REDDING, Calif., Feb. 1 /PRNewswire-FirstCall/ -- Bank of Commerce Holdings , a $618.3 million asset financial holding company, and parent company of Redding Bank of Commerce(TM), Roseville Bank of Commerce(TM), Sutter Bank of Commerce(TM) and Bank of Commerce Mortgage(TM) today announced income of $6.1 million for 2007.
2007 Highlights -- Assets of $618.3 million -- Income of $6.1 million -- Record loan growth of $77.3 million -- Core deposit growth of $32.9 million -- "Bank of Commerce - Bank of Choice(TM)" reflecting a renewed commitment to making Bank of Commerce the bank of choice(TM) for local businesses with a fresh focus on family and personal finances -- Treasury stock repurchase program announced -- Quarterly dividends of $0.08 per share
"The strength of our core banking business continued to serve us very well through 2007. Top line revenues increased to $45.8 million in 2007 compared with $39.5 million in 2006, a 15.9% increase over the prior year. Removing a non-recurring income item of $2.3 million, top line revenues are still up 9.9% or $3.9 million over the prior year's performance. Overall, our performance remains above average and consistent with our goal of achieving upper quartile performance compared with our peers."
"Our loan and deposit growth trends were solid and our team continued to earn more of our customers business. We maintained our conservative risk management practices and our strong balance sheet and capital ratios. We are not immune to the evolving slowdown in the housing sector, yet we had another solid quarter despite turbulent credit markets. During the fourth quarter we strengthened our reserves by funding $3.3 million in provisions for loan losses. Although two credits from our real estate development portfolio were placed into non-accrual status in the fourth quarter, no loan losses occurred during 2007. Looking ahead, we are taking appropriate steps to ensure we focus intently on actively managing our exposures and controlling costs."
"Net income for 2007 was $6.1 million, a decrease of 7.0% or $461,000 over the prior year. Return on average assets was 1.04% and return on average equity was 13.39% in 2007 compared with 1.20% and 15.59% respectively in 2006. Diluted earnings per share for 2007 and 2006 were $0.68 and $0.74, respectively."
"We continue to invest in our business for the long term and to introduce new products and services in our marketplace. You will notice the bank's colorful, contemporary redesign in everything from our fresh logo mark, branch signage and account statements to our newly re-launched website.
Our new Buenaventura office located in an upscale shopping district on the Westside of Redding opened on January 14, 2008," said Patrick J. Moty, President and CEO of the Company.
Financial Performance
Diluted earnings per share was $0.68 compared to $0.74 in 2006, a decrease of 8.1%. Our balance sheet grew by 6.0% or $34.9 million over the prior year end. Loans, the single largest asset of the Company grew by $77.3 million or 18.9%, an all-time high for the Company. Deposit growth was up 7.8% or $34.2 million of which $32.9 million was centered in core checking and savings deposits.
Revenue
Top line revenues increased to $45.8 million in 2007 compared to $39.5 in 2006. Removing a non-recurring income item of $2.3 million, top line revenues are still up 9.9% or $3.9 million over the prior year.
Loans
Net portfolio loans increased $77.3 million or 18.9% to $486.3 million. The increase is primarily in the commercial and industrial portfolio. Our Company concentrates its lending activities primarily within Shasta, El Dorado, Placer, Sacramento, Sutter, Yuba and Tehama counties, in California, and the location of the five full service offices of the Bank. Our Company has a diversified loan portfolio and a significant portion of its customers' ability to repay the loans is dependent upon the professional services and investor commercial real estate sectors. Generally, the loans are secured by real estate or other assets and are expected to be repaid from cash flows of the borrower's business or cash flows from real estate investments.
Net Interest Income
Net interest income modestly decreased by $23,000 over the prior year, a -0.10% decrease. The average balance of total earning assets increased to $552.9 million in 2007 compared to $517.5 million in 2006, a 6.8% increase. Yields on portfolio loans increased 4 basis points to 8.26% compared to 8.22% in 2006. Yields on all earning assets increased 18 basis points to 7.45% compared to 7.27% in 2006. Likewise, funding costs increased 39 basis points to 4.08% compared with 3.69% in 2006, reflective of the highly competitive market for deposit accounts.
Non Interest Income
Non-interest income consists of earnings on key man life insurance, payroll and benefit processing fees, processing fees for merchants who accept credit card payments for goods and services, service charge on deposit accounts, mortgage servicing fees and other service fees. During the fourth quarter 2007, key life proceeds of $2.3 million were recognized. This revenue is exempt from federal and state income tax.
For the year ended December 31, 2007, non-interest income represented 9.9% of the Company's revenues versus 4.9% in 2006 and 7.1% in 2005. Mortgage activities continued to slow during 2007 reflective in the fee income of $50,000 compared to $71,000 in 2006, a 29.6% decrease year over year.
Non Interest Expense
Non-interest expense consists of salaries and related employee benefits, occupancy and equipment expenses, data processing fees, professional fees, directors' fees and other operating expenses. The increase in salary and benefit expense for 2007 over 2006 is primarily due to a one time executive severance package, coupled with staff increases to support the new westside office. The increase in professional service fees is reflective of professional services utilized to redesign the Company logo, website and collateral pieces.
Credit Quality
During the fourth quarter 2007, two credits in the real estate development portfolio were placed into non-accrual status. The gross interest income that would have been recorded during the period had the loans been current in accordance with their original terms was approximately $96,000. The Company's OREO (Other Real Estate Owned) remained at $0 during 2007, 2006 and 2005. During the fourth quarter we strengthened our reserves by funding $3.3 million in provisions for loan losses.
The Company's allowance for loan losses was 1.66% of total loans at December 31, 2007 and 1.18% at December 31, 2006. Provisions for loan losses were $3,291,250 compared to $226,000 for the year ended 2006.
Facilities
During the first quarter 2008, the Company has opened a new contemporary, consumer friendly express office with extended hours located at 3455 Placer Street, Redding, California 96001. (The Westside location).
Dividends
On December 19, 2007, the Company announced a $0.08 quarterly cash dividend payable to shareholders of record as of December 31, 2007 and payable on January 11, 2008.
Capital
The capital ratios of Bank of Commerce continue to be above the well-capitalized guidelines established by bank regulatory agencies.
Bank of Commerce Holdings, with administrative offices in Redding, California is a financial service holding company that owns Redding Bank of Commerce(TM), Roseville Bank of Commerce(TM), Sutter Bank of Commerce(TM) and Bank of Commerce Mortgage(TM). The Company is a federally insured California banking corporation and opened on October 22, 1982.
BOCH is a NASDAQ Global Market listed stock. Please contact your local investment advisor for purchases and sales. Investment firms making a market in BOCH stock are:
Howe Barnes Hoefer & Arnett/ Morgan Stanley/ John Cavender Rick Hill 555 Market Street 310 Hemsted Drive, Suite 100 San Francisco, CA Redding, CA (800) 346-5544 (800) 733-6126 Wachovia Securities/ Raymond James Financial/ Ken Myers, Rick Hansen Geoff Ball 10466 Brunswick Road 1805 Hilltop Drive, Suite 106 Grass Valley, CA Redding, CA (888) 383-3112 (800) 926-5040
This 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. -- The health of the economy declines nationally or regionally which could reduce the demand for loans or reduce the value of real estate collateral securing most of the Company's loans. -- Credit quality deteriorates which could cause an increase in the provision for loan losses. -- Losses in the Company's merchant credit card processing business. -- 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, 2007 and under the heading "Risk factors that may affect results" 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.
Condensed Consolidated Balance Sheets (Unaudited) ASSETS 2007 2006 Cash and due from banks $13,839,123 $14,661,386 Federal funds sold and securities purchased under agreements to resell 8,395,000 24,605,000 Cash and cash equivalents 22,234,123 39,266,386 Securities available-for-sale (including pledged collateral of $61,329,000 at December 31, 2007 and $71,686,000 at December 31, 2006) 67,906,386 95,601,107 Securities held-to-maturity, at cost (estimated fair value of $10,632,208 at December 31 2007 and $10,792,938 at December 31 2006) 10,558,765 10,810,113 Loans, net of the allowance for loan and lease losses of $8,232,970 at December 31, 2007 and $4,904,266 at December 31, 2006 486,282,571 408,989,228 Bank premises and equipment, net 10,963,975 8,595,044 Other assets 20,381,095 20,180,149 TOTAL ASSETS $618,326,915 $583,442,027 LIABILITIES AND STOCKHOLDERS' EQUITY Deposits: Demand - noninterest bearing $75,717,742 $84,778,916 Demand - interest bearing 142,820,773 119,437,370 Savings accounts 41,376,296 22,748,885 Certificates of deposit 213,716,486 212,442,258 Total Deposits 473,631,297 439,407,429 198,323,303 188,620,698 Securities sold under agreements to repurchase 15,513,211 37,116,610 Federal Home Loan Bank borrowings 60,000,000 40,000,000 Other liabilities 7,553,559 7,536,738 Junior subordinated debt payable to unconsolidated subsidiary grantor trust 15,465,000 15,465,000 Total liabilities 572,163,067 539,525,777 Stockholders' equity: Preferred stock, no par value; 2,000,000 shares authorized; no shares issued and outstanding in 2007 and 2006 - - Common stock, no par value; 50,000,000 shares authorized; 8,757,445 shares issued and outstanding in 2007 and 8,847,042 shares issued and outstanding in 2006 9,995,517 11,517,368 Retained earnings 36,604,902 33,336,032 Accumulated other comprehensive (loss) income, net of tax (436,571) ( 937,150) Total stockholders' equity 46,163,848 43,916,250 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $618,326,915 $583,442,027 Condensed Consolidated Statements of Income (Unaudited) Dec. 31, 2007 Dec. 31, 2006 Dec. 31, 2005 Interest income: Interest and fees on loans $36,134,170 $32,394,766 $24,069,980 Interest on tax-exempt securities 1,228,944 786,972 332,385 Interest on U.S. government securities 3,084,672 3,421,191 2,910,695 Interest on federal funds sold and securities purchased under agreement to resell 680,578 871,879 491,019 Interest on other securities 89,686 135,651 59,909 Total interest income 41,218,050 37,610,459 27,863,988 Interest expense: Interest on demand deposits 2,735,170 1,504,180 938,532 Interest on savings deposits 1,215,920 288,883 182,994 Interest on certificates of deposit 10,570,776 8,485,799 4,331,468 Interest on securities sold under repurchase agreements 1,177,417 1,138,242 430,754 Interest on FHLB borrowings 2,421,636 3,079,432 1,161,762 Interest on junior subordinated debt payable to unconsolidated subsidiary grantor trusts 1,084,990 1,078,884 580,935 Total interest expense 19,205,909 15,575,420 7,626,445 Net interest income 22,012,141 22,035,039 20,237,543 Provision for loan and lease losses 3,291,250 225,900 447,700 Net interest income after provision for loan and lease losses 18,720,891 21,809,139 19,789,843 Noninterest income: Service charges on deposit accounts 277,769 345,737 393,661 Payroll and benefit processing fees 382,738 385,867 356,957 Earnings on cash surrender value -Bank owned life insurance 2,731,251 328,743 209,322 Net (loss) gain on sale of securities available-for-sale 45,670 (170,524) (1,537) Net gain on sale of loans 0 89,851 145,594 Merchant credit card service income, net 388,438 380,066 345,721 Mortgage brokerage fee income 49,995 71,350 249,049 Other income 658,893 497,141 424,973 Total noninterest income 4,534,754 1,928,231 2,123,740 Noninterest expense: Salaries and related benefits 8,665,679 8,020,136 6,883,754 Occupancy and equipment expense 2,372,617 1,845,664 1,572,458 FDIC insurance premium 51,077 47,670 48,659 Data processing fees 395,558 216,313 303,316 Professional service fees 1,027,671 683,602 648,871 Payroll processing fees 107,856 103,518 110,376 Deferred compensation expense 411,191 368,809 321,321 Stationery and supplies 256,799 230,843 241,144 Postage 137,740 112,740 104,439 Directors' expenses 311,777 243,428 219,687 Other expenses 2,005,729 1,460,008 1,294,684 Total noninterest expense 15,743,694 13,332,731 11,748,709 Income before provision for income taxes 9,011,951 10,404,639 10,164,874 Provision for income taxes 1,405,053 3,836,930 3,886,504 Net Income $6,106,898 $6,567,709 $6,278,370 Basic earnings per share $0.69 $0.75 $0.73 Weighted average shares - basic 8,857,627 8,759,568 8,600,270 Diluted earnings per share $0.68 $0.74 $0.71 Weighted average shares - diluted 8,937,736 8,931,584 8,844,626 Quarterly Financial Condition Data (Unaudited) For the Quarter Ended Dec. Sept. June March Dec. Sept. June 31, 30, 30, 31, 31, 30, 30, 2007 2007 2007 2007 2006 2006 2006 Cash and due from banks $13,839 $12,366 $18,206 $12,597 $14,661 $17,535 $12,668 Federal funds sold and securities purchased under agreements to resell 8,395 7,980 14,115 21,195 24,605 28,010 14,155 Total Cash & Equivalents 22,234 20,346 32,321 33,792 39,266 45,545 26,823 Securities available- for-sale 67,906 93,423 94,029 92,769 95,601 97,614 97,366 Securities held to maturity, at cost 10,559 10,592 10,637 10,673 10,810 10,841 11,141 Loans, net of allowance for loan losses 486,283 461,171 437,821 411,357 408,990 403,657 401,185 Bank premises and equipment, net 10,964 10,464 10,329 9,992 8,595 7,350 6,690 Other assets 20,381 19,979 20,440 19,513 20,180 20,211 20,942 TOTAL ASSETS $618,327 $615,975 $605,577 $578,096 $583,442 $585,218 $564,147 Liabilities: Demand - noninterest bearing $75,718 $70,809 $69,842 $ 70,035 $84,779 81,125 74,505 Demand - interest bearing 142,821 136,219 114,530 112,550 119,437 111,439 101,492 Savings 41,376 44,406 45,082 41,537 22,749 22,610 23,111 Certificates of deposit 213,716 220,803 211,794 211,422 212,442 214,019 189,577 Total deposits 473,631 472,237 441,248 435,544 439,407 429,193 388,685 Securities sold under agreements to repurchase 15,513 26,755 46,655 35,053 37,117 35,260 32,507 Federal Home Loan Bank borrowings 60,000 50,000 50,000 40,000 40,000 55,000 80,000 Other liabilities 7,554 6,734 7,114 6,646 7,537 6,352 6,536 Junior subordinated debt payable to subsidiary grantor trust 15,465 15,465 15,465 15,465 15,465 15,465 15,465 Total liabil- ities 572,163 571,191 560,482 532,708 539,526 541,270 523,193 Stockholders' equity: Common stock 9,996 10,252 11,966 11,940 11,517 12,416 11,442 Retained earnings 36,605 35,617 34,997 34,110 33,336 32,526 31,479 Accumulated other comprehensive income (loss), net (437) (1,085) (1,868) (662) (937) (994) (1,967) Total stockholders' equity 46,164 44,784 45,095 45,388 43,916 43,948 40,954 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $618,327 $615,975 $605,577 $578,096 $583,442 $585,218 $564,147 Interest Income: Net interest income 5,585 5,641 5,461 $5,327 $5,418 $5,530 $5,674 Provision for loan losses 3,170 115 0 6 0 72 143 Net interest income after provision for loan losses 2,415 5,526 5,461 5,321 5,418 5,458 5,531 Noninterest Income: Service charges 63 70 76 69 91 81 86 Merchant credit card service income, net 91 109 89 92 100 89 93 Net gain (loss) on sale of securities available -for-sale 0 0 0 46 0 (171) 0 Mortgage brokerage fee income (6) 21 29 6 (13) 32 35 Other income 2,745 326 424 285 363 397 298 Total non- interest income 2,893 526 618 498 541 428 512 Noninterest Expense: Salaries and related benefits 2,208 2,402 1,959 2,097 2,150 1,996 1,996 Net Occupancy and equipment expense 737 635 543 458 496 467 448 Professional service fees 365 216 252 195 181 149 150 Other expenses 1,218 775 947 738 659 687 716 Total non- interest expense 4,528 4,028 3,701 3,488 3,486 3,299 3,310 Income before income taxes 780 2,024 2,378 2,331 2,473 2,587 2,733 Provision for income taxes (910) 693 778 844 858 915 1,044 Net Income $1,690 $1,331 $1,600 $1,487 $1,615 $1,672 $1,689 Average Balances, Interest Income/Expense and Yields/Rates Paid (Unaudited, Dollars in thousands) Average Yield/ Average Yield/ Balance Interest Rate Balance Interest Rate Interest Earning Assets Portfolio loans $437,217 $36,134 8.26% $394,152 $32,394 8.22% Tax-exempt securities 30,727 1,229 4.00% 21,112 787 3.73% US government securities 26,782 1,112 4.15% 39,576 1,593 4.03% Mortgage backed securities 43,122 1,973 4.58% 42,476 1,828 4.30% Federal funds sold 13,099 681 5.20% 17,124 872 5.09% Other securities 2,000 90 4.50% 3,075 136 4.42% Average Earning Assets $552,947 $41,219 7.45% $517,515 $37,610 7.27% Cash & due from banks 14,273 14,113 Bank premises and fixed assets 10,155 6,878 Other assets 17,986 11,022 Average Total Assets $595,361 $549,528 Interest Bearing Liabilities Interest bearing demand $121,281 $2,735 2.26% $108,066 $1,504 1.39% Savings deposits 39,565 1,216 3.07% 24,633 289 1.17% Certificates of deposit 215,511 10,571 4.91% 190,568 8,486 4.45% Repurchase Agreements 32,237 1,177 3.65% 29,708 1,138 3.83% Other borrowings 62,095 3,507 5.65% 69,014 4,158 6.02% Average Interest Liabilities $470,689 $19,206 4.08% $421,989 15,575 3.69% Noninterest bearing Demand 72,545 79,245 Other liabilities 6,502 6,154 Stockholders' equity 45,625 42,140 Average Liabilities and Stockholders' equity $595,361 $549,528 Net Interest Income and Net Interest Margin $22,013 3.98% $22,035 4.26% Average Yield/ Balance Interest Rate Interest Earning Assets Portfolio loans $337,284 $24,070 7.14 % Tax-exempt securities 9,966 332 3.33 % US government securities 35,779 1,272 3.56 % Mortgage backed securities 41,181 1,639 3.98 % Federal funds sold 15,225 491 3.22 % Other securities 1,384 60 4.34 % Average Earning Assets $440,819 $27,864 6.32 % Cash & due from banks 15,208 Bank premises and fixed assets 5,563 Other assets 7,172 Average Total Assets $468,762 Interest Bearing Liabilities Interest bearing demand $112,236 $939 0.84 % Savings deposits 26,542 183 0.69 % Certificates of deposit 149,204 4,331 2.90 % Repurchase Agreements 17,892 63 0.36 % Other borrowings 34,042 2,110 6.20 % Average Interest Liabilities $339,916 7,626 2.24 % Noninterest bearing Demand 80,219 Other liabilities 4,417 Stockholders' equity 44,210 Average Liabilities and Stockholders' equity $468,762 Net Interest Income and Net Interest Margin $20,238 4.59 %
Interest income on loans includes fee income of approximately $241,000, $429,000 and $556,000 for the years ended December 31, 2007, 2006, and 2005 respectively. The Company's average total assets increased to $590.0 million in 2007 from $549.5 million in 2006 and $468.8 million in 2005, representing a 6.1% increase in 2007 over 2006 and a 17.2% increase in 2006 over 2005.
