SAN JOSE, Calif., July 27, 2023 (GLOBE NEWSWIRE) --
Heritage Commerce Corp (Nasdaq: HTBK), the holding
company (the “Company”) for Heritage Bank of Commerce (the “Bank”),
today announced second quarter 2023 net income increased 11% to
$16.4 million, or $0.27 per average diluted common share, compared
to $14.8 million, or $0.24 per average diluted common share, for
the second quarter of 2022, and decreased (13%) from $18.9 million,
or $0.31 per average diluted common share, for the first quarter of
2023. For the six months ended June 30, 2023, net income increased
28% to $35.3 million, or $0.58 per average diluted common share,
compared to $27.7 million, or $0.45 per average diluted common
share, for the six months ended June 30, 2022. All results are
unaudited.
"We are pleased to report excellent operating results for the
second quarter of 2023, achieving record earnings not only for this
quarter but also for the first six months of the year,” said Clay
Jones, President and Chief Executive Officer. “Our profits have
shown a notable 28% increase compared to the first six months of
2022. This growth is attributed to the expansion of our loan
portfolio, increased deposits, higher net interest income, and
improved efficiency."
Mr. Jones further acknowledged that as clients sought higher
yields on their deposits, there was an anticipated shift towards
interest-bearing deposits. While this shift affected margins during
the period, it reflects the Bank's responsiveness to client
preferences and demonstrates the commitment to meeting their
financial needs.
“Our credit quality remains strong, with only a minor increase
to nonperforming and classified assets.” said Mr. Jones. “We remain
confident in our allowance for credit losses with respect to our
loan portfolio, as our reserves represent 863% of nonperforming
loans and 1.45% of total loans.”
"Looking ahead to the second half of the year, we remain
confident in the Bank's well-positioned balance sheet, with an
emphasis on strength, stability, and liquidity. With a
well-diversified and stable deposit base, along with abundant
alternative funding sources, we are successfully navigating the
current challenges within the banking industry," stated Mr.
Jones.
Mr. Jones conveyed his gratitude to the loyal clients, dedicated
team members, community nonprofits, and the Company’s shareholders,
recognizing their continuing support. Their trust and collaboration
play a crucial role in the Company’s ongoing success and ability to
provide exceptional financial services to our clients.
Current Financial Condition and Liquidity
Position
The following are important factors in understanding our current
financial condition and liquidity position:
Liquidity and Available Lines of Credit:
- The following table shows our liquidity and available lines of
credit at June 30, 2023:
|
|
|
|
LIQUIDITY AND
AVAILABLE LINES OF CREDIT |
|
Total |
(in $000’s, unaudited) |
|
Available |
Excess funds at the Federal
Reserve Bank ("FRB") |
|
$ |
464,100 |
FRB discount window
collateralized line of credit |
|
|
1,266,522 |
Federal Home Loan Bank
("FHLB") collateralized borrowing capacity |
|
|
1,087,564 |
Unpledged investment
securities (at fair value) |
|
|
108,571 |
Off-balance sheet
deposits |
|
|
86,734 |
Federal funds purchase
arrangements |
|
|
80,000 |
Holding company line of
credit |
|
|
20,000 |
Total |
|
$ |
3,113,491 |
|
|
|
|
- The Company’s total liquidity and borrowing capacity was $3.113
billion, all of which remained available at June 30, 2023.
- The available liquidity and borrowing capacity was 69% of total
deposits and approximately 145% of estimated uninsured deposits at
June 30, 2023.
- The Bank increased its credit line availability from the FRB
and the FHLB by $332.3 million to $2.354 billion at June 30, 2023,
from $2.022 billion at March 31, 2023, and increased by $1.515
billion from $839.5 million at 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 rapid, flexible liquidity during an uncertain time.
- The loan to deposit ratio was 73.07% at June 30, 2023, compared
to 75.14% at December 31, 2022, and 73.39% at March 31,
2023.
Deposits:
- Total deposits increased $111.2 million, or 3%, to $4.501
billion at June 30, 2023 from $4.390 billion at December 31, 2022,
and increased $56.2 million, or 1% from March 31, 2023.
- Migration of customer deposits resulted in an increase in
Insured Cash Sweep (“ICS”)/Certificate of Deposit Account Registry
Service (“CDARS”) deposits of $793.7 million to $824.1 million at
June 30, 2023, compared to $30.4 million at December 31, 2022.
ICS/CDARS deposits increased $520.0 million to $824.1 million at
June 30, 2023 from $304.1 million at March 31,
2023.
- Noninterest-bearing demand deposits decreased ($416.9) million,
or (24%), to $1.320 billion at June 30, 2023 from December 31,
2022, and decreased ($149.2) million, or (10%) from March 31, 2023,
primarily due to clients seeking higher yields and moving
noninterest-bearing deposits to the Bank’s interest-bearing and ICS
deposits.
- The Company had 24,404 deposits accounts at June 30, 2023, with
an average balance of $187,000, compared to 24,103 deposit accounts
at March 31, 2023, with an average balance of $184,000. At December
31, 2023, the Company had 23,833 deposit accounts, with an average
balance of $184,000.
- Deposits from the top 100 client relationships totaled $2.108
billion, representing 47% of total deposits, with an average
account size of $401,000, representing 22% of the total number of
accounts at June 30, 2023.
Investment Securities:
- Investment securities totaled $1.168 billion at June 30, 2023,
of which $486.1 million were in the securities available-for-sale
portfolio (at fair value), and $682.1 million were in the
securities held-to-maturity portfolio (at amortized cost, net of
allowance for credit losses of $13,000).
- The weighted average life of the total investment securities
portfolio was 4.79 years at June 30, 2023.
- The following are the projected cash flows from paydowns and
maturities in the investment securities portfolio for the periods
indicated based on the current interest rate environment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agency |
|
|
|
|
|
|
|
|
Mortgage- |
|
|
|
|
|
|
|
backed and |
|
|
PROJECTED INVESTMENT
SECURITIES CASH FLOWS |
|
U.S. |
|
Municipal |
|
|
(in $000’s, unaudited) |
|
Treasury |
|
Securities |
|
Total |
Third quarter of 2023 |
|
$ |
27,000 |
|
$ |
24,587 |
|
$ |
51,587 |
Fourth quarter of 2023 |
|
|
20,000 |
|
|
19,739 |
|
|
39,739 |
First quarter of 2024 |
|
|
37,000 |
|
|
19,458 |
|
|
56,458 |
Second quarter of 2024 |
|
|
131,000 |
|
|
18,624 |
|
|
149,624 |
Total |
|
$ |
215,000 |
|
$ |
82,408 |
|
$ |
297,408 |
|
|
|
|
|
|
|
|
|
|
Loans:
- Loans, excluding loans held-for-sale, decreased ($9.8) million
to $3.289 billion at June 30, 2023 from December 31, 2022, and
increased $26.9 million, or 1%, from March 31, 2023.
- Commercial real estate (“CRE”) loans totaled $1.755 billion at
June 30, 2023, of which 35% were owner occupied and 65% were
investor CRE loans.
- During the second quarter of 2023, 41 new CRE loans were
originated totaling $92 million with a weighted average
loan-to-value and debt-service coverage for the non-owner occupied
portfolio of 40% and 1.77 times, respectively
- The average loan size for all CRE loans was $1.6 million, and
the average loan size for office CRE loans was $1.7 million.
- The Company has personal guarantees on 90% of its CRE
portfolio. A substantial portion of the unguaranteed CRE loans were
made to credit-worthy non-profit organizations.
- Total office exposure in the CRE portfolio was $397 million,
including 30 loans totaling approximately $76 million, in San Jose,
17 loans totaling approximately $29 million in San Francisco, and 6
loans totaling approximately $11 million, in Oakland, at June 30,
2023. Non-owner occupied CRE with office exposure
totaled $307 million at June 30, 2023.
- Of the $397 million of CRE loans with office exposure,
approximately $35 million, or 9%, are situated in the Bay Area
downtown business districts of San Jose and San Francisco, with an
average balance of $2.3 million.
- At June 30, 2023, the weighted average loan-to-value and
debt-service coverage for the entire non-owner occupied office
portfolio were 43.6% and 1.87 times, respectively. For the 8
non-owner occupied office loans in San Francisco at June 30, 2023,
the weighted average loan-to-value and debt-service coverage were
34% and 1.55 times, respectively.
Second Quarter Ended June 30,
2023
Operating Results, Balance Sheet Review, Capital
Management, and Credit Quality
(as of, or for the periods ended June 30, 2023,
compared to June 30, 2022, and March 31, 2023, except as
noted):
Operating Results:
- Diluted earnings per share were $0.27 for the second quarter of
2023, compared to $0.24 for the second quarter of 2022, and $0.31
for the first quarter of 2023. Diluted earnings per share were
$0.58 for the first six months of 2023, compared to $0.45 for the
first six months 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: |
|
For the Six Months Ended: |
|
|
June 30, |
|
March 31, |
|
June 30, |
|
June 30, |
|
June 30, |
(unaudited) |
|
2023 |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Return on average tangible
assets |
|
1.29 |
% |
|
|
1.52 |
% |
|
|
1.15 |
% |
|
|
1.40 |
% |
|
|
1.07 |
% |
|
Return on average tangible
common equity |
|
13.93 |
% |
|
|
16.71 |
% |
|
|
14.06 |
% |
|
|
15.29 |
% |
|
|
13.28 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Net interest income increased 11% to $46.3 million for the
second quarter of 2023, compared to $41.9 million for the second
quarter of 2022. The fully tax equivalent (“FTE”) net interest
margin increased 38 basis points to 3.76% for the second quarter of
2023, from 3.38% for the second quarter of 2022, primarily due to
increases in the prime rate and the rate on overnight funds,
partially offset by a higher cost of funds, a decrease in the
average balances of noninterest bearing demand deposits and an
increase in the average balances of short-term borrowings.
- Net interest income decreased (6%) to $46.3 million for the
second quarter of 2023, compared to $49.3 million for the first
quarter of 2023. The FTE net interest margin decreased (33) basis
points to 3.76% for the second quarter of 2023 from 4.09% for the
first quarter of 2023, primarily due to a higher cost of funds, a
decrease in the average balances of noninterest bearing demand
deposits, and a decrease in the accretion of the loan purchase
discount into interest income from acquired loans partially offset
by increases in the prime rate and higher average yields on
overnight funds.
- For the first six months of 2023, the net interest income
increased 19% to $95.6 million, compared to $80.1 million for the
first six months of 2022. The FTE net interest margin increased 71
basis points to 3.92% for the first six months of 2023, from 3.21%
for the first six months of 2022, primarily due to increases in the
prime rate and the rate on overnight funds, partially offset by a
higher cost of funds, a decrease in the average balances of
noninterest bearing demand deposits, and an increase in the average
balances of short-term borrowings.
- The following table, as of June 30,
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 |
|
$ |
16,770 |
|
|
8.2 |
|
% |
+300 |
|
$ |
12,537 |
|
|
6.2 |
|
% |
+200 |
|
$ |
8,326 |
|
|
4.1 |
|
% |
+100 |
|
$ |
4,147 |
|
|
2.0 |
|
% |
0 |
|
|
— |
|
|
— |
|
|
−100 |
|
$ |
(5,371 |
) |
|
(2.6 |
) |
% |
−200 |
|
$ |
(17,083 |
) |
|
(8.4 |
) |
% |
−300 |
|
$ |
(32,894 |
) |
|
(16.2 |
) |
% |
−400 |
|
$ |
(48,726 |
) |
|
(24.0 |
) |
% |
|
(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 5.47% for the second quarter of 2023,
compared to 5.46% for the first quarter of 2023, primarily due to
increases in the prime rate.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarter Ended |
|
For the Quarter Ended |
|
|
|
June 30, 2023 |
|
March 31, 2023 |
|
|
|
Average |
|
Interest |
|
Average |
|
Average |
|
Interest |
|
Average |
|
(in $000’s, unaudited) |
|
Balance |
|
Income |
|
Yield |
|
Balance |
|
Income |
|
Yield |
|
Loans, core bank |
|
$ |
2,660,119 |
|
|
$ |
35,310 |
|
5.32 |
% |
$ |
2,688,800 |
|
|
$ |
34,967 |
|
5.27 |
% |
Prepayment fees |
|
|
— |
|
|
|
73 |
|
0.01 |
% |
|
— |
|
|
|
138 |
|
0.02 |
% |
Asset-based lending |
|
|
28,251 |
|
|
|
686 |
|
9.74 |
% |
|
27,550 |
|
|
|
627 |
|
9.23 |
% |
Bay View Funding factored
receivables |
|
|
68,680 |
|
|
|
3,847 |
|
22.47 |
% |
|
77,755 |
|
|
|
4,001 |
|
20.87 |
% |
Purchased residential
mortgages |
|
|
478,220 |
|
|
|
3,829 |
|
3.21 |
% |
|
487,780 |
|
|
|
3,857 |
|
3.21 |
% |
Loan fair value mark /
accretion |
|
|
(3,929 |
) |
|
|
283 |
|
0.04 |
% |
|
(4,360 |
) |
|
|
522 |
|
0.08 |
% |
Total loans (includes loans held-for-sale) |
|
$ |
3,231,341 |
|
|
$ |
44,028 |
|
5.47 |
% |
$ |
3,277,525 |
|
|
$ |
44,112 |
|
5.46 |
% |
|
- The average yield on the total loan
portfolio increased to 5.47% for the second quarter of 2023,
compared to 4.80% for the second quarter of 2022, primarily due to
increases in the prime rate, partially offset by a decrease in the
accretion of the loan purchase discount into interest income from
acquired loans, lower prepayment fees, and higher average balances
of lower yielding purchased residential mortgages.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarter Ended |
|
For the Quarter Ended |
|
|
|
June 30, 2023 |
|
June 30, 2022 |
|
|
|
Average |
|
Interest |
|
Average |
|
Average |
|
Interest |
|
Average |
|
(in $000’s, unaudited) |
|
Balance |
|
Income |
|
Yield |
|
Balance |
|
Income |
|
Yield |
|
Loans, core bank |
|
$ |
2,660,119 |
|
|
$ |
35,310 |
|
5.32 |
% |
$ |
2,560,740 |
|
|
$ |
28,025 |
|
4.39 |
% |
Prepayment fees |
|
|
— |
|
|
|
73 |
|
0.01 |
% |
|
— |
|
|
|
549 |
|
0.09 |
% |
Asset-based lending |
|
|
28,251 |
|
|
|
686 |
|
9.74 |
% |
|
49,667 |
|
|
|
874 |
|
7.06 |
% |
Bay View Funding factored
receivables |
|
|
68,680 |
|
|
|
3,847 |
|
22.47 |
% |
|
64,085 |
|
|
|
3,129 |
|
19.58 |
% |
Purchased residential
mortgages |
|
|
478,220 |
|
|
|
3,829 |
|
3.21 |
% |
|
381,988 |
|
|
|
2,711 |
|
2.85 |
% |
Loan fair value mark /
accretion |
|
|
(3,929 |
) |
|
|
283 |
|
0.04 |
% |
|
(6,303 |
) |
|
|
1,250 |
|
0.20 |
% |
Total loans (includes loans held-for-sale) |
|
$ |
3,231,341 |
|
|
$ |
44,028 |
|
5.47 |
% |
$ |
3,050,177 |
|
|
$ |
36,538 |
|
4.80 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- The average yield on the total loan
portfolio increased to 5.46% for the first six months of 2023,
compared to 4.75% for the first six months of 2022, primarily due
to increases in the prime rate, partially offset by a decrease in
the accretion of the loan purchase discount into interest income
from acquired loans, lower prepayment fees, and higher average
balances of lower yielding purchased residential mortgages.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended |
|
For the Six Months Ended |
|
|
|
June 30, 2023 |
|
June 30, 2022 |
|
|
|
Average |
|
Interest |
|
Average |
|
Average |
|
Interest |
|
Average |
|
(in $000’s, unaudited) |
|
Balance |
|
Income |
|
Yield |
|
Balance |
|
Income |
|
Yield |
|
Loans, core bank |
|
$ |
2,674,389 |
|
|
$ |
70,277 |
|
5.30 |
% |
$ |
2,556,636 |
|
|
$ |
55,690 |
|
4.39 |
% |
Prepayment fees |
|
|
— |
|
|
|
211 |
|
0.02 |
% |
|
— |
|
|
|
1,059 |
|
0.08 |
% |
Asset-based lending |
|
|
27,902 |
|
|
|
1,313 |
|
9.49 |
% |
|
59,587 |
|
|
|
1,825 |
|
6.18 |
% |
Bay View Funding factored
receivables |
|
|
73,193 |
|
|
|
7,848 |
|
21.62 |
% |
|
60,940 |
|
|
|
5,922 |
|
19.60 |
% |
Purchased residential
mortgages |
|
|
482,964 |
|
|
|
7,686 |
|
3.21 |
% |
|
368,880 |
|
|
|
5,139 |
|
2.81 |
% |
Loan fair value mark /
accretion |
|
|
(4,143 |
) |
|
|
805 |
|
0.06 |
% |
|
(6,600 |
) |
|
|
2,004 |
|
0.16 |
% |
Total loans (includes loans held-for-sale) |
|
$ |
3,254,305 |
|
|
$ |
88,140 |
|
5.46 |
% |
$ |
3,039,443 |
|
|
$ |
71,639 |
|
4.75 |
% |
|
•
|
In aggregate, the remaining net purchase discount on total loans
acquired was $3.8 million at June 30, 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 |
|
|
|
June 30, 2023 |
|
March 31, 2023 |
|
|
|
Average |
|
Interest |
|
Average |
|
Average |
|
Interest |
|
Average |
|
(in $000’s, unaudited) |
|
Balance |
|
Expense |
|
Rate |
|
Balance |
|
Expense |
|
Rate |
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, noninterest-bearing |
|
$ |
1,368,373 |
|
|
|
|
|
|
$ |
1,667,260 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, interest-bearing |
|
|
1,118,200 |
|
$ |
1,788 |
|
0.64 |
% |
|
1,217,731 |
|
$ |
1,476 |
|
0.49 |
% |
Savings and money market |
|
|
1,109,347 |
|
|
4,638 |
|
1.68 |
% |
|
1,285,173 |
|
|
3,489 |
|
1.10 |
% |
Time deposits - under $100 |
|
|
11,610 |
|
|
20 |
|
0.69 |
% |
|
12,280 |
|
|
10 |
|
0.33 |
% |
Time deposits - $100 and over |
|
|
201,600 |
|
|
1,410 |
|
2.81 |
% |
|
163,047 |
|
|
845 |
|
2.10 |
% |
ICS/CDARS - interest-bearing demand, money market |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and time deposits |
|
|
614,911 |
|
|
2,867 |
|
1.87 |
% |
|
70,461 |
|
|
81 |
|
0.47 |
% |
Total interest-bearing deposits |
|
|
3,055,668 |
|
|
10,723 |
|
1.41 |
% |
|
2,748,692 |
|
|
5,901 |
|
0.87 |
% |
Total deposits |
|
|
4,424,041 |
|
|
10,723 |
|
0.97 |
% |
|
4,415,952 |
|
|
5,901 |
|
0.54 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term borrowings |
|
|
62,653 |
|
|
787 |
|
5.04 |
% |
|
46,677 |
|
|
578 |
|
5.02 |
% |
Subordinated debt, net of
issuance costs |
|
|
39,401 |
|
|
538 |
|
5.48 |
% |
|
39,363 |
|
|
537 |
|
5.53 |
% |
Total interest-bearing liabilities |
|
|
3,157,722 |
|
|
12,048 |
|
1.53 |
% |
|
2,834,732 |
|
|
7,016 |
|
1.00 |
% |
Total interest-bearing liabilities and demand, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
noninterest-bearing / cost of funds |
|
$ |
4,526,095 |
|
$ |
12,048 |
|
1.07 |
% |
$ |
4,501,992 |
|
$ |
7,016 |
|
0.63 |
% |
|
• |
The average cost of total deposits increased to 0.97% for the
second quarter of 2023, compared to 0.54% for the first quarter of
2023. The average cost of funds increased to 1.07% for
the second quarter of 2023, compared to 0.63% for the first quarter
of 2023. The average cost of deposits was 0.10% and the average
cost of funds was 0.15% for the second quarter of 2022. |
|
|
|
|
• |
The average cost of total deposits increased to 0.76% for the first
six months of 2023, compared to 0.10% for the first six months of
2022. The average cost of funds increased to 0.85% for
the first six months of 2023, compared to 0.14% for the first six
months of 2022. |
|
|
|
|
• |
The increase in the average cost of total deposits and the average
cost of funds for the second quarter of 2023 and first six months
of 2023 was primarily due to clients seeking higher yields and
moving noninterest-bearing deposits to the Bank’s interest-bearing
and ICS deposits and an increase in market interest rates. |
|
|
|
- During the second quarter of 2023,
we recorded a provision for credit losses on loans of $260,000,
compared to a ($181,000) recapture of provision for credit losses
on loans for the second quarter of 2022, and a provision for credit
losses on loans of $32,000 for the first quarter of 2023. There was
a provision for credit losses on loans of $292,000 for the six
months ended June 30, 2023, compared to a ($748,000) recapture of
provision for credit losses on loans for the six months ended June
30, 2022.
- Total noninterest income remained
relatively flat at $2.1 million for both the second quarter of 2023
and the second quarter of 2022. Total noninterest income decreased
(25%) to $2.1 million for the second quarter of 2023, compared to
$2.8 million for the first quarter of 2023, primarily due to lower
service charges and fees on deposit accounts.
- For the six months ended June 30,
2023, total noninterest income increased 6% to $4.8 million,
compared to $4.6 million for the six months ended June 30, 2022,
primarily due to higher service charges and fees on deposit
accounts, partially offset by a $637,000 gain on warrants during
the first six months of 2022.
- Total noninterest expense for the
second quarter of 2023 increased to $25.0 million, compared to
$23.2 million for the second quarter of 2022, primarily due to
higher salaries and employee benefits, and higher insurance and
information technology related expenses included in other
noninterest expense during the second quarter of 2023. Total
noninterest expense for the second quarter of 2023 decreased to
$25.0 million, compared to $25.4 million for the first quarter of
2023, primarily due to a decrease in payroll taxes, vacation and
401(k) expenses, higher deferred loan origination costs, and lower
professional fees, partially offset by higher information
technology related expenses.
- Total noninterest expense for the six months ended June 30,
2023 increased to $50.4 million, compared to $46.4 million for the
six months ended June 30, 2022, primarily due to higher salaries
and employee benefits, and higher insurance and information
technology related expenses included in other noninterest expense
during the six months ended June 30, 2023.
- Full time equivalent employees were 347 at June 30, 2023, and
332 at June 30, 2022, and 339 at March 31,
2023.
- The efficiency ratio was 51.67% for the second quarter of 2023,
compared to 52.73% for the second quarter of 2022, and 48.83% for
the first quarter of 2023. The efficiency ratio improved to 50.20%
for the six months ended June 30, 2023, compared to 54.86% for the
six months ended June 30, 2022, primarily due to higher net
interest income.
- Income tax expense was $6.7 million for the second quarter of
2023, compared to $6.1 million for the second quarter of 2022, and
$7.7 million for the first quarter of 2023. The effective tax rate
for the second quarter of 2023 was 29.0%, compared to 29.3% for the
second quarter of 2022, and 28.9% for the first quarter of 2023.
Income tax expense for the six months ended June 30, 2023 was $14.4
million, compared to $11.3 million for the six months ended June
30, 2022. The effective tax rate for both the six months ended June
30, 2023 and June 30, 2022 was 28.9%.
Balance Sheet Review, Capital Management and Credit
Quality:
- Total assets decreased (1%) to $5.312 billion at June 30, 2023,
compared to $5.357 billion at June 30, 2022. Total assets decreased
(4%) from $5.537 billion at March 31, 2023, due to the repayment
during the second quarter of 2023 of $300.0 million in borrowings
that were outstanding at March 31, 2023.
- 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 |
|
June 30, |
|
March 31, |
|
June 30, |
(in $000’s, unaudited) |
|
2023 |
|
2023 |
|
2022 |
Balance (at fair value): |
|
|
|
|
|
|
|
|
|
U.S. Treasury |
|
$ |
421,146 |
|
|
$ |
422,903 |
|
|
$ |
250,126 |
|
Agency mortgage-backed securities |
|
|
64,912 |
|
|
|
68,848 |
|
|
|
82,003 |
|
Total |
|
$ |
486,058 |
|
|
$ |
491,751 |
|
|
$ |
332,129 |
|
|
|
|
|
|
|
|
|
|
|
Pre-tax unrealized
(loss): |
|
|
|
|
|
|
|
|
|
U.S. Treasury |
|
$ |
(10,903 |
) |
|
$ |
(7,510 |
) |
|
$ |
(1,239 |
) |
Agency mortgage-backed securities |
|
|
(5,659 |
) |
|
|
(4,969 |
) |
|
|
(2,949 |
) |
Total |
|
$ |
(16,562 |
) |
|
$ |
(12,479 |
) |
|
$ |
(4,188 |
) |
|
• |
The pre-tax unrealized loss on the securities available-for-sale
portfolio was ($16.6) million, or ($11.7) million net of taxes,
which was 2% of total shareholders’ equity at June 30, 2023. |
|
|
|
|
• |
The weighted average life of the securities available-for-sale
portfolio was 1.64 years at June 30, 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 |
|
June 30, |
|
March 31, |
|
June 30, |
(in $000’s, unaudited) |
|
2023 |
|
|
2023 |
|
|
2022 |
|
Balance (at amortized
cost): |
|
|
|
|
|
|
|
|
|
Agency mortgage-backed securities |
|
$ |
648,337 |
|
|
$ |
663,481 |
|
|
$ |
683,779 |
|
Municipals — exempt from Federal tax |
|
|
33,771 |
|
|
|
34,764 |
|
|
|
39,976 |
|
Total |
|
$ |
682,108 |
|
|
$ |
698,245 |
|
|
$ |
723,755 |
|
|
|
|
|
|
|
|
|
|
|
Pre-tax unrealized
(loss): |
|
|
|
|
|
|
|
|
|
Agency mortgage-backed securities |
|
$ |
(95,285 |
) |
|
$ |
(89,962 |
) |
|
$ |
(72,490 |
) |
Municipals — exempt from Federal tax |
|
|
(1,052 |
) |
|
|
(297 |
) |
|
|
(436 |
) |
Total |
|
$ |
(96,337 |
) |
|
$ |
(90,259 |
) |
|
$ |
(72,926 |
) |
|
|
|
|
|
|
|
|
|
|
Allowance for credit losses on
municipal securities |
|
$ |
(13 |
) |
|
$ |
(14 |
) |
|
$ |
(39 |
) |
|
• |
The pre-tax unrealized loss on the securities held-to-maturity
portfolio was ($96.3) million at June 30, 2023, or ($67.9) million
net of taxes, which was 11% of total shareholders’ equity at June
30, 2023. |
|
|
|
|
• |
The weighted average life of the securities held-to-maturity
portfolio was 7.12 years at June 30, 2023. |
|
|
|
- The unrealized losses in both the available-for-sale and
held-to-maturity portfolios were due to higher interest rates at
June 30, 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 |
|
June 30, 2023 |
|
|
March 31, 2023 |
|
|
June 30, 2022 |
|
|
(in $000’s, unaudited) |
|
Balance |
|
% to Total |
|
|
Balance |
|
% to Total |
|
|
Balance |
|
% to Total |
|
|
Commercial |
|
$ |
466,354 |
|
|
14 |
% |
|
$ |
506,602 |
|
|
16 |
% |
|
$ |
531,421 |
|
|
17 |
% |
|
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CRE - owner occupied |
|
|
608,031 |
|
|
18 |
% |
|
|
603,298 |
|
|
18 |
% |
|
|
597,521 |
|
|
19 |
% |
|
CRE - non-owner occupied |
|
|
1,147,313 |
|
|
35 |
% |
|
|
1,083,852 |
|
|
33 |
% |
|
|
993,621 |
|
|
32 |
% |
|
Land and construction |
|
|
162,816 |
|
|
5 |
% |
|
|
166,408 |
|
|
5 |
% |
|
|
155,389 |
|
|
5 |
% |
|
Home equity |
|
|
128,009 |
|
|
4 |
% |
|
|
124,481 |
|
|
4 |
% |
|
|
116,641 |
|
|
4 |
% |
|
Multifamily |
|
|
244,959 |
|
|
7 |
% |
|
|
231,242 |
|
|
7 |
% |
|
|
221,938 |
|
|
7 |
% |
|
Residential mortgages |
|
|
514,064 |
|
|
16 |
% |
|
|
528,639 |
|
|
16 |
% |
|
|
448,958 |
|
|
15 |
% |
|
Consumer and other |
|
|
17,635 |
|
|
1 |
% |
|
|
17,905 |
|
|
1 |
% |
|
|
18,354 |
|
|
1 |
% |
|
Total Loans |
|
|
3,289,181 |
|
|
100 |
% |
|
|
3,262,427 |
|
|
100 |
% |
|
|
3,083,843 |
|
|
100 |
% |
|
Deferred loan costs (fees),
net |
|
|
(397 |
) |
|
— |
|
|
|
(512 |
) |
|
— |
|
|
|
(1,391 |
) |
|
— |
|
|
Loans, net of deferred costs and fees |
|
$ |
3,288,784 |
|
|
100 |
% |
|
$ |
3,261,915 |
|
|
100 |
% |
|
$ |
3,082,452 |
|
|
100 |
% |
|
|
• |
Loans, excluding loans held-for-sale, increased $206.3 million, or
7%, to $3.289 billion at June 30, 2023, compared to $3.082 billion
at June 30, 2022, and increased $26.9 million, or 1%, from $3.262
billion at March 31, 2023. Loans, excluding residential
mortgages, increased $141.2 million, or 5%, to $2.775 billion at
June 30, 2023, compared to $2.633 billion at June 30, 2022, and
increased $41.4 million, or 2%, from $2.733 billion at March 31,
2023. |
|
|
|
|
• |
Commercial and industrial (“C&I”) line utilization was 29% at
June 30, 2023, compared to 28% at June 30, 2022, and 31% at March
31, 2023. |
|
|
|
|
• |
At June 30, 2023, there was 35% of the CRE loan portfolio secured
by owner occupied real estate, compared to 36% at both June 30,
2022 and March 31, 2023. |
|
|
|
- The following table presents the maturity distribution of the
Company’s loans, excluding loans held-for-sale, as of June 30,
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, and contractual
repricing dates.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
$ |
392,663 |
|
41 |
% |
|
$ |
259,692 |
|
27 |
% |
|
$ |
307,481 |
|
32 |
% |
|
$ |
959,836 |
Loans with fixed interest
rates |
|
|
66,900 |
|
3 |
% |
|
|
576,870 |
|
25 |
% |
|
|
1,685,575 |
|
72 |
% |
|
|
2,329,345 |
Loans |
|
$ |
459,563 |
|
14 |
% |
|
$ |
836,562 |
|
25 |
% |
|
$ |
1,993,056 |
|
61 |
% |
|
$ |
3,289,181 |
|
• |
At June 30, 2023, approximately 29% of the Company’s loan portfolio
consisted of floating interest rate loans, compared to 36% at June
30, 2022, and 31% at March 31, 2023. |
|
|
|
- The following table summarizes the allowance for credit losses
on loans (“ACLL”) for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At or For the Quarter Ended: |
|
At or For the Six Months Ended: |
|
ALLOWANCE FOR CREDIT
LOSSES ON LOANS |
|
June 30, |
|
March 31, |
|
June 30, |
|
June 30, |
|
June 30, |
|
(in $000’s, unaudited) |
|
2023 |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
Balance at beginning of
period |
|
$ |
47,273 |
|
|
$ |
47,512 |
|
|
$ |
42,788 |
|
|
$ |
47,512 |
|
|
$ |
43,290 |
|
|
Charge-offs during the
period |
|
|
(24 |
) |
|
|
(380 |
) |
|
|
(355 |
) |
|
|
(404 |
) |
|
|
(371 |
) |
|
Recoveries during the
period |
|
|
294 |
|
|
|
109 |
|
|
|
3,238 |
|
|
|
403 |
|
|
|
3,319 |
|
|
Net recoveries (charge-offs) during the period |
|
|
270 |
|
|
|
(271 |
) |
|
|
2,883 |
|
|
|
(1 |
) |
|
|
2,948 |
|
|
Provision for (recapture of)
credit losses on loans during the period |
|
|
260 |
|
|
|
32 |
|
|
|
(181 |
) |
|
|
292 |
|
|
|
(748 |
) |
|
Balance at end of period |
|
$ |
47,803 |
|
|
$ |
47,273 |
|
|
$ |
45,490 |
|
|
$ |
47,803 |
|
|
$ |
45,490 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans, net of deferred
fees |
|
$ |
3,288,784 |
|
|
$ |
3,261,915 |
|
|
$ |
3,082,452 |
|
|
$ |
3,288,784 |
|
|
$ |
3,082,452 |
|
|
Total nonperforming loans |
|
$ |
5,537 |
|
|
$ |
2,240 |
|
|
$ |
2,715 |
|
|
$ |
5,537 |
|
|
$ |
2,715 |
|
|
ACLL to total loans |
|
|
1.45 |
|
% |
|
1.45 |
|
% |
|
1.48 |
|
% |
|
1.45 |
|
% |
|
1.48 |
|
% |
ACLL to total nonperforming
loans |
|
|
863.34 |
|
% |
|
2,110.40 |
|
% |
|
1,675.51 |
|
% |
|
863.34 |
|
% |
|
1,675.51 |
|
% |
|
• |
The following table shows the drivers of change in ACLL for the
first and second quarters of 2023: |
DRIVERS OF CHANGE IN
ACLL |
|
|
(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 |
|
Portfolio changes during the
second quarter of 2023 |
|
|
1,652 |
|
Qualitative and quantitative
changes during the second |
|
|
|
quarter of 2023 including changes in economic forecasts |
|
|
(1,122 |
) |
ACLL at June 30, 2023 |
|
$ |
47,803 |
|
|
- The following is a breakout of
nonperforming assets (“NPAs”) at the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NONPERFORMING
ASSETS |
|
June 30, 2023 |
|
|
March 31, 2023 |
|
|
June 30, 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 |
|
$ |
2,262 |
|
41 |
% |
|
$ |
1,459 |
|
65 |
% |
|
$ |
981 |
|
36 |
% |
|
Residential mortgages |
|
|
1,873 |
|
34 |
% |
|
|
— |
|
— |
% |
|
|
— |
|
— |
% |
|
Commercial loans |
|
|
1,306 |
|
23 |
% |
|
|
685 |
|
31 |
% |
|
|
640 |
|
24 |
% |
|
Home equity loans |
|
|
96 |
|
2 |
% |
|
|
96 |
|
4 |
% |
|
|
— |
|
— |
% |
|
CRE loans |
|
|
— |
|
— |
% |
|
|
— |
|
— |
% |
|
|
1,094 |
|
40 |
% |
|
Total nonperforming assets |
|
$ |
5,537 |
|
100 |
% |
|
$ |
2,240 |
|
100 |
% |
|
$ |
1,621 |
|
60 |
% |
|
|
• |
NPAs totaled $5.5 million, or 0.10% of total assets, at June 30,
2023, compared to $2.7 million, or 0.05% of total assets, at June
30, 2022, and $2.2 million, or 0.04% of total assets, at March 31,
2023. |
|
|
|
|
• |
There were no foreclosed assets on the balance sheet at June 30,
2023, June 30, 2022, or March 31, 2023. |
|
|
|
|
• |
Classified assets totaled $30.5 million, or 0.57% of total assets,
at June 30, 2023, compared to $28.9 million, or 0.54% of total
assets, at June 30, 2022, and $26.8 million, or 0.48% of total
assets, at March 31, 2023. |
|
|
|
- The following table summarizes the distribution of deposits and
the percentage of distribution in each category for the periods
indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DEPOSITS |
|
June 30, 2023 |
|
|
March 31, 2023 |
|
|
June 30, 2022 |
|
|
(in $000’s, unaudited) |
|
Balance |
|
% to Total |
|
|
Balance |
|
% to Total |
|
|
Balance |
|
% to Total |
|
|
Demand, noninterest-bearing |
|
$ |
1,319,844 |
|
29 |
% |
|
$ |
1,469,081 |
|
33 |
% |
|
$ |
1,846,365 |
|
40 |
% |
|
Demand, interest-bearing |
|
|
1,064,638 |
|
24 |
% |
|
|
1,196,789 |
|
27 |
% |
|
|
1,218,538 |
|
26 |
% |
|
Savings and money market |
|
|
1,075,835 |
|
24 |
% |
|
|
1,264,567 |
|
28 |
% |
|
|
1,387,003 |
|
30 |
% |
|
Time deposits — under
$250 |
|
|
44,520 |
|
1 |
% |
|
|
37,884 |
|
1 |
% |
|
|
36,691 |
|
1 |
% |
|
Time deposits — $250 and
over |
|
|
171,852 |
|
4 |
% |
|
|
172,070 |
|
4 |
% |
|
|
98,760 |
|
2 |
% |
|
ICS/CDARS — interest-bearing
demand, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
money market and time deposits |
|
|
824,083 |
|
18 |
% |
|
|
304,147 |
|
7 |
% |
|
|
26,287 |
|
1 |
% |
|
Total deposits |
|
$ |
4,500,772 |
|
100 |
% |
|
$ |
4,444,538 |
|
100 |
% |
|
$ |
4,613,644 |
|
100 |
% |
|
|
• |
Total deposits decreased ($112.9) million, or (2%), to $4.501
billion at June 30, 2023, compared to $4.614 billion at June 30,
2022, and increased $56.2 million, or 1%, from $4.445 billion at
March 31, 2023. |
|
|
|
|
• |
ICS/CDARS deposits increased $797.8 million to $824.1 million at
June 30, 2023, compared to $26.3 million at June 30, 2022, and
increased $519.9 million from $304.1 million at March 31,
2023. |
|
|
|
|
• |
Uninsured deposits were approximately $2.148 billion, or 48% of
total deposits, at June 30, 2023, compared to $2.556 billion, or
58% of total deposits, at March 31, 2023, and $2.788 billion, or
64% of total deposits, at December 31, 2022. |
|
|
|
- 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 June 30, 2023, as reflected in
the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Well-capitalized |
|
|
|
|
|
|
|
|
|
|
Financial |
|
|
|
|
|
|
|
|
|
|
Institution |
|
Basel III |
|
|
Heritage |
|
Heritage |
|
Basel III PCA |
|
Minimum |
|
|
Commerce |
|
Bank of |
|
Regulatory |
|
Regulatory |
CAPITAL RATIOS (unaudited) |
|
Corp |
|
Commerce |
|
Guidelines |
|
Requirement (1) |
Total Capital |
|
15.4 |
% |
|
14.8 |
% |
|
10.0 |
% |
|
10.5 |
% |
Tier 1 Capital |
|
13.2 |
% |
|
13.7 |
% |
|
8.0 |
% |
|
8.5 |
% |
Common Equity Tier 1
Capital |
|
13.2 |
% |
|
13.7 |
% |
|
6.5 |
% |
|
7.0 |
% |
Tier 1 Leverage |
|
9.7 |
% |
|
10.0 |
% |
|
5.0 |
% |
|
4.0 |
% |
Tangible common equity /
tangible assets (2) |
|
9.3 |
% |
|
9.6 |
% |
|
N/A |
|
|
N/A |
|
|
(1) |
|
Basel III minimum regulatory requirements for both the Company and
the Bank include a 2.5% capital conservation buffer, except the
leverage ratio. |
|
|
|
(2) |
|
Represents shareholders’ equity minus goodwill and other intangible
assets divided by total assets minus goodwill and other intangible
assets. |
|
|
- The following table reflects the components of accumulated
other comprehensive loss, net of taxes, for the periods
indicated:
|
|
|
|
|
|
|
|
|
|
ACCUMULATED OTHER
COMPREHENSIVE LOSS |
|
June 30, |
|
March 31, |
|
June 30, |
(in $000’s, unaudited) |
|
2023 |
|
|
2023 |
|
|
2022 |
|
Unrealized loss on securities
available-for-sale |
|
$ |
(11,822 |
) |
|
$ |
(8,924 |
) |
|
$ |
(3,036 |
) |
Split dollar insurance contracts
liability |
|
|
(3,187 |
) |
|
|
(3,139 |
) |
|
|
(5,501 |
) |
Supplemental executive retirement
plan liability |
|
|
(2,352 |
) |
|
|
(2,361 |
) |
|
|
(7,508 |
) |
Unrealized gain on interest-only
strip from SBA loans |
|
|
103 |
|
|
|
107 |
|
|
|
127 |
|
Total accumulated other comprehensive loss |
|
$ |
(17,258 |
) |
|
$ |
(14,317 |
) |
|
$ |
(15,918 |
) |
|
|
|
|
|
|
|
|
|
|
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.
The contents of our website are not incorporated into, and do not
perform a part of, this release or of our filings with the SEC.
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,
including public announcements by, and media stories regarding,
other financial institutions that may affect depositors’ confidence
in the banking system; (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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarter Ended: |
|
Percent Change From: |
|
|
For the Six Months Ended: |
CONSOLIDATED INCOME
STATEMENTS |
|
June 30, |
|
March 31, |
|
June 30, |
|
March 31, |
|
June 30, |
|
|
June 30, |
|
June 30, |
|
Percent |
|
(in $000’s, unaudited) |
|
2023 |
|
2023 |
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
2023 |
|
2022 |
|
|
Change |
|
Interest income |
|
$ |
58,341 |
|
$ |
56,274 |
|
$ |
43,556 |
|
|
4 |
|
% |
34 |
|
% |
|
$ |
114,615 |
|
$ |
83,462 |
|
|
37 |
|
% |
Interest expense |
|
|
12,048 |
|
|
7,016 |
|
|
1,677 |
|
|
72 |
|
% |
618 |
|
% |
|
|
19,064 |
|
|
3,362 |
|
|
467 |
|
% |
Net interest income before provision |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for credit losses on loans |
|
|
46,293 |
|
|
49,258 |
|
|
41,879 |
|
|
(6 |
) |
% |
11 |
|
% |
|
|
95,551 |
|
|
80,100 |
|
|
19 |
|
% |
Provision for (recapture of)
credit losses on loans |
|
|
260 |
|
|
32 |
|
|
(181 |
) |
|
713 |
|
% |
244 |
|
% |
|
|
292 |
|
|
(748 |
) |
|
139 |
|
% |
Net interest income after provision |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for credit losses on loans |
|
|
46,033 |
|
|
49,226 |
|
|
42,060 |
|
|
(6 |
) |
% |
9 |
|
% |
|
|
95,259 |
|
|
80,848 |
|
|
18 |
|
% |
Noninterest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service charges and fees on deposit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
accounts |
|
|
901 |
|
|
1,743 |
|
|
867 |
|
|
(48 |
) |
% |
4 |
|
% |
|
|
2,644 |
|
|
1,479 |
|
|
79 |
|
% |
Increase in cash surrender value of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
life insurance |
|
|
502 |
|
|
493 |
|
|
480 |
|
|
2 |
|
% |
5 |
|
% |
|
|
995 |
|
|
960 |
|
|
4 |
|
% |
Gain on sales of SBA loans |
|
|
199 |
|
|
76 |
|
|
27 |
|
|
162 |
|
% |
637 |
|
% |
|
|
275 |
|
|
183 |
|
|
50 |
|
% |
Servicing income |
|
|
104 |
|
|
131 |
|
|
139 |
|
|
(21 |
) |
% |
(25 |
) |
% |
|
|
235 |
|
|
245 |
|
|
(4 |
) |
% |
Termination fees |
|
|
— |
|
|
11 |
|
|
45 |
|
|
(100 |
) |
% |
(100 |
) |
% |
|
|
11 |
|
|
45 |
|
|
(76 |
) |
% |
Gain on proceeds from company-owned |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
life insurance |
|
|
— |
|
|
— |
|
|
27 |
|
|
N/A |
|
(100 |
) |
% |
|
|
— |
|
|
27 |
|
|
(100 |
) |
% |
Gain on warrants |
|
|
— |
|
|
— |
|
|
— |
|
|
N/A |
|
N/A |
|
|
|
— |
|
|
637 |
|
|
(100 |
) |
% |
Other |
|
|
368 |
|
|
312 |
|
|
513 |
|
|
18 |
|
% |
(28 |
) |
% |
|
|
680 |
|
|
982 |
|
|
(31 |
) |
% |
Total noninterest income |
|
|
2,074 |
|
|
2,766 |
|
|
2,098 |
|
|
(25 |
) |
% |
(1 |
) |
% |
|
|
4,840 |
|
|
4,558 |
|
|
6 |
|
% |
Noninterest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
|
13,987 |
|
|
14,809 |
|
|
13,476 |
|
|
(6 |
) |
% |
4 |
|
% |
|
|
28,796 |
|
|
27,297 |
|
|
5 |
|
% |
Occupancy and equipment |
|
|
2,422 |
|
|
2,400 |
|
|
2,277 |
|
|
1 |
|
% |
6 |
|
% |
|
|
4,822 |
|
|
4,714 |
|
|
2 |
|
% |
Professional fees |
|
|
1,149 |
|
|
1,399 |
|
|
1,291 |
|
|
(18 |
) |
% |
(11 |
) |
% |
|
|
2,548 |
|
|
2,371 |
|
|
7 |
|
% |
Other |
|
|
7,433 |
|
|
6,793 |
|
|
6,146 |
|
|
9 |
|
% |
21 |
|
% |
|
|
14,226 |
|
|
12,060 |
|
|
18 |
|
% |
Total noninterest expense |
|
|
24,991 |
|
|
25,401 |
|
|
23,190 |
|
|
(2 |
) |
% |
8 |
|
% |
|
|
50,392 |
|
|
46,442 |
|
|
9 |
|
% |
Income before income
taxes |
|
|
23,116 |
|
|
26,591 |
|
|
20,968 |
|
|
(13 |
) |
% |
10 |
|
% |
|
|
49,707 |
|
|
38,964 |
|
|
28 |
|
% |
Income tax expense |
|
|
6,713 |
|
|
7,674 |
|
|
6,147 |
|
|
(13 |
) |
% |
9 |
|
% |
|
|
14,387 |
|
|
11,277 |
|
|
28 |
|
% |
Net income |
|
$ |
16,403 |
|
$ |
18,917 |
|
$ |
14,821 |
|
|
(13 |
) |
% |
11 |
|
% |
|
$ |
35,320 |
|
$ |
27,687 |
|
|
28 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PER COMMON SHARE DATA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
|
$ |
0.27 |
|
$ |
0.31 |
|
$ |
0.24 |
|
|
(13 |
) |
% |
13 |
|
% |
|
$ |
0.58 |
|
$ |
0.46 |
|
|
26 |
|
% |
Diluted earnings per
share |
|
$ |
0.27 |
|
$ |
0.31 |
|
$ |
0.24 |
|
|
(13 |
) |
% |
13 |
|
% |
|
$ |
0.58 |
|
$ |
0.45 |
|
|
29 |
|
% |
Weighted average shares
outstanding - basic |
|
|
61,035,435 |
|
|
60,908,221 |
|
|
60,542,170 |
|
|
0 |
|
% |
1 |
|
% |
|
|
60,971,828 |
|
|
60,468,027 |
|
|
1 |
|
% |
Weighted average shares
outstanding - diluted |
|
|
61,167,689 |
|
|
61,268,072 |
|
|
60,969,154 |
|
|
0 |
|
% |
0 |
|
% |
|
|
61,192,720 |
|
|
60,945,711 |
|
|
0 |
|
% |
Common shares outstanding at
period-end |
|
|
61,091,155 |
|
|
60,948,607 |
|
|
60,666,794 |
|
|
0 |
|
% |
1 |
|
% |
|
|
61,091,155 |
|
|
60,666,794 |
|
|
1 |
|
% |
Dividend per share |
|
$ |
0.13 |
|
$ |
0.13 |
|
$ |
0.13 |
|
|
0 |
|
% |
0 |
|
% |
|
$ |
0.26 |
|
$ |
0.26 |
|
|
0 |
|
% |
Book value per share |
|
$ |
10.70 |
|
$ |
10.62 |
|
$ |
10.01 |
|
|
1 |
|
% |
7 |
|
% |
|
$ |
10.70 |
|
$ |
10.01 |
|
|
7 |
|
% |
Tangible book value per
share |
|
$ |
7.80 |
|
$ |
7.70 |
|
$ |
7.04 |
|
|
1 |
|
% |
11 |
|
% |
|
$ |
7.80 |
|
$ |
7.04 |
|
|
11 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KEY FINANCIAL RATIOS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized return on average
equity |
|
|
10.12 |
% |
|
12.03 |
% |
|
9.86 |
|
% |
(16 |
) |
% |
3 |
|
% |
|
|
11.06 |
% |
|
9.29 |
|
% |
19 |
|
% |
Annualized return on average
tangible |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
common equity |
|
|
13.93 |
% |
|
16.71 |
% |
|
14.06 |
|
% |
(17 |
) |
% |
(1 |
) |
% |
|
|
15.29 |
% |
|
13.28 |
|
% |
15 |
|
% |
Annualized return on average
assets |
|
|
1.25 |
% |
|
1.47 |
% |
|
1.11 |
|
% |
(15 |
) |
% |
13 |
|
% |
|
|
1.35 |
% |
|
1.04 |
|
% |
30 |
|
% |
Annualized return on average
tangible assets |
|
|
1.29 |
% |
|
1.52 |
% |
|
1.15 |
|
% |
(15 |
) |
% |
12 |
|
% |
|
|
1.40 |
% |
|
1.07 |
|
% |
31 |
|
% |
Net interest margin (FTE) |
|
|
3.76 |
% |
|
4.09 |
% |
|
3.38 |
|
% |
(8 |
) |
% |
11 |
|
% |
|
|
3.92 |
% |
|
3.21 |
|
% |
22 |
|
% |
Efficiency ratio |
|
|
51.67 |
% |
|
48.83 |
% |
|
52.73 |
|
% |
6 |
|
% |
(2 |
) |
% |
|
|
50.20 |
% |
|
54.86 |
|
% |
(8 |
) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE BALANCES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in $000’s, unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets |
|
$ |
5,278,243 |
|
$ |
5,235,506 |
|
$ |
5,334,636 |
|
|
1 |
|
% |
(1 |
) |
% |
|
$ |
5,256,993 |
|
$ |
5,388,638 |
|
|
(2 |
) |
% |
Average tangible assets |
|
$ |
5,100,399 |
|
$ |
5,057,063 |
|
$ |
5,154,245 |
|
|
1 |
|
% |
(1 |
) |
% |
|
$ |
5,078,851 |
|
$ |
5,207,912 |
|
|
(2 |
) |
% |
Average earning assets |
|
$ |
4,948,397 |
|
$ |
4,895,009 |
|
$ |
4,985,611 |
|
|
1 |
|
% |
(1 |
) |
% |
|
$ |
4,921,850 |
|
$ |
5,039,432 |
|
|
(2 |
) |
% |
Average loans
held-for-sale |
|
$ |
4,166 |
|
$ |
2,755 |
|
$ |
1,824 |
|
|
51 |
|
% |
128 |
|
% |
|
$ |
3,764 |
|
$ |
1,652 |
|
|
128 |
|
% |
Average total loans |
|
$ |
3,227,175 |
|
$ |
3,274,770 |
|
$ |
3,048,353 |
|
|
(1 |
) |
% |
6 |
|
% |
|
$ |
3,250,541 |
|
$ |
3,037,791 |
|
|
7 |
|
% |
Average deposits |
|
$ |
4,424,041 |
|
$ |
4,415,952 |
|
$ |
4,579,436 |
|
|
0 |
|
% |
(3 |
) |
% |
|
$ |
4,420,019 |
|
$ |
4,637,960 |
|
|
(5 |
) |
% |
Average demand deposits -
noninterest-bearing |
|
$ |
1,368,373 |
|
$ |
1,667,260 |
|
$ |
1,836,350 |
|
|
(18 |
) |
% |
(25 |
) |
% |
|
$ |
1,516,991 |
|
$ |
1,846,699 |
|
|
(18 |
) |
% |
Average interest-bearing
deposits |
|
$ |
3,055,668 |
|
$ |
2,748,692 |
|
$ |
2,743,086 |
|
|
11 |
|
% |
11 |
|
% |
|
$ |
2,903,028 |
|
$ |
2,791,261 |
|
|
4 |
|
% |
Average interest-bearing
liabilities |
|
$ |
3,157,722 |
|
$ |
2,834,732 |
|
$ |
2,791,527 |
|
|
11 |
|
% |
13 |
|
% |
|
$ |
2,997,119 |
|
$ |
2,835,495 |
|
|
6 |
|
% |
Average equity |
|
$ |
650,240 |
|
$ |
637,597 |
|
$ |
603,182 |
|
|
2 |
|
% |
8 |
|
% |
|
$ |
643,954 |
|
$ |
601,279 |
|
|
7 |
|
% |
Average tangible common
equity |
|
$ |
472,396 |
|
$ |
459,154 |
|
$ |
422,791 |
|
|
3 |
|
% |
12 |
|
% |
|
$ |
465,812 |
|
$ |
420,553 |
|
|
11 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarter Ended: |
|
CONSOLIDATED INCOME
STATEMENTS |
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
|
(in $000’s, unaudited) |
|
2023 |
|
2023 |
|
2022 |
|
2022 |
|
2022 |
|
|
Interest income |
|
$ |
58,341 |
|
$ |
56,274 |
|
$ |
55,192 |
|
$ |
50,174 |
|
$ |
43,556 |
|
|
Interest expense |
|
|
12,048 |
|
|
7,016 |
|
|
3,453 |
|
|
2,133 |
|
|
1,677 |
|
|
Net interest income before provision |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for credit losses on loans |
|
|
46,293 |
|
|
49,258 |
|
|
51,739 |
|
|
48,041 |
|
|
41,879 |
|
|
Provision for (recapture of)
credit losses on loans |
|
|
260 |
|
|
32 |
|
|
508 |
|
|
1,006 |
|
|
(181 |
) |
|
Net interest income after provision |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for credit losses on loans |
|
|
46,033 |
|
|
49,226 |
|
|
51,231 |
|
|
47,035 |
|
|
42,060 |
|
|
Noninterest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service charges and fees on deposit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
accounts |
|
|
901 |
|
|
1,743 |
|
|
1,801 |
|
|
1,360 |
|
|
867 |
|
|
Increase in cash surrender value of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
life insurance |
|
|
502 |
|
|
493 |
|
|
481 |
|
|
484 |
|
|
480 |
|
|
Gain on sales of SBA loans |
|
|
199 |
|
|
76 |
|
|
— |
|
|
308 |
|
|
27 |
|
|
Servicing income |
|
|
104 |
|
|
131 |
|
|
138 |
|
|
125 |
|
|
139 |
|
|
Termination fees |
|
|
— |
|
|
11 |
|
|
— |
|
|
16 |
|
|
45 |
|
|
Gain on proceeds from company-owned |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
life insurance |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
27 |
|
|
Gain on warrants |
|
|
— |
|
|
— |
|
|
— |
|
|
32 |
|
|
— |
|
|
Other |
|
|
368 |
|
|
312 |
|
|
352 |
|
|
456 |
|
|
513 |
|
|
Total noninterest income |
|
|
2,074 |
|
|
2,766 |
|
|
2,772 |
|
|
2,781 |
|
|
2,098 |
|
|
Noninterest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
|
13,987 |
|
|
14,809 |
|
|
13,915 |
|
|
14,119 |
|
|
13,476 |
|
|
Occupancy and equipment |
|
|
2,422 |
|
|
2,400 |
|
|
2,510 |
|
|
2,415 |
|
|
2,277 |
|
|
Professional fees |
|
|
1,149 |
|
|
1,399 |
|
|
1,414 |
|
|
1,230 |
|
|
1,291 |
|
|
Other |
|
|
7,433 |
|
|
6,793 |
|
|
6,679 |
|
|
6,135 |
|
|
6,146 |
|
|
Total noninterest expense |
|
|
24,991 |
|
|
25,401 |
|
|
24,518 |
|
|
23,899 |
|
|
23,190 |
|
|
Income before income
taxes |
|
|
23,116 |
|
|
26,591 |
|
|
29,485 |
|
|
25,917 |
|
|
20,968 |
|
|
Income tax expense |
|
|
6,713 |
|
|
7,674 |
|
|
8,686 |
|
|
7,848 |
|
|
6,147 |
|
|
Net income |
|
$ |
16,403 |
|
$ |
18,917 |
|
$ |
20,799 |
|
$ |
18,069 |
|
$ |
14,821 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PER COMMON SHARE DATA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
|
$ |
0.27 |
|
$ |
0.31 |
|
$ |
0.34 |
|
$ |
0.30 |
|
$ |
0.24 |
|
|
Diluted earnings per
share |
|
$ |
0.27 |
|
$ |
0.31 |
|
$ |
0.34 |
|
$ |
0.30 |
|
$ |
0.24 |
|
|
Weighted average shares
outstanding - basic |
|
|
61,035,435 |
|
|
60,908,221 |
|
|
60,788,803 |
|
|
60,686,992 |
|
|
60,542,170 |
|
|
Weighted average shares
outstanding - diluted |
|
|
61,167,689 |
|
|
61,268,072 |
|
|
61,357,023 |
|
|
61,123,801 |
|
|
60,969,154 |
|
|
Common shares outstanding at
period-end |
|
|
61,091,155 |
|
|
60,948,607 |
|
|
60,852,723 |
|
|
60,716,794 |
|
|
60,666,794 |
|
|
Dividend per share |
|
$ |
0.13 |
|
$ |
0.13 |
|
$ |
0.13 |
|
$ |
0.13 |
|
$ |
0.13 |
|
|
Book value per share |
|
$ |
10.70 |
|
$ |
10.62 |
|
$ |
10.39 |
|
$ |
10.04 |
|
$ |
10.01 |
|
|
Tangible book value per
share |
|
$ |
7.80 |
|
$ |
7.70 |
|
$ |
7.46 |
|
$ |
7.09 |
|
$ |
7.04 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KEY FINANCIAL RATIOS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized return on average
equity |
|
|
10.12 |
% |
|
12.03 |
% |
|
13.40 |
% |
|
11.72 |
% |
|
9.86 |
|
% |
Annualized return on average
tangible |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
common equity |
|
|
13.93 |
% |
|
16.71 |
% |
|
18.89 |
% |
|
16.60 |
% |
|
14.06 |
|
% |
Annualized return on average
assets |
|
|
1.25 |
% |
|
1.47 |
% |
|
1.54 |
% |
|
1.31 |
% |
|
1.11 |
|
% |
Annualized return on average
tangible assets |
|
|
1.29 |
% |
|
1.52 |
% |
|
1.59 |
% |
|
1.36 |
% |
|
1.15 |
|
% |
Net interest margin (FTE) |
|
|
3.76 |
% |
|
4.09 |
% |
|
4.10 |
% |
|
3.73 |
% |
|
3.38 |
|
% |
Efficiency ratio |
|
|
51.67 |
% |
|
48.83 |
% |
|
44.98 |
% |
|
47.02 |
% |
|
52.73 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE BALANCES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in $000’s, unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets |
|
$ |
5,278,243 |
|
$ |
5,235,506 |
|
$ |
5,360,867 |
|
$ |
5,466,330 |
|
$ |
5,334,636 |
|
|
Average tangible assets |
|
$ |
5,100,399 |
|
$ |
5,057,063 |
|
$ |
5,181,793 |
|
$ |
5,286,591 |
|
$ |
5,154,245 |
|
|
Average earning assets |
|
$ |
4,948,397 |
|
$ |
4,895,009 |
|
$ |
5,009,578 |
|
$ |
5,117,373 |
|
$ |
4,985,611 |
|
|
Average loans
held-for-sale |
|
$ |
4,166 |
|
$ |
2,755 |
|
$ |
2,346 |
|
$ |
3,282 |
|
$ |
1,824 |
|
|
Average total loans |
|
$ |
3,227,175 |
|
$ |
3,274,770 |
|
$ |
3,248,210 |
|
$ |
3,140,705 |
|
$ |
3,048,353 |
|
|
Average deposits |
|
$ |
4,424,041 |
|
$ |
4,415,952 |
|
$ |
4,600,533 |
|
$ |
4,712,044 |
|
$ |
4,579,436 |
|
|
Average demand deposits -
noninterest-bearing |
|
$ |
1,368,373 |
|
$ |
1,667,260 |
|
$ |
1,851,003 |
|
$ |
1,910,748 |
|
$ |
1,836,350 |
|
|
Average interest-bearing
deposits |
|
$ |
3,055,668 |
|
$ |
2,748,692 |
|
$ |
2,749,530 |
|
$ |
2,801,296 |
|
$ |
2,743,086 |
|
|
Average interest-bearing
liabilities |
|
$ |
3,157,722 |
|
$ |
2,834,732 |
|
$ |
2,788,880 |
|
$ |
2,840,611 |
|
$ |
2,791,527 |
|
|
Average equity |
|
$ |
650,240 |
|
$ |
637,597 |
|
$ |
615,941 |
|
$ |
611,707 |
|
$ |
603,182 |
|
|
Average tangible common
equity |
|
$ |
472,396 |
|
$ |
459,154 |
|
$ |
436,867 |
|
$ |
431,968 |
|
$ |
422,791 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
End of Period: |
|
Percent Change From: |
|
CONSOLIDATED BALANCE
SHEETS |
|
June 30, |
|
March 31, |
|
June 30, |
|
March 31, |
|
June 30, |
|
(in $000’s, unaudited) |
|
2023 |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
$ |
42,551 |
|
|
$ |
41,318 |
|
|
$ |
35,764 |
|
|
3 |
|
% |
19 |
|
% |
Other investments and
interest-bearing deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in other financial institutions |
|
|
468,951 |
|
|
|
698,690 |
|
|
|
840,821 |
|
|
(33 |
) |
% |
(44 |
) |
% |
Securities available-for-sale,
at fair value |
|
|
486,058 |
|
|
|
491,751 |
|
|
|
332,129 |
|
|
(1 |
) |
% |
46 |
|
% |
Securities held-to-maturity,
at amortized cost |
|
|
682,095 |
|
|
|
698,231 |
|
|
|
723,716 |
|
|
(2 |
) |
% |
(6 |
) |
% |
Loans held-for-sale - SBA,
including deferred costs |
|
|
3,136 |
|
|
|
2,792 |
|
|
|
2,281 |
|
|
12 |
|
% |
37 |
|
% |
Loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
|
466,354 |
|
|
|
506,602 |
|
|
|
531,421 |
|
|
(8 |
) |
% |
(12 |
) |
% |
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CRE - owner occupied |
|
|
608,031 |
|
|
|
603,298 |
|
|
|
597,521 |
|
|
1 |
|
% |
2 |
|
% |
CRE - non-owner occupied |
|
|
1,147,313 |
|
|
|
1,083,852 |
|
|
|
993,621 |
|
|
6 |
|
% |
15 |
|
% |
Land and construction |
|
|
162,816 |
|
|
|
166,408 |
|
|
|
155,389 |
|
|
(2 |
) |
% |
5 |
|
% |
Home equity |
|
|
128,009 |
|
|
|
124,481 |
|
|
|
116,641 |
|
|
3 |
|
% |
10 |
|
% |
Multifamily |
|
|
244,959 |
|
|
|
231,242 |
|
|
|
221,938 |
|
|
6 |
|
% |
10 |
|
% |
Residential mortgages |
|
|
514,064 |
|
|
|
528,639 |
|
|
|
448,958 |
|
|
(3 |
) |
% |
15 |
|
% |
Consumer and other |
|
|
17,635 |
|
|
|
17,905 |
|
|
|
18,354 |
|
|
(2 |
) |
% |
(4 |
) |
% |
Loans |
|
|
3,289,181 |
|
|
|
3,262,427 |
|
|
|
3,083,843 |
|
|
1 |
|
% |
7 |
|
% |
Deferred loan fees, net |
|
|
(397 |
) |
|
|
(512 |
) |
|
|
(1,391 |
) |
|
(22 |
) |
% |
(71 |
) |
% |
Total loans, net of deferred costs and fees |
|
|
3,288,784 |
|
|
|
3,261,915 |
|
|
|
3,082,452 |
|
|
1 |
|
% |
7 |
|
% |
Allowance for credit losses on
loans |
|
|
(47,803 |
) |
|
|
(47,273 |
) |
|
|
(45,490 |
) |
|
1 |
|
% |
5 |
|
% |
Loans, net |
|
|
3,240,981 |
|
|
|
3,214,642 |
|
|
|
3,036,962 |
|
|
1 |
|
% |
7 |
|
% |
Company-owned life
insurance |
|
|
79,940 |
|
|
|
79,438 |
|
|
|
77,972 |
|
|
1 |
|
% |
3 |
|
% |
Premises and equipment,
net |
|
|
9,197 |
|
|
|
9,142 |
|
|
|
9,593 |
|
|
1 |
|
% |
(4 |
) |
% |
Goodwill |
|
|
167,631 |
|
|
|
167,631 |
|
|
|
167,631 |
|
|
0 |
|
% |
0 |
|
% |
Other intangible assets |
|
|
9,830 |
|
|
|
10,431 |
|
|
|
12,351 |
|
|
(6 |
) |
% |
(20 |
) |
% |
Accrued interest receivable
and other assets |
|
|
121,467 |
|
|
|
122,474 |
|
|
|
117,621 |
|
|
(1 |
) |
% |
3 |
|
% |
Total assets |
|
$ |
5,311,837 |
|
|
$ |
5,536,540 |
|
|
$ |
5,356,841 |
|
|
(4 |
) |
% |
(1 |
) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, noninterest-bearing |
|
$ |
1,319,844 |
|
|
$ |
1,469,081 |
|
|
$ |
1,846,365 |
|
|
(10 |
) |
% |
(29 |
) |
% |
Demand, interest-bearing |
|
|
1,064,638 |
|
|
|
1,196,789 |
|
|
|
1,218,538 |
|
|
(11 |
) |
% |
(13 |
) |
% |
Savings and money market |
|
|
1,075,835 |
|
|
|
1,264,567 |
|
|
|
1,387,003 |
|
|
(15 |
) |
% |
(22 |
) |
% |
Time deposits - under $250 |
|
|
44,520 |
|
|
|
37,884 |
|
|
|
36,691 |
|
|
18 |
|
% |
21 |
|
% |
Time deposits - $250 and over |
|
|
171,852 |
|
|
|
172,070 |
|
|
|
98,760 |
|
|
0 |
|
% |
74 |
|
% |
ICS/CDARS - interest-bearing demand, money market |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and time deposits |
|
|
824,083 |
|
|
|
304,147 |
|
|
|
26,287 |
|
|
171 |
|
% |
3035 |
|
% |
Total deposits |
|
|
4,500,772 |
|
|
|
4,444,538 |
|
|
|
4,613,644 |
|
|
1 |
|
% |
(2 |
) |
% |
Other short-term borrowings |
|
|
— |
|
|
|
300,000 |
|
|
|
— |
|
|
N/A |
|
|
N/A |
|
|
Subordinated debt, net of issuance costs |
|
|
39,425 |
|
|
|
39,387 |
|
|
|
39,274 |
|
|
0 |
|
% |
0 |
|
% |
Accrued interest payable and other liabilities |
|
|
117,970 |
|
|
|
105,407 |
|
|
|
96,699 |
|
|
12 |
|
% |
22 |
|
% |
Total liabilities |
|
|
4,658,167 |
|
|
|
4,889,332 |
|
|
|
4,749,617 |
|
|
(5 |
) |
% |
(2 |
) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’
Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock |
|
|
505,075 |
|
|
|
504,135 |
|
|
|
499,832 |
|
|
0 |
|
% |
1 |
|
% |
Retained earnings |
|
|
165,853 |
|
|
|
157,390 |
|
|
|
123,310 |
|
|
5 |
|
% |
35 |
|
% |
Accumulated other comprehensive loss |
|
|
(17,258 |
) |
|
|
(14,317 |
) |
|
|
(15,918 |
) |
|
(21 |
) |
% |
(8 |
) |
% |
Total shareholders' equity |
|
|
653,670 |
|
|
|
647,208 |
|
|
|
607,224 |
|
|
1 |
|
% |
8 |
|
% |
Total liabilities and shareholders’ equity |
|
$ |
5,311,837 |
|
|
$ |
5,536,540 |
|
|
$ |
5,356,841 |
|
|
(4 |
) |
% |
(1 |
) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
End of Period: |
CONSOLIDATED BALANCE
SHEETS |
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
(in $000’s, unaudited) |
|
2023 |
|
|
2023 |
|
|
2022 |
|
|
2022 |
|
|
2022 |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
$ |
42,551 |
|
|
$ |
41,318 |
|
|
$ |
27,595 |
|
|
$ |
40,500 |
|
|
$ |
35,764 |
|
Other investments and
interest-bearing deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in other financial institutions |
|
|
468,951 |
|
|
|
698,690 |
|
|
|
279,008 |
|
|
|
641,251 |
|
|
|
840,821 |
|
Securities available-for-sale,
at fair value |
|
|
486,058 |
|
|
|
491,751 |
|
|
|
489,596 |
|
|
|
478,534 |
|
|
|
332,129 |
|
Securities held-to-maturity,
at amortized cost |
|
|
682,095 |
|
|
|
698,231 |
|
|
|
714,990 |
|
|
|
703,794 |
|
|
|
723,716 |
|
Loans held-for-sale - SBA,
including deferred costs |
|
|
3,136 |
|
|
|
2,792 |
|
|
|
2,456 |
|
|
|
2,081 |
|
|
|
2,281 |
|
Loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
|
466,354 |
|
|
|
506,602 |
|
|
|
533,915 |
|
|
|
542,829 |
|
|
|
531,421 |
|
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CRE - owner occupied |
|
|
608,031 |
|
|
|
603,298 |
|
|
|
614,663 |
|
|
|
612,241 |
|
|
|
597,521 |
|
CRE - non-owner occupied |
|
|
1,147,313 |
|
|
|
1,083,852 |
|
|
|
1,066,368 |
|
|
|
1,023,405 |
|
|
|
993,621 |
|
Land and construction |
|
|
162,816 |
|
|
|
166,408 |
|
|
|
163,577 |
|
|
|
167,439 |
|
|
|
155,389 |
|
Home equity |
|
|
128,009 |
|
|
|
124,481 |
|
|
|
120,724 |
|
|
|
116,489 |
|
|
|
116,641 |
|
Multifamily |
|
|
244,959 |
|
|
|
231,242 |
|
|
|
244,882 |
|
|
|
229,455 |
|
|
|
221,938 |
|
Residential mortgages |
|
|
514,064 |
|
|
|
528,639 |
|
|
|
537,905 |
|
|
|
508,839 |
|
|
|
448,958 |
|
Consumer and other |
|
|
17,635 |
|
|
|
17,905 |
|
|
|
17,033 |
|
|
|
16,620 |
|
|
|
18,354 |
|
Loans |
|
|
3,289,181 |
|
|
|
3,262,427 |
|
|
|
3,299,067 |
|
|
|
3,217,317 |
|
|
|
3,083,843 |
|
Deferred loan fees, net |
|
|
(397 |
) |
|
|
(512 |
) |
|
|
(517 |
) |
|
|
(844 |
) |
|
|
(1,391 |
) |
Total loans, net of deferred fees |
|
|
3,288,784 |
|
|
|
3,261,915 |
|
|
|
3,298,550 |
|
|
|
3,216,473 |
|
|
|
3,082,452 |
|
Allowance for credit losses on
loans |
|
|
(47,803 |
) |
|
|
(47,273 |
) |
|
|
(47,512 |
) |
|
|
(46,921 |
) |
|
|
(45,490 |
) |
Loans, net |
|
|
3,240,981 |
|
|
|
3,214,642 |
|
|
|
3,251,038 |
|
|
|
3,169,552 |
|
|
|
3,036,962 |
|
Company-owned life
insurance |
|
|
79,940 |
|
|
|
79,438 |
|
|
|
78,945 |
|
|
|
78,456 |
|
|
|
77,972 |
|
Premises and equipment,
net |
|
|
9,197 |
|
|
|
9,142 |
|
|
|
9,301 |
|
|
|
9,428 |
|
|
|
9,593 |
|
Goodwill |
|
|
167,631 |
|
|
|
167,631 |
|
|
|
167,631 |
|
|
|
167,631 |
|
|
|
167,631 |
|
Other intangible assets |
|
|
9,830 |
|
|
|
10,431 |
|
|
|
11,033 |
|
|
|
11,692 |
|
|
|
12,351 |
|
Accrued interest receivable
and other assets |
|
|
121,467 |
|
|
|
122,474 |
|
|
|
125,987 |
|
|
|
128,343 |
|
|
|
117,621 |
|
Total assets |
|
$ |
5,311,837 |
|
|
$ |
5,536,540 |
|
|
$ |
5,157,580 |
|
|
$ |
5,431,262 |
|
|
$ |
5,356,841 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, noninterest-bearing |
|
$ |
1,319,844 |
|
|
$ |
1,469,081 |
|
|
$ |
1,736,722 |
|
|
$ |
1,883,574 |
|
|
$ |
1,846,365 |
|
Demand, interest-bearing |
|
|
1,064,638 |
|
|
|
1,196,789 |
|
|
|
1,196,427 |
|
|
|
1,154,403 |
|
|
|
1,218,538 |
|
Savings and money market |
|
|
1,075,835 |
|
|
|
1,264,567 |
|
|
|
1,285,444 |
|
|
|
1,487,400 |
|
|
|
1,387,003 |
|
Time deposits - under $250 |
|
|
44,520 |
|
|
|
37,884 |
|
|
|
32,445 |
|
|
|
34,728 |
|
|
|
36,691 |
|
Time deposits - $250 and over |
|
|
171,852 |
|
|
|
172,070 |
|
|
|
108,192 |
|
|
|
93,263 |
|
|
|
98,760 |
|
ICS/CDARS - interest-bearing demand, money market |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and time deposits |
|
|
824,083 |
|
|
|
304,147 |
|
|
|
30,374 |
|
|
|
29,897 |
|
|
|
26,287 |
|
Total deposits |
|
|
4,500,772 |
|
|
|
4,444,538 |
|
|
|
4,389,604 |
|
|
|
4,683,265 |
|
|
|
4,613,644 |
|
Other short-term borrowings |
|
|
— |
|
|
|
300,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Subordinated debt, net of issuance costs |
|
|
39,425 |
|
|
|
39,387 |
|
|
|
39,350 |
|
|
|
39,312 |
|
|
|
39,274 |
|
Accrued interest payable and other liabilities |
|
|
117,970 |
|
|
|
105,407 |
|
|
|
96,170 |
|
|
|
99,168 |
|
|
|
96,699 |
|
Total liabilities |
|
|
4,658,167 |
|
|
|
4,889,332 |
|
|
|
4,525,124 |
|
|
|
4,821,745 |
|
|
|
4,749,617 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’
Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock |
|
|
505,075 |
|
|
|
504,135 |
|
|
|
502,923 |
|
|
|
501,240 |
|
|
|
499,832 |
|
Retained earnings |
|
|
165,853 |
|
|
|
157,390 |
|
|
|
146,389 |
|
|
|
133,489 |
|
|
|
123,310 |
|
Accumulated other comprehensive loss |
|
|
(17,258 |
) |
|
|
(14,317 |
) |
|
|
(16,856 |
) |
|
|
(25,212 |
) |
|
|
(15,918 |
) |
Total shareholders' equity |
|
|
653,670 |
|
|
|
647,208 |
|
|
|
632,456 |
|
|
|
609,517 |
|
|
|
607,224 |
|
Total liabilities and shareholders’ equity |
|
$ |
5,311,837 |
|
|
$ |
5,536,540 |
|
|
$ |
5,157,580 |
|
|
$ |
5,431,262 |
|
|
$ |
5,356,841 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At or For the Quarter Ended: |
|
Percent Change From: |
|
CREDIT QUALITY
DATA |
|
June 30, |
|
March 31, |
|
June 30, |
|
March 31, |
|
June 30, |
|
(in $000’s, unaudited) |
|
2023 |
|
|
2023 |
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
Nonaccrual loans -
held-for-investment |
|
$ |
3,275 |
|
|
$ |
781 |
|
$ |
1,734 |
|
|
319 |
|
% |
89 |
|
% |
Restructured and loans over 90
days past due |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and still accruing |
|
|
2,262 |
|
|
|
1,459 |
|
|
981 |
|
|
55 |
|
% |
131 |
|
% |
Total nonperforming loans |
|
|
5,537 |
|
|
|
2,240 |
|
|
2,715 |
|
|
147 |
|
% |
104 |
|
% |
Foreclosed assets |
|
|
— |
|
|
|
— |
|
|
— |
|
|
N/A |
|
|
N/A |
|
|
Total nonperforming assets |
|
$ |
5,537 |
|
|
$ |
2,240 |
|
$ |
2,715 |
|
|
147 |
|
% |
104 |
|
% |
Other restructured loans still
accruing |
|
$ |
— |
|
|
$ |
— |
|
$ |
113 |
|
|
N/A |
|
|
(100 |
) |
% |
Net charge-offs (recoveries)
during the quarter |
|
$ |
(270 |
) |
|
$ |
271 |
|
$ |
(2,883 |
) |
|
(200 |
) |
% |
91 |
|
% |
Provision for (recapture of)
credit losses on loans during the quarter |
|
$ |
260 |
|
|
$ |
32 |
|
$ |
(181 |
) |
|
713 |
|
% |
244 |
|
% |
Allowance for credit losses on
loans |
|
$ |
47,803 |
|
|
$ |
47,273 |
|
$ |
45,490 |
|
|
1 |
|
% |
5 |
|
% |
Classified assets |
|
$ |
30,500 |
|
|
$ |
26,800 |
|
$ |
28,929 |
|
|
14 |
|
% |
5 |
|
% |
Allowance for credit losses on
loans to total loans |
|
|
1.45 |
|
% |
|
1.45 |
% |
|
1.48 |
|
% |
0 |
|
% |
(2 |
) |
% |
Allowance for credit losses on
loans to total nonperforming loans |
|
|
863.34 |
|
% |
|
2,110.40 |
% |
|
1,675.51 |
|
% |
(59 |
) |
% |
(48 |
) |
% |
Nonperforming assets to total
assets |
|
|
0.10 |
|
% |
|
0.04 |
% |
|
0.05 |
|
% |
150 |
|
% |
100 |
|
% |
Nonperforming loans to total
loans |
|
|
0.17 |
|
% |
|
0.07 |
% |
|
0.09 |
|
% |
143 |
|
% |
89 |
|
% |
Classified assets to Heritage
Commerce Corp |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 capital plus allowance for credit losses on loans |
|
|
6 |
|
% |
|
5 |
% |
|
6 |
|
% |
20 |
|
% |
0 |
|
% |
Classified assets to Heritage
Bank of Commerce |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 capital plus allowance for credit losses on loans |
|
|
5 |
|
% |
|
5 |
% |
|
6 |
|
% |
0 |
|
% |
(17 |
) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER PERIOD-END
STATISTICS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in $000’s, unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Heritage Commerce
Corp: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible common equity (1) |
|
$ |
476,209 |
|
|
$ |
469,146 |
|
$ |
427,242 |
|
|
2 |
|
% |
11 |
|
% |
Shareholders’ equity / total assets |
|
|
12.31 |
|
% |
|
11.69 |
% |
|
11.34 |
|
% |
5 |
|
% |
9 |
|
% |
Tangible common equity / tangible assets (2) |
|
9.27 |
|
% |
|
8.76 |
% |
|
8.25 |
|
% |
6 |
|
% |
12 |
|
% |
Loan to deposit ratio |
|
|
73.07 |
|
% |
|
73.39 |
% |
|
66.81 |
|
% |
0 |
|
% |
9 |
|
% |
Noninterest-bearing deposits / total deposits |
|
|
29.32 |
|
% |
|
33.05 |
% |
|
40.02 |
|
% |
(11 |
) |
% |
(27 |
) |
% |
Total capital ratio |
|
|
15.4 |
|
% |
|
15.3 |
% |
|
14.6 |
|
% |
1 |
|
% |
5 |
|
% |
Tier 1 capital ratio |
|
|
13.2 |
|
% |
|
13.1 |
% |
|
12.5 |
|
% |
1 |
|
% |
6 |
|
% |
Common Equity Tier 1 capital ratio |
|
|
13.2 |
|
% |
|
13.1 |
% |
|
12.5 |
|
% |
1 |
|
% |
6 |
|
% |
Tier 1 leverage ratio |
|
|
9.7 |
|
% |
|
9.6 |
% |
|
8.7 |
|
% |
1 |
|
% |
11 |
|
% |
Heritage Bank of
Commerce: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capital ratio |
|
|
14.8 |
|
% |
|
14.7 |
% |
|
14.1 |
|
% |
1 |
|
% |
5 |
|
% |
Tier 1 capital ratio |
|
|
13.7 |
|
% |
|
13.5 |
% |
|
13.0 |
|
% |
1 |
|
% |
5 |
|
% |
Common Equity Tier 1 capital ratio |
|
|
13.7 |
|
% |
|
13.5 |
% |
|
13.0 |
|
% |
1 |
|
% |
5 |
|
% |
Tier 1 leverage ratio |
|
|
10.0 |
|
% |
|
9.9 |
% |
|
9.0 |
|
% |
1 |
|
% |
11 |
|
% |
|
(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 |
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
|
(in $000’s, unaudited) |
|
2023 |
|
|
2023 |
|
2022 |
|
|
2022 |
|
|
2022 |
|
|
Nonaccrual loans -
held-for-investment |
|
$ |
3,275 |
|
|
$ |
781 |
|
$ |
740 |
|
|
$ |
491 |
|
|
$ |
1,734 |
|
|
Restructured and loans over 90
days past due |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and still accruing |
|
|
2,262 |
|
|
|
1,459 |
|
|
1,685 |
|
|
|
545 |
|
|
|
981 |
|
|
Total nonperforming loans |
|
|
5,537 |
|
|
|
2,240 |
|
|
2,425 |
|
|
|
1,036 |
|
|
|
2,715 |
|
|
Foreclosed assets |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Total nonperforming assets |
|
$ |
5,537 |
|
|
$ |
2,240 |
|
$ |
2,425 |
|
|
$ |
1,036 |
|
|
$ |
2,715 |
|
|
Other restructured loans still
accruing |
|
$ |
— |
|
|
$ |
— |
|
$ |
171 |
|
|
$ |
93 |
|
|
$ |
113 |
|
|
Net charge-offs (recoveries)
during the quarter |
|
$ |
(270 |
) |
|
$ |
271 |
|
$ |
(83 |
) |
|
$ |
(425 |
) |
|
$ |
(2,883 |
) |
|
Provision for (recapture of)
credit losses on loans during the quarter |
|
$ |
260 |
|
|
$ |
32 |
|
$ |
508 |
|
|
$ |
1,006 |
|
|
$ |
(181 |
) |
|
Allowance for credit losses on
loans |
|
$ |
47,803 |
|
|
$ |
47,273 |
|
$ |
47,512 |
|
|
$ |
46,921 |
|
|
$ |
45,490 |
|
|
Classified assets |
|
$ |
30,500 |
|
|
$ |
26,800 |
|
$ |
14,544 |
|
|
$ |
28,570 |
|
|
$ |
28,929 |
|
|
Allowance for credit losses on
loans to total loans |
|
|
1.45 |
|
% |
|
1.45 |
% |
|
1.44 |
|
% |
|
1.46 |
|
% |
|
1.48 |
|
% |
Allowance for credit losses on
loans to total nonperforming loans |
|
|
863.34 |
|
% |
|
2,110.40 |
% |
|
1,959.26 |
|
% |
|
4,529.05 |
|
% |
|
1,675.51 |
|
% |
Nonperforming assets to total
assets |
|
|
0.10 |
|
% |
|
0.04 |
% |
|
0.05 |
|
% |
|
0.02 |
|
% |
|
0.05 |
|
% |
Nonperforming loans to total
loans |
|
|
0.17 |
|
% |
|
0.07 |
% |
|
0.07 |
|
% |
|
0.03 |
|
% |
|
0.09 |
|
% |
Classified assets to Heritage
Commerce Corp |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 capital plus allowance for credit losses on loans |
|
|
6 |
|
% |
|
5 |
% |
|
3 |
|
% |
|
6 |
|
% |
|
6 |
|
% |
Classified assets to Heritage
Bank of Commerce |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 capital plus allowance for credit losses on loans |
|
|
5 |
|
% |
|
5 |
% |
|
3 |
|
% |
|
5 |
|
% |
|
6 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER PERIOD-END
STATISTICS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in $000’s, unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Heritage Commerce
Corp: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible common equity (1) |
|
$ |
476,209 |
|
|
$ |
469,146 |
|
$ |
453,792 |
|
|
$ |
430,194 |
|
|
$ |
427,242 |
|
|
Shareholders’ equity / total assets |
|
|
12.31 |
|
% |
|
11.69 |
% |
|
12.26 |
|
% |
|
11.22 |
|
% |
|
11.34 |
|
% |
Tangible common equity / tangible assets (2) |
|
9.27 |
|
% |
|
8.76 |
% |
|
9.11 |
|
% |
|
8.19 |
|
% |
|
8.25 |
|
% |
Loan to deposit ratio |
|
|
73.07 |
|
% |
|
73.39 |
% |
|
75.14 |
|
% |
|
68.68 |
|
% |
|
66.81 |
|
% |
Noninterest-bearing deposits / total deposits |
|
|
29.32 |
|
% |
|
33.05 |
% |
|
39.56 |
|
% |
|
40.22 |
|
% |
|
40.02 |
|
% |
Total capital ratio |
|
|
15.4 |
|
% |
|
15.3 |
% |
|
14.8 |
|
% |
|
14.5 |
|
% |
|
14.6 |
|
% |
Tier 1 capital ratio |
|
|
13.2 |
|
% |
|
13.1 |
% |
|
12.7 |
|
% |
|
12.4 |
|
% |
|
12.5 |
|
% |
Common Equity Tier 1 capital ratio |
|
|
13.2 |
|
% |
|
13.1 |
% |
|
12.7 |
|
% |
|
12.4 |
|
% |
|
12.5 |
|
% |
Tier 1 leverage ratio |
|
|
9.7 |
|
% |
|
9.6 |
% |
|
9.2 |
|
% |
|
8.7 |
|
% |
|
8.7 |
|
% |
Heritage Bank of
Commerce: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capital ratio |
|
|
14.8 |
|
% |
|
14.7 |
% |
|
14.2 |
|
% |
|
14.0 |
|
% |
|
14.1 |
|
% |
Tier 1 capital ratio |
|
|
13.7 |
|
% |
|
13.5 |
% |
|
13.2 |
|
% |
|
12.9 |
|
% |
|
13.0 |
|
% |
Common Equity Tier 1 capital ratio |
|
|
13.7 |
|
% |
|
13.5 |
% |
|
13.2 |
|
% |
|
12.9 |
|
% |
|
13.0 |
|
% |
Tier 1 leverage ratio |
|
|
10.0 |
|
% |
|
9.9 |
% |
|
9.5 |
|
% |
|
9.0 |
|
% |
|
9.0 |
|
% |
|
(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. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarter Ended |
|
For the Quarter Ended |
|
|
|
June 30, 2023 |
|
June 30, 2022 |
|
|
|
|
|
|
Interest |
|
Average |
|
|
|
|
Interest |
|
Average |
|
NET INTEREST INCOME
AND NET INTEREST MARGIN |
|
Average |
|
Income/ |
|
Yield/ |
|
Average |
|
Income/ |
|
Yield/ |
|
(in $000’s, unaudited) |
|
Balance |
|
Expense |
|
Rate |
|
Balance |
|
Expense |
|
Rate |
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, gross
(1)(2) |
|
$ |
3,231,341 |
|
$ |
44,028 |
|
|
5.47 |
% |
$ |
3,050,177 |
|
$ |
36,538 |
|
|
4.80 |
% |
Securities - taxable |
|
|
1,147,375 |
|
|
6,982 |
|
|
2.44 |
% |
|
912,408 |
|
|
4,407 |
|
|
1.94 |
% |
Securities - exempt from
Federal tax (3) |
|
|
34,070 |
|
|
302 |
|
|
3.56 |
% |
|
40,447 |
|
|
343 |
|
|
3.40 |
% |
Other investments and
interest-bearing deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in other financial institutions |
|
|
535,611 |
|
|
7,092 |
|
|
5.31 |
% |
|
982,579 |
|
|
2,340 |
|
|
0.96 |
% |
Total interest earning assets (3) |
|
|
4,948,397 |
|
|
58,404 |
|
|
4.73 |
% |
|
4,985,611 |
|
|
43,628 |
|
|
3.51 |
% |
Cash and due from banks |
|
|
35,159 |
|
|
|
|
|
|
|
37,172 |
|
|
|
|
|
|
Premises and equipment,
net |
|
|
9,190 |
|
|
|
|
|
|
|
9,666 |
|
|
|
|
|
|
Goodwill and other intangible
assets |
|
|
177,844 |
|
|
|
|
|
|
|
180,391 |
|
|
|
|
|
|
Other assets |
|
|
107,653 |
|
|
|
|
|
|
|
121,796 |
|
|
|
|
|
|
Total assets |
|
$ |
5,278,243 |
|
|
|
|
|
|
$ |
5,334,636 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
shareholders’ equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, noninterest-bearing |
|
$ |
1,368,373 |
|
|
|
|
|
|
$ |
1,836,350 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, interest-bearing |
|
|
1,118,200 |
|
|
1,788 |
|
|
0.64 |
% |
|
1,249,875 |
|
|
468 |
|
|
0.15 |
% |
Savings and money market |
|
|
1,109,347 |
|
|
4,638 |
|
|
1.68 |
% |
|
1,327,665 |
|
|
558 |
|
|
0.17 |
% |
Time deposits - under $100 |
|
|
11,610 |
|
|
20 |
|
|
0.69 |
% |
|
12,643 |
|
|
4 |
|
|
0.13 |
% |
Time deposits - $100 and over |
|
|
201,600 |
|
|
1,410 |
|
|
2.81 |
% |
|
125,258 |
|
|
114 |
|
|
0.37 |
% |
ICS/CDARS - interest-bearing demand, money market |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and time deposits |
|
|
614,911 |
|
|
2,867 |
|
|
1.87 |
% |
|
27,645 |
|
|
2 |
|
|
0.03 |
% |
Total interest-bearing deposits |
|
|
3,055,668 |
|
|
10,723 |
|
|
1.41 |
% |
|
2,743,086 |
|
|
1,146 |
|
|
0.17 |
% |
Total deposits |
|
|
4,424,041 |
|
|
10,723 |
|
|
0.97 |
% |
|
4,579,436 |
|
|
1,146 |
|
|
0.10 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term borrowings |
|
|
62,653 |
|
|
787 |
|
|
5.04 |
% |
|
16 |
|
|
— |
|
|
0.00 |
% |
Subordinated debt, net of
issuance costs |
|
|
39,401 |
|
|
538 |
|
|
5.48 |
% |
|
48,425 |
|
|
531 |
|
|
4.40 |
% |
Total interest-bearing liabilities |
|
|
3,157,722 |
|
|
12,048 |
|
|
1.53 |
% |
|
2,791,527 |
|
|
1,677 |
|
|
0.24 |
% |
Total interest-bearing liabilities and demand, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
noninterest-bearing / cost of funds |
|
|
4,526,095 |
|
|
12,048 |
|
|
1.07 |
% |
|
4,627,877 |
|
|
1,677 |
|
|
0.15 |
% |
Other liabilities |
|
|
101,908 |
|
|
|
|
|
|
|
103,577 |
|
|
|
|
|
|
Total liabilities |
|
|
4,628,003 |
|
|
|
|
|
|
|
4,731,454 |
|
|
|
|
|
|
Shareholders’ equity |
|
|
650,240 |
|
|
|
|
|
|
|
603,182 |
|
|
|
|
|
|
Total liabilities and shareholders’ equity |
|
$ |
5,278,243 |
|
|
|
|
|
|
$ |
5,334,636 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
(3) / margin |
|
|
|
|
|
46,356 |
|
|
3.76 |
% |
|
|
|
|
41,951 |
|
|
3.38 |
% |
Less tax equivalent adjustment
(3) |
|
|
|
|
|
(63 |
) |
|
|
|
|
|
|
|
(72 |
) |
|
|
|
Net interest income |
|
|
|
|
$ |
46,293 |
|
|
|
|
|
|
|
$ |
41,879 |
|
|
|
|
|
(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 $94,000 for
the second quarter of 2023, compared to $816,000 for the second
quarter of 2022. Prepayment fees totaled $73,000 for the second
quarter of 2023, compared to $549,000 for the second quarter of
2022. |
(3) |
|
Reflects the FTE adjustment for Federal tax-exempt income based on
a 21% tax rate. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarter Ended |
|
For the Quarter Ended |
|
|
|
June 30, 2023 |
|
March 31, 2023 |
|
|
|
|
|
|
Interest |
|
Average |
|
|
|
|
Interest |
|
Average |
|
NET INTEREST INCOME
AND NET INTEREST MARGIN |
|
Average |
|
Income/ |
|
Yield/ |
|
Average |
|
Income/ |
|
Yield/ |
|
(in $000’s, unaudited) |
|
Balance |
|
Expense |
|
Rate |
|
Balance |
|
Expense |
|
Rate |
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, gross
(1)(2) |
|
$ |
3,231,341 |
|
$ |
44,028 |
|
|
5.47 |
% |
$ |
3,277,525 |
|
$ |
44,112 |
|
|
5.46 |
% |
Securities - taxable |
|
|
1,147,375 |
|
|
6,982 |
|
|
2.44 |
% |
|
1,161,021 |
|
|
7,056 |
|
|
2.46 |
% |
Securities - exempt from
Federal tax (3) |
|
|
34,070 |
|
|
302 |
|
|
3.56 |
% |
|
36,012 |
|
|
313 |
|
|
3.52 |
% |
Other investments and
interest-bearing deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in other financial institutions |
|
|
535,611 |
|
|
7,092 |
|
|
5.31 |
% |
|
420,451 |
|
|
4,859 |
|
|
4.69 |
% |
Total interest earning assets (3) |
|
|
4,948,397 |
|
|
58,404 |
|
|
4.73 |
% |
|
4,895,009 |
|
|
56,340 |
|
|
4.67 |
% |
Cash and due from banks |
|
|
35,159 |
|
|
|
|
|
|
|
37,563 |
|
|
|
|
|
|
Premises and equipment,
net |
|
|
9,190 |
|
|
|
|
|
|
|
9,269 |
|
|
|
|
|
|
Goodwill and other intangible
assets |
|
|
177,844 |
|
|
|
|
|
|
|
178,443 |
|
|
|
|
|
|
Other assets |
|
|
107,653 |
|
|
|
|
|
|
|
115,222 |
|
|
|
|
|
|
Total assets |
|
$ |
5,278,243 |
|
|
|
|
|
|
$ |
5,235,506 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
shareholders’ equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, noninterest-bearing |
|
$ |
1,368,373 |
|
|
|
|
|
|
$ |
1,667,260 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, interest-bearing |
|
|
1,118,200 |
|
|
1,788 |
|
|
0.64 |
% |
|
1,217,731 |
|
|
1,476 |
|
|
0.49 |
% |
Savings and money market |
|
|
1,109,347 |
|
|
4,638 |
|
|
1.68 |
% |
|
1,285,173 |
|
|
3,489 |
|
|
1.10 |
% |
Time deposits - under $100 |
|
|
11,610 |
|
|
20 |
|
|
0.69 |
% |
|
12,280 |
|
|
10 |
|
|
0.33 |
% |
Time deposits - $100 and over |
|
|
201,600 |
|
|
1,410 |
|
|
2.81 |
% |
|
163,047 |
|
|
845 |
|
|
2.10 |
% |
ICS/CDARS - interest-bearing demand, money market |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and time deposits |
|
|
614,911 |
|
|
2,867 |
|
|
1.87 |
% |
|
70,461 |
|
|
81 |
|
|
0.47 |
% |
Total interest-bearing deposits |
|
|
3,055,668 |
|
|
10,723 |
|
|
1.41 |
% |
|
2,748,692 |
|
|
5,901 |
|
|
0.87 |
% |
Total deposits |
|
|
4,424,041 |
|
|
10,723 |
|
|
0.97 |
% |
|
4,415,952 |
|
|
5,901 |
|
|
0.54 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term borrowings |
|
|
62,653 |
|
|
787 |
|
|
5.04 |
% |
|
46,677 |
|
|
578 |
|
|
5.02 |
% |
Subordinated debt, net of
issuance costs |
|
|
39,401 |
|
|
538 |
|
|
5.48 |
% |
|
39,363 |
|
|
537 |
|
|
5.53 |
% |
Total interest-bearing liabilities |
|
|
3,157,722 |
|
|
12,048 |
|
|
1.53 |
% |
|
2,834,732 |
|
|
7,016 |
|
|
1.00 |
% |
Total interest-bearing liabilities and demand, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
noninterest-bearing / cost of funds |
|
|
4,526,095 |
|
|
12,048 |
|
|
1.07 |
% |
|
4,501,992 |
|
|
7,016 |
|
|
0.63 |
% |
Other liabilities |
|
|
101,908 |
|
|
|
|
|
|
|
95,917 |
|
|
|
|
|
|
Total liabilities |
|
|
4,628,003 |
|
|
|
|
|
|
|
4,597,909 |
|
|
|
|
|
|
Shareholders’ equity |
|
|
650,240 |
|
|
|
|
|
|
|
637,597 |
|
|
|
|
|
|
Total liabilities and shareholders’ equity |
|
$ |
5,278,243 |
|
|
|
|
|
|
$ |
5,235,506 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
(3) / margin |
|
|
|
|
|
46,356 |
|
|
3.76 |
% |
|
|
|
|
49,324 |
|
|
4.09 |
% |
Less tax equivalent adjustment
(3) |
|
|
|
|
|
(63 |
) |
|
|
|
|
|
|
|
(66 |
) |
|
|
|
Net interest income |
|
|
|
|
$ |
46,293 |
|
|
|
|
|
|
|
$ |
49,258 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 $94,000 for
the second quarter of 2023, compared to $300,000 for the first
quarter of 2023. Prepayment fees totaled $73,000 for the second
quarter of 2023, compared to $138,000 for the first quarter of
2023. |
(3) |
|
Reflects the FTE adjustment for Federal tax-exempt income based on
a 21% tax rate. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended |
|
For the Six Months Ended |
|
|
|
June 30, 2023 |
|
June 30, 2022 |
|
|
|
|
|
|
Interest |
|
Average |
|
|
|
|
Interest |
|
Average |
|
NET INTEREST INCOME
AND NET INTEREST MARGIN |
|
Average |
|
Income/ |
|
Yield/ |
|
Average |
|
Income/ |
|
Yield/ |
|
(in $000’s, unaudited) |
|
Balance |
|
Expense |
|
Rate |
|
Balance |
|
Expense |
|
Rate |
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, gross
(1)(2) |
|
$ |
3,254,305 |
|
$ |
88,140 |
|
|
5.46 |
% |
$ |
3,039,443 |
|
$ |
71,639 |
|
|
4.75 |
% |
Securities - taxable |
|
|
1,154,160 |
|
|
14,038 |
|
|
2.45 |
% |
|
847,409 |
|
|
7,851 |
|
|
1.87 |
% |
Securities - exempt from
Federal tax (3) |
|
|
35,036 |
|
|
615 |
|
|
3.54 |
% |
|
42,647 |
|
|
719 |
|
|
3.40 |
% |
Other investments,
interest-bearing deposits in other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
financial institutions and Federal funds sold |
|
|
478,349 |
|
|
11,951 |
|
|
5.04 |
% |
|
1,109,933 |
|
|
3,404 |
|
|
0.62 |
% |
Total interest earning assets (3) |
|
|
4,921,850 |
|
|
114,744 |
|
|
4.70 |
% |
|
5,039,432 |
|
|
83,613 |
|
|
3.35 |
% |
Cash and due from banks |
|
|
36,354 |
|
|
|
|
|
|
|
37,400 |
|
|
|
|
|
|
Premises and equipment,
net |
|
|
9,229 |
|
|
|
|
|
|
|
9,636 |
|
|
|
|
|
|
Goodwill and other intangible
assets |
|
|
178,142 |
|
|
|
|
|
|
|
180,726 |
|
|
|
|
|
|
Other assets |
|
|
111,418 |
|
|
|
|
|
|
|
121,444 |
|
|
|
|
|
|
Total assets |
|
$ |
5,256,993 |
|
|
|
|
|
|
$ |
5,388,638 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
shareholders’ equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, noninterest-bearing |
|
$ |
1,516,991 |
|
|
|
|
|
|
$ |
1,846,699 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, interest-bearing |
|
|
1,167,690 |
|
|
3,264 |
|
|
0.56 |
% |
|
1,264,849 |
|
|
927 |
|
|
0.15 |
% |
Savings and money market |
|
|
1,196,774 |
|
|
8,127 |
|
|
1.37 |
% |
|
1,361,014 |
|
|
1,101 |
|
|
0.16 |
% |
Time deposits - under $100 |
|
|
11,943 |
|
|
30 |
|
|
0.51 |
% |
|
12,937 |
|
|
9 |
|
|
0.14 |
% |
Time deposits - $100 and over |
|
|
182,430 |
|
|
2,255 |
|
|
2.49 |
% |
|
122,187 |
|
|
220 |
|
|
0.36 |
% |
ICS/CDARS - interest-bearing demand, money market |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and time deposits |
|
|
344,191 |
|
|
2,948 |
|
|
1.73 |
% |
|
30,274 |
|
|
3 |
|
|
0.02 |
% |
Total interest-bearing deposits |
|
|
2,903,028 |
|
|
16,624 |
|
|
1.15 |
% |
|
2,791,261 |
|
|
2,260 |
|
|
0.16 |
% |
Total deposits |
|
|
4,420,019 |
|
|
16,624 |
|
|
0.76 |
% |
|
4,637,960 |
|
|
2,260 |
|
|
0.10 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term borrowings |
|
|
54,709 |
|
|
1,365 |
|
|
5.03 |
% |
|
23 |
|
|
— |
|
|
0.00 |
% |
Subordinated debt, net of
issuance costs |
|
|
39,382 |
|
|
1,075 |
|
|
5.50 |
% |
|
44,211 |
|
|
1,102 |
|
|
5.03 |
% |
Total interest-bearing liabilities |
|
|
2,997,119 |
|
|
19,064 |
|
|
1.28 |
% |
|
2,835,495 |
|
|
3,362 |
|
|
0.24 |
% |
Total interest-bearing liabilities and demand, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
noninterest-bearing / cost of funds |
|
|
4,514,110 |
|
|
19,064 |
|
|
0.85 |
% |
|
4,682,194 |
|
|
3,362 |
|
|
0.14 |
% |
Other liabilities |
|
|
98,929 |
|
|
|
|
|
|
|
105,165 |
|
|
|
|
|
|
Total liabilities |
|
|
4,613,039 |
|
|
|
|
|
|
|
4,787,359 |
|
|
|
|
|
|
Shareholders’ equity |
|
|
643,954 |
|
|
|
|
|
|
|
601,279 |
|
|
|
|
|
|
Total liabilities and shareholders’ equity |
|
$ |
5,256,993 |
|
|
|
|
|
|
$ |
5,388,638 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
(3) / margin |
|
|
|
|
|
95,680 |
|
|
3.92 |
% |
|
|
|
|
80,251 |
|
|
3.21 |
% |
Less tax equivalent adjustment
(3) |
|
|
|
|
|
(129 |
) |
|
|
|
|
|
|
|
(151 |
) |
|
|
|
Net interest income |
|
|
|
|
$ |
95,551 |
|
|
|
|
|
|
|
$ |
80,100 |
|
|
|
|
|
(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 $394,000
for the first six months of 2023, compared to $2,604,000 for the
first six months of 2022. Prepayment fees totaled $211,000 for the
first six months of 2023, compared to $1,059,000 for the first six
months 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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Heritage Commerce (NASDAQ:HTBK)
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From May 2023 to May 2024