Press Release

Bank of Commerce Holdings(tm) Announces 2009 Operating Results

Patrick J. Moty, President & CEO of Bank of Commerce Holdings (NASDAQ:BOCH) , a $813 million financial services holding company, and parent company of Redding Bank of Commerce(TM), Roseville Bank of Commerce(TM), and Bank of Commerce Mortgage(TM) today announced 2009 operating results.

2009 Highlights

-- Diluted EPS of $0.58, up 132% year-over-year

-- Net income of $6.0 million, up $3.8 million or 174% year-over-year

-- Average earning assets up $120.2 million or 19.6% year-over-year

-- Average portfolio loans up $70.6 million or 13.6% year-over-year

-- Average deposits up $93.6 million or 21.2% year-over-year

-- Provision for loan losses of $9.5 million

-- Total risk based capital of 12.96%

-- Cash dividends of $2.3 million paid in 2009

'We decided early on that our best strategy for 2009 was to create an unquestionably strong balance sheet and stay focused on what we do best - Banking - and the results are in. We are very proud of the financial performance of our Company through the current downward economic cycle. Operationally and financially our Company's performance has exceeded our projections,' said Patrick J. Moty, President & CEO.

Financial Performance

While the current economic environment remains extremely challenging, our company provided solid value to our shareholders in 2009. Our Company earned $6.0 million or $0.58 per diluted share reflecting a year-over-year increase exceeding 132%. We declared cash dividends totaling $0.24 per share in 2009, representing a yield of 4.55%.

Management maintained a diligent and aggressive stance in regards to asset quality. The Company provided $9.5 million in loan loss provisions reflecting our continuing proactive and rigid stance in identifying and recognizing impaired credits. While portions of our loan portfolio remain to some extent stressed, our capital position is strong and supportive of continuing organic and strategic growth opportunities.

Our balance sheet grew by $39.5 million or 5.11% on a year-over-year basis; the majority of our asset growth was centered in the loan portfolio. Total loans outstanding at 12/31/09 increased by $98.3 million or 18.9% compared to 12/31/08, illustrating our willingness and commitment to serving our customers and our community.

We funded our asset growth through deposit growth. Total deposits increased $85.2 million or 15.3% over 2008. Deposit generation also assisted in reducing the level of wholesale borrowings by $50.0 million over 12/31/08.

Net Interest Income

The Company's earnings performance is highly dependent on net interest income. Net interest income increased 35.8% or $7.6 million on a year-over-year basis. Total interest income increased $3.6 million or 9.7% while total interest expense decreased $4.0 million or 24.5%. The aforementioned loan growth coupled with reduced funding costs associated with repricing time deposits and wholesale borrowings were the primary drivers in our year-over-year improvement in net interest income.

Securities Gains

The Company recognized $2.4 million in gains on sale of securities in 2009. This represents an increase of 288% or $1.8 million over 2008. Approximately $51.6 million in available-for-sale securities were sold for liquidity purposes to fund loan growth and reduce the level of wholesale borrowings.

Management does not consider securities gains as a source of recurring income.

Non-interest Income

Non-interest income includes service charges on deposit accounts, payroll processing fees, earnings on key life investments, gains on the sale of securities investments, and mortgage brokerage fee income. Non-interest income for 2009 was $10.1 million or 19.6% of the Company's total gross revenues as compared to $2.6 million and 6.5% of total gross revenues in 2008. The $7.5 million increased is primarily due to an increase in mortgage brokerage fee income associated with our purchase of an equity interest in the Simonich Corporation (See Acquisition below) and the $1.8 million increase in securities gains over 2008.

Non-Interest Expense

Non-interest expense increased $5.3 million or 34.8% to $20.6 million in 2009. The increase is associated with our purchase of an equity interest in the Simonich Corporation, and is centered in salaries and related benefits and other general operating expenses. In addition, FDIC insurance assessments increased $891,000 or 233% over 2008.

Return on Average Assets/ Average Equity

The Company's return on average assets (ROA) improved significantly in 2009. Net income increased $3.8 million or 174% over 2008 improving our ROA to 0.75% as compared to an ROA of 0.33% at year-end 2008. Return on average equity likewise improved to 9.01% at 12/31/09 compared to 4.99% at 12/31/08.

Acquisition

During the second quarter, the Company completed a business combination with Simonich Corporation resulting in a 51% equity position. The agreement was dated May 15, 2009. The total price of the purchase was $2.5 million, with $1.5 million paid at closing and the additional $1.0 million to be earned-out over a period of three years based upon delivering an established level of profits. It is possible to earn out the $1.0 million in a shorter period of time if the profit levels exceed expectations. As a result of the Company obtaining a controlling interest in Simonich Corporation, the new company was rebranded as Bank of Commerce Mortgage(TM).

The operating results of Bank of Commerce Mortgage(TM) have been consolidated with the Company as of the date of acquisition through 12/31/09. Bank of Commerce Mortgage(TM) originates and sells mortgage loans.

Loans

Total loans, the single largest asset class of the Company, grew by $98.3 million or 18.9% over year-end 2008.

On April 17, 2009, the Company completed a 'Loan Swap' transaction which included the purchase of a portfolio of performing real estate loans with an outstanding balance of $80.4 million. The real estate loan portfolio was purchased from a private equity firm in exchange for a combination of approximately $14.0 million in non-performing loans and cash. Management believes this transaction has strengthened the Company's balance sheet while also providing diversification in its loan portfolio.

Asset Quality

While we continue to advance loans to credit-worthy borrowers, segments of the Company's loan portfolio remained strained. The Commercial and Industrial portfolio experienced deterioration in 2009 while our real estate development properties and construction related lending are showing some signs of stabilization. Nevertheless, our loan portfolio remains susceptible to additional weakening in real estate values and continuing deterioration in the general economy.

Our Company provided $9.5 million in provisions for loan and lease losses compared to $6.5 million a year ago. The Company's allowance for loan losses was 1.86% of total loans at December 31, 2009 compared to 1.60% of total loans a year ago. Elevated provisions are associated with an aggressive reclassification of loans and management's assertive approach in recognizing impaired loans.

Net charge-offs were $6.6 million at December 31, 2009 compared to approximately $6.3 million in 2008. The charge-offs were centered in commercial and industrial loans, and real estate loans. We are committed to working with, and finding potential solutions, when our customers experience financial difficulties.

Two properties were taken into other real estate owned (OREO) during 2009, and no write downs were recorded. During fiscal year 2009 one of the respective properties was sold, resulting in a $20,251 gain on sale. OREO was $2.8 million at December 31, 2009 versus $2.9 million at December 31, 2008.

As of December 31, 2009, non-performing assets represents 1.65% of total assets compared to 2.98% a year ago.

Deposits

The Company's primary funding source, deposits, grew by $85.2 million or 15.3% over 2008; the deposit growth was centered in certificates of deposit followed by interest-bearing checking accounts. Management primarily attributes deposit growth to the current economic environment and general concerns with alternative investments. Therefore, it is reasonably possible that with an economic recovery, our customers could migrate back into these other asset classes.

Capital

The capital ratios of the Company continue to be well above the well-capitalized guidelines established by bank regulatory agencies. Total risk-based capital to risk-weighted assets was 12.96% at December 31, 2009.

Liquidity

Our Company continues to maintain a relatively low-risk, liquid and valuable available-for-sale investment portfolio. This resource is utilized as a source of liquidity as opportunities to reposition the balance sheet present themselves.

The Company's consolidated liquidity position remains ample to meet short-term and long-term future contingencies. At December 31, 2009, the Company had available cash equivalents of $56.3 million, non-pledged security investments of $24.4 million, available lines of credit at the Federal Home Loan Bank of approximately $30.0 million, and a federal funds borrowing line with correspondent bank of $10.0 million.

Bank of Commerce Holdings, with administrative offices in Redding, California is a financial service holding company that owns Redding Bank of Commerce(TM), Roseville Bank of Commerce(TM), and Bank of Commerce Mortgage(TM).

The Company is a federally insured California banking corporation and opened on October 22, 1982.

BOCH is a NASDAQ National Market listed stock. Please contact your local investment advisor for purchases and sales.

This quarterly press release includes forward-looking information, which is subject to the 'safe harbor' created by the Securities Act of 1933, and Securities Act of 1934. These forward-looking statements (which involve the Company's plans, beliefs and goals, refer to estimates or use similar terms) involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties include, but are not limited to, the following factors:

-- Competitive pressure in the banking industry and changes in the

regulatory environment.

-- Changes in the interest rate environment and volatility of rate

sensitive assets and liabilities.

-- The health of the economy declines nationally or regionally which

could reduce the demand for loans or reduce the value of real estate

collateral securing most of the Company's loans.

-- Credit quality deteriorates which could cause an increase in the

provision for loan losses.

-- Losses in the Company's merchant credit card processing business.

-- Asset/Liability matching risks and liquidity risks.

-- Changes in the securities markets.

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, 2008 and under the heading:

'Risk factors that may affect results' and subsequent reports on Form 10-Q and current reports on Form 8-K. 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.

BANK OF COMMERCE HOLDINGS AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2009 (unaudited) and 2008

ASSETS 2009 2008

Cash and due from banks $36,902,278 $10,216,062

Interest bearing due from banks $30,347,615 $23,500,000

Federal funds sold and securities

purchased under agreements to resell 990,000 51,475,000

------- ----------

Cash and cash equivalents 68,239,893 85,191,062

Securities available-for-sale (including

pledged collateral of $55,672,267 at

December 31, 2009 and $68,735,000 at

December 31, 2008) 80,062,136 131,686,600

Loans, net of the allowance for loan and

lease losses of $11,207,213 at December

31, 2009 and $8,429,383 at December 31,

2008 590,022,710 518,946,461

Mortgage held for sale, at fair value 27,288,423 0

Bank premises and equipment, net 9,979,565 7,738,060

Goodwill 3,727,052 0

Other Real Estate Owned 2,879,956 2,934,151

---------

Other assets 31,206,411 27,717,626

---------- ----------

TOTAL ASSETS $813,406,146 $774,213,960

============ ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits:

Demand - noninterest bearing $69,447,731 $79,988,122

Demand - interest bearing 163,813,660 143,871,441

Savings accounts 65,413,991 67,135,736

Certificates of deposit 341,788,698 264,286,604

----------- -----------

Total Deposits 640,464,080 555,281,903

Securities sold under agreements to

repurchase 9,620,867 13,853,255

Federal Home Loan Bank borrowings 70,000,000 120,000,000

Other liabilities 9,049,555 7,036,161

Junior subordinated debt payable to

unconsolidated subsidiary grantor trust 15,465,000 15,465,000

---------- ----------

Total liabilities 744,599,502 711,636,319

Commitments and contingencies

Stockholders' equity:

Preferred stock (liquidation preference of

$1,000 per share; issued 2008); 2,000,000

shares authorized; 17,000 shares issued

and outstanding in 2009 and 2008 16,641,016 16,551,268

Common stock, no par value; 50,000,000

shares authorized; 8,711,495 shares

issued and outstanding in 2009 and 2008 9,730,284 9,649,673

Common Stock Warrant 448,732 448,732

Retained earnings 39,003,734 36,008,865

Accumulated other comprehensive income

(loss), net of tax 657,662 (80,897)

------- -------

Total Equity - Bank of Commerce Holdings 66,481,428 62,577,641

Non controlling interest in subsidiary 2,325,216 0

===

Total stockholders' equity 68,806,644 62,577,641

---------- ----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $813,406,146 $774,213,960

============ ============

BANK OF COMMERCE HOLDINGS AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

FOR THE YEARS ENDED DECEMBER 31, 2009 (unaudited), 2008 AND 2007

2009 2008 2007

---- ---- ----

Interest income:

Interest and fees on

loans $35,860,336 $33,582,112 $36,134,170

Interest on tax-exempt

securities 1,164,344 1,196,662 1,228,944

Interest on U.S.

government securities 3,449,909 2,468,749 3,084,672

Interest on federal

funds sold and

securities purchased

under agreement to

resell 31,737 303,227 680,578

Interest on other

securities 822,673 138,645 89,686

------- ------- ------

Total interest income 41,328,999 37,689,395 41,218,050

---------- ---------- ----------

Interest expense:

Interest on demand

deposits 1,014,554 2,172,704 2,735,170

Interest on savings

deposits 962,774 1,576,351 1,215,920

Interest on

certificates of

deposit 7,628,282 8,552,217 10,570,776

Interest on securities

sold under repurchase

agreements 50,503 172,743 1,177,417

Interest on FHLB

borrowings 1,833,181 2,811,982 2,421,636

Interest on junior

subordinated debt

payable to

unconsolidated

subsidiary grantor

trusts 846,072 1,056,284 1,084,990

------- --------- ---------

Total interest expense 12,335,366 16,342,281 19,205,909

---------- ---------- ----------

Net interest income 28,993,633 21,347,114 22,012,141

Provision for loan and

lease losses 9,475,000 6,520,000 3,291,250

--------- --------- ---------

Net interest income

after provision for

loan and lease losses 19,518,633 14,827,114 18,720,891

---------- ---------- ----------

Noninterest income:

Service charges on

deposit accounts 390,263 311,266 277,769

Payroll and benefit

processing fees 452,037 452,852 382,738

Earnings on cash

surrender value -

Bank owned life

insurance 418,265 340,220 331,251

Life Insurance policy

benefits - - 2,400,000

Net gain (loss) on sale

of securities

available-for-sale 2,437,575 627,879 45,670

Net loss on sale of

derivative swap

transaction - (225,442) -

Net gain on sale of

loans 340,621 - -

Merchant credit card

service income, net 296,551 364,391 388,438

Mortgage brokerage fee

income 5,327,256 21,019 49,995

Other income 400,866 731,233 658,893

------- ------- -------

Total noninterest

income 10,063,434 2,623,418 4,534,754

---------- --------- ---------

Noninterest expense:

Salaries and related

benefits 10,881,865 7,750,980 8,665,679

Occupancy and equipment

expense 2,655,376 2,500,557 2,372,617

OREO expense 163,724 735,000 -

FDIC insurance premium 1,274,416 382,722 51,077

Data processing fees 282,429 276,165 395,558

Professional service

fees 819,960 667,015 1,027,671

Payroll processing fees 114,393 115,932 107,856

Deferred compensation

expense 478,175 461,640 411,191

Stationery and supplies 185,206 262,087 256,799

Postage 146,719 133,909 137,740

Directors' expenses 298,596 293,918 311,777

Other expenses 3,322,805 1,715,747 2,005,729

--------- --------- ---------

Total noninterest expense 20,623,664 15,295,672 15,743,694

---------- ---------- ----------

Income before provision

for income taxes 8,958,403 2,154,860 7,511,951

Provision (Benefit) for

income taxes 2,689,698 (39,526) 1,405,053

--------- ------- ---------

Net Income $6,268,705 $2,194,386 $6,106,898

Less: Net income

attributable to non-

controlling interest 263,405 - -

Net Income attributable

to Bank of Commerce

Holdings $6,005,300 $2,194,386 $6,106,898

========== ========== ==========

Less: preferred

dividend and accretion

on preferred stock 942,109 - -

Income available to

common shareholders 5,063,191 2,194,386 6,106,898

Basic earnings per

share $0.58 $0.25 $0.69

Weighted average shares

- basic 8,711,495 8,712,873 8,857,627

Diluted earnings per

share $0.58 $0.25 $0.68

Weighted average shares

-diluted 8,711,495 8,724,550 8,937,736

Cash Dividends declared $0.24 $0.32 $0.32

Average Balances, Interest Income/Expense and Yields/Rates Paid

Years Ended December 31,

(Dollars in thousands)

----------------------

2009

(unaudited) 2008

------------ ----

Average Yield/ Average Yield/

Balance Interest Rate Balance Interest Rate

-------- -------- ------- -------- -------- -------

Interest

Earning

Assets

Portfolio

loans $589,336 $35,860 6.08% $518,759 $33,582 6.47%

Tax-

exempt

securities 28,834 1,164 4.10% 24,399 1,197 4.91%

US

government

securities 8,606 343 3.99% 13,637 553 4.06%

Mortgage

backed

securities 53,722 3,107 5.78% 37,328 1,916 5.13%

Federal

funds

sold 13,438 32 0.24% 17,987 303 1.68%

Other

securities 41,305 823 1.99% 2,918 139 4.76%

------ --- ---- ----- --- ----

Average

Earning

Assets $735,241 $41,329 5.62% $615,028 $37,690 6.13%

Cash &

due from

banks 26,841 16,298

Bank

premises

and

fixed

assets 10,322 11,097

Other

assets 40,639 19,866

------ ------

Average

Total

Assets $804,211 $662,289

======== ========

Interest

Bearing

Liabilities

Interest

bearing

demand $145,542 $1,015 0.70% $138,743 $2,173 1.57%

Savings

deposits 62,846 963 1.53% 56,914 1,576 2.77%

Certificates

of

deposit 317,417 7,628 2.40% 234,493 8,552 3.65%

Repurchase

Agreements 11,006 51 .046% 13,043 173 1.33%

Other

borrowings 122,057 2,678 2.19% 98,518 3,868 3.93%

------- ----- ---- ------ ----- ----

Average

Interest

Liabilities $658,868 12,335 1.87% $541,711 $16,342 3.02%

Noninterest

bearing

Demand 69,250 70,933

Other

liabilities 9,467 5,660

Stockholders'

equity 66,626 43,985

------ ------

Average

Liabilities

and

Stockholders'

equity $804,211 $662,289

======== ========

Net

Interest

Income

and Net

Interest

Margin $28,994 3.94% $21,348 3.47%

--------- ======= ---- ======= ----

(Dollars in thousands)

----------------------

2007

----

Average Yield/

Balance Interest Rate

-------- -------- -------

Interest Earning

Assets

Portfolio loans $437,217 $36,134 8.26%

Tax-exempt securities 30,727 1,229 4.00%

US government

securities 26,782 1,112 4.15%

Mortgage backed

securities 43,122 1,973 4.58%

Federal funds sold 13,099 681 5.20%

Other securities 2,000 90 4.50%

----- --- ----

Average Earning Assets $552,947 $41,219 7.45%

Cash & due from banks 14,273

Bank premises and

fixed assets 10,155

Other assets 17,986

------

Average Total Assets $595,361

========

Interest Bearing

Liabilities

Interest bearing

demand $121,281 $2,735 2.26%

Savings deposits 39,565 1,216 3.07%

Certificates of

deposit 215,511 10,571 4.91%

Repurchase Agreements 32,237 1,177 3.65%

Other borrowings 62,095 3,507 5.65%

------ ----- ----

Average Interest

Liabilities $470,689 $19,206 4.08%

Noninterest bearing

Demand 72,545

Other liabilities 6,502

Stockholders' equity 45,625

------

Average Liabilities

and Stockholders'

equity $595,361

========

Net Interest Income

and Net Interest

Margin $22,013 3.98%

------------------- ======= ----

BANK OF COMMERCE HOLDINGS & SUBSIDIARIES

Portfolio Loan Mix

During the past two years, we have restructured our loan portfolio, reducing our concentration in commercial real estate loans, especially construction and land development loans, and maintained our strengths in commercial and industrial loans. In addition, in April 2009, we entered into a loan sale and purchase agreement with a third party whereby we purchased an $80.6 million pool of first mortgage loans made to legal U.S. residents who do not have a social security number ('ITIN loans'). These were seasoned, performing loans carrying an average balance of $86,000 and a yield of 7.44%. As of December 31, 2009 and 2008, our loan portfolio consisted of the following types of loans:

Loan Type December 31, 2009 December 31, 2008

Percentage Percentage

Dollar of Total Dollar of Total

Amount Loans Amount Loans

------- ----------- ------- -----------

(in thousands) (in thousands)

------------ -----------

Commercial and

financial loans $133,078 22.13% $164,083 31.11%

Real estate -

construction

loans 59,524 9.90% 84,218 15.97%

Real estate -

commercial

(investor) 197,023 32.77% 147,868 28.03%

Real estate -

commercial

(owner occupied) 63,001 10.48% 70,046 13.28%

Real estate -

ITIN loans 78,250 13.01% - 0.00%

Real estate -

mortgage 20,526 3.41% 20,285 3.85%

Real estate -

other 45,601 7.58% 39,915 7.57%

Installment 2,223 0.37% 145 0.02%

Other loans 2,211 0.37% 903 0.17%

----- ---- --- ----

Loans $601,437 100.00% $527,463 100.00%

Nonperforming loans

The following table sets forth a summary of the Company's nonperforming and impaired loans and other assets as of the dates indicated:

(Dollars in thousands) As of December 31,

---------------------- ------------------

2009 2008 2007 2006 2005

---- ---- ---- ---- ----

Nonaccrual loans $7,667 $20,154 $12,409 $0 $372

90 days past due and still

accruing interest 2,885 0 0 0 0

----- --- --- --- ---

Total nonperforming loans 10,552 20,154 12,409 0 372

Other real estate owned 2,880 2,934 0 0 0

----- ----- --- --- ---

Total nonperforming assets $13,432 $23,088 $12,409 $0 $372

-------------------------- ------- ------- ------- --- ----

The Company's practice is to place an asset on nonaccrual status when one of the following events occurs: (i) Any installment of principal or interest is 90 days or more past due (unless management's opinion reflects that the loan is well-secured and in the process of collection), (ii) management determines the ultimate collection of principal or interest to be unlikely or (iii) the terms of the loan have been renegotiated due to a serious weakening of the borrower's financial condition.

Nonperforming loans may be on nonaccrual, are 90 days past due and still accruing, or have been restructured. Accruals are resumed on loans only when they are brought fully current with respect to interest and principal and when the loan is estimated to be fully collectible. Restructured loans are those loans on which concessions in terms have been granted due to the borrower's financial or legal difficulties. Nonaccrual loans consisted of fourteen credits at year end 2009. The gross interest income that would have been recorded during the period had the loans been current in accordance with their original terms was approximately $319,485. Interest collected prior to non-accrual status was approximately $162,510.

The Company's OREO as of year-end 2009 consisted of one mixed-use development property and two real estate loans valued at $2.7 million, $32,900 and $74,000 respectively; 2008 reflected OREO of one mixed-use development property valued at $2.9 million, and $0 for 2007.

BANK OF COMMERCE HOLDINGS & SUBSIDIARIES

Quarterly Financial Condition Data (unaudited)

Dollars in

thousands,

except for

per share December 31, September 30, June 30, March 31, December 31,

data 2009 2009 2009 2009 2008

---- ---- ---- ---- ----

Interest

income:

Interest and

fees on loans $9,184 $9,355 $9,272 $8,049 $8,028

Interest on

tax-exempt

securities 311 278 279 296 313

Interest on

U.S.

government

securities 676 628 954 1,192 873

Interest on

federal funds

sold and

securities

repurchased

under

agreements to

resell 1 1 5 25 39

Interest on

other

securities 266 309 131 117 81

--- --- --- --- ---

Total

interest

income 10,438 10,571 10,641 9,679 9,334

Interest

expense:

Interest on

demand

deposits 229 240 239 307 411

Interest on

savings

deposits 221 223 238 281 383

Interest on

certificates

of deposit 1,906 1,978 1,900 1,881 1,975

Securities

sold under

repurchase

agreements 13 13 11 14 22

Interest on

FHLB and

other

borrowings 356 514 539 581 638

Interest on

junior

subordinated

debt payable to

unconsolidated

subsidiary

grantor trust 24 234 216 215 263

--- --- --- --- ---

Total

interest

expense 2,749 3,165 3,143 3,279 3,692

Net interest

income 7,689 7,406 7,498 6,400 5,642

Provision for

loan and

lease losses 3,150 1,844 3,056 1,425 3,620

Net interest

income after

provision for

loan and

lease losses 4,539 5,562 4,442 4,975 2,022

Noninterest

income:

Service

charges on

deposit

accounts 94 108 96 92 108

Payroll and

benefit

processing

fees 105 109 104 134 118

Earnings on

cash

surrender

value - bank

owned life

insurance 107 108 117 86 86

Net gain on

sale of

securities

available-

for-sale 454 506 1,074 404 33

Net gain on

sale of loans 1 0 340 - -

Merchant

credit card

service

income, net 68 80 75 74 85

Mortgage

brokerage fee

income 2,112 1,913 1,302 - 4

Other income 119 120 87 75 156

--- --- --- --- ---

Total

noninterest

income 3,060 2,944 3,195 865 590

Noninterest

expense:

Salaries and

related

benefits 3,209 2,902 2,644 2,127 2,001

Occupancy and

equipment

expense 1,339 1,124 730 572 1,339

FDIC insurance

premium 279 421 301 273 99

Data

processing

fees 51 52 68 111 52

Professional

service fees 146 220 295 159 270

Payroll

processing

fees 26 27 27 34 30

Deferred

compensation

expense 118 118 123 119 120

Stationery and

supplies 44 62 26 53 70

Postage 36 0 76 81 30

Directors'

expense 67 75 120 37 71

Other expenses 802 653 483 394 425

--- --- --- --- ---

Total

noninterest

expense 6,116 5,654 4,893 3,960 4,507

Income (loss)

before

provision for

income taxes 1,483 2,852 2,744 1,880 (1,895)

Provision

(benefit) for

income taxes 43 1,010 1,027 610 (1,237)

Less: Income

non-

controlling

interest (33) (129) 101 - -

=== ==== === === ===

Net income

(loss) $1,407 $1,713 $1,616 $1,270 $(658)

====== ====== ====== ====== =====

Less preferred

dividend and

accretion on

preferred

stock ($235) (235) ($235) ($237) ($0)

Income

available to

common

shareholders $1,172 $1,478 $1,381 $1,033 $(658)

Basic earnings

(loss) per

share $0.13 $0.17 $0.16 $0.12 ($0.07)

Weighted

average

shares -

basic 8,711 8,711 8,711 8,711 8,755

Diluted

earnings

(loss) per

share $0.13 $0.17 $0.16 $0.12 ($0.07)

Weighted

average

shares -

diluted 8,711 8,711 8,712 8,711 8,802

Cash dividends

per share $0.06 $0.12 $0.00 $0.06 $0.08