Bank of Commerce Holdings

In 2018, the California “Women on Boards” bill was signed into law to advance equitable gender representation on certain California corporate boards. California is the first state in the nation to require all publicly-held domestic or foreign corporations whose principal executive offices are located in California to have at least one female director on their boards by December 31, 2019 (either by filling an open seat or by adding a seat). One or two more women directors may be required, depending upon the size of the public company’s board by December 31, 2021. We had one female serving on our board as of December 31, 2019, and we will continue to advance equitable gender representation by adding females to our board in accordance with California’s Women on Boards bill.

In 2018, President Trump signed into law the Crapo Bill discussed above, which modified and removed certain financial reform rules and regulations, including some of those implemented under the Dodd-Frank Act in an effort to provide regulatory relief to certain financial institutions. While the Crapo Bill maintains most of the regulatory structure established by the Dodd-Frank Act, it amended certain aspects of the regulatory framework for small depository institutions with assets of less than $10 billion. Many of these changes could result in meaningful regulatory changes for community banks.

In July 2017, the United Kingdom Financial Conduct Authority announced that the London Interbank Offered Rate (“LIBOR”) may no longer be published after 2021. LIBOR is used extensively in the U.S and globally as a “benchmark” or “reference rate” for various commercial and financial contracts. In response, the Alternative Reference Rates Committee (“ARRC”), made up of financial and capital market institutions, was convened to address the replacement of LIBOR in the U.S. The ARRC identified a potential successor to LIBOR in the Secured Overnight Financing Rate (“SOFR”) and crafted a plan to facilitate the transition. However, there are significant conceptual and technical differences between LIBOR and SOFR. The Financial Stability Oversight Committee has stated that the end or waning use of LIBOR has the potential to significantly disrupt trading in many important types of financial contracts.

At this time, no consensus exists as to what rate or rates may become acceptable alternatives to LIBOR and it is impossible to predict the effect of any such alternatives on the value of LIBOR-based securities and variable rate loans, subordinated debentures or other securities or financial arrangements. The replacement of LIBOR with one or more alternative rates may impact the availability and cost of hedging instruments and borrowings, including the rates we pay on our subordinated debentures and derivative financial instruments. If LIBOR rates are no longer available, and we are required to implement substitute indices for the calculation of interest rates under contracts or financial instruments to which we are a party, we may incur significant expenses in effecting the transition.

On September 18, 2019, we announced that our Board of Directors had authorized a stock purchase program. The stock purchase program authorizes the Company to purchase up to one million shares of its common stock over a period ending March 31, 2020 and was effective immediately. Purchases may be made in the open market, including in block trades, or through privately negotiated transactions, from time to time when management determines that market conditions and other factors warrant such purchases. There is no guarantee as to the exact number of shares to be purchased, and the stock purchase program may be modified, suspended, or terminated without prior notice. On February 21, 2020 we announced that our Board of Directors increased the number of shares that may be purchased from 1,000,000 to 1,500,000 shares of common stock, and extended the program by one year to March 31, 2021. The following table provides information regarding purchases under the program.

On September 18, 2019, we announced that our Board of Directors had authorized a stock purchase program. The stock purchase program authorizes the Company to purchase up to one million shares of its common stock over a period ending March 31, 2020 and is effective immediately. Purchases may be made in the open market, including in block trades, or through privately negotiated transactions, from time to time when management determines that market conditions and other factors warrant such purchases. There is no guarantee as to the exact number of shares to be purchased, and the stock purchase program may be modified, suspended, or terminated without prior notice. On February 21, 2020 we announced that our Board of Directors increased the number of shares that may be repurchased from 1,000,000 to 1,500,000 shares of common stock, and extended the program by one year to March 31, 2021. During the fourth quarter of 2019, we repurchased 90,501 shares under the plan.

The Boards of Directors of the Company and the Bank recently approved Second Amendments (each, an “Amendment”) to our Employment Agreements with Randall S. Eslick, our President and Chief Executive Officer, James A. Sundquist, our Executive Vice President and Chief Financial Officer, and Robert H. Muttera, our Executive Vice President and Chief Credit Officer (the “Executives”). Under each Amendment, each Executive’s employment with the Company and the Bank will continue for a period of three (3) years and, on the third anniversary, the Executive’s Employment Agreement will automatically extend for a period of one (1) year (unless otherwise agreed between the parties). Under Mr. Sundquist’s Amendment, Mr. Sundquist will also be entitled to receive retention bonuses in the amount of $25,000 in July 2021, $75,000 in July 2022, and $50,000 in July 2023 (provided he is still employed on those dates and has satisfactorily performed his job). Under Mr. Eslick’s Amendment, Mr. Eslick’s Employment Agreement was also amended to increase the amount payable to Mr. Eslick in the event of a Change in Control from 2x to 2.99x his Total Compensation Package (as defined in his Employment Agreement).

The response to this item is incorporated by reference to Bank of Commerce Holdings Proxy Statement for the 2020 Annual Meeting of shareholders (the “Proxy Statement”) under the captions “Information about the Director Nominees”, “Director Qualifications and Nominations for Directors”, “The Board and Governance Matters”, “Committees of the Board of Directors”, “Report of the Audit and Qualified Legal Compliance Committee”, “Director Independence, Certain Relationships and Related Transactions”, “Named Executive Officers of the Company”, “Delinquent Section 16(a) Reports”, “Voting Securities and Ownership of Certain Beneficial Holders”, and “Code of Conduct, Code of Ethics, and Corporate Governance Documents”.