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

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

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.

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.

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.

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.

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	%

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.

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

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.

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.

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.

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		%

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.

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	%

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.

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

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

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

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

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