GlobeNewswire Inc | Jan 22, 2021 09:00AM EST

January 22, 2021

SACRAMENTO, Calif., Jan. 22, 2021 (GLOBE NEWSWIRE) -- Bank of Commerce Holdings (NASDAQ: BOCH) (the Company), a $1.764 billion asset bank holding company and parent company of Merchants Bank of Commerce (the Bank), today announced financial results for the quarter and year ended December 31, 2020. Net income for the quarter ended December 31, 2020 was $5.1 million or $0.30 per share diluted, compared with net income of $4.4 million or $0.24 per share diluted for the same period of 2019. Net income for the year ended December 31, 2020 was $14.2 million or $0.83 per share diluted, compared with net income of $15.0 million or $0.83 per share diluted for the same period of 2019.

Significant Items for the fourth quarter of 2020:

-- COVID-19 loan deferrals outstanding declined to $9.5 million at December 31, 2020 as borrowers resumed making payments compared to deferral balances of $38.6 million and $123.3 million at September 30, 2020 and June 30, 2020, respectively. -- 119 PPP loans totaling $32.7 million (20%) have been forgiven by the SBA or repaid by the borrower, resulting in $664 thousand of accelerated fee income. -- COVID-19 credit concerns have moderated and no provision for loan and lease losses was required during the fourth quarter.

Randall S. Eslick, President and CEO commented: Looking back on 2020, I could not be more proud of the accomplishments of our dedicated employees. Despite the rollercoaster that was 2020, the year was unexpectedly positive for our company. We supported our employees, customers and communities through the pandemic; we saw substantial growth in loans and deposits; and we ended the year delivering solid returns to our investors.Our company is well positioned for future success.

Financial highlights for the year ended December 31, 2020:

-- Net income of $14.2 million was a decrease of $797 thousand (5%) from $15.0 million earned during the prior year. Earnings of $0.83 per share diluted was unchanged compared to the prior year and reflects the impact of the following: 1.5 million shares of common stock repurchased between October of 2019 and April of 2020.$5.3 million provision for loan and lease losses for the current year.$1.1 million in non-recurring costs during the first quarter of 2020 associated with the termination of a technology management services contract and a severance agreement; both previously announced.$2.7 million in non-recurring costs recorded during the year ended December 31, 2019 associated with our January 31, 2019 acquisition of Merchants National Bank of Sacramento and the name change of our subsidiary bank. -- Net interest income increased $1.9 million (4%) to $55.5 million compared to $53.5 million in the prior year. -- Net interest margin declined to 3.60% compared to 3.94% in the prior year. -- Return on average assets decreased to 0.86% compared to 1.03% in the prior year. -- Return on average equity decreased to 8.27% compared to 9.09% in the prior year. -- Average loans totaled $1.149 billion, an increase of $129 million (13%) compared to average loans in the prior year. -- Average earning assets totaled $1.539 billion, an increase of $178 million (13%) compared to average earning assets in the prior year. -- Average deposits totaled $1.423 billion, an increase of $179 million (14%) compared to average deposits in the prior year. Average non-maturing deposits totaled $1.281 billion, an increase of $197 million (18%) compared to the prior year.Average certificates of deposit totaled $142.1 million, a decrease of $18.5 million (12%) compared to the prior year. -- The Companys efficiency ratio was 58.8% compared to 64.5% in the prior year. The Companys efficiency ratio of 58.8% for 2020 includes $1.1 million of non-recurring costs. The efficiency ratio excluding these costs was 56.9%.The Companys efficiency ratio of 64.5% for 2019 includes $2.7 million of non-recurring costs associated with our acquisition of Merchants and name change of our subsidiary bank. The efficiency ratio excluding these non-recurring costs is 59.9%. -- Nonperforming assets at December 31, 2020 totaled $7.0 million or 0.40% of total assets, an increase of $1.4 million (24%) since December 31, 2019. The increase in nonperforming assets results primarily from two commercial loans totaling $1.4 million and a $640 thousand commercial real estate loan, all of which are well secured, that were placed on nonaccrual status during the year ending December 31, 2020. -- Book value per common share was $10.58 at December 31, 2020 compared to $9.62 at December 31, 2019. -- Tangible book value per common share was $9.64 at December 31, 2020 compared to $8.71 at December 31, 2019.

Financial highlights for the fourth quarter of 2020:

-- Net income of $5.1 million was an increase of $703 thousand (16%) from $4.4 million earned during the same period in the prior year. Earnings of $0.30 per share diluted was an increase of $0.06 (25%) per share from $0.24 per share diluted earned during the same period in the prior year and reflects the impact of the following: 1.5 million shares of common stock repurchased between October of 2019 and April of 2020. -- Net interest income increased $1.3 million (9%) to $14.6 million compared to $13.3 million for the same period in the prior year. -- Net interest margin declined to 3.46% compared to 3.80% for the same period in the prior year. -- Return on average assets decreased to 1.14% compared to 1.16% for the same period in the prior year. -- Return on average equity increased to 11.56% compared to 10.06% for the same period in the prior year. -- Average loans totaled $1.173 billion, an increase of $141 million (14%) compared to average loans for the same period in the prior year. -- Average earning assets totaled $1.675 billion, an increase of $284 million (20%) compared to the same period in the prior year. -- Average deposits totaled $1.555 billion, an increase of $273 million (21%) compared to the same period in the prior year. Average non-maturing deposits totaled $1.417 billion, an increase of $288 million (26%) compared to the same period in the prior year.Average certificates of deposit totaled $138.4 million, a decrease of $14.8 million (10%) compared to the same period in the prior year. -- The Companys efficiency ratio was 54.8% compared to 58.7% for the same period in the prior year. -- Nonperforming assets at December 31, 2020 totaled $7.0 million or 0.40% of total assets, a decrease of $1.1 million (53% annualized) since September 30, 2020. The decrease in nonperforming assets was due to a $1.1 million commercial real estate loan that was placed on nonaccrual status in the second quarter of 2020 and paid off during the fourth quarter of 2020. -- Book value per common share was $10.58 at December 31, 2020 compared to $10.32 at September 30, 2020. -- Tangible book value per common share was $9.64 at December 31, 2020 compared to $9.38 at September 30, 2020.

Impact of COVID-19:

-- At December 31, 2020, we have 487 loans totaling $130.8 million in the Small Business Administrations Paycheck Protection Program (PPP) compared to 606 loans totaling $163.5 million at September 30, 2020. Substantially all of the loans were made to existing customers and were funded under the two-year PPP loan program. -- We have experienced significant increases in deposit balances during 2020. All PPP loan funds were deposited into customer accounts at our bank and customer behavior has emphasized savings during the economic slow down. -- Organic loan growth continues to be slow as we maintain credit underwriting discipline in the current economic environment. -- For the six-month period, from April through September, SBA made principal and interest payments on all our SBA 7(a) loans. In October, borrowers resumed responsibility for making their payments. -- After considering qualitative and quantitative factors, management determined that the Companys goodwill was not impaired at December 31, 2020. -- At December 31, 2020, our workforce totaled 212 employees of which 107 are working remotely. -- All of our branch offices remain open, although they are operating under a reduced schedule. Our pandemic response team is continuing to modify and enhance our workforce and customer protection as additional information or requirements are promulgated by the CDC and the state of California.

Forward-Looking Statements

Bank of Commerce Holdings wishes to take advantage of the Safe Harbor provisions included in the Private Securities Litigation Reform Act of 1995. This news release includes statements by the Company, which describe managements expectations and developments, which may not be based on historical facts and are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21B of the Securities Act of 1934, as amended. Future events are difficult to predict, and the expectations described above are necessarily subject to risk and uncertainty that may cause actual results to differ materially and adversely. In addition to discussions about risks and uncertainties set forth from time to time in the Company's public filings, factors that may cause actual results to differ materially from those contemplated by such forward looking statements include, among others, the following possibilities: (1) local, national and international economic conditions are less favorable than expected or have a more direct and pronounced effect on the Company than expected and adversely affect the Company's ability to continue its internal growth at historical rates and maintain the quality of its earning assets; (2) changes in interest rates reduce interest margins more than expected and negatively affect funding sources; (3) projected business increases following strategic expansion or opening or acquiring new banks and/or branches are lower than expected; (4) our concentration in lending tied to real estate exposes us to the adverse effects of material increases in interest rates, declines in the general economy, tightening credit markets or declines in real estate values; (5) competitive pressure among financial institutions increases significantly; (6) legislation or regulatory requirements or changes adversely affect the businesses in which the Company is engaged; and (7) technological changes could expose us to new risks.

TABLE 1 SELECTED FINANCIAL INFORMATION - UNAUDITED (dollars in thousands except per share data) For The Three Months Ended For The Twelve Months Ended Net income,average December 31, September 30, December 31, assets andaverageshareholders' 2020 2019 2020 2020 2019 equityNet income $ 5,072 $ 4,369 $ 4,329 $ 14,164 $ 14,961 Average total $ 1,774,937 $ 1,492,643 $ 1,704,116 $ 1,640,519 $ 1,458,112 assetsAverage totalearning $ 1,674,544 $ 1,390,446 $ 1,601,436 $ 1,538,605 $ 1,360,325 assetsAverageshareholders' $ 174,520 $ 172,385 $ 171,433 $ 171,287 $ 164,642 equity Selectedperformance ratiosReturn onaverage 1.14 % 1.16 % 1.01 % 0.86 % 1.03 %assetsReturn onaverage 11.56 % 10.06 % 10.05 % 8.27 % 9.09 %equityEfficiency 54.8 % 58.7 % 54.8 % 58.8 % 64.5 %ratio Share and per share amountsWeightedaverage 16,663 18,068 16,660 16,918 17,956 shares -basic ^(1)Weightedaverage 16,731 18,150 16,696 16,963 18,024 shares -diluted ^(1)Earnings per $ 0.30 $ 0.24 $ 0.26 $ 0.84 $ 0.83 share - basicEarnings pershare - $ 0.30 $ 0.24 $ 0.26 $ 0.83 $ 0.83 diluted At December 31, At September 30,Share and per 2020 2019 2020 share amountsCommon sharesoutstanding ^ 16,801 18,137 16,792 (2)Book valueper common $ 10.58 $ 9.62 $ 10.32 share ^(2)Tangible bookvalue per $ 9.64 $ 8.71 $ 9.38 common share^(2)(3) Capital ratios ^(4)Bank ofCommerce HoldingsCommon equitytier 1 13.12 % 13.19 % 12.61 % capital ratioTier 1 13.97 % 14.04 % 13.44 % capital ratioTotal capital 16.06 % 15.97 % 15.53 % ratioTier 1leverage 9.46 % 11.30 % 9.60 % ratioTangiblecommon equity 9.27 % 10.80 % 9.13 % ratio ^(5) MerchantsBank of CommerceCommon equitytier 1 14.58 % 14.39 % 14.01 % capital ratioTier 1 14.58 % 14.39 % 14.01 % capital ratioTotal capital 15.83 % 15.48 % 15.26 % ratioTier 1leverage 9.86 % 11.58 % 9.99 % ratio ^(1) Excludes unvested restricted shares issued in accordance with theCompany's equity incentive plan, as they are non-participative in dividends orvoting rights.^(2) Includes unvested restricted shares issued in accordance with theCompany's equity incentive plan.^(3) Book value per share is computed by dividing total shareholders? equity byshares outstanding. Tangible book value per share is computed by dividing totalshareholders? equity less goodwill and core deposit intangible, net by sharesoutstanding. Management believes that tangible book value per share ismeaningful because it is a measure that the Company and investors commonly useto assess capital adequacy.^(4) The Company and the Bank continue to meet all capital adequacyrequirements to which they are subject.^(5) Management believes the tangible common equity ratio is a useful measureof capital adequacy because it provides a meaningful base for period-to-periodand company-to-company comparisons, which management believes will assistinvestors in assessing the capital of the Company and the ability of theCompany to absorb potential losses. The tangible common equity ratio iscalculated as total shareholders' equity less goodwill and core depositintangible, net divided by total assets less goodwill and core depositintangible, net.

BALANCE SHEET OVERVIEW

As of December 31, 2020, the Company had total consolidated assets of $1.764 billion, gross loans of $1.140 billion, allowance for loan and lease losses (ALLL) of $17 million, total deposits of $1.543 billion, and shareholders equity of $178 million.

TABLE 2LOAN BALANCES BY TYPE - UNAUDITED(dollars in thousands) At December 31, At September 30, % of % of Change % of 2020 Total 2019 Total Amount % 2020 TotalCommercial $ 115,559 10 % $ 141,197 14 % $ (25,638 ) (18 ) % $ 121,025 10 %Paycheckprotection 130,814 11 ? ? 130,814 100 % 163,493 14 programReal estate-construction 44,549 4 26,830 3 17,719 66 % 40,289 3 and landdevelopmentReal estate- commercial 512,832 45 493,920 48 18,912 4 % 538,079 45 non-owneroccupiedReal estate- commercial 210,155 18 218,833 21 (8,678 ) (4 ) % 210,455 17 owneroccupiedReal estate- 29,035 3 33,039 3 (4,004 ) (12 ) % 30,071 2 residential- ITINReal estate-residential 55,925 5 63,661 6 (7,736 ) (12 ) % 57,867 5 - 1-4 familymortgageReal estate-residential 18,894 2 22,099 2 (3,205 ) (15 ) % 20,296 2 - equitylinesConsumer and 21,969 2 33,324 3 (11,355 ) (34 ) % 24,490 2 otherGross loans 1,139,732 100 % 1,032,903 100 % 106,829 10 % 1,206,065 100 %Deferred(fees) and 229 2,162 (1,933 ) (1,037 ) costsLoans, netof deferred 1,139,961 1,035,065 104,896 1,205,028 fees andcostsAllowancefor loan and (16,910 ) (12,231 ) (4,679 ) (16,873 ) lease lossesNet loans $ 1,123,051 $ 1,022,834 $ 100,217 $ 1,188,155 Averageloans during $ 1,172,705 $ 1,031,702 $ 141,003 14 % $ 1,209,277 the quarterAverageloans duringthe quarter $ 1,024,324 $ ? $ 1,024,324 100 % $ 1,046,187 (excludingPPP)Averageyield on 4.59 % 4.86 % (0.27 ) (6 ) % 4.42 % loans duringthe quarterAverageyield onloans during 4.67 % 4.86 % (0.19 ) (4 ) % 4.75 % the quarter(excludingPPP)Averageyield on 4.57 % 4.95 % (0.38 ) (8 ) % 4.56 % loans yearto dateAverageyield onloans year 4.75 % 4.95 % (0.20 ) (4 ) % 4.77 % to date(excludingPPP)

The Company recorded gross loan balances of $1.140 billion at December 31, 2020, compared with $1.033 billion and $1.206 billion at December 31, 2019 and September 30, 2020, respectively, an increase of $107 million and a decrease of $66 million, respectively.

The average yield on loans during the quarter was 4.59% compared to 4.86% and 4.42% for the quarters ended December 31, 2019 and September 30, 2020, respectively. Yields were impacted by PPP loans, which averaged $148.4 million and yielded 4.07% during the current quarter and $163.1 million and yielded 2.31% during the prior quarter.

Gross loan balances in the table above include a net fair value discount for loans acquired from Merchants of $920 thousand, $1.7 million and $1.1 million at December 31, 2020, December 31, 2019 and September 30, 2020, respectively. We recorded $141 thousand, $188 thousand and $233 thousand in accretion of the discount for these loans during the quarters ended December 31, 2020, December 31, 2019 and September 30, 2020, respectively.

We have 487 PPP loans totaling $130.8 million at December 31, 2020. During the fourth quarter of 2020, 119 PPP loans totaling $32.7 million were repaid. Loan fee income net of loan origination costs is earned over the 24-month life of the loans as a part of the loan yield. When a PPP loan is repaid prior to maturity, all unamortized fees and costs associated with the loan are accelerated into income. During the current quarter, we recognized $664 thousand in accelerated fee income. At December 31, 2020, net fees totaling $2.2 million remain to be earned in future quarters. The following tables provide additional information on the PPP loans by industry and by loan balance at December 31, 2020.

TABLE 3PPP LOANS BY INDUSTRY - UNAUDITED(dollars in thousands) At December 31, 2020 Number BalanceConstruction 75 $ 55,644Healthcare and Social Assistance 81 15,520Professional, Scientific and Tech Services 58 7,708Accommodation and Food Services 47 8,800Admin, Support, Waste Management and Remediation 15 4,988ServicesPrimary Metal Manufacturing 14 5,037Retail Trade 49 6,710Other 148 26,407Total 487 $ 130,814

TABLE 4PPP LOANS BY LOAN SIZE - UNAUDITED(dollars in thousands) At December 31, 2020 Balance Number Average Loan Size$50,000 or less $ 4,220 181 $ 23$50,001 to $150,000 11,884 143 83$150,001 to $350,000 19,150 85 225$350,001 to $1,999,999 52,004 66 788$2,000,000 or greater 43,556 12 3,630Total $ 130,814 487 $ 269

During the third quarter of 2020, the SBA began accepting applications for PPP loan forgiveness. The bank has 60 days to review and approve an application before submitting it to SBA, and the SBA then has 90 days to process it for forgiveness. The following table presents the status of our loans in the forgiveness process.

TABLE 5PPP LOANS FORGIVENESS APPLICATION STATUS - UNAUDITED(dollars in thousands) At December 31, 2020 At September 30, 2020 Average Average Balance Number Loan Balance Number Loan Size SizeBorrower has not $ 33,459 185 $ 181 $ 78,930 390 $ 202started applicationBorrower is working 31,277 136 230 38,624 123 314on applicationBorrower hascompletedapplication and the 43,872 105 418 32,400 73 444bank is reviewingitBank has approvedapplication and 22,087 44 502 13,539 20 677submitted it to theSBARemaining balancefor loans partially 119 17 7 ? ? ?repaidPPP loans not fully 130,814 487 269 163,493 606 270repaid Repayments ^(1) 32,679 119 275 ? ? ?Total PPP loans $ 163,493 606 $ 270 $ 163,493 606 $ 270originated by bank ^(1) Includes 119 loans fully repaid by SBA or the borrower and $3.2 million ofpartial repayment for 17 borrowers who participated in the SBA Economic InjuryDisaster Loan ("EIDL") program.

TABLE 6CASH, CASH EQUIVALENTS, AND INVESTMENT SECURITIES - UNAUDITED(dollars in thousands) At December 31, At September 30, % of % of Change % of 2020 Total 2019 Total Amount % 2020 TotalCash and due from $ 19,875 4 % $ 21,338 6 % $ (1,463 ) (7 ) % $ 22,884 5 %banksInterest-bearingdeposits in other 87,111 16 59,266 16 27,845 47 % 104,999 23 banksTotal cash and 106,986 20 80,604 22 26,382 33 % 127,883 28 cash equivalents Investment securities:U.S. government 32,994 6 38,733 11 (5,739 ) (15 ) % 31,811 7 and agenciesObligations ofstate and 108,366 20 42,098 11 66,268 157 % 91,863 20 politicalsubdivisionsResidentialmortgage backedsecurities and 240,478 42 180,835 49 59,643 33 % 165,693 35 collateralizedmortgageobligationsCorporate ? ? 2,966 1 (2,966 ) (100 ) % ? ? securitiesCommercialmortgage backed 28,074 5 19,307 5 8,767 45 % 19,576 4 securitiesOther asset 36,968 7 3,011 1 33,957 1,128 % 28,089 6 backed securitiesTotal investment 446,880 80 286,950 78 159,930 56 % 337,032 72 securities - AFS Total cash, cashequivalents and $ 553,866 100 % $ 367,554 100 % $ 186,312 51 % $ 464,915 100 %investmentsecuritiesAverage yield oninterest-bearingduefrom banks 0.12 % 1.66 % (1.54 ) 0.12 % during thequarterAverage yield oninvestmentsecurities during 2.06 % 2.61 % (0.55 ) 2.33 % the quarter -nominalAverage yield oninvestmentsecuritiesduring 2.19 % 2.71 % (0.52 ) 2.50 % the quarter - taxequivalent

As of December 31, 2020, we maintained noninterest-bearing cash positions of $19.9 million and interest-bearing deposits of $87.1 million at the Federal Reserve Bank and correspondent banks. Management has been challenged to invest the rapidly increasing liquidity generated by growth in deposits and loan repayments. During the fourth quarter of 2020, we continued the deployment of excess cash into our investment portfolio.

Investment securities totaled $446.9 million at December 31, 2020, compared with $287.0 million and $337.0 million at December 31, 2019 and September 30, 2020, respectively. Our investment portfolio has shortened in duration considerably over the past year, which is now allowing us to add longer-term securities with a better yield without extending the duration of the total portfolio beyond our risk appetite. During the fourth quarter of 2020, we purchased securities with a par value of $133.3 million and weighted average yield of 1.49% (1.52% tax equivalent). Investment purchases were comprised primarily of longer duration municipal bonds and lower coupon, moderate-term mortgage backed securities. No securities were sold during the fourth quarter.

Average securities balances for the quarters ended December 31, 2020, December 31, 2019 and September 30, 2020 were $377.4 million, $277.6 million and $296.8 million, respectively. Weighted average yields on securities balances for those same periods were 2.06%, 2.61% and 2.33%, respectively.

At December 31, 2020, our net unrealized gains on available-for-sale investment securities were $10.6 million compared with net unrealized gains of $3.7 million and $10.4 million at December 31, 2019 and September 30, 2020, respectively. The changes in net unrealized gains were due to changes in market interest rates.

TABLE 7DEPOSITS BY TYPE - UNAUDITED(dollars in thousands) At December 31, At September 30, % of % of Change % of 2020 Total 2019 Total Amount % 2020 TotalDemand - $ 541,033 35 % $ 432,680 34 % $ 108,353 25 % $ 542,060 36 %noninterest-bearingDemand - interest-bearing 290,251 19 239,258 19 50,993 21 % 280,370 18 Money market 425,121 28 307,559 24 117,562 38 % 403,785 27 Total demand 1,256,405 82 979,497 77 276,908 28 % 1,226,215 81 Savings 150,695 10 135,888 11 14,807 11 % 151,016 10 Total non-maturing 1,407,100 92 1,115,385 88 291,715 26 % 1,377,231 91 deposits Certificates of deposit 135,679 8 151,786 12 (16,107 ) (11 ) % 140,900 9 Total deposits $ 1,542,779 100 % $ 1,267,171 100 % $ 275,608 22 % $ 1,518,131 100 %

Total deposits at December 31, 2020, increased $276 million or 22% to $1.543 billion compared to December 31, 2019 and increased $24.6 million or 6% annualized compared to September 30, 2020. Total non-maturing deposits increased $291.7 million or 26% compared to the same date a year ago and increased $29.9 million or 9% annualized compared to September 30, 2020. The increase in non-maturing deposits compared to the same period one year ago was due to PPP loan program disbursements and changes in customer behavior, which is placing greater emphasis on savings. Certificates of deposit decreased $16.1 million or 11% compared to the same date a year ago and decreased $5.2 million or 15% annualized compared to September 30, 2020. These decreases reflect our decision to reduce reliance on public deposits and depositor reaction to the low interest rate environment.

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

TABLE 8AVERAGE COST OF FUNDS - UNAUDITEDFor The Three Months Ended December September June 30, March 31, December September June 30, March 31, 31, 30, 31, 30, 2020 2020 2020 2020 2019 2019 2019 2019Interest-bearing 0.29 % 0.36 % 0.43 % 0.53 % 0.56 % 0.56 % 0.54 % 0.49 %depositsInterest-bearingdeposits and 0.19 % 0.23 % 0.28 % 0.35 % 0.38 % 0.38 % 0.37 % 0.34 %noninterest-bearingdemandAllinterest-bearing 0.37 % 0.44 % 0.52 % 0.65 % 0.68 % 0.68 % 0.74 % 0.67 %liabilitiesAllinterest-bearingliabilities and 0.24 % 0.29 % 0.34 % 0.43 % 0.46 % 0.46 % 0.52 % 0.46 %noninterest-bearingdemand

Equity

As detailed in Table 1, capital ratios remain appropriate for the Companys risk profile.

In late 2019, we announced a program to repurchase 1.0 million common shares which was later increased to 1.5 million common shares. Between October of 2019 and April of 2020, all 1.5 million shares were repurchased at a total cost of $13.6 million including commissions, or an average of $9.11 per share.

During the fourth quarter of 2020, we announced a new share repurchase program to repurchase up to 1.0 million shares of common stock over a period ending December 31, 2021. As of December 31, 2020, no shares have been repurchased.

INCOME STATEMENT OVERVIEW

TABLE 9SUMMARY INCOME STATEMENT - UNAUDITED(dollars in thousands, except per share data) For The Three Months Ended December 31, Change September Change 30, 2020 2019 Amount % 2020 Amount %Interest $ 15,519 $ 14,808 $ 711 5 % $ 15,218 $ 301 2 %incomeInterest 963 1,494 (531 ) (36 ) % 1,088 (125 ) (11 ) %expenseNet interest 14,556 13,314 1,242 9 % 14,130 426 3 %incomeProvision forloanand ? ? ? ? % 1,100 (1,100 ) (100 ) %lease lossesNoninterest 1,016 1,021 (5 ) 0 % 1,189 (173 ) (15 ) %incomeNoninterest 8,534 8,421 113 1 % 8,390 144 2 %expenseIncome beforeprovisionfor 7,038 5,914 1,124 19 % 5,829 1,209 21 %income taxesProvision for 1,966 1,545 421 27 % 1,500 466 31 %income taxesNet income $ 5,072 $ 4,369 $ 703 16 % $ 4,329 $ 743 17 % Earnings per $ 0.30 $ 0.24 $ 0.06 25 % $ 0.26 $ 0.04 15 %share - basicWeightedaverage 16,663 18,068 (1,405 ) (8 ) % 16,660 3 ? %shares -basicEarnings pershare - $ 0.30 $ 0.24 $ 0.06 25 % $ 0.26 $ 0.04 15 %dilutedWeightedaverage 16,731 18,150 (1,419 ) (8 ) % 16,696 35 ? %shares -dilutedDividendsdeclared $ 0.06 $ 0.05 $ 0.01 20 % $ 0.05 $ 0.01 20 %percommonshare

Fourth Quarter of 2020 Compared With The Fourth Quarter of 2019

Net income for the fourth quarter of 2020 increased $703 thousand compared to the fourth quarter of 2019. In the current quarter, net interest income was $1.2 million higher. This positive change was partially offset by noninterest income that was $5 thousand lower, noninterest expense that was $113 thousand higher and a provision for income taxes that was $421 thousand higher.

Net Interest Income

Net interest income increased $1.2 million compared to the same period a year ago.

Interest income for the fourth quarter of 2020 increased $711 thousand or 5% to $15.5 million.

-- During the fourth quarter of 2020, we recognized $664 thousand in accelerated fee income on PPP loans forgiven or repaid during the quarter. These accelerated loan fees increased the average yield on loans for the fourth quarter of 2020 by 23 basis points. -- PPP loans had an average balance of $148.4 million and yield of 4.07% (2.29% excluding accelerated fee income). -- Excluding PPP loans, interest and fees on loans decreased $629 thousand due to a $7.4 million decrease in average loan balances and a 19 basis point decrease in average yield. -- Interest on investment securities increased $126 thousand due to a $99.8 million increase in average securities balances partially offset by a 55 basis point decrease in average yield. -- Interest on interest-bearing deposits due from banks decreased $304 thousand due to a 155 basis point decrease in average yield that was partially offset by a $43.3 million increase in average interest-bearing deposit balances. During 2020, in response to the economic effects of the COVID-19 pandemic, the Federal Reserve cut interest rates by 150 to 175 basis points.

Interest expense for the fourth quarter of 2020 decreased $531 thousand or 36% to $963 thousand.

-- Interest expense on interest-bearing deposits decreased $477 thousand. Average interest-bearing demand and savings deposit balances increased $163.9 million, while average certificate of deposit balances decreased $14.8 million. The average rate paid on interest-bearing deposits decreased 27 basis points. -- Average FHLB borrowings were $7.1 million in the current quarter. The borrowings bear no interest under a program offered by the FHLB during the second quarter of 2020 in response to COVID-19 liquidity concerns. There were no borrowings during the same period a year ago. -- Interest expense on other term debt decreased $4 thousand. The average debt balance was essentially unchanged, while the average rate paid decreased 18 basis points. -- Interest expense on junior subordinated debentures decreased $50 thousand. The average debt balance was unchanged, while the average rate paid decreased 192 basis points.

Provision for Loan and Lease Losses

Most asset quality concerns from earlier in 2020 have moderated. Net loan recoveries were $36 thousand for the current quarter compared to net loan charge-offs of $54 thousand during the same period a year ago. Most COVID-19 loan payment deferrals have ended with no negative impact on delinquencies. Classified assets actually decreased during the current quarter due to a repayment of $7.2 million from one commercial real estate borrower. As a result, no provision for loan and lease losses was necessary during the current quarter. There was no provision for loan and lease losses in the fourth quarter of 2019. A more in depth discussion of our provision is provided following Table 11.

Noninterest Income

Noninterest income for the three months ended December 31, 2020 decreased $5 thousand compared to the same period a year previous.

Noninterest Expense

Noninterest expense for the three months ended December 31, 2020 increased $113 thousand compared to the same period a year previous. Increases in noninterest expense included the following items:

-- $360 thousand increase in salaries and related benefits. During the current quarter, we recognized increased incentive accruals and we hired three relationship managers to open a loan production office in Santa Rosa. -- $105 thousand increase in FDIC insurance premiums. During 2019, we benefited from a Small Bank Assessment Credit from the FDIC.

These increases were partially offset by $231 thousand savings in network infrastructure costs and a broad array of pandemic induced savings in areas such as travel, conferences and business development.

The Companys efficiency ratio was 54.8% for the fourth quarter of 2020. The ratio during the same period in 2019 was 58.7%.

Income Tax Provision

For the three months ended December 31, 2020, our income tax provision of $2.0 million on pre-tax income of $7.0 million was an effective tax rate of 27.9%. The tax provision for the fourth quarter of the prior year was $1.5 million on pre-tax income of $5.9 million for an effective rate of 26.1%.

-- The tax provision of $2.0 million included $132 thousand applicable to earlier quarters, as deductible operating losses and tax credits from our low-income housing partnerships were lower than we anticipated. The effective tax rate excluding this $132 thousand was 26.1%.

Fourth Quarter of 2020 Compared With The Third Quarter of 2020

Net income for the fourth quarter of 2020 increased $743 thousand compared to the third quarter of 2020. In the current quarter, net interest income was $426 thousand higher and the provision for loan and lease losses was $1.1 million lower. These positive changes were partially offset by noninterest income that was $173 thousand lower, noninterest expense that was $144 thousand higher and a provision for income taxes that was $466 thousand higher.

Net Interest Income

Net interest income increased $426 thousand over the prior quarter.

Interest income for the three months ended December 31, 2020 increased $301 thousand or 2% to $15.5 million.

-- During the fourth quarter of 2020, we recognized $664 thousand in accelerated fee income on PPP loans forgiven or repaid during the quarter. These accelerated loan fees increased the average yield on loans for the fourth quarter of 2020 by 23 basis points. -- PPP loans had an average balance of $148.4 million and yield of 4.07% (2.29% excluding accelerated fee income). -- Excluding PPP loans, interest and fees on loans decreased $485 thousand due to a $21.9 million decrease in average loan balances and an 8 basis point decrease in average yield. -- Interest on investment securities increased $210 thousand due to an $80.6 million increase in average security balances partially offset by a 28 basis point decrease in average yield. -- Interest on interest-bearing deposits due from banks increased $7 thousand due to a $29.0 million increase in average balances partially offset by a 1 basis point decrease in average yield.

Interest expense for the three months ended December 31, 2020 decreased $125 thousand or 11% to $963 thousand.

-- Interest expense on interest-bearing deposits decreased $117 thousand. Average interest-bearing demand and savings deposit balances increased $50.6 million, while average certificates of deposit decreased $1.4 million. The average rate paid on interest-bearing deposits decreased 7 basis points. -- Average FHLB borrowings were $7.1 million in the current quarter compared to $10.0 million in the prior quarter. The borrowings bear no interest under a program offered by the FHLB during the second quarter of 2020 in response to COVID-19 liquidity concerns. -- Interest expense on other term debt decreased $5 thousand. The average debt balance was essentially unchanged, while the average rate paid decreased 21 basis points. -- Interest expense on junior subordinated debentures decreased $3 thousand. The average debt balance was unchanged, while average rate paid decreased 12 basis points.

Provision for Loan and Lease Losses

Most asset quality concerns from earlier in 2020 have moderated. Net loan recoveries were $36 thousand in the current quarter compared to net loan charge-offs of $316 thousand in the prior quarter. Most COVID-19 loan deferrals ended with no negative impact on delinquencies. Classified assets actually decreased during the current quarter due to a repayment of $7.2 million on two loans from one commercial real estate borrower. Nonaccrual loans decreased by $1.1 million during the current quarter when compared to the previous quarter due to the repayment of a $1.1 million commercial real estate loan. As a result, management determined that no provision for loan and lease losses was necessary during the current quarter compared with a provision for loan and lease losses of $1.1 million in the prior quarter. A more in depth discussion of our provision is provided following Table 11.

Noninterest Income

Noninterest income for the three months ended December 31, 2020 decreased $173 thousand compared to the prior quarter. The prior quarter included a $258 thousand gain on sale of investment securities that did not recur in the current quarter.

Noninterest Expense

Noninterest expense for the three months ended December 31, 2020 increased $144 thousand compared to the prior quarter. The increase was primarily due to an increase in accrual for incentives that was partially offset by a broad array of pandemic induced savings in areas such as travel, sponsorships, conferences and business development.

The Companys efficiency ratio was 54.8% for both the fourth quarter of 2020 and the prior quarter.

Income Tax Provision

For the three months ended December 31, 2020, our income tax provision of $2.0 million on pre-tax income of $7.0 million was an effective tax rate of 27.9%. The income tax provision for the prior quarter of $1.5 million on pre-tax income of $5.8 million was an effective tax rate of 25.7%.

-- The tax provision of $2.0 million included $132 thousand applicable to earlier quarters, as deductible operating losses and tax credits from our low-income housing partnerships were lower than we anticipated. The effective tax rate excluding this $132 thousand was 26.1%.

Earnings Per Share

Diluted earnings per share were $0.30 for the three months ended December 31, 2020 compared with diluted earnings per share of $0.24 for the same period a year ago and diluted earnings per share of $0.26 for the prior period. Net income and weighted average shares used to calculate earnings per share diluted are summarized in Table 9 presented earlier in this press release.

TABLE 10aNET INTEREST MARGIN - UNAUDITED(dollars in thousands) For The Three Months Ended December 31, 2020 December 31, 2019 September 30, 2020 Average Yield Average Yield Average Yield / / / Balance Interest Rate ^ Balance Interest Rate ^ Balance Interest Rate ^ ^(^1) (6) ^(^1) (6) ^(^1) (6)Interest-earning assets: Loans net of PPP ^(2) $ 1,024,324 $ 12,014 4.67 % $ 1,031,702 $ 12,643 4.86 % $ 1,046,187 $ 12,499 4.75 %PPP loans ^(3) 148,381 1,518 4.07 % ? ? ? % 163,090 949 2.31 %Taxable securities 304,242 1,484 1.94 % 245,487 1,567 2.53 % 228,045 1,284 2.24 %Tax-exempt securities ^(4) 73,207 467 2.54 % 32,158 258 3.18 % 68,766 457 2.64 %Interest-bearing depositsin 124,390 36 0.12 % 81,099 340 1.66 % 95,348 29 0.12 %other banksAverage interest-earning 1,674,544 15,519 3.69 % 1,390,446 14,808 4.23 % 1,601,436 15,218 3.78 %assetsCash and due from banks 22,413 24,083 23,381 Premises and equipment, net 15,162 16,049 15,365 Goodwill 11,671 11,671 11,671 Other intangible assets, net 4,126 4,890 4,318 Other assets 20,128 17,121 21,408 Average total assets $ 1,748,044 $ 1,464,260 $ 1,677,579 Interest-bearing liabilities: Interest-bearing demand $ 283,213 57 0.08 % $ 244,276 108 0.18 % $ 279,744 71 0.10 %Money market 430,014 237 0.22 % 318,127 479 0.60 % 387,995 289 0.30 %Savings 151,223 53 0.14 % 138,155 128 0.37 % 146,074 74 0.20 %Certificates of deposit 138,380 390 1.12 % 153,223 499 1.29 % 139,757 420 1.20 %Federal Home Loan Bank of San 7,120 ? ? % ? ? ? % 10,000 ? ? %Francisco borrowingsOther borrowings net ofunamortized debt issuance 9,999 179 7.12 % 9,952 183 7.30 % 9,988 184 7.33 %costsJunior subordinateddebentures 10,310 47 1.81 % 10,310 97 3.73 % 10,310 50 1.93 %Average interest-bearing 1,030,259 963 0.37 % 874,043 1,494 0.68 % 983,868 1,088 0.44 %liabilitiesNoninterest-bearing demand 552,601 428,420 531,459 Other liabilities 17,557 17,795 17,356 Shareholders? equity 174,520 172,385 171,433 Average liabilities $ 1,774,937 $ 1,492,643 $ 1,704,116 andshareholders? equityNet interest income andnet $ 14,556 3.46 % $ 13,314 3.80 % $ 14,130 3.51 %interest margin^ (5) ^(1) Interest income on loans includes deferred fees and costs of approximately$85 thousand, $224 thousand, and $240 thousand for the three months endedDecember 31, 2020 and 2019 and September 30, 2020, respectively. Interestincome on PPP loans includes $1.1 million and $538 thousand of fee income forthe three months ended December 31, 2020 and September 30, 2020, respectively.^(2) Loans net of PPP includes average nonaccrual loans of $7.2 million, $11.4million and $6.6 million for the three months ended December 31, 2020 and 2019and September 30, 2020, respectively.^(3) PPP loans represents average gross loans and excludes deferred fees andcosts.^(4) Interest income and yields on tax-exempt securities are not presented on ataxable equivalent basis.^(5) Net interest margin is net interest income expressed as a percentage ofaverage interest-earning assets. Net interest income for the three months endedDecember 31, 2020 and 2019 and September 30, 2020 included $141 thousand, $188thousand and $233 thousand in accretion of the discount on the loans acquiredfrom Merchants Holding Company, which improved the net interest margin by five,seven and seven basis points, respectively. Net interest income for the threemonths ended December 31, 2020 included $1.5 million in interest and fee incomefrom PPP loans with an average balance of $148.4 million for the quarter, whichincreased the net interest margin by six basis points.^(6) Yields and rates are calculated by dividing the income or expense by theaverage balance of the assets or liabilities, respectively, and annualizing theresult.

TABLE 10bNET INTEREST MARGIN - UNAUDITED(dollars in thousands) For The Twelve Months Ended December 31, 2020 December 31, 2019 Average Yield Average Yield / / Balance Interest Rate ^ Balance Interest Rate ^ ^(^1) (6) ^(^1) (6)Interest-earning assets:Loans net of PPP ^(2) $ 1,038,069 $ 49,262 4.75 % $ 1,020,801 $ 50,534 4.95 %PPP loans^ (3) 111,306 3,280 2.95 % ? ? ? %Taxable securities 245,336 5,679 2.31 % 246,723 6,673 2.70 %Tax-exempt securities ^ 58,912 1,618 2.75 % 38,706 1,244 3.21 %(4)Interest-bearing 84,982 240 0.28 % 54,095 1,112 2.06 %deposits in other banksAverage 1,538,605 60,079 3.90 % 1,360,325 59,563 4.38 %interest-earning assetsCash and due from banks 22,339 22,806 Premises and equipment, 15,426 15,598 netGoodwill 11,671 10,758 Other intangible 4,412 4,807 assets, netOther assets 20,966 14,982 Average total assets $ 1,613,419 $ 1,429,276 Interest-bearing liabilities:Interest-bearing demand $ 264,652 313 0.12 % $ 242,516 480 0.20 %Money market 372,939 1,246 0.33 % 304,340 1,599 0.53 %Savings 142,857 340 0.24 % 136,733 493 0.36 %Certificates of deposit 142,067 1,741 1.23 % 160,550 1,977 1.23 %Federal Home Loan Bankof San Francisco 8,347 5 0.06 % 9,644 247 2.56 %borrowingsOther borrowings net ofunamortized debt 9,981 731 7.32 % 10,895 806 7.40 %issuance costsJunior 10,310 248 2.41 % 10,310 426 4.13 %subordinateddebenturesAverageinterest-bearing 951,153 4,624 0.49 % 874,988 6,028 0.69 %liabilitiesNoninterest-bearing 500,862 400,588 demandOther liabilities 17,217 17,894 Shareholders? equity 171,287 164,642 Average liabilities and $ 1,640,519 $ 1,458,112 shareholders? equityNet interest income andnet interest margin^ $ 55,455 3.60 % $ 53,535 3.94 %(5) ^(1) Interest income on loans includes deferred fees and costs of approximately$720 thousand and $657 thousand for the years ended December 31, 2020 and 2019,respectively. Interest income on PPP loans includes $2.2 million of fee incomefor the year ended December 31, 2020.^(2) Loans net of PPP includes average nonaccrual loans of $6.2 million and$11.7 million for the years ended December 31, 2020 and 2019, respectively.^(3) PPP loans represents average gross loans and excludes deferred fees andcosts.^(4) Interest income and yields on tax-exempt securities are not presented on ataxable equivalent basis.^(5) Net interest margin is net interest income expressed as a percentage ofaverage interest-earning assets. Net interest income for the years endedDecember 31, 2020 and 2019 included $753 thousand and $620 thousand,respectively, in accretion of the discount on the loans acquired from MerchantsHolding Company, which improved the net interest margin by six basis points.Net interest income for the year ended December 31, 2020 included $3.3 millionin interest and fee income from PPP loans with an average balance of $111.3million for the year ended December 31, 2020, which decreased the net interestmargin by five basis points.^(6) Yields and rates are calculated by dividing the income or expense by theaverage balance of the assets or liabilities, respectively, and annualizing theresult.

TABLE 11 ALLOWANCE FOR LOAN AND LEASE LOSSES ROLL FORWARD AND IMPAIRED LOAN TOTALS - UNAUDITED(dollars in thousands) For The Three Months Ended December 31, September 30, June 30, March 31, December 31, 2020 2020 2020 2020 2019ALLLbeginning $ 16,873 $ 16,089 $ 15,067 $ 12,231 $ 12,285 balanceProvisionfor loan and ? 1,100 1,300 2,850 ? lease lossesLoans (86 ) (502 ) (356 ) (169 ) (174 ) charged-offLoan loss 123 186 78 155 120 recoveriesALLL ending $ 16,910 $ 16,873 $ 16,089 $ 15,067 $ 12,231 balance At December 31, At September At June 30, At March 31, At December 31, 30, 2020 2020 2020 2020 2019Nonaccrual loans:Commercial $ 1,535 $ 1,549 $ 7 $ 39 $ 61 Real estate- commercial ? 1,062 1,062 ? ? non-owneroccupiedReal estate- commercial 3,734 3,750 3,647 3,103 3,103 owneroccupiedReal estate- 1,585 1,574 1,738 1,878 2,221 residential- ITINReal estate-residential 141 145 180 184 191 - 1-4 familymortgageConsumer and 18 18 37 39 40 otherTotalnonaccrual 7,013 8,098 6,671 5,243 5,616 loansAccruingtroubleddebt restructuredloans:Commercial 498 531 592 592 595 Real estate- 3,466 3,597 3,642 3,891 3,957 residential- ITINReal estate-residential 126 131 221 226 231 - equitylinesTotalaccruingtroubled 4,090 4,259 4,455 4,709 4,783 debtrestructuredloans All otheraccruing ? ? ? ? ? impairedloans Totalimpaired $ 11,103 $ 12,357 $ 11,126 $ 9,952 $ 10,399 loans Gross loansoutstanding $ 1,139,732 $ 1,206,065 $ 1,206,340 $ 1,052,245 $ 1,032,903 at periodend Impairedloans to 0.97 % 1.02 % 0.92 % 0.95 % 1.01 %gross loansNonaccrualloans to 0.62 % 0.67 % 0.55 % 0.50 % 0.54 %gross loans Allowance for loan and lease losses as a percent of:Gross loans 1.48 % 1.40 % 1.33 % 1.43 % 1.18 %Nonaccrual 241.12 % 208.36 % 241.18 % 287.37 % 217.79 %loansImpaired 152.30 % 136.55 % 144.61 % 151.40 % 117.62 %loans

TABLE 12 ALLOWANCE, RESERVE AND DISCOUNT - UNAUDITED (dollars in thousands) At December At September At June 30, At March 31, At December 31, 30, 31, 2020 2020 2020 2020 2019ALLL $ 16,910 $ 16,873 $ 16,089 $ 15,067 $ 12,231 Reserve forunfunded 800 800 800 695 695 commitmentsDiscount onacquired 919 1,060 1,293 1,509 1,672 loans ^(1)Totalallowance, $ 18,629 $ 18,733 $ 18,182 $ 17,271 $ 14,598 reserve anddiscount Gross loans $ 1,139,732 $ 1,206,065 $ 1,206,340 $ 1,052,245 $ 1,032,903 PPP loans ^ 130,814 163,493 162,189 ? ? (2)Total grossloans net $ 1,008,918 $ 1,042,572 $ 1,044,151 $ 1,052,245 $ 1,032,903 of PPPloans Totalallowance,reserve anddiscount asa 1.85 % 1.80 % 1.74 % 1.64 % 1.41 %percentageof totalgross loansnet of PPPloans^ (2)^(1) Discount on acquired loans includes fair value discount for loans acquiredfrom Merchants in January of 2019.^(2) PPP loans are fully guaranteed by SBA and no allowance, reserve ordiscount is provided for them.

Provision for Loan and Lease Losses

We monitor credit quality and the general economic environment to ensure that the ALLL is maintained at a level that is adequate to cover estimated credit losses in the loan and lease portfolio. Our review of ALLL adequacy utilizes both quantitative and qualitative factors. The quantitative analysis relies on historical loss rates which, unfortunately, may not be indicative of potential losses related to a pandemic such as we are currently experiencing with COVID-19. In response to quantitative data deficiencies, we have placed greater reliance on qualitative factors (Q-Factors).

During the current quarter, most of our COVID-19 loan deferrals have resumed payments: nonaccrual loans decreased due to the repayment of a $1.1 million commercial real estate loan and classified assets decreased due to repayment of $7.2 million from one commercial real estate borrower. As a result of improvement in our asset quality metrics, management determined that no provision for loan and lease losses was necessary during the current quarter. We recorded $1.1 million in provision for loan and lease losses in the prior quarter and there was no provision for loan and lease loss during the same quarter a year ago. Our ALLL as a percentage of gross loans was 1.48% as of December 31, 2020 compared to 1.18% as of December 31, 2019 and 1.40% as of September 30, 2020. Excluding SBA guaranteed PPP loans our ALLL as a percentage of gross loans was 1.68% as of December 31, 2020 compared to 1.62% as of September 30, 2020.

Our ALLL methodology, adjusted for the revised Q-Factors in prior quarters and the improvements in loan quality metrics discussed above necessitated an ALLL of $16.9 million at December 31, 2020, an increase of 38% compared to our ALLL of $12.2 million at December 31, 2019. Management believes the Companys ALLL is adequate at December 31, 2020. There is, however, no assurance that future loan and lease losses will not exceed the levels provided for in the ALLL and could possibly result in future charges to the provision for loan and lease losses.

At December 31, 2020, the recorded investment in loans classified as impaired totaled $11.1 million, with a corresponding specific reserve of $192 thousand compared to impaired loans of $10.4 million with a corresponding specific reserve of $324 thousand at December 31, 2019 and impaired loans of $12.4 million, with a corresponding specific reserve of $204 thousand at September 30, 2020. The decrease in impaired loans during the current quarter was due to the repayment of a nonaccrual commercial real estate loan totaling $1.1 million during the fourth quarter of 2020.

TABLE 13TROUBLED DEBT RESTRUCTURINGS - UNAUDITED(dollars in thousands) At December At At March At December 31, September At June 30, 31, 31, 30, 2020 2020 2020 2020 2019Nonaccrual $ 2,007 $ 2,063 $ 2,194 $ 1,611 $ 1,680 Accruing 4,090 4,259 4,455 4,709 4,783 Total troubleddebt $ 6,097 $ 6,322 $ 6,649 $ 6,320 $ 6,463 restructurings Troubled debtrestructuringsas a 0.53 % 0.52 % 0.55 % 0.60 % 0.63 %percentage oftotal grossloans

There were no new troubled debt restructurings during the current quarter. As of December 31, 2020, we had 91 loans that were classified as troubled debt restructurings, of which 89 were performing according to their restructured terms.

Troubled Debt Restructuring Guidance

Financial institution regulators and the CARES Act have changed the treatment of short-term loan modifications for borrowers impacted by COVID-19. The change provides that modifications made in response to COVID-19, to borrowers under certain circumstances, should not be considered a troubled debt restructuring.

We have responded to the needs of our borrowers in accordance with the CARES Act and regulatory guidance to grant short-term COVID-19 related loan modifications. These modified loans are not troubled debt restructurings and are not considered to be past due or non-performing. We have granted deferrals ranging from one to six months determined on a case-by-case basis considering the nature of the business and the impact of COVID-19. For some borrowers that where initially granted a deferral of less than six months, we have granted an additional deferral period on a case-by-case basis.

Since March of 2020, we have granted 278 payment deferrals totaling $127.3 million. As of December 31, 2020 previously deferred loans totaling $115.6 million have resumed making payments or have paid off. Three loans that were previously deferred totaling $2.1 million were past due at December 31, 2020 and have been moved to nonaccrual status. Two of those loans totaling $1.4 million were made to one commercial borrower and are guaranteed under the California Capital Access Program for Small Business. The third loan for $640 thousand is a commercial real estate loan that was changed to a troubled debt restructured loan in the second quarter of 2020.

We maintain close contact with our borrowers to update our understanding of the impact of the pandemic on them, their businesses and the underlying collateral for our loans. For borrowers who continue to have been granted a loan payment deferral, we have evaluated their credit quality position and the potential for loss of principal.

The following tables present approved loan deferrals that are in effect at December 31, 2020. For the loans with payment deferrals at December 31, 2020, one borrower none of these loans received a PPP loan through our U.S. Small Business Administration (SBA) department.

TABLE 14aCOVID-19 LOAN DEFERRALS - UNAUDITED(dollars in thousands) Payments Scheduled to Resume In The Three Months Ended March 31, 2021 # AmountLength of 1st deferral granted: 3 months 4 $ 1,3046 months 3 484Length of 2nd deferral granted: 2 months 2 7143 months 2 3,053Loans serviced by others ^(1) 71 3,959Total 82 $ 9,514^(1) Loans serviced by others are small residential mortgages and consumer homeimprovement loans which are deferred on a short-term basis up to a maximum ofsix months. These loans are geographically disbursed throughout the UnitedStates and serviced by a third party.

TABLE 14bCOVID-19 LOAN DEFERRALS BY INDUSTRY - UNAUDITED(dollars in thousands) Payments Scheduled to Resume In The Three Months Ended March 31, 2021Industry: # AmountHealth care and social assistance 1 $ 12Other services 1 2,032Restaurants, bars and caterers 2 1,695Other industries 7 1,816Loans serviced by others ^(1) 71 3,959Total 82 $ 9,514^(1) Loans serviced by others are small residential mortgages and consumer homeimprovement loans which are deferred on a short-term basis up to a maximum ofsix months. These loans are geographically disbursed throughout the UnitedStates and serviced by a third party.

The following table presents nonperforming assets at the dates indicated.

TABLE 15NONPERFORMING ASSETS - UNAUDITED(dollars in thousands) At At At June At March At December September 30, 31, December 31, 30, 31, 2020 2020 2020 2020 2019Total nonaccrual $ 7,013 $ 8,098 $ 6,671 $ 5,243 $ 5,616 loans90 days past due and ? ? ? 2 ? still accruingTotal nonperforming 7,013 8,098 6,671 5,245 5,616 loans Other real estate 8 8 8 8 35 owned ("OREO")Total nonperforming $ 7,021 $ 8,106 $ 6,679 $ 5,253 $ 5,651 assets Nonperforming loans 0.62 % 0.67 % 0.55 % 0.50 % 0.54 %to gross loansNonperforming assets 0.40 % 0.47 % 0.39 % 0.36 % 0.38 %to total assets

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

TABLE 16LOANS BY RATE INDEX AND PROJECTED REPRICING PERIOD - UNAUDITED(dollars in thousands) At December 31, 2020 Years 6 Through Beyond Rate Index: Year 1 Year 2 Year 3 Year 4 Year 5 Year 10 Year 10 TotalFixed $ 87,179 $ 140,831 $ 58,748 $ 29,769 $ 28,706 $ 164,817 $ 21,693 $ 531,743Variable: Prime 77,139 6,390 3,408 6,882 9,595 1,232 ? 104,6465 Year 51,142 65,555 58,578 75,057 109,165 54,938 ? 414,435Treasury7 Year 3,242 4,866 479 5,601 13,839 ? ? 28,027Treasury1 Year LIBOR 22,509 ? ? ? ? ? ? 22,509Other Indexes 5,166 277 1,775 5,566 7,000 10,632 1,172 31,588Total variable 159,198 77,088 64,240 93,106 139,599 66,802 1,172 601,205 Nonaccrual 1,047 1,030 987 694 496 2,018 741 7,013Total $ 247,424 $ 218,949 $ 123,975 $ 123,569 $ 168,801 $ 233,637 $ 23,606 $ 1,139,961

For variable rate loans, the following table summarizes those that are at or above their floor rate, and those that do not possess a contractual floor rate.

TABLE 17LOAN FLOORS - UNAUDITED(dollars in thousands) At December 31, 2020 Loans At Loans Above Floor Rate Floor Rate TotalVariable rate loans with floors: Prime $ 54,833 $ 5,914 $ 60,7475 year Treasury 342,105 46,964 389,0697 Year Treasury 28,027 ? 28,0271 Year LIBOR ? 717 717Other Indexes 18,290 833 19,123 $ 443,255 $ 54,428 497,683 Variable rate loans without floors: Prime 43,8995 year Treasury 25,3661 Year LIBOR 21,792Other Indexes 12,465 103,522 Total accruing variable rate loans $ 601,205 Nonaccrual 7,013Total variable rate loans $ 608,218

TABLE 18UNAUDITEDCONSOLIDATED BALANCE SHEET(dollars in thousands, except per share data) At December 31, Change At September 30, 2020 2019 $ % 2020 Assets: Cash and due from $ 19,875 $ 21,338 $ (1,463 ) (7 ) % $ 22,884 banksInterest-bearingdeposits in other 87,111 59,266 27,845 47 % 104,999 banksTotal cash and cash 106,986 80,604 26,382 33 % 127,883 equivalents Securitiesavailable-for-sale, 446,880 286,950 159,930 56 % 337,032 at fair valueLoans, net ofdeferred fees and 1,139,961 1,035,065 104,896 10 % 1,205,028 costsAllowance for loan (16,910 ) (12,231 ) (4,679 ) (38 ) % (16,873 )and lease lossesNet loans 1,123,051 1,022,834 100,217 10 % 1,188,155 Premises and 14,999 15,906 (907 ) (6 ) % 15,210 equipment, netOther real estate 8 35 (27 ) (77 ) % 8 ownedLife insurance 24,206 23,701 505 2 % 24,086 Deferred tax asset, 3,954 4,553 (599 ) (13 ) % 2,571 netGoodwill 11,671 11,671 ? ? % 11,671 Other intangible 4,044 4,809 (765 ) (16 ) % 4,235 assets, netOther assets 28,155 28,553 (398 ) (1 ) % 29,037 Total assets $ 1,763,954 $ 1,479,616 $ 284,338 19 % $ 1,739,888 Liabilities andshareholders' equity:Demand - $ 541,033 $ 432,680 $ 108,353 25 % $ 542,060 noninterest-bearingDemand - 290,251 239,258 50,993 21 % 280,370 interest-bearingMoney market 425,121 307,559 117,562 38 % 403,785 Savings 150,695 135,888 14,807 11 % 151,016 Certificates of 135,679 151,786 (16,107 ) (11 ) % 140,900 depositTotal deposits 1,542,779 1,267,171 275,608 22 % 1,518,131 Term debt: Federal Home LoanBank of San 5,000 ? 5,000 100 % 10,000 FranciscoborrowingsOther borrowings 10,000 10,000 ? ? % 10,000 Unamortized debt ? (43 ) 43 100 % (7 )issuance costsNet term debt 15,000 9,957 5,043 51 % 19,993 Junior subordinated 10,310 10,310 ? ? % 10,310 debenturesOther liabilities 18,163 17,700 463 3 % 18,104 Total liabilities 1,586,252 1,305,138 281,114 22 % 1,566,538 Shareholders' equity:Common stock 58,988 71,311 (12,323 ) (17 ) % 58,872 Retained earnings 111,226 100,566 10,660 11 % 107,154 Accumulated othercomprehensive 7,488 2,601 4,887 188 % 7,324 income, net of taxTotal shareholders' 177,702 174,478 3,224 2 % 173,350 equity Total liabilitiesand shareholders' $ 1,763,954 $ 1,479,616 $ 284,338 19 % $ 1,739,888 equity Totalinterest-earning $ 1,663,321 $ 1,377,588 $ 285,733 21 % $ 1,636,661 assetsShares outstanding 16,801 18,137 (1,336 ) (7 ) % 16,792 Book value per $ 10.58 $ 9.62 $ 0.96 10 % $ 10.32 share ^(1)Tangible book value $ 9.64 $ 8.71 $ 0.93 11 % $ 9.38 per share ^(1) ^(1) Book value per share is computed by dividing total shareholders? equity byshares outstanding. Tangible book value per share is computed by dividing totalshareholders? equity less goodwill and core deposit intangible, net by sharesoutstanding. Management believes that tangible book value per share ismeaningful because it is a measure that the Company and investors commonly useto assess capital adequacy.

TABLE 19UNAUDITEDINCOME STATEMENT(dollars in thousands, except per share data) For The Three Months Ended For The Twelve Months Ended December 31, Change September December 31, 30, 2020 2019 $ % 2020 2020 2019Interest income: Interest and $ 13,532 $ 12,643 $ 889 7 % $ 13,448 $ 52,542 $ 50,534fees on loansInterest ontaxable 1,484 1,567 (83 ) (5 ) % 1,284 5,679 6,673securitiesInterest ontax-exempt 467 258 209 81 % 457 1,618 1,244securitiesInterest oninterest-bearing 36 340 (304 ) (89 ) % 29 240 1,112deposits inother banksTotal interest 15,519 14,808 711 5 % 15,218 60,079 59,563incomeInterest expense:Interest on 57 108 (51 ) (47 ) % 71 313 480demand depositsInterest on 237 479 (242 ) (51 ) % 289 1,246 1,599money marketInterest on 53 128 (75 ) (59 ) % 74 340 493savingsInterest oncertificates of 390 499 (109 ) (22 ) % 420 1,741 1,977depositInterest onFederal HomeLoan Bank of San ? ? ? ? % ? 5 247FranciscoborrowingsInterest on 179 183 (4 ) (2 ) % 184 731 806other borrowingsInterest onjunior 47 97 (50 ) (52 ) % 50 248 426subordinateddebenturesTotal interest 963 1,494 (531 ) (36 ) % 1,088 4,624 6,028expenseNet interest 14,556 13,314 1,242 9 % 14,130 55,455 53,535incomeProvision forloan and lease ? ? ? ? % 1,100 5,250 ?lossesNet interestincome afterprovisionfor 14,556 13,314 1,242 9 % 13,030 50,205 53,535loan and leaselossesNoninterest income:Service chargeson deposit 173 198 (25 ) (13 ) % 142 636 730accountsATM and point of 306 282 24 9 % 297 1,134 1,158sale feesPayroll andbenefit 182 183 (1 ) (1 ) % 152 647 669processing feesLife insurance 125 126 (1 ) (1 ) % 125 521 536Gain oninvestment ? 49 (49 ) (100 ) % 258 482 186securities, netFederal HomeLoan Bank of San 94 131 (37 ) (28 ) % 109 369 507Franciscodividends(Loss) gain on ? 21 (21 ) (100 ) % ? (23 ) 62sale of OREOOther income 136 31 105 339 % 106 286 336Totalnoninterest 1,016 1,021 (5 ) ? % 1,189 4,052 4,184income

TABLE 19 - CONTINUEDUNAUDITEDINCOME STATEMENT(dollars in thousands, except per share data) For The Three Months Ended For The Twelve Months Ended December 31, Change September December 31, 30, 2020 2019 $ % 2020 2020 2019Noninterest expense: Salaries and related 5,284 4,924 360 7 % 5,126 21,262 20,804benefitsPremises and equipment 966 916 50 5 % 951 3,597 3,752Federal Deposit InsuranceCorporationinsurance 105 ? 105 ? % 101 332 91premiumData processing 584 739 (155 ) (21 ) % 581 2,281 2,535Professional services 292 309 (17 ) (6 ) % 342 1,437 1,539Telecommunications 174 190 (16 ) (8 ) % 157 658 737Acquisition and merger ? ? ? ? % ? ? 2,193Other expenses 1,129 1,343 (214 ) (16 ) % 1,132 5,410 5,604Total noninterest expense 8,534 8,421 113 1 % 8,390 34,977 37,255Income before provision 7,038 5,914 1,124 19 % 5,829 19,280 20,464for income taxesProvision for income taxes 1,966 1,545 421 27 % 1,500 5,116 5,503Net income $ 5,072 $ 4,369 $ 703 16 % $ 4,329 $ 14,164 $ 14,961 Earnings per share - basic $ 0.30 $ 0.24 $ 0.06 25 % $ 0.26 $ 0.84 $ 0.83Weighted average shares - 16,663 18,068 (1,405 ) (8 ) % 16,660 16,918 17,956basicEarnings per share - $ 0.30 $ 0.24 $ 0.06 25 % $ 0.26 $ 0.83 $ 0.83dilutedWeighted average shares - 16,731 18,150 (1,419 ) (8 ) % 16,696 16,963 18,024diluted

TABLE 20UNAUDITED CONDENSED CONSOLIDATEDQUARTERLY AVERAGE BALANCE SHEETS(dollars in thousands) For The Three Months Ended December September June 30, March 31, December 31, 30, 31, 2020 2020 2020 2020 2019Earning assets: Loans $ 1,172,705 $ 1,209,277 $ 1,180,915 $ 1,033,689 $ 1,031,702Taxable securities 304,242 228,045 211,195 237,405 245,487Tax-exempt 73,207 68,766 58,540 34,869 32,158securitiesInterest-bearingdeposits in other 124,390 95,348 72,507 47,135 81,099banksTotal earning 1,674,544 1,601,436 1,523,157 1,353,098 1,390,446assets Cash and due from 22,413 23,381 21,564 21,987 24,083banksPremises and 15,162 15,365 15,428 15,753 16,049equipment, netOther real estate 8 8 8 33 54ownedLife insurance 24,147 24,028 23,899 23,762 23,638Deferred tax asset, 2,738 2,501 3,016 4,259 4,691netGoodwill 11,671 11,671 11,671 11,671 11,671Other intangible 4,126 4,318 4,508 4,701 4,890assets, netOther assets 20,128 21,408 23,576 18,755 17,121Total assets $ 1,774,937 $ 1,704,116 $ 1,626,827 $ 1,454,019 $ 1,492,643 Liabilities andshareholders' equity:Demand - $ 552,601 $ 531,459 $ 497,636 $ 420,847 $ 428,420noninterest-bearingDemand - 283,213 279,744 261,907 233,375 244,276interest-bearingMoney market 430,014 387,995 365,368 307,587 318,127Savings 151,223 146,074 138,500 135,504 138,155Certificates of 138,380 139,757 142,955 147,241 153,223depositTotal deposits 1,555,431 1,485,029 1,406,366 1,244,554 1,282,201 Federal Home LoanBank of San 7,120 10,000 16,044 220 ?FranciscoborrowingsOther borrowingsnet of unamortized 9,999 9,988 9,976 9,963 9,952debt issuance costsJunior subordinated 10,310 10,310 10,310 10,310 10,310debenturesOther liabilities 17,557 17,356 17,095 16,852 17,795Total liabilities 1,600,417 1,532,683 1,459,791 1,281,899 1,320,258 Shareholders' 174,520 171,433 167,036 172,120 172,385equityLiabilities &shareholders' $ 1,774,937 $ 1,704,116 $ 1,626,827 $ 1,454,019 $ 1,492,643equity

TABLE 21UNAUDITED CONDENSED CONSOLIDATEDANNUAL AVERAGE BALANCE SHEETS(dollars in thousands) For The Year Ended December 31, December 31, December 31, December 31, 2020 2019 2018 2017Earning assets: Loans $ 1,149,375 $ 1,020,801 $ 915,360 $ 818,119Taxable securities 245,336 246,723 207,407 165,333Tax-exempt 58,912 38,706 50,330 74,231securitiesInterest-bearingdeposits in other 84,982 54,095 47,038 66,872banksTotal earning 1,538,605 1,360,325 1,220,135 1,124,555assets Cash and due from 22,339 22,806 20,468 18,301banksPremises and 15,426 15,598 13,952 15,567equipment, netOther real estate 14 35 93 664ownedLife insurance 23,960 23,371 22,148 21,905Deferred tax asset, 3,126 5,430 7,567 8,919netGoodwill 11,671 10,758 665 665Other intangible 4,412 4,807 1,252 1,471assets, netOther assets 20,966 14,982 2,561 6,204Total assets $ 1,640,519 $ 1,458,112 $ 1,288,841 $ 1,198,251 Liabilities andshareholders' equity:Demand - $ 500,862 $ 400,588 $ 332,197 $ 289,735noninterest-bearingDemand - 264,652 242,516 238,328 209,792interest-bearingMoney market 372,939 304,340 250,685 224,913Savings 142,857 136,733 109,025 111,376Certificates of 142,067 160,550 168,183 205,648depositTotal deposits 1,423,377 1,244,727 1,098,418 1,041,464 Federal Home LoanBank of San 8,347 9,644 22,466 302FranciscoborrowingsOther borrowingsnet of unamortized 9,981 10,895 15,143 17,981debt issuance costsJunior subordinated 10,310 10,310 10,310 10,310debenturesOther liabilities 17,217 17,894 12,286 12,293Total liabilities 1,469,232 1,293,470 1,158,623 1,082,350 Shareholders' 171,287 164,642 130,218 115,901equityLiabilities &shareholders' $ 1,640,519 $ 1,458,112 $ 1,288,841 $ 1,198,251equity

About Bank of Commerce Holdings

Bank of Commerce Holdings is a bank holding company headquartered in Sacramento, California and is the parent company for Merchants Bank of Commerce. The Bank is an FDIC-insured California banking corporation providing community banking and financial services in northern California along the Interstate 5 corridor from Sacramento to Yreka and in the North Bay wine region. The Bank was incorporated as a California banking corporation on November 25, 1981 and opened for business on October 22, 1982. The Companys common stock is listed on the NASDAQ Global Market and trades under the symbol BOCH.

Contact Information:

Randall S. Eslick, President and Chief Executive Officer Telephone Direct (916) 677-5800

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

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