##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2010
 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 o
    
    Non-accelerated filer þ
    
    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
IFINANCIAL INFORMATIONItem 1 Financial StatementsCondensed Consolidated Balance Sheets
September 30, 2010, December 31, 2009 and September 30, 2009
    
    
    3Condensed Consolidated Statements of Income
Three and Nine Months Ended September 30, 2010 and September 30, 2009
    
    
    4Condensed Consolidated Statements of Stockholders Equity
Three and Nine Months Ended September 30, 2010
    
    
    5Condensed Consolidated Statements of Cash Flows
Nine Months Ended September 30, 2010 and 2009
    
    
    6Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    7Item 2 Managements Discussion and Analysis
Of Financial Condition and Results of Operations
    
    
    29Item 3 Quantitative and Qualitative Disclosure about Market Risk
    
    
    64Item 4T Controls and Procedures
    
    
    66PART II.OTHER INFORMATIONItem 1 Legal Proceedings
    
    
    67Item 1a Risk Factors
    
    
    67Item 2 Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    67Item 3 Defaults Upon Senior Securities
    
    
    68Item 4 (Removed and Reserved)
    
    
    68Item 5 Other Information
    
    
    68Item 6 Exhibits
    
    
    68SIGNATURE PAGE
    
    
    69EX-31.1EX-31.2EX-32
  2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
 
 Condensed Consolidated Balance Sheets
September 30, 2010 (unaudited), December 31, 2009 and September 30, 2009 (unaudited)
 September 30,
    
    
    December 31,
    
    
    September 30,(Dollars in thousands)
    
    2010
    
    
    2009
    
    
    2009ASSETSCash and due from banks, noninterest bearing
    
    $
    27,763
    
    
    $
    36,902
    
    
    $
    20,224Interest bearing due from banks
    
    
    43,188
    
    
    
    31,338
    
    
    
    56,208Cash and cash equivalents
    
    
    70,951
    
    
    
    68,240
    
    
    
    76,432Securities available-for-sale, at fair value (including
pledged collateral of $43,772 at September 30, 2010,
$55,672 at December 31, 2009 and $61,345 at September 30,
2009)
    
    
    166,925
    
    
    
    80,062
    
    
    
    86,499Portfolio Loans, net of the allowance for loan losses of
$15,452 at September 30, 2010, $11,207 at December 31,
2009 and $8,899 at September 30, 2009
    
    
    595,575
    
    
    
    590,023
    
    
    
    590,885Mortgage loans held for sale
    
    
    41,025
    
    
    
    27,288
    
    
    
    16,787Bank premises and equipment, net
    
    
    9,842
    
    
    
    9,980
    
    
    
    10,201Goodwill
    
    
    3,695
    
    
    
    3,727
    
    
    
    3,727Other real estate owned
    
    
    2,020
    
    
    
    2,880
    
    
    
    2,934Other assets
    
    
    34,239
    
    
    
    31,206
    
    
    
    27,215TOTAL ASSETS
    
    $
    924,272
    
    
    $
    813,406
    
    
    $
    814,680LIABILITIES AND STOCKHOLDERS EQUITYDemand  noninterest bearing
    
    $
    90,613
    
    
    $
    69,448
    
    
    $
    70,491Demand  interest bearing
    
    
    161,154
    
    
    
    163,814
    
    
    
    156,233Savings accounts
    
    
    82,761
    
    
    
    65,414
    
    
    
    59,982Certificates of deposit
    
    
    305,503
    
    
    
    341,788
    
    
    
    312,968Total deposits
    
    
    640,031
    
    
    
    640,464
    
    
    
    599,674Securities sold under agreements to repurchase
    
    
    11,328
    
    
    
    9,621
    
    
    
    10,038Federal Home Loan Bank and Federal Reserve Bank borrowings
    
    
    141,000
    
    
    
    70,000
    
    
    
    100,000Mortgage warehouse lines of credit
    
    
    
    
    
    
    
    
    
    
    12,285Other liabilities
    
    
    11,669
    
    
    
    9,050
    
    
    
    8,967Junior subordinated debt payable to unconsolidated
subsidiary grantor trust
    
    
    15,465
    
    
    
    15,465
    
    
    
    15,465Total Liabilities
    
    
    819,493
    
    
    
    744,600
    
    
    
    746,429Commitments and contingencies
Stockholders Equity:Preferred stock (liquidation preference of $1,000 per
share; issued 2008) 2,000,000 authorized; 17,000 shares
issued and outstanding on September 30, 2010, December
31, 2009, and September 30, 2009
    
    
    16,708
    
    
    
    16,641
    
    
    
    16,619Common stock , no par value, 50,000,000 shares
authorized; 16,991,495 shares issued and outstanding at
September 30, 2010, 8,711,495 issued and outstanding on
December 31, 2009 and at September 30, 2009
    
    
    42,741
    
    
    
    9,730
    
    
    
    9,709Common stock warrant
    
    
    449
    
    
    
    449
    
    
    
    449Retained earnings
    
    
    40,845
    
    
    
    39,004
    
    
    
    38,355Accumulated other comprehensive income, net of tax
    
    
    1,717
    
    
    
    657
    
    
    
    827Total Equity  Bank of Commerce Holdings
    
    
    102,460
    
    
    
    66,481
    
    
    
    65,959Non controlling interest in subsidiary
    
    
    2,319
    
    
    
    2,325
    
    
    
    2,292Total stockholders equity
    
    
    104,779
    
    
    
    68,806
    
    
    
    68,251TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    924,272
    
    
    $
    813,406
    
    
    $
    814,680
 See accompanying notes to condensed consolidated financial statements.
 3




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
 
 Condensed Consolidated Statements of Income
 Three and Nine Months Ended September 30, 2010 and September 30, 2009 (Unaudited)
 For Three Months Ended:
    
    
    For Nine Months Ended:September 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,(Amounts in thousands, except for per share data)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Interest income:Interest and fees on loans
    
    $
    9,414
    
    
    $
    9,355
    
    
    $
    27,767
    
    
    $
    26,676Interest on tax-exempt securities
    
    
    465
    
    
    
    278
    
    
    
    1,168
    
    
    
    853Interest on U.S. government securities
    
    
    633
    
    
    
    628
    
    
    
    1,578
    
    
    
    2,774Interest on federal funds sold and securities purchased
under agreements to resell
    
    
    1
    
    
    
    1
    
    
    
    2
    
    
    
    31Interest on other securities
    
    
    471
    
    
    
    309
    
    
    
    1,085
    
    
    
    557Total interest income
    
    
    10,984
    
    
    
    10,571
    
    
    
    31,600
    
    
    
    30,891Interest expense:Interest on demand deposits
    
    
    251
    
    
    
    240
    
    
    
    707
    
    
    
    786Interest on savings deposits
    
    
    237
    
    
    
    223
    
    
    
    677
    
    
    
    742Interest on certificates of deposit
    
    
    1,453
    
    
    
    1,941
    
    
    
    4,768
    
    
    
    5,722Securities sold under agreements to repurchase
    
    
    13
    
    
    
    13
    
    
    
    40
    
    
    
    38Interest on FHLB and other borrowings
    
    
    186
    
    
    
    514
    
    
    
    460
    
    
    
    1,634Interest on junior subordinated debt payable
to unconsolidated subsidiary grantor trust
    
    
    204
    
    
    
    234
    
    
    
    619
    
    
    
    665Total interest expense
    
    
    2,344
    
    
    
    3,165
    
    
    
    7,271
    
    
    
    9,587Net interest income
    
    
    8,640
    
    
    
    7,406
    
    
    
    24,329
    
    
    
    21,304Provision for loan and lease losses
    
    
    4,450
    
    
    
    1,844
    
    
    
    8,300
    
    
    
    6,325Net interest income after provision for loan losses
    
    
    4,190
    
    
    
    5,562
    
    
    
    16,029
    
    
    
    14,979Noninterest income:Service charges on deposit accounts
    
    
    63
    
    
    
    108
    
    
    
    207
    
    
    
    296Payroll and benefit processing fees
    
    
    107
    
    
    
    109
    
    
    
    335
    
    
    
    347Earnings on cash surrender value 
Bank owned life insurance
    
    
    112
    
    
    
    108
    
    
    
    327
    
    
    
    311Net gain on sale of securities available-for-sale
    
    
    179
    
    
    
    506
    
    
    
    1,243
    
    
    
    1,984Net gain on transfer of financial assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    340Gain on settlement of put reserve
    
    
    1,750
    
    
    
    
    
    
    
    1,750
    
    
    
    Mortgage brokerage fee income
    
    
    3,293
    
    
    
    1,913
    
    
    
    8,585
    
    
    
    3,215Other income
    
    
    179
    
    
    
    200
    
    
    
    515
    
    
    
    511Total noninterest income
    
    
    5,683
    
    
    
    2,944
    
    
    
    12,962
    
    
    
    7,004Noninterest expense:Salaries and related benefits
    
    
    4,162
    
    
    
    2,902
    
    
    
    11,238
    
    
    
    7,673Occupancy and equipment expense
    
    
    952
    
    
    
    1,124
    
    
    
    2,805
    
    
    
    2,426Write down of other real estate owned
    
    
    129
    
    
    
    
    
    
    
    1,374
    
    
    
    FDIC insurance premium
    
    
    250
    
    
    
    421
    
    
    
    755
    
    
    
    995Data processing fees
    
    
    52
    
    
    
    52
    
    
    
    205
    
    
    
    231Professional service fees
    
    
    216
    
    
    
    220
    
    
    
    1,159
    
    
    
    674Deferred compensation expense
    
    
    126
    
    
    
    118
    
    
    
    366
    
    
    
    360Stationery and supplies
    
    
    35
    
    
    
    62
    
    
    
    211
    
    
    
    141Postage
    
    
    58
    
    
    
    
    
    
    
    145
    
    
    
    111Directors expense
    
    
    56
    
    
    
    75
    
    
    
    208
    
    
    
    232Goodwill impairment
    
    
    
    
    
    
    
    
    
    
    32
    
    
    
    Other expenses
    
    
    1,257
    
    
    
    680
    
    
    
    3,490
    
    
    
    1,664Total noninterest expense
    
    
    7,293
    
    
    
    5,654
    
    
    
    21,988
    
    
    
    14,507Income before provision for income taxes
    
    
    2,580
    
    
    
    2,852
    
    
    
    7,003
    
    
    
    7,476Provision for income taxes
    
    
    916
    
    
    
    1,010
    
    
    
    2,410
    
    
    
    2,647Net Income
    
    
    1,664
    
    
    
    1,842
    
    
    
    4,593
    
    
    
    4,829Less: Net income (loss) attributable to non-controlling
interest
    
    
    105
    
    
    
    129
    
    
    
    (6
    )
    
    
    230Net Income attributable to Bank of Commerce Holdings
    
    $
    1,559
    
    
    $
    1,713
    
    
    $
    4,599
    
    
    $
    4,599Less: preferred dividend and accretion on preferred stock
    
    
    235
    
    
    
    235
    
    
    
    706
    
    
    
    707Income available to common shareholders
    
    $
    1,324
    
    
    $
    1,478
    
    
    $
    3,893
    
    
    $
    3,892Basic earnings per share
    
    $
    0.08
    
    
    $
    0.17
    
    
    $
    0.27
    
    
    $
    0.45Weighted average shares  basic
    
    
    16,991
    
    
    
    8,711
    
    
    
    14,263
    
    
    
    8,711Diluted earnings per share
    
    $
    0.08
    
    
    $
    0.17
    
    
    $
    0.27
    
    
    $
    0.45Weighted average shares  diluted
    
    
    16,991
    
    
    
    8,711
    
    
    
    14,263
    
    
    
    8,712Cash Dividends declared
    
    $
    0.03
    
    
    $
    0.12
    
    
    $
    0.15
    
    
    $
    0.18
 4




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
 
 Condensed Consolidated Statements of Stockholders Equity
 Three and Nine Months Ended September 30, 2010 (Unaudited)
 Accumulated OtherComp- Income
    
    
    Subtotal
    
    
    Non ControllingPreferred
    
    
    
    
    
    
    Common
    
    
    Stock
    
    
    
    
    
    
    (Loss),
    
    
    Bank of Commerce
    
    
    Interest in(Dollars in Thousands)
    
    Comprehensive Income
    
    
    Amount
    
    
    Warrant
    
    
    Shares
    
    
    Amount
    
    
    Retained Earnings
    
    
    net of tax
    
    
    Holdings
    
    
    Subsidiary
    
    
    TotalBalance at December 31, 2009
    
    
    
    
    
    $
    16,641
    
    
    $
    449
    
    
    
    8,711,495
    
    
    $
    9,730
    
    
    $
    39,004
    
    
    $
    657
    
    
    $
    66,481
    
    
    $
    2,325
    
    
    $
    68,806Comprehensive Income:Net Income (loss)
    
    $
    1,280
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,535
    
    
    
    
    
    
    
    1,535
    
    
    
    (255
    )
    
    
    1,280Other Comprehensive Income:Unrealized gains on securities, net of tax
    
    
    245Reclassification adjustment for gains included in net income, net of tax
    
    
    (549
    )Total Other Comprehensive Income
    
    
    976Less: Other Comprehensive loss non-controlling interest
    
    
    (255
    )Total Comprehensive Income  BOCH
    
    $
    1,231
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (304
    )
    
    
    (304
    )
    
    
    
    
    
    
    (304
    )Accretion on Preferred Stock
    
    
    
    
    
    
    22
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (22
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Common cash dividends
($0.06 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (523
    )
    
    
    
    
    
    
    (523
    )
    
    
    
    
    
    
    (523
    )Preferred stock dividend
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (213
    )
    
    
    
    
    
    
    (213
    )
    
    
    
    
    
    
    (213
    )Compensation expense associated with stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13
    
    
    
    
    
    
    
    
    
    
    
    13
    
    
    
    
    
    
    
    13Issuance of new shares, net of issuance
costs ($4.25 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,200,000
    
    
    
    28,752
    
    
    
    
    
    
    
    
    
    
    
    28,752
    
    
    
    
    
    
    
    28,752Balance at March 31, 2010
    
    
    
    
    
    $
    16,663
    
    
    $
    449
    
    
    
    15,911,495
    
    
    $
    38,495
    
    
    $
    39,781
    
    
    $
    353
    
    
    $
    95,741
    
    
    $
    2,070
    
    
    $
    97,811Comprehensive Income:Net Income
    
    $
    1,649
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,505
    
    
    
    
    
    
    
    1,505
    
    
    
    144
    
    
    
    1,649Other Comprehensive Income:Unrealized gains on securities, net of tax
    
    
    168Reclassification adjustment for gains included in net income, net of tax
    
    
    (78
    )Total Other Comprehensive Income
    
    
    1,739Less: Other Comprehensive income non-controlling interest
    
    
    144Total Comprehensive Income  BOCH
    
    $
    1,595
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    90
    
    
    
    90
    
    
    
    
    
    
    
    90Accretion on Preferred Stock
    
    
    
    
    
    
    23
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (23
    )Common cash dividends
($0.06 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,019
    )
    
    
    
    
    
    
    (1,019
    )
    
    
    
    
    
    
    (1,019
    )Preferred stock dividend
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (213
    )
    
    
    
    
    
    
    (213
    )
    
    
    
    
    
    
    (213
    )Compensation expense associated with stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14
    
    
    
    
    
    
    
    
    
    
    
    14
    
    
    
    
    
    
    
    14Issuance of new shares, net of issuance
costs ($4.25 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,080,000
    
    
    
    4,361
    
    
    
    
    
    
    
    
    
    
    
    4,361
    
    
    
    
    
    
    
    4,361Balance at June 30, 2010
    
    
    
    
    
    $
    16,686
    
    
    $
    449
    
    
    
    16,991,495
    
    
    $
    42,870
    
    
    $
    40,031
    
    
    $
    443
    
    
    $
    100,479
    
    
    $
    2,214
    
    
    $
    102,693Comprehensive Income:Net Income
    
    $
    1,664
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,559
    
    
    
    
    
    
    
    1,559
    
    
    
    105
    
    
    
    1,664Other Comprehensive Income:Unrealized gains on securities and derivatives, net of tax
    
    
    1,380Reclassification adjustment for gains included in net income, net of tax
    
    
    (106
    )Total Other Comprehensive Income
    
    
    2,938Less: Other Comprehensive income non-controlling interest
    
    
    105Total Comprehensive Income  BOCH
    
    $
    2,833
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,274
    
    
    
    1,274
    
    
    
    
    
    
    
    1,274Accretion on Preferred Stock
    
    
    
    
    
    
    22
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (22
    )Common cash dividends
($0.03 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (510
    )
    
    
    
    
    
    
    (510
    )
    
    
    
    
    
    
    (510
    )Preferred stock dividend
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (213
    )
    
    
    
    
    
    
    (213
    )
    
    
    
    
    
    
    (213
    )Compensation expense associated with stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    12
    
    
    
    
    
    
    
    12Additional issuance costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (141
    )
    
    
    
    
    
    
    
    
    
    
    (141
    )
    
    
    
    
    
    
    (141
    )Balance at September 30, 2010
    
    
    
    
    
    $
    16,708
    
    
    $
    449
    
    
    
    16,991,495
    
    
    $
    42,741
    
    
    $
    40,845
    
    
    $
    1,717
    
    
    $
    102,460
    
    
    $
    2,319
    
    
    $
    104,779
 See accompanying notes to condensed consolidated financial statements.
 5




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
 
 Condensed Consolidated Statements of Cash Flows (Unaudited)
 Nine Months Ended September 30, 2010 and 2009
 September 30,
    
    
    September 30,(Dollars in thousands)
    
    2010
    
    
    2009Cash flows from operating activities:Net income
    
    $
    4,593
    
    
    $
    4,829Adjustments to reconcile net income to net
cash provided by operating activities:Provision for loan and lease losses
    
    
    8,300
    
    
    
    6,325Provision for depreciation and amortization
    
    
    718
    
    
    
    943Goodwill impairment
    
    
    32
    
    
    
    Compensation expense associated with stock options
    
    
    39
    
    
    
    60Gain on transfer of financial assets
    
    
    
    
    
    
    (340
    )Gross proceeds from sales of loans held for sale
    
    
    482,641
    
    
    
    286,885Gross originations of loans held for sale
    
    
    (496,378
    )
    
    
    (291,609
    )Gain on sale of securities available-for-sale
    
    
    (1,243
    )
    
    
    (1,984
    )Amortization of investment premiums and accretion of discounts, net
    
    
    261
    
    
    
    (90
    )Gain on settlement of put reserve
    
    
    (1,750
    )
    
    
    Loss (Gain) on sale of other real estate owned
    
    
    139
    
    
    
    (20
    )Write down of other real estate owned
    
    
    1,374
    
    
    
    (Increase) in deferred income taxes
    
    
    (2,656
    )
    
    
    (580
    )Increase in cash surrender value of bank owned life policies
    
    
    (278
    )
    
    
    (1,471
    )Effect of changes in:Other assets
    
    
    (825
    )
    
    
    (723
    )Deferred compensation
    
    
    321
    
    
    
    337Deferred loan fees
    
    
    (85
    )
    
    
    145Other liabilities
    
    
    3,461
    
    
    
    (5,226
    )Net cash used in operating activities
    
    
    (1,336
    )
    
    
    (2,519
    )Cash flows from investing activities:Proceeds from maturities and payments of available for sale securities
    
    
    25,805
    
    
    
    22,653Proceeds from sales of available-for-sale securities
    
    
    38,707
    
    
    
    67,874Purchases of available-for-sale securities
    
    
    (148,000
    )
    
    
    (41,468
    )Purchase of ITIN loan portfolio
    
    
    
    
    
    
    (66,696
    )Purchases of home equity loan portfolio
    
    
    (14,801
    )
    
    
    Loan origination, net of principal repayments
    
    
    151
    
    
    
    (11,431
    )Purchases of premises and equipment, net
    
    
    (586
    )
    
    
    (286
    )Proceeds from the sales of other real estate owned
    
    
    229
    
    
    
    315Cash acquired in merger, net of cash consideration paid
    
    
    
    
    
    
    265Net cash used in investing activities
    
    
    (98,495
    )
    
    
    (28,774
    )Cash flows from financing activities:Net increase (decrease) in demand deposits and savings accounts
    
    
    35,853
    
    
    
    (4,289
    )Net (decrease) increase in certificates of deposit
    
    
    (36,286
    )
    
    
    48,681Net increase (decrease) in securities sold under agreement to repurchase
    
    
    1,707
    
    
    
    (3,815
    )Net change in FHLB advances
    
    
    71,000
    
    
    
    (20,000
    )Net change in other short term borrowings
    
    
    
    
    
    
    4,375Cash dividends paid on common stock
    
    
    (2,065
    )
    
    
    (1,742
    )Cash dividends paid on preferred stock
    
    
    (639
    )
    
    
    (640
    )Net proceeds from issuance of common stock
    
    
    32,972
    
    
    
    Net cash from financing activities
    
    
    102,542
    
    
    
    212,534Net increase (decrease) in cash and cash equivalents
    
    
    2,711
    
    
    
    (8,759
    )Cash and cash equivalents, beginning of period
    
    
    68,240
    
    
    
    85,191Cash and cash equivalents, end of period
    
    $
    70,951
    
    
    $
    76,432Supplemental disclosures:Cash paid during the period for:Income taxes
    
    $
    3,711
    
    
    $
    2,189Interest
    
    
    7,369
    
    
    
    9,635Transfer of loans to other real estate owned
    
    
    882
    
    
    
    3,229
 See accompanying notes to condensed consolidated financial statements.
 6




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##### Table of Contents



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




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
  Purchase Price and Goodwill
  (Dollars in thousands)GoodwillTotal consideration at fair value
    
    $
    2,465Fair value of non-controlling interest
    
    
    2,062$
    4,527Acquisition date fair value of net assets acquired
    
    $
    (800
    )Goodwill at date of acquisition
    
    $
    3,727
   (Dollars in thousands)
    
    
    
    
    
    Nine Months Ended September 30, 2009Pro-Forma Income Statement
    
    Bank
    
    
    Mortgage
    
    
    Parent
    
    
    Intercompany
    
    
    ConsolidatedInterest income:Total interest income
    
    $
    30,663
    
    
    $
    
    
    
    $
    246
    
    
    $
    (18
    )
    
    $
    30,891Interest expense:Total interest expense
    
    
    8,955
    
    
    
    41
    
    
    
    638
    
    
    
    (18
    )
    
    
    9,616Net interest income
    
    
    21,708
    
    
    
    (41
    )
    
    
    (392
    )
    
    
    
    
    
    
    21,275Provision for loan and lease losses
    
    
    6,325
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,325Net interest income after provision for loan losses
    
    
    15,383
    
    
    
    (41
    )
    
    
    (392
    )
    
    
    
    
    
    
    14,950Noninterest income:Mortgage brokerage fee income
    
    
    27
    
    
    
    5,898
    
    
    
    
    
    
    
    
    
    
    
    5,925Other noninterest income
    
    
    3,789
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    3,791Total noninterest income
    
    
    3,816
    
    
    
    5,900
    
    
    
    
    
    
    
    
    
    
    
    9,716Noninterest expense:Salaries and related benefits
    
    
    6,209
    
    
    
    2,768
    
    
    
    98
    
    
    
    
    
    
    
    9,075Occupancy and equipment expense
    
    
    1,872
    
    
    
    840
    
    
    
    
    
    
    
    
    
    
    
    2,712Other noninterest expense
    
    
    3,743
    
    
    
    1,062
    
    
    
    153
    
    
    
    
    
    
    
    4,958Total noninterest expense
    
    
    11,824
    
    
    
    4,670
    
    
    
    251
    
    
    
    
    
    
    
    16,745Income before provision for income taxes
    
    
    7,375
    
    
    
    1,189
    
    
    
    (643
    )
    
    
    
    
    
    
    7,921Provision for income taxes
    
    
    2,373
    
    
    
    275
    
    
    
    
    
    
    
    
    
    
    
    2,648Net Income
    
    
    5,002
    
    
    
    914
    
    
    
    (643
    )
    
    
    
    
    
    
    5,273Less: Net income attributable to non-controlling interest
    
    
    
    
    
    
    448
    
    
    
    
    
    
    
    
    
    
    
    448Net Income attributable to Bank of Commerce Holdings
    
    $
    5,002
    
    
    $
    466
    
    
    $
    (643
    )
    
    
    
    
    
    $
    4,825Less: Preferred dividend and accretion on preferred stock
    
    
    
    
    
    
    
    
    
    
    707
    
    
    
    
    
    
    
    707Income available to common shareholders
    
    $
    5,002
    
    
    $
    466
    
    
    $
    (1,350
    )
    
    
    
    
    
    $
    4,118
 8




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
 3. Recent Accounting Pronouncements
 FASB ASU 2010-20 Disclosures about the Credit Quality of Financing Receivables and the
Allowance for Credit Losses (Topic 310)
  FASB ASU 2010-18 Effect of a Loan Modification When the Loan is Part of a Pool that is
Accounted for as a Single Asset (Topic 310)
   FASB
ASU 2010-13 Effect of Denominating the Exercise Price of a Share-Based Payment Award
in the Currency of the Market in Which the Underlying Equity Security Trades.
 FASB ASU 2010-09 Subsequent Events (Topic 855): Amendments to Certain Recognition and
Disclosure Requirements
 9




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
 FASB ASU 2010-06 Fair Value Measurements and Disclosures (Topic 820) Improving Disclosures
about Fair Value Measurements FASB Accounting Standards Codification
  FASB ASU 2010-01 Equity (Topic 505): Accounting for Distributions to Shareholders with
Components of Stock and Cash
 10




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
 4. Earnings per Share
  (Dollars in thousands, except per share data)
    
    Three Months Ended
    
    
    Nine Months EndedEarnings Per Share
    
    September 30, 2010
    
    
    September 30, 2009
    
    
    September 30, 2010
    
    
    September 30, 2009Basic EPS Calculation:Net Income attributable to Bank of Commerce
Holdings
    
    $
    1,559
    
    
    $
    1,713
    
    
    $
    4,599
    
    
    $
    4,599Less: dividend on Preferred Stock
    
    
    213
    
    
    
    213
    
    
    
    639
    
    
    
    640Less: accretion on Preferred Stock
    
    
    22
    
    
    
    22
    
    
    
    67
    
    
    
    67Numerator: Earnings available to common
stockholders
    
    $
    1,324
    
    
    $
    1,478
    
    
    $
    3,893
    
    
    $
    3,892Denominator (average common shares outstanding)
    
    
    16,991
    
    
    
    8,711
    
    
    
    14,263
    
    
    
    8,711Basic earnings per Share
    
    $
    0.08
    
    
    $
    0.17
    
    
    $
    0.27
    
    
    $
    0.45Diluted EPS Calculation:Net Income attributable to Bank of Commerce
Holdings
    
    $
    1,559
    
    
    $
    1,713
    
    
    $
    4,599
    
    
    $
    4,599Less: dividend on Preferred Stock
    
    
    213
    
    
    
    213
    
    
    
    639
    
    
    
    640Less: accretion on Preferred Stock
    
    
    22
    
    
    
    22
    
    
    
    67
    
    
    
    67Numerator: Earnings available to common
stockholders
    
    $
    1,324
    
    
    $
    1,478
    
    
    $
    3,893
    
    
    $
    3,892Denominator:Average common shares outstanding
    
    
    16,991
    
    
    
    8,711
    
    
    
    14,263
    
    
    
    8,711Plus incremental shares from assumed conversionsStock Options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,712Diluted earnings per Share
    
    $
    0.08
    
    
    $
    0.17
    
    
    $
    0.27
    
    
    $
    0.45Anti-dilutive options not included in EPS Calculation
    
    
    282,080
    
    
    
    621,605
    
    
    
    282,080
    
    
    
    621,605Anti-dilutive warrants not included in EPS Calculation
    
    
    405,405
    
    
    
    405,405
    
    
    
    405,405
    
    
    
    405,405
 5. Stock Option Plans
  11




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
 6. Securities Available-for-Sale
    As of September 30, 2010(Dollars in thousands)
    
    
    
    
    
    Gross
    
    
    Gross
    
    
    EstimatedAvailable for sale securities
    
    Amortized Costs
    
    
    Unrealized Gains
    
    
    Unrealized Losses
    
    
    Fair ValueU.S. Treasury and agencies
    
    $
    31,083
    
    
    $
    186
    
    
    $
    
    
    
    $
    31,269Obligations of state and political subdivisions
    
    
    62,964
    
    
    
    2,168
    
    
    
    (16
    )
    
    
    65,116Residential mortgage backed securities and
collateralized mortgage obligations
    
    
    64,628
    
    
    
    1,247
    
    
    
    (142
    )
    
    
    65,733Other asset backed securities
    
    
    4,746
    
    
    
    61
    
    
    
    
    
    
    
    4,807Total
    
    $
    163,421
    
    
    $
    3,662
    
    
    $
    (158
    )
    
    $
    166,925
 As of December 31, 2009(Dollars in thousands)
    
    
    
    
    
    Gross
    
    
    Gross
    
    
    EstimatedAvailable for sale securities
    
    Amortized Costs
    
    
    Unrealized Gains
    
    
    Unrealized Losses
    
    
    Fair ValueU.S.- Treasury and agencies
    
    $
    18,500
    
    
    $
    101
    
    
    $
    
    
    
    $
    18,601Obligations of state and political subdivisions
    
    
    32,184
    
    
    
    547
    
    
    
    (85
    )
    
    
    32,646Residential mortgage backed securities and
collateralized mortgage obligations
    
    
    28,278
    
    
    
    869
    
    
    
    (332
    )
    
    
    28,815Total
    
    $
    78,962
    
    
    $
    1,517
    
    
    $
    (417
    )
    
    $
    80,062
  (Dollars in thousands)
    
    Amortized Cost
    
    
    Estimated Fair ValueDue in one year or less
    
    $
    
    
    
    $
    Due after one year through five years
    
    
    20,787
    
    
    
    21,089Due after five years through ten years
    
    
    23,905
    
    
    
    24,321Due after ten years
    
    
    118,729
    
    
    
    121,515Total
    
    $
    163,421
    
    
    $
    166,925
  12




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
    As of September 30, 2010Less than 12 months
    
    
    12 months or more
    
    
    TotalFair
    
    
    
    
    
    
    Fair
    
    
    
    
    
    
    Fair
    
    
    Unrealized(Dollars in thousands)
    
    Value
    
    
    Unrealized Losses
    
    
    Value
    
    
    Unrealized Losses
    
    
    Value
    
    
    LossesObligations of state and
political subdivisions
    
    $
    4,175
    
    
    $
    (16
    )
    
    $
    
    
    
    $
    
    
    
    $
    4,175
    
    
    
    (16
    )Residential mortgage
backed securities and
collateralized mortgage
obligations
    
    
    11,826
    
    
    
    (99
    )
    
    
    3,644
    
    
    
    (43
    )
    
    
    15,470
    
    
    
    (142
    )Total temporarily
impaired securities
    
    $
    16,001
    
    
    $
    (115
    )
    
    $
    3,644
    
    
    $
    (43
    )
    
    $
    19,645
    
    
    $
    (158
    )
 As of December 31, 2009Less than 12 months
    
    
    12 months or more
    
    
    TotalFair
    
    
    
    
    
    
    Fair
    
    
    
    
    
    
    Fair
    
    
    Unrealized(Dollars in thousands)
    
    Value
    
    
    Unrealized Losses
    
    
    Value
    
    
    Unrealized Losses
    
    
    Value
    
    
    LossesU.S. Treasury and agencies
    
    $
    3,994
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    3,994
    
    
    $
    Obligations of state and
political subdivisions
    
    
    8,517
    
    
    
    (84
    )
    
    
    500
    
    
    
    (1
    )
    
    
    9,017
    
    
    
    (85
    )Residential mortgage
backed securities and
collateralized mortgage
obligations
    
    
    7,516
    
    
    
    (332
    )
    
    
    
    
    
    
    
    
    
    
    7,516
    
    
    
    (332
    )Total temporarily
impaired securities
    
    $
    20,027
    
    
    $
    (416
    )
    
    $
    500
    
    
    $
    (1
    )
    
    $
    20,527
    
    
    $
    (417
    )
 U.S. Treasury and agency securities
  Obligations of state and political subdivisions
  13




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
  Residential mortgage-backed securities and collateralized mortgage obligations
  7. Mortgages held for sale
  8. Goodwill
  Mortgage ServicesAccumulated(Dollars in thousands)
    
    Gross
    
    
    Impairment
    
    
    TotalBalance, December 31, 2008
    
    $
    
    
    
    $
    
    
    
    $
    Net additions
    
    
    3,727
    
    
    
    
    
    
    
    3,727Balance, December 31, 2009
    
    
    3,727
    
    
    
    
    
    
    
    3,727Impairment
    
    
    
    
    
    
    (32
    )
    
    
    (32
    )Balance, September 30, 2010
    
    $
    3,727
    
    
    $
    (32
    )
    
    $
    3,695
    14




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
    9. Junior Subordinated Debt Payable to Unconsolidated Subsidiary Grantor Trust
        15




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
   10. Preferred Stock and Warrants
       16




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
  11. Commitments and contingent liabilities
 Lease Commitments 
 (Dollars in thousands)Operating Leases2010
    
    $
    2002011
    
    
    7752012
    
    
    6062013
    
    
    4882014
    
    
    499Thereafter
    
    
    434Total
    
    $
    3,002
 Legal Proceedings
 FHLB Advances 
 (Dollars in thousands)FHLB AdvancesAdvance Amount

    
    Interest Rate

    
    
    Maturity$
    6,000
    
    
    
    0.25
    %
    
    
    12/7/2010120,000
    
    
    
    0.28
    %
    
    
    12/7/201015,000
    
    
    
    0.30
    %
    
    
    3/5/2013
   FRB Advances
 Off-Balance Sheet Financial Instruments
 17




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
     (Dollars in thousands)Credit Commitments
    
    September 30, 2010
    
    
    September 30, 2009Unfunded loan commitments
    
    $
    121,164
    
    
    $
    137,964Standby letters of credit
    
    
    3,858
    
    
    
    5,489Guaranteed commitments outstanding
    
    
    1,299
    
    
    
    1,325$
    126,321
    
    
    $
    144,778
    12. Accounting for Income Tax and Uncertainties
  18




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
    13. Fair Value Measurement
  Fair Value Hierarchy
       19




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
  (Dollars in thousands)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    TotalRecurring basis
    
    Fair Value at September 30, 2010
    
    
    GainsTotal
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    (Losses)Available for sale securitiesObligations of states and political
subdivisions
    
    $
    65,116
    
    
    $
    
    
    
    $
    65,116
    
    
    $
    
    
    
    $
    Other investment securities (1)
    
    
    101,809
    
    
    
    
    
    
    
    101,809
    
    
    
    
    
    
    
    Total assets measured at fair value
    
    $
    166,925
    
    
    $
    
    
    
    $
    166,925
    
    
    $
    
    
    
    $
    Derivatives
    
    $
    602
    
    
    
    
    
    
    $
    602Total liabilities measured at fair value
    
    $
    602
    
    
    $
    
    
    
    $
    602
    
    
    
    
    
    
    $
    
 
 (1)
    
    Principally represents U.S. Treasury and agencies or residential mortgage-backed securities
issued or guaranteed by governmental agencies. (Dollars in thousands)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    TotalRecurring basis
    
    Fair Value at December 31, 2009
    
    
    GainsTotal
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    (Losses)Available for sale securitiesObligations of states and political
subdivisions
    
    $
    32,646
    
    
    $
    
    
    
    $
    32,646
    
    
    $
    
    
    
    $
    Other investment securities (1)
    
    
    47,416
    
    
    
    
    
    
    
    47,416
    
    
    
    
    
    
    
    Total assets measured at fair value
    
    $
    80,062
    
    
    $
    
    
    
    $
    80,062
    
    
    $
    
    
    
    $
    
 
 (1)
    
    Principally represents U.S. Treasury and agencies or residential mortgage-backed
securities issued or guaranteed by governmental agencies  Securities available-for-sale
 Derivative Assets and Liabilities 
 20




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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)Non recurring basis
    
    Fair Value at September 30, 2010
    
    
    Losses as of September 30, 2010Three
    
    
    NineMonths Ended
    
    
    Months EndedTotal
    
    
    TotalTotal
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    (Losses)
    
    
    (Losses)Impaired loans
    
    $
    20,698
    
    
    $
    
    
    
    $
    14,399
    
    
    $
    6,299
    
    
    $
    (1,289
    )
    
    $
    (4,946
    )Other real estate owned
    
    
    2,020
    
    
    
    
    
    
    
    
    
    
    
    2,020
    
    
    
    (125
    )
    
    
    (1,374
    )Goodwill
    
    
    3,695
    
    
    
    
    
    
    
    
    
    
    
    3,695
    
    
    
    
    
    
    
    (32
    )Total assets measured at
fair value
    
    $
    26,413
    
    
    $
    0
    
    
    $
    14,399
    
    
    $
    12,014
    
    
    $
    (1,414
    )
    
    $
    (6,352
    )
 (Dollars in thousands)Non recurring basis
    
    Fair Value at December 31, 2009
    
    
    Losses as of December 31, 2009Three
    
    
    NineMonths Ended
    
    
    Months EndedTotal
    
    
    TotalTotal
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    (Losses)
    
    
    (Losses)Impaired loans
    
    $
    5,278
    
    
    $
    
    
    
    $
    2,917
    
    
    $
    2,361
    
    
    $
    (563
    )
    
    $
    (633
    )Other real estate owned
    
    
    2,880
    
    
    
    
    
    
    
    
    
    
    
    2,880
    
    
    
    (161
    )
    
    
    (161
    )Total assets measured at
fair value
    
    $
    8,158
    
    
    $
    
    
    
    $
    2,917
    
    
    $
    5,241
    
    
    $
    (724
    )
    
    $
    (794
    )
  
    
    Impaired loans with a carrying amount of $25,643,581 were written down to their fair
value of $20,697,921, resulting in an impairment charge of $4,945,660 which was included in
earnings for the period.
    
    Other real estate owned with a carrying amount of $3,393,283 was written down to fair
value of $2,019,547 resulting in a loss of $1,373,736 which was included in earnings for
the period.
    
    Goodwill with a carrying amount of $3,727,052 was written down to the fair value of
$3,695,012, resulting in an impairment charge of $32,040, which was included in earnings
for the period.
  Impaired loans 
  21




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
  Other Real Estate Owned
 Goodwill
 Method for determining fair values
  Cash and cash equivalents
 Loans receivable
 Mortgage Loans held for sale
 Commitments to extend credit and standby letters of credit
 Federal Home Loan Bank borrowings-
 Junior subordinated debt payable to unconsolidated subsidiary grantor trust 
 Deposit liabilities
 Securities purchased under agreements to resell 
 Earn out payable 
 Derivative assets and liabilities 
 22




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
 Commitments
 Limitations
    September 30, 2010
    
    
    December 31, 2009Carrying
    
    
    
    
    
    
    Carrying(Dollars in thousands)
    
    Amounts
    
    
    Fair Value
    
    
    Amounts
    
    
    Fair ValueFinancial assetsCash and cash equivalents
    
    $
    70,951
    
    
    $
    70,951
    
    
    $
    68,240
    
    
    $
    68,240Portfolio loans, net
    
    
    595,575
    
    
    
    605,500
    
    
    
    590,023
    
    
    
    611,099Mortgages held for sale
    
    
    41,025
    
    
    
    41,025
    
    
    
    27,288
    
    
    
    27,288Interest receivable
    
    
    3,862
    
    
    
    3,862
    
    
    
    3,087
    
    
    
    3,087Financial LiabilitiesDeposits
    
    
    640,031
    
    
    
    641,588
    
    
    
    640,465
    
    
    
    642,917Securities sold under agreement to repurchase
    
    
    11,328
    
    
    
    11,328
    
    
    
    9,621
    
    
    
    9,621Federal home loan borrowings
    
    
    141,000
    
    
    
    141,000
    
    
    
    70,000
    
    
    
    70,000Subordinated debenture
    
    
    15,465
    
    
    
    15,465
    
    
    
    15,465
    
    
    
    15,465Earn out payable
    
    
    976
    
    
    
    976
    
    
    
    965
    
    
    
    965Interest payable
    
    
    397
    
    
    
    397
    
    
    
    495
    
    
    
    495
 Contract
    
    
    ContractOff balance sheet financial instruments:
    
    Amount
    
    
    AmountCommitments to extend credit
    
    $
    121,164
    
    
    $
    122,872Standby letters of credit
    
    $
    3,858
    
    
    $
    4,844Guaranteed commitments outstanding
    
    $
    1,299
    
    
    $
    1,325
 23




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
 14. Transfer of Financial Assets
    15. Segment Reporting
    Three Months Ended September 30, 2010(Dollars in thousands)
    
    Bank
    
    
    Mortgage
    
    
    Parent
    
    
    Elimination
    
    
    ConsolidatedNet interest income (expense)
    
    $
    8,920
    
    
    $
    
    
    
    $
    (141
    )
    
    $
    (139
    )
    
    $
    8,640Provision for loan and lease losses
    
    
    4,450
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,450Total noninterest income
    
    
    2,391
    
    
    
    3,153
    
    
    
    
    
    
    
    139
    
    
    
    5,683Total noninterest expense
    
    
    4,609
    
    
    
    2,732
    
    
    
    (48
    )
    
    
    
    
    
    
    7,293Income before provision for income taxes
    
    
    2,252
    
    
    
    421
    
    
    
    (93
    )
    
    
    
    
    
    
    2,580Provision for income taxes
    
    
    709
    
    
    
    207
    
    
    
    
    
    
    
    
    
    
    
    916Net Income
    
    
    1,543
    
    
    
    214
    
    
    
    (93
    )
    
    
    
    
    
    
    1,664Less: Net income attributable to
non-controlling interest
    
    
    
    
    
    
    105
    
    
    
    
    
    
    
    
    
    
    
    105Net Income attributable to Bank of
Commerce Holdings
    
    $
    1,543
    
    
    $
    109
    
    
    $
    (93
    )
    
    $
    
    
    
    $
    1,559
 Nine Months Ended September 30, 2010(Dollars in thousands)
    
    Bank
    
    
    Mortgage
    
    
    Parent
    
    
    Elimination
    
    
    ConsolidatedNet interest income (expense)
    
    $
    25,121
    
    
    $
    (1
    )
    
    $
    (437
    )
    
    $
    (354
    )
    
    $
    24,329Provision for loan and lease losses
    
    
    8,300
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,300Total noninterest income
    
    
    4,394
    
    
    
    8,214
    
    
    
    
    
    
    
    354
    
    
    
    12,962Total noninterest expense
    
    
    13,914
    
    
    
    7,634
    
    
    
    440
    
    
    
    
    
    
    
    21,988Income before provision for income taxes
    
    
    7,301
    
    
    
    579
    
    
    
    (877
    )
    
    
    
    
    
    
    7,003Provision for income taxes
    
    
    2,079
    
    
    
    331
    
    
    
    
    
    
    
    
    
    
    
    2,410Net Income
    
    
    5,222
    
    
    
    248
    
    
    
    (877
    )
    
    
    
    
    
    
    4,593Less: Net income attributable to
non-controlling interest
    
    
    
    
    
    
    (6
    )
    
    
    
    
    
    
    
    
    
    
    (6
    )Net Income attributable to Bank of
Commerce Holdings
    
    $
    5,222
    
    
    $
    254
    
    
    $
    (877
    )
    
    $
    
    
    
    $
    4,599
 24




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
 Three Months Ended September 30, 2009(Dollars in thousands)
    
    Bank
    
    
    Mortgage
    
    
    Parent
    
    
    Elimination
    
    
    ConsolidatedNet interest income (expense)
    
    $
    7,586
    
    
    $
    (9
    )
    
    $
    (171
    )
    
    $
    
    
    
    $
    7,406Provision for loan and lease losses
    
    
    1,850
    
    
    
    (6
    )
    
    
    
    
    
    
    
    
    
    
    1,844Total noninterest income
    
    
    1,050
    
    
    
    1,894
    
    
    
    
    
    
    
    
    
    
    
    2,944Total noninterest expense
    
    
    4,042
    
    
    
    1,525
    
    
    
    87
    
    
    
    
    
    
    
    5,654Income before provision for income taxes
    
    
    2,744
    
    
    
    366
    
    
    
    (258
    )
    
    
    
    
    
    
    2,852Provision for income taxes
    
    
    907
    
    
    
    103
    
    
    
    
    
    
    
    
    
    
    
    1,010Net Income
    
    
    1,837
    
    
    
    263
    
    
    
    (258
    )
    
    
    
    
    
    
    1,842Less: Net income attributable to
non-controlling interest
    
    
    
    
    
    
    129
    
    
    
    
    
    
    
    
    
    
    
    129Net Income attributable to Bank of
Commerce Holdings
    
    $
    1,837
    
    
    $
    134
    
    
    $
    (258
    )
    
    $
    
    
    
    $
    1,713
 Nine Months Ended September 30, 2009(Dollars in thousands)
    
    Bank
    
    
    Mortgage
    
    
    Parent
    
    
    Elimination
    
    
    ConsolidatedNet interest income (expense)
    
    $
    21,736
    
    
    $
    (12
    )
    
    $
    (420
    )
    
    $
    
    
    
    $
    21,304Provision for loan and lease losses
    
    
    6,325
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,325Total noninterest income
    
    
    3,816
    
    
    
    3,188
    
    
    
    
    
    
    
    
    
    
    
    7,004Total noninterest expense
    
    
    11,825
    
    
    
    2,432
    
    
    
    250
    
    
    
    
    
    
    
    14,507Income before provision for income taxes
    
    
    7,402
    
    
    
    744
    
    
    
    (670
    )
    
    
    
    
    
    
    7,476Provision for income taxes
    
    
    2,373
    
    
    
    274
    
    
    
    
    
    
    
    
    
    
    
    2,647Net Income
    
    
    5,029
    
    
    
    470
    
    
    
    (670
    )
    
    
    
    
    
    
    4,829Less: Net income attributable to
non-controlling interest
    
    
    
    
    
    
    230
    
    
    
    
    
    
    
    
    
    
    
    230Net Income attributable to Bank of
Commerce Holdings
    
    $
    5,029
    
    
    $
    240
    
    
    $
    (670
    )
    
    $
    
    
    
    $
    4,599
  September 30, 2010Bank
    
    
    Mortgage
    
    
    Parent
    
    
    Elimination
    
    
    ConsolidatedTotal assets
    
    $
    915,924
    
    
    $
    18,448
    
    
    $
    9,351
    
    
    $
    (19,451
    )
    
    $
    924,272Total loans, gross
    
    $
    618,617
    
    
    $
    
    
    
    $
    2,336
    
    
    $
    (9,926
    )
    
    $
    611,027Total deposits
    
    $
    647,655
    
    
    $
    
    
    
    $
    
    
    
    $
    (7,624
    )
    
    $
    640,031
 December 31, 2010Bank
    
    
    Mortgage
    
    
    Parent
    
    
    Elimination
    
    
    ConsolidatedTotal assets
    
    $
    807,216
    
    
    $
    15,001
    
    
    $
    3,873
    
    
    $
    (12,684
    )
    
    $
    813,406Total loans, gross
    
    $
    606,472
    
    
    $
    
    
    
    $
    2,470
    
    
    $
    (7,712
    )
    
    $
    601,230Total deposits
    
    $
    643,582
    
    
    $
    
    
    
    $
    
    
    
    $
    (3,118
    )
    
    $
    640,464
 September 30, 2009Bank
    
    
    Mortgage
    
    
    Parent
    
    
    Elimination
    
    
    ConsolidatedTotal assets
    
    $
    795,326
    
    
    $
    23,490
    
    
    $
    4,280
    
    
    $
    (8,416
    )
    
    $
    814,680Total loans, gross
    
    $
    601,171
    
    
    $
    
    
    
    $
    2,513
    
    
    $
    (3,900
    )
    
    $
    599,784Total deposits
    
    $
    602,664
    
    
    $
    
    
    
    $
    
    
    
    $
    (2,990
    )
    
    $
    599,674
 25




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
 16. Common Stock Offering
     17. Other Real Estate Owned
   18. Derivatives
   26




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
 Cash flow hedges
    (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 Sheet
    
    Sept 30,Risk Exposure
    
    Description
    
    Location
    
    2010
    
    
    MaturityLiability DerivativesInterest rate contract
    
    Forward starting interest rate swaps
    
    Other liabilities
    
    $
    (108
    )
    
    September 1, 2012Interest rate contract
    
    Forward starting interest rate swaps
    
    Other liabilities
    
    $
    (235
    )
    
    September 1, 2013Interest rate contract
    
    Forward starting interest rate swaps
    
    Other liabilities
    
    $
    (195
    )
    
    September 1, 2014Interest rate contract
    
    Forward starting interest rate swaps
    
    Other liabilities
    
    $
    (103
    )
    
    September 1, 2015Interest rate contract
    
    Forward starting interest rate swaps
    
    Other liabilities
    
    $
    39
    
    
    March 1, 2017Total
    
    $
    (602
    )
  27




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
 20. Gain on Settlement of Put Reserve
   21. Subsequent Events
  28




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Forward Looking Statements and Risk Factors
 An investment in the Company has risk. The discussion below and elsewhere in this Report and in
other documents the Company files with the SEC incorporates various risk factors that could cause
the Companys financial results and condition to vary significantly from period to period.
Information in the accompanying financial statements contains certain forward-looking statements,
which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform
Act of 1995. We caution the investor that such statements are subject to risks and uncertainties
that could cause actual results to differ materially from those stated. These risks and
uncertainties include the Companys ability to maintain or expand its market share and net interest
margins, or to implement its marketing and growth strategies. Further, actual results may be
affected by the Companys ability to compete on price and other factors with other financial
institutions; customer acceptance of new products and services; and general trends in the banking
and the regulatory environment, as they relate to the Companys cost of funds and return on assets.
The reader is advised that this list of risks is not exhaustive and should not be construed as any
prediction by the Company as to which risks would cause actual results to differ materially from
those indicated by the forward-looking statements. Readers are cautioned not to place undue
reliance on these forward-looking statements.
 For additional information concerning risks and uncertainties related to the Company and its
operations please refer to the Companys Annual Report on Form 10-K for the year ended December 31,
2009 under the heading Risk factors that may affect results. Readers are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of the date hereof. The
Company undertakes no obligation to revise or publicly release the results of any revision to these
forward-looking statements to reflect events or circumstances after the date hereof or to reflect
the occurrence of unanticipated events.
 The following sections discuss significant changes and trends in the financial condition, capital
resources and liquidity of the Company from December 31, 2009 to September 30, 2010. Also discussed
are significant trends and changes in the Companys results of operations for the three and nine
months ended September 30, 2010, compared to the same period in 2009. The consolidated financial
statements and related notes appearing elsewhere in this report are condensed and unaudited. The
following discussion and analysis is intended to provide greater detail of the Companys financial
condition and results.
 Company Overview
 tm tm tm tm
 ï Bank of Choice tm
 tm tm
  29




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
     Utilize the Strength of Our Management Team.
 Leverage Our Existing Foundation for Additional Growth
 Maintain Local Decision-Making and Accountability.
 Focus on Asset Quality and Strong Underwriting.
 30




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
 Build a Stable Core Deposit Base.
  Risk Factors
 Our business is subject to various economic risks that could adversely impact our results of
operations and financial condition.
   
    
    Loan delinquencies may further increase causing additional increases in our provision
and allowance for loan losses;
    
    Financial sector regulators may adopt more restrictive practices or interpretations of
existing regulations, or adopt new regulations;
    
    Collateral for loans made by the Bank, especially real estate related, may continue to
decline in value, which in turn could reduce a clients borrowing power, and reduce the
value of assets and collateral associated with our loans held for investment;
    
    Consumer confidence levels may decline and cause adverse changes in payment patterns,
resulting in increased delinquencies and default rates on loans and other credit facilities
and decreased demand for our products and services; and
    
    Performance of the underlying loans in the private label mortgage backed securities we
hold may continue to deteriorate as the recession continues, potentially causing
other-than-temporary impairment markdowns to our investment portfolio.
 Nonperforming assets take significant time to resolve and adversely affect our results of
operations and financial condition.
   31




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
  We have a concentration risk in real estate related loans.
  Monitoring and servicing our Individual Tax Identification Number (ITIN) residential mortgage
loans could prove more costly and time consuming than previously modeled.
  Future loan losses may exceed the allowance for loan losses.
  Defaults may negatively impact us.
   Interest rate fluctuations, which are out of our control, could harm profitability.
  32




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
   Changes in the fair value of our securities may reduce our stockholders equity and net income.
   Conditions in the financial markets may limit our access to additional funding to meet our
liquidity needs.
  The condition of other financial institutions could negatively affect us.
   Changes in laws, government regulation and monetary policy may have a material effect on our
results of operations.
  33




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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.
  34




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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.
  35




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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.
 36




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
 We are subject to extensive regulation which could adversely affect our business.
   Higher FDIC deposit insurance premiums and assessments could adversely affect our financial
condition.
  Shares eligible for future sale could have a dilutive effect.
  Changes in accounting standards may impact how we report our financial condition and results of
operations.
  A natural disaster or recurring energy shortage, especially in California, could harm our business.
  37




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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.
  38




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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
 Anti-takeover provisions in our articles of incorporation could make a third party acquisition
of us difficult.
   There may be future sales or other dilutions of our equity which may adversely affect the market
price of our common stock.
   The holders of our preferred stock and trust preferred securities have rights that are senior to
those of our holders of common stock and that may impact our ability to pay dividends on our common
stock to our common shareholders and reduce net income available to our common shareholders.
   Our future ability to pay dividends and repurchase stock is subject to restrictions.
  39




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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
 Potential Volatility of Deposits
   Negative Publicity could Damage our Reputation
  Mortgage banking interest rate and market risk
     Mortgage banking revenue can be volatile from quarter to quarter
  40




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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
        41




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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
 Executive Overview
       Sources of Income
    42




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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
     43




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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
 Nine months endingSeptember 30, 2010
    
    
    September 30, 2009ProfitabilityReturn on average assets
    
    
    0.70
    %
    
    
    0.77
    %Return on average equity
    
    
    6.61
    %
    
    
    8.88
    %Average earning assets to total average assets
    
    
    89.86
    %
    
    
    93.56
    %Interest MarginNet interest margin
    
    
    4.14
    %
    
    
    3.81
    %Asset QualityAllowance for loan losses to total loans
    
    
    2.53
    %
    
    
    1.48
    %Nonperforming assets to total assets
    
    
    3.03
    %
    
    
    3.28
    %Net charge-offs to average loans
    
    
    0.67
    %
    
    
    0.99
    %LiquidityLoans to deposits
    
    
    93.05
    %
    
    
    98.53
    %Liquidity ratio
    
    
    47.30
    %
    
    
    36.38
    %CapitalTier 1 risk-based capital  Bank
    
    
    14.28
    %
    
    
    11.58
    %Total risk-based capital  Bank
    
    
    15.54
    %
    
    
    12.83
    %Tier 1 risk-based capital  Company
    
    
    14.58
    %
    
    
    11.79
    %Total risk-based capital  Company
    
    
    15.84
    %
    
    
    13.01
    %EfficiencyEfficiency ratio
    
    
    58.96
    %
    
    
    51.25
    %
 Financial Highlights  Results of Operations
 Balance Sheet
      44




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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
    Income Statement
     Net Interest Income and Net Interest Margin
  45




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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
     Liquidity
     Capital Management
   46




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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
        Well
    
    
    MinimumActual
    
    
    Capitalized
    
    
    CapitalSeptember 30, 2010
    
    Capital
    
    
    Ratio
    
    
    Requirement
    
    
    RequirementThe CompanyLeverage
    
    $
    114,723,030
    
    
    
    12.59
    %
    
    
    n/a
    
    
    
    4.0
    %Tier 1 Risk-Based
    
    $
    114,723,030
    
    
    
    14.58
    %
    
    
    n/a
    
    
    
    4.0
    %Total Risk-Based
    
    $
    124,630,793
    
    
    
    15.84
    %
    
    
    n/a
    
    
    
    8.0
    %Redding Bank of CommerceLeverage
    
    $
    105,470,141
    
    
    
    11.52
    %
    
    
    5.0
    %
    
    
    4.0
    %Tier 1 Risk-Based
    
    $
    105,470,141
    
    
    
    14.28
    %
    
    
    6.0
    %
    
    
    4.0
    %Total Risk-Based
    
    $
    114,786,085
    
    
    
    15.54
    %
    
    
    10.0
    %
    
    
    8.0
    %
 Short and Long Term Borrowings
   Allowance for Loan and Lease Losses
   47




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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
       most significant
    48




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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
 Factors that may affect future results
          Critical Accounting Policies
   49




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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
 General
  Preparation of financial statements
  Use of estimates
  Accounting Principles Generally Accepted in the United States of America
   Valuation of Investments and Impairment of Securities
    50




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




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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
 Revenue recognition
  Income Taxes
   Mortgages Held for Sale
  Derivative Loan Commitments
   Other Real Estate Owned
  52




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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
  Table 1.
    
    Average Balances, Interest Income/Expense and Yields/Rates Paid(unaudited)
 Nine Months Ended
    
    
    Nine Months EndedSeptember 30, 2010
    
    
    September 30, 2009Average
    
    
    
    
    
    
    Yield/
    
    
    Average
    
    
    
    
    
    
    Yield/(Dollars in thousands)
    
    Balance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    RateEarning AssetsPortfolio Loans1
    
    $
    625,396
    
    
    $
    27,767
    
    
    
    5.92
    %
    
    $
    589,802
    
    
    $
    26,676
    
    
    
    6.03
    %Tax-exempt Securities2
    
    
    38,452
    
    
    
    1,168
    
    
    
    4.05
    %
    
    
    27,859
    
    
    
    853
    
    
    
    4.08
    %US Government Securities
    
    
    26,631
    
    
    
    478
    
    
    
    2.39
    %
    
    
    7,721
    
    
    
    252
    
    
    
    4.33
    %Mortgage backed Securities
    
    
    45,368
    
    
    
    1,100
    
    
    
    3.23
    %
    
    
    59,892
    
    
    
    2,522
    
    
    
    5.61
    %Other Securities
    
    
    47,644
    
    
    
    1,085
    
    
    
    3.04
    %
    
    
    17,499
    
    
    
    557
    
    
    
    1.77
    %Federal Funds Sold
    
    
    995
    
    
    
    2
    
    
    
    0.27
    %
    
    
    41,996
    
    
    
    31
    
    
    
    0.23
    %Average Earning Assets
    
    $
    784,486
    
    
    $
    31,600
    
    
    
    5.37
    %
    
    $
    744,769
    
    
    $
    30,891
    
    
    
    5.53
    %Cash & Due From Banks
    
    $
    37,178
    
    
    
    
    
    
    
    
    
    
    $
    21,890Bank Premises
    
    
    9,875
    
    
    
    
    
    
    
    
    
    
    
    10,435Other Assets
    
    
    41,518
    
    
    
    
    
    
    
    
    
    
    
    23,755Average Total Assets
    
    $
    873,057
    
    
    
    
    
    
    
    
    
    
    $
    800,849Interest Bearing LiabilitiesDemand Interest Bearing
    
    $
    133,494
    
    
    $
    707
    
    
    
    0.71
    %
    
    $
    141,493
    
    
    $
    786
    
    
    
    0.74
    %Savings Deposits
    
    
    74,310
    
    
    
    677
    
    
    
    1.21
    %
    
    
    62,554
    
    
    
    742
    
    
    
    1.58
    %Certificates of Deposit
    
    
    329,456
    
    
    
    4,768
    
    
    
    1.93
    %
    
    
    305,237
    
    
    
    5,722
    
    
    
    2.50
    %Repurchase Agreements
    
    
    11,971
    
    
    
    40
    
    
    
    0.45
    %
    
    
    11,202
    
    
    
    38
    
    
    
    0.45
    %FHLB Borrowings
    
    
    102,271
    
    
    
    460
    
    
    
    0.60
    %
    
    
    122,601
    
    
    
    1,634
    
    
    
    1.81
    %Trust Preferred Borrowings
    
    
    15,000
    
    
    
    619
    
    
    
    5.50
    %
    
    
    15,000
    
    
    
    665
    
    
    
    5.67
    %666,502
    
    
    $
    7,271
    
    
    
    1.45
    %
    
    
    658,087
    
    
    $
    9,587
    
    
    
    1.94
    %Noninterest bearing demand
    
    
    92,204
    
    
    
    
    
    
    
    
    
    
    
    71,718Other Liabilities
    
    
    21,621
    
    
    
    
    
    
    
    
    
    
    
    5,800Stockholders Equity
    
    
    92,730
    
    
    
    
    
    
    
    
    
    
    
    65,244Average
Liabilities and Stockholders Equity
    
    $
    873,057
    
    
    
    
    
    
    
    
    
    
    $
    800,849Net Interest Income and Net Interest Margin
    
    
    
    
    
    $
    24,329
    
    
    
    4.14
    %
    
    
    
    
    
    $
    21,304
    
    
    
    3.81
    %
   
 1
    
    Average nonaccrual loans and average
loans held for sale of $15 million and $23.2 million are included respectively2
    
    The yield on tax-exempt securities has not
been adjusted to a tax-equivalent yield basis. 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)
 September 30, 2010
    
    
    Over
    
    
    September 30, 2009(Dollars in thousands)
    
    Volume
    
    
    Rate
    
    
    TotalIncrease (decrease) in interest incomePortfolio Loans
    
    $
    1,580
    
    
    $
    (489
    )
    
    $
    1,091Tax-exempt Securities
    
    
    322
    
    
    
    (7
    )
    
    
    315US Government Securities
    
    
    339
    
    
    
    (112
    )
    
    
    227Mortgage Back Securities
    
    
    (352
    )
    
    
    (1,071
    )
    
    
    (1,423
    )Other Securities
    
    
    129
    
    
    
    399
    
    
    
    528Federal Funds Sold
    
    
    (33
    )
    
    
    4
    
    
    
    (29
    )Total Increase (Decrease)
    
    
    1,985
    
    
    
    (1,276
    )
    
    
    709Increase (decrease) in interest expenseInterest Bearing Demand
    
    
    (42
    )
    
    
    (37
    )
    
    
    (79
    )Savings Deposits
    
    
    107
    
    
    
    (172
    )
    
    
    (65
    )Certificates of Deposit
    
    
    351
    
    
    
    (1,305
    )
    
    
    (954
    )Repurchase Agreements
    
    
    3
    
    
    
    (1
    )
    
    
    2FHLB Borrowings
    
    
    (91
    )
    
    
    (1,083
    )
    
    
    (1,174
    )Trust Preferred Borrowings
    
    
    19
    
    
    
    (65
    )
    
    
    (46
    )Total Increase (Decrease)
    
    
    347
    
    
    
    (2,663
    )
    
    
    (2,316
    )Net Increase
    
    $
    1,638
    
    
    $
    1,387
    
    
    $
    3,025
     54




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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
  (Dollars in thousands)
    
    Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Noninterest incomeService charges on deposit accounts
    
    $
    63
    
    
    $
    108
    
    
    $
    207
    
    
    $
    296Payroll and benefit processing fees
    
    
    107
    
    
    
    109
    
    
    
    335
    
    
    
    347Earnings on cash surrender value -
Bank owned insurance
    
    
    112
    
    
    
    108
    
    
    
    327
    
    
    
    311Net gain on sale of securities available-for-sale
    
    
    179
    
    
    
    506
    
    
    
    1,243
    
    
    
    1,984Net on transfer of financial assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    340Net gain on settlement of put reserve
    
    
    1,750
    
    
    
    
    
    
    
    1,750
    
    
    
    Mortgage brokerage fee income
    
    
    3,293
    
    
    
    1,913
    
    
    
    8,585
    
    
    
    3,215Other Income
    
    
    179
    
    
    
    200
    
    
    
    515
    
    
    
    511Total Noninterest income
    
    $
    5,683
    
    
    $
    2,944
    
    
    
    12,962
    
    
    $
    7,004
        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 Ended
    
    
    Nine Months EndedNoninterest Expense
    
    September 30, 2010
    
    
    September 30, 2009
    
    
    September 30, 2010
    
    
    September 30, 2009Salaries and related benefits
    
    $
    4,162
    
    
    $
    2,902
    
    
    $
    11,238
    
    
    $
    7,673Occupancy and equipment expense
    
    
    952
    
    
    
    1,124
    
    
    
    2,805
    
    
    
    2,426Write down of other real estate owned
    
    
    129
    
    
    
    
    
    
    
    1,374
    
    
    
    FDIC insurance premium
    
    
    250
    
    
    
    421
    
    
    
    755
    
    
    
    995Data processing fees
    
    
    52
    
    
    
    52
    
    
    
    205
    
    
    
    231Professional service fees
    
    
    216
    
    
    
    220
    
    
    
    1,159
    
    
    
    674Deferred compensation expense
    
    
    126
    
    
    
    118
    
    
    
    366
    
    
    
    360Stationery and Supplies
    
    
    35
    
    
    
    62
    
    
    
    211
    
    
    
    141Postage
    
    
    58
    
    
    
    
    
    
    
    145
    
    
    
    111Directors expense
    
    
    56
    
    
    
    75
    
    
    
    208
    
    
    
    232Goodwill Impairment
    
    
    
    
    
    
    
    
    
    
    32
    
    
    
    Other expenses
    
    
    1,257
    
    
    
    680
    
    
    
    3,490
    
    
    
    1,664Total Noninterest expense
    
    $
    7,293
    
    
    $
    5,654
    
    
    $
    21,988
    
    
    $
    14,507
          56




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
  Income Taxes
    (Dollars in thousands)
    
    Three Months Ended
    
    
    Nine Months EndedIncome Taxes
    
    September 30, 2010
    
    
    September 30, 2009
    
    
    September 30, 2010
    
    
    September 30, 2009Tax provision
    
    $
    916
    
    
    $
    1,010
    
    
    $
    2,410
    
    
    $
    2,647Effective tax rate
    
    
    37.01
    %
    
    
    31.73
    %
    
    
    34.38
    %
    
    
    34.35
    %
   (Dollars in thousands)Deferred Tax Assets
    
    September 30, 2010
    
    
    September 30, 2009State Franchise taxes
    
    $
    390
    
    
    $
    173Deferred compensation
    
    
    2,474
    
    
    
    2,289Loan loss reserves
    
    
    7,006
    
    
    
    3,990Other
    
    
    338
    
    
    
    184Total Deferred Tax Assets
    
    $
    10,208
    
    
    $
    6,636Deferred Tax LiabilitiesState Franchise taxes
    
    
    
    
    
    
    (473
    )Unrealized gain on
available-for-sale investment
securities
    
    
    (1,511
    )
    
    
    (578
    )Depreciation
    
    
    (120
    )
    
    
    (146
    )Deferred loan origination costs
    
    
    (425
    )
    
    
    (406
    )Deferred state taxes
    
    
    (757
    )
    
    
    Other
    
    
    (154
    )
    
    
    (156
    )Total Deferred Tax Liabilities
    
    $
    (2,967
    )
    
    
    (1,759
    )Total Net Deferred Tax Asset
    
    $
    7,241
    
    
    $
    4,877
 57




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
 Asset Quality
    (Dollars in thousands)Portfolio Loans
    
    September 30, 2010
    
    
    December 31, 2009Commercial & financial loans
    
    $
    136,258
    
    
    $
    133,080Real estate  construction loans
    
    
    43,942
    
    
    
    59,524Real estate   commercial (investor)
    
    
    183,620
    
    
    
    197,023Real estate
 commercial (owner occupied)
    
    
    72,093
    
    
    
    63,001Real estate  ITIN loan pool
    
    
    72,299
    
    
    
    78,250Real estate  other mortgage
    
    
    19,345
    
    
    
    20,525Real estate  equity lines
    
    
    79,460
    
    
    
    45,601Installment
    
    
    2,371
    
    
    
    2,223Other loans
    
    
    1,763
    
    
    
    2,212Less:Net deferred loan fees
    
    
    124
    
    
    
    209Allowance for loan losses
    
    
    15,452
    
    
    
    11,207Total net portfolio loans
    
    $
    595,575
    
    
    $
    590,023
  (Dollars in thousands)
    
    
    
    
    
    % of TotalLoan Type
    
    Balance
    
    
    net portfolio loansCommercial lots and entitled commercial land
    
    $
    17,945
    
    
    
    3.01
    %Commercial real estate  construction
    
    
    17,626
    
    
    
    2.96
    %1-4 family subdivision loans
    
    
    5,692
    
    
    
    0.96
    %1-4 family individual residential lots
    
    
    2,016
    
    
    
    0.34
    %1-4 family construction speculative
    
    
    663
    
    
    
    0.11
    %Total real estate- construction
    
    $
    43,942
    
    
    
    7.38
    %
  58




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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
 Mortgages held for sale
  Nonperforming Assets
  (Dollars in thousands)Nonperforming assets
    
    September 30, 2010
    
    
    December 31, 2009Commercial & Industrial
    
    $
    4,952
    
    
    $
    237Secured by 1-4 family, closed end 1st lien
    
    
    1,204
    
    
    
    623Secured by 1-4 family  Revolving
    
    
    194
    
    
    
    199Secured by NFNR  Other
    
    
    9,617
    
    
    
    5,759Secured by RE - 1-4 Construction
    
    
    261
    
    
    
    849Secured by RE  Other Construction
    
    
    2,251
    
    
    
    Nonaccrual Loan Portfolio
    
    $
    18,479
    
    
    $
    7,667Nonaccrual  ITIN Loan Pool
    
    
    6,751
    
    
    
    Nonaccrual  Home Equity Loan Pool
    
    
    42
    
    
    
    90 days past due and still accruing interest
    
    
    682
    
    
    
    5,052Other real estate owned
    
    
    2,020
    
    
    
    2,880Total nonperforming assets
    
    $
    27,974
    
    
    $
    15,599
    59




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
      Troubled debt restructurings
    
    September 30, 2010
    
    
    
    December 31, 2009Nonaccrual
    
    
    12,587
    
    
    
    $
    4,937Accruing
    
    
    12,162
    
    
    
    
    5,730Total troubled debt restructurings
    
    $
    24,749
    
    
    
    $
    10,667
 Allowance for Loan and Lease Losses (ALLL)
      60




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
   
    
    Changes in lending policies and procedures, including underwriting, collection,
charge-off and recovery practices not considered elsewhere in estimating credit losses;
    
    Changes in regional, local and business conditions and developments that affect the
collectability of loans, including the conditions of various market segments;
    
    Changes in the nature and volume of the loan portfolio and in the terms of loans;
    
    Changes in the experience, ability and depth of lending management and other relevant
staff;
    
    Changes in the volume and severity of past due loans, the volume of nonaccrual loans and
the volume and severity of adversely classified or graded loans;
    
    Changes in the quality of the Companys loan review systems or the degree of oversight
by the board of directors;
    
    The existence and effects of any concentrations of credit and changes in the level of
such concentrations;
    
    The effect of other external factors such as competition and legal and regulatory
requirements on the level of estimated credit losses;
    
    Loan loss history over the past 18 months has contributed significantly to the
percentage of loss allocations. Accordingly the loan loss history component of the
provision for loan and lease losses has been adjusted to weight toward recent history with
80% of the allocation to the last two and one half years.
      61




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
  (Dollars in thousand)

    
    Three Months Ended
    
    
    Nine Months EndedSeptember 30, 2010
    
    
    September 30, 2009
    
    
    September 30, 2010
    
    
    September 30, 2009Beginning balance
    
    $
    12,767
    
    
    $
    8,496
    
    
    $
    11,207
    
    
    $
    8,429Provision for loan loss charged to expense
    
    
    4,450
    
    
    
    1,844
    
    
    
    8,300
    
    
    
    6,325Loans charged off
    
    
    (1,883
    )
    
    
    (1,461
    )
    
    
    (4,765
    )
    
    
    (6,005
    )Loan loss recoveries
    
    
    118
    
    
    
    20
    
    
    
    710
    
    
    
    150Ending balance
    
    $
    15,452
    
    
    $
    8,899
    
    
    $
    15,452
    
    
    $
    8,899Gross portfolio loans outstanding at period end
    
    
    611,027
    
    
    
    599,784
    
    
    
    611,027
    
    
    
    599,784Ratio of allowance for loan losses to total loans
    
    
    2.53
    %
    
    
    1.48
    %
    
    
    2.53
    %
    
    
    1.48
    %Nonaccrual loans at period end:Construction
    
    $
    2,512
    
    
    $
    3,094
    
    
    $
    2,512
    
    
    $
    3,094Commercial real estate
    
    
    9,617
    
    
    
    6,846
    
    
    
    9,617
    
    
    
    6,846Commercial
    
    
    4,952
    
    
    
    271
    
    
    
    4,952
    
    
    
    271Home equity
    
    
    194
    
    
    
    202
    
    
    
    194
    
    
    
    202Residential real estate
    
    
    7,997
    
    
    
    894
    
    
    
    7,997
    
    
    
    894Total nonaccrual loans
    
    $
    25,272
    
    
    $
    11,307
    
    
    
    25,272
    
    
    
    11,307Accruing troubled-debt restructured loansConstruction
    
    $
    2,327
    
    
    $
    
    
    
    $
    2,327
    
    
    $
    Commercial real estate
    
    
    2,929
    
    
    
    
    
    
    
    2,929
    
    
    
    Residential real estate
    
    
    6,906
    
    
    
    
    
    
    
    6,906
    
    
    
    Total accruing restructured loans
    
    
    12,162
    
    
    
    
    
    
    
    12,162
    
    
    
    All other accruing impaired loans
    
    
    740
    
    
    
    
    
    
    
    740
    
    
    
    Total impaired loans
    
    $
    38,174
    
    
    $
    11,307
    
    
    $
    38,174
    
    
    $
    11,307Allowance for loan losses to nonaccrual loans at
period end
    
    
    61.14
    %
    
    
    78.70
    %
    
    
    61.14
    %
    
    
    78.70
    %Nonaccrual loans to total loans
    
    
    4.14
    %
    
    
    1.89
    %
    
    
    4.14
    %
    
    
    1.89
    %Average recorded investment in impaired loans
    
    $
    35,046
    
    
    $
    10,906
    
    
    $
    25,786
    
    
    $
    15,731Cash receipt on nonaccrual loan interest and
recognized as interest income
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
  62




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##### Table of Contents



BANK OF COMMERCE HOLDINGS & SUBSIDIARIES
QUARTERLY INCOME STATEMENT
 September 30,
    
    
    June 30,
    
    
    March 31,
    
    

    December 31,
    
    
    September 30,(Dollars in thousands, except for per share data)
    
    2010
    
    
    2010
    
    
    2010
    
    
    2009
    
    
    2009Interest income:Interest and fees on loans
    
    $
    9,414
    
    
    $
    9,302
    
    
    $
    9,051
    
    
    $
    9,184
    
    
    $
    9,355Interest on tax-exempt securities
    
    
    465
    
    
    
    381
    
    
    
    322
    
    
    
    311
    
    
    
    278Interest on U.S. government securities
    
    
    633
    
    
    
    507
    
    
    
    439
    
    
    
    676
    
    
    
    628Interest on federal funds sold and securities
repurchased under agreements to resell
    
    
    1
    
    
    
    
    
    
    
    1
    
    
    
    1
    
    
    
    1Interest on other securities
    
    
    471
    
    
    
    343
    
    
    
    270
    
    
    
    266
    
    
    
    309Total interest income
    
    
    10,984
    
    
    
    10,533
    
    
    
    10,083
    
    
    
    10,438
    
    
    
    10,571Interest expense:Interest on demand deposits
    
    
    251
    
    
    
    226
    
    
    
    230
    
    
    
    229
    
    
    
    240Interest on savings deposits
    
    
    237
    
    
    
    221
    
    
    
    219
    
    
    
    221
    
    
    
    223Interest on certificates of deposit
    
    
    1,453
    
    
    
    1,554
    
    
    
    1,761
    
    
    
    1,906
    
    
    
    1,941Securities sold under repurchase agreements
    
    
    13
    
    
    
    15
    
    
    
    12
    
    
    
    13
    
    
    
    13Interest on FHLB and other borrowings
    
    
    186
    
    
    
    138
    
    
    
    136
    
    
    
    172
    
    
    
    514Interest on junior subordinated debt
    
    
    204
    
    
    
    207
    
    
    
    208
    
    
    
    208
    
    
    
    234Total interest expense
    
    
    2,344
    
    
    
    2,361
    
    
    
    2,566
    
    
    
    2,749
    
    
    
    3,165Net interest income
    
    
    8,640
    
    
    
    8,172
    
    
    
    7,517
    
    
    
    7,689
    
    
    
    7,406Provision for loan and lease losses
    
    
    4,450
    
    
    
    1,600
    
    
    
    2,250
    
    
    
    3,150
    
    
    
    1,844Net interest income after provision for loan and
lease losses
    
    
    4,190
    
    
    
    6,572
    
    
    
    5,267
    
    
    
    4,539
    
    
    
    5,562Noninterest income:Service charges on deposit accounts
    
    
    63
    
    
    
    62
    
    
    
    82
    
    
    
    94
    
    
    
    108Payroll and benefit processing fees
    
    
    107
    
    
    
    100
    
    
    
    128
    
    
    
    105
    
    
    
    109Earnings on cash surrender value  bank owned
life insurance
    
    
    112
    
    
    
    107
    
    
    
    108
    
    
    
    107
    
    
    
    108Net gain on sale of securities available-for-sale
    
    
    179
    
    
    
    133
    
    
    
    931
    
    
    
    454
    
    
    
    506Net gain on transfer of financial assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    Gain on settlement of put reserve
    
    
    1,750
    
    
    
    64
    
    
    
    54
    
    
    
    68
    
    
    
    80Mortgage brokerage fee income
    
    
    3,293
    
    
    
    2,753
    
    
    
    2,539
    
    
    
    2,112
    
    
    
    1,913Other income
    
    
    179
    
    
    
    118
    
    
    
    100
    
    
    
    119
    
    
    
    120Total noninterest income
    
    
    5,683
    
    
    
    3,337
    
    
    
    3,942
    
    
    
    3,060
    
    
    
    2,944Noninterest expense:Salaries and related benefits
    
    
    4,162
    
    
    
    3,365
    
    
    
    3,711
    
    
    
    3,209
    
    
    
    2,902Occupancy and equipment expense
    
    
    952
    
    
    
    924
    
    
    
    929
    
    
    
    1,178
    
    
    
    1,124Write down of other real estate owned
    
    
    129
    
    
    
    1,064
    
    
    
    181
    
    
    
    161
    
    
    
    FDIC insurance premium
    
    
    250
    
    
    
    254
    
    
    
    251
    
    
    
    279
    
    
    
    421Data processing fees
    
    
    52
    
    
    
    64
    
    
    
    89
    
    
    
    51
    
    
    
    52Professional service fees
    
    
    216
    
    
    
    543
    
    
    
    400
    
    
    
    146
    
    
    
    220Deferred compensation expense
    
    
    126
    
    
    
    122
    
    
    
    118
    
    
    
    118
    
    
    
    118Stationery and supplies
    
    
    35
    
    
    
    96
    
    
    
    80
    
    
    
    44
    
    
    
    62Postage
    
    
    58
    
    
    
    45
    
    
    
    42
    
    
    
    36
    
    
    
    Directors expense
    
    
    56
    
    
    
    68
    
    
    
    84
    
    
    
    67
    
    
    
    75Other expenses
    
    
    1,257
    
    
    
    965
    
    
    
    1,300
    
    
    
    828
    
    
    
    680Total noninterest expense
    
    
    7,293
    
    
    
    7,510
    
    
    
    7,185
    
    
    
    6,117
    
    
    
    5,654Income before provision for income taxes
    
    
    2,580
    
    
    
    2,399
    
    
    
    2,024
    
    
    
    1,482
    
    
    
    2,852Provision for income taxes
    
    
    916
    
    
    
    750
    
    
    
    744
    
    
    
    43
    
    
    
    1,010Net Income
    
    
    1,664
    
    
    
    1,649
    
    
    
    1,280
    
    
    
    1,439
    
    
    
    1,842Less: Net income (loss) attributable to non-controlling interest
    
    
    105
    
    
    
    144
    
    
    
    (255
    )
    
    
    33
    
    
    
    129Net income
attributable to Bank of Commerce Holdings
    
    $
    1,559
    
    
    $
    1,505
    
    
    $
    1,535
    
    
    $
    1,406
    
    
    $
    1,713Less: Preferred dividend and accretion on preferred
stock
    
    $
    235
    
    
    $
    236
    
    
    $
    235
    
    
    $
    235
    
    
    $
    235Income available to common stockholders
    
    $
    1,324
    
    
    $
    1,269
    
    
    $
    1,300
    
    
    $
    1,171
    
    
    $
    1,478Basic earnings per share
    
    $
    0.08
    
    
    $
    0.08
    
    
    $
    0.15
    
    
    $
    0.13
    
    
    $
    0.17Weighted average shares  basic
    
    
    16,991
    
    
    
    16,837
    
    
    
    8,871
    
    
    
    8,711
    
    
    
    8,711Diluted earnings per share
    
    $
    0.08
    
    
    $
    0.08
    
    
    $
    0.15
    
    
    $
    0.13
    
    
    $
    0.17Weighted average shares  diluted
    
    
    16,991
    
    
    
    16,837
    
    
    
    8,871
    
    
    
    8,711
    
    
    
    8,711Cash dividends per share
    
    $
    0.03
    
    
    $
    0.06
    
    
    $
    0.06
    
    
    $
    0.06
    
    
    $
    0.12
 63




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##### Table of Contents



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
          64




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##### Table of Contents



QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK (Continued)
    65




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##### Table of Contents



ITEM 4T. CONTROLS AND PROCEDURES
         66




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##### Table of Contents



PART II. Other Information
 
 Item 1. Legal Proceedings
  
 Item 1a. Risk Factors
         
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
   67




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##### Table of Contents



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds (Continued)
     
 Item 3. Defaults Upon Senior Securities
  
 Item 4. (Removed and Reserved)
  
 Item 5. Other Information
  
 Item 6. Exhibits
 (31.1)
    
    Certification of Chief Executive Officer pursuant to Sarbanes-Oxley Act of 2002(31.2)
    
    Certification of Chief Financial Officer pursuant to Sarbanes-Oxley Act of 2002(32.0)
    
    Certification of Chief Executive Officer and Chief Financial Officer pursuant to
Sarbanes-Oxley Act of 2002
 68




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##### Table of Contents



SIGNATURES
  BANK OF COMMERCE HOLDINGS
                    (Registrant)Date: November 12, 2010
    /s/ Samuel D. JimenezSamuel D. JimenezSenior Vice President and 
Chief Financial Officer 69