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Bank of Commerce Holdings Announces Results for the Fourth Quarter of 2017

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SACRAMENTO, Calif., Jan. 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 year ended December 31, 2017. Net income for the quarter ended December 31, 2017 was $7 thousand or $0.00 per share – diluted, compared with net income of $2.3 million or $0.17 per share – diluted for the same period of 2016. Net income for the year ended December 31, 2017 was $7.3 million or $0.48 per share – diluted compared with $5.3 million or $0.39 per share – diluted for the year ended December 31, 2016.

Significant Item – Tax Cuts and Jobs Act of 2017

The 2017 results include the $2.5 million negative net impact of the Tax Cuts and Jobs Act of 2017("Act") for both the fourth quarter ($0.15 per share – diluted) and for the year ($0.16 per share – diluted). The Act reduced the federal corporate tax rate from 35% to 21% and required the Company to revalue its deferred tax assets and liabilities. Management believes that our financial results are more comparative excluding the impact of these deferred tax asset and liability revaluations.

Non-GAAP Financial Measures

In addition to results presented in accordance with generally accepted accounting principles in the United States of America (GAAP), this press release contains certain non-GAAP financial measures. We believe that these non-GAAP financial measures provide investors with information useful in understanding the Company's financial performance; however, readers of this document are urged to review these non-GAAP financial measures in conjunction with the GAAP results as reported.

                                         
SELECTED NON-GAAP FINANCIAL INFORMATION - UNAUDITED  
(amounts in thousands except per share data)  
    For The Three Months Ended   For The Twelve Months Ended 
Reconciliation of Net Income (GAAP) to Net Income Excluding   December 31,   September 30,   December 31,  
Deferred Tax Asset Write-down (non-GAAP):   2017    2016    2017   2017
  2016
Net income (GAAP)   $  7      $  2,297      $  2,876      $  7,344      $  5,259   
Deferred tax asset write-down (GAAP)      2,490         —        —        2,490         363   
Net income excluding deferred tax asset write-down (non-GAAP)   $  2,497      $  2,297      $  2,876      $  9,834      $  5,622   
                                         
Earnings per share - diluted (GAAP)   $  —     $  0.17      $  0.18      $  0.48      $  0.39   
Effect of deferred tax asset write-down      0.15         —        —        0.16         0.03   
Earnings per share - diluted excluding net deferred tax asset write-down   $  0.15      $  0.17      $  0.18      $  0.64      $  0.42   
                                         
Non-GAAP Ratios:                                        
Return on average assets excluding net deferred tax asset write-down     0.79 %     0.81 %     0.93 %     0.82 %     0.52 %
Return on average equity excluding net deferred tax asset write-down     7.69 %     9.69 %     9.01 %     8.48 %     6.07 %
Effective tax rate excluding deferred tax asset write-down     34.46 %     19.94 %     33.16 %     31.10 %     22.10 %
                                         
GAAP Information:                                        
Return on average assets     0.00 %     0.81 %     0.93 %     0.61 %     0.49 %
Return on average equity     0.02 %     9.69 %     9.01 %     6.34 %     5.68 %
Effective tax rate     99.82 %     19.94 %     33.16 %     48.54 %     27.13 %
                                         

Randall S. Eslick, President and CEO commented: "In 2017 we continued executing on our corporate vision and strategic plan to earn our independence. I am especially proud of the hard work and dedication of our employees as they delivered extraordinary growth in loans and deposits and enhanced returns to our shareholders. Our company is well positioned to meet the opportunities and challenges of the coming year and I look forward to our continued growth and success."

Financial highlights for the year ended December 31, 2017:

  • Average deposits for the year ended December 31, 2017 totaled $1.0 billion, an increase of $115.1 million (12%) compared to average deposits for the prior year.
  • Average loans for the year ended December 31, 2017 totaled $818.1 million, an increase of $65.2 million (9%) compared to average loans for the prior year.
  • Average earning assets totaled $1.1 billion for the year ended December 31, 2017, an increase of $116.8 million (12%) compared to average earning assets for the prior year.
  • Net income of $7.3 million or $0.48 per share – diluted for the year ended December 31, 2017 was an increase of $2.1 million (40%) from $5.3 million or $0.39 per share – diluted earned during the same period in the prior year. Net income for 2016 was negatively impacted by $3.0 million of branch acquisition and balance sheet restructuring costs, a $546 thousand other-than-temporary-impairment of an investment security and the write-off of a $363 thousand deferred tax asset.
  • Return on average assets improved to 0.61% for the year ended December 31, 2017 compared to 0.49% for the prior year.
  • Return on average equity improved to 6.34% for the year ended December 31, 2017 compared to 5.68% for the prior year.
  • The Company's efficiency ratio was 67.0% for the year ended December 31, 2017 compared to 81.9% for the prior year.
  • Net interest income increased $5.1 million (14%) to $41.4 million for the year ended December 31, 2017 compared to $36.2 million for the prior year.
  • Nonperforming assets at December 31, 2017 totaled $5.8 million or 0.46% of total assets, a decrease of $6.3 million (52%) compared to December 31, 2016.
  • Tangible book value per common share was $7.70 at December 31, 2017 compared to $6.83 at December 31, 2016.

Financial highlights for the fourth quarter of 2017:

  • Average deposits for the three months ended December 31, 2017 totaled $1.1 billion, an increase of $28.7 million (11% annualized) compared to average deposits for the prior quarter.
  • Average loans for the three months ended December 31, 2017 totaled $839.0 million, an increase of $33.9 million (17% annualized) compared to average loans for the prior quarter.
  • Average earning assets for the three months ended December 31, 2017 totaled $1.2 billion, an increase of $31.9 million (11% annualized) compared to average earning assets for the prior quarter.
  • Net income of $7 thousand or $0.00 per share – diluted for the three months ended December 31, 2017 was a decrease of $2.3 million (100%) from $2.3 million or $0.17 per share – diluted earned during the same period in the prior year.
  • Return on average assets declined to 0.00% for the fourth quarter of 2017 compared to 0.81% for the same period in the prior year.
  • Return on average equity declined to 0.02% for the fourth quarter of 2017 compared to 9.69% for the same period in the prior year.
  • The Company's efficiency ratio was 64.9% for the fourth quarter of 2017 compared to 73.2% during the same period in 2016.
  • Net interest income increased $1.4 million (15%) to $10.9 million for the fourth quarter of 2017 compared to $9.4 million for the same period in the prior year.
  • Nonperforming assets at December 31, 2017 totaled $5.8 million or 0.46% of total assets, a decrease of $2.5 million since September 30, 2017.

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, 2016 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 Twelve Months Ended  
    December 31,     September 30,   December 31,  
Net income, average assets and average shareholders' equity   2017    2016    2017   2017   2016  
Net income   $  7      $  2,297      $  2,876      $  7,344    $  5,259   
Average total assets   $  1,251,960      $  1,126,034      $  1,220,900      $  1,198,251    $  1,079,750   
Average total earning assets   $  1,178,037      $  1,051,387      $  1,146,132      $  1,124,555    $  1,007,793   
Average shareholders' equity   $  128,862      $  94,326      $  126,574      $  115,901    $  92,554   
                                       
Selected performance ratios                                      
Return on average assets     0.00 %     0.81 %     0.93 %     0.61 %   0.49 %
Return on average equity     0.02 %     9.69 %     9.01 %     6.34 %   5.68 %
Efficiency ratio     64.94 %     73.17 %     63.10 %     67.04 %   81.83 %
                                       
Share and per share amounts                                      
Weighted average shares - basic (1)      16,195         13,370         16,191         15,207       13,367   
Weighted average shares - diluted      16,306         13,476         16,288         15,310       13,425   
Earnings per share - basic   $  —     $  0.17      $  0.18      $  0.48    $  0.39   
Earnings per share - diluted   $  —     $  0.17      $  0.18      $  0.48    $  0.39   
                                       
    At December 31,     At September 30,      
Share and per share amounts   2017    2016    2017          
Common shares outstanding (2)      16,272         13,440         16,265                 
Tangible book value per common share   $  7.82      $  6.83      $  7.77                 
                                       
Capital ratios                                    
Bank of Commerce Holdings (3)                                    
Common equity tier 1 capital ratio (4)     12.26 %     9.43 %     12.66 %              
Tier 1 capital ratio (4)     13.23 %     10.42 %     13.65 %              
Total capital ratio (4)     15.44 %     12.68 %     15.91 %              
Tier 1 leverage ratio (4)     10.86 %     9.13 %     11.12 %              
Tangible common equity ratio (5)     9.88 %     8.07 %     10.27 %              
                                       
Redding Bank of Commerce                                      
Common equity tier 1 capital ratio (4)     12.58 %     12.31 %     12.87 %              
Tier 1 capital ratio (4)     12.58 %     12.31 %     12.87 %              
Total capital ratio (4)     13.81 %     13.55 %     14.12 %              
Tier 1 leverage ratio (4)     10.33 %     10.80 %     10.50 %              
                                       
(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) 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.
(4) The Company and the Bank continue to meet all capital adequacy requirements to which they are subject. The capital ratios for 2016 were impacted by increased average total assets, the addition of $1.8 million of core deposit intangible and $665 thousand of goodwill recorded in conjunction with the acquisition of five branches in March of 2016.
(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 December 31, 2017, the Company had total consolidated assets of $1.3 billion, gross loans of $879.8 million, allowance for loan and lease losses ("ALLL") of $11.9 million, total deposits of $1.1 billion, and shareholders' equity of $127.3 million.

                                               
TABLE 2
LOAN BALANCES BY TYPE - UNAUDITED
(amounts in thousands)
  At December 31,             At September 30,
      % of       % of   Change       % of
  2017   Total   2016   Total   Amount   %   2017   Total
Commercial $  149,088      17 %   $  153,844      19 %   $  (4,756 )    (3 ) %   $  147,212      18 %
Real estate - construction and land development    15,902      2        36,792      5        (20,890 )    (57 ) %      14,700      2  
Real estate - commercial non-owner occupied    377,668      43        292,615      36        85,053       29    %      333,766      40  
Real estate - commercial owner occupied    185,340      21        167,335      21        18,005       11    %      183,424      22  
Real estate - residential - ITIN    41,188      5        45,566      6        (4,378 )    (10 ) %      42,063      5  
Real estate - residential - 1-4 family mortgage    30,377      3        20,425      3        9,952       49    %      21,119      3  
Real estate - residential - equity lines    30,347      3        35,953      4        (5,606 )    (16 ) %      31,158      4  
Consumer and other    49,925      6        51,681      6        (1,756 )    (3 ) %      51,432      6  
Gross loans    879,835      100 %      804,211      100 %      75,624       9    %      824,874      100 %
Deferred fees and costs    1,710               1,324               386               1,770         
Loans, net of deferred fees and costs    881,545               805,535               76,010               826,644         
Allowance for loan and lease losses    (11,925 )            (11,544 )            (381 )            (11,692 )      
Net loans $  869,620            $  793,991            $  75,629            $  814,952         
                                               
Average yield on loans during the quarter   4.77 %           4.69 %            0.08              4.87 %      
                                                       

The Company recorded gross loan balances of $879.8 million at December 31, 2017, compared with $804.2 million and $824.9 million at December 31, 2016 and September 30, 2017, respectively, an increase of $75.6 million and $55.0 million, respectively. The increase in gross loans compared to the same period a year ago and the prior period was driven by organic loan originations and is the result of investments in our SBA division and in our expanded Sacramento commercial banking group.

Average loan balances were $839.0 million for the quarter ended December 31, 2017, compared with $778.5 for the quarter ended December 31, 2016 and $805.1 million for the quarter ended September 30, 2017, an increase of $60.5 million or 8% and an increase of $33.9 million or 17% annualized, respectively.

The average yield on loans during the quarter was 4.77% compared to 4.69% and 4.87% for the quarters ended December 31, 2016 and September 30, 2017, respectively. The prior quarter included $161 thousand of interest income from a nonaccrual loan that was repaid during the quarter and enhanced the average yield by eight basis points.

                                                 
TABLE 3
CASH, CASH EQUIVALENTS, AND INVESTMENT SECURITIES - UNAUDITED
(amounts in thousands)
    At December 31,               At September 30,
        % of       % of   Change       % of
    2017   Total   2016   Total   Amount   %   2017   Total
                                                 
Cash and due from banks   $  17,979      5 %   $  16,419      6 %   $  1,560       10    %   $  19,929      6 %
Interest-bearing deposits in other banks      48,991      15        51,988      19        (2,997 )    (6 ) %      65,702      19  
Total cash and cash equivalents      66,970      20        68,407      25        (1,437 )    (2 ) %      85,631      25  
                                                 
Investment securities:                                                
U.S. government and agencies      40,369      12        10,354      4        30,015       290    %      36,474      10  
Obligations of state and political subdivisions      78,844      24        59,428      22        19,416       33    %      53,850      15  
Residential mortgage backed securities and collateralized mortgage obligations      114,592      34        69,604      24        44,988       65    %      105,224      31  
Corporate securities      4,992      1        16,116      6        (11,124 )    (69 ) %      6,968      2  
Commercial mortgage backed securities      26,641      8        15,514      6        11,127       72    %      26,148      7  
Other asset backed securities      2,516      1        4,158      2        (1,642 )    (39 ) %      3,830      1  
Total investment securities - AFS      267,954      80        175,174      64        92,780       53    %      232,494      66  
                                                 
Obligations of state and political subdivisions - HTM      —     0        31,187      11        (31,187 )    (100 ) %      30,724      9  
Total investment securities - AFS and HTM      267,954      80        206,361      75        61,593       30    %      263,218      75  
Total cash, cash equivalents and investment securities   $  334,924      100 %   $  274,768      100 %   $  60,156       22    %   $  348,849      100 %
Average yield on interest-bearing due from banks and investment securities during the quarter - (nominal)     2.30 %           1.95 %            0.35              2.19 %      
                                                         

As of December 31, 2017, we maintained noninterest-bearing cash positions of $18.0 million and interest-bearing deposits of $49.0 million at the Federal Reserve Bank and correspondent banks. During the fourth quarter of 2017, we deployed liquidity provided by the sale of common stock and strong organic deposit growth into organic loan originations, and AFS securities.

During the fourth quarter, we reclassified the entire HTM securities portfolio to AFS. At the date of the reclassification the HTM securities portfolio was recorded at an amortized cost of $30.3 million. The reclassification of securities between categories was accounted for at fair value. At the date of the reclassification, the securities had a fair value of $31.4 million and unrealized holding gains of $1.2 million which were recorded in other comprehensive income.

Investment securities totaled $268.0 million at December 31, 2017, compared with $206.4 million and $263.2 million at December 31, 2016 and September 30, 2017, 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 fourth quarter of 2017, we purchased 20 securities with a par value of $29.6 million and weighted average yield of 2.71% and sold 19 securities with a par value of $16.0 million and weighted average yield of 2.33%. The sales activity on available-for-sale securities resulted in $2 thousand in net realized losses. There were no purchases or sales of held-to-maturity securities during the fourth quarter of 2017. During the same period, we received $7.4 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 December 31, 2017 and 2016 were $272.0 million and 2.94% compared to $197.2 million and 3.02%, respectively.

At December 31, 2017, our net unrealized losses on available-for-sale investment securities were $452 thousand compared with net unrealized losses of $1.3 million and net unrealized gains of $630 thousand at December 31, 2016 and September 30, 2017, respectively. The changes in the net unrealized gain or loss on the investment securities portfolio are primarily 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 December 31,               At September 30,
      % of       % of     Change       % of
  2017   Total   2016   Total   Amount   %   2017   Total
Demand - noninterest-bearing $  305,650      28 %   $  270,398      27 %   $  35,252      13   %   $  316,814      30 %
Demand - interest-bearing    496,990      45        405,569      40        91,421      23   %      433,466      41  
Total demand    802,640      73        675,967      67        126,673      19   %      750,280      71  
                                               
Savings    110,837      10        113,309      11        (2,472 )   (2 ) %      111,962      11  
Total non-maturing deposits    913,477      83        789,276      78        124,201      16   %      862,242      82  
                                               
Certificates of deposit    189,255      17        215,390      22        (26,135 )   (12 ) %      200,543      18  
Total deposits $  1,102,732      100 %   $  1,004,666      100 %   $  98,066      10   %   $  1,062,785      100 %
                                               
Average rate on interest-bearing deposits during the quarter   0.42 %           0.40 %            0.02              0.43 %      
Average rate on all deposits during the quarter   0.30 %           0.29 %            0.01              0.31 %      
                                                       

Total deposits at December 31, 2017, increased $98.1 million or 10% to $1.1 billion compared to December 31, 2016, and increased $39.9 million or 15% annualized compared to September 30, 2017. Total non-maturing deposits increased $124.2 million or 16% compared to the same date a year ago and increased $51.2 million or 24% annualized compared to September 30, 2017. Certificates of deposit decreased $26.1 million or 12% compared to the same date a year ago and decreased $11.2 million or 23% annualized compared to September 30, 2017.

                 
TABLE 5
WHOLESALE AND BROKERED DEPOSITS - UNAUDITED
(amounts in thousands)
  At December 31,   At September 30,
  2017   2016   2017
CDARS / ICS reciprocal brokered deposits $  66,279    $  65,212    $  56,203 
Online listing service wholesale time deposits    36,060       48,900       37,293 
Total wholesale and brokered deposits $  102,339    $  114,112    $  93,496 
 

In accordance with regulatory Call Report instructions, the Bank will file (or has filed) quarterly Call Reports which list brokered deposits of $66.3 million, $65.2 million and $56.2 million at December 31, 2017, December 31, 2016 and September 30, 2017, respectively.

INCOME STATEMENT OVERVIEW

                                         
TABLE 6
SUMMARY INCOME STATEMENT - UNAUDITED
(amounts in thousands, except per share data)
  For The Three Months Ended
  December 31,   Change   September 30,   Change
  2017   2016   Amount   %   2017   Amount   %
Interest income $  12,047    $  10,518    $  1,529      15   %   $  11,765    $  282      2   %
Interest expense    1,178       1,084       94      9   %      1,181       (3 )    —   %
Net interest income    10,869       9,434       1,435      15   %      10,584       285      3   %
Provision for loan
and lease losses
   450       —      450       100    %      —      450       100    %
Noninterest income    1,282       1,260       22      2   %      1,076       206      19   %
Noninterest expense    7,891       7,825       66      1   %      7,357       534      7   %
Income before provision
for income taxes
   3,810       2,869       941      33   %      4,303       (493 )   (11 ) %
Provision for income taxes:                                        
Net deferred tax asset write-down    2,490       —      2,490       100    %      —      2,490       100    %
Provision for income taxes from operations    1,313       572       741      130   %      1,427       (114 )   (8 ) %
Total provision for income taxes    3,803       572       3,231      565   %      1,427       2,376      167   %
Net income $  7    $  2,297    $  (2,290 )   (100 ) %   $  2,876    $  (2,869 )   (100 ) %
                                         
Basic earnings per share $  —   $  0.17    $  (0.17 )    (100 ) %   $  0.18    $  (0.18 )    (100 ) %
Average basic shares    16,195       13,370       2,825       21    %      16,191       4       —   %
Diluted earnings per share $  —   $  0.17    $  (0.17 )    (100 ) %   $  0.18    $  (0.18 )    (100 ) %
Average diluted shares    16,306       13,476       2,830       21    %      16,288       18       —   %
Dividends declared per common share $  0.03    $  0.03    $  —      —   %   $  0.03    $  —      —   %
                                                 

Fourth Quarter of 2017 Compared With Fourth Quarter of 2016

Income before provision for income taxes for the fourth quarter of 2017 increased $941 thousand compared to the fourth quarter of 2016. In the current quarter, net interest income was $1.4 million higher and noninterest income was $22 thousand higher. These positive changes were offset by provision for loan and lease losses that was $450 thousand higher and noninterest expense that was $66 thousand higher.

Net Interest Income

Net interest income increased $1.4 million compared to the same period a year ago.

Interest income for the three months ended December 31, 2017 increased $1.5 million or 15% to $12.0 million. Interest and fees on loans increased $902 thousand due to a $60.5 million increase in average loan balances and an eight basis point increase in the average yield on the loan portfolio. Interest on securities increased $513 thousand due to a $74.8 million increase in average securities balances and a six basis point increase in the average yield on the securities portfolio. Interest on interest-bearing deposits due from banks increased $114 thousand primarily due to a 75 basis point increase in average yield resulting from increased fed funds rates.

Interest expense for the fourth quarter of 2017 increased $94 thousand or 9% to $1.2 million. The increase was primarily caused by a two basis point increase in the average rate paid on interest-bearing deposits and a $60.7 million increase in average interest-bearing demand deposits.

Provision for loan and lease loss

During the three months ended December 31, 2017 the company recorded a provision for loan and lease losses of $450 thousand reflecting growth in the loan portfolio. There was no provision for loan and lease losses during the fourth quarter of 2016.

Noninterest Income

Noninterest income for the three months ended December 31, 2017 increased $22 thousand compared to the fourth quarter for 2016. Net Gains on sale of OREO properties increased $336 thousand while FHLB dividends decreased $272 thousand (a special dividend was recorded during the prior year).

Noninterest Expense

Noninterest expense for the three months ended December 31, 2017 increased $66 thousand compared to the same period a year previous. The increase in noninterest expense was primarily due to the following negative items:

  • Compensation costs increased $286 thousand
  • Premises and equipment costs increased $51 thousand

These increases were partially offset by the following positive items:

  • Professional service fees decreased $202 thousand
  • Data processing fees decreased $78 thousand

The Company's efficiency ratio was 64.9% for the fourth quarter of 2017 compared to 73.2% during the same period in 2016.

Income Tax Provision

For the three months ended December 31, 2017, our income tax provision of $3.8 million on pre-tax income of $3.8 million was an effective tax rate of 99.8%. The income tax provision was composed of a $2.5 million write-down of our deferred tax assets and a $1.3 million tax provision on pre-tax net operating income of $3.8 million (34.5%). The $2.5 million write-down occurred when we revalued our deferred tax assets and liabilities to account for the future impact of lower corporate tax rates resulting from the Tax Cuts and Jobs Act enacted on December 22, 2017.

This compares with a provision for income taxes of $572 thousand (19.9% effective tax rate) for the three months ended December 31, 2016. This effective tax rate benefited from a decrease in the amortization  of our investments in affordable housing partnerships.

Fourth Quarter of 2017 Compared With Third Quarter of 2017

Income before provision for income taxes for the fourth quarter of 2017 decreased $493 thousand compared to the third quarter of 2017. In the current quarter, net interest income was $285 thousand higher and noninterest income was $206 thousand higher. These positive changes were offset by a provision for loan and lease losses that was $450 thousand higher and noninterest expenses that were $534 thousand higher.

Net Interest Income

Net interest income increased $285 thousand over the prior quarter.

Interest income for the three months ended December 31, 2017 increased $282 thousand or 2% to $12.0 million. Interest and fees on loans increased $196 thousand due to a $33.9 million increase in average loan balances. Interest on investment securities increased $140 thousand due to a $15.3 million increase in average securities balances and a seven basis point increase in average yield on the securities portfolio. Interest on interest-bearing deposits due from banks decreased $54 thousand due to a $17.3 million decrease in average balances.

Interest expense for the three months ended December 31, 2017 decreased $3 thousand or less than 1% to $1.2 million. The average rate paid on interest-bearing deposits decreased 1 basis point to 42 basis points. Average interest-bearing demand deposit balances increased $24.3 million while average certificate of deposit balances decreased $9.2 million.

Provision for loan and lease loss

During the three months ended December 31, 2017 the company recorded a provision for loan and lease losses of $450 thousand reflecting growth in the loan portfolio. There was no provision for loan and lease losses during the prior quarter.

Noninterest Income

Noninterest income for the three months ended December 31, 2017 increased $206 thousand. During the current quarter gains on sale of OREO increased $265 thousand.

Noninterest Expense

Noninterest expense for the three months ended December 31, 2017 increased $534 thousand compared to the third quarter of 2017. The increase in noninterest expense included the following items:

  • Loan origination cost deferrals decreased $110 thousand
  • Employee incentive and other compensation-related costs increased $122 thousand
  • Postage and supplies increased $80 thousand due to costs associated with the annual deposit account disclosures
  • Recruiting costs increased $82 thousand

The Company's efficiency ratio was 64.9% for the fourth quarter of 2017 compared to 63.1% during the prior quarter.

Income Tax Provision

For the three months ended December 31, 2017, our income tax provision of $3.8 million on pre-tax income of $3.8 million was an effective tax rate of 99.8%. The income tax provision was composed of a $2.5 million write-down of our deferred tax assets and a $1.3 million tax provision on pre-tax net operating income of $3.8 million (34.5%). The $2.5 million write-down occurred when we revalued our deferred tax assets and liabilities to account for the future impact of lower corporate tax rates resulting from the Tax Cuts and Jobs Act enacted on December 22, 2017. This compares with a provision for income taxes of $1.4 million (33.2% effective tax rate) for the prior quarter.

Earnings Per Share

Diluted earnings per share were $0.00 for the three months ended December 31, 2017. Excluding the $2.5 million negative net impact of the net deferred tax asset revaluation, diluted earnings per share would have been $0.15 for the three months ended December 31, 2017. This compared with diluted earnings per share of $0.17 for the same period a year ago and diluted earnings per share of $0.18 for the prior period. Net income and weighted average shares used to calculate earnings per share – diluted are summarized in table 6 and the table of "Selected Non-GAAP Financial Information" presented earlier in this press release.

                                                       
TABLE 7a
NET INTEREST MARGIN - UNAUDITED
(amounts in thousands)
    For The Three Months Ended
    December 31, 2017   December 31, 2016   September 30, 2017
    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)   $  839,004    $  10,083     4.77  %   $  778,458    $  9,181     4.69  %   $  805,144    $  9,887     4.87  %
Taxable securities      199,849       1,211     2.40  %      124,881       705     2.25  %      179,362       1,049     2.32  %
Tax-exempt securities      72,152       529     2.91  %      72,288       522     2.87  %      77,303       551     2.83  %
Interest-bearing deposits in other banks      67,032       224     1.33  %      75,760       110     0.58  %      84,323       278     1.31  %
Average interest-earning assets      1,178,037       12,047     4.06  %      1,051,387       10,518     3.98  %      1,146,132       11,765     4.07  %
Cash and due from banks      19,783                   16,953                   19,143             
Premises and equipment, net      14,948                   16,331                   15,362             
Other assets      39,192                   41,363                   40,263             
Average total assets   $  1,251,960                $  1,126,034                $  1,220,900             
                                                       
Interest-bearing liabilities:                                                      
Interest-bearing demand   $  459,451       216     0.19  %   $  398,749       135     0.13  %   $  436,614       196     0.18  %
Savings deposits      111,725       54     0.19  %      111,755       45     0.16  %      110,305       52     0.19  %
Certificates of deposit      194,886       547     1.11  %      217,463       543     0.99  %      204,044       567     1.10  %
Net term debt      17,211       285     6.57  %      18,975       298     6.25  %      17,804       292     6.51  %
Junior subordinated debentures      10,310       76     2.92  %      10,310       63     2.43  %      10,310       74     2.85  %
Average interest-bearing liabilities      793,583       1,178     0.59  %      757,252       1,084     0.57  %      779,077       1,181     0.60  %
Noninterest-bearing demand      316,961                   261,600                   303,314             
Other liabilities      12,554                   12,856                   11,935             
Shareholders' equity      128,862                   94,326                   126,574             
Average liabilities and shareholders' equity   $  1,251,960                $  1,126,034                $  1,220,900             
Net interest income and net interest margin (4)         $  10,869     3.66  %         $  9,434     3.57  %         $  10,584     3.66  %
Tax equivalent net interest margin (3)                3.75  %                3.67  %                3.76  %
                                                       
(1) Interest income on loans is net of deferred fees and costs of approximately $123 thousand, $139 thousand, and $95 thousand for the three months ended December 31, 2017, and 2016 and September 30, 2017, respectively.
(2) Net loans includes average nonaccrual loans of $6.5 million, $10.0 million and $8.6 million for the three months ended December 31, 2017 and 2016 and September 30, 2017, respectively.
(3) Tax-exempt income has been adjusted to tax equivalent basis at a 34% tax rate. The amount of such adjustments was an addition to recorded income of approximately $273 thousand, $269 thousand and $284 thousand for the three months ended December 31, 2017 and 2016 and September 30, 2017, respectively.
(4) Net interest margin is 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 7b
NET INTEREST MARGIN - UNAUDITED
(amounts in thousands)
    For The Twelve Months Ended
    December 31, 2017   December 31, 2016
    Average         Yield /   Average         Yield /
(Amounts in thousands)   Balance   Interest(1)   Rate (5)   Balance   Interest(1)   Rate (5)
Interest-earning assets:                                    
Net loans (2)   $  818,119    $  39,112     4.78  %   $  752,938    $  35,435     4.71  %
Taxable securities      165,333       3,921     2.37  %      120,884       2,986     2.47  %
Tax-exempt securities      74,231       2,144     2.89  %      75,303       2,256     3.00  %
Interest-bearing deposits in other banks      66,872       772     1.15  %      58,668       332     0.57  %
Average interest-earning assets      1,124,555       45,949     4.09  %      1,007,793       41,009     4.07  %
Cash and due from banks      18,301                   15,831             
Premises and equipment, net      15,567                   15,078             
Other assets      39,828                   41,048             
Average total assets   $  1,198,251                $  1,079,750             
                                     
Interest-bearing liabilities:                                    
Interest-bearing demand   $  434,705       744     0.17  %   $  374,170       523     0.14  %
Savings deposits      111,376       200     0.18  %      104,771       174     0.17  %
Certificates of deposit      205,648       2,188     1.06  %      221,074       2,179     0.99  %
Net term debt      18,283       1,168     6.39  %      37,286       1,667     4.47  %
Junior subordinated debentures      10,310       287     2.78  %      10,310       235     2.28  %
Average interest-bearing liabilities      780,322       4,587     0.59  %      747,611       4,778     0.64  %
Noninterest-bearing demand      289,735                   226,368             
Other liabilities      12,293                   13,217             
Shareholders' equity      115,901                   92,554             
Average liabilities and shareholders' equity   $  1,198,251                $  1,079,750             
Net interest income and net interest margin (4)         $  41,362     3.68  %         $  36,231     3.60  %
Tax equivalent net interest margin (3)                3.78  %                3.71  %
                                     
(1) Interest income on loans is net of deferred fees and costs of approximately $546 thousand and $1.1 million for the year ended December 31, 2017 and 2016, respectively.
(2) Net loans includes average nonaccrual loans of $8.9 million and $10.6 million for the year ended December 31, 2017 and 2016, respectively.
(3) Tax-exempt income has been adjusted to tax equivalent basis at a 34% tax rate. The amount of such adjustments was an addition to recorded income of approximately $1.1 million and $1.2 million for the year ended December 31, 2017 and 2016, respectively.
(4) Net interest margin is 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 8  
ALLOWANCE FOR LOAN AND LEASE LOSSES ROLL FORWARD AND IMPAIRED LOAN TOTALS - UNAUDITED  
(amounts in thousands)  
  For The Three Months Ended  
  December 31,   September 30,   June 30,   March 31,   December 31,
  2017   2017   2017   2017   2016
Beginning balance ALLL $  11,692        $  11,688        $  11,641        $  11,544        $  11,849     
Provision for loan and lease losses    450           —          300           200           —    
Loans charged-off    (451 )        (245 )        (359 )        (447 )        (386 )  
Loan loss recoveries    234           249           106           344           81     
Ending balance ALLL $  11,925        $  11,692        $  11,688        $  11,641        $  11,544     
                                       
  At December 31,   At September 30,   At June 30,   At March 31,   At December 31,
  2017   2017   2017   2017   2016
Nonaccrual loans:                                      
Commercial $  1,603        $  2,309        $  2,410        $  2,534        $  2,749     
Real estate - commercial non-owner occupied    —          —          1,196           1,196           1,196     
Real estate - commercial owner occupied    600           617           639           654           784     
Real estate - residential - ITIN    2,909           3,201           3,346           3,331           3,576     
Real estate - residential - 1-4 family mortgage    606           626           653           1,337           1,914     
Real estate - residential - equity lines    45           815           872           906           917     
Consumer and other    36           37           38           39           250     
Total nonaccrual loans    5,799           7,605           9,154           9,997           11,386     
Accruing troubled debt restructured loans:                                      
Commercial    1,551           671           703           741           776     
Real estate - commercial non-owner occupied    803           805           806           808           808     
Real estate - residential - ITIN    4,614           4,655           4,712           4,761           5,033     
Real estate - residential - equity lines    380           441           445           450           454     
Total accruing troubled debt restructured loans    7,348           6,572           6,666           6,760           7,071     
                                       
All other accruing impaired loans    —          —          —          —          337     
                                       
Total impaired loans $  13,147        $  14,177        $  15,820        $  16,757        $  18,794     
                                       
Gross loans outstanding at period end $  879,835        $  824,874        $  815,388        $  810,194        $  804,211     
                                       
Impaired loans to gross loans   1.49   %     1.72   %     1.94   %     2.07   %     2.34   %
Nonaccrual loans to gross loans   0.66   %     0.92   %     1.12   %     1.23   %     1.42   %
                                       
Allowance for loan and lease losses as a percent of:                          
Gross loans   1.36   %     1.42   %     1.43   %     1.44   %     1.44   %
Nonaccrual loans   205.64   %     153.74   %     127.68   %     116.44   %     101.39   %
Impaired loans   90.71   %     82.47   %     73.88   %     69.47   %     61.42   %
                                                 

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. A combination of net loan losses and loan portfolio growth supported management's decision to record a provision of $450 thousand for the three months ended December 31, 2017. There were no provisions for loan and lease losses during the quarter ended September 30, 2017 or the quarter ended December 31, 2016. Our ALLL as a percentage of gross loans was 1.36% as of December 31, 2017 compared to 1.44% as of December 31, 2016 and 1.42% as of September 30, 2017. 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 December 31, 2017. 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 December 31, 2017, the recorded investment in loans classified as impaired totaled $13.1 million, with a corresponding specific reserve of $1.2 million compared to impaired loans of $18.8 million with a corresponding specific reserve of $1.5 million at December 31, 2016 and impaired loans of $14.2 million, with a corresponding specific reserve of $918 thousand at September 30, 2017. The decrease in loans classified as impaired compared to the prior quarter is primarily due to one residential real estate equity loan that was paid off during the quarter. The increase in the specific reserve on impaired loans compared to the prior quarter was primarily due to one commercial loan.

                                         
TABLE 9
TROUBLED DEBT RESTRUCTURINGS - UNAUDITED
(amounts in thousands)
    At December 31,   At September 30,   At June 30,   At March 31,   At December 31,
    2017   2017   2017   2017   2016
Nonaccrual   $  3,581      $  4,403      $  4,630      $  4,570      $  4,995   
Accruing      7,348         6,572         6,666         6,760         7,071   
Total troubled debt restructurings   $  10,929      $  10,975      $  11,296      $  11,330      $  12,066   
                                         
Troubled debt restructurings as a percentage of total gross loans     1.24 %     1.33 %     1.39 %     1.40 %     1.50 %
 

There were no new troubled debt restructurings during the three months ended December 31, 2017. As of December 31, 2017, we had 116 restructured loans that qualified as troubled debt restructurings, of which 110 were performing according to their restructured terms.

                                         
TABLE 10
NONPERFORMING ASSETS - UNAUDITED
(amounts in thousands)
    At December 31,   At September 30,   At June 30,   At March 31,   At December 31,
    2017   2017   2017   2017   2016
Total nonaccrual loans   $  5,799      $  7,605      $  9,154      $  9,997      $  11,386   
90 days past due and still accruing      —        —        —        —        —  
Total nonperforming loans      5,799         7,605         9,154         9,997         11,386   
                                         
Other real estate owned      35         699         1,517         814         759   
Total nonperforming assets   $  5,834      $  8,304      $  10,671      $  10,811      $  12,145   
                                         
Nonperforming loans to gross loans     0.66 %     0.92 %     1.12 %     1.23 %     1.42 %
Nonperforming assets to total assets     0.46 %     0.67 %     0.88 %     0.95 %     1.06 %
                                         

The December 31, 2017 OREO balance consists of one 1-4 family residential real estate property in the amount of $35 thousand. The decrease in the OREO balance compared to the prior quarter is due to the disposition of one nonfarm nonresidential property, one undeveloped commercial property and one 1-4 family residential property. Net gains on sale of OREO in the current quarter were $346 thousand compared to net gains of $10 thousand and $81 thousand in the same quarter a year ago and in the prior quarter, respectively. Net gains on sale of OREO property in the current quarter were primarily due to one nonfarm nonresidential property that had a carrying value of $565 thousand and sold for $923 thousand resulting in a gain of $358 thousand.

                               
TABLE 11
UNAUDITED CONSOLIDATED
BALANCE SHEET
(amounts in thousands, except per share data)
    At December 31,   At December 31,   Change   At September 30,
    2017   2016   $   %   2017
Assets:                              
Cash and due from banks   $  17,979      $  16,419      $  1,560       10    %   $  19,929   
Interest-bearing deposits in other banks      48,991         51,988         (2,997 )    (6 ) %      65,702   
Total cash and cash equivalents      66,970         68,407         (1,437 )    (2 ) %      85,631   
                               
Securities available-for-sale, at fair value      267,954         175,174         92,780       53    %      232,494   
Securities held-to-maturity, at amortized cost      —        31,187         (31,187 )    (100 ) %      30,724   
                               
Loans, net of deferred fees and costs      881,545         805,535         76,010       9    %      826,644   
Allowance for loan and lease losses      (11,925 )      (11,544 )      (381 )    3    %      (11,692 )
Net loans      869,620         793,991         75,629       10    %      814,952   
                               
Premises and equipment, net      14,748         16,226         (1,478 )    (9 ) %      15,039   
Other real estate owned      35         759         (724 )    (95 ) %      699   
Life insurance      21,898         23,098         (1,200 )    (5 ) %      21,764   
Deferred taxes      6,505         9,542         (3,037 )    (32 ) %      8,751   
Goodwill and core deposit intangible, net      2,030         2,252         (222 )    (10 ) %      2,086   
Other assets      19,661         20,356         (695 )    (3 ) %      19,741   
Total assets   $  1,269,421      $  1,140,992      $  128,429       11    %   $  1,231,881   
                               
Liabilities and shareholders' equity:                              
Demand - noninterest-bearing   $  305,650      $  270,398      $  35,252       13    %   $  316,814   
Demand - interest-bearing      496,990         405,569         91,421       23    %      433,466   
Savings      110,837         113,309         (2,472 )    (2 ) %      111,962   
Certificates of deposit      189,255         215,390         (26,135 )    (12 ) %      200,543   
Total deposits      1,102,732         1,004,666         98,066       10    %      1,062,785   
                               
Term debt      17,096         18,917         (1,821 )    (10 ) %      17,700   
Unamortized debt issuance costs      (138 )      (184 )      46       (25 ) %      (150 )
Net term debt      16,958         18,733         (1,775 )    (9 ) %      17,550   
                               
Junior subordinated debentures      10,310         10,310         —      —   %      10,310   
Other liabilities      12,157         13,177         (1,020 )    (8 ) %      12,831   
Total liabilities      1,142,157         1,046,886         95,271       9    %      1,103,476   
                               
Shareholders' equity:                              
Common stock      51,830         24,547         27,283       111    %      51,755   
Retained earnings      75,700         70,218         5,482       8    %      76,179   
Accumulated other comprehensive (loss) income, net of tax      (266 )      (659 )      393       (60 ) %      471   
Total shareholders' equity      127,264         94,106         33,158       35    %      128,405   
                               
Total liabilities and shareholders' equity   $  1,269,421      $  1,140,992      $  128,429       11    %   $  1,231,881   
                               
Total interest-earning assets   $  1,198,942      $  1,065,228      $  133,714       13    %   $  1,154,934   
Shares outstanding      16,272         13,440                     16,265   
Book value per share   $  7.82      $  7.00                  $  7.89   
Tangible book value per share (1)   $  7.70      $  6.83                  $  7.77   
                               
(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 12
UNAUDITED
INCOME STATEMENT
(amounts in thousands, except per share data)
    For The Three Months Ended   For The Twelve Months Ended
    December 31,   Change   September 30,   December 31,
    2017   2016   $   %   2017   2017   2016
Interest income:                                          
Interest and fees on loans   $  10,083      $  9,181    $  902       10    %   $  9,887    $  39,112    $  35,435   
Interest on securities      1,211         705       506       72    %      1,049       3,921       2,986   
Interest on tax-exempt securities      529         522       7       1    %      551       2,144       2,256   
Interest on deposits in other banks      224         110       114       104    %      278       772       332   
Total interest income      12,047         10,518       1,529       15    %      11,765       45,949       41,009   
Interest expense:                                          
Interest on demand deposits      216         135       81       60    %      196       744       523   
Interest on savings deposits      54         45       9       20    %      52       200       174   
Interest on certificates of deposit      547         543       4       1    %      567       2,188       2,179   
Interest on term debt      285         298       (13 )    (4 ) %      292       1,168       1,667   
Interest on other borrowings      76         63       13       21    %      74       287       235   
Total interest expense      1,178         1,084       94       9    %      1,181       4,587       4,778   
Net interest income      10,869         9,434       1,435       15    %      10,584       41,362       36,231   
Provision for loan and lease losses      450         —      450       100    %      —      950       —  
Net interest income after provision for loan and lease losses      10,419         9,434       985       10    %      10,584       40,412       36,231   
Noninterest income:                                          
Service charges on deposit accounts      141         120       21       18    %      132       542       413   
ATM and point of sale      266         281       (15 )    (5 ) %      273       1,093       995   
Payroll and benefit processing fees      173         161       12       7    %      147       658       593   
Life insurance      135         152       (17 )    (11 ) %      134       1,050       613   
(Loss) gain on investment securities, net      (2 )      52       (54 )    (104 ) %      38       137       244   
Impairment losses on investment securities      —        —      —      —   %      —      —      (546 )
Federal Home Loan Bank of San Francisco dividends      81         353       (272 )    (77 ) %      80       318       644   
Gain on sale of OREO      346         10       336       3,360    %      81       368       (109 )
Other income      142         131       11       8    %      191       658       639   
Total noninterest income      1,282         1,260       22       2    %      1,076       4,824       3,486   


                                           
TABLE 12 - CONTINUED
UNAUDITED
INCOME STATEMENT
(amounts in thousands, except per share data)
    For The Three Months Ended   For The Twelve Months Ended
    December 31,   Change   September 30,   December 31,
    2017   2016   $   %   2017   2017   2016
Noninterest expense:                                          
Salaries and related benefits      4,523       4,237       286       7    %      4,291       17,819       16,425 
Occupancy and equipment      1,073       1,022       51       5    %      1,067       4,242       3,869 
Federal Deposit Insurance Corporation insurance premium      88       102       (14 )    (14 ) %      78       318       615 
Data processing fees      455       533       (78 )    (15 ) %      437       1,749       1,675 
Professional service fees      279       481       (202 )    (42 ) %      276       1,398       1,690 
Telecommunications      226       206       20       10    %      219       879       751 
Branch acquisition costs      —      —      —      —   %      —      —      580 
Loss on cancellation of interest rate swap      —      —      —      —   %      —      —      2,325 
Other expenses      1,247       1,244       3       —   %      989       4,559       4,570 
Total noninterest expense      7,891       7,825       66       1    %      7,357       30,964       32,500 
Income before provision for income taxes      3,810       2,869       941       33    %      4,303       14,272       7,217 
Provision for income taxes:                                          
Net deferred tax asset write-down      2,490       —      2,490       100    %      —      2,490       363 
Provision for income taxes from operations      1,313       572       741       130    %      1,427       4,438       1,595 
Total provision for income taxes      3,803       572       3,231       565    %      1,427       6,928       1,958 
Net income   $  7    $  2,297    $  (2,290 )    (100 ) %   $  2,876    $  7,344    $  5,259 
                                           
Basic earnings per share   $  —   $  0.17    $  (0.17 )    (100 ) %   $  0.18    $  0.48    $  0.39 
Average basic shares      16,195       13,370       2,825       21    %      16,191       15,207       13,367 
Diluted earnings per share   $  —   $  0.17    $  (0.17 )    (100 ) %   $  0.18    $  0.48    $  0.39 
Average diluted shares      16,306       13,476       2,830       21    %      16,288       15,310       13,425 


                         
TABLE 13
UNAUDITED CONDENSED CONSOLIDATED
ANNUAL AVERAGE BALANCE SHEETS
(amounts in thousands)
    For The Twelve Months Ended
    December 31,   December 31,   December 31,   December 31,
    2017   2016   2015   2014
Earning assets:                        
Loans   $  818,119    $  752,938    $  699,227    $  625,166 
Taxable securities      165,333       120,884       120,897       147,916 
Tax exempt securities      74,231       75,303       77,089       83,973 
Interest-bearing deposits in other banks      66,872       58,668       30,323       56,465 
Total earning assets      1,124,555       1,007,793       927,536       913,520 
                         
Cash and due from banks      18,301       15,831       11,220       11,246 
Premises and equipment, net      15,567       15,078       11,552       12,105 
Other assets      39,828       41,048       42,423       36,936 
Total assets   $  1,198,251    $  1,079,750    $  992,731    $  973,807 
                         
Liabilities and shareholders' equity:                        
Demand - noninterest-bearing   $  289,735    $  226,368    $  156,578    $  139,792 
Demand - interest-bearing      434,705       374,170       283,105       272,383 
Savings      111,376       104,771       92,659       91,108 
Certificates of deposit      205,648       221,074       238,626       259,445 
Total deposits      1,041,464       926,383       770,968       762,728 
                         
Net term debt      18,283       37,286       88,874       77,534 
Junior subordinated debentures      10,310       10,310       10,310       15,239 
Other liabilities      12,293       13,217       16,588       15,934 
Total liabilities      1,082,350       987,196       886,740       871,435 
                         
Shareholders' equity      115,901       92,554       105,991       102,372 
Liabilities & shareholders' equity   $  1,198,251    $  1,079,750    $  992,731    $  973,807 


                               
TABLE 14
UNAUDITED CONDENSED CONSOLIDATED
QUARTERLY AVERAGE BALANCE SHEETS
(amounts in thousands)
    For The Three Months Ended
    December 31,   September 30,   June 30,   March 31,   December 31,
    2017   2017   2017   2017   2016
Earning assets:                              
Loans   $  839,004    $  805,144    $  821,321    $  806,793    $  778,458 
Taxable securities      199,849       179,362       143,705       137,582       124,881 
Tax exempt securities      72,152       77,303       73,927       73,524       72,288 
Interest-bearing deposits in other banks      67,032       84,323       58,691       57,140       75,760 
Total earning assets      1,178,037       1,146,132       1,097,644       1,075,039       1,051,387 
                               
Cash and due from banks      19,783       19,143       17,364       16,873       16,953 
Premises and equipment, net      14,948       15,362       15,809       16,165       16,331 
Other assets      39,192       40,263       39,630       40,228       41,363 
Total assets   $  1,251,960    $  1,220,900    $  1,170,447    $  1,148,305    $  1,126,034 
                               
Liabilities and shareholders' equity:                              
Demand - noninterest-bearing   $  316,961    $  303,314    $  275,039    $  262,881    $  261,600 
Demand - interest-bearing      459,451       436,614       421,888       420,416       398,749 
Savings      111,725       110,305       109,857       113,647       111,755 
Certificates of deposit      194,886       204,044       208,703       215,202       217,463 
Total deposits      1,083,023       1,054,277       1,015,487       1,012,146       989,567 
                               
Term debt      17,211       17,804       19,539       18,598       18,975 
Junior subordinated debentures      10,310       10,310       10,310       10,310       10,310 
Other liabilities      12,554       11,935       12,256       12,431       12,856 
Total liabilities      1,123,098       1,094,326       1,057,592       1,053,485       1,031,708 
                               
Shareholders' equity      128,862       126,574       112,855       94,820       94,326 
Liabilities & shareholders' equity   $  1,251,960    $  1,220,900    $  1,170,447    $  1,148,305    $  1,126,034 
                               

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 opened 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

Telephone Direct (530) 722-3959

 

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