SACRAMENTO, Calif., April 17, 2020 (GLOBE NEWSWIRE) -- Bank of Commerce Holdings (NASDAQ: BOCH) (the “Company”), a $1.456 billion asset bank holding company and parent company of Merchants Bank of Commerce (the “Bank”), today announced financial results for the quarter ended March 31, 2020. Net income for the quarter ended March 31, 2020 was $916 thousand or $0.05 per share – diluted, compared with net income of $2.3 million or $0.13 per share – diluted for the same period of 2019.

Significant Items for the first quarter of 2020:

• $2.9 million provision for loan and lease losses.
• $1.1 million in non-recurring costs.
• 1,351,922 shares of common stock repurchased.
• Initial impact of COVID-19.

Randall S. Eslick, President and CEO commented: “The current health crisis has changed our world and is impacting our company in many ways. Our employees need physical protection and work schedule flexibility, our borrowers need credit accommodation and everyone needs a little compassion. In response, we have taken many varied actions to assist borrowers, depositors, employees and our communities. Our company is stronger for these efforts and over the coming weeks and months we will continue to respond to needs and challenges as they arise.”

Financial highlights for the first quarter of 2020 compared to the same quarter a year ago:

• Net income of $916 thousand was a decrease of $1.4 million (60%) from $2.3 million earned during the same period in the prior year. Earnings of $0.05 per share – diluted was a decrease of $0.08 (62%) from $0.13 per share – diluted earned during the same period in the prior year and reflects the impact of the following:
  • $2.9 million provision for loan and lease losses for the current quarter.
  • $1.1 million in non-recurring costs for the current quarter associated with the termination of a technology management services contract and a previously announced severance agreement.
  • $1.9 million 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”).
• Net interest income decreased $18 thousand (less than 1%) to $13.0 million compared to $13.0 million for the same period in the prior year.
• Net interest margin declined to 3.86% compared to 3.94% for the same period in the prior year.
• Return on average assets decreased to 0.25% compared to 0.66% for the same period in the prior year.
• Return on average equity decreased to 2.14% compared to 6.12% for the same period in the prior year.
• Average loans totaled $1.034 billion, an increase of $40 million (4%) compared to average loans for the same period in the prior year.
• Average earning assets totaled $1.353 billion, an increase of $16 million (1%) compared to average earning assets for the same period in the prior year.
• Average deposits totaled $1.245 billion, an increase of $21 million (2%) compared to average deposits for the same period in the prior year.
  • Average non-maturing deposits totaled $1.097 billion, an increase of $41 million (4%) compared to the same period in the prior year.
  • Average certificates of deposit totaled $147.2 million, a decrease of $20.2 million (12%) compared to same period in the prior year.
• The Company’s efficiency ratio was 70.5% compared to 77.7% during the same period in the prior year.
  • The Company’s efficiency ratio of 70.5% for the first quarter of 2020 included $1.1 million in non-recurring costs. The efficiency ratio excluding these costs was 62.5%.
  • The Company’s efficiency ratio of 77.7% for the first quarter of 2019 included $1.9 million in non-recurring acquisition costs. The efficiency ratio excluding these non-recurring costs was 64.0%
• Nonperforming assets at March 31, 2020 totaled $5.3 million or 0.36% of total assets, a decrease of $9.3 million (64%) since March 31, 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 and sold in the fourth quarter of 2019.
• Book value per common share was $9.86 at March 31, 2020 compared to $8.90 at March 31, 2019.
• Tangible book value per common share was $8.89 at March 31, 2020 compared to $7.96 at March 31, 2019.

Financial highlights for the first quarter of 2020 compared to prior quarter:

• Net income of $916 thousand ($0.05 per share – diluted) was a decrease of $3.5 million (79%) from $4.4 million ($0.24 per share – diluted) earned during the prior quarter and reflects the impact of the following:
  • $2.9 million provision for loan and lease losses for the current quarter.
  • $1.1 million in non-recurring costs for the current quarter associated with the termination of a technology management services contract and a previously announced severance agreement.
• Net interest income decreased $328 thousand (2%) to $13.0 million compared to $13.3 million for the prior quarter.
• Net interest margin improved to 3.86% compared to 3.80% for the prior quarter.
• Return on average assets decreased to 0.25% compared to 1.16% for the prior quarter.
• Return on average equity decreased to 2.14% compared to 10.06% for the prior quarter.
• Average loans totaled $1.034 billion, an increase of $2 million (1% annualized) compared to average loans for the prior quarter.
• Average earning assets totaled $1.353 billion, a decrease of $37 million (11% annualized) compared the prior quarter.
• Average deposits totaled $1.245 billion, a decrease of $38 million (12% annualized) compared the prior quarter.
  • Average non-maturing deposits totaled $1.097 billion, a decrease of $32 million (11% annualized) compared to the prior quarter.
  • Average certificates of deposit totaled $147.2 million, a decrease of $6.0 million (16% annualized) compared to the prior quarter.
• The Company’s efficiency ratio was 70.5% compared to 58.7% for the prior quarter.
  • The Company’s efficiency ratio of 70.5% for the first quarter of 2020 included $1.1 million in non-recurring costs. The efficiency ratio excluding these costs was 62.5%.
• Nonperforming assets at March 31, 2020 totaled $5.3 million or 0.36% of total assets, a decrease of $400 thousand (28% annualized) since December 31, 2019.
• Book value per common share was $9.86 at March 31, 2020 compared to $9.62 at December 31, 2019.
• Tangible book value per common share was $8.89 at March 31, 2020 compared to $8.71 at December 31, 2019.

Subsequent impacts of COVID-19:

• We are participating in the federal Paycheck Protection Program (“PPP”) administered through the Small Business Administration (“SBA”). We expect to utilize liquidity provided by the Federal Reserve to fund the program. Through April 13, 2020, we had received approximately 580 loan applications for approximately $186 million and we have now stopped accepting applications. We do not expect that the growth in our assets resulting from the PPP will impact our regulatory capital ratios.
• We have not experienced any unusual pressure on our deposit balances or on our liquidity position as a result of COVID-19. Should this change, in addition to our primary sources of liquidity, the Bank has credit arrangements as disclosed in our 2019 Form 10-K that provide secondary funding sources that totaled $517.8 million.
• At March 31, 2019 our workforce totaled 216 employees of which 105 are working remotely.
• All of our branch offices remain open, although they are operating under a reduced schedule.

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.

TABLE 1
SELECTED FINANCIAL INFORMATION - UNAUDITED
(amounts in thousands except per share data)
		For The Three Months Ended
Net income, average assets and		March 31,								December 31,
average shareholders' equity		2020				2019				2019
Net income		$	916			$	2,306			$	4,369
Average total assets		$	1,454,019			$	1,425,860			$	1,492,643
Average total earning assets		$	1,353,098			$	1,337,006			$	1,390,446
Average shareholders' equity		$	172,120			$	152,705			$	172,385
Selected performance ratios
Return on average assets			0.25	%			0.66	%			1.16	%
Return on average equity			2.14	%			6.12	%			10.06	%
Efficiency ratio			70.5	%			77.7	%			58.7	%
Share and per share amounts
Weighted average shares - basic (1)			17,695				17,489				18,068
Weighted average shares - diluted (1)			17,747				17,552				18,150
Earnings per share - basic		$	0.05			$	0.13			$	0.24
Earnings per share - diluted		$	0.05			$	0.13			$	0.24
		At March 31,								At December 31,
Share and per share amounts		2020				2019				2019
Common shares outstanding (2)			16,796				18,213				18,137
Book value per common share (2)		$	9.86			$	8.90			$	9.62
Tangible book value per common share (2)(3)		$	8.89			$	7.96			$	8.71
Capital ratios (4)
Bank of Commerce Holdings
Common equity tier 1 capital ratio			12.02	%			12.40	%			13.19	%
Tier 1 capital ratio			12.85	%			13.25	%			14.04	%
Total capital ratio			14.93	%			15.19	%			15.97	%
Tier 1 leverage ratio			10.78	%			11.05	%			11.30	%
Tangible common equity ratio (5)			10.38	%			9.97	%			10.80	%
Merchants Bank of Commerce
Common equity tier 1 capital ratio			13.66	%			13.98	%			14.39	%
Tier 1 capital ratio			13.66	%			13.98	%			14.39	%
Total capital ratio			14.91	%			15.08	%			15.48	%
Tier 1 leverage ratio			11.45	%			11.66	%			11.58	%
(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 March 31, 2020, the Company had total consolidated assets of $1.456 billion, gross loans of $1.052 billion, allowance for loan and lease losses (“ALLL”) of $15 million, total deposits of $1.242 billion, and shareholders’ equity of $166 million.

TABLE 2
LOAN BALANCES BY TYPE - UNAUDITED
(amounts in thousands)
	At March 31,																				At December 31,
					% of							% of			Change											% of
	2020				Total			2019				Total			Amount				%			2019				Total
Commercial	$	138,870			13	%		$	149,575			14	%		$	(10,705	)		(7	)%		$	141,197			14	%
Real estate - construction and land development		34,394			3				30,335			3				4,059			13	%			26,830			3
Real estate - commercial non-owner occupied		514,052			49				477,798			47				36,254			8	%			493,920			48
Real estate - commercial owner occupied		217,319			21				200,349			19				16,970			8	%			218,833			21
Real estate - residential - ITIN		31,998			3				36,145			3				(4,147	)		(11	)%			33,039			3
Real estate - residential - 1-4 family mortgage		62,533			6				68,092			7				(5,559	)		(8	%			63,661			6
Real estate - residential - equity lines		23,158			2				26,162			3				(3,004	)		(11	)%			22,099			2
Consumer and other		29,921			3				46,150			4				(16,229	)		(35	)%			33,324			3
Gross loans		1,052,245			100	%			1,034,606			100	%			17,639			2	%			1,032,903			100	%
Deferred fees and costs		2,129							1,992							137							2,162
Loans, net of deferred fees and costs		1,054,374							1,036,598							17,776							1,035,065
Allowance for loan and lease losses		(15,067	)						(12,242	)						(2,825	)						(12,231	)
Net loans	$	1,039,307						$	1,024,356						$	14,951						$	1,022,834
Average loans during the quarter	$	1,033,689						$	993,261						$	40,428			4	%		$	1,031,702
Average yield on loans during the quarter		4.80	%						4.91	%						(0.11	)						4.86	%
Average yield on loans during the year		4.80	%						4.91	%						(0.11	)						4.95	%

The Company recorded gross loan balances of $1.052 billion at March 31, 2020, compared with $1.035 billion and $1.033 billion at March 31, 2019 and December 31, 2019, respectively, an increase of $18 million and $19 million, respectively.

The average yield on loans during the quarter was 4.80% compared to 4.91% and 4.86% for the quarters ended March 31, 2019 and December 31, 2019, respectively.

Gross loan balances in the table above include a net fair value discount for loans acquired from Merchants of $1.5 million, $1.7 million and $2.3 million at March 31, 2020, December 31, 2019 and March 31, 2019, respectively. We recorded $163 thousand $188 thousand and $48 thousand in accretion of the discount for these loans during the quarters ended March 31, 2020, December 31, 2019 and March 31, 2019, respectively.

TABLE 3
CASH, CASH EQUIVALENTS, AND INVESTMENT SECURITIES - UNAUDITED
(amounts in thousands)
		At March 31,																			At December 31,
					% of						% of			Change										% of
		2020			Total			2019			Total			Amount				%			2019			Total
Cash and due from banks		$	21,127		6	%		$	32,104		9	%		$	(10,977	)		(34	)%		$	21,338		6	%
Interest-bearing deposits in other banks			22,813		7				30,425		9				(7,612	)		(25	)%			59,266		16
Total cash and cash equivalents			43,940		13				62,529		18				(18,589	)		(30	)%			80,604		22
Investment securities:
U.S. government and agencies			36,043		11				46,451		13				(10,408	)		(22	)%			38,733		11
Obligations of state and political subdivisions			63,263		19				48,935		14				14,328			29	%			42,098		11
Residential mortgage backed securities and collateralized mortgage obligations			160,439		50				171,814		47				(11,375	)		(7	)%			180,835		49
Corporate securities			2,983		1				2,958		1				25			1	%			2,966		1
Commercial mortgage backed securities			17,428		5				23,864		7				(6,436	)		(27	)%			19,307		5
Other asset backed securities			4,921		1				95		—				4,826			5,080	%			3,011		1
Total investment securities - AFS			285,077		87				294,117		82				(9,040	)		(3	)%			286,950		78
Total cash, cash equivalents and investment securities		$	329,017		100	%		$	356,646		100	%		$	(27,629	)		(8	)%		$	367,554		100	%
Average yield on interest-bearing due from banks and investment securities during the quarter - nominal			2.53	%					2.83	%					(0.30	)						2.39	%
Average yield on interest-bearing due from banks and investment securities during the quarter - tax equivalent			2.62	%					2.95	%					(0.33	)						2.47	%

As of March 31, 2020, we maintained noninterest-bearing cash positions of $21.1 million and interest-bearing deposits of $22.8 million at the Federal Reserve Bank and correspondent banks.

Investment securities totaled $285.1 million at March 31, 2020, compared with $294.1 million and $287.0 million at March 31, 2019 and December 31, 2019, respectively. During the first quarter of 2020, we repositioned a portion of the Bank’s investment securities portfolio to take advantage of widening credit spreads on municipal securities. We purchased securities with a par value of $37.9 million and weighted average yield of 2.85% and sold securities with a par value of $28.6 million and weighted average yield of 2.24%. The sales resulted in net realized gains of $84 thousand for the quarter ended March 31, 2020.

Average securities balances for the quarters ended March 31, 2020, December 31, 219 and March 31, 2019 were $272.3 million, $277.6 million and $303.5 million, respectively. Weighted average yields on securities balances for those same periods were 2.74%, 2.61% and 2.87%, respectively.

At March 31, 2020, our net unrealized gains on available-for-sale investment securities were $8.4 million compared with net unrealized losses of $701 thousand and net unrealized gains of $3.7 million at March 31, 2019 and December 31, 2019, respectively. The changes in net unrealized gains / losses on the investment securities portfolio were due to changes in market interest rates.

TABLE 4
DEPOSITS BY TYPE - UNAUDITED
(amounts in thousands)
	At March 31,																			At December 31,
				% of						% of				Change									% of
	2020			Total			2019			Total			Amount				%			2019			Total
Demand - noninterest-bearing	$	419,315		34	%		$	385,696		31	%		$	33,619			9	%		$	432,680		34	%
Demand - interest-bearing		231,276		19				241,292		19				(10,016	)		(4	)%			239,258		19
Money market		314,687		25				311,853		25				2,834			1	%			307,559		24
Total demand		965,278		78				938,841		75				26,437			3	%			979,497		77
Savings		133,552		11				139,237		11				(5,685	)		(4	)%			135,888		11
Total non-maturing deposits		1,098,830		89				1,078,078		86				20,752			2	%			1,115,385		88
Certificates of deposit		143,557		11				170,216		14				(26,659	)		(16	)%			151,786		12
Total deposits	$	1,242,387		100	%		$	1,248,294		100	%		$	(5,907	)		0	%		$	1,267,171		100	%

Total deposits at March 31, 2020, decreased $6 million or less than 1% to $1.242 billion compared to March 31, 2019 and decreased $25 million or 8% annualized compared to December 31, 2019. Total non-maturing deposits increased $20.8 million or 2% compared to the same date a year ago and decreased $16.6 million or 6% annualized compared to December 31, 2019. The decrease in non-maturing deposits from December 31, 2019 to March 31, 2020 was less than the seasonal declines we have experienced during the first quarter of prior years. Certificates of deposit decreased $26.7 million thousand or 16% compared to the same date a year ago and decreased $8.2 million or 22% annualized compared to December 31, 2019.

The following table presents the average cost of interest-bearing deposits, all deposits and all interest-bearing liabilities for the periods indicated.

TABLE 5
AVERAGE COST OF FUNDS - UNAUDITED
For The Three Months Ended
	March 31,				December 31,				September 30,				June 30,				March 31,				December 31,				September 30,				June 30,
	2020				2019				2019				2019				2019				2018				2018				2018
Interest-bearing deposits		0.53	%			0.56	%			0.56	%			0.54	%			0.49	%			0.45	%			0.42	%			0.41	%
Interest-bearing deposits and noninterest-bearing demand		0.35	%			0.38	%			0.38	%			0.37	%			0.34	%			0.31	%			0.29	%			0.29	%
All interest-bearing liabilities		0.65	%			0.68	%			0.68	%			0.74	%			0.67	%			0.61	%			0.64	%			0.68	%
All interest-bearing liabilities and noninterest-bearing demand		0.43	%			0.46	%			0.46	%			0.52	%			0.46	%			0.42	%			0.45	%			0.50	%

Stock Repurchase Program

We previously announced a program to repurchase 1.5 million common shares. During the first quarter of 2020 and the fourth quarter of 2019 we repurchased 1,351,922 and 90,501 shares of common stock, respectively. The remaining 57,577 shares under the program were repurchased during the first week of April 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 6
SUMMARY INCOME STATEMENT - UNAUDITED
(amounts in thousands, except per share data)
	For The Three Months Ended
	March 31,						Change							December 31,			Change
	2020			2019			Amount				%			2019			Amount				%
Interest income	$	14,345		$	14,427		$	(82	)		(1	)%		$	14,808		$	(463	)		(3	)%
Interest expense		1,359			1,423			(64	)		(4	)%			1,494			(135	)		(9	)%
Net interest income		12,986			13,004			(18	)		0	%			13,314			(328	)		(2	)%
Provision for loan and lease losses		2,850			—			2,850			100	%			—			2,850			100	%
Noninterest income		892			1,057			(165	)		(16	)%			1,021			(129	)		(13	)%
Noninterest expense		9,783			10,923			(1,140	)		(10	)%			8,421			1,362			16	%
Income before provision for income taxes		1,245			3,138			(1,893	)		(60	)%			5,914			(4,669	)		(79	)%
Provision for income taxes		329			832			(503	)		(60	)%			1,545			(1,216	)		(79	)%
Net income	$	916		$	2,306		$	(1,390	)		(60	)%		$	4,369		$	(3,453	)		(79	)%
Earnings per share - basic	$	0.05		$	0.13		$	(0.08	)		(62	)%		$	0.24		$	(0.19	)		(79	)%
Weighted average shares - basic		17,695			17,489			206			1	%			18,068			(373	)		(2	)%
Earnings per share - diluted	$	0.05		$	0.13		$	(0.08	)		(62	)%		$	0.24		$	(0.19	)		(79	)%
Weighted average shares - diluted		17,747			17,552			195			1	%			18,150			(403	)		(2	)%
Dividends declared per common share	$	0.05		$	0.04		$	0.01			25	%		$	0.05		$	—			—	%

First Quarter of 2020 Compared With First Quarter of 2019

Net income for the first quarter of 2020 decreased $1.4 million compared to the first quarter of 2019. In the current quarter, net interest income was $18 thousand lower, provision for loan and lease losses was $2.9 million higher and noninterest income was $165 thousand lower. These decreases to pre-tax income were partially offset by noninterest expense that was $1.1 million lower and income taxes that were $503 thousand lower.

Net Interest Income

Net interest income decreased $18 thousand compared to the same period a year ago.

Interest income for the first quarter of 2020 decreased $82 thousand million or 1% to $14.3 million.

• Interest and fees on loans increased $307 thousand due to a $40.4 million increase in average loan balances partially offset by an 11 basis point decrease in the average yield on the loan portfolio.
• Interest on investment securities decreased $298 thousand due to a $31 thousand decrease in average securities balances and a 14 basis point decrease in average yield on the securities portfolio.
  
• Interest on interest-bearing deposits due from banks decreased $91 thousand due to a 116 basis point decrease in average yield that was partially offset by a $6.9 million increase in average interest-bearing deposit balances.
  

Interest expense for the first quarter of 2020 decreased $64 thousand or 5% to $1.4 million.

• Interest expense on interest-bearing deposits increased $69 thousand. Average interest-bearing demand and savings deposit balances increased $8.6 million, while average certificate of deposit balances decreased $20.2 million. The average rate paid on interest-bearing deposits decreased three basis points.
• Interest expense on FHLB borrowings decreased $55 thousand. Average FHLB borrowings were $220 thousand in the current quarter compared to $8.8 million for the same period a year ago.
• Interest expense on other term debt decreased $55 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 $23 thousand. The average rate paid on junior subordinated debentures decreased 93 basis points.

Provision for Loan and Lease Losses

Net loan loss charge-offs were only $14 thousand for the current quarter compared $50 thousand for the same period a year ago. As illustrated in Table 8 asset quality metrics improved during the three months ended March 31, 2020 when compared to the same period a year ago. However, based on our analysis of the potential economic effects of the COVID-19 we recorded a provision for loan and lease losses of $2.9 million for the first quarter of 2020. There was no provision for loan and lease losses in the first quarter of 2019. A discussion of our provision is provided following Table 8 below.

Noninterest Income

Noninterest income for the three months ended March 31, 2020 decreased $165 thousand compared to the first quarter for 2019. The decrease was primarily due to a $132 thousand loss on disposal of ATM equipment which is included in “other noninterest income”.

Noninterest Expense

Noninterest expense for the three months ended March 31, 2020 decreased $1.1 million compared to the same period a year previous. During the current quarter we recorded $700 thousand in non-recurring costs related to the termination of a technology management services contract and $414 thousand in non-recurring costs related to a severance agreement. The first quarter of 2019 included $1.9 million in non-recurring acquisition costs. Excluding the non-recurring costs in both periods, noninterest expense decreased $324 thousand for the three months ended March 31, 2020 compared to the same period a year previous. This decrease was primarily due to salary and benefit cost savings.

The Company’s efficiency ratio was 70.5% for the first quarter of 2020 (62.5% excluding $1.1 million in non-recurring costs). The ratio during the same period in 2019 was 77.7% (64.0% excluding $1.9 million of non-recurring costs).

Income Tax Provision

For the three months ended March 31, 2020, our income tax provision of $329 thousand on pre-tax income of $1.2 million was an effective tax rate of 26.4%. The tax provision for the first quarter of the prior year was $832 thousand on pre-tax income of $3.1 million for an effective rate of 26.5%.

First Quarter of 2020 Compared With Fourth Quarter of 2019

Net income for the first quarter of 2020 decreased $3.5 million compared to the fourth quarter of 2019. In the current quarter, net interest income was $328 thousand lower, provision for loan and lease losses was $2.9 million higher, noninterest income was $129 thousand lower and noninterest expense was $1.4 million higher. These changes were partially offset by a provision for income taxes that was $1.2 million lower.

Net Interest Income

Net interest income decreased $328 thousand over the prior quarter.

Interest income for the three months ended March 31, 2020 decreased $463 thousand or 3% to $14.3 million.

• Interest and fees on loans decreased $305 thousand due to a 6 basis point decrease in the average yield on the loan portfolio partially offset by a $2.0 million increase in average loan balances.
• Interest on investment securities increased $28 thousand due to a 14 basis point increase in average yield on the investment portfolio partially offset by a $5.4 million decrease in average securities balances.
• Interest on interest-bearing deposits due from banks decreased $186 thousand due to a $34.0 million decrease in average balances and a 35 basis point decrease in the average yield on interest-bearing deposits due from banks.

Interest expense for the three months ended March 31, 2020 decreased $135 thousand or 9% to $1.4 million.

• Interest expense on interest-bearing deposits decreased $129 thousand. Average interest-bearing demand and savings deposit balances decreased $24.1 million, while average certificates of deposit decreased $6.0 million. The average rate paid on interest-bearing deposits decreased by three basis points.
• Interest expense on other term debt and junior subordinated debentures decreased $6 thousand.

Provision for Loan and Lease Losses

Net loan charge offs were $14 thousand in the current quarter compared to $54 thousand in the prior quarter. As illustrated in Table 8 asset quality metrics improved during the three months ended March 31, 2020 when compared to the previous quarter. However, based on our analysis of the potential economic effects of the COVID-19 we recorded a provision for loan and lease losses of $2.9 million for the first quarter of 2020. There was no provision for loan and lease losses in the prior quarter. A discussion of our provision is provided following Table 8 below.

Noninterest Income

Noninterest income for the three months ended March 31, 2020 decreased $129 thousand, the decrease was primarily due to a $132 thousand loss on disposal of ATM equipment which is included in “other noninterest income”.

Noninterest Expense

Noninterest expense for the three months ended March 31, 2020 increased $1.4 million compared to the prior quarter. Increases in noninterest expense included:

• $700 thousand in non-recurring costs related to the termination of a technology management services contract.
• $414 thousand non-recurring costs related to a previously disclosed severance agreement.
• $441 thousand in salaries and benefits.

The Company’s efficiency ratio was 70.5% for the first quarter of 2020 (62.5% excluding $1.1 million in non-recurring costs.) compared with 58.7% for the prior quarter.

Income Tax Provision

For the three months ended March 31, 2020, our income tax provision of $329 thousand on pre-tax income of $1.2 million was an effective tax rate of 26.4%. The income tax provision for the prior quarter of $1.5 million on pre-tax income of $5.9 million was an effective tax rate of 26.1%.

Earnings Per Share

Diluted earnings per share were $0.05 for the three months ended March 31, 2020 compared with diluted earnings per share of $0.13 for the same period a year ago and diluted earnings per share of $0.24 for the prior period. Net income and weighted average shares used to calculate earnings per share – diluted are summarized in Table 6 presented earlier in this press release.

TABLE 7
NET INTEREST MARGIN - UNAUDITED
(amounts in thousands)
		For The Three Months Ended
		March 31, 2020									March 31, 2019									December 31, 2019
		Average Balance			Interest(1)			Yield / Rate (5)			Average Balance			Interest(1)			Yield / Rate (5)			Average Balance			Interest(1)			Yield / Rate (5)
Interest-earning assets:
Net loans (2)		$	1,033,689		$	12,338		4.80	%		$	993,261		$	12,031		4.91	%		$	1,031,702		$	12,643		4.86	%
Taxable securities			237,405			1,582		2.68	%			253,068			1,764		2.83	%			245,487			1,567		2.53	%
Tax-exempt securities (3)			34,869			271		3.13	%			50,454			387		3.11	%			32,158			258		3.18	%
Interest-bearing deposits in other banks			47,135			154		1.31	%			40,223			245		2.47	%			81,099			340		1.66	%
Average interest- earning assets			1,353,098			14,345		4.26	%			1,337,006			14,427		4.38	%			1,390,446			14,808		4.23	%
Cash and due from banks			21,987									21,392									24,083
Premises and equipment, net			15,753									14,581									16,049
Goodwill			11,671									7,902									11,671
Other intangible assets, net			4,701									3,970									4,890
Other assets			46,809									41,009									45,504
Average total assets		$	1,454,019								$	1,425,860								$	1,492,643
Interest-bearing liabilities:
Interest-bearing demand		$	233,375			100		0.17	%		$	243,376			126		0.21	%		$	244,276			108		0.18	%
Money market			307,587			403		0.53	%			293,396			289		0.40	%			318,127			479		0.60	%
Savings			135,504			118		0.35	%			131,081			111		0.34	%			138,155			128		0.37	%
Certificates of deposit			147,241			464		1.27	%			167,463			490		1.19	%			153,223			499		1.29	%
Federal Home Loan Bank of San Francisco borrowings			220			—		—	%			8,778			55		2.54	%			—			—		—	%
Other borrowings net of unamortized debt issuance costs			9,963			184		7.43	%			12,889			239		7.52	%			9,952			183		7.30	%
Junior subordinated debentures			10,310			90		3.51	%			10,310			113		4.44	%			10,310			97		3.73	%
Average interest- bearing liabilities			844,200			1,359		0.65	%			867,293			1,423		0.67	%			874,043			1,494		0.68	%
Noninterest-bearing demand			420,847									388,410									428,420
Other liabilities			16,852									17,452									17,795
Shareholders’ equity			172,120									152,705									172,385
Average liabilities and shareholders’ equity		$	1,454,019								$	1,425,860								$	1,492,643
Net interest income and net interest margin (4)					$	12,986		3.86	%					$	13,004		3.94	%					$	13,314		3.80	%
(1) Interest income on loans includes deferred fees and costs of approximately $257 thousand, $181 thousand, and $224 thousand for the three months ended March 31, 2020 and 2019 and December 31, 2019, respectively.
(2) Net loans includes average nonaccrual loans of $5.5 million, $8.5 million and $11.4 million for the three months ended March 31, 2020 and 2019 and December 31, 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 three months ended March 31, 2020 and 2019 and December 31, 2019 included $163 thousand, $48 thousand and $188 thousand in accretion of the discount on the loans acquired from Merchants Holding Company, which improved the net interest margin by 6, 2 and 7 basis points, respectively.
(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 8
ALLOWANCE FOR LOAN AND LEASE LOSSES ROLL FORWARD AND IMPAIRED LOAN TOTALS - UNAUDITED
(amounts in thousands)
	For The Three Months Ended
	March 31,				December 31,				September 30,					June 30,				March 31,
	2020				2019				2019					2019				2019
Beginning balance ALLL	$	12,231			$	12,285			$	12,445				$	12,242			$	12,292
Provision for loan and lease losses		2,850				—				—					—				—
Loans charged-off		(169	)			(174	)			(319	)				(659	)			(348	)
Loan loss recoveries		155				120				159					862				298
Ending balance ALLL	$	15,067			$	12,231			$	12,285				$	12,445			$	12,242
	At March 31,				At December 31,				At September 30,					At June 30,				At March 31,
	2020				2019				2019					2019				2019
Nonaccrual loans:
Commercial	$	39			$	61			$	139				$	194			$	1,018
Real estate - commercial non-owner occupied		—				—				10,099					10,690				10,878
Real estate - commercial owner occupied		3,103				3,103				—					—				—
Real estate - residential - ITIN		1,878				2,221				2,339					2,389				2,392
Real estate - residential - 1-4 family mortgage		184				191				198					217				182
Real estate - residential - equity lines		—				—				—					—				42
Consumer and other		39				40				21					22				23
Total nonaccrual loans		5,243				5,616				12,796					13,512				14,535
Accruing troubled debt restructured loans:
Commercial		592				595				629					1,092				1,187
Real estate - commercial non-owner occupied		—				—				—					791				793
Real estate - residential - ITIN		3,891				3,957				4,072					4,300				4,342
Real estate - residential - equity lines		226				231				236					242				358
Total accruing troubled debt restructured loans		4,709				4,783				4,937					6,425				6,680
All other accruing impaired loans		—				—				—					—				—
Total impaired loans	$	9,952			$	10,399			$	17,733				$	19,937			$	21,215
Gross loans outstanding at period end	$	1,052,245			$	1,032,903			$	1,033,082				$	1,036,724			$	1,034,606
Impaired loans to gross loans		0.95	%			1.01	%			1.72	%				1.92	%			2.05	%
Nonaccrual loans to gross loans		0.50	%			0.54	%			1.24	%				1.30	%			1.40	%
Allowance for loan and lease losses as a percent of:
Gross loans		1.43	%			1.18	%			1.19	%				1.20	%			1.18	%
Nonaccrual loans		287.37	%			217.79	%			96.01	%				92.10	%			84.22	%
Impaired loans		151.40	%			117.62	%			69.28	%				62.42	%			57.70	%

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 March 31, 2020, our review of the adequacy of our allowance for loan and lease losses (ALLL) focused on our Q-Factor for “changes in international, national, regional and local 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 in higher risk industries or for loans with higher LTVs. We also completed analyses on individual borrowers who may be higher risk and utilized the most current or projected economic indicators possible. After completing this work, we significantly increased our Q-Factor for “changes in international, national, regional and local conditions”. The increase, expressed as a percent, varied from 50% to 200%.

Our ALLL methodology, adjusted for the revised Q-Factor discussed above necessitated an ALLL of $15.1 million at March 31, 2020, an increase of 23% compared to our ALLL of $12.2 million at December 31, 2019. A provision for loan and lease losses of $2.9 million was recorded during the quarter. There was no provision for loan and lease loss during the prior quarter or during the same quarter a year ago. Our ALLL as a percentage of gross loans was 1.43% as of March 31, 2020 compared to 1.18% as of March 31, 2019 and December 31, 2019.

Management believes the Company’s ALLL is adequate at March 31, 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 March 31, 2020, the recorded investment in loans classified as impaired totaled $10.0 million, with a corresponding specific reserve of $318 thousand compared to impaired loans of $21.2 million with a corresponding specific reserve of $1.4 million at March 31, 2019 and impaired loans of $10.4 million, with a corresponding specific reserve of $324 thousand at December 31, 2019.

TABLE 9
TROUBLED DEBT RESTRUCTURINGS - UNAUDITED
(amounts in thousands)
		At March 31,				At December 31,				At September 30,				At June 30,				At March 31,
		2020				2019				2019				2019				2019
Nonaccrual		$	1,611			$	1,680			$	1,746			$	1,828			$	2,725
Accruing			4,709				4,783				4,937				6,425				6,680
Total troubled debt restructurings		$	6,320			$	6,463			$	6,683			$	8,253			$	9,405
Troubled debt restructurings as a percentage of total gross loans			0.60	%			0.63	%			0.65	%			0.80	%			0.91	%

There were no new troubled debt restructurings during the three months ended March 31, 2020. As of March 31, 2020, we had 97 restructured loans that qualified as troubled debt restructurings, of which 93 were performing according to their restructured terms.

TDR Guidance

On March 22, 2020, financial institution regulators released guidance in response to the COVID-19 pandemic which provided clarification on the treatment of short term loan modifications for borrowers who are, or may be, unable to meet their contractual payment obligations because of the effects of COVID-19. The guidance presented a change to the existing accounting for troubled debt restructurings (“TDR”) stating that short-term modifications made in response to COVID-19, to borrowers who are considered current, should not be considered a TDR. The guidance provided examples of short-term (six months or less) modifications including; payment deferrals, fee waivers and extensions of repayment terms. The guidance noted that institutions can presume that borrowers who were current on payments were not experiencing financial difficulties, and as such, the loans don’t meet the TDR classification criteria. The guidance also clarified that modification or deferral programs mandated by the federal or state government related to COVID-19 would not be within the scope of TDR accounting.

We are responding to the needs of our borrowers in accordance with the 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 and pending loan modification requests at March 31, 2020, none of which meet the definition of a TDR.

TABLE 10
COVID-19 LOAN MODIFICATIONS - UNAUDITED
(dollars in thousands)
	At March 31, 2020
				Commercial			Residential
	Commercial			Real Estate			Real Estate			Consumer			Total
In process	$	2,613		$	10,404		$	—		$	—		$	13,017
Approved		6,649			13,580			3,271			14			23,514
Total	$	9,262		$	23,984		$	3,271		$	14		$	36,531
Number of contracts in process		11			9			—			—			20
Number of contracts approved		13			19			4			1			37
Total		24			28			4			1			57

The following table presents nonperforming assets at the dates indicated.

TABLE 11
NONPERFORMING ASSETS - UNAUDITED
(amounts in thousands)
		At March 31,				At December 31,				At September 30,				At June 30,				At March 31,
		2020				2019				2019				2019				2019
Total nonaccrual loans		$	5,243			$	5,616			$	12,796			$	13,512			$	14,535
90 days past due and still accruing			2				—				—				—				—
Total nonperforming loans			5,245				5,616				12,796				13,512				14,535
Other real estate owned ("OREO")			8				35				58				—				34
Total nonperforming assets		$	5,253			$	5,651			$	12,854			$	13,512			$	14,569
Nonperforming loans to gross loans			0.50	%			0.54	%			1.24	%			1.30	%			1.40	%
Nonperforming assets to total assets			0.36	%			0.38	%			0.87	%			0.94	%			0.99	%

The following table summarizes when loans are projected to reprice by year and rate index as of March 31, 2020.

TABLE 12
LOANS BY RATE INDEX AND PROJECTED REPAYMENT - UNAUDITED
(amounts in thousands)
	At March 31, 2020
																Years 6
																Through			Beyond
	Year 1			Year 2			Year 3			Year 4			Year 5			Year 10			Year 10			Total
Rate Index:
Fixed	$	49,987		$	52,031		$	58,887		$	53,363		$	28,366		$	171,005		$	38,479		$	452,118
Variable:
Prime		92,700			6,103			8,011			6,263			6,987			1,604			—			121,668
5 Year Treasury		30,691			62,962			79,234			72,404			92,052			50,407			—			387,750
7 Year Treasury		773			7,776			4,831			5,690			361			13,739			—			33,170
1 Year LIBOR		21,225			—			—			—			—			—			—			21,225
Other Indexes		4,088			2,924			1,799			1,737			9,913			12,067			672			33,200
Nonaccrual		572			514			498			479			456			1,850			874			5,243
Total	$	200,036		$	132,310		$	153,260		$	139,936		$	138,135		$	250,672		$	40,025		$	1,054,374

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 13
LOAN FLOORS - UNAUDITED
(amounts in thousands)
		At March 31, 2020
		Loans At			Loans Above
		Floor Rate			Floor Rate			Total
Variable rate loans with floors:
Prime		$	63,481		$	5,280		$	68,761
5 year Treasury			302,583			50,386			352,969
7 Year Treasury			33,170			—			33,170
1 Year LIBOR			—			741			741
Other Indexes			14,299			1,287			15,586
		$	413,533		$	57,694			471,227
Variable rate loans without floors:
Prime									52,907
5 year Treasury									34,781
7 Year Treasury									—
1 Year LIBOR									20,484
Other Indexes									17,614
									125,786
Total variable rate loans									597,013
Fixed rate loans									452,118
Nonaccrual loans									5,243
Total loans								$	1,054,374

TABLE 14
UNAUDITED CONSOLIDATED
BALANCE SHEET
(amounts in thousands, except per share data)
	At March 31,								Change							At December 31,
	2020				2019				$				%			2019
Assets:
Cash and due from banks	$	21,127			$	32,104			$	(10,977	)		(34	)%		$	21,338
Interest-bearing deposits in other banks		22,813				30,425				(7,612	)		(25	)%			59,266
Total cash and cash equivalents		43,940				62,529				(18,589	)		(30	)%			80,604
Securities available-for-sale, at fair value		285,077				294,117				(9,040	)		(3	)%			286,950
Loans, net of deferred fees and costs		1,054,374				1,036,598				17,776			2	%			1,035,065
Allowance for loan and lease losses		(15,067	)			(12,242	)			(2,825	)		(23	)%			(12,231	)
Net loans		1,039,307				1,024,356				14,951			1	%			1,022,834
Premises and equipment, net		15,452				15,391				61			—	%			15,906
Other real estate owned		8				34				(26	)		(76	)%			35
Life insurance		23,824				23,294				530			2	%			23,701
Deferred tax asset, net		3,149				6,072				(2,923	)		(48	)%			4,553
Goodwill		11,671				11,710				(39	)		—	%			11,671
Other intangible assets, net		4,618				5,384				(766	)		(14	)%			4,809
Other assets		28,834				28,604				230			1	%			28,553
Total assets	$	1,455,880			$	1,471,491			$	(15,611	)		(1	)%		$	1,479,616
Liabilities and shareholders' equity:
Demand - noninterest-bearing	$	419,315			$	385,696			$	33,619			9	%		$	432,680
Demand - interest-bearing		231,276				241,292				(10,016	)		(4	)%			239,258
Money market		314,687				311,853				2,834			1	%			307,559
Savings		133,552				139,237				(5,685	)		(4	)%			135,888
Certificates of deposit		143,557				170,216				(26,659	)		(16	)%			151,786
Total deposits		1,242,387				1,248,294				(5,907	)		—	%			1,267,171
Term debt:
Federal Home Loan Bank of San Francisco borrowings		10,000				20,000				(10,000	)		(50	)%			—
Other borrowings		10,000				12,596				(2,596	)		(21	)%			10,000
Unamortized debt issuance costs		(31	)			(79	)			48			61	%			(43	)
Net term debt		19,969				32,517				(12,548	)		(39	)%			9,957
Junior subordinated debentures		10,310				10,310				—			—	%			10,310
Other liabilities		17,556				18,272				(716	)		(4	)%			17,700
Total liabilities		1,290,222				1,309,393				(19,171	)		(1	)%			1,305,138
Shareholders' equity:
Common stock		59,067				71,966				(12,899	)		(18	)%			71,311
Retained earnings		100,644				90,626				10,018			11	%			100,566
Accumulated other comprehensive income (loss), net of tax		5,947				(494	)			6,441			1,304	%			2,601
Total shareholders' equity		165,658				162,098				3,560			2	%			174,478
Total liabilities and shareholders' equity	$	1,455,880			$	1,471,491			$	(15,611	)		(1	)%		$	1,479,616
Total interest-earning assets	$	1,353,822			$	1,361,841			$	(8,019	)		(1	)%		$	1,377,588
Shares outstanding		16,796				18,213				(1,417	)		(8	)%			18,137
Book value per share (1)	$	9.86			$	8.90			$	0.96			11	%		$	9.62
Tangible book value per share (1)	$	8.89			$	7.96			$	0.93			12	%		$	8.71
(1)  Book value per share is computed by dividing total shareholders’ equity by shares outstanding. Tangible book value per share is computed by dividing total shareholders’ equity less goodwill and core deposit intangible, net by shares outstanding. Management believes that tangible book value per share is meaningful because it is a measure that the Company and investors commonly use to assess capital adequacy.

TABLE 15
UNAUDITED
INCOME STATEMENT
(amounts in thousands, except per share data)
		For The Three Months Ended
		March 31,							Change							December 31,
		2020				2019			$				%			2019
Interest income:
Interest and fees on loans		$	12,338			$	12,031		$	307			3	%		$	12,643
Interest on taxable securities			1,582				1,764			(182	)		(10	)%			1,567
Interest on tax-exempt securities			271				387			(116	)		(30	)%			258
Interest on interest-bearing deposits in other banks			154				245			(91	)		(37	)%			340
Total interest income			14,345				14,427			(82	)		(1	)%			14,808
Interest expense:
Interest on demand deposits			100				126			(26	)		(21	)%			108
Interest on money market			403				289			114			39	%			479
Interest on savings			118				111			7			6	%			128
Interest on certificates of deposit			464				490			(26	)		(5	)%			499
Interest on Federal Home Loan Bank of San Francisco borrowings			—				55			(55	)		(100	)%			—
Interest on other borrowings			184				239			(55	)		(23	)%			183
Interest on junior subordinated debentures			90				113			(23	)		(20	)%			97
Total interest expense			1,359				1,423			(64	)		(4	)%			1,494
Net interest income			12,986				13,004			(18	)		—	%			13,314
Provision for loan and lease losses			2,850				—			2,850			100	%			—
Net interest income after provision for loan and lease losses			10,136				13,004			(2,868	)		(22	)%			13,314
Noninterest income:
Service charges on deposit accounts			169				168			1			1	%			198
ATM and point of sale fees			268				265			3			1	%			282
Payroll and benefit processing fees			170				171			(1	)		(1	)%			183
Life insurance			123				129			(6	)		(5	)%			126
Gain on investment securities, net			84				92			(8	)		(9	)%			49
Federal Home Loan Bank of San Francisco dividends			130				121			9			7	%			131
(Loss) gain on sale of OREO			(23	)			23			(46	)		(200	)%			21
Other (loss) income			(29	)			88			(117	)		(133	)%			31
Total noninterest income			892				1,057			(165	)		(16	)%			1,021

TABLE 15 - CONTINUED
UNAUDITED
INCOME STATEMENT
(amounts in thousands, except per share data)
		For The Three Months Ended
		March 31,						Change							December 31,
		2020			2019			$				%			2019
Noninterest expense:
Salaries and related benefits			5,887			5,729			158			3	%			4,924
Premises and equipment			854			975			(121	)		(12	)%			916
Federal Deposit Insurance Corporation insurance premium			36			100			(64	)		(64	)%			—
Data processing			531			576			(45	)		(8	)%			739
Professional services			334			303			31			10	%			309
Telecommunications			171			173			(2	)		(1	)%			190
Acquisition and merger			—			1,930			(1,930	)		(100	)%			—
Other expenses			1,970			1,137			833			73	%			1,343
Total noninterest expense			9,783			10,923			(1,140	)		(10	)%			8,421
Income before provision for income taxes			1,245			3,138			(1,893	)		(60	)%			5,914
Provision for income taxes			329			832			(503	)		(60	)%			1,545
Net income		$	916		$	2,306		$	(1,390	)		(60	)%		$	4,369
Earnings per share - basic		$	0.05		$	0.13		$	(0.08	)		(62	)%		$	0.24
Weighted average shares - basic			17,695			17,489			206			1	%			18,068
Earnings per share - diluted		$	0.05		$	0.13		$	(0.08	)		(62	)%		$	0.24
Weighted average shares - diluted			17,747			17,552			195			1	%			18,150

TABLE 16
UNAUDITED CONDENSED CONSOLIDATED
QUARTERLY AVERAGE BALANCE SHEETS
(amounts in thousands)
		For The Three Months Ended
		March 31,			December 31,			September 30,			June 30,			March 31,
		2020			2019			2019			2019			2019
Earning assets:
Loans		$	1,033,689		$	1,031,702		$	1,029,534		$	1,028,187		$	993,261
Taxable securities			237,405			245,487			238,601			249,907			253,068
Tax-exempt securities			34,869			32,158			32,974			39,501			50,454
Interest-bearing deposits in other banks			47,135			81,099			58,897			35,605			40,223
Total earning assets			1,353,098			1,390,446			1,360,006			1,353,200			1,337,006
Cash and due from banks			21,987			24,083			23,822			21,942			21,392
Premises and equipment, net			15,753			16,049			15,922			15,819			14,581
Goodwill			11,671			11,671			11,686			11,720			7,902
Other intangible assets, net			4,701			4,890			5,083			5,275			3,970
Other assets			46,809			45,504			45,925			42,769			41,009
Total assets		$	1,454,019		$	1,492,643		$	1,462,444		$	1,450,725		$	1,425,860
Liabilities and shareholders' equity:
Demand - noninterest-bearing		$	420,847		$	428,420		$	405,853		$	379,173		$	388,410
Demand - interest-bearing			233,375			244,276			243,553			238,840			243,376
Money market			307,587			318,127			309,188			296,326			293,396
Savings			135,504			138,155			138,296			139,307			131,081
Certificates of deposit			147,241			153,223			157,620			164,084			167,463
Total deposits			1,244,554			1,282,201			1,254,510			1,217,730			1,223,726
Federal Home Loan Bank of San Francisco borrowings			220			—			—			30,000			8,778
Other borrowings net of unamortized debt issuance costs			9,963			9,952			9,942			10,841			12,889
Junior subordinated debentures			10,310			10,310			10,310			10,310			10,310
Other liabilities			16,852			17,795			18,074			18,246			17,452
Total liabilities			1,281,899			1,320,258			1,292,836			1,287,127			1,273,155
Shareholders' equity			172,120			172,385			169,608			163,598			152,705
Liabilities & shareholders' equity		$	1,454,019		$	1,492,643		$	1,462,444		$	1,450,725		$	1,425,860

TABLE 17
UNAUDITED CONDENSED CONSOLIDATED
YEAR TO DATE AVERAGE BALANCE SHEETS
(amounts in thousands)
	For the Three Months Ended							For the Twelve Months Ended
		March 31,			March 31,			December 31,			December 31,			December 31,
		2020			2019			2019			2018			2017
Earning assets:
Loans		$	1,033,689		$	993,261		$	1,020,801		$	915,360		$	818,119
Taxable securities			237,405			253,068			246,723			207,407			165,333
Tax-exempt securities			34,869			50,454			38,706			50,330			74,231
Interest-bearing deposits in other banks			47,135			40,223			54,095			47,038			66,872
Total earning assets			1,353,098			1,337,006			1,360,325			1,220,135			1,124,555
Cash and due from banks			21,987			21,392			22,806			20,468			18,301
Premises and equipment, net			15,753			14,581			15,598			13,952			15,567
Goodwill			11,671			7,902			10,758			665			665
Other intangible assets, net			4,701			3,970			4,807			1,252			1,471
Other assets			46,809			41,009			43,818			32,369			37,692
Total assets		$	1,454,019		$	1,425,860		$	1,458,112		$	1,288,841		$	1,198,251
Liabilities and shareholders' equity:
Demand - noninterest-bearing		$	420,847		$	388,410		$	400,588		$	332,197		$	289,735
Demand - interest-bearing			233,375			243,376			242,516			238,328			209,792
Money market			307,587			293,396			304,340			250,685			224,913
Savings			135,504			131,081			136,733			109,025			111,376
Certificates of deposit			147,241			167,463			160,550			168,183			205,648
Total deposits			1,244,554			1,223,726			1,244,727			1,098,418			1,041,464
Federal Home Loan Bank of San Francisco borrowings			220			8,778			9,644			22,466			302
Other borrowings net of unamortized debt issuance costs			9,963			12,889			10,895			15,143			17,981
Junior subordinated debentures			10,310			10,310			10,310			10,310			10,310
Other liabilities			16,852			17,452			17,894			12,286			12,293
Total liabilities			1,281,899			1,273,155			1,293,470			1,158,623			1,082,350
Shareholders' equity			172,120			152,705			164,642			130,218			115,901
Liabilities & shareholders' equity		$	1,454,019		$	1,425,860		$	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 Officer
Telephone Direct (916) 677-5800

James A. Sundquist, Executive Vice President and Chief Financial Officer
Telephone Direct (916) 677-5825

Andrea M. Newburn, Vice President and Senior Administrative Officer / Corporate Secretary
Telephone Direct (530) 722-3959