##### 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, 2011
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from
to
 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 o
  Large accelerated filer o   
    Accelerated filer þ
    Non-accelerated filer o
    Smaller Reporting Company o(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, 2011, and December 31, 2010
    
    
    3Condensed Consolidated Statements of Income
Three Months Ended March 31, 2011, and March 31, 2010
    
    
    4Condensed Consolidated Statements of Stockholders Equity
Three Months Ended March 31, 2011
    
    
    5Condensed Consolidated Statements of Comprehensive Income (Loss)
Three Months Ended March 31, 2011, and March 31, 2010
    
    
    6Condensed Consolidated Statements of Cash Flows
Three Months Ended March 31, 2011 and 2010
    
    
    7Notes to Unaudited Condensed Consolidated Financial Statements
Three Months Ended March 31, 2011, and March 31, 2010
    
    
    8Item 2 Managements Discussion and Analysis
Of Financial Condition and Results of Operations
    
    
    31Item 3 Quantitative and Qualitative Disclosure about Market Risk
    
    
    62Item 4 Controls and Procedures
    
    
    64PART II. OTHER INFORMATIONItem 1 Legal Proceedings
    
    
    65Item 1a Risk Factors
    
    
    65Item 2 Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    65Item 3 Defaults Upon Senior Securities
    
    
    65Item 4 (Removed and Reserved)
    
    
    65Item 5 Other Information
    
    
    65Item 6 Exhibits
    
    
    65SIGNATURE PAGE
    
    
    66EX-31.1EX-31.2EX-32
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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, 2011 and December 31, 2010
 March 31,
    
    
    December 31,2011
    
    
    2010(Dollars in thousands)
    
    (Unaudited)
    
    
    (Audited)ASSETSCash and due from banks, noninterest bearing
    
    $
    31,321
    
    
    $
    23,786Interest bearing due from banks
    
    
    36,975
    
    
    
    39,470Cash and cash equivalents
    
    
    68,296
    
    
    
    63,256Securities available-for-sale, at fair value (including
pledged collateral of $84.5 million at March 31, 2011,
and $101.2 million at December 31, 2010)
    
    
    185,717
    
    
    
    189,235Portfolio loans, net of the allowance for loan and lease
losses of $13.6 million at March 31, 2011, and $12.8
million at December 31, 2010
    
    
    589,266
    
    
    
    587,865Mortgage loans held for sale
    
    
    18,963
    
    
    
    42,995Bank premises and equipment, net
    
    
    9,736
    
    
    
    9,697Goodwill
    
    
    3,695
    
    
    
    3,695Other real estate owned
    
    
    3,868
    
    
    
    2,288Other assets
    
    
    35,984
    
    
    
    40,102TOTAL ASSETS
    
    $
    915,525
    
    
    $
    939,133LIABILITIES AND STOCKHOLDERS EQUITYDemand  noninterest bearing
    
    $
    87,842
    
    
    $
    91,025Demand  interest bearing
    
    
    146,202
    
    
    
    162,258Savings accounts
    
    
    91,912
    
    
    
    83,652Certificates of deposit
    
    
    302,133
    
    
    
    311,767Total deposits
    
    
    628,089
    
    
    
    648,702Securities sold under agreements to repurchase
    
    
    14,607
    
    
    
    13,548Federal Home Loan Bank and Federal Reserve Bank borrowings
    
    
    141,000
    
    
    
    141,000Mortgage warehouse lines of credit
    
    
    
    
    
    
    Other liabilities
    
    
    10,281
    
    
    
    16,691Junior subordinated debentures
    
    
    15,465
    
    
    
    15,465Total Liabilities
    
    
    809,442
    
    
    
    835,406Commitments 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, 2011 and December 31,
2010
    
    
    16,753
    
    
    
    16,731Common stock , no par value, 50,000,000 shares
authorized; 16,991,495 shares issued and outstanding on
March 31, 2011, 16,991,495 issued and outstanding on
December 31, 2010
    
    
    42,768
    
    
    
    42,755Common stock warrant
    
    
    449
    
    
    
    449Retained earnings
    
    
    42,642
    
    
    
    41,722Accumulated other comprehensive income (loss), net of tax
    
    
    916
    
    
    
    (509
    )Total Equity  Bank of Commerce Holdings
    
    
    103,528
    
    
    
    101,148Non controlling interest in subsidiary
    
    
    2,555
    
    
    
    2,579Total Stockholders Equity
    
    
    106,083
    
    
    
    103,727TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    915,525
    
    
    $
    939,133
 See accompanying notes to condensed consolidated financial statements.
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BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
 
 Condensed Consolidated Statements of Income
 Three Months Ended March 31, 2011 and March 31, 2010 (Unaudited)
 For Three Months EndedMarch 31,
    
    
    March 31,(Amounts in thousands, except for per share data)
    
    2011
    
    
    2010Interest income:Interest and fees on loans
    
    $
    8,786
    
    
    $
    9,051Interest on tax-exempt securities
    
    
    532
    
    
    
    322Interest on U.S. government securities
    
    
    678
    
    
    
    439Interest on federal funds sold and securities purchased under agreement to resell
    
    
    
    
    
    
    1Interest on other securities
    
    
    650
    
    
    
    270Total interest income
    
    
    10,646
    
    
    
    10,083Interest expense:Interest on demand deposits
    
    
    226
    
    
    
    230Interest on savings deposits
    
    
    246
    
    
    
    219Interest on certificates of deposit
    
    
    1,313
    
    
    
    1,761Securities sold under agreements to repurchase
    
    
    14
    
    
    
    12Interest on FHLB and other borrowings
    
    
    164
    
    
    
    136Interest on junior subordinated debt payable to unconsolidated subsidiary grantor trust
    
    
    107
    
    
    
    208Total interest expense
    
    
    2,070
    
    
    
    2,566Net interest income
    
    
    8,576
    
    
    
    7,517Provision for loan and lease losses
    
    
    2,400
    
    
    
    2,250Net interest income after provision for loan losses
    
    
    6,176
    
    
    
    5,267Noninterest income:Service charges on deposit accounts
    
    
    50
    
    
    
    82Payroll and benefit processing fees
    
    
    129
    
    
    
    128Earnings on cash surrender value  Bank owned life insurance
    
    
    111
    
    
    
    108Net gain on sale of securities available-for-sale
    
    
    258
    
    
    
    931Merchant credit card service income, net
    
    
    270
    
    
    
    54Mortgage brokerage fee income
    
    
    2,492
    
    
    
    2,539Other income
    
    
    111
    
    
    
    100Total noninterest income
    
    
    3,421
    
    
    
    3,942Noninterest expense:Salaries and related benefits
    
    
    4,253
    
    
    
    3,711Occupancy and equipment expense
    
    
    708
    
    
    
    926Write down of other real estate owned
    
    
    187
    
    
    
    184FDIC insurance premium
    
    
    372
    
    
    
    251Data processing fees
    
    
    99
    
    
    
    89Professional service fees
    
    
    550
    
    
    
    400Director deferred fee compensation plan
    
    
    127
    
    
    
    118Stationery and supplies
    
    
    43
    
    
    
    80Postage
    
    
    42
    
    
    
    42Directors expense
    
    
    74
    
    
    
    84Goodwill impairment
    
    
    
    
    
    
    Other expenses
    
    
    1,071
    
    
    
    1,300Total noninterest expense
    
    
    7,526
    
    
    
    7,185Income before provision for income taxes
    
    
    2,071
    
    
    
    2,024Provision for income taxes
    
    
    431
    
    
    
    744Net Income
    
    
    1,640
    
    
    
    1,280Less: Net income (loss) attributable to non-controlling interest
    
    
    (24
    )
    
    
    (255
    )Net income attributable to Bank of Commerce Holdings
    
    $
    1,664
    
    
    $
    1,535Less: preferred dividend and accretion on preferred stock
    
    
    235
    
    
    
    235Income available to common shareholders
    
    $
    1,429
    
    
    $
    1,300Basic earnings per share
    
    $
    0.08
    
    
    $
    0.15Weighted average shares  basic
    
    
    16,991
    
    
    
    8,871Diluted earnings per share
    
    $
    0.08
    
    
    $
    0.15Weighted average shares  diluted
    
    
    16,991
    
    
    
    8,871Cash dividends declared
    
    $
    0.03
    
    
    $
    0.06
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BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
 
 Condensed Consolidated Statements of Stockholders Equity
 Three Months Ended March 31, 2011 (Unaudited)
 Accumulated Other
    
    
    Subtotal
    
    
    NonComp- Income
    
    
    Bank of
    
    
    ControllingPreferred
    
    
    
    
    
    
    Common
    
    
    Stock
    
    
    Retained
    
    
    (Loss),
    
    
    Commerce
    
    
    Interest in(Dollars in Thousands)
    
    Amount
    
    
    Warrant
    
    
    Shares
    
    
    Amount
    
    
    Earnings
    
    
    net of tax
    
    
    Holdings
    
    
    Subsidiary
    
    
    TotalBalance at December 31, 2010
    
    $
    16,731
    
    
    $
    449
    
    
    
    16,991
    
    
    $
    42,755
    
    
    $
    41,722
    
    
    $
    (509
    )
    
    $
    101,148
    
    
    $
    2,579
    
    
    $
    103,727Net Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,664
    
    
    
    
    
    
    
    1,664
    
    
    
    (24
    )
    
    
    1,640Other comprehensive income, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,425
    
    
    
    1,425
    
    
    
    
    
    
    
    1,425Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    3,089
    
    
    
    
    
    
    $
    3,065Accretion on preferred stock
    
    
    22
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (22
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Common cash dividend ($0.03 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (509
    )
    
    
    
    
    
    
    (509
    )
    
    
    
    
    
    
    (509
    )Preferred stock dividend
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (213
    )
    
    
    
    
    
    
    (213
    )
    
    
    
    
    
    
    (213
    )Compensation expense associated with stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13
    
    
    
    
    
    
    
    
    
    
    
    13
    
    
    
    
    
    
    
    13Balance at March 31, 2011
    
    $
    16,753
    
    
    $
    449
    
    
    
    16,991
    
    
    $
    42,768
    
    
    $
    42,642
    
    
    $
    916
    
    
    $
    103,528
    
    
    $
    2,555
    
    
    $
    106,083
 See accompanying notes to condensed consolidated financial statements.
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BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
 
 Condensed Consolidated Statements of Comprehensive Income (Loss)
 Three Months Ended March 31, 2011 and March 31, 2010 (Unaudited)
 Three months endedMarch 31,(Dollars in thousands)
    
    2011
    
    
    2010Net income (loss)
    
    $
    1,640
    
    
    $
    1,280Available-for-sale securities:Unrealized gains arising during the period
    
    
    2,007
    
    
    
    414Reclassification adjustments for net gains realized in earnings, net of tax
    
    
    (144
    )
    
    
    (548
    )Income tax expense related to unrealized gains
    
    
    (826
    )
    
    
    (170
    )Net change in unrealized gains
    
    
    1,037
    
    
    
    (304
    )Derivatives:Unrealized gains arising during the period
    
    
    659
    
    
    
    Reclassification adjustment for net gains realized in earnings
    
    
    
    
    
    
    Income tax expense related to unrealized gains
    
    
    (271
    )
    
    
    Net change in unrealized gains
    
    
    388
    
    
    
    Total other comprehensive income, net of tax
    
    
    3,065
    
    
    
    976Less: Other comprehensive income non-controlling interest
    
    
    (24
    )
    
    
    (255
    )Total other comprehensive income  Bank of Commerce Holdings
    
    $
    3,089
    
    
    $
    1,231
 See accompanying notes to condensed consolidated financial statements.
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BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
 
 Condensed Consolidated Statements of Cash Flows

(Unaudited)
 Three Months Ended March 31, 2011 and 2010
 March 31,
    
    
    March 31,(Dollars in thousands)
    
    2011
    
    
    2010Cash flows from operating activities:Net income
    
    $
    1,640
    
    
    $
    1,280Adjustments to reconcile net income to net cash provided by operating activities:Provision for loan and lease losses
    
    
    2,400
    
    
    
    2,250Provision for depreciation and amortization
    
    
    221
    
    
    
    232Compensation expense associated with stock options
    
    
    13
    
    
    
    13Gross proceeds from sales of loans held for sale
    
    
    145,032
    
    
    
    141,752Gross originations of loans held for sale
    
    
    (121,000
    )
    
    
    (141,662
    )Gain on sale of securities available-for-sale
    
    
    (258
    )
    
    
    (931
    )Amortization of investment premiums and accretion of discounts, net
    
    
    256
    
    
    
    (3
    )Loss on sale of other real estate owned
    
    
    162
    
    
    
    Write down of other real estate owned
    
    
    187
    
    
    
    184Decrease (increase) in deferred income taxes
    
    
    434
    
    
    
    (730
    )Increase in cash surrender value of bank owned life insurance policies
    
    
    (93
    )
    
    
    (92
    )Effect of changes in:Decrease (increase) in other assets
    
    
    442
    
    
    
    (668
    )Deferred compensation
    
    
    115
    
    
    
    118Increase (decrease) in deferred loan fees
    
    
    14
    
    
    
    (37
    )(Decrease) increase in other liabilities
    
    
    (6,526
    )
    
    
    908Net cash provided by operating activities
    
    
    23,039
    
    
    
    2,614Cash flows from investing activities:Proceeds from maturities and payments of available-for-sale securities
    
    
    3,452
    
    
    
    3,015Proceeds from sales of available-for-sale securities
    
    
    23,048
    
    
    
    18,158Purchases of available-for-sale securities
    
    
    (21,217
    )
    
    
    (18,266
    )Purchases of home equity loan portfolio
    
    
    
    
    
    
    (14,801
    )Loan origination, net of principal repayments
    
    
    (5,915
    )
    
    
    15,743Purchases of premises and equipment, net
    
    
    (262
    )
    
    
    (227
    )Proceeds from the sales of other real estate owned
    
    
    171
    
    
    
    Proceeds from the termination of interest rate swaps
    
    
    3,000
    
    
    
    Net cash provided by investing activities
    
    
    2,277
    
    
    
    3,622Cash flows from financing activities:Net decrease in demand deposits and savings accounts
    
    
    (10,979
    )
    
    
    (10,179
    )Net decrease in certificates of deposit
    
    
    (9,634
    )
    
    
    (11,242
    )Net increase in securities sold under agreement to repurchase
    
    
    1,059
    
    
    
    9,199Federal Home Loan Bank advances
    
    
    56,000
    
    
    
    70,000Federal Home Loan Bank advance repayments
    
    
    (56,000
    )
    
    
    (70,000
    )Cash dividends paid on common stock
    
    
    (509
    )
    
    
    (1,045
    )Cash dividends paid on preferred stock
    
    
    (213
    )
    
    
    (213
    )Net proceeds from issuance of common stock
    
    
    
    
    
    
    28,752Net cash (used in) provided by financing activities
    
    
    (20,276
    )
    
    
    15,272Net increase (decrease) in cash and cash equivalents
    
    
    5,040
    
    
    
    21,508Cash and cash equivalents, beginning of period
    
    
    63,256
    
    
    
    68,240Cash and cash equivalents, end of period
    
    $
    68,296
    
    
    $
    89,748Supplemental disclosures of cash flow Activity:Cash paid during the period for:Income taxes
    
    $
    
    
    
    $
    400Interest
    
    
    2,045
    
    
    
    2,491Supplemental disclosures of non cash investing activities:Transfer of loans to other real estate owned
    
    
    2,099
    
    
    
    699Changes in unrealized (loss) gain on investment securities available-for-sale
    
    
    1,762
    
    
    
    (517
    )Changes in deferred tax asset related to changes in unrealized (loss) gain on investment securities
    
    
    (725
    )
    
    
    213Changes in accumulated other comprehensive income due to changes in unrealized (loss) gain on
investment securities
    
    
    1,037
    
    
    
    304
 See accompanying notes to condensed consolidated financial statements.
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BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
 
 Notes to Unaudited Condensed Consolidated Financial Statements
 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
     NOTE 2. RECENT ACCOUNTING PRONOUNCEMENTS
 FASB ASU No. 2011-02 Receivables (Topic 310): A Creditors Determination of Whether a
Restructuring Is a Troubled Debt Restructuring. Subtopic
310-40 ReceivablesTroubled Debt Restructurings by Creditors Section 310-10-35 Subtopic 450-20, ContingenciesLoss Contingencies 310-10-50-33 50-34 Receivables (Topic 310): Deferral of the Effective Date of
Disclosures about Troubled Debt Restructurings in Update No. 2010-20,
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BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
 FASB ASU No. 2011-01, Receivables (Topic 310): Deferral of the Effective Date of
Disclosures about Troubled Debt Restructurings in Update No. 2010-20. Receivables (Topic 310): Disclosures about the Credit Quality of Financing
Receivables and the Allowance for Credit Losses
 FASB ASU 2010-20 Disclosures about the Credit Quality of Financing Receivables and the
Allowance for Credit Losses (Topic 310)
   FASB ASU 2010-06 Fair Value Measurements and Disclosures (Topic 820) Improving Disclosures
about Fair Value Measurements FASB Accounting Standards Codification
  NOTE 3. EARNINGS PER SHARE
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BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
  (Dollars in thousands, except per share data)
 Earnings Per Share
    
    March 31, 2011
    
    
    March 31, 2010Basic EPS Calculation:Net income attributable to Bank of Commerce Holdings
    
    $
    1,664
    
    
    $
    1,535Less: dividend on preferred stock
    
    
    213
    
    
    
    213Less: accretion on preferred stock
    
    
    22
    
    
    
    22Numerator: earnings available to common shareholders
    
    $
    1,429
    
    
    $
    1,300Denominator (average common shares outstanding)
    
    
    16,991,495
    
    
    
    8,871,495Basic earnings per share
    
    $
    0.08
    
    
    $
    0.15Diluted EPS Calculation:Net income
    
    $
    1,664
    
    
    $
    1,535Less: dividend on preferred stock
    
    
    213
    
    
    
    213Less: accretion on preferred stock
    
    
    22
    
    
    
    22Numerator: earnings available to common shareholders
    
    $
    1,429
    
    
    $
    1,300Denominator:Average common shares outstanding
    
    
    16,991,495
    
    
    
    8,871,495Plus incremental shares from assumed conversionsStock options
    
    
    
    
    
    
    Warrants
    
    
    
    
    
    
    16,991,495
    
    
    
    8,871,495Diluted earnings per share
    
    $
    0.08
    
    
    $
    0.15Anti-dilutive options not included in EPS calculation
    
    
    300,080
    
    
    
    282,080Anti-dilutive warrants not included in EPS calculation
    
    
    435,410
    
    
    
    405,405
 NOTE 4. STOCK OPTION PLANS
  NOTE 5. SECURITIES
  As of March 31, 2011Gross(Dollars in thousands)
    
    Amortized
    
    
    Unrealized
    
    
    Gross
    
    
    EstimatedAvailable-for-sale securities
    
    Costs
    
    
    Gains
    
    
    Unrealized Losses
    
    
    Fair ValueU.S. Treasury and agencies
    
    $
    29,778
    
    
    $
    6
    
    
    $
    (489
    )
    
    $
    29,295Obligations of state and political subdivisions
    
    
    63,048
    
    
    
    375
    
    
    
    (1,287
    )
    
    
    62,136Residential mortgage backed securities and collateralized
mortgage obligations
    
    
    66,059
    
    
    
    368
    
    
    
    (340
    )
    
    
    66,087Corporate securities
    
    
    22,894
    
    
    
    73
    
    
    
    (133
    )
    
    
    22,834Other asset backed securities
    
    
    5,398
    
    
    
    
    
    
    
    (33
    )
    
    
    5,365Total
    
    $
    187,177
    
    
    $
    822
    
    
    $
    (2,282
    )
    
    $
    185,717
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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
 As of December 31, 2010 (Audited)Gross
    
    
    Gross(Dollars in thousands)
    
    Amortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    EstimatedAvailable-for-sale securities
    
    Costs
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueU.S. Treasury and agencies
    
    $
    26,814
    
    
    $
    6
    
    
    $
    (489
    )
    
    $
    26,331Obligations of state and political subdivisions
    
    
    67,004
    
    
    
    82
    
    
    
    (2,935
    )
    
    
    64,151Residential mortgage backed securities and collateralized
mortgage obligations
    
    
    65,052
    
    
    
    446
    
    
    
    (251
    )
    
    
    65,247Corporate securities
    
    
    29,019
    
    
    
    28
    
    
    
    (90
    )
    
    
    28,957Other asset backed securities
    
    
    4,569
    
    
    
    
    
    
    
    (20
    )
    
    
    4,549Total
    
    $
    192,458
    
    
    $
    562
    
    
    $
    (3,785
    )
    
    $
    189,235
  Available-for-sale(Dollars in thousands)
    
    Amortized Cost
    
    
    Fair ValueAMOUNTS MATURING IN:One year or less
    
    $
    2,395
    
    
    $
    2,401One year through five years
    
    
    45,680
    
    
    
    45,782Five years through ten years
    
    
    68,552
    
    
    
    68,056After ten years
    
    
    70,550
    
    
    
    69,478$
    187,177
    
    
    $
    185,717
   Other-Than-Temporarily Impaired Debt Securities
    11




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
  As of March 31, 2011Less than 12 months
    
    12 months or more
    
    TotalFair
    
    Unrealized
    
    Fair
    
    Unrealized
    
    Fair
    
    Unrealized(Dollars in thousands)
    
    Value
    
    Losses
    
    Value
    
    Losses
    
    Value
    
    LossesU.S. Treasury and agencies
    
    $
    25,295
    
    
    $
    (489
    )
    
    $
    
    
    
    $
    
    
    
    $
    25,295
    
    
    $
    (489
    )Obligations of state and
political subdivisions
    
    
    37,298
    
    
    
    (1,286
    )
    
    
    
    
    
    
    
    
    
    
    37,298
    
    
    
    (1,286
    )Residential mortgage backed
securities and
collateralized mortgage
obligations
    
    
    27,598
    
    
    
    (327
    )
    
    
    430
    
    
    
    (14
    )
    
    
    28,028
    
    
    
    (341
    )Corporate securities
    
    
    12,428
    
    
    
    (133
    )
    
    
    
    
    
    
    
    
    
    
    12,428
    
    
    
    (133
    )Other asset backed securities
    
    
    3,366
    
    
    
    (33
    )
    
    
    
    
    
    
    
    
    
    
    3,366
    
    
    
    (33
    )Total temporarily
impaired securities
    
    $
    105,985
    
    
    $
    (2,268
    )
    
    $
    430
    
    
    $
    (14
    )
    
    $
    106,415
    
    
    $
    (2,282
    )
 As of December 31, 2010Less than 12 months
    
    12 months or more
    
    TotalFair
    
    Unrealized
    
    Fair
    
    Unrealized
    
    Fair
    
    Unrealized(Dollars in thousands)
    
    Value
    
    Losses
    
    Value
    
    Losses
    
    Value
    
    LossesU.S. Treasury and agencies
    
    $
    18,829
    
    
    $
    (489
    )
    
    $
    
    
    
    $
    
    
    
    $
    18,829
    
    
    $
    (489
    )Obligations of state and
political subdivisions
    
    
    52,414
    
    
    
    (2,935
    )
    
    
    
    
    
    
    
    
    
    
    52,414
    
    
    
    (2,935
    )Residential mortgage backed
securities and
collateralized mortgage
obligations
    
    
    26,477
    
    
    
    (251
    )
    
    
    
    
    
    
    
    
    
    
    26,477
    
    
    
    (251
    )Corporate securities
    
    
    14,494
    
    
    
    (90
    )
    
    
    
    
    
    
    
    
    
    
    14,494
    
    
    
    (90
    )Other asset backed securities
    
    
    4,549
    
    
    
    (20
    )
    
    
    
    
    
    
    
    
    
    
    4,549
    
    
    
    (20
    )Total temporarily
impaired securities
    
    $
    116,763
    
    
    $
    (3,785
    )
    
    $
    
    
    
    $
    
    
    
    $
    116,763
    
    
    $
    (3,785
    )
    12




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
 NOTE 6. LOANS AND ALLOWANCE FOR LOAN AND LEASE LOSSES
  (Dollars in thousands)
    
    March 31, 2011
    
    
    December 31, 2010Commercial
    
    $
    135,928
    
    
    $
    130,579Real estate  construction loans
    
    
    31,121
    
    
    
    41,327Real estate  commercial (investor)
    
    
    224,630
    
    
    
    215,697Real estate  commercial (owner occupied)
    
    
    66,535
    
    
    
    68,055Real estate  ITIN loans
    
    
    69,265
    
    
    
    70,585Real estate  mortgage
    
    
    21,120
    
    
    
    19,299Real estate  equity lines
    
    
    47,948
    
    
    
    48,178Consumer
    
    
    6,303
    
    
    
    6,775Other
    
    
    130
    
    
    
    301$
    602,980
    
    
    $
    600,796Less:Deferred loan fees, net
    
    
    104
    
    
    
    90Allowance for loan and lease losses
    
    
    13,610
    
    
    
    12,841$
    589,266
    
    
    $
    587,865
  Recorded60-89
    
    Greater
    
    
    
    
    
    
    
    
    
    
    
    
    
    Investment >30-59 Days
    
    Days Past
    
    Than 90
    
    Total Past
    
    
    
    
    
    
    
    
    
    90 Days and(Dollars in thousands)
    
    Past Due
    
    Due
    
    Days
    
    Due
    
    Current
    
    Total
    
    AccruingMarch 31, 2011Commercial
    
    $
    3,849
    
    
    $
    
    
    
    $
    
    
    
    $
    3,849
    
    
    $
    132,079
    
    
    $
    135,928
    
    
    $
    Commercial real estate:Construction
    
    
    99
    
    
    
    125
    
    
    
    
    
    
    
    224
    
    
    
    30,897
    
    
    
    31,121
    
    
    
    Other
    
    
    23,243
    
    
    
    
    
    
    
    
    
    
    
    23,243
    
    
    
    267,922
    
    
    
    291,165
    
    
    
    Residential:1-4 family
    
    
    8,226
    
    
    
    670
    
    
    
    6,637
    
    
    
    15,533
    
    
    
    53,732
    
    
    
    69,265
    
    
    
    298Home equities
    
    
    660
    
    
    
    94
    
    
    
    445
    
    
    
    1,199
    
    
    
    67,869
    
    
    
    69,068
    
    
    
    445Consumer
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    6
    
    
    
    6,427
    
    
    
    6,433
    
    
    
    Total
    
    $
    36,083
    
    
    $
    889
    
    
    $
    7,082
    
    
    $
    44,054
    
    
    $
    558,926
    
    
    $
    602,980
    
    
    $
    743December 31, 2010Commercial
    
    $
    1,625
    
    
    $
    
    
    
    $
    677
    
    
    $
    2,302
    
    
    $
    128,277
    
    
    $
    130,579
    
    
    $
    Commercial real estate:Construction
    
    
    342
    
    
    
    
    
    
    
    
    
    
    
    342
    
    
    
    40,985
    
    
    
    41,327
    
    
    
    Other
    
    
    5,168
    
    
    
    
    
    
    
    2,520
    
    
    
    7,688
    
    
    
    276,064
    
    
    
    283,752
    
    
    
    Residential:1-4 family
    
    
    7,857
    
    
    
    2,404
    
    
    
    6,720
    
    
    
    16,981
    
    
    
    53,604
    
    
    
    70,585
    
    
    
    Home equities
    
    
    450
    
    
    
    
    
    
    
    
    
    
    
    450
    
    
    
    67,027
    
    
    
    67,477
    
    
    
    Consumer
    
    
    19
    
    
    
    
    
    
    
    
    
    
    
    19
    
    
    
    7,057
    
    
    
    7,076
    
    
    
    Total
    
    $
    15,461
    
    
    $
    2,404
    
    
    $
    9,917
    
    
    $
    27,782
    
    
    $
    573,014
    
    
    $
    600,796
    
    
    $
    
 13




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
    Nonaccrual loans, segregated by class of loans, were as follows:
 (Dollars in thousands)
    
    March 31, 2011
    
    
    December 31, 2010Commercial
    
    $
    2,849
    
    
    $
    2,302Commercial real estate:Construction
    
    
    224
    
    
    
    342Other
    
    
    3,706
    
    
    
    7,066Residential:1-4 family
    
    
    11,704
    
    
    
    10,704Home equities
    
    
    96
    
    
    
    97Consumer
    
    
    
    
    
    
    Total
    
    $
    18,579
    
    
    $
    20,511
   
    
    An impairment assessment has been completed on the TDR loan, as prescribed by ASC 310,
and no impairment has been identified,
    
    the borrower has not been delinquent 90 or more days prior to the loan modification
date, and
    
    it is more likely than not that the modified payment amounts will continue into the
foreseeable future.
  14




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
  As of March 31, 2011Unpaid
    
    
    
    
    
    
    AverageRecorded
    
    
    Principal
    
    
    Related
    
    
    Recorded
    
    
    Interest Income(Dollars in thousands)
    
    Investment
    
    
    Balance
    
    
    Allowance
    
    
    Investment
    
    
    RecognizedWith no related allowance recorded:Commercial
    
    $
    116
    
    
    $
    120
    
    
    $
    
    
    
    $
    202
    
    
    $
    Commercial real estate:Construction
    
    
    125
    
    
    
    247
    
    
    
    
    
    
    
    520
    
    
    
    6Other
    
    
    4,377
    
    
    
    6,776
    
    
    
    
    
    
    
    5,663
    
    
    
    19Residential:1-4 family
    
    
    8,621
    
    
    
    11,002
    
    
    
    
    
    
    
    7,859
    
    
    
    Home equities
    
    
    329
    
    
    
    338
    
    
    
    
    
    
    
    513
    
    
    
    2Total with no related allowance recorded
    
    $
    13,568
    
    
    $
    18,483
    
    
    $
    
    
    
    $
    14,757
    
    
    $
    27With an allowance recorded:Commercial
    
    $
    2,733
    
    
    $
    4,997
    
    
    $
    682
    
    
    $
    2,377
    
    
    $
    Commercial real estate:Construction
    
    
    2,427
    
    
    
    2,428
    
    
    
    139
    
    
    
    2,427
    
    
    
    93Other
    
    
    2,946
    
    
    
    2,951
    
    
    
    189
    
    
    
    2,948
    
    
    
    52Residential:1-4 family
    
    
    9,165
    
    
    
    9,585
    
    
    
    696
    
    
    
    8,998
    
    
    
    119Home equities
    
    
    1,047
    
    
    
    1,047
    
    
    
    105
    
    
    
    932
    
    
    
    21Total with an allowance recorded
    
    $
    18,318
    
    
    $
    21,008
    
    
    $
    1,811
    
    
    $
    17,682
    
    
    $
    285Subtotal:Commercial
    
    $
    2,849
    
    
    $
    5,117
    
    
    $
    682
    
    
    $
    2,579
    
    
    $
    Commercial real estate
    
    $
    9,875
    
    
    $
    12,402
    
    
    $
    328
    
    
    $
    11,558
    
    
    $
    170Residential
    
    $
    19,162
    
    
    $
    21,972
    
    
    $
    801
    
    
    $
    18,302
    
    
    $
    142Total
    
    $
    31,886
    
    
    $
    39,491
    
    
    $
    1,811
    
    
    $
    32,439
    
    
    $
    312
 As of December 31, 2010Unpaid
    
    
    
    
    
    
    AverageRecorded
    
    
    Principal
    
    
    Related
    
    
    Recorded
    
    
    Interest Income(Dollars in thousands)
    
    Investment
    
    
    Balance
    
    
    Allowance
    
    
    Investment
    
    
    RecognizedWith no related allowance recorded:Commercial
    
    $
    120
    
    
    $
    120
    
    
    $
    
    
    
    $
    445
    
    
    $
    Commercial real estate:Construction
    
    
    718
    
    
    
    947
    
    
    
    
    
    
    
    2,002
    
    
    
    2Other
    
    
    9,527
    
    
    
    12,421
    
    
    
    
    
    
    
    9,942
    
    
    
    10Residential:1-4 family
    
    
    8,067
    
    
    
    9,745
    
    
    
    
    
    
    
    8,393
    
    
    
    78Home equities
    
    
    97
    
    
    
    105
    
    
    
    
    
    
    
    236
    
    
    
    Total with no related allowance recorded
    
    $
    18,529
    
    
    $
    23,338
    
    
    $
    
    
    
    $
    21,018
    
    
    $
    90With an allowance recorded:Commercial
    
    $
    2,182
    
    
    $
    9,372
    
    
    $
    449
    
    
    $
    2,532
    
    
    $
    Commercial real estate:Construction
    
    
    2,428
    
    
    
    3,347
    
    
    
    139
    
    
    
    2,374
    
    
    
    74Other
    
    
    1,160
    
    
    
    3,022
    
    
    
    111
    
    
    
    923
    
    
    
    27Residential:1-4 family
    
    
    8,716
    
    
    
    9,298
    
    
    
    599
    
    
    
    4,562
    
    
    
    30Home equities
    
    
    901
    
    
    
    901
    
    
    
    90
    
    
    
    
    
    
    
    Total with an allowance recorded
    
    $
    15,387
    
    
    $
    25,940
    
    
    $
    1,388
    
    
    $
    10,391
    
    
    $
    131Subtotal:Commercial
    
    $
    2,302
    
    
    $
    9,492
    
    
    $
    449
    
    
    $
    2,977
    
    
    $
    Commercial real estate
    
    $
    13,833
    
    
    $
    19,737
    
    
    $
    250
    
    
    $
    15,241
    
    
    $
    113Residential
    
    $
    17,781
    
    
    $
    20,049
    
    
    $
    689
    
    
    $
    13,191
    
    
    $
    108Total
    
    $
    33,916
    
    
    $
    49,278
    
    
    $
    1,388
    
    
    $
    31,409
    
    
    $
    221
 15




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
   March 31, 2011(Dollars in thousands)
    
    Performing
    
    Nonperforming
    
    TotalCommercial
    
    $
    133,079
    
    
    $
    2,849
    
    
    $
    135,928Commercial real estate:Construction
    
    
    30,897
    
    
    
    224
    
    
    
    31,121Other
    
    
    287,459
    
    
    
    3,706
    
    
    
    291,165Residential:1-4 family
    
    
    57,262
    
    
    
    12,003
    
    
    
    69,265Home equities
    
    
    68,527
    
    
    
    541
    
    
    
    69,068Consumer
    
    
    6,433
    
    
    
    
    
    
    
    6,433Total
    
    $
    583,657
    
    
    $
    19,323
    
    
    $
    602,980
 December 31, 2010(Dollars in thousands)
    
    Performing
    
    Nonperforming
    
    TotalCommercial
    
    $
    128,277
    
    
    $
    2,302
    
    
    $
    130,579Commercial real estate:Construction
    
    
    40,985
    
    
    
    342
    
    
    
    41,327Other
    
    
    276,686
    
    
    
    7,066
    
    
    
    283,752Residential:1-4 family
    
    
    59,881
    
    
    
    10,704
    
    
    
    70,585Home equities
    
    
    67,380
    
    
    
    97
    
    
    
    67,477Consumer
    
    
    7,076
    
    
    
    
    
    
    
    7,076Total
    
    $
    580,285
    
    
    $
    20,511
    
    
    $
    600,796
  Pass Grade
 
    
    Strong cashflows  borrowers cashflows must meet or exceed the Companys minimum Debt
Service Coverage Ratio.
    
    Collateral margin  generally, the borrower must have pledged an acceptable collateral
class with an adequate collateral margin.
  
    
    Qualitative Factors  in addition to meeting the Companys minimum cashflow and
collateral requirements, a number of other quantitative and qualitative factors are also
factored into assigning a pass grade including the borrowers level of leverage (Debt to
Equity), prospects, history and experience in their industry, credit history, and any other
relevant factors including a borrowers character.
 Watch Grade
 
    
    Adequate Cashflows  borrowers in this category demonstrate adequate cashflows and Debt
Service Coverage Ratios, but also exhibit one or more less than positive conditions such as
declining trends in the level of cashflows, increasing or sole reliance on secondary
sources of cashflows, and/or do not meet the Companys minimum Debt Service Coverage Ratio.
However, cashflow remains at acceptable levels to meet debt service requirements.
    
    Adequate Collateral Margin  the collateral securing the debt remains adequate but also
exhibits a declining trend in value or expected volatility due to macro or industry
specific conditions. The current collateral value, less selling costs, remains adequate to
cover the outstanding debt under a liquidation scenario.
 16




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
 
    
    Qualitative Factors  while the borrowers cashflow and collateral margin generally
remain adequate, one or more quantitative and qualitative factors may also factor into
assigning a Watch Grade including the borrowers level of leverage (Debt to Equity),
deterioration in prospects, limited experience in their industry, newly formed company,
overall deterioration in the industry, negative trends or recent events in a borrowers
credit history, deviation from core business, and any other relevant factors.
 Special Mention Grade
  
    
    Adequate Cashflows  borrowers in this category demonstrate adequate cashflows and Debt
Service Coverage Ratios, but also reflect adverse trends in operations or continuing
financial deterioration that, if it does not stabilize and reverse in a reasonable
timeframe, retirement of the debt may be jeopardized.
 
    
    Adequate Collateral Margin  the collateral securing the debt remains
adequate but also exhibits a continuing declining trend in value or volatility due to macro
or industry specific conditions. The current collateral value, less selling costs, remains
adequate, but should the negative collateral trend continue, the full recovery of the
outstanding debt under a liquidation scenario could be jeopardized.
 
    
    Qualitative Factors  while the borrowers cashflow and/or collateral margin continue
to deteriorate but generally remain adequate, one or more quantitative and qualitative
factors may also be factoring into assigning a Special Mention Grade including inadequate
or incomplete loan documentation, perfection of collateral, inadequate credit structure,
borrower unable or unwilling to produce current and adequate financial information, and any
other relevant factors.
 Substandard Grade
  
    
    Sustained or substantial deteriorating financial trends,
    
    Unresolved management problems,
    
    Collateral is insufficient to repay debt; collateral is not sufficiently supported by
independent sources, such as asset-based financial audits, appraisals, or equipment
evaluations,
    
    Improper perfection of lien position, which is not readily correctable,
    
    Unanticipated and severe decline in market values,
    
    High reliance on secondary source of repayment,
    
    Legal proceedings, such as bankruptcy or a divorce, which has substantially decreased
the borrowers capacity to repay the debt,
    
    Fraud committed by the borrower,
    
    IRS liens that take precedence,
    
    Forfeiture statutes for assets involved in criminal activities,
    
    Protracted repayment terms outside of policy that are for longer than the same type of
credit in the Company portfolio,
    
    Any other relevant quantitative or qualitative factor that negatively affects the
current net worth and paying capacity of the borrower or of the collateral pledged, if any.
 17




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
 Doubtful Grade
 
    
    Proposed merger(s),
    
    Acquisition or liquidation procedures,
    
    Capital injection,
    
    Perfecting liens on additional collateral,
    
    Refinancing plans,
   March 31, 2011(Dollars in thousands)
    
    Pass
    
    Watch
    
    Special Mention
    
    Substandard
    
    Doubtful
    
    TotalCommercial
    
    $
    104,749
    
    
    $
    17,000
    
    
    $
    1,596
    
    
    $
    9,850
    
    
    $
    2,733
    
    
    $
    135,928Commercial real estate:Construction
    
    
    12,425
    
    
    
    12,676
    
    
    
    43
    
    
    
    5,878
    
    
    
    99
    
    
    
    31,121Other
    
    
    242,836
    
    
    
    21,758
    
    
    
    17,947
    
    
    
    8,423
    
    
    
    201
    
    
    
    291,165Residential:1-4 family
    
    
    54,661
    
    
    
    
    
    
    
    
    
    
    
    14,604
    
    
    
    
    
    
    
    69,265Home equities
    
    
    41,499
    
    
    
    3,788
    
    
    
    12,145
    
    
    
    10,589
    
    
    
    1,047
    
    
    
    69,068Consumer
    
    
    6,096
    
    
    
    190
    
    
    
    71
    
    
    
    76
    
    
    
    
    
    
    
    6,433Total
    
    $
    462,266
    
    
    $
    55,412
    
    
    $
    31,802
    
    
    $
    49,420
    
    
    $
    4,080
    
    
    $
    602,980
 December 31, 2010(Dollars in thousands)
    
    Pass
    
    Watch
    
    Special Mention
    
    Substandard
    
    Doubtful
    
    TotalCommercial
    
    $
    96,691
    
    
    $
    17,100
    
    
    $
    2,454
    
    
    $
    12,153
    
    
    $
    2,181
    
    
    $
    130,579Commercial real estate:Construction
    
    
    26,960
    
    
    
    8,228
    
    
    
    44
    
    
    
    5,995
    
    
    
    100
    
    
    
    41,327Other
    
    
    237,086
    
    
    
    34,420
    
    
    
    1,125
    
    
    
    8,401
    
    
    
    2,720
    
    
    
    283,752Residential:1-4 family
    
    
    57,390
    
    
    
    
    
    
    
    
    
    
    
    13,195
    
    
    
    
    
    
    
    70,585Home equities
    
    
    39,085
    
    
    
    4,428
    
    
    
    12,765
    
    
    
    10,298
    
    
    
    901
    
    
    
    67,477Consumer
    
    
    6,544
    
    
    
    362
    
    
    
    73
    
    
    
    97
    
    
    
    
    
    
    
    7,076Total
    
    $
    463,756
    
    
    $
    64,538
    
    
    $
    16,461
    
    
    $
    50,139
    
    
    $
    5,902
    
    
    $
    600,796
 18




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
  As of March 31, 2011Commercial(Dollars in thousands)
    
    Commercial
    
    Real Estate
    
    Consumer
    
    Residential
    
    Unallocated
    
    TotalAllowance for credit losses:
    
    $
    4,185
    
    
    $
    3,900
    
    
    $
    46
    
    
    $
    4,561
    
    
    $
    149
    
    
    $
    12,841Beginning balanceCharge-offs
    
    
    (252
    )
    
    
    (1,003
    )
    
    
    (19
    )
    
    
    (692
    )
    
    
    
    
    
    
    (1,966
    )Recoveries
    
    
    35
    
    
    
    22
    
    
    
    1
    
    
    
    277
    
    
    
    
    
    
    
    335Provision
    
    
    147
    
    
    
    1,592
    
    
    
    6
    
    
    
    804
    
    
    
    (149
    )
    
    
    2,400Ending balance
    
    $
    4,115
    
    
    $
    4,511
    
    
    $
    34
    
    
    $
    4,950
    
    
    $
    
    
    
    $
    13,610Ending balance:individually evaluated for
impairment
    
    $
    682
    
    
    $
    328
    
    
    $
    
    
    
    $
    801
    
    
    $
    
    
    
    $
    1,811Ending balance:collectively evaluated for
impairment
    
    $
    3,433
    
    
    $
    4,183
    
    
    $
    34
    
    
    $
    4,149
    
    
    $
    
    
    
    $
    11,799Financing receivablesEnding balance
    
    $
    135,928
    
    
    $
    322,286
    
    
    $
    6,433
    
    
    $
    138,333
    
    
    $
    
    
    
    $
    602,980Ending balance individually
evaluated for impairment
    
    $
    2,849
    
    
    $
    9,875
    
    
    $
    
    
    
    $
    19,162
    
    
    $
    
    
    
    $
    31,886Ending balance collectively
evaluated for impairment
    
    $
    133,079
    
    
    $
    312,411
    
    
    $
    6,433
    
    
    $
    119,171
    
    
    $
    
    
    
    $
    571,094
 As of December 31, 2010Commercial(Dollars in thousands)
    
    Commercial
    
    Real Estate
    
    Consumer
    
    Residential
    
    Unallocated
    
    TotalAllowance for credit losses:Beginning balance
    
    $
    5,306
    
    
    $
    3,535
    
    
    $
    35
    
    
    $
    2,059
    
    
    $
    272
    
    
    $
    11,207Charge-offs
    
    
    (4,192
    )
    
    
    (3,391
    )
    
    
    
    
    
    
    (4,506
    )
    
    
    
    
    
    
    (12,089
    )Recoveries
    
    
    393
    
    
    
    154
    
    
    
    8
    
    
    
    318
    
    
    
    
    
    
    
    873Provision
    
    
    2,678
    
    
    
    3,602
    
    
    
    3
    
    
    
    6,690
    
    
    
    (123
    )
    
    
    12,850Ending balance
    
    $
    4,185
    
    
    $
    3,900
    
    
    $
    46
    
    
    $
    4,561
    
    
    $
    149
    
    
    $
    12,841Ending balance:individually evaluated for
impairment
    
    $
    449
    
    
    $
    250
    
    
    $
    
    
    
    $
    689
    
    
    $
    
    
    
    $
    1,388Ending balance:collectively evaluated for
impairment
    
    $
    3,736
    
    
    $
    3,650
    
    
    $
    46
    
    
    $
    3,872
    
    
    $
    149
    
    
    $
    11,453Financing receivablesEnding balance
    
    $
    130,579
    
    
    $
    325,079
    
    
    $
    7,076
    
    
    $
    138,062
    
    
    $
    
    
    
    $
    600,796Ending balance individually
evaluated for impairment
    
    $
    2,302
    
    
    $
    13,833
    
    
    $
    
    
    
    $
    17,781
    
    
    $
    
    
    
    $
    33,916Ending balance collectively
evaluated for impairment
    
    $
    128,277
    
    
    $
    311,246
    
    
    $
    7,076
    
    
    $
    120,281
    
    
    $
    
    
    
    $
    566,880
     Commercial Loans
 19




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
   Commercial Real Estate (CRE) Loans
   Consumer Loans
     20




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
     Valuation allowances specific to the ITIN and purchased Home Equity Portfolios
 ITIN Portfolio
 
    
    Increased delinquencies  20% of the portfolio was delinquent 30 days or more as of
December 31, 2010.
    
    Servicer modification efforts were generally extending beyond a typical timeframe
    
    Mortgage insurance  A small number of mortgage insurance claims have been denied and
management has not been able to identify a trend regarding any potential future denials.
    
    Sale of OREO  An emerging trend in the lengthening disposition of ITIN OREO had
developed, including the potential for decreased recoveries and consequently increased net
charge-offs.
    
    Lack of loss guaranty due to settlement.
  Home Equity Portfolio
  NOTE 7. OTHER REAL ESTATE OWNED
  21




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
    NOTE 8. COMMITMENTS AND CONTINGENT LIABILITIES
 Lease Commitments 
 (Dollars in thousands)Amounts due in:2011
    
    $
    5912012
    
    
    6062013
    
    
    4882014
    
    
    4992015
    
    
    164Thereafter
    
    
    270Total
    
    $
    2,618
 Legal Proceedings
 FHLB Advances 
  (Dollars in thousands)
    
    Advance Amount
    
    
    Interest Rate
    
    
    Maturity$
    120,000
    
    
    
    0.29
    %
    
    June 6, 20116,000
    
    
    
    0.33
    %
    
    February 28, 201215,000
    
    
    
    0.32
    %
    
    March 5, 2013
   22




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
  Other Available Borrowing Lines
 Off-Balance Sheet Financial Instruments
      (Dollars in thousands)
    
    March 31, 2011
    
    
    December 31, 2010Off-balance sheet commitments:Commitments to extend credit
    
    $
    127,094
    
    
    $
    146,915Standby letters of credit
    
    
    3,252
    
    
    
    3,509Guaranteed commitments outstanding
    
    
    1,299
    
    
    
    1,299Total commitments
    
    $
    131,645
    
    
    $
    151,723
   NOTE 9. ACCOUNTING FOR INCOME TAX AND UNCERTAINTIES
  23




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
    NOTE 10. FAIR VALUE MEASUREMENT
   March 31, 2011
    
    December 31, 2010Carrying
    
    
    
    
    
    Carrying(Dollars in thousands)
    
    Amounts
    
    Fair Value
    
    Amounts
    
    Fair ValueFinancial assetsCash and cash equivalents
    
    $
    68,296
    
    
    $
    68,296
    
    
    $
    63,256
    
    
    $
    63,256Portfolio loans, net
    
    
    589,266
    
    
    
    604,310
    
    
    
    587,865
    
    
    
    595,442Mortgages loans held for sale
    
    
    18,963
    
    
    
    18,963
    
    
    
    42,995
    
    
    
    42,995Interest receivable
    
    
    4,299
    
    
    
    4,299
    
    
    
    3,845
    
    
    
    3,845Financial liabilitiesDeposits
    
    
    628,089
    
    
    
    630,218
    
    
    
    648,702
    
    
    
    650,200Securities sold under agreements to repurchase
    
    
    14,607
    
    
    
    14,607
    
    
    
    13,548
    
    
    
    13,548Federal Home Loan Bank advances
    
    
    141,000
    
    
    
    140,998
    
    
    
    141,000
    
    
    
    140,963Subordinated debenture
    
    
    15,465
    
    
    
    6,726
    
    
    
    15,465
    
    
    
    6,633Interest payable
    
    
    484
    
    
    
    484
    
    
    
    458
    
    
    
    458Contract
    
    
    
    
    
    ContractOff balance sheet financial instruments:
    
    Amount
    
    
    
    
    
    AmountCommitments to extend credit
    
    $
    127,094
    
    
    
    
    
    
    $
    146,915Standby letters of credit
    
    $
    3,252
    
    
    
    
    
    
    $
    3,509Guaranteed commitments outstanding
    
    $
    1,299
    
    
    
    
    
    
    $
    1,299
  Cash and cash equivalents
 Portfolio loans receivable
 Interest receivable and payable
 Mortgage loans held for sale
 24




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
 FHLB
advances
 Subordinated debenture
 Deposit liabilities
 Securities sold under agreements to repurchase
 Commitments
  Fair Value Hierarchy
 Level 1
 Level 2
 Level 3
   25




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
  (Dollars in thousands)
    
    Fair Value at March 31, 2011Recurring basis
    
    Total
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Available-for-sale securitiesObligations of states and political subdivisions
    
    $
    62,136
    
    
    $
    
    
    
    $
    62,136
    
    
    $
    Corporate securities
    
    
    22,834
    
    
    
    
    
    
    
    22,834
    
    
    
    Other investment securities (1)
    
    
    100,747
    
    
    
    
    
    
    
    100,747
    
    
    
    Total assets measured at fair value
    
    $
    185,717
    
    
    $
    
    
    
    $
    185,717
    
    
    $
    Earn out payable
    
    
    596
    
    
    
    
    
    
    
    
    
    
    
    596Total liabilities measured at fair value
    
    $
    596
    
    
    $
    
    
    
    $
    
    
    
    $
    596
 
 (1)
    
    Principally represents U.S. Treasury and agencies or residential mortgage backed securities
issued or guaranteed by governmental agencies. (Dollars in thousands)
    
    Fair Value at December 31, 2010Recurring basis
    
    Total
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Available-for-sale securitiesObligations of states and political subdivisions
    
    $
    64,151
    
    
    $
    
    
    
    $
    64,151
    
    
    $
    Corporate securities
    
    
    28,957
    
    
    
    
    
    
    
    28,957
    
    
    
    Other investment securities (1)
    
    
    96,127
    
    
    
    
    
    
    
    96,127
    
    
    
    Derivatives
    
    
    2,341
    
    
    
    
    
    
    
    2,341
    
    
    
    Total assets measured at fair value
    
    $
    191,576
    
    
    $
    
    
    
    $
    191,576
    
    
    $
    Earn out payable
    
    
    986
    
    
    
    
    
    
    
    
    
    
    
    986Total liabilities measured at fair value
    
    $
    986
    
    
    $
    
    
    
    $
    
    
    
    $
    986
 
 (1)
    
    Principally represents U.S. Treasury and agencies or residential mortgage backed securities
issued or guaranteed by governmental agencies.  (Dollars in thousands)
    
    March 31,
    
    December 31,2011
    
    2010Beginning balance
    
    $
    986
    
    
    $
    965Transfers into Level 3
    
    
    
    
    
    
    Transfers out of Level 3
    
    
    
    
    
    
    Total lossesIncluded in earnings (or changes in net liabilities)
    
    
    (390
    )
    
    
    21Included in other comprehensive income
    
    
    
    
    
    
    Purchases, issuances, sales, and settlementsPurchases
    
    
    
    
    
    
    Issuances
    
    
    
    
    
    
    Sales
    
    
    
    
    
    
    Settlements
    
    
    
    
    
    
    Ending balance
    
    $
    596
    
    
    $
    986
  26




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
   Assets and Liabilities Recorded at Fair Value on a Non Recurring Basis
   (Dollars in thousands)
    
    Fair Value at March 31, 2011TotalNon recurring basis
    
    Total
    
    Level 1
    
    Level 2
    
    Level 3
    
    (Losses)Impaired loans
    
    $
    2,108
    
    
    $
    
    
    
    $
    
    
    
    $
    2,108
    
    
    $
    (1,119
    )Other real estate owned
    
    
    3,506
    
    
    
    
    
    
    
    
    
    
    
    3,506
    
    
    
    (187
    )Total assets measured at fair value
    
    $
    5,614
    
    
    $
    
    
    
    $
    
    
    
    $
    5,614
    
    
    $
    (1,306
    )
 (Dollars in thousands)
    
    Fair Value at December 31, 2010TotalNon recurring basis
    
    Total
    
    Level 1
    
    Level 2
    
    Level 3
    
    (Losses)Impaired loans
    
    $
    12,982
    
    
    $
    
    
    
    $
    
    
    
    $
    12,982
    
    
    $
    (6,726
    )Other real estate owned
    
    
    1,994
    
    
    
    
    
    
    
    
    
    
    
    1,994
    
    
    
    (1,571
    )Goodwill
    
    
    3,695
    
    
    
    
    
    
    
    
    
    
    
    3,695
    
    
    
    (32
    )Total assets measured at fair value
    
    $
    18,671
    
    
    $
    
    
    
    $
    
    
    
    $
    18,671
    
    
    $
    (8,329
    )
  
    
    Collateral dependent impaired loans with a carrying amount of $3.2 million were written
down to their fair value of $2.1 million resulting in a $1.1 million adjustment to the ALLL.
 
    
    OREO with a carrying amount of $3.7 million was written down to fair value of $3.5
million resulting in a loss of $187.0 thousand which was included in earnings for the
period.
   27




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
   Limitations
    NOTE 11. TRANSFER OF FINANCIAL ASSETS
    NOTE 12. SEGMENT REPORTING
   28




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements
  (Dollars in thousands)
    
    Three Months Ended March 31, 2011Bank
    
    Mortgage
    
    Parent
    
    Elimination
    
    ConsolidatedNet interest income (expense)
    
    $
    8,788
    
    
    $
    
    
    
    $
    (54
    )
    
    $
    (158
    )
    
    $
    8,576Provision for loan and lease losses
    
    
    2,400
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,400Total noninterest income
    
    
    975
    
    
    
    2,288
    
    
    
    
    
    
    
    158
    
    
    
    3,421Total noninterest expense
    
    
    4,774
    
    
    
    2,594
    
    
    
    158
    
    
    
    
    
    
    
    7,526Income before provision for income taxes
    
    
    2,589
    
    
    
    (306
    )
    
    
    (212
    )
    
    
    
    
    
    
    2,071Provision for income taxes
    
    
    688
    
    
    
    (257
    )
    
    
    
    
    
    
    
    
    
    
    431Net income
    
    
    1,901
    
    
    
    (49
    )
    
    
    (212
    )
    
    
    
    
    
    
    1,640Less: net income attributable to non-controlling interest
    
    
    
    
    
    
    (24
    )
    
    
    
    
    
    
    
    
    
    
    (24
    )Net income attributable to Bank of Commerce Holdings
    
    $
    1,901
    
    
    $
    (25
    )
    
    $
    (212
    )
    
    $
    
    
    
    $
    1,664
 (Dollars in thousands)
    
    Three Months Ended March 31, 2010Bank
    
    Mortgage
    
    Parent
    
    Elimination
    
    ConsolidatedNet interest income (expense)
    
    $
    7,797
    
    
    $
    (1
    )
    
    $
    (155
    )
    
    $
    (124
    )
    
    $
    7,517Provision for loan and lease losses
    
    
    2,250
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,250Total noninterest income
    
    
    1,424
    
    
    
    2,394
    
    
    
    
    
    
    
    124
    
    
    
    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 income attributable to non-controlling interest
    
    
    
    
    
    
    (255
    )
    
    
    
    
    
    
    
    
    
    
    (255
    )Net income attributable to Bank of Commerce Holdings
    
    $
    1,819
    
    
    $
    10
    
    
    $
    (294
    )
    
    $
    
    
    
    $
    1,535
  (Dollars in thousands)
    
    March 31, 2011Bank
    
    Mortgage
    
    Parent
    
    Elimination
    
    ConsolidatedTotal assets
    
    $
    906,527
    
    
    $
    16,882
    
    
    $
    120,174
    
    
    $
    (128,058
    )
    
    $
    915,525Total portfolio loans, gross
    
    $
    609,776
    
    
    $
    
    
    
    $
    2,242
    
    
    $
    (9,037
    )
    
    $
    602,981Total deposits
    
    $
    633,132
    
    
    $
    
    
    
    $
    
    
    
    $
    (5,043
    )
    
    $
    628,089
 (Dollars in thousands)
    
    December 31, 2010Bank
    
    Mortgage
    
    Parent
    
    Elimination
    
    ConsolidatedTotal assets
    
    $
    923,832
    
    
    $
    23,912
    
    
    $
    118,173
    
    
    $
    (126,784
    )
    
    $
    939,133Total portfolio loans, gross
    
    $
    606,646
    
    
    $
    
    
    
    $
    2,289
    
    
    $
    (8,139
    )
    
    $
    600,796Total deposits
    
    $
    655,802
    
    
    $
    
    
    
    $
    
    
    
    $
    (7,100
    )
    
    $
    648,702
 NOTE 13. DERIVATIVES
   29




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BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
  (Dollars in thousands)
 Description
    
    Notional Amount
    
    Effective Date
    
    MaturityForward starting interest rate swap
    
    $
    75,000
    
    
    March 1, 2012
    
    September 1, 2012Forward starting interest rate swap
    
    $
    75,000
    
    
    September 4, 2012
    
    September 1, 2013Forward starting interest rate swap
    
    $
    75,000
    
    
    September 3, 2013
    
    September 1, 2014Forward starting interest rate swap
    
    $
    75,000
    
    
    September 2, 2014
    
    September 1, 2015Forward starting interest rate swap
    
    $
    75,000
    
    
    September 1, 2015
    
    March 1, 2017
   (Dollars in thousands)
 Underlying
    
    
    
    Balance SheetRisk Exposure
    
    Description
    
    Location
    
    Fair Value
    
    MaturityAsset DerivativesInterest rate contract
    
    Forward starting interest rate swaps
    
    Other assets
    
    $
    (22
    )
    
    September 1, 2012Interest rate contract
    
    Forward starting interest rate swaps
    
    Other assets
    
    $
    198
    
    
    September 1, 2013Interest rate contract
    
    Forward starting interest rate swaps
    
    Other assets
    
    $
    443
    
    
    September 1, 2014Interest rate contract
    
    Forward starting interest rate swaps
    
    Other assets
    
    $
    611
    
    
    September 1, 2015Interest rate contract
    
    Forward starting interest rate swaps
    
    Other assets
    
    $
    1,111
    
    
    March 1, 2017Total
    
    $
    2,341
   30




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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,
2010 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, 2010 to March 31, 2011. Also discussed are
significant trends and changes in the Companys results of operations for the three months ended
March 31, 2011, compared to the same period in 2010. 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 rd
 tm tm
  31




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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.
 32




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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 ALLL;
 
    
    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.
   33




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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 and lease losses.
  Defaults may negatively impact us.
   Interest rate fluctuations, which are out of our control, could harm profitability.
  34




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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.
  35




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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.
  36




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##### Table of Contents



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.
  37




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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.
 38




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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.
  39




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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.
  40




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##### Table of Contents



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.
  41




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##### Table of Contents



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
  42




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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
 The Impact of New Financial Reform Legislation is Yet to be Determined
        43




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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
 Executive Overview
       Sources of Income
    44




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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
     45




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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
 (Unaudited)
    
    Three months endedMarch 31, 2011
    
    
    March 31, 2010ProfitabilityReturn on average assets
    
    
    0.72
    %
    
    
    0.75
    %Return on average equity
    
    
    6.35
    %
    
    
    8.76
    %Average earning assets to total average assets
    
    
    92.09
    %
    
    
    89.51
    %Interest MarginNet interest margin
    
    
    4.02
    %
    
    
    4.12
    %Asset QualityAllowance for loan and lease losses to total loans
    
    
    2.26
    %
    
    
    2.00
    %Nonperforming assets to total assets
    
    
    2.45
    %
    
    
    2.02
    %Net charge-offs to average loans
    
    
    0.27
    %
    
    
    0.20
    %LiquidityLoans to deposits
    
    
    95.99
    %
    
    
    98.38
    %Liquidity ratio
    
    
    44.70
    %
    
    
    49.78
    %CapitalTier 1 Risk-Based Capital  Bank
    
    
    14.79
    %
    
    
    15.35
    %Total Risk-Based Capital  Bank
    
    
    16.05
    %
    
    
    16.61
    %Tier 1 Risk-Based Capital  Company
    
    
    15.10
    %
    
    
    14.90
    %Total Risk-Based Capital  Company
    
    
    16.36
    %
    
    
    16.16
    %EfficiencyEfficiency ratio
    
    
    62.74
    %
    
    
    62.70
    %
 Financial Highlights  Results of Operations
 Balance Sheet
       46




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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
  Income Statement
      Liquidity
     Capital Management and Adequacy
  47




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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
     (Dollars in thousands)
 WellActual
    
    
    Capitalized
    
    
    Minimum CapitalMarch 31, 2011
    
    Capital
    
    
    Ratio
    
    
    Requirement
    
    
    RequirementThe Holding CompanyLeverage
    
    $
    116,472
    
    
    
    12.56
    %
    
    
    n/a
    
    
    
    4.00
    %Tier 1 Risk-Based
    
    
    116,472
    
    
    
    15.10
    %
    
    
    n/a
    
    
    
    4.00
    %Total Risk-Based
    
    
    126,169
    
    
    
    16.36
    %
    
    
    n/a
    
    
    
    8.00
    %The BankLeverage
    
    $
    108,655
    
    
    
    11.80
    %
    
    
    5.00
    %
    
    
    4.00
    %Tier 1 Risk-Based
    
    
    108,655
    
    
    
    14.79
    %
    
    
    6.00
    %
    
    
    4.00
    %Total Risk-Based
    
    
    117,896
    
    
    
    16.05
    %
    
    
    10.00
    %
    
    
    8.00
    %
      48




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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
   Short and Long Term Borrowings
   Allowance for Loan and Lease Losses
     Factors that may affect future results
      49




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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
      Critical Accounting Policies
   Valuation of Investments and Impairment of Securities
   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
   Income Taxes
   51




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
 Derivative Financial Instruments and Hedging Activities
 
    
    Derivative Loan Commitments The Company, through its majority owned subsidiary, Bank
of Commerce Mortgage, enters into forward delivery contracts to sell residential mortgage
loans at specific prices and dates in order to hedge the interest rate risk in its
portfolio of mortgage loans held for sale and its residential mortgage loan commitments.
Generally, the Company enters into a best efforts interest rate lock commitment (IRLC) with
borrowers and forward delivery contracts with investors associated with mortgage loans
receivable held for sale.
 These derivative instruments consist primarily of IRLCs executed with borrowers and
mandatory forward purchase commitments with investor lenders. These derivative instruments
are accounted for as fair value hedges, with the changes in fair value reflected in earnings
as a component of mortgage brokerage fee income. At March 31, 2011 the Company did not
maintain any open positions or any other outstanding derivative loan commitments.
 
    
    Interest Rate Swap Agreements- As part of the Companys risk management strategy, the
Company enters into interest rate swap agreements or other derivatives to mitigate the
interest rate risk inherent in certain assets and liabilities. These derivative instruments
are accounted for as cash flow hedges, with the changes in fair value reflected in other
comprehensive income and subsequently reclassified to earnings when gains or losses are
realized on the hedged item. At March 31, 2011, the Company did not maintain any interest
rate swap agreements.
 Fair Value Measurements
   Net Interest Income and Net Interest Margin
     52




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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
  Average Balances, Interest Income/Expense and Yields/Rates Paid
(unaudited)
 Three Months Ended
    
    
    Three Months EndedMarch 31, 2011
    
    
    March 31, 2010Average Balance
    
    
    Interest
    
    
    Yield/Rate
    
    
    Average Balance
    
    
    Interest
    
    
    Yield/RateInterest Earning AssetsPortfolio loans1
    
    $
    616,374
    
    
    $
    8,786
    
    
    
    5.70
    %
    
    $
    616,617
    
    
    $
    9,051
    
    
    
    5.87
    %Tax-exempt securities
    
    
    53,127
    
    
    
    532
    
    
    
    4.01
    %
    
    
    31,055
    
    
    
    322
    
    
    
    4.15
    %US government securities
    
    
    30,148
    
    
    
    161
    
    
    
    2.14
    %
    
    
    19,689
    
    
    
    144
    
    
    
    2.93
    %Mortgage backed securities
    
    
    71,211
    
    
    
    516
    
    
    
    2.90
    %
    
    
    23,058
    
    
    
    295
    
    
    
    5.12
    %Federal funds sold
    
    
    
    
    
    
    
    
    
    
    0.00
    %
    
    
    968
    
    
    
    1
    
    
    
    0.41
    %Other securities
    
    
    83,135
    
    
    
    651
    
    
    
    3.13
    %
    
    
    38,653
    
    
    
    270
    
    
    
    2.79
    %Average Earning Assets
    
    
    853,995
    
    
    $
    10,646
    
    
    
    4.99
    %
    
    
    730,040
    
    
    $
    10,083
    
    
    
    5.52
    %Cash & due from banks
    
    
    34,505
    
    
    
    
    
    
    
    
    
    
    
    44,374Bank premises
    
    
    9,596
    
    
    
    
    
    
    
    
    
    
    
    9,887Other assets
    
    
    29,232
    
    
    
    
    
    
    
    
    
    
    
    31,337Average Total Assets
    
    $
    927,328
    
    
    
    
    
    
    
    
    
    
    $
    815,638Interest Bearing LiabilitiesInterest bearing demand
    
    $
    149,152
    
    
    $
    226
    
    
    
    0.61
    %
    
    $
    149,000
    
    
    $
    230
    
    
    
    0.62
    %Savings deposits
    
    
    88,291
    
    
    
    246
    
    
    
    1.11
    %
    
    
    70,191
    
    
    
    219
    
    
    
    1.25
    %Certificates of deposit
    
    
    307,525
    
    
    
    1,313
    
    
    
    1.71
    %
    
    
    338,425
    
    
    
    1,761
    
    
    
    2.08
    %Repurchase agreements
    
    
    14,218
    
    
    
    14
    
    
    
    0.39
    %
    
    
    10,257
    
    
    
    12
    
    
    
    0.47
    %Other borrowings
    
    
    159,654
    
    
    
    271
    
    
    
    0.68
    %
    
    
    85,465
    
    
    
    344
    
    
    
    1.61
    %Average Interest Liabilities
    
    
    718,840
    
    
    $
    2,070
    
    
    
    1.15
    %
    
    
    653,338
    
    
    $
    2,566
    
    
    
    1.57
    %Noninterest bearing demand
    
    
    98,502
    
    
    
    
    
    
    
    
    
    
    
    73,217Other liabilities
    
    
    5,132
    
    
    
    
    
    
    
    
    
    
    
    19,006Shareholders equity
    
    
    104,854
    
    
    
    
    
    
    
    
    
    
    
    70,077Average Liabilities and Shareholders Equity
    
    $
    927,328
    
    
    
    
    
    
    
    
    
    
    $
    815,638Net Interest Income and Net Interest Margin
    
    
    
    
    
    $
    8,576
    
    
    
    4.02
    %
    
    
    
    
    
    $
    7,517
    
    
    
    4.12
    %
    
 1
    
    Average nonaccrual loans and average loans held for sale of $18.8 and $19.5 million are included, respectively 53




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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)
 (Dollars in thousands)
    
    March 31, 2011 over March 31, 2010Variance Due to
    
    
    Variance Due toAverage Volume
    
    
    Average Rate
    
    
    TotalIncrease (decrease)In interest income:Portfolio loans
    
    $
    (3
    )
    
    $
    (262
    )
    
    $
    (265
    )Tax-exempt securities
    
    
    221
    
    
    
    (11
    )
    
    
    210US government securities
    
    
    56
    
    
    
    (39
    )
    
    
    17Mortgage backed securities
    
    
    349
    
    
    
    (128
    )
    
    
    221Federal funds sold
    
    
    
    
    
    
    (1
    )
    
    
    (1
    )Other securities
    
    
    348
    
    
    
    33
    
    
    
    381Total increase (decrease)
    
    
    971
    
    
    
    (408
    )
    
    
    563(Decrease) increaseIn interest expense:Interest bearing demand
    
    
    
    
    
    
    (4
    )
    
    
    (4
    )Savings accounts
    
    
    50
    
    
    
    (23
    )
    
    
    27Certificates of deposit
    
    
    (132
    )
    
    
    (316
    )
    
    
    (448
    )Repurchase agreements
    
    
    4
    
    
    
    (2
    )
    
    
    2Other borrowings
    
    
    127
    
    
    
    (200
    )
    
    
    (73
    )Total increase (decrease)
    
    
    49
    
    
    
    (545
    )
    
    
    (496
    )Net increase (decrease)
    
    $
    922
    
    
    $
    137
    
    
    $
    1,059
   Noninterest Income
  (Dollars in thousands)
    
    Three Months EndedMarch 31,
    
    
    March 31,2011
    
    
    2010Noninterest income:Service charges on deposit accounts
    
    $
    50
    
    
    $
    82Payroll and benefit processing fees
    
    
    129
    
    
    
    128Earnings on cash surrender value  Bank owned life insurance
    
    
    111
    
    
    
    108Net gain on sale of securities available-for-sale
    
    
    258
    
    
    
    931Merchant credit card service income, net
    
    
    270
    
    
    
    54Mortgage brokerage fee income
    
    
    2,492
    
    
    
    2,539Other income
    
    
    111
    
    
    
    100Total noninterest income
    
    $
    3,421
    
    
    $
    3,942
 54




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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
    Noninterest Expense
  (Dollars in thousands)
    
    Three Months EndedMarch 31,
    
    
    March 31,2011
    
    
    2010Noninterest expense:Salaries & related benefits
    
    $
    4,253
    
    
    $
    3,711Occupancy & equipment expense
    
    
    708
    
    
    
    926Write down of other real estate owned
    
    
    187
    
    
    
    184FDIC insurance premium
    
    
    372
    
    
    
    251Data processing fees
    
    
    99
    
    
    
    89Professional service fees
    
    
    550
    
    
    
    400Directors deferred fee compensation plan
    
    
    127
    
    
    
    118Stationery & supplies
    
    
    43
    
    
    
    80Postage
    
    
    42
    
    
    
    42Directors expenses
    
    
    74
    
    
    
    84Other expenses
    
    
    1,071
    
    
    
    1,300Total noninterest expense
    
    $
    7,526
    
    
    $
    7,185
    Income Taxes
  55




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
  (Dollars in thousands)
    
    Three Months EndedMarch 31, 2011
    
    
    March 31, 2010Income tax provision (benefit)
    
    $
    431
    
    
    $
    744Effective tax rate
    
    
    20.81
    %
    
    
    36.76
    %
     (Dollars in thousands)
    
    March 31, 2011
    
    
    March 31, 2010Deferred tax assets:State franchise taxes
    
    $
    79
    
    
    $
    89Deferred compensation
    
    
    2,585
    
    
    
    2,392Loan loss reserves
    
    
    6,396
    
    
    
    5,561Unrealized (gains) losses other comprehensive income
    
    
    (641
    )
    
    
    (247
    )Other
    
    
    562
    
    
    
    271Total deferred tax assets
    
    $
    8,981
    
    
    $
    8,066Deferred tax liabilities:Depreciation
    
    
    (90
    )
    
    
    (262
    )Deferred loan origination costs
    
    
    (369
    )
    
    
    (395
    )Deferred state taxes
    
    
    (705
    )
    
    
    (618
    )Other
    
    
    (454
    )
    
    
    (156
    )Total deferred tax liabilities
    
    $
    (1,618
    )
    
    $
    (1,431
    )Net deferred tax asset
    
    $
    7,363
    
    
    $
    6,635
 Asset Quality and Portfolio Concentration
    56




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
      (Dollars in thousands)Portfolio Loans
    
    March 31, 2011
    
    
    December 31, 2010Commercial
    
    $
    135,928
    
    
    $
    130,579Real Estate loansConstruction loans
    
    
    31,121
    
    
    
    41,327Commercial
    
    
    291,165
    
    
    
    283,752ITIN loan pool
    
    
    69,265
    
    
    
    70,585Other first lien mortgages
    
    
    21,120
    
    
    
    19,299Equity loans
    
    
    47,948
    
    
    
    48,178Consumer
    
    
    6,303
    
    
    
    6,775Other loans
    
    
    130
    
    
    
    301Gross loans
    
    
    602,980
    
    
    
    600,796Less:Net deferred loan fees
    
    
    104
    
    
    
    90Allowance for loan and lease losses
    
    
    13,610
    
    
    
    12,841Total net portfolio loans
    
    $
    589,266
    
    
    $
    587,865
  (Dollars in thousands)
 % of TotalLoan Type
    
    Balance
    
    
    net portfolio loansCommercial lots and entitled commercial land
    
    $
    10,415
    
    
    
    1.73
    %Commercial real estate  construction
    
    
    16,412
    
    
    
    2.72
    %1-4 family subdivision loans
    
    
    2,110
    
    
    
    0.35
    %1-4 family individual residential lots
    
    
    1,707
    
    
    
    0.28
    %1-4 family construction speculative
    
    
    477
    
    
    
    0.08
    %Total real estate  construction
    
    $
    31,121
    
    
    
    5.16
    %
 57




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
  % of GrossLoan Type
    
    Balance
    
    
    Loan PortfolioCommercial-investor
    
    $
    224,630
    
    
    
    37.25
    %Commercial-owner occupied
    
    
    66,535
    
    
    
    11.03
    %Total commercial real estate
    
    $
    291,165
    
    
    
    48.28
    %
  Mortgages held for sale
   Nonperforming Assets
  (Dollars in thousands)Nonperforming assets
    
    March 31, 2011
    
    
    December 31, 2010Commercial
    
    $
    2,849
    
    
    $
    2,302Secured by 1-4 family, closed end 1st lien
    
    
    1,634
    
    
    
    1,166Secured by 1-4 family  revolving
    
    
    96
    
    
    
    97Secured by RE - 1-4 construction
    
    
    125
    
    
    
    242Secured by RE  other construction
    
    
    99
    
    
    
    100Secured by NFNR
    
    
    3,706
    
    
    
    7,066Nonaccrual loan portfolio
    
    $
    8,509
    
    
    $
    10,973Nonaccrual  ITIN loan pool
    
    $
    10,071
    
    
    $
    9,538Nonaccrual  home equity loan pool
    
    
    
    
    
    
    90 days past due and still accruing interest
    
    
    743
    
    
    
    Other real estate owned
    
    
    3,868
    
    
    
    2,288Total nonperforming assets
    
    $
    23,191
    
    
    $
    22,799
  58




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
        
    
    Increasing delinquencies  20% of the portfolio was delinquent 30 days or more as of
December 31, 2010,
 
    
    Servicer modification efforts were generally extending beyond a typical timeframe,
 
    
    Mortgage insurance  A small number of mortgage insurance claims have been denied and
management has not been able to identify a trend regarding any potential future denials,
 
    
    Sale of OREO  An emerging trend in the lengthening disposition of ITIN OREO had
developed including the potential for decreased recoveries and consequently increased net
charge offs.
  59




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
     (Dollars in thousands)
 Troubled debt restructurings
    
    March 31, 2011
    
    
    December 31, 2010Nonaccrual
    
    $
    9,752
    
    
    $
    11,977Accruing
    
    
    12,125
    
    
    
    12,668Total troubled debt restructurings
    
    $
    21,877
    
    
    $
    24,645
  (Dollars in thousands)
 March 31,
    
    
    December 31,
    
    
    March 31,2011
    
    
    2010
    
    
    2010Beginning balance
    
    $
    12,841
    
    
    $
    11,207
    
    
    $
    11,207Provision for loan loss charged to expense
    
    
    2,400
    
    
    
    12,850
    
    
    
    2,250Loans charged off
    
    
    (1,966
    )
    
    
    (12,089
    )
    
    
    (1,688
    )Loan loss recoveries
    
    
    335
    
    
    
    873
    
    
    
    428Ending balance
    
    $
    13,610
    
    
    $
    12,841
    
    
    $
    12,197Gross portfolio loans outstanding at period end
    
    $
    602,876
    
    
    $
    600,707
    
    
    $
    608,984Ratio of allowance for loan and lease losses to total loans
    
    
    2.26
    %
    
    
    2.14
    %
    
    
    2.00
    %Nonaccrual loans at period end:Commercial
    
    $
    2,848
    
    
    $
    2,302
    
    
    $
    Construction
    
    
    224
    
    
    
    342
    
    
    
    307Commercial real estate
    
    
    3,706
    
    
    
    7,066
    
    
    
    7,309Residential real estate
    
    
    11,705
    
    
    
    10,704
    
    
    
    2,439Home equity
    
    
    96
    
    
    
    97
    
    
    
    198Total nonaccrual loans
    
    $
    18,579
    
    
    $
    20,511
    
    
    $
    10,253Accruing troubled debt restructured loansCommercial
    
    $
    
    
    
    $
    
    
    
    $
    767Construction
    
    
    2,328
    
    
    
    2,804
    
    
    
    4,475Commercial real estate
    
    
    3,619
    
    
    
    3,621
    
    
    
    2,157Residential real estate
    
    
    5,782
    
    
    
    6,243
    
    
    
    5,302Home equity
    
    
    396
    
    
    
    
    
    
    
    Total accruing restructured loans
    
    $
    12,125
    
    
    $
    12,668
    
    
    $
    12,701All other accruing impaired loans
    
    
    1,182
    
    
    
    737
    
    
    
    Total impaired loans
    
    $
    31,886
    
    
    $
    33,916
    
    
    $
    22,954Allowance for loan and lease losses to nonaccrual loans at period end
    
    
    73.25
    %
    
    
    62.61
    %
    
    
    118.96
    %Nonaccrual loans to total loans
    
    
    3.08
    %
    
    
    3.41
    %
    
    
    1.68
    %
 60




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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)
    
    2011
    
    
    2010
    
    
    2010
    
    
    2010
    
    
    2010Interest income:Interest and fees on loans
    
    $
    8,786
    
    
    $
    9,233
    
    
    $
    9,414
    
    
    $
    9,302
    
    
    $
    9,051Interest on tax-exempt securities
    
    
    532
    
    
    
    524
    
    
    
    465
    
    
    
    381
    
    
    
    322Interest on U.S. government securities
    
    
    678
    
    
    
    504
    
    
    
    633
    
    
    
    507
    
    
    
    439Interest on federal funds sold and securities
purchased under agreement to resell
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    1Interest on other securities
    
    
    650
    
    
    
    530
    
    
    
    471
    
    
    
    343
    
    
    
    270Total interest income
    
    
    10,646
    
    
    
    10,791
    
    
    
    10,984
    
    
    
    10,533
    
    
    
    10,083Interest expense:Interest on demand deposits
    
    
    226
    
    
    
    261
    
    
    
    251
    
    
    
    226
    
    
    
    230Interest on savings deposits
    
    
    246
    
    
    
    244
    
    
    
    237
    
    
    
    221
    
    
    
    219Interest on certificates of deposit
    
    
    1,313
    
    
    
    1,383
    
    
    
    1,453
    
    
    
    1,554
    
    
    
    1,761Securities sold under agreements to repurchase
    
    
    14
    
    
    
    12
    
    
    
    13
    
    
    
    15
    
    
    
    12Interest on FHLB and other borrowings
    
    
    164
    
    
    
    166
    
    
    
    186
    
    
    
    138
    
    
    
    136Interest on subordinated debt
    
    
    107
    
    
    
    61
    
    
    
    204
    
    
    
    207
    
    
    
    208Total interest expense
    
    
    2,070
    
    
    
    2,127
    
    
    
    2,344
    
    
    
    2,361
    
    
    
    2,566Net interest income
    
    
    8,576
    
    
    
    8,664
    
    
    
    8,640
    
    
    
    8,172
    
    
    
    7,517Provision for loan and lease losses
    
    
    2,400
    
    
    
    4,550
    
    
    
    4,450
    
    
    
    1,600
    
    
    
    2,250Net interest income after provision for
loan losses
    
    
    6,176
    
    
    
    4,114
    
    
    
    4,190
    
    
    
    6,572
    
    
    
    5,267Noninterest income:Service charges on deposit accounts
    
    
    50
    
    
    
    53
    
    
    
    63
    
    
    
    62
    
    
    
    82Payroll and benefit processing fees
    
    
    129
    
    
    
    113
    
    
    
    107
    
    
    
    100
    
    
    
    128Earnings on cash surrender value  Bank
owned life insurance
    
    
    111
    
    
    
    111
    
    
    
    112
    
    
    
    107
    
    
    
    108Net gain on sale of securities available-for-sale
    
    
    258
    
    
    
    738
    
    
    
    179
    
    
    
    133
    
    
    
    931Gain on settlement of put reserve
    
    
    
    
    
    
    
    
    
    
    1,750
    
    
    
    
    
    
    
    Merchant credit card service income, net
    
    
    270
    
    
    
    53
    
    
    
    64
    
    
    
    64
    
    
    
    54Mortgage brokerage fee income
    
    
    2,492
    
    
    
    5,629
    
    
    
    3,293
    
    
    
    2,753
    
    
    
    2,539Other income
    
    
    111
    
    
    
    159
    
    
    
    115
    
    
    
    118
    
    
    
    100Total noninterest income
    
    
    3,421
    
    
    
    6,856
    
    
    
    5,683
    
    
    
    3,337
    
    
    
    3,942Noninterest expense:Salaries and related benefits
    
    
    4,253
    
    
    
    4,665
    
    
    
    4,162
    
    
    
    3,365
    
    
    
    3,711Occupancy and equipment expense
    
    
    708
    
    
    
    855
    
    
    
    952
    
    
    
    924
    
    
    
    929Write down of other real estate owned
    
    
    187
    
    
    
    197
    
    
    
    129
    
    
    
    1,064
    
    
    
    181FDIC insurance premium
    
    
    372
    
    
    
    261
    
    
    
    250
    
    
    
    254
    
    
    
    251Data processing fees
    
    
    99
    
    
    
    65
    
    
    
    52
    
    
    
    64
    
    
    
    89Professional service fees
    
    
    550
    
    
    
    567
    
    
    
    216
    
    
    
    543
    
    
    
    400Deferred compensation expense
    
    
    127
    
    
    
    127
    
    
    
    126
    
    
    
    122
    
    
    
    118Stationery and supplies
    
    
    43
    
    
    
    47
    
    
    
    35
    
    
    
    96
    
    
    
    80Postage
    
    
    42
    
    
    
    53
    
    
    
    58
    
    
    
    45
    
    
    
    42Directors expense
    
    
    74
    
    
    
    58
    
    
    
    56
    
    
    
    68
    
    
    
    84Other expenses
    
    
    1,071
    
    
    
    1,445
    
    
    
    1,257
    
    
    
    965
    
    
    
    1,300Total noninterest expense
    
    
    7,526
    
    
    
    8,340
    
    
    
    7,293
    
    
    
    7,510
    
    
    
    7,185Income before provision for income taxes
    
    
    2,071
    
    
    
    2,630
    
    
    
    2,580
    
    
    
    2,399
    
    
    
    2,024Provision for income taxes
    
    
    431
    
    
    
    749
    
    
    
    916
    
    
    
    750
    
    
    
    744Net Income
    
    
    1,640
    
    
    
    1,881
    
    
    
    1,664
    
    
    
    1,649
    
    
    
    1,280Less: Net income (loss) attributable to non-
controlling interest
    
    
    (24
    )
    
    
    260
    
    
    
    105
    
    
    
    144
    
    
    
    (255
    )Net income attributable to Bank of Commerce
Holdings
    
    $
    1,664
    
    
    $
    1,621
    
    
    $
    1,559
    
    
    $
    1,505
    
    
    $
    1,535Less: Preferred dividend and accretion on
preferred stock
    
    $
    235
    
    
    $
    234
    
    
    $
    235
    
    
    $
    236
    
    
    $
    235Income available to common stockholders
    
    $
    1,429
    
    
    $
    1,387
    
    
    $
    1,324
    
    
    $
    1,269
    
    
    $
    1,300Basic earnings per share
    
    $
    0.08
    
    
    $
    0.08
    
    
    $
    0.08
    
    
    $
    0.08
    
    
    $
    0.15Weighted average shares  basic
    
    
    16,991
    
    
    
    16,991
    
    
    
    16,991
    
    
    
    16,837
    
    
    
    8,871Diluted earnings per share
    
    $
    0.08
    
    
    $
    0.08
    
    
    $
    0.08
    
    
    $
    0.08
    
    
    $
    0.15Weighted average shares  diluted
    
    
    16,991
    
    
    
    16,991
    
    
    
    16,991
    
    
    
    16,837
    
    
    
    8,871Cash dividends declared
    
    $
    0.03
    
    
    $
    0.03
    
    
    $
    0.03
    
    
    $
    0.06
    
    
    $
    0.06
 61




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ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
         62




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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK (Continued)
    63




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ITEM 4.
    
    CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
   Report on Internal Control over Financial Reporting
      64




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PART II. OTHER INFORMATION
 
 Item 1.
    
    Legal Proceedings
  
 Item 1a. Risk Factors
  
 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
 
 65




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##### Table of Contents



SIGNATURES
  BANK OF COMMERCE HOLDINGS
(Registrant)Date: May 5, 2011
    /s/ Samuel D. JimenezSamuel D. JimenezExecutive Vice President and
Chief Financial Officer 66