Bank of Commerce Holdings Announces Results for the Fourth Quarter of 2017

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| Source: Bank of Commerce Holdings

SACRAMENTO, Calif., Jan. 19, 2018 (GLOBE NEWSWIRE) -- Bank of Commerce Holdings (NASDAQ:BOCH) (the “Company”), a $1.3 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, 2017. Net income for the quarter ended December 31, 2017 was $7 thousand or $0.00 per share – diluted, compared with net income of $2.3 million or $0.17 per share – diluted for the same period of 2016. Net income for the year ended December 31, 2017 was $7.3 million or $0.48 per share – diluted compared with $5.3 million or $0.39 per share – diluted for the year ended December 31, 2016.

Significant Item – Tax Cuts and Jobs Act of 2017

The 2017 results include the $2.5 million negative net impact of the Tax Cuts and Jobs Act of 2017(“Act”) for both the fourth quarter ($0.15 per share – diluted) and for the year ($0.16 per share – diluted). The Act reduced the federal corporate tax rate from 35% to 21% and required the Company to revalue its deferred tax assets and liabilities. Management believes that our financial results are more comparative excluding the impact of these deferred tax asset and liability revaluations.

Non-GAAP Financial Measures

In addition to results presented in accordance with generally accepted accounting principles in the United States of America (GAAP), this press release contains certain non-GAAP financial measures. We believe that these non-GAAP financial measures provide investors with information useful in understanding the Company’s financial performance; however, readers of this document are urged to review these non-GAAP financial measures in conjunction with the GAAP results as reported.

                     
SELECTED NON-GAAP FINANCIAL INFORMATION - UNAUDITED 
(amounts in thousands except per share data) 
  For The Three Months Ended For The Twelve Months Ended 
Reconciliation of Net Income (GAAP) to Net Income Excluding December 31, September 30, December 31,  
Deferred Tax Asset Write-down (non-GAAP): 2017  2016  2017 2017
 2016
Net income (GAAP) $ 7   $ 2,297   $ 2,876   $ 7,344   $ 5,259  
Deferred tax asset write-down (GAAP)   2,490     —    —    2,490     363  
Net income excluding deferred tax asset write-down (non-GAAP) $ 2,497   $ 2,297   $ 2,876   $ 9,834   $ 5,622  
                     
Earnings per share - diluted (GAAP) $ —  $ 0.17   $ 0.18   $ 0.48   $ 0.39  
Effect of deferred tax asset write-down   0.15     —    —    0.16     0.03  
Earnings per share - diluted excluding net deferred tax asset write-down $ 0.15   $ 0.17   $ 0.18   $ 0.64   $ 0.42  
                     
Non-GAAP Ratios:                    
Return on average assets excluding net deferred tax asset write-down  0.79%  0.81%  0.93%  0.82%  0.52%
Return on average equity excluding net deferred tax asset write-down  7.69%  9.69%  9.01%  8.48%  6.07%
Effective tax rate excluding deferred tax asset write-down  34.46%  19.94%  33.16%  31.10%  22.10%
                     
GAAP Information:                    
Return on average assets   0.00%  0.81%  0.93%  0.61%  0.49%
Return on average equity  0.02%  9.69%  9.01%  6.34%  5.68%
Effective tax rate  99.82%  19.94%  33.16%  48.54%  27.13%
                     

Randall S. Eslick, President and CEO commented: “In 2017 we continued executing on our corporate vision and strategic plan to earn our independence. I am especially proud of the hard work and dedication of our employees as they delivered extraordinary growth in loans and deposits and enhanced returns to our shareholders. Our company is well positioned to meet the opportunities and challenges of the coming year and I look forward to our continued growth and success.”

Financial highlights for the year ended December 31, 2017:

  • Average deposits for the year ended December 31, 2017 totaled $1.0 billion, an increase of $115.1 million (12%) compared to average deposits for the prior year.
  • Average loans for the year ended December 31, 2017 totaled $818.1 million, an increase of $65.2 million (9%) compared to average loans for the prior year.
  • Average earning assets totaled $1.1 billion for the year ended December 31, 2017, an increase of $116.8 million (12%) compared to average earning assets for the prior year.
  • Net income of $7.3 million or $0.48 per share – diluted for the year ended December 31, 2017 was an increase of $2.1 million (40%) from $5.3 million or $0.39 per share – diluted earned during the same period in the prior year. Net income for 2016 was negatively impacted by $3.0 million of branch acquisition and balance sheet restructuring costs, a $546 thousand other-than-temporary-impairment of an investment security and the write-off of a $363 thousand deferred tax asset.
  • Return on average assets improved to 0.61% for the year ended December 31, 2017 compared to 0.49% for the prior year.
  • Return on average equity improved to 6.34% for the year ended December 31, 2017 compared to 5.68% for the prior year.
  • The Company’s efficiency ratio was 67.0% for the year ended December 31, 2017 compared to 81.9% for the prior year.
  • Net interest income increased $5.1 million (14%) to $41.4 million for the year ended December 31, 2017 compared to $36.2 million for the prior year.
  • Nonperforming assets at December 31, 2017 totaled $5.8 million or 0.46% of total assets, a decrease of $6.3 million (52%) compared to December 31, 2016.
  • Tangible book value per common share was $7.70 at December 31, 2017 compared to $6.83 at December 31, 2016.

Financial highlights for the fourth quarter of 2017:

  • Average deposits for the three months ended December 31, 2017 totaled $1.1 billion, an increase of $28.7 million (11% annualized) compared to average deposits for the prior quarter.
  • Average loans for the three months ended December 31, 2017 totaled $839.0 million, an increase of $33.9 million (17% annualized) compared to average loans for the prior quarter.
  • Average earning assets for the three months ended December 31, 2017 totaled $1.2 billion, an increase of $31.9 million (11% annualized) compared to average earning assets for the prior quarter.
  • Net income of $7 thousand or $0.00 per share – diluted for the three months ended December 31, 2017 was a decrease of $2.3 million (100%) from $2.3 million or $0.17 per share – diluted earned during the same period in the prior year.
  • Return on average assets declined to 0.00% for the fourth quarter of 2017 compared to 0.81% for the same period in the prior year.
  • Return on average equity declined to 0.02% for the fourth quarter of 2017 compared to 9.69% for the same period in the prior year.
  • The Company’s efficiency ratio was 64.9% for the fourth quarter of 2017 compared to 73.2% during the same period in 2016.
  • Net interest income increased $1.4 million (15%) to $10.9 million for the fourth quarter of 2017 compared to $9.4 million for the same period in the prior year.
  • Nonperforming assets at December 31, 2017 totaled $5.8 million or 0.46% of total assets, a decrease of $2.5 million since September 30, 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, 2016 under the heading “Risk Factors” and to 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 
  December 31,   September 30, December 31,  
Net income, average assets and average shareholders' equity 2017  2016  2017 2017 2016 
Net income  $ 7   $ 2,297   $ 2,876   $ 7,344  $ 5,259  
Average total assets $ 1,251,960   $ 1,126,034   $ 1,220,900   $ 1,198,251  $ 1,079,750  
Average total earning assets $ 1,178,037   $ 1,051,387   $ 1,146,132   $ 1,124,555  $ 1,007,793  
Average shareholders' equity $ 128,862   $ 94,326   $ 126,574   $ 115,901  $ 92,554  
                    
Selected performance ratios                   
Return on average assets  0.00%  0.81%  0.93%  0.61% 0.49%
Return on average equity  0.02%  9.69%  9.01%  6.34% 5.68%
Efficiency ratio  64.94%  73.17%  63.10%  67.04% 81.83%
                    
Share and per share amounts                   
Weighted average shares - basic (1)   16,195     13,370     16,191     15,207    13,367  
Weighted average shares - diluted   16,306     13,476     16,288     15,310    13,425  
Earnings per share - basic $ —  $ 0.17   $ 0.18   $ 0.48  $ 0.39  
Earnings per share - diluted $ —  $ 0.17   $ 0.18   $ 0.48  $ 0.39  
                    
  At December 31,   At September 30,   
Share and per share amounts 2017  2016  2017     
Common shares outstanding (2)   16,272     13,440     16,265         
Tangible book value per common share $ 7.82   $ 6.83   $ 7.77         
                    
Capital ratios                  
Bank of Commerce Holdings (3)                  
Common equity tier 1 capital ratio (4)  12.26%  9.43%  12.66%       
Tier 1 capital ratio (4)  13.23%  10.42%  13.65%       
Total capital ratio (4)  15.44%  12.68%  15.91%       
Tier 1 leverage ratio (4)  10.86%  9.13%  11.12%       
Tangible common equity ratio (5)  9.88%  8.07%  10.27%       
                    
Redding Bank of Commerce                   
Common equity tier 1 capital ratio (4)  12.58%  12.31%  12.87%       
Tier 1 capital ratio (4)  12.58%  12.31%  12.87%       
Total capital ratio (4)  13.81%  13.55%  14.12%       
Tier 1 leverage ratio (4)  10.33%  10.80%  10.50%       
                    
(1) Excludes unvested restricted shares issued in accordance with the Company's equity incentive plan, as they are non participative in dividends or voting rights.
(2) Includes unvested restricted shares issued in accordance with the Company's equity incentive plan.
(3) Capital ratios for the Company include the benefit of $26.8 million net proceeds from the sale of 2,738,096 shares of common stock in the second quarter of 2017.
(4) 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 intangible and $665 thousand of goodwill recorded in conjunction with the acquisition of five branches in March of 2016.
(5) Management believes the tangible common equity ratio is a useful measure of capital adequacy because it provides a meaningful base for period-to-period and company-to-company comparisons, which management believes will assist investors in assessing the capital of the Company and the ability of the Company to absorb potential losses. The tangible common equity ratio is calculated as total shareholders' equity less goodwill and core deposit intangible, net divided by total assets less goodwill and core deposit intangible, net.
 

BALANCE SHEET OVERVIEW

As of December 31, 2017, the Company had total consolidated assets of $1.3 billion, gross loans of $879.8 million, allowance for loan and lease losses (“ALLL”) of $11.9 million, total deposits of $1.1 billion, and shareholders’ equity of $127.3 million.

                        
TABLE 2
LOAN BALANCES BY TYPE - UNAUDITED
(amounts in thousands)
 At December 31,       At September 30,
   % of    % of  Change   % of
 2017 Total 2016 Total Amount % 2017 Total
Commercial$ 149,088   17% $ 153,844   19% $ (4,756)  (3)% $ 147,212   18%
Real estate - construction and land development  15,902   2    36,792   5    (20,890)  (57)%   14,700   2 
Real estate - commercial non-owner occupied  377,668   43    292,615   36    85,053    29  %   333,766   40 
Real estate - commercial owner occupied  185,340   21    167,335   21    18,005    11  %   183,424   22 
Real estate - residential - ITIN  41,188   5    45,566   6    (4,378)  (10)%   42,063   5 
Real estate - residential - 1-4 family mortgage  30,377   3    20,425   3    9,952    49  %   21,119   3 
Real estate - residential - equity lines  30,347   3    35,953   4    (5,606)  (16)%   31,158   4 
Consumer and other  49,925   6    51,681   6    (1,756)  (3)%   51,432   6 
Gross loans  879,835   100%   804,211   100%   75,624    9  %   824,874   100%
Deferred fees and costs  1,710        1,324        386        1,770     
Loans, net of deferred fees and costs  881,545        805,535        76,010        826,644     
Allowance for loan and lease losses  (11,925)      (11,544)      (381)      (11,692)   
Net loans$ 869,620      $ 793,991      $ 75,629      $ 814,952     
                        
Average yield on loans during the quarter 4.77%     4.69%      0.08       4.87%   
                            

The Company recorded gross loan balances of $879.8 million at December 31, 2017, compared with $804.2 million and $824.9 million at December 31, 2016 and September 30, 2017, respectively, an increase of $75.6 million and $55.0 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 and is the result of investments in our SBA division and in our expanded Sacramento commercial banking group.

Average loan balances were $839.0 million for the quarter ended December 31, 2017, compared with $778.5 for the quarter ended December 31, 2016 and $805.1 million for the quarter ended September 30, 2017, an increase of $60.5 million or 8% and an increase of $33.9 million or 17% annualized, respectively.

The average yield on loans during the quarter was 4.77% compared to 4.69% and 4.87% for the quarters ended December 31, 2016 and September 30, 2017, respectively. The prior quarter included $161 thousand of interest income from a nonaccrual loan that was repaid during the quarter and enhanced the average yield by eight basis points.

                         
TABLE 3
CASH, CASH EQUIVALENTS, AND INVESTMENT SECURITIES - UNAUDITED
(amounts in thousands)
  At December 31,        At September 30,
    % of    % of  Change   % of
  2017 Total 2016 Total Amount % 2017 Total
                         
Cash and due from banks $ 17,979   5% $ 16,419   6% $ 1,560    10  % $ 19,929   6%
Interest-bearing deposits in other banks   48,991   15    51,988   19    (2,997)  (6)%   65,702   19 
Total cash and cash equivalents   66,970   20    68,407   25    (1,437)  (2)%   85,631   25 
                         
Investment securities:                        
U.S. government and agencies   40,369   12    10,354   4    30,015    290  %   36,474   10 
Obligations of state and political subdivisions   78,844   24    59,428   22    19,416    33  %   53,850   15 
Residential mortgage backed securities and collateralized mortgage obligations   114,592   34    69,604   24    44,988    65  %   105,224   31 
Corporate securities   4,992   1    16,116   6    (11,124)  (69)%   6,968   2 
Commercial mortgage backed securities   26,641   8    15,514   6    11,127    72  %   26,148   7 
Other asset backed securities   2,516   1    4,158   2    (1,642)  (39)%   3,830   1 
Total investment securities - AFS   267,954   80    175,174   64    92,780    53  %   232,494   66 
                         
Obligations of state and political subdivisions - HTM   —  0    31,187   11    (31,187)  (100)%   30,724   9 
Total investment securities - AFS and HTM   267,954   80    206,361   75    61,593    30  %   263,218   75 
Total cash, cash equivalents and investment securities $ 334,924   100% $ 274,768   100% $ 60,156    22  % $ 348,849   100%
Average yield on interest-bearing due from banks and investment securities during the quarter - (nominal)  2.30%     1.95%      0.35       2.19%   
                             

As of December 31, 2017, we maintained noninterest-bearing cash positions of $18.0 million and interest-bearing deposits of $49.0 million at the Federal Reserve Bank and correspondent banks. During the fourth quarter of 2017, we deployed liquidity provided by the sale of common stock and strong organic deposit growth into organic loan originations, and AFS securities.

During the fourth quarter, we reclassified the entire HTM securities portfolio to AFS. At the date of the reclassification the HTM securities portfolio was recorded at an amortized cost of $30.3 million. The reclassification of securities between categories was accounted for at fair value. At the date of the reclassification, the securities had a fair value of $31.4 million and unrealized holding gains of $1.2 million which were recorded in other comprehensive income.

Investment securities totaled $268.0 million at December 31, 2017, compared with $206.4 million and $263.2 million at December 31, 2016 and September 30, 2017, respectively. Our investment securities portfolio provides us with a secondary source of liquidity to fund higher yielding asset opportunities, such as loan originations. During the fourth quarter of 2017, we purchased 20 securities with a par value of $29.6 million and weighted average yield of 2.71% and sold 19 securities with a par value of $16.0 million and weighted average yield of 2.33%. The sales activity on available-for-sale securities resulted in $2 thousand in net realized losses. There were no purchases or sales of held-to-maturity securities during the fourth quarter of 2017. During the same period, we received $7.4 million in proceeds from principal payments, calls and maturities within the investment securities portfolio. Average securities balances and weighted average tax equivalent yields for the quarters ended December 31, 2017 and 2016 were $272.0 million and 2.94% compared to $197.2 million and 3.02%, respectively.

At December 31, 2017, our net unrealized losses on available-for-sale investment securities were $452 thousand compared with net unrealized losses of $1.3 million and net unrealized gains of $630 thousand at December 31, 2016 and September 30, 2017, respectively. The changes in the net unrealized gain or loss on the investment securities portfolio are primarily due to changes in market interest rates and the reclassification of all HTM securities to AFS during the fourth quarter of 2017.

                        
TABLE 4
DEPOSITS BY TYPE - UNAUDITED
(amounts in thousands)
 At December 31,        At September 30,
   % of    % of   Change   % of
 2017 Total 2016 Total Amount % 2017 Total
Demand - noninterest-bearing$ 305,650   28% $ 270,398   27% $ 35,252   13 % $ 316,814   30%
Demand - interest-bearing  496,990   45    405,569   40    91,421   23 %   433,466   41 
Total demand  802,640   73    675,967   67    126,673   19 %   750,280   71 
                        
Savings  110,837   10    113,309   11    (2,472) (2)%   111,962   11 
Total non-maturing deposits  913,477   83    789,276   78    124,201   16 %   862,242   82 
                        
Certificates of deposit  189,255   17    215,390   22    (26,135) (12)%   200,543   18 
Total deposits$ 1,102,732   100% $ 1,004,666   100% $ 98,066   10 % $ 1,062,785   100%
                        
Average rate on interest-bearing deposits during the quarter 0.42%     0.40%      0.02       0.43%   
Average rate on all deposits during the quarter 0.30%     0.29%      0.01       0.31%   
                            

Total deposits at December 31, 2017, increased $98.1 million or 10% to $1.1 billion compared to December 31, 2016, and increased $39.9 million or 15% annualized compared to September 30, 2017. Total non-maturing deposits increased $124.2 million or 16% compared to the same date a year ago and increased $51.2 million or 24% annualized compared to September 30, 2017. Certificates of deposit decreased $26.1 million or 12% compared to the same date a year ago and decreased $11.2 million or 23% annualized compared to September 30, 2017.

         
TABLE 5
WHOLESALE AND BROKERED DEPOSITS - UNAUDITED
(amounts in thousands)
 At December 31,  At September 30,
 2017 2016 2017
CDARS / ICS reciprocal brokered deposits$ 66,279  $ 65,212  $ 56,203 
Online listing service wholesale time deposits  36,060    48,900    37,293 
Total wholesale and brokered deposits$ 102,339  $ 114,112  $ 93,496 
 

In accordance with regulatory Call Report instructions, the Bank will file (or has filed) quarterly Call Reports which list brokered deposits of $66.3 million, $65.2 million and $56.2 million at December 31, 2017, December 31, 2016 and September 30, 2017, 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
 2017 2016 Amount % 2017 Amount %
Interest income $ 12,047  $ 10,518  $ 1,529   15 % $ 11,765  $ 282   2 %
Interest expense  1,178    1,084    94   9 %   1,181    (3)  — %
Net interest income  10,869    9,434    1,435   15 %   10,584    285   3 %
Provision for loan
and lease losses
  450    —   450    100  %   —   450    100  %
Noninterest income  1,282    1,260    22   2 %   1,076    206   19 %
Noninterest expense  7,891    7,825    66   1 %   7,357    534   7 %
Income before provision
for income taxes
  3,810    2,869    941   33 %   4,303    (493) (11)%
Provision for income taxes:                    
Net deferred tax asset write-down  2,490    —   2,490    100  %   —   2,490    100  %
Provision for income taxes from operations  1,313    572    741   130 %   1,427    (114) (8)%
Total provision for income taxes  3,803    572    3,231   565 %   1,427    2,376   167 %
Net income$ 7  $ 2,297  $ (2,290) (100)% $ 2,876  $ (2,869) (100)%
                     
Basic earnings per share$ — $ 0.17  $ (0.17)  (100)% $ 0.18  $ (0.18)  (100)%
Average basic shares  16,195    13,370    2,825    21  %   16,191    4    — %
Diluted earnings per share$ — $ 0.17  $ (0.17)  (100)% $ 0.18  $ (0.18)  (100)%
Average diluted shares  16,306    13,476    2,830    21  %   16,288    18    — %
Dividends declared per common share$ 0.03  $ 0.03  $ —   — % $ 0.03  $ —   — %
                         

Fourth Quarter of 2017 Compared With Fourth Quarter of 2016

Income before provision for income taxes for the fourth quarter of 2017 increased $941 thousand compared to the fourth quarter of 2016. In the current quarter, net interest income was $1.4 million higher and noninterest income was $22 thousand higher. These positive changes were offset by provision for loan and lease losses that was $450 thousand higher and noninterest expense that was $66 thousand higher.

Net Interest Income

Net interest income increased $1.4 million compared to the same period a year ago.

Interest income for the three months ended December 31, 2017 increased $1.5 million or 15% to $12.0 million. Interest and fees on loans increased $902 thousand due to a $60.5 million increase in average loan balances and an eight basis point increase in the average yield on the loan portfolio. Interest on securities increased $513 thousand due to a $74.8 million increase in average securities balances and a six basis point increase in the average yield on the securities portfolio. Interest on interest-bearing deposits due from banks increased $114 thousand primarily due to a 75 basis point increase in average yield resulting from increased fed funds rates.

Interest expense for the fourth quarter of 2017 increased $94 thousand or 9% to $1.2 million. The increase was primarily caused by a two basis point increase in the average rate paid on interest-bearing deposits and a $60.7 million increase in average interest-bearing demand deposits.

Provision for loan and lease loss

During the three months ended December 31, 2017 the company recorded a provision for loan and lease losses of $450 thousand reflecting growth in the loan portfolio. There was no provision for loan and lease losses during the fourth quarter of 2016.

Noninterest Income

Noninterest income for the three months ended December 31, 2017 increased $22 thousand compared to the fourth quarter for 2016. Net Gains on sale of OREO properties increased $336 thousand while FHLB dividends decreased $272 thousand (a special dividend was recorded during the prior year).

Noninterest Expense

Noninterest expense for the three months ended December 31, 2017 increased $66 thousand compared to the same period a year previous. The increase in noninterest expense was primarily due to the following negative items:

  • Compensation costs increased $286 thousand
  • Premises and equipment costs increased $51 thousand

These increases were partially offset by the following positive items:

  • Professional service fees decreased $202 thousand
  • Data processing fees decreased $78 thousand

The Company’s efficiency ratio was 64.9% for the fourth quarter of 2017 compared to 73.2% during the same period in 2016.

Income Tax Provision

For the three months ended December 31, 2017, our income tax provision of $3.8 million on pre-tax income of $3.8 million was an effective tax rate of 99.8%. The income tax provision was composed of a $2.5 million write-down of our deferred tax assets and a $1.3 million tax provision on pre-tax net operating income of $3.8 million (34.5%). The $2.5 million write-down occurred when we revalued our deferred tax assets and liabilities to account for the future impact of lower corporate tax rates resulting from the Tax Cuts and Jobs Act enacted on December 22, 2017.

This compares with a provision for income taxes of $572 thousand (19.9% effective tax rate) for the three months ended December 31, 2016. This effective tax rate benefited from a decrease in the amortization  of our investments in affordable housing partnerships.

Fourth Quarter of 2017 Compared With Third Quarter of 2017

Income before provision for income taxes for the fourth quarter of 2017 decreased $493 thousand compared to the third quarter of 2017. In the current quarter, net interest income was $285 thousand higher and noninterest income was $206 thousand higher. These positive changes were offset by a provision for loan and lease losses that was $450 thousand higher and noninterest expenses that were $534 thousand higher.

Net Interest Income

Net interest income increased $285 thousand over the prior quarter.

Interest income for the three months ended December 31, 2017 increased $282 thousand or 2% to $12.0 million. Interest and fees on loans increased $196 thousand due to a $33.9 million increase in average loan balances. Interest on investment securities increased $140 thousand due to a $15.3 million increase in average securities balances and a seven basis point increase in average yield on the securities portfolio. Interest on interest-bearing deposits due from banks decreased $54 thousand due to a $17.3 million decrease in average balances.

Interest expense for the three months ended December 31, 2017 decreased $3 thousand or less than 1% to $1.2 million. The average rate paid on interest-bearing deposits decreased 1 basis point to 42 basis points. Average interest-bearing demand deposit balances increased $24.3 million while average certificate of deposit balances decreased $9.2 million.

Provision for loan and lease loss

During the three months ended December 31, 2017 the company recorded a provision for loan and lease losses of $450 thousand reflecting growth in the loan portfolio. There was no provision for loan and lease losses during the prior quarter.

Noninterest Income

Noninterest income for the three months ended December 31, 2017 increased $206 thousand. During the current quarter gains on sale of OREO increased $265 thousand.

Noninterest Expense

Noninterest expense for the three months ended December 31, 2017 increased $534 thousand compared to the third quarter of 2017. The increase in noninterest expense included the following items:

  • Loan origination cost deferrals decreased $110 thousand
  • Employee incentive and other compensation-related costs increased $122 thousand
  • Postage and supplies increased $80 thousand due to costs associated with the annual deposit account disclosures
  • Recruiting costs increased $82 thousand

The Company’s efficiency ratio was 64.9% for the fourth quarter of 2017 compared to 63.1% during the prior quarter.

Income Tax Provision

For the three months ended December 31, 2017, our income tax provision of $3.8 million on pre-tax income of $3.8 million was an effective tax rate of 99.8%. The income tax provision was composed of a $2.5 million write-down of our deferred tax assets and a $1.3 million tax provision on pre-tax net operating income of $3.8 million (34.5%). The $2.5 million write-down occurred when we revalued our deferred tax assets and liabilities to account for the future impact of lower corporate tax rates resulting from the Tax Cuts and Jobs Act enacted on December 22, 2017. This compares with a provision for income taxes of $1.4 million (33.2% effective tax rate) for the prior quarter.

Earnings Per Share

Diluted earnings per share were $0.00 for the three months ended December 31, 2017. Excluding the $2.5 million negative net impact of the net deferred tax asset revaluation, diluted earnings per share would have been $0.15 for the three months ended December 31, 2017. This compared with diluted earnings per share of $0.17 for the same period a year ago and diluted earnings per share of $0.18 for the prior period. Net income and weighted average shares used to calculate earnings per share – diluted are summarized in table 6 and the table of “Selected Non-GAAP Financial Information” presented earlier in this press release.

                            
TABLE 7a
NET INTEREST MARGIN - UNAUDITED
(amounts in thousands)
  For The Three Months Ended
  December 31, 2017 December 31, 2016 September 30, 2017
  Average    Yield / Average    Yield / Average    Yield /
(Amounts in thousands) Balance Interest(1) Rate (5) Balance Interest(1) Rate (5) Balance Interest(1) Rate (5)
Interest-earning assets:                           
Net loans (2) $ 839,004  $ 10,083   4.77 % $ 778,458  $ 9,181   4.69 % $ 805,144  $ 9,887   4.87 %
Taxable securities   199,849    1,211   2.40 %   124,881    705   2.25 %   179,362    1,049   2.32 %
Tax-exempt securities   72,152    529   2.91 %   72,288    522   2.87 %   77,303    551   2.83 %
Interest-bearing deposits in other banks   67,032    224   1.33 %   75,760    110   0.58 %   84,323    278   1.31 %
Average interest-earning assets   1,178,037    12,047   4.06 %   1,051,387    10,518   3.98 %   1,146,132    11,765   4.07 %
Cash and due from banks   19,783          16,953          19,143       
Premises and equipment, net   14,948          16,331          15,362       
Other assets   39,192          41,363          40,263       
Average total assets $ 1,251,960        $ 1,126,034        $ 1,220,900       
                            
Interest-bearing liabilities:                           
Interest-bearing demand $ 459,451    216   0.19 % $ 398,749    135   0.13 % $ 436,614    196   0.18 %
Savings deposits   111,725    54   0.19 %   111,755    45   0.16 %   110,305    52   0.19 %
Certificates of deposit   194,886    547   1.11 %   217,463    543   0.99 %   204,044    567   1.10 %
Net term debt   17,211    285   6.57 %   18,975    298   6.25 %   17,804    292   6.51 %
Junior subordinated debentures   10,310    76   2.92 %   10,310    63   2.43 %   10,310    74   2.85 %
Average interest-bearing liabilities   793,583    1,178   0.59 %   757,252    1,084   0.57 %   779,077    1,181   0.60 %
Noninterest-bearing demand   316,961          261,600          303,314       
Other liabilities   12,554          12,856          11,935       
Shareholders’ equity   128,862          94,326          126,574       
Average liabilities and shareholders’ equity $ 1,251,960        $ 1,126,034        $ 1,220,900       
Net interest income and net interest margin (4)    $ 10,869   3.66 %    $ 9,434   3.57 %    $ 10,584   3.66 %
Tax equivalent net interest margin (3)        3.75 %        3.67 %        3.76 %
                            
(1) Interest income on loans is net of deferred fees and costs of approximately $123 thousand, $139 thousand, and $95 thousand for the three months ended December 31, 2017, and 2016 and September 30, 2017, respectively.
(2) Net loans includes average nonaccrual loans of $6.5 million, $10.0 million and $8.6 million for the three months ended December 31, 2017 and 2016 and September 30, 2017, respectively.
(3) Tax-exempt income has been adjusted to tax equivalent basis at a 34% tax rate. The amount of such adjustments was an addition to recorded income of approximately $273 thousand, $269 thousand and $284 thousand for the three months ended December 31, 2017 and 2016 and September 30, 2017, respectively.
(4) Net interest margin is net interest income expressed as a percentage of average interest-earning assets.
(5) Yields and rates are calculated by dividing the income or expense by the average balance of the assets or liabilities, respectively, and annualizing the result.


                   
TABLE 7b
NET INTEREST MARGIN - UNAUDITED
(amounts in thousands)
  For The Twelve Months Ended
  December 31, 2017 December 31, 2016
  Average    Yield / Average    Yield /
(Amounts in thousands) Balance Interest(1) Rate (5) Balance Interest(1) Rate (5)
Interest-earning assets:                  
Net loans (2) $ 818,119  $ 39,112   4.78 % $ 752,938  $ 35,435   4.71 %
Taxable securities   165,333    3,921   2.37 %   120,884    2,986   2.47 %
Tax-exempt securities   74,231    2,144   2.89 %   75,303    2,256   3.00 %
Interest-bearing deposits in other banks   66,872    772   1.15 %   58,668    332   0.57 %
Average interest-earning assets   1,124,555    45,949   4.09 %   1,007,793    41,009   4.07 %
Cash and due from banks   18,301          15,831       
Premises and equipment, net   15,567          15,078       
Other assets   39,828          41,048       
Average total assets $ 1,198,251        $ 1,079,750       
                   
Interest-bearing liabilities:                  
Interest-bearing demand $ 434,705    744   0.17 % $ 374,170    523   0.14 %
Savings deposits   111,376    200   0.18 %   104,771    174   0.17 %
Certificates of deposit   205,648    2,188   1.06 %   221,074    2,179   0.99 %
Net term debt   18,283    1,168   6.39 %   37,286    1,667   4.47 %
Junior subordinated debentures   10,310    287   2.78 %   10,310    235   2.28 %
Average interest-bearing liabilities   780,322    4,587   0.59 %   747,611    4,778   0.64 %
Noninterest-bearing demand   289,735          226,368       
Other liabilities   12,293          13,217       
Shareholders’ equity   115,901          92,554       
Average liabilities and shareholders’ equity $ 1,198,251        $ 1,079,750       
Net interest income and net interest margin (4)    $ 41,362   3.68 %    $ 36,231   3.60 %
Tax equivalent net interest margin (3)        3.78 %        3.71 %
                   
(1) Interest income on loans is net of deferred fees and costs of approximately $546 thousand and $1.1 million for the year ended December 31, 2017 and 2016, respectively.
(2) Net loans includes average nonaccrual loans of $8.9 million and $10.6 million for the year ended December 31, 2017 and 2016, respectively.
(3) Tax-exempt income has been adjusted to tax equivalent basis at a 34% tax rate. The amount of such adjustments was an addition to recorded income of approximately $1.1 million and $1.2 million for the year ended December 31, 2017 and 2016, respectively.
(4) Net interest margin is net interest income expressed as a percentage of average interest-earning assets.
(5) Yields and rates are calculated by dividing the income or expense by the average balance of the assets or liabilities, respectively, and annualizing the result.
 


                    
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,
 2017 2017 2017 2017 2016
Beginning balance ALLL$ 11,692    $ 11,688    $ 11,641    $ 11,544    $ 11,849   
Provision for loan and lease losses  450      —     300      200      —  
Loans charged-off  (451)    (245)    (359)    (447)    (386) 
Loan loss recoveries  234      249      106      344      81   
Ending balance ALLL$ 11,925    $ 11,692    $ 11,688    $ 11,641    $ 11,544   
                    
 At December 31,  At September 30, At June 30, At March 31, At December 31,
 2017 2017 2017 2017 2016
Nonaccrual loans:                   
Commercial $ 1,603    $ 2,309    $ 2,410    $ 2,534    $ 2,749   
Real estate - commercial non-owner occupied  —     —     1,196      1,196      1,196   
Real estate - commercial owner occupied  600      617      639      654      784   
Real estate - residential - ITIN  2,909      3,201      3,346      3,331      3,576   
Real estate - residential - 1-4 family mortgage  606      626      653      1,337      1,914   
Real estate - residential - equity lines  45      815      872      906      917   
Consumer and other  36      37      38      39      250   
Total nonaccrual loans  5,799      7,605      9,154      9,997      11,386   
Accruing troubled debt restructured loans:                   
Commercial   1,551      671      703      741      776   
Real estate - commercial non-owner occupied  803      805      806      808      808   
Real estate - residential - ITIN  4,614      4,655      4,712      4,761      5,033   
Real estate - residential - equity lines  380      441      445      450      454   
Total accruing troubled debt restructured loans  7,348      6,572      6,666      6,760      7,071   
                    
All other accruing impaired loans  —     —     —     —     337   
                    
Total impaired loans$ 13,147    $ 14,177    $ 15,820    $ 16,757    $ 18,794   
                    
Gross loans outstanding at period end$ 879,835    $ 824,874    $ 815,388    $ 810,194    $ 804,211   
                    
Impaired loans to gross loans 1.49 %  1.72 %  1.94 %  2.07 %  2.34 %
Nonaccrual loans to gross loans 0.66 %  0.92 %  1.12 %  1.23 %  1.42 %
                    
Allowance for loan and lease losses as a percent of:             
Gross loans 1.36 %  1.42 %  1.43 %  1.44 %  1.44 %
Nonaccrual loans 205.64 %  153.74 %  127.68 %  116.44 %  101.39 %
Impaired loans 90.71 %  82.47 %  73.88 %  69.47 %  61.42 %
                         

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. A combination of net loan losses and loan portfolio growth supported management’s decision to record a provision of $450 thousand for the three months ended December 31, 2017. There were no provisions for loan and lease losses during the quarter ended September 30, 2017 or the quarter ended December 31, 2016. Our ALLL as a percentage of gross loans was 1.36% as of December 31, 2017 compared to 1.44% as of December 31, 2016 and 1.42% as of September 30, 2017. Based on the Bank’s ALLL methodology, which uses criteria such as risk factors and historical loss rates, and given the ongoing improvements in asset quality, management believes the Company’s ALLL is adequate at December 31, 2017. 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, 2017, the recorded investment in loans classified as impaired totaled $13.1 million, with a corresponding specific reserve of $1.2 million compared to impaired loans of $18.8 million with a corresponding specific reserve of $1.5 million at December 31, 2016 and impaired loans of $14.2 million, with a corresponding specific reserve of $918 thousand at September 30, 2017. The decrease in loans classified as impaired compared to the prior quarter is primarily due to one residential real estate equity loan that was paid off during the quarter. The increase in the specific reserve on impaired loans compared to the prior quarter was primarily due to one commercial loan.

                     
TABLE 9
TROUBLED DEBT RESTRUCTURINGS - UNAUDITED
(amounts in thousands)
  At December 31,  At September 30, At June 30, At March 31, At December 31,
  2017 2017 2017 2017 2016
Nonaccrual $ 3,581   $ 4,403   $ 4,630   $ 4,570   $ 4,995  
Accruing   7,348     6,572     6,666     6,760     7,071  
Total troubled debt restructurings $ 10,929   $ 10,975   $ 11,296   $ 11,330   $ 12,066  
                     
Troubled debt restructurings as a percentage of total gross loans  1.24%  1.33%  1.39%  1.40%  1.50%
 

There were no new troubled debt restructurings during the three months ended December 31, 2017. As of December 31, 2017, we had 116 restructured loans that qualified as troubled debt restructurings, of which 110 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,
  2017 2017 2017 2017 2016
Total nonaccrual loans $ 5,799   $ 7,605   $ 9,154   $ 9,997   $ 11,386  
90 days past due and still accruing   —    —    —    —    — 
Total nonperforming loans   5,799     7,605     9,154     9,997     11,386  
                     
Other real estate owned   35     699     1,517     814     759  
Total nonperforming assets $ 5,834   $ 8,304   $ 10,671   $ 10,811   $ 12,145  
                     
Nonperforming loans to gross loans  0.66%  0.92%  1.12%  1.23%  1.42%
Nonperforming assets to total assets  0.46%  0.67%  0.88%  0.95%  1.06%
                     

The December 31, 2017 OREO balance consists of one 1-4 family residential real estate property in the amount of $35 thousand. The decrease in the OREO balance compared to the prior quarter is due to the disposition of one nonfarm nonresidential property, one undeveloped commercial property and one 1-4 family residential property. Net gains on sale of OREO in the current quarter were $346 thousand compared to net gains of $10 thousand and $81 thousand in the same quarter a year ago and in the prior quarter, respectively. Net gains on sale of OREO property in the current quarter were primarily due to one nonfarm nonresidential property that had a carrying value of $565 thousand and sold for $923 thousand resulting in a gain of $358 thousand.

                
TABLE 11
UNAUDITED CONSOLIDATED
BALANCE SHEET
(amounts in thousands, except per share data)
  At December 31,  At December 31,  Change At September 30,
  2017 2016 $ % 2017
Assets:               
Cash and due from banks $ 17,979   $ 16,419   $ 1,560    10  % $ 19,929  
Interest-bearing deposits in other banks   48,991     51,988     (2,997)  (6)%   65,702  
Total cash and cash equivalents   66,970     68,407     (1,437)  (2)%   85,631  
                
Securities available-for-sale, at fair value   267,954     175,174     92,780    53  %   232,494  
Securities held-to-maturity, at amortized cost   —    31,187     (31,187)  (100)%   30,724  
                
Loans, net of deferred fees and costs   881,545     805,535     76,010    9  %   826,644  
Allowance for loan and lease losses   (11,925)   (11,544)   (381)  3  %   (11,692)
Net loans   869,620     793,991     75,629    10  %   814,952  
                
Premises and equipment, net   14,748     16,226     (1,478)  (9)%   15,039  
Other real estate owned   35     759     (724)  (95)%   699  
Life insurance   21,898     23,098     (1,200)  (5)%   21,764  
Deferred taxes   6,505     9,542     (3,037)  (32)%   8,751  
Goodwill and core deposit intangible, net   2,030     2,252     (222)  (10)%   2,086  
Other assets   19,661     20,356     (695)  (3)%   19,741  
Total assets $ 1,269,421   $ 1,140,992   $ 128,429    11  % $ 1,231,881  
                
Liabilities and shareholders' equity:               
Demand - noninterest-bearing $ 305,650   $ 270,398   $ 35,252    13  % $ 316,814  
Demand - interest-bearing   496,990     405,569     91,421    23  %   433,466  
Savings   110,837     113,309     (2,472)  (2)%   111,962  
Certificates of deposit   189,255     215,390     (26,135)  (12)%   200,543  
Total deposits   1,102,732     1,004,666     98,066    10  %   1,062,785  
                
Term debt   17,096     18,917     (1,821)  (10)%   17,700  
Unamortized debt issuance costs   (138)   (184)   46    (25)%   (150)
Net term debt   16,958     18,733     (1,775)  (9)%   17,550  
                
Junior subordinated debentures   10,310     10,310     —   — %   10,310  
Other liabilities   12,157     13,177     (1,020)  (8)%   12,831  
Total liabilities   1,142,157     1,046,886     95,271    9  %   1,103,476  
                
Shareholders' equity:               
Common stock   51,830     24,547     27,283    111  %   51,755  
Retained earnings   75,700     70,218     5,482    8  %   76,179  
Accumulated other comprehensive (loss) income, net of tax   (266)   (659)   393    (60)%   471  
Total shareholders' equity   127,264     94,106     33,158    35  %   128,405  
                
Total liabilities and shareholders' equity $ 1,269,421   $ 1,140,992   $ 128,429    11  % $ 1,231,881  
                
Total interest-earning assets $ 1,198,942   $ 1,065,228   $ 133,714    13  % $ 1,154,934  
Shares outstanding   16,272     13,440           16,265  
Book value per share $ 7.82   $ 7.00         $ 7.89  
Tangible book value per share (1) $ 7.70   $ 6.83         $ 7.77  
                
(1) Tangible book value per share is computed by dividing total shareholders’ equity less goodwill and core deposit intangible, net by shares outstanding. Management believes that tangible book value per share is meaningful because it is a measure that the Company and investors commonly use to assess capital adequacy.


                      
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,
  2017 2016 $ % 2017 2017 2016
Interest income:                     
Interest and fees on loans $ 10,083   $ 9,181  $ 902    10  % $ 9,887  $ 39,112  $ 35,435  
Interest on securities   1,211     705    506    72  %   1,049    3,921    2,986  
Interest on tax-exempt securities   529     522    7    1  %   551    2,144    2,256  
Interest on deposits in other banks   224     110    114    104  %   278    772    332  
Total interest income   12,047     10,518    1,529    15  %   11,765    45,949    41,009  
Interest expense:                     
Interest on demand deposits   216     135    81    60  %   196    744    523  
Interest on savings deposits   54     45    9    20  %   52    200    174  
Interest on certificates of deposit   547     543    4    1  %   567    2,188    2,179  
Interest on term debt   285     298    (13)  (4)%   292    1,168    1,667  
Interest on other borrowings   76     63    13    21  %   74    287    235  
Total interest expense   1,178     1,084    94    9  %   1,181    4,587    4,778  
Net interest income   10,869     9,434    1,435    15  %   10,584    41,362    36,231  
Provision for loan and lease losses   450     —   450    100  %   —   950    — 
Net interest income after provision for loan and lease losses   10,419     9,434    985    10  %   10,584    40,412    36,231  
Noninterest income:                     
Service charges on deposit accounts   141     120    21    18  %   132    542    413  
ATM and point of sale   266     281    (15)  (5)%   273    1,093    995  
Payroll and benefit processing fees   173     161    12    7  %   147    658    593  
Life insurance   135     152    (17)  (11)%   134    1,050    613  
(Loss) gain on investment securities, net   (2)   52    (54)  (104)%   38    137    244  
Impairment losses on investment securities   —    —   —   — %   —   —   (546)
Federal Home Loan Bank of San Francisco dividends   81     353    (272)  (77)%   80    318    644  
Gain on sale of OREO   346     10    336    3,360  %   81    368    (109)
Other income   142     131    11    8  %   191    658    639  
Total noninterest income   1,282     1,260    22    2  %   1,076    4,824    3,486  


                      
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,
  2017 2016 $ % 2017 2017 2016
Noninterest expense:                     
Salaries and related benefits   4,523    4,237    286    7  %   4,291    17,819    16,425 
Occupancy and equipment   1,073    1,022    51    5  %   1,067    4,242    3,869 
Federal Deposit Insurance Corporation insurance premium   88    102    (14)  (14)%   78    318    615 
Data processing fees   455    533    (78)  (15)%   437    1,749    1,675 
Professional service fees   279    481    (202)  (42)%   276    1,398    1,690 
Telecommunications   226    206    20    10  %   219    879    751 
Branch acquisition costs   —   —   —   — %   —   —   580 
Loss on cancellation of interest rate swap   —   —   —   — %   —   —   2,325 
Other expenses   1,247    1,244    3    — %   989    4,559    4,570 
Total noninterest expense   7,891    7,825    66    1  %   7,357    30,964    32,500 
Income before provision for income taxes   3,810    2,869    941    33  %   4,303    14,272    7,217 
Provision for income taxes:                     
Net deferred tax asset write-down   2,490    —   2,490    100  %   —   2,490    363 
Provision for income taxes from operations   1,313    572    741    130  %   1,427    4,438    1,595 
Total provision for income taxes   3,803    572    3,231    565  %   1,427    6,928    1,958 
Net income $ 7  $ 2,297  $ (2,290)  (100)% $ 2,876  $ 7,344  $ 5,259 
                      
Basic earnings per share $ — $ 0.17  $ (0.17)  (100)% $ 0.18  $ 0.48  $ 0.39 
Average basic shares   16,195    13,370    2,825    21  %   16,191    15,207    13,367 
Diluted earnings per share $ — $ 0.17  $ (0.17)  (100)% $ 0.18  $ 0.48  $ 0.39 
Average diluted shares   16,306    13,476    2,830    21  %   16,288    15,310    13,425 


             
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,
  2017 2016 2015 2014
Earning assets:            
Loans $ 818,119  $ 752,938  $ 699,227  $ 625,166 
Taxable securities   165,333    120,884    120,897    147,916 
Tax exempt securities   74,231    75,303    77,089    83,973 
Interest-bearing deposits in other banks   66,872    58,668    30,323    56,465 
Total earning assets   1,124,555    1,007,793    927,536    913,520 
             
Cash and due from banks   18,301    15,831    11,220    11,246 
Premises and equipment, net   15,567    15,078    11,552    12,105 
Other assets   39,828    41,048    42,423    36,936 
Total assets $ 1,198,251  $ 1,079,750  $ 992,731  $ 973,807 
             
Liabilities and shareholders' equity:            
Demand - noninterest-bearing $ 289,735  $ 226,368  $ 156,578  $ 139,792 
Demand - interest-bearing   434,705    374,170    283,105    272,383 
Savings   111,376    104,771    92,659    91,108 
Certificates of deposit   205,648    221,074    238,626    259,445 
Total deposits   1,041,464    926,383    770,968    762,728 
             
Net term debt   18,283    37,286    88,874    77,534 
Junior subordinated debentures   10,310    10,310    10,310    15,239 
Other liabilities   12,293    13,217    16,588    15,934 
Total liabilities   1,082,350    987,196    886,740    871,435 
             
Shareholders' equity   115,901    92,554    105,991    102,372 
Liabilities & shareholders' equity $ 1,198,251  $ 1,079,750  $ 992,731  $ 973,807 


                
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,
  2017 2017 2017 2017 2016
Earning assets:               
Loans $ 839,004  $ 805,144  $ 821,321  $ 806,793  $ 778,458 
Taxable securities   199,849    179,362    143,705    137,582    124,881 
Tax exempt securities   72,152    77,303    73,927    73,524    72,288 
Interest-bearing deposits in other banks   67,032    84,323    58,691    57,140    75,760 
Total earning assets   1,178,037    1,146,132    1,097,644    1,075,039    1,051,387 
                
Cash and due from banks   19,783    19,143    17,364    16,873    16,953 
Premises and equipment, net   14,948    15,362    15,809    16,165    16,331 
Other assets   39,192    40,263    39,630    40,228    41,363 
Total assets $ 1,251,960  $ 1,220,900  $ 1,170,447  $ 1,148,305  $ 1,126,034 
                
Liabilities and shareholders' equity:               
Demand - noninterest-bearing $ 316,961  $ 303,314  $ 275,039  $ 262,881  $ 261,600 
Demand - interest-bearing   459,451    436,614    421,888    420,416    398,749 
Savings   111,725    110,305    109,857    113,647    111,755 
Certificates of deposit   194,886    204,044    208,703    215,202    217,463 
Total deposits   1,083,023    1,054,277    1,015,487    1,012,146    989,567 
                
Term debt   17,211    17,804    19,539    18,598    18,975 
Junior subordinated debentures   10,310    10,310    10,310    10,310    10,310 
Other liabilities   12,554    11,935    12,256    12,431    12,856 
Total liabilities   1,123,098    1,094,326    1,057,592    1,053,485    1,031,708 
                
Shareholders' equity   128,862    126,574    112,855    94,820    94,326 
Liabilities & shareholders' equity $ 1,251,960  $ 1,220,900  $ 1,170,447  $ 1,148,305  $ 1,126,034 
                

About Bank of Commerce Holdings

Bank of Commerce Holdings is a bank holding company headquartered in Sacramento, 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 community 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”.

Contact Information:

Randall S. Eslick, President and Chief Executive Officer

Telephone Direct (916) 677-5800

James A. Sundquist, Executive Vice President and Chief Financial Officer

Telephone Direct (916) 677-5825

Samuel D. Jimenez, Executive Vice President and Chief Operating Officer

Telephone Direct (530) 722-3952

Andrea Schneck, Vice President and Senior Administrative Officer

Telephone Direct (530) 722-3959