Bank of Commerce Holdings (NASDAQ: BOCH) (the “Company”), a $1.712
billion asset bank holding company and parent company of Merchants
Bank of Commerce (the “Bank”), today announced financial results
for the quarter and six months ended June 30, 2020. Net income for
the quarter ended June 30, 2020 was $3.8 million or $0.23 per share
– diluted, compared with net income of $3.6 million or $0.20 per
share – diluted for the same period of 2019. Net income for
the six months ended June 30, 2020 was $4.8 million or $0.28 per
share – diluted, compared with net income of $6.0 million or $0.33
per share – diluted for the same period of 2019.
Significant Items for the second quarter of
2020:
- $1.3 million provision for loan and lease losses.
- $162.2 million in loans funded through June 30, 2020 under the
federal Paycheck Protection Program (“PPP”) (594 loans).
- Through June 30, 2020 approved 244 loan modifications for loans
totaling $123.3 million.
- Ongoing impact of COVID-19.
Randall S. Eslick, President and CEO commented: “We are proud of
our company’s response to recent economic and medical challenges.
During the second quarter we installed physical protections for
employees and customers, assigned 50% of our employees to work
remotely, extended 594 PPP loans totaling $162.2 million and
deferred loan payments for 10% of our loan portfolio. Until these
challenges abate, we remain committed to ongoing protection and
support for our employees, customers and communities.”
Financial highlights for the second quarter of
2020:
- Net income of $3.8 million was an increase of $203 thousand
(6%) from $3.6 million earned during the same period in the prior
year. Earnings of $0.23 per share – diluted was an increase of
$0.03 (15%) from $0.20 per share – diluted earned during the same
period in the prior year and reflects the impact of the following:
- 1.5 million shares of common stock repurchased between October
of 2019 and April of 2020.
- $1.3 million provision for loan and lease losses for the
current quarter.
- $840 thousand in non-recurring costs recorded during the same
period a year ago associated with our January 31, 2019 acquisition
of Merchants Holding Company in Sacramento (“Merchants”) and the
name change of our subsidiary bank.
- Net interest income increased $288 thousand (2%) to $13.8
million compared to $13.5 million for the same period in the prior
year.
- Net interest margin declined to 3.64% compared to 4.00% for the
same period in the prior year.
- Return on average assets decreased to 0.95% compared to 1.01%
for the same period in the prior year.
- Return on average equity increased to 9.26% compared to 8.93%
for the same period in the prior year.
- Average loans totaled $1.181 billion, an increase of $153
million (15%) compared to average loans for the same period in the
prior year.
- Average earning assets totaled $1.523 billion, an increase of
$170 million (13%) compared to average earning assets for the same
period in the prior year.
- Average deposits totaled $1.406 billion, an increase of $189
million (15%) compared to average deposits for the same period in
the prior year.
- Average non-maturing deposits totaled $1.263 billion, an
increase of $210 million (20%) compared to the same period in the
prior year.
- Average certificates of deposit totaled $143.0 million, a
decrease of $21.1 million (13%) compared to same period in the
prior year.
- The Company’s efficiency ratio was 56.1% compared to 65.9%
during the same period in the prior year.
- The Company’s efficiency ratio of 65.9% for the second quarter
of 2019 included $840 thousand in non-recurring acquisition and the
name change costs. The efficiency ratio excluding these
non-recurring costs was 60.1%.
- Nonperforming assets at June 30, 2020 totaled $6.7 million or
0.39% of total assets, a decrease of $6.8 million (51%) since June
30, 2019. The decrease in nonperforming assets results from one
$10.9 million commercial real estate loan which was placed in
nonaccrual status in the first quarter of 2019 and sold in the
fourth quarter of 2019.
- Book value per common share was $10.13 at June 30, 2020
compared to $9.22 at June 30, 2019.
- Tangible book value per common share was $9.17 at June 30, 2020
compared to $8.29 at June 30, 2019.
Financial highlights for the six months ended
June 30, 2020:
- Net income of $4.8 million was a decrease of $1.2 million (20%)
from $6.0 million earned during the same period in the prior year.
Earnings of $0.28 per share – diluted was a decrease of $0.05 (15%)
per share – diluted earned during the same period in prior year and
reflects the impact of the following:
- 1.5 million shares of common stock repurchased between October
of 2019 and April of 2020.
- $4.2 million provision for loan and lease losses for the six
months ended June 30, 2020.
- $1.1 million in non-recurring costs for the first quarter of
2020 associated with the termination of a technology management
services contract and a previously announced severance
agreement.
- $2.8 million in non-recurring costs recorded during six months
ended June 30, 2019 associated with our January 31, 2019
acquisition of Merchants and the name change of our subsidiary
bank.
- Net interest income increased $270 thousand (1%) to $26.8
million compared to $26.5 million for the same period in the prior
year.
- Net interest margin declined to 3.74% compared to 3.97% for
same period in the prior year.
- Return on average assets decreased to 0.62% compared to 0.83%
for the same period in the prior year.
- Return on average equity decreased to 5.65% compared to 7.59%
for the same period in the prior year.
- Average loans totaled $1.107 billion, an increase of $96
million (10%) compared to average loans for the same period in the
prior year.
- Average earning assets totaled $1.438 billion, an increase of
$93 million (7%) compared the same period in the prior year.
- Average deposits totaled $1.325 billion, an increase of $105
million (9%) compared the same period in the prior year.
- Average non-maturing deposits totaled $1.180 billion, an
increase of $125 million (12%) compared to the same period in the
prior year.
- Average certificates of deposit totaled $145.1 million, a
decrease of $20.7 million (12%) compared to the same period in the
prior year.
- The Company’s efficiency ratio was 63.1% compared to 71.7% for
the same period in the prior year.
- The Company’s efficiency ratio of 63.1% for the first six
months of 2020 included $1.1 million in non-recurring costs. The
efficiency ratio excluding these costs was 59.2%.
- The Company’s efficiency ratio of 71.7% for the first six
months of 2019 includes $2.8 million in non-recurring costs. The
efficiency ratio excluding these non-recurring costs was
62.0%.
- Nonperforming assets at June 30, 2020 totaled $6.7 million or
0.39% of total assets, an increase of $1.0 million (37% annualized)
since December 31, 2019.
- Book value per common share was $10.13 at June 30, 2020
compared to $9.62 at December 31, 2019.
- Tangible book value per common share was $9.17 at June 30, 2020
compared to $8.71 at December 31, 2019.
Impact of COVID-19:
- We have funded 594 loans totaling $162.2 million for the PPP
through June 30, 2020. The growth in our assets resulting from the
PPP has impacted our Tier 1 Leverage capital ratio as we have not
utilized the liquidity available to us from the Federal Reserve’s
PPP Liquidity Facility and its associated beneficial capital
treatment. Substantially all of the loans were made to existing
customers and were funded under the two year PPP loan program.
- We have experienced significant increased deposit balances as
all of the PPP loan funds were deposited into customer accounts at
our bank and as a result of customer behavior that is focused on
maintaining greater non-maturing deposit balances.
- Organic loan growth has been slowed as we maintain credit
underwriting discipline in light of the current economic
environment.
- At June 30, 2020 the Company’s goodwill was not impaired as
supported by a review by an independent third party
consultant.
- At June 30, 2020, our workforce totaled 214 employees of which
114 are working remotely.
- All of our branch offices remain open, although they are
operating under a reduced schedule. Our pandemic response team is
continuing to modify and enhance our workforce and customer
protection as additional information or requirements are
promulgated by the state of California.
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 |
|
SELECTED FINANCIAL INFORMATION - UNAUDITED |
|
(dollars in thousands except per share data) |
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For The Three Months Ended |
|
For The Six Months Ended |
|
Net income, average
assets and |
|
June 30, |
|
|
March 31, |
|
June 30, |
|
average shareholders' equity |
|
2020 |
|
|
2019 |
|
|
2020 |
|
2020 |
|
|
2019 |
|
Net income |
|
$ |
3,847 |
|
|
$ |
3,644 |
|
|
$ |
916 |
|
|
$ |
4,763 |
|
|
$ |
5,950 |
|
Average total assets |
|
$ |
1,626,827 |
|
|
$ |
1,450,725 |
|
|
$ |
1,454,019 |
|
|
$ |
1,540,423 |
|
|
$ |
1,438,361 |
|
Average total earning
assets |
|
$ |
1,523,157 |
|
|
$ |
1,353,200 |
|
|
$ |
1,353,098 |
|
|
$ |
1,438,127 |
|
|
$ |
1,345,177 |
|
Average shareholders'
equity |
|
$ |
167,036 |
|
|
$ |
163,598 |
|
|
$ |
172,120 |
|
|
$ |
169,578 |
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$ |
158,182 |
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Selected performance ratios |
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Return on average assets |
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0.95 |
% |
|
|
1.01 |
% |
|
|
0.25 |
% |
|
|
0.62 |
% |
|
|
0.83 |
% |
Return on average equity |
|
|
9.26 |
% |
|
|
8.93 |
% |
|
|
2.14 |
% |
|
|
5.65 |
% |
|
|
7.59 |
% |
Efficiency ratio |
|
|
56.1 |
% |
|
|
65.9 |
% |
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|
70.5 |
% |
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|
63.1 |
% |
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71.7 |
% |
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Share and per share amounts |
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Weighted average shares -
basic (1) |
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16,660 |
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|
18,134 |
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|
17,695 |
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|
17,178 |
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|
17,816 |
|
Weighted average shares -
diluted (1) |
|
|
16,689 |
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|
18,194 |
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|
17,747 |
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|
17,217 |
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|
17,878 |
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Earnings per share -
basic |
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$ |
0.23 |
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$ |
0.20 |
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$ |
0.05 |
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$ |
0.28 |
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$ |
0.33 |
|
Earnings per share -
diluted |
|
$ |
0.23 |
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$ |
0.20 |
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$ |
0.05 |
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$ |
0.28 |
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$ |
0.33 |
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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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2020 |
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2019 |
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2020 |
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Common shares outstanding
(2) |
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|
16,739 |
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|
18,214 |
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16,796 |
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Book value per common share
(2) |
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$ |
10.13 |
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$ |
9.22 |
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$ |
9.86 |
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Tangible book value per common
share (2)(3) |
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$ |
9.17 |
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$ |
8.29 |
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$ |
8.89 |
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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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12.34 |
% |
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12.56 |
% |
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12.02 |
% |
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Tier 1 capital ratio |
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13.18 |
% |
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13.41 |
% |
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12.85 |
% |
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Total capital ratio |
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15.27 |
% |
|
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15.35 |
% |
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14.93 |
% |
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Tier 1 leverage ratio |
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9.82 |
% |
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11.08 |
% |
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10.78 |
% |
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Tangible common equity ratio
(5) |
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9.05 |
% |
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10.59 |
% |
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10.38 |
% |
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Merchants Bank of
Commerce |
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Common equity tier 1 capital
ratio |
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13.72 |
% |
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|
14.06 |
% |
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|
13.66 |
% |
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Tier 1 capital ratio |
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|
13.72 |
% |
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|
14.06 |
% |
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|
13.66 |
% |
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Total capital ratio |
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|
14.97 |
% |
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15.16 |
% |
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|
14.91 |
% |
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Tier 1 leverage ratio |
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|
10.21 |
% |
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|
11.61 |
% |
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|
11.45 |
% |
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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, 2020, the Company had total consolidated assets
of $1.712 billion, gross loans of $1.206 billion, allowance for
loan and lease losses (“ALLL”) of $16 million, total deposits of
$1.494 billion, and shareholders’ equity of $170 million.
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TABLE 2 |
LOAN BALANCES BY TYPE - UNAUDITED |
(dollars 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 |
|
2020 |
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Total |
|
2019 |
|
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Total |
|
Amount |
|
% |
|
2020 |
|
|
Total |
Commercial |
$ |
126,024 |
|
|
10 |
% |
|
$ |
152,303 |
|
|
15 |
% |
|
$ |
(26,279 |
) |
|
(17 |
) |
% |
|
$ |
138,870 |
|
|
13 |
% |
PPP |
|
162,189 |
|
|
13 |
|
|
|
— |
|
|
0 |
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|
162,189 |
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|
100 |
|
% |
|
|
— |
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|
0 |
|
Real estate - construction and
land development |
|
41,371 |
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|
3 |
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|
37,685 |
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4 |
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|
3,686 |
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10 |
|
% |
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|
34,394 |
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3 |
|
Real estate - commercial
non-owner occupied |
|
521,004 |
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|
44 |
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|
468,706 |
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|
45 |
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|
52,298 |
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11 |
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% |
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|
514,052 |
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|
49 |
|
Real estate - commercial owner
occupied |
|
215,799 |
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|
18 |
|
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|
210,711 |
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21 |
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|
5,088 |
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2 |
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% |
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|
217,319 |
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|
21 |
|
Real estate - residential -
ITIN |
|
31,083 |
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3 |
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|
35,162 |
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3 |
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(4,079 |
) |
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(12 |
) |
% |
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|
31,998 |
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3 |
|
Real estate - residential -
1-4 family mortgage |
|
60,756 |
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|
5 |
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|
67,092 |
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6 |
|
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(6,336 |
) |
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(9 |
) |
% |
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|
62,533 |
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6 |
|
Real estate - residential -
equity lines |
|
20,938 |
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|
2 |
|
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|
23,656 |
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2 |
|
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(2,718 |
) |
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(11 |
) |
% |
|
|
23,158 |
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2 |
|
Consumer and other |
|
27,176 |
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|
2 |
|
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|
41,409 |
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4 |
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(14,233 |
) |
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(34 |
) |
% |
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|
29,921 |
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3 |
|
Gross loans |
|
1,206,340 |
|
|
100 |
% |
|
|
1,036,724 |
|
|
100 |
% |
|
|
169,616 |
|
|
16 |
|
% |
|
|
1,052,245 |
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|
100 |
% |
Deferred fees and costs |
|
(1,603 |
) |
|
|
|
|
|
2,005 |
|
|
|
|
|
|
(3,608 |
) |
|
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|
2,129 |
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Loans, net of deferred fees and costs |
|
1,204,737 |
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|
1,038,729 |
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|
166,008 |
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|
1,054,374 |
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Allowance for loan and lease
losses |
|
(16,089 |
) |
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(12,445 |
) |
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|
(3,644 |
) |
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|
(15,067 |
) |
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Net loans |
$ |
1,188,648 |
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$ |
1,026,284 |
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|
$ |
162,364 |
|
|
|
|
|
$ |
1,039,307 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average loans during the
quarter |
$ |
1,180,915 |
|
|
|
|
|
$ |
1,028,187 |
|
|
|
|
|
$ |
152,728 |
|
|
15 |
|
% |
|
$ |
1,033,689 |
|
|
|
|
Average loans during the
quarter (excluding PPP) |
$ |
1,048,139 |
|
|
|
|
|
$ |
1,028,187 |
|
|
|
|
|
$ |
19,952 |
|
|
2 |
|
% |
|
$ |
1,033,689 |
|
|
|
|
Average yield on loans during
the quarter |
|
4.50 |
|
% |
|
|
|
|
5.01 |
|
% |
|
|
|
|
(0.51 |
) |
|
(10 |
) |
% |
|
|
4.80 |
|
% |
|
|
Average yield on all loans
during the quarter (excluding PPP) |
|
4.76 |
|
% |
|
|
|
|
5.01 |
|
% |
|
|
|
|
(0.25 |
) |
|
(5 |
) |
% |
|
|
4.80 |
|
% |
|
|
Average yield on all loans
during the year to date |
|
4.64 |
|
% |
|
|
|
|
4.96 |
|
% |
|
|
|
|
(0.32 |
) |
|
(6 |
) |
% |
|
|
4.80 |
|
% |
|
|
Average yield on all loans
during the year to date (excluding PPP) |
|
4.78 |
|
% |
|
|
|
|
4.96 |
|
% |
|
|
|
|
(0.18 |
) |
|
(4 |
) |
% |
|
|
4.80 |
|
% |
|
|
The Company recorded gross loan balances of $1.206 billion at
June 30, 2020, compared with $1.037 billion and $1.052 billion at
June 30, 2019 and March 31, 2020, respectively, an increase of $170
million and $154 million, respectively.
The average yield on loans during the quarter was 4.50% compared
to 5.01% and 4.80% for the quarters ended June 30, 2019 and March
31, 2020, respectively. Yields in the current quarter were
negatively impacted by PPP loans which averaged $132.8 million and
yielded 2.46%.
Gross loan balances in the table above include a net fair value
discount for loans acquired from Merchants of $1.3 million, $1.5
million and $2.0 million at June 30, 2020, March 31, 2020 and June
30, 2019, respectively. We recorded $216 thousand, $163 thousand
and $190 thousand in accretion of the discount for these loans
during the quarters ended June 30, 2020, March 31, 2020 and June
30, 2019, respectively.
We have funded 594 PPP loans totaling $162.2 million through
June 30, 2020. Substantially all of the loans were made to existing
customers and the loan proceeds were initially deposited with our
institution. At origination, loan fee income net of loan
origination costs totaled $4.3 million and is being earned over the
24 month duration of the loans as a part of the loan yield. At June
30, 2020 $3.8 million remains to be earned in future quarters. The
following tables provide additional information on the PPP loans by
industry and by loan balance at June 30, 2020.
|
|
|
TABLE 3 |
PPP LOANS BY INDUSTRY - UNAUDITED |
(dollars in thousands) |
|
|
|
|
At June 30, 2020 |
|
Balance |
Construction |
$ |
64,242 |
Healthcare and Social
Assistance |
|
17,530 |
Professional, Scientific and
Tech Services |
|
12,155 |
Accommodation and Food
Services |
|
10,328 |
Admin, Support, Waste
Management and Remediation Services |
|
7,372 |
Primary Metal
Manufacturing |
|
6,581 |
Retail Trade |
|
8,033 |
Other |
|
35,948 |
Total |
$ |
162,189 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 4 |
PPP LOANS BY LOAN SIZE - UNAUDITED |
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
At June 30, 2020 |
|
Balance |
|
Number |
|
Average Loan Size |
$150,000 or less |
$ |
20,256 |
|
381 |
|
$ |
53 |
$150,001 to $350,000 |
|
25,234 |
|
109 |
|
|
232 |
$350,001 to $1,999,999 |
|
73,143 |
|
92 |
|
|
795 |
$2,000,000 or greater |
|
43,556 |
|
12 |
|
|
3,630 |
Total |
$ |
162,189 |
|
594 |
|
$ |
273 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 5 |
CASH, CASH EQUIVALENTS, AND INVESTMENT SECURITIES -
UNAUDITED |
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At June 30, |
|
|
|
|
|
|
|
At March 31, |
|
|
|
|
% of |
|
|
|
% of |
|
Change |
|
|
|
% of |
|
|
2020 |
|
Total |
|
2019 |
|
Total |
|
Amount |
|
% |
|
2020 |
|
Total |
Cash and due from banks |
|
$ |
29,630 |
|
7 |
% |
|
$ |
21,306 |
|
7 |
% |
|
$ |
8,324 |
|
|
39 |
|
% |
|
$ |
21,127 |
|
6 |
% |
Interest-bearing deposits in
other banks |
|
|
126,132 |
|
29 |
|
|
|
19,319 |
|
6 |
|
|
|
106,813 |
|
|
553 |
|
% |
|
|
22,813 |
|
7 |
|
Total cash and cash equivalents |
|
|
155,762 |
|
36 |
|
|
|
40,625 |
|
13 |
|
|
|
115,137 |
|
|
283 |
|
% |
|
|
43,940 |
|
13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government and
agencies |
|
|
33,195 |
|
8 |
|
|
|
44,837 |
|
14 |
|
|
|
(11,642 |
) |
|
(26 |
) |
% |
|
|
36,043 |
|
11 |
|
Obligations of state and
political subdivisions |
|
|
76,888 |
|
18 |
|
|
|
45,003 |
|
14 |
|
|
|
31,885 |
|
|
71 |
|
% |
|
|
63,263 |
|
19 |
|
Residential mortgage backed
securities and collateralized mortgage obligations |
|
|
137,120 |
|
30 |
|
|
|
168,085 |
|
50 |
|
|
|
(30,965 |
) |
|
(18 |
) |
% |
|
|
160,439 |
|
50 |
|
Corporate securities |
|
|
1,000 |
|
0 |
|
|
|
2,978 |
|
1 |
|
|
|
(1,978 |
) |
|
(66 |
) |
% |
|
|
2,983 |
|
1 |
|
Commercial mortgage backed
securities |
|
|
16,329 |
|
4 |
|
|
|
24,868 |
|
8 |
|
|
|
(8,539 |
) |
|
(34 |
) |
% |
|
|
17,428 |
|
5 |
|
Other asset backed
securities |
|
|
15,668 |
|
4 |
|
|
|
48 |
|
— |
|
|
|
15,620 |
|
|
32,542 |
|
% |
|
|
4,921 |
|
1 |
|
Total investment securities - AFS |
|
|
280,200 |
|
64 |
|
|
|
285,819 |
|
87 |
|
|
|
(5,619 |
) |
|
(2 |
) |
% |
|
|
285,077 |
|
87 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cash, cash equivalents
and investment securities |
|
$ |
435,962 |
|
100 |
% |
|
$ |
326,444 |
|
100 |
% |
|
$ |
109,518 |
|
|
34 |
|
% |
|
$ |
329,017 |
|
100 |
% |
Average yield on
interest-bearing due from banks during the quarter |
|
|
0.12 |
% |
|
|
|
|
2.47 |
% |
|
|
|
|
(2.35 |
) |
|
|
|
|
|
1.31 |
% |
|
|
Average yield on investment
securities during the quarter - nominal |
|
|
2.61 |
% |
|
|
|
|
2.86 |
% |
|
|
|
|
(0.25 |
) |
|
|
|
|
|
2.74 |
% |
|
|
Average yield on investment
securities during the quarter - tax equivalent |
|
|
2.78 |
% |
|
|
|
|
2.98 |
% |
|
|
|
|
(0.20 |
) |
|
|
|
|
|
2.84 |
% |
|
|
As of June 30, 2020, we maintained noninterest-bearing cash
positions of $29.6 million and interest-bearing deposits of $126.1
million at the Federal Reserve Bank and correspondent banks.
Investment securities totaled $280.2 million at June 30, 2020,
compared with $285.8 million and $285.1 million at June 30, 2019
and March 31, 2020, respectively. During the second quarter of
2020, we continued to reposition a portion of the Bank’s investment
securities portfolio to take advantage of longer durations and
widening credit spreads on municipal securities. During the second
quarter of 2020, we purchased securities with a par value of $32.4
million and weighted average yield of 2.13% (2.53% tax equivalent)
and sold securities with a par value of $19.8 million and weighted
average yield of 2.03%. The sales resulted in net realized gains of
$140 thousand and $224 thousand for the quarter and six months
ended June 30, 2020, respectively.
Average securities balances for the quarters ended June 30,
2020, March 31, 2020 and June 30, 2019 were $269.7 million, $272.3
million and $289.4 million, respectively. Weighted average yields
on securities balances for those same periods were 2.61%, 2.74% and
2.86%, respectively.
At June 30, 2020, our net unrealized gains on available-for-sale
investment securities were $10.1 million compared with net
unrealized gains of $3.4 million and $8.4 million at June 30, 2019
and March 31, 2020, respectively. The changes in net unrealized
gains on the investment securities portfolio were due to changes in
market interest rates and do not reflect changes in credit
quality.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 6 |
DEPOSITS BY TYPE - UNAUDITED |
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At June 30, |
|
|
|
|
|
|
|
At March 31, |
|
|
|
% of |
|
|
|
% of |
|
|
Change |
|
|
|
% of |
|
2020 |
|
Total |
|
2019 |
|
Total |
|
Amount |
|
% |
|
2020 |
|
Total |
Demand -
noninterest-bearing |
$ |
521,751 |
|
35 |
% |
|
$ |
397,349 |
|
32 |
% |
|
$ |
124,402 |
|
|
31 |
|
% |
|
$ |
419,315 |
|
34 |
% |
Demand - interest-bearing |
|
287,198 |
|
19 |
|
|
|
238,175 |
|
19 |
|
|
|
49,023 |
|
|
21 |
|
% |
|
|
231,276 |
|
19 |
|
Money market |
|
405,322 |
|
27 |
|
|
|
300,847 |
|
24 |
|
|
|
104,475 |
|
|
35 |
|
% |
|
|
314,687 |
|
25 |
|
Total demand |
|
1,214,271 |
|
81 |
|
|
|
936,371 |
|
75 |
|
|
|
277,900 |
|
|
30 |
|
% |
|
|
965,278 |
|
78 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings |
|
142,389 |
|
10 |
|
|
|
138,591 |
|
11 |
|
|
|
3,798 |
|
|
3 |
|
% |
|
|
133,552 |
|
11 |
|
Total non-maturing
deposits |
|
1,356,660 |
|
91 |
|
|
|
1,074,962 |
|
86 |
|
|
|
281,698 |
|
|
26 |
|
% |
|
|
1,098,830 |
|
89 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certificates of deposit |
|
137,647 |
|
9 |
|
|
|
160,556 |
|
14 |
|
|
|
(22,909 |
) |
|
(14 |
) |
% |
|
|
143,557 |
|
11 |
|
Total deposits |
$ |
1,494,307 |
|
100 |
% |
|
$ |
1,235,518 |
|
100 |
% |
|
$ |
258,789 |
|
|
21 |
|
% |
|
$ |
1,242,387 |
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deposits at June 30, 2020, increased $259 million or 21%
to $1.494 billion compared to June 30, 2019 and increased $252
million or 82% annualized compared to March 31, 2020. Total
non-maturing deposits increased $281.7 million or 26% compared to
the same date a year ago and increased $257.8 million or 94%
annualized compared to March 31, 2020. The increase in non-maturing
deposits from March 31, 2020 to June 30, 2020 was due to PPP loan
program disbursements and changes in customer behavior which is
placing greater emphasis on increasing non-maturing deposit
balances. Certificates of deposit decreased $22.9 million or 14%
compared to the same date a year ago and decreased $5.9 million or
16% annualized compared to March 31, 2020. The decrease in
certificates of deposits from March 31, 2020 to June 30, 2020
reflects our decision to reduce reliance on public deposits.
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, |
|
2020 |
|
2020 |
|
2019 |
|
2019 |
|
2019 |
|
2019 |
|
2018 |
|
2018 |
Interest-bearing deposits |
|
0.43 |
% |
|
|
0.53 |
% |
|
|
0.56 |
% |
|
|
0.56 |
% |
|
|
0.54 |
% |
|
|
0.49 |
% |
|
|
0.45 |
% |
|
|
0.42 |
% |
Interest-bearing deposits and
noninterest-bearing demand |
|
0.28 |
% |
|
|
0.35 |
% |
|
|
0.38 |
% |
|
|
0.38 |
% |
|
|
0.37 |
% |
|
|
0.34 |
% |
|
|
0.31 |
% |
|
|
0.29 |
% |
All interest-bearing
liabilities |
|
0.52 |
% |
|
|
0.65 |
% |
|
|
0.68 |
% |
|
|
0.68 |
% |
|
|
0.74 |
% |
|
|
0.67 |
% |
|
|
0.61 |
% |
|
|
0.64 |
% |
All interest-bearing
liabilities and noninterest-bearing demand |
|
0.34 |
% |
|
|
0.43 |
% |
|
|
0.46 |
% |
|
|
0.46 |
% |
|
|
0.52 |
% |
|
|
0.46 |
% |
|
|
0.42 |
% |
|
|
0.45 |
% |
Stock Repurchase Program
We previously announced a program to repurchase 1.5 million
common shares. Between October of 2019 and April of 2020 all 1.5
million shares were repurchased at a total cost of $13.6 million
including commissions, or an average of $9.11 per share.
INCOME STATEMENT OVERVIEW
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 8 |
SUMMARY INCOME STATEMENT - UNAUDITED |
(dollars in thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For The Three Months Ended |
|
June 30, |
|
Change |
|
March 31, |
|
Change |
|
2020 |
|
2019 |
|
Amount |
|
% |
|
2020 |
|
Amount |
|
% |
Interest income |
$ |
14,997 |
|
$ |
15,127 |
|
$ |
(130 |
) |
|
(1 |
) |
% |
|
$ |
14,345 |
|
$ |
652 |
|
|
5 |
|
% |
Interest expense |
|
1,214 |
|
|
1,632 |
|
|
(418 |
) |
|
(26 |
) |
% |
|
|
1,359 |
|
|
(145 |
) |
|
(11 |
) |
% |
Net interest income |
|
13,783 |
|
|
13,495 |
|
|
288 |
|
|
2 |
|
% |
|
|
12,986 |
|
|
797 |
|
|
6 |
|
% |
Provision for loan and lease
losses |
|
1,300 |
|
|
— |
|
|
1,300 |
|
|
100 |
|
% |
|
|
2,850 |
|
|
(1,550 |
) |
|
(54 |
) |
% |
Noninterest income |
|
955 |
|
|
1,100 |
|
|
(145 |
) |
|
(13 |
) |
% |
|
|
892 |
|
|
63 |
|
|
7 |
|
% |
Noninterest expense |
|
8,270 |
|
|
9,611 |
|
|
(1,341 |
) |
|
(14 |
) |
% |
|
|
9,783 |
|
|
(1,513 |
) |
|
(15 |
) |
% |
Income before provision for
income taxes |
|
5,168 |
|
|
4,984 |
|
|
184 |
|
|
4 |
|
% |
|
|
1,245 |
|
|
3,923 |
|
|
315 |
|
% |
Provision for income taxes |
|
1,321 |
|
|
1,340 |
|
|
(19 |
) |
|
(1 |
) |
% |
|
|
329 |
|
|
992 |
|
|
302 |
|
% |
Net
income |
$ |
3,847 |
|
$ |
3,644 |
|
$ |
203 |
|
|
6 |
|
% |
|
$ |
916 |
|
$ |
2,931 |
|
|
320 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share -
basic |
$ |
0.23 |
|
$ |
0.20 |
|
$ |
0.03 |
|
|
15 |
|
% |
|
$ |
0.05 |
|
$ |
0.18 |
|
|
360 |
|
% |
Weighted average shares -
basic |
|
16,660 |
|
|
18,134 |
|
|
(1,474 |
) |
|
(8 |
) |
% |
|
|
17,695 |
|
|
(1,035 |
) |
|
(6 |
) |
% |
Earnings per share -
diluted |
$ |
0.23 |
|
$ |
0.20 |
|
$ |
0.03 |
|
|
15 |
|
% |
|
$ |
0.05 |
|
$ |
0.18 |
|
|
360 |
|
% |
Weighted average shares -
diluted |
|
16,689 |
|
|
18,194 |
|
|
(1,505 |
) |
|
(8 |
) |
% |
|
|
17,747 |
|
|
(1,058 |
) |
|
(6 |
) |
% |
Dividends declared per common
share |
$ |
0.05 |
|
$ |
0.05 |
|
$ |
— |
|
|
— |
|
% |
|
$ |
0.05 |
|
$ |
— |
|
|
— |
|
% |
Second Quarter of 2020 Compared With The Second
Quarter of 2019
Net income for the second quarter of 2020 increased $203
thousand compared to the second quarter of 2019. In the current
quarter, net interest income was $288 thousand higher, noninterest
expense was $1.3 million lower and income taxes were $19 thousand
lower. These changes were partially offset by a provision for loan
and lease losses that was $1.3 million higher and noninterest
income that was $145 thousand lower.
Net Interest Income
Net interest income increased $288 thousand compared to the same
period a year ago.
Interest income for the second quarter of 2020 decreased $130
thousand or 1% to $15.0 million.
- Interest and fees on loans increased $377 thousand due to a
$152.7 million increase in average loan balances partially offset
by a 51 basis point decrease in the average yield on the loan
portfolio. Much of the 51 basis point decrease was caused by PPP
loans which yielded only 2.46%. The yield on loans exclusive of PPP
loans declined 25 basis points.
- Interest on investment securities decreased $309 thousand due
to a $19.7 million decrease in average securities balances and a 24
basis point decrease in average yield on the securities
portfolio.
- Interest on interest-bearing deposits due from banks decreased
$198 thousand due to a 235 basis point decrease in average yield
that was partially offset by a $36.9 million increase in average
interest-bearing deposit balances.
Interest expense for the second quarter of 2020 decreased $418
thousand or 26% to $1.2 million.
- Interest expense on interest-bearing deposits decreased $165
thousand. Average interest-bearing demand and savings deposit
balances increased $91.3 million, while average certificate of
deposit balances decreased $21.1 million. The average rate paid on
interest-bearing deposits decreased 11 basis points.
- Interest expense on FHLB borrowings decreased $187 thousand.
Average FHLB borrowings were $16.0 million in the current quarter
compared to $30.0 million for the same period a year ago. The
average rate paid on FHLB borrowings decreased 244 basis
points.
- Interest expense on other term debt decreased $17 thousand.
During the second quarter of 2019, we completed the early repayment
of our variable rate senior debt.
- Interest expense on junior subordinated debentures decreased
$49 thousand. The average rate paid on junior subordinated
debentures decreased 190 basis points.
Provision for Loan and Lease Losses
Net loan loss charge-offs were $278 thousand for the current
quarter compared to net loan recoveries of $203 thousand for the
same period a year ago. As illustrated in Table 10 asset quality
metrics are improved for the three months ended June 30, 2020 when
compared to the same period a year ago. We recognize the
deteriorating credit environment due to the economic effects of
COVID-19 and have made changes to our qualitative factors
(Q-Factors) in calculating our ALLL. As a result we recorded a
provision for loan and lease losses of $1.3 million for the second
quarter of 2020. There was no provision for loan and lease losses
in the second quarter of 2019. A discussion of our provision is
provided following Table 10.
Noninterest Income
Noninterest income for the three months ended June 30, 2020
decreased $145 thousand including an $88 thousand decrease in
Federal Home Loan Bank of San Francisco dividends.
Noninterest Expense
Noninterest expense for the three months ended June 30, 2020
decreased $1.3 million compared to the same period a year previous.
Decreases in noninterest expense included the following items:
- $697 thousand deferred loan origination cost benefit in the
second quarter of 2020 as a result of loans originated under the
PPP.
- $840 thousand in non-recurring costs recorded during the second
quarter of 2019 associated acquisition of Merchants and the name
change of our subsidiary bank.
The Company’s efficiency ratio was 56.1% for the second quarter
of 2020. The ratio during the same period in 2019 was 65.9% (60.1%
excluding $840 thousand of non-recurring costs).
Income Tax Provision
For the three months ended June 30, 2020, our income tax
provision of $1.3 million on pre-tax income of $5.2 million was an
effective tax rate of 25.6%. The tax provision for the second
quarter of the prior year was $1.3 million on pre-tax income of
$5.0 million for an effective rate of 26.9%. The 2019 tax rate
reflects the non-deductibility of certain acquisition-related
expenses.
Second Quarter of 2020 Compared With The First
Quarter of 2020
Net income for the second quarter of 2020 increased $2.9 million
compared to the first quarter of 2020. In the current quarter, net
interest income was $797 thousand higher, provision for loan and
lease losses was $1.6 million lower, noninterest income was $63
thousand higher and noninterest expense was $1.5 million lower.
These changes were partially offset by a provision for income taxes
that was $ 992 thousand higher.
Net Interest Income
Net interest income increased $797 thousand over the prior
quarter.
Interest income for the three months ended June 30, 2020
increased $652 thousand or 5% to $15.0 million.
- Interest and fees on loans increased $886 thousand due to a
$147.2 million increase in average loan balances partially offset
by a 30 basis point decrease in the average yield on the loan
portfolio. Much of the 30 basis point decrease was caused by PPP
loans which yielded only 2.46%. The yield on loans exclusive of PPP
loans declined only 4 basis points.
- Interest on investment securities decreased $101 thousand due
to a 12 basis point decrease in average yield on the investment
portfolio and a $2.5 million decrease in average securities
balances.
- Interest on interest-bearing deposits due from banks decreased
$133 thousand due to a 120 basis point decrease in the average
yield on interest-bearing deposits due from banks partially offset
by a $25.4 million increase in average balances.
Interest expense for the three months ended June 30, 2020
decreased $145 thousand or 11% to $1.2 million.
- Interest expense on interest-bearing deposits decreased $121
thousand. Average interest-bearing demand and savings deposit
balances increased $89.3 million, while average certificates of
deposit decreased $4.3 million. The average rate paid on
interest-bearing deposits decreased by ten basis points.
- Interest expense on FHLB borrowings increased to $5 thousand.
Average FHLB borrowings were $16.0 million in the current quarter
compared to $220 thousand in the prior quarter. During the second
quarter, we took an advance under our FHLB line of credit for $10.0
million at 0% interest with $5.0 million due in 6 months and $5.0
million due in one year. The average rate paid on FHLB borrowings
was 0.13% during the second quarter of 2020.
- Interest expense on other term debt was unchanged at $184
thousand for both quarters.
- Interest expense on other junior subordinated debentures
decreased $29 thousand due to a 113 basis point decrease in the
average rate paid.
Provision for Loan and Lease Losses
Net loan charge-offs were $278 thousand in the current quarter
compared to $14 thousand in the prior quarter. As illustrated in
Table 10 total nonaccrual loans increased by $1.4 million during
the three months ended June 30, 2020 when compared to the previous
quarter. The increase was primarily due to one commercial real
estate loan that was moved to nonaccrual status during the quarter.
We recorded a provision for loan and lease losses of $2.9 million
and $1.3 million for the first and second quarters of 2020,
respectively. A discussion of our provision is provided following
Table 10.
Noninterest Income
Noninterest income for the three months ended June 30, 2020
increased $63 thousand and was not concentrated in any one
item.
Noninterest Expense
Noninterest expense for the three months ended June 30, 2020
decreased $1.5 million compared to the prior quarter. Decreases in
noninterest expense included:
- $748 thousand deferred loan origination cost benefit as a
result of loans originated under the PPP during the current
quarter.
- $700 thousand in non-recurring costs related to the termination
of a technology management services contract in the prior
quarter.
- $414 thousand non-recurring costs related to a previously
disclosed severance agreement in the prior quarter.
The Company’s efficiency ratio was 56.1% for the second quarter
of 2020 compared with 70.5% for the prior quarter (62.5% excluding
$1.1 million in non-recurring costs.).
Income Tax Provision
For the three months ended June 30, 2020, our income tax
provision of $1.3 million on pre-tax income of $5.2 million was an
effective tax rate of 25.6%. The income tax provision for the prior
quarter of $329 thousand on pre-tax income of $1.2 million was an
effective tax rate of 26.4%.
Earnings Per Share
Diluted earnings per share were $0.23 for the three months ended
June 30, 2020 compared with diluted earnings per share of $0.20 for
the same period a year ago and diluted earnings per share of $0.05
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 |
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For The Three Months Ended |
|
|
June 30, 2020 |
|
June 30, 2019 |
|
March 31, 2020 |
|
|
Average |
|
|
|
|
Yield / |
|
Average |
|
|
|
|
Yield / |
|
Average |
|
|
|
|
Yield / |
|
|
Balance |
|
Interest(1) |
|
Rate (5) |
|
Balance |
|
Interest(1) |
|
Rate (5) |
|
Balance |
|
Interest(1) |
|
Rate (5) |
Interest-earning
assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans net of PPP (2) |
|
$ |
1,048,139 |
|
$ |
12,411 |
|
4.76 |
% |
|
$ |
1,028,187 |
|
$ |
12,847 |
|
5.01 |
% |
|
$ |
1,033,689 |
|
$ |
12,338 |
|
4.80 |
% |
PPP loans |
|
|
132,776 |
|
|
813 |
|
2.46 |
% |
|
|
— |
|
|
— |
|
— |
% |
|
|
— |
|
|
— |
|
— |
% |
Taxable securities |
|
|
211,195 |
|
|
1,329 |
|
2.53 |
% |
|
|
249,907 |
|
|
1,733 |
|
2.78 |
% |
|
|
237,405 |
|
|
1,582 |
|
2.68 |
% |
Tax-exempt securities (3) |
|
|
58,540 |
|
|
423 |
|
2.91 |
% |
|
|
39,501 |
|
|
328 |
|
3.33 |
% |
|
|
34,869 |
|
|
271 |
|
3.13 |
% |
Interest-bearing deposits in other banks |
|
|
72,507 |
|
|
21 |
|
0.12 |
% |
|
|
35,605 |
|
|
219 |
|
2.47 |
% |
|
|
47,135 |
|
|
154 |
|
1.31 |
% |
Average interest- earning
assets |
|
|
1,523,157 |
|
|
14,997 |
|
3.96 |
% |
|
|
1,353,200 |
|
|
15,127 |
|
4.48 |
% |
|
|
1,353,098 |
|
|
14,345 |
|
4.26 |
% |
Cash and due from banks |
|
|
21,564 |
|
|
|
|
|
|
|
|
21,942 |
|
|
|
|
|
|
|
|
21,987 |
|
|
|
|
|
|
Premises and equipment, net |
|
|
15,428 |
|
|
|
|
|
|
|
|
15,819 |
|
|
|
|
|
|
|
|
15,753 |
|
|
|
|
|
|
Goodwill |
|
|
11,671 |
|
|
|
|
|
|
|
|
11,720 |
|
|
|
|
|
|
|
|
11,671 |
|
|
|
|
|
|
Other intangible assets, net |
|
|
4,508 |
|
|
|
|
|
|
|
|
5,275 |
|
|
|
|
|
|
|
|
4,701 |
|
|
|
|
|
|
Other assets |
|
|
50,499 |
|
|
|
|
|
|
|
|
42,769 |
|
|
|
|
|
|
|
|
46,809 |
|
|
|
|
|
|
Average total assets |
|
$ |
1,626,827 |
|
|
|
|
|
|
|
$ |
1,450,725 |
|
|
|
|
|
|
|
$ |
1,454,019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing demand |
|
$ |
261,907 |
|
|
85 |
|
0.13 |
% |
|
$ |
238,840 |
|
|
129 |
|
0.22 |
% |
|
$ |
233,375 |
|
|
100 |
|
0.17 |
% |
Money market |
|
|
365,368 |
|
|
317 |
|
0.35 |
% |
|
|
296,326 |
|
|
380 |
|
0.51 |
% |
|
|
307,587 |
|
|
403 |
|
0.53 |
% |
Savings |
|
|
138,500 |
|
|
95 |
|
0.28 |
% |
|
|
139,307 |
|
|
123 |
|
0.35 |
% |
|
|
135,504 |
|
|
118 |
|
0.35 |
% |
Certificates of deposit |
|
|
142,955 |
|
|
467 |
|
1.31 |
% |
|
|
164,084 |
|
|
497 |
|
1.21 |
% |
|
|
147,241 |
|
|
464 |
|
1.27 |
% |
Federal Home Loan Bank of San Francisco borrowings |
|
|
16,044 |
|
|
5 |
|
0.13 |
% |
|
|
30,000 |
|
|
192 |
|
2.57 |
% |
|
|
220 |
|
|
— |
|
0.21 |
% |
Other borrowings net of unamortized debt issuance costs |
|
|
9,976 |
|
|
184 |
|
7.42 |
% |
|
|
10,841 |
|
|
201 |
|
7.44 |
% |
|
|
9,963 |
|
|
184 |
|
7.43 |
% |
Junior subordinated debentures |
|
|
10,310 |
|
|
61 |
|
2.38 |
% |
|
|
10,310 |
|
|
110 |
|
4.28 |
% |
|
|
10,310 |
|
|
90 |
|
3.51 |
% |
Average interest- bearing
liabilities |
|
|
945,060 |
|
|
1,214 |
|
0.52 |
% |
|
|
889,708 |
|
|
1,632 |
|
0.74 |
% |
|
|
844,200 |
|
|
1,359 |
|
0.65 |
% |
Noninterest-bearing demand |
|
|
497,636 |
|
|
|
|
|
|
|
|
379,173 |
|
|
|
|
|
|
|
|
420,847 |
|
|
|
|
|
|
Other liabilities |
|
|
17,095 |
|
|
|
|
|
|
|
|
18,246 |
|
|
|
|
|
|
|
|
16,852 |
|
|
|
|
|
|
Shareholders’ equity |
|
|
167,036 |
|
|
|
|
|
|
|
|
163,598 |
|
|
|
|
|
|
|
|
172,120 |
|
|
|
|
|
|
Average liabilities and
shareholders’ equity |
|
$ |
1,626,827 |
|
|
|
|
|
|
|
$ |
1,450,725 |
|
|
|
|
|
|
|
$ |
1,454,019 |
|
|
|
|
|
|
Net interest income and net
interest margin (4) |
|
|
|
|
$ |
13,783 |
|
3.64 |
% |
|
|
|
|
$ |
13,495 |
|
4.00 |
% |
|
|
|
|
$ |
12,986 |
|
3.86 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Interest
income on loans includes deferred fees and costs of approximately
$138 thousand, $91 thousand, and $257 thousand for the three months
ended June 30, 2020 and 2019 and March 31, 2020, respectively.
Interest income on PPP loans includes $476 thousand of fee income
for the three months ended June 30, 2020. |
(2) Loans net of
PPP includes average nonaccrual loans of $5.6 million, $13.7
million and $5.5 million for the three months ended June 30, 2020
and 2019 and March 31, 2020, respectively. |
(3) Interest
income and yields on tax-exempt securities are not presented on a
taxable equivalent basis. |
(4) Net interest
margin is net interest income expressed as a percentage of average
interest-earning assets. Net interest income for the three months
ended June 30, 2020 and 2019 and March 31, 2020 included $216
thousand, $190 thousand and $163 thousand in accretion of the
discount on the loans acquired from Merchants Holding Company,
which improved the net interest margin by 7, 7 and 6 basis points,
respectively. Net interest income for the three months ended June
30, 2020 included $813 thousand in interest and fee income from PPP
loans with an average balance of $132.8 million for the quarter
which decreased the net interest margin by11 basis points. |
(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 |
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For The Six Months Ended |
|
|
June 30, 2020 |
|
June 30, 2019 |
|
|
Average |
|
|
|
|
Yield / |
|
Average |
|
|
|
|
Yield / |
|
|
Balance |
|
Interest(1) |
|
Rate (5) |
|
Balance |
|
Interest(1) |
|
Rate (5) |
Interest-earning
assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans net of PPP (2) |
|
$ |
1,040,914 |
|
$ |
24,749 |
|
4.78 |
% |
|
$ |
1,010,821 |
|
$ |
24,878 |
|
4.96 |
% |
PPP loans |
|
|
66,388 |
|
|
813 |
|
2.46 |
% |
|
|
— |
|
|
— |
|
— |
% |
Taxable securities |
|
|
224,300 |
|
|
2,911 |
|
2.61 |
% |
|
|
251,479 |
|
|
3,497 |
|
2.80 |
% |
Tax-exempt securities (3) |
|
|
46,705 |
|
|
694 |
|
2.99 |
% |
|
|
44,947 |
|
|
715 |
|
3.21 |
% |
Interest-bearing deposits in other banks |
|
|
59,820 |
|
|
175 |
|
0.59 |
% |
|
|
37,930 |
|
|
464 |
|
2.47 |
% |
Average interest- earning
assets |
|
|
1,438,127 |
|
|
29,342 |
|
4.10 |
% |
|
|
1,345,177 |
|
|
29,554 |
|
4.43 |
% |
Cash and due from banks |
|
|
21,775 |
|
|
|
|
|
|
|
|
21,640 |
|
|
|
|
|
|
Premises and equipment, net |
|
|
15,591 |
|
|
|
|
|
|
|
|
15,203 |
|
|
|
|
|
|
Goodwill |
|
|
11,671 |
|
|
|
|
|
|
|
|
9,822 |
|
|
|
|
|
|
Other intangible assets, net |
|
|
4,604 |
|
|
|
|
|
|
|
|
4,625 |
|
|
|
|
|
|
Other assets |
|
|
48,655 |
|
|
|
|
|
|
|
|
41,894 |
|
|
|
|
|
|
Average total assets |
|
$ |
1,540,423 |
|
|
|
|
|
|
|
$ |
1,438,361 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing demand |
|
$ |
247,641 |
|
|
185 |
|
0.15 |
% |
|
$ |
241,095 |
|
|
255 |
|
0.21 |
% |
Money market |
|
|
336,477 |
|
|
720 |
|
0.43 |
% |
|
|
294,869 |
|
|
669 |
|
0.46 |
% |
Savings |
|
|
137,002 |
|
|
213 |
|
0.31 |
% |
|
|
135,217 |
|
|
234 |
|
0.35 |
% |
Certificates of deposit |
|
|
145,098 |
|
|
931 |
|
1.29 |
% |
|
|
165,764 |
|
|
987 |
|
1.20 |
% |
Federal Home Loan Bank of San Francisco borrowings |
|
|
8,132 |
|
|
5 |
|
0.12 |
% |
|
|
19,448 |
|
|
247 |
|
2.56 |
% |
Other borrowings net of unamortized debt issuance costs |
|
|
9,970 |
|
|
368 |
|
7.42 |
% |
|
|
11,859 |
|
|
440 |
|
7.48 |
% |
Junior subordinated debentures |
|
|
10,310 |
|
|
151 |
|
2.95 |
% |
|
|
10,310 |
|
|
223 |
|
4.36 |
% |
Average interest- bearing
liabilities |
|
|
894,630 |
|
|
2,573 |
|
0.58 |
% |
|
|
878,562 |
|
|
3,055 |
|
0.70 |
% |
Noninterest-bearing demand |
|
|
459,241 |
|
|
|
|
|
|
|
|
383,766 |
|
|
|
|
|
|
Other liabilities |
|
|
16,974 |
|
|
|
|
|
|
|
|
17,851 |
|
|
|
|
|
|
Shareholders’ equity |
|
|
169,578 |
|
|
|
|
|
|
|
|
158,182 |
|
|
|
|
|
|
Average liabilities and
shareholders’ equity |
|
$ |
1,540,423 |
|
|
|
|
|
|
|
$ |
1,438,361 |
|
|
|
|
|
|
Net interest income and net
interest margin (4) |
|
|
|
|
$ |
26,769 |
|
3.74 |
% |
|
|
|
|
$ |
26,499 |
|
3.97 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Interest
income on loans includes deferred fees and costs of approximately
$395 thousand and $272 thousand for the six months ended June 30,
2020 and 2019, respectively. Interest income on PPP loans includes
$476 thousand of fee income for the three months ended June 30,
2020. |
(2) Loans net of
PPP includes average nonaccrual loans of $5.5 million and $11.1
million for the six months ended June 30, 2020 and 2019,
respectively. |
(3) Interest
income and yields on tax-exempt securities are not presented on a
taxable equivalent basis. |
(4) Net interest
margin is net interest income expressed as a percentage of average
interest-earning assets. Net interest income for the six months
ended June 30, 2020 and 2019 included $379 thousand and $238
thousand in accretion of the discount on the loans acquired from
Merchants Holding Company, which improved the net interest margin
by 7 and 4 basis points, respectively. Net interest income for the
six months ended June 30, 2020 included $813 thousand in interest
and fee income from PPP loans with an average balance of $66.4
million for the six months ended June 30, 2020 which decreased the
net interest margin by 6 basis points. |
(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 |
|
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For The Three Months Ended |
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
|
2020 |
|
2020 |
|
2019 |
|
2019 |
|
2019 |
Beginning balance ALLL |
$ |
15,067 |
|
|
|
$ |
12,231 |
|
|
|
$ |
12,285 |
|
|
|
$ |
12,445 |
|
|
|
$ |
12,242 |
|
|
Provision for loan and lease
losses |
|
1,300 |
|
|
|
|
2,850 |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
Loans charged-off |
|
(356 |
) |
|
|
|
(169 |
) |
|
|
|
(174 |
) |
|
|
|
(319 |
) |
|
|
|
(659 |
) |
|
Loan loss recoveries |
|
78 |
|
|
|
|
155 |
|
|
|
|
120 |
|
|
|
|
159 |
|
|
|
|
862 |
|
|
Ending balance ALLL |
$ |
16,089 |
|
|
|
$ |
15,067 |
|
|
|
$ |
12,231 |
|
|
|
$ |
12,285 |
|
|
|
$ |
12,445 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At June 30, |
|
At March 31, |
|
At December 31, |
|
At September 30, |
|
At June 30, |
|
2020 |
|
2020 |
|
2019 |
|
2019 |
|
2019 |
Nonaccrual loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
$ |
7 |
|
|
|
$ |
39 |
|
|
|
$ |
61 |
|
|
|
$ |
139 |
|
|
|
$ |
194 |
|
|
Real estate - commercial non-owner occupied |
|
1,062 |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
10,099 |
|
|
|
|
10,690 |
|
|
Real estate - commercial owner occupied |
|
3,647 |
|
|
|
|
3,103 |
|
|
|
|
3,103 |
|
|
|
|
— |
|
|
|
|
— |
|
|
Real estate - residential - ITIN |
|
1,738 |
|
|
|
|
1,878 |
|
|
|
|
2,221 |
|
|
|
|
2,339 |
|
|
|
|
2,389 |
|
|
Real estate - residential - 1-4 family mortgage |
|
180 |
|
|
|
|
184 |
|
|
|
|
191 |
|
|
|
|
198 |
|
|
|
|
217 |
|
|
Consumer and other |
|
37 |
|
|
|
|
39 |
|
|
|
|
40 |
|
|
|
|
21 |
|
|
|
|
22 |
|
|
Total nonaccrual loans |
|
6,671 |
|
|
|
|
5,243 |
|
|
|
|
5,616 |
|
|
|
|
12,796 |
|
|
|
|
13,512 |
|
|
Accruing troubled debt
restructured loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
592 |
|
|
|
|
592 |
|
|
|
|
595 |
|
|
|
|
629 |
|
|
|
|
1,092 |
|
|
Real estate - commercial non-owner occupied |
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
791 |
|
|
Real estate - residential - ITIN |
|
3,642 |
|
|
|
|
3,891 |
|
|
|
|
3,957 |
|
|
|
|
4,072 |
|
|
|
|
4,300 |
|
|
Real estate - residential - equity lines |
|
221 |
|
|
|
|
226 |
|
|
|
|
231 |
|
|
|
|
236 |
|
|
|
|
242 |
|
|
Total accruing troubled debt
restructured loans |
|
4,455 |
|
|
|
|
4,709 |
|
|
|
|
4,783 |
|
|
|
|
4,937 |
|
|
|
|
6,425 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All other accruing impaired
loans |
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total impaired loans |
$ |
11,126 |
|
|
|
$ |
9,952 |
|
|
|
$ |
10,399 |
|
|
|
$ |
17,733 |
|
|
|
$ |
19,937 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross loans outstanding at
period end |
$ |
1,206,340 |
|
|
|
$ |
1,052,245 |
|
|
|
$ |
1,032,903 |
|
|
|
$ |
1,033,082 |
|
|
|
$ |
1,036,724 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired loans to gross loans |
|
0.92 |
|
% |
|
|
0.95 |
|
% |
|
|
1.01 |
|
% |
|
|
1.72 |
|
% |
|
|
1.92 |
|
% |
Nonaccrual loans to gross
loans |
|
0.55 |
|
% |
|
|
0.50 |
|
% |
|
|
0.54 |
|
% |
|
|
1.24 |
|
% |
|
|
1.30 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan
and lease losses as a percent of: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross loans |
|
1.33 |
|
% |
|
|
1.43 |
|
% |
|
|
1.18 |
|
% |
|
|
1.19 |
|
% |
|
|
1.20 |
|
% |
Nonaccrual loans |
|
241.18 |
|
% |
|
|
287.37 |
|
% |
|
|
217.79 |
|
% |
|
|
96.01 |
|
% |
|
|
92.10 |
|
% |
Impaired loans |
|
144.61 |
|
% |
|
|
151.40 |
|
% |
|
|
117.62 |
|
% |
|
|
69.28 |
|
% |
|
|
62.42 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 11 |
|
ALLOWANCE, RESERVE AND DISCOUNT - UNAUDITED |
|
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At June 30, |
|
At March 31, |
|
At December 31, |
|
At September 30, |
|
At June 30, |
|
2020 |
|
2020 |
|
2019 |
|
2019 |
|
2019 |
ALLL |
$ |
16,089 |
|
|
$ |
15,067 |
|
|
$ |
12,231 |
|
|
$ |
12,285 |
|
|
$ |
12,445 |
|
Reserve for unfunded
commitments |
|
800 |
|
|
|
695 |
|
|
|
695 |
|
|
|
695 |
|
|
|
695 |
|
Discount on acquired loans
(1) |
|
1,293 |
|
|
|
1,509 |
|
|
|
1,672 |
|
|
|
1,860 |
|
|
|
2,053 |
|
Total allowance, reserve and discount |
$ |
18,182 |
|
|
$ |
17,271 |
|
|
$ |
14,598 |
|
|
$ |
14,840 |
|
|
$ |
15,193 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross loans |
$ |
1,206,340 |
|
|
$ |
1,052,245 |
|
|
$ |
1,032,903 |
|
|
$ |
1,033,082 |
|
|
$ |
1,036,724 |
|
PPP loans |
|
162,189 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total gross loans net of PPP loans |
$ |
1,044,151 |
|
|
$ |
1,052,245 |
|
|
$ |
1,032,903 |
|
|
$ |
1,033,082 |
|
|
$ |
1,036,724 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total allowance, reserve and
discount as a percentage of total gross loans net of PPP loans |
|
1.74 |
% |
|
|
1.64 |
% |
|
|
1.41 |
% |
|
|
1.44 |
% |
|
|
1.47 |
% |
(1) Discount on
acquired loans includes fair value discount for loans acquired from
Merchants in January of 2019. |
COVID‐19 Loan Analysis
During the second quarter of 2020, we worked to proactively
monitor our loan portfolio by contacting many of our borrowers to
evaluate the impact of the pandemic on them, their businesses and
the underlying collateral for our loans. For borrowers who received
a loan payment deferral we are working with the borrowers to
evaluate the potential for further deterioration of credit quality
at the end of the deferral period.
We evaluated our commercial loan and commercial real estate loan
portfolios (86% of gross loans excluding PPP loans) to identify
those loans in industries that are most at risk or where other
information indicates the borrower may be significantly impacted by
the effects of COVID-19. The following table presents loans by
industry that are most at risk or where other information indicates
the loan or borrower may be highly impacted by COVID-19 and the
related loan modifications. The table below includes $10.1 million
and $22.4 million of SBA 7(a) (generally 75% guaranteed) loans in
the high risk and low to moderate risk categories,
respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 12 |
COVID-19 LOAN ANALYSIS - UNAUDITED |
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At June 30, 2020 |
|
Individually Analyzed Loans With a COVID-19 Risk
Of |
|
|
|
|
|
|
|
Loan Modifications |
|
|
|
|
|
|
Low and |
|
|
|
|
|
|
|
|
|
|
|
|
Low and |
|
High |
|
Moderate |
|
PPP |
|
Total |
|
High |
|
Moderate |
|
# |
|
Amount |
|
Amount |
|
Amount |
|
Amount |
|
# |
|
Amount |
|
# |
|
Amount |
CRE and C&I |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industries highly impacted by COVID-19: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail trade |
13 |
|
$ |
13,716 |
|
$ |
25,555 |
|
$ |
8,033 |
|
$ |
47,304 |
|
4 |
|
$ |
3,838 |
|
6 |
|
$ |
4,156 |
Health care and social assistance |
47 |
|
|
14,650 |
|
|
12,305 |
|
|
17,530 |
|
|
44,485 |
|
14 |
|
|
7,281 |
|
8 |
|
|
4,741 |
Hotels, motels and bed-and-breakfast inns |
17 |
|
|
34,790 |
|
|
— |
|
|
1,402 |
|
|
36,192 |
|
12 |
|
|
29,466 |
|
— |
|
|
— |
Other services |
7 |
|
|
6,438 |
|
|
18,492 |
|
|
2,874 |
|
|
27,804 |
|
3 |
|
|
4,972 |
|
5 |
|
|
2,737 |
Restaurants, bars and caterers |
20 |
|
|
10,951 |
|
|
— |
|
|
6,370 |
|
|
17,321 |
|
10 |
|
|
7,587 |
|
— |
|
|
— |
Educational services |
3 |
|
|
6,796 |
|
|
— |
|
|
2,693 |
|
|
9,489 |
|
— |
|
|
— |
|
— |
|
|
— |
Arts, entertainment and recreation |
21 |
|
|
4,362 |
|
|
— |
|
|
4,573 |
|
|
8,935 |
|
11 |
|
|
2,989 |
|
— |
|
|
— |
Other industries |
23 |
|
|
18,853 |
|
|
733,732 |
|
|
118,714 |
|
|
871,299 |
|
11 |
|
|
12,698 |
|
43 |
|
|
37,801 |
Residential, Consumer and All
Other not individually analyzed |
— |
|
|
— |
|
|
143,511 |
|
|
— |
|
|
143,511 |
|
— |
|
|
— |
|
117 |
|
|
5,007 |
Total |
151 |
|
$ |
110,556 |
|
$ |
933,595 |
|
$ |
162,189 |
|
$ |
1,206,340 |
|
65 |
|
$ |
68,831 |
|
179 |
|
$ |
54,442 |
Provision for Loan and Lease
Losses
We monitor credit quality and the general economic environment
to ensure that the ALLL is maintained at a level that is adequate
to cover estimated credit losses in the loan and lease portfolio.
Our review of ALLL adequacy utilizes both quantitative and
qualitative factors. The quantitative analysis relies on historical
loss rates which, unfortunately, are not indicative of potential
losses related to a pandemic such as we are currently experiencing
with COVID-19. In response to quantitative data deficiencies, we
have placed greater reliance on qualitative factors
(Q-Factors).
At June 30, 2020, our review of the adequacy of our allowance
for loan and lease losses (ALLL) focused on our Q-Factor for
“changes in the volume and severity of past due loans and other
similar conditions”. We considered concentrations of credit in
industries that are more likely to be significantly impacted by the
effects of COVID-19. We evaluated our C&I portfolio by NAICS
code and our CRE portfolio for concentrations of tenants and
businesses in higher risk industries or for loans with higher LTVs.
We also completed analyses on individual borrowers who may be
higher risk. After completing this work, we significantly increased
our Q-Factor for “changes in the volume and severity of past due
loans and other similar conditions”. Our ALLL methodology, adjusted
for the revised Q-Factor discussed above necessitated an ALLL of
$16.1 million at June 30, 2020, an increase of 32% compared to our
ALLL of $12.2 million at December 31, 2019. A provision for loan
and lease losses of $1.3 million was recorded during the current
quarter compared to $2.9 million in the prior quarter. There was no
provision for loan and lease loss during the same quarter a year
ago. Our ALLL as a percentage of gross loans was 1.33% as of June
30, 2020 compared to 1.20% as of June 30, 2019 and 1.43% as of
March 31, 2020. Excluding PPP loans our ALLL as a percentage of
gross loans was 1.54% as of June 30, 2020.
Management believes the Company’s ALLL is adequate at June 30,
2020. 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, 2020, the recorded investment in loans classified as
impaired totaled $11.1 million, with a corresponding specific
reserve of $270 thousand compared to impaired loans of $19.9
million with a corresponding specific reserve of $727 thousand at
June 30, 2019 and impaired loans of $10.0 million, with a
corresponding specific reserve of $318 thousand at March 31, 2020.
The increase in impaired loans during the current quarter was due
to one commercial real estate loan for $1.1 million which was
placed on nonaccrual status during the second quarter of 2020.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 13 |
TROUBLED DEBT RESTRUCTURINGS - UNAUDITED |
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At June 30, |
|
At March 31, |
|
At December 31, |
|
At September 30, |
|
At June 30, |
|
|
2020 |
|
2020 |
|
2019 |
|
2019 |
|
2019 |
Nonaccrual |
|
$ |
2,194 |
|
|
$ |
1,611 |
|
|
$ |
1,680 |
|
|
$ |
1,746 |
|
|
$ |
1,828 |
|
Accruing |
|
|
4,455 |
|
|
|
4,709 |
|
|
|
4,783 |
|
|
|
4,937 |
|
|
|
6,425 |
|
Total troubled debt
restructurings |
|
$ |
6,649 |
|
|
$ |
6,320 |
|
|
$ |
6,463 |
|
|
$ |
6,683 |
|
|
$ |
8,253 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Troubled debt restructurings
as a percentage of total gross loans |
|
|
0.55 |
% |
|
|
0.60 |
% |
|
|
0.63 |
% |
|
|
0.65 |
% |
|
|
0.80 |
% |
There was one new troubled debt restructuring of a $654 thousand
commercial real estate loan during the three months ended June 30,
2020. The borrower was impacted by COVID-19 but the loan did not
qualify under the new troubled debt restructuring guidance issued
by the financial institution regulators or under the CARES act.
As of June 30, 2020, we had 97 restructured loans that
qualified as troubled debt restructurings, of which 95 were
performing according to their restructured terms.
Troubled Debt Restructuring
Guidance
Financial institution regulators and the CARES Act have changed
the treatment of short term loan modifications for borrowers
impacted by COVID-19. The change provides that modifications made
in response to COVID-19, to borrowers under certain circumstances,
should not be considered a troubled debt restructuring.
We have responded to the needs of our borrowers in accordance
with the CARES Act and regulatory guidance to grant short term
COVID-19 related loan modifications. Deferral periods are either 3
or 6 months determined on a case-by-case basis considering the
nature of the business and the impact of COVID-19. The following
table presents approved loan modification requests at June 30,
2020, only one of which meet the definition of a troubled debt
restructuring. For the loans that were modified, 26 borrowers also
received a PPP loan through our SBA department. The table also
includes 59 consumer loan modifications on loans totaling $525
thousand and 51 residential real estate loan modifications totaling
$3.5 million which are serviced by third parties as part of our
purchased loan portfolios.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 14 |
COVID-19 LOAN MODIFICATIONS - UNAUDITED |
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At June 30, 2020 |
|
|
|
Commercial |
|
Residential |
|
|
|
|
|
|
Commercial |
|
Real Estate |
|
Real Estate |
|
Consumer |
|
Total |
Approved |
$ |
14,033 |
|
$ |
102,061 |
|
$ |
6,623 |
|
$ |
556 |
|
$ |
123,273 |
Total |
$ |
14,033 |
|
$ |
102,061 |
|
$ |
6,623 |
|
$ |
556 |
|
$ |
123,273 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of contracts
approved |
|
44 |
|
|
81 |
|
|
58 |
|
|
61 |
|
|
244 |
Total |
|
44 |
|
|
81 |
|
|
58 |
|
|
61 |
|
|
244 |
The following table presents nonperforming assets at the dates
indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 15 |
NONPERFORMING ASSETS - UNAUDITED |
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At June 30, |
|
At March 31, |
|
At December 31, |
|
At September 30, |
|
At June 30, |
|
|
2020 |
|
2020 |
|
2019 |
|
2019 |
|
2019 |
Total nonaccrual loans |
|
$ |
6,671 |
|
|
$ |
5,243 |
|
|
$ |
5,616 |
|
|
$ |
12,796 |
|
|
$ |
13,512 |
|
90 days past due and still
accruing |
|
|
— |
|
|
|
2 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total nonperforming loans |
|
|
6,671 |
|
|
|
5,245 |
|
|
|
5,616 |
|
|
|
12,796 |
|
|
|
13,512 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other real estate owned
("OREO") |
|
|
8 |
|
|
|
8 |
|
|
|
35 |
|
|
|
58 |
|
|
|
— |
|
Total nonperforming
assets |
|
$ |
6,679 |
|
|
$ |
5,253 |
|
|
$ |
5,651 |
|
|
$ |
12,854 |
|
|
$ |
13,512 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonperforming loans to gross
loans |
|
|
0.55 |
% |
|
|
0.50 |
% |
|
|
0.54 |
% |
|
|
1.24 |
% |
|
|
1.30 |
% |
Nonperforming assets to total
assets |
|
|
0.39 |
% |
|
|
0.36 |
% |
|
|
0.38 |
% |
|
|
0.87 |
% |
|
|
0.94 |
% |
The following table summarizes when loans are projected to
reprice by year and rate index as of June 30, 2020.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 16 |
LOANS BY RATE INDEX AND PROJECTED REPAYMENT -
UNAUDITED |
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At June 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years 6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Through |
|
Beyond |
|
|
|
|
|
Year 1 |
|
Year 2 |
|
Year 3 |
|
Year 4 |
|
Year 5 |
|
Year 10 |
|
Year 10 |
|
Total |
Rate
Index: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed |
|
$ |
54,472 |
|
$ |
216,930 |
|
$ |
68,744 |
|
$ |
39,618 |
|
$ |
32,010 |
|
$ |
177,452 |
|
$ |
30,599 |
|
$ |
619,825 |
Variable: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prime |
|
|
80,588 |
|
|
6,026 |
|
|
7,379 |
|
|
7,416 |
|
|
8,321 |
|
|
1,264 |
|
|
— |
|
|
110,994 |
5 Year Treasury |
|
|
28,754 |
|
|
68,980 |
|
|
87,110 |
|
|
65,206 |
|
|
86,679 |
|
|
50,943 |
|
|
— |
|
|
387,672 |
7 Year Treasury |
|
|
643 |
|
|
3,221 |
|
|
4,798 |
|
|
5,661 |
|
|
365 |
|
|
13,648 |
|
|
— |
|
|
28,336 |
1 Year LIBOR |
|
|
22,373 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
22,373 |
Other Indexes |
|
|
4,821 |
|
|
1,569 |
|
|
1,156 |
|
|
550 |
|
|
9,682 |
|
|
10,390 |
|
|
698 |
|
|
28,866 |
Nonaccrual |
|
|
1,645 |
|
|
557 |
|
|
545 |
|
|
523 |
|
|
499 |
|
|
2,085 |
|
|
817 |
|
|
6,671 |
Total |
|
$ |
193,296 |
|
$ |
297,283 |
|
$ |
169,732 |
|
$ |
118,974 |
|
$ |
137,556 |
|
$ |
255,782 |
|
$ |
32,114 |
|
$ |
1,204,737 |
For variable rate loans, the following table summarizes those
that are at or above their floor rate, and those that do not
possess a contractual floor rate.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 17 |
LOAN FLOORS - UNAUDITED |
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
At June 30, 2020 |
|
|
Loans At |
|
Loans Above |
|
|
|
|
|
Floor Rate |
|
Floor Rate |
|
Total |
Variable rate loans
with floors: |
|
|
|
|
|
|
|
|
|
Prime |
|
$ |
58,041 |
|
$ |
5,532 |
|
$ |
63,573 |
5 year Treasury |
|
|
309,033 |
|
|
48,569 |
|
|
357,602 |
7 Year Treasury |
|
|
28,336 |
|
|
— |
|
|
28,336 |
1 Year LIBOR |
|
|
— |
|
|
734 |
|
|
734 |
Other Indexes |
|
|
15,137 |
|
|
1,274 |
|
|
16,411 |
|
|
$ |
410,547 |
|
$ |
56,109 |
|
|
466,656 |
|
|
|
|
|
|
|
|
|
|
Variable rate loans
without floors: |
|
|
|
|
|
|
|
|
|
Prime |
|
|
|
|
|
|
|
|
47,421 |
5 year Treasury |
|
|
|
|
|
|
|
|
30,070 |
1 Year LIBOR |
|
|
|
|
|
|
|
|
21,639 |
Other Indexes |
|
|
|
|
|
|
|
|
12,455 |
|
|
|
|
|
|
|
|
|
111,585 |
Total variable rate
loans |
|
|
|
|
|
|
|
$ |
578,241 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE
18 |
UNAUDITED
CONSOLIDATED |
BALANCE
SHEET |
(dollars in
thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At June 30, |
|
Change |
|
At March 31, |
|
|
2020 |
|
|
2019 |
|
|
$ |
|
% |
|
2020 |
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
$ |
29,630 |
|
|
$ |
21,306 |
|
|
$ |
8,324 |
|
|
39 |
|
% |
|
$ |
21,127 |
|
Interest-bearing deposits in other banks |
|
|
126,132 |
|
|
|
19,319 |
|
|
|
106,813 |
|
|
553 |
|
% |
|
|
22,813 |
|
Total cash and cash equivalents |
|
|
155,762 |
|
|
|
40,625 |
|
|
|
115,137 |
|
|
283 |
|
% |
|
|
43,940 |
|
Securities available-for-sale, at fair value |
|
|
280,200 |
|
|
|
285,819 |
|
|
|
(5,619 |
) |
|
(2 |
) |
% |
|
|
285,077 |
|
Loans, net of deferred fees and costs |
|
|
1,204,737 |
|
|
|
1,038,729 |
|
|
|
166,008 |
|
|
16 |
|
% |
|
|
1,054,374 |
|
Allowance for loan and lease losses |
|
|
(16,089 |
) |
|
|
(12,445 |
) |
|
|
(3,644 |
) |
|
(29 |
) |
% |
|
|
(15,067 |
) |
Net loans |
|
|
1,188,648 |
|
|
|
1,026,284 |
|
|
|
162,364 |
|
|
16 |
|
% |
|
|
1,039,307 |
|
Premises and equipment, net |
|
|
15,466 |
|
|
|
15,836 |
|
|
|
(370 |
) |
|
(2 |
) |
% |
|
|
15,452 |
|
Other real estate owned |
|
|
8 |
|
|
|
— |
|
|
|
8 |
|
|
— |
|
% |
|
|
8 |
|
Life insurance |
|
|
23,968 |
|
|
|
23,449 |
|
|
|
519 |
|
|
2 |
|
% |
|
|
23,824 |
|
Deferred tax asset, net |
|
|
2,645 |
|
|
|
4,791 |
|
|
|
(2,146 |
) |
|
(45 |
) |
% |
|
|
3,149 |
|
Goodwill |
|
|
11,671 |
|
|
|
11,708 |
|
|
|
(37 |
) |
|
— |
|
% |
|
|
11,671 |
|
Other intangible assets, net |
|
|
4,426 |
|
|
|
5,192 |
|
|
|
(766 |
) |
|
(15 |
) |
% |
|
|
4,618 |
|
Other assets |
|
|
29,102 |
|
|
|
28,282 |
|
|
|
820 |
|
|
3 |
|
% |
|
|
28,834 |
|
Total assets |
|
$ |
1,711,896 |
|
|
$ |
1,441,986 |
|
|
$ |
269,910 |
|
|
19 |
|
% |
|
$ |
1,455,880 |
|
Liabilities and shareholders'
equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand - noninterest-bearing |
|
$ |
521,751 |
|
|
$ |
397,349 |
|
|
$ |
124,402 |
|
|
31 |
|
% |
|
$ |
419,315 |
|
Demand - interest-bearing |
|
|
287,198 |
|
|
|
238,175 |
|
|
|
49,023 |
|
|
21 |
|
% |
|
|
231,276 |
|
Money market |
|
|
405,322 |
|
|
|
300,847 |
|
|
|
104,475 |
|
|
35 |
|
% |
|
|
314,687 |
|
Savings |
|
|
142,389 |
|
|
|
138,591 |
|
|
|
3,798 |
|
|
3 |
|
% |
|
|
133,552 |
|
Certificates of deposit |
|
|
137,647 |
|
|
|
160,556 |
|
|
|
(22,909 |
) |
|
(14 |
) |
% |
|
|
143,557 |
|
Total deposits |
|
|
1,494,307 |
|
|
|
1,235,518 |
|
|
|
258,789 |
|
|
21 |
|
% |
|
|
1,242,387 |
|
Term debt: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal Home Loan Bank of San Francisco borrowings |
|
|
10,000 |
|
|
|
— |
|
|
|
10,000 |
|
|
100 |
|
% |
|
|
10,000 |
|
Other borrowings |
|
|
10,000 |
|
|
|
10,000 |
|
|
|
— |
|
|
— |
|
% |
|
|
10,000 |
|
Unamortized debt issuance costs |
|
|
(19 |
) |
|
|
(67 |
) |
|
|
48 |
|
|
72 |
|
% |
|
|
(31 |
) |
Net term debt |
|
|
19,981 |
|
|
|
9,933 |
|
|
|
10,048 |
|
|
101 |
|
% |
|
|
19,969 |
|
Junior subordinated debentures |
|
|
10,310 |
|
|
|
10,310 |
|
|
|
— |
|
|
— |
|
% |
|
|
10,310 |
|
Other liabilities |
|
|
17,743 |
|
|
|
18,372 |
|
|
|
(629 |
) |
|
(3 |
) |
% |
|
|
17,556 |
|
Total liabilities |
|
|
1,542,341 |
|
|
|
1,274,133 |
|
|
|
268,208 |
|
|
21 |
|
% |
|
|
1,290,222 |
|
Shareholders' equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock |
|
|
58,749 |
|
|
|
72,087 |
|
|
|
(13,338 |
) |
|
(19 |
) |
% |
|
|
59,067 |
|
Retained earnings |
|
|
103,658 |
|
|
|
93,363 |
|
|
|
10,295 |
|
|
11 |
|
% |
|
|
100,644 |
|
Accumulated other comprehensive income, net of tax |
|
|
7,148 |
|
|
|
2,403 |
|
|
|
4,745 |
|
|
197 |
|
% |
|
|
5,947 |
|
Total shareholders' equity |
|
|
169,555 |
|
|
|
167,853 |
|
|
|
1,702 |
|
|
1 |
|
% |
|
|
165,658 |
|
Total liabilities and
shareholders' equity |
|
$ |
1,711,896 |
|
|
$ |
1,441,986 |
|
|
$ |
269,910 |
|
|
19 |
|
% |
|
$ |
1,455,880 |
|
Total interest-earning
assets |
|
$ |
1,600,922 |
|
|
$ |
1,340,456 |
|
|
$ |
260,466 |
|
|
19 |
|
% |
|
$ |
1,353,822 |
|
Shares outstanding |
|
|
16,739 |
|
|
|
18,214 |
|
|
|
(1,475 |
) |
|
(8 |
) |
% |
|
|
16,796 |
|
Book value per share (1) |
|
$ |
10.13 |
|
|
$ |
9.22 |
|
|
$ |
0.91 |
|
|
10 |
|
% |
|
$ |
9.86 |
|
Tangible book value per share
(1) |
|
$ |
9.17 |
|
|
$ |
8.29 |
|
|
$ |
0.88 |
|
|
11 |
|
% |
|
$ |
8.89 |
|
|
|
|
|
|
|
9 |
|
|
|
|
|
|
|
|
|
|
(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 19 |
UNAUDITED |
INCOME STATEMENT |
(dollars in thousands, except per share data) |
|
|
For The Three Months Ended |
|
For The Six Months Ended |
|
|
June 30, |
|
Change |
|
March 31, |
|
June 30, |
|
|
2020 |
|
2019 |
|
$ |
|
% |
|
2020 |
|
|
2020 |
|
|
2019 |
Interest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and fees on loans |
|
$ |
13,224 |
|
$ |
12,847 |
|
$ |
377 |
|
|
3 |
|
% |
|
$ |
12,338 |
|
|
$ |
25,562 |
|
|
$ |
24,878 |
Interest on taxable securities |
|
|
1,329 |
|
|
1,733 |
|
|
(404 |
) |
|
(23 |
) |
% |
|
|
1,582 |
|
|
|
2,911 |
|
|
|
3,497 |
Interest on tax-exempt securities |
|
|
423 |
|
|
328 |
|
|
95 |
|
|
29 |
|
% |
|
|
271 |
|
|
|
694 |
|
|
|
715 |
Interest on interest-bearing deposits in other banks |
|
|
21 |
|
|
219 |
|
|
(198 |
) |
|
(90 |
) |
% |
|
|
154 |
|
|
|
175 |
|
|
|
464 |
Total interest income |
|
|
14,997 |
|
|
15,127 |
|
|
(130 |
) |
|
(1 |
) |
% |
|
|
14,345 |
|
|
|
29,342 |
|
|
|
29,554 |
Interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest on demand deposits |
|
|
85 |
|
|
129 |
|
|
(44 |
) |
|
(34 |
) |
% |
|
|
100 |
|
|
|
185 |
|
|
|
255 |
Interest on money market |
|
|
317 |
|
|
380 |
|
|
(63 |
) |
|
(17 |
) |
% |
|
|
403 |
|
|
|
720 |
|
|
|
669 |
Interest on savings |
|
|
95 |
|
|
123 |
|
|
(28 |
) |
|
(23 |
) |
% |
|
|
118 |
|
|
|
213 |
|
|
|
234 |
Interest on certificates of deposit |
|
|
467 |
|
|
497 |
|
|
(30 |
) |
|
(6 |
) |
% |
|
|
464 |
|
|
|
931 |
|
|
|
987 |
Interest on Federal Home Loan Bank of San Francisco borrowings |
|
|
5 |
|
|
192 |
|
|
(187 |
) |
|
(97 |
) |
% |
|
|
— |
|
|
|
5 |
|
|
|
247 |
Interest on other borrowings |
|
|
184 |
|
|
201 |
|
|
(17 |
) |
|
(8 |
) |
% |
|
|
184 |
|
|
|
368 |
|
|
|
440 |
Interest on junior subordinated debentures |
|
|
61 |
|
|
110 |
|
|
(49 |
) |
|
(45 |
) |
% |
|
|
90 |
|
|
|
151 |
|
|
|
223 |
Total interest expense |
|
|
1,214 |
|
|
1,632 |
|
|
(418 |
) |
|
(26 |
) |
% |
|
|
1,359 |
|
|
|
2,573 |
|
|
|
3,055 |
Net interest income |
|
|
13,783 |
|
|
13,495 |
|
|
288 |
|
|
2 |
|
% |
|
|
12,986 |
|
|
|
26,769 |
|
|
|
26,499 |
Provision for loan and lease
losses |
|
|
1,300 |
|
|
— |
|
|
1,300 |
|
|
100 |
|
% |
|
|
2,850 |
|
|
|
4,150 |
|
|
|
— |
Net interest income after provision for loan and lease losses |
|
|
12,483 |
|
|
13,495 |
|
|
(1,012 |
) |
|
(7 |
) |
% |
|
|
10,136 |
|
|
|
22,619 |
|
|
|
26,499 |
Noninterest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service charges on deposit accounts |
|
|
152 |
|
|
187 |
|
|
(35 |
) |
|
(19 |
) |
% |
|
|
169 |
|
|
|
321 |
|
|
|
355 |
ATM and point of sale fees |
|
|
263 |
|
|
318 |
|
|
(55 |
) |
|
(17 |
) |
% |
|
|
268 |
|
|
|
531 |
|
|
|
583 |
Payroll and benefit processing fees |
|
|
143 |
|
|
157 |
|
|
(14 |
) |
|
(9 |
) |
% |
|
|
170 |
|
|
|
313 |
|
|
|
328 |
Life insurance |
|
|
148 |
|
|
155 |
|
|
(7 |
) |
|
(5 |
) |
% |
|
|
123 |
|
|
|
271 |
|
|
|
284 |
Gain on investment securities, net |
|
|
140 |
|
|
33 |
|
|
107 |
|
|
324 |
|
% |
|
|
84 |
|
|
|
224 |
|
|
|
125 |
Federal Home Loan Bank of San Francisco dividends |
|
|
36 |
|
|
124 |
|
|
(88 |
) |
|
(71 |
) |
% |
|
|
130 |
|
|
|
166 |
|
|
|
245 |
Gain (loss) on sale of OREO |
|
|
— |
|
|
18 |
|
|
(18 |
) |
|
(100 |
) |
% |
|
|
(23 |
) |
|
|
(23 |
) |
|
|
41 |
Other income (loss) |
|
|
73 |
|
|
108 |
|
|
(35 |
) |
|
(32 |
) |
% |
|
|
(29 |
) |
|
|
44 |
|
|
|
196 |
Total noninterest income |
|
|
955 |
|
|
1,100 |
|
|
(145 |
) |
|
(13 |
) |
% |
|
|
892 |
|
|
|
1,847 |
|
|
|
2,157 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 19 - CONTINUED |
UNAUDITED |
INCOME STATEMENT |
(dollars in thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For The Three Months Ended |
|
For The Six Months Ended |
|
|
June 30, |
|
Change |
|
March 31, |
|
June 30, |
|
|
2020 |
|
2019 |
|
$ |
|
% |
|
2020 |
|
2020 |
|
2019 |
Noninterest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and related benefits |
|
|
4,965 |
|
|
5,146 |
|
|
(181 |
) |
|
(4 |
) |
% |
|
|
5,887 |
|
|
10,852 |
|
|
10,875 |
Premises and equipment |
|
|
826 |
|
|
928 |
|
|
(102 |
) |
|
(11 |
) |
% |
|
|
854 |
|
|
1,680 |
|
|
1,903 |
Federal Deposit Insurance Corporation insurance premium |
|
|
90 |
|
|
95 |
|
|
(5 |
) |
|
(5 |
) |
% |
|
|
36 |
|
|
126 |
|
|
195 |
Data processing |
|
|
585 |
|
|
638 |
|
|
(53 |
) |
|
(8 |
) |
% |
|
|
531 |
|
|
1,116 |
|
|
1,214 |
Professional services |
|
|
469 |
|
|
535 |
|
|
(66 |
) |
|
(12 |
) |
% |
|
|
334 |
|
|
803 |
|
|
838 |
Telecommunications |
|
|
156 |
|
|
180 |
|
|
(24 |
) |
|
(13 |
) |
% |
|
|
171 |
|
|
327 |
|
|
353 |
Acquisition and merger |
|
|
— |
|
|
376 |
|
|
(376 |
) |
|
(100 |
) |
% |
|
|
— |
|
|
— |
|
|
2,306 |
Other expenses |
|
|
1,179 |
|
|
1,713 |
|
|
(534 |
) |
|
(31 |
) |
% |
|
|
1,970 |
|
|
3,149 |
|
|
2,850 |
Total noninterest expense |
|
|
8,270 |
|
|
9,611 |
|
|
(1,341 |
) |
|
(14 |
) |
% |
|
|
9,783 |
|
|
18,053 |
|
|
20,534 |
Income before provision for
income taxes |
|
|
5,168 |
|
|
4,984 |
|
|
184 |
|
|
4 |
|
% |
|
|
1,245 |
|
|
6,413 |
|
|
8,122 |
Provision for income taxes |
|
|
1,321 |
|
|
1,340 |
|
|
(19 |
) |
|
(1 |
) |
% |
|
|
329 |
|
|
1,650 |
|
|
2,172 |
Net income |
|
$ |
3,847 |
|
$ |
3,644 |
|
$ |
203 |
|
|
6 |
|
% |
|
$ |
916 |
|
$ |
4,763 |
|
$ |
5,950 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share -
basic |
|
$ |
0.23 |
|
$ |
0.20 |
|
$ |
0.03 |
|
|
15 |
|
% |
|
$ |
0.05 |
|
$ |
0.28 |
|
$ |
0.33 |
Weighted average shares -
basic |
|
|
16,660 |
|
|
18,134 |
|
|
(1,474 |
) |
|
(8 |
) |
% |
|
|
17,695 |
|
|
17,178 |
|
|
17,816 |
Earnings per share -
diluted |
|
$ |
0.23 |
|
$ |
0.20 |
|
$ |
0.03 |
|
|
15 |
|
% |
|
$ |
0.05 |
|
$ |
0.28 |
|
$ |
0.33 |
Weighted average shares -
diluted |
|
|
16,689 |
|
|
18,194 |
|
|
(1,505 |
) |
|
(8 |
) |
% |
|
|
17,747 |
|
|
17,217 |
|
|
17,878 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 20 |
UNAUDITED CONDENSED CONSOLIDATED |
QUARTERLY AVERAGE BALANCE SHEETS |
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For The Three Months Ended |
|
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
|
|
2020 |
|
2020 |
|
2019 |
|
2019 |
|
2019 |
Earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans |
|
$ |
1,180,915 |
|
$ |
1,033,689 |
|
$ |
1,031,702 |
|
$ |
1,029,534 |
|
$ |
1,028,187 |
Taxable securities |
|
|
211,195 |
|
|
237,405 |
|
|
245,487 |
|
|
238,601 |
|
|
249,907 |
Tax-exempt securities |
|
|
58,540 |
|
|
34,869 |
|
|
32,158 |
|
|
32,974 |
|
|
39,501 |
Interest-bearing deposits in other banks |
|
|
72,507 |
|
|
47,135 |
|
|
81,099 |
|
|
58,897 |
|
|
35,605 |
Total earning assets |
|
|
1,523,157 |
|
|
1,353,098 |
|
|
1,390,446 |
|
|
1,360,006 |
|
|
1,353,200 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
|
21,564 |
|
|
21,987 |
|
|
24,083 |
|
|
23,822 |
|
|
21,942 |
Premises and equipment,
net |
|
|
15,428 |
|
|
15,753 |
|
|
16,049 |
|
|
15,922 |
|
|
15,819 |
Goodwill |
|
|
11,671 |
|
|
11,671 |
|
|
11,671 |
|
|
11,686 |
|
|
11,720 |
Other intangible assets,
net |
|
|
4,508 |
|
|
4,701 |
|
|
4,890 |
|
|
5,083 |
|
|
5,275 |
Other assets |
|
|
50,499 |
|
|
46,809 |
|
|
45,504 |
|
|
45,925 |
|
|
42,769 |
Total assets |
|
$ |
1,626,827 |
|
$ |
1,454,019 |
|
$ |
1,492,643 |
|
$ |
1,462,444 |
|
$ |
1,450,725 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and shareholders'
equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand - noninterest-bearing |
|
$ |
497,636 |
|
$ |
420,847 |
|
$ |
428,420 |
|
$ |
405,853 |
|
$ |
379,173 |
Demand - interest-bearing |
|
|
261,907 |
|
|
233,375 |
|
|
244,276 |
|
|
243,553 |
|
|
238,840 |
Money market |
|
|
365,368 |
|
|
307,587 |
|
|
318,127 |
|
|
309,188 |
|
|
296,326 |
Savings |
|
|
138,500 |
|
|
135,504 |
|
|
138,155 |
|
|
138,296 |
|
|
139,307 |
Certificates of deposit |
|
|
142,955 |
|
|
147,241 |
|
|
153,223 |
|
|
157,620 |
|
|
164,084 |
Total deposits |
|
|
1,406,366 |
|
|
1,244,554 |
|
|
1,282,201 |
|
|
1,254,510 |
|
|
1,217,730 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal Home Loan Bank of San Francisco borrowings |
|
|
16,044 |
|
|
220 |
|
|
— |
|
|
— |
|
|
30,000 |
Other borrowings net of unamortized debt issuance costs |
|
|
9,976 |
|
|
9,963 |
|
|
9,952 |
|
|
9,942 |
|
|
10,841 |
Junior subordinated debentures |
|
|
10,310 |
|
|
10,310 |
|
|
10,310 |
|
|
10,310 |
|
|
10,310 |
Other liabilities |
|
|
17,095 |
|
|
16,852 |
|
|
17,795 |
|
|
18,074 |
|
|
18,246 |
Total liabilities |
|
|
1,459,791 |
|
|
1,281,899 |
|
|
1,320,258 |
|
|
1,292,836 |
|
|
1,287,127 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity |
|
|
167,036 |
|
|
172,120 |
|
|
172,385 |
|
|
169,608 |
|
|
163,598 |
Liabilities &
shareholders' equity |
|
$ |
1,626,827 |
|
$ |
1,454,019 |
|
$ |
1,492,643 |
|
$ |
1,462,444 |
|
$ |
1,450,725 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 21 |
UNAUDITED CONDENSED CONSOLIDATED |
YEAR TO DATE AVERAGE BALANCE SHEETS |
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended |
|
For the Twelve Months Ended |
|
|
June 30, |
|
June 30, |
|
December 31, |
|
December 31, |
|
December 31, |
|
|
2020 |
|
2019 |
|
2019 |
|
2018 |
|
2017 |
Earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans |
|
$ |
1,107,302 |
|
$ |
1,010,821 |
|
$ |
1,020,801 |
|
$ |
915,360 |
|
$ |
818,119 |
Taxable securities |
|
|
224,300 |
|
|
251,479 |
|
|
246,723 |
|
|
207,407 |
|
|
165,333 |
Tax-exempt securities |
|
|
46,705 |
|
|
44,947 |
|
|
38,706 |
|
|
50,330 |
|
|
74,231 |
Interest-bearing deposits in other banks |
|
|
59,820 |
|
|
37,930 |
|
|
54,095 |
|
|
47,038 |
|
|
66,872 |
Total earning assets |
|
|
1,438,127 |
|
|
1,345,177 |
|
|
1,360,325 |
|
|
1,220,135 |
|
|
1,124,555 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
|
21,775 |
|
|
21,640 |
|
|
22,806 |
|
|
20,468 |
|
|
18,301 |
Premises and equipment,
net |
|
|
15,591 |
|
|
15,203 |
|
|
15,598 |
|
|
13,952 |
|
|
15,567 |
Goodwill |
|
|
11,671 |
|
|
9,822 |
|
|
10,758 |
|
|
665 |
|
|
665 |
Other intangible assets,
net |
|
|
4,604 |
|
|
4,625 |
|
|
4,807 |
|
|
1,252 |
|
|
1,471 |
Other assets |
|
|
48,655 |
|
|
41,894 |
|
|
43,818 |
|
|
32,369 |
|
|
37,692 |
Total assets |
|
$ |
1,540,423 |
|
$ |
1,438,361 |
|
$ |
1,458,112 |
|
$ |
1,288,841 |
|
$ |
1,198,251 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and shareholders'
equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand - noninterest-bearing |
|
$ |
459,241 |
|
$ |
383,766 |
|
$ |
400,588 |
|
$ |
332,197 |
|
$ |
289,735 |
Demand - interest-bearing |
|
|
247,641 |
|
|
241,095 |
|
|
242,516 |
|
|
238,328 |
|
|
209,792 |
Money market |
|
|
336,477 |
|
|
294,869 |
|
|
304,340 |
|
|
250,685 |
|
|
224,913 |
Savings |
|
|
137,002 |
|
|
135,217 |
|
|
136,733 |
|
|
109,025 |
|
|
111,376 |
Certificates of deposit |
|
|
145,098 |
|
|
165,764 |
|
|
160,550 |
|
|
168,183 |
|
|
205,648 |
Total deposits |
|
|
1,325,459 |
|
|
1,220,711 |
|
|
1,244,727 |
|
|
1,098,418 |
|
|
1,041,464 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal Home Loan Bank of San Francisco borrowings |
|
|
8,132 |
|
|
19,448 |
|
|
9,644 |
|
|
22,466 |
|
|
302 |
Other borrowings net of unamortized debt issuance costs |
|
|
9,970 |
|
|
11,859 |
|
|
10,895 |
|
|
15,143 |
|
|
17,981 |
Junior subordinated debentures |
|
|
10,310 |
|
|
10,310 |
|
|
10,310 |
|
|
10,310 |
|
|
10,310 |
Other liabilities |
|
|
16,974 |
|
|
17,851 |
|
|
17,894 |
|
|
12,286 |
|
|
12,293 |
Total liabilities |
|
|
1,370,845 |
|
|
1,280,179 |
|
|
1,293,470 |
|
|
1,158,623 |
|
|
1,082,350 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity |
|
|
169,578 |
|
|
158,182 |
|
|
164,642 |
|
|
130,218 |
|
|
115,901 |
Liabilities &
shareholders' equity |
|
$ |
1,540,423 |
|
$ |
1,438,361 |
|
$ |
1,458,112 |
|
$ |
1,288,841 |
|
$ |
1,198,251 |
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 in northern California from Sacramento to Yreka
along the Interstate 5 corridor. 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
Andrea M. Newburn, Vice President and Senior Administrative
Officer / Corporate SecretaryTelephone Direct (530) 722-3959
Bank of Commerce (NASDAQ:BOCH)
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