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"Our third consecutive quarter of strong earnings illustrates our Company's ability to profitably grow, even through the current downward economic cycle and despite elevated provisioning for credit losses," said Patrick J. Moty, President and CEO. "We have significantly built capital and continue to strengthen our balance sheet. Operationally and financially the company's performance is exceeding our projections."
3rd Quarter 2009 Highlights
-- Net Income of $1,713,000 up 139% over third quarter 2008
-- Diluted EPS of $0.17 compared to $0.08 over third quarter 2008 up 113%
-- Average earning assets up $132.2 million or 21.6% over the prior year
-- Average loans up $70.5 million or 13.6% over the prior year
-- Average core deposits up $97.2 million or 20.1% over the prior year
-- Strong provision for loan loss of $1.8 million for the quarter
-- Total risk based capital of 12.83% at September 30, 2009
Nine months 2009 Highlights
-- Net income of $4,599,000 up 61% over prior year
-- Top line revenues up $7.5 million or 24.7%
-- Diluted EPS of $0.45 compared to $0.33 prior year up 36% over the prior
year
-- Strong provision for loan losses of $6.3 million
-- Year to date non-performing assets/total assets decreased to 2.04%
compared to 2.98% at December 31, 2008.
Balance Sheet
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 $40.0 million or 5.2% over year end 2008, and $163 million or 25.1% 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 $88.0 million over the same period a year ago.
The Company's primary funding source, deposits, reflected increases of $44.6 million from year-end 2008 and $96.8 million year-over-year. The deposit growth was centered in time deposits; time deposits increased by $48.7 million or 18% since year-end 2008 and $97.8 million or 46% 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 loan 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 $5.9 million at September 30, 2009 compared to net charge offs of $5.0 million for the same period a year ago.
The charge-offs were centered 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 $2.9 million at September 30, 2009 and $4.9 million 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 12.83% at September 30, 2009.
Net Interest Margin
Average portfolio loans, the largest component of average earning assets, increased $70.5 million or 13.6% on average compared with same period a year ago. Average securities including federal funds sold increased $61.6 million over the same period a year ago. The yield on earning assets decreased to 5.53% for the nine-month period ended September 30, 2009 compared to 6.17% 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 nine-months ended September 30, 2009 increased $91.8 million or 21.4% compared with the same period in the prior year. Average non-interest bearing deposits have increased by $2.8 million or 4.1% over the prior year nine-month period. The overall cost of interest-bearing liabilities for the first nine-months of 2009 was 1.94% compared with 3.21% for the first nine-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 $5.6 million or 35.6% in net interest income for the nine-month period ended September 30, 2009 from the same period in 2008. The net interest margin increased 39 basis points to 3.81% 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 2.04% of total assets as of June 30, 2009 compared to 2.98% at December 31, 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 1.48% of total loans at September 30, 2009 and 1.20% at September 30, 2008. Year to date provisions for loan losses at September 30, 2009 were $6,325,000 compared to $2,900,000 for the same period in 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 nine months ended September 30, 2009, the Company has recorded $2.0 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 September 30, 2009, the Company had overnight investments of $76.6 million, available lines of credit at the Federal Home Loan bank of approximately $30.3 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)
September December September
30, 2009 31, 2008 30, 2008
Dollars in thousands -------- -------- --------
ASSETS
Cash and due from banks, non interest
bearing $20,224 $10,216 $12,617
Interest bearing due from banks 56,208 23,500 -
Federal funds sold and securities purchased
under agreements to resell - 51,475 20,135
--- ------ ------
Cash and cash equivalents 76,432 85,191 32,752
Securities available-for-sale, at fair value
(including pledged collateral of $61,345 at
September 30, 2009, $68,735 at December 31,
2008 and $58,939 at September 30, 2008) 86,499 131,687 74,863
Portfolio Loans, net of the allowance for
loan losses of $8,899 at September 30,
2009, $8,429 at December 31, 2008 and
$6,128 at September 30, 2008 590,885 518,946 503,348
Mortgages held for sale, at fair value 16,787 - -
Bank premises and equipment, net 10,201 10,672 10,893
Goodwill 2,927 - -
Other real estate owned 2,934 2,934 4,869
Other assets 27,215 24,784 23,819
------ ------ ------
TOTAL ASSETS $813,880 $774,214 $650,544
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Demand - noninterest bearing $70,491 $79,988 $80,168
Demand - interest bearing 156,233 143,871 138,319
Savings accounts 59,982 67,136 69,469
Certificates of deposit 312,968 264,287 215,095
------- ------- -------
Total deposits 599,674 555,282 503,051
Securities sold under agreements to
repurchase 10,038 13,853 13,580
Federal Home Loan Bank and Federal Reserve
Bank borrowings 100,000 120,000 65,000
Mortgage warehouse lines of credit 12,285 - -
Other liabilities 8,967 7,036 7,863
Junior subordinated debt payable to
unconsolidated subsidiary grantor trust 15,465 15,465 15,465
------ ------ ------
Total Liabilities 746,429 711,636 604,959
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 September 30,
2008 16,619 16,551 -
Common stock , no par value, 50,000,000
shares authorized; 8,711,495 shares issued
and outstanding at September 30, 2009,
December 31, 2008 and at September 30,
2008 9,709 9,650 9,619
Common Stock Warrant 449 449 -
Retained earnings 38,355 36,009 37,364
Accumulated other comprehensive income
(loss), net of tax 827 (81) (1,398)
--- --- ------
Total Equity - Bank of Commerce Holdings 65,959 62,578 45,585
Non controlling interest in subsidiary 1,492 - -
Total stockholders' equity 67,451 62,578 45,585
------ ------ ------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $813,880 $774,214 $650,544
======== ======== ========
BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Condensed Consolidated Statements of Income (Unaudited)
Three months ended: Nine months ended:
September September September September
30, 30, 30, 30,
Amounts in thousands, except --------- -------- --------- --------
for per share data 2009 2008 2009 2008
---- ---- ---- ----
Interest income:
Interest and fees on loans $9,355 $8,252 $26,676 $25,554
Interest on tax-exempt securities 278 308 853 884
Interest on U.S. government
securities 628 582 2,774 1,596
Interest on federal funds sold
and securities purchased under
agreements to resell 1 116 31 264
Interest on other securities 309 13 557 58
--- --- --- ---
Total interest income 10,571 9,271 30,891 28,356
------ ----- ------ ------
Interest expense:
Interest on demand deposits 240 514 786 1,762
Interest on savings deposits 223 543 742 1,193
Interest on certificates of
deposit 1,941 1,963 5,722 6,577
Securities sold under agreements
to repurchase 13 32 38 151
Interest on FHLB and other
borrowings 514 662 1,634 2,174
Interest on junior subordinated
debt payable to unconsolidated
subsidiary grantor trust 234 317 665 793
--- --- --- ---
Total interest expense 3,165 4,031 9,587 12,650
----- ----- ----- ------
Net interest income 7,406 5,240 21,304 15,706
Provision for loan and lease losses 1,844 1,300 6,325 2,900
----- ----- ----- -----
Net interest income after
provision for loan losses 5,562 3,940 14,979 12,806
----- ----- ------ ------
Noninterest income:
Service charges on deposit
accounts 108 91 296 203
Payroll and benefit processing
fees 109 107 347 335
Earnings on cash surrender value -
Bank owned life insurance 108 86 311 254
Net gain on sale of securities
available-for-sale 506 159 1,984 595
Net gain on transfer of financial
assets - - 340 -
Net loss on sale of derivative
swap transaction - - - (225)
Merchant credit card service
income, net 80 99 229 279
Mortgage brokerage fee income 1,913 2 3,215 17
Other income 120 207 282 575
--- --- --- ---
Total noninterest income 2,944 751 7,004 2,033
----- --- ----- -----
Noninterest expense:
Salaries and related benefits 2,902 1,909 7,673 5,750
Occupancy and equipment expense 1,124 613 2,426 1,897
FDIC insurance premium 421 113 995 284
Data processing fees 52 81 231 224
Professional service fees 220 146 674 397
Payroll and benefit fees 27 26 88 86
Deferred compensation expense 118 118 360 342
Stationery and supplies 62 50 141 192
Postage (46) 32 111 104
Directors' expense 75 81 232 223
Other expenses 699 443 1,576 1,290
--- --- ----- -----
Total noninterest expense 5,654 3,612 14,507 10,789
----- ----- ------ ------
Income before provision for
income taxes 2,852 1,079 7,476 4,050
Provision for income taxes 1,010 362 2,647 1,197
----- --- ----- -----
Net Income 1,842 717 4,829 2,853
Less: Net income attributable to
non-controlling interest (129) - (230) -
Net Income attributable to Bank of
Commerce Holdings $1,713 $717 $4,599 $2,853
====== ==== ====== ======
Less: preferred dividend and
accretion on preferred stock 235 707 -
Income available to common
shareholders $1,478 $717 $3,892 $2,853
Basic earnings per share $0.17 $0.08 $0.45 $0.33
Weighted average shares - basic 8,711 8,711 8,711 8,713
Diluted earnings per share $0.17 $0.08 $.45 $0.33
Weighted average shares - diluted 8,711 8,713 8,712 8,729
Cash Dividends declared $0.12 $0.08 $0.18 $0.24
Average Balances, Interest Income/Expense and Yields/Rates Paid
(Unaudited, Dollars in thousands)
Nine Months Ended Nine Months Ended
September 30, 2009 September 30, 2008
-------------------------- --------------------------
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
Earning Assets
Portfolio
Loans(1) $589,802 $26,676 6.03% $519,255 $25,554 6.56%
Tax-exempt
Securities(2) 27,859 853 4.08% 29,754 884 3.96%
US Government
Securities 7,721 251 4.33% 9,124 395 5.77%
Mortgage backed
Securities 59,282 2,522 5.61% 36,266 1,201 4.42%
Federal Funds
Sold 41,996 30 0.23% 16,498 264 2.13%
Other Securities 17,499 559 1.77% 1,730 58 4.47%
------ --- ----- ----- -- -----
Average Earning
Assets $744,796 $30,891 5.53% $612,627 $28,356 6.17%
------- -------
Cash & Due From
Banks $21,890 $13,287
Bank Premises 10,435 11,191
Allowance for
Loan Losses (8,475) (6,630)
Other Assets 32,230 11,556
------ ------
Average Total
Assets $798,876 $642,031
======== ========
Interest Bearing
Liabilities
Demand Interest
Bearing $141,493 $786 0.74% $138,034 $1,762 1.70%
Savings Deposits 62,554 742 1.58% 53,244 1,193 2.99%
Certificates of
Deposit 305,237 5,723 2.50% 223,630 6,577 3.92%
Repurchase
Agreements 11,202 38 0.45% 13,814 151 1.46%
FHLB Borrowings 122,601 1,660 1.81% 81,587 2,174 3.55%
Trust Preferred
Borrowings 15,000 638 5.67% 15,000 793 7.05%
------ --- ----- ------ --- -----
658,087 9,587 1.94% 525,309 $12,650 3.21%
----- ------- -------
Noninterest
bearing demand 71,718 68,920
Other
Liabilities 3,827 890
Stockholders'
Equity 65,244 46,912
------ ------
Average
Liabilities and
Stockholders'
Equity $798,876 $642,031
======== ========
Net Interest
Income and Net
Interest Margin $21,304 3.81% $15,706 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, September June March December September
except for per share 30, 30, 31, 31, 30,
data 2009 2009 2009 2008 2008
---- ---- ---- ---- ----
Interest income:
Interest and fees on loans $9,355 $9,272 $8,049 $8,028 $8,252
Interest on tax-exempt
securities 278 279 296 313 308
Interest on U.S.
government securities 628 954 1,192 873 582
Interest on federal funds
sold and securities
repurchased under
agreements to resell 1 5 25 39 116
Interest on other
securities 346 131 117 81 13
--- --- --- --- ---
Total interest income 10,608 10,641 9,679 9,334 9,271
Interest expense:
Interest on demand deposits 240 239 307 411 514
Interest on savings deposits 223 238 281 383 543
Interest on certificates
of deposit 1,978 1,900 1,881 1,975 1,963
Securities sold under
repurchase agreements 13 11 14 22 32
Interest on FHLB and
other borrowings 514 539 581 638 662
Interest on junior
subordinated debt
payable to unconsolidated
subsidiary grantor trust 234 216 215 263 317
--- --- --- --- ---
Total interest expense 3,202 3,143 3,279 3,692 4,031
Net interest income 7,406 7,498 6,400 5,642 5,240
Provision for loan and
lease losses 1,844 3,056 1,425 3,620 1,300
Net interest income after
provision for loan and
lease losses 5,562 4,442 4,975 2,022 3,940
Noninterest income:
Service charges on
deposit accounts 108 96 92 108 91
Payroll and benefit
processing fees 109 104 134 118 107
Earnings on cash
surrender value - bank
owned life insurance 108 117 86 86 86
Net gain on sale of
securities
available-for-sale 506 1,074 404 33 159
Transfer of financial
assets - 340 - - -
Merchant credit card
service income, net 80 75 74 85 99
Mortgage brokerage fee
income 1,913 1,302 - 4 2
Other income 120 87 75 156 207
--- -- -- --- ---
Total noninterest income 2,944 3,195 865 590 751
Noninterest expense:
Salaries and related
benefits 2,902 2,644 2,127 2,001 1,909
Occupancy and equipment
expense 1,124 730 572 1,339 613
FDIC insurance premium 421 301 273 99 113
Data processing fees 52 68 111 52 81
Professional service fees 220 295 159 270 146
Payroll processing fees 27 27 34 30 26
Deferred compensation expense 118 123 119 120 118
Stationery and supplies 62 26 53 70 50
Postage (46) 76 81 30 32
Directors' expense 75 120 37 71 81
Other expenses 699 483 394 425 443
--- --- --- --- ---
Total noninterest expense 5,654 4,893 3,960 4,507 3,612
Income (loss) before
provision for income
taxes 2,852 2,744 1,882 (1,895) 1,079
Provision (benefit) for
income taxes 1,010 1,027 610 (1,237) 362
Less: Income non-controlling
interest (129) 101 - - -
==== === === === ===
Net income (loss) $1,713 $1,616 $1,270 $(658) $717
====== ====== ====== ====== ====
Less preferred dividend
and accretion on
preferred stock (235) ($235) ($237) ($0) ($0)
Income available to common
shareholders $1,478 $1,381 $1,033 $(658) $717
Basic earnings (loss) per
share $0.17 $0.16 $0.12 ($0.07) $0.08
Weighted average shares -
basic 8,711 8,711 8,711 8,755 8,711
Diluted earnings (loss)
per share $0.17 $0.16 $0.12 ($0.07) $0.08
Weighted average shares -
diluted 8,711 8,712 8,711 8,802 8,713
Cash dividends per share $0.12 $0.00 $0.06 $0.08 $0.08
SOURCE Bank of Commerce Holdings
http://reddingbankofcommerce.com
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