SAN JOSE, Calif., April 24, 2025 (GLOBE NEWSWIRE) -- Heritage Commerce Corp (Nasdaq: HTBK), (the "Company"), the holding company for Heritage Bank of Commerce (the "Bank") today announced its financial results for the first quarter of 2025. All data are unaudited.
QUARTERLY HIGHLIGHTS:
| Net Income | Earnings Per Share | Pre-Provision Net Revenue ("PPNR")(1) | Fully Tax Equivalent ("FTE") Net Interest Margin(1) | Efficiency Ratio(1) | Tangible Book Value Per Share(1) | ||
| $11.6 million | $0.19 | $16.6 million | 3.39% | 63.96% | $8.48 | ||
CEO COMMENTARY:
"We delivered a solid quarter of performance with a 9% increase in our level of profitability from the prior quarter," said Clay Jones, President and Chief Executive Officer. "While our balance sheet trends reflected the seasonally low loan demand and deposit outflows in the first quarter, we generated a higher level of profitability due to improved net interest margin, strong expense control, and an improvement in our asset quality. We also redeployed some of our excess liquidity to purchase new investment securities, which we expect will have a positive impact on our net interest income and net interest margin going forward. Our longer-term trends remain positive as well, with notable improvement in many areas compared to the first quarter of last year, including a 14% increase in net income and increases in the annualized returns on average assets and average equity."
"While economic uncertainty has increased over the past few months, we still expect to deliver solid financial performance in 2025 as we continue to capitalize on our market position to assist new clients that have been impacted by dislocation and disruption in our markets resulting from bank failures and acquisitions. We believe that we will continue to see positive trends in areas such as net interest margin, loan and deposit growth, and expense management, which should lead to strong financial performance for our shareholders as we move through the year," said Mr. Jones.
| LINKED-QUARTER BASIS | YEAR-OVER-YEAR |
| FINANCIAL HIGHLIGHTS: | |
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| CREDIT QUALITY: | |
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| KEY PERFORMANCE METRICS: | |
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(1)This is a non-GAAP financial measure as defined and discussed under "Non-GAAP Financial Measures" later in this press release.
Results of Operations:
Net interest income totaled $43.4 million for the first quarter of 2025, a slight decrease of $235,000, or 1%, compared to $43.6 million for the fourth quarter of 2024. The decrease was primarily due to two fewer accrual days during the quarter from the prior linked quarter, together with a lower average balance on interest earning assets, which was largely offset by a decrease in rates paid on deposits and a decrease of higher cost deposit balances. Net interest income increased $3.9 million, or 10%, compared to $39.5 million for the first quarter of 2024. The increase was primarily due to growth in average earning asset balances, partially offset by an increase in interest-bearing deposit balances.
The FTE net interest margin(1) was 3.39% for the first quarter of 2025, an increase over 3.32% for the fourth quarter of 2024 primarily due to lower rates paid on customer deposits, an increase in the average balances of securities and loans, and higher average yields on securities, partially offset by a decrease in the average balance of noninterest-bearing demand deposits and a lower average yield on overnight funds. The FTE net interest margin(1) increased from 3.31% for the first quarter of 2024 primarily due to lower rates paid on customer deposits, an increase in the average balances of loans, and higher average yields on securities and loans, and an increase in the average balance of deposits resulting in a higher average balance of overnight funds, partially offset by a lower average yield on overnight funds.
We recorded a provision for credit losses on loans of $274,000 for the first quarter of 2025, compared to a $1.3 million provision for credit losses on loans for the fourth quarter of 2024, and a $184,000 provision for credit losses on loans for the first quarter of 2024.
Total noninterest income remained relatively flat at $2.7 million for the first quarter of 2025, compared to $2.8 million for the fourth quarter of 2024, and $2.6 million for the first quarter of 2024.
Total revenue, which is defined as net interest income before provision for credit losses on loans plus noninterest income, decreased $314,000, or 1%, to $46.1 million for the first quarter of 2025, compared to $46.4 million for the fourth quarter of 2024, and increased $3.9 million, or 9%, from $42.1 million for the first quarter of 2024.
Total noninterest expense for the first quarter of 2025 decreased to $29.5 million, compared to $30.3 million for the fourth quarter of 2024, primarily due to nonrecurring personnel related expenses and legal fees of approximately $1.1 million, and higher professional fees and homeowner association vendor payments during the fourth quarter of 2024. Total noninterest expense increased compared to $27.5 million for the first quarter of 2024, primarily due to higher salaries and employee benefits, professional fees, and information technology related expenses.
Income tax expense was $4.7 million for the first quarter of 2025, compared to $4.1 million for the fourth quarter of 2024, and $4.3 million for the first quarter of 2024. The effective tax rate for the first quarter of 2025 was 28.8%, compared to 27.9% for the fourth quarter of 2024, and 29.5% for the first quarter of 2024.
Net income was $11.6 million, or $0.19 per average diluted common share, for the first quarter of 2025, compared to $10.6 million, or $0.17 per average diluted common share, for the fourth quarter of 2024, and $10.2 million, or $0.17 per average diluted common share, for the first quarter of 2024.
For the first quarter of 2025, the Company's PPNR(1), which is defined as total revenue less noninterest expense, was $16.6 million, compared to $16.1 million for the fourth quarter of 2024, and $14.6 million for the first quarter of 2024.
The efficiency ratio(1) improved to 63.96% for the first quarter of 2025, compared to 65.35% for the fourth quarter of 2024, as a result of lower noninterest expense, partially offset by lower total revenue. The efficiency ratio(1) improved from 65.34% for the first quarter of 2024, primarily due to higher total revenue, partially offset by higher noninterest expense during the first quarter of 2025.
Full time equivalent employees were 350 at March 31, 2025 compared to 355 at December 31, 2024, and 351 at March 31, 2024.
(1)This is a non-GAAP financial measure as defined and discussed under "Non-GAAP Financial Measures" later in this press release.
Financial Condition and Capital Management:
Total assets decreased 2% to $5.5 billion at March 31, 2025, compared to $5.6 billion at December 31, 2024, primarily due to a decrease in deposits resulting in a decrease in overnight funds. Total assets increased 5% from $5.3 billion at March 31, 2024, primarily due to an increase in deposits resulting in an increase in overnight funds, and an increase in loans.
Investment securities available-for-sale (at fair value) totaled $371.0 million at March 31, 2025, compared to $256.3 million at December 31, 2024, and $404.5 million at March 31, 2024. The pre-tax unrealized loss on the securities available-for-sale portfolio was $3.1 million, or $2.3 million net of taxes, which equaled less than 1% of total shareholders' equity at March 31, 2025.
During the first quarter of 2025, the Company purchased $62.3 million of agency mortgage-backed securities, $44.8 million of collateralized mortgage obligations, and $44.7 million of U.S. Treasury securities, for total purchases of $151.8 million in the available-for-sale portfolio. Securities purchased had a book yield of 4.86% and an average life of 4.34 years.
Investment securities held-to-maturity (at amortized cost, net of allowance for credit losses of $12,000), totaled $576.7 million at March 31, 2025, compared to $590.0 million at December 31, 2024, and $636.2 million at March 31, 2024. The fair value of the securities held-to-maturity portfolio was $496.3 million at March 31, 2025. The pre-tax unrecognized loss on the securities held-to-maturity portfolio was $80.5 million, or $56.7 million net of taxes, which equaled 8.1% of total shareholders' equity at March 31, 2025.
The unrealized and unrecognized losses in both the available-for-sale and held-to-maturity portfolios were due to higher interest rates at March 31, 2025 compared to when the securities were purchased. The issuers are of high credit quality and all principal amounts are expected to be repaid when the securities mature. The fair value is expected to recover as the securities approach their maturity date and/or market rates decline.
Loans HFI, net of deferred costs and fees, remained flat at $3.5 billion at March 31, 2025 as compared to December 31, 2024, and increased $150.8 million, or 5%, from $3.3 billion at March 31, 2024. Loans HFI, excluding residential mortgages, remained flat at $3.0 billion at March 31, 2025 as compared to December 31, 2024, and increased $175.5 million, or 6%, from $2.8 billion at March 31, 2024.
Commercial and industrial line utilization was 31% at March 31, 2025, compared to 34% at December 31, 2024, and 28% at March 31, 2024. Commercial real estate ("CRE") loans totaled $2.0 billion at March 31, 2025, of which 31% were owner occupied and 69% were investor CRE loans. Owner occupied CRE loans totaled 31% at December 31, 2024 and 32% at March 31, 2024. At March 31, 2025, approximately 24% of the Company's loan portfolio consisted of floating interest rate loans, compared to 26% at both December 31, 2024 and March 31, 2024.
At March 31, 2025, paydowns and maturities of investment securities and fixed interest rate loans maturing within one year totaled $395.6 million.
Total deposits decreased $136.8 million, or 3%, to $4.7 billion at March 31, 2025, compared to $4.8 billion at December 31, 2024 due to deposits outflows we typically see in the first quarter, and increased $238.6 million, or 5% from $4.4 billion at March 31, 2024.
The following table shows the Company's deposit types as a percentage of total deposits at the dates indicated:
| March 31, | December 31, | March 31, | |||||||
| DEPOSITS TYPE % TO TOTAL DEPOSITS | 2025 | 2024 | 2024 | ||||||
| Demand, noninterest-bearing | 24 | % | 25 | % | 28 | % | |||
| Demand, interest-bearing | 20 | % | 19 | % | 21 | % | |||
| Savings and money market | 29 | % | 28 | % | 25 | % | |||
| Time deposits - under $250 | 1 | % | 1 | % | 1 | % | |||
| Time deposits - $250 and over | 5 | % | 4 | % | 4 | % | |||
| ICS/CDARS - interest-bearing demand, | |||||||||
| money market and time deposits | 21 | % | 23 | % | 21 | % | |||
| Total deposits | 100 | % | 100 | % | 100 | % | |||
The loan to deposit ratio was 74.45% at March 31, 2025, compared to 72.45% at December 31, 2024, and 75.06% at March 31, 2024.
The Company's total available liquidity and borrowing capacity was $3.2 billion at March 31, 2025, compared to $3.3 billion at December 31, 2024, and $3.0 billion at March 31, 2024.
Total shareholders' equity was $696.2 million at March 31, 2025, compared to $689.7 million at December 31, 2024, and $676.3 million at March 31, 2024. The increase in shareholders' equity at March 31, 2025 is primarily a function of net income and the decrease in the total accumulated other comprehensive loss, partially offset by dividends to stockholders.
Total accumulated other comprehensive loss of $6.8 million at March 31, 2025 was comprised of unrealized losses on securities available-for-sale of $2.3 million, a split dollar insurance contracts liability of $2.4 million, a supplemental executive retirement plan liability of $2.2 million, and a $49,000 unrealized gain on interest-only strip from SBA loans.
The Company's consolidated capital ratios exceeded regulatory guidelines and the Bank's capital ratios exceeded regulatory guidelines under the prompt corrective action ("PCA") regulatory guidelines for a well-capitalized financial institution, and the Basel III minimum regulatory requirements at March 31, 2025.
Tangible book value per share(1) was $8.48 at March 31, 2025, compared to $8.41 at December 31, 2024, and $8.17 at March 31, 2024.
In July 2024, the Company announced that its Board of Directors adopted a share repurchase program under which the Company is authorized to repurchase up to $15 million of the Company's shares of its issued and outstanding common stock. The Company did not repurchase any of its common stock during 2024 or the first quarter of 2025.
(1)This is a non-GAAP financial measure as defined and discussed under "Non-GAAP Financial Measures" later in this press release.
Credit Quality:
The provision for credit losses on loans totaled $274,000 for the first quarter of 2025, compared to a $1.3 million provision for credit losses on loans for the fourth quarter of 2024, and a provision for credit losses on loans of $184,000 for the first quarter of 2024. Net charge-offs totaled $965,000 for the first quarter of 2025, compared to $197,000 for the fourth quarter of 2024, and $254,000 for the first quarter of 2024. More than half of the net charge-offs for the first quarter of 2025 related to one commercial contractor that was previously reserved for during the fourth quarter of 2024. The remaining charge-offs were related to five different small businesses in a variety of industries. Four loans were underwritten using a scored small business product whose underwriting guidelines have been tightened since the loans were made.
The allowance for credit losses on loans ("ACLL") at March 31, 2025 was $48.3 million, or 1.38% of total loans, representing 765% of total nonperforming loans. The ACLL at December 31, 2024 was $49.0 million, or 1.40% of total loans, representing 638% of total nonperforming loans. The ACLL at March 31, 2024 was $47.9 million, or 1.44% of total loans, representing 608% of total nonperforming loans. The reduction to the allowance for credit on losses on loans reflects our credit assessment and economic factors.
NPAs were $6.3 million at March 31, 2025, compared to $7.7 million at December 31, 2024, and $7.9 million at March 31, 2024. There were no CRE loans in NPAs at March 31, 2025, December 31, 2024, or March 31, 2024. There were no foreclosed assets on the balance sheet at March 31, 2025, December 31, 2024, or March 31, 2024. There were no Shared National Credits ("SNCs") or material purchased participations included in NPAs or total loans at March 31, 2025, December 31, 2024, or March 31, 2024.
Classified assets totaled $40.0 million, or 0.73% of total assets, at March 31, 2025, compared to $41.7 million, or 0.74% of total assets, at December 31, 2024, and $35.4 million, or 0.67% of total assets, at March 31, 2024. The increase in classified assets from March 31, 2024 was primarily the result of one downgraded owner occupied CRE credit, and a number of residential related loans downgraded during the fourth quarter of 2024. The loans are well-collateralized and we do not anticipate to incur losses as a result of the downgrades of these loans.
Heritage Commerce Corp, a bank holding company established in October 1997, is the parent company of Heritage Bank of Commerce, established in 1994 and headquartered in San Jose, CA with full-service branches in Danville, Fremont, Gilroy, Hollister, Livermore, Los Altos, Los Gatos, Morgan Hill, Oakland, Palo Alto, Pleasanton, Redwood City, San Francisco, San Jose, San Mateo, San Rafael, and Walnut Creek. Heritage Bank of Commerce is an SBA Preferred Lender. Bay View Funding, a subsidiary of Heritage Bank of Commerce, is based in San Jose, CA and provides business-essential working capital factoring financing to various industries throughout the United States. For more information, please visit www.heritagecommercecorp.com. The contents of our website are not incorporated into, and do not form a part of, this release or of our filings with the Securities and Exchange Commission.
Reclassifications
During the first quarter of 2025, we reclassified Federal Home Loan Bank ("FHLB") and Federal Reserve Bank ("FRB") stock dividends from interest income to noninterest income and the related average asset balances were reclassified from interest earning assets to other assets on the "Net Interest Income and Net Interest Margin" tables. The amounts for the prior periods were reclassified to conform to the current presentation. These reclassifications did not affect previously reported net income or shareholders' equity.
Non-GAAP Financial Measures
Financial results are presented in accordance with accounting principles generally accepted in the United States of America ("GAAP") and prevailing practices in the banking industry. However, certain non-GAAP performance measures and ratios are used by management to evaluate and measure the Company's performance. Management believes these non-GAAP financial measures are common in the banking industry, and may enhance comparability for peer comparison purposes. These non-GAAP financial measures should be supplemental to primary GAAP financial measures and should not be read in isolation or relied upon as a substitute for primary GAAP financial measures. A reconciliation of GAAP to non-GAAP financial measures is presented in the tables at the end of this press release under "Reconciliation of Non-GAAP Financial Measures."
Forward-Looking Statement Disclaimer
Certain matters discussed in this press release constitute forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements are inherently uncertain in that they reflect plans and expectations for future events. These statements may include, among other things, those relating to the Company's future financial performance, plans and objectives regarding future events, expectations regarding changes in interest rates and market conditions, projected cash flows of our investment securities portfolio, the performance of our loan portfolio, estimated net interest income resulting from a shift in interest rates, expectation of high credit quality issuers ability to repay, as well as statements relating to the anticipated effects on the Company's financial condition and results of operations from expected developments or events. Any statements that reflect our belief about, confidence in, or expectations for future events, performance or condition should be considered forward-looking statements. Readers should not construe these statements as assurances of a given level of performance, nor as promises that we will take actions that we currently expect to take. All statements are subject to various risks and uncertainties, many of which are outside our control and some of which may fall outside our ability to predict or anticipate. Accordingly, our actual results may differ materially from our projected results, and we may take actions or experience events that we do not currently expect. 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, Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2024, and include: (i) risks of geographic concentration of our client base, our loans, and the collateral securing our loans, as those clients and assets may be particularly subject to natural disasters and to events and conditions that directly or indirectly affect those regions, including the particular risks of natural disasters (including earthquakes, fires, and flooding) and other events that disproportionately affect that region; (ii) cybersecurity risks that may affect us directly or may impact us indirectly by virtue of their effects on our clients, markets or vendors, including our ability to identify and address cybersecurity risks, including those posed by the increasing use of artificial intelligence, such as data security breaches, "denial of service" attacks, "hacking" and identity theft affecting us, our clients, and our third-party vendors and service providers; (iii) domestic, international and multinational political events that have accompanied or that may in the future accompany or result from recent political changes, particularly including sociopolitical events and conditions that result from political conflicts and law enforcement activities that may adversely affect our markets or our clients; (iv) media items and consumer confidence as those factors affect our clients' confidence in the banking system generally and in our bank specifically; (v) adequacy of our risk management framework, disclosure controls and procedures and internal control over financial reporting; (vi) market, geographic and sociopolitical factors that arise by virtue of the fact that we operate primarily in the general San Francisco Bay Area of Northern California; (vii) the effects of recent wildfires affecting Southern California, which have affected certain clients and certain loans secured by mortgages in Los Angeles County, and which are affecting or may, in the future, affect other clients in those and other markets throughout California; (viii) factors that affect our liquidity and our ability to meet client demands for withdrawals from deposit accounts and undrawn lines of credit, including our cash on hand and the availability of funds from our own lines of credit; (ix) factors that affect the value and liquidity of our investment portfolios, particularly the values of securities available-for-sale; (x) our ability to estimate accurately, and to establish adequate reserves against, the risk of loss associated with our loan and lease portfolios and our factoring business; (xi) inflationary pressures and changes in the interest rate environment that reduce our margins and yields, the fair value of financial instruments or our level of loan originations, or increase the level of defaults, losses and prepayments on loans to clients, whether held in the portfolio or in the secondary market; (xii) 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; (xiii) 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; (xiv) events that affect our ability to attract, recruit, and retain qualified officers and other personnel to implement our strategic plan, and that enable current and future personnel to protect and develop our relationships with clients, and to promote our business, results of operations and growth prospects; (xv) the expense and uncertain resolution of litigation matters whether occurring in the ordinary course of business or otherwise, particularly including but not limited to the effects of recent and ongoing developments in California labor and employment laws, regulations and court decisions; and (xvi) 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: | |||||||||||||||
| CONSOLIDATED INCOME STATEMENTS | March 31, | December 31, | March 31, | December 31, | March 31, | |||||||||||
| (in $000's, unaudited) | 2025 | 2024 | 2024 | 2024 | 2024 | |||||||||||
| Interest income | $ | 61,832 | $ | 64,043 | $ | 56,960 | (3 | ) | % | 9 | % | |||||
| Interest expense | 18,472 | 20,448 | 17,458 | (10 | ) | % | 6 | % | ||||||||
| Net interest income before provision | ||||||||||||||||
| for credit losses on loans | 43,360 | 43,595 | 39,502 | (1 | ) | % | 10 | % | ||||||||
| Provision for credit losses on loans | 274 | 1,331 | 184 | (79 | ) | % | 49 | % | ||||||||
| Net interest income after provision | ||||||||||||||||
| for credit losses on loans | 43,086 | 42,264 | 39,318 | 2 | % | 10 | % | |||||||||
| Noninterest income: | ||||||||||||||||
| Service charges and fees on deposit | ||||||||||||||||
| accounts | 892 | 885 | 877 | 1 | % | 2 | % | |||||||||
| FHLB and FRB stock dividends | 590 | 590 | 591 | 0 | % | 0 | % | |||||||||
| Increase in cash surrender value of | ||||||||||||||||
| life insurance | 538 | 528 | 518 | 2 | % | 4 | % | |||||||||
| Gain on sales of SBA loans | 98 | 125 | 178 | (22 | ) | % | (45 | ) | % | |||||||
| Servicing income | 82 | 77 | 90 | 6 | % | (9 | ) | % | ||||||||
| Termination fees | 87 | 18 | 13 | 383 | % | 569 | % | |||||||||
| Other | 409 | 552 | 371 | (26 | ) | % | 10 | % | ||||||||
| Total noninterest income | 2,696 | 2,775 | 2,638 | (3 | ) | % | 2 | % | ||||||||
| Noninterest expense: | ||||||||||||||||
| Salaries and employee benefits | 16,575 | 16,976 | 15,509 | (2 | ) | % | 7 | % | ||||||||
| Occupancy and equipment | 2,534 | 2,495 | 2,443 | 2 | % | 4 | % | |||||||||
| Professional fees | 1,580 | 1,711 | 1,327 | (8 | ) | % | 19 | % | ||||||||
| Other | 8,767 | 9,122 | 8,257 | (4 | ) | % | 6 | % | ||||||||
| Total noninterest expense | 29,456 | 30,304 | 27,536 | (3 | ) | % | 7 | % | ||||||||
| Income before income taxes | 16,326 | 14,735 | 14,420 | 11 | % | 13 | % | |||||||||
| Income tax expense | 4,700 | 4,114 | 4,254 | 14 | % | 10 | % | |||||||||
| Net income | $ | 11,626 | $ | 10,621 | $ | 10,166 | 9 | % | 14 | % | ||||||
| PER COMMON SHARE DATA | ||||||||||||||||
| (unaudited) | ||||||||||||||||
| Basic earnings per share | $ | 0.19 | $ | 0.17 | $ | 0.17 | 12 | % | 12 | % | ||||||
| Diluted earnings per share | $ | 0.19 | $ | 0.17 | $ | 0.17 | 12 | % | 12 | % | ||||||
| Weighted average shares outstanding - basic | 61,479,579 | 61,320,505 | 61,186,623 | 0 | % | 0 | % | |||||||||
| Weighted average shares outstanding - diluted | 61,708,361 | 61,679,735 | 61,470,552 | 0 | % | 0 | % | |||||||||
| Common shares outstanding at period-end | 61,611,121 | 61,348,095 | 61,253,625 | 0 | % | 1 | % | |||||||||
| Dividend per share | $ | 0.13 | $ | 0.13 | $ | 0.13 | 0 | % | 0 | % | ||||||
| Book value per share | $ | 11.30 | $ | 11.24 | $ | 11.04 | 1 | % | 2 | % | ||||||
| Tangible book value per share(1) | $ | 8.48 | $ | 8.41 | $ | 8.17 | 1 | % | 4 | % | ||||||
| KEY PERFORMANCE METRICS | ||||||||||||||||
| (in $000's, unaudited) | ||||||||||||||||
| Annualized return on average equity | 6.81 | % | 6.16 | % | 6.08 | % | 11 | % | 12 | % | ||||||
| Annualized return on average tangible | ||||||||||||||||
| common equity(1) | 9.09 | % | 8.25 | % | 8.24 | % | 10 | % | 10 | % | ||||||
| Annualized return on average assets | 0.85 | % | 0.75 | % | 0.79 | % | 13 | % | 8 | % | ||||||
| Annualized return on average tangible assets(1) | 0.88 | % | 0.78 | % | 0.82 | % | 13 | % | 7 | % | ||||||
| Net interest margin (FTE)(1) | 3.39 | % | 3.32 | % | 3.31 | % | 2 | % | 2 | % | ||||||
| Total revenue | $ | 46,056 | $ | 46,370 | $ | 42,140 | (1 | ) | % | 9 | % | |||||
| Pre-provision net revenue(1) | $ | 16,600 | $ | 16,066 | $ | 14,604 | 3 | % | 14 | % | ||||||
| Efficiency ratio(1) | 63.96 | % | 65.35 | % | 65.34 | % | (2 | ) | % | (2 | ) | % | ||||
| AVERAGE BALANCES | ||||||||||||||||
| (in $000's, unaudited) | ||||||||||||||||
| Average assets | $ | 5,559,896 | $ | 5,607,840 | $ | 5,178,636 | (1 | ) | % | 7 | % | |||||
| Average tangible assets(1) | $ | 5,386,001 | $ | 5,433,439 | $ | 5,002,597 | (1 | ) | % | 8 | % | |||||
| Average earning assets | $ | 5,188,317 | $ | 5,235,986 | $ | 4,810,505 | (1 | ) | % | 8 | % | |||||
| Average loans held-for-sale | $ | 2,290 | $ | 2,260 | $ | 2,749 | 1 | % | (17 | ) | % | |||||
| Average loans held-for-investment | $ | 3,429,014 | $ | 3,388,729 | $ | 3,297,240 | 1 | % | 4 | % | ||||||
| Average deposits | $ | 4,717,517 | $ | 4,771,491 | $ | 4,360,150 | (1 | ) | % | 8 | % | |||||
| Average demand deposits - noninterest-bearing | $ | 1,167,330 | $ | 1,222,393 | $ | 1,177,078 | (5 | ) | % | (1 | ) | % | ||||
| Average interest-bearing deposits | $ | 3,550,187 | $ | 3,549,098 | $ | 3,183,072 | 0 | % | 12 | % | ||||||
| Average interest-bearing liabilities | $ | 3,589,872 | $ | 3,588,755 | $ | 3,222,603 | 0 | % | 11 | % | ||||||
| Average equity | $ | 692,733 | $ | 686,263 | $ | 672,292 | 1 | % | 3 | % | ||||||
| Average tangible common equity(1) | $ | 518,838 | $ | 511,862 | $ | 496,253 | 1 | % | 5 | % | ||||||
(1)This is a non-GAAP financial measure as defined and discussed under "Non-GAAP Financial Measures" in this press release.
| For the Quarter Ended: | ||||||||||||||||
| CONSOLIDATED INCOME STATEMENTS | March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||
| (in $000's, unaudited) | 2025 | 2024 | 2024 | 2024 | 2024 | |||||||||||
| Interest income | $ | 61,832 | $ | 64,043 | $ | 60,852 | $ | 58,489 | $ | 56,960 | ||||||
| Interest expense | 18,472 | 20,448 | 21,523 | 19,622 | 17,458 | |||||||||||
| Net interest income before provision | ||||||||||||||||
| for credit losses on loans | 43,360 | 43,595 | 39,329 | 38,867 | 39,502 | |||||||||||
| Provision for credit losses on loans | 274 | 1,331 | 153 | 471 | 184 | |||||||||||
| Net interest income after provision | ||||||||||||||||
| for credit losses on loans | 43,086 | 42,264 | 39,176 | 38,396 | 39,318 | |||||||||||
| Noninterest income: | ||||||||||||||||
| Service charges and fees on deposit | ||||||||||||||||
| accounts | 892 | 885 | 908 | 891 | 877 | |||||||||||
| FHLB and FRB stock dividends | 590 | 590 | 586 | 588 | 591 | |||||||||||
| Increase in cash surrender value of | ||||||||||||||||
| life insurance | 538 | 528 | 530 | 521 | 518 | |||||||||||
| Gain on sales of SBA loans | 98 | 125 | 94 | 76 | 178 | |||||||||||
| Servicing income | 82 | 77 | 108 | 90 | 90 | |||||||||||
| Termination fees | 87 | 18 | 46 | 100 | 13 | |||||||||||
| Gain on proceeds from company-owned | ||||||||||||||||
| life insurance | - | - | - | 219 | - | |||||||||||
| Other | 409 | 552 | 554 | 379 | 371 | |||||||||||
| Total noninterest income | 2,696 | 2,775 | 2,826 | 2,864 | 2,638 | |||||||||||
| Noninterest expense: | ||||||||||||||||
| Salaries and employee benefits | 16,575 | 16,976 | 15,673 | 15,794 | 15,509 | |||||||||||
| Occupancy and equipment | 2,534 | 2,495 | 2,599 | 2,689 | 2,443 | |||||||||||
| Professional fees | 1,580 | 1,711 | 1,306 | 1,072 | 1,327 | |||||||||||
| Other | 8,767 | 9,122 | 7,977 | 8,633 | 8,257 | |||||||||||
| Total noninterest expense | 29,456 | 30,304 | 27,555 | 28,188 | 27,536 | |||||||||||
| Income before income taxes | 16,326 | 14,735 | 14,447 | 13,072 | 14,420 | |||||||||||
| Income tax expense | 4,700 | 4,114 | 3,940 | 3,838 | 4,254 | |||||||||||
| Net income | $ | 11,626 | $ | 10,621 | $ | 10,507 | $ | 9,234 | $ | 10,166 | ||||||
| PER COMMON SHARE DATA | ||||||||||||||||
| (unaudited) | ||||||||||||||||
| Basic earnings per share | $ | 0.19 | $ | 0.17 | $ | 0.17 | $ | 0.15 | $ | 0.17 | ||||||
| Diluted earnings per share | $ | 0.19 | $ | 0.17 | $ | 0.17 | $ | 0.15 | $ | 0.17 | ||||||
| Weighted average shares outstanding - basic | 61,479,579 | 61,320,505 | 61,295,877 | 61,279,914 | 61,186,623 | |||||||||||
| Weighted average shares outstanding - diluted | 61,708,361 | 61,679,735 | 61,546,157 | 61,438,088 | 61,470,552 | |||||||||||
| Common shares outstanding at period-end | 61,611,121 | 61,348,095 | 61,297,344 | 61,292,094 | 61,253,625 | |||||||||||
| Dividend per share | $ | 0.13 | $ | 0.13 | $ | 0.13 | $ | 0.13 | $ | 0.13 | ||||||
| Book value per share | $ | 11.30 | $ | 11.24 | $ | 11.18 | $ | 11.08 | $ | 11.04 | ||||||
| Tangible book value per share(1) | $ | 8.48 | $ | 8.41 | $ | 8.33 | $ | 8.22 | $ | 8.17 | ||||||
| KEY PERFORMANCE METRICS | ||||||||||||||||
| (in $000's, unaudited) | ||||||||||||||||
| Annualized return on average equity | 6.81 | % | 6.16 | % | 6.14 | % | 5.50 | % | 6.08 | % | ||||||
| Annualized return on average tangible | ||||||||||||||||
| common equity(1) | 9.09 | % | 8.25 | % | 8.27 | % | 7.43 | % | 8.24 | % | ||||||
| Annualized return on average assets | 0.85 | % | 0.75 | % | 0.78 | % | 0.71 | % | 0.79 | % | ||||||
| Annualized return on average tangible assets(1) | 0.88 | % | 0.78 | % | 0.81 | % | 0.74 | % | 0.82 | % | ||||||
| Net interest margin (FTE)(1) | 3.39 | % | 3.32 | % | 3.15 | % | 3.23 | % | 3.31 | % | ||||||
| Total revenue | $ | 46,056 | $ | 46,370 | $ | 42,155 | $ | 41,731 | $ | 42,140 | ||||||
| Pre-provision net revenue(1) | $ | 16,600 | $ | 16,066 | $ | 14,600 | $ | 13,543 | $ | 14,604 | ||||||
| Efficiency ratio(1) | 63.96 | % | 65.35 | % | 65.37 | % | 67.55 | % | 65.34 | % | ||||||
| AVERAGE BALANCES | ||||||||||||||||
| (in $000's, unaudited) | ||||||||||||||||
| Average assets | $ | 5,559,896 | $ | 5,607,840 | $ | 5,352,067 | $ | 5,213,171 | $ | 5,178,636 | ||||||
| Average tangible assets(1) | $ | 5,386,001 | $ | 5,433,439 | $ | 5,177,114 | $ | 5,037,673 | $ | 5,002,597 | ||||||
| Average earning assets | $ | 5,188,317 | $ | 5,235,986 | $ | 4,980,082 | $ | 4,840,670 | $ | 4,810,505 | ||||||
| Average loans held-for-sale | $ | 2,290 | $ | 2,260 | $ | 1,493 | $ | 1,503 | $ | 2,749 | ||||||
| Average loans held-for-investment | $ | 3,429,014 | $ | 3,388,729 | $ | 3,359,647 | $ | 3,328,358 | $ | 3,297,240 | ||||||
| Average deposits | $ | 4,717,517 | $ | 4,771,491 | $ | 4,525,946 | $ | 4,394,545 | $ | 4,360,150 | ||||||
| Average demand deposits - noninterest-bearing | $ | 1,167,330 | $ | 1,222,393 | $ | 1,172,304 | $ | 1,127,145 | $ | 1,177,078 | ||||||
| Average interest-bearing deposits | $ | 3,550,187 | $ | 3,549,098 | $ | 3,353,642 | $ | 3,267,400 | $ | 3,183,072 | ||||||
| Average interest-bearing liabilities | $ | 3,589,872 | $ | 3,588,755 | $ | 3,393,264 | $ | 3,306,972 | $ | 3,222,603 | ||||||
| Average equity | $ | 692,733 | $ | 686,263 | $ | 680,404 | $ | 675,108 | $ | 672,292 | ||||||
| Average tangible common equity(1) | $ | 518,838 | $ | 511,862 | $ | 505,451 | $ | 499,610 | $ | 496,253 | ||||||
(1)This is a non-GAAP financial measure as defined and discussed under "Non-GAAP Financial Measures" in this press release.
| End of Period: | Percent Change From: | ||||||||||||||||||
| CONSOLIDATED BALANCE SHEETS | March 31, | December 31, | March 31, | December 31, | March 31, | ||||||||||||||
| (in $000's, unaudited) | 2025 | 2024 | 2024 | 2024 | 2024 | ||||||||||||||
| ASSETS | |||||||||||||||||||
| Cash and due from banks | $ | 44,281 | $ | 29,864 | $ | 32,543 | 48 | % | 36 | % | |||||||||
| Other investments and interest-bearing deposits | |||||||||||||||||||
| in other financial institutions | 700,769 | 938,259 | 508,816 | (25 | ) | % | 38 | % | |||||||||||
| Securities available-for-sale, at fair value | 370,976 | 256,274 | 404,474 | 45 | % | (8 | ) | % | |||||||||||
| Securities held-to-maturity, at amortized cost | 576,718 | 590,016 | 636,249 | (2 | ) | % | (9 | ) | % | ||||||||||
| Loans - held-for-sale - SBA, including deferred costs | 1,884 | 2,375 | 1,946 | (21 | ) | % | (3 | ) | % | ||||||||||
| Loans - held-for-investment: | |||||||||||||||||||
| Commercial | 489,241 | 531,350 | 452,231 | (8 | ) | % | 8 | % | |||||||||||
| Real estate: | |||||||||||||||||||
| CRE - owner occupied | 616,825 | 601,636 | 585,031 | 3 | % | 5 | % | ||||||||||||
| CRE - non-owner occupied | 1,363,275 | 1,341,266 | 1,271,184 | 2 | % | 7 | % | ||||||||||||
| Land and construction | 136,106 | 127,848 | 129,712 | 6 | % | 5 | % | ||||||||||||
| Home equity | 119,138 | 127,963 | 122,794 | (7 | ) | % | (3 | ) | % | ||||||||||
| Multifamily | 284,510 | 275,490 | 269,263 | 3 | % | 6 | % | ||||||||||||
| Residential mortgages | 465,330 | 471,730 | 490,035 | (1 | ) | % | (5 | ) | % | ||||||||||
| Consumer and other | 12,741 | 14,837 | 16,439 | (14 | ) | % | (22 | ) | % | ||||||||||
| Loans | 3,487,166 | 3,492,120 | 3,336,689 | 0 | % | 5 | % | ||||||||||||
| Deferred loan fees, net | (268 | ) | (183 | ) | (587 | ) | 46 | % | (54 | ) | % | ||||||||
| Total loans - held-for-investment, net of deferred fees | 3,486,898 | 3,491,937 | 3,336,102 | 0 | % | 5 | % | ||||||||||||
| Allowance for credit losses on loans | (48,262 | ) | (48,953 | ) | (47,888 | ) | (1 | ) | % | 1 | % | ||||||||
| Loans, net | 3,438,636 | 3,442,984 | 3,288,214 | 0 | % | 5 | % | ||||||||||||
| Company-owned life insurance | 81,749 | 81,211 | 80,007 | 1 | % | 2 | % | ||||||||||||
| Premises and equipment, net | 9,772 | 10,140 | 9,986 | (4 | ) | % | (2 | ) | % | ||||||||||
| Goodwill | 167,631 | 167,631 | 167,631 | 0 | % | 0 | % | ||||||||||||
| Other intangible assets | 5,986 | 6,439 | 8,074 | (7 | ) | % | (26 | ) | % | ||||||||||
| Accrued interest receivable and other assets | 115,853 | 119,813 | 118,134 | (3 | ) | % | (2 | ) | % | ||||||||||
| Total assets | $ | 5,514,255 | $ | 5,645,006 | $ | 5,256,074 | (2 | ) | % | 5 | % | ||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||||||||||
| Liabilities: | |||||||||||||||||||
| Deposits: | |||||||||||||||||||
| Demand, noninterest-bearing | $ | 1,128,593 | $ | 1,214,192 | $ | 1,242,059 | (7 | ) | % | (9 | ) | % | |||||||
| Demand, interest-bearing | 949,068 | 936,587 | 925,100 | 1 | % | 3 | % | ||||||||||||
| Savings and money market | 1,353,293 | 1,325,923 | 1,124,900 | 2 | % | 20 | % | ||||||||||||
| Time deposits - under $250 | 37,592 | 38,988 | 38,105 | (4 | ) | % | (1 | ) | % | ||||||||||
| Time deposits - $250 and over | 213,357 | 206,755 | 200,739 | 3 | % | 6 | % | ||||||||||||
| ICS/CDARS - interest-bearing demand, money market | |||||||||||||||||||
| and time deposits | 1,001,365 | 1,097,586 | 913,757 | (9 | ) | % | 10 | % | |||||||||||
| Total deposits | 4,683,268 | 4,820,031 | 4,444,660 | (3 | ) | % | 5 | % | |||||||||||
| Subordinated debt, net of issuance costs | 39,691 | 39,653 | 39,539 | 0 | % | 0 | % | ||||||||||||
| Accrued interest payable and other liabilities | 95,106 | 95,595 | 95,579 | (1 | ) | % | 0 | % | |||||||||||
| Total liabilities | 4,818,065 | 4,955,279 | 4,579,778 | (3 | ) | % | 5 | % | |||||||||||
| Shareholders' Equity: | |||||||||||||||||||
| Common stock | 511,596 | 510,070 | 507,578 | 0 | % | 1 | % | ||||||||||||
| Retained earnings | 191,401 | 187,762 | 181,306 | 2 | % | 6 | % | ||||||||||||
| Accumulated other comprehensive loss | (6,807 | ) | (8,105 | ) | (12,588 | ) | (16 | ) | % | (46 | ) | % | |||||||
| Total shareholders' equity | 696,190 | 689,727 | 676,296 | 1 | % | 3 | % | ||||||||||||
| Total liabilities and shareholders' equity | $ | 5,514,255 | $ | 5,645,006 | $ | 5,256,074 | (2 | ) | % | 5 | % | ||||||||
| End of Period: | ||||||||||||||||||||
| CONSOLIDATED BALANCE SHEETS | March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||
| (in $000's, unaudited) | 2025 | 2024 | 2024 | 2024 | 2024 | |||||||||||||||
| ASSETS | ||||||||||||||||||||
| Cash and due from banks | $ | 44,281 | $ | 29,864 | $ | 49,722 | $ | 37,497 | $ | 32,543 | ||||||||||
| Other investments and interest-bearing deposits | ||||||||||||||||||||
| in other financial institutions | 700,769 | 938,259 | 906,588 | 610,763 | 508,816 | |||||||||||||||
| Securities available-for-sale, at fair value | 370,976 | 256,274 | 237,612 | 273,043 | 404,474 | |||||||||||||||
| Securities held-to-maturity, at amortized cost | 576,718 | 590,016 | 604,193 | 621,178 | 636,249 | |||||||||||||||
| Loans - held-for-sale - SBA, including deferred costs | 1,884 | 2,375 | 1,649 | 1,899 | 1,946 | |||||||||||||||
| Loans - held-for-investment: | ||||||||||||||||||||
| Commercial | 489,241 | 531,350 | 481,266 | 477,929 | 452,231 | |||||||||||||||
| Real estate: | ||||||||||||||||||||
| CRE - owner occupied | 616,825 | 601,636 | 602,062 | 594,504 | 585,031 | |||||||||||||||
| CRE - non-owner occupied | 1,363,275 | 1,341,266 | 1,310,578 | 1,283,323 | 1,271,184 | |||||||||||||||
| Land and construction | 136,106 | 127,848 | 125,761 | 125,374 | 129,712 | |||||||||||||||
| Home equity | 119,138 | 127,963 | 124,090 | 126,562 | 122,794 | |||||||||||||||
| Multifamily | 284,510 | 275,490 | 273,103 | 268,968 | 269,263 | |||||||||||||||
| Residential mortgages | 465,330 | 471,730 | 479,524 | 484,809 | 490,035 | |||||||||||||||
| Consumer and other | 12,741 | 14,837 | 14,179 | 18,758 | 16,439 | |||||||||||||||
| Loans | 3,487,166 | 3,492,120 | 3,410,563 | 3,380,227 | 3,336,689 | |||||||||||||||
| Deferred loan fees, net | (268 | ) | (183 | ) | (327 | ) | (434 | ) | (587 | ) | ||||||||||
| Total loans - held-for-investment, net of deferred fees | 3,486,898 | 3,491,937 | 3,410,236 | 3,379,793 | 3,336,102 | |||||||||||||||
| Allowance for credit losses on loans | (48,262 | ) | (48,953 | ) | (47,819 | ) | (47,954 | ) | (47,888 | ) | ||||||||||
| Loans, net | 3,438,636 | 3,442,984 | 3,362,417 | 3,331,839 | 3,288,214 | |||||||||||||||
| Company-owned life insurance | 81,749 | 81,211 | 80,682 | 80,153 | 80,007 | |||||||||||||||
| Premises and equipment, net | 9,772 | 10,140 | 10,398 | 10,310 | 9,986 | |||||||||||||||
| Goodwill | 167,631 | 167,631 | 167,631 | 167,631 | 167,631 | |||||||||||||||
| Other intangible assets | 5,986 | 6,439 | 6,966 | 7,521 | 8,074 | |||||||||||||||
| Accrued interest receivable and other assets | 115,853 | 119,813 | 123,738 | 121,190 | 118,134 | |||||||||||||||
| Total assets | $ | 5,514,255 | $ | 5,645,006 | $ | 5,551,596 | $ | 5,263,024 | $ | 5,256,074 | ||||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||
| Deposits: | ||||||||||||||||||||
| Demand, noninterest-bearing | $ | 1,128,593 | $ | 1,214,192 | $ | 1,272,139 | $ | 1,187,320 | $ | 1,242,059 | ||||||||||
| Demand, interest-bearing | 949,068 | 936,587 | 913,910 | 928,246 | 925,100 | |||||||||||||||
| Savings and money market | 1,353,293 | 1,325,923 | 1,309,676 | 1,126,520 | 1,124,900 | |||||||||||||||
| Time deposits - under $250 | 37,592 | 38,988 | 39,060 | 39,046 | 38,105 | |||||||||||||||
| Time deposits - $250 and over | 213,357 | 206,755 | 196,945 | 203,886 | 200,739 | |||||||||||||||
| ICS/CDARS - interest-bearing demand, money market | ||||||||||||||||||||
| and time deposits | 1,001,365 | 1,097,586 | 997,803 | 959,592 | 913,757 | |||||||||||||||
| Total deposits | 4,683,268 | 4,820,031 | 4,729,533 | 4,444,610 | 4,444,660 | |||||||||||||||
| Other short-term borrowings | - | - | - | - | - | |||||||||||||||
| Subordinated debt, net of issuance costs | 39,691 | 39,653 | 39,615 | 39,577 | 39,539 | |||||||||||||||
| Accrued interest payable and other liabilities | 95,106 | 95,595 | 97,096 | 99,638 | 95,579 | |||||||||||||||
| Total liabilities | 4,818,065 | 4,955,279 | 4,866,244 | 4,583,825 | 4,579,778 | |||||||||||||||
| Shareholders' Equity: | ||||||||||||||||||||
| Common stock | 511,596 | 510,070 | 509,134 | 508,343 | 507,578 | |||||||||||||||
| Retained earnings | 191,401 | 187,762 | 185,110 | 182,571 | 181,306 | |||||||||||||||
| Accumulated other comprehensive loss | (6,807 | ) | (8,105 | ) | (8,892 | ) | (11,715 | ) | (12,588 | ) | ||||||||||
| Total shareholders' equity | 696,190 | 689,727 | 685,352 | 679,199 | 676,296 | |||||||||||||||
| Total liabilities and shareholders' equity | $ | 5,514,255 | $ | 5,645,006 | $ | 5,551,596 | $ | 5,263,024 | $ | 5,256,074 | ||||||||||
| At or For the Quarter Ended: | Percent Change From: | |||||||||||||||
| CREDIT QUALITY DATA | March 31, | December 31, | March 31, | December 31, | March 31, | |||||||||||
| (in $000's, unaudited) | 2025 | 2024 | 2024 | 2024 | 2024 | |||||||||||
| Nonaccrual loans - held-for-investment: | ||||||||||||||||
| Land and construction loans | $ | 4,793 | $ | 5,874 | $ | 4,673 | (18 | ) | % | 3 | % | |||||
| Home equity and other loans | 927 | 290 | 120 | 220 | % | 673 | % | |||||||||
| Commercial loans | 324 | 1,014 | 1,127 | (68 | ) | % | (71 | ) | % | |||||||
| CRE loans | - | - | - | N/A | N/A | |||||||||||
| Total nonaccrual loans - held-for-investment: | 6,044 | 7,178 | 5,920 | (16 | ) | % | 2 | % | ||||||||
| Loans over 90 days past due | ||||||||||||||||
| and still accruing | 268 | 489 | 1,951 | (45 | ) | % | (86 | ) | % | |||||||
| Total nonperforming loans | 6,312 | 7,667 | 7,871 | (18 | ) | % | (20 | ) | % | |||||||
| Foreclosed assets | - | - | - | N/A | N/A | |||||||||||
| Total nonperforming assets | $ | 6,312 | $ | 7,667 | $ | 7,871 | (18 | ) | % | (20 | ) | % | ||||
| Net charge-offs during the quarter | $ | 965 | $ | 197 | $ | 254 | 390 | % | 280 | % | ||||||
| Provision for credit losses on loans during the quarter | $ | 274 | $ | 1,331 | $ | 184 | (79 | ) | % | 49 | % | |||||
| Allowance for credit losses on loans | $ | 48,262 | $ | 48,953 | $ | 47,888 | (1 | ) | % | 1 | % | |||||
| Classified assets | $ | 40,034 | $ | 41,661 | $ | 35,392 | (4 | ) | % | 13 | % | |||||
| Allowance for credit losses on loans to total loans | 1.38 | % | 1.40 | % | 1.44 | % | (1 | ) | % | (4 | ) | % | ||||
| Allowance for credit losses on loans to total nonperforming loans | 764.61 | % | 638.49 | % | 608.41 | % | 20 | % | 26 | % | ||||||
| Nonperforming assets to total assets | 0.11 | % | 0.14 | % | 0.15 | % | (21 | ) | % | (27 | ) | % | ||||
| Nonperforming loans to total loans | 0.18 | % | 0.22 | % | 0.24 | % | (18 | ) | % | (25 | ) | % | ||||
| Classified assets to Heritage Commerce Corp | ||||||||||||||||
| Tier 1 capital plus allowance for credit losses on loans | 7 | % | 7 | % | 6 | % | 0 | % | 17 | % | ||||||
| Classified assets to Heritage Bank of Commerce | ||||||||||||||||
| Tier 1 capital plus allowance for credit losses on loans | 7 | % | 7 | % | 6 | % | 0 | % | 17 | % | ||||||
| OTHER PERIOD-END STATISTICS | ||||||||||||||||
| (in $000's, unaudited) | ||||||||||||||||
| Heritage Commerce Corp: | ||||||||||||||||
| Tangible common equity (1) | $ | 522,573 | $ | 515,657 | $ | 500,591 | 1 | % | 4 | % | ||||||
| Shareholders' equity / total assets | 12.63 | % | 12.22 | % | 12.87 | % | 3 | % | (2 | ) | % | |||||
| Tangible common equity / tangible assets (1) | 9.78 | % | 9.43 | % | 9.85 | % | 4 | % | (1 | ) | % | |||||
| Loan to deposit ratio | 74.45 | % | 72.45 | % | 75.06 | % | 3 | % | (1 | ) | % | |||||
| Noninterest-bearing deposits / total deposits | 24.10 | % | 25.19 | % | 27.94 | % | (4 | ) | % | (14 | ) | % | ||||
| Total capital ratio | 15.9 | % | 15.6 | % | 15.6 | % | 2 | % | 2 | % | ||||||
| Tier 1 capital ratio | 13.6 | % | 13.4 | % | 13.4 | % | 1 | % | 1 | % | ||||||
| Common Equity Tier 1 capital ratio | 13.6 | % | 13.4 | % | 13.4 | % | 1 | % | 1 | % | ||||||
| Tier 1 leverage ratio | 9.8 | % | 9.6 | % | 10.2 | % | 2 | % | (4 | ) | % | |||||
| Heritage Bank of Commerce: | ||||||||||||||||
| Tangible common equity / tangible assets (1) | 10.15 | % | 9.79 | % | 10.22 | % | 4 | % | (1 | ) | % | |||||
| Total capital ratio | 15.4 | % | 15.1 | % | 15.1 | % | 2 | % | 2 | % | ||||||
| Tier 1 capital ratio | 14.1 | % | 13.9 | % | 13.9 | % | 1 | % | 1 | % | ||||||
| Common Equity Tier 1 capital ratio | 14.1 | % | 13.9 | % | 13.9 | % | 1 | % | 1 | % | ||||||
| Tier 1 leverage ratio | 10.2 | % | 10.0 | % | 10.6 | % | 2 | % | (4 | ) | % | |||||
(1)This is a non-GAAP financial measure as defined and discussed under "Non-GAAP Financial Measures" in this press release.
| At or For the Quarter Ended: | ||||||||||||||||
| CREDIT QUALITY DATA | March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||
| (in $000's, unaudited) | 2025 | 2024 | 2024 | 2024 | 2024 | |||||||||||
| Nonaccrual loans - held-for-investment: | ||||||||||||||||
| Land and construction loans | $ | 4,793 | $ | 5,874 | $ | 5,862 | $ | 4,774 | $ | 4,673 | ||||||
| Home equity and other loans | 927 | 290 | 84 | 108 | 120 | |||||||||||
| Commercial loans | 324 | 1,014 | 752 | 900 | 1,127 | |||||||||||
| CRE loans | - | - | - | - | - | |||||||||||
| Total nonaccrual loans - held-for-investment: | 6,044 | 7,178 | 6,698 | 5,782 | 5,920 | |||||||||||
| Loans over 90 days past due | ||||||||||||||||
| and still accruing | 268 | 489 | 460 | 248 | 1,951 | |||||||||||
| Total nonperforming loans | 6,312 | 7,667 | 7,158 | 6,030 | 7,871 | |||||||||||
| Foreclosed assets | - | - | - | - | - | |||||||||||
| Total nonperforming assets | $ | 6,312 | $ | 7,667 | $ | 7,158 | $ | 6,030 | $ | 7,871 | ||||||
| Net charge-offs during the quarter | $ | 965 | $ | 197 | $ | 288 | $ | 405 | $ | 254 | ||||||
| Provision for credit losses on loans during the quarter | $ | 274 | $ | 1,331 | $ | 153 | $ | 471 | $ | 184 | ||||||
| Allowance for credit losses on loans | $ | 48,262 | $ | 48,953 | $ | 47,819 | $ | 47,954 | $ | 47,888 | ||||||
| Classified assets | $ | 40,034 | $ | 41,661 | $ | 32,609 | $ | 33,605 | $ | 35,392 | ||||||
| Allowance for credit losses on loans to total loans | 1.38 | % | 1.40 | % | 1.40 | % | 1.42 | % | 1.44 | % | ||||||
| Allowance for credit losses on loans to total nonperforming loans | 764.61 | % | 638.49 | % | 668.05 | % | 795.26 | % | 608.41 | % | ||||||
| Nonperforming assets to total assets | 0.11 | % | 0.14 | % | 0.13 | % | 0.11 | % | 0.15 | % | ||||||
| Nonperforming loans to total loans | 0.18 | % | 0.22 | % | 0.21 | % | 0.18 | % | 0.24 | % | ||||||
| Classified assets to Heritage Commerce Corp | ||||||||||||||||
| Tier 1 capital plus allowance for credit losses on loans | 7 | % | 7 | % | 6 | % | 6 | % | 6 | % | ||||||
| Classified assets to Heritage Bank of Commerce | ||||||||||||||||
| Tier 1 capital plus allowance for credit losses on loans | 7 | % | 7 | % | 6 | % | 6 | % | 6 | % | ||||||
| OTHER PERIOD-END STATISTICS | ||||||||||||||||
| (in $000's, unaudited) | ||||||||||||||||
| Heritage Commerce Corp: | ||||||||||||||||
| Tangible common equity (1) | $ | 522,573 | $ | 515,657 | $ | 510,755 | $ | 504,047 | $ | 500,591 | ||||||
| Shareholders' equity / total assets | 12.63 | % | 12.22 | % | 12.35 | % | 12.91 | % | 12.87 | % | ||||||
| Tangible common equity / tangible assets (1) | 9.78 | % | 9.43 | % | 9.50 | % | 9.91 | % | 9.85 | % | ||||||
| Loan to deposit ratio | 74.45 | % | 72.45 | % | 72.11 | % | 76.04 | % | 75.06 | % | ||||||
| Noninterest-bearing deposits / total deposits | 24.10 | % | 25.19 | % | 26.90 | % | 26.71 | % | 27.94 | % | ||||||
| Total capital ratio | 15.9 | % | 15.6 | % | 15.6 | % | 15.6 | % | 15.6 | % | ||||||
| Tier 1 capital ratio | 13.6 | % | 13.4 | % | 13.4 | % | 13.4 | % | 13.4 | % | ||||||
| Common Equity Tier 1 capital ratio | 13.6 | % | 13.4 | % | 13.4 | % | 13.4 | % | 13.4 | % | ||||||
| Tier 1 leverage ratio | 9.8 | % | 9.6 | % | 10.0 | % | 10.2 | % | 10.2 | % | ||||||
| Heritage Bank of Commerce: | ||||||||||||||||
| Tangible common equity / tangible assets (1) | 10.15 | % | 9.79 | % | 9.86 | % | 10.28 | % | 10.22 | % | ||||||
| Total capital ratio | 15.4 | % | 15.1 | % | 15.1 | % | 15.1 | % | 15.1 | % | ||||||
| Tier 1 capital ratio | 14.1 | % | 13.9 | % | 13.9 | % | 13.9 | % | 13.9 | % | ||||||
| Common Equity Tier 1 capital ratio | 14.1 | % | 13.9 | % | 13.9 | % | 13.9 | % | 13.9 | % | ||||||
| Tier 1 leverage ratio | 10.2 | % | 10.0 | % | 10.4 | % | 10.6 | % | 10.6 | % | ||||||
(1)This is a non-GAAP financial measure as defined and discussed under "Non-GAAP Financial Measures" in this press release.
| For the Quarter Ended | For the Quarter Ended | ||||||||||||||||||||
| March 31, 2025 | December 31, 2024 | ||||||||||||||||||||
| Interest | Average | Interest | Average | ||||||||||||||||||
| NET INTEREST INCOME AND NET INTEREST MARGIN | Average | Income/ | Yield/ | Average | Income/ | Yield/ | |||||||||||||||
| (in $000's, unaudited) | Balance | Expense | Rate | Balance | Expense | Rate | |||||||||||||||
| Assets: | |||||||||||||||||||||
| Loans, core bank | $ | 2,945,072 | 39,758 | 5.47 | % | $ | 2,899,347 | $ | 39,852 | 5.47 | % | ||||||||||
| Prepayment fees | - | 224 | 0.03 | % | - | 35 | 0.00 | % | |||||||||||||
| Bay View Funding factored receivables | 60,250 | 2,942 | 19.80 | % | 59,153 | 3,084 | 20.74 | % | |||||||||||||
| Purchased residential mortgages | 427,963 | 3,597 | 3.41 | % | 434,846 | 3,732 | 3.41 | % | |||||||||||||
| Loan fair value mark / accretion | (1,981 | ) | 181 | 0.02 | % | (2,357 | ) | 429 | 0.06 | % | |||||||||||
| Loans, gross (1)(2) | 3,431,304 | 46,702 | 5.52 | % | 3,390,989 | 47,132 | 5.53 | % | |||||||||||||
| Securities - taxable | 876,092 | 5,559 | 2.57 | % | 800,174 | 4,475 | 2.22 | % | |||||||||||||
| Securities - exempt from Federal tax (3) | 30,480 | 275 | 3.66 | % | 30,570 | 274 | 3.57 | % | |||||||||||||
| Other investments and interest-bearing deposits | |||||||||||||||||||||
| in other financial institutions | 850,441 | 9,354 | 4.46 | % | 1,014,253 | 12,220 | 4.79 | % | |||||||||||||
| Total interest earning assets (3) | 5,188,317 | 61,890 | 4.84 | % | 5,235,986 | 64,101 | 4.87 | % | |||||||||||||
| Cash and due from banks | 31,869 | 32,569 | |||||||||||||||||||
| Premises and equipment, net | 10,007 | 10,301 | |||||||||||||||||||
| Goodwill and other intangible assets | 173,895 | 174,401 | |||||||||||||||||||
| Other assets | 155,808 | 154,583 | |||||||||||||||||||
| Total assets | $ | 5,559,896 | $ | 5,607,840 | |||||||||||||||||
| Liabilities and shareholders' equity: | |||||||||||||||||||||
| Deposits: | |||||||||||||||||||||
| Demand, noninterest-bearing | $ | 1,167,330 | $ | 1,222,393 | |||||||||||||||||
| Demand, interest-bearing | 944,375 | 1,438 | 0.62 | % | 906,581 | 1,452 | 0.64 | % | |||||||||||||
| Savings and money market | 1,323,038 | 8,073 | 2.47 | % | 1,339,397 | 9,090 | 2.70 | % | |||||||||||||
| Time deposits - under $100 | 11,383 | 47 | 1.67 | % | 11,388 | 49 | 1.71 | % | |||||||||||||
| Time deposits - $100 and over | 234,421 | 2,129 | 3.68 | % | 234,446 | 2,310 | 3.92 | % | |||||||||||||
| ICS/CDARS - interest-bearing demand, money market | |||||||||||||||||||||
| and time deposits | 1,036,970 | 6,248 | 2.44 | % | 1,057,286 | 7,009 | 2.64 | % | |||||||||||||
| Total interest-bearing deposits | 3,550,187 | 17,935 | 2.05 | % | 3,549,098 | 19,910 | 2.23 | % | |||||||||||||
| Total deposits | 4,717,517 | 17,935 | 1.54 | % | 4,771,491 | 19,910 | 1.66 | % | |||||||||||||
| Short-term borrowings | 18 | - | 0.00 | % | 28 | - | 0.00 | % | |||||||||||||
| Subordinated debt, net of issuance costs | 39,667 | 537 | 5.49 | % | 39,629 | 538 | 5.40 | % | |||||||||||||
| Total interest-bearing liabilities | 3,589,872 | 18,472 | 2.09 | % | 3,588,755 | 20,448 | 2.27 | % | |||||||||||||
| Total interest-bearing liabilities and demand, | |||||||||||||||||||||
| noninterest-bearing / cost of funds | 4,757,202 | 18,472 | 1.57 | % | 4,811,148 | 20,448 | 1.69 | % | |||||||||||||
| Other liabilities | 109,961 | 110,429 | |||||||||||||||||||
| Total liabilities | 4,867,163 | 4,921,577 | |||||||||||||||||||
| Shareholders' equity | 692,733 | 686,263 | |||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 5,559,896 | $ | 5,607,840 | |||||||||||||||||
| Net interest income / margin (3) | 43,418 | 3.39 | % | 43,653 | 3.32 | % | |||||||||||||||
| Less tax equivalent adjustment (3) | (58 | ) | (58 | ) | |||||||||||||||||
| Net interest income | $ | 43,360 | 3.39 | % | $ | 43,595 | 3.31 | % | |||||||||||||
(1)Includes loans held-for-sale. Nonaccrual loans are included in average balances.
(2)Yield amounts earned on loans include fees and costs. The accretion of net deferred loan fees into loan interest income was $214,000 for the first quarter of 2025, compared to $167,000 for the fourth quarter of 2024. Prepayment fees totaled $224,000 for the first quarter of 2025, compared to $35,000 for the fourth quarter of 2024.
(3)Reflects the FTE adjustment for Federal tax-exempt income based on a 21% tax rate. This is a non-GAAP financial measure as defined and discussed under "Non-GAAP Financial Measures" in this press release.
| For the Quarter Ended | For the Quarter Ended | ||||||||||||||||||||
| March 31, 2025 | March 31, 2024 | ||||||||||||||||||||
| Interest | Average | Interest | Average | ||||||||||||||||||
| NET INTEREST INCOME AND NET INTEREST MARGIN | Average | Income/ | Yield/ | Average | Income/ | Yield/ | |||||||||||||||
| (in $000's, unaudited) | Balance | Expense | Rate | Balance | Expense | Rate | |||||||||||||||
| Assets: | |||||||||||||||||||||
| Loans, core bank | $ | 2,945,072 | $ | 39,758 | 5.47 | % | $ | 2,795,351 | $ | 37,721 | 5.43 | % | |||||||||
| Prepayment fees | - | 224 | 0.03 | % | - | 24 | 0.00 | % | |||||||||||||
| Bay View Funding factored receivables | 60,250 | 2,942 | 19.80 | % | 53,511 | 2,838 | 21.33 | % | |||||||||||||
| Purchased residential mortgages | 427,963 | 3,597 | 3.41 | % | 454,240 | 3,788 | 3.35 | % | |||||||||||||
| Loan fair value mark / accretion | (1,981 | ) | 181 | 0.02 | % | (3,113 | ) | 229 | 0.03 | % | |||||||||||
| Loans, gross (1)(2) | 3,431,304 | 46,702 | 5.52 | % | 3,299,989 | 44,600 | 5.44 | % | |||||||||||||
| Securities - taxable | 876,092 | 5,559 | 2.57 | % | 1,042,484 | 6,183 | 2.39 | % | |||||||||||||
| Securities - exempt from Federal tax (3) | 30,480 | 275 | 3.66 | % | 31,939 | 286 | 3.60 | % | |||||||||||||
| Other investments and interest-bearing deposits | |||||||||||||||||||||
| in other financial institutions | 850,441 | 9,354 | 4.46 | % | 436,093 | 5,951 | 5.49 | % | |||||||||||||
| Total interest earning assets (3) | 5,188,317 | 61,890 | 4.84 | % | 4,810,505 | 57,020 | 4.77 | % | |||||||||||||
| Cash and due from banks | 31,869 | 33,214 | |||||||||||||||||||
| Premises and equipment, net | 10,007 | 10,015 | |||||||||||||||||||
| Goodwill and other intangible assets | 173,895 | 176,039 | |||||||||||||||||||
| Other assets | 155,808 | 148,863 | |||||||||||||||||||
| Total assets | $ | 5,559,896 | $ | 5,178,636 | |||||||||||||||||
| Liabilities and shareholders' equity: | |||||||||||||||||||||
| Deposits: | |||||||||||||||||||||
| Demand, noninterest-bearing | $ | 1,167,330 | $ | 1,177,078 | |||||||||||||||||
| Demand, interest-bearing | 944,375 | 1,438 | 0.62 | % | 920,048 | 1,554 | 0.68 | % | |||||||||||||
| Savings and money market | 1,323,038 | 8,073 | 2.47 | % | 1,067,581 | 6,649 | 2.50 | % | |||||||||||||
| Time deposits - under $100 | 11,383 | 47 | 1.67 | % | 10,945 | 42 | 1.54 | % | |||||||||||||
| Time deposits - $100 and over | 234,421 | 2,129 | 3.68 | % | 221,211 | 2,064 | 3.75 | % | |||||||||||||
| ICS/CDARS - interest-bearing demand, money market | |||||||||||||||||||||
| and time deposits | 1,036,970 | 6,248 | 2.44 | % | 963,287 | 6,611 | 2.76 | % | |||||||||||||
| Total interest-bearing deposits | 3,550,187 | 17,935 | 2.05 | % | 3,183,072 | 16,920 | 2.14 | % | |||||||||||||
| Total deposits | 4,717,517 | 17,935 | 1.54 | % | 4,360,150 | 16,920 | 1.56 | % | |||||||||||||
| Short-term borrowings | 18 | - | 0.00 | % | 15 | - | 0.00 | % | |||||||||||||
| Subordinated debt, net of issuance costs | 39,667 | 537 | 5.49 | % | 39,516 | 538 | 5.48 | % | |||||||||||||
| Total interest-bearing liabilities | 3,589,872 | 18,472 | 2.09 | % | 3,222,603 | 17,458 | 2.18 | % | |||||||||||||
| Total interest-bearing liabilities and demand, | |||||||||||||||||||||
| noninterest-bearing / cost of funds | 4,757,202 | 18,472 | 1.57 | % | 4,399,681 | 17,458 | 1.60 | % | |||||||||||||
| Other liabilities | 109,961 | 106,663 | |||||||||||||||||||
| Total liabilities | 4,867,163 | 4,506,344 | |||||||||||||||||||
| Shareholders' equity | 692,733 | 672,292 | |||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 5,559,896 | $ | 5,178,636 | |||||||||||||||||
| Net interest income / margin (3) | 43,418 | 3.39 | % | 39,562 | 3.31 | % | |||||||||||||||
| Less tax equivalent adjustment (3) | (58 | ) | (60 | ) | |||||||||||||||||
| Net interest income | $ | 43,360 | 3.39 | % | $ | 39,502 | 3.30 | % | |||||||||||||
(1)Includes loans held-for-sale. Nonaccrual loans are included in average balances.
(2)Yield amounts earned on loans include fees and costs. The accretion of net deferred loan fees into loan interest income was $214,000 for the first quarter of 2025, compared to $160,000 for the first quarter of 2024. Prepayment fees totaled $224,000 for the first quarter of 2025, compared to $24,000 for the first quarter of 2024.
(3)Reflects the FTE adjustment for Federal tax-exempt income based on a 21% tax rate. This is a non-GAAP financial measure as defined and discussed under "Non-GAAP Financial Measures" in this press release.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Management considers tangible book value per share as a useful measurement of the Company's equity. The Company references the return on average tangible common equity and the return on average tangible assets as measurements of profitability.
The following table summarizes components of the tangible book value per share at the dates indicated:
| TANGIBLE BOOK VALUE PER SHARE | March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||
| (in $000's, unaudited) | 2025 | 2024 | 2024 | 2024 | 2024 | ||||||||||||||||
| Capital components: | |||||||||||||||||||||
| Total Equity (GAAP) | $ | 696,190 | $ | 689,727 | $ | 685,352 | $ | 679,199 | $ | 676,296 | |||||||||||
| Less: Preferred Stock | - | - | - | - | - | ||||||||||||||||
| Total Common Equity | 696,190 | 689,727 | 685,352 | 679,199 | 676,296 | ||||||||||||||||
| Less: Goodwill | (167,631 | ) | (167,631 | ) | (167,631 | ) | (167,631 | ) | (167,631 | ) | |||||||||||
| Less: Other Intangible Assets | (5,986 | ) | (6,439 | ) | (6,966 | ) | (7,521 | ) | (8,074 | ) | |||||||||||
| Total Tangible Common Equity (non-GAAP) | $ | 522,573 | $ | 515,657 | $ | 510,755 | $ | 504,047 | $ | 500,591 | |||||||||||
| Common shares outstanding at period-end | 61,611,121 | 61,348,095 | 61,297,344 | 61,292,094 | 61,253,625 | ||||||||||||||||
| Tangible book value per share (non-GAAP) | $ | 8.48 | $ | 8.41 | $ | 8.33 | $ | 8.22 | $ | 8.17 | |||||||||||
The following tables summarize components of the annualized return on average tangible common equity and the annualized return on average tangible assets for the periods indicated:
| RETURN ON AVERAGE TANGIBLE COMMON | For the Quarter Ended: | ||||||||||||||||||||
| EQUITY AND AVERAGE TANGIBLE COMMON ASSETS | March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||
| (in $000's, unaudited) | 2025 | 2024 | 2024 | 2024 | 2024 | ||||||||||||||||
| Net income | $ | 11,626 | $ | 10,621 | $ | 10,507 | $ | 9,234 | $ | 10,166 | |||||||||||
| Average tangible common equity components: | |||||||||||||||||||||
| Average Equity (GAAP) | $ | 692,733 | $ | 686,263 | $ | 680,404 | $ | 675,108 | $ | 672,292 | |||||||||||
| Less: Goodwill | (167,631 | ) | (167,631 | ) | (167,631 | ) | (167,631 | ) | (167,631 | ) | |||||||||||
| Less: Other Intangible Assets | (6,264 | ) | (6,770 | ) | (7,322 | ) | (7,867 | ) | (8,408 | ) | |||||||||||
| Total Average Tangible Common Equity (non-GAAP) | $ | 518,838 | $ | 511,862 | $ | 505,451 | $ | 499,610 | $ | 496,253 | |||||||||||
| Annualized return on average tangible common equity (non-GAAP) | 9.09 | % | 8.25 | % | 8.27 | % | 7.43 | % | 8.24 | % | |||||||||||
| Average tangible assets components: | |||||||||||||||||||||
| Average Assets (GAAP) | $ | 5,559,896 | $ | 5,607,840 | $ | 5,352,067 | $ | 5,213,171 | $ | 5,178,636 | |||||||||||
| Less: Goodwill | (167,631 | ) | (167,631 | ) | (167,631 | ) | (167,631 | ) | (167,631 | ) | |||||||||||
| Less: Other Intangible Assets | (6,264 | ) | (6,770 | ) | (7,322 | ) | (7,867 | ) | (8,408 | ) | |||||||||||
| Total Average Tangible Assets (non-GAAP) | $ | 5,386,001 | $ | 5,433,439 | $ | 5,177,114 | $ | 5,037,673 | $ | 5,002,597 | |||||||||||
| Annualized return on average tangible assets (non-GAAP) | 0.88 | % | 0.78 | % | 0.81 | % | 0.74 | % | 0.82 | % | |||||||||||
Management reviews yields on certain asset categories and the net interest margin of the Company on an FTE basis. In this non-GAAP presentation, net interest income is adjusted to reflect tax-exempt interest income on an equivalent before-tax basis using tax rates effective as of the end of the period. This measure ensures comparability of net interest income arising from both taxable and tax-exempt sources. The following tables summarize components of FTE net interest income of the Company for the periods indicated:
| For the Quarter Ended: | ||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||
| (in $000's, unaudited) | 2025 | 2024 | 2024 | 2024 | 2024 | |||||||||||
| Net interest income before | ||||||||||||||||
| credit losses on loans (GAAP) | $ | 43,360 | $ | 43,595 | $ | 39,329 | $ | 38,867 | $ | 39,502 | ||||||
| Tax-equivalent adjustment on securities - | ||||||||||||||||
| exempt from Federal tax | 58 | 58 | 59 | 60 | 60 | |||||||||||
| Net interest income, FTE (non-GAAP) | $ | 43,418 | $ | 43,653 | $ | 39,388 | $ | 38,927 | $ | 39,562 | ||||||
| Average balance of total interest earning assets | $ | 5,188,317 | $ | 5,235,986 | $ | 4,980,082 | $ | 4,840,670 | $ | 4,810,505 | ||||||
| Net interest margin (annualized net interest income divided by the | ||||||||||||||||
| average balance of total interest earnings assets) (GAAP) | 3.39 | % | 3.31 | % | 3.14 | % | 3.23 | % | 3.30 | % | ||||||
| Net interest margin, FTE (annualized net interest income, FTE, | ||||||||||||||||
| divided by the average balance of total | ||||||||||||||||
| earnings assets) (non-GAAP) | 3.39 | % | 3.32 | % | 3.15 | % | 3.23 | % | 3.31 | % | ||||||
Management views its non-GAAP PPNR as a key metric for assessing the Company's earnings power. The following table summarizes the components of PPNR for the periods indicated:
| For the Quarter Ended: | ||||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||
| (in $000's, unaudited) | 2025 | 2024 | 2024 | 2024 | 2024 | |||||||||||||||
| Net interest income before credit losses on loans | $ | 43,360 | $ | 43,595 | $ | 39,329 | $ | 38,867 | $ | 39,502 | ||||||||||
| Noninterest income | 2,696 | 2,775 | 2,826 | 2,864 | 2,638 | |||||||||||||||
| Total revenue | 46,056 | 46,370 | $ | 42,155 | $ | 41,731 | $ | 42,140 | ||||||||||||
| Less: Noninterest expense | (29,456 | ) | (30,304 | ) | (27,555 | ) | (28,188 | ) | (27,536 | ) | ||||||||||
| PPNR (non-GAAP) | $ | 16,600 | $ | 16,066 | $ | 14,600 | $ | 13,543 | $ | 14,604 | ||||||||||
The efficiency ratio is a non-GAAP financial measure, which is calculated by dividing noninterest expense by total revenue (net interest income plus noninterest income), and measures how much it costs to produce one dollar of revenue. The following tables summarize components of the efficiency ratio of the Company for the periods indicated:
| For the Quarter Ended: | ||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||
| (in $000's, unaudited) | 2025 | 2024 | 2024 | 2024 | 2024 | |||||||||||
| Noninterest expense | $ | 29,456 | $ | 30,304 | $ | 27,555 | $ | 28,188 | $ | 27,536 | ||||||
| Net interest income before credit losses on loans | $ | 43,360 | $ | 43,595 | $ | 39,329 | $ | 38,867 | $ | 39,502 | ||||||
| Noninterest income | 2,696 | 2,775 | 2,826 | 2,864 | 2,638 | |||||||||||
| Total revenue | $ | 46,056 | $ | 46,370 | $ | 42,155 | $ | 41,731 | $ | 42,140 | ||||||
| Efficiency ratio (noninterest expense divided | ||||||||||||||||
| by total revenue) (non-GAAP) | 63.96 | % | 65.35 | % | 65.37 | % | 67.55 | % | 65.34 | % | ||||||
Management considers the tangible common equity ratio as a useful measurement of the Company's and the Bank's equity. The following table summarizes components of the tangible common equity to tangible assets ratio of the Company at the dates indicated:
| TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS | March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||
| (in $000's, unaudited) | 2025 | 2024 | 2024 | 2024 | 2024 | ||||||||||||||||
| Capital components: | |||||||||||||||||||||
| Total Equity (GAAP) | $ | 696,190 | $ | 689,727 | $ | 685,352 | $ | 679,199 | $ | 676,296 | |||||||||||
| Less: Preferred Stock | - | - | - | - | - | ||||||||||||||||
| Total Common Equity | 696,190 | 689,727 | 685,352 | 679,199 | 676,296 | ||||||||||||||||
| Less: Goodwill | (167,631 | ) | (167,631 | ) | (167,631 | ) | (167,631 | ) | (167,631 | ) | |||||||||||
| Less: Other Intangible Assets | (5,986 | ) | (6,439 | ) | (6,966 | ) | (7,521 | ) | (8,074 | ) | |||||||||||
| Total Tangible Common Equity (non-GAAP) | $ | 522,573 | $ | 515,657 | $ | 510,755 | $ | 504,047 | $ | 500,591 | |||||||||||
| Asset components: | |||||||||||||||||||||
| Total Assets (GAAP) | $ | 5,514,255 | $ | 5,645,006 | $ | 5,551,596 | $ | 5,263,024 | $ | 5,256,074 | |||||||||||
| Less: Goodwill | (167,631 | ) | (167,631 | ) | (167,631 | ) | (167,631 | ) | (167,631 | ) | |||||||||||
| Less: Other Intangible Assets | (5,986 | ) | (6,439 | ) | (6,966 | ) | (7,521 | ) | (8,074 | ) | |||||||||||
| Total Tangible Assets (non-GAAP) | $ | 5,340,638 | $ | 5,470,936 | $ | 5,376,999 | $ | 5,087,872 | $ | 5,080,369 | |||||||||||
| Tangible common equity / tangible assets (non-GAAP) | 9.78 | % | 9.43 | % | 9.50 | % | 9.91 | % | 9.85 | % | |||||||||||
The following table summarizes components of the tangible common equity to tangible assets ratio of the Bank at the dates indicated:
| TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS | March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||
| (in $000's, unaudited) | 2025 | 2024 | 2024 | 2024 | 2024 | ||||||||||||||||
| Capital components: | |||||||||||||||||||||
| Total Equity (GAAP) | $ | 715,605 | $ | 709,379 | $ | 704,585 | $ | 697,964 | $ | 694,543 | |||||||||||
| Less: Preferred Stock | - | - | - | - | - | ||||||||||||||||
| Total Common Equity | 715,605 | 709,379 | 704,585 | 697,964 | 694,543 | ||||||||||||||||
| Less: Goodwill | (167,631 | ) | (167,631 | ) | (167,631 | ) | (167,631 | ) | (167,631 | ) | |||||||||||
| Less: Other Intangible Assets | (5,986 | ) | (6,439 | ) | (6,966 | ) | (7,521 | ) | (8,074 | ) | |||||||||||
| Total Tangible Common Equity (non-GAAP) | $ | 541,988 | $ | 535,309 | $ | 529,988 | $ | 522,812 | $ | 518,838 | |||||||||||
| Asset components: | |||||||||||||||||||||
| Total Assets (GAAP) | $ | 5,512,160 | $ | 5,641,646 | $ | 5,548,576 | $ | 5,260,500 | $ | 5,254,044 | |||||||||||
| Less: Goodwill | (167,631 | ) | (167,631 | ) | (167,631 | ) | (167,631 | ) | (167,631 | ) | |||||||||||
| Less: Other Intangible Assets | (5,986 | ) | (6,439 | ) | (6,966 | ) | (7,521 | ) | (8,074 | ) | |||||||||||
| Total Tangible Assets (non-GAAP) | $ | 5,338,543 | $ | 5,467,576 | $ | 5,373,979 | $ | 5,085,348 | $ | 5,078,339 | |||||||||||
| Tangible common equity / tangible assets (non-GAAP) | 10.15 | % | 9.79 | % | 9.86 | % | 10.28 | % | 10.22 | % | |||||||||||
