SAN JOSE, Calif., April 27, 2023 (GLOBE NEWSWIRE)
-- Heritage Commerce Corp (Nasdaq: HTBK), the
holding company (the “Company”) for Heritage Bank of Commerce (the
“Bank”), today announced first quarter 2023 net income increased
47% to $18.9 million, or $0.31 per average diluted common share,
compared to $12.9 million, or $0.21 per average diluted common
share, for the first quarter of 2022, and decreased (9%) from $20.8
million, or $0.34 per average diluted common share, for the fourth
quarter of 2022. All results are unaudited.
“We delivered record first quarter earnings and the second best
quarterly results in the Company’s history,” said Clay Jones,
President and Chief Executive Officer. “First quarter earnings have
been typically impacted by higher payroll taxes and employee
benefits, due to the seasonal peak of these expenses. Profits
increased 47% over the first quarter a year ago supported by strong
year-over-year growth in net interest income and noninterest
income, higher net interest margin and improved efficiency ratio.
Total deposits increased by $54.9 million from the linked quarter
to $4.445 billion at March 31, 2023. Noninterest-bearing deposits
shifted during the quarter to the Bank's interest-bearing deposits,
primarily due to the acceleration of recent rate hikes by the
Federal Reserve Bank, prompting customers to seek higher yields.”
As a result, there was a substantial increase in the Bank’s
interest-bearing deposits and Insured Cash Sweep (“ICS”) deposits.
“With a solid earnings performance, a large core deposit base and
excellent credit quality, we believe we have a solid foundation
to accommodate our clients lending and deposit needs,” stated
Mr. Jones.
“Both the Company and the Bank remain in a strong financial
position. Our capital levels and liquidity position are healthy,
and the Bank has experienced stable deposit trends. Our prudent
approach to risk management has enabled us to navigate recent
market volatility in the financial industry,” Mr. Jones continued.
Mr. Jones expressed gratitude to the Bank's clients for their
continued support and emphasized that the banking team is dedicated
to meeting their needs.
“Our credit quality remains strong. Over our nearly 30 year
history, the Bank has consistently taken a prudent approach to real
estate underwriting across all product types, through many economic
cycles. We believe our conservative credit standards, along with
our continuous stress testing of each borrower for maturity dates,
lease maturities, occupancy, interest rates and liquidity capacity
will prove our loan portfolio is well positioned to successfully
weather economic volatility.” The Company recorded a $32,000
provision for credit losses on loans for the first quarter of 2023.
The allowance for credit losses on loans was $47.3 million, and
increased to 1.45% of total loans, at March 31, 2023, compared to
1.41% of total loans from the year ago quarter, and 1.44% of total
loans at December 31, 2022.
“Complementing our stellar performance this quarter, we are very
proud to have recently ranked 21st nationally for the
best performing Community Bank by S&P Market Intelligence,”
said Mr. Jones. “Criteria for the ranking included a gross loans
and leases-to-total assets ratio of at least 33% and a leverage
ratio of at least 5%. Based on the selected criteria, 196 banks and
thrifts were eligible for ranking.” [Source S&P
Capital IQ]
Current Financial Condition and Liquidity
Position
In light of current industry developments, the following are
important factors in understanding our current financial condition
and liquidity position:
Liquidity and Lines of Credit:
- The following table shows our liquidity, available lines of
credit and the amounts outstanding at March 31, 2023:
|
|
|
|
|
|
|
|
|
|
|
| LIQUIDITY AND LINES OF
CREDIT |
|
Total
Available
|
|
Outstanding
Lines of
Credit
|
|
Remaining
Available
|
|
(in $000’s, unaudited) |
|
|
|
| Unpledged investment
securities (at fair value) |
|
$ |
122,483 |
|
$ |
— |
|
$ |
122,483 |
| Off-balance sheet
deposits |
|
|
132,987 |
|
|
— |
|
|
132,987 |
| Excess funds at the Federal
Reserve Bank ("FRB") |
|
|
695,400 |
|
|
— |
|
|
695,400 |
| FRB discount window |
|
|
1,231,874 |
|
|
150,000 |
(1) |
|
1,081,874 |
| Federal Home Loan Bank
("FHLB") Advances |
|
|
789,909 |
|
|
150,000 |
(1) |
|
639,909 |
| Federal funds purchase
arrangements |
|
|
80,000 |
|
|
— |
|
|
80,000 |
| Holding company line of
credit |
|
|
20,000 |
|
|
— |
|
|
20,000 |
|
Total |
|
$ |
3,072,653 |
|
$ |
300,000 |
|
$ |
2,772,653 |
|
______________________ |
|
(1) |
Both the FRB and the FHLB lines of credit were repaid in full on
April 20, 2023. |
|
______________________ |
- The Company’s total liquidity and borrowing capacity was $3.073
billion, of which $2.773 billion was remaining available at March
31, 2023.
- The remaining available liquidity and borrowing capacity of
$2.773 billion was 62% of total deposits and approximately 110% of
estimated uninsured deposits at March 31, 2023.
- During the first quarter of 2023, the Bank increased its credit
line availability from the FRB and the FHLB by $839.5 million to
$2.022 billion at March 31, 2023 from December 31, 2022.
- The Company borrowed $150.0 million on its line of credit with
the FRB, and another $150.0 million on its line of credit with the
FHLB during the first quarter of 2023, and both lines of credit
were repaid in full on April 20, 2023. These short-term borrowings
provided instant liquidity during an uncertain time and allowed the
Company to test the lines for future contingency planning
purposes.
- The loan to deposit ratio was 73.39% at March 31, 2023,
compared to 75.14% at December 31, 2022.
Deposits:
- Total deposits increased $54.9 million, or 1%, to $4.445
billion at March 31, 2023 from December 31, 2022.
- ICS/Certificate of Deposit Account Registry Service (“CDARS”)
deposits increased $273.7 million, or 901%, to $304.1 million at
March 31, 2023 from $30.4 million at December 31, 2022, which
included $128.0 million of off-balance sheet relationship-based
client deposits brought onto the balance sheet, and an increase in
client deposits of $145.8 million during the first quarter of
2023.
- Noninterest-bearing demand deposits decreased ($267.6) million,
or (15%), to $1.469 billion at March 31, 2023 from December 31,
2022, primarily due to clients moving noninterest-bearing deposits
to the Bank’s interest-bearing and ICS deposits.
- The Company had 24,103 deposits accounts at March 31, 2023,
with an average balance of $184,000.
- Deposits from the top 100 client relationships totaled $2.201
billion, representing 50% of total deposits, with an average
account size of $445,000, representing 21% of the total number of
accounts at March 31, 2023.
Investment Securities:
- Investment securities totaled $1.190 billion at March 31, 2023,
of which $491.8 million were in the securities available-for-sale
portfolio (at fair value), and $698.2 million were in the
securities held-to-maturity portfolio (at amortized cost, net of
allowance for credit losses of $14,000).
- The weighted average life of the investment securities
portfolio was 4.82 years and the modified duration was 4.04 years
at March 31, 2023.
Loans:
- Loans, excluding loans held-for-sale, decreased ($36.6)
million, or (1%) to $3.3 billion at March 31, 2023 from December
31, 2022.
- Commercial real estate (“CRE”) loans totaled $1.687 billion at
March 31, 2023, which included 36% of owner occupied loans and 64%
of investor and other CRE loans.
- The average loan size for all CRE loans was $1.6 million, and
the average loan size for office CRE loans was also $1.6
million.
- The Company has personal guaranties on 90% of its CRE
portfolio, while 10% are unguaranteed. A substantial portion of the
unguaranteed CRE loans were made to credit-worthy non-profit
organizations.
- Office exposure in the CRE portfolio totaled $383 million,
including 30 loans totaling approximately $70 million, in San Jose,
19 loans totaling approximately $28 million, in San Francisco, and
5 loans totaling approximately $10 million, in Oakland, at March
31, 2023.
- Of the $383 million of CRE loans with office exposure,
approximately $29 million, or 8%, are situated in the Bay Area
downtown business districts of San Jose and San Francisco, with an
average balance of $2.2 million.
- At March 31, 2023, the weighted average loan-to-value and
debt-service coverage for the entire non-owner occupied office
portfolio were 43.2% and 2.09 times, respectively. For the ten
non-owner occupied office loans in the City of San Francisco at
March 31, 2023, the weighted average loan-to-value and debt-service
coverage were 28.5% and 3.41 times, respectively.
- The average vacancy level for the San Francisco CRE loans was
5.8%, of which the vast majority are single-tenant small spaces in
office buildings situated outside of downtown.
First Quarter Ended March 31,
2023
Operating Results, Balance Sheet Review, Capital
Management, and Credit Quality
(as of, or for the periods ended March 31, 2023,
compared to March 31, 2022, and December 31, 2022, except as
noted):
Operating Results:
- Diluted earnings per share were
$0.31 for the first quarter of 2023, compared to $0.21 for the
first quarter of 2022, and $0.34 for the fourth quarter of
2022.
- The following table indicates the
ratios for the return on average tangible assets and the return on
average tangible common equity for the periods indicated:
| |
|
|
|
|
|
|
|
|
|
| |
|
For the Quarter Ended: |
| |
|
March 31, |
|
December 31, |
|
March 31, |
|
(unaudited) |
|
2023 |
|
2022 |
|
2022 |
|
Return on average tangible assets |
|
1.52 |
% |
|
|
1.59 |
% |
|
|
0.99 |
% |
|
| Return on average tangible
common equity |
|
16.71 |
% |
|
|
18.89 |
% |
|
|
12.47 |
% |
|
- Net interest income, before provision for credit losses on
loans, increased 29% to $49.3 million for the first quarter of
2023, compared to $38.2 million for the first quarter of 2022. The
fully tax equivalent (“FTE”) net interest margin increased 104
basis points to 4.09% for the first quarter of 2023, from 3.05% for
the first quarter of 2022, primarily due to increases in the prime
rate and the rate on overnight funds, and a shift in the mix of
earning assets into higher yielding loans and investment
securities, partially offset by lower interest and fees on Small
Business Administration (“SBA”) Paycheck Protection Program (“PPP”)
loans, lower prepayment fees, a decrease in the accretion of the
loan purchase discount into interest income from acquired loans, a
higher cost of funds, and an increase in short-term borrowings.
- Net interest income, before provision for credit losses on
loans, decreased (5%) to $49.3 million for the first quarter of
2023, compared to $51.7 million for the fourth quarter of 2022. The
FTE net interest margin decreased 1 basis point to 4.09% for the
first quarter of 2023 from 4.10% for the fourth quarter of 2022,
primarily due to a higher cost of funds, a decrease in the average
balances of noninterest bearing demand deposits, and an increase in
short-term borrowings, partially offset by increases in the prime
rate and higher average yields on overnight funds, and an increase
in the accretion of the loan purchase discount into interest income
from acquired loans.
- The Company reviewed beta
assumptions for non-maturing interest-bearing deposit accounts as
of March 31, 2023, and increased the beta assumptions for the
upward shock scenarios. The following table, as of March 31, 2023,
sets forth the estimated changes in the Company’s annual net
interest income that would result from an instantaneous shift in
interest rates from the base rate:
| |
|
|
|
|
|
|
| |
|
Increase/(Decrease) in |
|
| |
|
Estimated Net |
|
| |
|
Interest Income(1) |
|
| CHANGE IN INTEREST
RATES (basis points) |
|
Amount |
|
Percent |
|
|
(in $000's, unaudited) |
|
|
|
|
|
|
|
+400 |
|
$ |
14,603 |
|
|
7.1 |
|
% |
| +300 |
|
$ |
10,917 |
|
|
5.3 |
|
% |
| +200 |
|
$ |
7,254 |
|
|
3.5 |
|
% |
| +100 |
|
$ |
3,618 |
|
|
1.8 |
|
% |
|
0 |
|
|
— |
|
|
— |
|
|
| −100 |
|
$ |
(6,667 |
) |
|
(3.2 |
) |
% |
| −200 |
|
$ |
(19,823 |
) |
|
(9.6 |
) |
% |
| −300 |
|
$ |
(35,220 |
) |
|
(17.1 |
) |
% |
| −400 |
|
$ |
(50,409 |
) |
|
(24.4 |
) |
% |
__________________
|
(1) |
Computations of prospective effects of hypothetical interest rate
changes are based on numerous assumptions including relative levels
of market interest rates, loan prepayments and deposit decay, and
should not be relied upon as indicative of actual results. Actual
rates paid on deposits may differ from the hypothetical interest
rates modeled due to competitive or market factors, which could
reduce any actual impact on net interest income. |
|
______________________ |
- The following tables present the
average balance of loans outstanding, interest income, and the
average yield for the periods indicated:
- The average yield on the total loan
portfolio increased to 5.46% for the first quarter of 2023,
compared to 5.19% for the fourth quarter of 2022, primarily due to
increases in the prime rate, and an increase in the accretion of
the loan purchase discount into interest income from acquired
loans.
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
For the Quarter Ended |
|
|
For the Quarter Ended |
|
| |
|
March 31, 2023 |
|
|
December 31, 2022 |
|
| |
|
Average |
|
Interest |
|
Average |
|
|
Average |
|
Interest |
|
Average |
|
|
(in $000’s, unaudited) |
|
Balance |
|
Income |
|
Yield |
|
|
Balance |
|
Income |
|
Yield |
|
|
Loans, core bank |
|
$ |
2,680,849 |
|
|
$ |
34,827 |
|
5.27 |
% |
|
$ |
2,654,311 |
|
|
$ |
33,594 |
|
5.02 |
% |
| Prepayment fees |
|
|
— |
|
|
|
138 |
|
0.02 |
% |
|
|
— |
|
|
|
123 |
|
0.02 |
% |
| PPP loans |
|
|
832 |
|
|
|
2 |
|
0.97 |
% |
|
|
1,255 |
|
|
|
3 |
|
0.95 |
% |
| PPP fees, net |
|
|
— |
|
|
|
18 |
|
8.77 |
% |
|
|
— |
|
|
|
25 |
|
7.90 |
% |
| Asset-based lending |
|
|
27,550 |
|
|
|
627 |
|
9.23 |
% |
|
|
35,519 |
|
|
|
756 |
|
8.44 |
% |
| Bay View Funding factored
receivables |
|
|
77,755 |
|
|
|
4,001 |
|
20.87 |
% |
|
|
71,789 |
|
|
|
3,696 |
|
20.43 |
% |
| Purchased residential
mortgages |
|
|
487,780 |
|
|
|
3,857 |
|
3.21 |
% |
|
|
485,149 |
|
|
|
3,842 |
|
3.14 |
% |
| Purchased CRE loans |
|
|
7,119 |
|
|
|
120 |
|
6.84 |
% |
|
|
7,307 |
|
|
|
80 |
|
4.34 |
% |
| Loan fair value mark /
accretion |
|
|
(4,360 |
) |
|
|
522 |
|
0.08 |
% |
|
|
(4,774 |
) |
|
|
382 |
|
0.06 |
% |
|
Total loans (includes loans held-for-sale) |
|
$ |
3,277,525 |
|
|
$ |
44,112 |
|
5.46 |
% |
|
$ |
3,250,556 |
|
|
$ |
42,501 |
|
5.19 |
% |
|
|
• |
The average yield on the total loan portfolio increased to 5.46%
for the first quarter of 2023, compared to 4.70% for the first
quarter of 2022, primarily due to increases in the prime rate,
partially offset by lower interest and fees on PPP loans, lower
prepayment fees, a decrease in the accretion of the loan purchase
discount into interest income from acquired loans, and higher
average balances of lower yielding purchased residential
mortgages. |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
For the Quarter Ended |
|
|
For the Quarter Ended |
|
| |
|
March 31, 2023 |
|
|
March 31, 2022 |
|
| |
|
Average |
|
Interest |
|
Average |
|
|
Average |
|
Interest |
|
Average |
|
|
(in $000’s, unaudited) |
|
Balance |
|
Income |
|
Yield |
|
|
Balance |
|
Income |
|
Yield |
|
|
Loans, core bank |
|
$ |
2,680,849 |
|
|
$ |
34,827 |
|
5.27 |
% |
|
$ |
2,483,708 |
|
|
$ |
26,097 |
|
4.26 |
% |
| Prepayment fees |
|
|
— |
|
|
|
138 |
|
0.02 |
% |
|
|
— |
|
|
|
510 |
|
0.08 |
% |
| PPP loans |
|
|
832 |
|
|
|
2 |
|
0.97 |
% |
|
|
60,264 |
|
|
|
146 |
|
0.98 |
% |
| PPP fees, net |
|
|
— |
|
|
|
18 |
|
8.77 |
% |
|
|
— |
|
|
|
1,346 |
|
9.06 |
% |
| Asset-based lending |
|
|
27,550 |
|
|
|
627 |
|
9.23 |
% |
|
|
69,617 |
|
|
|
950 |
|
5.53 |
% |
| Bay View Funding factored
receivables |
|
|
77,755 |
|
|
|
4,001 |
|
20.87 |
% |
|
|
57,761 |
|
|
|
2,793 |
|
19.61 |
% |
| Purchased residential
mortgages |
|
|
487,780 |
|
|
|
3,857 |
|
3.21 |
% |
|
|
355,626 |
|
|
|
2,428 |
|
2.77 |
% |
| Purchased CRE loans |
|
|
7,119 |
|
|
|
120 |
|
6.84 |
% |
|
|
8,514 |
|
|
|
77 |
|
3.67 |
% |
| Loan fair value mark /
accretion |
|
|
(4,360 |
) |
|
|
522 |
|
0.08 |
% |
|
|
(6,901 |
) |
|
|
754 |
|
0.12 |
% |
|
Total loans (includes loans held-for-sale) |
|
$ |
3,277,525 |
|
|
$ |
44,112 |
|
5.46 |
% |
|
$ |
3,028,589 |
|
|
$ |
35,101 |
|
4.70 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
• |
In
aggregate, the remaining net purchase discount on total loans
acquired was $4.1 million at March 31, 2023. |
- The following table presents the
average balance of deposits and interest-bearing liabilities,
interest expense, and the average rate for the periods
indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
For the Quarter Ended |
|
|
For the Quarter Ended |
|
| |
|
March 31, 2023 |
|
|
December 31, 2022 |
|
| |
|
Average |
|
Interest |
|
Average |
|
|
Average |
|
Interest |
|
Average |
|
|
(in $000’s, unaudited) |
|
Balance |
|
Expense |
|
Rate |
|
|
Balance |
|
Expense |
|
Rate |
|
| Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, noninterest-bearing |
|
$ |
1,667,260 |
|
$ |
— |
|
N/A |
|
|
$ |
1,851,003 |
|
$ |
— |
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, interest-bearing |
|
|
1,217,731 |
|
|
1,476 |
|
0.49 |
% |
|
|
1,164,378 |
|
|
945 |
|
0.32 |
% |
|
Savings and money market |
|
|
1,285,173 |
|
|
3,489 |
|
1.10 |
% |
|
|
1,424,964 |
|
|
1,694 |
|
0.47 |
% |
|
Time deposits - under $100 |
|
|
12,280 |
|
|
10 |
|
0.33 |
% |
|
|
12,157 |
|
|
7 |
|
0.23 |
% |
|
Time deposits - $100 and over |
|
|
163,047 |
|
|
845 |
|
2.10 |
% |
|
|
120,246 |
|
|
268 |
|
0.88 |
% |
|
ICS/CDARS - interest-bearing demand, money market |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and time deposits |
|
|
70,461 |
|
|
81 |
|
0.47 |
% |
|
|
27,785 |
|
|
1 |
|
0.01 |
% |
|
Total interest-bearing deposits |
|
|
2,748,692 |
|
|
5,901 |
|
0.87 |
% |
|
|
2,749,530 |
|
|
2,915 |
|
0.42 |
% |
|
Total deposits |
|
|
4,415,952 |
|
|
5,901 |
|
0.54 |
% |
|
|
4,600,533 |
|
|
2,915 |
|
0.25 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Short-term borrowings |
|
|
46,677 |
|
|
578 |
|
5.02 |
% |
|
|
24 |
|
|
— |
|
— |
% |
| Subordinated debt, net of
issuance costs |
|
|
39,363 |
|
|
537 |
|
5.53 |
% |
|
|
39,326 |
|
|
538 |
|
5.43 |
% |
|
Total interest-bearing liabilities |
|
|
2,834,732 |
|
|
7,016 |
|
1.00 |
% |
|
|
2,788,880 |
|
|
3,453 |
|
0.49 |
% |
|
Total interest-bearing liabilities and demand, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
noninterest-bearing / cost of funds |
|
$ |
4,501,992 |
|
$ |
7,016 |
|
0.63 |
% |
|
$ |
4,639,883 |
|
$ |
3,453 |
|
0.30 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
• |
The average cost of total deposits increased to 0.54% for the first
quarter of 2023, compared to 0.25% for the fourth quarter of 2022.
The average cost of funds increased to 0.63% for the first quarter
of 2023, compared to 0.30% for the fourth quarter of 2022. The
average cost of deposits was 0.10% and the average cost of funds
was 0.14% for the first quarter of 2022. |
- During the first quarter of 2023,
there was a provision for credit losses on loans of $32,000,
compared to a ($567,000) recapture of provision for credit losses
on loans for the first quarter of 2022, and a provision for credit
losses on loans of $508,000 for the fourth quarter of 2022.
- Total noninterest income increased 12% to $2.8 million for the
first quarter of 2023, compared to $2.5 million for the first
quarter of 2022, primarily due to higher service charges and fees
on deposit accounts. Total noninterest income remained relatively
flat at $2.8 million for both the first quarter of 2023 and the
fourth quarter of 2022.
- Total noninterest expense for the first quarter of 2023
increased to $25.4 million, compared to $23.3 million for the first
quarter of 2022, primarily due to higher payroll taxes and employee
benefits, higher professional fees, and higher insurance and
information technology related expenses included in other
noninterest expense during the first quarter of 2023. Total
noninterest expense for the first quarter of 2023 increased to
$25.4 million, compared to $24.5 million for the fourth quarter of
2022, primarily due to an increase of $1.3 million for 401(k)
employer contribution, vacation, and payroll taxes in the first
quarter of 2023, consistent with the cyclical nature of those
expenses.
- Full time equivalent employees were 339 at March 31, 2023, and
325 at March 31, 2022, and 340 at December 31, 2022.
- The efficiency ratio improved to 48.83% for the first quarter
of 2023, compared to 57.16% for the first quarter of 2022,
primarily due to an increase in net interest income. The efficiency
ratio was 44.98% for the fourth quarter of 2022.
- Income tax expense was $7.7 million for the first quarter of
2023, compared to $5.1 million for the first quarter of 2022, and
$8.7 million for the fourth quarter of 2022. The effective tax rate
for the first quarter of 2023 was 28.9%, compared to 28.5% for the
first quarter of 2022, and 29.5% for the fourth quarter of
2022.
Balance Sheet Review, Capital Management and Credit
Quality:
- Total assets increased 2% to $5.537 billion at March 31, 2023,
compared to $5.427 billion at March 31, 2022, and increased 7% from
$5.158 billion at December 31, 2022.
- The following table shows the balances of securities
available-for-sale, at fair value, and the related pre-tax
unrealized (loss) for the periods indicated:
| |
|
|
|
|
|
|
|
|
|
| SECURITIES
AVAILABLE-FOR-SALE |
|
March 31, |
|
December 31, |
|
March 31, |
|
(in $000’s, unaudited) |
|
2023 |
|
2022 |
|
2022 |
| Balance (at fair value): |
|
|
|
|
|
|
|
|
|
|
U.S. Treasury |
|
$ |
422,903 |
|
|
$ |
418,474 |
|
|
$ |
21,564 |
|
|
Agency mortgage-backed securities |
|
|
68,848 |
|
|
|
71,122 |
|
|
|
89,653 |
|
|
Total |
|
$ |
491,751 |
|
|
$ |
489,596 |
|
|
$ |
111,217 |
|
|
|
|
|
|
|
|
|
|
|
|
| Pre-tax unrealized
(loss): |
|
|
|
|
|
|
|
|
|
|
U.S. Treasury |
|
$ |
(7,510 |
) |
|
$ |
(10,323 |
) |
|
$ |
(93 |
) |
|
Agency mortgage-backed securities |
|
|
(4,969 |
) |
|
|
(5,794 |
) |
|
|
(1,406 |
) |
|
Total |
|
$ |
(12,479 |
) |
|
$ |
(16,117 |
) |
|
$ |
(1,499 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
• |
The pre-tax unrealized loss on the securities available-for-sale
portfolio was $12.5 million, or $8.9 million net of taxes, which
was 1% of total shareholders’ equity at March 31, 2023. |
- The following table shows the
balances of securities held-to-maturity, at amortized cost, and the
related pre-tax unrealized (loss) gain and allowance for credit
losses for the periods indicated:
| |
|
|
|
|
|
|
|
|
|
| SECURITIES
HELD-TO-MATURITY |
|
March 31, |
|
December 31, |
|
March 31, |
|
(in $000’s, unaudited) |
|
2023 |
|
2022 |
|
2022 |
| Balance (at amortized
cost): |
|
|
|
|
|
|
|
|
|
|
Agency mortgage-backed securities |
|
$ |
663,481 |
|
|
$ |
677,381 |
|
|
$ |
696,161 |
|
|
Municipals — exempt from Federal tax |
|
|
34,764 |
|
|
|
37,623 |
|
|
|
40,701 |
|
|
Total |
|
$ |
698,245 |
|
|
$ |
715,004 |
|
|
$ |
736,862 |
|
|
|
|
|
|
|
|
|
|
|
|
| Pre-tax unrealized (loss)
gain: |
|
|
|
|
|
|
|
|
|
|
Agency mortgage-backed securities |
|
$ |
(89,962 |
) |
|
$ |
(99,742 |
) |
|
$ |
(46,226 |
) |
|
Municipals — exempt from Federal tax |
|
|
(297 |
) |
|
|
(810 |
) |
|
|
148 |
|
|
Total |
|
$ |
(90,259 |
) |
|
$ |
(100,552 |
) |
|
$ |
(46,078 |
) |
| |
|
|
|
|
|
|
|
|
|
| Allowance for credit losses on
municipal securities |
|
$ |
(14 |
) |
|
$ |
(14 |
) |
|
$ |
(39 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
• |
The pre-tax unrealized loss on the securities held-to-maturity
portfolio was $90.3 million at March 31, 2023, or $64.5 million net
of taxes, which was 10% of total shareholders’ equity at March 31,
2023. |
- The unrealized losses in both the available-for-sale and
held-to-maturity portfolios were due to higher interest rates at
March 31, 2023 compared to when the securities were purchased. The
issuers are of high credit quality and all principal amounts are
expected to be repaid when the securities mature. The fair value is
expected to recover as the securities approach their maturity date
and/or market rates decline.
- The loan portfolio remains
well-diversified as reflected in the following table which
summarizes the distribution of loans, excluding loans
held-for-sale, and the percentage of distribution in each category
for the periods indicated:
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| LOANS |
|
March 31, 2023 |
|
|
December 31, 2022 |
|
|
March 31, 2022 |
|
|
(in $000’s, unaudited) |
|
Balance |
|
% to Total |
|
|
Balance |
|
% to Total |
|
|
Balance |
|
% to Total |
|
|
Commercial |
|
$ |
506,037 |
|
|
16 |
% |
|
$ |
532,749 |
|
|
16 |
% |
|
$ |
568,053 |
|
|
19 |
% |
| PPP Loans(1) |
|
|
565 |
|
|
0 |
% |
|
|
1,166 |
|
|
0 |
% |
|
|
37,393 |
|
|
1 |
% |
| Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CRE - owner occupied |
|
|
603,298 |
|
|
18 |
% |
|
|
614,663 |
|
|
19 |
% |
|
|
597,542 |
|
|
20 |
% |
|
CRE - non-owner occupied |
|
|
1,083,852 |
|
|
33 |
% |
|
|
1,066,368 |
|
|
32 |
% |
|
|
928,220 |
|
|
31 |
% |
|
Land and construction |
|
|
166,408 |
|
|
5 |
% |
|
|
163,577 |
|
|
5 |
% |
|
|
153,323 |
|
|
5 |
% |
|
Home equity |
|
|
124,481 |
|
|
4 |
% |
|
|
120,724 |
|
|
4 |
% |
|
|
111,609 |
|
|
3 |
% |
|
Multifamily |
|
|
231,242 |
|
|
7 |
% |
|
|
244,882 |
|
|
7 |
% |
|
|
221,767 |
|
|
7 |
% |
|
Residential mortgages |
|
|
528,639 |
|
|
16 |
% |
|
|
537,905 |
|
|
16 |
% |
|
|
391,171 |
|
|
13 |
% |
| Consumer and other |
|
|
17,905 |
|
|
1 |
% |
|
|
17,033 |
|
|
1 |
% |
|
|
17,110 |
|
|
1 |
% |
|
Total Loans |
|
|
3,262,427 |
|
|
100 |
% |
|
|
3,299,067 |
|
|
100 |
% |
|
|
3,026,188 |
|
|
100 |
% |
| Deferred loan costs (fees),
net |
|
|
(512 |
) |
|
— |
|
|
|
(517 |
) |
|
— |
|
|
|
(2,124 |
) |
|
— |
|
|
Loans, net of deferred costs and fees |
|
$ |
3,261,915 |
|
|
100 |
% |
|
$ |
3,298,550 |
|
|
100 |
% |
|
$ |
3,024,064 |
|
|
100 |
% |
__________________
|
(1) |
Less than 1% at March 31, 2023 and December 31, 2022. |
|
|
• |
Loans, excluding loans held-for-sale, increased $237.9 million, or
8%, to $3.262 billion at March 31, 2023, compared to $3.024 billion
at March 31, 2022, and decreased ($36.6) million, or (1%), from
$3.299 billion at December 31, 2022. Loans, excluding loans
held-for-sale, PPP loans and residential mortgages, increased
$136.5 million, or 5%, to $2.733 billion at March 31, 2023,
compared to $2.596 billion at March 31, 2022, and decreased ($26.8)
million, or (1%), from $2.760 billion at December 31, 2022. |
|
|
|
|
| |
• |
Commercial and industrial
(“C&I”) line utilization was 31% at both March 31, 2023 and
March 31, 2022, compared to 29% at December 31, 2022. |
| |
|
|
| |
• |
At March 31, 2023, there was 36%
of the CRE loan portfolio secured by owner occupied real estate,
compared to 39% at March 31, 2022, and 37% at December 31,
2022. |
- The following table presents the maturity distribution of the
Company’s loans, excluding loans held-for-sale, as of March 31,
2023. The table shows the distribution of such loans between those
loans with predetermined (fixed) interest rates and those with
variable (floating) interest rates. Floating rates generally
fluctuate with changes in the prime rate as reflected in the
Western Edition of The Wall Street Journal.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Due in |
|
Over One Year But |
|
|
|
|
|
|
|
|
|
| LOAN
MATURITIES |
|
One Year or Less |
|
Less than Five Years |
|
Over Five Years |
|
|
|
|
(in $000’s, unaudited) |
|
Balance |
|
% to Total |
|
Balance |
|
% to Total |
|
Balance |
|
% to Total |
|
Total |
| Loans with variable interest
rates |
|
$ |
409,059 |
|
41 |
% |
|
$ |
286,346 |
|
28 |
% |
|
$ |
312,341 |
|
31 |
% |
|
$ |
1,007,746 |
| Loans with fixed interest
rates |
|
|
65,799 |
|
3 |
% |
|
|
500,734 |
|
22 |
% |
|
|
1,688,148 |
|
75 |
% |
|
|
2,254,681 |
|
Loans |
|
$ |
474,858 |
|
15 |
% |
|
$ |
787,080 |
|
24 |
% |
|
$ |
2,000,489 |
|
61 |
% |
|
$ |
3,262,427 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
• |
At
March 31, 2023, approximately 31% of the Company’s loan portfolio
consisted of floating interest rate loans, compared to 38% at March
31, 2022, and 33% at December 31, 2022. |
- The following table summarizes the allowance for credit losses
on loans (“ACLL”) for the periods indicated:
| |
|
|
|
|
|
|
|
|
|
|
| |
|
At or For the Quarter Ended: |
|
| ALLOWANCE FOR CREDIT
LOSSES ON LOANS |
|
March 31, |
|
December 31, |
|
March 31, |
|
|
(in $000’s, unaudited) |
|
2023 |
|
2022 |
|
2022 |
|
|
Balance at beginning of period |
|
$ |
47,512 |
|
|
$ |
46,921 |
|
|
$ |
43,290 |
|
|
| Charge-offs during the
period |
|
|
(380 |
) |
|
|
(56 |
) |
|
|
(16 |
) |
|
| Recoveries during the
period |
|
|
109 |
|
|
|
139 |
|
|
|
81 |
|
|
|
Net recoveries (charge-offs) during the period |
|
|
(271 |
) |
|
|
83 |
|
|
|
65 |
|
|
| Provision for (recapture of)
credit losses on loans during the period |
|
|
32 |
|
|
|
508 |
|
|
|
(567 |
) |
|
|
Balance at end of period |
|
$ |
47,273 |
|
|
$ |
47,512 |
|
|
$ |
42,788 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total loans, net of deferred
fees |
|
$ |
3,261,915 |
|
|
$ |
3,298,550 |
|
|
$ |
3,024,064 |
|
|
| Total nonperforming loans |
|
$ |
2,240 |
|
|
$ |
2,425 |
|
|
$ |
3,830 |
|
|
| ACLL to total loans |
|
|
1.45 |
|
% |
|
1.44 |
|
% |
|
1.41 |
|
% |
| ACLL to total nonperforming
loans |
|
|
2,110.40 |
|
% |
|
1,959.26 |
|
% |
|
1,117.18 |
|
% |
|
|
• |
The following table shows the drivers of change in ACLL under the
current expected credit losses (“CECL”) methodology for the first
quarter of 2023: |
| |
|
|
|
| DRIVERS OF CHANGE IN
ACLL UNDER CECL |
|
|
|
(in $000’s, unaudited) |
|
|
|
ACLL at December 31, 2022 |
|
$ |
47,512 |
|
| Portfolio changes during the
first quarter of 2023 |
|
|
(160 |
) |
| Qualitative and quantitative
changes during the first |
|
|
|
|
quarter of 2023 including changes in economic forecasts |
|
|
(79 |
) |
|
ACLL at March 31, 2023 |
|
$ |
47,273 |
|
- The following is a breakout of
nonperforming assets (“NPAs”) at the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| NONPERFORMING
ASSETS |
|
March 31, 2023 |
|
|
December 31, 2022 |
|
|
March 31, 2022 |
|
|
(in $000’s, unaudited) |
|
Balance |
|
% of Total |
|
|
Balance |
|
% of Total |
|
|
Balance |
|
% of Total |
|
| Restructured and loans over
90 days past due |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and still accruing |
|
$ |
1,459 |
|
65 |
% |
|
$ |
1,685 |
|
70 |
% |
|
$ |
527 |
|
14 |
% |
| Commercial loans |
|
|
685 |
|
31 |
% |
|
|
642 |
|
26 |
% |
|
|
997 |
|
26 |
% |
| Home equity loans |
|
|
96 |
|
4 |
% |
|
|
98 |
|
4 |
% |
|
|
73 |
|
2 |
% |
| CRE loans |
|
|
— |
|
— |
% |
|
|
— |
|
— |
% |
|
|
2,233 |
|
58 |
% |
|
Total nonperforming assets |
|
$ |
2,240 |
|
100 |
% |
|
$ |
2,425 |
|
100 |
% |
|
$ |
3,830 |
|
100 |
% |
|
|
• |
NPAs totaled $2.2 million, or 0.04% of total assets, at March 31,
2023, compared to $3.8 million, or 0.07% of total assets, at March
31, 2022, and $2.4 million, or 0.05% of total assets, at December
31, 2022.
|
| |
• |
There were no foreclosed assets
on the balance sheet at March 31, 2023, March 31, 2022, or December
31, 2022.
|
| |
• |
Classified assets totaled $26.8
million, or 0.48% of total assets, at March 31, 2023, compared to
$30.6 million, or 0.56% of total assets, at March 31, 2022, and
$14.5 million, or 0.28% of total assets, at December 31, 2022. |
- The following table summarizes the distribution of deposits and
the percentage of distribution in each category for the periods
indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| DEPOSITS |
|
March 31, 2023 |
|
|
December 31, 2022 |
|
|
March 31, 2022 |
|
|
(in $000’s, unaudited) |
|
Balance |
|
% to Total |
|
|
Balance |
|
% to Total |
|
|
Balance |
|
% to Total |
|
| Demand,
noninterest-bearing |
|
$ |
1,469,081 |
|
33 |
% |
|
$ |
1,736,722 |
|
40 |
% |
|
$ |
1,811,943 |
|
38 |
% |
| Demand, interest-bearing |
|
|
1,196,789 |
|
27 |
% |
|
|
1,196,427 |
|
27 |
% |
|
|
1,268,942 |
|
27 |
% |
| Savings and money market |
|
|
1,264,567 |
|
28 |
% |
|
|
1,285,444 |
|
29 |
% |
|
|
1,447,434 |
|
31 |
% |
| Time deposits — under
$250 |
|
|
37,884 |
|
1 |
% |
|
|
32,445 |
|
1 |
% |
|
|
38,417 |
|
1 |
% |
| Time deposits — $250 and
over |
|
|
172,070 |
|
4 |
% |
|
|
108,192 |
|
2 |
% |
|
|
93,161 |
|
2 |
% |
| ICS/CDARS —
interest-bearing demand, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
money market and time deposits |
|
|
304,147 |
|
7 |
% |
|
|
30,374 |
|
1 |
% |
|
|
30,008 |
|
1 |
% |
|
Total deposits |
|
$ |
4,444,538 |
|
100 |
% |
|
$ |
4,389,604 |
|
100 |
% |
|
$ |
4,689,905 |
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
• |
Total deposits increased $54.9 million, or 1%, to $4.445 billion at
March 31, 2023, compared to $4.390 billion at December 31, 2022,
and decreased ($245.4) million, or (5%), from $4.690 billion at
March 31, 2022.
|
| |
• |
ICS/CDARS deposits increased
$273.7 million, or 901%, to $304.1 million at March 31, 2023,
compared to $30.4 million at December 31, 2022, and increased
$274.1 million, or 914%, from $30.0 million at March 31, 2022.
|
| |
• |
Uninsured deposits represented
approximately 57% of total deposits at March 31, 2023. |
- The Company’s
consolidated capital ratios exceeded regulatory guidelines and the
Bank’s capital ratios exceeded regulatory guidelines under the
Basel III prompt corrective action (“PCA”) regulatory guidelines
for a well-capitalized financial institution, and the Basel III
minimum regulatory requirements at March 31, 2023, as reflected in
the following table:
| |
|
Heritage
Commerce
Corp
|
|
Heritage
Bank of
Commerce
|
|
Well-capitalized
Financial
Institution
Basel III
PCA
Regulatory
Guidelines
|
|
Basel III
Minimum
Regulatory
Requirement
(1)
|
| |
|
|
|
|
|
CAPITAL RATIOS (unaudited) |
|
|
|
|
|
Total Capital |
|
15.3 |
% |
|
14.7 |
% |
|
10.0 |
% |
|
10.5 |
% |
| Tier 1 Capital |
|
13.1 |
% |
|
13.5 |
% |
|
8.0 |
% |
|
8.5 |
% |
| Common Equity Tier 1
Capital |
|
13.1 |
% |
|
13.5 |
% |
|
6.5 |
% |
|
7.0 |
% |
| Tier 1 Leverage |
|
9.6 |
% |
|
9.9 |
% |
|
5.0 |
% |
|
4.0 |
% |
__________________
|
(1) |
Basel III minimum regulatory requirements for both the Company and
the Bank include a 2.5% capital conservation buffer, except the
leverage ratio. |
- The following table reflects the
components of accumulated other comprehensive loss, net of taxes,
for the periods indicated:
| |
|
|
|
|
|
|
|
|
|
| ACCUMULATED OTHER
COMPREHENSIVE LOSS |
|
March 31, |
|
December 31, |
|
March 31, |
|
(in $000’s, unaudited) |
|
2023 |
|
|
2022 |
|
|
2022 |
|
|
Unrealized loss on securities available-for-sale |
|
$ |
(8,924 |
) |
|
$ |
(11,506 |
) |
|
$ |
(1,127 |
) |
| Split dollar insurance
contracts liability |
|
|
(3,139 |
) |
|
|
(3,091 |
) |
|
|
(5,491 |
) |
| Supplemental executive
retirement plan liability |
|
|
(2,361 |
) |
|
|
(2,371 |
) |
|
|
(7,588 |
) |
| Unrealized gain on
interest-only strip from SBA loans |
|
|
107 |
|
|
|
112 |
|
|
|
152 |
|
|
Total accumulated other comprehensive loss |
|
$ |
(14,317 |
) |
|
$ |
(16,856 |
) |
|
$ |
(14,054 |
) |
| |
|
|
|
|
|
|
|
|
|
Heritage Commerce Corp, a bank holding company
established in October 1997, is the parent company of Heritage
Bank of Commerce, established in 1994 and headquartered in San
Jose, CA with full-service branches in Danville, Fremont, Gilroy,
Hollister, Livermore, Los Altos, Los Gatos, Morgan Hill, Oakland,
Palo Alto, Pleasanton, Redwood City, San Francisco, San Jose, San
Mateo, San Rafael, and Walnut Creek. Heritage Bank of Commerce is
an SBA Preferred Lender. Bay View Funding, a subsidiary of Heritage
Bank of Commerce, is based in San Jose, CA and provides
business-essential working capital factoring financing to various
industries throughout the United States. For more information,
please visit www.heritagecommercecorp.com.
Forward-Looking Statement
Disclaimer
Certain matters discussed in this press release constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements are subject to various risks and uncertainties that may
be outside our control and our actual results could differ
materially from our projected results. Risks and uncertainties that
could cause our financial performance to differ materially from our
goals, plans, expectations and projections expressed in
forward-looking statements include those set forth in our filings
with the Securities and Exchange Commission (“SEC”), Item 1A
of the Company’s Annual Report on Form 10-K for the year ended
December 31, 2022, and the following: (1) geopolitical and domestic
political developments that can increase levels of political and
economic unpredictability, contribute to rising energy and
commodity prices, and increase the volatility of financial markets;
(2) current and future economic and market conditions in the United
States generally or in the communities we serve, including the
effects of declines in property values and overall slowdowns in
economic growth should these events occur; (3) effects of and
changes in trade, monetary and fiscal policies and laws, including
the interest rate policies of the Federal Open Market Committee of
the Federal Reserve Board; (4) inflationary pressures and changes
in the interest rate environment that reduce our margins and
yields, the fair value of financial instruments or our level of
loan originations, or increase the level of defaults, losses and
prepayments on loans we have made and make, whether held in the
portfolio or in the secondary market; (5) liquidity risks; (6) our
ability to mitigate and manage deposit liabilities in a manner that
balances the need to meet current and expected withdrawals while
investing a sufficient portion of our assets to promote strong
earning capacity; (7) changes in the level of nonperforming assets
and charge offs and other credit quality measures, and their impact
on the adequacy of our allowance for credit losses and our
provision for credit losses; (8) volatility in credit and equity
markets and its effect on the global economy; (9) conditions
relating to the impact of the COVID-19 pandemic, and other
infectious illness outbreaks that may arise in the future, our
customers, employees, businesses, liquidity, financial results and
overall condition including severity and duration of the associated
uncertainties in U.S. and global markets; (10) our ability to
effectively compete with other banks and financial services
companies and the effects of competition in the financial services
industry on our business; (11) our ability to achieve loan growth
and attract deposits in our market area, the impact of the cost of
deposits and our ability to retain deposits; (12) risks associated
with concentrations in real estate related loans; (13) the relative
strength or weakness of the commercial and real estate markets
where our borrowers are located, including related vacancy rates,
and asset and market prices; (14) credit related impairment charges
to our securities portfolio; (15) increased capital requirements
for our continual growth or as imposed by banking regulators, which
may require us to raise capital at a time when capital is not
available on favorable terms or at all; (16) regulatory limits on
Heritage Bank of Commerce’s ability to pay dividends to the
Company; (17) operational issues stemming from, and/or capital
spending necessitated by, the potential need to adapt to industry
changes in information technology systems, on which we are highly
dependent; (18) our inability to attract, recruit, and retain
qualified officers and other personnel could harm our ability to
implement our strategic plan, impair our relationships with
customers and adversely affect our business, results of operations
and growth prospects; (19) possible adjustment of the valuation of
our deferred tax assets; (20) our ability to keep pace with
technological changes, including our ability to identify and
address cyber-security risks such as data security breaches,
“denial of service” attacks, “hacking” and identity theft; (21)
inability of our framework to manage risks associated with our
business, including operational risk and credit risk; (22) risks of
loss of funding of Small Business Administration (“SBA”) or SBA
loan programs, or changes in those programs; (23) compliance with
applicable laws and governmental and regulatory requirements,
including the Dodd-Frank Act and others relating to banking,
consumer protection, securities, accounting and tax matters; (24)
effect of changes in accounting policies and practices, as may be
adopted by the regulatory agencies, as well as the Public Company
Accounting Oversight Board, the Financial Accounting Standards
Board and other accounting standard setters; (25) the expense and
uncertain resolution of litigation matters whether occurring in the
ordinary course of business or otherwise; (26) availability of and
competition for acquisition opportunities; (27) risks resulting
from domestic terrorism; (28) risks resulting from social unrest
and protests; (29) risks of natural disasters (including
earthquakes, fires, and flooding) and other events beyond our
control; and (30) our success in managing the risks involved in the
foregoing factors.
Member FDIC
For additional information,
contact:
Debbie Reuter
EVP,
Corporate Secretary
Direct: (408) 494-4542
Debbie.Reuter@herbank.com
|
CONSOLIDATED INCOME STATEMENTS |
|
For the Quarter Ended: |
|
Percent Change From: |
|
| |
March 31, |
|
December 31, |
|
March 31, |
|
December 31, |
|
March 31, |
|
|
(in $000’s, unaudited) |
|
2023 |
|
2022 |
|
2022 |
|
|
2022 |
|
|
2022 |
|
|
|
Interest income |
|
$ |
56,274 |
|
$ |
55,192 |
|
$ |
39,906 |
|
|
2 |
|
% |
41 |
|
% |
| Interest expense |
|
|
7,016 |
|
|
3,453 |
|
|
1,685 |
|
|
103 |
|
% |
316 |
|
% |
|
Net interest income before provision |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for credit losses on loans |
|
|
49,258 |
|
|
51,739 |
|
|
38,221 |
|
|
(5 |
) |
% |
29 |
|
% |
| Provision for (recapture of)
credit losses on loans |
|
|
32 |
|
|
508 |
|
|
(567 |
) |
|
(94 |
) |
% |
106 |
|
% |
|
Net interest income after provision |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for credit losses on loans |
|
|
49,226 |
|
|
51,231 |
|
|
38,788 |
|
|
(4 |
) |
% |
27 |
|
% |
| Noninterest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service charges and fees on deposit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
accounts |
|
|
1,743 |
|
|
1,801 |
|
|
612 |
|
|
(3 |
) |
% |
185 |
|
% |
|
Increase in cash surrender value of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
life insurance |
|
|
493 |
|
|
481 |
|
|
480 |
|
|
2 |
|
% |
3 |
|
% |
|
Servicing income |
|
|
131 |
|
|
138 |
|
|
106 |
|
|
(5 |
) |
% |
24 |
|
% |
|
Gain on sales of SBA loans |
|
|
76 |
|
|
— |
|
|
156 |
|
|
N/A |
|
(51 |
) |
% |
|
Termination fees |
|
|
11 |
|
|
— |
|
|
— |
|
|
N/A |
|
N/A |
|
|
Gain on warrants |
|
|
— |
|
|
— |
|
|
637 |
|
|
N/A |
|
(100 |
) |
% |
|
Other |
|
|
312 |
|
|
352 |
|
|
469 |
|
|
(11 |
) |
% |
(33 |
) |
% |
|
Total noninterest income |
|
|
2,766 |
|
|
2,772 |
|
|
2,460 |
|
|
0 |
|
% |
12 |
|
% |
| Noninterest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
|
14,809 |
|
|
13,915 |
|
|
13,821 |
|
|
6 |
|
% |
7 |
|
% |
|
Occupancy and equipment |
|
|
2,400 |
|
|
2,510 |
|
|
2,437 |
|
|
(4 |
) |
% |
(2 |
) |
% |
|
Professional fees |
|
|
1,399 |
|
|
1,414 |
|
|
1,080 |
|
|
(1 |
) |
% |
30 |
|
% |
|
Other |
|
|
6,793 |
|
|
6,679 |
|
|
5,914 |
|
|
2 |
|
% |
15 |
|
% |
|
Total noninterest expense |
|
|
25,401 |
|
|
24,518 |
|
|
23,252 |
|
|
4 |
|
% |
9 |
|
% |
| Income before income
taxes |
|
|
26,591 |
|
|
29,485 |
|
|
17,996 |
|
|
(10 |
) |
% |
48 |
|
% |
| Income tax expense |
|
|
7,674 |
|
|
8,686 |
|
|
5,130 |
|
|
(12 |
) |
% |
50 |
|
% |
|
Net income |
|
$ |
18,917 |
|
$ |
20,799 |
|
$ |
12,866 |
|
|
(9 |
) |
% |
47 |
|
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PER COMMON SHARE DATA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic earnings per share |
|
$ |
0.31 |
|
$ |
0.34 |
|
$ |
0.21 |
|
|
(9 |
) |
% |
48 |
|
% |
| Diluted earnings per
share |
|
$ |
0.31 |
|
$ |
0.34 |
|
$ |
0.21 |
|
|
(9 |
) |
% |
48 |
|
% |
| Weighted average shares
outstanding - basic |
|
|
60,908,221 |
|
|
60,788,803 |
|
|
60,393,883 |
|
|
0 |
|
% |
1 |
|
% |
| Weighted average shares
outstanding - diluted |
|
|
61,268,072 |
|
|
61,357,023 |
|
|
60,921,835 |
|
|
0 |
|
% |
1 |
|
% |
| Common shares outstanding at
period-end |
|
|
60,948,607 |
|
|
60,852,723 |
|
|
60,407,846 |
|
|
0 |
|
% |
1 |
|
% |
| Dividend per share |
|
$ |
0.13 |
|
$ |
0.13 |
|
$ |
0.13 |
|
|
0 |
|
% |
0 |
|
% |
| Book value per share |
|
$ |
10.62 |
|
$ |
10.39 |
|
$ |
9.95 |
|
|
2 |
|
% |
7 |
|
% |
| Tangible book value per
share |
|
$ |
7.70 |
|
$ |
7.46 |
|
$ |
6.96 |
|
|
3 |
|
% |
11 |
|
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KEY FINANCIAL RATIOS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Annualized return on average
equity |
|
|
12.03 |
% |
|
13.40 |
% |
|
8.71 |
|
% |
(10 |
) |
% |
38 |
|
% |
| Annualized return on average
tangible |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
common equity |
|
|
16.71 |
% |
|
18.89 |
% |
|
12.47 |
|
% |
(12 |
) |
% |
34 |
|
% |
| Annualized return on average
assets |
|
|
1.47 |
% |
|
1.54 |
% |
|
0.96 |
|
% |
(5 |
) |
% |
53 |
|
% |
| Annualized return on average
tangible assets |
|
|
1.52 |
% |
|
1.59 |
% |
|
0.99 |
|
% |
(4 |
) |
% |
54 |
|
% |
| Net interest margin (FTE) |
|
|
4.09 |
% |
|
4.10 |
% |
|
3.05 |
|
% |
0 |
|
% |
34 |
|
% |
| Efficiency ratio |
|
|
48.83 |
% |
|
44.98 |
% |
|
57.16 |
|
% |
9 |
|
% |
(15 |
) |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE BALANCES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in $000’s, unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average assets |
|
$ |
5,235,506 |
|
$ |
5,360,867 |
|
$ |
5,443,240 |
|
|
(2 |
) |
% |
(4 |
) |
% |
| Average tangible assets |
|
$ |
5,057,063 |
|
$ |
5,181,793 |
|
$ |
5,262,175 |
|
|
(2 |
) |
% |
(4 |
) |
% |
| Average earning assets |
|
$ |
4,895,009 |
|
$ |
5,009,578 |
|
$ |
5,093,851 |
|
|
(2 |
) |
% |
(4 |
) |
% |
| Average loans
held-for-sale |
|
$ |
2,755 |
|
$ |
2,346 |
|
$ |
1,478 |
|
|
17 |
|
% |
86 |
|
% |
| Average total loans |
|
$ |
3,274,770 |
|
$ |
3,248,210 |
|
$ |
3,027,111 |
|
|
1 |
|
% |
8 |
|
% |
| Average deposits |
|
$ |
4,415,952 |
|
$ |
4,600,533 |
|
$ |
4,697,136 |
|
|
(4 |
) |
% |
(6 |
) |
% |
| Average demand deposits -
noninterest-bearing |
|
$ |
1,667,260 |
|
$ |
1,851,003 |
|
$ |
1,857,164 |
|
|
(10 |
) |
% |
(10 |
) |
% |
| Average interest-bearing
deposits |
|
$ |
2,748,692 |
|
$ |
2,749,530 |
|
$ |
2,839,972 |
|
|
0 |
|
% |
(3 |
) |
% |
| Average interest-bearing
liabilities |
|
$ |
2,834,732 |
|
$ |
2,788,880 |
|
$ |
2,879,952 |
|
|
2 |
|
% |
(2 |
) |
% |
| Average equity |
|
$ |
637,597 |
|
$ |
615,941 |
|
$ |
599,355 |
|
|
4 |
|
% |
6 |
|
% |
| Average tangible common
equity |
|
$ |
459,154 |
|
$ |
436,867 |
|
$ |
418,290 |
|
|
5 |
|
% |
10 |
|
% |
| |
|
For the Quarter Ended: |
|
| CONSOLIDATED INCOME
STATEMENTS |
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
|
March 31, |
|
|
(in $000’s, unaudited) |
|
2023 |
|
2022 |
|
2022 |
|
2022 |
|
|
2022 |
|
|
|
Interest income |
|
$ |
56,274 |
|
$ |
55,192 |
|
$ |
50,174 |
|
$ |
43,556 |
|
|
$ |
39,906 |
|
|
| Interest expense |
|
|
7,016 |
|
|
3,453 |
|
|
2,133 |
|
|
1,677 |
|
|
|
1,685 |
|
|
|
Net interest income before provision |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for credit losses on loans |
|
|
49,258 |
|
|
51,739 |
|
|
48,041 |
|
|
41,879 |
|
|
|
38,221 |
|
|
| Provision for (recapture of)
credit losses on loans |
|
|
32 |
|
|
508 |
|
|
1,006 |
|
|
(181 |
) |
|
|
(567 |
) |
|
|
Net interest income after provision |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for credit losses on loans |
|
|
49,226 |
|
|
51,231 |
|
|
47,035 |
|
|
42,060 |
|
|
|
38,788 |
|
|
| Noninterest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service charges and fees on deposit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
accounts |
|
|
1,743 |
|
|
1,801 |
|
|
1,360 |
|
|
867 |
|
|
|
612 |
|
|
|
Increase in cash surrender value of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
life insurance |
|
|
493 |
|
|
481 |
|
|
484 |
|
|
480 |
|
|
|
480 |
|
|
|
Servicing income |
|
|
131 |
|
|
138 |
|
|
125 |
|
|
139 |
|
|
|
106 |
|
|
|
Gain on sales of SBA loans |
|
|
76 |
|
|
— |
|
|
308 |
|
|
27 |
|
|
|
156 |
|
|
|
Termination fees |
|
|
11 |
|
|
— |
|
|
16 |
|
|
45 |
|
|
|
— |
|
|
|
Gain on warrants |
|
|
— |
|
|
— |
|
|
32 |
|
|
— |
|
|
|
637 |
|
|
|
Gain on proceeds from company-owned |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
life insurance |
|
|
— |
|
|
— |
|
|
— |
|
|
27 |
|
|
|
— |
|
|
|
Other |
|
|
312 |
|
|
352 |
|
|
456 |
|
|
513 |
|
|
|
469 |
|
|
|
Total noninterest income |
|
|
2,766 |
|
|
2,772 |
|
|
2,781 |
|
|
2,098 |
|
|
|
2,460 |
|
|
| Noninterest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
|
14,809 |
|
|
13,915 |
|
|
14,119 |
|
|
13,476 |
|
|
|
13,821 |
|
|
|
Occupancy and equipment |
|
|
2,400 |
|
|
2,510 |
|
|
2,415 |
|
|
2,277 |
|
|
|
2,437 |
|
|
|
Professional fees |
|
|
1,399 |
|
|
1,414 |
|
|
1,230 |
|
|
1,291 |
|
|
|
1,080 |
|
|
|
Other |
|
|
6,793 |
|
|
6,679 |
|
|
6,135 |
|
|
6,146 |
|
|
|
5,914 |
|
|
|
Total noninterest expense |
|
|
25,401 |
|
|
24,518 |
|
|
23,899 |
|
|
23,190 |
|
|
|
23,252 |
|
|
| Income before income
taxes |
|
|
26,591 |
|
|
29,485 |
|
|
25,917 |
|
|
20,968 |
|
|
|
17,996 |
|
|
| Income tax expense |
|
|
7,674 |
|
|
8,686 |
|
|
7,848 |
|
|
6,147 |
|
|
|
5,130 |
|
|
|
Net income |
|
$ |
18,917 |
|
$ |
20,799 |
|
$ |
18,069 |
|
$ |
14,821 |
|
|
$ |
12,866 |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PER COMMON SHARE DATA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic earnings per share |
|
$ |
0.31 |
|
$ |
0.34 |
|
$ |
0.30 |
|
$ |
0.24 |
|
|
$ |
0.21 |
|
|
| Diluted earnings per
share |
|
$ |
0.31 |
|
$ |
0.34 |
|
$ |
0.30 |
|
$ |
0.24 |
|
|
$ |
0.21 |
|
|
| Weighted average shares
outstanding - basic |
|
|
60,908,221 |
|
|
60,788,803 |
|
|
60,686,992 |
|
|
60,542,170 |
|
|
|
60,393,883 |
|
|
| Weighted average shares
outstanding - diluted |
|
|
61,268,072 |
|
|
61,357,023 |
|
|
61,123,801 |
|
|
60,969,154 |
|
|
|
60,921,835 |
|
|
| Common shares outstanding at
period-end |
|
|
60,948,607 |
|
|
60,852,723 |
|
|
60,716,794 |
|
|
60,666,794 |
|
|
|
60,407,846 |
|
|
| Dividend per share |
|
$ |
0.13 |
|
$ |
0.13 |
|
$ |
0.13 |
|
$ |
0.13 |
|
|
$ |
0.13 |
|
|
| Book value per share |
|
$ |
10.62 |
|
$ |
10.39 |
|
$ |
10.04 |
|
$ |
10.01 |
|
|
$ |
9.95 |
|
|
| Tangible book value per
share |
|
$ |
7.70 |
|
$ |
7.46 |
|
$ |
7.09 |
|
$ |
7.04 |
|
|
$ |
6.96 |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KEY FINANCIAL RATIOS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Annualized return on average
equity |
|
|
12.03 |
% |
|
13.40 |
% |
|
11.72 |
% |
|
9.86 |
|
% |
|
8.71 |
|
% |
| Annualized return on average
tangible |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
common equity |
|
|
16.71 |
% |
|
18.89 |
% |
|
16.60 |
% |
|
14.06 |
|
% |
|
12.47 |
|
% |
| Annualized return on average
assets |
|
|
1.47 |
% |
|
1.54 |
% |
|
1.31 |
% |
|
1.11 |
|
% |
|
0.96 |
|
% |
| Annualized return on average
tangible assets |
|
|
1.52 |
% |
|
1.59 |
% |
|
1.36 |
% |
|
1.15 |
|
% |
|
0.99 |
|
% |
| Net interest margin (FTE) |
|
|
4.09 |
% |
|
4.10 |
% |
|
3.73 |
% |
|
3.38 |
|
% |
|
3.05 |
|
% |
| Efficiency ratio |
|
|
48.83 |
% |
|
44.98 |
% |
|
47.02 |
% |
|
52.73 |
|
% |
|
57.16 |
|
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE BALANCES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in $000’s, unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average assets |
|
$ |
5,235,506 |
|
$ |
5,360,867 |
|
$ |
5,466,330 |
|
$ |
5,334,636 |
|
|
$ |
5,443,240 |
|
|
| Average tangible assets |
|
$ |
5,057,063 |
|
$ |
5,181,793 |
|
$ |
5,286,591 |
|
$ |
5,154,245 |
|
|
$ |
5,262,175 |
|
|
| Average earning assets |
|
$ |
4,895,009 |
|
$ |
5,009,578 |
|
$ |
5,117,373 |
|
$ |
4,985,611 |
|
|
$ |
5,093,851 |
|
|
| Average loans
held-for-sale |
|
$ |
2,755 |
|
$ |
2,346 |
|
$ |
3,282 |
|
$ |
1,824 |
|
|
$ |
1,478 |
|
|
| Average total loans |
|
$ |
3,274,770 |
|
$ |
3,248,210 |
|
$ |
3,140,705 |
|
$ |
3,048,353 |
|
|
$ |
3,027,111 |
|
|
| Average deposits |
|
$ |
4,415,952 |
|
$ |
4,600,533 |
|
$ |
4,712,044 |
|
$ |
4,579,436 |
|
|
$ |
4,697,136 |
|
|
| Average demand deposits -
noninterest-bearing |
|
$ |
1,667,260 |
|
$ |
1,851,003 |
|
$ |
1,910,748 |
|
$ |
1,836,350 |
|
|
$ |
1,857,164 |
|
|
| Average interest-bearing
deposits |
|
$ |
2,748,692 |
|
$ |
2,749,530 |
|
$ |
2,801,296 |
|
$ |
2,743,086 |
|
|
$ |
2,839,972 |
|
|
| Average interest-bearing
liabilities |
|
$ |
2,834,732 |
|
$ |
2,788,880 |
|
$ |
2,840,611 |
|
$ |
2,791,527 |
|
|
$ |
2,879,952 |
|
|
| Average equity |
|
$ |
637,597 |
|
$ |
615,941 |
|
$ |
611,707 |
|
$ |
603,182 |
|
|
$ |
599,355 |
|
|
| Average tangible common
equity |
|
$ |
459,154 |
|
$ |
436,867 |
|
$ |
431,968 |
|
$ |
422,791 |
|
|
$ |
418,290 |
|
|
| |
|
End of Period: |
|
Percent Change From: |
|
| CONSOLIDATED BALANCE
SHEETS |
|
March 31, |
|
December 31, |
|
March 31, |
|
December 31, |
|
March 31, |
|
|
(in $000’s, unaudited) |
|
2023 |
|
|
2022 |
|
|
2022 |
|
|
2022 |
|
|
2022 |
|
|
| ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
$ |
41,318 |
|
|
$ |
27,595 |
|
|
$ |
29,729 |
|
|
50 |
|
% |
39 |
|
% |
| Other investments and
interest-bearing deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in other financial institutions |
|
|
698,690 |
|
|
|
279,008 |
|
|
|
1,187,436 |
|
|
150 |
|
% |
(41 |
) |
% |
| Securities available-for-sale,
at fair value |
|
|
491,751 |
|
|
|
489,596 |
|
|
|
111,217 |
|
|
0 |
|
% |
342 |
|
% |
| Securities held-to-maturity,
at amortized cost |
|
|
698,231 |
|
|
|
714,990 |
|
|
|
736,823 |
|
|
(2 |
) |
% |
(5 |
) |
% |
| Loans held-for-sale - SBA,
including deferred costs |
|
|
2,792 |
|
|
|
2,456 |
|
|
|
831 |
|
|
14 |
|
% |
236 |
|
% |
| Loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
|
506,037 |
|
|
|
532,749 |
|
|
|
568,053 |
|
|
(5 |
) |
% |
(11 |
) |
% |
|
PPP loans |
|
|
565 |
|
|
|
1,166 |
|
|
|
37,393 |
|
|
(52 |
) |
% |
(98 |
) |
% |
|
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CRE - owner occupied |
|
|
603,298 |
|
|
|
614,663 |
|
|
|
597,542 |
|
|
(2 |
) |
% |
1 |
|
% |
|
CRE - non-owner occupied |
|
|
1,083,852 |
|
|
|
1,066,368 |
|
|
|
928,220 |
|
|
2 |
|
% |
17 |
|
% |
|
Land and construction |
|
|
166,408 |
|
|
|
163,577 |
|
|
|
153,323 |
|
|
2 |
|
% |
9 |
|
% |
|
Home equity |
|
|
124,481 |
|
|
|
120,724 |
|
|
|
111,609 |
|
|
3 |
|
% |
12 |
|
% |
|
Multifamily |
|
|
231,242 |
|
|
|
244,882 |
|
|
|
221,767 |
|
|
(6 |
) |
% |
4 |
|
% |
|
Residential mortgages |
|
|
528,639 |
|
|
|
537,905 |
|
|
|
391,171 |
|
|
(2 |
) |
% |
35 |
|
% |
|
Consumer and other |
|
|
17,905 |
|
|
|
17,033 |
|
|
|
17,110 |
|
|
5 |
|
% |
5 |
|
% |
|
Loans |
|
|
3,262,427 |
|
|
|
3,299,067 |
|
|
|
3,026,188 |
|
|
(1 |
) |
% |
8 |
|
% |
|
Deferred loan fees, net |
|
|
(512 |
) |
|
|
(517 |
) |
|
|
(2,124 |
) |
|
(1 |
) |
% |
(76 |
) |
% |
|
Total loans, net of deferred costs and fees |
|
|
3,261,915 |
|
|
|
3,298,550 |
|
|
|
3,024,064 |
|
|
(1 |
) |
% |
8 |
|
% |
| Allowance for credit losses on
loans |
|
|
(47,273 |
) |
|
|
(47,512 |
) |
|
|
(42,788 |
) |
|
(1 |
) |
% |
10 |
|
% |
|
Loans, net |
|
|
3,214,642 |
|
|
|
3,251,038 |
|
|
|
2,981,276 |
|
|
(1 |
) |
% |
8 |
|
% |
| Company-owned life
insurance |
|
|
79,438 |
|
|
|
78,945 |
|
|
|
78,069 |
|
|
1 |
|
% |
2 |
|
% |
| Premises and equipment,
net |
|
|
9,142 |
|
|
|
9,301 |
|
|
|
9,580 |
|
|
(2 |
) |
% |
(5 |
) |
% |
| Goodwill |
|
|
167,631 |
|
|
|
167,631 |
|
|
|
167,631 |
|
|
0 |
|
% |
0 |
|
% |
| Other intangible assets |
|
|
10,431 |
|
|
|
11,033 |
|
|
|
13,009 |
|
|
(5 |
) |
% |
(20 |
) |
% |
| Accrued interest receivable
and other assets |
|
|
122,474 |
|
|
|
125,987 |
|
|
|
111,797 |
|
|
(3 |
) |
% |
10 |
|
% |
|
Total assets |
|
$ |
5,536,540 |
|
|
$ |
5,157,580 |
|
|
$ |
5,427,398 |
|
|
7 |
|
% |
2 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, noninterest-bearing |
|
$ |
1,469,081 |
|
|
$ |
1,736,722 |
|
|
$ |
1,811,943 |
|
|
(15 |
) |
% |
(19 |
) |
% |
|
Demand, interest-bearing |
|
|
1,196,789 |
|
|
|
1,196,427 |
|
|
|
1,268,942 |
|
|
0 |
|
% |
(6 |
) |
% |
|
Savings and money market |
|
|
1,264,567 |
|
|
|
1,285,444 |
|
|
|
1,447,434 |
|
|
(2 |
) |
% |
(13 |
) |
% |
|
Time deposits - under $250 |
|
|
37,884 |
|
|
|
32,445 |
|
|
|
38,417 |
|
|
17 |
|
% |
(1 |
) |
% |
|
Time deposits - $250 and over |
|
|
172,070 |
|
|
|
108,192 |
|
|
|
93,161 |
|
|
59 |
|
% |
85 |
|
% |
|
ICS/CDARS - interest-bearing demand, money market |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and time deposits |
|
|
304,147 |
|
|
|
30,374 |
|
|
|
30,008 |
|
|
901 |
|
% |
914 |
|
% |
|
Total deposits |
|
|
4,444,538 |
|
|
|
4,389,604 |
|
|
|
4,689,905 |
|
|
1 |
|
% |
(5 |
) |
% |
|
Other short-term borrowings |
|
|
300,000 |
|
|
|
— |
|
|
|
— |
|
|
N/A |
|
N/A |
|
|
Subordinated debt, net of issuance costs |
|
|
39,387 |
|
|
|
39,350 |
|
|
|
39,987 |
|
|
0 |
|
% |
(2 |
) |
% |
|
Accrued interest payable and other liabilities |
|
|
105,407 |
|
|
|
96,170 |
|
|
|
96,450 |
|
|
10 |
|
% |
9 |
|
% |
|
Total liabilities |
|
|
4,889,332 |
|
|
|
4,525,124 |
|
|
|
4,826,342 |
|
|
8 |
|
% |
1 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Shareholders’
Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock |
|
|
504,135 |
|
|
|
502,923 |
|
|
|
498,763 |
|
|
0 |
|
% |
1 |
|
% |
|
Retained earnings |
|
|
157,390 |
|
|
|
146,389 |
|
|
|
116,347 |
|
|
8 |
|
% |
35 |
|
% |
|
Accumulated other comprehensive loss |
|
|
(14,317 |
) |
|
|
(16,856 |
) |
|
|
(14,054 |
) |
|
15 |
|
% |
(2 |
) |
% |
|
Total shareholders' equity |
|
|
647,208 |
|
|
|
632,456 |
|
|
|
601,056 |
|
|
2 |
|
% |
8 |
|
% |
|
Total liabilities and shareholders’ equity |
|
$ |
5,536,540 |
|
|
$ |
5,157,580 |
|
|
$ |
5,427,398 |
|
|
7 |
|
% |
2 |
|
% |
| |
|
End of Period: |
| CONSOLIDATED BALANCE
SHEETS |
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
|
March 31, |
|
(in $000’s, unaudited) |
|
2023 |
|
|
2022 |
|
|
2022 |
|
|
2022 |
|
|
2022 |
|
| ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
$ |
41,318 |
|
|
$ |
27,595 |
|
|
$ |
40,500 |
|
|
$ |
35,764 |
|
|
$ |
29,729 |
|
| Other investments and
interest-bearing deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in other financial institutions |
|
|
698,690 |
|
|
|
279,008 |
|
|
|
641,251 |
|
|
|
840,821 |
|
|
|
1,187,436 |
|
| Securities available-for-sale,
at fair value |
|
|
491,751 |
|
|
|
489,596 |
|
|
|
478,534 |
|
|
|
332,129 |
|
|
|
111,217 |
|
| Securities held-to-maturity,
at amortized cost |
|
|
698,231 |
|
|
|
714,990 |
|
|
|
703,794 |
|
|
|
723,716 |
|
|
|
736,823 |
|
| Loans held-for-sale - SBA,
including deferred costs |
|
|
2,792 |
|
|
|
2,456 |
|
|
|
2,081 |
|
|
|
2,281 |
|
|
|
831 |
|
| Loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
|
506,037 |
|
|
|
532,749 |
|
|
|
541,215 |
|
|
|
523,268 |
|
|
|
568,053 |
|
|
PPP loans |
|
|
565 |
|
|
|
1,166 |
|
|
|
1,614 |
|
|
|
8,153 |
|
|
|
37,393 |
|
|
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CRE - owner occupied |
|
|
603,298 |
|
|
|
614,663 |
|
|
|
612,241 |
|
|
|
597,521 |
|
|
|
597,542 |
|
|
CRE - non-owner occupied |
|
|
1,083,852 |
|
|
|
1,066,368 |
|
|
|
1,023,405 |
|
|
|
993,621 |
|
|
|
928,220 |
|
|
Land and construction |
|
|
166,408 |
|
|
|
163,577 |
|
|
|
167,439 |
|
|
|
155,389 |
|
|
|
153,323 |
|
|
Home equity |
|
|
124,481 |
|
|
|
120,724 |
|
|
|
116,489 |
|
|
|
116,641 |
|
|
|
111,609 |
|
|
Multifamily |
|
|
231,242 |
|
|
|
244,882 |
|
|
|
229,455 |
|
|
|
221,938 |
|
|
|
221,767 |
|
|
Residential mortgages |
|
|
528,639 |
|
|
|
537,905 |
|
|
|
508,839 |
|
|
|
448,958 |
|
|
|
391,171 |
|
|
Consumer and other |
|
|
17,905 |
|
|
|
17,033 |
|
|
|
16,620 |
|
|
|
18,354 |
|
|
|
17,110 |
|
|
Loans |
|
|
3,262,427 |
|
|
|
3,299,067 |
|
|
|
3,217,317 |
|
|
|
3,083,843 |
|
|
|
3,026,188 |
|
|
Deferred loan fees, net |
|
|
(512 |
) |
|
|
(517 |
) |
|
|
(844 |
) |
|
|
(1,391 |
) |
|
|
(2,124 |
) |
|
Total loans, net of deferred fees |
|
|
3,261,915 |
|
|
|
3,298,550 |
|
|
|
3,216,473 |
|
|
|
3,082,452 |
|
|
|
3,024,064 |
|
| Allowance for credit losses on
loans |
|
|
(47,273 |
) |
|
|
(47,512 |
) |
|
|
(46,921 |
) |
|
|
(45,490 |
) |
|
|
(42,788 |
) |
|
Loans, net |
|
|
3,214,642 |
|
|
|
3,251,038 |
|
|
|
3,169,552 |
|
|
|
3,036,962 |
|
|
|
2,981,276 |
|
| Company-owned life
insurance |
|
|
79,438 |
|
|
|
78,945 |
|
|
|
78,456 |
|
|
|
77,972 |
|
|
|
78,069 |
|
| Premises and equipment,
net |
|
|
9,142 |
|
|
|
9,301 |
|
|
|
9,428 |
|
|
|
9,593 |
|
|
|
9,580 |
|
| Goodwill |
|
|
167,631 |
|
|
|
167,631 |
|
|
|
167,631 |
|
|
|
167,631 |
|
|
|
167,631 |
|
| Other intangible assets |
|
|
10,431 |
|
|
|
11,033 |
|
|
|
11,692 |
|
|
|
12,351 |
|
|
|
13,009 |
|
| Accrued interest receivable
and other assets |
|
|
122,474 |
|
|
|
125,987 |
|
|
|
128,343 |
|
|
|
117,621 |
|
|
|
111,797 |
|
|
Total assets |
|
$ |
5,536,540 |
|
|
$ |
5,157,580 |
|
|
$ |
5,431,262 |
|
|
$ |
5,356,841 |
|
|
$ |
5,427,398 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, noninterest-bearing |
|
$ |
1,469,081 |
|
|
$ |
1,736,722 |
|
|
$ |
1,883,574 |
|
|
$ |
1,846,365 |
|
|
$ |
1,811,943 |
|
|
Demand, interest-bearing |
|
|
1,196,789 |
|
|
|
1,196,427 |
|
|
|
1,154,403 |
|
|
|
1,218,538 |
|
|
|
1,268,942 |
|
|
Savings and money market |
|
|
1,264,567 |
|
|
|
1,285,444 |
|
|
|
1,487,400 |
|
|
|
1,387,003 |
|
|
|
1,447,434 |
|
|
Time deposits - under $250 |
|
|
37,884 |
|
|
|
32,445 |
|
|
|
34,728 |
|
|
|
36,691 |
|
|
|
38,417 |
|
|
Time deposits - $250 and over |
|
|
172,070 |
|
|
|
108,192 |
|
|
|
93,263 |
|
|
|
98,760 |
|
|
|
93,161 |
|
|
ICS/CDARS - interest-bearing demand, money market |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and time deposits |
|
|
304,147 |
|
|
|
30,374 |
|
|
|
29,897 |
|
|
|
26,287 |
|
|
|
30,008 |
|
|
Total deposits |
|
|
4,444,538 |
|
|
|
4,389,604 |
|
|
|
4,683,265 |
|
|
|
4,613,644 |
|
|
|
4,689,905 |
|
|
Other short-term borrowings |
|
|
300,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Subordinated debt, net of issuance costs |
|
|
39,387 |
|
|
|
39,350 |
|
|
|
39,312 |
|
|
|
39,274 |
|
|
|
39,987 |
|
|
Accrued interest payable and other liabilities |
|
|
105,407 |
|
|
|
96,170 |
|
|
|
99,168 |
|
|
|
96,699 |
|
|
|
96,450 |
|
|
Total liabilities |
|
|
4,889,332 |
|
|
|
4,525,124 |
|
|
|
4,821,745 |
|
|
|
4,749,617 |
|
|
|
4,826,342 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Shareholders’
Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock |
|
|
504,135 |
|
|
|
502,923 |
|
|
|
501,240 |
|
|
|
499,832 |
|
|
|
498,763 |
|
|
Retained earnings |
|
|
157,390 |
|
|
|
146,389 |
|
|
|
133,489 |
|
|
|
123,310 |
|
|
|
116,347 |
|
|
Accumulated other comprehensive loss |
|
|
(14,317 |
) |
|
|
(16,856 |
) |
|
|
(25,212 |
) |
|
|
(15,918 |
) |
|
|
(14,054 |
) |
|
Total shareholders' equity |
|
|
647,208 |
|
|
|
632,456 |
|
|
|
609,517 |
|
|
|
607,224 |
|
|
|
601,056 |
|
|
Total liabilities and shareholders’
equity |
|
$ |
5,536,540 |
|
|
$ |
5,157,580 |
|
|
$ |
5,431,262 |
|
|
$ |
5,356,841 |
|
|
$ |
5,427,398 |
|
| |
|
At or For the Quarter Ended: |
|
Percent Change From: |
|
| CREDIT QUALITY
DATA |
|
March 31, |
|
December 31, |
|
March 31, |
|
December 31, |
|
March 31, |
|
|
(in $000’s, unaudited) |
|
2023 |
|
2022 |
|
|
2022 |
|
|
2022 |
|
|
2022 |
|
|
|
Nonaccrual loans - held-for-investment |
|
$ |
781 |
|
$ |
740 |
|
|
$ |
3,303 |
|
|
6 |
|
% |
(76 |
) |
% |
| Restructured and loans over 90
days past due |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and still accruing |
|
|
1,459 |
|
|
1,685 |
|
|
|
527 |
|
|
(13 |
) |
% |
177 |
|
% |
|
Total nonperforming loans |
|
|
2,240 |
|
|
2,425 |
|
|
|
3,830 |
|
|
(8 |
) |
% |
(42 |
) |
% |
| Foreclosed assets |
|
|
— |
|
|
— |
|
|
|
— |
|
|
N/A |
|
N/A |
|
|
Total nonperforming assets |
|
$ |
2,240 |
|
$ |
2,425 |
|
|
$ |
3,830 |
|
|
(8 |
) |
% |
(42 |
) |
% |
| Other restructured loans still
accruing |
|
$ |
— |
|
$ |
171 |
|
|
$ |
125 |
|
|
(100 |
) |
% |
(100 |
) |
% |
| Net charge-offs (recoveries)
during the quarter |
|
$ |
271 |
|
$ |
(83 |
) |
|
$ |
(65 |
) |
|
427 |
|
% |
517 |
|
% |
| Provision for (recapture of)
credit losses on loans during the quarter |
|
$ |
32 |
|
$ |
508 |
|
|
$ |
(567 |
) |
|
(94 |
) |
% |
106 |
|
% |
| Allowance for credit losses on
loans |
|
$ |
47,273 |
|
$ |
47,512 |
|
|
$ |
42,788 |
|
|
(1 |
) |
% |
10 |
|
% |
| Classified assets |
|
$ |
26,800 |
|
$ |
14,544 |
|
|
$ |
30,579 |
|
|
84 |
|
% |
(12 |
) |
% |
| Allowance for credit losses on
loans to total loans |
|
|
1.45 |
% |
|
1.44 |
|
% |
|
1.41 |
|
% |
1 |
|
% |
3 |
|
% |
| Allowance for credit losses on
loans to total nonperforming loans |
|
|
2,110.40 |
% |
|
1,959.26 |
|
% |
|
1,117.18 |
|
% |
8 |
|
% |
89 |
|
% |
| Nonperforming assets to total
assets |
|
|
0.04 |
% |
|
0.05 |
|
% |
|
0.07 |
|
% |
(20 |
) |
% |
(43 |
) |
% |
| Nonperforming loans to total
loans |
|
|
0.07 |
% |
|
0.07 |
|
% |
|
0.13 |
|
% |
0 |
|
% |
(46 |
) |
% |
| Classified assets to Heritage
Commerce Corp |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 capital plus allowance for credit losses on loans |
|
|
5 |
% |
|
3 |
|
% |
|
6 |
|
% |
67 |
|
% |
(17 |
) |
% |
| Classified assets to Heritage
Bank of Commerce |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 capital plus allowance for credit losses on loans |
|
|
5 |
% |
|
3 |
|
% |
|
6 |
|
% |
67 |
|
% |
(17 |
) |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| OTHER PERIOD-END
STATISTICS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in $000’s, unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Heritage Commerce
Corp: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible common equity (1) |
|
$ |
469,146 |
|
$ |
453,792 |
|
|
$ |
420,416 |
|
|
3 |
|
% |
12 |
|
% |
|
Shareholders’ equity / total assets |
|
|
11.69 |
% |
|
12.26 |
|
% |
|
11.07 |
|
% |
(5 |
) |
% |
6 |
|
% |
|
Tangible common equity / tangible assets (2) |
|
|
8.76 |
% |
|
9.11 |
|
% |
|
8.01 |
|
% |
(4 |
) |
% |
9 |
|
% |
|
Loan to deposit ratio |
|
|
73.39 |
% |
|
75.14 |
|
% |
|
64.48 |
|
% |
(2 |
) |
% |
14 |
|
% |
|
Noninterest-bearing deposits / total deposits |
|
|
33.05 |
% |
|
39.56 |
|
% |
|
38.63 |
|
% |
(16 |
) |
% |
(14 |
) |
% |
|
Total capital ratio |
|
|
15.3 |
% |
|
14.8 |
|
% |
|
14.6 |
|
% |
3 |
|
% |
5 |
|
% |
|
Tier 1 capital ratio |
|
|
13.1 |
% |
|
12.7 |
|
% |
|
12.4 |
|
% |
3 |
|
% |
6 |
|
% |
|
Common Equity Tier 1 capital ratio |
|
|
13.1 |
% |
|
12.7 |
|
% |
|
12.4 |
|
% |
3 |
|
% |
6 |
|
% |
|
Tier 1 leverage ratio |
|
|
9.6 |
% |
|
9.2 |
|
% |
|
8.3 |
|
% |
4 |
|
% |
16 |
|
% |
| Heritage Bank of
Commerce: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capital ratio |
|
|
14.7 |
% |
|
14.2 |
|
% |
|
13.9 |
|
% |
4 |
|
% |
6 |
|
% |
|
Tier 1 capital ratio |
|
|
13.5 |
% |
|
13.2 |
|
% |
|
12.9 |
|
% |
2 |
|
% |
5 |
|
% |
|
Common Equity Tier 1 capital ratio |
|
|
13.5 |
% |
|
13.2 |
|
% |
|
12.9 |
|
% |
2 |
|
% |
5 |
|
% |
|
Tier 1 leverage ratio |
|
|
9.9 |
% |
|
9.5 |
|
% |
|
8.7 |
|
% |
4 |
|
% |
14 |
|
% |
__________________
|
(1) |
Represents shareholders' equity minus goodwill and other intangible
assets |
| (2) |
Represents shareholders' equity
minus goodwill and other intangible assets divided by total assets
minus goodwill and other intangible assets |
| |
|
At or For the Quarter Ended: |
|
| CREDIT QUALITY
DATA |
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
|
March 31, |
|
|
(in $000’s, unaudited) |
|
2023 |
|
2022 |
|
|
2022 |
|
|
2022 |
|
|
2022 |
|
|
|
Nonaccrual loans - held-for-investment |
|
$ |
781 |
|
$ |
740 |
|
|
$ |
491 |
|
|
$ |
1,734 |
|
|
$ |
3,303 |
|
|
| Restructured and loans over 90
days past due |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and still accruing |
|
|
1,459 |
|
|
1,685 |
|
|
|
545 |
|
|
|
981 |
|
|
|
527 |
|
|
|
Total nonperforming loans |
|
|
2,240 |
|
|
2,425 |
|
|
|
1,036 |
|
|
|
2,715 |
|
|
|
3,830 |
|
|
| Foreclosed assets |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
Total nonperforming assets |
|
$ |
2,240 |
|
$ |
2,425 |
|
|
$ |
1,036 |
|
|
$ |
2,715 |
|
|
$ |
3,830 |
|
|
| Other restructured loans still
accruing |
|
$ |
— |
|
$ |
171 |
|
|
$ |
93 |
|
|
$ |
113 |
|
|
$ |
125 |
|
|
| Net charge-offs (recoveries)
during the quarter |
|
$ |
271 |
|
$ |
(83 |
) |
|
$ |
(425 |
) |
|
$ |
(2,883 |
) |
|
$ |
(65 |
) |
|
| Provision for (recapture of)
credit losses on loans during the quarter |
|
$ |
32 |
|
$ |
508 |
|
|
$ |
1,006 |
|
|
$ |
(181 |
) |
|
$ |
(567 |
) |
|
| Allowance for credit losses on
loans |
|
$ |
47,273 |
|
$ |
47,512 |
|
|
$ |
46,921 |
|
|
$ |
45,490 |
|
|
$ |
42,788 |
|
|
| Classified assets |
|
$ |
26,800 |
|
$ |
14,544 |
|
|
$ |
28,570 |
|
|
$ |
28,929 |
|
|
$ |
30,579 |
|
|
| Allowance for credit losses on
loans to total loans |
|
|
1.45 |
% |
|
1.44 |
|
% |
|
1.46 |
|
% |
|
1.48 |
|
% |
|
1.41 |
|
% |
| Allowance for credit losses on
loans to total nonperforming loans |
|
|
2,110.40 |
% |
|
1,959.26 |
|
% |
|
4,529.05 |
|
% |
|
1,675.51 |
|
% |
|
1,117.18 |
|
% |
| Nonperforming assets to total
assets |
|
|
0.04 |
% |
|
0.05 |
|
% |
|
0.02 |
|
% |
|
0.05 |
|
% |
|
0.07 |
|
% |
| Nonperforming loans to total
loans |
|
|
0.07 |
% |
|
0.07 |
|
% |
|
0.03 |
|
% |
|
0.09 |
|
% |
|
0.13 |
|
% |
| Classified assets to Heritage
Commerce Corp |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 capital plus allowance for credit losses on loans |
|
|
5 |
% |
|
3 |
|
% |
|
6 |
|
% |
|
6 |
|
% |
|
6 |
|
% |
| Classified assets to Heritage
Bank of Commerce |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 capital plus allowance for credit losses on loans |
|
|
5 |
% |
|
3 |
|
% |
|
5 |
|
% |
|
6 |
|
% |
|
6 |
|
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| OTHER PERIOD-END
STATISTICS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in $000’s, unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Heritage Commerce
Corp: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible common equity (1) |
|
$ |
469,146 |
|
$ |
453,792 |
|
|
$ |
430,194 |
|
|
$ |
427,242 |
|
|
$ |
420,416 |
|
|
|
Shareholders’ equity / total assets |
|
|
11.69 |
% |
|
12.26 |
|
% |
|
11.22 |
|
% |
|
11.34 |
|
% |
|
11.07 |
|
% |
|
Tangible common equity / tangible assets (2) |
|
|
8.76 |
% |
|
9.11 |
|
% |
|
8.19 |
|
% |
|
8.25 |
|
% |
|
8.01 |
|
% |
|
Loan to deposit ratio |
|
|
73.39 |
% |
|
75.14 |
|
% |
|
68.68 |
|
% |
|
66.81 |
|
% |
|
64.48 |
|
% |
|
Noninterest-bearing deposits / total deposits |
|
|
33.05 |
% |
|
39.56 |
|
% |
|
40.22 |
|
% |
|
40.02 |
|
% |
|
38.63 |
|
% |
|
Total capital ratio |
|
|
15.3 |
% |
|
14.8 |
|
% |
|
14.5 |
|
% |
|
14.6 |
|
% |
|
14.6 |
|
% |
|
Tier 1 capital ratio |
|
|
13.1 |
% |
|
12.7 |
|
% |
|
12.4 |
|
% |
|
12.5 |
|
% |
|
12.4 |
|
% |
|
Common Equity Tier 1 capital ratio |
|
|
13.1 |
% |
|
12.7 |
|
% |
|
12.4 |
|
% |
|
12.5 |
|
% |
|
12.4 |
|
% |
|
Tier 1 leverage ratio |
|
|
9.6 |
% |
|
9.2 |
|
% |
|
8.7 |
|
% |
|
8.7 |
|
% |
|
8.3 |
|
% |
| Heritage Bank of
Commerce: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capital ratio |
|
|
14.7 |
% |
|
14.2 |
|
% |
|
14.0 |
|
% |
|
14.1 |
|
% |
|
13.9 |
|
% |
|
Tier 1 capital ratio |
|
|
13.5 |
% |
|
13.2 |
|
% |
|
12.9 |
|
% |
|
13.0 |
|
% |
|
12.9 |
|
% |
|
Common Equity Tier 1 capital ratio |
|
|
13.5 |
% |
|
13.2 |
|
% |
|
12.9 |
|
% |
|
13.0 |
|
% |
|
12.9 |
|
% |
|
Tier 1 leverage ratio |
|
|
9.9 |
% |
|
9.5 |
|
% |
|
9.0 |
|
% |
|
9.0 |
|
% |
|
8.7 |
|
% |
__________________
|
(1) |
Represents shareholders' equity minus goodwill and other intangible
assets |
| (2) |
Represents shareholders' equity
minus goodwill and other intangible assets divided by total assets
minus goodwill and other intangible assets |
| NET
INTEREST INCOME AND NET INTEREST MARGIN |
|
For the Quarter Ended |
|
For the Quarter Ended |
|
| |
March 31, 2023 |
|
March 31, 2022 |
|
| |
|
|
|
Interest |
|
Average |
|
|
|
|
Interest |
|
Average |
|
| |
Average |
|
Income/ |
|
Yield/ |
|
Average |
|
Income/ |
|
Yield/ |
|
|
(in $000’s, unaudited) |
|
Balance |
|
Expense |
|
Rate |
|
Balance |
|
Expense |
|
Rate |
|
| Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, gross (1)(2) |
|
$ |
3,277,525 |
|
$ |
44,112 |
|
|
5.46 |
% |
$ |
3,028,589 |
|
|
35,101 |
|
|
4.70 |
% |
| Securities - taxable |
|
|
1,161,021 |
|
|
7,056 |
|
|
2.46 |
% |
|
781,689 |
|
|
3,444 |
|
|
1.79 |
% |
| Securities - exempt from
Federal tax (3) |
|
|
36,012 |
|
|
313 |
|
|
3.52 |
% |
|
44,871 |
|
|
376 |
|
|
3.40 |
% |
| Other investments and
interest-bearing deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in other financial institutions |
|
|
420,451 |
|
|
4,859 |
|
|
4.69 |
% |
|
1,238,702 |
|
|
1,064 |
|
|
0.35 |
% |
|
Total interest earning assets (3) |
|
|
4,895,009 |
|
|
56,340 |
|
|
4.67 |
% |
|
5,093,851 |
|
|
39,985 |
|
|
3.18 |
% |
| Cash and due from banks |
|
|
37,563 |
|
|
|
|
|
|
|
37,630 |
|
|
|
|
|
|
| Premises and equipment,
net |
|
|
9,269 |
|
|
|
|
|
|
|
9,605 |
|
|
|
|
|
|
| Goodwill and other intangible
assets |
|
|
178,443 |
|
|
|
|
|
|
|
181,065 |
|
|
|
|
|
|
| Other assets |
|
|
115,222 |
|
|
|
|
|
|
|
121,089 |
|
|
|
|
|
|
|
Total assets |
|
$ |
5,235,506 |
|
|
|
|
|
|
$ |
5,443,240 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Liabilities and
shareholders’ equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, noninterest-bearing |
|
$ |
1,667,260 |
|
|
|
|
|
|
$ |
1,857,164 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, interest-bearing |
|
|
1,217,731 |
|
|
1,476 |
|
|
0.49 |
% |
|
1,279,989 |
|
|
459 |
|
|
0.15 |
% |
|
Savings and money market |
|
|
1,285,173 |
|
|
3,489 |
|
|
1.10 |
% |
|
1,394,734 |
|
|
543 |
|
|
0.16 |
% |
|
Time deposits - under $100 |
|
|
12,280 |
|
|
10 |
|
|
0.33 |
% |
|
13,235 |
|
|
5 |
|
|
0.15 |
% |
|
Time deposits - $100 and over |
|
|
163,047 |
|
|
845 |
|
|
2.10 |
% |
|
119,082 |
|
|
106 |
|
|
0.36 |
% |
|
ICS/CDARS - interest-bearing demand, money market |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and time deposits |
|
|
70,461 |
|
|
81 |
|
|
0.47 |
% |
|
32,932 |
|
|
1 |
|
|
0.01 |
% |
|
Total interest-bearing deposits |
|
|
2,748,692 |
|
|
5,901 |
|
|
0.87 |
% |
|
2,839,972 |
|
|
1,114 |
|
|
0.16 |
% |
|
Total deposits |
|
|
4,415,952 |
|
|
5,901 |
|
|
0.54 |
% |
|
4,697,136 |
|
|
1,114 |
|
|
0.10 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Short-term borrowings |
|
|
46,677 |
|
|
578 |
|
|
5.02 |
% |
|
29 |
|
|
— |
|
|
0.00 |
% |
| Subordinated debt, net of
issuance costs |
|
|
39,363 |
|
|
537 |
|
|
5.53 |
% |
|
39,951 |
|
|
571 |
|
|
5.80 |
% |
|
Total interest-bearing liabilities |
|
|
2,834,732 |
|
|
7,016 |
|
|
1.00 |
% |
|
2,879,952 |
|
|
1,685 |
|
|
0.24 |
% |
|
Total interest-bearing liabilities and demand, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
noninterest-bearing / cost of funds |
|
|
4,501,992 |
|
|
7,016 |
|
|
0.63 |
% |
|
4,737,116 |
|
|
1,685 |
|
|
0.14 |
% |
| Other liabilities |
|
|
95,917 |
|
|
|
|
|
|
|
106,769 |
|
|
|
|
|
|
|
Total liabilities |
|
|
4,597,909 |
|
|
|
|
|
|
|
4,843,885 |
|
|
|
|
|
|
| Shareholders’ equity |
|
|
637,597 |
|
|
|
|
|
|
|
599,355 |
|
|
|
|
|
|
|
Total liabilities and shareholders’ equity |
|
$ |
5,235,506 |
|
|
|
|
|
|
$ |
5,443,240 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net interest income
(3) / margin |
|
|
|
|
|
49,324 |
|
|
4.09 |
% |
|
|
|
|
38,300 |
|
|
3.05 |
% |
| Less tax equivalent adjustment
(3) |
|
|
|
|
|
(66 |
) |
|
|
|
|
|
|
|
(79 |
) |
|
|
|
|
Net interest income |
|
|
|
|
$ |
49,258 |
|
|
|
|
|
|
|
$ |
38,221 |
|
|
|
|
__________________
|
(1) |
Includes loans held-for-sale. Nonaccrual loans are included in
average balances. |
| (2) |
Yield amounts earned on loans
include fees and costs. The accretion of net deferred loan fees
into loan interest income was $300,000 for the first quarter of
2023 (of which $18,000 was from PPP loans), compared to $1,788,000
for the first quarter of 2022 (of which $1,346,000 was from PPP
loans). Prepayment fees totaled $138,000 for the first quarter of
2023, compared to $510,000 for the first quarter of 2022. |
| (3) |
Reflects the FTE adjustment for
Federal tax-exempt income based on a 21% tax rate. |
| NET
INTEREST INCOME AND NET INTEREST MARGIN |
|
For the Quarter Ended |
|
For the Quarter Ended |
|
| |
March 31, 2023 |
|
December 31, 2022 |
|
| |
|
|
|
Interest |
|
Average |
|
|
|
|
Interest |
|
Average |
|
| |
Average |
|
Income/ |
|
Yield/ |
|
Average |
|
Income/ |
|
Yield/ |
|
|
(in $000’s, unaudited) |
|
Balance |
|
Expense |
|
Rate |
|
Balance |
|
Expense |
|
Rate |
|
| Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, gross (1)(2) |
|
$ |
3,277,525 |
|
$ |
44,112 |
|
|
5.46 |
% |
$ |
3,250,556 |
|
$ |
42,501 |
|
|
5.19 |
% |
| Securities - taxable |
|
|
1,161,021 |
|
|
7,056 |
|
|
2.46 |
% |
|
1,156,563 |
|
|
6,941 |
|
|
2.38 |
% |
| Securities - exempt from
Federal tax (3) |
|
|
36,012 |
|
|
313 |
|
|
3.52 |
% |
|
37,958 |
|
|
324 |
|
|
3.39 |
% |
| Other investments and
interest-bearing deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in other financial institutions |
|
|
420,451 |
|
|
4,859 |
|
|
4.69 |
% |
|
564,501 |
|
|
5,494 |
|
|
3.86 |
% |
|
Total interest earning assets (3) |
|
|
4,895,009 |
|
|
56,340 |
|
|
4.67 |
% |
|
5,009,578 |
|
|
55,260 |
|
|
4.38 |
% |
| Cash and due from banks |
|
|
37,563 |
|
|
|
|
|
|
|
36,392 |
|
|
|
|
|
|
| Premises and equipment,
net |
|
|
9,269 |
|
|
|
|
|
|
|
9,436 |
|
|
|
|
|
|
| Goodwill and other intangible
assets |
|
|
178,443 |
|
|
|
|
|
|
|
179,074 |
|
|
|
|
|
|
| Other assets |
|
|
115,222 |
|
|
|
|
|
|
|
126,387 |
|
|
|
|
|
|
|
Total assets |
|
$ |
5,235,506 |
|
|
|
|
|
|
$ |
5,360,867 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Liabilities and
shareholders’ equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, noninterest-bearing |
|
$ |
1,667,260 |
|
|
|
|
|
|
$ |
1,851,003 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, interest-bearing |
|
|
1,217,731 |
|
|
1,476 |
|
|
0.49 |
% |
|
1,164,378 |
|
|
945 |
|
|
0.32 |
% |
|
Savings and money market |
|
|
1,285,173 |
|
|
3,489 |
|
|
1.10 |
% |
|
1,424,964 |
|
|
1,694 |
|
|
0.47 |
% |
|
Time deposits - under $100 |
|
|
12,280 |
|
|
10 |
|
|
0.33 |
% |
|
12,157 |
|
|
7 |
|
|
0.23 |
% |
|
Time deposits - $100 and over |
|
|
163,047 |
|
|
845 |
|
|
2.10 |
% |
|
120,246 |
|
|
268 |
|
|
0.88 |
% |
|
ICS/CDARS - interest-bearing demand, money market |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and time deposits |
|
|
70,461 |
|
|
81 |
|
|
0.47 |
% |
|
27,785 |
|
|
1 |
|
|
0.01 |
% |
|
Total interest-bearing deposits |
|
|
2,748,692 |
|
|
5,901 |
|
|
0.87 |
% |
|
2,749,530 |
|
|
2,915 |
|
|
0.42 |
% |
|
Total deposits |
|
|
4,415,952 |
|
|
5,901 |
|
|
0.54 |
% |
|
4,600,533 |
|
|
2,915 |
|
|
0.25 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Short-term borrowings |
|
|
46,677 |
|
|
578 |
|
|
5.02 |
% |
|
24 |
|
|
— |
|
|
0.00 |
% |
| Subordinated debt, net of
issuance costs |
|
|
39,363 |
|
|
537 |
|
|
5.53 |
% |
|
39,326 |
|
|
538 |
|
|
5.43 |
% |
|
Total interest-bearing liabilities |
|
|
2,834,732 |
|
|
7,016 |
|
|
1.00 |
% |
|
2,788,880 |
|
|
3,453 |
|
|
0.49 |
% |
|
Total interest-bearing liabilities and demand, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
noninterest-bearing / cost of funds |
|
|
4,501,992 |
|
|
7,016 |
|
|
0.63 |
% |
|
4,639,883 |
|
|
3,453 |
|
|
0.30 |
% |
| Other liabilities |
|
|
95,917 |
|
|
|
|
|
|
|
105,043 |
|
|
|
|
|
|
|
Total liabilities |
|
|
4,597,909 |
|
|
|
|
|
|
|
4,744,926 |
|
|
|
|
|
|
| Shareholders’ equity |
|
|
637,597 |
|
|
|
|
|
|
|
615,941 |
|
|
|
|
|
|
|
Total liabilities and shareholders’ equity |
|
$ |
5,235,506 |
|
|
|
|
|
|
$ |
5,360,867 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net interest income
(3) / margin |
|
|
|
|
|
49,324 |
|
|
4.09 |
% |
|
|
|
|
51,807 |
|
|
4.10 |
% |
| Less tax equivalent adjustment
(3) |
|
|
|
|
|
(66 |
) |
|
|
|
|
|
|
|
(68 |
) |
|
|
|
|
Net interest income |
|
|
|
|
$ |
49,258 |
|
|
|
|
|
|
|
$ |
51,739 |
|
|
|
|
__________________
|
(1) |
Includes loans held-for-sale. Nonaccrual loans are included in
average balances. |
| (2) |
Yield amounts earned on loans
include fees and costs. The accretion of net deferred loan fees
into loan interest income was $300,000 for the first quarter of
2023 (of which $18,000 was from PPP loans), compared to $326,000
for the fourth quarter of 2022 (of which $25,000 was from PPP
loans). Prepayment fees totaled $138,000 for the first quarter of
2023, compared to $123,000 for the fourth quarter of 2022. |
| (3) |
Reflects the FTE adjustment for
Federal tax-exempt income based on a 21% tax rate. |
Heritage Commerce (NASDAQ:HTBK)
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