Exhibit 99.1

For immediate release:

Bank of Commerce Holdings™ announces Third Quarter 2011 Earnings

REDDING, California, October 28, 2011/ PR Newswire — Patrick J. Moty, President & CEO of Bank of Commerce Holdings (NASDAQ: BOCH), a $928.2 million bank holding company, and parent company of Redding Bank of Commerce™, Roseville Bank of Commerce™

(a division of Redding Bank of Commerce), and Bank of Commerce Mortgage™ today reported net income available to common shareholders of $1.7 million and diluted earnings per share (“EPS”) of $0.10 for the third quarter 2011.

Key Financial Items for the Third Quarter 2011:

 

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Net Income available to common shareholders of $1.7 million reflects a 31% increase over the $1.25 million reported for the quarter ended September 30, 2010, and a 36.8% increase over the $1.3 million recorded for the second quarter 2011.

 

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Diluted EPS of $0.10 compares to $0.08 reported for the same period a year ago and $0.07 for prior quarter ended June 30, 2011.

 

•

Loan loss provisions for the third quarter were $2.2 million compared to $4.4 million for the third quarter 2010 and $2.6 million for the prior quarter ended June 30, 2011.

 

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Nonperforming assets represented 2.30% of total assets in the current period versus 2.49% for the quarter ended June 30, 2011.

 

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Non-maturing core deposits increased $35.5 million or 11% from a year ago September 30, 2010.

 

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Mortgage banking revenue for the three months ended September 30, 2011 increased by 32% compared to the same period a year ago, primarily driven by increased origination and refinancing activities due to lower market rates.

Patrick J. Moty, President and CEO commented: “We are delighted to report a continuing trend of sound financial performance. The Company’s third quarter results reflect a sizeable increase in residential mortgage originations from Bank of Commerce Mortgage, and our continuing efforts in maintaining a solid net interest margin and aggressively managing through problematic assets. ”

 

1

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Table 1 below shows summary financial information for the quarters ended September 30, 2011 and 2010, and June 30, 2011.

Table 1

SUMMARY FINANCIAL INFORMATION

 

(Shares and dollars in thousands)		Quarter ended September 30, 2011				Quarter ended September 30, 2010				Change				Quarter ended June 30, 2011				Change
Selective quarterly performance ratios
Return on average assets, annualized			0.91	%			0.67	%			0.24	%			0.65	%			0.26	%
Return on average equity, annualized			7.45	%			5.95	%			1.50	%			5.53	%			1.92	%
Efficiency ratio for quarter to date			56.32	%			50.93	%			5.39	%			64.68	%			-8.36	%
Share and Per Share figures - Actual
Common shares outstanding at period end			16,991				16,991				—				16,991				—
Weighted average diluted shares			16,991				16,991				—				16,991				—
Income per diluted share		$	0.10			$	0.08			$	0.02			$	0.07			$	0.03
Book value per common share		$	5.30			$	5.05			$	0.25			$	5.23			$	0.07
Tangible book value per common share		$	4.95			$	4.73			$	0.22			$	4.88			$	0.06
Capital Ratios
		September 30, 2011				September 30, 2010				Change				June 30, 2011				Change
Bank of Commerce Holdings
Tier 1 risk based capital ratio			14.80	%			14.58	%			0.22	%			15.75	%			-0.95	%
Total risk based capital ratio			16.05	%			15.84	%			0.21	%			17.00	%			-0.95	%
Leverage ratio			13.82	%			12.59	%			1.23	%			12.87	%			0.95	%
Redding Bank of Commerce
Tier 1 risk based capital ratio			15.20	%			14.28	%			0.92	%			15.76	%			-0.56	%
Total risk based capital ratio			16.45	%			15.54	%			0.91	%			17.02	%			-0.57	%
Leverage ratio			13.05	%			11.52	%			1.53	%			12.16	%			0.89	%

As indicated in Table 1 above, Bank of Commerce Holdings (the “Company”) continues to remain well capitalized. At September 30, 2011, the Company’s Tier 1 and Total risk based capital ratios measured 14.80% and 16.05% respectively, while the leverage ratio was 13.82%.

Return on average assets (ROA) and return on average equity (ROE) for the three months ended September 30, 2011, was 0.91% and 7.45%, respectively compared with 0.67% and 5.95% for the three months ended September 30, 2010. The increase in ROA and ROE for the three months ended September 30, 2011 compared with the same period a year ago, was primarily driven by lower provision expense, and decreased interest expense on deposits and borrowings, offset by decreased yields in the loan portfolio. In addition, the Company experienced disproportional decreases in total average assets, and average earning assets, while continuing to maintain consistent period over period net interest margins. The Company continues to experience decreased yields in the loan portfolio due to the combination of, downward rate adjustments of variable rate loans, pay offs of higher yielding loans, and the transfer of existing loans to nonaccrual status.

 

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Balance Sheet Overview

As of September 30, 2011, the Company had total consolidated assets of $928.2 million, total net portfolio loans of $579.0 million, Allowance for loan losses of $10.6 million, total deposits of $650.6 million, and stockholders’ equity of $112.8 million.

Overall, the net portfolio loan balance decreased modestly for the three months ended September 30, 2011 compared to the same period a year ago. The Company’s net loan portfolio was $579.0 million at September 30, 2011, compared with $595.6 million at September 30, 2010, a decrease of $21.5 million, or 3%. The decrease was primarily driven by net payoffs, and specific charge offs of principal balances.

Table 2

PERIOD END LOANS

 

(Dollars in thousands)		September  30, 2011				% of Total				September  30, 2010				% of Total				Change								June 30, 2011				% of Total
																		Amount				%
Commercial		$	147,495				25	%		$	134,612				22	%		$	12,883				10	%		$	140,610				24	%
Real estate loans
Construction			24,257				4	%			43,942				7	%			(19,685	)			-45	%			26,357				4	%
Commercial (investor)			215,781				37	%			215,117				35	%			664				—	%			218,535				37	%
Commercial (owner occupied)			64,963				11	%			72,093				12	%			(7,130	)			-10	%			68,327				11	%
ITIN loan pool			66,365				11	%			72,299				12	%			(5,934	)			-8	%			67,675				11	%
Other mortgage			19,653				3	%			19,345				3	%			308				2	%			22,116				4	%
Equity lines			45,593				8	%			47,963				8	%			(2,370	)			-5	%			46,850				8	%
Consumer			5,400				1	%			5,691				1	%			(291	)			-5	%			5,271				1	%
Other loans			101				—	%			89				—	%			12				13	%			91				—	%
Gross loans			589,608				100	%			611,151				100	%			(21,543	)			-4	%			595,832				100	%
Less:
Deferred loan fees, net			11								124								(113	)			-91	%			51
Allowance for loan losses			10,590								15,452								(4,862	)			-31	%			13,363
Net portfolio loans		$	579,007							$	595,575							$	(16,568	)			-3	%		$	582,418
Yield on loans			5.67	%							6.05	%											-0.38	%			5.74	%

 

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Table 3

PERIOD END CASH EQUIVALENTS AND INVESTMENT SECURITIES

 

(Dollars in thousands)		September 30, 2011				% of Total				September 30, 2010				% of Total				Change								June 30, 2011				% of Total
																		Amount				%
Cash equivalents:
Cash and due from banks		$	30,961				14	%		$	27,763				12	%		$	3,198				12	%		$	19,091				9	%
Interest bearing due from banks			27,476				12	%			43,188				18	%			(15,712	)			-36	%			29,225				14	%
			58,437				26	%			70,951				30	%			(12,514	)			-18	%			48,316				23	%
Investment Securities:
U.S. Treasury and agency			4,012				2	%			31,269				13	%			(27,257	)			-87	%			21,982				10	%
Obligations of state and political subdivisions			60,417				27	%			65,116				27	%			(4,699	)			-7	%			57,881				27	%
Mortgage backed securities			46,169				21	%			65,733				28	%			(19,564	)			-30	%			39,309				19	%
Corporate securities			35,521				16	%			—				—	%			35,521				100	%			23,432				11	%
Other asset backed securities			19,585				8	%			4,807				2	%			14,778				307	%			19,580				10	%
			165,704				74	%			166,925				70	%			(1,221	)			-1	%			162,184				77	%
Total cash equivalents and investment securities		$	224,141				100	%		$	237,876				100	%		$	(13,735	)			-6	%		$	210,500				100	%
Yield on cash equivalents and investment Securities			2.32	%							2.63	%															2.68	%

The Company continued to maintain a strong liquidity position during the reporting period. As of September 30, 2011 the Company maintained cash positions at the Federal Reserve Bank (FRB) and correspondent banks in the amount of $31.0 million. The Company also held certificates of deposits with other financial institutions in the amount of $27.5 million, which the Company considers highly liquid.

The Company continues to maintain a relatively low-risk, liquid available-for-sale investment portfolio. This resource is utilized as a source of liquidity to fund other higher yielding asset opportunities, such as mortgage loan originations when required. Investment securities totaled $165.7 million at September 30, 2011, compared with $162.2 million at June 30, 2011. The $3.5 million, or 2.17% increase primarily reflected net purchase activity relating to municipal bonds, residential mortgage backed securities, and corporate securities, offset by sales of U.S treasuries and agencies. During the three months ended September 30, 2011, the Company sold securities with the objective of repositioning the portfolio to shorten duration. The Company recognized $532 thousand in gains on sales of securities for the three months ended September 30, 2011.

At September 30, 2011, the Company’s net unrealized gain on available-for-sale securities was $2.0 million, compared with an $809 thousand net unrealized gain at June 30, 2011. The favorable change in net unrealized gains was primarily due to increases in the fair values of the Company’s municipal bond portfolio, primarily driven by decreases in long term interest rates.

 

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Table 4

QUARTERLY AVERAGE DEPOSITS BY CATEGORY

 

		Q3 2011				% of Total				Q3 2010				% of Total				Change								Q2 2011				% of Total
(Dollars in thousands)																		Amount				%
Demand deposits		$	99,087				15	%		$	94,038				15	%		$	5,049				5	%		$	91,608				14	%
Interest bearing demand			167,489				26	%			152,043				23	%			15,446				10	%			147,802				23	%
Total checking deposits			266,576				41	%			246,081				38	%			20,495				8	%			239,410				37	%
Savings			94,287				14	%			79,272				12	%			15,015				19	%			93,111				15	%
Total non-time deposits			360,863				55	%			325,353				50	%			35,510				11	%			332,521				52	%
Time deposits			290,811				45	%			319,492				50	%			(28,681	)			-9	%			306,668				48	%
Total deposits		$	651,674				100	%		$	644,845				100	%		$	6,829				1	%		$	639,189				100	%
Weighted average rate on total deposits			1.13	%							1.41	%															1.25	%

Third quarter 2011 average total deposits of $651.7 million increased 1% or $6.8 million from the third quarter in 2010.

Operating Results for the Third Quarter 2011

Through a proactive and aggressive management of problem credits, and the maintenance of a relatively healthy net interest margin, the Company has remained profitable during the economic downturn. Accordingly, the Company continues to be well positioned to take advantage of growth opportunities in the coming years. Net income attributable to Bank of Commerce Holdings was $2.0 million for the three months ended September 30, 2011, compared with $1.5 million for the three months ended June 30, 2011, and $1.6 million for the three months ended September 30, 2010. Net income available to common stockholders was $1.7 million for the three months ended September 30, 2011, compared with $1.3 million for the three months ended June 30, 2011, and $1.3 million for the three months ended September 30, 2010. During the third quarter of 2011, diluted earnings per share increased $0.03 per share when compared to the second quarter of 2011, and increased $0.02 per share compared to the third quarter of 2010.

The Company continued to pay cash dividends of $0.03 per share during the third quarter, consistent with the three months ended June 30, 2011 and September 30, 2010.

Table 5

SUMMARY INCOME STATEMENT

 

		Q3 2011				Q3 2010				Change								Q2 2011				Change
(Dollars in thousands)										Amount				%								Amount				%
Net interest income		$	8,446			$	8,678			$	(232	)			-3	%		$	8,517			$	(71	)			-1	%
Provision for loan and lease losses			2,211				4,450				(2,239	)			-50	%			2,580				(369	)			-14	%
Noninterest income			5,301				5,648				(347	)			-6	%			3,625				1,676				46	%
Noninterest expense			7,742				7,296				446				6	%			7,854				(112	)			-1	%
Income before income taxes			3,794				2,580				1,214				47	%			1,708				2,086				122	%
Provision for income taxes			1,403				916				487				53	%			216				1,187				550	%
Net income			2,391				1,664				727				44	%			1,492				899				60	%
Less: Net income attributable to noncontrolling interest			348				105				243				231	%			6				342				+100	%
Net income attributable to Bank of Commerce Holdings			2,043				1,559				484				31	%			1,486				557				37	%
Less: preferred dividend and accretion on preferred stock			334				235				99				42	%			235				99				42	%
Income available to common shareholders		$	1,709			$	1,324			$	385				29	%		$	1,251			$	458				37	%
Basic earnings per share		$	0.10			$	0.08			$	0.02				25	%		$	0.07			$	0.03				43	%
Diluted earnings per share		$	0.10			$	0.08			$	0.02				25	%		$	0.07			$	0.03				43	%
Cash dividends declared per share		$	0.03			$	0.03			$	—				—	%		$	0.03			$	—				—	%

Table 6

NET INTEREST SPREAD AND MARGIN

 

		Q3 2011				Q3 2010				Change Amount				Q2 2011				Change Amount
(Dollars in thousands)
Yield on average interest earning assets			4.87	%			5.10	%			-0.23	%			4.83	%			0.04	%
Rate on average interest bearing liabilities			1.18	%			1.45	%			-0.27	%			1.20	%			-0.02	%
Net interest spread			3.69	%			3.65	%			0.04	%			3.63	%			0.06	%
Net interest margin on a tax equivalent basis			4.03	%			4.02	%			0.01	%			3.97	%			0.06	%
Average earning assets		$	859,919			$	884,464			$	(24,545	)		$	881,887			$	(21,968	)
Average interest bearing liabilities		$	686,422			$	716,942			$	(30,520	)		$	711,513			$	(25,091	)

 

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Net interest income for the three months ended September 30, 2011 was $8.4 million, an decrease of $232 thousand or 3% compared to the same period in 2010, and a decrease of $71 thousand or 1% compared with three months ended June 30, 2011. Net interest income for the three months ended September 30, 2011 compared to the same period a year ago, was negatively impacted by lower yields in the loan portfolio, partially offset by lower volume of FHLB advances and certificates of deposits, and lower funding costs relating to the certificate of deposits and floating rate junior subordinated debentures.

The net interest margin (net interest income as a percentage of average interest earning assets) on a fully tax-equivalent basis was 4.03% for the three months ended September 30, 2011, a decrease of 1basis point as compared to the same period in 2010.

Table 7

NONINTEREST INCOME

 

(Dollars in thousands)		Q3 2011				Q3 2010				Change								Q2 2011				Change
										Amount				%								Amount				%
Service charges on deposit accounts		$	50			$	63			$	(13	)			-21	%		$	52			$	(2	)			-4	%
Payroll and benefit processing fees			99				107				(8	)			-7	%			102				(3	)			-3	%
Earnings on cash surrender value – bank owned life insurance			117				112				5				4	%			119				(2	)			-2	%
Net gain on sale of securities available-for-sale			532				179				353				197	%			655				(123	)			-19	%
Gain on settlement of put reserve			—				1,750				(1,750	)			-100	%			—				—				—	%
Merchant credit card service income, net			39				65				(26	)			-40	%			33				6				18	%
Mortgage banking revenue, net			4,346				3,281				1,065				32	%			2,550				1,796				70	%
Other income			118				91				27				30	%			114				4				4	%
Total noninterest income		$	5,301			$	5,648			$	(347	)			-6	%		$	3,625			$	1,676				46	%

For the three months ended September 30, 2011, the Company recorded service charges on deposit accounts of $50 thousand compared to $63 thousand for the same period a year ago. The decrease in service charges was primarily attributable to the discontinuance of the Overdraft Privilege product, and decreased analysis fees charged to customers.

For the three months ended September 30, 2011, Company recorded earnings on cash surrender value Bank owned life insurance of $117 thousand compared to $112 thousand for the same period a year ago. The increased income was primarily attributable to one time accrual adjustments, and the purchase of an additional policy.

For the three months ended September 30, 2011, the Company recorded securities gains of $532 thousand compared to securities gains of $179 thousand for the same period a year ago. The increased gains during the three months ended September 30, 2011 compared to the same period a year ago, resulted from increased sales activity pursuant to repositioning of the available-for-sale investment portfolio to shorten duration.

For the three months ended September 30, 2011, the Company recorded merchant credit card income of $39 thousand compared to $65 thousand for the same period a year ago. During the first quarter of 2011, approximately 50% of the merchant credit card portfolio was sold to an independent third party, resulting in additional revenues of $225 thousand. Accordingly, merchant credit card income for the three months ended September 30, 2011 is down 40% compared to the same period a year ago.

Mortgage banking revenue for the three months ended September 30, 2011 increased by 32% compared to the same period a year ago, primarily driven by increased origination and refinancing activity due to lower market interest rates.

For the three months ended September 30, 2011, the Company recorded other noninterest income of $118 thousand compared to $91 thousand for the same period a year ago. The increase in other noninterest income was primarily related to immaterial reclassification adjustments.

 

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Table 8

NONINTEREST EXPENSE

 

(Dollars in thousands)		Q3 2011				Q3 2010				Change								Q2 2011				Change
										Amount				%								Amount				%
Salaries and related benefits		$	4,994			$	4,162			$	832				20	%		$	4,068			$	926				23	%
Occupancy and equipment expense			742				952				(210	)			-22	%			800				(58	)			-7	%
Write down of other real estate owned			—				129				(129	)			-100	%			370				(370	)			-100	%
FDIC insurance premium			300				250				50				20	%			363				(63	)			-17	%
Data processing fees			92				52				40				77	%			91				1				1	%
Professional service fees			513				216				297				138	%			595				(82	)			-14	%
Deferred compensation expense			136				126				10				8	%			131				5				4	%
Stationery and supplies			63				35				28				80	%			88				(25	)			-28	%
Postage			47				58				(11	)			-19	%			44				3				7	%
Directors expense			67				56				11				20	%			67				—				—	%
Other expenses			788				1,260				(472	)			-37	%			1,237				(449	)			-36	%
Total noninterest expense		$	7,742			$	7,296			$	446				6	%		$	7,854			$	(112	)			-1	%

Noninterest expense includes salaries and benefits, occupancy and equipment, write down of other real estate owned (OREO), FDIC insurance assessments, director fees, and other expenses. Other expenses include overhead items such as utilities, telephone, insurance and licensing fees, and business travel. Noninterest expense for the three months ended September 30, 2011 was $7.7 million compared to $7.3 million during the same period in 2010, and $7.9 million for the second quarter 2011.

Salaries and related benefits for the three months ended September 30, 2011 increased by $832 thousand or 20%, compared to the same period a year ago, and increased by $926 thousand compared to the second quarter of 2011. During the second quarter of 2011, the mortgage subsidiary transitioned existing loan officers from a commission based compensation plan to a salary based compensation plan, which resulted in increased salary expense. Prior to the transition, commission expenses were recorded in net mortgage banking revenues. Furthermore, during late second quarter of 2011, the mortgage subsidiary added several new branches resulting in increased salary expense during the three months ended September 30, 2011.

Occupancy and equipment expense for the three months ended September 30, 2011 decreased by $210 thousand or 22%, compared to the same period a year ago, and decreased by $58 thousand compared to the second quarter of 2011. The decrease in occupancy and equipment expense was primarily driven by decreased rent expense, and decreased equipment repairs expenses.

Write down of the Company’s OREO decreased by $129 thousand compared to the same period a year ago, and decreased $370 thousand when compared to the second quarter of 2011. The OREO charges during the periods presented were primarily associated with a commercial real estate property where management identified impairment and appropriately reduced the property’s carrying value.

FDIC insurance premium expense for the three months ended September 30, 2011 increased by $50 thousand or 20%, compared to the same period a year ago. The increase is primarily due to the FDIC’s revisions in deposit insurance assessments methodology for determining premiums, and prepayment true up adjustments.

Data processing expense for the three months ended September 30, 2011 increased by $40 thousand or 77%, compared to the same period a year ago. The increase is primarily attributable to new software additions and their associated licensing.

Professional service fees encompass audit, legal and consulting fees. The increase in the three months ended September 30, 2011 professional service fee expense compared to the same period a year ago was primarily driven by increased consulting fees related to network infrastructure, and increased legal fees related to mortgage loan officer compensation reform, both of which were recognized by the mortgage subsidiary.

Other expenses for the three months ended September 30, 2011 decreased by $472 thousand or 37.46%, compared to the same period a year ago, and decreased by $449 thousand compared to the three months ended June 30, 2011. The decrease in other expenses is primarily related to decreased loan losses recognized by the mortgage subsidiary, partially offset by increased losses on sale of OREO.

 

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Table 9

ALLOWANCE ROLL FORWARD

 

(Dollars in thousands)		Q3 2011				Q2 2011				Q1 2011				Q4 2010				Q3 2010
Beginning balance		$	13,363			$	13,610			$	12,841			$	15,452			$	12,767
Provision for loan loss charged to expense			2,211				2,580				2,400				4,550				4,450
Loans charged off			(5,355	)			(3,166	)			(1,966	)			(7,324	)			(1,883	)
Loan loss recoveries			371				339				335				163				118
Ending balance		$	10,590			$	13,363			$	13,610			$	12,841			$	15,452
Gross portfolio loans outstanding at period end		$	589,608			$	595,832			$	602,980			$	600,796			$	611,151
Ratio of allowance for loan losses to total loans			1.80	%			2.24	%			2.26	%			2.14	%			2.53	%
Nonaccrual loans at period end:
Commercial		$	228			$	901			$	2,848			$	2,302			$	4,952
Construction			1,650				1,999				224				342				2,512
Commercial real estate			3,034				3,282				3,706				7,066				9,617
Residential real estate			14,010				12,741				11,705				10,704				7,997
Home equity			353				—				96				97				194
Total nonaccrual loans		$	19,275			$	18,923			$	18,579			$	20,511			$	25,272
Accruing troubled debt restructured loans
Commercial		$	—			$	—			$	—			$	—			$	—
Construction			—				108				2,328				2,804				2,327
Commercial real estate			16,811				17,304				3,619				3,621				2,929
Residential real estate			3,279				6,569				5,782				6,243				6,906
Home equity			426				429				396				—				—
Total accruing restructured loans		$	20,516			$	24,410			$	12,125			$	12,668			$	12,162
All other accruing impaired loans			908				539				1,182				737				740
Total impaired loans		$	40,699			$	43,872			$	31,886			$	33,916			$	38,174
Allowance for loan losses to nonaccrual loans at period end			54.94	%			70.62	%			73.25	%			62.61	%			61.14	%
Nonaccrual loans to total loans			3.27	%			3.18	%			3.08	%			3.41	%			4.14	%
Allowance for loan losses to impaired loans			26.02	%			30.46	%			42.68	%			37.86	%			40.48	%

The Company continued to conservatively monitor credit quality during the period, and adjust the ALL accordingly. As such, the Company provided $2.2 million in provisions for loan losses for the three months ended September 30, 2011, compared with $4.5 million for the same period a year ago. The Company’s ALL as a percentage of total portfolio loans were 1.80% and 2.53% as of September 30, 2011, and September 30, 2010, respectively.

Net charge offs were $5.0 million for the three months ended September 30, 2011 compared with net charge offs of $1.8 million for the same period a year ago. The charge offs were centered in commercial real estate, commercial, and construction loans, where ongoing credit quality issues continue to surface. During the three months ended September 30, 2011, the Company recognized a significant charge off of $1.2 million due to a short pay-off settlement relating to a large commercial real estate loan. The continued weaknesses in the commercial loan portfolio are specifically centered on loans where the borrower’s business is tied to real estate. For the foreseeable future, the commercial real estate loan portfolio, and commercial loan portfolio will continue to be influenced by weakness in real estate values, the effects of high unemployment levels, and general overall weakness in economic conditions.

As of September 30, 2011, impaired loans totaled $41.0 million, of which $19.3 million were in nonaccrual status. Of the total impaired loans, $12.6 million or one hundred and forty-four were ITIN loans with an approximate average balance of $87 thousand. The ITIN loan pool represents residential mortgage loans made to legal United States residents without a social security number, and are geographically dispersed throughout the United States. The remaining impaired loans consist of two commercial loans, four construction loans, two commercial real estate loans, eleven non-ITIN residential mortgages, and sixteen home equity loans.

Loans are reported as Troubled Debt Restructurings (TDRs) when the Bank grants a concession(s) to a borrower experiencing financial difficulties that it would not otherwise consider. Examples of such concessions include a reduction in the loan rate, forgiveness of principal or accrued interest, extending the maturity date(s) significantly, or providing a lower interest rate than would be normally available for a transaction of similar risk.

 

8

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TDRs are considered impaired loans, but are not necessarily placed on nonaccrual status at inception of TDR status. Rather, if the borrower is current to original loan terms at the time of the restructuring, and continues to pay as agreed to modified terms, the loan is reported as current. As of September 30, 2011, there were $6.9 million of impaired ITINs which were classified as TDRs with $4.1 million on nonaccrual.

As of September 30, 2011 the Company had $29.7 million in TDR’s compared to $32.4 million as of June 30, 2011. As of September 30, 2011, the Company had one hundred and one restructured loans that qualified as TDRs, of which forty-three loans were performing according to their restructured terms. TDRs represented 5.03% of gross portfolio loans, compared with 5.43% of gross portfolio loans at June 30, 2011.

Table 10

TROUBLED DEBT RESTRUCTURINGS

 

(Dollars in thousands)		September 30, 2011				June 30, 2011				March 31, 2011				December 31, 2010				September 30, 2010
Nonaccrual		$	9,155			$	7,959			$	9,752			$	11,977			$	12,587
Accruing			20,516				24,410				12,125				12,668				12,162
Total troubled debt restructurings		$	29,671			$	32,369			$	21,877			$	24,645			$	24,749
Percentage of total gross portfolio loans			5.03	%			5.43	%			3.63	%			4.10	%			4.05	%

Table 11

NONPERFORMING ASSETS

 

(Dollars in thousands)		September 30, 2011				June 30, 2011				March 31, 2011				December 31, 2010				September 30, 2010
Commercial		$	228			$	901			$	2,849			$	2,302			$	4,952
Real estate construction
Commercial real estate construction			1,543				1,973				99				100				2,251
Residential real estate construction			107				26				125				242				261
Total real estate construction			1,650				1,999				224				342				2,512
Real estate mortgage
1-4 family, closed end 1st lien			4,205				3,002				1,634				1,166				1,204
1-4 family revolving			353				—				96				97				194
ITIN 1-4 family loan pool			9,805				9,739				10,071				9,538				6,751
Home equity loan pool			—				—				—				—				42
Total real estate mortgage			14,363				12,741				11,801				10,801				8,191
Commercial real estate			3,034				3,282				3,706				7,066				9,617
Total nonaccrual loans			19,275				18,923				18,580				20,511				25,272
90 days past due not on nonaccrual			373				953				743				—				682
Total nonperforming loans			19,648				19,876				19,323				20,511				25,954
Other real estate owned			1,665				1,793				3,868				2,288				2,020
Total nonperforming assets		$	21,313			$	21,669			$	23,191			$	22,799			$	27,974
Nonperforming loans to total loans			3.33	%			3.34	%			3.20	%			3.41	%			4.25	%
Nonperforming assets to total assets			2.30	%			2.49	%			2.53	%			2.43	%			3.03	%

 

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Table 12

OTHER REAL ESTATE OWNED ACTIVITY

 

(Dollars in thousands)		Q3 2011				Q2 2011				Q1 2011				Q4 2010				Q3 2010
Beginning balance		$	1,793			$	3,868			$	2,288			$	2,020			$	2,039
Additions to OREO			129				407				2,099				3,680				215
Dispositions of OREO			(257	)			(2,112	)			(332	)			(3,215	)			(105	)
OREO valuation adjustment			—				(370	)			(187	)			(197	)			(129	)
Ending balance		$	1,665			$	1,793			$	3,868			$	2,288			$	2,020

At September 30, 2011 the Company’s recorded investment in OREO was $1.7 million. During the third quarter of 2011, the Company transferred two foreclosed properties aggregating $129 thousand to OREO with no associated charges to the allowance for loan losses for these foreclosed assets. During the third quarter 2011, the Company sold four properties aggregating $257 thousand for a net loss of $72 thousand, and did not record any additional write downs of existing OREO in other noninterest expense. The September 30, 2011 OREO balance consists of seven properties, of which six are secured with 1-4 family residential real estate in the amount of $490 thousand. The remaining property consists of improved commercial land in the amount of $1.2 million.

 

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Table 13

INCOME STATEMENT

 

(Dollars in thousands, except for per share data)		Q3 2011				Q3 2010				Change								Q2 2011				Full Year 2010				Full Year 2009
										$				%
Interest income:
Interest and fees on loans		$	9,013			$	9,710			$	(697	)			-7	%		$	8,958			$	38,034			$	35,860
Interest on tax-exempt securities			470				465				5				1	%			478				1,692				1,164
Interest on U.S. government securities			437				633				(196	)			-31	%			633				2,083				3,450
Interest on other securities			548				472				76				16	%			577				1,616				855
Total interest income			10,468				11,280				(812	)			-7	%			10,646				43,425				41,329
Interest expense:
Interest on demand deposits			191				251				(60	)			-24	%			204				968				1,015
Interest on savings deposits			172				237				(65	)			-27	%			229				921				963
Interest on certificates of deposit			1,204				1,453				(249	)			-17	%			1,272				6,151				7,628
Securities sold under agreements to repurchase			9				13				(4	)			-31	%			13				52				51
Interest on FHLB and other borrowings			135				178				(43	)			-24	%			148				1,630				1,833
Interest on other borrowings			311				470				(159	)			-34	%			263				680				845
Total interest expense			2,022				2,602				(580	)			-22	%			2,129				10,402				12,335
Net interest income			8,446				8,678				(232	)			-3	%			8,517				33,023				28,994
Provision for loan and lease losses			2,211				4,450				(2,239	)			-50	%			2,580				12,850				9,475
Net interest income after provision for loan losses			6,235				4,228				2,007				47	%			5,937				20,173				19,519
Noninterest income:
Service charges on deposit accounts			50				63				(13	)			-21	%			52				260				390
Payroll and benefit processing fees			99				107				(8	)			-7	%			102				448				452
Earnings on cash surrender value – Bank owned life insurance			117				112				5				4	%			119				438				418
Net gain on sale of securities available-for-sale			532				179				353				197	%			655				1,981				2,438
Gain on settlement of put reserve			—				1,750				(1,750	)			—	%			—				1,750				—
Merchant credit card service income, net			39				65				(26	)			-40	%			33				235				—
Mortgage banking revenue, net			4,346				3,281				1,065				32	%			2,550				14,328				5,327
Other income			118				91				27				30	%			114				351				1,038
Total noninterest income			5,301				5,648				(347	)			-6	%			3,625				19,791				10,063
Noninterest expense:
Salaries and related benefits			4,994				4,162				832				20	%			4,068				15,903				10,882
Occupancy and equipment expense			742				952				(210	)			-22	%			800				3,660				3,405
Write down of other real estate owned			—				129				(129	)			-100	%			370				1,571				161
FDIC insurance premium			300				250				50				20	%			363				1,016				1,274
Data processing fees			92				52				40				77	%			91				270				282
Professional service fees			513				216				297				138	%			595				1,726				820
Deferred compensation expense			136				126				10				8	%			131				493				478
Stationery and supplies			63				35				28				80	%			88				258				185
Postage			47				58				(11	)			-19	%			44				198				147
Directors’ expense			67				56				11				20	%			67				266				299
Other expenses			788				1,260				(472	)			-37	%			1,237				4,970				2,691
Total noninterest expense			7,742				7,296				446				6	%			7,854				30,331				20,624
Income before provision for income taxes			3,794				2,580				1,214				47	%			1,708				9,633				8,958
Provision for income taxes			1,403				916				487				53	%			216				3,159				2,690
Net Income			2,391				1,664				727				44	%			1,492				6,474				6,268
Less: Net income (loss) attributable to noncontrolling interest			348				105				243				231	%			6				254				263
Net income attributable to Bank of Commerce Holdings		$	2,043			$	1,559			$	484				31	%		$	1,486			$	6,220			$	6,005
Less: Preferred dividend and accretion on preferred stock			334				235				99				42	%			235				940				942
Income available to common stockholders		$	1,709			$	1,324			$	385				29	%		$	1,251			$	5,280			$	5,063
Basic earnings per share		$	0.10			$	0.08			$	0.02							$	0.07			$	0.35			$	0.58
Weighted average shares – basic			16,991				16,991				—								16,991				14,951				8,711
Diluted earnings per share		$	0.10			$	0.08			$	0.02							$	0.07			$	0.35			$	0.58
Weighted average shares – diluted			16,991				16,991				—								16,991				14,951				8,711
Cash dividends declared		$	0.03			$	0.03			$	—							$	0.03			$	0.18			$	0.24

 

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Table 14

BALANCE SHEET

 

(Dollars in thousands)		September 30, 2011				September 30, 2010				Change								June 30, 2011
										$				%
ASSETS
Cash and due from banks		$	30,961			$	27,763			$	3,198				12	%		$	19,091
Interest bearing deposits in other banks			27,476				43,188				(15,712	)			-36	%			29,225
Cash and cash equivalents			58,437				70,951				(12,514	)			-18	%			48,316
Investment securities			165,704				166,925				(1,221	)			-1	%			162,184
Total portfolio loans			589,597				611,027				(21,430	)			-4	%			595,781
Allowance for loan losses			10,590				15,452				(4,862	)			-31	%			13,363
Loans, net			579,007				595,575				(16,568	)			-3	%			582,418
Mortgage loans held for sale			75,805				41,025				34,780				85	%			26,067
Total interest earning assets			889,543				889,928				(385	)			—	%			832,348
Bank premises and equipment, net			9,664				9,842				(178	)			-2	%			9,691
Goodwill			3,695				3,695				—				—	%			3,695
OREO, net			1,665				2,020				(355	)			-18	%			1,793
Other assets			34,194				34,239				(45	)			—	%			34,358
TOTAL ASSETS		$	928,171			$	924,272			$	3,899				—	%		$	868,522
LIABILITIES AND STOCKHOLDERS’ EQUITY
Demand – noninterest bearing		$	99,431			$	90,613			$	8,818				10	%		$	87,643
Demand – interest bearing			175,745				161,154				14,591				9	%			149,917
Savings accounts			94,519				82,761				11,758				14	%			93,698
Certificates of deposit			280,887				305,503				(24,616	)			-8	%			294,173
Total deposits			650,582				640,031				10,551				2	%			625,431
Securities sold under agreements to repurchase			15,701				11,328				4,373				39	%			15,353
Federal Home Loan Bank borrowings			111,000				141,000				(30,000	)			-21	%			91,000
Mortgage warehouse line of credit			11,290				—				11,290				100	%			4,236
Junior subordinated debentures			15,465				15,465				—				—	%			15,465
Other liabilities			11,377				11,669				(292	)			-3	%			8,843
Total Liabilities		$	815,415			$	819,493			$	(4,078	)			—	%		$	760,328
Total Equity – Bank of Commerce Holdings			109,847				102,460				7,387				7	%			105,633
Noncontrolling interest in subsidiary			2,909				2,319				590				25	%			2,561
Total Stockholders’ Equity			112,756				104,779				7,977				8	%			108,194
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	928,171			$	924,272			$	3,899				—	%		$	868,522

 

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Table 15

AVERAGE BALANCE SHEET (Year to Date)

 

(Dollars in thousands)		September 30, 2011				September 30, 2010				June 30, 2011				December 31, 2010				December 31, 2009
Earning assets:
Loans		$	634,945			$	625,396			$	626,685			$	640,213			$	589,336
Tax exempt securities			50,330				38,452				50,899				42,172				28,384
US government securities			24,661				26,631				29,480				27,423				8,606
Mortgage backed securities			68,422				45,368				73,500				48,972				53,722
Other securities			41,828				11,080				42,256				16,946				3,199
Interest bearing due from banks			67,560				71,984				69,205				62,651				64,454
Fed funds sold			—				995				—				995				13,438
Average earning assets			887,746				819,906				892,025				839,372				761,139
Cash and DFB			2,240				1,758				1,985				1,473				493
Bank premises			9,531				9,875				9,576				9,814				10,322
Other assets			21,122				41,518				21,114				55,440				32,257
Average total assets		$	920,639			$	873,057			$	924,700			$	906,099			$	804,211
Interest bearing liabilities:
Demand – interest bearing		$	154,882			$	133,494			$	148,473			$	146,210			$	145,542
Savings deposits			91,918				74,310				90,714				76,718				62,846
CDs			301,607				329,456				307,094				321,051				317,417
Repurchase agreements			14,723				11,971				14,224				12,274				11,006
Other borrowings			148,418				117,271				156,756				128,242				122,057
			711,548				666,502				717,261				684,495				658,868
Demand – noninterest bearing			96,802				92,204				95,641				94,253				69,250
Other liabilities			4,908				21,621				5,617				31,714				9,467
Shareholders’ equity			107,381				92,730				106,181				95,637				66,626
Average liabilities & equity		$	920,639			$	873,057			$	924,700			$	906,099			$	804,211

 

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BOCH is a NASDAQ National Market listed stock. Please contact your local investment advisor for purchases and sales. Investment firms making a market in BOCH stock are:

Raymond James Financial / Howe Barnes

John T. Cavender

555 Market Street

San Francisco, CA (800) 346-5544

Hill, Thompson, Magid & Co. Inc / R.J. Dragani

15 Exchange Place, Suite 800

Jersey City, New Jersey 07030 (201) 369-2908

Keefe, Bruyette & Woods, Inc. /

Dave Bonaccorso

101 California Street, 37^th Floor

San Francisco, CA 94105 (415) 591-5063

Sandler & O’Neil /Bryan Sullivan

919 Third Avenue, 6^th Floor

New York, NY 10022 (888) 383-3112

McAdams Wright Ragen, Inc. /Joey Warmenhoven

1121 SW Fifth Avenue

Suite 1400

Portland, Oregon 97204 (866) 662-0351

Stifel Nicolaus

Perry Wright

1255 East Street #100

Redding, CA 96001 (530) 244-7199

Contact Information:

Patrick J. Moty, President & CEO 530-722-3953

Linda J. Miles, Executive Vice President & Chief Operating Officer 530-722-3955

Samuel D. Jimenez, Executive Vice President & Chief Financial Officer 530-722-3952

 

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