Bank of Commerce Holdings (NASDAQ: BOCH) (the “Company”), a $1.442
billion asset bank holding company and parent company of Merchants
Bank of Commerce (the “Bank”), today announced financial results
for the quarter ended June 30, 2019. Net income for the quarter
ended June 30, 2019 was $3.6 million or $0.20 per share – diluted,
compared with net income of $3.6 million or $0.22 per share –
diluted for the same period of 2018. Net income for the six months
ended June 30, 2019 was $6.0 million or $0.33 per share – diluted,
compared with net income of $6.9 million or $0.42 per share –
diluted for the same period of 2018.
The current year includes the benefits of our January 31, 2019
acquisition of Merchants National Bank of Sacramento (“Merchants”).
In May, we successfully converted all of Merchant’s computer
records onto our core system. As previously announced, the
Company’s subsidiary bank, which had been operating under multiple
names, simultaneously changed the name for all locations to
Merchants Bank of Commerce. To date, acquisition related costs have
totaled $2.3 million and costs related to the name change have
totaled $464 thousand. All significant costs for these two projects
have now been absorbed.
Randall S. Eslick, President and CEO commented: “I am very
pleased with our second quarter accomplishments which are the
result of the hard work of our dedicated and talented employees.
The changes made during the second quarter reflect the continued
execution of our strategic plan. I am particularly excited that
with the successful integration of Merchant’s data systems along
with our name change, we now operate our bank under one name and
one computer system. These changes will lead to greater
efficiencies and reinforce a consistent message throughout our
company.”
Financial highlights for the second quarter of
2019:
- Net income of $3.6 million was an increase of $26 thousand (1%)
from $3.6 million earned during the same period in the prior year.
Earnings of $0.20 per share – diluted was a decrease of $0.02 (9%)
from $0.22 per share – diluted earned during the same period in the
prior year and reflects the impact of 1,834,142 shares of common
stock issued during the first quarter of 2019 as part of our
acquisition of Merchants.
- Acquisition costs associated with our acquisition of Merchants
totaled $376 thousand. Costs related to the name change of our
subsidiary bank totaled $464 thousand.
- Net interest income increased $1.9 million (17%) to $13.5
million compared to $11.6 million for the same period in the prior
year.
- Return on average assets decreased to 1.01% compared to 1.14%
for the same period in the prior year.
- Return on average equity decreased to 8.93% compared to 11.32%
for the same period in the prior year.
- Average loans totaled $1.028 billion, an increase of $106
million (11%) compared to average loans for the same period in the
prior year.
- Average earning assets totaled $1.353 billion, an increase of
$145 million (12%) compared to average earning assets for the same
period in the prior year.
- Average deposits totaled $1.218 billion, an increase of $163
million (15%) compared to average deposits for the same period in
the prior year.-Average non-maturing deposits totaled $1.054
billion, an increase of $170 million (19%) compared to the same
period in the prior year.-Average certificates of deposit totaled
$164.1 million, a decrease of $6.7 million (4%) compared to same
period in the prior year.
- The Company’s efficiency ratio was 65.9% compared to 61.2%
during the same period in the prior year.-The Company’s efficiency
ratio of 65.9% for the second quarter of 2019 includes $376
thousand in acquisition costs and $464 thousand in name change
costs. The efficiency ratio excluding these non-recurring costs was
60.1%.
- Nonperforming assets at June 30, 2019 totaled $13.5 million or
0.94% of total assets, an increase of $9.1 million since June 30,
2018. The increase in nonperforming assets results from one $10.3
million commercial real estate loan.
- Book value per common share was $9.22 at June 30, 2019 compared
to $7.97 at June 30, 2018.
- Tangible book value per common share was $8.29 at June 30, 2019
compared to $7.85 at June 30, 2018.
Financial highlights for the six months ended June 30,
2019:
- Net income of $6.0 million ($0.33 per share – diluted) was a
decrease of $909 thousand (13%) from $6.9 million ($0.42 per share
– diluted) earned during the same period in the prior year.
- Acquisition costs associated with our acquisition of Merchants
totaled $2.3 million. Costs related to the name change of our
subsidiary bank totaled $464 thousand.
- Net interest income increased $3.6 million (16%) to $26.5
million compared to $22.9 million for the same period in the prior
year.
- Return on average assets decreased to 0.83% compared to 1.10%
for the same period in the prior year.
- Return on average equity decreased to 7.59% compared to 10.84%
for the same period in the prior year.
- Average loans totaled $1.011 billion, an increase of $107
million (12%) compared to average loans for the same period in the
prior year.
- Average earning assets totaled $1.345 billion, an increase of
$150 million (13%) compared the same period in the prior year.
- Average deposits totaled $1.221 billion, an increase of $158
million (15%) compared the same period in the prior year.-Average
non-maturing deposits totaled $1.055 billion, an increase of $169
million (19%) compared to the same period in the prior
year.-Average certificates of deposit totaled $165.8 million, a
decrease of $10.6 million (6%) compared to the same period in the
prior year.
- The Company’s efficiency ratio was 71.7% compared to 63.1% for
the same period in the prior year.-The Company’s efficiency ratio
of 71.7% for the first six months of 2019 includes $2.3 million in
acquisition costs and $464 thousand in name change costs. The
efficiency ratio excluding these non-recurring costs was
62.0%.
- Nonperforming assets at June 30, 2019 totaled $13.5 million or
0.94% of total assets, an increase of $9.3 million since December
31, 2018. The increase in nonperforming assets results from one
$10.3 million commercial real estate loan.
- Book value per common share was $9.22 at June 30, 2019 compared
to $8.47 at December 31, 2018.
- Tangible book value per common share was $8.29 at June 30, 2019
compared to $8.36 at December 31, 2018.
Forward-Looking Statements
Bank of Commerce Holdings wishes to take
advantage of the Safe Harbor provisions included in the Private
Securities Litigation Reform Act of 1995. This news release
includes statements by the Company, which describe management’s
expectations and developments, which may not be based on historical
facts and are “forward-looking statements” within the meaning of
Section 27A of the Securities Act of 1933, as amended and Section
21B of the Securities Act of 1934, as amended. Future events are
difficult to predict, and the expectations described above are
necessarily subject to risk and uncertainty that may cause actual
results to differ materially and adversely. In addition to
discussions about risks and uncertainties set forth from time to
time in the Company's public filings, factors that may cause actual
results to differ materially from those contemplated by such
forward looking statements include, among others, the following
possibilities: (1) local, national and international economic
conditions are less favorable than expected or have a more direct
and pronounced effect on the Company than expected and adversely
affect the Company's ability to continue its internal growth at
historical rates and maintain the quality of its earning assets;
(2) changes in interest rates reduce interest margins more than
expected and negatively affect funding sources; (3) projected
business increases following strategic expansion or opening or
acquiring new banks and/or branches are lower than expected; (4)
our concentration in lending tied to real estate exposes us to the
adverse effects of material increases in interest rates, declines
in the general economy, tightening credit markets or declines in
real estate values; (5) competitive pressure among financial
institutions increases significantly; (6) legislation or regulatory
requirements or changes adversely affect the businesses in which
the Company is engaged; and (7) technological changes could expose
us to new risks.
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TABLE 1 |
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SELECTED FINANCIAL INFORMATION - UNAUDITED |
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(amounts in thousands except per share data) |
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For The Three Months Ended |
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For The Six Months Ended |
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Net income, average
assets and |
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June 30, |
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March 31, |
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June 30, |
|
average shareholders' equity |
|
2019 |
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2018 |
|
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2019 |
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2019 |
|
2018 |
|
Net income |
|
$ |
3,644 |
|
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$ |
3,618 |
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$ |
2,306 |
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$ |
5,950 |
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$ |
6,859 |
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Average total assets |
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$ |
1,450,725 |
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$ |
1,276,697 |
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$ |
1,425,860 |
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$ |
1,438,361 |
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$ |
1,262,710 |
|
Average total earning
assets |
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$ |
1,353,200 |
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$ |
1,208,281 |
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$ |
1,337,006 |
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$ |
1,345,177 |
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$ |
1,195,154 |
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Average shareholders'
equity |
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$ |
163,598 |
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$ |
128,181 |
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$ |
152,705 |
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$ |
158,182 |
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$ |
127,628 |
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Selected performance ratios |
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Return on average assets |
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1.01 |
% |
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1.14 |
% |
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0.66 |
% |
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0.83 |
% |
|
1.10 |
% |
Return on average equity |
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|
8.93 |
% |
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|
11.32 |
% |
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6.12 |
% |
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7.59 |
% |
|
10.84 |
% |
Efficiency ratio |
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65.9 |
% |
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61.2 |
% |
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77.7 |
% |
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71.7 |
% |
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63.1 |
% |
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Share and per share amounts |
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Weighted average shares -
basic (1) |
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18,134 |
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16,245 |
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17,489 |
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17,816 |
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16,237 |
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Weighted average shares -
diluted (1) |
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18,194 |
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16,325 |
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17,552 |
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17,878 |
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16,319 |
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Earnings per share -
basic |
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$ |
0.20 |
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$ |
0.22 |
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$ |
0.13 |
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$ |
0.33 |
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$ |
0.42 |
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Earnings per share -
diluted |
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$ |
0.20 |
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$ |
0.22 |
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$ |
0.13 |
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$ |
0.33 |
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$ |
0.42 |
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At June 30, |
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At March 31, |
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Share and per share amounts |
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2019 |
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2018 |
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2019 |
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Common shares outstanding
(2) |
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18,214 |
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16,318 |
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18,213 |
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Book value per common share
(2) |
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$ |
9.22 |
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$ |
7.97 |
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$ |
8.90 |
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Tangible book value per common
share (2)(3) |
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$ |
8.29 |
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$ |
7.85 |
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$ |
7.96 |
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Capital ratios (4) |
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Bank of Commerce Holdings |
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Common equity tier 1 capital
ratio |
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12.56 |
% |
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12.15 |
% |
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12.40 |
% |
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Tier 1 capital ratio |
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13.41 |
% |
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13.07 |
% |
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13.25 |
% |
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Total capital ratio |
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15.35 |
% |
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15.20 |
% |
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15.19 |
% |
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Tier 1 leverage ratio |
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11.08 |
% |
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11.07 |
% |
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11.05 |
% |
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Tangible common equity ratio
(5) |
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10.59 |
% |
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10.02 |
% |
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9.97 |
% |
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Merchants Bank of
Commerce |
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Common equity tier 1 capital
ratio |
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14.06 |
% |
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12.51 |
% |
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13.98 |
% |
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Tier 1 capital ratio |
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14.06 |
% |
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12.51 |
% |
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13.98 |
% |
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Total capital ratio |
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15.16 |
% |
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13.72 |
% |
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15.08 |
% |
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Tier 1 leverage ratio |
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11.61 |
% |
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10.60 |
% |
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11.66 |
% |
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(1) Excludes
unvested restricted shares issued in accordance with the Company's
equity incentive plan, as they are non participative in dividends
or voting rights. |
(2) Includes
unvested restricted shares issued in accordance with the Company's
equity incentive plan. |
(3) Book value
per share is computed by dividing total shareholders’ equity by
shares outstanding. Tangible book value per share is computed by
dividing total shareholders’ equity less goodwill and core deposit
intangible, net by shares outstanding. Management believes that
tangible book value per share is meaningful because it is a measure
that the Company and investors commonly use to assess capital
adequacy. |
(4) The Company
and the Bank continue to meet all capital adequacy requirements to
which they are subject. |
(5) Management
believes the tangible common equity ratio is a useful measure of
capital adequacy because it provides a meaningful base for
period-to-period and company-to-company comparisons, which
management believes will assist investors in assessing the capital
of the Company and the ability of the Company to absorb potential
losses. The tangible common equity ratio is calculated as total
shareholders' equity less goodwill and core deposit intangible, net
divided by total assets less goodwill and core deposit intangible,
net. |
BALANCE SHEET OVERVIEW
As of June 30, 2019, the Company had total consolidated assets
of $1.442 billion, gross loans of $1.037 billion, allowance for
loan and lease losses (“ALLL”) of $12 million, total deposits of
$1.236 billion, and shareholders’ equity of $168 million.
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TABLE 2 |
LOAN BALANCES BY TYPE - UNAUDITED |
(amounts in thousands) |
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At June 30, |
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At March 31, |
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% of |
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% of |
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Change |
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% of |
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2019 |
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Total |
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2018 |
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Total |
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Amount |
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% |
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2019 |
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Total |
Commercial |
$ |
152,303 |
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|
15 |
% |
|
$ |
139,670 |
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|
15 |
% |
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$ |
12,633 |
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9 |
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% |
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$ |
149,575 |
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14 |
% |
Real estate - construction and
land development |
|
37,685 |
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4 |
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21,292 |
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2 |
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16,393 |
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77 |
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% |
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30,335 |
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3 |
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Real estate - commercial
non-owner occupied |
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468,706 |
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45 |
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427,088 |
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46 |
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41,618 |
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10 |
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% |
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|
469,048 |
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46 |
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Real estate - commercial owner
occupied |
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210,711 |
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21 |
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199,412 |
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21 |
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11,299 |
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6 |
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% |
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|
209,099 |
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20 |
|
Real estate - residential -
ITIN |
|
35,162 |
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3 |
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39,424 |
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4 |
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(4,262 |
) |
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(11 |
) |
% |
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36,145 |
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3 |
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Real estate - residential -
1-4 family mortgage |
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67,092 |
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6 |
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|
33,391 |
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4 |
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|
33,701 |
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|
101 |
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% |
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|
68,092 |
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7 |
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Real estate - residential -
equity lines |
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23,656 |
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2 |
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|
28,879 |
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3 |
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(5,223 |
) |
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(18 |
) |
% |
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|
26,162 |
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3 |
|
Consumer and other |
|
41,409 |
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4 |
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|
47,660 |
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5 |
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(6,251 |
) |
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(13 |
) |
% |
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|
46,150 |
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4 |
|
Gross loans |
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1,036,724 |
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|
100 |
% |
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|
936,816 |
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|
100 |
% |
|
|
99,908 |
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|
11 |
|
% |
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|
1,034,606 |
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|
100 |
% |
Deferred fees and costs |
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2,005 |
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|
1,763 |
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|
242 |
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|
1,992 |
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Loans, net of deferred fees and costs |
|
1,038,729 |
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|
938,579 |
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|
100,150 |
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|
1,036,598 |
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Allowance for loan and lease
losses |
|
(12,445 |
) |
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(12,388 |
) |
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(57 |
) |
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(12,242 |
) |
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Net loans |
$ |
1,026,284 |
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$ |
926,191 |
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$ |
100,093 |
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$ |
1,024,356 |
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Average loans |
$ |
1,028,187 |
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$ |
922,687 |
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$ |
105,500 |
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11 |
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% |
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$ |
993,261 |
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Average yield on loans during
the quarter |
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5.01 |
% |
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4.85 |
% |
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0.16 |
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4.91 |
% |
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Average yield on loans during
the year |
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4.96 |
% |
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4.89 |
% |
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0.07 |
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|
4.91 |
% |
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The Company recorded gross loan balances of $1.037 billion at
June 30, 2019, compared with $937 million and $1.035 billion at
June 30, 2018 and March 31, 2019, respectively, an increase of $100
million and $2 million, respectively. During the first quarter of
2019, Merchants Holding Company acquisition provided an additional
$85.3 million of loans. At June 30, 2019, gross loans from the
acquisition totaled $83.4 million.
The average yield on loans during the quarter was 5.01% compared
to 4.85% and 4.91% for the quarters ended June 30, 2018 and March
31, 2019, respectively. During the first quarter of 2019, a $10.3
million commercial real estate loan was placed on nonaccrual
status. The uncollected interest on the loan was reversed which
reduced our average yield on loans by 5 basis points. During the
second quarter of 2019, we received a loan prepayment penalty that
increased the average yield by 5 basis points.
Gross loan balances in the table above include a fair value
discount for loans acquired from Merchants during the first quarter
of 2019 of $2.0 million and $2.2 million at June 30, 2019 and March
31, 2019, respectively. We recorded $48 thousand and $195 thousand
in accretion of the discount for these loans during the first and
second quarters of 2019, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 3 |
CASH, CASH EQUIVALENTS, AND INVESTMENT SECURITIES -
UNAUDITED |
(amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At June 30, |
|
|
|
|
|
|
|
At March 31, |
|
|
|
|
% of |
|
|
|
% of |
|
Change |
|
|
|
% of |
|
|
2019 |
|
|
Total |
|
2018 |
|
|
Total |
|
Amount |
|
% |
|
2019 |
|
|
Total |
Cash and due from banks |
|
$ |
21,306 |
|
|
7 |
% |
|
$ |
23,996 |
|
|
8 |
% |
|
$ |
(2,690 |
) |
|
(11 |
) |
% |
|
$ |
32,104 |
|
|
9 |
% |
Interest-bearing deposits in
other banks |
|
|
19,319 |
|
|
6 |
|
|
|
15,690 |
|
|
5 |
|
|
|
3,629 |
|
|
23 |
|
% |
|
|
30,425 |
|
|
9 |
|
Total cash and cash equivalents |
|
|
40,625 |
|
|
13 |
|
|
|
39,686 |
|
|
13 |
|
|
|
939 |
|
|
2 |
|
% |
|
|
62,529 |
|
|
18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government and
agencies |
|
|
44,837 |
|
|
14 |
|
|
|
38,994 |
|
|
14 |
|
|
|
5,843 |
|
|
15 |
|
% |
|
|
46,451 |
|
|
13 |
|
Obligations of state and
political subdivisions |
|
|
45,003 |
|
|
14 |
|
|
|
58,479 |
|
|
20 |
|
|
|
(13,476 |
) |
|
(23 |
) |
% |
|
|
48,935 |
|
|
14 |
|
Residential mortgage backed
securities and collateralized mortgage obligations |
|
|
168,085 |
|
|
50 |
|
|
|
121,218 |
|
|
43 |
|
|
|
46,867 |
|
|
39 |
|
% |
|
|
171,814 |
|
|
47 |
|
Corporate securities |
|
|
2,978 |
|
|
1 |
|
|
|
3,987 |
|
|
1 |
|
|
|
(1,009 |
) |
|
(25 |
) |
% |
|
|
2,958 |
|
|
1 |
|
Commercial mortgage backed
securities |
|
|
24,868 |
|
|
8 |
|
|
|
24,742 |
|
|
9 |
|
|
|
126 |
|
|
1 |
|
% |
|
|
23,864 |
|
|
7 |
|
Other asset backed
securities |
|
|
48 |
|
|
— |
|
|
|
219 |
|
|
0 |
|
|
|
(171 |
) |
|
(78 |
) |
% |
|
|
95 |
|
|
— |
|
Total investment securities - AFS |
|
|
285,819 |
|
|
87 |
|
|
|
247,639 |
|
|
87 |
|
|
|
38,180 |
|
|
15 |
|
% |
|
|
294,117 |
|
|
82 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cash, cash equivalents
and investment securities |
|
$ |
326,444 |
|
|
100 |
% |
|
$ |
287,325 |
|
|
100 |
% |
|
$ |
39,119 |
|
|
14 |
|
% |
|
$ |
356,646 |
|
|
100 |
% |
Average yield on
interest-bearing due from banks and investment securities during
the quarter - nominal |
|
|
2.81 |
% |
|
|
|
|
|
2.56 |
% |
|
|
|
|
|
0.25 |
|
|
|
|
|
|
2.83 |
% |
|
|
|
Average yield on
interest-bearing due from banks and investment securities during
the quarter - tax equivalent |
|
|
2.92 |
% |
|
|
|
|
|
2.72 |
% |
|
|
|
|
|
0.20 |
|
|
|
|
|
|
2.95 |
% |
|
|
|
As of June 30, 2019, we maintained noninterest-bearing cash
positions of $21.3 million and interest-bearing deposits of $19.3
million at the Federal Reserve Bank and correspondent banks.
Investment securities totaled $285.8 million at June 30, 2019,
compared with $247.6 million and $294.1 million at June 30, 2018
and March 31, 2019, respectively. During the first quarter of 2019,
the Merchants acquisition included securities with a par value of
$107.4 million. Management elected to sell securities with a par
value of $67.8 million and $18.5 million during the first and
second quarters of 2019, respectively. The sales resulted in net
realized gains of $92 thousand and $33 thousand for the first and
second quarters of 2019, respectively.
Average securities balances and weighted average tax equivalent
yields for the quarters ended June 30, 2019 and 2018 were $289.4
million and 2.98% compared to $256.6 million and 2.82%,
respectively.
At June 30, 2019, our net unrealized gains on available-for-sale
investment securities were $3.4 million compared with net
unrealized losses of $4.9 million and $701 thousand at June 30,
2018 and March 31, 2019, respectively. The changes in net
unrealized losses on the investment securities portfolio were due
to changes in market interest rates.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 4 |
DEPOSITS BY TYPE - UNAUDITED |
(amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At June 30, |
|
|
|
|
|
|
|
At March 31, |
|
|
|
% of |
|
|
|
% of |
|
|
Change |
|
|
|
% of |
|
2019 |
|
Total |
|
2018 |
|
Total |
|
Amount |
|
% |
|
2019 |
|
Total |
Demand - noninterest-bearing |
$ |
397,349 |
|
32 |
% |
|
$ |
316,347 |
|
30 |
% |
|
$ |
81,002 |
|
|
26 |
|
% |
|
$ |
385,696 |
|
31 |
% |
Demand - interest-bearing |
|
238,175 |
|
19 |
|
|
|
217,674 |
|
21 |
|
|
|
20,501 |
|
|
9 |
|
% |
|
|
241,292 |
|
19 |
|
Money market |
|
300,847 |
|
24 |
|
|
|
247,413 |
|
23 |
|
|
|
53,434 |
|
|
22 |
|
% |
|
|
311,853 |
|
25 |
|
Total demand |
|
936,371 |
|
75 |
|
|
|
781,434 |
|
74 |
|
|
|
154,937 |
|
|
20 |
|
% |
|
|
938,841 |
|
75 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings |
|
138,591 |
|
11 |
|
|
|
106,170 |
|
10 |
|
|
|
32,421 |
|
|
31 |
|
% |
|
|
139,237 |
|
11 |
|
Total non-maturing
deposits |
|
1,074,962 |
|
86 |
|
|
|
887,604 |
|
84 |
|
|
|
187,358 |
|
|
21 |
|
% |
|
|
1,078,078 |
|
86 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certificates of deposit |
|
160,556 |
|
14 |
|
|
|
166,925 |
|
16 |
|
|
|
(6,369 |
) |
|
(4 |
) |
% |
|
|
170,216 |
|
14 |
|
Total deposits |
$ |
1,235,518 |
|
100 |
% |
|
$ |
1,054,529 |
|
100 |
% |
|
$ |
180,989 |
|
|
17 |
|
% |
|
$ |
1,248,294 |
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deposits at June 30, 2019, increased $181 million or 17%
to $1.236 billion compared to June 30, 2018 and decreased $13
million or 4% annualized compared to March 31, 2019. Total
non-maturing deposits increased $187.4 million or 21% compared to
the same date a year ago and decreased $3.2 million or less than 1%
annualized compared to March 31, 2019. Certificates of deposit
decreased $6.4 million or 4% compared to the same date a year ago
and decreased $9.7 million or 23% annualized compared to March 31,
2019.
During the first quarter of 2019, Merchants Holding Company
acquisition provided an additional $190.2 million of deposits. The
decrease in the acquired deposits of $16.5 million at June 30, 2019
is not attributable to the loss of any significant relationships.
As illustrated in the following table, legacy deposits have
experienced their seasonal decline, while wholesale time deposits
have matured and were not renewed.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 5 |
YEAR TO DATE CHANGES IN DEPOSITS |
(amounts in thousands) |
|
|
|
|
|
Change In Acquired |
|
Change In Legacy |
|
|
|
|
|
Acquired |
|
Deposits For The Five |
|
Deposits For The Six |
|
|
|
Legacy Deposits |
|
Merchants Deposits |
|
Months Ended |
|
Months Ended |
|
Deposits At |
|
At December 31, |
|
At January 31, |
|
June 30, |
|
June 30, |
|
At June 30, |
|
2018 |
|
2019 |
|
2019 |
|
2019 |
|
2019 |
Demand - noninterest-bearing |
$ |
347,199 |
|
$ |
51,880 |
|
$ |
(2,777 |
) |
|
$ |
1,047 |
|
|
$ |
397,349 |
Demand - interest-bearing |
|
252,202 |
|
|
28,231 |
|
|
(5,695 |
) |
|
|
(36,563 |
) |
|
|
238,175 |
Money market |
|
265,093 |
|
|
43,316 |
|
|
(1,805 |
) |
|
|
(5,757 |
) |
|
|
300,847 |
Total demand |
|
864,494 |
|
|
123,427 |
|
|
(10,277 |
) |
|
|
(41,273 |
) |
|
|
936,371 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings |
|
114,840 |
|
|
28,786 |
|
|
(1,998 |
) |
|
|
(3,037 |
) |
|
|
138,591 |
Total non-maturing
deposits |
|
979,334 |
|
|
152,213 |
|
|
(12,275 |
) |
|
|
(44,310 |
) |
|
|
1,074,962 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certificates of deposit |
|
152,382 |
|
|
38,003 |
|
|
(4,174 |
) |
|
|
(25,655 |
) |
|
|
160,556 |
Total deposits |
$ |
1,131,716 |
|
$ |
190,216 |
|
$ |
(16,449 |
) |
|
$ |
(69,965 |
) |
|
$ |
1,235,518 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 6 |
WHOLESALE AND RECIPROCAL DEPOSITS - UNAUDITED |
(amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
At June 30, |
|
At March 31, |
|
2019 |
|
2018 |
|
2019 |
CDARS / ICS reciprocal
deposits |
$ |
60,492 |
|
$ |
60,538 |
|
$ |
65,192 |
Online listing service
wholesale time deposits |
|
248 |
|
|
25,491 |
|
|
1,683 |
Total wholesale and reciprocal
deposits |
$ |
60,740 |
|
$ |
86,029 |
|
$ |
66,875 |
For calendar quarters prior to April 1, 2018, CDARS/ ICS
reciprocal deposits were considered to be brokered deposits by
regulatory authorities and were reported as such on quarterly Call
Reports. With passage of The Economic Growth, Regulatory Relief and
Consumer Protection Act in May 2018, this is no longer so.
AVERAGE COST OF FUNDS
The following table presents the average cost of
interest-bearing deposits, all deposits and all interest-bearing
liabilities for the periods indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 7 |
AVERAGE COST OF FUNDS - UNAUDITED |
For The Three Months Ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|
2019 |
|
2019 |
|
2018 |
|
2018 |
|
2018 |
|
2018 |
|
2017 |
|
2017 |
Interest-bearing deposits |
|
0.54 |
% |
|
|
0.49 |
% |
|
|
0.45 |
% |
|
|
0.42 |
% |
|
|
0.41 |
% |
|
|
0.41 |
% |
|
|
0.42 |
% |
|
|
0.43 |
% |
Interest-bearing deposits
andnoninterest-bearing demand |
|
0.37 |
% |
|
|
0.34 |
% |
|
|
0.31 |
% |
|
|
0.29 |
% |
|
|
0.29 |
% |
|
|
0.29 |
% |
|
|
0.30 |
% |
|
|
0.31 |
% |
All interest-bearing
liabilities |
|
0.74 |
% |
|
|
0.67 |
% |
|
|
0.61 |
% |
|
|
0.64 |
% |
|
|
0.68 |
% |
|
|
0.60 |
% |
|
|
0.59 |
% |
|
|
0.60 |
% |
All interest-bearing
liabilities andnoninterest-bearing demand |
|
0.52 |
% |
|
|
0.46 |
% |
|
|
0.42 |
% |
|
|
0.45 |
% |
|
|
0.50 |
% |
|
|
0.43 |
% |
|
|
0.42 |
% |
|
|
0.43 |
% |
INCOME STATEMENT OVERVIEW
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 8 |
SUMMARY INCOME STATEMENT - UNAUDITED |
(amounts in thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For The Three Months Ended |
|
June 30, |
|
Change |
|
March 31, |
|
Change |
|
2019 |
|
2018 |
|
Amount |
|
% |
|
2019 |
|
Amount |
|
% |
Interest income |
$ |
15,127 |
|
$ |
12,990 |
|
$ |
2,137 |
|
|
16 |
|
% |
|
$ |
14,427 |
|
$ |
700 |
|
|
5 |
|
% |
Interest expense |
|
1,632 |
|
|
1,410 |
|
|
222 |
|
|
16 |
|
% |
|
|
1,423 |
|
|
209 |
|
|
15 |
|
% |
Net interest income |
|
13,495 |
|
|
11,580 |
|
|
1,915 |
|
|
17 |
|
% |
|
|
13,004 |
|
|
491 |
|
|
4 |
|
% |
Provision for loan and lease
losses |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
% |
|
|
— |
|
|
— |
|
|
— |
|
% |
Noninterest income |
|
1,100 |
|
|
962 |
|
|
138 |
|
|
14 |
|
% |
|
|
1,057 |
|
|
43 |
|
|
4 |
|
% |
Noninterest expense |
|
9,611 |
|
|
7,671 |
|
|
1,940 |
|
|
25 |
|
% |
|
|
10,923 |
|
|
(1,312 |
) |
|
(12 |
) |
% |
Income before provision for
income taxes |
|
4,984 |
|
|
4,871 |
|
|
113 |
|
|
2 |
|
% |
|
|
3,138 |
|
|
1,846 |
|
|
59 |
|
% |
Provision for income taxes |
|
1,340 |
|
|
1,253 |
|
|
87 |
|
|
7 |
|
% |
|
|
832 |
|
|
508 |
|
|
61 |
|
% |
Net
income |
$ |
3,644 |
|
$ |
3,618 |
|
$ |
26 |
|
|
1 |
|
% |
|
$ |
2,306 |
|
$ |
1,338 |
|
|
58 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
$ |
0.20 |
|
$ |
0.22 |
|
$ |
(0.02 |
) |
|
(9 |
) |
% |
|
$ |
0.13 |
|
$ |
0.07 |
|
|
54 |
|
% |
Average basic shares |
|
18,134 |
|
|
16,245 |
|
|
1,889 |
|
|
12 |
|
% |
|
|
17,489 |
|
|
645 |
|
|
4 |
|
% |
Diluted earnings per
share |
$ |
0.20 |
|
$ |
0.22 |
|
$ |
(0.02 |
) |
|
(9 |
) |
% |
|
$ |
0.13 |
|
$ |
0.07 |
|
|
54 |
|
% |
Average diluted shares |
|
18,194 |
|
|
16,325 |
|
|
1,869 |
|
|
11 |
|
% |
|
|
17,552 |
|
|
642 |
|
|
4 |
|
% |
Dividends declared per common
share |
$ |
0.05 |
|
$ |
0.04 |
|
$ |
0.01 |
|
|
25 |
|
% |
|
$ |
0.04 |
|
$ |
0.01 |
|
|
25 |
|
% |
Second Quarter of 2019 Compared With Second
Quarter of 2018
Net income for the second quarter of 2019 increased $26 thousand
compared to the second quarter of 2018. In the current quarter, net
interest income was $1.9 million higher and noninterest income was
$138 thousand higher. These positive changes were offset by
noninterest expenses that were $1.9 million higher and the
provision for income taxes was $87 thousand higher.
Net Interest Income
Net interest income increased $1.9 million compared to the same
period a year ago.
Interest income for the second quarter of 2019 increased $2.1
million or 16% to $15.1 million.
- Interest and fees on loans increased $1.7 million due to a
$105.5 million increase in average loan balances and a 16 basis
point increase in the average yield on the loan portfolio.
- Interest on securities increased $370 thousand due to a $32.9
million increase in average securities balances and a 21 basis
point increase in average yield on the securities portfolio.
- Interest on interest-bearing deposits due from banks increased
$84 thousand due to a $6.6 million increase in average
interest-bearing deposit balances, and a 60 basis point increase in
average yield.
Interest expense for the second quarter of 2019 increased $222
thousand or 16% to $1.6 million.
- Interest expense on interest bearing deposits increased $362
thousand. Average interest-bearing demand and savings deposit
balances increased $99.7 million, while average certificate of
deposit balances decreased $6.7 million. The average rate paid on
interest-bearing deposits increased 13 basis points.
- Interest expense on borrowings from the Federal Home Loan Bank
of San Francisco decreased $75 thousand. Average Federal Home Loan
Bank of San Francisco borrowings outstanding in the current quarter
were $30.0 million compared to $55.3 million in the same quarter a
year ago.
- Interest expense on other term debt and junior subordinated
debentures decreased $65 thousand. During the current quarter, we
completed the early repayment of our variable rate senior
debt.
Provision for loan and lease losses
As illustrated in Table 10, the nonaccrual status of a $10.3
million commercial real estate loan has resulted in a deterioration
in our asset quality metrics. However, net loan loss recoveries
totaled $203 thousand for the current quarter and no provision for
loan and lease losses was necessary. There was no provision for
loan and lease losses in the second quarter of 2018.
Noninterest Income
Noninterest income for the three months ended June 30, 2019
increased $138 thousand compared to the second quarter for 2018.
Gains on sale of investment securities increased $29 thousand and
dividends on Federal Home Loan Bank of San Francisco stock
increased $29 thousand.
Noninterest Expense
Noninterest expense for the three months ended June 30, 2019
increased $1.9 million compared to the same period a year previous,
which included:
- $464 thousand in costs related to the name change.
- $376 thousand in acquisition costs.
- $739 thousand increase in operating expenses from the Merchants
acquisition.
The Company’s efficiency ratio was 65.9% for the second quarter
of 2019 (60.1% (non-GAAP) exclusive of non-recurring acquisition
and name change costs). The ratio during the same period in 2018
was 61.2%. Management believes the efficiency ratio exclusive of
non-recurring acquisition and name change cost is a useful measure
because it provides more meaningful period-to-period and
company-to-company comparisons, which management believes will
assist investors in assessing the Company’s performance.
Income Tax Provision
For the three months ended June 30, 2019, our income tax
provision of $1.3 million on pre-tax income of $5.0 million was an
effective tax rate of 26.9%. The tax provision for the second
quarter of the prior year was $1.3 million on pre-tax income of
$4.9 million for an effective tax rate of 25.7%. The current
quarter includes $28 thousand, of acquisition costs which are not
tax deductible.
Second Quarter of 2019 Compared With First
Quarter of 2019
Net income for the second quarter of 2019 increased $1.3 million
compared to the first quarter of 2019. In the current quarter, net
interest income was $491 thousand higher, noninterest income was
$43 thousand higher and noninterest expense was $1.3 million lower.
These positive changes were offset by the provision for income
taxes that was $508 thousand higher.
Net Interest Income
Net interest income increased $491 thousand over the prior
quarter. The second quarter includes three months of income and
expense associated with the January 31, 2019 acquisition of
Merchants. The first quarter includes two months.
Interest income for the three months ended June 30, 2019
increased $700 thousand or 5% to $15.1 million.
- Interest and fees on loans increased $816 thousand due to a
$34.9 million increase in average loan balances and a ten basis
point increase in the average yield on the loan portfolio.
- Interest on investment securities decreased $90 thousand due to
a $14.1 million decrease in average securities balances partially
offset by a 27 basis point increase in average yield on the
investment portfolio.
- Interest on interest-bearing deposits due from banks decreased
$26 thousand due to a $4.6 million decrease in average
balances.
Interest expense for the three months ended June 30, 2019
increased $209 thousand or 15% to $1.6 million.
- Interest expense on deposits increased $113 thousand as average
interest-bearing demand and savings deposits increased $6.6
million, average certificates of deposit decreased $3.4 million and
the average rate paid on these deposits increased by five basis
points.
- Interest expense on borrowings from the Federal Home Loan Bank
of San Francisco increased $137 thousand. Average Federal Home Loan
Bank of San Francisco borrowings outstanding in the current quarter
were $30.0 million, compared to $8.8 million in the prior
quarter
- Interest expense on other term debt and junior subordinated
debentures decreased $41 thousand. During the second quarter of
2019 we completed the early repayment and termination of our senior
debt agreement.
Provision for loan and lease losses
As illustrated in Table 10, the nonaccrual status of a $10.3
million commercial real estate loan has resulted in a deterioration
in our asset quality metrics. However, net loan loss recoveries
totaled $203 thousand for the current quarter and no provision for
loan and lease losses was necessary. There was no provision for
loan and lease losses in the first quarter of 2019.
Noninterest Income
Noninterest income for the three months ended June 30, 2019
increased $43 thousand, the increase was not concentrated in any
one item.
Noninterest Expense
Noninterest expense for the three months ended June 30, 2019
decreased $1.3 million. The decrease was due to a $1.6 million
decrease in acquisition costs partially offset by $464 thousand
increase in name change costs.
The Company’s efficiency ratio was 65.9% for the second quarter
of 2019 (60.1% (non-GAAP) exclusive of non-recurring acquisition
and name change costs). The ratio during the prior quarter was
77.7% (64.0% exclusive of acquisition costs). Management believes
the efficiency ratio exclusive of non-recurring acquisition and
name change cost is a useful measure because it provides more
meaningful period-to-period and company-to-company comparisons,
which management believes will assist investors in assessing the
Company’s performance.
Income Tax Provision
For the three months ended June 30, 2019, our income tax
provision of $1.3 million on pre-tax income of $5.0 million was an
effective tax rate of 26.9%. The income tax provision for the prior
quarter of $832 thousand on pre-tax income of $3.1 million was an
effective tax rate of 26.5%. The current and prior quarter include
$28 thousand and $150 thousand, respectively, of acquisition costs
which are not tax deductible.
Earnings Per Share
Diluted earnings per share were $0.20 for the three months ended
June 30, 2019 compared with diluted earnings per share of $0.22 for
the same period a year ago and diluted earnings per share of $0.13
for the prior period. Net income and weighted average shares used
to calculate earnings per share – diluted are summarized in Table 8
presented earlier in this press release.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 9a |
NET INTEREST MARGIN - UNAUDITED |
(amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For The Three Months Ended |
|
|
June 30, 2019 |
|
June 30, 2018 |
|
March 31, 2019 |
|
|
Average |
|
|
|
|
Yield / |
|
Average |
|
|
|
|
Yield / |
|
Average |
|
|
|
|
Yield / |
|
|
Balance |
|
Interest(1) |
|
Rate (5) |
|
Balance |
|
Interest(1) |
|
Rate (5) |
|
Balance |
|
Interest(1) |
|
Rate (5) |
Interest-earning
assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loans (2) |
|
$ |
1,028,187 |
|
$ |
12,847 |
|
5.01 |
% |
|
$ |
922,687 |
|
$ |
11,164 |
|
4.85 |
% |
|
$ |
993,261 |
|
$ |
12,031 |
|
4.91 |
% |
Taxable securities |
|
|
249,907 |
|
|
1,733 |
|
2.78 |
% |
|
|
206,247 |
|
|
1,278 |
|
2.49 |
% |
|
|
253,068 |
|
|
1,764 |
|
2.83 |
% |
Tax-exempt securities |
|
|
39,501 |
|
|
328 |
|
3.33 |
% |
|
|
50,306 |
|
|
413 |
|
3.29 |
% |
|
|
50,454 |
|
|
387 |
|
3.11 |
% |
Interest-bearing deposits in other banks |
|
|
35,605 |
|
|
219 |
|
2.47 |
% |
|
|
29,041 |
|
|
135 |
|
1.86 |
% |
|
|
40,223 |
|
|
245 |
|
2.47 |
% |
Average interest- earning
assets |
|
|
1,353,200 |
|
|
15,127 |
|
4.48 |
% |
|
|
1,208,281 |
|
|
12,990 |
|
4.31 |
% |
|
|
1,337,006 |
|
|
14,427 |
|
4.38 |
% |
Cash and due from banks |
|
|
21,942 |
|
|
|
|
|
|
|
|
19,880 |
|
|
|
|
|
|
|
|
21,392 |
|
|
|
|
|
|
Premises and equipment, net |
|
|
15,819 |
|
|
|
|
|
|
|
|
14,167 |
|
|
|
|
|
|
|
|
14,581 |
|
|
|
|
|
|
Goodwill and core deposit intangible, net |
|
|
16,995 |
|
|
|
|
|
|
|
|
1,943 |
|
|
|
|
|
|
|
|
11,872 |
|
|
|
|
|
|
Other assets |
|
|
42,769 |
|
|
|
|
|
|
|
|
32,426 |
|
|
|
|
|
|
|
|
41,009 |
|
|
|
|
|
|
Average total assets |
|
$ |
1,450,725 |
|
|
|
|
|
|
|
$ |
1,276,697 |
|
|
|
|
|
|
|
$ |
1,425,860 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing demand |
|
$ |
238,840 |
|
|
129 |
|
0.22 |
% |
|
$ |
225,927 |
|
|
80 |
|
0.14 |
% |
|
$ |
243,376 |
|
|
126 |
|
0.21 |
% |
Money market |
|
|
296,326 |
|
|
380 |
|
0.51 |
% |
|
|
241,724 |
|
|
135 |
|
0.22 |
% |
|
|
293,396 |
|
|
289 |
|
0.40 |
% |
Savings |
|
|
139,307 |
|
|
123 |
|
0.35 |
% |
|
|
107,108 |
|
|
64 |
|
0.24 |
% |
|
|
131,081 |
|
|
111 |
|
0.34 |
% |
Certificates of deposit |
|
|
164,084 |
|
|
497 |
|
1.21 |
% |
|
|
170,824 |
|
|
488 |
|
1.15 |
% |
|
|
167,463 |
|
|
490 |
|
1.19 |
% |
Federal Home Loan Bank of San Francisco borrowings |
|
|
30,000 |
|
|
192 |
|
2.57 |
% |
|
|
55,275 |
|
|
267 |
|
1.94 |
% |
|
|
8,778 |
|
|
55 |
|
2.54 |
% |
Other borrowings net of unamortized debt issuance costs |
|
|
10,841 |
|
|
201 |
|
7.44 |
% |
|
|
15,614 |
|
|
279 |
|
7.17 |
% |
|
|
12,889 |
|
|
239 |
|
7.52 |
% |
Junior subordinated debentures |
|
|
10,310 |
|
|
110 |
|
4.28 |
% |
|
|
10,310 |
|
|
97 |
|
3.77 |
% |
|
|
10,310 |
|
|
113 |
|
4.44 |
% |
Average interest- bearing
liabilities |
|
|
889,708 |
|
|
1,632 |
|
0.74 |
% |
|
|
826,782 |
|
|
1,410 |
|
0.68 |
% |
|
|
867,293 |
|
|
1,423 |
|
0.67 |
% |
Noninterest-bearing demand |
|
|
379,173 |
|
|
|
|
|
|
|
|
309,199 |
|
|
|
|
|
|
|
|
388,410 |
|
|
|
|
|
|
Other liabilities |
|
|
18,246 |
|
|
|
|
|
|
|
|
12,535 |
|
|
|
|
|
|
|
|
17,452 |
|
|
|
|
|
|
Shareholders’ equity |
|
|
163,598 |
|
|
|
|
|
|
|
|
128,181 |
|
|
|
|
|
|
|
|
152,705 |
|
|
|
|
|
|
Average liabilities and
shareholders’ equity |
|
$ |
1,450,725 |
|
|
|
|
|
|
|
$ |
1,276,697 |
|
|
|
|
|
|
|
$ |
1,425,860 |
|
|
|
|
|
|
Net interest income and net
interest margin (4) |
|
|
|
|
$ |
13,495 |
|
4.00 |
% |
|
|
|
|
$ |
11,580 |
|
3.84 |
% |
|
|
|
|
$ |
13,004 |
|
3.94 |
% |
Tax equivalent net
interest margin (3) |
|
|
|
|
|
|
|
4.03 |
% |
|
|
|
|
|
|
|
3.88 |
% |
|
|
|
|
|
|
|
3.98 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Interest
income on loans includes deferred fees and costs of approximately
$91 thousand, $145 thousand and $181 thousand for the three months
ended June 30, 2019 and 2018 and March 31, 2019, respectively. |
(2) Net loans
includes average nonaccrual loans of $13.7 million, $4.2 million
and $8.5 million for the three months ended June 30, 2019 and 2018
and March 31, 2019, respectively. |
(3) Tax-exempt
income has been adjusted to tax equivalent basis at a 21% tax rate
for 2019 and 2018. The amount of such adjustments was an addition
to recorded income of approximately $87 thousand, $110 thousand and
$103 thousand for the three months ended June 30, 2019 and 2018 and
March 31, 2019, respectively. |
(4) Net interest
margin is annualized net interest income expressed as a percentage
of average interest-earning assets. |
(5) Yields and
rates are calculated by dividing the income or expense by the
average balance of the assets or liabilities, respectively, and
annualizing the result. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 9b |
|
NET INTEREST MARGIN - UNAUDITED |
|
(amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For The Six Months Ended |
|
|
|
June 30, 2019 |
|
June 30, 2018 |
|
|
|
Average |
|
|
|
|
Yield / |
|
Average |
|
|
|
|
Yield / |
|
|
|
Balance |
|
Interest(1) |
|
Rate (5) |
|
Balance |
|
Interest(1) |
|
Rate (5) |
|
Interest-earning
assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loans (2) |
|
$ |
1,010,821 |
|
$ |
24,878 |
|
4.96 |
% |
|
$ |
903,389 |
|
$ |
21,893 |
|
4.89 |
% |
|
Taxable securities |
|
|
251,479 |
|
|
3,497 |
|
2.80 |
% |
|
|
205,777 |
|
|
2,487 |
|
2.44 |
% |
|
Tax-exempt securities |
|
|
44,947 |
|
|
715 |
|
3.21 |
% |
|
|
55,021 |
|
|
876 |
|
3.21 |
% |
|
Interest-bearing deposits in other banks |
|
|
37,930 |
|
|
464 |
|
2.47 |
% |
|
|
30,967 |
|
|
264 |
|
1.72 |
% |
|
Average interest- earning
assets |
|
|
1,345,177 |
|
|
29,554 |
|
4.43 |
% |
|
|
1,195,154 |
|
|
25,520 |
|
4.31 |
% |
|
Cash and due from banks |
|
|
21,640 |
|
|
|
|
|
|
|
|
18,767 |
|
|
|
|
|
|
|
Premises and equipment, net |
|
|
15,203 |
|
|
|
|
|
|
|
|
14,361 |
|
|
|
|
|
|
|
Goodwill and core deposit intangible, net |
|
|
14,447 |
|
|
|
|
|
|
|
|
1,971 |
|
|
|
|
|
|
|
Other assets |
|
|
41,894 |
|
|
|
|
|
|
|
|
32,457 |
|
|
|
|
|
|
|
Average total assets |
|
$ |
1,438,361 |
|
|
|
|
|
|
|
$ |
1,262,710 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing demand |
|
$ |
241,095 |
|
|
255 |
|
0.21 |
% |
|
$ |
230,075 |
|
|
169 |
|
0.15 |
% |
|
Money market |
|
|
294,869 |
|
|
669 |
|
0.46 |
% |
|
|
238,963 |
|
|
267 |
|
0.23 |
% |
|
Savings |
|
|
135,217 |
|
|
234 |
|
0.35 |
% |
|
|
108,907 |
|
|
123 |
|
0.23 |
% |
|
Certificates of deposit |
|
|
165,764 |
|
|
987 |
|
1.20 |
% |
|
|
176,332 |
|
|
983 |
|
1.12 |
% |
|
Federal Home Loan Bank of San Francisco borrowings |
|
|
19,448 |
|
|
247 |
|
2.56 |
% |
|
|
33,978 |
|
|
314 |
|
1.86 |
% |
|
Other borrowings net of unamortized debt issuance costs |
|
|
11,859 |
|
|
440 |
|
7.48 |
% |
|
|
16,069 |
|
|
560 |
|
7.03 |
% |
|
Junior subordinated debentures |
|
|
10,310 |
|
|
223 |
|
4.36 |
% |
|
|
10,310 |
|
|
179 |
|
3.50 |
% |
|
Average interest- bearing
liabilities |
|
|
878,562 |
|
|
3,055 |
|
0.70 |
% |
|
|
814,634 |
|
|
2,595 |
|
0.64 |
% |
|
Noninterest-bearing demand |
|
|
383,766 |
|
|
|
|
|
|
|
|
308,304 |
|
|
|
|
|
|
|
Other liabilities |
|
|
17,851 |
|
|
|
|
|
|
|
|
12,144 |
|
|
|
|
|
|
|
Shareholders’ equity |
|
|
158,182 |
|
|
|
|
|
|
|
|
127,628 |
|
|
|
|
|
|
|
Average liabilities and
shareholders’ equity |
|
$ |
1,438,361 |
|
|
|
|
|
|
|
$ |
1,262,710 |
|
|
|
|
|
|
|
Net interest income and net
interest margin (4) |
|
|
|
|
$ |
26,499 |
|
3.97 |
% |
|
|
|
|
$ |
22,925 |
|
3.87 |
% |
|
Tax equivalent net
interest margin (3) |
|
|
|
|
|
|
|
4.00 |
% |
|
|
|
|
|
|
|
3.91 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Interest
income on loans includes deferred fees and costs of approximately
$272 thousand and $282 thousand for the six months ended June 30,
2019 and 2018, respectively. |
(2) Net loans
includes average nonaccrual loans of $11.1 million and $4.5 million
for the six months ended June 30, 2019 and 2018, respectively. |
(3) Tax-exempt
income has been adjusted to tax equivalent basis at a 21% tax rate
for 2019 and 2018. The amount of such adjustments was an addition
to recorded income of approximately $190 thousand and $233 thousand
for the six months ended June 30, 2019 and 2018, respectively. |
(4) Net interest
margin is annualized net interest income expressed as a percentage
of average interest-earning assets. |
(5) Yields and
rates are calculated by dividing the income or expense by the
average balance of the assets or liabilities, respectively, and
annualizing the result. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 10 |
ALLOWANCE FOR LOAN AND LEASE LOSSES ROLL FORWARD AND
IMPAIRED LOAN TOTALS - UNAUDITED |
(amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For The Three Months Ended |
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
|
2019 |
|
2019 |
|
2018 |
|
2018 |
|
2018 |
Beginning balance ALLL |
$ |
12,242 |
|
|
$ |
12,292 |
|
|
$ |
12,392 |
|
|
$ |
12,388 |
|
|
$ |
12,295 |
|
Provision for loan and lease
losses |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Loans charged-off |
|
(659 |
) |
|
|
(348 |
) |
|
|
(279 |
) |
|
|
(198 |
) |
|
|
(382 |
) |
Loan loss recoveries |
|
862 |
|
|
|
298 |
|
|
|
179 |
|
|
|
202 |
|
|
|
475 |
|
Ending balance ALLL |
$ |
12,445 |
|
|
$ |
12,242 |
|
|
$ |
12,292 |
|
|
$ |
12,392 |
|
|
$ |
12,388 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At June 30, |
|
At March 31, |
|
At December 31, |
|
At September 30, |
|
At June 30, |
|
2019 |
|
2019 |
|
2018 |
|
2018 |
|
2018 |
Nonaccrual loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
$ |
194 |
|
|
$ |
1,018 |
|
|
$ |
959 |
|
|
$ |
899 |
|
|
$ |
1,358 |
|
Real estate - construction and land development |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Real estate - commercial non-owner occupied |
|
10,690 |
|
|
|
10,878 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Real estate - commercial owner occupied |
|
— |
|
|
|
— |
|
|
|
548 |
|
|
|
— |
|
|
|
— |
|
Real estate - residential - ITIN |
|
2,389 |
|
|
|
2,392 |
|
|
|
2,388 |
|
|
|
2,571 |
|
|
|
2,613 |
|
Real estate - residential - 1-4 family mortgage |
|
217 |
|
|
|
182 |
|
|
|
185 |
|
|
|
179 |
|
|
|
184 |
|
Real estate - residential - equity lines |
|
— |
|
|
|
42 |
|
|
|
43 |
|
|
|
44 |
|
|
|
44 |
|
Consumer and other |
|
22 |
|
|
|
23 |
|
|
|
23 |
|
|
|
24 |
|
|
|
33 |
|
Total nonaccrual loans |
|
13,512 |
|
|
|
14,535 |
|
|
|
4,146 |
|
|
|
3,717 |
|
|
|
4,232 |
|
Accruing troubled debt
restructured loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
1,092 |
|
|
|
1,187 |
|
|
|
1,224 |
|
|
|
1,291 |
|
|
|
1,420 |
|
Real estate - commercial non-owner occupied |
|
791 |
|
|
|
793 |
|
|
|
795 |
|
|
|
797 |
|
|
|
799 |
|
Real estate - residential - ITIN |
|
4,300 |
|
|
|
4,342 |
|
|
|
4,484 |
|
|
|
4,535 |
|
|
|
4,592 |
|
Real estate - residential - equity lines |
|
242 |
|
|
|
358 |
|
|
|
363 |
|
|
|
367 |
|
|
|
372 |
|
Total accruing troubled debt
restructured loans |
|
6,425 |
|
|
|
6,680 |
|
|
|
6,866 |
|
|
|
6,990 |
|
|
|
7,183 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All other accruing impaired
loans |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total impaired loans |
$ |
19,937 |
|
|
$ |
21,215 |
|
|
$ |
11,012 |
|
|
$ |
10,707 |
|
|
$ |
11,415 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross loans outstanding at
period end |
$ |
1,036,724 |
|
|
$ |
1,034,606 |
|
|
$ |
946,251 |
|
|
$ |
927,480 |
|
|
$ |
936,816 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired loans to gross loans |
|
1.92 |
% |
|
|
2.05 |
% |
|
|
1.16 |
% |
|
|
1.15 |
% |
|
|
1.22 |
% |
Nonaccrual loans to gross
loans |
|
1.30 |
% |
|
|
1.40 |
% |
|
|
0.44 |
% |
|
|
0.40 |
% |
|
|
0.45 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan
and lease losses as a percent of: |
|
|
|
|
|
|
|
|
|
Gross loans |
|
1.20 |
% |
|
|
1.18 |
% |
|
|
1.30 |
% |
|
|
1.34 |
% |
|
|
1.32 |
% |
Nonaccrual loans |
|
92.10 |
% |
|
|
84.22 |
% |
|
|
296.48 |
% |
|
|
333.39 |
% |
|
|
292.72 |
% |
Impaired loans |
|
62.42 |
% |
|
|
57.70 |
% |
|
|
111.62 |
% |
|
|
115.74 |
% |
|
|
108.52 |
% |
We continue to monitor credit quality and adjust the ALLL to
ensure that the ALLL is maintained at a level that is adequate to
cover estimated credit losses in the loan and lease portfolio. As
illustrated in Table 10, the nonaccrual status of a $10.3 million
commercial real estate loan has resulted in a deterioration in our
asset quality metrics for the first two quarters of 2019. Net loan
loss recoveries totaled $203 thousand for the quarter ended June
30, 2019 and no provision for loan and lease losses was necessary
for the quarter. There was no provision for loan and lease loss
during the prior quarter or during the same quarter a year ago.
The loans acquired from Merchants were recorded at fair value
which included a discount for credit risk which is not a part of
the ALLL. As a result, our ALLL as a percentage of gross loans
declined to 1.20% as of June 30, 2019 compared to 1.32% as of June
30, 2018 and increased compared to 1.18% as of March 31, 2019.
Based on the Bank’s ALLL methodology, which uses criteria such
as risk factors and historical loss rates, and given the ongoing
improvements in asset quality, management believes the Company’s
ALLL is adequate at June 30, 2019. There is, however, no assurance
that future loan and lease losses will not exceed the levels
provided for in the ALLL and could possibly result in future
charges to the provision for loan and lease losses.
At June 30, 2019, the recorded investment in loans classified as
impaired totaled $19.9 million, with a corresponding specific
reserve of $727 thousand compared to impaired loans of $11.4
million with a corresponding specific reserve of $1.2 million at
June 30, 2018 and impaired loans of $21.2 million, with a
corresponding specific reserve of $1.4 million at March 31, 2019.
The increase in loans classified as impaired compared to the same
period a year ago results from one $10.3 million commercial real
estate loan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 11 |
TROUBLED DEBT RESTRUCTURINGS - UNAUDITED |
(amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At June 30, |
|
At March 31, |
|
At December 31, |
|
At September 30, |
|
At June 30, |
|
|
2019 |
|
2019 |
|
2018 |
|
2018 |
|
2018 |
Nonaccrual |
|
$ |
1,828 |
|
|
$ |
2,725 |
|
|
$ |
2,693 |
|
|
$ |
2,720 |
|
|
$ |
3,218 |
|
Accruing |
|
|
6,425 |
|
|
|
6,680 |
|
|
|
6,866 |
|
|
|
6,990 |
|
|
|
7,183 |
|
Total troubled debt
restructurings |
|
$ |
8,253 |
|
|
$ |
9,405 |
|
|
$ |
9,559 |
|
|
$ |
9,710 |
|
|
$ |
10,401 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Troubled debt restructurings
as a percentage of total gross loans |
|
|
0.80 |
% |
|
|
0.91 |
% |
|
|
1.01 |
% |
|
|
1.05 |
% |
|
|
1.11 |
% |
There were two new troubled debt restructurings to grant a
payment deferral modification and a maturity modification during
the three months ended June 30, 2019. As of June 30, 2019, we had
103 restructured loans that qualified as troubled debt
restructurings, of which 101 were performing according to their
restructured terms.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 12 |
NONPERFORMING ASSETS - UNAUDITED |
(amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At June 30, |
|
At March 31, |
|
At December 31, |
|
At September 30, |
|
At June 30, |
|
|
2019 |
|
2019 |
|
2018 |
|
2018 |
|
2018 |
Total nonaccrual loans |
|
$ |
13,512 |
|
|
$ |
14,535 |
|
|
$ |
4,146 |
|
|
$ |
3,717 |
|
|
$ |
4,232 |
|
90 days past due and still
accruing |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total nonperforming loans |
|
|
13,512 |
|
|
|
14,535 |
|
|
|
4,146 |
|
|
|
3,717 |
|
|
|
4,232 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other real estate owned
("OREO") |
|
|
— |
|
|
|
34 |
|
|
|
31 |
|
|
|
136 |
|
|
|
140 |
|
Total nonperforming
assets |
|
$ |
13,512 |
|
|
$ |
14,569 |
|
|
$ |
4,177 |
|
|
$ |
3,853 |
|
|
$ |
4,372 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonperforming loans to gross
loans |
|
|
1.30 |
% |
|
|
1.40 |
% |
|
|
0.44 |
% |
|
|
0.40 |
% |
|
|
0.45 |
% |
Nonperforming assets to total
assets |
|
|
0.94 |
% |
|
|
0.99 |
% |
|
|
0.32 |
% |
|
|
0.29 |
% |
|
|
0.34 |
% |
The following table summarizes as of June 30, 2019 when loans
are projected to reprice by year and rate index.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 13 |
LOANS BY RATE INDEX AND PROJECTED REPAYMENT -
UNAUDITED |
(amounts in thousands) |
At June 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years 6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Through |
|
Beyond |
|
|
|
|
|
Year 1 |
|
Year 2 |
|
Year 3 |
|
Year 4 |
|
Year 5 |
|
Year 10 |
|
Year 10 |
|
Total |
Rate
Index: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed |
|
$ |
48,588 |
|
$ |
56,475 |
|
$ |
47,676 |
|
$ |
62,631 |
|
$ |
41,420 |
|
$ |
160,327 |
|
$ |
35,466 |
|
$ |
452,583 |
Variable: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prime |
|
|
107,931 |
|
|
2,634 |
|
|
6,032 |
|
|
7,495 |
|
|
9,420 |
|
|
1,737 |
|
|
— |
|
|
135,249 |
5 Year Treasury |
|
|
29,766 |
|
|
29,299 |
|
|
81,885 |
|
|
89,985 |
|
|
67,317 |
|
|
38,093 |
|
|
— |
|
|
336,345 |
7 Year Treasury |
|
|
892 |
|
|
943 |
|
|
11,370 |
|
|
4,855 |
|
|
5,671 |
|
|
14,005 |
|
|
— |
|
|
37,736 |
1 Year LIBOR |
|
|
23,347 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
23,347 |
Other Indexes |
|
|
8,328 |
|
|
1,943 |
|
|
4,503 |
|
|
2,082 |
|
|
1,496 |
|
|
19,682 |
|
|
1,923 |
|
|
39,957 |
Nonaccrual |
|
|
1,515 |
|
|
10,019 |
|
|
292 |
|
|
277 |
|
|
256 |
|
|
826 |
|
|
327 |
|
|
13,512 |
Total |
|
$ |
220,367 |
|
$ |
101,313 |
|
$ |
151,758 |
|
$ |
167,325 |
|
$ |
125,580 |
|
$ |
234,670 |
|
$ |
37,716 |
|
$ |
1,038,729 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE
14 |
UNAUDITED
CONSOLIDATED |
BALANCE
SHEET |
(amounts in
thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At June 30, |
|
Change |
|
At March 31, |
|
|
2019 |
|
|
2018 |
|
|
$ |
|
% |
|
2019 |
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
$ |
21,306 |
|
|
$ |
23,996 |
|
|
$ |
(2,690 |
) |
|
(11 |
) |
% |
|
$ |
32,104 |
|
Interest-bearing deposits in other banks |
|
|
19,319 |
|
|
|
15,690 |
|
|
|
3,629 |
|
|
23 |
|
% |
|
|
30,425 |
|
Total cash and cash equivalents |
|
|
40,625 |
|
|
|
39,686 |
|
|
|
939 |
|
|
2 |
|
% |
|
|
62,529 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities available-for-sale, at fair value |
|
|
285,819 |
|
|
|
247,639 |
|
|
|
38,180 |
|
|
15 |
|
% |
|
|
294,117 |
|
Loans, net of deferred fees and costs |
|
|
1,038,729 |
|
|
|
938,579 |
|
|
|
100,150 |
|
|
11 |
|
% |
|
|
1,036,598 |
|
Allowance for loan and lease losses |
|
|
(12,445 |
) |
|
|
(12,388 |
) |
|
|
(57 |
) |
|
— |
|
% |
|
|
(12,242 |
) |
Net loans |
|
|
1,026,284 |
|
|
|
926,191 |
|
|
|
100,093 |
|
|
11 |
|
% |
|
|
1,024,356 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premises and equipment, net |
|
|
15,836 |
|
|
|
13,908 |
|
|
|
1,928 |
|
|
14 |
|
% |
|
|
15,391 |
|
Other real estate owned |
|
|
— |
|
|
|
140 |
|
|
|
(140 |
) |
|
(100 |
) |
% |
|
|
34 |
|
Life insurance |
|
|
23,449 |
|
|
|
22,155 |
|
|
|
1,294 |
|
|
6 |
|
% |
|
|
23,294 |
|
Deferred tax asset, net |
|
|
4,791 |
|
|
|
7,815 |
|
|
|
(3,024 |
) |
|
(39 |
) |
% |
|
|
6,072 |
|
Goodwill and core deposit intangible, net |
|
|
16,900 |
|
|
|
1,920 |
|
|
|
14,980 |
|
|
780 |
|
% |
|
|
17,094 |
|
Other assets |
|
|
28,282 |
|
|
|
22,050 |
|
|
|
6,232 |
|
|
28 |
|
% |
|
|
28,604 |
|
Total assets |
|
$ |
1,441,986 |
|
|
$ |
1,281,504 |
|
|
$ |
160,482 |
|
|
13 |
|
% |
|
$ |
1,471,491 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and shareholders'
equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand - noninterest-bearing |
|
$ |
397,349 |
|
|
$ |
316,347 |
|
|
$ |
81,002 |
|
|
26 |
|
% |
|
$ |
385,696 |
|
Demand - interest-bearing |
|
|
238,175 |
|
|
|
217,674 |
|
|
|
20,501 |
|
|
9 |
|
% |
|
|
241,292 |
|
Money market |
|
|
300,847 |
|
|
|
247,413 |
|
|
|
53,434 |
|
|
22 |
|
% |
|
|
311,853 |
|
Savings |
|
|
138,591 |
|
|
|
106,170 |
|
|
|
32,421 |
|
|
31 |
|
% |
|
|
139,237 |
|
Certificates of deposit |
|
|
160,556 |
|
|
|
166,925 |
|
|
|
(6,369 |
) |
|
(4 |
) |
% |
|
|
170,216 |
|
Total deposits |
|
|
1,235,518 |
|
|
|
1,054,529 |
|
|
|
180,989 |
|
|
17 |
|
% |
|
|
1,248,294 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Term debt: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal Home Loan Bank of San Francisco borrowings |
|
|
— |
|
|
|
60,000 |
|
|
|
(60,000 |
) |
|
(100 |
) |
% |
|
|
20,000 |
|
Other borrowings |
|
|
10,000 |
|
|
|
15,296 |
|
|
|
(5,296 |
) |
|
(35 |
) |
% |
|
|
12,596 |
|
Unamortized debt issuance costs |
|
|
(67 |
) |
|
|
(115 |
) |
|
|
48 |
|
|
(42 |
) |
% |
|
|
(79 |
) |
Net term debt |
|
|
9,933 |
|
|
|
75,181 |
|
|
|
(65,248 |
) |
|
(87 |
) |
% |
|
|
32,517 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Junior subordinated debentures |
|
|
10,310 |
|
|
|
10,310 |
|
|
|
— |
|
|
— |
|
% |
|
|
10,310 |
|
Other liabilities |
|
|
18,372 |
|
|
|
11,406 |
|
|
|
6,966 |
|
|
61 |
|
% |
|
|
18,272 |
|
Total liabilities |
|
|
1,274,133 |
|
|
|
1,151,426 |
|
|
|
122,707 |
|
|
11 |
|
% |
|
|
1,309,393 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock |
|
|
72,087 |
|
|
|
52,043 |
|
|
|
20,044 |
|
|
39 |
|
% |
|
|
71,966 |
|
Retained earnings |
|
|
93,363 |
|
|
|
81,475 |
|
|
|
11,888 |
|
|
15 |
|
% |
|
|
90,626 |
|
Accumulated other comprehensive income (loss), net of tax |
|
|
2,403 |
|
|
|
(3,440 |
) |
|
|
5,843 |
|
|
(170 |
) |
% |
|
|
(494 |
) |
Total shareholders' equity |
|
|
167,853 |
|
|
|
130,078 |
|
|
|
37,775 |
|
|
29 |
|
% |
|
|
162,098 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and
shareholders' equity |
|
$ |
1,441,986 |
|
|
$ |
1,281,504 |
|
|
$ |
160,482 |
|
|
13 |
|
% |
|
$ |
1,471,491 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-earning
assets |
|
$ |
1,340,456 |
|
|
$ |
1,206,791 |
|
|
$ |
133,665 |
|
|
11 |
|
% |
|
$ |
1,361,841 |
|
Shares outstanding |
|
|
18,214 |
|
|
|
16,318 |
|
|
|
1,896 |
|
|
12 |
|
% |
|
|
18,213 |
|
Book value per share |
|
$ |
9.22 |
|
|
$ |
7.97 |
|
|
$ |
1.25 |
|
|
16 |
|
% |
|
$ |
8.90 |
|
Tangible book value per share
(1) |
|
$ |
8.29 |
|
|
$ |
7.85 |
|
|
$ |
0.44 |
|
|
6 |
|
% |
|
$ |
7.96 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Book
value per share is computed by dividing total shareholders’ equity
by shares outstanding. Tangible book value per share is computed by
dividing total shareholders’ equity less goodwill and core deposit
intangible, net by shares outstanding. Management believes that
tangible book value per share is meaningful because it is a measure
that the Company and investors commonly use to assess capital
adequacy. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 15 |
UNAUDITED |
INCOME STATEMENT |
(amounts in thousands, except per share data) |
|
|
For The Three Months Ended |
|
For The Six Months Ended |
|
|
June 30, |
|
Change |
|
March 31, |
|
June 30, |
|
|
2019 |
|
2018 |
|
$ |
|
% |
|
2019 |
|
2019 |
|
2018 |
Interest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and fees on loans |
|
$ |
12,847 |
|
$ |
11,164 |
|
$ |
1,683 |
|
|
15 |
|
% |
|
$ |
12,031 |
|
$ |
24,878 |
|
$ |
21,893 |
Interest on taxable securities |
|
|
1,733 |
|
|
1,278 |
|
|
455 |
|
|
36 |
|
% |
|
|
1,764 |
|
|
3,497 |
|
|
2,487 |
Interest on tax-exempt securities |
|
|
328 |
|
|
413 |
|
|
(85 |
) |
|
(21 |
) |
% |
|
|
387 |
|
|
715 |
|
|
876 |
Interest on interest-bearing deposits in other banks |
|
|
219 |
|
|
135 |
|
|
84 |
|
|
62 |
|
% |
|
|
245 |
|
|
464 |
|
|
264 |
Total interest income |
|
|
15,127 |
|
|
12,990 |
|
|
2,137 |
|
|
16 |
|
% |
|
|
14,427 |
|
|
29,554 |
|
|
25,520 |
Interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest on demand deposits |
|
|
129 |
|
|
80 |
|
|
49 |
|
|
61 |
|
% |
|
|
126 |
|
|
255 |
|
|
169 |
Interest on money market |
|
|
380 |
|
|
135 |
|
|
245 |
|
|
181 |
|
% |
|
|
289 |
|
|
669 |
|
|
267 |
Interest on savings |
|
|
123 |
|
|
64 |
|
|
59 |
|
|
92 |
|
% |
|
|
111 |
|
|
234 |
|
|
123 |
Interest on certificates of deposit |
|
|
497 |
|
|
488 |
|
|
9 |
|
|
2 |
|
% |
|
|
490 |
|
|
987 |
|
|
983 |
Interest on Federal Home Loan Bank of San Francisco borrowings |
|
|
192 |
|
|
267 |
|
|
(75 |
) |
|
(28 |
) |
% |
|
|
55 |
|
|
247 |
|
|
314 |
Interest on other borrowings |
|
|
201 |
|
|
279 |
|
|
(78 |
) |
|
(28 |
) |
% |
|
|
239 |
|
|
440 |
|
|
560 |
Interest on junior subordinated debentures |
|
|
110 |
|
|
97 |
|
|
13 |
|
|
13 |
|
% |
|
|
113 |
|
|
223 |
|
|
179 |
Total interest expense |
|
|
1,632 |
|
|
1,410 |
|
|
222 |
|
|
16 |
|
% |
|
|
1,423 |
|
|
3,055 |
|
|
2,595 |
Net interest income |
|
|
13,495 |
|
|
11,580 |
|
|
1,915 |
|
|
17 |
|
% |
|
|
13,004 |
|
|
26,499 |
|
|
22,925 |
Provision for loan and lease
losses |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
% |
|
|
— |
|
|
— |
|
|
— |
Net interest income after provision for loan and lease losses |
|
|
13,495 |
|
|
11,580 |
|
|
1,915 |
|
|
17 |
|
% |
|
|
13,004 |
|
|
26,499 |
|
|
22,925 |
Noninterest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service charges on deposit accounts |
|
|
187 |
|
|
175 |
|
|
12 |
|
|
7 |
|
% |
|
|
168 |
|
|
355 |
|
|
351 |
ATM and point of sale fees |
|
|
318 |
|
|
300 |
|
|
18 |
|
|
6 |
|
% |
|
|
265 |
|
|
583 |
|
|
566 |
Fees on payroll and benefit processing |
|
|
157 |
|
|
146 |
|
|
11 |
|
|
8 |
|
% |
|
|
171 |
|
|
328 |
|
|
315 |
Life insurance |
|
|
155 |
|
|
127 |
|
|
28 |
|
|
22 |
|
% |
|
|
129 |
|
|
284 |
|
|
256 |
Gain on investment securities, net |
|
|
33 |
|
|
4 |
|
|
29 |
|
|
725 |
|
% |
|
|
92 |
|
|
125 |
|
|
40 |
Federal Home Loan Bank of San Francisco dividends |
|
|
124 |
|
|
95 |
|
|
29 |
|
|
31 |
|
% |
|
|
121 |
|
|
245 |
|
|
175 |
Gain on sale of OREO |
|
|
18 |
|
|
— |
|
|
18 |
|
|
100 |
|
% |
|
|
23 |
|
|
41 |
|
|
16 |
Other income |
|
|
108 |
|
|
115 |
|
|
(7 |
) |
|
(6 |
) |
% |
|
|
88 |
|
|
196 |
|
|
225 |
Total noninterest income |
|
|
1,100 |
|
|
962 |
|
|
138 |
|
|
14 |
|
% |
|
|
1,057 |
|
|
2,157 |
|
|
1,944 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 15 - CONTINUED |
UNAUDITED |
INCOME STATEMENT |
(amounts in thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For The Three Months Ended |
|
For The Six Months Ended |
|
|
June 30, |
|
Change |
|
March 31, |
|
June 30, |
|
|
2019 |
|
2018 |
|
$ |
|
% |
|
2019 |
|
2019 |
|
2018 |
Noninterest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and related benefits |
|
|
5,146 |
|
|
4,513 |
|
|
633 |
|
|
14 |
|
% |
|
|
5,729 |
|
|
10,875 |
|
|
9,368 |
Premises and equipment |
|
|
945 |
|
|
1,016 |
|
|
(71 |
) |
|
(7 |
) |
% |
|
|
992 |
|
|
1,937 |
|
|
2,087 |
Federal Deposit Insurance Corporation insurance premium |
|
|
95 |
|
|
93 |
|
|
2 |
|
|
2 |
|
% |
|
|
100 |
|
|
195 |
|
|
189 |
Data processing fees |
|
|
621 |
|
|
471 |
|
|
150 |
|
|
32 |
|
% |
|
|
559 |
|
|
1,180 |
|
|
903 |
Professional service fees |
|
|
535 |
|
|
314 |
|
|
221 |
|
|
70 |
|
% |
|
|
303 |
|
|
838 |
|
|
659 |
Telecommunications |
|
|
180 |
|
|
178 |
|
|
2 |
|
|
1 |
|
% |
|
|
173 |
|
|
353 |
|
|
394 |
Acquisition |
|
|
376 |
|
|
— |
|
|
376 |
|
|
100 |
|
% |
|
|
1,930 |
|
|
2,306 |
|
|
— |
Other expenses |
|
|
1,713 |
|
|
1,086 |
|
|
627 |
|
|
58 |
|
% |
|
|
1,137 |
|
|
2,850 |
|
|
2,104 |
Total noninterest expense |
|
|
9,611 |
|
|
7,671 |
|
|
1,940 |
|
|
25 |
|
% |
|
|
10,923 |
|
|
20,534 |
|
|
15,704 |
Income before provision for
income taxes |
|
|
4,984 |
|
|
4,871 |
|
|
113 |
|
|
2 |
|
% |
|
|
3,138 |
|
|
8,122 |
|
|
9,165 |
Provision for income taxes |
|
|
1,340 |
|
|
1,253 |
|
|
87 |
|
|
7 |
|
% |
|
|
832 |
|
|
2,172 |
|
|
2,306 |
Net income |
|
$ |
3,644 |
|
$ |
3,618 |
|
$ |
26 |
|
|
1 |
|
% |
|
$ |
2,306 |
|
$ |
5,950 |
|
$ |
6,859 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
|
$ |
0.20 |
|
$ |
0.22 |
|
$ |
(0.02 |
) |
|
(9 |
) |
% |
|
$ |
0.13 |
|
$ |
0.33 |
|
$ |
0.42 |
Average basic shares |
|
|
18,134 |
|
|
16,245 |
|
|
1,889 |
|
|
12 |
|
% |
|
|
17,489 |
|
|
17,816 |
|
|
16,237 |
Diluted earnings per
share |
|
$ |
0.20 |
|
$ |
0.22 |
|
$ |
(0.02 |
) |
|
(9 |
) |
% |
|
$ |
0.13 |
|
$ |
0.33 |
|
$ |
0.42 |
Average diluted shares |
|
|
18,194 |
|
|
16,325 |
|
|
1,869 |
|
|
11 |
|
% |
|
|
17,552 |
|
|
17,878 |
|
|
16,319 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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TABLE 16 |
UNAUDITED CONDENSED CONSOLIDATED |
QUARTERLY AVERAGE BALANCE SHEETS |
(amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For The Three Months Ended |
|
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
|
|
2019 |
|
2019 |
|
2018 |
|
2018 |
|
2018 |
Earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans |
|
$ |
1,028,187 |
|
$ |
993,261 |
|
$ |
923,409 |
|
$ |
930,863 |
|
$ |
922,687 |
Taxable securities |
|
|
249,907 |
|
|
253,068 |
|
|
218,137 |
|
|
199,883 |
|
|
206,247 |
Tax-exempt securities |
|
|
39,501 |
|
|
50,454 |
|
|
42,868 |
|
|
48,561 |
|
|
50,306 |
Interest-bearing deposits in other banks |
|
|
35,605 |
|
|
40,223 |
|
|
75,295 |
|
|
50,397 |
|
|
29,041 |
Total earning assets |
|
|
1,353,200 |
|
|
1,337,006 |
|
|
1,259,709 |
|
|
1,229,704 |
|
|
1,208,281 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
|
21,942 |
|
|
21,392 |
|
|
22,447 |
|
|
21,834 |
|
|
19,880 |
Premises and equipment,
net |
|
|
15,819 |
|
|
14,581 |
|
|
13,331 |
|
|
13,768 |
|
|
14,167 |
Goodwill and core deposit
intangible, net |
|
|
16,995 |
|
|
11,872 |
|
|
1,842 |
|
|
1,888 |
|
|
1,943 |
Other assets |
|
|
42,769 |
|
|
41,009 |
|
|
31,488 |
|
|
33,084 |
|
|
32,426 |
Total assets |
|
$ |
1,450,725 |
|
$ |
1,425,860 |
|
$ |
1,328,817 |
|
$ |
1,300,278 |
|
$ |
1,276,697 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and shareholders'
equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand - noninterest-bearing |
|
$ |
379,173 |
|
$ |
388,410 |
|
$ |
367,457 |
|
$ |
343,948 |
|
$ |
309,199 |
Demand - interest-bearing |
|
|
238,840 |
|
|
243,376 |
|
|
257,227 |
|
|
235,664 |
|
|
225,927 |
Money market |
|
|
296,326 |
|
|
293,396 |
|
|
265,190 |
|
|
259,242 |
|
|
241,724 |
Savings |
|
|
139,307 |
|
|
131,081 |
|
|
110,934 |
|
|
107,349 |
|
|
107,108 |
Certificates of deposit |
|
|
164,084 |
|
|
167,463 |
|
|
157,035 |
|
|
163,302 |
|
|
170,824 |
Total deposits |
|
|
1,217,730 |
|
|
1,223,726 |
|
|
1,157,843 |
|
|
1,109,505 |
|
|
1,054,782 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal Home Loan Bank of San Francisco borrowings |
|
|
30,000 |
|
|
8,778 |
|
|
— |
|
|
22,283 |
|
|
55,275 |
Other borrowings net of unamortized debt issuance costs |
|
|
10,841 |
|
|
12,889 |
|
|
13,785 |
|
|
14,681 |
|
|
15,614 |
Junior subordinated debentures |
|
|
10,310 |
|
|
10,310 |
|
|
10,310 |
|
|
10,310 |
|
|
10,310 |
Other liabilities |
|
|
18,246 |
|
|
17,452 |
|
|
12,846 |
|
|
12,000 |
|
|
12,535 |
Total liabilities |
|
|
1,287,127 |
|
|
1,273,155 |
|
|
1,194,784 |
|
|
1,168,779 |
|
|
1,148,516 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity |
|
|
163,598 |
|
|
152,705 |
|
|
134,033 |
|
|
131,499 |
|
|
128,181 |
Liabilities &
shareholders' equity |
|
$ |
1,450,725 |
|
$ |
1,425,860 |
|
$ |
1,328,817 |
|
$ |
1,300,278 |
|
$ |
1,276,697 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 17 |
UNAUDITED CONDENSED CONSOLIDATED |
YEAR TO DATE AVERAGE BALANCE SHEETS |
(amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended |
|
For the Twelve Months Ended |
|
|
June 30, |
|
June 30, |
|
December 31, |
|
December 31, |
|
December 31, |
|
|
2019 |
|
2018 |
|
2018 |
|
2017 |
|
2016 |
Earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans |
|
$ |
1,010,821 |
|
$ |
903,389 |
|
$ |
915,360 |
|
$ |
818,119 |
|
$ |
752,938 |
Taxable securities |
|
|
251,479 |
|
|
205,777 |
|
|
207,407 |
|
|
165,333 |
|
|
120,884 |
Tax-exempt securities |
|
|
44,947 |
|
|
55,021 |
|
|
50,330 |
|
|
74,231 |
|
|
75,303 |
Interest-bearing deposits in other banks |
|
|
37,930 |
|
|
30,967 |
|
|
47,038 |
|
|
66,872 |
|
|
58,668 |
Total earning assets |
|
|
1,345,177 |
|
|
1,195,154 |
|
|
1,220,135 |
|
|
1,124,555 |
|
|
1,007,793 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
|
21,640 |
|
|
18,767 |
|
|
20,468 |
|
|
18,301 |
|
|
15,831 |
Premises and equipment,
net |
|
|
15,203 |
|
|
14,361 |
|
|
13,952 |
|
|
15,567 |
|
|
15,078 |
Goodwill and core deposit
intangible, net |
|
|
14,447 |
|
|
1,971 |
|
|
1,917 |
|
|
2,136 |
|
|
1,888 |
Other assets |
|
|
41,894 |
|
|
32,457 |
|
|
32,369 |
|
|
37,692 |
|
|
39,160 |
Total assets |
|
$ |
1,438,361 |
|
$ |
1,262,710 |
|
$ |
1,288,841 |
|
$ |
1,198,251 |
|
$ |
1,079,750 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and shareholders'
equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand - noninterest-bearing |
|
$ |
383,766 |
|
$ |
308,304 |
|
$ |
332,197 |
|
$ |
289,735 |
|
$ |
226,368 |
Demand - interest-bearing |
|
|
241,095 |
|
|
230,075 |
|
|
238,328 |
|
|
209,792 |
|
|
172,011 |
Money market |
|
|
294,869 |
|
|
238,963 |
|
|
250,685 |
|
|
224,913 |
|
|
202,159 |
Savings |
|
|
135,217 |
|
|
108,907 |
|
|
109,025 |
|
|
111,376 |
|
|
104,771 |
Certificates of deposit |
|
|
165,764 |
|
|
176,332 |
|
|
168,183 |
|
|
205,648 |
|
|
221,074 |
Total deposits |
|
|
1,220,711 |
|
|
1,062,581 |
|
|
1,098,418 |
|
|
1,041,464 |
|
|
926,383 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal Home Loan Bank of San Francisco borrowings |
|
|
19,448 |
|
|
33,978 |
|
|
22,466 |
|
|
302 |
|
|
17,856 |
Other borrowings net of unamortized debt issuance costs |
|
|
11,859 |
|
|
16,069 |
|
|
15,143 |
|
|
17,981 |
|
|
19,430 |
Junior subordinated debentures |
|
|
10,310 |
|
|
10,310 |
|
|
10,310 |
|
|
10,310 |
|
|
10,310 |
Other liabilities |
|
|
17,851 |
|
|
12,144 |
|
|
12,286 |
|
|
12,293 |
|
|
13,217 |
Total liabilities |
|
|
1,280,179 |
|
|
1,135,082 |
|
|
1,158,623 |
|
|
1,082,350 |
|
|
987,196 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity |
|
|
158,182 |
|
|
127,628 |
|
|
130,218 |
|
|
115,901 |
|
|
92,554 |
Liabilities &
shareholders' equity |
|
$ |
1,438,361 |
|
$ |
1,262,710 |
|
$ |
1,288,841 |
|
$ |
1,198,251 |
|
$ |
1,079,750 |
About Bank of Commerce Holdings
Bank of Commerce Holdings is a bank holding
company headquartered in Sacramento, California and is the parent
company for Merchants Bank of Commerce. The Bank is an FDIC-insured
California banking corporation providing community banking and
financial services through twelve locations in northern California.
The Bank was incorporated as a California banking corporation on
November 25, 1981 and opened for business on October 22, 1982. The
Company’s common stock is listed on the NASDAQ Global Market and
trades under the symbol “BOCH”.
Contact Information:
Randall S. Eslick, President and Chief Executive
OfficerTelephone Direct (916) 677-5800
James A. Sundquist, Executive Vice President and Chief Financial
OfficerTelephone Direct (916) 677-5825
Samuel D. Jimenez, Executive Vice President and Chief Operating
OfficerTelephone Direct (530) 722-3952
Andrea M. Newburn, Vice President and Senior Administrative
Officer / Corporate SecretaryTelephone Direct (530) 722-3959
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