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"We are very pleased with our Company's performance results this quarter- and we remain cautiously optimistic with a number of encouraging factors pointing towards economic improvement. Mortgage rates have fallen to all time lows, gas and oil prices are down more than 50% from their highest levels, and consumer sentiment is improving. We continue to focus on strengthening our balance sheet; by providing appropriate reserves, strong capital and significant liquidity," said Patrick J. Moty, President and CEO.
2nd Quarter 2009 Highlights
-- Net Income of $1,616,000 up 78% over second quarter 2008
-- Average earning assets up $124.5 million or 20.5% over the prior year
-- Average loans up $57.3 million or 11.1% over the prior year
-- Average core deposits up $80.6 million or 19.6% over the prior year
-- Provision for loan loss of $3.1 million for the quarter
-- Total risk based capital of 12.82% at June 30, 2009
-- Diluted EPS of $0.16 compared to $0.10 over second quarter 2008
Six months 2009 Highlights
-- Net income of $2,886,000 up 35% over prior year
-- Top line revenues up $4.0 million or 19.7%
-- Diluted EPS of $0.28 compared to $0.25 prior year
-- 51% Ownership Simonich Corporation - rebranded Bank of Commerce
Mortgage(TM)
-- Provision for loan losses of $4.5 million
-- Year to date non-performing assets/total assets decreased to 1.20%
compared to 2.88% a year ago
Balance Sheet
Our Company believes that 2009 and beyond may be redefining the financial services industry. During 2009 and 2008, the focus of the Company has been on strengthening the balance sheet, by providing appropriate reserves, strong capital, and significant liquidity. Our strength and security continue to compare favorably with our industry peers.
Our balance sheet increased by $32.9 million or 4.3% over year end 2008, and $160.5 million or 24.8% over the same period a year ago. During the second quarter the Company completed a business combination with Simonich Corporation d.b.a. BWC Mortgage services resulting in a 51% controlling interest in the acquired company. Mortgage loans held for sale represent warehouse lines outstanding at our subsidiary Bank of Commerce Mortgage(TM). Total assets acquired as a result of the business combination were $15.6 million. Additionally, the Company recorded $2.9 million in goodwill.
The loan portfolio, the single largest asset class of the Company grew by $72.0 million over year-end 2008 and $83.2 million over the same period a year ago. Included in the loan growth was the purchase of an Individual Tax Identification ("ITIN") Mortgage loan pool with a fair value of $80.7 million.
The Company's primary funding source, deposits, reflected increases of $11.8 million from year-end 2008 and $98.7 million year-over-year. The deposit growth was centered in time deposits; time deposits increased by $31.2 million or 12% since year-end 2008 and $77.2 million or 35% year-over-year. Management primarily attributes deposit growth to the current economic environment and our customers' concern with alternative investments such as stocks and bonds. Therefore, it is possible that with an economic recovery, our customers could migrate back into these other asset classes.
Asset Quality
The Commercial and Industrial portfolio is performing well given the current market conditions while real estate development properties and construction related lending remains under stress. Our loan portfolio will likely continue to be influenced by weakness in real estate values, the effects of higher energy prices and higher unemployment levels.
Net charge offs were $4.4 million at June 30, 2009 compared to net charge offs of $3.0 million for the same period a year ago.
The charge-offs were in commercial and real estate development loans. One development property was taken into other real estate owned (OREO) during 2008 and one commercial lot loan was added in the second quarter 2009. OREO was $3.2 million at June 30, 2009 and zero for the same period a year ago. The second OREO property of approximately $300,000 was sold and settled on July 22, 2009 with no loss recorded. We are committed to working with our customers to find potential solutions when our customers experience financial difficulties.
Management has taken aggressive actions in provisioning for loan losses, charging down impairments and keeping an attentive eye on expenses. As long as the U.S. economy remains weak, losses in the loan portfolio may increase. Our Company continues to take actions to enable us to navigate through this current economic and credit cycle.
Capital
The capital ratios of Redding Bank of Commerce continue to be above the well-capitalized guidelines established by bank regulatory agencies. Total risk-based capital to risk-weighted assets was 12.82% at June 30, 2009.
Net Interest Margin
Average portfolio loans, the largest component of average earning assets, increased $57.3 million or 11.08% on average compared with same period a year ago. Average securities including federal funds sold increased $68.3 million over the same period a year ago. The yield on earning assets decreased to 5.51% for the six-month period ended June 30, 2009 compared to 6.23% for the same period in the prior year. The decrease is primarily due to multiple interest rate drops on earning assets during the period.
Average interest-bearing deposits for the six-months ended June 30, 2009 increased $80.6 million or 19.6% compared with the same period in the prior year. Average non-interest bearing deposits have increased by $5.4 million or 8.11% over the prior year six-month period.
The overall cost of interest-bearing liabilities for the first six-months of 2009 was 2.00% compared with 3.25% for the first six-months of 2008. The decreased cost was primarily a result of the drop in interest rates during the period coupled with refinancing of FHLB borrowings at lower interest rates.
The net effect of the changes discussed above resulted in an increase of $3.4 million or 32.9% in net interest income for the six-month period ended June 30, 2009 from the same period in 2008. The net interest margin increased 35 basis points to 3.77% from 3.42% over the same period a year ago.
Non Performing Assets and ALLL
The Company continues to be aggressive in identifying non-performing assets. Non-performing assets decreased to 1.20% of total assets as of June 30, 2009 compared to 2.98% at December 31, 2008 and 2.88% at June 30, 2008.
Elevated provisions are associated with an aggressive reclassification of loans and management's aggressive stance in recognizing impaired loans. The Company's allowance for loan losses was 1.43% of total loans at June 30, 2009 and 0.98% at June 30, 2008. Year to date provisions for loan losses at June 30, 2009 were $4,481,000 compared to $1,600,000 for the same period in 2008.
The allowance for loan and lease losses totaled $8.5 million at June 30, 2009 compared to $5.0 million at June 30, 2008.
Liquidity
Our Company continues to maintain a relatively low-risk, liquid and valuable available-for-sale investment portfolio. This resource is utilized as a source of liquidity as opportunities to reposition the balance sheet present themselves. During the six months ended June 30, 2009, the Company has recorded $1.5 million in gains on sales of securities. Proceeds from the sales were used to fund loan growth.
The Company's consolidated liquidity position remains ample to meet short-term and long-term future contingencies. At June 30, 2009, the Company had overnight investments of $78.9 million, available lines of credit at the Federal Home Loan bank of approximately $30.0 million, and two federal funds borrowing line with correspondent banks of $25.0 million.
Bank of Commerce Holdings, with administrative offices in Redding, California is a financial service holding company that owns Redding Bank of Commerce(TM), Roseville Bank of Commerce(TM), and Bank of Commerce Mortgage(TM).
The Company is a federally insured California banking corporation and opened on October 22, 1982.
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:
Howe Barnes Hoefer & Arnett Investment Inc. /
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, 37th Floor
San Francisco, CA 94105 (415) 591-5063
Sandler & O'Neil /Bryan Sullivan
919 Third Avenue, 6th Floor
New York, NY 10022 (888) 383-3112
Raymond James Financial/ Geoff Ball
1805 Hilltop Drive, Suite 106
Redding, CA (800) 926-5040
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 the Company's 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.
-- The health of the economy declines nationally or regionally which could
reduce the demand for loans or reduce the value of real estate
collateral securing most of the Company's loans.
-- Credit quality deteriorates which could cause an increase in the
provision for loan losses.
-- Losses in the Company's merchant credit card processing business.
-- 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 year ended December 31, 2008 and under the heading: "Risk factors that may affect results" and subsequent reports on Form 10-Q and current reports on Form 8-K. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to revise or publicly release the results of any revision to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
Dollars in thousands
ASSETS June 30, Dec. 31, June 30,
2009 2008 2008
-------- -------- --------
Cash and due from banks,
non interest bearing $36,352 $10,216 $16,660
Interest bearing due from banks 27,512 23,500 0
Federal funds sold and securities
purchased under agreements to resell 15,140 51,475 11,585
------- ------- -------
Cash and cash equivalents 79,004 85,191 28,245
Securities available-for-sale at
fair value (including pledged
collateral of $60,678 at
June 30, 2009, $68,735 at
December 31, 2008 and $68,165
at June 30, 2008) 75,480 131,687 66,728
Securities held-to-maturity,
at cost (estimated fair value of
$0 at June 30, 2009, $0 at
December 31, 2008 and $10,285
at June 30, 2008) - - 10,385
Portfolio Loans, net of the allowance
for loan losses of $8,496 at
June 30, 2009, $8,429 at
December 31, 2008 and $5,017 at
June 30, 2008 (includes estimated
fair value of ITIN loans of
$80,671 at June 30, 2009, $0 at
December 31, 2008 and $0 at
June 30, 2008) 587,637 518,946 507,651
Mortgages held for sale, at
fair value, net of deferred income 20,225 - -
Bank premises and equipment, net 10,586 10,672 11,068
Goodwill 2,927 - -
OREO 3,229 2,934 -
Other assets 28,031 24,784 22,531
------- ------- -------
TOTAL ASSETS $807,119 $774,214 $646,608
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Demand - noninterest bearing 69,957 $79,988 $68,625
Demand - interest bearing 142,210 143,871 128,994
Savings accounts 59,432 67,136 52,453
Certificates of deposit 295,508 264,287 218,303
------- ------- -------
Total deposits 567,107 555,282 468,375
Securities sold under agreements
to repurchase 10,843 13,853 14,343
Federal Home Loan Bank and
Federal Reserve Bank borrowings 120,000 120,000 95,000
Mortgage banking liability 20,812 - -
Other liabilities 6,021 7,036 7,396
Junior subordinated debt payable
to unconsolidated
subsidiary grantor trust 15,465 15,465 15,465
------- ------- -------
Total Liabilities 740,248 711,636 600,579
Commitments and contingencies
Stockholders' Equity:
Preferred stock (liquidation
preference of $1,000 per share;
issued 2008) 2,000,000 authorized;
17,000 shares issued and
outstanding in 2009, and
December 31, 2008, none
outstanding at June 30, 2008 16,596 16,551 -
Common stock , no par value,
50,000,000 shares authorized;
8,711,495 shares issued and
outstanding at June 30, 2009,
December 31, 2008 and at
June 30, 2008 9,688 9,650 9,590
Common Stock Warrant 449 449 -
Retained earnings 37,945 36,009 37,344
Accumulated other comprehensive
income (loss), net of tax 30 (81) (905)
------- ------- -------
Total Equity - Bank of Commerce Holdings 64,708 62,578 46,029
Non controlling interest in subsidiary 2,163 - -
Total stockholders' equity 66,871 62,578 46,029
------- ------- -------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $807,119 $774,214 $646,608
======== ======== ========
BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Condensed Consolidated Statements of Income (Unaudited)
Three Months Six Months
Ended Ended
June June June June
Amounts in thousands, except for 30, 30, 30, 30,
per share data 2009 2008 2009 2008
------ ------ ------- -------
Interest income:
Interest and fees on loans $9,272 $8,171 $17,321 $17,302
Interest on tax-exempt
securities 279 302 575 576
Interest on U.S. government
securities 954 533 2,146 1,014
Interest on federal funds
sold and securities purchased
under agreements to resell 5 90 30 148
Interest on other
securities 131 23 248 45
--- -- --- --
Total interest income 10,641 9,119 20,320 19,085
------ ----- ------ ------
Interest expense:
Interest on demand deposits 239 498 546 1,248
Interest on savings
deposits 238 360 519 650
Interest on certificates of
deposit 1,900 2,238 3,781 4,614
Securities sold under
agreements to repurchase 11 35 25 119
Interest on FHLB and other
borrowings 539 781 1,120 1,512
Interest on junior
subordinated debt payable
to unconsolidated subsidiary
grantor trust 216 161 431 476
--- --- --- ---
Total interest expense 3,143 4,073 6,422 8,619
----- ----- ----- -----
Net interest income 7,498 5,046 13,898 10,466
Provision for loan and
lease losses 3,056 1,000 4,481 1,600
----- ----- ----- -----
Net interest income after
provision for loan losses 4,442 4,046 9,417 8,866
----- ----- ----- -----
Noninterest income:
Service charges on deposit
accounts 96 50 188 112
Payroll and benefit
processing fees 104 99 238 228
Earnings on cash surrender
value -
Bank owned life insurance 117 85 203 168
Net gain on sale of
securities
available-for-sale 1,074 194 1,478 436
Net gain on sale of loans 340 - 340 -
Net loss on sale of
derivative swap
transaction - - - (225)
Merchant credit card
service income, net 75 97 149 180
Mortgage brokerage fee
income 1,302 5 1,302 15
Other income 87 187 162 368
-- --- --- ---
Total noninterest income 3,195 717 4,060 1,282
----- --- ----- -----
Noninterest expense:
Salaries and related
benefits 2,644 1,892 4,771 3,841
Occupancy and equipment
expense 730 640 1,302 1,284
FDIC insurance premium 301 113 574 171
Data processing fees 68 65 179 143
Professional service fees 295 133 454 251
Payroll and benefit fees 27 27 61 60
Deferred compensation
expense 123 113 242 224
Stationery and supplies 26 80 79 142
Postage 76 38 157 72
Directors' expense 120 94 157 142
Other expenses 483 418 877 847
--- --- --- ---
Total noninterest expense 4,893 3,613 8,853 7,177
----- ----- ----- -----
Income before provision for
income taxes 2,744 1,150 4,624 2,971
Provision for income taxes 1,027 244 1,637 835
----- --- ----- ---
Net Income 1,717 906 2,987 2,136
Less: Net income
attributable to
non-controlling interest 101 - 101 -
Net Income attributable to
Bank of Commerce Holdings $1,616 $906 $2,886 $2,136
====== ==== ====== ======
Less: preferred dividend
and accretion on preferred
stock 235 - 472 -
Income available to common
shareholders $1,381 $906 $2,414 $2,136
Basic earnings per share $0.16 $0.10 $0.28 $0.25
Weighted average shares -
basic 8,711 8,748 8,711 8,714
Diluted earnings per share $0.16 $0.10 $0.28 $0.24
Weighted average shares -
diluted 8,712 8,751 8,712 8,732
Cash Dividends declared $0.00 $0.08 $0.06 $0.16
Average Balances, Interest Income/Expense and Yields/Rates Paid
(Unaudited, Dollars in thousands)
Six Months Ended Six Months Ended
June 30, 2009 June 30, 2008
------------- -------------
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
Earning
Assets
Portfolio
Loans(1) $574,206 $17,321 6.04% $516,938 $17,302 6.69%
Tax-exempt
Securities(2) 28,245 575 4.07% 30,402 576 3.79%
US Government
Securities 8,624 192 4.45% 14,601 264 3.62%
Mortgage backed
Securities 69,253 1,954 5.64% 30,960 750 4.84%
Federal Funds
Sold 25,771 30 0.23% 17,561 148 1.69%
Other
Securities 31,905 248 1.55% 2,000 45 4.50%
------ --- ----- ----- -- -----
Average
Earning
Assets $738,004 $20,320 5.51% $612,462 $19,085 6.23%
------- -------- -------
Cash & Due
From Banks $19,388 $13,252
Bank Premises 13,480 11,264
Allowance for
Loan Losses (8,638) (5,946)
Other Assets 25,971 17,745
------ ------
Average Total
Assets $788,205 $648,777
======== ========
Interest
Bearing
Liabilities
Demand
Interest
Bearing $137,938 $546 0.79% $132,543 $1,248 1.88%
Savings
Deposits 63,499 519 1.63% 48,987 650 2.65%
Certificates
of Deposit 289,925 3,781 2.61% 229,245 4,614 4.03%
Repurchase
Agreements 11,523 25 0.43% 12,925 119 1.84%
FHLB
Borrowings 124,393 1,120 1.80% 91,869 1,512 3.29%
Trust
Preferred
Borrowings 15,000 431 5.75% 15,000 476 6.35%
------ --- ----- ----- --- -----
642,278 $6,422 2.00% 530,569 $8,619 3.25%
------ ------- ------
Noninterest
bearing
demand 72,009 66,606
Other
Liabilities 8,674 4,391
Stockholders'
Equity 65,244 47,211
------ ------
Average
Liabilities
and
Stockholders'
Equity $788,205 $648,777
======== ========
Net Interest
Income and
Net Interest
Margin $13,898 3.77% $10,466 3.42%
======= =======
(1) Average non-performing loans of $14.2 million are included
(2) The yield on tax-exempt securities has not been adjusted to a
tax-equivalent yield basis.
BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Quarterly Financial Condition Data
(Unaudited)
Dollars in thousands,
except for per share June March December September June
data 30, 31, 31, 30, 30,
2009 2009 2008 2008 2008
------ ------ ------ ------ ------
Interest income:
Interest and fees on loans $9,272 $8,049 $8,028 $8,252 $8,171
Interest on tax-exempt
securities 279 296 313 308 302
Interest on U.S. government
securities 954 1,192 873 582 533
Interest on federal funds sold
and securities repurchased
under agreements to resell 5 25 39 116 90
Interest on other securities 131 117 81 13 23
--- --- -- -- --
Total interest income 10,641 9,679 9,334 9,271 9,119
Interest expense:
Interest on demand deposits 239 307 411 514 498
Interest on savings deposits 238 281 383 543 360
Interest on certificates of
deposit 1,900 1,881 1,975 1,963 2,238
Securities sold under
repurchase agreements 11 14 22 32 35
Interest on FHLB and other
borrowings 539 581 638 662 781
Interest on junior
subordinated debt payable to
unconsolidated subsidiary
grantor trust 216 215 263 317 161
--- --- --- --- ---
Total interest expense 3,143 3,279 3,692 4,031 4,073
Net interest income 7,498 6,400 5,642 5,240 5,046
Provision for loan and lease
losses 3,056 1,425 3,620 1,300 1,000
Net interest income after
provision for loan and lease
losses 4,442 4,975 2,022 3,940 4,046
Noninterest income:
Service charges on deposit
accounts 96 92 108 91 50
Payroll and benefit processing
fees 104 134 118 107 99
Earnings on cash surrender
value - bank owned life
insurance 117 86 86 86 85
Net gain on sale of securities
available-for-sale 1,074 404 33 159 194
Net gain on sale of loans 340 - - - -
Merchant credit card service
income, net 75 74 85 99 97
Mortgage brokerage fee income 1,302 - 4 2 5
Other income 87 75 156 207 187
-- -- --- --- ---
Total noninterest income 3,195 865 590 751 717
Noninterest expense:
Salaries and related benefits 2,644 2,127 2,001 1,909 1,892
Occupancy and equipment
expense 730 572 1,339 613 640
FDIC insurance premium 301 273 99 113 113
Data processing fees 68 111 52 81 65
Professional service fees 295 159 270 146 133
Payroll processing fees 27 34 30 26 27
Deferred compensation expense 123 119 120 118 113
Stationery and supplies 26 53 70 50 80
Postage 76 81 30 32 38
Directors' expense 120 37 71 81 94
Other expenses 483 394 425 443 418
--- --- --- --- ---
Total noninterest expense 4,893 3,960 4,507 3,612 3,613
Income (loss) before provision
for income taxes 2,744 1,882 (1,895) 1,079 1,150
Provision (benefit) for income
taxes 1,027 610 (1,237) 362 244
----- --- ------- --- ---
Net Income 1,717 1,270 $(658) 717 906
Less: Income non-controlling
interest 101 - - - -
=== === === === ===
Net income (loss) $1,616 $1,270 $(658) $717 $906
====== ====== ====== ==== ====
Less preferred dividend and
accretion on preferred stock ($235) ($237) ($0) ($0) ($0)
Income available to common
shareholders $1,381 $1,033 $(658) $717 $906
Basic earnings (loss) per
share $0.16 $0.12 ($0.07) $0.08 $0.10
Weighted average shares -
basic 8,711 8,711 8,755 8,711 8,748
Diluted earnings (loss) per
share $0.16 $0.12 ($0.07) $0.08 $0.10
Weighted average shares -
diluted 8,712 8,711 8,802 8,713 8,751
Cash dividends per share $0.00 $0.06 $0.08 $0.08 $0.08
SOURCE Bank of Commerce Holdings
http://www.bankofcommerceholdings.com
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