Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	4.2%	5.2%
Adjusted beta	0.62	0.71

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.8%	7.9%

Tax rate	26.8%	27.0%
Debt/Equity ratio	0.08	0.08
Cost of debt	5.0%	5.0%

After-tax WACC	5.6%	7.6%


Selected WACC	6.6%

BOCH WACC - Detailed calculations of Beta

		Debt/Equity		Unlevered
Peers	Company Name	ratio	Beta	beta

BOCH	Bank of Commerce Holdings	0.08	0.72	0.68
BFIN	BankFinancial Corp	0.13	0.28	0.26
CHMG	Chemung Financial Corp	0.02	0.51	0.51
COFS	ChoiceOne Financial Services Inc	0.42	0.75	0.57
ESXB	Community Bankers Trust Corp	0.02	1.21	1.19
ISBA	Isabella Bank Corp	0.39	0.39	0.3
MNSB	MainStreet Bancshares Inc	0.46	0.03	0.02
NWFL	Norwood Financial Corp	0.23	0.67	0.58
SHBI	Shore Bancshares Inc	0.13	1.03	0.94
SLCT	Select Bancorp Inc	0.04	0.88	0.85

	Low	High

Unlevered beta	0.55	0.62
Relevered beta	0.43	0.57
Adjusted relevered beta	0.62	0.71

BOCH's CAPM model and how its cost of Equity is calculated

The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.

This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.

Here’s how we figure out the cost of equity for BOCH:

cost_of_equity (6.85%) = risk_free_rate (3.45%) + equity_risk_premium (4.70%) * adjusted_beta (0.62) + risk_adjustments (0.25%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.