SAN JOSE, Calif., Jan. 28, 2021 (GLOBE NEWSWIRE) --
Heritage Commerce Corp (Nasdaq: HTBK), the holding
company (the “Company”) for Heritage Bank of Commerce (the “Bank”),
today announced fourth quarter 2020 net income of $11.6 million, or
$0.19 per average diluted common share, compared to $5.7 million,
or $0.10 per average diluted common share, for the fourth quarter
of 2019, and $11.2 million, or $0.19 per average diluted common
share, for the third quarter of 2020. For the year ended December
31, 2020, net income was $35.3 million, or $0.59 per average
diluted common share, compared to $40.5 million, or $0.84 per
average diluted common share, for the year ended December 31, 2019.
All results are unaudited.
“We generated solid earnings, for the full year of 2020, fueled
by a year-over-year increase in net interest income, total
deposits, and gains on sales of SBA loans,” said Mr. Keith Wilton,
President and Chief Executive Officer. “Our results in the midst of
this challenging economic environment are a testament to our
resilient bankers, our customers and our communities. Our
participation in the initial rounds of the Small Business
Administration (“SBA”) Paycheck Protection Program (“PPP”), helped
meet the financial needs of our customers who were significantly
impacted by the pandemic and we are actively participating in this
newest round of PPP funding.”
“Credit quality improved with nonperforming assets (“NPAs”)
declining (20%) year-over-year and (23%) on a linked quarter basis,
to $7.9 million at year end,” said Mr. Wilton. “In fact, we
released $1.3 million of our provision for credit losses on loans
largely due to recoveries of previously charged off accounts and
the successful resolution of a nonperforming credit resulting in
the release of specific reserves. This brings our allowance for
credits losses on loans (“ACLL”) to total loans to 1.70%, and the
ACLL to total loans, excluding PPP loans, to 1.91% at December 31,
2020. Further, capital and liquidity positions remain strong with a
total risk-based capital ratio and leverage for the Company
(consolidated) at 16.5% and 9.1% respectively, and 15.8% and 9.5%
respectively, for the Bank, at December 31, 2020,” added Mr.
Wilton.
“During the fourth quarter of 2020, we completed the final
touches to our new San Jose corporate headquarters at 224 Airport
Parkway and finalized the move of our San Mateo branch and
administrative offices to newly renovated facilities,” commented
Mr. Wilton. “These combined facilities represent over 50% of the
Company’s office footprint and include modifications and upgrades
to meet enhanced energy saving requirements, further representing
our Company’s commitment to lowering our carbon footprint.”
“The past year presented many challenges to members of the
communities we serve. During 2020, we were proud of our employees
who volunteered their time to many local organizations that assist
minority, disenfranchised and underrepresented groups in our
community, and we congratulate them for their service. In addition,
we are proud of our Company’s continued ability to provide grants
and sponsorships to support these community groups,” said Mr.
Wilton.
In response to two economic stimulus laws passed by Congress in
the first half of the 2020, Heritage Bank of Commerce funded 1,105
PPP loans, with total principal balances of $333.4 million. Through
2020, PPP loan payoffs totaled $9.1 million while SBA loan
forgiveness totaled $33.7 million and the Bank ended the fourth
quarter of 2020 with $290.7 million in outstanding PPP loan
balances. These loans generated $2.2 million in interest income and
$3.9 million in net deferred fee revenue during 2020. At December
31, 2020, total loans included remaining deferred fees on PPP loans
of ($6.8) million and deferred costs of $783,000.
On April 7, 2020, the U.S. banking agencies issued an
Interagency Statement on Loan Modifications and Reporting for
Financial Institutions Working with Customers Affected by the
Coronavirus. The statement describes accounting for
COVID-19-related loan modifications, including clarifying the
interaction between current accounting rules and the temporary
relief provided by the Coronavirus Aid, Relief, and Economic
Security (“CARES Act”). The Bank made accommodations for initial
payment deferrals for a number of customers of up to 90 days,
generally, with the potential, upon application, of an additional
90 days of payment deferral (180 days maximum). The Bank also
waived all normal applicable fees. As well, most of the deferrals
we originally granted have returned to regular payments. The
following table shows the deferments at December 31, 2020 by
category:
|
|
|
Underlying Collateral |
|
|
|
|
|
|
|
|
|
|
|
|
NON-SBA
LOANS |
|
|
Business |
|
|
Real |
|
|
|
(in $000’s, unaudited) |
|
|
Assets |
|
|
Estate |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
Initial
Deferments(1) |
|
$ |
- |
|
$ |
1,573 |
|
$ |
1,573 |
2nd
Deferments(2) |
|
|
295 |
|
|
684 |
|
|
979 |
Total |
|
$ |
295 |
|
$ |
2,257 |
|
$ |
2,552 |
|
|
|
|
|
|
|
|
|
|
(1) Initial
deferments were generally for 3 months |
|
|
|
|
|
|
|
|
|
(2) 2nd deferments
were for an additional 3 months |
|
|
|
|
|
|
|
|
|
In addition to its portfolio of SBA PPP loans, the Bank also has
a portfolio of SBA 7(a) loans totaling $48.9 million as of January
15, 2021. As part of the SBA’s Coronavirus debt relief efforts,
beginning in April of 2020, the SBA commenced a six-month program
to cover payments of principal, interest and any associated fees
for these borrowers, which largely ended with the September
payment. The following table reflects the status of these SBA 7(a)
loans as of January 15, 2021:
SBA 7(a) LOANS |
|
|
|
|
Number |
(in $000’s, unaudited) |
|
|
Balance |
|
of Loans |
SBA 7(a) loans that borrowers
made payments |
|
|
|
|
|
by January 15, 2021 |
|
$ |
41,994 |
|
234 |
Payments Not Made / NSF /
Returned |
|
|
1,032 |
|
12 |
Due dates later in
January |
|
|
85 |
|
2 |
New loans / No payment
due |
|
|
3,267 |
|
4 |
CARES Payments |
|
|
2,062 |
|
9 |
Request for Deferral |
|
|
448 |
|
5 |
Total Portfolio |
|
$ |
48,888 |
|
266 |
The CARES Act was recently amended to include $3.5 billion of
extended debt relief payments for SBA borrowers. The program will
initially provide for 3 payments of principal and interest to a
maximum of $9,000 per month under various criteria and then an
additional 5 payments for borrowers considered “underserved” as
defined in the amended legislation.
Credit Quality and Performance
At December 31, 2020, NPAs declined by $1.9 million,
or (20%), to $7.9 million, compared to $9.8 million at December 31,
2019, and decreased by $2.4 million, or (23%) from $10.3 million at
September 30, 2020. Classified assets increased to $34.0 million,
or 0.73% of total assets, at December 31, 2020, compared to $32.6
million, or 0.79% of total assets, at December 31, 2019, and $33.0
million, or 0.72% of total assets, at September 30, 2020.
The Company continues to monitor portfolio loans made to
commercial customers with businesses in higher risk sectors due to
the COVID-19 pandemic. During the fourth quarter of 2020, the
percentage of loans identified as higher risk to total loans
increased slightly compared to the third quarter of 2020. The
following table provides a breakdown of such loans as a percentage
of total loans for the periods indicated:
|
|
% of Total |
|
% of Total |
|
|
% of Total |
|
|
% of Total |
|
|
|
Loans at |
|
Loans at |
|
|
Loans at |
|
|
Loans at |
|
HIGHER RISK SECTORS (unaudited) |
|
December 31, 2020 |
|
September 30, 2020 |
|
|
June 30, 2020 |
|
|
March 31, 2020 |
|
Health care and social
assistance: |
|
|
|
|
|
|
|
|
|
|
|
Offices of dentists |
|
2.01 |
% |
1.86 |
% |
|
1.79 |
% |
|
1.63 |
% |
Offices of physicians (except mental health specialists) |
|
0.81 |
% |
0.74 |
% |
|
0.76 |
% |
|
0.70 |
% |
Other community housing services |
|
0.28 |
% |
0.27 |
% |
|
0.27 |
% |
|
0.11 |
% |
All others |
|
2.15 |
% |
2.15 |
% |
|
2.21 |
% |
|
1.84 |
% |
Total health care and social assistance |
|
5.25 |
% |
5.02 |
% |
|
5.03 |
% |
|
4.28 |
% |
Retail trade: |
|
|
|
|
|
|
|
|
|
|
|
Gasoline stations with convenience stores |
|
2.16 |
% |
1.97 |
% |
|
1.90 |
% |
|
1.98 |
% |
All others |
|
2.34 |
% |
2.44 |
% |
|
2.44 |
% |
|
2.18 |
% |
Total retail trade |
|
4.50 |
% |
4.41 |
% |
|
4.34 |
% |
|
4.16 |
% |
Accommodation and food
services: |
|
|
|
|
|
|
|
|
|
|
|
Full-service restaurants |
|
1.30 |
% |
1.40 |
% |
|
1.38 |
% |
|
0.86 |
% |
Limited-service restaurants |
|
0.57 |
% |
0.74 |
% |
|
0.79 |
% |
|
0.63 |
% |
Hotels (except casino hotels) and motels |
|
0.95 |
% |
0.92 |
% |
|
0.89 |
% |
|
0.94 |
% |
All others |
|
0.68 |
% |
0.68 |
% |
|
0.70 |
% |
|
0.52 |
% |
Total accommodation and food services |
|
3.50 |
% |
3.74 |
% |
|
3.76 |
% |
|
2.95 |
% |
Educational services: |
|
|
|
|
|
|
|
|
|
|
|
Elementary and secondary schools |
|
0.58 |
% |
0.57 |
% |
|
0.65 |
% |
|
0.15 |
% |
Education support services |
|
0.45 |
% |
0.43 |
% |
|
0.40 |
% |
|
0.15 |
% |
All others |
|
0.19 |
% |
0.17 |
% |
|
0.24 |
% |
|
0.17 |
% |
Total educational services |
|
1.22 |
% |
1.17 |
% |
|
1.29 |
% |
|
0.47 |
% |
Arts, entertainment, and
recreation |
|
1.34 |
% |
1.27 |
% |
|
1.26 |
% |
|
1.09 |
% |
Purchased participations in
micro loan portfolio |
|
0.60 |
% |
0.68 |
% |
|
0.80 |
% |
|
0.95 |
% |
Total higher risk sectors |
|
16.41 |
% |
16.29 |
% |
|
16.48 |
% |
|
13.90 |
% |
The increase in higher risk sector loans in the last three
quarters of 2020, compared to the first quarter of 2020, was
primarily due to the addition of PPP loans during the second
quarter of 2020.
Capital and Liquidity
The Company’s and the Bank’s consolidated capital ratios
exceeded regulatory guidelines for a well-capitalized financial
institution, and the Basel III minimum regulatory requirements at
December 31, 2020.
Our liquidity position refers to our ability to maintain cash
flows sufficient to fund operations, meet all of our obligations
and commitments, and accommodate unexpected sudden changes in
balances of loans and deposits in a timely manner. At various
times the Company requires funds to meet short term cash
requirements brought about by loan growth or deposit outflows, the
purchase of assets, or liability repayments. An integral part of
the Company’s ability to manage its liquidity position
appropriately is the Company’s large base of core deposits, which
are generated by offering traditional banking services in its
service area and which have historically been a stable source of
funds. To manage liquidity needs properly, cash inflows must be
timed to coincide with anticipated outflows or sufficient liquidity
resources must be available to meet varying demands. At December
31, 2020, the Company had a strong liquidity position with $1.13
billion in cash and cash equivalents, and $781.6 million in
available borrowing capacity from sources including the Federal
Home Loan Bank (“FHLB”), the Federal Reserve Bank of San Francisco
(“FRB”), Federal funds facilities with several financial
institutions, and a line of credit with a correspondent bank. The
Company also had $498.5 million (at fair market value) in unpledged
securities available at December 31, 2020. The loan to deposit
ratio was 66.91% at December 31, 2020, compared to 74.20% at
December 31, 2019, and decreased from 69.32% at September 30,
2020.
Fourth Quarter and Year Ended December
31, 2020
Operating Results, Balance Sheet Review, Capital
Management, and Credit Quality
(as of, or for the periods ended December 31, 2020, compared to
December 31, 2019, and September 30, 2020, except as noted):
Operating Results:
- Diluted earnings per share were
$0.19 for the fourth quarter of 2020, compared to $0.10 for the
fourth quarter of 2019, and $0.19 for the third quarter of 2020.
Diluted earnings per share were $0.59 for the year ended December
31, 2020, compared to $0.84 for the year ended December 31,
2019.
- The following table indicates the
ratios for the return on average tangible assets and the return on
average tangible equity for the periods indicated:
|
|
For the Quarter Ended |
|
For the Year Ended |
|
|
December 31, |
|
September 30, |
|
December 31, |
|
December 31, |
|
December 31, |
(unaudited) |
|
2020 |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Return on average tangible assets |
|
1.02 |
% |
|
1.02 |
% |
|
0.57 |
% |
|
0.83 |
% |
|
1.25 |
% |
Return on average tangible
equity |
|
11.75 |
% |
|
11.41 |
% |
|
5.96 |
% |
|
9.04 |
% |
|
13.09 |
% |
- Net interest income, before provision for credit losses on
loans, decreased (13%) to $34.2 million for the fourth quarter of
2020, compared to $39.2 million for the fourth quarter of 2019,
primarily due to decreases in the prime rate, and yield on
investment securities and overnight funds. Net interest income
remained flat for the fourth quarter of 2020, compared to $34.2
million for the third quarter of 2020. Net interest income
increased 8% to $141.9 million for the year ended December 31,
2020, compared to $131.8 million for the year ended December 31,
2019, primarily due to an increase in the average balance of loans
resulting from the Presidio Bank (“Presidio”) merger, additional
interest and fee income from PPP loans, and an increase in the
accretion of the loan discount into loan interest income from our
merger with Presidio, partially offset by decreases in the prime
rate, and decreases in the yield on investment securities and
overnight funds.
- The fully tax equivalent (“FTE”) net interest margin contracted
100 basis points to 3.15% for the fourth quarter of 2020, from
4.15% for the fourth quarter of 2019, primarily due to a decline in
the average yield on loans, investment securities, and overnight
funds, partially offset by a decline in the cost of
interest-bearing liabilities. The FTE net interest margin
contracted 9 basis points for the fourth quarter of 2020 from 3.24%
for the third quarter of 2020, primarily due to a decline in the
average yield on investment securities, and overnight funds,
partially offset by an increase in the average yield on loans and a
decline in the cost of interest-bearing liabilities.
- For the year ended December 31, 2020, the FTE net interest
margin contracted 78 basis points to 3.50%, compared to 4.28% for
the year ended December 31, 2019, primarily due to a decline in the
average yield on loans, investment securities, and overnight funds,
partially offset by a decline in the cost of interest-bearing
liabilities.
- 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 decreased to 4.93% for the fourth quarter of 2020,
compared to 5.76% for the fourth quarter of 2019, primarily due to
a decline in the average yield in the prime rate, new average
balances of lower yielding PPP loans, and a decrease in the
accretion of the loan purchase discount into loan interest income
from the acquisitions.
|
|
For the Quarter Ended |
|
For the Quarter Ended |
|
|
|
December 31, 2020 |
|
December 31, 2019 |
|
|
|
Average |
|
Interest |
|
Average |
|
Average |
|
Interest |
|
Average |
|
(in $000’s, unaudited) |
|
Balance |
|
Income |
|
Yield |
|
Balance |
|
Income |
|
Yield |
|
Loans, core bank and asset-based lending |
|
$ |
2,256,944 |
|
|
$ |
26,348 |
|
4.64 |
% |
$ |
2,353,871 |
|
|
$ |
30,786 |
|
5.19 |
% |
SBA PPP loans |
|
|
313,335 |
|
|
|
787 |
|
1.00 |
% |
|
— |
|
|
|
— |
|
N/A |
|
PPP fees, net |
|
|
— |
|
|
|
1,935 |
|
2.46 |
% |
|
— |
|
|
|
— |
|
N/A |
|
Bay View Funding factored
receivables |
|
|
50,720 |
|
|
|
2,856 |
|
22.40 |
% |
|
45,045 |
|
|
|
2,888 |
|
25.44 |
% |
Purchased residential
mortgages |
|
|
24,955 |
|
|
|
118 |
|
1.88 |
% |
|
33,867 |
|
|
|
237 |
|
2.78 |
% |
Purchased commercial real
estate ("CRE") loans |
|
|
20,854 |
|
|
|
176 |
|
3.36 |
% |
|
28,407 |
|
|
|
238 |
|
3.32 |
% |
Loan fair value mark /
accretion |
|
|
(12,017 |
) |
|
|
687 |
|
0.12 |
% |
|
(15,089 |
) |
|
|
1,338 |
|
0.23 |
% |
Total loans (includes loans held-for-sale) |
|
$ |
2,654,791 |
|
|
$ |
32,907 |
|
4.93 |
% |
$ |
2,446,101 |
|
|
$ |
35,487 |
|
5.76 |
% |
|
• |
The average
yield on the total loan portfolio increased to 4.93% for the fourth
quarter of 2020 compared to 4.86% for the third quarter of 2020,
primarily due to higher fees from PPP loans and a higher average
balance of Bay View Funding factored receivables, partially offset
by a decrease in the accretion of the loan purchase discount into
loan interest income from the acquisitions. |
|
|
For the Quarter Ended |
|
For the Quarter Ended |
|
|
|
December 31, 2020 |
|
September 30, 2020 |
|
|
|
Average |
|
Interest |
|
Average |
|
Average |
|
Interest |
|
Average |
|
(in $000’s, unaudited) |
|
Balance |
|
Income |
|
Yield |
|
Balance |
|
Income |
|
Yield |
|
Loans, core bank and asset-based lending |
|
$ |
2,256,944 |
|
|
$ |
26,348 |
|
4.64 |
% |
$ |
2,266,227 |
|
|
$ |
26,508 |
|
4.65 |
% |
SBA PPP loans |
|
|
313,335 |
|
|
|
787 |
|
1.00 |
% |
|
324,518 |
|
|
|
816 |
|
1.00 |
% |
PPP fees, net |
|
|
— |
|
|
|
1,935 |
|
2.46 |
% |
|
— |
|
|
|
1,305 |
|
1.60 |
% |
Bay View Funding factored
receivables |
|
|
50,720 |
|
|
|
2,856 |
|
22.40 |
% |
|
40,300 |
|
|
|
2,431 |
|
24.00 |
% |
Purchased residential
mortgages |
|
|
24,955 |
|
|
|
118 |
|
1.88 |
% |
|
29,399 |
|
|
|
180 |
|
2.44 |
% |
Purchased CRE loans |
|
|
20,854 |
|
|
|
176 |
|
3.36 |
% |
|
22,603 |
|
|
|
195 |
|
3.43 |
% |
Loan fair value mark /
accretion |
|
|
(12,017 |
) |
|
|
687 |
|
0.12 |
% |
|
(13,353 |
) |
|
|
1,200 |
|
0.21 |
% |
Total loans (includes loans held-for-sale) |
|
$ |
2,654,791 |
|
|
$ |
32,907 |
|
4.93 |
% |
$ |
2,669,694 |
|
|
$ |
32,635 |
|
4.86 |
% |
|
• |
The average
yield on the total loan portfolio decreased to 5.06% for the year
ended December 31, 2020 compared to 5.86% for the year ended
December 31, 2019, primarily due to decreases in the prime rate on
loans and new average balances of lower yielding PPP loans,
partially offset by higher PPP loan fees and an increase in the
accretion of the loan purchase discount into loan interest income
from the acquisitions. |
|
|
For the Year Ended |
|
For the Year Ended |
|
|
|
December 31, 2020 |
|
December 31, 2019 |
|
|
|
Average |
|
Interest |
|
Average |
|
Average |
|
Interest |
|
Average |
|
(in $000’s, unaudited) |
|
Balance |
|
Income |
|
Yield |
|
Balance |
|
Income |
|
Yield |
|
Loans, core bank and asset-based lending |
|
$ |
2,327,624 |
|
|
$ |
110,652 |
|
4.75 |
% |
$ |
1,890,079 |
|
|
$ |
100,380 |
|
5.31 |
% |
SBA PPP loans |
|
|
218,391 |
|
|
|
2,185 |
|
1.00 |
% |
|
— |
|
|
|
— |
|
N/A |
|
PPP fees, net |
|
|
— |
|
|
|
3,877 |
|
1.78 |
% |
|
— |
|
|
|
— |
|
N/A |
|
Bay View Funding factored
receivables |
|
|
45,765 |
|
|
|
10,727 |
|
23.44 |
% |
|
46,710 |
|
|
|
11,688 |
|
25.02 |
% |
Purchased residential
mortgages |
|
|
29,648 |
|
|
|
725 |
|
2.45 |
% |
|
35,343 |
|
|
|
951 |
|
2.69 |
% |
Purchased CRE loans |
|
|
24,072 |
|
|
|
831 |
|
3.45 |
% |
|
30,936 |
|
|
|
1,107 |
|
3.58 |
% |
Loan fair value mark /
accretion |
|
|
(14,005 |
) |
|
|
4,172 |
|
0.18 |
% |
|
(8,151 |
) |
|
|
2,682 |
|
0.14 |
% |
Total loans (includes loans held-for-sale) |
|
$ |
2,631,495 |
|
|
$ |
133,169 |
|
5.06 |
% |
$ |
1,994,917 |
|
|
$ |
116,808 |
|
5.86 |
% |
|
• |
In aggregate, the original total net purchase discount on loans
from the Focus Business Bank, Tri-Valley Bank, United American
Bank, and Presidio loan portfolio was $25.2 million. In aggregate,
the remaining net purchase discount on total loans acquired was
$12.1 million at December 31, 2020.
|
|
|
|
• |
The average cost of total deposits was 0.14% for the fourth quarter
of 2020, compared to 0.26% for the fourth quarter of 2019 and 0.16%
for the third quarter of 2020. The average cost of total deposits
was 0.17% for the year ended December 31, 2020, compared to 0.29%
for the year ended December 31, 2019.
|
|
|
• |
There was a credit of $1.3 million to the provision for credit
losses on loans for the fourth quarter of 2020, compared to a $3.2
million provision for loan losses for the fourth quarter of 2019,
and a $197,000 provision for credit losses on loans for the third
quarter of 2020. There was a $13.2 million provision for credit
losses on loans for the year ended December 31, 2020, compared to
an $846,000 provision for loan losses for the year ended December
31, 2019.
|
|
|
|
• |
The increase in the provision for credit losses on loans for the
year ended December 31, 2020, compared to the year ended December
31, 2019, was driven primarily by a significantly deteriorated
economic outlook resulting from the Coronavirus pandemic. The three
loan classes where the largest increases in reserves were recorded
under the Current Expected Credit Loss ("CECL") loss rate
methodology were investor-owned CRE, land and construction, and
commercial and industrial (“C&I”). Ongoing impacts of the CECL
methodology will be dependent upon changes in economic conditions
and forecasts, originated and acquired loan portfolio composition,
portfolio duration, and other factors.
|
|
|
|
• |
Total noninterest income was $2.1 million for the fourth quarter of
2020, compared to $2.4 million for the fourth quarter of 2019,
primarily due to lower service charges and fees on deposit
accounts. Total noninterest income decreased to $2.1 million for
the fourth quarter of 2020 from $2.6 million for the third quarter
of 2020, primarily due to a realized gain on warrants exercised
during the third quarter of 2020.
|
|
|
|
• |
For the year ended December 31, 2020, total noninterest income was
$9.9 million, compared to $10.2 million for the year ended December
31, 2019, primarily due to lower service charges and fees on
deposit accounts, partially offset by an increase in the cash
surrender value of life insurance, a gain realized on a warrant
exercised, and a gain on the disposition of foreclosed assets
during the first quarter of 2020.
|
|
|
|
• |
Total noninterest expense for the fourth quarter of 2020 decreased
to $21.6 million, compared to $30.6 million for the fourth quarter
of 2019, primarily due to lower merger-related costs. Total
noninterest expense for the fourth quarter of 2020 modestly
increased compared to $21.2 million for the third quarter of
2020.
|
|
|
|
• |
Noninterest expense for the year ended December 31, 2020 increased
to $89.5 million, compared to $84.9 million for the year ended
December 31, 2019, primarily due to higher salaries and employee
benefits as a result of annual salary increases, and additional
employees and operating costs added as a result of the Presidio
merger, partially offset by lower merger-related costs.
|
|
|
|
|
• |
The following table reflects pre-tax merger-related costs resulting
from the merger with Presidio for the periods indicated: |
|
|
For the Quarter Ended |
|
For the Year Ended |
MERGER-RELATED
COSTS |
|
December 31, |
|
September 30, |
|
December 31, |
|
December 31, |
|
December 31, |
(in $000’s, unaudited) |
|
2020 |
|
2020 |
|
|
2019 |
|
2020 |
|
2019 |
Salaries and employee benefits |
|
$ |
— |
|
$ |
— |
|
|
$ |
6,580 |
|
$ |
356 |
|
$ |
6,580 |
Other |
|
|
101 |
|
|
17 |
|
|
|
3,299 |
|
|
2,245 |
|
|
4,500 |
Total merger-related
costs |
|
$ |
101 |
|
$ |
17 |
|
|
$ |
9,879 |
|
$ |
2,601 |
|
$ |
11,080 |
|
• |
Full time
equivalent employees were 330 at December 31, 2020, 357 at December
31, 2019, and 342 at September 30, 2020. |
- The efficiency ratio was 59.45% for the fourth quarter of 2020,
compared to 73.58% for the fourth quarter of 2019, and 57.58% for
the third quarter of 2020. The efficiency ratio for the year ended
December 31, 2020 was 58.96%, compared to 59.76% for the year ended
December 31, 2019.
- Income tax expense was $4.4 million for the fourth quarter of
2020, compared to $2.1 million for the fourth quarter of 2019, and
$4.2 million for the third quarter of 2020. The effective tax rate
for the fourth quarter of 2020 was 27.6%, compared to 26.9% for the
fourth quarter of 2019, and 27.3% for the third quarter of 2020.
Income tax expense for the year ended December 31, 2020 was $13.8
million, compared to $15.9 million for the year ended December 31,
2019. The effective tax rate was 28.1% for the years ended December
31, 2020 and December 31, 2019.
- The difference in the effective tax rate for the periods
reported compared to the combined Federal and state statutory tax
rate of 29.6% is primarily the result of the Company’s investment
in life insurance policies whose earnings are not subject to taxes,
tax credits related to investments in low income housing limited
partnerships (net of low income housing investment losses), and
tax-exempt interest income earned on municipal bonds.
Balance Sheet Review, Capital Management and Credit
Quality:
- Total assets increased 13% to $4.63 billion at December 31,
2020, compared to $4.11 billion at December 31, 2019. Total assets
increased 1% from $4.61 billion at September 30, 2020.
- Securities available-for-sale, at fair value, totaled $235.8
million at December 31, 2020, compared to $404.8 million at
December 31, 2019, and $294.4 million at September 30, 2020. At
December 31, 2020, the Company’s securities available-for-sale
portfolio was comprised of $175.3 million of agency mortgage-backed
securities (all issued by U.S. Government sponsored entities), and
$60.5 million of U.S. Treasury securities. The pre-tax unrealized
gain on securities available-for-sale at December 31, 2020 was $5.8
million, compared to a pre-tax unrealized gain on securities
available-for-sale of $2.3 million at December 31, 2019, and a
pre-tax unrealized gain on securities available-for-sale of $6.9
million at September 30, 2020. All other factors remaining the
same, when market interest rates are decreasing, the Company will
experience a higher unrealized gain (or a lower unrealized loss) on
the securities portfolio.
- At December 31, 2020, securities held-to-maturity, at amortized
cost, totaled $297.4 million, compared to $366.6 million at
December 31, 2019, and $295.6 million at September 30, 2020. At
December 31, 2020, the Company’s securities held-to-maturity
portfolio was comprised of $228.7 million of agency mortgage-backed
securities, and $68.7 million of tax-exempt municipal bonds. During
the fourth quarter of 2020, the Company purchased $30.9 million of
agency mortgage-backed securities (securities held-to-maturity),
with a book yield of 1.15% and an average life of 6.18 years.
- With the CECL methodology implementation date of January 1,
2020, there was a $58,000 allowance for credit losses recorded on
the Company’s held-to-maturity municipal investment securities
portfolio. For the year ended December 31, 2020, there was a
reduction of $4,000 to the allowance for credit losses on the
Company’s held-to-maturity municipal investment securities
portfolio, for an allowance for credit losses of $54,000 at
December 31, 2020.
- 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 |
|
December 31, 2020 |
|
September 30, 2020 |
|
December 31, 2019 |
|
(in $000’s, unaudited) |
|
Balance |
|
% to Total |
|
Balance |
|
% to Total |
|
Balance |
|
% to Total |
|
Commercial |
|
$ |
555,707 |
|
|
21 |
% |
$ |
574,359 |
|
|
21 |
% |
$ |
603,345 |
|
|
24 |
% |
Paycheck Protection Program
Loans |
|
|
290,679 |
|
|
11 |
% |
|
323,550 |
|
|
12 |
% |
|
— |
|
|
0 |
% |
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CRE - owner occupied |
|
|
560,362 |
|
|
21 |
% |
|
561,528 |
|
|
21 |
% |
|
548,907 |
|
|
22 |
% |
CRE - non-owner occupied |
|
|
693,103 |
|
|
27 |
% |
|
713,563 |
|
|
27 |
% |
|
767,821 |
|
|
30 |
% |
Land and construction |
|
|
144,594 |
|
|
6 |
% |
|
142,632 |
|
|
5 |
% |
|
147,189 |
|
|
6 |
% |
Home equity |
|
|
111,885 |
|
|
4 |
% |
|
111,468 |
|
|
4 |
% |
|
151,775 |
|
|
6 |
% |
Multifamily |
|
|
166,425 |
|
|
6 |
% |
|
169,791 |
|
|
6 |
% |
|
180,623 |
|
|
7 |
% |
Residential mortgages |
|
|
85,116 |
|
|
3 |
% |
|
91,077 |
|
|
3 |
% |
|
100,759 |
|
|
4 |
% |
Consumer and other |
|
|
18,116 |
|
|
1 |
% |
|
17,511 |
|
|
1 |
% |
|
33,744 |
|
|
1 |
% |
Total Loans |
|
|
2,625,987 |
|
|
100 |
% |
|
2,705,479 |
|
|
100 |
% |
|
2,534,163 |
|
|
100 |
% |
Deferred loan costs (fees),
net |
|
|
(6,726 |
) |
|
— |
|
|
(8,463 |
) |
|
— |
|
|
(319 |
) |
|
— |
|
Loans, net of deferred costs and fees |
|
$ |
2,619,261 |
|
|
100 |
% |
$ |
2,697,016 |
|
|
100 |
% |
$ |
2,533,844 |
|
|
100 |
% |
|
• |
Loans,
excluding loans held-for-sale, increased $85.4 million, or 3%, to
$2.62 billion at December 31, 2020, compared to $2.53 billion at
December 31, 2019, and decreased (3%) from $2.70 billion at
September 30, 2020. Total loans at December 31, 2020 included
$290.7 million of PPP loans.
|
|
• |
C&I line usage was 28% at December 31, 2020, compared to
35% at December 31, 2019, and 28% at September 30, 2020.
|
|
• |
At December 31, 2020, 45% of the CRE loan portfolio was secured
by owner-occupied real estate. |
- The following table summarizes the allowance for credit losses
on loans(1) for the periods indicated:
|
|
|
For the Quarter Ended
|
|
For the Year Ended
|
|
ALLOWANCE FOR CREDIT
LOSSES ON LOANS |
|
|
December 31,
|
|
September 30,
|
|
December 31,
|
|
December 31,
|
|
December 31,
|
|
(in $000’s, unaudited) |
|
|
2020
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Balance at beginning of period |
|
|
$ |
45,422 |
|
|
$ |
45,444 |
|
|
$ |
25,895 |
|
|
$ |
23,285 |
|
|
$ |
27,848 |
|
|
Charge-offs during the
period |
|
|
|
(144 |
) |
|
|
(598 |
) |
|
|
(6,003 |
) |
|
|
(1,880 |
) |
|
|
(6,623 |
) |
|
Recoveries during the
period |
|
|
|
470 |
|
|
|
379 |
|
|
|
170 |
|
|
|
1,192 |
|
|
|
1,214 |
|
|
Net recoveries (charge-offs) during the period |
|
|
|
326 |
|
|
|
(219 |
) |
|
|
(5,833 |
) |
|
|
(688 |
) |
|
|
(5,409 |
) |
|
Impact of adopting Topic
326 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
8,570 |
|
|
|
— |
|
|
Provision (recapture) for
credit losses on loans during the period(1) |
|
|
|
(1,348 |
) |
|
|
197 |
|
|
|
3,223 |
|
|
|
13,233 |
|
|
|
846 |
|
|
Balance at end of period |
|
|
$ |
44,400 |
|
|
$ |
45,422 |
|
|
$ |
23,285 |
|
|
$ |
44,400 |
|
|
$ |
23,285 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans, net of deferred
fees |
|
|
$ |
2,619,261 |
|
|
$ |
2,697,016 |
|
|
$ |
2,533,844 |
|
|
$ |
2,619,261 |
|
|
$ |
2,533,844 |
|
|
Total nonperforming loans |
|
|
$ |
7,869 |
|
|
$ |
10,262 |
|
|
$ |
9,828 |
|
|
$ |
7,869 |
|
|
$ |
9,828 |
|
|
Allowance for credit losses on
loans to total loans(2) |
|
|
|
1.70 |
|
% |
|
1.68 |
|
% |
|
0.92 |
|
% |
|
1.70 |
|
% |
|
0.92 |
|
% |
Allowance for credit losses on
loans to total nonperforming loans(2) |
|
|
|
564.24 |
|
% |
|
442.62 |
|
% |
|
236.93 |
|
% |
|
564.24 |
|
% |
|
236.93 |
|
% |
(1) |
Provision
(recapture) for credit losses on loans for the quarters ended
December 31, 2020 and September 30, 2020, and the year ended
December 31, 2020, |
|
Provision for
loan losses for the quarter and the year ended December 31,
2019 |
(2) |
ACLL at December
31, 2020 and September 30, 2020, Allowance for loan losses ("ALLL")
at December 31, 2019 |
- The ACLL was 1.70% of total loans at December 31, 2020 and the
ACLL to total nonperforming loans was 564.24% at December 31, 2020.
The ALLL was 0.92% of total loans and the ALLL to nonperforming
loans was 236.93% at December 31, 2019. The ACLL was 1.68% of total
loans at September 30, 2020 and the ACLL to total nonperforming
loans was 442.62% at September 30, 2020. The ACLL was 1.91% of
total loans, excluding PPP loans, at December 31, 2020, and
September 30, 2020.
- The following table shows the results of adopting CECL for the
year ended December 31, 2020:
DRIVERS OF CHANGE IN
ACLL UNDER CECL |
|
|
(in $000’s, unaudited) |
|
|
ALLL at December 31, 2019 |
|
$ |
23,285 |
|
Day 1 adjustment impact of
adopting Topic 326 |
|
|
8,570 |
|
ACLL at January 1, 2020 |
|
|
31,855 |
|
Net (charge-offs) during the
first quarter of 2020 |
|
|
(422 |
) |
Portfolio changes during the
first quarter of 2020 |
|
|
1,216 |
|
Economic factors during the
first quarter of 2020 |
|
|
12,054 |
|
ACLL at March 31, 2020 |
|
|
44,703 |
|
Net (charge-offs) during the second quarter of 2020 |
|
|
(373 |
) |
Portfolio changes during the second quarter of 2020 |
|
|
(4,282 |
) |
Qualitative and quantitative changes during the second |
|
|
|
quarter of 2020 including changes in economic forecasts |
|
|
5,396 |
|
ACLL at June 30, 2020 |
|
|
45,444 |
|
Net (charge-offs) during the
third quarter of 2020 |
|
|
(219 |
) |
Portfolio changes during the
third quarter of 2020 |
|
|
488 |
|
Qualitative and quantitative
changes during the third |
|
|
|
quarter of 2020 including changes in economic forecasts |
|
|
(291 |
) |
ACLL at September 30, 2020 |
|
|
45,422 |
|
Net (charge-offs) during the
fourth quarter of 2020 |
|
|
326 |
|
Portfolio changes during the
fourth quarter of 2020 |
|
|
(1,622 |
) |
Qualitative and quantitative
changes during the fourth |
|
|
|
quarter of 2020 including changes in economic forecasts |
|
|
274 |
|
ACLL at December 31, 2020 |
|
$ |
44,400 |
|
- Net recoveries totaled $326,000 for
the fourth quarter of 2020, compared to net charge-offs of $5.8
million for the fourth quarter of 2019, and net charge-offs of
$219,000 for the third quarter of 2020.
- The following is a breakout of NPAs
at the periods indicated:
|
|
End of Period: |
|
NONPERFORMING
ASSETS |
|
December 31, 2020 |
|
September 30, 2020 |
|
December 31, 2019 |
|
(in $000’s, unaudited) |
|
Balance |
|
% of Total |
|
Balance |
|
% of Total |
|
Balance |
|
% of Total |
|
CRE loans |
|
$ |
3,706 |
|
47 |
% |
$ |
4,328 |
|
42 |
% |
$ |
5,094 |
|
52 |
% |
Commercial loans |
|
|
2,726 |
|
35 |
% |
|
2,908 |
|
28 |
% |
|
3,444 |
|
35 |
% |
Consumer and other loans |
|
|
407 |
|
5 |
% |
|
1,464 |
|
14 |
% |
|
— |
|
0
|
% |
Home equity loans |
|
|
949 |
|
12 |
% |
|
961 |
|
10 |
% |
|
137 |
|
1 |
% |
Restructured and loans over
90 days past due and still accruing |
|
|
81 |
|
1 |
% |
|
601 |
|
6 |
% |
|
1,153 |
|
12 |
% |
Total nonperforming assets |
|
$ |
7,869 |
|
100 |
% |
$ |
10,262 |
|
100 |
% |
$ |
9,828 |
|
100 |
% |
|
• |
NPAs totaled
$7.9 million, or 0.17% of total assets, at December 31, 2020,
compared to $9.8 million, or 0.24% of total assets, at December 31,
2019, and $10.3 million, or 0.22% of total assets, at September 30,
2020.
|
|
• |
There were no foreclosed assets on the balance sheet at
December 31, 2020, December 31, 2019, or September 30, 2020.
|
|
• |
Classified assets increased to $34.0 million, or 0.73% of total
assets, at December 31, 2020, compared to $32.6 million, or 0.79%
of total assets, at December 31, 2019, and increased from $33.0
million, or 0.72% of total assets, at September 30, 2020.
|
- The following table summarizes the distribution of deposits and
the percentage of distribution in each category for the periods
indicated:
DEPOSITS |
|
December 31, 2020 |
|
September 30, 2020 |
|
December 31, 2019 |
|
(in $000’s, unaudited) |
|
Balance |
|
% to Total |
|
Balance |
|
% to Total |
|
Balance |
|
% to Total |
|
Demand, noninterest-bearing |
|
$ |
1,661,655 |
|
42 |
% |
$ |
1,698,027 |
|
44 |
% |
$ |
1,450,873 |
|
42 |
% |
Demand, interest-bearing |
|
|
960,179 |
|
24 |
% |
|
926,041 |
|
24 |
% |
|
798,375 |
|
23 |
% |
Savings and money market |
|
|
1,119,968 |
|
29 |
% |
|
1,108,252 |
|
28 |
% |
|
982,430 |
|
29 |
% |
Time deposits — under
$250 |
|
|
45,027 |
|
1 |
% |
|
46,684 |
|
1 |
% |
|
54,361 |
|
2 |
% |
Time deposits — $250 and
over |
|
|
103,746 |
|
3 |
% |
|
92,276 |
|
2 |
% |
|
99,882 |
|
3 |
% |
CDARS — interest-bearing
demand, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
money market and time deposits |
|
|
23,911 |
|
1 |
% |
|
19,121 |
|
1 |
% |
|
28,847 |
|
1 |
% |
Total deposits |
|
$ |
3,914,486 |
|
100 |
% |
$ |
3,890,401 |
|
100 |
% |
$ |
3,414,768 |
|
100 |
% |
|
• |
Total deposits
increased $499.7 million, or 15%, to $3.91 billion at December 31,
2020, compared to $3.41 billion at December 31, 2019. Total
deposits increased $24.1 million, or 1%, from $3.89 billion at
September 30, 2020.
|
|
• |
Deposits, excluding all time deposits and CDARS deposits,
increased $510.1 million, or 16%, to $3.74 billion at December 31,
2020, compared to $3.23 billion at December 31, 2019. Deposits,
excluding all time deposits and CDARS deposits remained relatively
flat from $3.73 billion at September 30, 2020.
|
- The Company’s
consolidated capital ratios exceeded regulatory guidelines and the
Bank’s capital ratios exceeded the 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 December 31, 2020, 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 Risk-Based |
|
16.5 |
% |
|
15.8 |
% |
|
10.0 |
% |
|
10.5 |
% |
Tier 1 Risk-Based |
|
14.0 |
% |
|
14.6 |
% |
|
8.0 |
% |
|
8.5 |
% |
Common Equity Tier 1
Risk-Based |
|
14.0 |
% |
|
14.6 |
% |
|
6.5 |
% |
|
7.0 |
% |
Leverage |
|
9.1 |
% |
|
9.5 |
% |
|
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 |
|
December 31, |
|
September 30, |
|
December 31, |
(in $000’s, unaudited) |
|
2020 |
|
|
2020 |
|
|
2019 |
|
Unrealized gain on securities available-for-sale |
|
$ |
3,709 |
|
|
$ |
4,495 |
|
|
$ |
1,242 |
|
Remaining unamortized
unrealized gain on securities |
|
|
|
|
|
|
|
|
|
available-for-sale transferred to held-to-maturity |
|
|
261 |
|
|
|
271 |
|
|
|
297 |
|
Split dollar insurance
contracts liability |
|
|
(6,140 |
) |
|
|
(4,839 |
) |
|
|
(4,835 |
) |
Supplemental executive
retirement plan liability |
|
|
(8,767 |
) |
|
|
(6,662 |
) |
|
|
(6,842 |
) |
Unrealized gain on
interest-only strip from SBA loans |
|
|
220 |
|
|
|
351 |
|
|
|
360 |
|
Total accumulated other comprehensive loss |
|
$ |
(10,717 |
) |
|
$ |
(6,384 |
) |
|
$ |
(9,778 |
) |
- Tangible equity was $393.6 million at December 31, 2020,
compared to $388.9 million at December 31, 2019, and $392.5 million
at September 30, 2020. Tangible book value per share was $6.57 at
December 31, 2020, compared to $6.55 at December 31, 2019, and
September 30, 2020.
D.C. Solar Litigation
|
• |
In December
2020, Solar Eclipse Investment Fund III, et al v. Heritage Bank
of Commerce, et al., was filed against Heritage, and
others, in the Solano County Superior Court (“Solar Eclipse”). Also
in December 2020, Solarmore Management Services, Inc. v. Jeff
Carpoff et al., (“Solarmore”) filed an amended complaint
in the United States District Court for the Eastern District of
California against Heritage and others. Both of these cases relate
to our former deposit relationships with D.C. Solar and their
affiliates (collectively “D.C. Solar”) and its sponsored investment
funds. These actions seek unspecified damages and are in an early
phase. We believe these actions are without merit and we intend to
vigorously defend them.
|
|
• |
In re Double Jump, Inc. is pending in the United
States Bankruptcy Court of Nevada and was filed by D.C. Solar and
some of its affiliated entities. One of the chapter 7 trustees has
indicated that it may bring an adversary action against Heritage
related to our former deposit relationships with D.C. Solar and its
sponsored investment funds. The parties have agreed to attend a
pre-filing mediation. |
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, Palo Alto,
Pleasanton, Redwood City, San Francisco, San Jose, San Mateo, San
Rafael, Sunnyvale, 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
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, 2019, and the following: (1) 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; (2) 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;
(3) our ability to anticipate interest rate changes and manage
interest rate risk; (4) changes in inflation, interest rates, and
market liquidity which may impact interest margins and impact
funding sources; (5) volatility in credit and equity markets and
its effect on the global economy; (6) 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; (7) our ability to achieve loan growth and attract
deposits; (8) risks associated with concentrations in real estate
related loans; (9) the relative strength or weakness of the
commercial and real estate markets where our borrowers are located,
including related asset and market prices; (10) other than
temporary impairment charges to our securities portfolio; (11)
changes in the level of NPAs and charge offs and other credit
quality measures, and their impact on the adequacy of the Company’s
allowance for credit losses and the Company’s provision for credit
losses; (12) 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; (13) regulatory limits on Heritage Bank of
Commerce’s ability to pay dividends to the Company; (14) changes in
our capital management policies, including those regarding business
combinations, dividends, and share repurchases; (15) 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; (16) 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; (17)
possible adjustment of the valuation of our deferred tax assets;
(18) 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; (19) inability of our framework to manage risks
associated with our business, including operational risk and credit
risk; (20) risks of loss of funding of SBA or SBA loan programs, or
changes in those programs; (21) compliance with governmental and
regulatory requirements, including the Dodd-Frank Act and others
relating to banking, consumer protection, securities, accounting
and tax matters; (22) significant changes in applicable laws and
regulations, including those concerning taxes, banking and
securities; (23) 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;
(24) costs and effects of legal and regulatory developments,
including resolution of regulatory or other governmental inquiries,
and the results of regulatory examinations or reviews; (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 of natural
disasters (including earthquakes) and other events beyond our
control; (29) the effect of the COVID-19 pandemic, and other
infectious illness outbreaks that may arise in the future, on the
Bank’s customers, employees, businesses, liquidity, financial
results and overall condition and which has created significant
uncertainties in U.S. and global markets, including our customers'
ability to make timely payments on obligations, and operating
expense due to alternative approaches to doing business; (30)
changes in governmental policy and regulation, including measures
taken in response to economic, business, political and social
conditions, such as the SBA Paycheck Protection Program (“PPP”),
the Federal Reserve Board's efforts to provide liquidity to the
financial system and provide credit to private commercial and
municipal borrowers, and other programs designed to address the
effects of the COVID-19 pandemic; (31) the Bank's participation as
a lender in the PPP and similar programs and its effect on the
Bank's liquidity, financial results, businesses and customers,
including the availability of program funds and the ability of
customers to comply with requirements and otherwise perform with
respect to loans obtained under such programs; (32) 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 Year Ended: |
CONSOLIDATED INCOME
STATEMENTS |
|
December 31, |
|
September 30, |
|
December 31, |
|
September 30, |
|
December 31, |
|
|
December 31, |
|
December 31, |
|
Percent |
|
(in $000’s, unaudited) |
|
2020 |
|
|
2020 |
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
|
2020 |
|
2019 |
|
Change |
|
Interest income |
|
$ |
36,145 |
|
|
$ |
36,252 |
|
$ |
42,471 |
|
|
0 |
|
% |
(15 |
) |
% |
|
$ |
150,471 |
|
$ |
142,659 |
|
5 |
|
% |
Interest expense |
|
|
1,940 |
|
|
|
2,087 |
|
|
3,242 |
|
|
(7 |
) |
% |
(40 |
) |
% |
|
|
8,581 |
|
|
10,847 |
|
(21 |
) |
% |
Net interest income before provision |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for credit losses on loans(1) |
|
|
34,205 |
|
|
|
34,165 |
|
|
39,229 |
|
|
0 |
|
% |
(13 |
) |
% |
|
|
141,890 |
|
|
131,812 |
|
8 |
|
% |
Provision (recapture) for
credit losses on loans(1) |
|
|
(1,348 |
) |
|
|
197 |
|
|
3,223 |
|
|
(784 |
) |
% |
(142 |
) |
% |
|
|
13,233 |
|
|
846 |
|
1464 |
|
% |
Net interest income after provision |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for credit losses on loans(1) |
|
|
35,553 |
|
|
|
33,968 |
|
|
36,006 |
|
|
5 |
|
% |
(1 |
) |
% |
|
|
128,657 |
|
|
130,966 |
|
(2 |
) |
% |
Noninterest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service charges and fees on deposit accounts |
|
|
608 |
|
|
|
632 |
|
|
1,140 |
|
|
(4 |
) |
% |
(47 |
) |
% |
|
|
2,859 |
|
|
4,510 |
|
(37 |
) |
% |
Increase in cash surrender value of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
life insurance |
|
|
465 |
|
|
|
464 |
|
|
405 |
|
|
0 |
|
% |
15 |
|
% |
|
|
1,845 |
|
|
1,404 |
|
31 |
|
% |
Gain on sales of SBA loans |
|
|
372 |
|
|
|
400 |
|
|
358 |
|
|
(7 |
) |
% |
4 |
|
% |
|
|
839 |
|
|
689 |
|
22 |
|
% |
Servicing income |
|
|
98 |
|
|
|
187 |
|
|
156 |
|
|
(48 |
) |
% |
(37 |
) |
% |
|
|
673 |
|
|
636 |
|
6 |
|
% |
Gain (loss) on sales of securities |
|
|
7 |
|
|
|
— |
|
|
(217 |
) |
|
N/A |
|
|
(103 |
) |
% |
|
|
277 |
|
|
661 |
|
(58 |
) |
% |
Gain on the disposition of foreclosed assets |
|
|
— |
|
|
|
— |
|
|
— |
|
|
N/A |
|
|
N/A |
|
|
|
|
791 |
|
|
— |
|
N/A |
|
|
Other |
|
|
506 |
|
|
|
912 |
|
|
551 |
|
|
(45 |
) |
% |
(8 |
) |
% |
|
|
2,638 |
|
|
2,344 |
|
13 |
|
% |
Total noninterest income |
|
|
2,056 |
|
|
|
2,595 |
|
|
2,393 |
|
|
(21 |
) |
% |
(14 |
) |
% |
|
|
9,922 |
|
|
10,244 |
|
(3 |
) |
% |
Noninterest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
|
12,457 |
|
|
|
11,967 |
|
|
18,819 |
|
|
4 |
|
% |
(34 |
) |
% |
|
|
50,927 |
|
|
50,754 |
|
0 |
|
% |
Occupancy and equipment |
|
|
2,197 |
|
|
|
2,283 |
|
|
2,013 |
|
|
(4 |
) |
% |
9 |
|
% |
|
|
8,018 |
|
|
6,647 |
|
21 |
|
% |
Professional fees |
|
|
1,396 |
|
|
|
1,352 |
|
|
899 |
|
|
3 |
|
% |
55 |
|
% |
|
|
5,338 |
|
|
3,259 |
|
64 |
|
% |
Other |
|
|
5,507 |
|
|
|
5,566 |
|
|
8,895 |
|
|
(1 |
) |
% |
(38 |
) |
% |
|
|
25,228 |
|
|
24,238 |
|
4 |
|
% |
Total noninterest expense |
|
|
21,557 |
|
|
|
21,168 |
|
|
30,626 |
|
|
2 |
|
% |
(30 |
) |
% |
|
|
89,511 |
|
|
84,898 |
|
5 |
|
% |
Income before income
taxes |
|
|
16,052 |
|
|
|
15,395 |
|
|
7,773 |
|
|
4 |
|
% |
107 |
|
% |
|
|
49,068 |
|
|
56,312 |
|
(13 |
) |
% |
Income tax expense |
|
|
4,429 |
|
|
|
4,198 |
|
|
2,088 |
|
|
6 |
|
% |
112 |
|
% |
|
|
13,769 |
|
|
15,851 |
|
(13 |
) |
% |
Net income |
|
$ |
11,623 |
|
|
$ |
11,197 |
|
$ |
5,685 |
|
|
4 |
|
% |
104 |
|
% |
|
$ |
35,299 |
|
$ |
40,461 |
|
(13 |
) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PER COMMON SHARE DATA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
|
$ |
0.19 |
|
|
$ |
0.19 |
|
$ |
0.10 |
|
|
0 |
|
% |
90 |
|
% |
|
$ |
0.59 |
|
$ |
0.87 |
|
(32 |
) |
% |
Diluted earnings per
share |
|
$ |
0.19 |
|
|
$ |
0.19 |
|
$ |
0.10 |
|
|
0 |
|
% |
90 |
|
% |
|
$ |
0.59 |
|
$ |
0.84 |
|
(30 |
) |
% |
Weighted average shares
outstanding - basic |
|
|
59,616,951 |
|
|
|
59,589,243 |
|
|
57,168,605 |
|
|
0 |
|
% |
4 |
|
% |
|
|
59,478,343 |
|
|
46,684,384 |
|
27 |
|
% |
Weighted average shares
outstanding - diluted |
|
|
60,247,296 |
|
|
|
60,141,412 |
|
|
58,361,976 |
|
|
0 |
|
% |
3 |
|
% |
|
|
60,169,139 |
|
|
47,906,229 |
|
26 |
|
% |
Common shares outstanding at
period-end |
|
|
59,917,457 |
|
|
|
59,914,987 |
|
|
59,368,156 |
|
|
0 |
|
% |
1 |
|
% |
|
|
59,917,457 |
|
|
59,368,156 |
|
1 |
|
% |
Dividend per share |
|
$ |
0.13 |
|
|
$ |
0.13 |
|
$ |
0.12 |
|
|
0 |
|
% |
8 |
|
% |
|
$ |
0.52 |
|
$ |
0.48 |
|
8 |
|
% |
Book value per share |
|
$ |
9.64 |
|
|
$ |
9.64 |
|
$ |
9.71 |
|
|
0 |
|
% |
(1 |
) |
% |
|
$ |
9.64 |
|
$ |
9.71 |
|
(1 |
) |
% |
Tangible book value per
share |
|
$ |
6.57 |
|
|
$ |
6.55 |
|
$ |
6.55 |
|
|
0 |
|
% |
0 |
|
% |
|
$ |
6.57 |
|
$ |
6.55 |
|
0 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KEY FINANCIAL RATIOS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized return on average
equity |
|
|
7.99 |
|
% |
|
7.73 |
% |
|
4.04 |
|
% |
3 |
|
% |
98 |
|
% |
|
|
6.12 |
% |
|
9.51 |
% |
(36 |
) |
% |
Annualized return on average
tangible equity |
|
|
11.75 |
|
% |
|
11.41 |
% |
|
5.96 |
|
% |
3 |
|
% |
97 |
|
% |
|
|
9.04 |
% |
|
13.09 |
% |
(31 |
) |
% |
Annualized return on average
assets |
|
|
0.98 |
|
% |
|
0.98 |
% |
|
0.55 |
|
% |
0 |
|
% |
78 |
|
% |
|
|
0.80 |
% |
|
1.21 |
% |
(34 |
) |
% |
Annualized return on average
tangible assets |
|
|
1.02 |
|
% |
|
1.02 |
% |
|
0.57 |
|
% |
0 |
|
% |
79 |
|
% |
|
|
0.83 |
% |
|
1.25 |
% |
(34 |
) |
% |
Net interest margin (FTE) |
|
|
3.15 |
|
% |
|
3.24 |
% |
|
4.15 |
|
% |
(3 |
) |
% |
(24 |
) |
% |
|
|
3.50 |
% |
|
4.28 |
% |
(18 |
) |
% |
Efficiency ratio |
|
|
59.45 |
|
% |
|
57.58 |
% |
|
73.58 |
|
% |
3 |
|
% |
(19 |
) |
% |
|
|
58.96 |
% |
|
59.76 |
% |
(1 |
) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE BALANCES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in $000’s, unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets |
|
$ |
4,703,154 |
|
|
$ |
4,562,412 |
|
$ |
4,124,018 |
|
|
3 |
|
% |
14 |
|
% |
|
$ |
4,434,329 |
|
$ |
3,353,770 |
|
32 |
|
% |
Average tangible assets |
|
$ |
4,518,279 |
|
|
$ |
4,376,533 |
|
$ |
3,943,725 |
|
|
3 |
|
% |
15 |
|
% |
|
$ |
4,248,090 |
|
$ |
3,237,289 |
|
31 |
|
% |
Average earning assets |
|
$ |
4,338,117 |
|
|
$ |
4,203,902 |
|
$ |
3,762,239 |
|
|
3 |
|
% |
15 |
|
% |
|
$ |
4,071,805 |
|
$ |
3,094,589 |
|
32 |
|
% |
Average loans
held-for-sale |
|
$ |
2,772 |
|
|
$ |
5,169 |
|
$ |
3,299 |
|
|
(46 |
) |
% |
(16 |
) |
% |
|
$ |
3,459 |
|
$ |
3,714 |
|
(7 |
) |
% |
Average total loans |
|
$ |
2,652,019 |
|
|
$ |
2,664,525 |
|
$ |
2,442,802 |
|
|
0 |
|
% |
9 |
|
% |
|
$ |
2,628,036 |
|
$ |
1,991,203 |
|
32 |
|
% |
Average deposits |
|
$ |
3,980,017 |
|
|
$ |
3,846,652 |
|
$ |
3,432,771 |
|
|
3 |
|
% |
16 |
|
% |
|
$ |
3,719,896 |
|
$ |
2,819,932 |
|
32 |
|
% |
Average demand deposits -
noninterest-bearing |
|
$ |
1,749,837 |
|
|
$ |
1,700,972 |
|
$ |
1,452,893 |
|
|
3 |
|
% |
20 |
|
% |
|
$ |
1,638,055 |
|
$ |
1,131,098 |
|
45 |
|
% |
Average interest-bearing
deposits |
|
$ |
2,230,180 |
|
|
$ |
2,145,680 |
|
$ |
1,979,878 |
|
|
4 |
|
% |
13 |
|
% |
|
$ |
2,081,841 |
|
$ |
1,688,834 |
|
23 |
|
% |
Average interest-bearing
liabilities |
|
$ |
2,269,960 |
|
|
$ |
2,185,439 |
|
$ |
2,027,106 |
|
|
4 |
|
% |
12 |
|
% |
|
$ |
2,121,621 |
|
$ |
1,730,320 |
|
23 |
|
% |
Average equity |
|
$ |
578,560 |
|
|
$ |
576,135 |
|
$ |
558,478 |
|
|
0 |
|
% |
4 |
|
% |
|
$ |
576,675 |
|
$ |
425,674 |
|
35 |
|
% |
Average tangible equity |
|
$ |
393,685 |
|
|
$ |
390,256 |
|
$ |
378,185 |
|
|
1 |
|
% |
4 |
|
% |
|
$ |
390,436 |
|
$ |
309,193 |
|
26 |
|
% |
(1) |
Provision (recapture) for credit losses on loans for the quarters
ended December 31, 2020, September 30, 2020 and the year ended
December 31, 2020, Provision for loan losses for quarter and year
ended December 31, 2019 |
|
|
For the Quarter Ended: |
|
CONSOLIDATED INCOME
STATEMENTS |
|
December 31, |
|
September 30, |
|
June 30, |
|
March 31, |
|
December 31, |
|
(in $000’s, unaudited) |
|
2020 |
|
|
2020 |
|
2020 |
|
2020 |
|
2019 |
|
|
Interest income |
|
$ |
36,145 |
|
|
$ |
36,252 |
|
$ |
37,132 |
|
$ |
40,942 |
|
$ |
42,471 |
|
|
Interest expense |
|
|
1,940 |
|
|
|
2,087 |
|
|
2,192 |
|
|
2,362 |
|
|
3,242 |
|
|
Net interest income before provision |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for credit losses on loans(1) |
|
|
34,205 |
|
|
|
34,165 |
|
|
34,940 |
|
|
38,580 |
|
|
39,229 |
|
|
Provision (recapture) for
credit losses on loans(1) |
|
|
(1,348 |
) |
|
|
197 |
|
|
1,114 |
|
|
13,270 |
|
|
3,223 |
|
|
Net interest income after provision |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for credit losses on loans(1) |
|
|
35,553 |
|
|
|
33,968 |
|
|
33,826 |
|
|
25,310 |
|
|
36,006 |
|
|
Noninterest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service charges and fees on deposit accounts |
|
|
608 |
|
|
|
632 |
|
|
650 |
|
|
969 |
|
|
1,140 |
|
|
Increase in cash surrender value of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
life insurance |
|
|
465 |
|
|
|
464 |
|
|
458 |
|
|
458 |
|
|
405 |
|
|
Gain on sales of SBA loans |
|
|
372 |
|
|
|
400 |
|
|
— |
|
|
67 |
|
|
358 |
|
|
Servicing income |
|
|
98 |
|
|
|
187 |
|
|
205 |
|
|
183 |
|
|
156 |
|
|
Gain (loss) on sales of securities |
|
|
7 |
|
|
|
— |
|
|
170 |
|
|
100 |
|
|
(217 |
) |
|
Gain on the disposition of foreclosed assets |
|
|
— |
|
|
|
— |
|
|
— |
|
|
791 |
|
|
— |
|
|
Other |
|
|
506 |
|
|
|
912 |
|
|
595 |
|
|
625 |
|
|
551 |
|
|
Total noninterest income |
|
|
2,056 |
|
|
|
2,595 |
|
|
2,078 |
|
|
3,193 |
|
|
2,393 |
|
|
Noninterest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
|
12,457 |
|
|
|
11,967 |
|
|
12,300 |
|
|
14,203 |
|
|
18,819 |
|
|
Occupancy and equipment |
|
|
2,197 |
|
|
|
2,283 |
|
|
1,766 |
|
|
1,772 |
|
|
2,013 |
|
|
Professional fees |
|
|
1,396 |
|
|
|
1,352 |
|
|
1,155 |
|
|
1,435 |
|
|
899 |
|
|
Other |
|
|
5,507 |
|
|
|
5,566 |
|
|
5,791 |
|
|
8,364 |
|
|
8,895 |
|
|
Total noninterest expense |
|
|
21,557 |
|
|
|
21,168 |
|
|
21,012 |
|
|
25,774 |
|
|
30,626 |
|
|
Income before income
taxes |
|
|
16,052 |
|
|
|
15,395 |
|
|
14,892 |
|
|
2,729 |
|
|
7,773 |
|
|
Income tax expense |
|
|
4,429 |
|
|
|
4,198 |
|
|
4,274 |
|
|
868 |
|
|
2,088 |
|
|
Net income |
|
$ |
11,623 |
|
|
$ |
11,197 |
|
$ |
10,618 |
|
$ |
1,861 |
|
$ |
5,685 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PER COMMON SHARE DATA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
|
$ |
0.19 |
|
|
$ |
0.19 |
|
$ |
0.18 |
|
$ |
0.03 |
|
$ |
0.10 |
|
|
Diluted earnings per
share |
|
$ |
0.19 |
|
|
$ |
0.19 |
|
$ |
0.18 |
|
$ |
0.03 |
|
$ |
0.10 |
|
|
Weighted average shares
outstanding - basic |
|
|
59,616,951 |
|
|
|
59,589,243 |
|
|
59,420,592 |
|
|
59,286,927 |
|
|
57,168,605 |
|
|
Weighted average shares
outstanding - diluted |
|
|
60,247,296 |
|
|
|
60,141,412 |
|
|
60,112,423 |
|
|
60,194,025 |
|
|
58,361,976 |
|
|
Common shares outstanding at
period-end |
|
|
59,917,457 |
|
|
|
59,914,987 |
|
|
59,856,767 |
|
|
59,568,219 |
|
|
59,368,156 |
|
|
Dividend per share |
|
$ |
0.13 |
|
|
$ |
0.13 |
|
$ |
0.13 |
|
$ |
0.13 |
|
$ |
0.12 |
|
|
Book value per share |
|
$ |
9.64 |
|
|
$ |
9.64 |
|
$ |
9.60 |
|
$ |
9.59 |
|
$ |
9.71 |
|
|
Tangible book value per
share |
|
$ |
6.57 |
|
|
$ |
6.55 |
|
$ |
6.49 |
|
$ |
6.46 |
|
$ |
6.55 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KEY FINANCIAL RATIOS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized return on average
equity |
|
|
7.99 |
|
% |
|
7.73 |
% |
|
7.45 |
% |
|
1.29 |
% |
|
4.04 |
|
% |
Annualized return on average
tangible equity |
|
|
11.75 |
|
% |
|
11.41 |
% |
|
11.06 |
% |
|
1.91 |
% |
|
5.96 |
|
% |
Annualized return on average
assets |
|
|
0.98 |
|
% |
|
0.98 |
% |
|
0.96 |
% |
|
0.19 |
% |
|
0.55 |
|
% |
Annualized return on average
tangible assets |
|
|
1.02 |
|
% |
|
1.02 |
% |
|
1.01 |
% |
|
0.19 |
% |
|
0.57 |
|
% |
Net interest margin (FTE) |
|
|
3.15 |
|
% |
|
3.24 |
% |
|
3.46 |
% |
|
4.25 |
% |
|
4.15 |
|
% |
Efficiency ratio |
|
|
59.45 |
|
% |
|
57.58 |
% |
|
56.76 |
% |
|
61.70 |
% |
|
73.58 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE BALANCES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in $000’s, unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets |
|
$ |
4,703,154 |
|
|
$ |
4,562,412 |
|
$ |
4,434,238 |
|
$ |
4,033,151 |
|
$ |
4,124,018 |
|
|
Average tangible assets |
|
$ |
4,518,279 |
|
|
$ |
4,376,533 |
|
$ |
4,247,522 |
|
$ |
3,845,646 |
|
$ |
3,943,725 |
|
|
Average earning assets |
|
$ |
4,338,117 |
|
|
$ |
4,203,902 |
|
$ |
4,075,673 |
|
$ |
3,665,151 |
|
$ |
3,762,239 |
|
|
Average loans
held-for-sale |
|
$ |
2,772 |
|
|
$ |
5,169 |
|
$ |
3,617 |
|
$ |
2,265 |
|
$ |
3,299 |
|
|
Average total loans |
|
$ |
2,652,019 |
|
|
$ |
2,664,525 |
|
$ |
2,683,476 |
|
$ |
2,511,460 |
|
$ |
2,442,802 |
|
|
Average deposits |
|
$ |
3,980,017 |
|
|
$ |
3,846,652 |
|
$ |
3,720,850 |
|
$ |
3,327,812 |
|
$ |
3,432,771 |
|
|
Average demand deposits -
noninterest-bearing |
|
$ |
1,749,837 |
|
|
$ |
1,700,972 |
|
$ |
1,660,547 |
|
$ |
1,438,944 |
|
$ |
1,452,893 |
|
|
Average interest-bearing
deposits |
|
$ |
2,230,180 |
|
|
$ |
2,145,680 |
|
$ |
2,060,303 |
|
$ |
1,888,868 |
|
$ |
1,979,878 |
|
|
Average interest-bearing
liabilities |
|
$ |
2,269,960 |
|
|
$ |
2,185,439 |
|
$ |
2,099,982 |
|
$ |
1,928,770 |
|
$ |
2,027,106 |
|
|
Average equity |
|
$ |
578,560 |
|
|
$ |
576,135 |
|
$ |
572,939 |
|
$ |
579,051 |
|
$ |
558,478 |
|
|
Average tangible equity |
|
$ |
393,685 |
|
|
$ |
390,256 |
|
$ |
386,223 |
|
$ |
391,546 |
|
$ |
378,185 |
|
|
(1) |
Provision (recapture) for credit losses on loans for the quarters
ended December 31, 2020, September 30, June 30, 2020 and March 31,
2020, Provision for loan losses for the quarter ended December
31, 2019 |
|
|
End of Period: |
|
Percent Change From: |
|
CONSOLIDATED BALANCE
SHEETS |
|
December 31, |
|
September 30, |
|
December 31, |
|
September 30, |
|
December 31, |
|
(in $000’s, unaudited) |
|
2020 |
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
$ |
30,598 |
|
|
$ |
33,353 |
|
|
$ |
49,447 |
|
|
(8 |
) |
% |
(38 |
) |
% |
Other investments and
interest-bearing deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in other financial institutions |
|
|
1,100,475 |
|
|
|
926,915 |
|
|
|
407,923 |
|
|
19 |
|
% |
170 |
|
% |
Securities available-for-sale,
at fair value |
|
|
235,774 |
|
|
|
294,438 |
|
|
|
404,825 |
|
|
(20 |
) |
% |
(42 |
) |
% |
Securities held-to-maturity,
at amortized cost |
|
|
297,389 |
|
|
|
295,609 |
|
|
|
366,560 |
|
|
1 |
|
% |
(19 |
) |
% |
Loans held-for-sale - SBA,
including deferred costs |
|
|
1,699 |
|
|
|
3,565 |
|
|
|
1,052 |
|
|
(52 |
) |
% |
62 |
|
% |
Loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
|
555,707 |
|
|
|
574,359 |
|
|
|
603,345 |
|
|
(3 |
) |
% |
(8 |
) |
% |
SBA PPP loans |
|
|
290,679 |
|
|
|
323,550 |
|
|
|
— |
|
|
(10 |
) |
% |
N/A |
|
|
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CRE - owner occupied |
|
|
560,362 |
|
|
|
561,528 |
|
|
|
548,907 |
|
|
0 |
|
% |
2 |
|
% |
CRE - non-owner occupied |
|
|
693,103 |
|
|
|
713,563 |
|
|
|
767,821 |
|
|
(3 |
) |
% |
(10 |
) |
% |
Land and construction |
|
|
144,594 |
|
|
|
142,632 |
|
|
|
147,189 |
|
|
1 |
|
% |
(2 |
) |
% |
Home equity |
|
|
111,885 |
|
|
|
111,468 |
|
|
|
151,775 |
|
|
0 |
|
% |
(26 |
) |
% |
Multifamily |
|
|
166,425 |
|
|
|
169,791 |
|
|
|
180,623 |
|
|
(2 |
) |
% |
(8 |
) |
% |
Residential mortgages |
|
|
85,116 |
|
|
|
91,077 |
|
|
|
100,759 |
|
|
(7 |
) |
% |
(16 |
) |
% |
Consumer and other |
|
|
18,116 |
|
|
|
17,511 |
|
|
|
33,744 |
|
|
3 |
|
% |
(46 |
) |
% |
Loans |
|
|
2,625,987 |
|
|
|
2,705,479 |
|
|
|
2,534,163 |
|
|
(3 |
) |
% |
4 |
|
% |
Deferred loan fees, net |
|
|
(6,726 |
) |
|
|
(8,463 |
) |
|
|
(319 |
) |
|
(21 |
) |
% |
2008 |
|
% |
Total loans, net of deferred costs and fees |
|
|
2,619,261 |
|
|
|
2,697,016 |
|
|
|
2,533,844 |
|
|
(3 |
) |
% |
3 |
|
% |
Allowance for credit losses on
loans(1) |
|
|
(44,400 |
) |
|
|
(45,422 |
) |
|
|
(23,285 |
) |
|
(2 |
) |
% |
91 |
|
% |
Loans, net |
|
|
2,574,861 |
|
|
|
2,651,594 |
|
|
|
2,510,559 |
|
|
(3 |
) |
% |
3 |
|
% |
Company-owned life
insurance |
|
|
77,523 |
|
|
|
77,059 |
|
|
|
76,027 |
|
|
1 |
|
% |
2 |
|
% |
Premises and equipment,
net |
|
|
10,459 |
|
|
|
10,412 |
|
|
|
8,250 |
|
|
0 |
|
% |
27 |
|
% |
Goodwill |
|
|
167,631 |
|
|
|
167,631 |
|
|
|
167,420 |
|
|
0 |
|
% |
0 |
|
% |
Other intangible assets |
|
|
16,664 |
|
|
|
17,628 |
|
|
|
20,415 |
|
|
(5 |
) |
% |
(18 |
) |
% |
Accrued interest receivable
and other assets |
|
|
121,041 |
|
|
|
128,581 |
|
|
|
96,985 |
|
|
(6 |
) |
% |
25 |
|
% |
Total assets |
|
$ |
4,634,114 |
|
|
$ |
4,606,785 |
|
|
$ |
4,109,463 |
|
|
1 |
|
% |
13 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, noninterest-bearing |
|
$ |
1,661,655 |
|
|
$ |
1,698,027 |
|
|
$ |
1,450,873 |
|
|
(2 |
) |
% |
15 |
|
% |
Demand, interest-bearing |
|
|
960,179 |
|
|
|
926,041 |
|
|
|
798,375 |
|
|
4 |
|
% |
20 |
|
% |
Savings and money market |
|
|
1,119,968 |
|
|
|
1,108,252 |
|
|
|
982,430 |
|
|
1 |
|
% |
14 |
|
% |
Time deposits-under $250 |
|
|
45,027 |
|
|
|
46,684 |
|
|
|
54,361 |
|
|
(4 |
) |
% |
(17 |
) |
% |
Time deposits-$250 and over |
|
|
103,746 |
|
|
|
92,276 |
|
|
|
99,882 |
|
|
12 |
|
% |
4 |
|
% |
CDARS - money market and time deposits |
|
|
23,911 |
|
|
|
19,121 |
|
|
|
28,847 |
|
|
25 |
|
% |
(17 |
) |
% |
Total deposits |
|
|
3,914,486 |
|
|
|
3,890,401 |
|
|
|
3,414,768 |
|
|
1 |
|
% |
15 |
|
% |
Subordinated debt, net of issuance costs |
|
|
39,740 |
|
|
|
39,693 |
|
|
|
39,554 |
|
|
0 |
|
% |
0 |
|
% |
Other short-term borrowings |
|
|
— |
|
|
|
— |
|
|
|
328 |
|
|
N/A |
|
|
(100 |
) |
% |
Accrued interest payable and other liabilities |
|
|
101,999 |
|
|
|
98,884 |
|
|
|
78,105 |
|
|
3 |
|
% |
31 |
|
% |
Total liabilities |
|
|
4,056,225 |
|
|
|
4,028,978 |
|
|
|
3,532,755 |
|
|
1 |
|
% |
15 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’
Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock |
|
|
493,707 |
|
|
|
493,126 |
|
|
|
489,745 |
|
|
0 |
|
% |
1 |
|
% |
Retained earnings |
|
|
94,899 |
|
|
|
91,065 |
|
|
|
96,741 |
|
|
4 |
|
% |
(2 |
) |
% |
Accumulated other comprehensive loss |
|
|
(10,717 |
) |
|
|
(6,384 |
) |
|
|
(9,778 |
) |
|
(68 |
) |
% |
(10 |
) |
% |
Total shareholders' equity |
|
|
577,889 |
|
|
|
577,807 |
|
|
|
576,708 |
|
|
0 |
|
% |
0 |
|
% |
Total liabilities and shareholders’ equity |
|
$ |
4,634,114 |
|
|
$ |
4,606,785 |
|
|
$ |
4,109,463 |
|
|
1 |
|
% |
13 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)Allowance for credit losses on loans at December 31,
2020 and September 30, 2020, Allowance for loan losses at December
31, 2019 |
|
|
|
End of Period: |
CONSOLIDATED BALANCE
SHEETS |
|
December 31, |
|
September 30, |
|
June 30, |
|
March 31, |
|
December 31, |
(in $000’s, unaudited) |
|
2020 |
|
|
2020 |
|
|
2020 |
|
|
2020 |
|
|
2019 |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
$ |
30,598 |
|
|
$ |
33,353 |
|
|
$ |
40,108 |
|
|
$ |
36,998 |
|
|
$ |
49,447 |
|
Other investments and
interest-bearing deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in other financial institutions |
|
|
1,100,475 |
|
|
|
926,915 |
|
|
|
885,792 |
|
|
|
406,399 |
|
|
|
407,923 |
|
Securities available-for-sale,
at fair value |
|
|
235,774 |
|
|
|
294,438 |
|
|
|
323,565 |
|
|
|
373,570 |
|
|
|
404,825 |
|
Securities held-to-maturity,
at amortized cost |
|
|
297,389 |
|
|
|
295,609 |
|
|
|
322,677 |
|
|
|
348,044 |
|
|
|
366,560 |
|
Loans held-for-sale - SBA,
including deferred costs |
|
|
1,699 |
|
|
|
3,565 |
|
|
|
4,324 |
|
|
|
2,415 |
|
|
|
1,052 |
|
Loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
|
555,707 |
|
|
|
574,359 |
|
|
|
553,843 |
|
|
|
696,168 |
|
|
|
603,345 |
|
SBA PPP loans |
|
|
290,679 |
|
|
|
323,550 |
|
|
|
324,550 |
|
|
|
— |
|
|
|
— |
|
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CRE - owner occupied |
|
|
560,362 |
|
|
|
561,528 |
|
|
|
553,463 |
|
|
|
539,465 |
|
|
|
548,907 |
|
CRE - non-owner occupied |
|
|
693,103 |
|
|
|
713,563 |
|
|
|
725,776 |
|
|
|
748,245 |
|
|
|
767,821 |
|
Land and construction |
|
|
144,594 |
|
|
|
142,632 |
|
|
|
138,284 |
|
|
|
153,321 |
|
|
|
147,189 |
|
Home equity |
|
|
111,885 |
|
|
|
111,468 |
|
|
|
112,679 |
|
|
|
117,544 |
|
|
|
151,775 |
|
Multifamily |
|
|
166,425 |
|
|
|
169,791 |
|
|
|
169,637 |
|
|
|
170,292 |
|
|
|
180,623 |
|
Residential mortgages |
|
|
85,116 |
|
|
|
91,077 |
|
|
|
95,033 |
|
|
|
95,808 |
|
|
|
100,759 |
|
Consumer and other |
|
|
18,116 |
|
|
|
17,511 |
|
|
|
22,759 |
|
|
|
33,326 |
|
|
|
33,744 |
|
Loans |
|
|
2,625,987 |
|
|
|
2,705,479 |
|
|
|
2,696,024 |
|
|
|
2,554,169 |
|
|
|
2,534,163 |
|
Deferred loan fees, net |
|
|
(6,726 |
) |
|
|
(8,463 |
) |
|
|
(9,635 |
) |
|
|
(258 |
) |
|
|
(319 |
) |
Total loans, net of deferred fees |
|
|
2,619,261 |
|
|
|
2,697,016 |
|
|
|
2,686,389 |
|
|
|
2,553,911 |
|
|
|
2,533,844 |
|
Allowance for credit losses on
loans(1) |
|
|
(44,400 |
) |
|
|
(45,422 |
) |
|
|
(45,444 |
) |
|
|
(44,703 |
) |
|
|
(23,285 |
) |
Loans, net |
|
|
2,574,861 |
|
|
|
2,651,594 |
|
|
|
2,640,945 |
|
|
|
2,509,208 |
|
|
|
2,510,559 |
|
Company-owned life
insurance |
|
|
77,523 |
|
|
|
77,059 |
|
|
|
76,944 |
|
|
|
76,485 |
|
|
|
76,027 |
|
Premises and equipment,
net |
|
|
10,459 |
|
|
|
10,412 |
|
|
|
9,500 |
|
|
|
9,025 |
|
|
|
8,250 |
|
Goodwill |
|
|
167,631 |
|
|
|
167,631 |
|
|
|
167,631 |
|
|
|
167,371 |
|
|
|
167,420 |
|
Other intangible assets |
|
|
16,664 |
|
|
|
17,628 |
|
|
|
18,593 |
|
|
|
19,557 |
|
|
|
20,415 |
|
Accrued interest receivable
and other assets |
|
|
121,041 |
|
|
|
128,581 |
|
|
|
124,322 |
|
|
|
129,090 |
|
|
|
96,985 |
|
Total assets |
|
$ |
4,634,114 |
|
|
$ |
4,606,785 |
|
|
$ |
4,614,401 |
|
|
$ |
4,078,162 |
|
|
$ |
4,109,463 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, noninterest-bearing |
|
$ |
1,661,655 |
|
|
$ |
1,698,027 |
|
|
$ |
1,714,058 |
|
|
$ |
1,444,534 |
|
|
$ |
1,450,873 |
|
Demand, interest-bearing |
|
|
960,179 |
|
|
|
926,041 |
|
|
|
934,780 |
|
|
|
810,425 |
|
|
|
798,375 |
|
Savings and money market |
|
|
1,119,968 |
|
|
|
1,108,252 |
|
|
|
1,091,740 |
|
|
|
949,076 |
|
|
|
982,430 |
|
Time deposits-under $250 |
|
|
45,027 |
|
|
|
46,684 |
|
|
|
49,493 |
|
|
|
51,009 |
|
|
|
54,361 |
|
Time deposits-$250 and over |
|
|
103,746 |
|
|
|
92,276 |
|
|
|
93,822 |
|
|
|
96,540 |
|
|
|
99,882 |
|
CDARS - money market and time deposits |
|
|
23,911 |
|
|
|
19,121 |
|
|
|
16,333 |
|
|
|
15,055 |
|
|
|
28,847 |
|
Total deposits |
|
|
3,914,486 |
|
|
|
3,890,401 |
|
|
|
3,900,226 |
|
|
|
3,366,639 |
|
|
|
3,414,768 |
|
Subordinated debt, net of issuance costs |
|
|
39,740 |
|
|
|
39,693 |
|
|
|
39,646 |
|
|
|
39,600 |
|
|
|
39,554 |
|
Other short-term borrowings |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
328 |
|
Accrued interest payable and other liabilities |
|
|
101,999 |
|
|
|
98,884 |
|
|
|
99,722 |
|
|
|
100,482 |
|
|
|
78,105 |
|
Total liabilities |
|
|
4,056,225 |
|
|
|
4,028,978 |
|
|
|
4,039,594 |
|
|
|
3,506,721 |
|
|
|
3,532,755 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’
Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock |
|
|
493,707 |
|
|
|
493,126 |
|
|
|
492,333 |
|
|
|
491,347 |
|
|
|
489,745 |
|
Retained earnings |
|
|
94,899 |
|
|
|
91,065 |
|
|
|
87,654 |
|
|
|
84,803 |
|
|
|
96,741 |
|
Accumulated other comprehensive loss |
|
|
(10,717 |
) |
|
|
(6,384 |
) |
|
|
(5,180 |
) |
|
|
(4,709 |
) |
|
|
(9,778 |
) |
Total shareholders' equity |
|
|
577,889 |
|
|
|
577,807 |
|
|
|
574,807 |
|
|
|
571,441 |
|
|
|
576,708 |
|
Total liabilities and shareholders’ equity |
|
$ |
4,634,114 |
|
|
$ |
4,606,785 |
|
|
$ |
4,614,401 |
|
|
$ |
4,078,162 |
|
|
$ |
4,109,463 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)Allowance for credit losses on loans at September 30,
2020, June 30, 2020 and March 31, 2020, Allowance for loan
losses at December 31, 2019 |
|
|
End of Period: |
|
Percent Change From: |
|
CREDIT QUALITY
DATA |
|
December 31, |
|
September 30, |
|
December 31, |
|
September 30, |
|
December 31, |
|
(in $000’s, unaudited) |
|
2020 |
|
|
2020 |
|
2019 |
|
2020 |
|
|
2019 |
|
|
Nonaccrual loans - held-for-investment |
|
$ |
7,788 |
|
|
$ |
9,661 |
|
$ |
8,675 |
|
(19 |
) |
% |
(10 |
) |
% |
Restructured and loans over 90
days past due |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and still accruing |
|
|
81 |
|
|
|
601 |
|
|
1,153 |
|
(87 |
) |
% |
(93 |
) |
% |
Total nonperforming loans |
|
|
7,869 |
|
|
|
10,262 |
|
|
9,828 |
|
(23 |
) |
% |
(20 |
) |
% |
Foreclosed assets |
|
|
— |
|
|
|
— |
|
|
— |
|
N/A |
|
|
N/A |
|
|
Total nonperforming assets |
|
$ |
7,869 |
|
|
$ |
10,262 |
|
$ |
9,828 |
|
(23 |
) |
% |
(20 |
) |
% |
Other restructured loans still
accruing |
|
$ |
169 |
|
|
$ |
98 |
|
$ |
436 |
|
72 |
|
% |
(61 |
) |
% |
Net charge-offs (recoveries)
during the quarter |
|
$ |
(326 |
) |
|
$ |
219 |
|
$ |
5,833 |
|
(249 |
) |
% |
(106 |
) |
% |
Provision (recapture) for
credit losses on loans during the quarter(1) |
|
$ |
(1,348 |
) |
|
$ |
197 |
|
$ |
3,223 |
|
(784 |
) |
% |
(142 |
) |
% |
Allowance for credit losses on
loans(2) |
|
$ |
44,400 |
|
|
$ |
45,422 |
|
$ |
23,285 |
|
(2 |
) |
% |
91 |
|
% |
Classified assets |
|
$ |
34,028 |
|
|
$ |
33,024 |
|
$ |
32,579 |
|
3 |
|
% |
4 |
|
% |
Allowance for credit losses on
loans to total loans(2) |
|
|
1.70 |
|
% |
|
1.68 |
% |
|
0.92 |
% |
1 |
|
% |
85 |
|
% |
Allowance for credit losses on
loans to total nonperforming loans(2) |
|
|
564.24 |
|
% |
|
442.62 |
% |
|
236.93 |
% |
27 |
|
% |
138 |
|
% |
Nonperforming assets to total
assets |
|
|
0.17 |
|
% |
|
0.22 |
% |
|
0.24 |
% |
(23 |
) |
% |
(29 |
) |
% |
Nonperforming loans to total
loans |
|
|
0.30 |
|
% |
|
0.38 |
% |
|
0.39 |
% |
(21 |
) |
% |
(23 |
) |
% |
Classified assets to Heritage
Commerce Corp |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 capital plus allowance for credit losses on
loans(2) |
|
|
7 |
|
% |
|
7 |
% |
|
8 |
% |
0 |
|
% |
(13 |
) |
% |
Classified assets to Heritage
Bank of Commerce |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 capital plus allowance for credit losses on
loans(2) |
|
|
7 |
|
% |
|
7 |
% |
|
7 |
% |
0 |
|
% |
0 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER PERIOD-END
STATISTICS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in $000’s, unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Heritage Commerce
Corp: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible common equity (3) |
|
$ |
393,594 |
|
|
$ |
392,548 |
|
$ |
388,873 |
|
0 |
|
% |
1 |
|
% |
Shareholders’ equity / total assets |
|
|
12.47 |
|
% |
|
12.54 |
% |
|
14.03 |
% |
(1 |
) |
% |
(11 |
) |
% |
Tangible common equity / tangible assets (4) |
|
|
8.85 |
|
% |
|
8.88 |
% |
|
9.92 |
% |
0 |
|
% |
(11 |
) |
% |
Loan to deposit ratio |
|
|
66.91 |
|
% |
|
69.32 |
% |
|
74.20 |
% |
(3 |
) |
% |
(10 |
) |
% |
Noninterest-bearing deposits / total deposits |
|
|
42.45 |
|
% |
|
43.65 |
% |
|
42.49 |
% |
(3 |
) |
% |
0 |
|
% |
Total risk-based capital ratio |
|
|
16.5 |
|
% |
|
16.0 |
% |
|
14.6 |
% |
3
|
|
% |
13 |
|
% |
Tier 1 risk-based capital ratio |
|
|
14.0 |
|
% |
|
13.5 |
% |
|
12.5 |
% |
4 |
|
% |
12 |
|
% |
Common Equity Tier 1 risk-based capital ratio |
|
|
14.0 |
|
% |
|
13.5 |
% |
|
12.5 |
% |
4 |
|
% |
12 |
|
% |
Leverage ratio |
|
|
9.1 |
|
% |
|
9.3 |
% |
|
9.8 |
% |
(2 |
) |
% |
(7 |
) |
% |
Heritage Bank of
Commerce: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total risk-based capital ratio |
|
|
15.8 |
|
% |
|
15.2 |
% |
|
13.9 |
% |
4 |
|
% |
14 |
|
% |
Tier 1 risk-based capital ratio |
|
|
14.6 |
|
% |
|
14.1 |
% |
|
13.1 |
% |
4 |
|
% |
11 |
|
% |
Common Equity Tier 1 risk-based capital ratio |
|
|
14.6 |
|
% |
|
14.1 |
% |
|
13.1 |
% |
4 |
|
% |
11 |
|
% |
Leverage ratio |
|
|
9.5 |
|
% |
|
9.7 |
% |
|
10.2 |
% |
(2 |
) |
% |
(7 |
) |
% |
(1) |
Provision (recapture) for credit losses on loans for the quarters
ended December 31, 2020 and September 30, 2020, Provision for loan
losses for the quarter ended December 31, 2019 |
(2) |
ACLL at December 31, 2020
and September 30, 2020, ALLL at December 31, 2019 |
(3) |
Represents shareholders' equity
minus goodwill and other intangible assets |
(4) |
Represents shareholders' equity
minus goodwill and other intangible assets divided by total assets
minus goodwill and other intangible assets |
|
|
End of Period: |
|
CREDIT QUALITY
DATA |
|
December 31, |
|
September 30, |
|
June 30, |
|
March 31, |
|
December 31, |
|
(in $000’s, unaudited) |
|
2020 |
|
|
2020 |
|
2020 |
|
2020 |
|
2019 |
|
Nonaccrual loans - held-for-investment |
|
$ |
7,788 |
|
|
$ |
9,661 |
|
$ |
8,457 |
|
$ |
11,646 |
|
|
8,675 |
|
Restructured and loans over 90
days past due |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and still accruing |
|
|
81 |
|
|
|
601 |
|
|
668 |
|
|
442 |
|
|
1,153 |
|
Total nonperforming loans |
|
|
7,869 |
|
|
|
10,262 |
|
|
9,125 |
|
|
12,088 |
|
|
9,828 |
|
Foreclosed assets |
|
|
— |
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Total nonperforming assets |
|
$ |
7,869 |
|
|
$ |
10,262 |
|
$ |
9,125 |
|
$ |
12,088 |
|
$ |
9,828 |
|
Other restructured loans still
accruing |
|
$ |
169 |
|
|
$ |
98 |
|
$ |
64 |
|
$ |
103 |
|
$ |
436 |
|
Net charge-offs (recoveries)
during the quarter |
|
$ |
(326 |
) |
|
$ |
219 |
|
$ |
373 |
|
$ |
422 |
|
$ |
5,833 |
|
Provision (recapture) for
credit losses on loans during the quarter(1) |
|
$ |
(1,348 |
) |
|
$ |
197 |
|
$ |
1,114 |
|
$ |
13,270 |
|
$ |
3,223 |
|
Adoption of Topic 326 |
|
$ |
— |
|
|
$ |
— |
|
$ |
— |
|
$ |
8,570 |
|
$ |
— |
|
Allowance for credit losses on
loans(2) |
|
$ |
44,400 |
|
|
$ |
45,422 |
|
$ |
45,444 |
|
$ |
44,703 |
|
$ |
23,285 |
|
Classified assets |
|
$ |
34,028 |
|
|
$ |
33,024 |
|
$ |
31,452 |
|
$ |
39,603 |
|
$ |
32,579 |
|
Allowance for credit losses on
loans to total loans(2) |
|
|
1.70 |
|
% |
|
1.68 |
% |
|
1.69 |
% |
|
1.75 |
% |
|
0.92 |
% |
Allowance for credit losses on
loans to total nonperforming loans(2) |
|
|
564.24 |
|
% |
|
442.62 |
% |
|
498.02 |
% |
|
369.81 |
% |
|
236.93 |
% |
Nonperforming assets to total
assets |
|
|
0.17 |
|
% |
|
0.22 |
% |
|
0.20 |
% |
|
0.30 |
% |
|
0.24 |
% |
Nonperforming loans to total
loans |
|
|
0.30 |
|
% |
|
0.38 |
% |
|
0.34 |
% |
|
0.47 |
% |
|
0.39 |
% |
Classified assets to Heritage
Commerce Corp |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 capital plus allowance for credit losses on
loans(2) |
|
|
7 |
|
% |
|
7 |
% |
|
7 |
% |
|
9 |
% |
|
8 |
% |
Classified assets to Heritage
Bank of Commerce |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 capital plus allowance for credit losses on
loans(2) |
|
|
7 |
|
% |
|
7 |
% |
|
7 |
% |
|
9 |
% |
|
7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER PERIOD-END
STATISTICS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in $000’s, unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Heritage Commerce
Corp: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible common equity (3) |
|
$ |
393,594 |
|
|
$ |
392,548 |
|
$ |
388,583 |
|
$ |
384,513 |
|
$ |
388,873 |
|
Shareholders’ equity / total assets |
|
|
12.47 |
|
% |
|
12.54 |
% |
|
12.46 |
% |
|
14.01 |
% |
|
14.03 |
% |
Tangible common equity / tangible assets (4) |
|
|
8.85 |
|
% |
|
8.88 |
% |
|
8.78 |
% |
|
9.88 |
% |
|
9.92 |
% |
Loan to deposit ratio |
|
|
66.91 |
|
% |
|
69.32 |
% |
|
68.88 |
% |
|
75.86 |
% |
|
74.20 |
% |
Noninterest-bearing deposits / total deposits |
|
|
42.45 |
|
% |
|
43.65 |
% |
|
43.95 |
% |
|
42.91 |
% |
|
42.49 |
% |
Total risk-based capital ratio |
|
|
16.5 |
|
% |
|
16.0 |
% |
|
15.9 |
% |
|
14.8 |
% |
|
14.6 |
% |
Tier 1 risk-based capital ratio |
|
|
14.0 |
|
% |
|
13.5 |
% |
|
13.4 |
% |
|
12.5 |
% |
|
12.5 |
% |
Common Equity Tier 1 risk-based capital ratio |
|
|
14.0 |
|
% |
|
13.5 |
% |
|
13.4 |
% |
|
12.5 |
% |
|
12.5 |
% |
Leverage ratio |
|
|
9.1 |
|
% |
|
9.3 |
% |
|
9.4 |
% |
|
10.3 |
% |
|
9.8 |
% |
Heritage Bank of
Commerce: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total risk-based capital ratio |
|
|
15.8 |
|
% |
|
15.2 |
% |
|
15.1 |
% |
|
14.1 |
% |
|
13.9 |
% |
Tier 1 risk-based capital ratio |
|
|
14.6 |
|
% |
|
14.1 |
% |
|
14.0 |
% |
|
13.0 |
% |
|
13.1 |
% |
Common Equity Tier 1 risk-based capital ratio |
|
|
14.6 |
|
% |
|
14.1 |
% |
|
14.0 |
% |
|
13.0 |
% |
|
13.1 |
% |
Leverage ratio |
|
|
9.5 |
|
% |
|
9.7 |
% |
|
9.9 |
% |
|
10.7 |
% |
|
10.2 |
% |
(1) |
Provision (recapture) for credit losses on loans for the quarters
ended December 31, 2020, September 30, 2020, June 30, 2020 and
March 31, 2020, Provision for loan losses for the quarter
ended December 31, 2019 |
(2) |
ACLL at December 31, 2020,
September 30, 2020, June 30, 2020 and March 31,
2020, ALLL at December 31, 2019 |
(3) |
Represents shareholders' equity
minus goodwill and other intangible assets |
(4) |
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 |
|
|
|
December 31, 2020 |
|
December 31, 2019 |
|
NET INTEREST INCOME AND |
|
|
|
|
Interest |
|
Average |
|
|
|
|
Interest |
|
Average |
|
NET INTEREST
MARGIN |
|
Average |
|
Income/ |
|
Yield/ |
|
Average |
|
Income/ |
|
Yield/ |
|
(in $000’s, unaudited) |
|
Balance |
|
Expense |
|
Rate |
|
Balance |
|
Expense |
|
Rate |
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, gross (1)(2) |
|
$ |
2,654,791 |
|
$ |
32,907 |
|
|
4.93 |
% |
$ |
2,446,101 |
|
$ |
35,487 |
|
|
5.76 |
% |
Securities - taxable |
|
|
482,951 |
|
|
2,053 |
|
|
1.69 |
% |
|
653,623 |
|
|
3,687 |
|
|
2.24 |
% |
Securities - exempt from
Federal tax (3) |
|
|
70,318 |
|
|
570 |
|
|
3.22 |
% |
|
82,034 |
|
|
663 |
|
|
3.21 |
% |
Other investments and
interest-bearing deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in other financial institutions |
|
|
1,130,057 |
|
|
735 |
|
|
0.26 |
% |
|
580,481 |
|
|
2,773 |
|
|
1.90 |
% |
Total interest earning assets (3) |
|
|
4,338,117 |
|
|
36,265 |
|
|
3.33 |
% |
|
3,762,239 |
|
|
42,610 |
|
|
4.49 |
% |
Cash and due from banks |
|
|
42,861 |
|
|
|
|
|
|
|
48,313 |
|
|
|
|
|
|
Premises and equipment,
net |
|
|
10,387 |
|
|
|
|
|
|
|
8,497 |
|
|
|
|
|
|
Goodwill and other intangible
assets |
|
|
184,875 |
|
|
|
|
|
|
|
180,293 |
|
|
|
|
|
|
Other assets |
|
|
126,914 |
|
|
|
|
|
|
|
124,676 |
|
|
|
|
|
|
Total assets |
|
$ |
4,703,154 |
|
|
|
|
|
|
$ |
4,124,018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
shareholders’ equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, noninterest-bearing |
|
$ |
1,749,837 |
|
|
|
|
|
|
$ |
1,452,893 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, interest-bearing |
|
|
939,203 |
|
|
462 |
|
|
0.20 |
% |
|
789,465 |
|
|
600 |
|
|
0.30 |
% |
Savings and money market |
|
|
1,121,636 |
|
|
674 |
|
|
0.24 |
% |
|
1,009,880 |
|
|
1,283 |
|
|
0.50 |
% |
Time deposits - under $100 |
|
|
16,748 |
|
|
11 |
|
|
0.26 |
% |
|
19,613 |
|
|
28 |
|
|
0.57 |
% |
Time deposits - $100 and over |
|
|
131,740 |
|
|
208 |
|
|
0.63 |
% |
|
143,095 |
|
|
373 |
|
|
1.03 |
% |
CDARS - money market and time deposits |
|
|
20,853 |
|
|
1 |
|
|
0.02 |
% |
|
17,825 |
|
|
2 |
|
|
0.04 |
% |
Total interest-bearing deposits |
|
|
2,230,180 |
|
|
1,356 |
|
|
0.24 |
% |
|
1,979,878 |
|
|
2,286 |
|
|
0.46 |
% |
Total deposits |
|
|
3,980,017 |
|
|
1,356 |
|
|
0.14 |
% |
|
3,432,771 |
|
|
2,286 |
|
|
0.26 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subordinated debt, net of
issuance costs |
|
|
39,710 |
|
|
583 |
|
|
5.84 |
% |
|
46,758 |
|
|
955 |
|
|
8.10 |
% |
Short-term borrowings |
|
|
70 |
|
|
1 |
|
|
5.68 |
% |
|
470 |
|
|
1 |
|
|
0.84 |
% |
Total interest-bearing liabilities |
|
|
2,269,960 |
|
|
1,940 |
|
|
0.34 |
% |
|
2,027,106 |
|
|
3,242 |
|
|
0.63 |
% |
Total interest-bearing liabilities and demand, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
noninterest-bearing / cost of funds |
|
|
4,019,797 |
|
|
1,940 |
|
|
0.19 |
% |
|
3,479,999 |
|
|
3,242 |
|
|
0.37 |
% |
Other liabilities |
|
|
104,797 |
|
|
|
|
|
|
|
85,541 |
|
|
|
|
|
|
Total liabilities |
|
|
4,124,594 |
|
|
|
|
|
|
|
3,565,540 |
|
|
|
|
|
|
Shareholders’ equity |
|
|
578,560 |
|
|
|
|
|
|
|
558,478 |
|
|
|
|
|
|
Total liabilities and shareholders’ equity |
|
$ |
4,703,154 |
|
|
|
|
|
|
$ |
4,124,018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
(3) / margin |
|
|
|
|
|
34,325 |
|
|
3.15 |
% |
|
|
|
|
39,368 |
|
|
4.15 |
% |
Less tax equivalent adjustment
(3) |
|
|
|
|
|
(120 |
) |
|
|
|
|
|
|
|
(139 |
) |
|
|
|
Net interest income |
|
|
|
|
$ |
34,205 |
|
|
|
|
|
|
|
$ |
39,229 |
|
|
|
|
(1) |
Includes loans held-for-sale. Nonaccrual loans are included in
average balance. |
(2) |
Yield amounts earned on loans
include fees and costs. The accretion of net deferred loan fees
into loan interest income was $2,120,000 for the fourth quarter of
2020 (of which $1,935,000 was from PPP loans), compared to $90,000
for the fourth quarter of 2019. |
(3) |
Reflects the FTE adjustment for
Federal tax-exempt income based on a 21%. |
|
|
For the Quarter Ended |
|
For the Quarter Ended |
|
|
|
December 31, 2020 |
|
September 30, 2020 |
|
NET INTEREST INCOME AND |
|
|
|
|
Interest |
|
Average |
|
|
|
|
Interest |
|
Average |
|
NET INTEREST
MARGIN |
|
Average |
|
Income/ |
|
Yield/ |
|
Average |
|
Income/ |
|
Yield/ |
|
(in $000’s, unaudited) |
|
Balance |
|
Expense |
|
Rate |
|
Balance |
|
Expense |
|
Rate |
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, gross (1)(2) |
|
$ |
2,654,791 |
|
$ |
32,907 |
|
|
4.93 |
% |
$ |
2,669,694 |
|
$ |
32,635 |
|
|
4.86 |
% |
Securities - taxable |
|
|
482,951 |
|
|
2,053 |
|
|
1.69 |
% |
|
550,423 |
|
|
2,481 |
|
|
1.79 |
% |
Securities - exempt from
Federal tax (3) |
|
|
70,318 |
|
|
570 |
|
|
3.22 |
% |
|
72,625 |
|
|
586 |
|
|
3.21 |
% |
Other investments and
interest-bearing deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in other financial institutions |
|
|
1,130,057 |
|
|
735 |
|
|
0.26 |
% |
|
911,160 |
|
|
673 |
|
|
0.29 |
% |
Total interest earning assets (3) |
|
|
4,338,117 |
|
|
36,265 |
|
|
3.33 |
% |
|
4,203,902 |
|
|
36,375 |
|
|
3.44 |
% |
Cash and due from banks |
|
|
42,861 |
|
|
|
|
|
|
|
36,505 |
|
|
|
|
|
|
Premises and equipment,
net |
|
|
10,387 |
|
|
|
|
|
|
|
9,884 |
|
|
|
|
|
|
Goodwill and other intangible
assets |
|
|
184,875 |
|
|
|
|
|
|
|
185,879 |
|
|
|
|
|
|
Other assets |
|
|
126,914 |
|
|
|
|
|
|
|
126,242 |
|
|
|
|
|
|
Total assets |
|
$ |
4,703,154 |
|
|
|
|
|
|
$ |
4,562,412 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
shareholders’ equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, noninterest-bearing |
|
$ |
1,749,837 |
|
|
|
|
|
|
$ |
1,700,972 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, interest-bearing |
|
|
939,203 |
|
|
462 |
|
|
0.20 |
% |
|
934,892 |
|
|
506 |
|
|
0.22 |
% |
Savings and money market |
|
|
1,121,636 |
|
|
674 |
|
|
0.24 |
% |
|
1,052,800 |
|
|
762 |
|
|
0.29 |
% |
Time deposits - under $100 |
|
|
16,748 |
|
|
11 |
|
|
0.26 |
% |
|
17,298 |
|
|
16 |
|
|
0.37 |
% |
Time deposits - $100 and over |
|
|
131,740 |
|
|
208 |
|
|
0.63 |
% |
|
121,949 |
|
|
219 |
|
|
0.71 |
% |
CDARS - money market and time deposits |
|
|
20,853 |
|
|
1 |
|
|
0.02 |
% |
|
18,741 |
|
|
1 |
|
|
0.02 |
% |
Total interest-bearing deposits |
|
|
2,230,180 |
|
|
1,356 |
|
|
0.24 |
% |
|
2,145,680 |
|
|
1,504 |
|
|
0.28 |
% |
Total deposits |
|
|
3,980,017 |
|
|
1,356 |
|
|
0.14 |
% |
|
3,846,652 |
|
|
1,504 |
|
|
0.16 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subordinated debt, net of
issuance costs |
|
|
39,710 |
|
|
583 |
|
|
5.84 |
% |
|
39,663 |
|
|
583 |
|
|
5.85 |
% |
Short-term borrowings |
|
|
70 |
|
|
1 |
|
|
5.68 |
% |
|
96 |
|
|
— |
|
|
0.00 |
% |
Total interest-bearing liabilities |
|
|
2,269,960 |
|
|
1,940 |
|
|
0.34 |
% |
|
2,185,439 |
|
|
2,087 |
|
|
0.38 |
% |
Total interest-bearing liabilities and demand, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
noninterest-bearing / cost of funds |
|
|
4,019,797 |
|
|
1,940 |
|
|
0.19 |
% |
|
3,886,411 |
|
|
2,087 |
|
|
0.21 |
% |
Other liabilities |
|
|
104,797 |
|
|
|
|
|
|
|
99,866 |
|
|
|
|
|
|
Total liabilities |
|
|
4,124,594 |
|
|
|
|
|
|
|
3,986,277 |
|
|
|
|
|
|
Shareholders’ equity |
|
|
578,560 |
|
|
|
|
|
|
|
576,135 |
|
|
|
|
|
|
Total liabilities and shareholders’ equity |
|
$ |
4,703,154 |
|
|
|
|
|
|
$ |
4,562,412 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
(3) / margin |
|
|
|
|
|
34,325 |
|
|
3.15 |
% |
|
|
|
|
34,288 |
|
|
3.24 |
% |
Less tax equivalent adjustment
(3) |
|
|
|
|
|
(120 |
) |
|
|
|
|
|
|
|
(123 |
) |
|
|
|
Net interest income |
|
|
|
|
$ |
34,205 |
|
|
|
|
|
|
|
$ |
34,165 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Includes loans held-for-sale. Nonaccrual loans are included in
average balance. |
(2) |
Yield amounts earned on loans
include fees and costs. The accretion of net deferred loan fees
into loan interest income was $2,120,000 for the fourth quarter of
2020 (of which $1,935,000 was from PPP loans), compared to
$1,441,000 for the third quarter of 2020 (of which $1,305,000 was
from PPP loans). |
(3) |
Reflects the FTE adjustment for
Federal tax-exempt income based on a 21%. |
|
|
For the Year Ended |
|
For the Year Ended |
|
|
|
December 31, 2020 |
|
December 31, 2019 |
|
NET INTEREST INCOME AND |
|
|
|
|
Interest |
|
Average |
|
|
|
|
Interest |
|
Average |
|
NET INTEREST
MARGIN |
|
Average |
|
Income/ |
|
Yield/ |
|
Average |
|
Income/ |
|
Yield/ |
|
(in $000’s, unaudited) |
|
Balance |
|
Expense |
|
Rate |
|
Balance |
|
Expense |
|
Rate |
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, gross (1)(2) |
|
$ |
2,631,495 |
|
$ |
133,169 |
|
|
5.06 |
% |
$ |
1,994,917 |
|
$ |
116,808 |
|
|
5.86 |
% |
Securities - taxable |
|
|
578,506 |
|
|
11,637 |
|
|
2.01 |
% |
|
682,602 |
|
|
15,836 |
|
|
2.32 |
% |
Securities - exempt from
Federal tax (3) |
|
|
74,849 |
|
|
2,415 |
|
|
3.23 |
% |
|
84,165 |
|
|
2,720 |
|
|
3.23 |
% |
Other investments,
interest-bearing deposits in other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
financial institutions and Federal funds sold |
|
|
786,955 |
|
|
3,757 |
|
|
0.48 |
% |
|
332,905 |
|
|
7,867 |
|
|
2.36 |
% |
Total interest earning assets (3) |
|
|
4,071,805 |
|
|
150,978 |
|
|
3.71 |
% |
|
3,094,589 |
|
|
143,231 |
|
|
4.63 |
% |
Cash and due from banks |
|
|
40,401 |
|
|
|
|
|
|
|
40,070 |
|
|
|
|
|
|
Premises and equipment,
net |
|
|
9,497 |
|
|
|
|
|
|
|
7,395 |
|
|
|
|
|
|
Goodwill and other intangible
assets |
|
|
186,239 |
|
|
|
|
|
|
|
116,481 |
|
|
|
|
|
|
Other assets |
|
|
126,387 |
|
|
|
|
|
|
|
95,235 |
|
|
|
|
|
|
Total assets |
|
$ |
4,434,329 |
|
|
|
|
|
|
$ |
3,353,770 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
shareholders’ equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, noninterest-bearing |
|
$ |
1,638,055 |
|
|
|
|
|
|
$ |
1,131,098 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, interest-bearing |
|
|
891,513 |
|
|
2,035 |
|
|
0.23 |
% |
|
712,186 |
|
|
2,401 |
|
|
0.34 |
% |
Savings and money market |
|
|
1,026,319 |
|
|
3,144 |
|
|
0.31 |
% |
|
811,266 |
|
|
4,298 |
|
|
0.53 |
% |
Time deposits - under $100 |
|
|
17,659 |
|
|
67 |
|
|
0.38 |
% |
|
19,448 |
|
|
94 |
|
|
0.48 |
% |
Time deposits - $100 and over |
|
|
128,461 |
|
|
1,009 |
|
|
0.79 |
% |
|
130,856 |
|
|
1,359 |
|
|
1.04 |
% |
CDARS - money market and time deposits |
|
|
17,889 |
|
|
5 |
|
|
0.03 |
% |
|
15,078 |
|
|
7 |
|
|
0.05 |
% |
Total interest-bearing deposits |
|
|
2,081,841 |
|
|
6,260 |
|
|
0.30 |
% |
|
1,688,834 |
|
|
8,159 |
|
|
0.48 |
% |
Total deposits |
|
|
3,719,896 |
|
|
6,260 |
|
|
0.17 |
% |
|
2,819,932 |
|
|
8,159 |
|
|
0.29 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subordinated debt, net of
issuance costs |
|
|
39,641 |
|
|
2,320 |
|
|
5.85 |
% |
|
41,278 |
|
|
2,686 |
|
|
6.51 |
% |
Short-term borrowings |
|
|
139 |
|
|
1 |
|
|
0.72 |
% |
|
208 |
|
|
2 |
|
|
0.96 |
% |
Total interest-bearing liabilities |
|
|
2,121,621 |
|
|
8,581 |
|
|
0.40 |
% |
|
1,730,320 |
|
|
10,847 |
|
|
0.63 |
% |
Total interest-bearing liabilities and demand, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
noninterest-bearing / cost of funds |
|
|
3,759,676 |
|
|
8,581 |
|
|
0.23 |
% |
|
2,861,418 |
|
|
10,847 |
|
|
0.38 |
% |
Other liabilities |
|
|
97,978 |
|
|
|
|
|
|
|
66,678 |
|
|
|
|
|
|
Total liabilities |
|
|
3,857,654 |
|
|
|
|
|
|
|
2,928,096 |
|
|
|
|
|
|
Shareholders’ equity |
|
|
576,675 |
|
|
|
|
|
|
|
425,674 |
|
|
|
|
|
|
Total liabilities and shareholders’ equity |
|
$ |
4,434,329 |
|
|
|
|
|
|
$ |
3,353,770 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
(3) / margin |
|
|
|
|
|
142,397 |
|
|
3.50 |
% |
|
|
|
|
132,384 |
|
|
4.28 |
% |
Less tax equivalent adjustment
(3) |
|
|
|
|
|
(507 |
) |
|
|
|
|
|
|
|
(572 |
) |
|
|
|
Net interest income |
|
|
|
|
$ |
141,890 |
|
|
|
|
|
|
|
$ |
131,812 |
|
|
|
|
(1) |
Includes loans held-for-sale. Nonaccrual loans are included in
average balance. |
(2) |
Yield amounts earned on loans
include fees and costs. The accretion of net deferred loan fees
into loan interest income was $4,473,000 for the year ended
December 31, 2020 (of which $3,877,000 was from PPP loans),
compared to $580,000 for the year ended December 31, 2019. |
(3) |
Reflects the FTE adjustment
for Federal tax-exempt income based on a 21%. |
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