Bank of Commerce Holdings Announces First Quarter Results

Bank of Commerce Holdings Announces First Quarter Results

REDDING, Calif., May 1, 2014 (GLOBE NEWSWIRE) -- Randall S. Eslick, President
and Chief Executive Officer of Bank of Commerce Holdings (Nasdaq:BOCH), a
$970.0 million bank holding company and parent company of Redding Bank of
Commerce and Sacramento Bank of Commerce (a division of Redding Bank of
Commerce) (the "Bank"), today reported net income available to common
shareholders of $515 thousand and diluted earnings per share (EPS) of $0.04
for the first quarter 2014.

Financial highlights for the quarter:

  *Asset quality improved with reductions in nonperforming assets by $5.4
    million from the prior quarter and by $14.5 million from the first quarter
    of 2013. Nonperforming assets were 2.61% of total assets at quarter end
    compared to 3.23% at the prior quarter end and 4.07% at the end of first
    quarter 2013.
  *The Company's Tier 1 Leverage and Total Risk Based ratios are
    significantly above "Well Capitalized" levels at 12.11% and 16.48%,
    respectively.
  *Non maturing core deposits increased $44.3 million or 11% compared to the
    same period a year ago.

Net income available to common shareholders was $515 thousand for the three
months ended March 31, 2014, compared with $2.0 million for the same period a
year ago. The decrease in net income in the current quarter was attributed to
the following:

  *The negotiated settlement of a note receivable from the former mortgage
    subsidiary resulted in a loss of $1.4 million recorded in other expenses
    or ($0.07) per share.
  *A $290 thousand write-down on the pending sale of other real estate owned.
  *Securities losses of $245 thousand due to the sale of lower yielding,
    longer duration securities.

Randall S. Eslick, President and CEO commented: "While the first quarter
performance was short of our expectations, it is important to recognize that
the actions attributable to those results were proactive, non-recurring, and
strategic in nature. When combining these actions with our strong capital
position, we believe the Company is well positioned for sustainable core
operating earnings for the balance of 2014 and beyond."

This quarterly press release includes forward-looking information, which is
subject to the "safe harbor" created by the Securities Act of 1933, and
Securities Act of 1934. These forward-looking statements (which involve the
Company's plans, beliefs and goals, refer to estimates or use similar terms)
involve certain risks and uncertainties that could cause actual results to
differ materially from those in the forward-looking statements. Such risks and
uncertainties include, but are not limited to, the following factors:

  *Competitive pressure in the banking industry and changes in the regulatory
    environment
  *Changes in the interest rate environment and volatility of rate sensitive
    assets and liabilities
  *A decline in the health of the economy nationally or regionally which
    could further reduce the demand for loans or reduce the value of real
    estate collateral securing most of the Company's loans
  *Credit quality deterioration which could cause an increase in the
    provision for loan losses
  *Asset/Liability matching risks and liquidity risks
  *Changes in the securities markets

For additional information concerning risks and uncertainties related to the
Company and its operations please refer to the Company's Annual Report on Form
10-K for the year ended December 31, 2013 and under the heading: "Risk
Factors" and subsequent reports on Form 10-Q and current reports on Form 8-K.
Readers are cautioned not to place undue reliance on these forward-looking
statements, 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 March
31, 2014 and 2013, and December 31, 2013.


Table 1                    QUARTER END SUMMARY FINANCIAL INFORMATION
                                                                 
(Shares and dollars in      Q1        Q1                Q4           
thousands)
                           2014      2013      Change   2013         Change
Selective quarterly                                               
performance ratios
Return on average assets,   0.23%     0.84%     -0.61%   0.89%        -0.66%
annualized
Return on average equity,   2.19%     7.40%     -5.21%   8.18%        -5.99%
annualized
Efficiency ratio for        91.18%    58.54%    32.64%   61.79%       29.39%
quarter to date
                                                                 
Share and Per Share figures                                       
- Actual
Common shares outstanding   13,552    15,309    (1,757)  13,977       (425)
at period end
Weighted average diluted    13,987    15,703    (1,716)  14,176       (189)
shares
Diluted EPS                 $0.04    $0.13    $(0.09) $0.14       $(0.10)
Book value per common share $5.97    $5.80    $0.17   $5.86       $0.11
Tangible book value per     $5.97    $5.80    $0.17   $5.86       $0.11
common share
                                                                 
Capital Ratios              March 31, March 31, Change   December 31, Change
                            2014      2013               2013
Bank of Commerce Holdings                                         
Leverage ratio              12.11%    12.77%    -0.66%   12.80%       -0.69%
Tier 1 risk based capital   15.23%    14.19%    1.04%    15.94%       -0.71%
ratio
Total risk based capital    16.48%    15.44%    1.04%    17.20%       -0.72%
ratio

Redding Bank of Commerce    
Leverage ratio              11.97%    12.36%    -0.39%   12.49%       -0.52%
Tier 1 risk based capital   15.07%    13.72%    1.35%    16.82%       -0.49%
ratio
Total risk based capital    16.32%    14.97%    1.35%    15.56%       -0.50%
ratio

Bank of Commerce Holdings (the "Company") remains well capitalized. At March
31, 2014, the Company's Tier 1 and Total risk based capital ratios measured
15.23% and 16.48% respectively, while the leverage ratio was 12.11%.

Return on average assets (ROA) and return on average equity (ROE) for the
current quarter was 0.23% and 2.19%, respectively, compared with 0.84% and
7.40%, respectively, for the same period a year ago. The decrease in ROA and
ROE during the current quarter compared to the same period a year ago is
primarily attributed to the negotiated settlement of the Note from the former
mortgage subsidiary (the "Note") which resulted in a loss of $1.4 million or
($0.07) per share. The decrease in net ROA and ROE in the current quarter
compared to the same period a year ago is also due to a $290 thousand
write-down in the current quarter on the pending sale of other real estate
owned and securities losses of $245 thousand in the current quarter due to the
sale of lower yielding, longer duration securities.

During 2013 the Company authorized and completed the repurchase of 2.0 million
common shares through two separate repurchase plans. During the three months
ended March 31, 2014 the Company authorized a new repurchase plan and
repurchased 440,815 shares of common stock at a weighted average price of
$6.52 per share. All shares repurchased were retired subsequent to purchase.

The increase in the efficiency ratio to 91.18% compared to 58.54% for the same
period a year ago is primarily due to the loss on the Note recorded in other
expenses of $1.4 million during the three months ended March 31, 2014.
Decreased gains on investment securities also contributed to the increase in
the efficiency ratio.

Balance Sheet Overview

As of March 31, 2014, the Company had total consolidated assets of $970.0
million, total net portfolio loans of $597.6 million, allowance for loan and
lease losses of $9.7 million, total deposits of $761.7 million, and
stockholders' equity of $100.8 million.

Overall, the net portfolio loan balance decreased compared to the same period
a year ago. The Company recorded net portfolio loans of $597.6 million at
March 31, 2014, compared with $601.6 million at March 31, 2013, a decrease of
$4.0 million, or 1%. The decrease in net portfolio loans was primarily
attributable to principal paydowns on a commercial secured borrowing line held
with the Bank's former mortgage subsidiary used to fund 1-4 family mortgage
loan originations, partially offset by an increase in owner occupied
commercial real estate loans. The decrease in volume in the commercial secured
borrowing line is primarily attributable to an increase in mortgage interest
rates. Net portfolio loans increased in the current quarter compared to the
prior quarter, with net portfolio loans increasing by $13.5 million or 2.3%.
The increase was attributable to the purchase of a pool of consumer loans
during the quarter and a $4.4 million decrease in the ALLL.


Table 2        PERIOD END LOANS
              Q1        % of  Q1        % of  Change          Q4        % of
(Dollars in   2014      Total 2013      Total Amount       %  2013      Total
thousands)
                                                                 
Commercial     $165,747 27%   $189,670 31%   $(23,923) -13% $170,429 28%
Real estate -
construction   17,500    3%    16,235    3%    1,265      8%   18,545    3%
loans
Real estate -
commercial     205,111   34%   203,305   33%   1,806      1%   205,384   34%
(investor)
Real estate -
commercial     86,929    14%   75,969    12%   10,960     14%  83,976    14%
(owner
occupied)
Real estate -  55,411    9%    58,981    10%   (3,570)    -6%  56,101    9%
ITIN loans
Real estate -  14,973    2%    19,147    3%    (4,174)    -22% 14,590    2%
mortgage
Real estate -  45,519    8%    45,439    7%    80         0%   45,462    8%
equity lines
Consumer       15,749    3%    3,596     1%    12,153     338% 3,472     1%
Other          110       0%    266       0%    (156)      -59% 36        1%
Gross
portfolio      607,049   100%  612,608   100%  (5,559)    -1%  597,995   100%
loans
                                                                 
Less:                                                             
Deferred loan  (320)          (308)          (12)       4%   (303)     
fees, net
Allowance for  9,748          11,350         (1,602)    -14% 14,172    
loan losses
Net portfolio  $597,621      $601,566      $(3,945)  -1%  $584,126 
loans
                                                                 
Yield on loans 4.68%          4.82%          -0.14%         4.88%     




Table 3          PERIOD END CASH EQUIVALENTS AND INVESTMENT SECURITIES
(Dollars in      Q1        % of  Q1        % of  Change         Q4       % of
thousands)
                2014      Total 2013      Total Amount    %    2013     Total
Cash and cash                                                     
equivalents:
Cash and due     $54,422  17%   $44,226  14%   $10,196  23%  $38,369 13%
from banks
Interest bearing 20,146    6%    23,604    7%    (3,458)   -15% 20,146   6%
due from banks
                74,568    23%   67,830    21%   6,738     10%  58,515   19%
Investment                                                        
Securities-AFS
U.S. government  6,300     2%    2,930     1%    3,370     115% 6,264    2%
and agencies
Obligations of
state and        56,454    18%   0         0%    56,454    0%   59,209   20%
political
subdivisions
Residential
mortgage backed
securities and   53,105    17%   65,577    20%   (12,472)  -19% 62,991   20%
collateralized
mortgage
obligations
Corporate        49,553    16%   59,650    18%   (10,097)  -17% 48,230   15%
securities
Commercial
mortgage backed  10,406    3%    64,857    20%   (54,451)  -84% 10,472   3%
securities
Other asset
backed           28,192    9%    28,832    9%    (640)     -2%  29,474   9%
securities
Total Investment 204,010   65%   221,846   68%   (17,836)  -8%  216,640  69%
Securities-AFS
                                                                 
Securities-HTM,
at amortized                                                      
cost
Obligations of
state and        36,985    12%   34,526    11%   2,459     7%   36,696   12%
political
subdivisions
Total cash
equivalents and  $315,563 100%  $324,202 100%  $(8,639) -3%  $        100%
investment                                                      311,851
securities
                                                                 
Yield on cash
equivalents and  2.89%          2.55%          0.34%         2.49%    
investment
securities


The Company continued to maintain a strong liquidity position during the
reporting period. As of March 31, 2014, the Company maintained cash positions
at the Federal Reserve Bank and correspondent banks in the amount of $54.4
million. The Company also held certificates of deposits with other financial
institutions in the amount of $20.1 million.

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
$204.0 million at March 31, 2014, compared with $216.6 million at December 31,
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. This
strategy moderates the Company's exposure to rising interest rates, while
still providing a relatively 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 overall 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 first quarter of 2014, the Company
purchased twenty-two securities with a weighted average yield of 3.08%, and
sold thirty-two securities with a weighted average yield of 2.01%. The sales
activity resulted in $245 thousand net realized loss.

At March 31, 2014, the Company's net unrealized losses on available-for-sale
securities were $643 thousand compared with $3.7 million net unrealized losses
at December 31, 2013. The favorable change in net unrealized losses was
primarily due to increases in the fair values of the Company's municipal bond,
corporate bond, and mortgage backed securities portfolios. The increases in
the fair values of the Company's investment securities portfolio were
primarily driven by the narrowing of market spreads and changes in market
interest rates.


Table 4           QUARTERLY AVERAGE DEPOSITS BY CATEGORY
(Dollars in       Q1        %of   Q1        %of   Change       Q4        %of
thousands)
                 2014      Total 2013      Total Amount   %   2013      Total
Demand deposits   $132,495 18%   $114,476 16%   $18,019 16% $134,439 18%
Interest bearing  267,428   36%   234,445   34%   32,983   14% 261,949   36%
demand
Total checking    399,923   54%   348,921   50%   51,002   15% 396,388   54%
deposits
                                                                 
Savings           91,406    12%   90,689    13%   717      1%  92,949    13%
Total non-time    491,329   66%   439,610   63%   51,719   12% 489,337   67%
deposits
Time deposits     259,523   34%   257,131   37%   2,392    1%  247,376   33%
Total deposits    $750,852 100%  $696,741 100%  $54,111 8%  $736,713 100%
                                                                 
Average rate on   0.54%          0.62%          -0.08%      0.54%     
total deposits


During the first quarter, average total deposits increased 8% or $54.1 million
to $750.9 million compared to the same period a year ago. Non maturing core
deposits increased $44.3 million or 11% compared to the same period a year
ago. Insured Cash Sweep (ICS) deposits totaling $44.5 million as of March 31,
2014 are included in interest bearing demand. The ICS deposits are locally
generated funds, and as such, management considers this funding source as
stable. However, the regulatory bodies consider these deposits as noncore.

Brokered certificates of deposits totaled $13.9 million at March 31, 2014, and
were structured with both fixed rate terms and adjustable rate terms, and had
remaining maturities ranging from less than one month to 6.25 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 First Quarter of 2014

Net income attributable to Bank of Commerce Holdings was $565 thousand for the
three months ended March 31, 2014 compared with $2.1 million for the prior
quarter and $2.0 million for the same period a year ago. The decrease in net
income in the current quarter compared to the same period a year ago is
primarily driven by the negotiated settlement of the Note from the former
mortgage subsidiary resulting in a loss of $1.4 million. The decrease in net
income in the current quarter compared to the same period a year ago is also
due to a $290 thousand write-down on the pending sale of other real estate
owned in the current quarter and securities losses of $245 thousand in the
current quarter due to the sale of lower yielding, longer duration securities.

Net income available to common shareholders was $515 thousand for the three
months ended March 31, 2014, compared with $2.0 million for the same period a
year ago. Net income available to common shareholders decreased during the
three months ended March 31, 2014 compared with the same period a year ago due
to decreased net income attributable to Bank of Commerce Holdings as discussed
in the preceding paragraph. Preferred stock dividends payable to the U.S.
Treasury pursuant to the SBLF program were unchanged at $50 thousand. As a
result of increased qualified lending over the measurement period, preferred
stock dividends for the SBLF program are fixed at the current rate of 1%
through January 2016.


Table 5                 SUMMARY INCOME STATEMENT
(Dollars in thousands)  Q1      Q1      Change          Q4      Change
                       2014    2013    Amount    %     2013    Amount    %
Net interest income     $8,173 $8,506 $(333)   -4%   $8,494 $(321)   -4%
Provision for loan and  0       1,050   (1,050)   -100% 0       0         0%
lease losses
Noninterest income      364     824     (460)     -56%  719     (355)     -49%
Noninterest expense     7,784   5,462   2,322     43%   5,693   2,091     37%
Income before income    753     2,818   (2,065)   -73%  3,520   (2,767)   -79%
taxes
Provision for income    188     778     (590)     -76%  1,433   (1,245)   -87%
tax
Net income              565     2,040   (1,475)   -72%  2,087   (1,522)   -73%
Less: Preferred
dividend and accretion  50      50      0         0%    50      0         0%
on preferred stock
Income available to     $515   $1,990 $(1,475) -74%  $2,037 $(1,522) -75%
common shareholders
                                                                   
Basic earnings per      $0.04  $0.13  $(0.09)  -69%  $0.14  $(0.10)  -71%
share
Average basic shares    13,942  15,686  (1,744)   -11%  14,143  (201)     -1%
Diluted earnings per    $0.04  $0.13  $(0.09)  -69%  $0.14  $(0.10)  -71%
share
Average diluted shares  13,987  15,703  (1,716)   -11%  14,176  (189)     -1%


Diluted EPS were $0.04 for the three months ended March 31, 2014 compared with
$0.13 for the same period a year ago, and $0.14 for the prior period. EPS
decreased during the three months ended March 31, 2014 compared to the same
period a year ago due to a combination of the decrease in net income,
partially offset by 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 and 441,815 common shares repurchased during the three months ended March
31, 2014 under the plan announced March 30, 2014. 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 first quarter
of 2014, consistent with the quarterly dividends in the prior quarter and for
the same period a year ago

Net interest income is the largest source of our operating income. Net
interest income for the three months ended March 31, 2014 was $8.2 million
compared to $8.5 million during the same period a year ago and $8.5 million
for the prior quarter.

Interest income for the three months ended March 31, 2014 was $9.0 million, a
decrease of $477 thousand or 5% compared to the same period a year ago. The
decrease in interest income during the first quarter of 2014 compared to the
same period a year ago was primarily driven by decreased yields and volume in
the loan portfolio, decreased volume in the investment securities portfolio,
partially offset by increased yield of investment securities. Average loans
decreased $28.9 million including a decrease in average nonaccruing loans of
$7.9 million at March 31, 2014 compared to the same period a year ago. The
decrease in average loans is primarily attributed to a decrease in usage under
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 March 31, 2014, loan interest income
decreased $553 thousand or 7% compared to the same period a year ago.

Interest income recognized from the investment securities portfolio increased
$77 thousand during the three months ended March 31, 2014 compared to the same
period a year ago. The increase interest income derived from the investment
securities portfolio was primarily attributable to increased yield. Average
quarterly securities balances and weighted average tax equivalent yields at
March 31, 2014 and 2013 were $244.6 million and 3.44% compared to $248.0
million and 3.24%, respectively.

Interest expense for the current quarter was $827 thousand, a decrease of $144
thousand or 15% compared to the same period a year ago. During the current
quarter of 2014, 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)       Q1        Q1        Change     Q4        Change
                            2014      2013      Amount     2013      Amount
Tax equivalent yield on
average interest earning     4.08%     4.24%     -0.16%     4.29%     -0.21%
assets
Rate on average interest     0.47%     0.52%     -0.05%     0.47%     0.00%
bearing liabilities
Net interest spread          3.61%     3.72%     -0.11%     3.82%     -0.21%
Net interest margin on a tax 3.72%     3.82%     -0.10%     3.93%     -0.21%
equivalent basis
                                                                 
Average earning assets       $915,478 $924,644 $(9,166)  $895,101 $20,377
Average interest bearing     $708,822 $748,222 $(39,400) $692,739 $16,083
liabilities

The net interest margin (net interest income as a percentage of average
interest earning assets) on a fully tax-equivalent basis was 3.72% for the
three months ended March 31, 2014, a decrease of 10 basis points (bp) as
compared to the same period a year ago. The decrease in net interest margin
primarily resulted from a 16 bp decline in yield on average earning assets
partially offset by a 6 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 be challenging. 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 March 31, 2014 was $364
thousand, a decrease of $460 thousand or 56% when compared to the same period
a year ago. The following table presents the key components of noninterest
income for the three months ended March 31, 2014 and 2013, and December 31,
2013:


Table 7                         NONINTEREST INCOME
(Dollars in thousands)           Q1    Q1    Change        Q4    Change
                                2014  2013  Amount  %     2013  Amount  %
Service charges on deposit       $44  $46  $(2)   -4%   $45  $(1)   -2%
accounts
Payroll and benefit processing   135   128   7       5%    129   6       5%
fees
Earnings on cash surrender value 126   156   (30)    -19%  133   (7)     -5%
- bank owned life insurance
Gain (loss) on investment        (245) 189   (434)   -230% 64    (309)   -483%
securities, net
Merchant credit card service     26    33    (7)     -21%  31    (5)     -16%
income, net
Other income                     278   272   6       2%    317   (39)    -12%
Total noninterest income         $364 $824 $(460) -56%  $719 $(355) -49%


Bank owned life insurance earnings decreased $30 thousand for the three and
three months ended March 31, 2014 compared to the same periods a year ago. The
decrease was due to true-up adjustments recorded during the three months ended
March 31, 2013.

Gains on the sale of investment securities decreased $434 thousand to a net
loss of $245 thousand for the three months ended March 31, 2014, compared to
net gains of $189 thousand for the same period a year ago. During the three
months ended March 31, 2014, the Company purchased twenty-two securities with
weighted average yields of 3.08%. During the same period the Company sold
thirty-two securities with weighted average yields 2.01%. Generally,
securities purchased had relatively short durations with good credit quality.

Merchant credit card service income decreased $7 thousand for the three and
three months ended March 31, 2014 compared to the same period a year ago due
to increased customer utilization of a third party to provide some account
services.

Noninterest expense for the three months ended March 31, 2014 was $7.8
million, an increase of $2.3 million or 43% compared to the same period a year
ago. The following table presents the key elements of noninterest expense for
the three months ended March 31, 2014 and 2013, and December 31, 2013:


Table 8                      NONINTEREST EXPENSE
                            Q1      Q1      Change       Q4      Change
(Dollars in thousands)       2014    2013    Amount  %    2014    Amount  %
Salaries and related         $3,622 $2,924 $698   24%  $3,172 $450   14%
benefits
Occupancy and equipment      642     574     68      12%  554     88      16%
expense
Write down of other real     290     0       290     100% 0       290     100%
estate owned
FDIC insurance premium       191     88      103     117% 190     1       1%
Data processing fees         194     134     60      45%  150     44      29%
Professional service fees    264     269     (5)     -2%  315     (51)    -16%
Deferred compensation        115     155     (40)    -26% 121     (6)     -5%
expense
Other expenses               2,466   1,318   1,148   87%  1,191   1,275   107%
Total noninterest expense    $7,784 $5,462 $2,322 43%  $5,693 $2,091 37%


Salaries and related benefits expense for the three months ended March 31,
2014 was $3.6 million, an increase of $698 thousand or 24% compared to the
same period a year ago. The increase in salaries and related benefits was
primarily driven by an increase in the number of employees, increased
Supplemental Executive Retirement Plan (SERP) costs, increased health benefit
costs and an increase in contributions to the Company's employee profit
sharing plan.

Occupancy and equipment expenses increased $68 thousand for the three months
ended March 31, 2014 compared to the same period a year ago, due to increased
rent expenses and furniture fixture and equipment costs related to the
expansion of theSacramento Bank of Commerce branch and remodel of the Churn
Creek branch.

During the three months ended March 31, 2014 management determined that
further impairment necessary for an improved commercial land property in the
amount of $290 thousand. The property was transferred to OREO in 2010 and was
written down to its fair value in anticipation of its pending sale.

The increase in FDIC assessments of $103 thousand or 117% to $191 thousand
during the quarter ended March 31, 2014 resulted from true-up adjustments to
reverse prior period over accruals recorded in March of 2013.

Data processing expense for the three months ended March 31, 2014 was $194
thousand, an increase of $60 thousand or 45% 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.

Deferred compensation expense for the three months ended March 31, 2014 was
$115 thousand, a decrease of $40 thousand or 26% compared to the same period a
year ago. During June of 2013, the Company's board of directors approved a
revision to the SERP resulting in a reduction in accrual rate for deferred
compensation expenses.

Other expenses for the three months ended March 31, 2014 were $2.5 million, an
increase of $1.1 million or 87% compared to the same period a year ago. The
increase in other expenses was primarily driven by the negotiated settlement
of the Note from the former mortgage subsidiary which resulted in a loss of
$1.4 million. Other expenses for the three months ended March 31, 2014 also
include $74 thousand of amortization expense for affordable housing
investments purchased during 2013. The increase is partially offset by a
decrease in the amount of off balance sheet provision of $200 thousand and a
decrease in OREO expenses of $168 thousand compared to the same period a year
ago.


Table 9                      ALLOWANCE ROLL FORWARD
(Dollars in thousands)       Q1        Q4        Q3        Q2        Q1
                            2014      2013      2013      2013      2013
Beginning balance            $14,172  $13,542  $13,133  $11,350  $11,103
Provision for loan loss      0         0         300       1,400     1,050
charged to expense
Loans charged off            (4,903)   (815)     (635)     (474)     (845)
Loan loss recoveries         479       1,445     744       857       42
Ending balance               $9,748   $14,172  $13,542  $13,133  $11,350
                                                                
Gross portfolio loans        $607,049 $597,995 $594,562 $617,398 $612,608
outstanding at period end
                                                                
Ratio of allowance for loan
and lease losses to gross    1.61%     2.37%     2.28%     2.13%     1.85%
portfolio loans
Nonaccrual loans at period                                       
end:
Commercial                   $4,303   $6,527    $7,501   $7,898   $3,420
Commercial real estate       12,560    14,539    16,895    16,614    23,363
Residential real estate      7,360     8,217     10,953    11,165    11,302
Home equity                  484       513       517       345       --
Total nonaccrual loans       $24,707  $29,796  $35,866  $36,022  $38,085
Accruing troubled debt                                           
restructured loans
Commercial                   $62      $63      $65      $68      $70
Commercial real estate       3,853     3,864     1,742     1,748     4,593
Residential real estate      4,894     4,303     2,996     3,174     2,954
Home equity                  593       598       604       531       536
Total accruing restructured  $9,402   $8,828   $5,407   $5,521   $8,153
loans
                                                                
All other accruing impaired  2,564     3,517     4,190     4,445     1,426
loans
                                                                
Total impaired loans         $36,673  $42,141  $45,463  $45,988  $47,664
                                                                
Allowance for loan and lease
losses to nonaccrual loans   39.45%    47.56%    37.76%    36.46%    29.80%
at period end
Nonaccrual loans to gross    4.07%     4.98%     6.03%     5.83%     6.22%
portfolio loans
Allowance for loan and lease 26.58%    33.63%    29.79%    28.56%    23.81%
losses to impaired loans


The ALLL allocation decreased to $9.7 million compared to $14.2 million in the
prior quarter and $11.4 million reported for the same period a year ago. The
Company realized net charge offs of $4.4 million in the current quarter
compared with net recoveries of $630 thousand in the prior quarter and net
charge offs of $803 thousand in the same period a year ago. The increase in
net charge offs in the current quarter and the decrease in the ALLL allocation
is primarily due to chargeoffs related to two significant borrowing
relationships; the first included $3.4 million in chargeoffs of Commercial and
Industrial loans and the second included $1.4 million in chargeoffs of
Commercial Real Estate and Farmland loans. Allocations for the amounts charged
off were included in the ALLL balance as of December 31, 2013.

The Company continues to monitor credit quality, and adjust the ALLL
accordingly to ensure that the ALLL is maintained at a level that is adequate
to cover estimated credit losses in the loan and lease porfolios. As such, the
Company made no additional provisions for loan losses during the first quarter
of 2014 or the fourth quarter of 2013, compared with $1.1 million during the
same period a year ago. The Company's ALLL as a percentage of gross portfolio
loans was 1.61% at March 31, 2014 compared to 1.85% as of March 31, 2013.

The charge offs in the current quarter were primarily in the Commercial,
Commercial Real Estate and Farmland loan portfolios. During the first quarter
of 2014, the Bank's loan portfolio reflected higher charge off rates relative
to the previous four quarters. The charge offs in the current quarter were
centered in two borrowing relationships previously identified as impaired and
for which allocations were included in the ALLL balance as of December 31,
2013. 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 March 31, 2014, management believes the Company's ALLL is
adequately funded given the current level of credit risk.

At March 31, 2014, the recorded investment in loans classified as impaired
totaled $36.7 million, with a corresponding valuation allowance (included in
the ALLL) of $1.8 million. The valuation allowance on impaired loans
represents the impairment reserves on performing restructured loans, other
accruing loans, and nonaccrual loans. At December 31, 2013, the total recorded
investment in impaired loans was $42.1 million, with a corresponding valuation
allowance (included in the ALLL) of $4.8 million. The decrease in classified
loans during the period ended March 31, 2014 is primarily due to the
aforementioned two borrowing relationships.

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 one loan to grant a
maturity concession. The loan was classified as TDR and placed on nonaccrual
status. As of March 31, 2014, the Company had $29.2 million in TDRs compared
to $33.4 million as of December 31, 2013. As of March 31, 2014, the Company
had one hundred and seventeen restructured loans that qualified as TDRs, of
which ninety-three were performing according to their restructured terms. TDRs
represented 4.81% of gross portfolio loans as of March 31, 2014 compared with
5.59% at December 31, 2013.


Table 10                          PERIOD END TROUBLED DEBT RESTRUCTURINGS
(Dollars in thousands)            Q1       Q4       Q3       Q2       Q1
                                 2014     2013     2013     2013     2013
Nonaccrual                        $19,779 $24,596 $21,511 $15,552 $15,811
Accruing                          9,402    8,828    5,407    5,521    8,153
Total troubled debt               $29,181 $33,424 $26,918 $21,073 $23,964
restructurings
                                                                 
Percentage of total gross         4.81%    5.59%    4.53%    3.41%    3.91%
portfolio loans


Nonperforming loans, which include nonaccrual loans and accruing loans past
due over 90 days, totaled $24.7 million or 4.07% of portfolio loans as of
March 31, 2014, compared to $29.8 million, or 4.98% of portfolio loans at
December 31, 2013. Nonperforming assets, which include nonperforming loans and
other real estate owned ("OREO"), totaled $25.3 million, or 2.61% of total
assets as of March 31, 2014, compared with $30.7 million, or 3.23% of total
assets as of December 31, 2013. As of March 31, 2014, nonperforming assets of
$25.3 million have been written down by 36%, or $9.2 million, from their
original balance of $38.4 million. The decrease in nonperforming loans in the
current quarter is primarily due to $3.4 million in chargeoffs of Commercial
and Industrial loans for one borrowing relationship and $1.4 million in
chargeoffs of Commercial Real Estate and Farmland loans for one borrowing
relationship.


Table 11                          PERIOD END NONPERFORMING ASSETS
(Dollars in thousands)            Q1       Q4       Q3       Q2       Q1
                                 2014     2013     2013     2013     2013
Commercial                        $4,303  $6,527  $7,501  $7,898  $3,420
                                                                 
Real estate mortgage                                              
1-4 family, closed end 1st lien   1,286    1,322    1,740    1,797    1,846
1-4 family revolving              484      513      517      345      --
ITIN 1-4 family loan pool         6,074    6,895    9,213    9,368    9,456
Total real estate mortgage        7,844    8,730    11,470   11,510   11,302
                                                                 
Commercial real estate            12,560   14,539   16,895   16,614   23,363
Total nonaccrual loans            24,707   29,796   35,866   36,022   38,085
90 days past due not on           --       --       --       --       --
nonaccrual
Total nonperforming loans         24,707   29,796   35,866   36,022   38,085
                                                                 
Other real estate owned           623      913      959      1,360    1,785
Total nonperforming assets        $25,330 $30,709 $36,825 $37,382 $39,870
                                                                 
Nonperforming loans to portfolio  4.07%    4.98%    6.03%    5.83%    6.21%
loans
Nonperforming assets to total     2.61%    3.23%    3.95%    3.91%    4.07%
assets




Table 12               OTHER REAL ESTATE OWNED ACTIVITY
(Dollars in thousands) Q1    Q4    Q3      Q2      Q1
                      2014  2013  2013    2013    2013
Beginning balance      $913 $959 $1,360 $1,785 $3,061
Write-down             (290) 0     0       0       0
Additions to OREO      0     98    146     184     1,157
Dispositions of OREO   0     (144) (547)   (609)   (2,433)
Ending balance         $623 $913 $959   $1,360 $1,785


At March 31, 2014, and December 31, 2013, the recorded investment in OREO was
$623 thousand and $913 thousand, respectively. During the three months ended
March 31, 2014, further impairment was deemed necessary for an improved
commercial land property in the amount of $290 thousand. The property was
transferred to OREO in 2010 and was written down to its fair value in
anticipation of its pending sale. The March 31, 2014 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 $460 thousand.


Table 13                     INCOME STATEMENT
(Amounts in thousands,       Q1      Q1      Change          Q4      Full Year
except for per share data)
                            2014    2013    $         %     2013    2013
Interest income:                                                
Interest and fees on loans   $7,094 $7,647 $(553)   -7%   $7,432 $29,918
Interest on tax-exempt       652     623     29        5%    658     2,610
securities
Interest on U.S. government  1,114   1,066   48        5%    492     1,702
securities
Interest on other securities 140     141     (1)       -1%   719     3,031
Total interest income        9,000   9,477   (477)     -5%   9,301   37,261
Interest expense:                                               
Interest on demand deposits  121     139     (18)      -13%  121     485
Interest on savings deposits 57      71      (14)      -20%  60      254
Interest on certificates of  662     697     (35)      -5%   635     2,625
deposit
Interest on securities sold  0       4       (4)       -100% --      6
under repurchase agreements
Interest on FHLB borrowings  0       0       0         0%    (104)   (267)
Interest on other borrowings (13)    60      (73)      -122% 95      375
Total interest expense       827     971     (144)     -15%  807     3,478
Net interest income          8,173   8,506   (333)     -4%   8,494   33,783
Provision for loan and lease 0       1,050   (1,050)   -100% --      2,750
losses
Net interest income after
provision for loan and lease 8,173   7,456   717       10%   8,494   31,033
losses
Noninterest income:                                             
Service charges on deposit   44      46      (2)       -4%   45      191
accounts
Payroll and benefit          135     128     7         5%    129     484
processing fees
Earnings on cash surrender
value - bank owned life      126     156     (30)      -19%  133     534
insurance
(Loss) Gain on investment    (245)   189     (434)     -230% 64      995
securities, net
Merchant credit card service 26      33      (7)       -21%  31      129
income, net
Other income                 278     272     6         2%    317     1,209
Total noninterest income     364     824     (460)     -56%  719     3,542
Noninterest expense:                                            
Salaries and related         3,622   2,924   698       24%   3,172   12,035
benefits
Occupancy and equipment      642     574     68        12%   554     2,205
expense
Write down of other real     290     0       290       100%  --      --
estate owned
FDIC insurance premium       191     88      103       117%  190     725
Data processing fees         194     134     60        45%   150     547
Professional service fees    264     269     (5)       -2%   315     1,241
Deferred compensation        115     155     (40)      -26%  121     179
expense
Other expenses               2,466   1,318   1,148     87%   1,191   5,309
Total noninterest expense    7,784   5,462   2,322     43%   5,693   22,241
Income before provision      753     2,818   (2,065)   -73%  3,520   12,334
(benefit) for income taxes
Provision (benefit) for      188     778     (590)     -76%  1,433   4,399
income taxes
Net Income                   $565   $2,040 $(1,475) -72%  $2,087 $7,935
Less: Preferred dividend and 50      50      0         0%    50      200
accretion on preferred stock
Income available to common   $515   $1,990 $(1,475) -74%  $2,037 $7,735
shareholders
Basic earnings per share     $0.04  $0.13  $(0.09)  -69%  $0.14  $0.52
Average basic shares         13,942  15,686  (1,744)   -11%  14,143  14,940
Diluted earnings per share   $0.04  $0.13  $(0.09)  -69%  $0.14  $0.52
Average diluted shares       13,987  15,703  (1,716)   -11%  14,176  14,964



Table 14                      BALANCE SHEET
(Dollars in thousands)        March 31, March 31, Change          December 31,
ASSETS                        2014      2013      $         %     2013
Cash and due from banks       $54,422  $44,226  $10,196  23%   $38,369
Interest bearing due from     20,146    23,604    (3,458)   -15%  20,146
banks
Total cash and cash           74,568    67,830    6,738     10%   58,515
equivalents
                                                             
Securities
available-for-sale, at fair   204,010   221,846   (17,836)  -8%   216,640
value
Securities held-to-maturity,  36,985    34,526    2,459     7%    36,696
at amortized cost
                                                             
Portfolio loans               607,369   612,916   (5,547)   -1%   598,298
Allowance for loan losses     (9,748)   (11,350)  1,602     -14%  (14,172)
Net loans                     597,621   601,566   (3,945)   -1%   584,126
                                                             
Total interest earning assets 922,932   937,118   (14,186)  -2%   910,149
                                                             
Bank premises and equipment,  11,763    10,004    1,759     18%   10,893
net
Other intangibles             0         47        (47)      -100% --
Other real estate owned       623       1,785     (1,162)   -65%  913
Other assets                  44,427    40,911    3,516     9%    43,763
TOTAL ASSETS                  $969,997 $978,515 $(8,518) -1%   $951,546
                                                             
LIABILITIES AND STOCKHOLDERS'                                 
EQUITY
Demand - noninterest bearing  $131,290 $112,501 $18,789  17%   $133,984
Demand - interest bearing     269,634   237,542   32,092    14%   273,390
Savings accounts              93,279    91,434    1,845     2%    90,442
Certificates of deposit       267,508   256,916   10,592    4%    248,477
Total deposits                761,711   698,393   63,318    9%    746,293
                                                             
Securities sold under         0         15,625    (15,625)  -100% 0
agreements to repurchase
Federal Home Loan Bank        75,000    125,000   (50,000)  -40%  75,000
borrowings
Junior subordinated           15,465    15,465    0         0%    15,465
debentures
Other liabilities             17,034    15,251    1,783     12%   13,001
TOTAL LIABILITIES             869,210   869,734   (524)     0%    849,759
                                                             
TOTAL STOCKHOLDERS' EQUITY    100,787   108,781   (7,994)   -7%   101,787
                                                             
TOTAL LIABILITIES AND         $969,997 $978,515 $(8,518) -1%   $951,546
STOCKHOLDERS' EQUITY




Table 15                            YEAR TO DATE AVERAGE BALANCE SHEET
(Dollars in thousands)     March 31, March 31,  December December December 31,
                                                31,      31,
                          2014      2013       2013     2012     2011
Earning assets:                                               
Loans                      $605,682 $634,620 $612,819 $642,200  $626,275
Tax exempt securities      86,681    88,714    92,854    81,714     52,467
Taxable securities         157,936   155,727   157,486   135,615    130,898
Interest bearing due from  65,179    42,672    43,397    48,712     64,399
banks
Average earning assets     915,478   921,733   906,556   908,241    874,039
                                                               
Cash and DFB               10,212    9,397     10,570    10,125     2,251
Bank premises              11,197    9,951     10,338    9,567      9,489
Other assets               30,426    33,961    26,838    24,249     21,421
Average total assets       $967,313 $975,042 $954,302 $952,182  $907,200
                                                               
Interest bearing                                                
liabilities:
Demand - interest bearing  $267,428 $234,445 $244,125 $203,342  $157,696
Savings deposits           91,406    90,689    92,502    89,789     91,876
Certificates of deposit    259,523   257,131   249,500   285,574    296,381
Repurchase Agreements      0         13,993    5,780     14,246     14,805
Other Borrowings           90,465    151,964   125,144   125,839    130,933
Average interest bearing   708,822   748,222   717,051   718,790    691,691
liabilities
                                                               
Demand - noninterest       132,495   114,476   126,017   115,091    100,722
bearing
Other liabilities          23,013    2,051     5,041     7,033      6,679
                                                               
Shareholders' equity       102,983   110,293   106,193   111,268    108,108
Average liabilities &      $967,313 $975,042 $954,302 $952,182  $907,200
equity


About Bank of Commerce Holdings

Bank of Commerce Holdings is a bank holding company headquartered in Redding,
California and is the parent company for Redding Bank of Commerce which
operates under two separate names (Redding Bank of Commerce and Sacramento
Bank of Commerce, a division of Redding Bank of Commerce). The Bank is an FDIC
insured California banking corporation providing commercial banking and
financial services through four offices located in Northern California. The
Bank opened on October 22, 1982. The Company's common stock is listed on the
NASDAQ Global Market and trades under the symbol "BOCH".

Investment firms making a market in BOCH      
stock are:
                                             
Raymond James Financial                      Sandler O'Neill + Partners, L.P.
John T. Cavender                             Brian Sullivan
555 Market Street                             1251 Avenue of the Americas, 6th
                                              Floor
San Francisco, CA 94105                      New York, NY 10022
(800) 346-5544                                (212) 466-8022
                                             
                                             
McAdams Wright Ragen, Inc.                    Stifel Nicolaus
Joey Warmenhoven                              Perry Wright
1211 SW Fifth Avenue                          1255 East Street #100
Suite 1400                                    Redding, CA 96001
Portland, OR 97204                           (530) 244-7199
(866) 662-0351                                
                                             
                                             
FIG Partners                                  
Mike Hedrei                                   
1175 Peachtree Street NE #100                 
Colony Square Suite 2250                      
Atlanta, GA 30361                            
(212) 899-5217                                

CONTACT: Randall S. Eslick, President
         and Chief Executive Officer
         Telephone Direct (530) 722-3900
         Samuel D. Jimenez, Executive Vice President
         and Chief Operating Officer and Chief Financial Officer
         Telephone Direct (530) 722-3952
         Andrea Schneck, Vice President
         and Senior Administrative Officer
         Telephone Direct (530) 722-3959
 
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