Bank of Commerce Holdings™ announces Third Quarter Results

          Bank of Commerce Holdings™ announces Third Quarter Results

PR Newswire

REDDING, Calif., Oct. 31, 2013

REDDING, Calif., Oct. 31, 2013 /PRNewswire/ --Patrick J. Moty, President and
Chief Executive Officer of Bank of Commerce Holdings (NASDAQ: BOCH), a $931.8
million bank holding company and parent company of Redding Bank of Commerce™
and Roseville Bank of Commerce™ (a division of Redding Bank of Commerce) (the
"Bank"), today reported net income available to common shareholders of $1.8
million and diluted earnings per share (EPS) from continuing operations of
$0.12 for the quarter ended September 30, 2013.

Financial highlights:

  oNet income available to common shareholders of $1.8 million compared to
    $1.5 million reported for the third quarter of 2012, and $2.0 million
    recorded for the second quarter of 2013.
  oDiluted EPS attributable to continuing operations of $0.12 compared to
    $0.12 reported for the third quarter of 2012 and $0.13 for the second
    quarter of 2013. Diluted EPS attributable to discontinued operations of
    $0.00 compared to $(0.03) reported for the third quarter of 2012 and $0.00
    for the prior quarter ended June 30, 2013.
  oLoan loss provisions for the third quarter were $300 thousand compared to
    $1.9 million for the third quarter of 2012, and $1.4 million for the prior
    quarter ended June 30, 2013.
  oNonperforming assets represent 3.95% of total assets in the current period
    versus 3.03% for the third quarter of 2012 and 3.92% for the prior quarter
    ended June 30, 2013.

Patrick J. Moty, President and CEO commented: "I am very pleased to report
that year to date net income is up 6.5% over the same nine month period of
2012. Our core deposits continue to grow and increased by 10% over the same
period. In September we also declared a special cash dividend of $0.02 per
share in addition to our regular quarterly cash dividend."

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:

  oCompetitive pressure in the banking industry and changes in the regulatory
    environment
  oChanges in the interest rate environment and volatility of rate sensitive
    assets and liabilities
  oA 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
  oCredit quality deterioration which could cause an increase in the
    provision for loan losses
  oAsset/Liability matching risks and liquidity risks
  oChanges 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, 2012 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, which speak only as of the date hereof. The Company undertakes no
obligation to revise or publicly release the results of any revision to these
forward-looking statements to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.

Table 1 below shows summary financial information for the quarters ended
September 30, 2013 and 2012, and June 30, 2013.

Table 1
                         SUMMARY FINANCIAL INFORMATION
(Shares and dollars in  Quarter ended Quarter ended          Quarter
thousands)                                                    ended
                         September 30, September 30, Change   June 30,  Change
                         2013          2012                   2013
Selective quarterly
performance ratios
Return on average        0.76%         0.72%         0.04%    0.84%     -0.08%
assets, annualized
Return on average        6.89%         6.15%         0.74%    7.40%     -0.51%
equity, annualized
Efficiency ratio for     62.69%        52.06%        10.63%   55.29%    7.40%
quarter to date
Share and Per Share
figures – Actual
Common shares
outstanding at period    14,462        16,121        (1,659)  14,990    (528)
end
Weighted average diluted 14,853        16,240        (1,387)  15,139    (286)
shares
Diluted EPS attributable $       $       $      $     $ 
to continuing operations                   0.00         (0.01)
                         0.12         0.12                     0.13
Diluted EPS attributable $       $       $      $     $ 
to discontinued                             0.03         0.00
operations               0.00         (0.03)                  0.00
Book value per common    $       $       $      $     $ 
share                                      0.06         (0.07)
                         5.73         5.67                     5.80
Tangible book value per  $       $       $      $     $ 
common share                               0.06         (0.07)
                         5.73         5.67                     5.80
Capital Ratios
                         September 30, September 30, Change   June 30,  Change
                         2013          2012                   2013
Bank of Commerce
Holdings
Tier 1 risk based        15.66%        14.67%        0.73%    14.27%    1.13%
capital ratio
Total risk based capital 16.92%        15.92%        0.74%    15.53%    1.13%
ratio
Leverage ratio           12.80%        13.21%        -0.41%   13.02%    -0.22%
Redding Bank of Commerce
Tier 1 risk based        15.19%        14.11%        0.86%    14.68%    0.29%
capital ratio
Total risk based capital 16.45%        15.36%        0.86%    15.93%    0.29%
ratio
Leverage ratio           12.42%        12.71%        -0.27%   12.66%    -0.22%

Bank of Commerce Holdings (the "Company") remains well capitalized. At
September 30, 2013, the Company's Tier 1 and Total risk based capital ratios
measured 15.66% and 16.92% respectively, while the leverage ratio was 12.80%.

Return on average assets (ROA) and return on average equity (ROE) for the
current quarter was 0.76% and 6.89%, respectively, compared with 0.72% and
6.15%, respectively, for the same period a year ago. The increase in ROA and
ROE during the current quarter compared to the same period a year ago is
primarily attributed to the following:

  oLoss from discontinued operations decreased during the three months ended
    September 30, 2013; the Company realized $0 in income from discontinued
    operations compared to a loss of $507 thousand in the three months ended
    September 30, 2012.
  oThe provision for loan losses for the three months ended September 30,
    2013 decreased by $1.6 million compared to the same period a year ago.

The increase in ROE is also attributed to the decrease in the weighted average
number of dilutive common shares outstanding. During 2013 the Company
repurchased 1,513,668 common shares through two separate repurchase plans
resulting in a decrease in the weighted average shares outstanding of
1,135,519. All shares were retired subsequent to purchase.

The increase in the efficiency ratio compared to the prior quarter and same
period a year ago is due to increases in other expenses primarily driven by
the loss recognized from the termination of the forward starting interest rate
swap of $503 thousand and a loss of $176 thousand related to the purchase of
the remaining outstanding balance of an impaired participated commercial real
estate credit.

Balance Sheet Overview

As of September 30, 2013, the Company had total consolidated assets of $931.8
million, total net portfolio loans of $581.3 million, allowance for loan and
lease losses of $13.5 million, total deposits of $725.5 million, and
stockholders' equity of $102.8 million.

Overall, the net portfolio loan balance decreased during the third quarter of
2013 compared to the same period a year ago. The Company recorded net
portfolio loans of $581.3 million at September 30, 2013, compared with $594.1
million at September 30, 2012, a decrease of $12.8 million, or 2.15%. The
decrease in net portfolio loans was primarily driven by the pay off of a $7.2
million commercial real estate loan.



Table 2
                  PERIOD END LOANS
(Dollars in       September % of  September % of  Change        June 30, % of
thousands)        30,             30,
                  2013      Total 2012      Total Amount   %    2013     Total
Commercial        $      28%   $      27%   $       2%   $     31%
                  169,193        165,915        3,278        197,084
Real estate –
construction      15,625    3%    21,346    4%    (5,721)  -27% 15,875   3%
loans
Real estate –
commercial        208,530   35%   215,836   36%   (7,306)  -3%  201,896  33%
(investor)
Real estate –
commercial (owner 80,101    13%   74,667    12%   5,434    7%   78,478   13%
occupied)
Real estate –     57,232    10%   61,020    10%   (3,788)  -6%  58,271   9%
ITIN loans
Real estate –     15,872    3%    17,062    3%    (1,190)  -7%  17,738   3%
mortgage
Real estate –     43,989    7%    44,041    7%    (52)     0%   44,285   7%
equity lines
Consumer          3,753     1%    4,530     1%    (777)    -17% 3,581    1%
Other loans       267       0%    62        0%    205      331% 190      0%
 Gross        594,562   100%  604,479   100%  (9,917)  -2%  617,398  100%
portfolio loans
Less:
Deferred loan     (282)           (216)           (66)     31%  (335)
fees, net
Allowance for
loan and lease    13,542          10,560          2,982    28%  13,133
losses
 Net          $            $            $        -2%  $   
portfolio loans   581,302        594,135        (12,833)      604,600
Yield on loans    4.84%           5.23%           -0.39%        4.80%



Table 3
                 PERIOD END CASH EQUIVALENTS AND INVESTMENT
                 SECURITIES
(Dollars in      September % of  September % of  Change         June 30, % of
thousands)       30,             30,
                 2013      Total 2012      Total Amount   %     2013     Total
Cash
equivalents:
Cash and due     $           $           $           $   
from banks       28,616   10%    40,541 14%   (11,925) -29%         7%
                                                                22,426
Interest bearing 20,379    7%    23,893    9%    (3,514)  -15%  20,810   7%
due from banks
                 48,995    17%   64,434    23%   (15,439) -24%  43,236   14%
Investment
Securities-AFS:
U.S. government  3,718     1%    0         0%    3,718    100%  886      0%
and agencies
Obligations of
state and        61,492    20%   68,019    24%   (6,527)  -10%  68,652   23%
political
subdivisions
Mortgage backed  57,934    20%   54,353    20%   3,581    7%    53,538   18%
securities
Corporate        52,552    18%   49,747    18%   2,805    6%    66,924   23%
securities
Other asset
backed           33,946    12%   22,809    8%    11,137   49%   28,495   10%
securities
                 209,642   71%   194,928   70%   14,714   8%    218,495  74%
Investment
Securities-HTM:
Obligations of
state and        34,814    12%   18,808    7%    16,006   85%   34,843   12%
political
subdivisions
Total cash                                       $           $   
equivalents and  $      100%  $     100%          5%            100%
investment       293,451        278,170        15,281        296,574
securities
Yield on cash
equivalents and  2.50%           2.78%           -0.28%         2.51%
investment
securities

The Company continued to maintain a strong liquidity position during the
reporting period. As of September 30, 2013, the Company maintained cash
positions at the FRB and correspondent banks in the amount of $28.6 million.
The Company also held certificates of deposits with other financial
institutions in the amount of $20.4 million, which the Company considers
liquid.

The Company's available-for-sale investment portfolio is currently being
utilized as a secondary source of liquidity to fund other higher yielding
asset opportunities, such as commercial and commercial real estate loan
originations when required. Available-for-sale investment securities totaled
$209.6 million at September 30, 2013, compared with $218.5 million at June 30,
2013. During the three months ended September 30, 2013 the Company's
securities purchases were centered in asset and mortgage backed securities.

The purchases of asset backed securities were characterized as short to
moderate in duration, both fixed and floating, with the bonds reflecting solid
performance relative to their respective collateral profile and supporting
credit enhancements. The mortgage backed securities purchased during the
period were centered on moderate duration bonds with relatively solid cash
flows and yield. Overall, management's investment strategy reflects the
continuing expectation of rising rates across the yield curve. As such,
management will continue to actively seek out opportunities to reduce the
duration of the portfolio and improve cash flows. Given the current shape of
the yield curve, this strategy could entail absorbing low to moderate losses
within the portfolio to meet this longer term objective.

During the third quarter of 2013, the Company purchased twenty-five securities
with a weighted average yield of 2.91%, and sold thirty-one securities with a
weighted average yield of 2.46%. The sales activity resulted in $336 thousand
net realized gains.

At September 30, 2013, the Company's net unrealized losses on
available-for-sale securities were $4.3 million compared with $692 thousand
net unrealized losses at June 30, 2013. The unfavorable change in net
unrealized losses was primarily due to decreases in the fair values of the
Company's municipal bond and mortgaged backed security portfolios. The
decreases in the fair values of these securities were primarily driven by
changes in market interest rates and or widening of market spreads.

Table 4
                       QUARTERLY AVERAGE DEPOSITS BY CATEGORY
(Dollars in thousands) Q3      % of  Q3      % of  Change        Q2      % of
                       2013    Total 2012    Total Amount   %    2013    Total
Demand deposits        $    18%   $    18%   $     4%   $     16%
                       125,133       120,821       4,312        112,825
Interest bearing       246,236 35%   213,217 31%   33,019   15%  237,113 35%
demand
Total checking         371,369 53%   334,038 49%   37,331   11%  349,938 51%
deposits
Savings                94,062  13%   90,856  13%   3,206    4%   92,266  13%
Total non-time         465,431 66%   424,894 62%   40,537   10%  442,204 64%
deposits
Time deposits          241,947 34%   264,244 38%   (22,297) -8%  247,565 36%
Total deposits         $    100%  $    100%  $      3%   $     100%
                       707,378       689,138       18,240       689,769
Weighted average rate  0.56%         0.78%         -0.22%        0.57%
on total deposits

During the third quarter of 2013 average total deposits increased 3% or $18.2
million to $707.4 million compared to the third quarter in 2012. Non maturing
core deposits increased $33.2 million or 8% year over year. Insured Cash
Sweep (ICS) deposits totaling $37.9 million as of September 30, 2013 are
included in interest bearing demand. The ICS deposits are locally generated
funds but considered noncore for regulatory purposes. Management considers
these deposits as stable in nature.

Operating Results for the Third Quarter of 2013

Net income from continuing operations was $1.8 million for the three months
ended September 30, 2013 compared with $2.2 million for the same period a year
ago. The decrease in net income from continuing operations was primarily due
to an increase in the provision for income tax for the third quarter of 2013
which included the correction of an under-accrual of taxes that resulted from
incorrectly accounting for the book tax timing differences relating to the
sale of the Company's former mortgage subsidiary. As a result, the Company
recognized additional income tax, interest and penalties expense totaling $429
thousand, relating to 2012 tax year. Interest and/or penalties related to
income taxes are reported as a component of income tax expense. Net income
attributable to Bank of Commerce Holdings remained relatively consistent with
amounts reported for the same period a year ago as a result of decreased
losses reported from discontinued operations.

Net income available to common shareholders was $1.8 million for the three
months ended September 30, 2013, compared with $1.5 million for the same
period a year ago. Net income available to common shareholders increased
during three months ended September 30, 2013 compared with the same period a
year ago due to a $200 thousand decrease in preferred stock dividends payable
to the U.S. Treasury pursuant to the SBLF program as a result of increased
qualified lending.

Diluted earnings per share (EPS) from continuing operations and discontinued
operations were $0.12 and $0.00 for the three months ended September 30, 2013
compared with $0.12 and $(0.03) for the same period a year ago, respectively.
EPS attributable to continuing operations remained flat for the three months
ending September 30, 2013 compared to the same period a year ago due to a
combination of the decrease preferred stock dividends and decreased weighted
average shares. The decrease in weighted average shares directly resulted from
the repurchase of 1,513,668 common shares through two separate repurchase
plans announced in 2013. All shares were retired subsequent to purchase. As
such, the weighted average number of dilutive common shares outstanding
decreased by 1,113,673 during the nine months ended September 30, 2013.

The Company declared cash dividends of $0.03 per share for the third quarter
of 2013, consistent with the quarterly dividends paid in the first and second
quarters of 2013 and 2012. The Company also declared a special cash dividend
of $0.02 per share for the third quarter of 2013.

Table 5
                       SUMMARY INCOME STATEMENT
(Dollars in thousands) Q3      Q3      Change             Q2      Change
                       2013    2012    Amount      %      2013    Amount  %
Net interest income    $      $     $  (619)  -7%    $      $    3%
                       8,496  9,115                     8,286   210
Provision for loan and 300     1,900   (1,600)     -84%   1,400   (1,100) -79%
lease losses
Noninterest income     974     1,419   (445)       -31%   1,025   (51)    -5%
Noninterest expense    5,937   5,484   453         8%     5,148   789     15%
Income from continuing
operations before      3,233   3,150   83          3%     2,763   470     17%
income taxes
Provision for income   1,431   923     508         55%    757     674     89%
tax
Net income from        $      $     $  (425)  -19%   $      $      -10%
continuing operations  1,802  2,227                     2,006   (204)
Discontinued
Operations:
Income (loss) from     $    $                        $    $   
discontinued             0   (746)  $    746 100%    0      0   0%
operations
Income tax expense
associated with income
(loss) from            0       (239)   239         100%   0       0       0%
discontinued
operations
Net income (loss) from
discontinued           0       (507)   507         100%   0       0       0%
operations
Net income
attributable to Bank   1,802   1,720   82          5%     2,006   (204)   -10%
of Commerce Holdings
Less: preferred
dividend and accretion 50      250     (200)       -80%   50      0       0%
on preferred stock
Income available to    $      $     $    282 19%    $      $      -10%
common shareholders    1,752  1,470                     1,956   (204)
 Basic EPS           $     $                       $     $ 
attributable to        0.12   0.12   $   0.00 0%     0.13    (0.01)  -8%
continuing operations
 Basic EPS
attributable to        $     $     $   0.03 100%   $     $     0%
discontinued           0.00   (0.03)                     0.00    0.00
operations
 Average basic       14,829  16,240  (1,411)     -9%    15,120  (291)   -2%
shares
 Diluted EPS         $     $                       $     $ 
attributable to        0.12   0.12   $   0.00 0%     0.13    (0.01)  -8%
continuing operations
 Diluted EPS
attributable to        $     $     $   0.03 100%   $     $     0%
discontinued           0.00   (0.03)                     0.00    0.00
operations
 Average diluted     14,853  16,240  (1,387)     -9%    15,139  (286)   -2%
shares

Net interest income is the largest source of our operating income. Net
interest income for the three months ended September 30, 2013 was $8.5 million
compared to $9.1 million during the same period a year ago.

Interest income for the three months ended September 30, 2013 was $9.3
million, a decrease of $1.0 million or 10% compared to the same period a year
ago. The decrease in interest income during the second quarter of 2013
compared to the same period a year ago was primarily driven by decreased
yields in the loan portfolio and the investment securities portfolio,
partially offset by increased investment securities volume. The decrease in
loan portfolio yield was primarily driven by net increases in nonaccruing
commercial and commercial real estate loans compared to the same period a year
ago. Average nonaccruing loans at September 30, 2013 increased $10.2 million
compared to the same period a year ago. As a result, during the three months
ended September 30, 2013, loan interest income decreased $975 thousand or 12%
compared to the same period a year ago.

Interest income recognized from the investment securities portfolio decreased
$45 thousand during the three months ended September 30, 2013 compared to the
same period a year ago. The decrease in investment securities interest income
was primarily attributable to decreased yields partially offset by increased
volume. Average quarterly securities balances and weighted average tax
equivalent yields at September 30, 2013 and 2012 were $249.0 million and 3.25%
compared to $211.0 million and 3.84%, respectively.

Interest expense for the current quarter was $825 thousand, a decrease of $401
thousand or 33% compared to the same period a year ago. During the current
quarter of 2013, the Company continued to benefit from the re-pricing of
deposits, and significantly lower FHLB borrowings expense.

Table 6
                             NET INTEREST SPREAD AND MARGIN
(Dollars in thousands)       Q3         Q3        Change     Q2       Change
                             2013       2012      Amount     2013     Amount
Tax equivalent yield on
average interest earning     4.26%      4.68%     -0.42%     4.19%    0.07%
assets
Rate on average interest     0.47%      0.69%     -0.22%     0.49%    -0.02%
bearing liabilities
Net interest spread          3.79%      3.99%     -0.20%     3.70%    0.09%
Net interest margin on a tax 3.90%      4.14%     -0.24%     3.80%    0.10%
equivalent basis
Average earning assets       $        $       $       $      $   
                             904,022   907,675  (3,653)    904,640 (618)
Average interest bearing     $        $       $      $      $ 
liabilities                  709,096   708,163    933    720,681 (11,585)

The net interest margin (net interest income as a percentage of average
interest earning assets) on a fully tax-equivalent basis was 3.90% for the
three months ended September 30, 2013, a decrease of 24 basis points ("bp") as
compared to the same period a year ago. The decrease in net interest margin
primarily resulted from a 46 bp decline in yield on average earning assets,
partially offset by a 22 bp decrease 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 present significant challenges. Accordingly,
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 yield on earning assets.

Noninterest income for the three months ended September 30, 2013 was $974
thousand, a decrease of $445 thousand or 31% when compared to the same period
a year ago. The following table presents the key components of noninterest
income for the three months ended September 30, 2013 and 2012, and June 30,
2013:

Table 7
                       NONINTEREST INCOME
(Dollars in thousands) Q3      Q3       Change           Q2       Change
                       2013    2012     Amount     %     2013     Amount  %
Service charges on     $    $     $       -6%   $     $    -15%
deposit accounts       46      49       (3)             54       (8)
Payroll and benefit    113     122      (9)        -7%   114      (1)     -1%
processing fees
Earnings on cash
surrender value - Bank 133     114      19         17%   112      21      19%
owned life insurance
Gain (loss) on
investment securities, 336     550      (214)      -39%  406      (70)    -17%
net
Merchant credit card   33      39       (6)        -15%  32       1       3%
service income, net
Other income           313     545      (232)      -43%  307      6       2%
Total noninterest      $     $ 1,419 $  (445) -31%  $ 1,025 $     -5%
income                 974                                        (51)

Gains on the sale of investment securities decreased $214 thousand to $336
thousand for the three months ended September 30, 2013, compared to $550
thousand for the same period a year ago. During the three months ended
September 30, 2013, the Company purchased twenty-five securities with weighted
average yields of 2.91%. During the same period the Company sold thirty-one
securities with weighted average yields of 2.46%. Generally, securities
purchased had relatively short durations with good credit quality.

The major components of other income are fees earned on ATM transactions,
mortgage fee income, online banking services, wire transfers, and FHLB
dividends. The decrease in other income in the current year is primarily
driven by a $240 thousand litigation settlement with a servicer of purchased
pool loans included in the 2012 other income, partially offset by a $23
thousand increase in the FHLB dividends recorded during the three months
ending September 30, 2013 compared to the same period a year ago. Changes in
the components of other income are a result of normal operating activities.

Noninterest expense for the three months ended September 30, 2013 was $5.9
million, an increase of $453 thousand or 8% compared to the same period a year
ago. The following table presents the key elements of noninterest expense for
the three months ended September 30, 2013 and 2012, and June 30, 2013:

Table 8
                    NONINTEREST EXPENSE
(Dollars in         Q3       Q3       Change          Q2       Change
thousands)
                    2013     2012     Amount    %     2013     Amount     %
Salaries and        $ 2,865 $ 2,732 $   133 5%    $ 3,074 $  (209) -7%
related benefits
Occupancy and       549      508      41        8%    529      20         4%
equipment expense
FDIC insurance      202      202      0         0%    245      (43)       -18%
premium
Data processing     127      94       33        35%   136      (9)        -7%
fees
Professional        364      255      109       43%   294      70         24%
service fees
Deferred
compensation        58       150      (92)      -61%  0        58         0%
expense
Other expenses      1,772    1,543    229       15%   870      902        104%
Total noninterest   $ 5,937 $ 5,484 $   453 8%    $ 5,148 $       15%
expense                                                        789

The decrease in FDIC assessments of $43 thousand or 18% compared to the prior
quarter resulted from true-up adjustments to reverse prior period over
accruals and a decrease in the overall assessment rate.

Data processing expense for the three months ended September 30, 2013 was $127
thousand, an increase of $33 thousand or 35% compared to the same period a
year ago. The increases in data processing expense compared to the same
periods a year ago is primarily driven by increases in software maintenance
and licensing expenses. The Bank continues to strive to make improvements in
network infrastructure and systems, and expects to see continued increased
costs in these expenses for the foreseeable future.

Professional service fees encompass audit, legal and consulting fees.
Professional service fees for the three months ended September 30, 2013 was
$364 thousand, an increase of $109 thousand or 43% compared to the same period
a year ago. The increase in professional fees was primarily driven by
increased fees and usage of external audit and professional services.

Deferred compensation expense for the three months ended September 30, 2013
was $58 thousand, a decrease of $92 thousand compared to the same period a
year ago. During the second quarter of 2013, the Company revised the
Supplemental Executive Retirement Plan (SERP) resulting in a reversal of
current year and prior years accrued deferred compensation expenses of $357
thousand. For disclosure purposes, in the table above and in the Company's
Consolidated Statement of Operations, the current year credit balance in
deferred compensation expense is netted in the line item other expenses.

Other expenses for the three months ended September 30, 2013 were $1.8
million, an increase of $229 thousand or 15% compared to the same period a
year ago. The increase in other expenses was primarily driven by the loss
recognized from the termination of an interest rate hedge using a forward
starting interest rate swap of $503 thousand partially offset by a decrease in
losses on sale of OREO of $196 thousand. In addition to the loss recognized on
the forward starting interest rate swap hedge, the increase in other expenses
over the prior quarter of $902 thousand was primarily driven by a FHLB
prepayment penalty of $194 thousand and a loss of $176 thousand related to the
purchase of the remaining outstanding balance of an impaired participated
commercial real estate credit.

Table 9
                     ALLOWANCE ROLL FORWARD
(Dollars in          Q3          Q2          Q1          Q4          Q3
thousands)
                     2013        2013        2013        2012        2012
Beginning balance    $         $         $         $         $  
                     13,133     11,350     11,103     10,560     12,497
Provision for loan
loss charged to      300         1,400       1,050       4,550       1,900
expense
Loans charged off    (635)       (474)       (845)       (4,183)     (4,011)
Loan loss recoveries 744         857         42          176         174
Ending balance       $         $         $         $         $  
                     13,542     13,133     11,350     11,103     10,560
Gross portfolio      $          $          $          $          $ 
loans outstanding at 594,562    617,398    612,608    664,051    604,479
period end
Ratio of allowance
for loan losses to   2.28%       2.13%       1.85%       1.67%       1.75%
total loans
Nonaccrual loans at
period end:
 Commercial     $        $        $        $        $   
                     7,501      7,898      3,420      2,935      3,330
 Construction    0           0           0           0           77
 Commercial real 16,895      16,614      23,363      24,008      10,393
estate
 Residential     10,953      11,165      11,302      11,630      11,733
real estate
 Home equity     517         345         0           0           95
 Total        $         $         $         $         $  
nonaccrual loans     35,866     36,022     38,085     38,573     25,628
Accruing troubled
debt restructured
loans
 Commercial      $      $      $      $      $    
                      65         68         70        523           72
 Commercial real 1,742       1,748       4,593       4,598       9,790
estate
 Residential     2,996       3,174       2,954       2,934       3,117
real estate
 Home equity     604         531         536         561         501
 Total        $        $        $        $        $  
accruing             5,407      5,521      8,153      8,616      13,480
restructured loans
All other accruing   4,190       4,445       1,426       471         7,281
impaired loans
Total impaired loans $         $         $         $         $  
                     45,463     45,988     47,664     47,660     46,389
Allowance for loan
and lease losses to  37.76%      36.46%      29.80%      28.78%      41.20%
nonaccrual loans at
period end
Nonaccrual loans to  6.03%       5.83%       6.22%       5.81%       4.24%
total loans
Allowance for loan
and lease losses to  29.79%      28.56%      23.81%      23.30%      22.76%
impaired loans

During October of 2013 the Company received full principal payment on an
impaired commercial real estate loan that had a carrying amount of $2.1
million. As a result, the Company recovered $1.3 million in previously charged
off principal, and interest of $53 thousand. The Company considers this
transaction to be a subsequent event, which decreased the Company's recorded
investment in impaired loans compared to amounts reported as of September 30,
2013.

The ALLL allocation increased compared to amounts reported as of December 31,
2012. The ALLL at September 30, 2013 totaled $13.5 million compared to $13.1
million at June 30, 2013.

During the three months ended September 30, 2013, the provisions for loan
losses exceeded charge offs for the same period. During the three months ended
September 30, 2013 the Company realized net recoveries of $109 thousand
compared to net recoveries of $383 thousand in the three months ended June 30,
2013, and net charge offs of $3.8 million the three months ended September 30,
2012. There were a number of factors that contributed to the decrease in net
charge offs in the quarter ended September 30, 2013 over the same period a
year ago, including, less impairment charges on both existing impaired loans,
newly classified impaired loans, and higher recovery rates on previously
charged off loans.

The Company continues to monitor credit quality, and adjust the ALLL
accordingly. As such, the Company provided $300 thousand in provisions for
loan losses during the third quarter of 2013, compared with $1.9 million
during the same period a year ago. The decrease in current period provision
is supported by the decrease in net charge offs in the first 3 quarters of the
current year compared to the last two quarters of 2012 and the decrease in
gross portfolio loans outstanding. The Company's ALLL as a percentage of
gross portfolio loans was 2.28% and 2.13% as of September 30, 2013, and June
30, 2013, respectively.

The charge offs in the current quarter were primarily in 1-4 family home
equity loans and commercial real estate. During the third quarter of 2013, the
Bank's loan portfolio reflected higher recovery rates relative to the third
and fourth quarter of 2012. Management is cautiously optimistic that given
continuing improvement in local and national economic conditions, the
Company's impaired assets will continue to trend down. However, the commercial
real estate and commercial loan portfolios continue to be influenced by weak
real estate values, the effects of relatively high unemployment levels, and
less than robust economic conditions. At September 30, 2013, management
believes the Company's ALLL is adequately funded given the current level of
credit risk.

At September 30, 2013, the recorded investment in loans classified as impaired
totaled $45.5 million, with a corresponding valuation allowance (included in
the ALLL) of $4.3 million. The valuation allowance on impaired loans
represents the impairment reserves on performing restructured loans, other
accruing loans, and nonaccrual loans. At June 30, 2013, the total recorded
investment in impaired loans was $46.0 million, with a corresponding valuation
allowance (included in the ALLL) of $4.0 million.

Loans are reported as troubled debt restructurings (TDR) 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 comparing 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 current quarter, the Company restructured two loans to grant rate
and payment deferral concessions, one loan to grant a rate concession and
three loans to grant rate and maturity concessions. The loans were classified
as TDR's and four of the six loans were placed on nonaccrual status.

As of September 30, 2013, the Company had $26.9 million in TDRs compared to
$21.1 million as of June 30, 2013. As of September 30, 2013, the Company had
one hundred and eleven restructured loans that qualified as TDRs, of which
ninety-three were performing according to their restructured terms. TDRs
represented 4.53% of gross portfolio loans as of September 30, 2013 compared
with 3.41% at June 30, 2013.

Table 10
                             TROUBLED DEBT RESTRUCTURINGS
(Dollars in thousands)       September June 30,  March 31, December  September
                             30,                           31,       30,
                             2013      2013      2013      2012      2012
Nonaccrual                   $     $     $     $     $    
                             21,511   15,552   15,811   16,050   14,259
Accruing                     5,407     5,521     8,153     8,616     13,480
Total troubled debt          $     $     $     $     $    
restructurings               26,918   21,073   23,964   24,666   27,739
Percentage of total gross    4.53%     3.41%     3.91%     3.71%     4.59%
portfolio loans

Nonperforming loans, which include nonaccrual loans and accruing loans past
due over 90 days, totaled $35.9 million or 6.03% of total portfolio loans as
of September 30, 2013, compared to $36.0 million, or 5.83% of total loans at
June30, 2013. Nonperforming assets, which include nonperforming loans and
other real estate owned ("OREO"), totaled $36.8 million, or 3.95% of total
assets as of September 30, 2013, compared with $37.4 million, or 3.91% of
total assets as of June 30, 2013. As of September 30, 2013, nonperforming
assets of $36.8 million have been written down by 16%, or $6.0 million, from
their original balance of $45.5 million.

Table 11
                       NONPERFORMING ASSETS
(Dollars in           September   June 30,  March 31, December    September
thousands)             30,                             31,         30,
                       2013        2013      2013      2012        2012
Commercial             $      $     $     $      $     
                        7,501       7,898   3,420  2,935      3,330
Real estate
construction
 Residential real  0           0         0         0           77
estate construction
Total real estate      0           0         0         0           77
construction
Real estate mortgage
 1-4 family,       1,740       1,797     1,846     1,805       2,315
closed end 1st lien
 1-4 family        517         345       0         0           95
revolving
 ITIN 1-4 family   9,213       9,368     9,456     9,825       9,418
loan pool
Total real estate      11,470      11,510    11,302    11,630      11,828
mortgage
Commercial real estate 16,895      16,614    23,363    24,008      10,393
Total nonaccrual loans 35,866      36,022    38,085    38,573      25,628
90 days past due and   0           0         0         0           0
still accruing
 Total             35,866      36,022    38,085    38,573      25,628
nonperforming loans
Other real estate      959         1,360     1,785     3,061       3,052
owned
Total nonperforming    $       $     $     $       $     
assets                 36,825     37,382   39,870   41,634     28,680
Nonperforming loans to 6.03%       5.83%     6.21%     5.81%       4.24%
total loans
Nonperforming assets   3.95%       3.91%     4.07%     4.25%       3.03%
to total assets



Table 12
                         OTHER REAL ESTATE OWNED ACTIVITY
(Dollars in thousands)   Q3        Q2        Q1          Q4        Q3
                         2013      2013      2013        2012      2012
                         $     $     $      $     $     
Beginning balance                        3,061            2,647
                         1,360     1,785                 3,052
 Additions to OREO   146       184       1,157       242       4,046
 Dispositions of     (547)     (609)     (2,433)     (233)     (3,641)
OREO
 OREO valuation      0         0         0           0         0
adjustment
                         $     $     $      $     $     
Ending balance                          1,785            3,052
                         959      1,360                 3,061

At September 30, 2013, and June 30, 2013, the recorded investment in OREO was
$959 thousand and $1.4 million, respectively. For the three months ended
September 30, 2013, the Company transferred foreclosed property from two loans
in the amount of $146 thousand to OREO and no adjustments to the ALLL were
necessary. During the three months ended September 30, 2013, no further
impairment was identified on the foreclosed properties. During this period,
the Company sold seven existing properties with balances of $547 thousand for
a net loss of $139 thousand. The September 30, 2013 OREO balance consists of
four properties, of which three are secured by 1-4 family residential real
estate in the amount of $209 thousand. The remaining property consists of
improved commercial land in the amount of $750 thousand.

Table 13               INCOME STATEMENT
(Amounts in thousands,                                                 Full
except for per share   Q3      Q3      Change        Q2      Full Year Year
data)
                       2013    2012    $       %     2013    2012      2011
Interest income:
 Interest and fees   $     $     $     -12%  $     $        $ 
on loans               7,487  8,462  (975)        7,352  33,148   35,084
 Interest on tax     673     612     61      10%   656     2,399     2,014
exempt securities
 Interest on U.S.    445     426     19      4%    381     1,615     2,123
government securities
 Interest on other   716     841     (125)   -15%  772     3,175     2,410
securities
 Total interest 9,321   10,341  (1,020) -10%  9,161   40,337    41,631
income
Interest expense:
 Interest on demand  113     147     (34)    -23%  112     610       787
deposits
 Interest on savings 61      90      (29)    -32%  62      394       792
deposits
 Interest on
certificates of        639     866     (227)   -26%  654     3,697     4,912
deposit
 Interest on
securities sold under  0       6       (6)     -100% 2       24        43
repurchase agreements
 Interest on FHLB    (84)    (4)     (80)    +100% (48)    85        579
borrowings
 Interest on other   96      121     (25)    -21%  93      419       363
borrowings
 Total interest 825     1,226   (401)   -33%  875     5,229     7,476
expense
 Net interest   8,496   9,115   (619)   -7%   8,286   35,108    34,155
income
Provision for loan and 300     1,900   (1,600) -84%  1,400   9,400     8,991
lease losses
 Net interest income
after provision for    8,196   7,215   981     14%   6,886   25,708    25,164
loan and lease losses
Noninterest income:
 Service charges on  46      49      (3)     -6%   54      188       192
deposit accounts
 Payroll and benefit 113     122     (9)     -7%   114     538       458
processing fees
 Earnings on cash
surrender value – Bank 133     114     19      17%   112     470       465
owned life insurance
 Gain on investment  336     550     (214)   -39%  406     3,822     1,550
securities, net
 Merchant credit
card service income,   33      39      (6)     -15%  32      144       376
net
 Other income        313     545     (232)   -43%  307     1,431     850
 Total          974     1,419   (445)   -31%  1,025   6,593     3,891
noninterest income
Noninterest expense:
 Salaries and        2,865   2,732   133     5%    3,074   11,030    9,957
related benefits
 Occupancy and       549     508     41      8%    529     2,058     2,009
equipment expense
 Write down of other 0       0       0       0%    0       425       557
real estate owned
 FDIC insurance      202     202     0       0%    245     820       1,319
premium
 Data processing     127     94      33      35%   136     421       389
fees
 Professional        364     255     109     43%   294     1,078     1,016
service fees
 Deferred            58      150     (92)    -61%  0       594       533
compensation expense
 Other expenses      1,772   1,543   229     15%   870     5,206     4,147
 Total          5,937   5,484   453     8%    5,148   21,632    19,927
noninterest expense
Income from continuing
operations before      3,233   3,150   83      3%    2,763   10,669    9,128
provision for income
taxes
Provision for income   1,431   923     508     55%   757     3,109     2,444
taxes
 Net Income from     $     $     $     -19%  $     $       $  
continuing operations  1,802  2,227  (425)        2,006  7,560    6,684
Discontinued
Operations:
 Income (loss) from  $    $     $          $    $     $  
discontinued              0 (746)   746   100%     0 535       1,512
operations
 Income tax expense
associated with income
(loss) from            0       (239)   239     100%  0       331       392

 discontinued
operations
 Net income
(loss) from            0       (507)   507     100%  0       204       1,120
discontinued
operations
 Less: Net income
(loss) from
discontinued
operations             0       0       0       0%    0       348       549

 attributable to
noncontrolling
interest
Net income (loss) from
discontinued
operations             0       (507)   507     100%  0       (144)     571
attributable to
controlling interest
Net income
attributable to Bank   1,802   1,720   82      5%    2,006   7,416     7,255
of Commerce Holdings
Less: preferred
dividend and accretion 50      250     (200)   -80%  50      880       943
on preferred stock
 Income available to $     $     $    19%   $     $       $  
common shareholders    1,752  1,470   282         1,956  6,536    6,312
 Basic EPS           $    $    $          $    $      $   
attributable to        0.12   0.12   0.00   0%    0.13   0.41     0.34
continuing operations
 Basic EPS
attributable to        $    $     $    100%  $    $       $   
discontinued           0.00   (0.03)  0.03         0.00   (0.01)    0.03
operations
 Average basic       14,829  16,240  (1,411) -9%   15,120  16,344    16,991
shares
 Diluted EPS         $    $    $          $    $      $   
attributable to        0.12   0.12   0.00   0%    0.13   0.41     0.34
continuing operations
 Diluted EPS
attributable to        $    $     $    100%  $    $       $   
discontinued           0.00   (0.03)  0.03         0.00   (0.01)    0.03
operations
 Average diluted     14,853  16,240  (1,387) -9%   15,139  16,344    16,991
shares



Table 14
                                  BALANCE SHEET
(Dollars in thousands)            September September Change         June 30,
                                  30,       30,
ASSETS                            2013      2012      $        %     2013
Cash and due from banks           $     $     $       -29%  $    
                                  28,616   40,541   (11,925)       22,426
Interest bearing due from banks   20,379    23,893    (3,514)  -15%  20,810
 Total cash and cash         48,995    64,434    (15,439) -24%  43,236
equivalents
Securities available-for-sale, at 209,642   194,928   14,714   8%    218,495
fair value
Securities held-to-maturity, at   34,814    18,808    16,006   85%   34,843
amortized cost
Portfolio loans                   594,844   604,695   (9,851)  -2%   617,733
Allowance for loan losses         (13,542)  (10,560)  (2,982)  28%   (13,133)
 Net loans                   581,302   594,135   (12,833) -2%   604,600
Mortgage loans held for sale      0         27,875    (27,875) -100% 0
Total interest earning assets     888,295   910,740   (22,445) -2%   914,307
Bank premises and equipment, net  10,533    9,617     916      10%   10,275
Goodwill and other intangibles    31        63        (32)     -51%  39
Other real estate owned           959       3,052     (2,093)  -69%  1,360
Other assets                      45,541    33,538    12,003   36%   43,764
TOTAL ASSETS                      $      $      $       -2%   $   
                                  931,817  946,450  (14,633)       956,612
LIABILITIES AND STOCKHOLDERS'
EQUITY
Demand – noninterest bearing      $      $      $      12%   $   
                                  128,299  114,856  13,443        113,615
Demand – interest bearing         257,390   223,687   33,703   15%   243,087
Savings accounts                  92,043    91,666    377      0%    93,791
Certificates of deposit           247,791   261,410   (13,619) -5%   244,408
 Total deposits              725,523   691,619   33,904   5%    694,901
Securities sold under agreements  0         13,964    (13,964) -100% 1,758
to repurchase
Federal Home Loan Bank borrowings 75,000    100,000   (25,000) -25%  125,000
Junior subordinated debentures    15,465    15,465    0        0%    15,465
Other liabilities                 13,061    14,049    (987)    -7%   12,618
 Total Liabilities           829,049   835,097   (6,047)  -1%   849,742
 Total Stockholders' Equity  102,768   111,353   (8,586)  -8%   106,870
TOTAL LIABILITIES AND             $      $      $       -2%   $   
STOCKHOLDERS' EQUITY              931,817  946,450  (14,633)       956,612



Table 15
                                AVERAGE BALANCE SHEET (Year to Date)
(Dollars in thousands)          September September December December December
                                30,       30,       31,      31,      31,
                                2013      2012      2012     2011     2010
Earning assets:
 Loans                         $      $      $     $     $   
                                619,188  640,122  642,200 626,275  635,074
 Tax exempt securities         93,388    76,151    81,714   52,467   42,172
 US government securities      1,877     0         209      19,182   27,423
 Mortgage backed securities    64,953    63,255    61,434   67,052   48,972
 Other securities              89,313    68,962    73,972   44,664   15,702
 Interest bearing due from     41,991    49,389    48,712   64,399   70,911
banks
 Fed funds sold                0         0         0        0        995
 Average earning assets     910,710   897,879   908,241  874,039  841,249
Cash and DFB                    10,330    9,926     10,125   2,251    1,781
Bank premises                   10,175    9,529     9,567    9,489    9,814
Other assets                    28,431    32,696    24,249   21,421   48,116
 Average total assets       $      $      $     $     $   
                                959,646  950,030  952,182 907,200  900,960
Interest bearing liabilities:
 Demand - interest bearing     $      $      $     $     $   
                                239,308  193,687  203,342 157,696  141,983
 Savings deposits              92,351    89,543    89,789   91,876   76,718
 CDs                           248,825   297,445   285,574  296,381  321,051
 Repurchase agreements         7,728     13,955    14,246   14,805   12,274
 Other borrowings              137,886   127,151   125,839  130,933  128,249
                                726,098   721,781   718,790  691,691  680,275
Demand - noninterest bearing    117,830   112,403   115,091  100,722  92,433
Other liabilities               8,140     4,609     7,033    6,679    32,615
Shareholders' equity            107,578   111,237   111,268  108,108  95,637
 Average liabilities &      $      $      $     $     $   
equity                          959,646  950,030  952,182 907,200  900,960

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^TM and Roseville
Bank of Commerce^TM, 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
John T. Cavender
555 Market Street
San Francisco, CA 94105
(800) 346-5544

Sandler & O'Neil
Bryan Sullivan
919 Third Avenue, 6^th Floor
New York, NY 10022
(888) 383-3112

McAdams Wright Ragen, Inc.
Joey Warmenhoven
1121 SW Fifth Avenue
Suite 1400
Portland, OR 97204
(866) 662-0351

Stifel Nicolaus
Perry Wright
1255 East Street #100
Redding, CA 96001
(530) 244-7199

FIG Partners
Mike Hedrei
1175 Peachtree Street NE #100
Colony Square Suite 2250
Atlanta, GA 30361
(212) 899-5217

SOURCE Bank of Commerce Holdings

Website: http://reddingbankofcommerce.com
Contact: Patrick J. Moty, President and Chief Executive Officer, Telephone
Direct (530) 722-3953; Samuel D. Jimenez, Executive Vice President and Chief
Financial Officer, Telephone Direct (530) 722-3952; Andrea Schneck, Vice
President and Senior Administrative Officer, Telephone Direct (530) 722-3959