Change | % of | ||||||||||||||||||||||||||
| 2016 | Total | 2015 | Total | Amount | % | 2016 | Total | ||||||||||||||||||||||
| Demand - noninterest bearing | $ | 270,398 | 27 | % | $ | 169,507 | 21 | % | $ | 100,891 | 60 | % | $ | 254,435 | 26 | % | |||||||||||||
| Demand - interest bearing | 405,569 | 40 | 315,658 | 39 | 89,911 | 28 | % | 394,525 | 40 | ||||||||||||||||||||
| Total demand | 675,967 | 67 | 485,165 | 60 | 190,802 | 39 | % | 648,960 | 66 | ||||||||||||||||||||
| Savings | 113,309 | 11 | 94,503 | 12 | 18,806 | 20 | % | 110,201 | 11 | ||||||||||||||||||||
| Total non-maturing deposits | 789,276 | 78 | 579,668 | 72 | 209,608 | 36 | % | 759,161 | 77 | ||||||||||||||||||||
| Certificates of deposit | 215,390 | 22 | 224,067 | 28 | (8,677 | ) | (4 | ) | % | 216,332 | 23 | ||||||||||||||||||
| Total deposits | $ | 1,004,666 | 100 | % | $ | 803,735 | 100 | % | $ | 200,931 | 25 | % | $ | 975,493 | 100 | % | |||||||||||||
| Average rate on interest bearing deposits during the quarter | 0.40 | % | 0.48 | % | (0.08 | ) | 0.39 | % | |||||||||||||||||||||
| Average rate on all deposits during the quarter | 0.29 | % | 0.38 | % | (0.09 | ) | 0.29 | % | |||||||||||||||||||||
Total deposits at December 31, 2016, increased $200.9 million or 25% to $1.0 billion compared to December 31, 2015, and increased $29.2 thousand or 3% compared to September 30, 2016. Total non-maturing deposits increased $209.6 million or 36% compared to the same date a year ago and increased $30.1 million or 4% compared to September 30, 2016. Certificates of deposit decreased $8.7 million or 4% compared to the same date a year ago and decreased $942 thousand or 0.4% compared to September 30, 2016.
During the first quarter of 2016 the branch acquisition provided an additional $149.0 million of deposits and we called and redeemed $17.5 million of brokered certificates of deposit. At December 31, 2016, the deposits in the acquired branches totaled $145.6 million.
| TABLE 5 | |||||||||
| WHOLESALE AND BROKERED DEPOSITS - UNAUDITED | |||||||||
| (amounts in thousands) | |||||||||
| At December 31, | At September 30, | ||||||||
| 2016 | 2015 | 2016 | |||||||
| CDARS / ICS reciprocal deposits | $ | 65,212 | $ | 76,919 | $ | 59,502 | |||
| Third party brokered time deposits | — | 17,509 | — | ||||||
| Brokered deposits per Call Report | 65,212 | 94,428 | 59,502 | ||||||
| Online listing service time deposits | 48,900 | 58,462 | 52,456 | ||||||
| Total wholesale and brokered deposits | $ | 114,112 | $ | 152,890 | $ | 111,958 | |||
In accordance with regulatory Call Report instructions, the Bank will file (or has filed) quarterly Call Reports which list brokered deposits of $65.2 million, $94.4 million and $59.5 million at December 31, 2016, December 31, 2015 and September 30, 2016, respectively.
INCOME STATEMENT OVERVIEW
| TABLE 6 | |||||||||||||||||||||||||
| SUMMARY INCOME STATEMENT - UNAUDITED | |||||||||||||||||||||||||
| (amounts in thousands, except per share data) | |||||||||||||||||||||||||
| For The Three Months Ended | |||||||||||||||||||||||||
| December 31, | Change | September 30, | Change | ||||||||||||||||||||||
| 2016 | 2015 | Amount | % | 2016 | Amount | % | |||||||||||||||||||
| Interest income | $ | 10,518 | $ | 9,732 | $ | 786 | 8 | % | $ | 10,330 | $ | 188 | 2 | % | |||||||||||
| Interest expense | 1,084 | 1,381 | (297 | ) | (22 | ) | % | 1,054 | 30 | 3 | % | ||||||||||||||
| Net interest income | 9,434 | 8,351 | 1,083 | 13 | % | 9,276 | 158 | 2 | % | ||||||||||||||||
| Provision for loan and lease losses | — | — | — | — | % | — | — | — | % | ||||||||||||||||
| Noninterest income | 1,250 | 640 | 610 | 95 | % | 959 | 291 | 30 | % | ||||||||||||||||
| Noninterest expense: | |||||||||||||||||||||||||
| Branch acquisition and balance sheet reconfiguration costs | — | 347 | (347 | ) | (100 | ) | % | — | — | — | % | ||||||||||||||
| Other noninterest expense | 7,815 | 6,269 | 1,546 | 25 | % | 7,125 | 690 | 10 | % | ||||||||||||||||
| Income before provision for income taxes | 2,869 | 2,375 | 494 | 21 | % | 3,110 | (241 | ) | (8 | ) | % | ||||||||||||||
| Provision for income taxes | 572 | 505 | 67 | 13 | % | 744 | (172 | ) | (23 | ) | % | ||||||||||||||
| Net income | $ | 2,297 | $ | 1,870 | $ | 427 | 23 | % | $ | 2,366 | (69 | ) | (3 | ) | % | ||||||||||
| Less: Preferred stock extinguishment costs | — | 102 | (102 | ) | (100 | ) | % | — | — | — | % | ||||||||||||||
| Less: Preferred dividends | — | 39 | (39 | ) | (100 | ) | % | — | — | — | % | ||||||||||||||
| Income available to common shareholders | $ | 2,297 | $ | 1,729 | $ | 568 | 33 | % | $ | 2,366 | $ | (69 | ) | (3 | ) | % | |||||||||
| Basic earnings per share | $ | 0.17 | $ | 0.13 | $ | 0.04 | 31 | % | $ | 0.18 | $ | (0.01 | ) | (6 | ) | % | |||||||||
| Average basic shares | 13,370 | 13,341 | 29 | — | % | 13,369 | 1 | — | % | ||||||||||||||||
| Diluted earnings per share | $ | 0.17 | $ | 0.13 | $ | 0.04 | 31 | % | $ | 0.18 | $ | (0.01 | ) | (6 | ) | % | |||||||||
| Average diluted shares | 13,476 | 13,395 | 81 | 1 | % | 13,439 | 37 | — | % | ||||||||||||||||
| Dividends declared per common share | $ | 0.03 | $ | 0.03 | $ | — | — | % | $ | 0.03 | $ | — | — | % | |||||||||||
Fourth Quarter of 2016 Compared With Fourth Quarter of 2015
Net income available to common shareholders for the fourth quarter of 2016 increased $568 thousand compared to the fourth quarter of 2015. In the current quarter, net interest income was $1.1 million higher and noninterest income was $610 thousand higher. These positive changes were offset by an increase in noninterest expense of $1.2 million and a provision for income tax that was $67 thousand higher.
Net Interest Income
Net interest income increased $1.1 million over a year previous.
Interest income for the three months ended December 31, 2016 increased $786 thousand or 8% to $10.5 million. Interest and fees on loans increased $882 thousand primarily due to increased average loan balances. Interest on interest bearing deposits due from banks increased $71 thousand while interest on securities decreased $167 thousand.
Interest expense for the fourth quarter of 2016 decreased $297 thousand or 22% to $1.1 million. The net decrease was caused by the following.
- Interest on FHLB term debt decreased $499 thousand. During the first quarter of 2016 all FHLB term debt was repaid and an interest rate hedge associated with $75.0 million of that debt was terminated
- Interest on $20.0 million of senior and subordinated term debt increased $223 thousand. The senior and subordinated term debt was issued during the fourth quarter of 2015 to redeem $20.0 million of preferred stock
- Interest on interest bearing deposits decreased $34 thousand. Interest bearing deposits increased $100.0 million compared to the prior year, but the rate paid on all interest bearing deposits decreased by 9 basis points
- Interest on junior subordinated debentures and other borrowings increased $13 thousand
Noninterest Income
Noninterest income for the three months ended December 31, 2016 increased $610 thousand compared to the same period a year ago. Our branch and offsite ATM acquisition completed in the first quarter, enhanced point of sale and ATM fees by $177 thousand and service charges on deposit accounts by $69 thousand for the quarter ended December 31, 2016 compared to the same period a year ago. Federal Home Loan Bank of San Francisco stock dividends increased $254 thousand compared to the same period a year ago primarily due to a special dividend recorded during the three months ended December 31, 2016.
Noninterest Expense
Noninterest expense for the three months ended increased $1.2 million compared to the same period a year ago. The increase was primarily driven by increased costs to operate the five newly acquired branches and three offsite ATM locations. The net increase in noninterest expenses during the current quarter compared to the same period a year ago included the following:
- Salaries and occupancy costs directly related to the newly acquired branch and offsite ATM locations of $574 thousand
- Salaries and occupancy costs for all other locations increased $338 thousand primarily as a result of investment in our Sacramento marketplace commercial banking group
- Data processing fees increased $253 thousand
- Telecommunications expense increased $92 thousand
- ATM processing fees increased $53 thousand as a result of the additional activity at the recently acquired branch and offsite ATM locations
- Branch acquisition costs decreased $347 thousand
Income Tax Provision
During the three months ended December 31, 2016, the Company recorded a provision for income taxes of $572 thousand (19.94% of pretax income) compared with a provision for income taxes of $505 million (21.26% of pretax income) for the same period a year ago.
Fourth Quarter of 2016 Compared With Third Quarter of 2016
Net income available to common shareholders for the fourth quarter of 2016 decreased $69 thousand over the third quarter of 2016. In the current quarter, net interest income was $158 thousand higher, noninterest income was $291 thousand higher and the provision for income taxes decreased $172 thousand. These positive changes were offset by noninterest expenses that were $690 thousand higher.
Net Interest Income
Net interest income increased $158 thousand over the prior quarter.
Interest income for the three months ended December 31, 2016 increased $188 thousand or 2% to $10.5 million compared to the prior quarter. Interest and fees on loans increased $174 thousand due to increased average balances and increased yields. Interest on interest bearing deposits due from banks increased $28 thousand due to increased average balances and increased yields. These positive changes were partially offset by decreased interest on investment securities of $14 thousand.
Interest expense for the three months December 31, 2016 increased $30 thousand or 3% to $1.1 million compared to the prior quarter. Average total deposits for the fourth quarter of 2016 increased $30.0 million from the third quarter of 2016. The growth was in low cost core deposits.
Noninterest Income
Noninterest income for the three months ended December 31, 2016 increased $291 thousand compared to the prior quarter. During the current quarter Federal Home Loan Bank of San Francisco stock dividends increased $251 thousand primarily due to a special dividend recorded during the three months ended December 31, 2016.
Noninterest Expense
Noninterest expense for the three months ended December 31, 2016 increased $690 thousand compared to the prior quarter.
The increase in noninterest expense was primarily driven by following items:
- Salaries and related benefits costs increased $251 thousand
- Professional service fees increased $178 thousand
- Deferred loan origination costs decreased $113 thousand
- Data processing fees increased $69 thousand
- Advertising costs increased $73 thousand
Income Tax Provision
During the three months ended December 31, 2016, we recorded a provision for income taxes of $572 thousand (19.94% of pretax income) compared with a provision for income taxes of $744 thousand (23.92% of pretax income) for the prior quarter. Our income tax provision is composed of two main components: 1) federal and state income taxes based on our income and 2) amortization of our investments in affordable housing partnerships. The decrease in the effective tax rate during the three months ended December 31, 2016 when compared to the prior quarter is due to a decrease in the amortization of our investments in affordable housing partnerships.
Earnings Per Share
Diluted earnings per share available to common shareholders were $0.17 for the three months ended December 31, 2016 compared with diluted earnings per share available to common shareholders of $0.13 for the same period a year ago, and $0.18 for the prior period. The number of shares outstanding during these periods has not changed significantly. Changes in earnings per share are the result of changes in net income.
| TABLE 7 | ||||||||||||||||||||
| NET INTEREST MARGIN - UNAUDITED | ||||||||||||||||||||
| (amounts in thousands) | ||||||||||||||||||||
| For The Three Months Ended | ||||||||||||||||||||
| December 31, | Change | September 30, | Change | |||||||||||||||||
| 2016 | 2015 | Amount | 2016 | Amount | ||||||||||||||||
| Yield on average interest earning assets | 3.98 | % | 4.10 | % | (0.12 | ) | 4.03 | % | (0.05 | ) | ||||||||||
| Interest expense to fund average earning assets | 0.41 | % | 0.58 | % | (0.17 | ) | 0.41 | % | 0.00 | |||||||||||
| Net interest margin - nominal | 3.57 | % | 3.52 | % | 0.05 | 3.62 | % | (0.05 | ) | |||||||||||
| Yield on average interest earning assets - tax equivalent basis | 4.08 | % | 4.23 | % | (0.15 | ) | 4.14 | % | (0.06 | ) | ||||||||||
| Interest expense to fund average earning assets | 0.41 | % | 0.58 | % | (0.17 | ) | 0.41 | % | 0.00 | |||||||||||
| Net interest margin - tax equivalent basis | 3.67 | % | 3.65 | % | 0.02 | 3.73 | % | (0.06 | ) | |||||||||||
| Average earning assets | $ | 1,051,387 | $ | 940,831 | $ | 110,556 | $ | 1,019,230 | $ | 32,157 | ||||||||||
| Average interest bearing liabilities | $ | 757,252 | $ | 712,807 | $ | 44,445 | $ | 749,103 | $ | 8,149 | ||||||||||
The current quarter net interest margin decreased five basis points to 3.57% as compared to the prior quarter due to decreased yields in the investment portfolio. In the current interest rate environment, cash flows from maturities and repayments are being reinvested at interest rates lower than the maturing instruments.
The net interest margin was 3.57% for the current quarter compared to 3.52% for the same period a year ago. The 12 basis point decrease in yield on average earning assets has been offset by a 17 basis point decrease in interest expense to fund average earning assets. The decrease in interest income compared to the same quarter in the prior year is due to decreased yields in the investment portfolio and partially offset by increased yields on loans. The decrease in interest expense resulted from our acquisition of low cost core deposits and our ability to restructure our balance sheet.
Deposit balances increased $29.2 million and $200.9 million compared to the prior quarter and the same period a year ago respectively. The increase in deposit balances compared to the prior quarter was centered entirely in core deposits. The increase in deposit balances compared to the same period a year ago results from both the March 2016 branch acquisition and strong organic growth. Our overall cost of total deposits decreased to 0.29% for the quarter ended December 31, 2016 from 0.38% for the same period a year ago and were unchanged from 0.29% for the prior quarter.
| TABLE 8 | |||||||||||||||||||||||||
| ALLOWANCE FOR LOAN AND LEASE LOSSES ROLL FORWARD AND IMPAIRED LOAN TOTALS - UNAUDITED | |||||||||||||||||||||||||
| (amounts in thousands) | |||||||||||||||||||||||||
| For The Three Months Ended | |||||||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||||||||||||
| 2016 | 2016 | 2016 | 2016 | 2015 | |||||||||||||||||||||
| Beginning balance | $ | 11,849 | $ | 11,864 | $ | 11,495 | $ | 11,180 | $ | 10,891 | |||||||||||||||
| Provision for loan and lease losses charged to expense | — | — | — | — | — | ||||||||||||||||||||
| Loans charged off | (386 | ) | (357 | ) | (1,734 | ) | (307 | ) | (707 | ) | |||||||||||||||
| Loan loss recoveries | 81 | 342 | 2,103 | 622 | 996 | ||||||||||||||||||||
| Ending balance | $ | 11,544 | $ | 11,849 | $ | 11,864 | $ | 11,495 | $ | 11,180 | |||||||||||||||
| At December 31, | At September 30, | At June 30, | At March 31, | At December 31, | |||||||||||||||||||||
| 2016 | 2016 | 2016 | 2016 | 2015 | |||||||||||||||||||||
| Nonaccrual loans: | |||||||||||||||||||||||||
| Commercial | $ | 2,749 | $ | 1,710 | $ | 2,149 | $ | 2,563 | $ | 1,994 | |||||||||||||||
| Real estate - commercial non-owner occupied | 1,196 | 1,196 | 1,197 | 1,197 | 5,488 | ||||||||||||||||||||
| Real estate - commercial owner occupied | 784 | 800 | 816 | 1,190 | 1,071 | ||||||||||||||||||||
| Real estate - residential - ITIN | 3,576 | 3,392 | 3,664 | 3,705 | 3,649 | ||||||||||||||||||||
| Real estate - residential - 1-4 family mortgage | 1,914 | 1,798 | 1,824 | 1,742 | 1,775 | ||||||||||||||||||||
| Real estate - residential - equity lines | 917 | 942 | 995 | 1,270 | — | ||||||||||||||||||||
| Consumer and other | 250 | 252 | 266 | 31 | 32 | ||||||||||||||||||||
| Total nonaccrual loans | 11,386 | 10,090 | 10,911 | 11,698 | 14,009 | ||||||||||||||||||||
| Accruing troubled debt restructured loans: | |||||||||||||||||||||||||
| Commercial | 776 | 726 | 760 | 40 | 49 | ||||||||||||||||||||
| Real estate - commercial non-owner occupied | 808 | 811 | 816 | 821 | 824 | ||||||||||||||||||||
| Real estate - residential - ITIN | 5,033 | 5,280 | 5,336 | 5,502 | 5,458 | ||||||||||||||||||||
| Real estate - residential - equity lines | 454 | 543 | 548 | 553 | 558 | ||||||||||||||||||||
| Total accruing troubled debt restructured loans | 7,071 | 7,360 | 7,460 | 6,916 | 6,889 | ||||||||||||||||||||
| All other accruing impaired loans | 337 | 483 | 550 | 488 | 492 | ||||||||||||||||||||
| Total impaired loans | $ | 18,794 | $ | 17,933 | $ | 18,921 | $ | 19,102 | $ | 21,390 | |||||||||||||||
| Gross loans outstanding at period end | $ | 804,211 | $ | 779,019 | $ | 754,140 | $ | 724,243 | $ | 716,639 | |||||||||||||||
| Allowance for loan and lease losses as a percent of: | |||||||||||||||||||||||||
| Gross loans | 1.44 | % | 1.52 | % | 1.57 | % | 1.59 | % | 1.56 | % | |||||||||||||||
| Nonaccrual loans | 101.39 | % | 117.43 | % | 108.73 | % | 98.26 | % | 79.81 | % | |||||||||||||||
| Impaired loans | 61.42 | % | 66.07 | % | 62.70 | % | 60.18 | % | 52.27 | % | |||||||||||||||
| Nonaccrual loans to gross loans | 1.42 | % | 1.30 | % | 1.45 | % | 1.62 | % | 1.95 | % | |||||||||||||||
We realized net loan charge offs of $305 thousand in the current quarter compared with net loan loss charge offs of $15 thousand in the prior quarter and net loan recoveries of $289 thousand for the same period a year ago. Charge offs during the fourth quarter of 2016 of $386 thousand were primarily associated with purchased consumer loans, offset by recoveries totaling $81 thousand.
We continue 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. We made no provision for loan and lease losses during this quarter or the previous seven consecutive quarters. Our ALLL as a percentage of gross loans was 1.44% as of December 31, 2016 compared to 1.56% as of December 31, 2015 and 1.52% as of September 30, 2016. 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 December 31, 2016. 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 future charges to the provision for loan and lease losses.
At December 31, 2016, the recorded investment in loans classified as impaired totaled $18.8 million, with a corresponding valuation allowance of $1.5 million compared to impaired loans of $21.4 million with a corresponding valuation allowance of $832 thousand at December 31, 2015 and impaired loans of $17.9 million, with a corresponding valuation allowance of $925 thousand at September 30, 2016. The increase in loans classified as impaired and the corresponding valuation allowance compared to the prior quarter is due to two restructured loans for one commercial relationship. 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 December 31, | At September 30, | At June 30, | At March 31, | At December 31, | ||||||||||||||||
| 2016 | 2016 | 2016 | 2016 | 2015 | ||||||||||||||||
| Nonaccrual | $ | 4,995 | $ | 3,795 | $ | 3,785 | $ | 4,516 | $ | 9,015 | ||||||||||
| Accruing | 7,071 | 7,360 | 7,460 | 6,916 | 6,889 | |||||||||||||||
| Total troubled debt restructurings | $ | 12,066 | $ | 11,155 | $ | 11,245 | $ | 11,432 | $ | 15,904 | ||||||||||
| Percentage of total gross loans | 1.50 | % | 1.43 | % | 1.49 | % | 1.58 | % | 2.22 | % | ||||||||||
Loans are reported as a troubled debt restructuring when we grant 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 we 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 December 31, 2016, the Company restructured three loans; two to grant a maturity modification and the other to grant a maturity and rate modification. The loans were classified as troubled debt restructurings and two were placed on nonaccrual status. As of December 31, 2016, we had 121 restructured loans that qualified as troubled debt restructurings, of which 112 were performing according to their restructured terms.
| TABLE 10 | ||||||||||||||||||||
| NONPERFORMING ASSETS - UNAUDITED | ||||||||||||||||||||
| (amounts in thousands) | ||||||||||||||||||||
| At December 31, | At September 30, | At June 30, | At March 31, | At December 31, | ||||||||||||||||
| 2016 | 2016 | 2016 | 2016 | 2015 | ||||||||||||||||
| Total nonaccrual loans | $ | 11,386 | $ | 10,090 | $ | 10,911 | $ | 11,698 | $ | 14,009 | ||||||||||
| 90 days past due and still accruing | — | — | 10 | — | 88 | |||||||||||||||
| Total nonperforming loans | 11,386 | 10,090 | 10,921 | 11,698 | 14,097 | |||||||||||||||
| Other real estate owned | 759 | 793 | 765 | 1,011 | 1,423 | |||||||||||||||
| Total nonperforming assets | $ | 12,145 | $ | 10,883 | $ | 11,686 | $ | 12,709 | $ | 15,520 | ||||||||||
| Nonperforming loans to gross loans | 1.42 | % | 1.30 | % | 1.45 | % | 1.62 | % | 1.97 | % | ||||||||||
| Nonperforming assets to total assets | 1.06 | % | 0.98 | % | 1.09 | % | 1.18 | % | 1.53 | % | ||||||||||
The increase in nonaccrual loans during the fourth quarter of 2016 was associated with one commercial relationship.
At December 31, 2016, December 31, 2015 and September 30, 2016, the recorded investment in OREO was $759 thousand, $1.4 million and $793 thousand, respectively. The December 31, 2016 OREO balance consists of five properties, of which two are 1-4 family residential real estate properties in the amount of $66 thousand, two are nonfarm nonresidential properties in the amount of $581 thousand and one is an undeveloped commercial property in the amount of $112 thousand.
| TABLE 11 | ||||||||||||||||||||
| UNAUDITED CONSOLIDATED | ||||||||||||||||||||
| BALANCE SHEET | ||||||||||||||||||||
| (amounts in thousands, except per share data) | ||||||||||||||||||||
| At December 31, | At December 31, | Change | At September 30, | |||||||||||||||||
| 2016 | 2015 | $ | % | 2016 | ||||||||||||||||
| Assets: | ||||||||||||||||||||
| Cash and due from banks | $ | 16,419 | $ | 9,730 | $ | 6,689 | 69 | % | $ | 19,699 | ||||||||||
| Interest-bearing deposits in other banks | 51,988 | 41,462 | 10,526 | 25 | % | 65,431 | ||||||||||||||
| Total cash and cash equivalents | 68,407 | 51,192 | 17,215 | 34 | % | 85,130 | ||||||||||||||
| Securities available-for-sale, at fair value | 175,174 | 159,030 | 16,144 | 10 | % | 156,440 | ||||||||||||||
| Securities held-to-maturity, at amortized cost | 31,187 | 35,899 | (4,712 | ) | (13 | ) | % | 31,771 | ||||||||||||
| Loans, net of deferred fees and costs | 805,535 | 717,509 | 88,026 | 12 | % | 780,174 | ||||||||||||||
| Allowance for loan and lease losses | (11,544 | ) | (11,180 | ) | (364 | ) | 3 | % | (11,849 | ) | ||||||||||
| Net loans | 793,991 | 706,329 | 87,662 | 12 | % | 768,325 | ||||||||||||||
| Premises and equipment, net | 16,226 | 11,072 | 5,154 | 47 | % | 15,930 | ||||||||||||||
| Other real estate owned | 759 | 1,423 | (664 | ) | (47 | ) | % | 793 | ||||||||||||
| Life insurance | 23,098 | 22,485 | 613 | 3 | % | 22,946 | ||||||||||||||
| Deferred taxes | 9,542 | 9,760 | (218 | ) | (2 | ) | % | 8,171 | ||||||||||||
| Goodwill and core deposit intangibles, net | 2,252 | — | 2,252 | 100 | % | 2,307 | ||||||||||||||
| Other assets | 20,356 | 18,251 | 2,105 | 12 | % | 19,205 | ||||||||||||||
| Total assets | $ | 1,140,992 | $ | 1,015,441 | $ | 125,551 | 12 | % | $ | 1,111,018 | ||||||||||
| Liabilities and shareholders' equity: | ||||||||||||||||||||
| Demand - noninterest bearing | $ | 270,398 | $ | 169,507 | $ | 100,891 | 60 | % | $ | 254,435 | ||||||||||
| Demand - interest bearing | 405,569 | 315,658 | 89,911 | 28 | % | 394,525 | ||||||||||||||
| Savings | 113,309 | 94,503 | 18,806 | 20 | % | 110,201 | ||||||||||||||
| Certificates of deposit | 215,390 | 224,067 | (8,677 | ) | (4 | ) | % | 216,332 | ||||||||||||
| Total deposits | 1,004,666 | 803,735 | 200,931 | 25 | % | 975,493 | ||||||||||||||
| Term debt | 18,917 | 94,917 | (76,000 | ) | (80 | ) | % | 19,317 | ||||||||||||
| Unamortized debt issuance costs | (184 | ) | (223 | ) | 39 | (17 | ) | % | (193 | ) | ||||||||||
| Net term debt | 18,733 | 94,694 | (75,961 | ) | (80 | ) | % | 19,124 | ||||||||||||
| Junior subordinated debentures | 10,310 | 10,310 | — | 0 | % | 10,310 | ||||||||||||||
| Other liabilities | 13,177 | 16,180 | (3,003 | ) | (19 | ) | % | 11,798 | ||||||||||||
| Total liabilities | 1,046,886 | 924,919 | 121,967 | 13 | % | 1,016,725 | ||||||||||||||
| Shareholders' equity: | ||||||||||||||||||||
| Common stock | 24,547 | 24,214 | 333 | 1 | % | 24,483 | ||||||||||||||
| Retained earnings | 70,218 | 66,562 | 3,656 | 5 | % | 68,321 | ||||||||||||||
| Accumulated other comprehensive (loss) income, net of tax | (659 | ) | (254 | ) | (405 | ) | 159 | % | 1,489 | |||||||||||
| Total shareholders' equity | 94,106 | 90,522 | 3,584 | 4 | % | 94,293 | ||||||||||||||
| Total liabilities and shareholders' equity | $ | 1,140,992 | $ | 1,015,441 | $ | 125,551 | 12 | % | $ | 1,111,018 | ||||||||||
| Total interest earning assets | $ | 1,065,228 | $ | 952,302 | $ | 112,926 | 12 | % | $ | 1,031,527 | ||||||||||
| Shares outstanding | 13,440 | 13,385 | 13,439 | |||||||||||||||||
| Tangible book value per share | $ | 6.83 | $ | 6.76 | $ | 6.84 | ||||||||||||||
| TABLE 12 | ||||||||||||||||||||||||
| UNAUDITED | ||||||||||||||||||||||||
| INCOME STATEMENT | ||||||||||||||||||||||||
| (amounts in thousands, except per share data) | ||||||||||||||||||||||||
| For The Three Months Ended | For The Twelve Months Ended | |||||||||||||||||||||||
| December 31, | Change | September 30, | December 31, | |||||||||||||||||||||
| 2016 | 2015 | $ | % | 2016 | 2016 | 2015 | ||||||||||||||||||
| Interest income: | ||||||||||||||||||||||||
| Interest and fees on loans | $ | 9,181 | $ | 8,299 | $ | 882 | 11 | % | $ | 9,007 | $ | 35,435 | $ | 32,871 | ||||||||||
| Interest on securities | 705 | 795 | (90 | ) | (11 | ) | % | 689 | 2,986 | 3,284 | ||||||||||||||
| Interest on tax-exempt securities | 522 | 599 | (77 | ) | (13 | ) | % | 552 | 2,256 | 2,392 | ||||||||||||||
| Interest on deposits in other banks | 110 | 39 | 71 | 182 | % | 82 | 332 | 206 | ||||||||||||||||
| Total interest income | 10,518 | 9,732 | 786 | 8 | % | 10,330 | 41,009 | 38,753 | ||||||||||||||||
| Interest expense: | ||||||||||||||||||||||||
| Interest on demand deposits | 135 | 121 | 14 | 12 | % | 136 | 523 | 460 | ||||||||||||||||
| Interest on savings deposits | 45 | 51 | (6 | ) | (12 | ) | % | 43 | 174 | 213 | ||||||||||||||
| Interest on certificates of deposit | 543 | 585 | (42 | ) | (7 | ) | % | 524 | 2,179 | 2,356 | ||||||||||||||
| Interest on term debt | 298 | 572 | (274 | ) | (48 | ) | % | 292 | 1,667 | 1,759 | ||||||||||||||
| Interest on other borrowings | 63 | 52 | 11 | 21 | % | 59 | 235 | 195 | ||||||||||||||||
| Total interest expense | 1,084 | 1,381 | (297 | ) | (22 | ) | % | 1,054 | 4,778 | 4,983 | ||||||||||||||
| Net interest income | 9,434 | 8,351 | 1,083 | 13 | % | 9,276 | 36,231 | 33,770 | ||||||||||||||||
| Provision for loan and lease losses | — | — | — | — | % | — | — | — | ||||||||||||||||
| Net interest income after provision for loan and lease losses | 9,434 | 8,351 | 1,083 | 13 | % | 9,276 | 36,231 | 33,770 | ||||||||||||||||
| Noninterest income: | ||||||||||||||||||||||||
| Service charges on deposit accounts | 120 | 51 | 69 | 135 | % | 133 | 413 | 204 | ||||||||||||||||
| Payroll and benefit processing fees | 161 | 139 | 22 | 16 | % | 133 | 593 | 555 | ||||||||||||||||
| Earnings on cash surrender value - life insurance | 152 | 159 | (7 | ) | (4 | ) | % | 152 | 613 | 641 | ||||||||||||||
| Gain on investment securities, net | 52 | 30 | 22 | 73 | % | 70 | 244 | 443 | ||||||||||||||||
| Impairment losses on investment securities | — | — | — | — | % | — | (546 | ) | — | |||||||||||||||
| ATM and point of sale | 281 | 104 | 177 | 170 | % | 287 | 995 | 383 | ||||||||||||||||
| Federal Home Loan Bank of San Francisco dividends | 353 | 99 | 254 | 257 | % | 102 | 644 | 630 | ||||||||||||||||
| Other income | 131 | 58 | 73 | 126 | % | 82 | 639 | 327 | ||||||||||||||||
| Total noninterest income | 1,250 | 640 | 610 | 95 | % | 959 | 3,595 | 3,183 | ||||||||||||||||
| TABLE 12 - CONTINUED | |||||||||||||||||||||||
| UNAUDITED | |||||||||||||||||||||||
| INCOME STATEMENT | |||||||||||||||||||||||
| (amounts in thousands, except per share data) | |||||||||||||||||||||||
| For The Three Months Ended | For The Twelve Months Ended | ||||||||||||||||||||||
| December 31, | Change | September 30, | December 31, | ||||||||||||||||||||
| 2016 | 2015 | $ | % | 2016 | 2016 | 2015 | |||||||||||||||||
| Noninterest expense: | |||||||||||||||||||||||
| Salaries and related benefits | 4,237 | 3,610 | 627 | 17 | % | 3,873 | 16,425 | 14,303 | |||||||||||||||
| Occupancy and equipment | 1,022 | 737 | 285 | 39 | % | 1,071 | 3,869 | 2,894 | |||||||||||||||
| Federal Deposit Insurance Corporation insurance premium | 102 | 173 | (71 | ) | (41 | ) | % | 176 | 615 | 717 | |||||||||||||
| Data processing fees | 533 | 280 | 253 | 90 | % | 464 | 1,675 | 1,016 | |||||||||||||||
| Professional service fees | 481 | 461 | 20 | 4 | % | 303 | 1,690 | 1,628 | |||||||||||||||
| Telecommunications | 206 | 114 | 92 | 81 | % | 199 | 751 | 449 | |||||||||||||||
| Branch acquisition costs | — | 347 | (347 | ) | (100 | ) | % | — | 580 | 347 | |||||||||||||
| Loss on cancellation of interest rate swap | — | — | — | — | % | — | 2,325 | — | |||||||||||||||
| Other expenses | 1,234 | 894 | 340 | 38 | % | 1,039 | 4,679 | 3,551 | |||||||||||||||
| Total noninterest expense | 7,815 | 6,616 | 1,199 | 18 | % | 7,125 | 32,609 | 24,905 | |||||||||||||||
| Income before provision for income taxes | 2,869 | 2,375 | 494 | 21 | % | 3,110 | 7,217 | 12,048 | |||||||||||||||
| Deferred tax asset write-off | — | — | — | — | % | — | 363 | — | |||||||||||||||
| Provision for income taxes | 572 | 505 | 67 | 13 | % | 744 | 1,595 | 3,462 | |||||||||||||||
| Net income | $ | 2,297 | $ | 1,870 | $ | 427 | 23 | % | $ | 2,366 | $ | 5,259 | $ | 8,586 | |||||||||
| Less: Preferred stock extinguishment costs | — | 102 | (102 | ) | (100 | ) | % | — | — | 102 | |||||||||||||
| Less: Preferred dividends | — | 39 | (39 | ) | (100 | ) | % | — | — | 189 | |||||||||||||
| Income available to common shareholders | $ | 2,297 | $ | 1,729 | $ | 568 | 33 | % | $ | 2,366 | $ | 5,259 | $ | 8,295 | |||||||||
| Basic earnings per share | $ | 0.17 | $ | 0.13 | $ | 0.04 | 31 | % | $ | 0.18 | $ | 0.39 | $ | 0.62 | |||||||||
| Average basic shares | 13,370 | 13,341 | 29 | — | % | 13,369 | 13,367 | 13,331 | |||||||||||||||
| Diluted earnings per share | $ | 0.17 | $ | 0.13 | $ | 0.04 | 31 | % | $ | 0.18 | $ | 0.39 | $ | 0.62 | |||||||||
| Average diluted shares | 13,476 | 13,395 | 81 | 1 | % | 13,439 | 13,425 | 13,365 | |||||||||||||||
| TABLE 13 | ||||||||||||
| UNAUDITED CONDENSED CONSOLIDATED | ||||||||||||
| ANNUAL AVERAGE BALANCE SHEETS | ||||||||||||
| (amounts in thousands) | ||||||||||||
| For The Twelve Months Ended | ||||||||||||
| December 31, | December 31, | December 31, | December 31, | |||||||||
| 2016 | 2015 | 2014 | 2013 | |||||||||
| Earning assets: | ||||||||||||
| Loans | $ | 752,938 | $ | 699,227 | $ | 625,166 | $ | 612,780 | ||||
| Taxable securities | 120,884 | 120,897 | 147,916 | 157,486 | ||||||||
| Tax exempt securities | 75,303 | 77,089 | 83,973 | 92,854 | ||||||||
| Interest-bearing deposits in other banks | 58,668 | 30,323 | 56,465 | 43,342 | ||||||||
| Average earning assets | 1,007,793 | 927,536 | 913,520 | 906,462 | ||||||||
| Cash and due from banks | 15,831 | 11,220 | 11,246 | 10,624 | ||||||||
| Premises and equipment, net | 15,078 | 11,552 | 12,105 | 10,337 | ||||||||
| Other assets | 41,048 | 42,423 | 36,936 | 26,431 | ||||||||
| Average total assets | $ | 1,079,750 | $ | 992,731 | $ | 973,807 | $ | 953,854 | ||||
| Liabilities and shareholders' equity: | ||||||||||||
| Demand - noninterest bearing | $ | 226,368 | $ | 156,578 | $ | 139,792 | $ | 122,011 | ||||
| Demand - interest bearing | 374,170 | 283,105 | 272,383 | 244,125 | ||||||||
| Savings | 104,771 | 92,659 | 91,108 | 92,502 | ||||||||
| Certificates of deposit | 221,074 | 238,626 | 259,445 | 248,350 | ||||||||
| Total deposits | 926,383 | 770,968 | 762,728 | 706,988 | ||||||||
| Repurchase agreements | — | — | — | 5,780 | ||||||||
| Term debt, net | 37,286 | 88,874 | 77,534 | 107,603 | ||||||||
| Junior subordinated debentures | 10,310 | 10,310 | 15,239 | 15,465 | ||||||||
| Other liabilities | 13,217 | 16,588 | 15,934 | 11,825 | ||||||||
| Average total liabilities | 987,196 | 886,740 | 871,435 | 847,661 | ||||||||
| Shareholders' equity | 92,554 | 105,991 | 102,372 | 106,193 | ||||||||
| Average liabilities & shareholders' equity | $ | 1,079,750 | $ | 992,731 | $ | 973,807 | $ | 953,854 | ||||
| TABLE 14 | |||||||||||||||
| UNAUDITED CONDENSED CONSOLIDATED | |||||||||||||||
| QUARTERLY AVERAGE BALANCE SHEETS | |||||||||||||||
| (amounts in thousands) | |||||||||||||||
| For The Three Months Ended | |||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||
| 2016 | 2016 | 2016 | 2016 | 2015 | |||||||||||
| Earning assets: | |||||||||||||||
| Loans | $ | 778,458 | $ | 769,354 | $ | 742,684 | $ | 720,795 | $ | 714,494 | |||||
| Taxable securities | 124,881 | 114,578 | 124,183 | 119,917 | 111,098 | ||||||||||
| Tax exempt securities | 72,288 | 73,952 | 77,168 | 77,852 | 78,081 | ||||||||||
| Interest-bearing deposits in other banks | 75,760 | 61,346 | 46,097 | 51,254 | 37,158 | ||||||||||
| Average earning assets | 1,051,387 | 1,019,230 | 990,132 | 969,818 | 940,831 | ||||||||||
| Cash and due from banks | 16,953 | 17,018 | 17,028 | 12,301 | 12,372 | ||||||||||
| Premises and equipment, net | 16,331 | 15,941 | 15,632 | 12,384 | 11,001 | ||||||||||
| Other assets | 41,363 | 41,729 | 41,394 | 39,700 | 41,666 | ||||||||||
| Average total assets | $ | 1,126,034 | $ | 1,093,918 | $ | 1,064,186 | $ | 1,034,203 | $ | 1,005,870 | |||||
| Liabilities and shareholders' equity: | |||||||||||||||
| Demand - noninterest bearing | $ | 261,600 | $ | 240,418 | $ | 220,377 | $ | 182,539 | $ | 171,449 | |||||
| Demand - interest bearing | 398,749 | 390,895 | 382,811 | 323,771 | 302,862 | ||||||||||
| Savings | 111,755 | 107,210 | 103,990 | 96,027 | 92,939 | ||||||||||
| Certificates of deposit | 217,463 | 221,078 | 223,958 | 221,836 | 226,924 | ||||||||||
| Total deposits | 989,567 | 959,601 | 931,136 | 824,173 | 794,174 | ||||||||||
| Term debt | 18,975 | 19,610 | 19,510 | 91,444 | 79,772 | ||||||||||
| Junior subordinated debentures | 10,310 | 10,310 | 10,310 | 10,310 | 10,310 | ||||||||||
| Other liabilities | 12,856 | 11,159 | 11,913 | 16,969 | 16,197 | ||||||||||
| Average total liabilities | 1,031,708 | 1,000,680 | 972,869 | 942,896 | 900,453 | ||||||||||
| Shareholders' equity | 94,326 | 93,238 | 91,317 | 91,307 | 105,417 | ||||||||||
| Average liabilities & shareholders' equity | $ | 1,126,034 | $ | 1,093,918 | $ | 1,064,186 | $ | 1,034,203 | $ | 1,005,870 | |||||
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 banking and financial services through nine 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 | |||||
| John T. Cavender | Stifel Nicolaus | ||||
| One Embarcadero Center | Perry Wright | ||||
| Suite 650 | 1255 East Street, Suite 100 | ||||
| San Francisco, California 94111 | Redding, CA 96001 | ||||
| (415) 616-8935 | (530) 244-7199 | ||||