##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period fromto
 Commission file number 0-25135
 Bank of Commerce Holdings
 California
    
    94-2823865(State or jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification Number)1901 Churn Creek Road Redding, California
    
    96002(Address of principal executive offices)
    
    (Zip Code)
     þ o
  o þ
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller Reporting Company þ(Do not check if a smaller reporting company)
  o þ




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##### 



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
 Index to Form 10-Q
 PAGE NUMBERPART I
    
    FINANCIAL INFORMATIONItem 1
    
    Financial StatementsCondensed Consolidated Balance Sheets
March 31, 2010, December 31, 2009 and March 31, 2009
    
    
    3Condensed Consolidated Statements of Income
Three Months Ended March 31, 2010, December 31, 2009 and March 31, 2009
    
    
    4Condensed Consolidated Statement of Stockholders Equity
Three Months Ended March 31, 2010
    
    
    5Condensed Consolidated Statements of Cash Flows
Three Months Ended March 31, 2010 and 2009
    
    
    6Notes to Condensed Consolidated Financial Statements
    
    
    7Item 2
    
    Managements Discussion and Analysis
Of Financial Condition and Results of Operations
    
    
    23Item 3
    
    Quantitative and Qualitative Disclosure about Market Risk
    
    
    54Item 4T
    
    Controls and Procedures
    
    
    56PART II.
    
    OTHER INFORMATIONItem 1
    
    Legal Proceedings
    
    
    56Item 1a
    
    Risk Factors
    
    
    57Item 2
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    58Item 3
    
    Defaults Upon Senior Securities
    
    
    58Item 4
    
    (Removed and Reserved)
    
    
    58Item 5
    
    Other Information
    
    
    58Item 6
    
    Exhibits
    
    
    58SIGNATURE PAGE
    
    
    59EX-31.1EX-31.2EX-32
  2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Condensed Consolidated Balance Sheets
March 31, 2010 (unaudited), December 31, 2009 and March 31, 2009 (unaudited)
 March 31,
    
    
    December 31,
    
    
    March 31,Dollars in thousands
    
    2010
    
    
    2009
    
    
    2009ASSETSCash and due from banks, noninterest bearing
    
    $
    57,599
    
    
    $
    36,902
    
    
    $
    38,965Interest bearing due from banks
    
    
    32,149
    
    
    
    31,338
    
    
    
    Federal funds sold and securities purchased under
agreements to resell
    
    
    
    
    
    
    
    
    
    
    56,655Cash and cash equivalents
    
    
    89,748
    
    
    
    68,240
    
    
    
    95,620Securities available-for-sale, at fair value (including
pledged collateral of $60,130 at March 31, 2010, $55,672
at December 31, 2009 and $66,210 at March 31, 2009)
    
    
    77,571
    
    
    
    80,062
    
    
    
    105,538Portfolio Loans, net of the allowance for loan losses of
$12,197 at March 31, 2010, $11,207 at December 31, 2009
and $7,701 at March 31, 2009
    
    
    596,787
    
    
    
    590,023
    
    
    
    525,182Mortgage loans held for sale
    
    
    16,591
    
    
    
    27,288
    
    
    
    Bank premises and equipment, net
    
    
    9,975
    
    
    
    9,980
    
    
    
    10,553Goodwill
    
    
    3,727
    
    
    
    3,727
    
    
    
    Other real estate owned
    
    
    3,395
    
    
    
    2,880
    
    
    
    2,934Other assets
    
    
    32,899
    
    
    
    31,206
    
    
    
    25,509TOTAL ASSETS
    
    $
    830,693
    
    
    $
    813,406
    
    
    $
    765,336LIABILITIES AND STOCKHOLDERS EQUITYDemand  noninterest bearing
    
    $
    65,213
    
    
    $
    69,448
    
    
    $
    66,351Demand  interest bearing
    
    
    150,528
    
    
    
    163,814
    
    
    
    138,231Savings accounts
    
    
    72,756
    
    
    
    65,414
    
    
    
    72,873Certificates of deposit
    
    
    330,546
    
    
    
    341,788
    
    
    
    270,490Total deposits
    
    
    619,043
    
    
    
    640,464
    
    
    
    547,945Securities sold under agreements to repurchase
    
    
    18,820
    
    
    
    9,621
    
    
    
    10,813Federal Home Loan Bank and Federal Reserve Bank borrowings
    
    
    70,000
    
    
    
    70,000
    
    
    
    120,000Other liabilities
    
    
    9,554
    
    
    
    9,050
    
    
    
    7,716Junior subordinated debt payable to unconsolidated
subsidiary grantor trust
    
    
    15,465
    
    
    
    15,465
    
    
    
    15,465Total Liabilities
    
    
    732,882
    
    
    
    744,600
    
    
    
    701,939Commitments and contingenciesStockholders Equity:Preferred stock (liquidation preference of $1,000 per
share; issued 2008) 2,000,000 authorized; 17,000 shares
issued and outstanding on March 31, 2010, December 31,
2009, and March 31, 2009
    
    
    16,663
    
    
    
    16,641
    
    
    
    16,573Common stock , no par value, 50,000,000 shares
authorized; 15,911,495 shares issued and outstanding at
March 31, 2010, 8,711,495 issued and outstanding on
December 31, 2009 and at March 31, 2009
    
    
    38,495
    
    
    
    9,730
    
    
    
    9,679Common Stock Warrant
    
    
    449
    
    
    
    449
    
    
    
    449Retained earnings
    
    
    39,781
    
    
    
    39,004
    
    
    
    36,541Accumulated other comprehensive income, net of tax
    
    
    353
    
    
    
    657
    
    
    
    155Total Equity  Bank of Commerce Holdings
    
    
    95,741
    
    
    
    66,481
    
    
    
    63,397Non controlling interest in subsidiary
    
    
    2,070
    
    
    
    2,325
    
    
    
    Total stockholders equity
    
    
    97,811
    
    
    
    68,806
    
    
    
    63,397TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    830,693
    
    
    $
    813,406
    
    
    $
    765,336
 See accompanying notes to condensed consolidated financial statements.
 3




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Condensed Consolidated Statements of Income (Unaudited)
Three Months Ended March 31, 2010, December 31, 2009 and March 31, 2009
 For Three Months Ended:March 31,
    
    
    December 31,
    
    
    March 31,Amounts in thousands, except for per share data
    
    2010
    
    
    2009
    
    
    2009Interest income:Interest and fees on loans
    
    $
    9,051
    
    
    $
    9,184
    
    
    $
    8,049Interest on tax-exempt securities
    
    
    322
    
    
    
    311
    
    
    
    296Interest on U.S. government securities
    
    
    439
    
    
    
    676
    
    
    
    1,192Interest on federal funds sold and securities purchased under
agreements to resell
    
    
    1
    
    
    
    1
    
    
    
    25Interest on other securities
    
    
    270
    
    
    
    266
    
    
    
    117Total interest income
    
    
    10,083
    
    
    
    10,438
    
    
    
    9,679Interest expense:Interest on demand deposits
    
    
    230
    
    
    
    229
    
    
    
    307Interest on savings deposits
    
    
    219
    
    
    
    221
    
    
    
    281Interest on certificates of deposit
    
    
    1,761
    
    
    
    1,906
    
    
    
    1,881Securities sold under agreements to repurchase
    
    
    12
    
    
    
    13
    
    
    
    14Interest on FHLB and other borrowings
    
    
    136
    
    
    
    172
    
    
    
    581Interest on junior subordinated debt payable to unconsolidated
subsidiary grantor trust
    
    
    208
    
    
    
    208
    
    
    
    215Total interest expense
    
    
    2,566
    
    
    
    2,749
    
    
    
    3,279Net interest income
    
    
    7,517
    
    
    
    7,689
    
    
    
    6,400Provision for loan and lease losses
    
    
    2,250
    
    
    
    3,150
    
    
    
    1,425Net interest income after provision for loan and lease losses
    
    
    5,267
    
    
    
    4,539
    
    
    
    4,975Noninterest income:Service charges on deposit accounts
    
    
    82
    
    
    
    94
    
    
    
    92Payroll and benefit processing fees
    
    
    128
    
    
    
    105
    
    
    
    134Earnings on cash surrender value  Bank owned life insurance
    
    
    108
    
    
    
    107
    
    
    
    86Net gain on sale of securities available-for-sale
    
    
    931
    
    
    
    454
    
    
    
    404Merchant credit card service income, net
    
    
    54
    
    
    
    68
    
    
    
    74Mortgage brokerage fee income
    
    
    2,539
    
    
    
    2,112
    
    
    
    Other income
    
    
    100
    
    
    
    120
    
    
    
    75Total noninterest income
    
    
    3,942
    
    
    
    3,060
    
    
    
    865Noninterest expense:Salaries and related benefits
    
    
    3,711
    
    
    
    3,209
    
    
    
    2,127Occupancy and equipment expense
    
    
    1,110
    
    
    
    1,339
    
    
    
    572FDIC insurance premium
    
    
    251
    
    
    
    279
    
    
    
    273Data processing fees
    
    
    89
    
    
    
    51
    
    
    
    111Professional service fees
    
    
    400
    
    
    
    146
    
    
    
    159Payroll and benefit fees
    
    
    29
    
    
    
    26
    
    
    
    34Deferred compensation expense
    
    
    118
    
    
    
    118
    
    
    
    119Stationery and supplies
    
    
    80
    
    
    
    44
    
    
    
    53Postage
    
    
    42
    
    
    
    36
    
    
    
    81Directors expense
    
    
    84
    
    
    
    67
    
    
    
    37Other expenses
    
    
    1,271
    
    
    
    802
    
    
    
    394Total noninterest expense
    
    
    7,185
    
    
    
    6,117
    
    
    
    3,960Income before provision for income taxes
    
    
    2,024
    
    
    
    1,482
    
    
    
    1,880Provision for income taxes
    
    
    744
    
    
    
    43
    
    
    
    610Net Income
    
    
    1,280
    
    
    
    1,439
    
    
    
    1,270Less: Net (loss) income attributable to non-controlling interest
    
    
    (255
    )
    
    
    33
    
    
    
    Net Income attributable to Bank of Commerce Holdings
    
    $
    1,535
    
    
    $
    1,406
    
    
    $
    1,270Less: preferred dividend and accretion on preferred stock
    
    
    (235
    )
    
    
    (235
    )
    
    
    (237
    )Income available to common stockholders
    
    $
    1,300
    
    
    $
    1,171
    
    
    $
    1,033Basic earnings per share
    
    $
    0.15
    
    
    $
    0.13
    
    
    $
    0.12Weighted average shares  basic
    
    
    8,871
    
    
    
    8,711
    
    
    
    8,711Diluted earnings per share
    
    $
    0.15
    
    
    $
    0.13
    
    
    $
    0.12Weighted average shares  diluted
    
    
    8,871
    
    
    
    8,711
    
    
    
    8,711Cash dividends declared
    
    $
    0.06
    
    
    $
    0.06
    
    
    $
    0.06
 See accompanying notes to condensed consolidated financial statements.
 4




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Condensed Consolidated Statements of Stockholders Equity
Three Months Ended March 31, 2010 (Unaudited)
 Accumulated
    
    
    Subtotal
    
    
    NonOther Comp-
    
    
    Bank of
    
    
    ControllingComprehensive
    
    
    Preferred
    
    
    
    
    
    
    Common
    
    
    Stock
    
    
    Retained
    
    
    Income (Loss),
    
    
    Commerce
    
    
    Interest inDollars in Thousands
    
    Income
    
    
    Amount
    
    
    Warrant
    
    
    Shares
    
    
    Amount
    
    
    Earnings
    
    
    net of tax
    
    
    Holdings
    
    
    Subsidiary
    
    
    TotalBalance at December 31, 2009
    
    
    
    
    
    $
    16,641
    
    
    $
    449
    
    
    
    8,711,495
    
    
    $
    9,730
    
    
    $
    39,004
    
    
    $
    657
    
    
    $
    66,481
    
    
    $
    2,325
    
    
    $
    68,806Comprehensive Income:Net Income (loss)
    
    $
    1,280
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,535
    
    
    
    
    
    
    
    1,535
    
    
    
    (255
    )
    
    
    1,280Other Comprehensive Income:Unrealized gains on
securities, net of tax
    
    
    244Less: reclassification
adjustment for gains
included in net income,
net of tax
    
    
    (559
    )Total Other Comprehensive Income
    
    
    965Less: Other Comprehensive loss
non-controlling interest
    
    
    (255
    )Total Comprehensive Income  BOCH
    
    $
    1,220
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (304
    )
    
    
    (304
    )
    
    
    
    
    
    
    (304
    )Accretion on Preferred Stock
    
    
    
    
    
    
    22
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (22
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Common cash dividends ($0.06 per
share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (523
    )
    
    
    
    
    
    
    (523
    )
    
    
    
    
    
    
    (523
    )Preferred stock dividend
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (213
    )
    
    
    
    
    
    
    (213
    )
    
    
    
    
    
    
    (213
    )Compensation expense associated
with stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13
    
    
    
    
    
    
    
    
    
    
    
    13
    
    
    
    
    
    
    
    13Issuance of new shares, net of
issuance costs ($4.25 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,200,000
    
    
    
    28,752
    
    
    
    
    
    
    
    
    
    
    
    28,752
    
    
    
    
    
    
    
    28,752Balance at March 31, 2010
    
    
    
    
    
    $
    16,663
    
    
    $
    449
    
    
    
    15,911,495
    
    
    $
    38,495
    
    
    $
    39,781
    
    
    $
    353
    
    
    $
    95,741
    
    
    $
    ,2,070
    
    
    $
    97,811
 See accompanying notes to condensed consolidated financial statements.
 5




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended March 31, 2010 and 2009
 March 31,
    
    
    March 31,Dollars in thousands
    
    2010
    
    
    2009Cash flows from operating activities:Net income
    
    $
    1,280
    
    
    $
    1,270Adjustments to reconcile net income to net cash provided by operating
activities:Provision for loan and lease losses
    
    
    2,250
    
    
    
    1,425Provision for depreciation and amortization
    
    
    232
    
    
    
    260Compensation expense associated with stock options
    
    
    13
    
    
    
    29Write down of Other Real Estate Owned
    
    
    184
    
    
    
    Gross proceeds from sales of loans held for sale
    
    
    141,752
    
    
    
    Gross originations of loans held for sale
    
    
    (141,662
    )
    
    
    Gain on sale of securities available-for-sale
    
    
    (931
    )
    
    
    (404
    )Amortization of investment premiums and accretion of discounts, net
    
    
    (3
    )
    
    
    51Gain on sale of fixed assets
    
    
    (1
    )
    
    
    (Increase)/decrease in deferred income taxes
    
    
    (730
    )
    
    
    193Increase in cash surrender value of bank owned life policies
    
    
    (92
    )
    
    
    (86
    )Effect of changes in:Other assets
    
    
    (668
    )
    
    
    548Deferred compensation
    
    
    118
    
    
    
    82Deferred loan fees
    
    
    (37
    )
    
    
    11Other liabilities
    
    
    909
    
    
    
    600Net cash from operating activities
    
    
    2,614
    
    
    
    3,979Cash flows from investing activities:Proceeds from maturities and payments of available-for-sale securities
    
    
    3,015
    
    
    
    11,820Proceeds from sales of available-for-sale securities
    
    
    18,158
    
    
    
    20,379Purchases of available-for-sale securities
    
    
    (18,266
    )
    
    
    (5,631
    )Purchases of home equity loan portfolio
    
    
    (14,801
    )
    
    
    Investment in bank owned life policies
    
    
    
    
    
    
    (1,191
    )Loan origination, net of principal repayments
    
    
    15,743
    
    
    
    (7,672
    )Purchases of Bank premises and equipment, net
    
    
    (227
    )
    
    
    (140
    )Net cash from investing activities
    
    
    3,622
    
    
    
    17,565Cash flows from financing activities:Net decrease in demand deposits and savings accounts
    
    
    (10,179
    )
    
    
    (13,541
    )Net (decrease) increase in certificates of deposit
    
    
    (11,242
    )
    
    
    6,204Net increase (decrease) in securities sold under agreement to
repurchase
    
    
    9,199
    
    
    
    (3,040
    )Cash dividends paid on common stock
    
    
    (1,045
    )
    
    
    (523
    )Cash dividends paid on preferred stock
    
    
    (213
    )
    
    
    (215
    )Net proceeds from issuance of common stock
    
    
    28,752
    
    
    
    Net cash from (used in) financing activities
    
    
    15,272
    
    
    
    (11,115
    )Net increase in cash and cash equivalents
    
    
    21,508
    
    
    
    10,429Cash and cash equivalents, beginning of period
    
    
    68,240
    
    
    
    85,191Cash and cash equivalents, end of period
    
    $
    89,748
    
    
    $
    95,620Supplemental disclosures:Cash paid during the period for:Income taxes
    
    $
    400
    
    
    $
    Interest
    
    
    2,491
    
    
    
    3,318Transfer of loans to other real estate owned
    
    
    699
    
    
    
    
 See accompanying notes to condensed consolidated financial statements.
 6




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
 1. Summary of Significant Accounting Policies
    2. Business Combinations
      7




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements
  Purchase Price and Goodwill
  (In Thousands)Total consideration at fair value
    
    $
    2,465Fair value of non-controlling interest
    
    
    2,062$
    4,527Net acquisition date fair value of assets acquired
    
    
    ($800
    )Goodwill
    
    $
    3,727
   Pro-Forma Income Statement
    
    Three Months Ended March 31, 2009(In Thousands)
    
    Bank
    
    
    Mortgage
    
    
    Parent
    
    
    Intercompany
    
    
    ConsolidatedInterest income:Total interest income
    
    
    9,599
    
    
    
    
    
    
    
    103
    
    
    
    (23
    )
    
    
    9,679Interest expense:Total interest expense
    
    
    3,087
    
    
    
    19
    
    
    
    215
    
    
    
    (23
    )
    
    
    3,298Net interest income
    
    
    6,512
    
    
    
    (19
    )
    
    
    (112
    )
    
    
    
    
    
    
    6,381Provision for loan and lease losses
    
    
    1,425
    
    
    
    28
    
    
    
    
    
    
    
    
    
    
    
    1,453Net interest income after provision for loan losses
    
    
    5,087
    
    
    
    (47
    )
    
    
    (112
    )
    
    
    
    
    
    
    4,928Noninterest income:Mortgage brokerage fee income
    
    
    0
    
    
    
    1,885
    
    
    
    
    
    
    
    
    
    
    
    1,885Other noninterest income
    
    
    865
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    865Total noninterest income
    
    
    865
    
    
    
    1,885
    
    
    
    
    
    
    
    
    
    
    
    2,750Noninterest expense:Salaries and related benefits
    
    
    2,094
    
    
    
    890
    
    
    
    32
    
    
    
    
    
    
    
    3,016Occupancy and equipment expense
    
    
    572
    
    
    
    212
    
    
    
    
    
    
    
    
    
    
    
    784Other noninterest expense
    
    
    1,184
    
    
    
    524
    
    
    
    78
    
    
    
    
    
    
    
    1,786Total noninterest expense
    
    
    3,850
    
    
    
    1,626
    
    
    
    110
    
    
    
    
    
    
    
    5,586Income before provision for income taxes
    
    
    2,102
    
    
    
    212
    
    
    
    (222
    )
    
    
    
    
    
    
    2,092Provision for income taxes
    
    
    610
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    610Net Income
    
    
    1,492
    
    
    
    212
    
    
    
    (222
    )
    
    
    
    
    
    
    1,482Less: Net income attributable to non-controlling interest
    
    
    
    
    
    
    (103
    )
    
    
    
    
    
    
    
    
    
    
    (103
    )Net Income attributable to Bank of Commerce Holdings
    
    $
    1,492
    
    
    $
    109
    
    
    $
    (222
    )
    
    
    
    
    
    $
    1,379Less: Preferred dividend and accretion on preferred stock
    
    
    
    
    
    
    
    
    
    
    (237
    )
    
    
    
    
    
    
    (237
    )Income available to common shareholders
    
    $
    1,492
    
    
    $
    109
    
    
    $
    (459
    )
    
    
    =
    
    
    $
    1,142
 8




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
 3. Recent Accounting Pronouncements
 Subsequent Events (Topic 855): Amendments to Certain Recognition and
Disclosure Requirements.
 Fair Value Measurements and Disclosures (Topic 820) Improving
Disclosures about Fair Value Measurements. FASB Accounting Standards Codification
  Equity (Topic 505): Accounting for Distributions to Shareholders
with Components of Stock and Cash
 9




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
 4. Earnings per Share
  (Amounts in thousands, except per share data)
    
    Three Months EndedEarnings Per Share
    
    March 31, 2010
    
    
    March 31, 2009Basic EPS Calculation:Net income attributable to Bank of Commerce Holdings
    
    $
    1,535
    
    
    $
    1,270Less: dividend on Preferred Stock
    
    
    (213
    )
    
    
    (215
    )Less: accretion on Preferred Stock
    
    
    (22
    )
    
    
    (22
    )Numerator: Earnings available to common stockholders
    
    $
    1,300
    
    
    $
    1,033Denominator (average common shares outstanding)
    
    
    8,871
    
    
    
    8,711Basic earnings per Share
    
    $
    0.15
    
    
    $
    0.12Diluted EPS Calculation:Net income attributable to Bank of Commerce Holdings
    
    $
    1,535
    
    
    $
    1,270Less: dividend on Preferred Stock
    
    
    (213
    )
    
    
    (215
    )Less: accretion on Preferred Stock
    
    
    (22
    )
    
    
    (22
    )Numerator: Earnings available to common stockholders
    
    $
    1,300
    
    
    $
    1,033Denominator:Average common shares outstanding
    
    
    8,871
    
    
    
    8,711Plus incremental shares from assumed conversionsStock Options
    
    
    
    
    
    
    Warrants
    
    
    
    
    
    
    8,871
    
    
    
    8,711Diluted earnings per Share
    
    $
    0.15
    
    
    $
    0.12Anti-dilutive options not included in EPS Calculation
    
    
    282
    
    
    
    615Anti-dilutive warrants not included in EPS Calculation
    
    
    405
    
    
    
    405
 5. Stock Option Plans
   10




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
 6. Securities Available-for-Sale
    As of March 31, 2010(Dollars in thousands)
    
    
    
    
    
    Gross
    
    
    Gross
    
    
    EstimatedAvailable for sale securities
    
    Amortized Costs
    
    
    Unrealized Gains
    
    
    Unrealized Losses
    
    
    Fair ValueU.S. Treasury and agencies
    
    $
    19,999
    
    
    $
    41
    
    
    $
    (47
    )
    
    $
    19,993Obligations of state and political subdivisions
    
    
    34,967
    
    
    
    589
    
    
    
    (115
    )
    
    
    35,441Residential mortgage backed securities and
collateralized mortgage obligations
    
    
    19,702
    
    
    
    407
    
    
    
    (292
    )
    
    
    19,817Other asset backed securities
    
    
    2,320
    
    
    
    
    
    
    
    
    
    
    
    2,320Total
    
    $
    76,988
    
    
    $
    1,037
    
    
    $
    (454
    )
    
    $
    77,571
 As of December 31, 2009(Dollars in thousands)
    
    
    
    
    
    Gross
    
    
    Gross
    
    
    EstimatedAvailable for sale securities
    
    Amortized Costs
    
    
    Unrealized Gains
    
    
    Unrealized Losses
    
    
    Fair ValueU.S. Treasury and agencies
    
    $
    18,500
    
    
    $
    101
    
    
    $
    
    
    
    $
    18,601Obligations of state and political subdivisions
    
    
    32,184
    
    
    
    547
    
    
    
    (85
    )
    
    
    32,646Residential mortgage backed securities and
collateralized mortgage obligations
    
    
    28,278
    
    
    
    869
    
    
    
    (332
    )
    
    
    28,815Other asset backed securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    78,962
    
    
    $
    1,517
    
    
    $
    (417
    )
    
    $
    80,062
  Amortized Cost
    
    
    Estimated Fair ValueDue in one year or less
    
    $
    
    
    
    $
    Due after one year through five years
    
    
    5,220
    
    
    
    5,294Due after five years through ten years
    
    
    16,835
    
    
    
    16,888Due after ten years
    
    
    54,933
    
    
    
    55,389Total
    
    $
    76,988
    
    
    $
    77,571
  11




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
    As of March 31, 2010Less than 12 months
    
    12 months or more
    
    TotalFair
    
    Unrealized
    
    Fair
    
    Unrealized
    
    Fair
    
    Unrealized(In Thousands)
    
    Value
    
    Losses
    
    Value
    
    Losses
    
    Value
    
    LossesU.S. Treasury and agencies
    
    $
    10,020
    
    
    $
    (47
    )
    
    
    
    
    
    
    
    
    
    $
    10,020
    
    
    $
    (47
    )Obligations of state and
political subdivisions
    
    
    10,208
    
    
    
    (115
    )
    
    
    
    
    
    
    
    
    
    
    10,208
    
    
    
    (115
    )Residential mortgage
backed securities and
collateralized mortgage
    
    
    5,506
    
    
    
    (292
    )
    
    
    
    
    
    
    
    
    
    
    5,506
    
    
    
    (292
    )Total temporarily
impaired securities
    
    $
    25,734
    
    
    $
    (454
    )
    
    $
    0
    
    
    $
    0
    
    
    $
    25,734
    
    
    $
    (454
    )
 As of December 31, 2009Less than 12 months
    
    12 months or more
    
    TotalFair
    
    Unrealized
    
    Fair
    
    Unrealized
    
    Fair
    
    Unrealized(In Thousands)
    
    Value
    
    Losses
    
    Value
    
    Losses
    
    Value
    
    LossesObligations of
state and political
subdivisions
    
    
    8,517
    
    
    
    (84
    )
    
    
    500
    
    
    
    (1
    )
    
    
    9,017
    
    
    
    (85
    )Residential
mortgage backed
securities and
collateralized
mortgage
    
    
    7,516
    
    
    
    (332
    )
    
    
    
    
    
    
    
    
    
    
    7,516
    
    
    
    (332
    )Total temporarily
impaired securities
    
    $
    16,033
    
    
    $
    (416
    )
    
    $
    500
    
    
    $
    (1
    )
    
    $
    16,533
    
    
    $
    (417
    )
 U.S. Treasury and agency securities
  Obligations of state and political subdivisions
  12




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BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
  Mortgage-Backed securities
  7. Mortgages held for sale
  8. Goodwill
   9. Junior Subordinated Debt Payable to Unconsolidated Subsidiary Grantor Trust
    13




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BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
       10. Preferred Stock and Warrants
   14




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
      11. Commitments and contingent liabilities
 Lease Commitments 
 (Dollars in thousands)Operating Leases2010
    
    $
    6362011
    
    
    7752012
    
    
    6062013
    
    
    4882014
    
    
    498Thereafter
    
    
    447Total
    
    $
    3,450
 Legal Proceedings 
 15




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
 FHLB Advances 
 (In Thousands)Advance Amount
    
    Interest Rate
    
    Maturity$40,000,000
    
    0.16%
    
    4/26/2010$15,000,000
    
    0.16%
    
    5/19/2010$15,000,000
    
    0.26%
    
    3/5/2013
  FRB Advances
 Off-Balance Sheet Financial Instruments
    March 31, 2010
    
    March 31, 2009Credit CommitmentsUnfunded loan commitments
    
    $
    116,232,721
    
    
    $
    151,329,729Standby letters of credit
    
    
    4,290,307
    
    
    
    6,785,969Guaranteed commitments outstanding
    
    
    1,324,799
    
    
    
    1,350,399$
    121,847,827
    
    
    $
    159,466,097
 16




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
    12. Accounting for Income Tax and Uncertainties
   13. Fair Value Measurement
  Fair Value Hierarchy
  17




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
       (In Thousands)Recurring Basis
    
    
    
    
    
    Fair Value MeasurementsAt March 31, 2010Quoted Prices in
    
    
    Significant Other
    
    
    SignificantActive Markets For
    
    
    Observable
    
    
    UnobservableFair Value
    
    
    Identical Assets
    
    
    Inputs
    
    
    InputsDescription
    
    March 31, 2010
    
    
    Level (1)
    
    
    (Level 2)
    
    
    (Level 3)Available-for-sale securities
    
    $
    77,571,142
    
    
    $
    
    
    
    $
    77,571,142
    
    
    $
    Total assets measured at fair value
    
    $
    77,571,142
    
    
    $
    
    
    
    $
    77,571,142
    
    
    $
    LiabilitiesTotal liabilities measured at fair
value
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
 Recurring Basis
    
    
    
    
    
    Fair Value MeasurementsAt December 31, 2009Quoted Prices in
    
    
    Significant Other
    
    
    SignificantFair Value
    
    
    Active Markets For
    
    
    Observable
    
    
    UnobservableDecember 31,
    
    
    Identical Assets
    
    
    Inputs
    
    
    InputsDescription
    
    2009
    
    
    Level (1)
    
    
    (Level 2)
    
    
    (Level 3)Available for sale securities
    
    $
    80,062,136
    
    
    $
    
    
    
    $
    80,062,136
    
    
    $
    Total Assets Measured at fair value
    
    $
    80,062,136
    
    
    $
    
    
    
    $
    80,062,136
    
    
    $
    Total Liabilities Measured at fair value
    
    $
    
    
    
    
    
    
    
    $
    
 18




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
  Securities available-for-sale
 Assets and Liabilities Recorded at Fair Value on a Non Recurring Basis
  (In Thousands)Non Recurring Basis
    
    
    
    
    
    Fair Value MeasurementsAt March 31, 2010Quoted Prices in
    
    
    Significant Other
    
    
    SignificantFair Value
    
    
    Active Markets For
    
    
    Observable
    
    
    UnobservableMarch 31,
    
    
    Identical Assets
    
    
    Inputs
    
    
    InputsDescription
    
    2010
    
    
    Level (1)
    
    
    (Level 2)
    
    
    (Level 3)Impaired Loans
    
    $
    11,049,354
    
    
    $
    
    
    
    $
    
    
    
    $
    11,049,354Other real estate owned
    
    
    3,395,161
    
    
    $
    
    
    
    $
    
    
    
    
    3,395,161Total Assets Measured
at fair value
    
    $
    14,444,515
    
    
    
    
    
    
    
    
    
    
    $
    14,444,515Liabilities
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Total liabilities
measured at fair value
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
 Non Recurring Basis
    
    
    
    
    
    Fair Value MeasurementsAt December 31, 2009Quoted Prices in
    
    
    Significant Other
    
    
    SignificantActive Markets For
    
    
    Observable
    
    
    UnobservableFair Value
    
    
    Identical Assets
    
    
    Inputs
    
    
    InputsDescription
    
    Dec 31, 2009
    
    
    Level (1)
    
    
    (Level 2)
    
    
    (Level 3)Impaired Loans
    
    $
    5,278,493
    
    
    $
    
    
    
    $
    
    
    
    $
    5,278,493Other real estate owned
    
    
    2,879,956
    
    
    $
    
    
    
    $
    
    
    
    
    2,879,956Total Assets Measured
at fair value
    
    $
    8,158,449
    
    
    
    
    
    
    
    
    
    
    $
    8,158,449Liabilities
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Total liabilities
measured at fair value
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
 Impaired loans 
 19




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
  Other Real Estate Owned
 Method for determining fair values
  Cash and cash equivalents
 Loans receivable
 Mortgage Loans held for sale
 Commitments to extend credit and standby letters of credit
 Federal Home Loan Bank borrowings
 Junior subordinated debt payable to unconsolidated subsidiary grantor trust 
 Deposit liabilities
 Securities purchased under agreements to resell 
 Earn out payable 
 Limitations
 20




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
    March 31, 2010Contract
    
    Carrying(In Thousands)
    
    Amount
    
    Amount
    
    Fair ValueFinancial Assets:Cash and cash equivalents
    
    
    
    
    
    $
    89,748
    
    
    $
    89,748Portfolio Loans, net
    
    
    
    
    
    
    596,787
    
    
    
    607,243Mortgages held for sale
    
    
    
    
    
    
    16,591
    
    
    
    16,591Accrued interest on loans
    
    
    
    
    
    
    2,870
    
    
    
    2,870Accrued interest on securities
    
    
    
    
    
    
    720
    
    
    
    720Financial Liabilities:Demand and savings
    
    
    
    
    
    
    288,497
    
    
    
    288,497Fixed rate certificates
    
    
    
    
    
    
    328,860
    
    
    
    331,332Variable certificates
    
    
    
    
    
    
    1,686
    
    
    
    1,686Accrued interest on deposits and borrowings
    
    
    
    
    
    
    424
    
    
    
    424Securities sold under agreements to repurchase
    
    
    
    
    
    
    18,820
    
    
    
    18,820Federal Home Loan Borrowings
    
    
    
    
    
    
    70,000
    
    
    
    15,000Earn out payable
    
    
    
    
    
    
    965
    
    
    
    965Junior subordinated debt payable to
unconsolidated subsidiary grantor trust
    
    
    
    
    
    
    15,465
    
    
    
    15,465Off balance sheet financial instruments:
    
    $
    116,232,721Commitments to extend credit
    
    
    4,290,307Standby letters of credit
    
    
    1,324,799Guaranteed commitments outstanding
 14. Transfer of Financial Assets
   21




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
 15. Segment Reporting
    (In Thousands)
    
    Bank
    
    
    Mortgage
    
    
    Parent
    
    
    ConsolidatedNet interest income (expense)
    
    $
    7,673
    
    
    
    ($1
    )
    
    
    ($155
    )
    
    $
    7,517Provision for loan and lease losses
    
    
    2,250
    
    
    
    
    
    
    
    
    
    
    
    2,250Total noninterest income
    
    
    1,548
    
    
    
    2,394
    
    
    
    
    
    
    
    3,942Total noninterest expense
    
    
    4,408
    
    
    
    2,638
    
    
    
    139
    
    
    
    7,185Income before provision for income taxes
    
    
    2,563
    
    
    
    (245
    )
    
    
    (294
    )
    
    
    2,024Provision for income taxes
    
    
    744
    
    
    
    
    
    
    
    
    
    
    
    744Net Income
    
    
    1,819
    
    
    
    (245
    )
    
    
    (294
    )
    
    
    1,280Less: Net loss attributable to non-controlling interest
    
    
    
    
    
    
    (255
    )
    
    
    
    
    
    
    (255
    )Net Income attributable to Bank of Commerce Holdings
    
    $
    1,819
    
    
    $
    10
    
    
    $
    (294
    )
    
    $
    1,535
 Bank
    
    
    Mortgage
    
    
    Parent
    
    
    ConsolidatedTotal assets
    
    $
    815,515
    
    
    $
    12,308
    
    
    $
    2,870
    
    
    $
    830,693Total loans, gross
    
    $
    606,559
    
    
    $
    
    
    
    $
    2,425
    
    
    $
    608,984Total deposits
    
    $
    619,043
    
    
    $
    
    
    
    $
    
    
    
    $
    619,043
 16. Common Stock Offering
   17. Subsequent Events
  22




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##### Table of Contents



ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Forward Looking Statements and Risk Factors
 An investment in the Company has risk. The discussion below and elsewhere in this Report and in
other documents the Company files with the SEC incorporates various risk factors that could cause
the Companys financial results and condition to vary significantly from period to period.
Information in the accompanying financial statements contains certain forward-looking statements,
which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform
Act of 1995. We caution the investor that such statements are subject to risks and uncertainties
that could cause actual results to differ materially from those stated. These risks and
uncertainties include the Companys ability to maintain or expand its market share and net interest
margins, or to implement its marketing and growth strategies. Further, actual results may be
affected by the Companys ability to compete on price and other factors with other financial
institutions; customer acceptance of new products and services; and general trends in the banking
and the regulatory environment, as they relate to the Companys cost of funds and return on assets.
The reader is advised that this list of risks is not exhaustive and should not be construed as any
prediction by the Company as to which risks would cause actual results to differ materially from
those indicated by the forward-looking statements. Readers are cautioned not to place undue
reliance on these forward-looking statements.
 For additional information concerning risks and uncertainties related to the Company and its
operations please refer to the Companys Annual Report on Form 10-K for the year ended December 31,
2009 under the heading Risk factors that may affect results. Readers are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of the date hereof. The
Company undertakes no obligation to revise or publicly release the results of any revision to these
forward-looking statements to reflect events or circumstances after the date hereof or to reflect
the occurrence of unanticipated events.
 The following sections discuss significant changes and trends in the financial condition, capital
resources and liquidity of the Company from December 31, 2009 to March 31, 2010. Also discussed are
significant trends and changes in the Companys results of operations for the three months ended
March 31, 2010, compared to the same period in 2009. The consolidated financial statements and
related notes appearing elsewhere in this report are condensed and unaudited. The following
discussion and analysis is intended to provide greater detail of the Companys financial condition
and results.
 Company Overview
 tm tm tm tm
 ï Bank of Choice tm
 tm tm
  23




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
     Utilize the Strength of Our Management Team.
 Leverage Our Existing Foundation for Additional Growth
 Maintain Local Decision-Making and Accountability.
 Focus on Asset Quality and Strong Underwriting.
 24




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
 Build a Stable Core Deposit Base.
  Risk Factors
 Our business is subject to various economic risks that could adversely impact our results of
operations and financial condition.
   
    
    Loan delinquencies may further increase causing additional increases in our provision
and allowance for loan losses;
    
    Financial sector regulators may adopt more restrictive practices or interpretations of
existing regulations, or adopt new regulations;
    
    Collateral for loans made by the Bank, especially real estate related, may continue to
decline in value, which in turn could reduce a clients borrowing power, and reduce the
value of assets and collateral associated with our loans held for investment;
    
    Consumer confidence levels may decline and cause adverse changes in payment patterns,
resulting in increased delinquencies and default rates on loans and other credit facilities
and decreased demand for our products and services; and
    
    Performance of the underlying loans in the private label mortgage backed securities we
hold may continue to deteriorate as the recession continues, potentially causing
other-than-temporary impairment markdowns to our investment portfolio.
 Nonperforming assets take significant time to resolve and adversely affect our results of
operations and financial condition.
   25




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
  We have a concentration risk in real estate related loans.
  Monitoring and servicing our Individual Tax Identification Number (ITIN) residential mortgage
loans could prove more costly and time consuming than previously modeled.
  Future loan losses may exceed the allowance for loan losses.
  Defaults may negatively impact us.
   Interest rate fluctuations, which are out of our control, could harm profitability.
  26




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
  Changes in the fair value of our securities may reduce our stockholders equity and net income.
   Conditions in the financial markets may limit our access to additional funding to meet our
liquidity needs.
  The condition of other financial institutions could negatively affect us.
   Changes in laws, government regulation and monetary policy may have a material effect on our
results of operations.
   27




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
    Because of our participation in the Troubled Asset Relief Program we are subject to several
restrictions including, without limitation, restrictions on our ability to declare or pay dividends
and repurchase our shares as well as restrictions on compensation paid to our executives.
   Our Series A Preferred Stock diminishes the net income available to our common shareholders and
earnings per common share.
   Our holders of the Series A Preferred Stock have certain voting rights that may adversely affect
our common shareholders, and the holders of the Series A Preferred Stock may have interests
different from our common shareholders.
  28




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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
  
    
    Any authorization or issuance of shares ranking senior to the Series A Preferred Stock;
    
    Any amendments to the rights of the Series A Preferred Stock so as to adversely affect
the rights, preferences, privileges or voting power of the Series A Preferred Stock; or
    
    Consummation of any merger, share exchange or similar transaction unless the shares of
Series A Preferred Stock remain outstanding, or if we are not the surviving entity in such
transaction, are converted into or exchanged for preference securities of the surviving
entity and the shares of Series A Preferred Stock remaining outstanding or such preference
securities have the rights, preferences, privileges and voting power of the Series A
Preferred Stock.
  We rely heavily on our management team and the loss of key officers may adversely affect
operations.
       Internal control systems could fail to detect certain events.
  29




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
 Our operations could be interrupted if third party service providers experience difficulty,
terminate their services or fail to comply with banking regulations.
  Confidential customer information transmitted through the Banks online banking service is
vulnerable to security breaches and computer viruses, which could expose the Bank to litigation and
adversely affect its reputation and ability to generate deposits.
  Potential acquisitions may disrupt our business and dilute shareholder value.
    
    
    Potential exposure to unknown or contingent liabilities of the target company;
    
    Exposure to potential asset quality issues of the target company;
    
    Difficulty and expense of integrating the operations and personnel of the target
company;
    
    Potential disruption to our business;
    
    The possible loss of key employees and customers of the target company;
    
    Difficulty in estimating the value of the target company; and
    
    Potential changes in banking or tax laws or regulations that may affect the target
company.
 30




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
 We are subject to extensive regulation which could adversely affect our business.
   Higher FDIC deposit insurance premiums and assessments could adversely affect our financial
condition.
  Shares eligible for future sale could have a dilutive effect.
  Changes in accounting standards may impact how we report our financial condition and results of
operations.
  A natural disaster or recurring energy shortage, especially in California, could harm our business.
  31




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
 The price of our common stock may fluctuate significantly, and this may make it difficult for you
to resell shares of common stock owned by you at times or at prices you find attractive.
  
    
    Actual or anticipated variations in quarterly results of operations;
    
    Recommendations by securities analysts;
    
    Operating and stock price performance of other companies that investors deem comparable
to us;
    
    News reports relating to trends, concerns and other issues in the financial services
industry, including the failures of other financial institutions in the current economic
downturn;
    
    Perceptions in the marketplace regarding us and/or our competitors;
    
    Public sentiments toward the financial services and banking industry generally;
    
    New technology used, or services offered, by competitors;
    
    Significant acquisitions or business combinations, strategic partnerships, joint
ventures or capital commitments by or involving us or our competitors;
    
    Failure to integrate acquisitions or realize anticipated benefits from acquisitions;
    
    Changes in government regulations; and
    
    Geopolitical conditions such as acts or threats of terrorism or military conflicts.
  Our profitability measures could be adversely affected if we are unable to effectively deploy the
capital raised in our latest offering.
   Only a limited trading market exists for our common stock, which could lead to significant price
volatility.
  32




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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
 Anti-takeover provisions in our articles of incorporation could make a third party acquisition
of us difficult.
   There may be future sales or other dilutions of our equity which may adversely affect the market
price of our common stock.
   The holders of our preferred stock and trust preferred securities have rights that are senior to
those of our holders of common stock and that may impact our ability to pay dividends on our common
stock to our common shareholders and reduce net income available to our common shareholders.
   Our future ability to pay dividends and repurchase stock is subject to restrictions.
  33




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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
 Potential Volatility of Deposits
   Negative Publicity could Damage our Reputation
  Mortgage banking interest rate and market risk
     Mortgage banking revenue can be volatile from quarter to quarter
  34




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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
 Executive Overview
       Sources of Income
    35




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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
     36




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
 March 31, 2010
    
    
    March 31, 2009ProfitabilityReturn on average assets
    
    
    0.75
    %
    
    
    0.66
    %Return on average equity
    
    
    8.76
    %
    
    
    8.05
    %Average earning assets to total average assets
    
    
    89.51
    %
    
    
    93.80
    %Interest MarginNet interest margin
    
    
    4.12
    %
    
    
    3.55
    %Asset QualityAllowance for loan losses to total loans
    
    
    2.00
    %
    
    
    1.45
    %Nonperforming assets to total assets
    
    
    2.02
    %
    
    
    2.94
    %Net charge-offs to average loans
    
    
    0.20
    %
    
    
    0.41
    %LiquidityLoans to deposits
    
    
    98.38
    %
    
    
    97.25
    %Liquidity ratio
    
    
    49.78
    %
    
    
    43.16
    %CapitalTier 1 risk-based capital  Bank
    
    
    15.35
    %
    
    
    11.44
    %Total risk-based capital  Bank
    
    
    16.61
    %
    
    
    12.69
    %Tier 1 risk-based capital  Company
    
    
    14.90
    %
    
    
    11.45
    %Total risk-based capital  Company
    
    
    16.16
    %
    
    
    12.70
    %EfficiencyEfficiency ratio
    
    
    60.39
    %
    
    
    54.48
    %
 Financial Highlights  Results of Operations
 Balance Sheet
      37




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
   Income Statement
  Net Interest Income and Net Interest Margin
     Liquidity
  38




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
    Capital Management
        39




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
 Well
    
    
    MinimumActual
    
    
    Capitalized
    
    
    CapitalMarch 31, 2010
    
    Capital
    
    
    Ratio
    
    
    Requirement
    
    
    RequirementThe CompanyLeverage
    
    $
    109,035,988
    
    
    
    13.59
    %
    
    
    n/a
    
    
    
    4.0
    %Tier 1 Risk-Based
    
    
    109,035,988
    
    
    
    14.90
    %
    
    
    n/a
    
    
    
    4.0
    %Total Risk-Based
    
    
    118,226,009
    
    
    
    16.16
    %
    
    
    n/a
    
    
    
    8.0
    %Redding Bank of CommerceLeverage
    
    $
    102,055,282
    
    
    
    12.72
    %
    
    
    5.0
    %
    
    
    4.0
    %Tier 1 Risk-Based
    
    
    102,055,282
    
    
    
    15.35
    %
    
    
    6.0
    %
    
    
    4.0
    %Total Risk-Based
    
    
    110,418,793
    
    
    
    16.61
    %
    
    
    10.0
    %
    
    
    8.0
    %
 Short and Long Term Borrowings
   Allowance for Loan and Lease Losses
      most significant
 40




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
   Factors that may affect future results
       Critical Accounting Policies
  41




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
  General
  Preparation of financial statements
  Use of estimates
  Accounting Principles Generally Accepted in the United States of America
   Valuation of Investments and Impairment of Securities
   42




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
   Allowance for Loan and Lease Losses (ALLL)
 most significant
 critical to our financial results
    
    
    Changes in lending policies and procedures, including underwriting, collection,
charge-off and recovery practices not considered elsewhere in estimating credit losses;
    
    Changes in regional, local and business conditions and developments that affect the
collectability of loans, including the conditions of various market segments;
    
    Changes in the nature and volume of the loan portfolio and in the terms of loans;
    
    Changes in the experience, ability and depth of lending management and other relevant
staff;
    
    Changes in the volume and severity of past due loans, the volume of nonaccrual loans and
the volume and severity of adversely classified or graded loans;
    
    Changes in the quality of the Companys loan review systems or the degree of oversight
by the board of directors;
    
    Changes in the value of underlying collateral for all collateral dependent loans;
    
    The existence and effects of any concentrations of credit and changes in the level of
such concentrations;
    
    The effect of other external factors such as competition and legal and regulatory
requirements on the level of estimated credit losses;
    
    Loan loss history over the past 18 months has contributed significantly to the
percentage of loss allocations. Accordingly the loan loss history component of the
provision for loan and lease losses has been adjusted to weight toward recent history with
80% of the allocation to the last two and one half years.
 43




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
  Revenue recognition
  Income Taxes
  Mortgages Held for Sale
  Derivative Loan Commitments
  44




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
  Table 1.
 Average Balances, Interest Income/Expense and Yields/Rates Paid
(Unaudited, Dollars in thousands)
 Three Months Ended
    
    
    Three Months EndedMarch 31, 2010
    
    
    March 31, 2009Average
    
    
    
    
    
    
    Yield/
    
    
    Average
    
    
    
    
    
    
    Yield/Balance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    RateEarning AssetsPortfolio Loans1
    
    $
    616,617
    
    
    $
    9,051
    
    
    
    5.87
    %
    
    $
    524,367
    
    
    $
    8,049
    
    
    
    6.14
    %Tax-exempt Securities2
    
    
    31,055
    
    
    
    322
    
    
    
    4.15
    %
    
    
    29,304
    
    
    
    296
    
    
    
    4.04
    %US Government Securities
    
    
    19,689
    
    
    
    144
    
    
    
    2.93
    %
    
    
    11,316
    
    
    
    127
    
    
    
    4.49
    %Mortgage backed Securities
    
    
    23,058
    
    
    
    295
    
    
    
    5.12
    %
    
    
    80,263
    
    
    
    1,065
    
    
    
    5.31
    %Federal Funds Sold
    
    
    968
    
    
    
    1
    
    
    
    0.41
    %
    
    
    38,222
    
    
    
    25
    
    
    
    0.26
    %Other Securities
    
    
    38,653
    
    
    
    270
    
    
    
    2.79
    %
    
    
    37,557
    
    
    
    117
    
    
    
    1.25
    %Average Earning Assets
    
    
    730,040
    
    
    $
    10,083
    
    
    
    5.52
    %
    
    $
    721,029
    
    
    $
    9,679
    
    
    
    5.37
    %Cash & Due From Banks
    
    
    44,374
    
    
    
    
    
    
    
    
    
    
    $
    17,614Bank Premises
    
    
    9,887
    
    
    
    
    
    
    
    
    
    
    
    10,623Other Assets
    
    
    31,337
    
    
    
    
    
    
    
    
    
    
    
    19,412Average Total Assets
    
    $
    815,638
    
    
    
    
    
    
    
    
    
    
    $
    768,678Interest Bearing LiabilitiesInterest bearing demand
    
    $
    149,000
    
    
    $
    230
    
    
    
    0.62
    %
    
    $
    137,608
    
    
    $
    307
    
    
    
    0.89
    %Savings Deposits
    
    
    70,191
    
    
    
    219
    
    
    
    1.25
    %
    
    
    65,803
    
    
    
    281
    
    
    
    1.71
    %Certificates of Deposit
    
    
    338,425
    
    
    
    1,761
    
    
    
    2.08
    %
    
    
    265,296
    
    
    
    1,881
    
    
    
    2.84
    %Repurchase Agreements
    
    
    10,257
    
    
    
    12
    
    
    
    0.47
    %
    
    
    11,940
    
    
    
    14
    
    
    
    0.47
    %FHLB Borrowings
    
    
    70,000
    
    
    
    136
    
    
    
    0.78
    %
    
    
    120,000
    
    
    
    581
    
    
    
    1.94
    %Trust Preferred Borrowings
    
    
    15,465
    
    
    
    208
    
    
    
    5.38
    %
    
    
    15,000
    
    
    
    215
    
    
    
    5.73
    %Average Interest Bearing Liability
    
    
    653,338
    
    
    $
    2,566
    
    
    
    1.57
    %
    
    
    615,647
    
    
    $
    3,279
    
    
    
    2.13
    %Noninterest bearing demand
    
    
    73,217
    
    
    
    
    
    
    
    
    
    
    
    74,637Other Liabilities
    
    
    19,006
    
    
    
    
    
    
    
    
    
    
    
    5,219Stockholders Equity
    
    
    70,077
    
    
    
    
    
    
    
    
    
    
    
    73,175Average Liabilities and Stockholders
Equity
    
    $
    815,638
    
    
    
    
    
    
    
    
    
    
    $
    768,678Net Interest Income and Net Interest Margin
    
    
    
    
    
    $
    7,517
    
    
    
    4.12
    %
    
    
    
    
    
    $
    6,400
    
    
    
    3.55
    %
  
 1
    
    Average non accrual loans and average loans held for sale of $7.9 and $15.3 million are included respectively2
    
    The yield on tax-exempt securities has not been adjusted to a tax-equivalent yield basis. 45




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
  Table 2
 Analysis of Changes in Net Interest Income and Interest Expense (Unaudited)
 March 31, 2010
    
    
    Over
    
    
    March 31, 2009(Dollars in thousands)
    
    Volume
    
    
    Rate
    
    
    TotalIncrease(decrease) In Interest IncomePortfolio Loans
    
    $
    1,158
    
    
    $
    (156
    )
    
    
    1,002Tax-exempt Securities
    
    
    18
    
    
    
    8
    
    
    
    26US Government Securities
    
    
    61
    
    
    
    (44
    )
    
    
    17Mortgage Back Securities
    
    
    (732
    )
    
    
    (38
    )
    
    
    (770
    )Federal Funds Sold
    
    
    (38
    )
    
    
    14
    
    
    
    (24
    )Other Securities
    
    
    7
    
    
    
    146
    
    
    
    153Total Increase (Decrease)
    
    
    474
    
    
    
    (70
    )
    
    
    404Increase(decrease) In Interest ExpenseInterest Bearing Demand
    
    
    17
    
    
    
    (94
    )
    
    
    (77
    )Savings Deposits
    
    
    14
    
    
    
    (76
    )
    
    
    (62
    )Certificates of Deposit
    
    
    380
    
    
    
    (500
    )
    
    
    (120
    )Repurchase Agreements
    
    
    (2
    )
    
    
    
    
    
    
    (2
    )FHLB Borrowings
    
    
    (97
    )
    
    
    (348
    )
    
    
    (445
    )Trust Preferred Borrowings
    
    
    7
    
    
    
    (14
    )
    
    
    (7
    )Total Increase (Decrease)
    
    
    319
    
    
    
    (1,032
    )
    
    
    (713
    )Net Increase
    
    $
    155
    
    
    $
    962
    
    
    $
    1,117
    46




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
  Three Months Ended(Dollars in thousands)
    
    March 31, 2010
    
    
    March 31, 2009Noninterest incomeService charges on deposit accounts
    
    $
    82
    
    
    $
    92Payroll and benefit processing fees
    
    
    128
    
    
    
    134Earnings on cash surrender value -
Bank owned insurance
    
    
    108
    
    
    
    86Net gain on sale of securities
available-for-sale
    
    
    931
    
    
    
    404Net gain on transfer of financial assets
    
    
    
    
    
    
    Merchant credit card service income, net
    
    
    54
    
    
    
    74Mortgage brokerage fee income
    
    
    2,539
    
    
    
    Other Income
    
    
    100
    
    
    
    75Total Noninterest income
    
    $
    3,942
    
    
    $
    865
   Three Months Ended(Dollars in thousands)
    
    March 31, 2010
    
    
    March 31, 2009Noninterest expenseSalaries and related benefits
    
    $
    3,711
    
    
    $
    2,127Occupancy and equipment expense
    
    
    1,110
    
    
    
    572FDIC insurance premium
    
    
    251
    
    
    
    273Data processing fees
    
    
    89
    
    
    
    111Professional service fees
    
    
    400
    
    
    
    159Payroll and Benefit fees
    
    
    29
    
    
    
    34Deferred compensation expense
    
    
    118
    
    
    
    119Stationery and Supplies
    
    
    80
    
    
    
    53Postage
    
    
    42
    
    
    
    81Directors expense
    
    
    84
    
    
    
    37Other expenses
    
    
    1,271
    
    
    
    394Total Noninterest expense
    
    $
    7,185
    
    
    $
    3,960
  47




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
 Income Taxes
    (Dollars in thousands)Income Taxes
    
    March 31, 2010
    
    
    March 31, 2009Tax provision
    
    $
    744
    
    
    $
    610Effective tax rate
    
    
    32.50
    %
    
    
    32.41
    %
    March 31, 2010
    
    
    March 31, 2009Deferred Tax AssetsState Franchise taxes
    
    $
    89,433
    
    
    $
    (72,047
    )Deferred compensation
    
    
    2,391,936
    
    
    
    2,174,628Loan loss reserves
    
    
    5,561,483
    
    
    
    3,848,649Other
    
    
    270,260
    
    
    
    24,768Total Deferred Tax Assets
    
    $
    8,313,112
    
    
    $
    5,975,998Deferred Tax LiabilitiesUnrealized gain on
available-for-sale investment
securities
    
    
    (247,080
    )
    
    
    (108,560
    )Depreciation
    
    
    (261,636
    )
    
    
    (1,128,350
    )Deferred loan origination costs
    
    
    (395,228
    )
    
    
    Deferred state taxes
    
    
    (618,136
    )
    
    
    Other
    
    
    (155,512
    )
    
    
    Total Deferred Tax Liabilities
    
    $
    (1,677,592
    )
    
    $
    (1,236,910
    )Total Net Deferred Tax Asset
    
    $
    6,635,520
    
    
    $
    4,739,088
 48




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
 Asset Quality
    (Dollars in thousands)Portfolio Loans
    
    March 31, 2010
    
    
    December 31, 2009Commercial and financial loans
    
    $
    129,891
    
    
    $
    133,080Real estate  construction loans
    
    
    56,625
    
    
    
    59,524Real estate   commercial (investor)
    
    
    182,908
    
    
    
    197,023Real estate  commercial (owner
occupied)
    
    
    71,634
    
    
    
    63,001Real estate  ITIN loan pool
    
    
    74,728
    
    
    
    78,250Real estate  other mortgage
    
    
    20,672
    
    
    
    20,526Real estate  equity lines
    
    
    68,806
    
    
    
    45,601Installment
    
    
    2,367
    
    
    
    2,223Other loans
    
    
    1,525
    
    
    
    2,211Less:Net deferred loan fees
    
    
    172
    
    
    
    209Allowance for loan losses
    
    
    12,197
    
    
    
    11,207Total net portfolio loans
    
    $
    596,787
    
    
    $
    590,023
  (Dollars in thousands)
 % of Total loanLoan Type
    
    Balance
    
    
    portfolioCommercial lots and entitled commercial land
    
    $
    19,070
    
    
    
    3.20
    %Commercial real estate  construction
    
    
    27,067
    
    
    
    4.54
    %1-4 family subdivision loans
    
    
    7,366
    
    
    
    1.23
    %1-4 family individual residential lots
    
    
    2,154
    
    
    
    0.36
    %1-4 family construction speculative
    
    
    968
    
    
    
    0.16
    %Total real estate- construction
    
    $
    56,625
    
    
    
    9.49
    %
  49




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
 Mortgages held for sale
   Non performing Assets
  (Dollars in thousands)Non performing assets
    
    March 31, 2010
    
    
    December 31, 2009Nonaccrual loans
    
    $
    10,253
    
    
    $
    7,66790 days past due and still accruing interest
    
    
    3,099
    
    
    
    5,052Other real estate owned
    
    
    3,395
    
    
    
    2,880Total non performing assets
    
    $
    16,747
    
    
    $
    15,599
     50




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
 Allowance for Loan and Lease Losses (ALLL)
      
    
    Changes in lending policies and procedures, including underwriting, collection,
charge-off and recovery practices not considered elsewhere in estimating credit losses;
    
    Changes in regional, local and business conditions and developments that affect the
collectability of loans, including the conditions of various market segments;
    
    Changes in the nature and volume of the loan portfolio and in the terms of loans;
    
    Changes in the experience, ability and depth of lending management and other relevant
staff;
    
    Changes in the volume and severity of past due loans, the volume of nonaccrual loans and
the volume and severity of adversely classified or graded loans;
    
    Changes in the quality of the Companys loan review systems or the degree of oversight
by the board of directors;
    
    Changes in the value of underlying collateral for all collateral dependent loans;
    
    The existence and effects of any concentrations of credit and changes in the level of
such concentrations;
    
    The effect of other external factors such as competition and legal and regulatory
requirements on the level of estimated credit losses;
    
    Loan loss history over the past 18 months has contributed significantly to the
percentage of loss allocations. Accordingly the loan loss history component of the
provision for loan and lease losses has been adjusted to weight toward recent history with
80% of the allocation to the last two and one half years.
  51




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
   (Dollars in thousands)Allowance for Loan and LeaseLosses
    
    March 31, 2010
    
    
    March 31, 2009Beginning balance for Loan Losses
    
    $
    11,207
    
    
    $
    8,429Provision for Loan Losses
    
    
    2,250
    
    
    
    1,425Charge offs:Commercial
    
    
    (390
    )
    
    
    (1,658
    )Real Estate
    
    
    (1,298
    )
    
    
    (497
    )Total Charge offs
    
    
    (1,688
    )
    
    
    (2,155
    )Recoveries:Commercial
    
    
    396
    
    
    
    1Real Estate
    
    
    31
    
    
    
    0Other
    
    
    1
    
    
    
    1Total Recoveries
    
    
    428
    
    
    
    2Ending Balance
    
    $
    12,197
    
    
    $
    7,701ALLL to total loans
    
    
    2.00
    %
    
    
    1.45
    %Net Charge offs to average loans
    
    
    0.20
    %
    
    
    0.41
    %
    52




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
QUARTERLY INCOME STATEMENT
 March 31,
    
    
    December 31,
    
    
    September 30,
    
    
    June 30,
    
    
    March 31,Dollars in thousands, except for per share data
    
    2010
    
    
    2009
    
    
    2009
    
    
    2009
    
    
    2009Interest income:Interest and fees on loans
    
    $
    9,051
    
    
    $
    9,184
    
    
    $
    9,355
    
    
    $
    9,272
    
    
    $
    8,049Interest on tax-exempt securities
    
    
    322
    
    
    
    311
    
    
    
    278
    
    
    
    279
    
    
    
    296Interest on U.S. government securities
    
    
    439
    
    
    
    676
    
    
    
    628
    
    
    
    954
    
    
    
    1,192Interest on federal funds sold and
securities repurchased under agreements to
resell
    
    
    1
    
    
    
    1
    
    
    
    1
    
    
    
    5
    
    
    
    25Interest on other securities
    
    
    270
    
    
    
    266
    
    
    
    309
    
    
    
    131
    
    
    
    117Total interest income
    
    
    10,083
    
    
    
    10,438
    
    
    
    10,571
    
    
    
    10,641
    
    
    
    9,679Interest expense:Interest on demand deposits
    
    
    230
    
    
    
    229
    
    
    
    240
    
    
    
    239
    
    
    
    307Interest on savings deposits
    
    
    219
    
    
    
    221
    
    
    
    223
    
    
    
    238
    
    
    
    281Interest on certificates of deposit
    
    
    1,761
    
    
    
    1,906
    
    
    
    1,941
    
    
    
    1,900
    
    
    
    1,881Securities sold under repurchase agreements
    
    
    12
    
    
    
    13
    
    
    
    13
    
    
    
    11
    
    
    
    14Interest on FHLB and other borrowings
    
    
    136
    
    
    
    172
    
    
    
    514
    
    
    
    539
    
    
    
    581Interest on junior subordinated debt
payable to unconsolidated subsidiary
grantor trust
    
    
    208
    
    
    
    208
    
    
    
    234
    
    
    
    216
    
    
    
    215Total interest expense
    
    
    2,566
    
    
    
    2,749
    
    
    
    3,165
    
    
    
    3,143
    
    
    
    3,279Net interest income
    
    
    7,517
    
    
    
    7,689
    
    
    
    7,406
    
    
    
    7,498
    
    
    
    6,400Provision for loan and lease losses
    
    
    2,250
    
    
    
    3,150
    
    
    
    1,844
    
    
    
    3,056
    
    
    
    1,425Net interest income after provision for
loan and lease losses
    
    
    5,267
    
    
    
    4,539
    
    
    
    5,562
    
    
    
    4,442
    
    
    
    4,975Noninterest income:Service charges on deposit accounts
    
    
    82
    
    
    
    94
    
    
    
    108
    
    
    
    96
    
    
    
    92Payroll and benefit processing fees
    
    
    128
    
    
    
    105
    
    
    
    109
    
    
    
    104
    
    
    
    134Earnings on cash surrender value  bank
owned life insurance
    
    
    108
    
    
    
    107
    
    
    
    108
    
    
    
    117
    
    
    
    86Net gain on sale of securities
    
    
    931
    
    
    
    454
    
    
    
    506
    
    
    
    1,074
    
    
    
    404available-for-saleNet gain on sale of loans
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    340
    
    
    
    Merchant credit card service income, net
    
    
    54
    
    
    
    68
    
    
    
    80
    
    
    
    75
    
    
    
    74Mortgage brokerage fee income
    
    
    2,539
    
    
    
    2,112
    
    
    
    1,913
    
    
    
    1,302
    
    
    
    Other income
    
    
    100
    
    
    
    119
    
    
    
    120
    
    
    
    87
    
    
    
    75Total noninterest income
    
    
    3,942
    
    
    
    3,060
    
    
    
    2,944
    
    
    
    3,195
    
    
    
    865Noninterest expense:Salaries and related benefits
    
    
    3,711
    
    
    
    3,209
    
    
    
    2,902
    
    
    
    2,644
    
    
    
    2,127Occupancy and equipment expense
    
    
    1,110
    
    
    
    1,339
    
    
    
    1,124
    
    
    
    730
    
    
    
    572FDIC insurance premium
    
    
    251
    
    
    
    279
    
    
    
    421
    
    
    
    301
    
    
    
    273Data processing fees
    
    
    89
    
    
    
    51
    
    
    
    52
    
    
    
    68
    
    
    
    111Professional service fees
    
    
    400
    
    
    
    146
    
    
    
    220
    
    
    
    295
    
    
    
    159Payroll processing fees
    
    
    29
    
    
    
    26
    
    
    
    27
    
    
    
    27
    
    
    
    34Deferred compensation expense
    
    
    118
    
    
    
    118
    
    
    
    118
    
    
    
    123
    
    
    
    119Stationery and supplies
    
    
    80
    
    
    
    44
    
    
    
    62
    
    
    
    26
    
    
    
    53Postage
    
    
    42
    
    
    
    36
    
    
    
    
    
    
    
    76
    
    
    
    81Directors expense
    
    
    84
    
    
    
    67
    
    
    
    75
    
    
    
    120
    
    
    
    37Other expenses
    
    
    1,271
    
    
    
    802
    
    
    
    653
    
    
    
    483
    
    
    
    394Total noninterest expense
    
    
    7,185
    
    
    
    6,117
    
    
    
    5,654
    
    
    
    4,893
    
    
    
    3,960Income before provision for income taxes
    
    
    2,024
    
    
    
    1,482
    
    
    
    2,852
    
    
    
    2,744
    
    
    
    1,880Provision for income taxes
    
    
    744
    
    
    
    43
    
    
    
    1,010
    
    
    
    1,027
    
    
    
    610Net Income
    
    
    1,280
    
    
    
    1,439
    
    
    
    1,842
    
    
    
    1,717
    
    
    
    1,270Less: (Loss) income non-controlling interest
    
    
    (255
    )
    
    
    33
    
    
    
    129
    
    
    
    101
    
    
    
    Net income attributable to Bank of Commerce
Holdings
    
    $
    1,535
    
    
    $
    1,406
    
    
    $
    1,713
    
    
    $
    1,616
    
    
    $
    1,270Less preferred dividend and accretion on
preferred stock
    
    $
    (235
    )
    
    $
    (235
    )
    
    $
    (235
    )
    
    $
    (235
    )
    
    $
    (237
    )Income available to common stockholders
    
    $
    1,300
    
    
    $
    1,171
    
    
    $
    1,478
    
    
    $
    1,381
    
    
    $
    1,033Basic earnings per share
    
    $
    0.15
    
    
    $
    0.13
    
    
    $
    0.17
    
    
    $
    0.16
    
    
    $
    0.12Weighted average shares  basic
    
    
    8,871
    
    
    
    8,711
    
    
    
    8,711
    
    
    
    8,711
    
    
    
    8,711Diluted earnings per share
    
    $
    0.15
    
    
    $
    0.13
    
    
    $
    0.17
    
    
    $
    0.16
    
    
    $
    0.12Weighted average shares  diluted
    
    
    8,871
    
    
    
    8,711
    
    
    
    8,711
    
    
    
    8,712
    
    
    
    8,711Cash dividends per share
    
    $
    0.06
    
    
    $
    0.06
    
    
    $
    0.12
    
    
    $
    0.00
    
    
    $
    0.06
 53




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##### Table of Contents



ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
         54




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##### Table of Contents



QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK (Continued)
   55




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##### Table of Contents



ITEM 4T.
    
    CONTROLS AND PROCEDURES
         
 PART II. Other Information
 
 Item 1.
    
    Legal Proceedings
  56




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##### Table of Contents



Item 1a. Risk Factors
  57




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##### Table of Contents



Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
   
 Item 3.
    
    Defaults upon Senior Securities
 
  Item 4.
    
    (Removed and Reserved)
  
 Item 5.
    
    Other Information
 
 Item 6.
    
    Exhibits
    58




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##### Table of Contents



SIGNATURES
  BANK OF COMMERCE HOLDINGS
 Date: May 7, 2010
    
    /s/ Samuel D. JimenezSamuel D. JimenezSenior Vice President andChief Financial Officer
 59