Bank of Commerce Holdings™ Announces Second Quarter 2011 Earnings
REDDING, Calif., July 29, 2011 /PRNewswire/ -- Patrick J. Moty, President & CEO of Bank of Commerce Holdings (NASDAQ: BOCH), a $868.5 million bank holding company, and parent company of Redding Bank of Commerce™, Roseville Bank of Commerce™ (a division of Redding Bank of Commerce), and Bank of Commerce Mortgage™ today reported net income available to common shareholders of $1.25 million and diluted earnings per share ("EPS") of $0.07 for the second quarter 2011.
Key Financial Items for the Second Quarter 2011:
- Net Income available to common shareholders of $1.25 million reflects a modest decrease over the $1.27 million for the quarter ended June 30, 2010, and a 12.5% decrease over the $1.43 million recorded for the first quarter 2011.
- Diluted EPS of $0.07 compares to $0.08 reported for both the same period a year ago and prior quarter ended March 31, 2011.
- Loan loss provisions for the second quarter were $2.6 million while net charge-offs were $2.8 million.
- Non-performing assets represented 2.49% of total assets in the current period versus 2.53% for the quarter ended March 31, 2011.
- Non-maturing core deposits increased $22.9 million or 7.4% from a year ago June 30, 2010.
- Mortgage Loans Held for Sale increased $7.1 million or 37.5% to $26.1 million from the first quarter 2011.
"We remain relatively pleased with our Company's consistently solid financial performance, especially in light of lingering asset quality issues. Our second quarter performance is indicative of our ongoing efforts to aggressively manage the level of sub-performing and non-performing assets while positioning the balance sheet and our Company for continued growth and profitability," said Patrick J. Moty, President and CEO.
Table 1 below shows summary financial information for the quarters ended June 30, 2011 and 2010, and March 31, 2011.
Table 1 |
|||||||||
SUMMARY FINANCIAL INFORMATION |
|||||||||
(Shares and dollars in thousands) |
Quarter ended |
Quarter ended |
Quarter ended |
||||||
June 30, 2011 |
June 30, 2010 |
Change |
March 31, 2011 |
Change |
|||||
Selective quarterly performance ratios |
|||||||||
Return on average assets, annualized |
0.65% |
0.70% |
-0.05% |
0.72% |
-0.07% |
||||
Return on average equity, annualized |
5.53% |
6.02% |
-0.49% |
6.35% |
-0.82% |
||||
Efficiency ratio for quarter to date |
64.68% |
65.25% |
-0.57% |
63.10% |
1.58% |
||||
Share and Per Share figures - Actual |
|||||||||
Common shares outstanding at period end |
16,991 |
16,991 |
- |
16,991 |
- |
||||
Weighted average diluted shares |
16,991 |
16,837 |
154 |
16,991 |
- |
||||
Income per diluted share |
$ 0.07 |
$ 0.08 |
$ (0.01) |
$ 0.08 |
$ (0.01) |
||||
Book value per common share |
$ 5.23 |
$ 4.93 |
$ 0.30 |
$ 5.11 |
$ 0.12 |
||||
Tangible book value per common share |
$ 5.67 |
$ 5.44 |
$ 0.23 |
$ 5.64 |
$ 0.03 |
||||
Cash dividends declared |
$ 0.03 |
$ 0.06 |
$ (0.03) |
$ 0.03 |
$ - |
||||
Capital Ratios |
|||||||||
June 30, 2011 |
June 30, 2010 |
Change |
March 31, 2011 |
Change |
|||||
Bank of Commerce Holdings |
|||||||||
Tier 1 risk based capital ratio |
15.75% |
15.03% |
0.72% |
15.10% |
0.65% |
||||
Total risk based capital ratio |
17.00% |
16.28% |
0.72% |
16.36% |
0.64% |
||||
Leverage ratio |
12.87% |
13.26% |
-0.39% |
12.56% |
0.31% |
||||
Redding Bank of Commerce |
|||||||||
Tier 1 risk based capital ratio |
15.76% |
14.21% |
1.55% |
14.79% |
0.97% |
||||
Total risk based capital ratio |
17.02% |
15.47% |
1.55% |
16.05% |
0.97% |
||||
Leverage ratio |
12.16% |
12.30% |
-0.14% |
11.80% |
0.36% |
||||
As indicated in Table 1 above, the Company continues to remain well capitalized. At June 30, 2011, the Company's Tier 1 and Total risk based capital ratios measured 15.75% and 17.00% respectively, while the leverage ratio was 12.87%
Return on average assets (ROA) and return on average equity (ROE) for the three months ended June 30, 2011, was 0.65% and 5.53%, respectively compared with 0.70% and 6.02% for the three months ended June 30, 2010. The modest decrease in return on assets was driven by lower yields in the loan portfolio associated with the pay off of higher yielding loans, downward rate adjustments on variable rate loans, and the transfer of existing loans to nonaccrual status. Decreased yield in the available-for-sale investment portfolio had a negative impact on ROA as well. The decline in the investment portfolio yields was primarily driven by sales of securities with relatively higher yields. The investment sales activity was tied to the objective of reducing Company's interest rate risk exposure through shortening the duration of the investment portfolio and paying down short-term Federal Home Loan Bank (FHLB) borrowings.
The decrease in ROE for the three months ended June 30, 2011, compared with the same period a year ago, was primarily driven by the lower ROA and the deleveraging of the balance sheet. Specifically, the disproportional increase in average common equity relative to changes in earning assets and interest bearing liabilities combined to decrease ROE.
Balance Sheet Overview
Overall, the net portfolio loan balance did not materially change for the period ended June 30, 2011. The Company's net loan portfolio was $582.4 million at June 30, 2011, compared with $600.8 million at June 30, 2010, a decrease of $18.4 million, or 3%. Management's ongoing efforts to manage problem credits are reflected in the activity of its allowance for loan losses (ALL). As such, the Company provided $2.6 million in provisions for loan losses for the three months ended June 30, 2011 compared with $1.6 million for the same period a year ago. The Company's ALL as a percentage of total portfolio loans were 2.24% and 2.08% as of June 30, 2011, and June 30, 2010, respectively, and 2.26% as of March 31, 2011.
Table 2 |
||||||||||
PERIOD END LOANS |
||||||||||
(Dollars in thousands) |
June 30, |
% of |
June 30, |
% of |
Change |
March 31, |
% of |
|||
2011 |
Total |
2010 |
Total |
Amount |
% |
2011 |
Total |
|||
Commercial |
$ 140,610 |
24% |
$ 135,777 |
22% |
$ 4,833 |
4% |
$ 135,928 |
23% |
||
Real estate loans |
||||||||||
Construction |
26,357 |
4% |
43,266 |
7% |
(16,909) |
-39% |
31,121 |
5% |
||
Commercial (investor) |
218,535 |
37% |
215,681 |
35% |
2,854 |
1% |
224,630 |
37% |
||
Commercial (owner occupied) |
68,327 |
11% |
71,529 |
12% |
(3,202) |
-4% |
66,535 |
11% |
||
ITIN loan pool |
67,675 |
11% |
73,953 |
12% |
(6,278) |
-8% |
69,265 |
11% |
||
Other mortgage |
22,116 |
4% |
19,864 |
3% |
2,252 |
11% |
21,120 |
4% |
||
Equity lines |
46,850 |
8% |
47,750 |
8% |
(900) |
-2% |
47,948 |
8% |
||
Consumer |
5,271 |
1% |
5,752 |
1% |
(481) |
-8% |
6,303 |
1% |
||
Other loans |
91 |
-% |
220 |
-% |
(129) |
-59% |
130 |
0% |
||
Gross loans |
595,832 |
100% |
613,792 |
100% |
(17,960) |
-3% |
602,980 |
100% |
||
Less: |
||||||||||
Deferred loan fees, net |
51 |
193 |
(142) |
-74% |
104 |
|||||
Allowance for loan losses |
13,363 |
12,767 |
596 |
5% |
13,610 |
|||||
Net portfolio loans |
$ 582,418 |
$ 600,832 |
$ (18,414) |
-3% |
$ 589,266 |
|||||
Yield on loans |
5.74% |
6.00% |
-0.16% |
5.86% |
||||||
As of June 30, 2011, the Company had total consolidated assets of $868.5 million, total net portfolio loans of $582.4 million, an ALL of $13.4 million, total deposits of $625.4 million, and stockholders' equity of $108.2 million.
Table 3 |
||||||||||
PERIOD END CASH EQUIVALENTS AND INVESTMENT SECURITIES |
||||||||||
(Dollars in thousands) |
June 30, |
% of |
June 30, |
% of |
Change |
March 31, |
% of |
|||
2011 |
Total |
2010 |
Total |
Amount |
% |
2011 |
Total |
|||
Cash equivalents: |
||||||||||
Cash and due from banks |
$ 19,091 |
9% |
$ 36,815 |
14% |
$ (17,724) |
-48% |
$ 31,321 |
12% |
||
Interest bearing due from banks |
29,225 |
14% |
39,492 |
16% |
(10,267) |
-26% |
36,975 |
15% |
||
48,316 |
23% |
76,307 |
30% |
(27,991) |
-37% |
68,296 |
27% |
|||
Investment Securities: |
||||||||||
U.S. Treasury and agency |
21,982 |
10% |
34,818 |
14% |
(12,836) |
-37% |
29,295 |
12% |
||
Obligations of state and political subdivisions |
57,881 |
27% |
58,335 |
23% |
(454) |
-1% |
62,136 |
24% |
||
Mortgage backed securities |
39,309 |
19% |
77,733 |
31% |
(38,424) |
-49% |
66,087 |
26% |
||
Corporate securities |
23,432 |
11% |
- |
-% |
23,432 |
100% |
22,834 |
9% |
||
Other asset backed securities |
19,580 |
10% |
5,115 |
2% |
14,465 |
283% |
5,365 |
2% |
||
162,184 |
77% |
176,001 |
70% |
(13,817) |
-8% |
185,717 |
73% |
|||
Total cash equivalents and investment securities |
$ 210,500 |
100% |
$ 252,308 |
100% |
$ (41,808) |
-17% |
$ 254,013 |
100% |
||
Yield on cash equivalents and investment securities |
3.20% |
3.77% |
3.13% |
|||||||
The Company continued to maintain a strong liquidity position during the reporting period. As of June 30, 2011 the Company maintained cash positions at the Federal Reserve Bank (FRB) and correspondent banks in the amount of $19.1 million. The Company also held certificates of deposits with other financial institutions in the amount of $29.2 million, which the Company considers highly liquid.
The investment portfolio continues to remain relatively low-risk and as a source of primary and secondary liquidity. The portfolio is utilized as a source of liquidity in repositioning the balance sheet for the eventual increase in interest rates. Investment securities totaled $162.2 million at June 30, 2011, compared with $185.7 million at March 31, 2011. The $23.5 million or 12.67% decrease is reflective of net sales activity relating to municipal bonds, residential mortgage backed securities, and asset backed securities. The net cash proceeds were utilized to payoff maturing FHLB borrowings; the sales of longer maturity bonds also served to shorten the duration of the investment portfolio. As a direct result of the investment portfolio liquidation, for the three months ended June 30, 2011, the Company recorded approximately $655 thousand in realized gains on sales of securities.
At June 30, 2011, the Company's net unrealized gain on available-for-sale securities was $809 thousand, compared with $1.5 million net unrealized loss at March 31, 2011. The favorable change in net unrealized losses was primarily due to increases in the fair values of the Company's municipal bond portfolio.
Table 4 |
||||||||||
QUARTERLY AVERAGE DEPOSITS BY CATEGORY |
||||||||||
(Dollars in thousands) |
Q2 |
% of |
Q2 |
% of |
Change |
Q1 |
% of |
|||
2011 |
Total |
2010 |
Total |
Amount |
% |
2011 |
Total |
|||
Demand deposits |
$ 91,608 |
14% |
$ 92,744 |
15% |
$ (1,136) |
-1% |
$ 98,502 |
15% |
||
Interest bearing demand |
147,802 |
23% |
134,011 |
21% |
13,791 |
10% |
149,152 |
23% |
||
Total checking deposits |
239,410 |
37% |
226,755 |
36% |
12,655 |
6% |
247,654 |
38% |
||
Savings |
93,111 |
15% |
73,370 |
12% |
19,741 |
27% |
88,291 |
14% |
||
Total non-time deposits |
332,521 |
52% |
300,125 |
48% |
32,396 |
11% |
335,945 |
52% |
||
Time deposits |
306,668 |
48% |
328,110 |
52% |
(21,442) |
-7% |
307,525 |
48% |
||
Total deposits |
$ 639,189 |
100% |
$ 628,235 |
100% |
$ 10,954 |
2% |
$ 643,470 |
100% |
||
Weighted average rate on total deposits |
1.25% |
1.49% |
1.31% |
|||||||
Second quarter 2011 average total deposits of $639.2 million increased 2% or $11.0 million from the second quarter in 2010, and decreased by 0.66% or $4.3 million compared to the first quarter of 2011.
Operating Results for the Second Quarter 2011
Through proactive and aggressive management of problem credits, and the maintenance of a relatively healthy net interest margin, the Company has remained profitable during the economic downturn. Accordingly, the Company continues to be well positioned to take advantage of growth opportunities in the coming years. Net income attributable to Bank of Commerce Holdings was $1.5 million for the three months ended June 30, 2011, compared with $1.7 million for the three months ended March 31, 2011, and $1.5 million for the three months ended June 30, 2010. Net income available to common stockholders was $1.3 million for the three months ended June 30, 2011, compared with $1.4 million for the three months ended March 31, 2011, and $1.3 million for the three months ended June 30, 2010. During the second quarter, diluted earnings per share decreased $0.01 per share when compared to the first quarter of 2011, and the second quarter of 2010.
The Company continued to pay cash dividends of $0.03 per share during the second quarter. The dollar amount per share decreased from $0.06 per quarter during 2010 to $0.03 per quarter in 2011. The Company decreased the dividend rate to preserve capital, while ensuring that dividend payout ratios remain consistent to periods prior to the 2010 common stock offering.
Table 5 |
|||||||||||
SUMMARY INCOME STATEMENT |
|||||||||||
(Dollars in thousands) |
Q2 |
Q2 |
Change |
Q1 |
Change |
||||||
2011 |
2010 |
Amount |
% |
2011 |
Amount |
% |
|||||
Net interest income |
$ 8,517 |
$ 8,181 |
$ 336 |
4% |
$ 8,665 |
$ (148) |
-2% |
||||
Provision for loan and lease losses |
2,580 |
1,600 |
980 |
61% |
2,400 |
180 |
8% |
||||
Noninterest income |
3,625 |
3,327 |
298 |
9% |
3,452 |
173 |
5% |
||||
Noninterest expense |
7,854 |
7,509 |
345 |
5% |
7,646 |
208 |
3% |
||||
Income (loss) before income taxes |
1,708 |
2,399 |
(691) |
-29% |
2,071 |
(363) |
-18% |
||||
Provision (benefit) for income taxes |
216 |
750 |
(534) |
-71% |
431 |
(215) |
-50% |
||||
Net income (loss) |
1,492 |
1,649 |
(157) |
-10% |
1,640 |
(148) |
-9% |
||||
Less: Net income (loss) attributable to noncontrolling interest |
6 |
144 |
(138) |
-96% |
(24) |
30 |
125% |
||||
Net income attributable to Bank of Commerce Holdings |
1,486 |
1,505 |
(19) |
-1% |
1,664 |
(178) |
-11% |
||||
Less: preferred dividend and accretion on preferred stock |
235 |
236 |
(1) |
- |
235 |
- |
- |
||||
Income available to common shareholders |
$ 1,251 |
$ 1,269 |
$ (18) |
-1% |
$ 1,429 |
(178) |
-12% |
||||
Basic earnings per share |
$ 0.07 |
$ 0.08 |
$ (0.01) |
-13% |
$ 0.08 |
$ (0.01) |
-13% |
||||
Diluted earnings per share |
$ 0.07 |
$ 0.08 |
$ (0.01) |
-13% |
$ 0.08 |
$ (0.01) |
-13% |
||||
Cash dividends declared per share |
$ 0.03 |
$ 0.06 |
$ (0.03) |
50% |
$ 0.03 |
- |
- |
||||
Table 6 |
|||||||
NET INTEREST SPREAD AND MARGIN |
|||||||
(Dollars in thousands) |
Q2 |
Q2 |
Change |
Q1 |
Change |
||
2011 |
2010 |
Amount |
2011 |
Amount |
|||
Yield on average interest earning assets |
4.83% |
5.29% |
-0.46% |
4.91% |
-0.08% |
||
Rate on average interest bearing liabilities |
1.20% |
1.53% |
-0.33% |
1.24% |
-0.04% |
||
Net interest spread |
3.63% |
3.76% |
-0.13% |
3.67% |
-0.04% |
||
Net interest margin on a tax equivalent basis |
3.97% |
4.12% |
-0.15% |
4.02% |
-0.05% |
||
Average earning assets |
$ 881,887 |
$ 812,337 |
$ 69,550 |
$ 887,010 |
$ (5,123) |
||
Average interest bearing liabilities |
$ 711,513 |
$ 667,786 |
$ 43,727 |
$ 718,840 |
$ (7,327) |
||
Net interest income for the three months ended June 30, 2011 was $8.5 million, an increase of $336 thousand or 4.1% compared to the same period in 2010, and a decrease of $148 thousand or 2% compared with three months ended March 31, 2011. Net interest income during the three months ended June 30, 2011 was negatively impacted by decreased interest income realized from the available-for-sale investment portfolio, partially offset by lower volume of FHLB borrowings and lower funding costs relating to the Company's time deposits.
The net interest margin (net interest income as a percentage of average interest-earning assets) on a fully tax-equivalent basis was 3.97% for the three months ended June 30, 2011, a decrease of 15 basis points as compared to the same period in 2010, and a decrease of 5 basis points quarter over quarter. The year over year decrease in the net interest margin is primarily due to a decreasing yield in the loan portfolio as a result of payoffs, repricing coupons on variable rate loans, transfers of loans to nonaccrual status, and decreasing yields in the available-for-sale investment portfolio. The net decline in the net interest margin was partially offset by a 34 basis point decrease in interest expense to earning assets from repricing interest bearing deposits and junior subordinated debentures.
Table 7 |
|||||||||
NONINTEREST INCOME |
|||||||||
(Dollars in thousands) |
Q2 |
Q2 |
Change |
Q1 |
Change |
||||
2011 |
2010 |
Amount |
% |
2011 |
Amount |
% |
|||
Service charges on deposit accounts |
$ 52 |
$ 62 |
$ (10) |
-16% |
$ 50 |
$ 2 |
4% |
||
Payroll and benefit processing fees |
102 |
100 |
2 |
2% |
129 |
(27) |
-21% |
||
Earnings on cash surrender value - bank owned life insurance |
119 |
107 |
12 |
11% |
111 |
8 |
7% |
||
Net gain on sale of securities available-for-sale |
655 |
133 |
522 |
392% |
258 |
397 |
154% |
||
Merchant credit card service income, net |
33 |
64 |
(31) |
-48% |
270 |
(237) |
-88% |
||
Mortgage banking revenue, net |
2,550 |
2,776 |
(226) |
-8% |
2,533 |
17 |
1% |
||
Other income |
114 |
85 |
29 |
34% |
101 |
13 |
13% |
||
Total noninterest income |
$ 3,625 |
$ 3,327 |
$ 298 |
9% |
$ 3,452 |
$ 173 |
5% |
||
For the three months ended June 30, 2011, we recorded service charges on deposit accounts of $52 thousand, compared with $62 thousand for the same period a year ago, and $50 thousand for the first quarter 2011. The decrease in year over year service charges was primarily attributable to the discontinuance of the Overdraft Privilege product and decreased charges of analysis fees.
For the three months ended June 30, 2011, we recorded earnings on cash surrender value Bank owned life insurance of $119 thousand, compared with $107 thousand for the same period a year ago, and $111 thousand for the first quarter 2011. The increased expense was primarily attributable to the purchase of an additional policy.
For the three months ended June 30, 2011, we recorded securities gains of $655 thousand, compared with $133 thousand for the same period a year ago, and $258 thousand for the first quarter 2011. The increased gains resulted from increased sales activity pursuant to the liquidation and repositioning of our available-for-sale investment portfolio.
For the three months ended June 30, 2011, we recorded merchant credit card income of $33 thousand, compared with $64 thousand for the same period a year ago, and $270 thousand for the first quarter 2011. During the first quarter of 2011, approximately 50% of the merchant credit card portfolio was sold to an independent third party, resulting in additional revenues of $225 thousand. Accordingly, merchant credit card income for the three months ended June 30, 2011 is down 48% compared to the same period a year ago.
For the three months ended June 30, 2011, we recorded mortgage banking revenue of $2.6 million, compared with $2.8 million for the same period a year ago, and $2.5 million for the first quarter 2011. The decrease in mortgage banking revenue was driven by decreased origination and refinancing activity.
Table 8 |
|||||||||
NONINTEREST EXPENSE |
|||||||||
(Dollars in thousands) |
Q2 |
Q2 |
Change |
Q1 |
Change |
||||
2011 |
2010 |
Amount |
% |
2011 |
Amount |
% |
|||
Salaries and related benefits |
$ 4,068 |
$ 3,365 |
$ 703 |
21% |
$ 4,253 |
$ (185) |
-4% |
||
Occupancy and equipment expense |
800 |
924 |
(124) |
-13% |
728 |
72 |
10% |
||
Write down of other real estate owned |
370 |
1,064 |
(694) |
-65% |
187 |
183 |
98% |
||
FDIC insurance premium |
363 |
254 |
109 |
43% |
372 |
(9) |
-2% |
||
Data processing fees |
91 |
64 |
27 |
42% |
99 |
(8) |
-8% |
||
Professional service fees |
595 |
543 |
52 |
10% |
574 |
21 |
4% |
||
Deferred compensation expense |
131 |
122 |
9 |
7% |
127 |
4 |
3% |
||
Stationery and supplies |
88 |
96 |
(8) |
-8% |
51 |
37 |
73% |
||
Postage |
44 |
45 |
(1) |
-2% |
46 |
(2) |
-4% |
||
Directors expense |
67 |
68 |
(1) |
-1% |
74 |
(7) |
-9% |
||
Other expenses |
1,237 |
964 |
273 |
28% |
1,135 |
102 |
9% |
||
Total noninterest expense |
$ 7,854 |
$ 7,509 |
$ 345 |
5% |
$ 7,646 |
$ 208 |
3% |
||
Noninterest expense includes salaries and benefits, occupancy and equipment, write down of other real estate owned (OREO), FDIC insurance assessments, director fees, and other expenses. Other expenses include overhead items such as utilities, telephone, insurance and licensing fees, and business travel. Noninterest expense for the three months ended June 30, 2011 was $7.9 million compared to $7.5 million during the same period in 2010, and $7.6 million for the first quarter 2011.
Salaries and related benefits for the three months ended June 30, 2011 increased by $703 thousand or 20.89%, compared to the same period a year ago, and decreased by $185 thousand compared to the first quarter of 2011. During the last six months of fiscal year 2010, Mortgage Services transitioned existing independent contractors to FTE's, and increased staff due to growth in general operations, resulting in an increase in salaries and related benefits. The 2011 second quarter decrease in expense compared to first quarter 2011 was primarily due to lower bonuses paid out from the mortgage subsidiary, corresponding to the lower origination and refinancing volume.
Occupancy and equipment expense for the three months ended June 30, 2011 decreased by $124 thousand or 13.42%, compared to the same period a year ago, and increased by $72 thousand compared to the first quarter of 2011. The year over year decrease was driven by decreased rent expense, and decreased equipment repairs, both pertaining to the mortgage subsidiary.
Write down of the Company's OREO decreased by $694 thousand or 65.23%, compared to the same period a year ago, and increased $183 thousand or 98% when compared to the first quarter of 2011. The OREO charges during the periods presented were primarily associated with a commercial real estate property where management identified impairment and appropriately reduced the property's carrying value.
FDIC insurance premium expense for the three months ended June 30, 2011 increased by $109 thousand or 42.91%, compared to the same period a year ago. The increase is primarily due to the FDIC's revisions in deposit insurance assessments methodology for determining premiums, and prepayment true up adjustments.
Data processing expense for the three months ended June 30, 2011 increased by $27 thousand or 42.19%, compared to the same period a year ago. The increase is primarily attributable to new software additions and their associated licensing.
Professional service fees encompass audit, legal and consulting fees. The Company continues to experience increased expense in this area due to ongoing credit quality issues within the loan portfolio, and increased regulatory and financial reporting burdens.
Other expenses for the three months ended June 30, 2011 increased by $273 thousand or 28.32%, compared to the same period in the prior year, attributable primarily to increased losses on sale of OREO, and increased regulatory compliance expense.
Table 9 |
||||||
ALLOWANCE ACTIVITY |
||||||
(Dollars in thousands) |
Q2 |
Q1 |
Q4 |
Q3 |
Q2 |
|
2011 |
2011 |
2010 |
2010 |
2010 |
||
Beginning balance |
$ 13,610 |
$ 12,841 |
$ 15,452 |
$ 12,767 |
$ 12,197 |
|
Provision for loan loss charged to expense |
2,580 |
2,400 |
4,550 |
4,450 |
1,600 |
|
Loans charged off |
(3,166) |
(1,966) |
(7,324) |
(1,883) |
(1,194) |
|
Loan loss recoveries |
339 |
335 |
163 |
118 |
164 |
|
Ending balance |
$ 13,363 |
$ 13,610 |
$ 12,841 |
$ 15,452 |
$ 12,767 |
|
Gross portfolio loans outstanding at period end |
$ 595,832 |
$ 602,980 |
$ 600,796 |
$ 611,151 |
$ 613,792 |
|
Ratio of allowance for loan losses to total loans |
2.24% |
2.26% |
2.14% |
2.53% |
2.08% |
|
Nonaccrual loans at period end: |
||||||
Commercial |
$ 901 |
$ 2,848 |
$ 2,302 |
$ 4,952 |
$ 3,404 |
|
Construction |
1,999 |
224 |
342 |
2,512 |
2,415 |
|
Commercial real estate |
3,282 |
3,706 |
7,066 |
9,617 |
9,601 |
|
Residential real estate |
12,741 |
11,705 |
10,704 |
7,997 |
6,910 |
|
Home equity |
- |
96 |
97 |
194 |
499 |
|
Total nonaccrual loans |
$ 18,923 |
$ 18,579 |
$ 20,511 |
$ 25,272 |
$ 22,829 |
|
Accruing troubled debt restructured loans |
||||||
Commercial |
$ - |
$ - |
$ - |
$ - |
$ 484 |
|
Construction |
108 |
2,328 |
2,804 |
2,327 |
2,320 |
|
Commercial real estate |
17,304 |
3,619 |
3,621 |
2,929 |
1,164 |
|
Residential real estate |
6,569 |
5,782 |
6,243 |
6,906 |
5,120 |
|
Home equity |
429 |
396 |
- |
- |
- |
|
Total accruing restructured loans |
$ 24,410 |
$ 12,125 |
$ 12,668 |
$ 12,162 |
$ 9,088 |
|
All other accruing impaired loans |
539 |
1,182 |
737 |
740 |
- |
|
Total impaired loans |
$ 43,872 |
$ 31,886 |
$ 33,916 |
$ 38,174 |
$ 31,917 |
|
Allowance for loan losses to nonaccrual loans at period end |
70.62% |
73.25% |
62.61% |
61.14% |
55.92% |
|
Nonaccrual loans to total loans |
3.18% |
3.08% |
3.41% |
4.14% |
3.72% |
|
Allowance for loan losses to impaired loans |
30.46% |
42.68% |
37.86% |
40.48% |
40.00% |
|
As of June 30, 2011, impaired loans totaled $43.9 million, of which $19.0 million were in nonaccrual status. Of the total impaired loans, $13.3 million or one hundred and forty seven were ITIN loans with an approximate average balance of $90 thousand. The remaining nonaccrual loans consist of two commercial loans, three construction loans, four commercial real estate loans, and seven non-ITIN residential mortgages.
TDRs are considered impaired loans, but are not necessarily placed on nonaccrual status at inception of TDR status. Rather, if the borrower is current to original loan terms at the time of the restructuring, and continues to pay as agreed to modified terms, the loan is reported as current. As of June 30, 2011, there were $7.6 million of impaired ITINs which were classified as TDRs with $4.2 million on non-accrual.
As of June 30, 2011 the Company had $32.4 million in TDRs compared to $21.9 million as of March 31, 2011. The increase in TDRs is due to the restructuring of debts with a large commercial real estate borrower. As of June 30, 2011, the Company had one hundred and nine restructured loans that qualified as TDRs; fifty seven loans were performing according to their restructured terms. TDRs represented 5.43% of gross portfolio loans, compared with 3.63% of gross portfolio loans on March 31, 2011.
Table 10 |
||||||
TROUBLED DEBT RESTRUCTURINGS |
||||||
(Dollars in thousands) |
June 30, |
March 31, |
December 31, |
September 30, |
June 30, |
|
2011 |
2011 |
2010 |
2010 |
2010 |
||
Nonaccrual |
$ 7,959 |
$ 9,752 |
$ 11,977 |
$ 12,587 |
$ 10,851 |
|
Accruing |
24,410 |
12,125 |
12,668 |
12,162 |
9,088 |
|
Total troubled debt restructurings |
$ 32,369 |
$ 21,877 |
$ 24,645 |
$ 24,749 |
$ 19,939 |
|
Percentage of total gross portfolio loans |
5.43% |
3.63% |
4.10% |
4.05% |
3.25% |
|
Table 11 |
||||||
NONPERFORMING ASSETS |
||||||
(Dollars in thousands) |
June 30, |
March 31, |
December 31, |
September 30, |
June 30, |
|
2011 |
2011 |
2010 |
2010 |
2010 |
||
Commercial |
$ 901 |
$ 2,849 |
$ 2,302 |
$ 4,952 |
$ 3,404 |
|
Real estate construction |
||||||
Commercial real estate construction |
1,973 |
99 |
100 |
2,251 |
2,151 |
|
Residential real estate construction |
26 |
125 |
242 |
261 |
264 |
|
Total real estate construction |
1,999 |
224 |
342 |
2,512 |
2,415 |
|
Real estate mortgage |
||||||
1-4 family, closed end 1st lien |
3,002 |
1,634 |
1,166 |
1,204 |
1,674 |
|
1-4 family revolving |
- |
96 |
97 |
194 |
195 |
|
ITIN 1-4 family loan pool |
9,739 |
10,071 |
9,538 |
6,751 |
5,237 |
|
Home equity loan pool |
- |
- |
- |
42 |
304 |
|
Total real estate mortgage |
12,741 |
11,801 |
10,801 |
8,191 |
7,410 |
|
Commercial real estate |
3,282 |
3,706 |
7,066 |
9,617 |
9,600 |
|
Total nonaccrual loans |
18,923 |
18,580 |
20,511 |
25,272 |
22,829 |
|
90 days past due not on nonaccrual |
953 |
743 |
- |
682 |
592 |
|
Total nonperforming loans |
19,876 |
19,323 |
20,511 |
25,954 |
23,421 |
|
Other real estate owned |
1,793 |
3,868 |
2,288 |
2,020 |
2,039 |
|
Total nonperforming assets |
$ 21,669 |
$ 23,191 |
$ 22,799 |
$ 27,974 |
$ 25,460 |
|
Nonperforming loans to total loans |
3.34% |
3.20% |
3.41% |
4.25% |
3.82% |
|
Nonperforming assets to total assets |
2.49% |
2.53% |
2.43% |
3.03% |
2.74% |
|
Table 12 |
||||||
OTHER REAL ESTATE OWNED ACTIVITY |
||||||
(Dollars in thousands) |
Q2 |
Q1 |
Q4 |
Q3 |
Q2 |
|
2011 |
2011 |
2010 |
2010 |
2010 |
||
Beginning balance |
$ 3,868 |
$ 2,288 |
$ 2,020 |
$ 2,039 |
$ 3,395 |
|
Additions to OREO |
407 |
2,099 |
3,680 |
215 |
- |
|
Dispositions of OREO |
(2,112) |
(332) |
(3,215) |
(105) |
(292) |
|
OREO valuation adjustment |
(370) |
(187) |
(197) |
(129) |
(1,064) |
|
Ending balance |
$ 1,793 |
$ 3,868 |
$ 2,288 |
$ 2,020 |
$ 2,039 |
|
At June 30, 2011 the recorded investment in OREO was $1.8 million. During the second quarter of 2011, the Company transferred six foreclosed properties aggregating $407 thousand to OREO; associated charges to the allowance for loan losses for these foreclosed assets amounted to $7 thousand. During the second quarter 2011, the Company sold ten properties aggregating $2.1 million for a net loss of $202 thousand, and recorded $370 thousand in additional write downs of existing OREO in other noninterest expense. The June 30, 2011 OREO balance consists of nine properties, of which eight are secured with 1-4 family residential real estate in the amount of $618 thousand. The remaining property consists of vacant commercial land in the amount of $1.2 million.
Table 13 |
|||||||||
INCOME STATEMENT |
|||||||||
(Dollars in thousands, except for per share data) |
Q2 |
Q2 |
Q1 |
Full Year |
Full Year |
||||
2011 |
2010 |
$ |
% |
2011 |
2010 |
2009 |
|||
Interest income: |
|||||||||
Interest and fees on loans |
$ 8,958 |
$ 9,510 |
$ (552) |
-6% |
$ 9,033 |
$ 38,034 |
$ 35,860 |
||
Interest on tax-exempt securities |
478 |
381 |
97 |
25% |
532 |
1,692 |
1,164 |
||
Interest on U.S. government securities |
633 |
507 |
126 |
25% |
678 |
2,083 |
3,450 |
||
Interest on federal funds sold and securities purchased under |
|||||||||
agreement to resell |
- |
- |
- |
- |
- |
2 |
32 |
||
Interest on other securities |
577 |
343 |
234 |
68% |
650 |
1,614 |
823 |
||
Total interest income |
10,646 |
10,741 |
(95) |
-1% |
10,893 |
43,425 |
41,329 |
||
Interest expense: |
|||||||||
Interest on demand deposits |
204 |
226 |
(22) |
-10% |
226 |
968 |
1,015 |
||
Interest on savings deposits |
229 |
221 |
8 |
4% |
246 |
921 |
963 |
||
Interest on certificates of deposit |
1,272 |
1,554 |
(282) |
-18% |
1,313 |
6,151 |
7,628 |
||
Securities sold under agreements to repurchase |
13 |
15 |
(2) |
-13% |
14 |
52 |
51 |
||
Interest on FHLB and other borrowings |
148 |
138 |
10 |
7% |
164 |
1,630 |
1,833 |
||
Interest on other borrowings |
263 |
406 |
(143) |
-35% |
107 |
680 |
845 |
||
Total interest expense |
2,129 |
2,560 |
(431) |
-17% |
2,070 |
10,402 |
12,335 |
||
Net interest income |
8,517 |
8,181 |
336 |
4% |
8,576 |
33,023 |
28,994 |
||
Provision for loan and lease losses |
2,580 |
1,600 |
980 |
61% |
2,400 |
12,850 |
9,475 |
||
Net interest income after provision for loan losses |
5,937 |
6,581 |
(644) |
-10% |
6,176 |
20,173 |
19,519 |
||
Noninterest income: |
|||||||||
Service charges on deposit accounts |
52 |
62 |
(10) |
-16% |
50 |
260 |
390 |
||
Payroll and benefit processing fees |
102 |
100 |
2 |
2% |
129 |
448 |
452 |
||
Earnings on cash surrender value – Bank owned life insurance |
119 |
107 |
12 |
11% |
111 |
438 |
418 |
||
Net gain on sale of securities available-for-sale |
655 |
133 |
522 |
392% |
258 |
1,981 |
2,438 |
||
Gain on settlement of put reserve |
- |
- |
- |
- |
- |
1,750 |
- |
||
Merchant credit card service income, net |
33 |
64 |
(31) |
-48% |
270 |
235 |
- |
||
Mortgage banking revenue, net |
2,550 |
2,776 |
(226) |
-8% |
2,492 |
14,328 |
5,327 |
||
Other income |
114 |
85 |
29 |
34% |
111 |
351 |
1,038 |
||
Total noninterest income |
3,625 |
3,327 |
298 |
9% |
3,421 |
19,791 |
10,063 |
||
Noninterest expense: |
|||||||||
Salaries and related benefits |
4,068 |
3,365 |
703 |
21% |
4,253 |
15,903 |
10,882 |
||
Occupancy and equipment expense |
800 |
924 |
(124) |
-13% |
708 |
3,660 |
3,405 |
||
Write down of other real estate owned |
370 |
1,064 |
(694) |
-65% |
187 |
1,571 |
161 |
||
FDIC insurance premium |
363 |
254 |
109 |
43% |
372 |
1,016 |
1,274 |
||
Data processing fees |
91 |
64 |
27 |
42% |
99 |
270 |
282 |
||
Professional service fees |
595 |
543 |
52 |
10% |
550 |
1,726 |
820 |
||
Deferred compensation expense |
131 |
122 |
9 |
7% |
127 |
493 |
478 |
||
Stationery and supplies |
88 |
96 |
(8) |
-8% |
43 |
258 |
185 |
||
Postage |
44 |
45 |
(1) |
-2% |
42 |
198 |
147 |
||
Directors' expense |
67 |
68 |
(1) |
-1% |
74 |
266 |
299 |
||
Other expenses |
1,237 |
964 |
273 |
28% |
1,071 |
4,970 |
2,691 |
||
Total noninterest expense |
7,854 |
7,509 |
345 |
5% |
7,526 |
30,331 |
20,624 |
||
Income before provision for income taxes |
1,708 |
2,399 |
(691) |
-29% |
2,071 |
9,633 |
8,958 |
||
Provision for income taxes |
216 |
750 |
(534) |
-71% |
431 |
3,159 |
2,690 |
||
Net Income |
1,492 |
1,649 |
(157) |
-10% |
1,640 |
6,474 |
6,268 |
||
Less: Net income (loss) attributable to noncontrolling interest |
6 |
144 |
(138) |
-96% |
(24) |
254 |
263 |
||
Net income attributable to Bank of Commerce Holdings |
$ 1,486 |
$ 1,505 |
$ (19) |
-1% |
$ 1,664 |
$ 6,220 |
$ 6,005 |
||
Less: Preferred dividend and accretion on preferred stock |
235 |
236 |
(1) |
- |
235 |
940 |
942 |
||
Income available to common stockholders |
$ 1,251 |
$ 1,269 |
$ (18) |
-1% |
$ 1,429 |
$ 5,280 |
$ 5,063 |
||
Basic earnings per share |
$ 0.07 |
$ 0.08 |
$ (0.01) |
$ 0.08 |
$ 0.35 |
$ 0.58 |
|||
Weighted average shares - basic |
16,991 |
16,837 |
154 |
16,991 |
14,951 |
8,711 |
|||
Diluted earnings per share |
$ 0.07 |
$ 0.08 |
$ (0.01) |
$ 0.08 |
$ 0.35 |
$ 0.58 |
|||
Weighted average shares - diluted |
16,991 |
16,837 |
16,991 |
14,951 |
8,711 |
||||
Cash dividends declared |
$ 0.06 |
$ 0.03 |
$ 0.18 |
$ 0.24 |
|||||
Table 14 |
||||||
BALANCE SHEET |
||||||
(Dollars in thousands) |
June 30, |
June 30, |
March 31, |
|||
ASSETS |
2011 |
2010 |
$ |
% |
2011 |
|
Cash and due from banks |
$ 19,091 |
$ 36,815 |
$ (17,724) |
-48% |
$ 31,321 |
|
Interest bearing deposits in other banks |
29,225 |
39,492 |
(10,267) |
-26% |
36,975 |
|
Cash and cash equivalents |
48,316 |
76,307 |
(27,991) |
-37% |
68,296 |
|
Investment securities |
162,184 |
176,001 |
(13,817) |
-8% |
185,717 |
|
Total portfolio loans |
595,781 |
613,599 |
(17,818) |
-3% |
602,876 |
|
Allowance for loan losses |
13,363 |
12,767 |
596 |
5% |
13,610 |
|
Loans, net |
582,418 |
600,832 |
(18,414) |
-3% |
589,266 |
|
Mortgage loans held for sale |
26,067 |
26,875 |
(808) |
-3% |
18,963 |
|
Total interest earning assets |
832,348 |
892,782 |
(60,434) |
-7% |
875,852 |
|
Bank premises and equipment, net |
9,691 |
9,988 |
(297) |
-3% |
9,736 |
|
OREO, net |
3,695 |
2,039 |
1,656 |
81% |
3,695 |
|
Goodwill |
1,793 |
3,695 |
(1,902) |
-51% |
3,868 |
|
Other assets |
34,358 |
34,008 |
350 |
1% |
35,984 |
|
TOTAL ASSETS |
$ 868,522 |
$ 929,745 |
$ (61,223) |
-7% |
$ 915,525 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
||||||
Demand - noninterest bearing |
$ 87,643 |
$ 66,040 |
$ 21,603 |
33% |
$ 87,842 |
|
Demand - interest bearing |
149,917 |
165,871 |
(15,954) |
-10% |
146,202 |
|
Savings accounts |
93,698 |
76,438 |
17,260 |
23% |
91,912 |
|
Certificates of deposit |
294,173 |
334,676 |
(40,503) |
-12% |
302,133 |
|
Total deposits |
625,431 |
643,025 |
(17,594) |
-3% |
628,089 |
|
Securities sold under agreements to repurchase |
15,353 |
13,444 |
1,909 |
14% |
14,607 |
|
Federal Home Loan Bank borrowings |
91,000 |
145,000 |
(54,000) |
-37% |
141,000 |
|
Mortgage warehouse line of credit |
4,236 |
- |
4,236 |
100% |
- |
|
Junior subordinated debentures |
15,465 |
15,465 |
- |
- |
15,465 |
|
Other liabilities |
8,843 |
10,118 |
(1,275) |
-13% |
10,281 |
|
Total Liabilities |
$ 760,328 |
$ 827,052 |
(66,724) |
-8% |
$ 809,442 |
|
Total Equity – Bank of Commerce Holdings |
105,633 |
100,479 |
5,154 |
5% |
103,528 |
|
Noncontrolling interest in subsidiary |
2,561 |
2,214 |
347 |
16% |
2,555 |
|
Total Stockholders' Equity |
108,194 |
102,693 |
5,501 |
5% |
106,083 |
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ 868,522 |
$ 929,745 |
$ (61,223) |
-7% |
$ 915,525 |
|
Table 15 |
||||||
AVERAGE BALANCE SHEET |
||||||
(Dollars in thousands) |
Q2 |
Q2 |
Q1 |
Full Year |
Full Year |
|
2011 |
2010 |
2011 |
2010 |
2009 |
||
Earning assets: |
||||||
Loans |
$ 626,685 |
$ 622,525 |
$ 616,374 |
$ 640,213 |
$ 589,336 |
|
Tax exempt securities |
50,899 |
34,288 |
53,127 |
42,172 |
28,384 |
|
US government securities |
29,480 |
21,329 |
30,148 |
27,423 |
8,606 |
|
Mortgage backed securities |
73,500 |
32,076 |
71,211 |
48,972 |
53,722 |
|
Other securities |
42,256 |
9,043 |
44,975 |
16,946 |
3,199 |
|
Interest bearing due from banks |
69,205 |
71,793 |
71,175 |
62,651 |
64,454 |
|
Fed funds sold |
- |
990 |
- |
995 |
13,438 |
|
Average earning assets |
892,025 |
792,044 |
887,010 |
839,372 |
761,139 |
|
Cash and DFB |
1,985 |
1,829 |
1,490 |
1,473 |
493 |
|
Bank premises |
9,576 |
9,911 |
9,596 |
9,814 |
10,322 |
|
Other assets |
21,114 |
32,681 |
29,232 |
55,440 |
32,257 |
|
Average total assets |
$ 924,700 |
$ 836,465 |
$ 927,328 |
$ 906,099 |
$ 804,211 |
|
Interest-bearing liabilities: |
||||||
Demand - interest bearing |
$ 148,473 |
$ 143,813 |
$ 149,152 |
$ 141,983 |
$ 145,542 |
|
Savings deposits |
90,714 |
71,789 |
88,291 |
76,718 |
62,846 |
|
CDs |
307,094 |
333,239 |
307,525 |
321,051 |
317,417 |
|
Repurchase agreements |
14,224 |
11,215 |
14,218 |
12,274 |
11,006 |
|
Other borrowings |
156,756 |
89,692 |
159,654 |
134,255 |
122,057 |
|
717,261 |
649,748 |
718,840 |
686,281 |
658,868 |
||
Demand - noninterest bearing |
95,641 |
74,713 |
98,502 |
92,433 |
69,250 |
|
Other liabilities |
5,617 |
26,893 |
5,132 |
31,748 |
9,467 |
|
Shareholders' equity |
106,181 |
85,111 |
104,854 |
95,637 |
66,626 |
|
Average liabilities & equity |
$ 924,700 |
$ 836,465 |
$ 927,328 |
$ 906,099 |
$ 804,211 |
|
BOCH is a NASDAQ National Market listed stock. Please contact your local investment advisor for purchases and sales. Investment firms making a market in BOCH stock are:
Raymond James Financial / Howe Barnes
John T. Cavender
555 Market Street
San Francisco, CA (800) 346-5544
Hill, Thompson, Magid & Co. Inc / R.J. Dragani
15 Exchange Place, Suite 800
Jersey City, New Jersey 07030 (201) 369-2908
Keefe, Bruyette & Woods, Inc. /
Dave Bonaccorso
101 California Street, 37th Floor
San Francisco, CA 94105 (415) 591-5063
Sandler & O'Neil /Bryan Sullivan
919 Third Avenue, 6th Floor
New York, NY 10022 (888) 383-3112
McAdams Wright Ragen, Inc. /Joey Warmenhoven
1121 SW Fifth Avenue
Suite 1400
Portland, Oregon 97204 (866) 662-0351
Stiffel Nicolaus
Perry Wright
1255 East Street #100
Redding, CA 96001 (868) 950-5524
SOURCE Bank of Commerce Holdings
WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM?
Newsrooms &
Influencers
Digital Media
Outlets
Journalists
Opted In
Share this article