Bank of Commerce Holdings announces Fourth Quarter Results

          Bank of Commerce Holdings announces Fourth Quarter Results

PR Newswire

REDDING, Calif., Jan. 31, 2014

REDDING, Calif., Jan. 31, 2014 /PRNewswire/ -- Randy Eslick, President and
Chief Executive Officer of Bank of Commerce Holdings (NASDAQ: BOCH), a $951.5
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 $2.0
million and diluted earnings per share (EPS) from continuing operations of
$0.14 for the fourth quarter 2013 and full year income available to common
shareholders of $7.7 million and diluted EPS attributable to continuing
operations of $0.52 for the year.

Financial highlights for the quarter:

  oNet income available to common shareholders of $2.0 million reflects an
    11% increase over the $1.8 million recorded for the prior quarter and a
    67% increase compared to $1.2 million reported for the fourth quarter of
    2012.
  oDiluted EPS attributable to continuing operations of $0.14 compared to
    $0.12 for the prior quarter and $0.08 reported for the fourth quarter of
    2012.
  oLoan loss provisions for the fourth quarter were $0 compared to $300
    thousand for the prior quarter and $4.6 million for the fourth quarter of
    2012.
  oNonperforming assets were reduced by 17% from the prior quarter and
    represent 3.23% of total assets versus 3.95% for the prior quarter and
    4.25% for the fourth quarter of 2012.

Financial highlights for the full year 2013:

  oNet income available to common shareholders of $7.7 million reflects an
    18% increase over the $6.5 million reported for the full year 2012.
  oDiluted EPS attributable to continuing operations of $0.52 compares to
    $0.41 diluted EPS attributable to continuing operations for the prior
    year. Diluted EPS attributable to discontinued operations of $0.00
    compares to $(0.01) reported for the same period a year ago.
  oProvision for loan losses decreased 71% to $2.8 million compared to $9.4
    million for year end 2012.
  oNonperforming assets were reduced by 26% from the prior year to $30.7
    million and represent 3.23% of total assets compared to $41.6 million and
    4.25% of total assets at year end 2012.
  oOther Real Estate Owned was reduced by 70% from $3.0 million at year end
    2012 to $913 thousand at year end 2013.
  oNon-maturing core deposits increased $45.2 million or 11% from prior year.
  oPurchased the full amount of common shares authorized under two separate
    common stock repurchase plans and subsequently retired 2.0 million in
    common stock shares at a weighted average cost of $5.31 per share.

Randy Eslick, President and CEO commented: "In light of the current banking
environment, I am especially pleased to report net income available to common
shareholders of $7.7 million, an 18% increase over last year's performance. We
once again realized growth in non maturing core deposits with an 11% increase
over prior year, with continuing improvement in our asset quality. While 2014
will likely present ongoing challenges, there are also opportunities which our
team is excited to pursue as we continue on the path of building long-term
value for our shareholders."

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, 2013 and under the heading: "Risk
Factors" and subsequent reports on Form 10-Q and current reports on Form 8-K.
Readers are cautioned not to place undue reliance on these forward-looking
statements, 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
December 31, 2013 and 2012, and September 30, 2013.

Table 1
                                   QUARTER END SUMMARY FINANCIAL INFORMATION
(Shares and dollars in thousands)  Q4    Q4            Q3
                                   2013    2012   Change   2013   Change
Selective quarterly performance
ratios
Return on average assets,          0.89%   0.57%  0.32%    0.76%  0.13%
annualized
Return on average equity,          8.18%   4.97%  3.21%    6.89%  1.29%
annualized
Efficiency ratio for quarter to    61.79%  43.66% 18.13%   62.69% -0.90%
date
Share and Per Share figures -
Actual
Common shares outstanding at       13,977  15,972 (1,995)  14,462 (485)
period end
Weighted average diluted shares    14,176  16,034 (1,858)  14,853 (677)
Diluted EPS attributable to        $ 0.14  $ 0.08 $ 0.06   $ 0.12 $    0.02
continuing operations
Book value per common share        $ 5.86  $ 5.66 $ 0.20   $ 5.73 $    0.13
Tangible book value per common     $ 5.86  $ 5.66 $ 0.20   $ 5.73 $    0.13
share
Capital Ratios at Quarter End
Bank of Commerce Holdings
Tier 1 risk based capital ratio    17.20%  14.53% 2.67%    15.66% 1.54%
Total risk based capital ratio     15.94%  15.78% 0.16%    16.92% -0.98%
Leverage ratio                     12.80%  13.13% -0.33%   12.80% 0.00%
Redding Bank of Commerce
Tier 1 risk based capital ratio    16.82%  14.06% 2.76%    15.19% 1.63%
Total risk based capital ratio     15.56%  15.31% 0.25%    16.45% -0.89%
Leverage ratio                     12.49%  12.65% -0.16%   12.42% 0.07%

Bank of Commerce Holdings (the "Company") remains well capitalized. At
December 31, 2013, the Company's Tier 1 and Total risk based capital ratios
measured 17.20% and 15.94% respectively, while the leverage ratio was 12.80%.

Return on average assets (ROA) and return on average equity (ROE) for the
current quarter was 0.89% and 8.18%, respectively, compared with 0.57% and
4.97%, 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 decrease in the provision for loan losses of $4.6
million, partially offset by the $2.0 million decrease in net gains on
investment securities.

The increase in ROE is also attributed to the decrease in shareholders equity
resulting from the repurchase of common shares. During 2013 the Company
authorized and completed the repurchase of 2.0 million common shares through
two separate repurchase plans which resulted in a 1.4 million decrease in the
weighted average shares outstanding. All shares were retired subsequent to
purchase.

The increase in the efficiency ratio compared to the same period a year ago is
due to decreases in the gain on investment securities. Net gain on securities
for the current period was $64 thousand compared with $2.1 million for the
three months ended December 31, 2012.

Balance Sheet Overview

As of December 31, 2013, the Company had total consolidated assets of $951.5
million, total net portfolio loans of $584.1 million, allowance for loan and
lease losses of $14.2 million, total deposits of $746.3 million, and
stockholders' equity of $101.8 million.

Overall, the net portfolio loan balance decreased substantially compared to
the same period a year ago. The Company recorded net portfolio loans of $584.1
million at December 31, 2013, compared with $653.3 million at December 31,
2012, a decrease of $69.1 million, or 11%. The decrease in net portfolio loans
was primarily attributable to the $65.1 million decrease in a commercial
secured borrowing line held with the Bank's former mortgage subsidiary. The
commercial secured borrowing line of credit is used by the former mortgage
subsidiary to fund 1-4 family mortgage loan originations which the Bank
purchases an undivided participation ownership interest in the mortgage loans.
The decrease in volume in the commercial secured borrowing line is primarily
attributable to an increase in mortgage market interest rates, resulting in
lower volume. As of December 31, 2013 the commercial secured borrowing line
balance was $0.

Table 2
                    PERIOD END LOANS
(Dollars in         Q4    % of  Q4    % of  Change         Q3    % of
thousands)
                    2013    Total  2012    Total  Amount   %     2013    Total
Commercial          $       29%    $       35%    $        -27%  $       27%
                    170,429        232,276        (61,847)       169,193
Real estate -       18,545  3%     16,863  3%     1,682    10%   15,625  3%
construction loans
Real estate -
commercial          205,384 34%    211,318 32%    (5,934)  -3%   208,530 35%
(investor)
Real estate -
commercial (owner   83,976  14%    75,085  11%    8,891    12%   80,101  13%
occupied)
Real estate - ITIN  56,101  9%     60,105  9%     (4,004)  -7%   57,232  10%
loans
Real estate -       14,590  2%     18,452  3%     (3,862)  -21%  15,872  3%
mortgage
Real estate -       45,462  8%     45,181  7%     281      1%    43,989  7%
equity lines
Consumer            3,472   1%     4,422   1%     (950)    -21%  3,753   1%
Other               36      0%     349     0%     (313)    -90%  267     0%
 Gross          597,995 100%   664,051 100%   (66,056) -10%  594,562 100%
portfolio loans
Less:
Deferred loan fees, (303)          (312)          9        -3%   (282)
net
Allowance for loan  14,172         11,103         3,069    28%   13,542
losses
 Net portfolio  $              $              $        -11%  $
loans               584,126        653,260        (69,134)       581,302
Yield on loans      4.88%          5.16%          -0.28%         4.84%



Table 3
                     PERIOD END CASH EQUIVALENTS AND INVESTMENT SECURITIES
(Dollars in          Q4    % of  Q4    % of Change         Q3    % of
thousands)
                     2013    Total  2012    Total Amount   %     2013    Total
Cash and cash
equivalents:
Cash and due from    $      12%    $      7%    $ 16,613 76%   $      10%
banks                38,369         21,756                       28,616
Interest bearing due 20,146  6%     23,312  9%    (3,166)  -14%  20,379  7%
from banks
                     58,515  18%    45,068  16%   13,447   30%   48,995  17%
Investment
Securities-AFS
U.S. government and  6,264   2%     2,946   1%    3,318    113%  3,718   1%
agencies
Obligations of state
and political        59,209  21%    58,484  21%   725      1%    61,492  21%
subdivisions
Residential mortgage
backed securities    62,991  20%    51,530  19%   11,461   22%   57,934  20%
and collateralized
mortgage obligations
Corporate securities 48,230  15%    61,556  22%   (13,326) -22%  52,552  18%
Commercial mortgage  10,472  3%     4,324   3%    6,148    142%  8,924   3%
backed securities
Other asset backed   29,474  9%     18,514  7%    10,960   59%   25,022  8%
securities
                     216,640 70%    197,354 73%   19,286   10%   209,642 71%
Securities-HTM, at
amortized cost
Obligations of state
and political        36,696  12%    31,483  11%   5,213    17%   34,814  12%
subdivisions
Total cash
equivalents and      $       100%   $       100%  $ 37,946 14%   $       100%
investment           311,851        273,905                      293,451
securities
Yield on cash
equivalents and      2.50%          2.70%         -0.20%         2.50%
investment
securities

The Company continued to maintain a strong liquidity position during the
reporting period. As of December 31, 2013, the Company maintained cash
positions at the Federal Reserve Bank and correspondent banks in the amount of
$38.4 million. The Company also held certificates of deposits with other
financial institutions in the amount of $20.1 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
$216.6 million at December 31, 2013, compared with $209.6 million at September
30, 2013. During the current quarter the Company's securities purchases were
centered in municipal bonds, and mortgage backed securities.

The Company's purchases continue to focus on moderate term maturity
securities, taking advantage of the steepness of the yield curve, particularly
around the five to seven year part of the curve. This strategy limits the
Company's exposure to rising interest rates, while still providing an
acceptable yield. The municipal bond purchases were generally longer term
than purchases of other asset classes, but also provide for higher returns due
to the tax benefit received. 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 fourth quarter of 2013, the Company purchased twenty-seven
securities with a weighted average yield of 3.10%, and sold twenty-eight
securities with a weighted average yield of 2.13%. The sales activity resulted
in $64 thousand net realized gains.

At December 31, 2013, the Company's net unrealized losses on
available-for-sale securities were $3.7 million compared with $4.3 million net
unrealized losses at September 30, 2013. The favorable change in net
unrealized losses was primarily due to increases in the fair values of the
Company's municipal bond, and corporate bond portfolios. The increases in the
fair values of these securities were primarily driven by changes in market
interest rates and or the contraction of market spreads.

Table 4
                 QUARTERLY AVERAGE DEPOSITS BY CATEGORY
(Dollars in      Q4      % of Q4      % of Change        Q3      % of
thousands)
                 2013      Total 2012      Total Amount   %    2013      Total
Demand deposits  $ 134,439 18%   $ 123,099 17%   $ 11,340 9%   $ 125,133 18%
Interest bearing 261,949   36%   232,674   33%   29,275   13%  246,236   35%
demand
Total checking   396,388   54%   355,773   50%   40,615   11%  371,369   53%
deposits
Savings          92,949    13%   90,522    13%   2,427    3%   94,062    13%
Total non-time   489,337   67%   446,295   63%   43,042   10%  465,431   66%
deposits
Time deposits    247,376   33%   257,432   37%   (10,056) -4%  241,947   34%
Total deposits   $ 736,713 100%  $ 703,727 100%  $ 32,986 5%   $ 707,378 100%
Average rate on  0.54%           0.69%           -0.14%        0.56%
total deposits

Average total deposits increased 5% or $33.0 million to $736.7 million
compared to the fourth quarter in 2012. Non maturing core deposits increased
$45.2 million or 11% year over year. Insured Cash Sweep (ICS) deposits
totaling $37.0 million as of December 31, 2013 are included in interest
bearing demand. The ICS deposits are locally generated funds but considered
noncore for regulatory purposes. Management considers these deposits to be
stable in nature.

Brokered certificates of deposits totaled $17.2 million at December 31, 2013,
and were structured with both fixed rate terms and adjustable rate terms, and
had remaining maturities ranging from less than one month to 6.5 years.
Furthermore, brokered certificates of deposits with adjustable rate terms were
structured with call features allowing the Company to call the certificate
should interest rates move in a favorable direction. These call features are
generally exercisable within six to twelve months of issuance date and
quarterly thereafter.

Operating Results for the Fourth Quarter of 2013

Net income attributable to Bank of Commerce Holdings was $2.1 million for the
three months ended December 31, 2013 compared with $1.8 million for the prior
quarter and $1.4 million for the same period a year ago. The increase in net
income in the current quarter compared to the same period a year ago is
primarily driven by the decrease in the provision for loan losses of $4.6
million partially offset by decreased gains on sale of available for sale
securities included in noninterest income of $2.0 million and an increase in
the current year tax provision of $907 thousand. The increase in net income
attributable to Bank of Commerce Holdings from the prior quarter was primarily
due to decrease in the provision for loan loss.

Net income available to common shareholders was $2.0 million for the three
months ended December 31, 2013, compared with $1.2 million for the same period
a year ago. Net income available to common shareholders increased during the
three months ended December 31, 2013 compared with the same period a year ago
due to increased net income attributable to Bank of Commerce Holdings and a
$146 thousand decrease in preferred stock dividends payable to the U.S.
Treasury pursuant to the SBLF program. As a result of increased qualified
lending, preferred stock dividends for the SBLF program are fixed at the
current rate of 1% through January 2016.

Diluted EPS from continuing operations were $0.14 for the three months ended
December 31, 2013 compared with $0.08 for the same period a year ago, and
$0.12 for the prior period. EPS attributable to continuing operations
increased during the three months ended December 31, 2013 compared to the same
period a year ago due to a combination of the increase in net income
attributable to Bank of Commerce Holdings, decreased preferred stock dividends
and decreased weighted average shares. The decrease in weighted average shares
directly resulted from the repurchase of 2.0 million common shares through two
separate repurchase plans announced and completed in 2013. All repurchased
shares were retired subsequent to purchase. As such, the weighted average
number of dilutive common shares outstanding decreased by 1.4 million during
the twelve months ended December 31, 2013.

The Company declared cash dividends of $0.03 per share for the fourth quarter
of 2013, consistent with the quarterly dividends paid in each quarter of 2012
and the first three quarters of 2013. In addition to the Company's quarterly
cash dividend, during the third quarter of 2013, the Company declared a
special cash dividend of $0.02 per share.

Table 5
                     SUMMARY INCOME STATEMENT
(Dollars in          Q4     Q4     Change          Q3     Change
thousands)
                     2013     2012     Amount   %      2013     Amount   %
Net interest income  $ 8,494  $ 8,754  $ (260) -3%    $ 8,496  $      0%
                                                                (2)
Provision for loan   0        4,550    (4,550)  -100%  300      (300)    -100%
and lease losses
Noninterest income   719      2,713    (1,994)  -73%   974      (255)    -26%
Noninterest expense  5,693    5,007    686      14%    5,937    (244)    -4%
Income from
continuing           3,520    1,910    1,610    84%    3,233    287      9%
operations before
income taxes
Provision for income 1,433    526      907      172%   1,431    2        0%
tax
Net income from
continuing           2,087    1,384    703      51%    1,802    285      16%
operations
Less: Preferred
dividend and         50       196      (146)    -74%   50       0        0%
accretion on
preferred stock
Income available to  $ 2,037  $ 1,188  $  849 71%    $ 1,752  $  285 16%
common shareholders
Basic earnings per
share attributable   $  0.14 $  0.08 $  0.06 75%    $  0.12 $  0.02 17%
to continuing
operations
Average basic shares 14,143   16,034   (1,891)  -12%   14,829   (686)    -5%
Diluted earnings per
share attributable   $  0.14 $  0.08 $  0.06 75%    $  0.12 $  0.02 17%
to continuing
operations
Average diluted      14,176   16,034   (1,858)  -12%   14,853   (677)    -5%
shares

Net interest income is the largest source of our operating income. Net
interest income for the three months ended December 31, 2013 was $8.5 million
compared to $8.5 million in the prior quarter and $8.8 million during the same
period a year ago.

Interest income for the three months ended December 31, 2013 was $9.3 million,
a decrease of $545 thousand or 6% compared to the same period a year ago. The
decrease in interest income during the fourth quarter of 2013 compared to the
same period a year ago was primarily driven by decreased volume in the loan
portfolio, partially offset by increased investment securities volume. Average
loans decreased $53.0 million including a decrease in average nonaccruing
loans at of $9.5 million at December 31, 2013 compared to the same period a
year ago. The decrease in average loans is primarily attributed to the $65.1
million decrease in a commercial secured borrowing line held with the Bank's
former mortgage subsidiary used to fund 1-4 family mortgage loan originations.
The decrease in volume in the commercial secured borrowing line is primarily
attributable to an increase in mortgage market interest rates, resulting in
lower volume. As a result, during the three months ended December 31, 2013,
loan interest income decreased $594 thousand or 7% compared to the same period
a year ago.

Interest income recognized from the investment securities portfolio increased
$49 thousand during the three months ended December 31, 2013 compared to the
same period a year ago. The increase interest income derived from the
investment securities portfolio was primarily attributable to increased
volume. Average quarterly securities balances and weighted average tax
equivalent yields at December 31, 2013 and 2012 were $252.7 million and 3.24%
compared to $223.1 million and 3.51%, respectively.

Interest expense for the current quarter was $807 thousand, a decrease of $285
thousand or 26% 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 which was primarily
driven by lower rate and volume.

Table 6
                         NET INTEREST SPREAD AND MARGIN
(Dollars in thousands)   Q4      Q4      Change      Q3      Change
                         2013      2012      Amount      2013      Amount
Tax equivalent yield on
average interest earning 4.29%     4.42%     -0.13%      4.26%     0.03%
assets
Rate on average interest 0.47%     0.61%     -0.14%      0.47%     0.00%
bearing liabilities
Net interest spread      3.82%     3.81%     0.01%       3.79%     0.03%
Net interest margin on a 3.93%     3.95%     -0.02%      3.90%     0.03%
tax equivalent basis
Average earning assets   $ 895,101 $ 917,140 $ (22,039)  $ 904,022 $  (8,921)
Average interest bearing $ 692,739 $ 717,671 $ (24,932)  $ 709,096 $ (16,357)
liabilities

The net interest margin (net interest income as a percentage of average
interest earning assets) on a fully tax-equivalent basis was 3.93% for the
three months ended December 31, 2013, a decrease of 2 basis points ("bp") as
compared to the same period a year ago. The decrease in net interest margin
primarily resulted from a 13 bp decline in yield on average earning assets
offset by a 11 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 continue to 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 December 31, 2013 was $719
thousand, a decrease of $1.9 million or 73% when compared to the same period a
year ago. The following table presents the key components of noninterest
income for the three months ended December 31, 2013 and 2012, and September
30, 2013:

Table 7
                     NONINTEREST INCOME
(Dollars in          Q4   Q4     Change            Q3  Change
thousands)
                     2013   2012      Amount      %     2013   Amount     %
Service charges on   $  45 $   42 $     3 7%    $  46 $   (1) -2%
deposit accounts
Payroll and benefit  129    143       (14)        -10%  113    16         14%
processing fees
Earnings on cash
surrender value -    133    129       4           3%    133    -          0%
bank owned life
insurance
Gain (loss) on
investment           64     2,085     (2,021)     -97%  336    (272)      -81%
securities, net
Merchant credit card 31     32        (1)         -3%   33     (2)        -6%
service income, net
Other income         317    282       35          12%   313    4          1%
Total noninterest    $ 719  $ 2,713   $ (1,994)   -73%  $ 974  $ (255)   -26%
income

Gains on the sale of investment securities decreased $2.0 million to $64
thousand during the current quarter, compared to $2.1 million for the same
period a year ago. During the three months ended December 31, 2013, the
Company purchased twenty-seven securities with weighted average yields of
3.10%. During the same period the Company sold twenty-eight securities with
weighted average yields of 2.13%. Generally, securities purchased had
relatively moderate duration with relatively solid cash flows and yield.

The major components of other income are fees earned on ATM transactions,
mortgage fee income, online banking services, wire transfers, and FHLB
dividends. The increase in other income in the current quarter compared to the
same period a year ago is primarily driven by $47 thousand increase in the
FHLB dividends received during the three months ended December 31, 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 December 31, 2013 was $5.7
million, an increase of $686 thousand or 14% compared to the same period a
year ago. The following table presents the key elements of noninterest expense
for the three months ended December 31, 2013 and 2012, and September 30, 2013:

Table 8
                          NONINTEREST EXPENSE
(Dollars in thousands)    Q4    Q4    Change         Q3    Change
                          2013    2012    Amount   %     2013    Amount   %
Salaries and related      $ 3,172 $ 2,645 $  527 20%   $ 2,865 $  307 11%
benefits
Occupancy and equipment   554     535     19       4%    549     5        1%
expense
FDIC insurance premium    190     208     (18)     -9%   202     (12)     -6%
Data processing fees      150     142     8        6%    127     23       18%
Professional service fees 315     216     99       46%   364     (49)     -13%
Deferred compensation     121     154     (33)     -21%  110     11       10%
expense
Other expenses            1,191   1,107   84       8%    1,720   (529)    -31%
Total noninterest expense $ 5,693 $ 5,007 $  686 14%   $ 5,937 $ (244) -4%

Salaries and related benefits increased $527 thousand or 20% and $307 thousand
or 11% compared to the same period a year ago and the prior quarter
respectively. The increases in salaries and related benefits expense was
primarily driven by increased FTE and employment severance payments made to
certain senior officers.

Data processing expense for the three months ended December 31, 2013 was $150
thousand, an increase of $23 thousand or 18% compared to the prior quarter.
The increase in data processing expense 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 December 31, 2013 was
$315 thousand, an increase of $99 thousand or 46% 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 December 31, 2013 was
$121 thousand, a decrease of $33 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. Deferred compensation
expense for the three months ended December 31, 2013 increased $11 thousand or
10% compared to amounts recorded during the three months ended September 30,
2013. The increase in deferred compensation expense during the current quarter
compared to the prior quarter was primarily driven by an interest rate
revision to the participant's plans, which resulted in the reversal of
previously accrued interest expense in the prior quarter.

Other expenses for the three months ended December 31, 2013 were $1.2 million,
a decrease of $529 thousand or 31% compared to the prior quarter. The decrease
in other expenses during the three months ended December 31, 2013 compared to
the prior quarter was primarily driven by the $503 thousand loss recognized
from the termination of an interest rate hedge using a forward starting
interest rate swap.

Table 9
                                   ALLOWANCE ROLL FORWARD
(Dollars in thousands)  Q4       Q3       Q2       Q1       Q4
                        2013       2013       2013       2013       2012
Beginning balance       $ 13,542  $ 13,133  $ 11,350  $ 11,103  $ 
                                                                    10,560
Provision for loan loss -          300        1,400      1,050      4,550
charged to expense
Loans charged off       (815)      (635)      (474)      (845)      (4,183)
Loan loss recoveries    1,445      744        857        42         176
Ending balance          $ 14,172  $ 13,542  $ 13,133  $ 11,350  $ 
                                                                    11,103
Gross portfolio loans
outstanding at period   $597,995   $594,562   $617,398   $612,608   $ 664,051
end
Ratio of allowance for
loan and lease losses   2.37%      2.28%      2.13%      1.85%      1.67%
to total loans
Nonaccrual loans at
period end:
 Commercial       $  6,527 $  7,501 $  7,898 $  3,420 $  
                                                                    2,935
 Construction       -          -          -          -          -
 Commercial real    14,539     16,895     16,614     23,363     24,008
estate
 Residential real   8,217      10,953     11,165     11,302     11,630
estate
 Home equity        513        517        345        -          -
 Total           $ 29,796  $ 35,866  $ 36,022  $ 38,085  $ 
nonaccrual loans                                                    38,573
Accruing troubled debt
restructured loans
 Commercial         $      $      $      $      $    
                        63         65         68         70         523
 Construction       -          -          -          -          -
 Commercial real    3,864      1,742      1,748      4,593      4,598
estate
 Residential real   4,303      2,996      3,174      2,954      2,934
estate
 Home equity        598        604        531        536        561
 Total accruing  $  8,828 $  5,407 $  5,521 $  8,153 $  
restructured loans                                                  8,616
All other accruing      3,517      4,190      4,445      1,426      471
impaired loans
Total impaired loans    $ 42,141  $ 45,463  $ 45,988  $ 47,664  $ 
                                                                    47,660
Allowance for loan and
lease losses to         47.56%     37.76%     36.46%     29.80%     28.78%
nonaccrual loans at
period end
Nonaccrual loans to     4.98%      6.03%      5.83%      6.22%      5.81%
total loans
Allowance for loan and
lease losses to         33.63%     29.79%     28.56%     23.81%     23.30%
impaired loans

The ALLL allocation increased to $14.2 million compared to $13.5 million in
the prior quarter and $11.1 million reported as of December 31, 2012

During the current quarter, the Company made no additional provisions for loan
losses compared to provision expense of $300 thousand in the prior quarter and
$4.5 million during the same period a year ago. The Company realized net
recoveries of $630 thousand in the current quarter compared to net recoveries
of $109 thousand for the prior quarter and net charge offs of $4.0 million in
the same period a year ago. The increase in net recoveries in the current
quarter is primarily due to the receipt of full principal payment on an
impaired commercial real estate that had a carrying amount of $2.1 million,
and previously charged off principal of $1.3 million.

The Company continues to monitor credit quality, and adjust the ALLL
accordingly. As such, the Company made no additional provisions for loan
losses during the fourth quarter of 2013, compared with $4.6 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 current year compared to
the last two quarters of 2012. The Company's ALLL as a percentage of gross
portfolio loans was 2.37% and 2.28% as of December 31, 2013, and September 30,
2013, respectively.

The charge offs in the current quarter were in the Real estate – ITIN and
Commercial loan portfolios. During the fourth quarter of 2013, the Bank's loan
portfolio reflected higher recovery rates relative to the previous four
quarters. 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 December 31, 2013, management believes the
Company's ALLL is adequately funded given the current level of credit risk.

At December 31, 2013, the recorded investment in loans classified as impaired
totaled $42.1 million, with a corresponding valuation allowance (included in
the ALLL) of $4.8 million. The valuation allowance on impaired loans
represents the impairment reserves on performing restructured loans, other
accruing loans, and nonaccrual loans. At September 30, 2013, the total
recorded investment in impaired loans was $45.5 million, with a corresponding
valuation allowance (included in the ALLL) of $4.3 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, four loans were restructured to grant
maturity concessions and one loan was granted a payment deferral concession.
The loans were classified as TDR's and five of the seven loans were placed on
nonaccrual status.

As of December 31, 2013, the Company had $33.4 million in TDRs compared to
$26.9 million as of September 30, 2013. As of December 31, 2013, the Company
had one hundred and eighteen restructured loans that qualified as TDRs, of
which one hundred and two were performing according to their restructured
terms. TDRs represented 5.59% of gross portfolio loans as of December 31, 2013
compared with 4.53% at September 30, 2013.

Table 10
                               PERIOD END TROUBLED DEBT RESTRUCTURINGS
(Dollars in thousands)         Q4      Q3      Q2      Q1      Q4
                               2013      2013      2013      2013      2012
Nonaccrual                     $ 24,596 $ 21,511 $ 15,552 $ 15,811 $   
                                                                       16,050
Accruing                       8,828     5,407     5,521     8,153     8,616
Total troubled debt            $ 33,424 $ 26,918 $ 21,073 $ 23,964 $   
restructurings                                                         24,666
Percentage of total gross      5.59%     4.53%     3.41%     3.91%     3.71%
portfolio loans

Nonperforming loans, which include nonaccrual loans and accruing loans past
due over 90 days, totaled $29.8 million or 4.98% of total portfolio loans as
of December 31, 2013, compared to $35.9 million, or 6.03% of total loans at
September 30, 2013. Nonperforming assets, which include nonperforming loans
and other real estate owned ("OREO"), totaled $30.7 million, or 3.23% of total
assets as of December 31, 2013, compared with $36.8 million, or 3.95% of total
assets as of September 30, 2013. As of December 31, 2013, nonperforming assets
of $30.7 million have been written down by 15%, or $4.6 million, from their
original balance of $39.1 million.

Table 11
                                           PERIOD END NONPERFORMING ASSETS
(Dollars in thousands)           Q4      Q3    Q2      Q1      Q4
                                 2013      2013    2013      2013      2012
Commercial                       $  6,527 $    $  7,898 $  3,420 $   
                                           7,501                      2,935
Real estate mortgage
 1-4 family, closed end 1st  1,322     1,740   1,797     1,846     1,805
lien
 1-4 family revolving        513       517     345       -         -
 ITIN 1-4 family loan pool   6,895     9,213   9,368     9,456     9,825
Total real estate mortgage       8,730     11,470  11,510    11,302    11,630
Commercial real estate           14,539    16,895  16,614    23,363    24,008
Total nonaccrual loans           29,796    35,866  36,022    38,085    38,573
90 days past due not on          -         -       -         -         -
nonaccrual
 Total nonperforming loans   29,796    35,866  36,022    38,085    38,573
Other real estate owned          913       959     1,360     1,785     3,061
Total nonperforming assets       $ 30,709  $     $ 37,382  $ 39,870  $  
                                           36,825                     41,634
Nonperforming loans to total     4.98%     6.03%   5.83%     6.21%     5.81%
loans
Nonperforming assets to total    3.23%     3.95%   3.91%     4.07%     4.25%
assets



Table 12
                          OTHER REAL ESTATE OWNED ACTIVITY
(Dollars in thousands)    Q4   Q3      Q2     Q1     Q4
                          2013  2013     2013    2013    2012
Beginning balance         $ 959 $ 1,360  $ 1,785 $ 3,061 $ 3,052
 Additions to OREO    98    146      184     1,157   242
 Dispositions of OREO (144) (547)    (609)   (2,433) (233)
Ending balance            $ 913 $  959 $ 1,360 $ 1,785 $ 3,061

At December 31, 2013, and September 30, 2013, the recorded investment in OREO
was $913 thousand and $959 thousand, respectively. For the three months ended
December 31, 2013, the Company transferred foreclosed property from one loan
in the amount of $98 thousand to OREO and no adjustments to the ALLL were
necessary. During the three months ended December 31, 2013, no further
impairment was identified on the foreclosed properties. During this period,
the Company sold two existing properties with balances of $144 thousand for a
net loss of $30 thousand. The December 31, 2013 OREO balance consists of three
properties, of which two are secured by 1-4 family residential real estate in
the amount of $163 thousand. The remaining property consists of improved
commercial land in the amount of $750 thousand.

Table 13                   INCOME STATEMENT
(Amounts in thousands,     Q4   Q4   Change        Q3    Full    Full
except for per share data)                                     Year    Year
                           2013   2012   $       %     2013    2013    2012
Interest income:
 Interest and fees on    $     $     $      -7%   $    $     $ 
loans                      7,432  8,026  (594)        7,487  29,918 33,148
 Interest on tax-exempt  658    622    36      6%    673     2,610   2,399
securities
 Interest on U.S.        492    390    102     26%   445     1,702   1,615
government securities
 Interest on other       719    808    (89)    -11%  716     3,031   3,175
securities
 Total interest income  9,301  9,846  (545)   -6%   9,321   37,261  40,337
Interest expense:
 Interest on demand      121    153    (32)    -21%  113     485     610
deposits
 Interest on savings     60     83     (23)    -28%  61      254     394
deposits
 Interest on             635    761    (126)   -17%  639     2,625   3,697
certificates of deposit
 Interest on securities
sold under repurchase      -      5      (5)     -100% -       6       24
agreements
 Interest on FHLB        (104)  (14)   (90)    643%  (84)    (267)   85
borrowings
 Interest on other       95     104    (9)     -9%   96      375     419
borrowings
 Total interest expense 807    1,092  (285)   -26%  825     3,478   5,229
 Net interest income    8,494  8,754  (260)   -3%   8,496   33,783  35,108
Provision for loan and     -      4,550  (4,550) -100% 300     2,750   9,400
lease losses
 Net interest income
after provision for loan   8,494  4,204  4,290   102%  8,196   31,033  25,708
and lease losses
Noninterest income:
Service charges on deposit 45     42     3       7%    46      191     188
accounts
Payroll and benefit        129    143    (14)    -10%  113     484     538
processing fees
Earnings on cash surrender
value - bank owned life    133    129    4       3%    133     534     470
insurance
Gain (loss) on investment  64     2,085  (2,021) -97%  336     995     3,822
securities, net
Merchant credit card       31     32     (1)     -3%   33      129     144
service income, net
Other income               317    282    35      12%   313     1,209   1,431
 Total noninterest      719    2,713  (1,994) -73%  974     3,542   6,593
income
Noninterest expense:
Salaries and related       3,172  2,645  527     20%   2,865   12,035  11,030
benefits
Occupancy and equipment    554    535    19      4%    549     2,205   2,058
expense
Write down of other real   -      -      -       -     -       -       425
estate owned
FDIC insurance premium     190    208    (18)    -9%   202     725     820
Data processing fees       150    142    8       6%    127     547     421
Professional service fees  315    216    99      46%   364     1,241   1,078
Deferred compensation      121    154    (33)    -21%  58      179     594
expense
Other expenses             1,191  1,107  84      8%    1,772   5,309   5,206
 Total noninterest      5,693  5,007  686     14%   5,937   22,241  21,632
expense
Income before provision    3,520  1,910  1,610   84%   3,233   12,334  10,669
(benefit) for income taxes
 Provision (benefit) for 1,433  526    907     172%  1,431   4,399   3,109
income taxes
Net Income from continuing $     $     $     51%   $    $    $  
operations                 2,087  1,384  703          1,802  7,935  7,560
Discontinued Operations:
Income (loss) from         -      -      -       -     -       -       535
discontinued operations
Income tax expense
associated with income     -      -      -       -     -       -       331
(loss) from discontinued
operations
Net income (loss) from     -      -      -       -     -       -       204
discontinued operations
Less: Net income (loss)
from discontinued          -      -      -       -     -       -       348
operations attributable to
noncontrolling interest
Net income (loss) from
discontinued operations    -      -      -       -     -       -       (144)
attributable to
controlling interest
Net income attributable to 2,087  1,384  703     51%   1,802   7,935   7,416
Bank of Commerce Holdings
Less: Preferred dividend
and accretion on preferred 50     196    (146)   -74%  50      200     880
stock
Income available to common $     $     $     71%   $    $    $  
shareholders               2,037  1,188  849          1,752  7,735  6,536
Basic earnings per share   $    $    $           $    $    $   
attributable to continuing 0.14   0.08   0.06    75%    0.12  0.52 0.41
operations
Basic earnings per share                                               $  
attributable to            -      -      -       -     -       -       (0.01)
discontinued operations
Average basic shares       14,143 16,034 (1,891) -12%  $     $     $ 
                                                       14,829 14,940 16,344
Diluted earnings per share $    $    $           $    $    $   
attributable to continuing 0.14   0.08   0.06    75%    0.12  0.52 0.41
operations
Diluted earnings per share                                             $  
attributable to            -      -      -       -     -       -       (0.01)
discontinued operations
Average diluted shares     14,176 16,034 (1,858) -12%  14,853  14,964  16,344





Table 14                        BALANCE SHEET
(Dollars in thousands)          December  December  Change           September
                                31,       31,                        30,
ASSETS                          2013      2012      $         %      2013
Cash and due from banks         $      $      $ 16,613 76%    $   
                                38,369    21,756                     28,616
Interest bearing due from banks 20,146    23,312    (3,166)   -14%   20,379
 Total cash and cash       58,515    45,068    13,447    30%    48,995
equivalents
Securities available-for-sale,  216,640   197,354   19,286    10%    209,642
at fair value
Securities held-to-maturity, at 36,696    31,483    5,213     17%    34,814
amortized cost
Portfolio loans                 598,298   664,363   (66,065)  -10%   594,844
Allowance for loan losses       (14,172)  (11,103)  (3,069)   28%    (13,542)
 Net loans                  584,126   653,260   (69,134)  -11%   581,302
Mortgage loans held for sale    -         -         -         -      -
Total interest earning assets   910,149   938,268   (28,119)  -3%    888,295
Bank premises and equipment,    10,893    9,736     1,157     12%    10,533
net
Other intangibles               -         55        (55)      -100%  31
Other real estate owned         913       3,061     (2,148)   -70%   959
Other assets                    43,763    39,407    4,356     11%    45,541
TOTAL ASSETS                    $       $       $(27,878) -3%    $  
                                951,546   979,424                    931,817
LIABILITIES AND STOCKHOLDERS'
EQUITY
Demand - noninterest bearing    $       $       $ 16,510 14%    $  
                                133,984   117,474                    128,299
Demand - interest bearing       273,390   239,592   33,798    14%    257,390
Savings accounts                90,442    89,364    1,078     1%     92,043
Certificates of deposit         248,477   254,622   (6,145)   -2%    247,791
 Total deposits 746,293   701,052   45,241    6%     725,523
Securities sold under           -         13,095    (13,095)  -100%  -
agreements to repurchase
Federal Home Loan Bank Bank     75,000    125,000   (50,000)  -40%   75,000
borrowings
Junior subordinated debentures  15,465    15,465    -         0%     15,465
Other liabilities               13,001    14,491    (1,490)   -10%   13,062
 Total Liabilities   849,759   869,103   (19,344)  -2%    829,050
 Total Stockholders' 101,787   110,321   (8,534)   -8%    102,767
Equity
TOTAL LIABILITIES AND           $       $       $(27,878) -3%    $  
STOCKHOLDERS' EQUITY            951,546   979,424                    931,817





Table 15               YEAR TO DATE AVERAGE BALANCE SHEET
(Dollars in thousands) December 31,   December 31,  December 31,  December 31,
                       2013           2012          2011          2010
Earning assets:
 Loans                $   612,819  $           $           $  
                                      642,200       626,275       635,074
 Tax exempt           92,854         81,714        52,467        42,172
securities
 US government        3,015          209           19,182        27,423
securities
 Mortgage Backed      66,426         61,434        67,052        48,972
securities
 Other securities     88,045         73,972        44,664        15,702
 Interest bearing due 43,397         48,712        64,399        70,911
from banks
 Fed funds sold       -              -             -             995
 Average earning     906,556        908,241       874,039       841,249
assets
Cash and DFB           10,570         10,125        2,251         1,781
Bank premises          10,338         9,567         9,489         9,814
Other assets           26,838         24,249        21,421        48,116
 Average total     $   954,302  $           $           $  
assets                                952,182       907,200       900,960
Interest bearing
liabilities:
 Demand - interest    $   244,125  $           $           $  
bearing                               203,342       157,696       141,983
 Savings deposits     92,502         89,789        91,876        76,718
 Certificates of      249,500        285,574       296,381       321,051
deposit
 Repurchase           5,780          14,246        14,805        12,274
Agreements
 Other Borrowings     125,144        125,839       130,933       128,249
                       717,051        718,790       691,691       680,275
Demand - noninterest   126,017        115,091       100,722       92,433
bearing
Other liabilities      5,041          7,033         6,679         32,615
Shareholders' equity   106,193        111,268       108,108       95,637
 Average           $   954,302  $           $           $  
liabilities & equity                  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™ and Roseville
Bank of Commerce™, a division of Redding Bank of Commerce). The Bank is an
FDIC insured California banking corporation providing commercial banking and
financial services through four offices located in Northern California. The
Bank opened on October 22, 1982. The Company's common stock is listed on the
NASDAQ Global Market and trades under the symbol "BOCH".

Investment firms making a market in BOCH stock are:

Raymond James Financial
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: Randy Eslick, President and Chief Executive Officer, Telephone Direct
(916) 677-5800, Samuel D. Jimenez, Executive Vice President and Chief
Operating Officer and Chief Financial Officer, Telephone Direct (530) 722-3952
or Andrea Schneck, Vice President and Senior Administrative Officer, Telephone
Direct (530) 722-3959
 
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