2004 | Annual Report Bank of Commerce Holdingssm
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2004 | annual report Bank of Commerce Holdingssm ��������������������� bank of commerce holdings | annual report 2004 holdings | annual report bank of commerce �������� �������� �������� �������� �������� �������� �������� Our Mission �������� �������� �������� �������� ������� To be the premier provider of quality fi nancial products and ������� ���� ���� ���� ���� ���� ������������������� services to the business and professional communities, while enhancing shareholder return and providing a rewarding and challenging work environment. To recognize the special needs of the business person and professional, to create and deliver fi nancial products and services which represent exceptional value to our clients creating loyalty, and to service our successful customers | new beginnings | long-time employees community involvement | outstanding results community with integrity and pride. bank of commerce holdings | annual report 2004 | 2 holdings | annual report bank of commerce We are proud to report that fi nancially 2004 was our best year ever. Our assets grew by more than $37 million to over $438 million, a healthy 9.3% increase. bank of commerce holdings | annual report 2004 | 3 holdings | annual report bank of commerce Dear Shareholders, The year 2004, our twenty-second, will be remembered as one in which we achieved many milestones in our grand journey. We are proud to report that financially 2004 was our best year ever. Our assets grew by more than $37 million to over $438 million, a healthy 9.3% increase. Our loan portfolio grew by over $40 million to $318 million, a strong increase of 14%. Our deposits increased by over $25 million to over $352 million. Substantially all of the growth centered in core accounts, the most efficient funding source. Our net income reached $4.978 million or $.60 per share. This represents an increase of over 15% in comparison to $.52 per share last year. The increased profits fueled our growth and allowed for an increase in our cash dividend to $.23 per share. The key performance indicators, which reflect the financial vitality of the organization all improved in 2004. The return on our average assets improved from 1.10% to 1.22%. The return on our average equity improved from 15.2% to 15.37%. All of the key measurements for asset quality also improved and we are pleased with the overall financial health of our clients. Diligently applied credit underwriting along with an expanding economy has rewarded us with good improvement in the performance of the loan portfolio. We continue to leverage our investment in technology to help improve our effectiveness in our support services, providing additional capacity to expand our products and services. The listing of our securities on the National NASDAQ resulted in much improved liquidity, increasing the number of shares traded by 42%. We look forward to 2005, with the leadership and commitment of our new Chairman of the Board, Harry L. Grashoff, Jr. and the many opportunities to grow and increase the value of your company. As always, thank you for your confidence and support. We welcome any questions or comments you may have. Sincerely, Michael C. Mayer Robert C. Anderson President and Chairman of the Board Chief Executive Officer The Board of Directors proudly dedicate the company’s overall performance for 2004 to our bank of commerce holdings | annual report 2004 | 4 holdings | annual report bank of commerce Founding Chairman of the Board... Robert C. Anderson We wish to extend our warmest appreciation to Mr. Anderson. His leadership, vision and endless contributions over the past 22 years have been outstanding. Bob’s guidance through the good times, and dedication and support through diffi cult challenges have helped build Bank of Commerce Holdings into the company it is today. While we are very happy that Bob and his lovely wife Mary will be embarking on a new chapter in their lives, Bob’s presence will be missed around the RBC boardroom table. A heartfelt thank you, Bob, for all the years of service and dedication! bank of commerce holdings | annual report 2004 | 5 holdings | annual report bank of commerce Bob Anderson is a graduate of the University of California Berkeley and served four years in the Air Force. He became a CPA in 1958 and worked for a national fi rm in San Francisco before moving to Redding in 1960. Bob is married to Mary, is the father of three children, Robin, Justin and Judy and the grandfather of seven. Bob owned his own fi rm and worked as a CPA in Redding for twenty years before retiring. Bob was elected to the Redding City Council in 1969, serving a total of seventeen years, including two as Mayor. During his term as President of the Chamber of Commerce Bob had the privilege of meeting President Kennedy at the Whiskeytown dedication service. This was especially meaningful to him. Currently, Bob donates a great deal of time to St. Joseph Church and The Knights of Columbus. Left to right Robert C. Anderson, Chairman of the Board, Chairman – Executive Committee Welton L. Carrel, Director bank of commerce holdings | annual report 2004 | 6 holdings | annual report bank of commerce Board of Directors Left to right Russell L. Duclos, Chairman – Asset/Liability Committee John C. Fitzpatrick, Director Left to right Kenneth R. Gifford, Jr., Director Harry L. Grashoff, Jr., Chairman – Loan Committee Left to right Michael C. Mayer, Director, President and Chief Executive Officer Eugene L. Nichols, Director Left to right David H. Scott, Chairman – Audit Committee Lyle L. Tullis, Chairman – Nominating and Corporate Governance bank of commerce holdings | annual report 2004 | 7 holdings | annual report bank of commerce Left to right Michael C. Mayer, President and CEO Linda J. Miles, Executive Vice President & Chief Financial Officer Caryn A. Blais, Senior Vice President & Chief Information Officer Senior Leadership Left to right Theodore M. Cumming, Senior Vice President & Lending Group Manager Randy S. Eslick, Senior Vice President & Regional Manager Robert A. Matranga, Senior Vice President & Lending Group Manager Left to right Patrick J. Moty, Senior Vice President & Chief Credit Officer Robert O’Neil, Senior Vice President Commercial Banking Debra A. Sylvester, Senior Vice President & Administrative Operations Left to right Larry D. Watson, Senior Vice President Administrative Operations Roger D. Janis, Vice President Special Projects Samuel D. Jimenez, Vice President & Director of Risk Management Bank of Commerce Holdings™ announces a 19% increase in 2004 operating results. We are very proud to report that the fourth quarter of 2004 was a record for the Company in terms of financial results, a 31% increase over the same quarter in 2003. bank of commerce holdings | annual report 2004 | 8 holdings | annual report bank of commerce • Company name change to Bank of Commerce Holdings™ • NASDAQ National Market approved • BOCH trading symbol • Trademark of all Company names: Bank of Commerce Holdings™, Redding Bank of Commerce™, Roseville Bank of Commerce™ and Bank of Commerce Mortgage™ • July 1, 2004 Bank of Commerce Mortgage moves to new location at 1024 Mistletoe Drive Redding, California • July 21, 2004 Three-for-one stock split • October 2004 cash dividend of $0.23 per share • December 2004 inclusion in the prestigious America’s Community Bankers NASDAQ Index – ACBQ trading symbol bank of commerce holdings | annual report 2004 | 9 holdings | annual report bank of commerce Five Year Financial Summary In Thousands (Except Ratios and Per Share Data) As of and for the years ended December 31, 2004 2003 2002 2001 2000 Statements of Income Total Interest Income $20,996 $19,279 $18,565 $20,216 $20,177 Net Interest Income $16,887 $14,694 $12,517 $11,190 $11,455 Provision for Loan Losses $ 593 $ 515 $ 620 $ 255 $ 142 Total Noninterest Income $ 2,196 $ 2,150 $ 2,091 $ 2,823 $ 2,807 Total Noninterest Expense $10,581 $ 9,660 $ 8,267 $ 7,143 $ 6,458 Total Revenues $23,192 $21,429 $20,656 $23,039 $22,984 Net Income $ 4,978 $ 4,183 $ 3,696 $ 4,274 $ 4,812 Balance Sheets Total Assets $438,545 $401,158 $367,434 $318,686 $255,107 Total Net Loans $318,801 $278,204 $280,351 $216,960 $191,586 Allowance for Loan Losses $ 3,866 $ 3,675 $ 3,529 $ 2,916 $ 2,710 Total Deposits $352,879 $327,539 $314,447 $281,436 $218,036 Stockholders’ Equity $ 35,283 $ 30,511 $ 27,667 $ 27,240 $ 28,754 Performance Ratios Return on Average Assets 1.22% 1.10% 1.09% 1.49% 1.98% Return on Average Stockholders’ Equity 15.37% 15.20% 13.92% 15.43% 17.95% Dividend Payout 39.29% 42.09% 46.57% 41.94% 35.32% Average Equity to Average Assets 8.16% 7.21% 7.83% 9.67% 11.02% Tier 1 Risk-Based Capital-Bank 10.80% 10.77% 9.14% 10.93% 12.86% Total Risk-Based Capital-Bank 11.88% 12.02% 10.19% 12.18% 14.11% Net Interest Margin 4.45% 4.22% 4.06% 4.24% 5.16% Average Earning Assets to Total Average Assets 92.62% 91.26% 90.90% 92.15% 91.30% Nonperforming Assets to Total Assets 0.54% 1.16% .10% .11% .31% Net Charge-offs to Average Loans .12% .13% .01% .02% .09% Allowance for Loan Losses to Total Loans 1.20% 1.30% 1.26% 1.35% 1.42% Nonperforming Loans to Allowance for Loan Losses 61.64% 126.34% 0.20% 11.97% 29.56% Effi ciency Ratio 57.23% 59.15% 56.59% 50.97% 45.28% Share Data Average Common Shares Outstanding - basic 8,283 8,033 8,013 8,109 8,652 Average Common Shares Outstanding - diluted 8,703 8,327 8,604 8,568 9,105 Book Value Per Common Share $4.27 $3.80 $3.45 $3.36 $3.32 Basic Earnings Per Common Share $0.60 $0.52 $0.46 $0.51 $0.56 Diluted Earnings Per Common Share $0.57 $0.50 $0.43 $0.48 $0.53 Cash Dividends Per Common Share $0.23 $0.22 $0.22 $0.22 $0.20 “Bank of Commerce Holdings (BOCH) has achieved a 46.7% increase in stock price during 2004.