Randall S. Eslick, President and Chief Executive Officer of
Bank of Commerce Holdings (Nasdaq:BOCH)
(the
"Company"), a $997.2 million asset bank holding company
and parent company of Redding Bank of Commerce (the "Bank"), today
announced financial results for the fourth quarter and year ended
December 31, 2014. Net income available to common shareholders for
the quarter ended December 31, 2014 was $1.6 million or $0.12 per
share – diluted, compared with $2.0 million or $0.14 per share –
diluted for the same period of 2013. Net income available to common
shareholders for the year ended December 31, 2014 was $5.5 million
or $0.14 per share – diluted compared with $7.7 million or $0.52
for the same period of 2013.
Financial highlights for the full year 2014:
- Net income available to common shareholders was $5.5 million
for the year ended December 31, 2014 compared with $7.7 million for
the same period a year ago.
- Loans increased $62.8 million or 10% compared to the prior
year.
- Nonperforming assets decreased $8.5 million or 28% compared to
the prior year.
- Total deposits increased $42.7 million or 6% compared to the
prior year.
- Book value per share increased to $6.29 compared to $5.86 for
the prior year.
Financial highlights for the fourth quarter of 2014:
- Net income available to common shareholders was $1.6 million
for the three months ended December 31, 2014 compared with $2.0
million for the same period a year ago and $1.2 million for the
prior quarter.
- Nonperforming assets decreased $2.7 million or 11% compared to
the prior quarter.
- Total deposits increased $21.5 million or 3% compared to the
prior quarter.
- Loans increased $11.2 million or 2% compared to the prior
quarter.
- Gain of $406 thousand from the discounted repayment of $5.0
million of junior subordinated debentures.
- The quarter includes severance costs of $1.0 million associated
with the retirement of a former executive.
Randall S. Eslick, President and CEO commented:
"I am very pleased with our achievements during a challenging 2014.
The executive management team is energized and our loan and deposit
sales force is focused. On a year over year basis, we were able to
increase total deposits 6%, increase loans 10% and make sizeable
decreases in our nonperforming assets. We are poised to build on
these successes in 2015."
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 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
- A decline in the health of the economy nationally or regionally
which could further reduce the demand for loans or reduce the value
of real estate collateral securing most of the Company's 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 year ended December
31, 2013 and under the heading: "Risk Factors" 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. 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) |
|
At or For the
Three Months Ended |
At or For the
Twelve Months Ended |
|
December
31, |
September 30, |
December
31, |
|
2014 |
2013 |
2014 |
2014 |
2013 |
Net income, average assets and
average equity |
|
|
|
|
|
Income available to common shareholders |
$ 1,633 |
$ 2,037 |
$ 1,223 |
$ 5,527 |
$ 7,735 |
Average total assets |
$ 985,771 |
$ 939,732 |
$ 994,373 |
$ 993,925 |
$ 954,302 |
Average shareholders' equity |
$ 103,579 |
$ 102,084 |
$ 102,109 |
$ 102,364 |
$ 106,193 |
|
|
|
|
|
|
Selected performance
ratios |
|
|
|
|
|
Return on average assets |
0.68% |
0.89% |
0.51% |
0.58% |
0.83% |
Return on average equity |
6.50% |
8.18% |
4.99% |
5.59% |
7.47% |
Efficiency ratio |
78.55% |
61.79% |
69.98% |
74.05% |
59.59% |
|
|
|
|
|
|
Share and per share
amounts |
|
|
|
|
|
Common shares outstanding at period end |
13,295 |
13,977 |
13,294 |
13,295 |
13,977 |
Weighted average shares - basic |
13,295 |
14,143 |
13,294 |
13,475 |
14,940 |
Weighted average shares - diluted |
13,335 |
14,176 |
13,339 |
13,520 |
14,964 |
Earnings per share - basic |
$ 0.12 |
$ 0.14 |
$ 0.09 |
$ 0.41 |
$ 0.52 |
Earnings per share - diluted |
$ 0.12 |
$ 0.14 |
$ 0.09 |
$ 0.41 |
$ 0.52 |
Book value per common share |
$ 6.29 |
$ 5.86 |
$ 6.17 |
$ 6.29 |
$ 5.86 |
|
|
|
|
|
|
Capital ratios |
|
|
|
|
|
Bank of Commerce Holdings |
|
|
|
|
|
Leverage ratio |
11.59% |
12.80% |
11.87% |
11.59% |
12.80% |
Tier 1 risk based capital ratio |
13.91% |
15.94% |
14.74% |
13.91% |
15.94% |
Total risk based capital ratio |
15.16% |
17.20% |
15.99% |
15.16% |
17.20% |
|
|
|
|
|
|
Redding Bank of Commerce |
|
|
|
|
|
Leverage ratio |
11.57% |
12.49% |
11.84% |
11.57% |
12.49% |
Tier 1 risk based capital ratio |
13.89% |
15.56% |
14.68% |
13.89% |
15.56% |
Total risk based capital ratio |
15.14% |
16.82% |
15.93% |
15.14% |
16.82% |
The Company and the Bank continue to meet all capital adequacy
requirements to which they are subject. At December 31, 2014, the
Company's Tier 1 and Total risk based capital ratios were 13.91%
and 15.16% respectively, while the leverage ratio was 11.59%. The
decrease in capital ratios during the current quarter compared to
the same period a year ago and the prior quarter is primarily due
to repayment of junior subordinated debentures, repurchase of
common stock, and increased average assets.
BALANCE SHEET OVERVIEW
As of December 31, 2014, the Company had total consolidated
assets of $997.2 million, net loans of $650.2 million, allowance
for loan and lease losses ("ALLL") of $10.8 million, total deposits
of $789.0 million, and shareholders' equity of $103.6 million.
TABLE 2 |
LOAN BALANCES BY TYPE -
UNAUDITED |
(amounts in
thousands) |
|
At December
31, |
|
|
At September
30, |
|
|
% of |
|
% of |
Change |
|
% of |
|
2014 |
Total |
2013 |
Total |
Amount |
% |
2014 |
Total |
Commercial |
$ 153,957 |
23% |
$ 170,429 |
29% |
$ (16,472) |
-10% |
$ 160,024 |
25% |
Real estate - construction loans |
30,099 |
5% |
18,545 |
3% |
11,554 |
62% |
25,579 |
4% |
Real estate - commercial (investor) |
215,114 |
33% |
205,384 |
34% |
9,730 |
5% |
216,204 |
33% |
Real estate - commercial (owner
occupied) |
115,389 |
17% |
83,976 |
14% |
31,413 |
37% |
105,889 |
16% |
Real estate - ITIN loans |
52,830 |
8% |
56,101 |
9% |
(3,271) |
-6% |
53,805 |
8% |
Real estate - mortgage |
13,156 |
2% |
14,590 |
2% |
(1,434) |
-10% |
13,779 |
2% |
Real estate - equity lines |
44,981 |
7% |
45,462 |
8% |
(481) |
-1% |
45,050 |
7% |
Consumer |
35,210 |
5% |
3,472 |
1% |
31,738 |
914% |
28,998 |
4% |
Other |
162 |
0% |
36 |
0% |
126 |
350% |
367 |
1% |
Gross loans |
660,898 |
100% |
597,995 |
100% |
62,903 |
11% |
649,695 |
100% |
Deferred fees and costs |
157 |
|
303 |
|
(146) |
|
184 |
|
Loans, net of deferred fees and
costs |
661,055 |
|
598,298 |
|
62,757 |
|
649,879 |
|
Allowance for loan and lease losses |
(10,820) |
|
(14,172) |
|
3,352 |
|
(10,400) |
|
Net loans |
$ 650,235 |
|
$ 584,126 |
|
$ 66,109 |
|
$ 639,479 |
|
|
|
|
|
|
|
|
|
|
Average yield on loans |
4.77% |
|
5.00% |
|
-0.23% |
|
4.59% |
|
The Company recorded gross loan balances of $660.9 at December
31, 2014, compared with $598.0 at December 31, 2013, an increase of
$62.9 million. The increase in gross loans during the year ended
December 31, 2014 was driven by strong organic loan originations
and the purchase of wholesale loan pools. During 2014, the Company
purchased $42.2 million and $18.5 million in consumer and SBA loan
pools, respectively.
The decrease in the ALLL primarily resulted from $5.8 million in
charge offs related to three significant borrowing relationships
partially offset by $3.2 million in provision to the allowance for
loan and lease losses. The loans associated with these three
borrowers were collateral dependent, were adequately reserved for
at December 31, 2013, and were subsequently charged-off during the
second quarter of 2014. See table 7 for additional detail of the
ALLL.
TABLE 3 |
CASH, CASH EQUIVALENTS,
AND INVESTMENT SECURITIES - UNAUDITED |
(amounts in
thousands) |
|
At December
31, |
|
|
At September
30, |
|
|
% of |
|
% of |
Change |
|
% of |
|
2014 |
Total |
2013 |
Total |
Amount |
% |
2014 |
Total |
|
|
|
|
|
|
|
|
|
Cash and due from banks |
$ 43,949 |
16% |
$ 38,369 |
12% |
$ 5,580 |
15% |
$ 31,151 |
11% |
Interest bearing due from banks |
14,473 |
5% |
20,146 |
6% |
(5,673) |
-28% |
15,272 |
6% |
Total cash and cash equivalents |
58,422 |
21% |
58,515 |
18% |
(93) |
0% |
46,423 |
17% |
|
|
|
|
|
|
|
|
|
U.S. government and agencies |
6,393 |
2% |
6,264 |
2% |
129 |
2% |
7,825 |
3% |
Obligations of state and political
subdivisions |
54,363 |
20% |
59,209 |
21% |
(4,846) |
-8% |
57,161 |
21% |
Residential mortgage backed securities and
collateralized mortgage obligations |
47,015 |
17% |
62,991 |
20% |
(15,976) |
-25% |
46,498 |
17% |
Corporate securities |
37,734 |
13% |
48,230 |
15% |
(10,496) |
-22% |
39,717 |
15% |
Commercial mortgage backed securities |
10,389 |
4% |
10,472 |
3% |
(83) |
-1% |
11,100 |
4% |
Other asset backed securities |
31,092 |
11% |
29,474 |
9% |
1,618 |
5% |
27,078 |
10% |
Total investment securities - AFS |
186,986 |
67% |
216,640 |
70% |
(29,654) |
-14% |
189,379 |
70% |
|
|
|
|
|
|
|
|
|
Obligations of state and political
subdivisions - HTM |
36,806 |
12% |
36,696 |
12% |
110 |
0% |
36,888 |
13% |
Total investment securities |
223,792 |
79% |
253,336 |
82% |
(29,544) |
-14% |
226,267 |
83% |
|
|
|
|
|
|
|
|
|
Total cash equivalents and investment
securities |
$ 282,214 |
100% |
$ 311,851 |
100% |
$ (29,637) |
10% |
$ 272,690 |
100% |
|
|
|
|
|
|
|
|
|
Yield on cash, cash equivalents and
investment securities |
2.58% |
|
2.49% |
|
0.09% |
|
2.43% |
|
The Company continued to maintain a strong liquidity position
during the reporting period. As of December 31, 2014, the Company
maintained cash positions at the Federal Reserve Bank and
correspondent banks in the amount of $43.9 million. The Company
also held certificates of deposits with other financial
institutions in the amount of $14.5 million.
Available-for-sale investment securities totaled $187.0 million
at December 31, 2014, compared with $216.6 million at December 31,
2013 and $189.4 million at September 30, 2014. The Company's
available-for-sale investment portfolio provides the Company a
secondary source of liquidity to fund other higher yielding asset
opportunities, such as loan originations and wholesale loan
purchases. During the fourth quarter of 2014, the Company purchased
twelve securities with a par value of $14.9 million and weighted
average yield of 3.29% and sold nine securities with a par value of
$11.4 million and weighted average yield of 2.44%. The sales
activity resulted in $93 thousand in net realized gains for the
three months ended December 31, 2014. Average quarterly securities
balances and weighted average tax equivalent yields at December 31,
2014 and 2013 were $226.1 million and 3.40% compared to $252.7
million and 3.30%, respectively.
During the year ended December 31, 2014, the Company's
securities purchases were focused on moderate term maturities,
taking advantage of the steepness of the yield curve, which
moderates the Company's exposure to rising interest rates, while
still providing an acceptable yield. Sales were focused on longer
term municipal and corporate bonds, as well as mortgage-backed and
asset-backed securities with extended cash flows or with a high
probability of cash flows extending as interest rates increase.
Overall, management's investment strategy reflects the
continuing expectation of rising rates across the yield curve.
Management continues to actively seek out opportunities to reduce
the overall duration of the portfolio and accelerate cash flows.
This strategy could entail recognizing small losses within the
portfolio to meet these longer term objectives.
At December 31, 2014, the Company's net unrealized gains on
available-for-sale securities were $2.6 million compared with $3.7
million net unrealized loss at December 31, 2013 and $1.8 million
net unrealized gains at September 30, 2014. The favorable change in
net unrealized gains resulted primarily from increases in the fair
values of the Company's municipal bond, and US government
securities portfolios, caused by declines in long-term interest
rates.
TABLE 4 |
DEPOSITS BY TYPE
UNAUDITED |
(amounts in
thousands) |
|
At December
31, |
|
|
At September
30, |
|
|
% of |
|
% of |
Change |
|
% of |
|
2014 |
Total |
2013 |
Total |
Amount |
% |
2014 |
Total |
Demand - noninterest bearing |
$ 157,557 |
20% |
$ 133,984 |
18% |
$ 23,573 |
18% |
$ 151,684 |
20% |
Demand - interest bearing |
298,160 |
38% |
273,390 |
37% |
24,770 |
9% |
265,308 |
35% |
Total demand |
455,717 |
58% |
407,374 |
55% |
48,343 |
12% |
416,992 |
55% |
|
|
|
|
|
|
|
|
|
Savings |
88,569 |
11% |
90,442 |
12% |
(1,873) |
-2% |
91,589 |
12% |
Total non-maturing deposits |
544,286 |
69% |
497,816 |
67% |
46,470 |
9% |
508,581 |
67% |
|
|
|
|
|
|
|
|
|
Certificates of deposit |
244,749 |
31% |
248,477 |
33% |
(3,728) |
-2% |
258,939 |
33% |
Total deposits |
$ 789,035 |
100% |
$ 746,293 |
100% |
$ 42,742 |
6% |
$ 767,520 |
100% |
|
|
|
|
|
|
|
|
|
Average rate on interest bearing
deposits |
0.50% |
|
0.53% |
|
-0.03% |
|
0.54% |
|
Total deposits for the year ended December 31, 2014, increased
6% or $42.7 million to $789.0 million compared to the same period a
year ago and 3% or $21.5 million compared to the prior quarter.
Non-maturing core deposits increased $7.8 million or 2% compared to
the same period a year ago and 3% or $11.6 million compared to the
prior quarter.
Brokered deposits totaled $97.9 million at December 31, 2014
compared with $70.3 million at December 31, 2013, and $80.0 million
at September 30, 2014. Brokered deposits included reciprocal
deposits of $90.3 million, $55.1 million, and $66.4 million for the
same periods respectively.
Deposits obtained through the use of a deposit listing service
that are not considered brokered deposits totaled $67.5 million at
December 31, 2014 compared with $68.0 million at September 30, 2014
and $42.7 million at December 31, 2013.
INCOME STATEMENT OVERVIEW
TABLE 5 |
SUMMARY INCOME
STATEMENT - UNAUDITED |
(amounts in thousands,
except per share data) |
|
For The Three
Months Ended |
|
December
31, |
Change |
September 30, |
Change |
|
2014 |
2013 |
Amount |
% |
2014 |
Amount |
% |
Net interest income |
$ 8,290 |
$ 8,494 |
$ (204) |
-2% |
$ 7,948 |
$ 342 |
4% |
Provision for loan and lease losses |
675 |
— |
675 |
100% |
1,050 |
(375) |
-36% |
Noninterest income |
1,144 |
719 |
425 |
59% |
671 |
473 |
70% |
Noninterest expense |
7,410 |
5,693 |
1,717 |
30% |
6,032 |
1,378 |
23% |
Income before income taxes |
1,349 |
3,520 |
(2,171) |
-62% |
1,537 |
(188) |
-12% |
Provision (benefit) for income taxes |
(334) |
1,433 |
(1,767) |
-123% |
264 |
(598) |
-227% |
Net income |
1,683 |
2,087 |
(404) |
-19% |
1,273 |
410 |
32% |
Less: Dividend on preferred stock |
50 |
50 |
— |
0% |
50 |
— |
0% |
Income available to common
shareholders |
$ 1,633 |
$ 2,037 |
$ (404) |
-20% |
$ 1,223 |
$ 410 |
34% |
|
|
|
|
|
|
|
|
Basic earnings per share |
$ 0.12 |
$ 0.14 |
$ (0.02) |
-14% |
$ 0.09 |
$ 0.03 |
33% |
Average basic shares |
13,295 |
14,143 |
(848) |
-6% |
13,294 |
1 |
0% |
Diluted earnings per share |
$ 0.12 |
$ 0.14 |
$ (0.02) |
-14% |
$ 0.09 |
$ 0.03 |
33% |
Average diluted shares |
13,335 |
14,176 |
(841) |
-6% |
13,339 |
(4) |
0% |
Dividends declared per common share |
$ 0.03 |
$ 0.03 |
$ — |
0% |
$ 0.03 |
$ — |
0% |
Net income available to common shareholders was $1.6 million for
the three months ended December 31, 2014 compared with $2.0 million
for the same period a year ago. The decrease in net income
available to common shareholders in the current quarter compared to
the same period a year ago was primarily driven by increased loan
loss provisions and increased noninterest expense partially offset
by increased noninterest income and a decreased provision for
income taxes.
Net income available to common shareholders increased $410
thousand to $1.6 million during the three months ended December 31,
2014 compared to $1.2 million in the prior quarter. Increased
operating income, decreased provision for loan and lease losses and
decreased provision for tax expense were partially offset by
increased noninterest expense.
Return on average assets and return on average equity for the
current quarter was 0.68% and 6.50%, respectively, compared with
0.89% and 8.18%, respectively, for the same period a year ago. The
21 basis point decrease in return on average assets between these
periods is mostly attributed to decreased earnings. The decrease in
return on average equity was primarily driven by decreased net
income, partially offset by the decrease in weighted average shares
resulting from the Company's publically announced common stock
repurchase plans.
Net interest Income
Interest income for the three months ended December 31, 2014 was
$9.5 million, an increase of $228 thousand or 2% compared to the
same period a year ago and an increase of $427 thousand or 5%
compared to the prior quarter. The increase in interest income
compared to the same period a year ago was driven by increased
volume in the loan portfolio and increased yield in the investment
securities portfolio, partially offset by decreased volume in the
investment securities portfolio and decreased yield in the loan
portfolio. The increase in interest income compared to the prior
quarter was primarily due to increased volume and yield in the loan
portfolio.
Interest expense for the three months ended December 31, 2014
was $1.2 million, an increase of $432 thousand or 54% compared to
the same period a year ago and an increase of $85 thousand or 7%
compared to the prior quarter. During the second quarter of 2014
the Company concluded that the remaining hedged forecasted interest
costs from FHLB advances associated with the final two legs of a
terminated forward starting interest rate swap were no longer
probable. Accordingly, the remaining hedge gains recorded in other
comprehensive income relating to the interest rate swap were
immediately recognized in other noninterest income. Prior to this
determination the Company had been reclassifying the hedge gains
out of other comprehensive income into earnings as an adjustment to
interest expense.
TABLE 6 |
NET INTEREST SPREAD AND
MARGIN - UNAUDITED |
(amounts in
thousands) |
|
For the Three
Months Ended |
|
December
31, |
Change |
September 30, |
Change |
|
2014 |
2013 |
Amount |
2014 |
Amount |
Tax equivalent yield on average interest
earning assets |
4.28% |
4.31% |
-0.03% |
4.06% |
0.22% |
Rate on average interest bearing
liabilities |
0.70% |
0.47% |
0.23% |
0.64% |
0.06% |
Net interest spread |
3.58% |
3.84% |
-0.26% |
3.42% |
0.16% |
|
|
|
|
|
|
Net interest margin |
3.60% |
3.80% |
-0.20% |
3.42% |
0.18% |
Net interest margin on a tax equivalent
basis |
3.74% |
3.95% |
-0.21% |
3.56% |
0.18% |
|
|
|
|
|
|
Average earning assets |
$ 919,864 |
$ 895,101 |
$ 24,763 |
$ 929,447 |
$ (9,583) |
Average interest bearing liabilities |
$ 713,091 |
$ 692,739 |
$ 20,352 |
$ 722,300 |
$ (9,209) |
The net interest margin (net interest income as a percentage of
average interest earning assets) on a fully tax-equivalent basis
was 3.74% for the three months ended December 31, 2014, a decrease
of 21 basis points as compared to the same period a year ago. The
decrease in net interest margin resulted from a 3 basis point
decline in yield on average earning assets and an 18 basis point
increase in interest expense to average earning assets. With
decreasing elasticity in managing our funding costs and
historically low interest rates, maintaining our net interest
margin in the foreseeable future will continue to be challenging.
Management will continue to pursue organic loan growth, wholesale
loan purchases, and actively manage the investment securities
portfolio within our accepted risk tolerance to maximize yields on
earning assets.
Noninterest Income
Noninterest income for the three months ended December 31, 2014
was $1.1 million, an increase of $425 thousand and $473 thousand
when compared to the same period a year ago and the previous
quarter respectively. The increase in noninterest income in the
current quarter compared to the same period a year ago and prior
quarter is primarily due to a $406 thousand gain on discounted
repayment of junior subordinated debentures recognized during the
quarter ended December 31, 2014. The debentures were issued to Bank
of Commerce Holdings Trust. All of the debentures issued to the
Trust, less the common stock of the Trust, qualified as Tier 1
capital, under guidance issued by the Federal Reserve Board.
Noninterest Expense
Noninterest expense for the three months ended December 31, 2014
increased $1.7 million compared to the same period a year ago, and
increased $1.4 million compared to the prior quarter. The increase
in noninterest expense in the current quarter is primarily due to
severance costs associated with the retirement of a former
executive, and an overall increase in the number of employees.
During the three months ended December 31, 2014, the Company
recorded a provision for income tax benefit of $334 thousand
compared with a provision for income tax expense of $1.4 million
for the same period a year ago and a provision for income tax
expense of $264 thousand for the prior quarter. The tax benefit
recorded in the current quarter was driven by a change in the
Company's estimated annual effective tax rate. In addition, tax
return to accrual adjustments were recognized as a result of an
adjustment to 2013 permanent book tax differences. During the
current quarter, the recorded tax benefit of $334 thousand was
comprised of $164 thousand in tax expense derived from applying the
adjusted estimated effective tax rate, a tax benefit of $390
thousand, resulting from a change in the estimated effective tax
rate, and a tax benefit of $108 thousand resulting from tax return
to accrual adjustments.
Diluted earnings per share was $0.12 for the three months ended
December 31, 2014 compared with $0.14 for the same period a year
ago, and $0.09 for the prior period. Earnings per share decreased
during the three months ended December 31, 2014 compared to the
same period a year ago primarily due to a decrease in net income
partially offset by a decrease in weighted average shares. The
decrease in weighted average shares resulted from the repurchase of
2.0 million common shares through two separate repurchase plans
announced and completed in 2013 and the repurchase of 700,000
common shares from another repurchase plan announced and completed
during the six months ended June 30, 2014. All repurchased shares
were retired subsequent to purchase. The weighted average number of
dilutive common shares outstanding decreased by 502 thousand shares
during the year ended December 31, 2014.
TABLE 7 |
ALLOWANCE FOR LOAN AND
LEASE LOSSES ROLL FORWARD - UNAUDITED |
(amounts in
thousands) |
|
For The Three
Months Ended |
|
December 31, |
September 30, |
June 30, |
March 31, |
December 31, |
|
2014 |
2014 |
2014 |
2014 |
2013 |
Beginning balance |
$ 10,400 |
$ 9,882 |
$ 9,748 |
$ 14,172 |
$ 13,542 |
Provision for loan loss charged to
expense |
675 |
1,050 |
1,450 |
— |
— |
Loans charged off |
(374) |
(585) |
(1,456) |
(4,903) |
(815) |
Loan loss recoveries |
119 |
53 |
140 |
479 |
1,445 |
Ending balance |
$ 10,820 |
$ 10,400 |
$ 9,882 |
$ 9,748 |
$ 14,172 |
|
|
|
|
|
|
|
At December 31, |
At September 30, |
At June 30, |
At March 31, |
At December 31, |
|
2014 |
2014 |
2014 |
2014 |
2013 |
Nonaccrual loans: |
|
|
|
|
|
Commercial |
$ 5,112 |
$ 7,065 |
$ 4,375 |
$ 4,303 |
$ 6,527 |
Commercial real estate |
9,696 |
9,896 |
15,598 |
12,560 |
14,539 |
Residential real estate 1-4 family |
6,782 |
7,438 |
6,939 |
7,360 |
8,217 |
Home equity |
24 |
89 |
479 |
484 |
513 |
Consumer |
35 |
— |
87 |
— |
— |
Total nonaccrual loans |
21,649 |
24,488 |
27,478 |
24,707 |
29,796 |
|
|
|
|
|
|
Accruing troubled debt restructured
loans: |
|
|
|
|
|
Commercial |
1,485 |
1,585 |
13 |
62 |
63 |
Commercial real estate |
1,698 |
1,707 |
1,716 |
3,853 |
3,864 |
Residential real estate 1-4 family |
5,462 |
5,222 |
5,074 |
4,894 |
4,303 |
Home equity |
579 |
584 |
589 |
593 |
598 |
Total accruing troubled debt restructured
loans |
9,224 |
9,098 |
7,392 |
9,402 |
8,828 |
|
|
|
|
|
|
All other accruing impaired loans |
536 |
757 |
585 |
2,564 |
3,517 |
|
|
|
|
|
|
Total impaired loans |
$ 31,409 |
$ 34,343 |
$ 35,455 |
$ 36,673 |
$ 42,141 |
|
|
|
|
|
|
Gross loans outstanding at period end |
$ 660,898 |
$ 649,695 |
$ 619,418 |
$ 607,049 |
$ 597,995 |
|
|
|
|
|
|
Allowance for loan and lease losses as a
percent of: |
|
|
|
|
|
Gross loans |
1.64% |
1.60% |
1.60% |
1.61% |
2.37% |
Nonaccrual loans |
49.98% |
42.47% |
35.96% |
39.45% |
47.56% |
Impaired loans |
34.45% |
30.28% |
27.87% |
26.58% |
33.63% |
|
|
|
|
|
|
Nonaccrual loans to gross loans |
3.28% |
3.77% |
4.44% |
4.07% |
4.98% |
The Company realized net charge offs of $255 thousand in the
current quarter compared with net charge offs of $532 thousand in
the prior quarter and net recoveries of $630 thousand for the same
period a year ago. Charge offs in the current quarter are primarily
related to one commercial loan relationship.
The Company continues to monitor credit quality, and adjust the
ALLL accordingly to ensure that the ALLL is maintained at a level
that is adequate to cover estimated credit losses in the loan and
lease portfolio. As such, the Company recognized $675 thousand in
provisions for loan and lease losses during the fourth quarter of
2014, compared to $1.1 million for the prior quarter. The Company's
ALLL as a percentage of gross loans was 1.64% at December 31, 2014
compared to 1.60% as of September 30, 2014. At December 31, 2014,
management believes the Company's ALLL is adequately funded given
the current level of credit risk.
At December 31, 2014, the recorded investment in loans
classified as impaired totaled $31.4 million, with a corresponding
valuation allowance of $1.6 million compared to impaired loans of
$34.3 million, with a corresponding valuation allowance of $1.2
million at September 30, 2014. The valuation allowance on impaired
loans represents the impairment reserves on performing restructured
loans, other accruing loans, and nonaccrual loans. The decrease in
impaired loans during the three months ended December 31, 2014
compared to the prior quarter is primarily due to principal
payments on two commercial loan relationships.
Loans are reported as a troubled debt restructuring when the
Bank grants a concession(s) to a borrower experiencing financial
difficulties that it would not otherwise consider. Examples of such
concessions include a reduction in the note rate, forgiveness of
principal or accrued interest, extending the maturity date(s)
significantly, or providing a lower interest rate than would be
normally available for a transaction of similar risk. As a result
of these concessions, restructured loans are impaired as the Bank
will not collect all amounts due, both principal and interest, in
accordance with the terms of the original loan agreement.
Impairment reserves on non-collateral dependent restructured loans
are measured by measuring the present value of expected future cash
flows of the restructured loans, discounted at the effective
interest rate of the original loan agreement. These impairment
reserves are recognized as a specific component to be provided for
in the ALLL.
During the three months ended December 31, 2014, the Company
restructured one loan to grant a rate and maturity concession. The
loan was classified as a troubled debt restructuring and placed on
nonaccrual status. As of December 31, 2014, the Company had $23.5
million in troubled debt restructurings compared to $25.7 million
as of September 30, 2014. As of December 31, 2014, the Company had
one hundred eighteen restructured loans that qualified as troubled
debt restructurings, of which ninety-seven were performing
according to their restructured terms. Troubled debt restructurings
represented 3.55% of gross loans as of December 31, 2014 compared
with 3.95% at September 30, 2014.
TABLE 8 |
PERIOD END TROUBLED
DEBT RESTRUCTURINGS - UNAUDITED |
(amounts in
thousands) |
|
At December 31, |
At September 30, |
At June 30, |
At March 31, |
At December 31, |
|
2014 |
2014 |
2014 |
2014 |
2013 |
Nonaccrual |
$ 14,230 |
$ 16,556 |
$ 20,504 |
$ 19,779 |
$ 24,596 |
Accruing |
9,224 |
9,098 |
7,392 |
9,402 |
8,828 |
Total troubled debt restructurings |
$ 23,454 |
$ 25,654 |
$ 27,896 |
$ 29,181 |
$ 33,424 |
|
|
|
|
|
|
Percentage of total gross loans |
3.55% |
3.95% |
4.50% |
4.81% |
5.59% |
Nonperforming loans, which include nonaccrual loans and accruing
loans past due more than 90 days, totaled $21.7 million or 3.28% of
gross loans as of December 31, 2014, compared to $24.9 million, or
3.77% of gross loans at September 30, 2014. The decrease in
nonperforming loans in the current quarter compared to the prior
quarter primarily resulted from $1.7 million in payments received
from a commercial loan relationship. Nonperforming assets, which
include nonperforming loans and other real estate owned ("OREO"),
totaled $22.2 million, or 2.22% of total assets as of December 31,
2014, compared with $24.9 million, or 2.54% of total assets as of
September 30, 2014.
TABLE 9 |
PERIOD END
NONPERFORMING ASSETS - UNAUDITED |
(amounts in
thousands) |
|
At December 31, |
At September 30, |
At June 30, |
At March 31, |
At December 31, |
|
2014 |
2014 |
2014 |
2014 |
2013 |
Total nonaccrual loans |
$ 21,649 |
$ 24,488 |
$ 27,478 |
$ 24,707 |
$ 29,796 |
90 days past due not on nonaccrual |
23 |
— |
— |
— |
— |
Total nonperforming loans |
21,672 |
24,488 |
27,478 |
24,707 |
29,796 |
|
|
|
|
|
|
Other real estate owned |
502 |
393 |
826 |
623 |
913 |
Total nonperforming assets |
$ 22,174 |
$ 24,881 |
$ 28,304 |
$ 25,330 |
$ 30,709 |
|
|
|
|
|
|
Nonperforming loans to gross loans |
3.28% |
3.77% |
4.44% |
4.07% |
4.98% |
Nonperforming assets to total assets |
2.22% |
2.54% |
2.89% |
2.63% |
3.23% |
At December 31, 2014, and September 30, 2014, the recorded
investment in OREO was $502 thousand and $393 thousand,
respectively. The December 31, 2014 OREO balance consists of six
properties, of which five are secured by 1-4 family residential
real estate in the amount of $341 thousand and one commercial
nonfarm residential property in the amount of $161 thousand.
TABLE 10 |
UNAUDITED CONDENSED
CONSOLIDATED |
BALANCE
SHEET |
(amounts in
thousands) |
|
At December 31, |
At December 31, |
Change |
At September 30, |
|
2014 |
2013 |
$ |
% |
2014 |
Assets: |
|
|
|
|
|
Cash and due from banks |
$ 43,949 |
$ 38,369 |
$ 5,580 |
15% |
$ 31,151 |
Interest bearing due from banks |
14,473 |
20,146 |
(5,673) |
-28% |
15,272 |
Total cash and cash equivalents |
58,422 |
58,515 |
(93) |
0% |
46,423 |
|
|
|
|
|
|
Securities available-for-sale, at fair
value |
186,986 |
216,640 |
(29,654) |
-14% |
189,379 |
Securities held-to-maturity, at amortized
cost |
36,806 |
36,696 |
110 |
0% |
36,888 |
|
|
|
|
|
|
Loans, net of deferred fees and costs |
661,055 |
598,298 |
62,757 |
10% |
649,879 |
Allowance for loan and lease losses |
(10,820) |
(14,172) |
3,352 |
-24% |
10,400 |
Net loans |
650,235 |
584,126 |
66,109 |
11% |
660,279 |
|
|
|
|
|
|
Total interest earning assets |
943,269 |
910,149 |
33,120 |
4% |
922,569 |
|
|
|
|
|
|
Premises and equipment, net |
12,295 |
10,893 |
1,402 |
13% |
12,510 |
Other real estate owned |
502 |
913 |
(411) |
-45% |
393 |
Life insurance |
21,844 |
16,216 |
5,628 |
35% |
21,675 |
Deferred taxes |
10,231 |
11,653 |
(1,422) |
-12% |
10,314 |
Other assets |
19,871 |
20,690 |
(819) |
-4% |
20,696 |
Total Assets |
$ 997,192 |
$ 956,342 |
$ 40,850 |
4% |
$ 998,557 |
|
|
|
|
|
|
Liabilities and shareholders' equity: |
|
|
|
|
|
Demand - noninterest bearing |
$ 157,557 |
$ 133,984 |
$ 23,573 |
18% |
$ 151,684 |
Demand - interest bearing |
298,160 |
273,390 |
24,770 |
9% |
265,308 |
Savings |
88,569 |
90,442 |
(1,873) |
-2% |
91,589 |
Certificates of deposit |
244,749 |
248,477 |
(3,728) |
-2% |
258,939 |
Total deposits |
789,035 |
746,293 |
42,742 |
6% |
767,520 |
|
|
|
|
|
|
Federal Home Loan Bank borrowings |
75,000 |
75,000 |
— |
0% |
75,000 |
Junior subordinated debentures |
10,310 |
15,465 |
(5,155) |
-33% |
15,465 |
Other liabilities |
19,245 |
17,797 |
1,448 |
8% |
17,812 |
Total Liabilities |
893,590 |
854,555 |
39,035 |
5% |
875,797 |
|
|
|
|
|
|
Shareholders' equity: |
|
|
|
|
|
Preferred stock |
19,931 |
19,931 |
— |
0% |
19,931 |
Common Stock |
23,891 |
28,304 |
(4,413) |
-16% |
23,874 |
Retained earnings |
59,867 |
55,944 |
3,923 |
7% |
58,633 |
Accumulated other comprehensive (loss)
income, net of tax |
(87) |
(2,392) |
2,305 |
-96% |
(478) |
Total shareholders' equity |
103,602 |
101,787 |
1,815 |
2% |
101,960 |
|
|
|
|
|
|
Total liabilities and shareholders'
equity |
$ 997,192 |
$ 956,342 |
$ 40,850 |
4% |
$ 977,757 |
|
|
|
|
|
|
Shares outstanding |
13,295 |
13,977 |
|
|
13,294 |
Book value per share |
$ 6.29 |
$ 5.86 |
|
|
$ 6.17 |
|
TABLE 11 |
UNAUDITED |
INCOME
STATEMENT |
(amounts in thousands,
except per share data) |
|
For The Three
Months Ended |
|
|
|
December
31, |
Change |
September 30, |
Twelve Months
Ended December 31, |
|
2014 |
2013 |
$ |
% |
2014 |
2014 |
2013 |
Interest income: |
|
|
|
|
|
|
|
Interest and fees on loans |
$ 7,832 |
$ 7,432 |
$ 400 |
5% |
$ 7,350 |
$ 29,464 |
$ 29,918 |
Interest on securities |
980 |
658 |
322 |
49% |
998 |
4,203 |
4,198 |
Interest on tax-exempt securities |
620 |
492 |
128 |
26% |
629 |
2,536 |
2,610 |
Interest on deposits |
97 |
719 |
(622) |
-87% |
125 |
490 |
535 |
Total interest income |
9,529 |
9,301 |
228 |
2% |
9,102 |
36,693 |
37,261 |
Interest expense: |
|
|
|
|
|
|
|
Interest on demand deposits |
109 |
121 |
(12) |
-10% |
123 |
471 |
485 |
Interest on savings deposits |
55 |
60 |
(5) |
-8% |
59 |
228 |
254 |
Interest on certificates of deposit |
623 |
635 |
(12) |
-2% |
650 |
2,608 |
2,625 |
Interest on securities sold under
repurchase agreements |
— |
— |
— |
0% |
— |
— |
6 |
Interest on FHLB borrowings |
370 |
(104) |
474 |
-456% |
126 |
422 |
(267) |
Interest on other borrowings |
82 |
95 |
(13) |
-14% |
196 |
363 |
375 |
Total interest expense |
1,239 |
807 |
432 |
54% |
1,154 |
4,092 |
3,478 |
Net interest income |
8,290 |
8,494 |
(204) |
-2% |
7,948 |
32,601 |
33,783 |
Provision for loan and lease losses |
675 |
— |
675 |
100% |
1,050 |
3,175 |
2,750 |
Net interest income after provision for
loan and lease losses |
7,615 |
8,494 |
(879) |
-10% |
6,898 |
29,426 |
31,033 |
Noninterest income: |
|
|
|
|
|
|
|
Service charges on deposit accounts |
51 |
45 |
6 |
13% |
50 |
186 |
191 |
Payroll and benefit processing fees |
137 |
129 |
8 |
6% |
127 |
508 |
484 |
Increase in cash surrender value of life
insurance |
169 |
133 |
36 |
27% |
171 |
628 |
534 |
Gain (loss) on investment securities,
net |
93 |
64 |
29 |
45% |
32 |
(159) |
995 |
Merchant credit card service income,
net |
24 |
31 |
(7) |
-23% |
25 |
104 |
129 |
Other income |
670 |
317 |
353 |
111% |
266 |
3,048 |
1,209 |
Total noninterest income |
1,144 |
719 |
425 |
59% |
671 |
4,315 |
3,542 |
|
|
|
|
|
|
|
|
Noninterest expense: |
|
|
|
|
|
|
|
Salaries and related benefits |
4,257 |
3,172 |
1,085 |
34% |
3,474 |
14,770 |
12,035 |
Occupancy and equipment expense |
715 |
554 |
161 |
29% |
749 |
2,784 |
2,205 |
Write down of other real estate
owned |
— |
— |
— |
0% |
— |
290 |
— |
FDIC insurance premium |
214 |
190 |
24 |
13% |
204 |
798 |
725 |
Data processing fees |
260 |
150 |
110 |
73% |
217 |
889 |
547 |
Professional service fees |
616 |
315 |
301 |
96% |
309 |
1,527 |
1,241 |
Deferred compensation expense |
113 |
121 |
(8) |
-7% |
115 |
458 |
179 |
Other expenses |
1,235 |
1,191 |
44 |
4% |
964 |
5,821 |
5,309 |
Total noninterest expense |
7,410 |
5,693 |
1,717 |
30% |
6,032 |
27,337 |
22,241 |
Income before provision (benefit) for income
taxes |
1,349 |
3,520 |
(2,171) |
-62% |
1,537 |
6,404 |
12,334 |
Provision (benefit) for income taxes |
(334) |
1,433 |
(1,767) |
-123% |
264 |
677 |
4,399 |
Net income |
$ 1,683 |
$ 2,087 |
$ (404) |
-19% |
$ 1,273 |
$ 5,727 |
$ 7,935 |
Less: preferred dividend and accretion on
preferred stock |
50 |
50 |
— |
0% |
50 |
200 |
200 |
Income available to common shareholders |
$ 1,633 |
$ 2,037 |
$ (404) |
-20% |
$ 1,223 |
$ 5,527 |
$ 7,735 |
Basic earnings per share |
$ 0.12 |
$ 0.14 |
$ (0.02) |
-14% |
$ 0.09 |
$ 0.41 |
$ 0.52 |
Average basic shares |
13,295 |
14,143 |
(848) |
-6% |
13,294 |
13,475 |
14,940 |
Diluted earnings per share |
$ 0.12 |
$ 0.14 |
$ (0.02) |
-14% |
$ 0.09 |
$ 0.41 |
$ 0.52 |
Average diluted shares |
13,335 |
14,176 |
(841) |
-6% |
13,339 |
13,520 |
14,964 |
|
TABLE 12 |
UNAUDITED CONDENSED
CONSOLIDATED |
ANNUAL AVERAGE BALANCE
SHEET |
(amounts in
thousands) |
|
For the Twelve
Months Ended |
|
December 31, |
December 31, |
December 31, |
December 31, |
|
2014 |
2013 |
2012 |
2011 |
Earning assets: |
|
|
|
|
Loans |
$ 644,029 |
$ 612,819 |
$ 642,200 |
$ 626,275 |
Tax exempt securities |
83,973 |
92,854 |
81,714 |
52,467 |
Taxable securities |
148,606 |
157,486 |
135,615 |
130,898 |
Interest bearing due from banks |
56,466 |
43,397 |
48,712 |
64,399 |
Average earning assets |
933,074 |
906,556 |
908,241 |
874,039 |
|
|
|
|
|
Cash and due from banks |
11,249 |
10,570 |
10,125 |
2,251 |
Premises and equipment, net |
12,105 |
10,338 |
9,567 |
9,489 |
Other assets |
37,497 |
26,838 |
24,249 |
21,421 |
Average total assets |
$ 993,925 |
$ 954,302 |
$ 952,182 |
$ 907,200 |
|
|
|
|
|
Interest bearing liabilities: |
|
|
|
|
Demand - interest bearing |
$ 272,383 |
$ 244,125 |
$ 203,342 |
$ 157,696 |
Savings |
91,108 |
92,502 |
89,789 |
91,876 |
Certificates of deposit |
259,462 |
249,500 |
285,574 |
296,381 |
Repurchase agreements |
— |
5,780 |
14,246 |
14,805 |
Other borrowings |
15,533 |
15,584 |
15,465 |
8,398 |
FHLB borrowings |
77,466 |
109,560 |
110,374 |
122,535 |
Average interest bearing liabilities |
715,952 |
717,051 |
718,790 |
691,691 |
|
|
|
|
|
Demand - noninterest bearing |
140,520 |
126,017 |
115,091 |
100,722 |
Other liabilities |
35,089 |
5,041 |
7,033 |
6,679 |
Shareholders' equity |
102,364 |
106,193 |
111,268 |
108,108 |
Average liabilities & equity |
$ 993,925 |
$ 954,302 |
$ 952,182 |
$ 907,200 |
|
TABLE 13 |
UNAUDITED CONDENSED
CONSOLIDATED |
QUARTERLY AVERAGE
BALANCE SHEET |
(amounts in
thousands) |
|
For the Three
Months Ended |
|
December 31, |
September 30, |
June 30, |
March 31, |
December 31, |
|
2014 |
2014 |
2014 |
2014 |
2013 |
Earning assets: |
|
|
|
|
|
Loans |
$ 656,834 |
$ 640,990 |
$ 612,847 |
$ 605,682 |
$ 594,324 |
Tax exempt securities |
82,231 |
83,503 |
83,530 |
86,681 |
91,269 |
Taxable securities |
143,829 |
140,128 |
152,780 |
157,936 |
161,473 |
Interest bearing due from banks |
36,970 |
64,826 |
59,040 |
65,179 |
48,035 |
Average earning assets |
919,864 |
929,447 |
908,197 |
915,478 |
895,101 |
|
|
|
|
|
|
Cash and due from banks |
12,264 |
12,322 |
10,163 |
10,212 |
11,506 |
Premises and equipment, net |
12,464 |
12,551 |
12,190 |
11,197 |
10,823 |
Other assets |
41,179 |
40,053 |
36,297 |
30,426 |
22,302 |
Average total assets |
$ 985,771 |
$ 994,373 |
$ 966,847 |
$ 967,313 |
$ 939,732 |
|
|
|
|
|
|
Interest bearing liabilities: |
|
|
|
|
|
Demand - interest bearing |
$ 277,692 |
$ 269,633 |
$ 272,073 |
$ 267,428 |
$ 261,949 |
Savings |
89,992 |
91,556 |
91,488 |
91,406 |
92,949 |
Certificates of deposit |
254,942 |
260,592 |
262,809 |
259,523 |
247,376 |
Other borrowings |
15,465 |
15,737 |
15,465 |
15,465 |
15,465 |
FHLB borrowings |
75,000 |
84,782 |
75,000 |
75,000 |
75,000 |
Average interest bearing liabilities |
713,091 |
722,300 |
716,835 |
708,822 |
692,739 |
|
|
|
|
|
|
Demand - noninterest bearing |
154,471 |
142,796 |
132,842 |
132,495 |
134,439 |
Other liabilities |
14,630 |
27,168 |
16,040 |
23,013 |
10,470 |
Shareholders' equity |
103,579 |
102,109 |
101,130 |
102,983 |
102,084 |
Average liabilities & equity |
$ 985,771 |
$ 994,373 |
$ 966,847 |
$ 967,313 |
$ 939,732 |
About Bank of Commerce Holdings
Bank of Commerce Holdings is a bank holding company
headquartered in Redding, 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 commercial banking and
financial services through four 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".
Investment firms making a market in
BOCH stock are: |
|
|
|
Raymond James Financial |
McAdams Wright Ragen, Inc. |
John T. Cavender |
Joey Warmenhoven |
555 Market Street |
1211 SW Fifth Avenue, Suite 1400 |
San Francisco, CA 94105 |
Portland, OR 97204 |
(800) 346-5544 |
(866) 662-0351 |
|
|
Sandler O'Neill + Partners, L.P. |
Stifel Nicolaus |
Brian Sullivan |
Perry Wright |
1251 Avenue of the Americas, 6th Floor |
1255 East Street, Suite 100 |
New York, NY 10022 |
Redding, CA 96001 |
(212) 466-8022 |
(530) 244-7199 |
|
|
Contact Information: |
|
|
|
Randall S. Eslick, President and Chief
Executive Officer |
|
Telephone Direct (530) 722-3900 |
|
|
|
Samuel D. Jimenez, Executive Vice President
and Chief Operating Officer |
|
Telephone Direct (530) 722-3952 |
|
|
|
James A. Sundquist, Executive Vice President
and Chief Financial Officer |
|
Telephone Direct (530) 722-3908 |
|
|
|
Andrea Schneck, Vice President and Senior
Administrative Officer |
|
Telephone Direct (530) 722-3959 |
|
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