EX-99.1 2 ex_125675.htm EXHIBIT 99.1 ex_125675.htm

 

Exhibit 99.1

 

 


For Immediate Release:

Bank of Commerce Holdings Announces Results for the Third Quarter of 2018


SACRAMENTO, California, October 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 nine months ended September 30, 2018. Net income for the quarter ended September 30, 2018 was $4.0 million or $0.25 per share – diluted, compared with net income of $2.9 million or $0.18 per share – diluted for the same period of 2017. Net income for the nine months ended September 30, 2018 was $10.9 million or $0.67 per share – diluted, compared with net income of $7.3 million or $0.49 per share – diluted for the same period of 2017.

 

Financial highlights for the third quarter of 2018:

 

Net income of $4.0 million ($0.25 per share –diluted) was an increase of $1.1 million (40%) from $2.9 million ($0.18 per share – diluted) earned during the same period in the prior year.

Net interest income increased $1.5 million (15%) to $12.1 million compared to $10.6 million for the same period in the prior year.

Return on average assets improved to 1.23% compared to 0.93% for the same period in the prior year.

Return on average equity improved to 12.16% compared to 9.01% for the same period in the prior year.

Average loans totaled $930.9 million, an increase of $125.7 million (16%) compared to average loans for the same period in the prior year.

Average earning assets totaled $1.2 billion, an increase of $83.6 million (7%) compared the same period in the prior year.

Average deposits totaled $1.1 billion, an increase of $55.2 million (5%) compared the same period in the prior year.

 

o

Average non-maturing deposits totaled $946.2 million, an increase of $96.0 million (11%) compared to the same period in the prior year.

 

o

Average certificates of deposit totaled $163.3 million, a decrease of $40.7 million (20%) compared to the same period in the prior year.

The Company’s efficiency ratio was 58.4% compared to 63.1% for the same period in the prior year.

Nonperforming assets at September 30, 2018 totaled $3.9 million or 0.29% of total assets, a decrease of $4.5 million (54%) compared to September 30, 2017.

Book value per common share was $8.14 at September 30, 2018 compared to $7.89 at September 30, 2017.

Tangible book value per common share was $8.03 at September 30, 2018 compared to $7.77 at September 30, 2017.

 

Financial highlights for the nine months ended September 30, 2018:

 

Net income of $10.9 million was an increase of $3.6 million (48%) from $7.3 million earned during the same period in the prior year. Earnings of $0.67 per share – diluted was an increase of $0.18 (37%) from $0.49 per share – diluted earned during the same period in the prior year and reflects the impact of 2,738,096 shares of common stock sold and issued in the second quarter of 2017.

Net interest income increased $4.6 million (15%) to $35.1 million compared to $30.5 million for the same period in the prior year.

Return on average assets improved to 1.14% compared to 0.83% for the same period in the prior year

Return on average equity improved to 11.29% compared to 8.80% for the same period in the prior year.

Average loans totaled $912.6 million, an increase of $101.6 million (13%) compared to average loans for the same period in the prior year.

Average earning assets totaled $1.2 billion, an increase of $100.3 million (9%) compared to average earning assets for the same period in the prior year.

Average deposits totaled $1.1 billion, an increase of $50.1 million (5%) compared to average deposits for the same period in the prior year.

 

o

Average non-maturing deposits totaled $906.5 million, an increase of $88.3 million (11%) compared to average non-maturing deposits for the same period in the prior year.

 

o

Average certificates of deposit totaled $171.9 million, a decrease of $37.3 million (18%) compared to average certificates of deposit for the same period in the prior year.

The Company’s efficiency ratio was 61.5% compared to 67.8% during the same period in the prior year.

Nonperforming assets at September 30, 2018 totaled $3.9 million or 0.29% of total assets, a decrease of $2.0 million (45% annualized) since December 31, 2017.

Book value per common share was $8.14 at September 30, 2018 compared to $7.82 at December 31, 2017.

Tangible book value per common share was $8.03 at September 30, 2018 compared to $7.70 at December 31, 2017.

 

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Randall S. Eslick, President and CEO commented: “We are pleased to report very strong growth in deposits for the quarter. Total deposits increased $90 million, but more importantly core deposits increased $96 million. This growth reflects the benefits of a very vibrant economy for our customers and the results of the continued commitment by our dedicated employees. The added liquidity allowed us to repay short term borrowings advanced earlier in the year, was beneficial to our net interest margin and will support future loan growth.”

 

 

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, 2017 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.

 

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TABLE 1

SELECTED FINANCIAL INFORMATION - UNAUDITED

(amounts in thousands except per share data)

 

   

For The Three Months Ended

   

For The Nine Months Ended

 

Net income, average assets and

 

September 30,

   

June 30,

   

September 30,

 

average shareholders' equity

 

2018

   

2017

   

2018

   

2018

   

2017

 

Net income

  $ 4,032     $ 2,876     $ 3,618     $ 10,891     $ 7,337  

Average total assets

  $ 1,300,278     $ 1,220,900     $ 1,276,697     $ 1,275,369     $ 1,180,150  

Average total earning assets

  $ 1,229,704     $ 1,146,132     $ 1,208,281     $ 1,206,798     $ 1,106,532  

Average shareholders' equity

  $ 131,499     $ 126,574     $ 128,181     $ 128,933     $ 111,533  
                                         

Selected performance ratios

                                       

Return on average assets

    1.23

%

    0.93

%

    1.14

%

    1.14

%

    0.83

%

Return on average equity

    12.16

%

    9.01

%

    11.32

%

    11.29

%

    8.80

%

Efficiency ratio

    58.4

%

    63.1

%

    61.2

%

    61.5

%

    67.8

%

                                         

Share and per share amounts

                                       

Weighted average shares - basic (1)

    16,252       16,191       16,245       16,242       14,884  

Weighted average shares - diluted (2)

    16,342       16,288       16,325       16,327       14,984  

Earnings per share - basic

  $ 0.25     $ 0.18     $ 0.22     $ 0.67     $ 0.49  

Earnings per share - diluted

  $ 0.25     $ 0.18     $ 0.22     $ 0.67     $ 0.49  

 

   

At September 30,

   

At June 30,

                 

Share and per share amounts

 

2018

   

2017

   

2018

                 

Common shares outstanding (2)

    16,330       16,265       16,318                  

Book value per common share (2)

  $ 8.14     $ 7.89     $ 7.97                  

Tangible book value per common share (2)(3)

  $ 8.03     $ 7.77     $ 7.85                  
                                         

Capital ratios (4)

                                       

Bank of Commerce Holdings

                                       

Common equity tier 1 capital ratio

    12.65

%

    12.66

%

    12.15

%

               

Tier 1 capital ratio

    13.59

%

    13.65

%

    13.07

%

               

Total capital ratio

    15.75

%

    15.91

%

    15.20

%

               

Tier 1 leverage ratio

    11.18

%

    11.12

%

    11.11

%

               

Tangible common equity ratio (5)

    9.98

%

    10.27

%

    10.02

%

               
                                         

Redding Bank of Commerce

                                       

Common equity tier 1 capital ratio

    13.14

%

    12.87

%

    12.51

%

               

Tier 1 capital ratio

    13.14

%

    12.87

%

    12.51

%

               

Total capital ratio

    14.36

%

    14.12

%

    13.72

%

               

Tier 1 leverage ratio

    10.78

%

    10.50

%

    10.60

%

               

 

(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) 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.

(4) The Company and the Bank continue to meet all capital adequacy requirements to which they are subject. 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.

(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.

 

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BALANCE SHEET OVERVIEW

 

As of September 30, 2018, the Company had total consolidated assets of $1.3 billion, gross loans of $927.5 million, allowance for loan and lease losses (“ALLL”) of $12.4 million, total deposits of $1.1 billion, and shareholders’ equity of $133.0 million.

 

 

TABLE 2

 

LOAN BALANCES BY TYPE - UNAUDITED

 

(amounts in thousands)

 

 

   

At September 30,

                   

At June 30,

 
           

% of

           

% of

   

Change

           

% of

 
   

2018

   

Total

   

2017

   

Total

   

Amount

   

%

   

2018

   

Total

 

Commercial

  $ 132,091       14

%

  $ 140,433       17

%

  $ (8,342 )     (6

)%

  $ 139,670       15

%

Real estate - construction and land development

    20,496       2       14,700       2       5,796       39

%

    21,292       2  

Real estate - commercial non-owner occupied

    431,246       47       333,766       40       97,480       29

%

    427,088       46  

Real estate - commercial owner occupied

    195,608       21       190,203       23       5,405       3

%

    199,412       21  

Real estate - residential - ITIN

    38,353       4       42,063       5       (3,710 )     (9

)%

    39,424       4  

Real estate - residential - 1-4 family mortgage

    33,473       4       21,119       3       12,354       58

%

    33,391       4  

Real estate - residential - equity lines

    28,713       3       31,158       4       (2,445 )     (8

)%

    28,879       3  

Consumer and other

    47,500       5       51,432       6       (3,932 )     (8

)%

    47,660       5  

Gross loans

    927,480       100

%

    824,874       100

%

    102,606       12

%

    936,816       100

%

Deferred fees and costs

    1,757               1,770               (13 )             1,763          

Loans, net of deferred fees and costs

    929,237               826,644               102,593               938,579          

Allowance for loan and lease losses

    (12,392 )             (11,692 )             (700 )             (12,388 )        

Net loans

  $ 916,845             $ 814,952             $ 101,893             $ 926,191          
                                                                 

Average yield on loans during the quarter

    4.93 %             4.87 %             0.06               4.85 %        

 

 

The Company recorded gross loan balances of $927.5 million at September 30, 2018, compared with $824.9 million and $936.8 million at September 30, 2017 and June 30, 2018, respectively, an increase of $102.6 million and a decrease of $9.3 million, respectively. The increase in gross loans compared to the same period a year ago was organic and did not rely on loan pool purchases.

 

Average loan balances were $930.9 million for the quarter ended September 30, 2018, compared with $805.1 million for the quarter ended September 30, 2017 and $922.7 million for the quarter ended June 30, 2018, an increase of $125.7 million or 16% and an increase of $8.2 million or 4% annualized, respectively.

 

The average yield on loans during the current quarter was 4.93% compared to 4.87% and 4.85% for the quarters ended September 30, 2017 and June 30, 2018, respectively.

 

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TABLE 3

CASH, CASH EQUIVALENTS, AND INVESTMENT SECURITIES - UNAUDITED

(amounts in thousands)

 

   

At September 30,

                   

At June 30,

 
           

% of

           

% of

   

Change

           

% of

 
   

2018

   

Total

   

2017

   

Total

   

Amount

   

%

   

2018

   

Total

 

Cash and due from banks

  $ 21,316       6

%

  $ 19,929       6

%

  $ 1,387       7

%

  $ 23,996       9

%

Interest-bearing deposits in other banks

    69,920       21       65,702       19       4,218       6

%

    15,690       5  

Total cash and cash equivalents

    91,236       27       85,631       25       5,605       7

%

    39,686       14  
                                                                 

Investment securities:

                                                               

U.S. government and agencies

    35,656       11       36,474       10       (818 )     (2

)%

    38,994       14  

Obligations of state and political subdivisions

    51,562       16       53,850       15       (2,288 )     (4

)%

    58,479       20  

Residential mortgage backed securities and collateralized mortgage obligations

    124,109       38       105,224       31       18,885       18

%

    121,218       42  

Corporate securities

    3,974       1       6,968       2       (2,994 )     (43

)%

    3,987       1  

Commercial mortgage backed securities

    24,167       7       26,148       7       (1,981 )     (8

)%

    24,742       9  

Other asset backed securities

    165             3,830       1       (3,665 )     (96

)%

    219        

Total investment securities - AFS

    239,633       73       232,494       66       7,139       3

%

    247,639       86  
                                                                 

Obligations of state and political subdivisions - HTM

                30,724       9       (30,724 )     (100

)%

           

Total investment securities - AFS and HTM

    239,633       73       263,218       75       (23,585 )     (9

)%

    247,639       86  

Total cash, cash equivalents and investment securities

  $ 330,869       100

%

  $ 348,849       100

%

  $ (17,980 )     (5

)%

  $ 287,325       100

%

Average yield on interest-bearing due from banks and investment securities during the quarter - nominal

    2.47 %             2.19 %             0.28               2.56 %        

Average yield on interest-bearing due from banks and investment securities during the quarter - tax equivalent

    2.61 %             2.52 %             0.09               2.72 %        

 

As of September 30, 2018, we maintained noninterest-bearing cash positions of $21.3 million and interest-bearing deposits of $69.9 million at the Federal Reserve Bank and correspondent banks. The increase in cash and cash equivalents compared to the previous quarter reflects organic core deposit growth as a result of improved economic conditions and the seasonal change in deposits which was greater in 2018, than in the prior two years.

 

Investment securities totaled $239.6 million at September 30, 2018, compared with $263.2 million and $247.6 million at September 30, 2017 and June 30, 2018, 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 third quarter of 2018, we purchased five securities with a par value of $9.8 million and weighted average yield of 3.73% and sold nine securities with a par value of $7.2 million and weighted average yield of 2.83%. The sales activity on available-for-sale securities resulted in $1 thousand in net realized gains. During the same period, we received $9.3 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 September 30, 2018 and 2017 were $248.4 million and 2.74% compared to $256.7 million and 2.91%, respectively. The current quarter tax equivalent yields were reduced by 16 basis points as a result of the Tax Cuts and Jobs Act of 2017 which reduced the federal corporate tax rate from a graduated rate of 35% to a flat rate of 21%.

 

At September 30, 2018, our net unrealized losses on available-for-sale investment securities were $5.8 million compared with net unrealized gains of $630 thousand and net unrealized losses of $4.9 million at September 30, 2017 and June 30, 2018, respectively. The changes in the net unrealized loss on the investment securities portfolio are due to changes in market interest rates and the reclassification of all HTM securities to AFS during the fourth quarter of 2017.

 

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TABLE 4

DEPOSITS BY TYPE - UNAUDITED

(amounts in thousands)

 

   

At September 30,

                   

At June 30,

 
           

% of

           

% of

   

Change

           

% of

 
   

2018

   

Total

   

2017

   

Total

   

Amount

   

%

   

2018

   

Total

 

Demand - noninterest-bearing

  $ 361,516       32

%

  $ 316,814       30

%

  $ 44,702       14

%

  $ 316,347       30

%

Demand - interest-bearing

    510,553       45       433,466       41       77,087       18

%

    465,087       44  

Total demand

    872,069       77       750,280       71       121,789       16

%

    781,434       74  
                                                                 

Savings

    111,388       10       111,962       11       (574 )     (1

)%

    106,170       10  

Total non-maturing deposits

    983,457       87       862,242       82       121,215       14

%

    887,604       84  
                                                                 

Certificates of deposit

    161,304       13       200,543       18       (39,239 )     (20

)%

    166,925       16  

Total deposits

  $ 1,144,761       100

%

  $ 1,062,785       100

%

  $ 81,976       8

%

  $ 1,054,529       100

%

 

 

Total deposits at September 30, 2018, increased $82.0 million or 8% to $1.1 billion compared to September 30, 2017, and increased $90.2 million or 34% annualized compared to June 30, 2018. Total non-maturing deposits increased $121.2 million or 14% compared to the same date a year ago and increased $95.9 million or 43% annualized compared to June 30, 2018. Certificates of deposit decreased $39.2 million or 20% compared to the same date a year ago and decreased $5.6 million or 13% annualized compared to June 30, 2018.

 

TABLE 5

WHOLESALE AND RECIPROCAL DEPOSITS - UNAUDITED

(amounts in thousands)

 

   

At September 30,

   

At June 30,

 
   

2018

   

2017

   

2018

 

CDARS / ICS reciprocal deposits

  $ 78,772     $ 56,203     $ 60,538  

Online listing service wholesale time deposits

    24,397       37,293       25,491  

Total wholesale and reciprocal deposits

  $ 103,169     $ 93,496     $ 86,029  

 

For calendar quarters prior to June 30, 2018, CDARS/ ICS reciprocal deposits were considered to be brokered deposits by regulatory authorities and were reported as such on quarterly Call Reports. With passage of The Economic Growth, Regulatory Relief and Consumer Protection Act in May 2018, this is no longer so.

 

 

AVERAGE COST OF FUNDS

 

The following table presents the average cost of interest-bearing deposits, all deposits and all interest-bearing liabilities for the periods indicated.

 

 

TABLE 6

AVERAGE COST OF FUNDS - UNAUDITED

For The Three Months Ended

 

   

September 30,

   

June 30,

   

March 31,

   

December 31,

   

September 30,

   

June 30,

   

March 31,

   

December 31,

 
   

2018

   

2018

   

2018

   

2017

   

2017

   

2017

   

2017

   

2016

 

Interest-bearing deposits

    0.42

%

    0.41

%

    0.41

%

    0.42

%

    0.43

%

    0.42

%

    0.39

%

    0.40

%

Interest-bearing deposits and noninterest-bearing demand

    0.29

%

    0.29

%

    0.29

%

    0.30

%

    0.31

%

    0.31

%

    0.30

%

    0.30

%

All interest-bearing liabilities

    0.64

%

    0.68

%

    0.60

%

    0.59

%

    0.60

%

    0.60

%

    0.56

%

    0.57

%

All interest-bearing liabilities and noninterest-bearing demand

    0.45

%

    0.50

%

    0.43

%

    0.42

%

    0.43

%

    0.44

%

    0.42

%

    0.42

%

 

6

 

 

 

 

INCOME STATEMENT OVERVIEW

 

 

TABLE 7

SUMMARY INCOME STATEMENT - UNAUDITED

(amounts in thousands, except per share data)

For The Three Months Ended

 

   

September 30,

   

Change

   

June 30,

   

Change

 
   

2018

   

2017

   

Amount

   

%

   

2018

   

Amount

   

%

 

Interest income

  $ 13,431     $ 11,765     $ 1,666       14

%

  $ 12,990     $ 441       3

%

Interest expense

    1,304       1,181       123       10

%

    1,410       (106 )     (8

)%

Net interest income

    12,127       10,584       1,543       15

%

    11,580       547       5

%

Provision for loan and lease losses

                     

%

               

%

Noninterest income

    943       1,076       (133 )     (12

)%

    962       (19 )     (2

)%

Noninterest expense

    7,634       7,357       277       4

%

    7,671       (37 )     0

%

Income before provision for income taxes

    5,436       4,303       1,133       26

%

    4,871       565       12

%

Provision for income taxes

    1,404       1,427       (23 )     (2

)%

    1,253       151       12

%

Net income

  $ 4,032     $ 2,876     $ 1,156       40

%

  $ 3,618     $ 414       11

%

                                                         

Basic earnings per share

  $ 0.25     $ 0.18     $ 0.07       39

%

  $ 0.22     $ 0.03       14

%

Average basic shares

    16,252       16,191       61      

%

    16,245       7      

%

Diluted earnings per share

  $ 0.25     $ 0.18     $ 0.07       39

%

  $ 0.22     $ 0.03       14

%

Average diluted shares

    16,342       16,288       54      

%

    16,325       17      

%

Dividends declared per common share

  $ 0.04     $ 0.03     $ 0.01       33

%

  $ 0.04     $      

%

 

 

Third Quarter of 2018 Compared With Third Quarter of 2017

 

Net income for the third quarter of 2018 increased $1.2 million compared to the third quarter of 2017. In the current quarter, net interest income was $1.5 million higher and the provision for income taxes was $23 thousand lower. These positive changes were offset by noninterest income that was $133 thousand lower, and noninterest expenses that were $277 thousand higher.

 

Net Interest Income

 

Net interest income increased $1.5 million compared to the same period a year ago.

 

Interest income for the third quarter of 2018 increased $1.7 million or 14% to $13.4 million:

 

 

Interest and fees on loans increased $1.7 million due to a $125.7 million increase in average loan balances and a six basis point increase in the average yield on the loan portfolio.

 

 

Interest on securities increased $9 thousand due to a 10 basis point increase in average yield on the securities portfolio partially offset by an $8.2 million decrease in average securities balances.

 

 

Interest on interest-bearing deposits due from banks decreased $24 thousand due to a $33.9 million decrease in average interest-bearing deposit balances, partially offset by a 69 basis point increase in average yield.

 

Interest expense for the third quarter of 2018 increased $123 thousand or 10% to $1.3 million:

 

 

Interest expense on interest bearing deposits decreased $1 thousand. Average interest-bearing demand and savings deposit balances increased $55.3 million, while average certificate of deposit balances decreased $40.7 million. The average rate paid on interest-bearing deposits decreased one basis point.

 

 

Interest expense on other interest bearing liabilities increased $124 thousand due to increased borrowing from the Federal Home Loan Bank of San Francisco.

 

7

 

 

 

 

Provision for loan and lease loss

 

As a result of continued improved asset quality and net loan loss recoveries, no provision for loan and lease losses was necessary during the current quarter or during the same quarter a year ago.

 

Noninterest Income

 

Noninterest income for the three months ended September 30, 2018 decreased $133 thousand compared to the third quarter for 2017. The decrease was due to gains on sale of investment securities and OREO properties in the prior year totaling $119 thousand that did not recur in the current year.

 

Noninterest Expense

 

Noninterest expense for the three months ended September 30, 2018 increased $277 thousand compared to the same period a year previous. The net increase was due to a $238 thousand increase in salaries and related benefit costs that increased primarily as a result of additional employees hired in our Sacramento market and decreased deferrals of direct loan origination costs.

 

The Company’s efficiency ratio was 58.4% for the third quarter of 2018 compared to 63.1% during the same period in 2017.

 

Income Tax Provision

 

For the three months ended September 30, 2018, our income tax provision of $1.4 million on pre-tax income of $5.4 million was an effective tax rate of 25.8%. The current quarter effective tax rate reflects the benefits of the Tax Cuts and Jobs Act of 2017 which reduced the federal corporate tax rate from a graduated rate of 35% to a flat rate of 21%. This compares with a provision for income taxes for the third quarter of the prior year of $1.4 million on pre-tax income of $4.3 million which was an effective tax rate of 33.2%.

 

 

Third Quarter of 2018 Compared With Second Quarter of 2018

 

Net income for the third quarter of 2018 increased $414 thousand compared to the second quarter of 2018. In the current quarter, net interest income was $547 thousand higher and noninterest expense was $37 thousand lower. These positive changes were offset by noninterest income that was $19 thousand lower and a provision for income taxes that was $151 thousand higher.

 

Net Interest Income

 

Net interest income increased $547 thousand over the prior quarter.

 

Interest income for the three months ended September 30, 2018 increased $441 thousand or 3% to $13.4 million.

 

Interest and fees on loans increased $404 thousand due to the following:

 

o

Average loan balances increased $8.2 million and average yield on the loan portfolio increased eight basis points.

 

o

The third quarter of 2018 was one day longer than the second quarter of 2018.

Interest on investment securities decreased $82 thousand due to an $8.1 million decrease in average securities balances and a seven basis point decrease in average yield on the investment portfolio.

Interest on interest-bearing deposits due from banks increased $119 thousand due to a $21.4 million increase in average balances and a 14 basis point increase in average yield.

 

Interest expense for the three months ended September 30, 2018 decreased $106 thousand or 8% to $1.3 million.

 

Interest expense on deposits increased $47 thousand as average interest-bearing demand and savings deposits increased $27.5 million, average certificates of deposit decreased $7.5 million and the average rate paid on these deposits increased by one basis point.

Interest expense on borrowings from the Federal Home Loan Bank of San Francisco decreased $146 thousand. Federal Home Loan Bank of San Francisco borrowings averaged $22.3 million compared to an average balance of $55.3 million for the prior quarter.

Interest expense on other term debt decreased $7 thousand.

 

8

 

 

 

 

Provision for loan and lease loss

 

As a result of continued improved asset quality and net loan loss recoveries, no provision for loan and lease losses was necessary during the current or previous quarter.

 

Noninterest Income

 

Noninterest income for the three months ended September 30, 2018 decreased $19 thousand, a variance not concentrated in any one item.

 

Noninterest Expense

 

Noninterest expense for the three months ended September 30, 2018 decreased $37 thousand a variance not concentrated in any one item.

 

The Company’s efficiency ratio was 58.4% for the third quarter of 2018 compared to 61.2% during the prior quarter.

 

Income Tax Provision

 

For the three months ended September 30, 2018, our income tax provision of $1.4 million on pre-tax income of $5.4 million with an effective tax rate of 25.8%. This compares with a provision for income taxes for the prior quarter of $1.3 million on pretax income of $4.9 million which was an effective tax rate of 25.7%.

 

 

Earnings Per Share

 

Diluted earnings per share were $0.25 for the three months ended September 30, 2018 compared with diluted earnings per share of $0.18 for the same period a year ago and diluted earnings per share of $0.22 for the prior period. Net income and weighted average shares used to calculate earnings per share – diluted are summarized in table 7 presented earlier in this press release.

 

9

 

 

 

 

 

TABLE 8a

NET INTEREST MARGIN - UNAUDITED

(amounts in thousands)

 

   

For The Three Months Ended

 
   

September 30, 2018

   

September 30, 2017

   

June 30, 2018

 
   

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)

  $ 930,863     $ 11,568       4.93

%

  $ 805,144     $ 9,887       4.87

%

  $ 922,687     $ 11,164       4.85

%

Taxable securities

    199,883       1,209       2.40

%

    179,362       1,049       2.32

%

    206,247       1,278       2.49

%

Tax-exempt securities

    48,561       400       3.27

%

    77,303       551       2.83

%

    50,306       413       3.29

%

Interest-bearing deposits in other banks

    50,397       254       2.00

%

    84,323       278       1.31

%

    29,041       135       1.86

%

Average interest-earning assets

    1,229,704       13,431       4.33

%

    1,146,132       11,765       4.07

%

    1,208,281       12,990       4.31

%

Cash and due from banks

    21,834                       19,143                       19,880                  

Premises and equipment, net

    13,768                       15,362                       14,167                  

Goodwill and core deposit intangible, net

    1,888                       2,109                       1,943                  

Other assets

    33,084                       38,154                       32,426                  

Average total assets

  $ 1,300,278                     $ 1,220,900                     $ 1,276,697                  
                                                                         

Interest-bearing liabilities:

                                                                       

Interest-bearing demand

  $ 494,906       276       0.22

%

  $ 436,614       196       0.18

%

  $ 467,651       215       0.18

%

Savings deposits

    107,349       73       0.27

%

    110,305       52       0.19

%

    107,108       64       0.24

%

Certificates of deposit

    163,302       465       1.13

%

    204,044       567       1.10

%

    170,824       488       1.15

%

Federal Home Loan Bank of San Francisco borrowings

    22,283       121       2.15

%

               

%

    55,275       267       1.94

%

Other borrowings net of unamortized debt issuance costs

    14,681       265       7.16

%

    17,804       292       6.51

%

    15,614       279       7.17

%

Junior subordinated debentures

    10,310       104       4.00

%

    10,310       74       2.85

%

    10,310       97       3.77

%

Average interest-bearing liabilities

    812,831       1,304       0.64

%

    779,077       1,181       0.60

%

    826,782       1,410       0.68

%

Noninterest-bearing demand

    343,948                       303,314                       309,199                  

Other liabilities

    12,000                       11,935                       12,535                  

Shareholders’ equity

    131,499                       126,574                       128,181                  

Average liabilities and shareholders’ equity

  $ 1,300,278                     $ 1,220,900                     $ 1,276,697                  

Net interest income and net interest margin (4)

          $ 12,127       3.91

%

          $ 10,584       3.66

%

          $ 11,580       3.84

%

Tax equivalent net interest margin (3)

                    3.95

%

                    3.76

%

                    3.88

%

 

(1) Interest income on loans includes deferred fees and costs of approximately $75 thousand, $95 thousand, and $145 thousand for the three months ended September 30, 2018, and 2017 and June 30, 2018, respectively.

(2) Net loans includes average nonaccrual loans of $3.8 million, $8.6 million and $4.2 million for the three months ended September 30, 2018 and 2017 and June 30, 2018, respectively.

(3) Tax-exempt income has been adjusted to tax equivalent basis at a 21% for 2018 and at a 34% tax rate for 2017. The amount of such adjustments was an addition to recorded income of approximately $106 thousand, $284 thousand and $110 thousand for the three months ended September 30, 2018 and 2017 and June 30, 2018, respectively.

(4) Net interest margin is annualized 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.

 

10

 

 

 

 

TABLE 8b

NET INTEREST MARGIN - UNAUDITED

(amounts in thousands)

 

   

For The Nine Months Ended

 
   

September 30, 2018

   

September 30, 2017

 
   

Average

           

Yield /

   

Average

           

Yield /

 

(Amounts in thousands)

 

Balance

   

Interest(1)

   

Rate (5)

   

Balance

   

Interest(1)

   

Rate (5)

 

Interest-earning assets:

                                               

Net loans (2)

  $ 912,648     $ 33,461       4.90

%

  $ 811,080     $ 29,029       4.79

%

Taxable securities

    203,791       3,696       2.42

%

    153,702       2,710       2.36

%

Tax-exempt securities

    52,844       1,276       3.23

%

    74,932       1,615       2.88

%

Interest-bearing deposits in other banks

    37,515       518       1.85

%

    66,818       548       1.10

%

Average interest-earning assets

    1,206,798       38,951       4.32

%

    1,106,532       33,902       4.10

%

Cash and due from banks

    19,801                       17,802                  

Premises and equipment, net

    14,161                       15,776                  

Goodwill and core deposit intangible, net

    1,943                       2,164                  

Other assets

    32,666                       37,876                  

Average total assets

  $ 1,275,369                     $ 1,180,150                  
                                                 

Interest-bearing liabilities:

                                               

Interest-bearing demand

  $ 477,755       712       0.20

%

  $ 426,365       528       0.17

%

Savings deposits

    108,382       196       0.24

%

    111,258       146       0.18

%

Certificates of deposit

    171,941       1,448       1.13

%

    209,275       1,641       1.05

%

Federal Home Loan Bank of San Francisco borrowings

    30,037       435       1.94

%

    403       3       1.00

%

Other borrowings net of unamortized debt issuance costs

    15,601       825       7.07

%

    18,241       880       6.45

%

Junior subordinated debentures

    10,310       283       3.67

%

    10,310       211       2.74

%

Average interest-bearing liabilities

    814,026       3,899       0.64

%

    775,852       3,409       0.59

%

Noninterest-bearing demand

    320,316                       280,559                  

Other liabilities

    12,094                       12,206                  

Shareholders’ equity

    128,933                       111,533                  

Average liabilities and shareholders’ equity

  $ 1,275,369                     $ 1,180,150                  

Net interest income and net interest margin (4)

          $ 35,052       3.88

%

          $ 30,493       3.68

%

Tax equivalent net interest margin (3)

                    3.92

%

                    3.78

%

 

(1) Interest income on loans includes deferred fees and costs of approximately $356 thousand and $423 thousand for the nine months ended September 30, 2018 and 2017, respectively.

(2) Net loans includes average nonaccrual loans of $4.3 million and $9.7 million for the nine months ended September 30, 2018 and 2017, respectively.

(3) Tax-exempt income has been adjusted to tax equivalent basis at a 21% tax rate for 2018 and at a 34% tax rate for 2017. The amount of such adjustments was an addition to recorded income of approximately $339 thousand and $832 thousand for the nine months ended September 30, 2018 and 2017, respectively.

(4) Net interest margin is annualized 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.

 

11

 

 

 

 

 

TABLE 9

ALLOWANCE FOR LOAN AND LEASE LOSSES ROLL FORWARD AND IMPAIRED LOAN TOTALS - UNAUDITED

(amounts in thousands)

 

   

For The Three Months Ended

 
   

September 30,

   

June 30,

   

March 31,

   

December 31,

   

September 30,

 
   

2018

   

2018

   

2018

   

2017

   

2017

 

Beginning balance ALLL

  $ 12,388     $ 12,295     $ 11,925     $ 11,692     $ 11,688  

Provision for loan and lease losses

                      450        

Loans charged-off

    (198 )     (382 )     (390 )     (451 )     (245 )

Loan loss recoveries

    202       475       760       234       249  

Ending balance ALLL

  $ 12,392     $ 12,388     $ 12,295     $ 11,925     $ 11,692  

 

   

At September 30,

   

At June 30,

   

At March 31,

   

At December 31,

   

At September 30,

 
   

2018

   

2018

   

2018

   

2017

   

2017

 

Nonaccrual loans:

                                       

Commercial

  $ 899     $ 1,358     $ 1,109     $ 1,603     $ 2,309  

Real estate - commercial owner occupied

                      600       617  

Real estate - residential - ITIN

    2,571       2,613       2,839       2,909       3,201  

Real estate - residential - 1-4 family mortgage

    179       184       188       606       626  

Real estate - residential - equity lines

    44       44       45       45       815  

Consumer and other

    24       33       35       36       37  

Total nonaccrual loans

    3,717       4,232       4,216       5,799       7,605  

Accruing troubled debt restructured loans:

                                       

Commercial

    1,291       1,420       1,516       1,551       671  

Real estate - commercial non-owner occupied

    797       799       800       803       805  

Real estate - residential - ITIN

    4,535       4,592       4,554       4,614       4,655  

Real estate - residential - equity lines

    367       372       376       380       441  

Total accruing troubled debt restructured loans

    6,990       7,183       7,246       7,348       6,572  
                                         

All other accruing impaired loans

                             
                                         

Total impaired loans

  $ 10,707     $ 11,415     $ 11,462     $ 13,147     $ 14,177  
                                         

Gross loans outstanding at period end

  $ 927,480     $ 936,816     $ 900,420     $ 879,835     $ 824,874  
                                         

Impaired loans to gross loans

    1.15

%

    1.22

%

    1.27

%

    1.49

%

    1.72

%

Nonaccrual loans to gross loans

    0.40

%

    0.45

%

    0.47

%

    0.66

%

    0.92

%

                                         

Allowance for loan and lease losses as a percent of:

                         

Gross loans

    1.34

%

    1.32

%

    1.37

%

    1.36

%

    1.42

%

Nonaccrual loans

    333.39

%

    292.72

%

    291.63

%

    205.64

%

    153.74

%

Impaired loans

    115.74

%

    108.52

%

    107.27

%

    90.71

%

    82.47

%

 

 

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. As a result of continued improved asset quality and net loan loss recoveries, no provision for loan and lease losses was necessary during the current quarter, prior quarter or the same quarter a year previous. Our ALLL as a percentage of gross loans was 1.34% as of September 30, 2018 compared to 1.42% as of September 30, 2017 and 1.32% as of June 30, 2018. 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 September 30, 2018. 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.

 

12

 

 

 

 

At September 30, 2018, the recorded investment in loans classified as impaired totaled $10.7 million, with a corresponding specific reserve of $1.1 million compared to impaired loans of $14.2 million with a corresponding specific reserve of $918 thousand at September 30, 2017 and impaired loans of $11.4 million, with a corresponding specific reserve of $1.2 million at June 30, 2018.

 

TABLE 10

 

TROUBLED DEBT RESTRUCTURINGS - UNAUDITED

 

(amounts in thousands)

 

 

   
   

At September 30,

   

At June 30,

   

At March 31,

   

At December 31,

   

At September 30,

 
   

2018

   

2018

   

2018

   

2017

   

2017

 

Nonaccrual

  $ 2,720     $ 3,218     $ 3,237     $ 3,581     $ 4,403  

Accruing

    6,990       7,183       7,246       7,348       6,572  

Total troubled debt restructurings

  $ 9,710     $ 10,401     $ 10,483     $ 10,929     $ 10,975  
                                         

Troubled debt restructurings as a percentage of total gross loans

    1.05

%

    1.11

%

    1.16

%

    1.24

%

    1.33

%

 

 

There were no new troubled debt restructurings during the three months ended September 30, 2018. As of September 30, 2018, we had 107 restructured loans that qualified as troubled debt restructurings, of which all were performing according to their restructured terms.

 

 

 

 

TABLE 11

NONPERFORMING ASSETS - UNAUDITED

(amounts in thousands)

 

   

At September 30,

   

At June 30,

   

At March 31,

   

At December 31,

   

At September 30,

 
   

2018

   

2018

   

2018

   

2017

   

2017

 

Total nonaccrual loans

  $ 3,717     $ 4,232     $ 4,216     $ 5,799     $ 7,605  

90 days past due and still accruing

                             

Total nonperforming loans

    3,717       4,232       4,216       5,799       7,605  
                                         

Other real estate owned ("OREO")

    136       140       60       35       699  

Total nonperforming assets

  $ 3,853     $ 4,372     $ 4,276     $ 5,834     $ 8,304  
                                         

Nonperforming loans to gross loans

    0.40

%

    0.45

%

    0.47

%

    0.66

%

    0.92

%

Nonperforming assets to total assets

    0.29

%

    0.34

%

    0.34

%

    0.46

%

    0.67

%

 

13

 

 

 

 

 

TABLE 12

UNAUDITED CONSOLIDATED

BALANCE SHEET

(amounts in thousands, except per share data)

 

 

    At September 30,     Change     At June 30,  
    2018     2017     $     %     2018  
                                         

Assets:

                                       

Cash and due from banks

  $ 21,316     $ 19,929     $ 1,387       7

%

  $ 23,996  

Interest-bearing deposits in other banks

    69,920       65,702       4,218       6

%

    15,690  

Total cash and cash equivalents

    91,236       85,631       5,605       7

%

    39,686  
                                         

Securities available-for-sale, at fair value

    239,633       232,494       7,139       3

%

    247,639  

Securities held-to-maturity, at amortized cost

          30,724       (30,724 )     (100

)%

     

Loans, net of deferred fees and costs

    929,237       826,644       102,593       12

%

    938,579  

Allowance for loan and lease losses

    (12,392 )     (11,692 )     (700 )     6

%

    (12,388 )

Net loans

    916,845       814,952       101,893       13

%

    926,191  
                                         

Premises and equipment, net

    13,495       15,039       (1,544 )     (10

)%

    13,908  

Other real estate owned

    136       699       (563 )     (81

)%

    140  

Life insurance

    22,282       21,764       518       2

%

    22,155  

Deferred tax asset, net

    8,084       8,751       (667 )     (8

)%

    7,815  

Goodwill and core deposit intangible, net

    1,864       2,086       (222 )     (11

)%

    1,920  

Other assets

    21,894       19,741       2,153       11

%

    22,050  

Total assets

  $ 1,315,469     $ 1,231,881     $ 83,588       7

%

  $ 1,281,504  
                                         

Liabilities and shareholders' equity:

                                       

Demand - noninterest-bearing

  $ 361,516     $ 316,814     $ 44,702       14

%

  $ 316,347  

Demand - interest-bearing

    510,553       433,466       77,087       18

%

    465,087  

Savings

    111,388       111,962       (574 )     (1

)%

    106,170  

Certificates of deposit

    161,304       200,543       (39,239 )     (20

)%

    166,925  

Total deposits

    1,144,761       1,062,785       81,976       8

%

    1,054,529  
                                         

Term debt:

                                       

Federal Home Loan Bank of San Francisco borrowings

                     

%

    60,000  

Other borrowings

    14,396       17,700       (3,304 )     (19

)%

    15,296  

Unamortized debt issuance costs

    (103 )     (150 )     47       (31

)%

    (115 )

Net term debt

    14,293       17,550       (3,257 )     (19

)%

    75,181  
                                         

Junior subordinated debentures

    10,310       10,310            

%

    10,310  

Other liabilities

    13,136       12,831       305       2

%

    11,406  

Total liabilities

    1,182,500       1,103,476       79,024       7

%

    1,151,426  
                                         

Shareholders' equity:

                                       

Common stock

    52,191       51,755       436       1

%

    52,043  

Retained earnings

    84,857       76,179       8,678       11

%

    81,475  

Accumulated other comprehensive (loss) income, net of tax

    (4,079 )     471       (4,550 )     (966

)%

    (3,440 )

Total shareholders' equity

    132,969       128,405       4,564       4

%

    130,078  
                                         

Total liabilities and shareholders' equity

  $ 1,315,469     $ 1,231,881     $ 83,588       7

%

  $ 1,281,504  
                                         

Total interest-earning assets

  $ 1,244,581     $ 1,154,934     $ 89,647       8

%

  $ 1,206,791  

Shares outstanding

    16,330       16,265       65      

%

    16,318  

Book value per share

  $ 8.14     $ 7.89     $ 0.25       3

%

  $ 7.97  

Tangible book value per share (1)

  $ 8.03     $ 7.77     $ 0.26       3

%

  $ 7.85  

 

(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.

 

14

 

 

 

 

 

TABLE 13

UNAUDITED

INCOME STATEMENT

(amounts in thousands, except per share data)

 

   

For The Three Months Ended

   

For The Nine Months Ended

 
   

September 30,

   

Change

   

June 30,

   

September 30,

 
   

2018

   

2017

   

$

   

%

   

2018

   

2018

   

2017

 

Interest income:

                                                       

Interest and fees on loans

  $ 11,568     $ 9,887     $ 1,681       17

%

  $ 11,164     $ 33,461     $ 29,029  

Interest on taxable securities

    1,209       1,049       160       15

%

    1,278       3,696       2,710  

Interest on tax-exempt securities

    400       551       (151 )     (27

)%

    413       1,276       1,615  

Interest on interest-bearing deposits in other banks

    254       278       (24 )     (9

)%

    135       518       548  

Total interest income

    13,431       11,765       1,666       14

%

    12,990       38,951       33,902  

Interest expense:

                                                       

Interest on demand deposits

    276       196       80       41

%

    215       712       528  

Interest on savings deposits

    73       52       21       40

%

    64       196       146  

Interest on certificates of deposit

    465       567       (102 )     (18

)%

    488       1,448       1,641  

Interest on Federal Home Loan Bank of San Francisco borrowings

    121             121       100

%

    267       435       3  

Interest on other borrowings

    265       292       (27 )     (9

)%

    279       825       880  

Interest on junior subordinated debentures

    104       74       30       41

%

    97       283       211  

Total interest expense

    1,304       1,181       123       10

%

    1,410       3,899       3,409  

Net interest income

    12,127       10,584       1,543       15

%

    11,580       35,052       30,493  

Provision for loan and lease losses

                     

%

                500  

Net interest income after provision for loan and lease losses

    12,127       10,584       1,543       15

%

    11,580       35,052       29,993  

Noninterest income:

                                                       

Service charges on deposit accounts

    170       132       38       29

%

    175       521       401  

ATM and point of sale fees

    282       273       9       3

%

    300       848       827  

Fees on payroll and benefit processing

    159       147       12       8

%

    146       474       485  

Life insurance

    128       134       (6 )     (4

)%

    127       384       915  

Gain (loss) on investment securities, net

    1       38       (37 )     (97

)%

    4       41       139  

Federal Home Loan Bank of San Francisco dividends

    104       80       24       30

%

    95       279       237  

Gain (loss) on sale of OREO

    (7 )     81       (88 )     (109

)%

          9       22  

Insured cash sweep fees

          87       (87 )     (100

)%

                192  

Other income

    106       104       2       2

%

    115       331       324  

Total noninterest income

    943       1,076       (133 )     (12

)%

    962       2,887       3,542  

 

15

 

 

 

 

 

TABLE 13 - CONTINUED

UNAUDITED

INCOME STATEMENT

(amounts in thousands, except per share data)

 

   

For The Three Months Ended

   

For The Nine Months Ended

 
   

September 30,

   

Change

   

June 30,

   

September 30,

 
   

2018

   

2017

   

$

   

%

   

2018

   

2018

   

2017

 

Noninterest expense:

                                                       

Salaries and related benefits

    4,529       4,291       238       6

%

    4,513       13,897       13,296  

Premises and equipment

    1,017       1,067       (50 )     (5

)%

    1,016       3,104       3,169  

Federal Deposit Insurance Corporation insurance premium

    94       78       16       21

%

    93       283       230  

Data processing fees

    518       437       81       19

%

    471       1,421       1,294  

Professional service fees

    336       276       60       22

%

    314       995       1,119  

Telecommunications

    55       219       (164 )     (75

)%

    178       449       653  

Other expenses

    1,085       989       96       10

%

    1,086       3,189       3,312  

Total noninterest expense

    7,634       7,357       277       4

%

    7,671       23,338       23,073  

Income before provision for income taxes

    5,436       4,303       1,133       26

%

    4,871       14,601       10,462  

Provision for income taxes

    1,404       1,427       (23 )     (2

)%

    1,253       3,710       3,125  

Net income

  $ 4,032     $ 2,876     $ 1,156       40

%

  $ 3,618     $ 10,891     $ 7,337  
                                                         

Basic earnings per share

  $ 0.25     $ 0.18     $ 0.07       39

%

  $ 0.22     $ 0.67     $ 0.49  

Average basic shares

    16,252       16,191       61      

%

    16,245       16,242       14,884  

Diluted earnings per share

  $ 0.25     $ 0.18     $ 0.07       39

%

  $ 0.22     $ 0.67     $ 0.49  

Average diluted shares

    16,342       16,288       54      

%

    16,325       16,327       14,984  

 

16

 

 

 

 

 

 

TABLE 14

UNAUDITED CONDENSED CONSOLIDATED

YEAR TO DATE AVERAGE BALANCE SHEETS

(amounts in thousands)

 

   

For the Nine Months Ended

   

For the Twelve Months Ended

 
   

September 30,

   

September 30,

   

December 31,

   

December 31,

   

December 31,

 
   

2018

   

2017

   

2017

   

2016

   

2015

 

Earning assets:

                                       

Loans

  $ 912,648     $ 811,080     $ 818,119     $ 752,938     $ 699,227  

Taxable securities

    203,791       153,702       165,333       120,884       120,897  

Tax exempt securities

    52,844       74,932       74,231       75,303       77,089  

Interest-bearing deposits in other banks

    37,515       66,818       66,872       58,668       30,323  

Total earning assets

    1,206,798       1,106,532       1,124,555       1,007,793       927,536  
                                         

Cash and due from banks

    19,801       17,802       18,301       15,831       11,220  

Premises and equipment, net

    14,161       15,776       15,567       15,078       11,552  

Goodwill and core deposit intangible, net

    1,943       2,164       2,136       1,888        

Other assets

    32,666       37,876       37,692       39,160       42,423  

Total assets

  $ 1,275,369     $ 1,180,150     $ 1,198,251     $ 1,079,750     $ 992,731  
                                         

Liabilities and shareholders' equity:

                                       

Demand - noninterest-bearing

  $ 320,316     $ 280,559     $ 289,735     $ 226,368     $ 156,578  

Demand - interest-bearing

    477,755       426,365       434,705       374,170       283,105  

Savings

    108,382       111,258       111,376       104,771       92,659  

Certificates of deposit

    171,941       209,275       205,648       221,074       238,626  

Total deposits

    1,078,394       1,027,457       1,041,464       926,383       770,968  
                                         

Federal Home Loan Bank of San Francisco borrowings

    30,037       403       302       17,856       87,548  

Other borrowings net of unamortized debt issuance costs

    15,601       18,241       17,981       19,430       1,326  

Junior subordinated debentures

    10,310       10,310       10,310       10,310       10,310  

Other liabilities

    12,094       12,206       12,293       13,217       16,588  

Total liabilities

    1,146,436       1,068,617       1,082,350       987,196       886,740  
                                         

Shareholders' equity

    128,933       111,533       115,901       92,554       105,991  

Liabilities & shareholders' equity

  $ 1,275,369     $ 1,180,150     $ 1,198,251     $ 1,079,750     $ 992,731  

 

17

 

 

 

 

 

TABLE 15

UNAUDITED CONDENSED CONSOLIDATED

QUARTERLY AVERAGE BALANCE SHEETS

(amounts in thousands)

 

   

For The Three Months Ended

 
   

September 30,

   

June 30,

   

March 31,

   

December 31,

   

September 30,

 
   

2018

   

2018

   

2018

   

2017

   

2017

 

Earning assets:

                                       

Loans

  $ 930,863     $ 922,687     $ 883,876     $ 839,004     $ 805,144  

Taxable securities

    199,883       206,247       205,302       199,849       179,362  

Tax exempt securities

    48,561       50,306       59,789       72,152       77,303  

Interest-bearing deposits in other banks

    50,397       29,041       32,915       67,032       84,323  

Total earning assets

    1,229,704       1,208,281       1,181,882       1,178,037       1,146,132  
                                         

Cash and due from banks

    21,834       19,880       17,641       19,783       19,143  

Premises and equipment, net

    13,768       14,167       14,557       14,948       15,362  

Goodwill and core deposit intangible, net

    1,888       1,943       1,998       2,054       2,109  

Other assets

    33,084       32,426       32,485       37,138       38,154  

Total assets

  $ 1,300,278     $ 1,276,697     $ 1,248,563     $ 1,251,960     $ 1,220,900  
                                         

Liabilities and shareholders' equity:

                                       

Demand - noninterest-bearing

  $ 343,948     $ 309,199     $ 307,397     $ 316,961     $ 303,314  

Demand - interest-bearing

    494,906       467,651       470,440       459,451       436,614  

Savings

    107,349       107,108       110,725       111,725       110,305  

Certificates of deposit

    163,302       170,824       181,901       194,886       204,044  

Total deposits

    1,109,505       1,054,782       1,070,463       1,083,023       1,054,277  
                                         

Federal Home Loan Bank of San Francisco borrowings

    22,283       55,275       12,444              

Other borrowings net of unamortized debt issuance costs

    14,681       15,614       16,528       17,211       17,804  

Junior subordinated debentures

    10,310       10,310       10,310       10,310       10,310  

Other liabilities

    12,000       12,535       11,749       12,554       11,935  

Total liabilities

    1,168,779       1,148,516       1,121,494       1,123,098       1,094,326  
                                         

Shareholders' equity

    131,499       128,181       127,069       128,862       126,574  

Liabilities & shareholders' equity

  $ 1,300,278     $ 1,276,697     $ 1,248,563     $ 1,251,960     $ 1,220,900  

 

18

 

 

 

 

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 was incorporated as a California banking corporation on November 25, 1981 and opened for business 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 / Corporate Secretary

 

Telephone Direct (530) 722-3959

 

 

19