SAN JOSE, Calif., July 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 second quarter and six months ended June 30, 2025. All data are unaudited.
| REPORTED SECOND QUARTER 2025 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) | ||||
| $6.4 million | $0.10 | $9.4 million | 3.54 | % | 80.23 | % | $8.49 | ||
| ADJUSTED SECOND QUARTER 2025 HIGHLIGHTS:(1) | |||||||||
| Net Income | Earnings Per Share | PPNR(1) | FTE Net Interest Margin(1) | Efficiency Ratio(1) | Tangible Book Value Per Share(1) | ||||
| $13.0 million | $0.21 | $18.6 million | 3.54 | % | 61.01 | % | $8.59 | ||
CEO COMMENTARY:
"We executed well in the second quarter, generating a higher level of net income and earnings per share, excluding significant charges primarily related to a legal settlement," said Clay Jones, President and Chief Executive Officer. "We had positive trends in loan growth, an expansion in our net interest margin, and stable asset quality, while deposits declined due to seasonal outflows that we typically see in the second quarter. Our loan growth was well diversified across our portfolios. We continue to successfully add new clients by offering a superior banking experience and generate loan growth while maintaining our disciplined underwriting and pricing criteria."
"We have a strong balance sheet with a high level of capital and liquidity and healthy asset quality, which provides a strong foundation to weather periods of economic volatility. We are well positioned to navigate the current environment and expect to see positive trends in loan growth, the net interest margin, and expense management," said Mr. Jones.
| LINKED-QUARTER BASIS | YEAR-OVER-YEAR |
FINANCIAL HIGHLIGHTS:
| • Total revenue of $47.8 million, an increase of 4%, or $1.7 million • Noninterest expense of $38.3 million includes an accrual of $9.2 million for pre-tax charges primarily related to a legal settlement • Reported net income of $6.4 million and earnings per share of $0.10, down 45% and 47%, from $11.6 million and $0.19, respectively • Adjusted net income(1) of $13.0 million and adjusted earnings per share(1) of $0.21, both metrics up 11% from $11.6 million and $0.19, respectively | • Total revenue of $47.8 million, an increase of 15%, or $6.1 million • Noninterest expense of $38.3 million includes an accrual of $9.2 million for pre-tax charges primarily related to a legal settlement • Reported net income of $6.4 million and earnings per share of $0.10, down 31% and 33%, from $9.2 million and $0.15, respectively • Adjusted net income(1) of $13.0 million and adjusted earnings per share(1) of $0.21, both metrics up 40% from $9.2 million and $0.15, respectively |
FINANCIAL CONDITION:
| • Loans held-for-investment ("HFI") of $3.5 billion, up $47.4 million or 1% • Total deposits of $4.6 billion, down $55.9 million, or 1% • Loan to deposit ratio of 76.38%, up from 74.45% • Total shareholders' equity of $694.7 million, down $1.5 million | • Increase in loans HFI of $154.5 million, or 5% • Increase in total deposits of $182.7 million, or 4% • Loan to deposit ratio of 76.38%, up from 76.04% • Increase in total shareholders' equity of $15.5 million |
CREDIT QUALITY:
| • Nonperforming assets ("NPAs") to total assets of 0.11% for both quarters • NPAs to total assets of 0.11% for both quarters | • Classified assets to total assets of 0.69%, compared to 0.73% • Classified assets to total assets of 0.69%, compared to 0.64% |
KEY PERFORMANCE METRICS:
| • FTE net interest margin(1) of 3.54%, an increase from 3.39% • Common equity tier 1 capital ratio of 13.3%, compared to 13.6% • Total capital ratio of 15.5%, compared to 15.9% • Tangible common equity ratio(1) of 9.85%, an increase of 1% from 9.78% | • FTE net interest margin(1) of 3.54%, an increase from 3.26% • Common equity tier 1 capital ratio of 13.3%, compared to 13.4% • Total capital ratio of 15.5%, compared to 15.6% • Tangible common equity ratio(1) of 9.85%, a decrease of 1% from 9.91% |
(1)This is a non-GAAP financial measure as defined and discussed under "Non-GAAP Financial Measures" in this press release. All references to "adjusted" operating metrics exclude the $9.2 million of charges primarily related to a legal settlement in the second quarter and first six months of 2025 as presented in the reconciliation of non-GAAP financial measures at the end of this press release.
Results of Operations:
Reported net income was $6.4 million, or $0.10 per average diluted common share, for the second quarter of 2025. Adjusted net income(2) was $13.0 million, or $0.21 per average diluted common share, for the second quarter of 2025, compared to $11.6 million, or $0.19 per average diluted common share, for the first quarter of 2025, and $9.2 million, or $0.15 per average diluted common share, for the second quarter of 2024. The annualized return on average assets was 0.47% and annualized return on average equity was 3.68% for the second quarter of 2025, compared to 0.85% and 6.81%, respectively, for the first quarter of 2025, and 0.71% and 5.50%, respectively, for the second quarter of 2024. The adjusted annualized return on average assets(2) was 0.95% and adjusted annualized return on average tangible common equity(2) was 9.92% for the second quarter of 2025, compared to 0.85% and 9.09%, respectively, for the first quarter ended of 2025, and 0.71% and 7.43%, respectively, for the second quarter of 2024.
Reported net income was $18.0 million, or $0.29 per average diluted common share, for the first six months of 2025. Adjusted net income(2) was $24.6 million, or $0.40 per average diluted common share, for the first six months of 2025, compared to $19.4 million, or $0.32 per average diluted common share, for the first six months of 2024. The annualized return on average assets was 0.66% and annualized return on average equity was 5.23% for the six months ended June 30, 2025, compared to 0.75% and 5.79%, respectively, for the six months ended June 30, 2024. The adjusted annualized return on average assets(2) was 0.90% and annualized return on average tangible common equity(2) was 9.51% for the six months ended June 30, 2025, compared to 0.75% and 7.84%, respectively, for the six months ended June 30, 2024.
Total revenue, which is defined as net interest income before provision for credit losses on loans plus noninterest income, increased $1.7 million, or 4%, to $47.8 million for the second quarter of 2025, compared to $46.1 million for the first quarter of 2025, and increased $6.1 million, or 15%, from $41.7 million for the second quarter of 2024. Total revenue increased $9.9 million, or 12%, to $93.8 million for the first six months of 2025, compared to $83.9 million for the first six months of 2024.
For the second quarter and first six months of 2025, the Company's reported PPNR(2), which is defined as total revenue less adjusted noninterest expense(2) was $9.4 million and $26.0 million, respectively. The adjusted PPNR(2) was $18.6 million for the second quarter of 2025, compared to $16.6 million for the first quarter of 2025, and $13.5 million for the second quarter of 2024. For the six months of 2025, the Company's adjusted PPNR(2) was $35.2 million, compared to $28.1 million for the six months of 2024.
Net interest income totaled $44.8 million for the second quarter of 2025, an increase of $1.4 million, or 3%, compared to $43.4 million for the first quarter of 2025. The FTE net interest margin(2) was 3.54% for the second quarter of 2025, an increase over 3.39% for the first quarter of 2025 primarily due to an increase in the average yields and average balances of loans and securities, partially offset by a decrease in the average balances of deposits resulting in a lower average balance of overnight funds.
Net interest income increased $5.9 million, or 15%, to $44.8 million, compared to $38.9 million for the second quarter of 2024. The FTE net interest margin(2) increased from 3.23% for the second quarter of 2024 primarily due to lower rates paid on customer deposits, an increase in the average yields and average balances of loans and securities, 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.
For the first six months of 2025, net interest income increased $9.8 million, or 12% to $88.2 million, compared to $78.4 million for the first six months of 2024. The FTE net interest margin(2) increased 20 basis points to 3.47% for the first six months of 2025, from 3.27% for the first six months of 2024, primarily due to an increase in the average balances of average interest earning assets, and an increase in the average yields on loans and securities, partially offset by higher rates paid on client deposits and a lower yield on overnight funds.
We recorded a provision for credit losses on loans of $516,000 for the second quarter of 2025, compared to $274,000 for the first quarter of 2025, and $471,000 for the second quarter of 2024. There was a provision for credit losses on loans of $790,000 for the six months ended June 30, 2025, compared to $655,000 for the six months ended June 30, 2024. The increase in the provision for credit losses on loans for the second quarter and first six months of 2025 was primarily due to loan growth.
Total noninterest income increased to $3.0 million for the second quarter of 2025, compared to $2.7 million for the first quarter of 2025, and $2.9 million for the second quarter of 2024, primarily due to higher termination and facility fees. The increase in noninterest income in the second quarter of 2025 was partially offset by a $219,000 gain on proceeds from company-owned life insurance in the second quarter of 2024.
Total noninterest income increased 3% to $5.7 million for the first six months of 2025, compared to $5.5 million for the first six months of 2024, primarily due to higher termination and facility fees, partially offset by a $219,000 gain on proceeds from company-owned life insurance in the first six months of 2024.
(2)This is a non-GAAP financial measure as defined and discussed under "Non-GAAP Financial Measures" in this press release.
Reported noninterest expense for the second quarter of 2025 and first six months of 2025 totaled $38.3 million and $67.8 million, respectively. During the second quarter of 2025, the Company recorded expenses of $9.2 million, primarily due to pre-tax charges related to the settlement of certain litigation matters, including the anticipated settlement of a previously disclosed class action and California Private Attorneys General Act ("PAGA") lawsuit that alleged the violation of certain California wage-and-hour and related laws and regulations, and charges related to the planned closure of a Bank branch. Adjusted noninterest expense(3) was $29.1 million, compared to $29.5 million for the first quarter of 2025, and $28.2 million for the second quarter of 2024. Adjusted noninterest expense(3) for the first six months of 2025 was $58.6 million, compared to $55.7 million for the first six months of 2024.
Income tax expense decreased to $2.5 million for the second quarter of 2025, compared to $4.7 million for the first quarter of 2025, and $3.8 million for the second quarter of 2024, primarily due to lower pre-tax income. The effective tax rate for the second quarter of 2025 was 28.5%, compared to 28.8% for the first quarter of 2025, and 29.4% for the second quarter of 2024.
Income tax expense for the six months ended June 30, 2025 was $7.2 million, compared to $8.1 million for the six months ended June 30, 2024. The effective tax rate for six months ended June 30, 2025 was 28.7%, compared to 29.4% for the six months ended June 30, 2024.
The reported efficiency ratio(3) for the second quarter and first six month of 2025 was 80.23% and 72.24%, respectively. The adjusted efficiency ratio(3) improved to 61.01% for the second quarter of 2025, compared to 63.96% for the first quarter of 2025, as a result of higher total revenue. The adjusted efficiency ratio(3) improved from 67.55% for the second quarter of 2024, primarily due to higher total revenue, partially offset by higher noninterest expense. The adjusted efficiency ratio(3) improved to 62.45% for the first six months of 2025 from 66.44% for the first six months of 2024, primarily due to higher total revenue, partially offset by higher noninterest expense.
Full time equivalent employees were 350 at both June 30, 2025 and March 31, 2025, and 353 at June 30, 2024.
Financial Condition and Capital Management:
Total assets remained relatively flat at $5.5 billion at both June 30, 2025 and March 31, 2025. Total assets increased 4% from $5.3 billion at June 30, 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) decreased to $307.0 million at June 30, 2025, compared to $371.0 million at March 31, 2025, primarily due to maturities and paydowns, partially offset by purchases. Investment securities available-for-sale totaled $273.0 million at June 30, 2024. The pre-tax unrealized loss on the securities available-for-sale portfolio was $448,000, or $396,000 net of taxes, which equaled less than 1% of total shareholders' equity at June 30, 2025.
During the first six months of 2025, the Company purchased $87.2 million of agency mortgage-backed securities, $79.8 million of collateralized mortgage obligations, and $44.8 million of U.S. Treasury securities, for total purchases of $211.8 million in the available-for-sale portfolio. Securities purchased had a book yield of 4.82% and an average life of 4.55 years.
Investment securities held-to-maturity (at amortized cost, net of allowance for credit losses of ($16,000), totaled $561.2 million at June 30, 2025, compared to $576.7 million at March 31, 2025, and $621.2 million at June 30, 2024. The fair value of the securities held-to-maturity portfolio was $486.5 million at June 30, 2025. The pre-tax unrecognized loss on the securities held-to-maturity portfolio was $74.7 million, or $52.7 million net of taxes, which equaled 7.6% of total shareholders' equity at June 30, 2025.
The unrealized and unrecognized losses in both the available-for-sale and held-to-maturity portfolios were due to higher interest rates at June 30, 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, increased $47.4 million, or 1% to $3.5 billion at June 30, 2025, compared to $3.5 billion at March 31, 2025, and increased $154.5 million, or 5%, from $3.4 billion at June 30, 2024. Loans HFI, excluding residential mortgages, increased $58.3 million, or 2% to $3.1 billion at June 30, 2025, compared to $3.0 billion at March 31, 2025, and increased $184.9 million, or 6%, from $2.9 billion at June 30, 2024.
Commercial and industrial line utilization was 32% at June 30, 2025, compared to 31% at both March 31, 2025, and June 30, 2024. Commercial real estate ("CRE") loans totaled $2.0 billion at June 30, 2025, of which 31% were owner occupied and 31% were investor CRE loans. Owner occupied CRE loans totaled 31% at March 31, 2025 and 32% at June 30, 2024. Approximately 24% of the Company's loan portfolio consisted of floating interest rate loans at both June 30, 2025 and March 31, 2025, compared to 27% at June 30, 2024.
At June 30, 2025, paydowns and maturities of investment securities and fixed interest rate loans maturing within one year totaled $311.0 million.
(3)This is a non-GAAP financial measure as defined and discussed under "Non-GAAP Financial Measures" in this press release.
Total deposits decreased $55.9 million, or 1%, to $4.6 billion at June 30, 2025, compared to $4.7 billion at March 31, 2025, primarily due to season outflows. Total deposits increased $182.7 million, or 4% from $4.4 billion at June 30, 2024.
The following table shows the Company's deposit types as a percentage of total deposits at the dates indicated:
| June 30, | March 31, | June 30, | |||||||
| DEPOSITS TYPE % TO TOTAL DEPOSITS | 2025 | 2025 | 2024 | ||||||
| Demand, noninterest-bearing | 25 | % | 24 | % | 27 | % | |||
| Demand, interest-bearing | 21 | % | 20 | % | 21 | % | |||
| Savings and money market | 28 | % | 29 | % | 25 | % | |||
| Time deposits - under $250 | 1 | % | 1 | % | 1 | % | |||
| Time deposits - $250 and over | 4 | % | 5 | % | 4 | % | |||
| Insured Cash Sweep ("ICS")/Certificate of Deposit Registry | |||||||||
| Service ("CDARS") - interest-bearing demand, money | |||||||||
| market and time deposits | 21 | % | 21 | % | 22 | % | |||
| Total deposits | 100 | % | 100 | % | 100 | % |
The loan to deposit ratio was 76.38% at June 30, 2025, compared to 74.45% at March 31, 2025, and 76.04% at June 30, 2024.
The Company's total available liquidity and borrowing capacity was $3.1 billion at June 30, 2025, compared to $3.2 billion at March 31, 2025, and $3.0 billion at June 30, 2024.
Total shareholders' equity was $694.7 million at June 30, 2025, compared to $696.2 million at March 31, 2025, and $679.2 million at June 30, 2024. The change in shareholders' equity at June 30, 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 $5.0 million at June 30, 2025 was comprised of $2.5 million in actuarial losses associated with split dollar insurance contracts, $2.2 million in actuarial losses associated with the supplemental executive retirement plan, unrealized losses on securities available-for-sale of $396,000, and a $42,000 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 June 30, 2025.
Reported tangible book value per share(4) was $8.49 at June 30, 2025. Adjusted tangible book value per share(4) was $8.59 at June 30, 2025, compared to $8.48 at March 31, 2025, and $8.22 at June 30, 2024.
The Company is authorized to repurchase up to $15.0 million of the Company's shares of its issued and outstanding common stock under its share repurchase program authorized by the Board of Directors in July 2024. During the second quarter of 2025, the Company repurchased 207,989 shares of its common stock with a weighted average price of $9.19 for a total of $1.9 million. The remaining capacity under this share repurchase program was $13.1 million at June 30, 2025. In July 2025, the Company's Board of Directors extended the program for one year, expiring on July 31, 2026.
Credit Quality:
The provision for credit losses on loans totaled $516,000 for the second quarter of 2025, compared to a $274,000 provision for credit losses on loans for the first quarter of 2025 and a provision for credit losses on loans of $471,000 for the second quarter of 2024. Net charge-offs totaled $145,000 for the second quarter of 2025, compared to $965,000 for the first quarter of 2025, and $405,000 for the second quarter of 2024.
The provision for credit losses on loans totaled $790,000 for the first six months of 2025, compared to a $655,000 provision for credit losses on loans for the first six months of 2024. Net charge-offs totaled $1.1 million for the first six months of 2025, compared to $659,000 for the first six months of 2024.
The allowance for credit losses on loans ("ACLL") at June 30, 2025 was $48.6 million, or 1.38% of total loans, representing 787% of total nonperforming loans. The ACLL at March 31, 2025 was $48.3 million, or 1.38% of total loans, representing 765% of total nonperforming loans. The ACLL at June 30, 2024 was $48.0 million, or 1.42% of total loans, representing 795% of total nonperforming loans. The reduction to the allowance for credit on losses on loans reflects our credit assessment and economic factors.
NPAs were $6.2 million at June 30, 2025, compared to $6.3 million at March 31, 2025, and $6.0 million at June 30, 2024. There were no foreclosed assets on the balance sheet at June 30, 2025, March 31, 2025, or June 30, 2024. There were no Shared National Credits ("SNCs") or material purchased participations included in NPAs or total loans at June 30, 2025, March 31, 2025, or June 30, 2024.
Classified assets totaled $37.5 million, or 0.69% of total assets, at June 30, 2025, compared to $40.0 million, or 0.73% of total assets, at March 31, 2025, and $33.6 million, or 0.64% of total assets, at June 30, 2024.
(4)This is a non-GAAP financial measure as defined and discussed under "Non-GAAP Financial Measures" in this press release.
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. These measures include "adjusted" operating metrics that have been adjusted to exclude notable expenses incurred in the second quarter as well as other performance measures and ratios adjusted for notable items. Management believes these non-GAAP financial measures enhance comparability between periods and in some instances are common in the banking industry. 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, loan growth, expenses, net interest margin, 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 Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, and include: (i) 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, but not limited to, ransomware, data security breaches, "denial of service" attacks, "hacking" and identity theft) affecting us, our clients, and our third-party vendors and service providers; (ii) 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; (iii) media items and consumer confidence as those factors affect our clients' confidence in the banking system generally and in our bank specifically; (iv) adequacy of our risk management framework, disclosure controls and procedures and internal control over financial reporting; (v) 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; (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) 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; (viii) 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; (ix) 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; (x) 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; (xi) factors that affect the value and liquidity of our investment portfolios, particularly the values of securities available-for-sale; (xii) 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; (xiii) 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; (xiv) 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; (xv) 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; and (xvi) our success in managing the risks involved in the foregoing factors.
Member FDIC
For additional information, email:
InvestorRelations@herbank.com
| For the Quarter Ended: | Percent Change From: | For the Six Months Ended: | ||||||||||||||||||||||||
| CONSOLIDATED INCOME STATEMENTS | June 30, | March 31, | June 30, | March 31, | June 30, | June 30, | June 30, | Percent | ||||||||||||||||||
| (in $000's, unaudited) | 2025 | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | Change | ||||||||||||||||||
| Interest income | $ | 63,025 | $ | 61,832 | $ | 58,489 | 2 | % | 8 | % | $ | 124,857 | $ | 115,450 | 8 | % | ||||||||||
| Interest expense | 18,220 | 18,472 | 19,622 | (1 | ) | % | (7 | ) | % | 36,692 | 37,080 | (1 | ) | % | ||||||||||||
| Net interest income before provision | ||||||||||||||||||||||||||
| for credit losses on loans | 44,805 | 43,360 | 38,867 | 3 | % | 15 | % | 88,165 | 78,370 | 12 | % | |||||||||||||||
| Provision for credit losses on loans | 516 | 274 | 471 | 88 | % | 10 | % | 790 | 655 | 21 | % | |||||||||||||||
| Net interest income after provision | ||||||||||||||||||||||||||
| for credit losses on loans | 44,289 | 43,086 | 38,396 | 3 | % | 15 | % | 87,375 | 77,715 | 12 | % | |||||||||||||||
| Noninterest income: | ||||||||||||||||||||||||||
| Service charges and fees on deposit | ||||||||||||||||||||||||||
| accounts | 929 | 892 | 891 | 4 | % | 4 | % | 1,821 | 1,768 | 3 | % | |||||||||||||||
| FHLB and FRB stock dividends | 584 | 590 | 588 | (1 | ) | % | (1 | ) | % | 1,174 | 1,178 | |||||||||||||||
| Increase in cash surrender value of | ||||||||||||||||||||||||||
| life insurance | 548 | 538 | 521 | 2 | % | 5 | % | 1,086 | 1,039 | 5 | % | |||||||||||||||
| Termination fees | 227 | 87 | 100 | 161 | % | 127 | % | 314 | 113 | 178 | % | |||||||||||||||
| Gain on sales of SBA loans | 87 | 98 | 76 | (11 | ) | % | 14 | % | 185 | 254 | (27 | ) | % | |||||||||||||
| Servicing income | 61 | 82 | 90 | (26 | ) | % | (32 | ) | % | 143 | 180 | (21 | ) | % | ||||||||||||
| Gain on proceeds from company-owned | ||||||||||||||||||||||||||
| life insurance | - | - | 219 | N/A | (100 | ) | % | - | 219 | (100 | ) | % | ||||||||||||||
| Other | 541 | 409 | 379 | 32 | % | 43 | % | 950 | 750 | 27 | % | |||||||||||||||
| Total noninterest income | 2,977 | 2,696 | 2,864 | 10 | % | 4 | % | 5,673 | 5,501 | 3 | % | |||||||||||||||
| Noninterest expense: | ||||||||||||||||||||||||||
| Salaries and employee benefits | 16,227 | 16,575 | 15,794 | (2 | ) | % | 3 | % | 32,802 | 31,303 | 5 | % | ||||||||||||||
| Occupancy and equipment | 2,525 | 2,534 | 2,689 | 0 | % | (6 | ) | % | 5,059 | 5,132 | (1 | ) | % | |||||||||||||
| Professional fees | 1,819 | 1,580 | 1,072 | 15 | % | 70 | % | 3,399 | 2,399 | 42 | % | |||||||||||||||
| Other | 17,764 | 8,767 | 8,633 | 103 | % | 106 | % | 26,531 | 16,890 | 57 | % | |||||||||||||||
| Total noninterest expense | 38,335 | 29,456 | 28,188 | 30 | % | 36 | % | 67,791 | 55,724 | 22 | % | |||||||||||||||
| Income before income taxes | 8,931 | 16,326 | 13,072 | (45 | ) | % | (32 | ) | % | 25,257 | 27,492 | (8 | ) | % | ||||||||||||
| Income tax expense | 2,542 | 4,700 | 3,838 | (46 | ) | % | (34 | ) | % | 7,242 | 8,092 | (11 | ) | % | ||||||||||||
| Net income | $ | 6,389 | $ | 11,626 | $ | 9,234 | (45 | ) | % | (31 | ) | % | $ | 18,015 | $ | 19,400 | (7 | ) | % | |||||||
| PER COMMON SHARE DATA | ||||||||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||||||
| Basic earnings per share | $ | 0.10 | $ | 0.19 | $ | 0.15 | (47 | ) | % | (33 | ) | % | $ | 0.29 | $ | 0.32 | (9 | ) | % | |||||||
| Diluted earnings per share | $ | 0.10 | $ | 0.19 | $ | 0.15 | (47 | ) | % | (33 | ) | % | $ | 0.29 | $ | 0.32 | (9 | ) | % | |||||||
| Weighted average shares outstanding - basic | 61,508,180 | 61,479,579 | 61,279,914 | 0 | % | 0 | % | 61,493,880 | 61,233,269 | 0 | % | |||||||||||||||
| Weighted average shares outstanding - diluted | 61,624,600 | 61,708,361 | 61,438,088 | 0 | % | 0 | % | 61,664,942 | 61,446,484 | 0 | % | |||||||||||||||
| Common shares outstanding at period-end | 61,446,763 | 61,611,121 | 61,292,094 | 0 | % | 0 | % | 61,446,763 | 61,292,094 | 0 | % | |||||||||||||||
| Dividend per share | $ | 0.13 | $ | 0.13 | $ | 0.13 | 0 | % | 0 | % | $ | 0.26 | $ | 0.26 | 0 | % | ||||||||||
| Book value per share | $ | 11.31 | $ | 11.30 | $ | 11.08 | 0 | % | 2 | % | $ | 11.31 | $ | 11.08 | 2 | % | ||||||||||
| Tangible book value per share(1) | $ | 8.49 | $ | 8.48 | $ | 8.22 | 0 | % | 3 | % | $ | 8.49 | $ | 8.22 | 3 | % | ||||||||||
| KEY PERFORMANCE METRICS | ||||||||||||||||||||||||||
| (in $000's, unaudited) | ||||||||||||||||||||||||||
| Annualized return on average equity | 3.68 | % | 6.81 | % | 5.50 | % | (46 | ) | % | (33 | ) | % | 5.23 | % | 5.79 | % | (10 | ) | % | |||||||
| Annualized return on average tangible | ||||||||||||||||||||||||||
| common equity(1) | 4.89 | % | 9.09 | % | 7.43 | % | (46 | ) | % | (34 | ) | % | 6.97 | % | 7.84 | % | (11 | ) | % | |||||||
| Annualized return on average assets | 0.47 | % | 0.85 | % | 0.71 | % | (45 | ) | % | (34 | ) | % | 0.66 | % | 0.75 | % | (12 | ) | % | |||||||
| Annualized return on average tangible assets(1) | 0.48 | % | 0.88 | % | 0.74 | % | (45 | ) | % | (35 | ) | % | 0.68 | % | 0.78 | % | (13 | ) | % | |||||||
| Net interest margin (FTE)(1) | 3.54 | % | 3.39 | % | 3.23 | % | 4 | % | 10 | % | 3.47 | % | 3.27 | % | 6 | % | ||||||||||
| Total revenue | $ | 47,782 | $ | 46,056 | $ | 41,731 | 4 | % | 15 | % | 93,838 | 83,871 | 12 | % | ||||||||||||
| Pre-provision net revenue(1) | $ | 9,447 | $ | 16,600 | $ | 13,543 | (43 | ) | % | (30 | ) | % | 26,047 | 28,147 | (7 | ) | % | |||||||||
| Efficiency ratio(1) | 80.23 | % | 63.96 | % | 67.55 | % | 25 | % | 19 | % | 72.24 | % | 66.44 | % | 9 | % | ||||||||||
| AVERAGE BALANCES | ||||||||||||||||||||||||||
| (in $000's, unaudited) | ||||||||||||||||||||||||||
| Average assets | $ | 5,458,420 | $ | 5,559,896 | $ | 5,213,171 | (2 | ) | % | 5 | % | $ | 5,508,878 | $ | 5,195,903 | 6 | % | |||||||||
| Average tangible assets(1) | $ | 5,284,972 | $ | 5,386,001 | $ | 5,037,673 | (2 | ) | % | 5 | % | $ | 5,335,207 | $ | 5,020,134 | 6 | % | |||||||||
| Average earning assets | $ | 5,087,089 | $ | 5,188,317 | $ | 4,840,670 | (2 | ) | % | 5 | % | $ | 5,137,424 | $ | 4,825,587 | 6 | % | |||||||||
| Average loans held-for-sale | $ | 2,250 | $ | 2,290 | $ | 1,503 | (2 | ) | % | 50 | % | $ | 2,270 | $ | 2,126 | 7 | % | |||||||||
| Average loans held-for-investment | $ | 3,504,518 | $ | 3,429,014 | $ | 3,328,358 | 2 | % | 5 | % | $ | 3,466,975 | $ | 3,312,799 | 5 | % | ||||||||||
| Average deposits | $ | 4,618,007 | $ | 4,717,517 | $ | 4,394,545 | (2 | ) | % | 5 | % | $ | 4,667,487 | $ | 4,377,347 | 7 | % | |||||||||
| Average demand deposits - noninterest-bearing | $ | 1,146,494 | $ | 1,167,330 | $ | 1,127,145 | (2 | ) | % | 2 | % | $ | 1,156,854 | $ | 1,152,111 | 0 | % | |||||||||
| Average interest-bearing deposits | $ | 3,471,513 | $ | 3,550,187 | $ | 3,267,400 | (2 | ) | % | 6 | % | $ | 3,510,633 | $ | 3,225,236 | 9 | % | |||||||||
| Average interest-bearing liabilities | $ | 3,511,237 | $ | 3,589,872 | $ | 3,306,972 | (2 | ) | % | 6 | % | $ | 3,550,338 | $ | 3,264,788 | 9 | % | |||||||||
| Average equity | $ | 697,016 | $ | 692,733 | $ | 675,108 | 1 | % | 3 | % | $ | 694,886 | $ | 673,700 | 3 | % | ||||||||||
| Average tangible common equity(1) | $ | 523,568 | $ | 518,838 | $ | 499,610 | 1 | % | 5 | % | $ | 521,215 | $ | 497,931 | 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 | June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||
| (in $000's, unaudited) | 2025 | 2025 | 2024 | 2024 | 2024 | |||||||||||
| Interest income | $ | 63,025 | $ | 61,832 | $ | 64,043 | $ | 60,852 | $ | 58,489 | ||||||
| Interest expense | 18,220 | 18,472 | 20,448 | 21,523 | 19,622 | |||||||||||
| Net interest income before provision | ||||||||||||||||
| for credit losses on loans | 44,805 | 43,360 | 43,595 | 39,329 | 38,867 | |||||||||||
| Provision for credit losses on loans | 516 | 274 | 1,331 | 153 | 471 | |||||||||||
| Net interest income after provision | ||||||||||||||||
| for credit losses on loans | 44,289 | 43,086 | 42,264 | 39,176 | 38,396 | |||||||||||
| Noninterest income: | ||||||||||||||||
| Service charges and fees on deposit | ||||||||||||||||
| accounts | 929 | 892 | 885 | 908 | 891 | |||||||||||
| FHLB and FRB stock dividends | 584 | 590 | 590 | 586 | 588 | |||||||||||
| Increase in cash surrender value of | ||||||||||||||||
| life insurance | 548 | 538 | 528 | 530 | 521 | |||||||||||
| Termination fees | 227 | 87 | 18 | 46 | 100 | |||||||||||
| Gain on sales of SBA loans | 87 | 98 | 125 | 94 | 76 | |||||||||||
| Servicing income | 61 | 82 | 77 | 108 | 90 | |||||||||||
| Gain on proceeds from company-owned | ||||||||||||||||
| life insurance | - | - | - | - | 219 | |||||||||||
| Other | 541 | 409 | 552 | 554 | 379 | |||||||||||
| Total noninterest income | 2,977 | 2,696 | 2,775 | 2,826 | 2,864 | |||||||||||
| Noninterest expense: | ||||||||||||||||
| Salaries and employee benefits | 16,227 | 16,575 | 16,976 | 15,673 | 15,794 | |||||||||||
| Occupancy and equipment | 2,525 | 2,534 | 2,495 | 2,599 | 2,689 | |||||||||||
| Professional fees | 1,819 | 1,580 | 1,711 | 1,306 | 1,072 | |||||||||||
| Other | 17,764 | 8,767 | 9,122 | 7,977 | 8,633 | |||||||||||
| Total noninterest expense | 38,335 | 29,456 | 30,304 | 27,555 | 28,188 | |||||||||||
| Income before income taxes | 8,931 | 16,326 | 14,735 | 14,447 | 13,072 | |||||||||||
| Income tax expense | 2,542 | 4,700 | 4,114 | 3,940 | 3,838 | |||||||||||
| Net income | $ | 6,389 | $ | 11,626 | $ | 10,621 | $ | 10,507 | $ | 9,234 | ||||||
| PER COMMON SHARE DATA | ||||||||||||||||
| (unaudited) | ||||||||||||||||
| Basic earnings per share | $ | 0.10 | $ | 0.19 | $ | 0.17 | $ | 0.17 | $ | 0.15 | ||||||
| Diluted earnings per share | $ | 0.10 | $ | 0.19 | $ | 0.17 | $ | 0.17 | $ | 0.15 | ||||||
| Weighted average shares outstanding - basic | 61,508,180 | 61,479,579 | 61,320,505 | 61,295,877 | 61,279,914 | |||||||||||
| Weighted average shares outstanding - diluted | 61,624,600 | 61,708,361 | 61,679,735 | 61,546,157 | 61,438,088 | |||||||||||
| Common shares outstanding at period-end | 61,446,763 | 61,611,121 | 61,348,095 | 61,297,344 | 61,292,094 | |||||||||||
| Dividend per share | $ | 0.13 | $ | 0.13 | $ | 0.13 | $ | 0.13 | $ | 0.13 | ||||||
| Book value per share | $ | 11.31 | $ | 11.30 | $ | 11.24 | $ | 11.18 | $ | 11.08 | ||||||
| Tangible book value per share(1) | $ | 8.49 | $ | 8.48 | $ | 8.41 | $ | 8.33 | $ | 8.22 | ||||||
| KEY PERFORMANCE METRICS | ||||||||||||||||
| (in $000's, unaudited) | ||||||||||||||||
| Annualized return on average equity | 3.68 | % | 6.81 | % | 6.16 | % | 6.14 | % | 5.50 | % | ||||||
| Annualized return on average tangible | ||||||||||||||||
| common equity(1) | 4.89 | % | 9.09 | % | 8.25 | % | 8.27 | % | 7.43 | % | ||||||
| Annualized return on average assets | 0.47 | % | 0.85 | % | 0.75 | % | 0.78 | % | 0.71 | % | ||||||
| Annualized return on average tangible assets(1) | 0.48 | % | 0.88 | % | 0.78 | % | 0.81 | % | 0.74 | % | ||||||
| Net interest margin (FTE)(1) | 3.54 | % | 3.39 | % | 3.32 | % | 3.15 | % | 3.23 | % | ||||||
| Total revenue | $ | 47,782 | $ | 46,056 | $ | 46,370 | $ | 42,155 | $ | 41,731 | ||||||
| Pre-provision net revenue(1) | $ | 9,447 | $ | 16,600 | $ | 16,066 | $ | 14,600 | $ | 13,543 | ||||||
| Efficiency ratio(1) | 80.23 | % | 63.96 | % | 65.35 | % | 65.37 | % | 67.55 | % | ||||||
| AVERAGE BALANCES | ||||||||||||||||
| (in $000's, unaudited) | ||||||||||||||||
| Average assets | $ | 5,458,420 | $ | 5,559,896 | $ | 5,607,840 | $ | 5,352,067 | $ | 5,213,171 | ||||||
| Average tangible assets(1) | $ | 5,284,972 | $ | 5,386,001 | $ | 5,433,439 | $ | 5,177,114 | $ | 5,037,673 | ||||||
| Average earning assets | $ | 5,087,089 | $ | 5,188,317 | $ | 5,235,986 | $ | 4,980,082 | $ | 4,840,670 | ||||||
| Average loans held-for-sale | $ | 2,250 | $ | 2,290 | $ | 2,260 | $ | 1,493 | $ | 1,503 | ||||||
| Average loans held-for-investment | $ | 3,504,518 | $ | 3,429,014 | $ | 3,388,729 | $ | 3,359,647 | $ | 3,328,358 | ||||||
| Average deposits | $ | 4,618,007 | $ | 4,717,517 | $ | 4,771,491 | $ | 4,525,946 | $ | 4,394,545 | ||||||
| Average demand deposits - noninterest-bearing | $ | 1,146,494 | $ | 1,167,330 | $ | 1,222,393 | $ | 1,172,304 | $ | 1,127,145 | ||||||
| Average interest-bearing deposits | $ | 3,471,513 | $ | 3,550,187 | $ | 3,549,098 | $ | 3,353,642 | $ | 3,267,400 | ||||||
| Average interest-bearing liabilities | $ | 3,511,237 | $ | 3,589,872 | $ | 3,588,755 | $ | 3,393,264 | $ | 3,306,972 | ||||||
| Average equity | $ | 697,016 | $ | 692,733 | $ | 686,263 | $ | 680,404 | $ | 675,108 | ||||||
| Average tangible common equity(1) | $ | 523,568 | $ | 518,838 | $ | 511,862 | $ | 505,451 | $ | 499,610 | ||||||
(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 | June 30, | March 31, | June 30, | March 31, | June 30, | ||||||||||||||
| (in $000's, unaudited) | 2025 | 2025 | 2024 | 2025 | 2024 | ||||||||||||||
| ASSETS | |||||||||||||||||||
| Cash and due from banks | $ | 55,360 | $ | 44,281 | $ | 37,497 | 25 | % | 48 | % | |||||||||
| Other investments and interest-bearing deposits | |||||||||||||||||||
| in other financial institutions | 666,432 | 700,769 | 610,763 | (5 | ) | % | 9 | % | |||||||||||
| Securities available-for-sale, at fair value | 307,035 | 370,976 | 273,043 | (17 | ) | % | 12 | % | |||||||||||
| Securities held-to-maturity, at amortized cost | 561,205 | 576,718 | 621,178 | (3 | ) | % | (10 | ) | % | ||||||||||
| Loans - held-for-sale - SBA, including deferred costs | 1,156 | 1,884 | 1,899 | (39 | ) | % | (39 | ) | % | ||||||||||
| Loans - held-for-investment: | |||||||||||||||||||
| Commercial | 492,231 | 489,241 | 477,929 | 1 | % | 3 | % | ||||||||||||
| Real estate: | |||||||||||||||||||
| CRE - owner occupied | 627,810 | 616,825 | 594,504 | 2 | % | 6 | % | ||||||||||||
| CRE - non-owner occupied | 1,390,419 | 1,363,275 | 1,283,323 | 2 | % | 8 | % | ||||||||||||
| Land and construction | 149,460 | 136,106 | 125,374 | 10 | % | 19 | % | ||||||||||||
| Home equity | 120,763 | 119,138 | 126,562 | 1 | % | (5 | ) | % | |||||||||||
| Multifamily | 285,016 | 284,510 | 268,968 | 0 | % | 6 | % | ||||||||||||
| Residential mortgages | 454,419 | 465,330 | 484,809 | (2 | ) | % | (6 | ) | % | ||||||||||
| Consumer and other | 14,661 | 12,741 | 18,758 | 15 | % | (22 | ) | % | |||||||||||
| Loans | 3,534,779 | 3,487,166 | 3,380,227 | 1 | % | 5 | % | ||||||||||||
| Deferred loan fees, net | (446 | ) | (268 | ) | (434 | ) | 66 | % | 3 | % | |||||||||
| Total loans - held-for-investment, net of deferred fees | 3,534,333 | 3,486,898 | 3,379,793 | 1 | % | 5 | % | ||||||||||||
| Allowance for credit losses on loans | (48,633 | ) | (48,262 | ) | (47,954 | ) | 1 | % | 1 | % | |||||||||
| Loans, net | 3,485,700 | 3,438,636 | 3,331,839 | 1 | % | 5 | % | ||||||||||||
| Company-owned life insurance | 82,296 | 81,749 | 80,153 | 1 | % | 3 | % | ||||||||||||
| Premises and equipment, net | 9,765 | 9,772 | 10,310 | 0 | % | (5 | ) | % | |||||||||||
| Goodwill | 167,631 | 167,631 | 167,631 | 0 | % | 0 | % | ||||||||||||
| Other intangible assets | 5,532 | 5,986 | 7,521 | (8 | ) | % | (26 | ) | % | ||||||||||
| Accrued interest receivable and other assets | 125,125 | 115,853 | 121,190 | 8 | % | 3 | % | ||||||||||||
| Total assets | $ | 5,467,237 | $ | 5,514,255 | $ | 5,263,024 | (1 | ) | % | 4 | % | ||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||||||||||
| Liabilities: | |||||||||||||||||||
| Deposits: | |||||||||||||||||||
| Demand, noninterest-bearing | $ | 1,151,242 | $ | 1,128,593 | $ | 1,187,320 | 2 | % | (3 | ) | % | ||||||||
| Demand, interest-bearing | 955,504 | 949,068 | 928,246 | 1 | % | 3 | % | ||||||||||||
| Savings and money market | 1,320,142 | 1,353,293 | 1,126,520 | (2 | ) | % | 17 | % | |||||||||||
| Time deposits - under $250 | 35,356 | 37,592 | 39,046 | (6 | ) | % | (9 | ) | % | ||||||||||
| Time deposits - $250 and over | 210,818 | 213,357 | 203,886 | (1 | ) | % | 3 | % | |||||||||||
| ICS/CDARS - interest-bearing demand, money market | |||||||||||||||||||
| and time deposits | 954,272 | 1,001,365 | 959,592 | (5 | ) | % | (1 | ) | % | ||||||||||
| Total deposits | 4,627,334 | 4,683,268 | 4,444,610 | (1 | ) | % | 4 | % | |||||||||||
| Subordinated debt, net of issuance costs | 39,728 | 39,691 | 39,577 | 0 | % | 0 | % | ||||||||||||
| Accrued interest payable and other liabilities | 105,471 | 95,106 | 99,638 | 11 | % | 6 | % | ||||||||||||
| Total liabilities | 4,772,533 | 4,818,065 | 4,583,825 | (1 | ) | % | 4 | % | |||||||||||
| Shareholders' Equity: | |||||||||||||||||||
| Common stock | 509,888 | 511,596 | 508,343 | 0 | % | 0 | % | ||||||||||||
| Retained earnings | 189,794 | 191,401 | 182,571 | (1 | ) | % | 4 | % | |||||||||||
| Accumulated other comprehensive loss | (4,978 | ) | (6,807 | ) | (11,715 | ) | (27 | ) | % | (58 | ) | % | |||||||
| Total shareholders' equity | 694,704 | 696,190 | 679,199 | 0 | % | 2 | % | ||||||||||||
| Total liabilities and shareholders' equity | $ | 5,467,237 | $ | 5,514,255 | $ | 5,263,024 | (1 | ) | % | 4 | % | ||||||||
| End of Period: | ||||||||||||||||||||
| CONSOLIDATED BALANCE SHEETS | June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||||||
| (in $000's, unaudited) | 2025 | 2025 | 2024 | 2024 | 2024 | |||||||||||||||
| ASSETS | ||||||||||||||||||||
| Cash and due from banks | $ | 55,360 | $ | 44,281 | $ | 29,864 | $ | 49,722 | $ | 37,497 | ||||||||||
| Other investments and interest-bearing deposits | ||||||||||||||||||||
| in other financial institutions | 666,432 | 700,769 | 938,259 | 906,588 | 610,763 | |||||||||||||||
| Securities available-for-sale, at fair value | 307,035 | 370,976 | 256,274 | 237,612 | 273,043 | |||||||||||||||
| Securities held-to-maturity, at amortized cost | 561,205 | 576,718 | 590,016 | 604,193 | 621,178 | |||||||||||||||
| Loans - held-for-sale - SBA, including deferred costs | 1,156 | 1,884 | 2,375 | 1,649 | 1,899 | |||||||||||||||
| Loans - held-for-investment: | ||||||||||||||||||||
| Commercial | 492,231 | 489,241 | 531,350 | 481,266 | 477,929 | |||||||||||||||
| Real estate: | ||||||||||||||||||||
| CRE - owner occupied | 627,810 | 616,825 | 601,636 | 602,062 | 594,504 | |||||||||||||||
| CRE - non-owner occupied | 1,390,419 | 1,363,275 | 1,341,266 | 1,310,578 | 1,283,323 | |||||||||||||||
| Land and construction | 149,460 | 136,106 | 127,848 | 125,761 | 125,374 | |||||||||||||||
| Home equity | 120,763 | 119,138 | 127,963 | 124,090 | 126,562 | |||||||||||||||
| Multifamily | 285,016 | 284,510 | 275,490 | 273,103 | 268,968 | |||||||||||||||
| Residential mortgages | 454,419 | 465,330 | 471,730 | 479,524 | 484,809 | |||||||||||||||
| Consumer and other | 14,661 | 12,741 | 14,837 | 14,179 | 18,758 | |||||||||||||||
| Loans | 3,534,779 | 3,487,166 | 3,492,120 | 3,410,563 | 3,380,227 | |||||||||||||||
| Deferred loan fees, net | (446 | ) | (268 | ) | (183 | ) | (327 | ) | (434 | ) | ||||||||||
| Total loans - held-for-investment, net of deferred fees | 3,534,333 | 3,486,898 | 3,491,937 | 3,410,236 | 3,379,793 | |||||||||||||||
| Allowance for credit losses on loans | (48,633 | ) | (48,262 | ) | (48,953 | ) | (47,819 | ) | (47,954 | ) | ||||||||||
| Loans, net | 3,485,700 | 3,438,636 | 3,442,984 | 3,362,417 | 3,331,839 | |||||||||||||||
| Company-owned life insurance | 82,296 | 81,749 | 81,211 | 80,682 | 80,153 | |||||||||||||||
| Premises and equipment, net | 9,765 | 9,772 | 10,140 | 10,398 | 10,310 | |||||||||||||||
| Goodwill | 167,631 | 167,631 | 167,631 | 167,631 | 167,631 | |||||||||||||||
| Other intangible assets | 5,532 | 5,986 | 6,439 | 6,966 | 7,521 | |||||||||||||||
| Accrued interest receivable and other assets | 125,125 | 115,853 | 119,813 | 123,738 | 121,190 | |||||||||||||||
| Total assets | $ | 5,467,237 | $ | 5,514,255 | $ | 5,645,006 | $ | 5,551,596 | $ | 5,263,024 | ||||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||
| Deposits: | ||||||||||||||||||||
| Demand, noninterest-bearing | $ | 1,151,242 | $ | 1,128,593 | $ | 1,214,192 | $ | 1,272,139 | $ | 1,187,320 | ||||||||||
| Demand, interest-bearing | 955,504 | 949,068 | 936,587 | 913,910 | 928,246 | |||||||||||||||
| Savings and money market | 1,320,142 | 1,353,293 | 1,325,923 | 1,309,676 | 1,126,520 | |||||||||||||||
| Time deposits - under $250 | 35,356 | 37,592 | 38,988 | 39,060 | 39,046 | |||||||||||||||
| Time deposits - $250 and over | 210,818 | 213,357 | 206,755 | 196,945 | 203,886 | |||||||||||||||
| ICS/CDARS - interest-bearing demand, money market | ||||||||||||||||||||
| and time deposits | 954,272 | 1,001,365 | 1,097,586 | 997,803 | 959,592 | |||||||||||||||
| Total deposits | 4,627,334 | 4,683,268 | 4,820,031 | 4,729,533 | 4,444,610 | |||||||||||||||
| Subordinated debt, net of issuance costs | 39,728 | 39,691 | 39,653 | 39,615 | 39,577 | |||||||||||||||
| Accrued interest payable and other liabilities | 105,471 | 95,106 | 95,595 | 97,096 | 99,638 | |||||||||||||||
| Total liabilities | 4,772,533 | 4,818,065 | 4,955,279 | 4,866,244 | 4,583,825 | |||||||||||||||
| Shareholders' Equity: | ||||||||||||||||||||
| Common stock | 509,888 | 511,596 | 510,070 | 509,134 | 508,343 | |||||||||||||||
| Retained earnings | 189,794 | 191,401 | 187,762 | 185,110 | 182,571 | |||||||||||||||
| Accumulated other comprehensive loss | (4,978 | ) | (6,807 | ) | (8,105 | ) | (8,892 | ) | (11,715 | ) | ||||||||||
| Total shareholders' equity | 694,704 | 696,190 | 689,727 | 685,352 | 679,199 | |||||||||||||||
| Total liabilities and shareholders' equity | $ | 5,467,237 | $ | 5,514,255 | $ | 5,645,006 | $ | 5,551,596 | $ | 5,263,024 | ||||||||||
| At or For the Quarter Ended: | Percent Change From: | |||||||||||||||
| CREDIT QUALITY DATA | June 30, | March 31, | June 30, | March 31, | June 30, | |||||||||||
| (in $000's, unaudited) | 2025 | 2025 | 2024 | 2025 | 2024 | |||||||||||
| Nonaccrual loans - held-for-investment: | ||||||||||||||||
| Land and construction loans | $ | 4,198 | $ | 4,793 | $ | 4,774 | (12 | ) | % | (12 | ) | % | ||||
| Home equity and other loans | 728 | 927 | 108 | (21 | ) | % | 574 | % | ||||||||
| Residential mortgages | 607 | - | - | N/A | N/A | |||||||||||
| Commercial loans | 491 | 324 | 900 | 52 | % | (45 | ) | % | ||||||||
| CRE loans | 31 | - | - | N/A | N/A | |||||||||||
| Total nonaccrual loans - held-for-investment: | 6,055 | 6,044 | 5,782 | 0 | % | 5 | % | |||||||||
| Loans over 90 days past due | ||||||||||||||||
| and still accruing | 123 | 268 | 248 | (54 | ) | % | (50 | ) | % | |||||||
| Total nonperforming loans | 6,178 | 6,312 | 6,030 | (2 | ) | % | 2 | % | ||||||||
| Foreclosed assets | - | - | - | N/A | N/A | |||||||||||
| Total nonperforming assets | $ | 6,178 | $ | 6,312 | $ | 6,030 | (2 | ) | % | 2 | % | |||||
| Net charge-offs during the quarter | $ | 145 | $ | 965 | $ | 405 | (85 | ) | % | (64 | ) | % | ||||
| Provision for credit losses on loans during the quarter | $ | 516 | $ | 274 | $ | 471 | 88 | % | 10 | % | ||||||
| Allowance for credit losses on loans | $ | 48,633 | $ | 48,262 | $ | 47,954 | 1 | % | 1 | % | ||||||
| Classified assets | $ | 37,525 | $ | 40,034 | $ | 33,605 | (6 | ) | % | 12 | % | |||||
| Allowance for credit losses on loans to total loans | 1.38 | % | 1.38 | % | 1.42 | % | 0 | % | (3 | ) | % | |||||
| Allowance for credit losses on loans to total nonperforming loans | 787.20 | % | 764.61 | % | 795.26 | % | 3 | % | (1 | ) | % | |||||
| Nonperforming assets to total assets | 0.11 | % | 0.11 | % | 0.11 | % | 0 | % | 0 | % | ||||||
| Nonperforming loans to total loans | 0.17 | % | 0.18 | % | 0.18 | % | (6 | ) | % | (6 | ) | % | ||||
| 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 | 6 | % | 7 | % | 6 | % | (14 | ) | % | 0 | % | |||||
| OTHER PERIOD-END STATISTICS | ||||||||||||||||
| (in $000's, unaudited) | ||||||||||||||||
| Heritage Commerce Corp: | ||||||||||||||||
| Tangible common equity (1) | $ | 521,541 | $ | 522,573 | $ | 504,047 | 0 | % | 3 | % | ||||||
| Shareholders' equity / total assets | 12.71 | % | 12.63 | % | 12.91 | % | 1 | % | (2 | ) | % | |||||
| Tangible common equity / tangible assets (1) | 9.85 | % | 9.78 | % | 9.91 | % | 1 | % | (1 | ) | % | |||||
| Loan to deposit ratio | 76.38 | % | 74.45 | % | 76.04 | % | 3 | % | 0 | % | ||||||
| Noninterest-bearing deposits / total deposits | 24.88 | % | 24.10 | % | 26.71 | % | 3 | % | (7 | ) | % | |||||
| Total capital ratio | 15.5 | % | 15.9 | % | 15.6 | % | (3 | ) | % | (1 | ) | % | ||||
| Tier 1 capital ratio | 13.3 | % | 13.6 | % | 13.4 | % | (2 | ) | % | (1 | ) | % | ||||
| Common Equity Tier 1 capital ratio | 13.3 | % | 13.6 | % | 13.4 | % | (2 | ) | % | (1 | ) | % | ||||
| Tier 1 leverage ratio | 9.9 | % | 9.8 | % | 10.2 | % | 1 | % | (3 | ) | % | |||||
| Heritage Bank of Commerce: | ||||||||||||||||
| Tangible common equity / tangible assets (1) | 10.28 | % | 10.15 | % | 10.28 | % | 1 | % | 0 | % | ||||||
| Total capital ratio | 15.1 | % | 15.4 | % | 15.1 | % | (2 | ) | % | 0 | % | |||||
| Tier 1 capital ratio | 13.8 | % | 14.1 | % | 13.9 | % | (2 | ) | % | (1 | ) | % | ||||
| Common Equity Tier 1 capital ratio | 13.8 | % | 14.1 | % | 13.9 | % | (2 | ) | % | (1 | ) | % | ||||
| Tier 1 leverage ratio | 10.4 | % | 10.2 | % | 10.6 | % | 2 | % | (2 | ) | % | |||||
(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 | June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||
| (in $000's, unaudited) | 2025 | 2025 | 2024 | 2024 | 2024 | |||||||||||
| Nonaccrual loans - held-for-investment: | ||||||||||||||||
| Land and construction loans | $ | 4,198 | $ | 4,793 | $ | 5,874 | $ | 5,862 | $ | 4,774 | ||||||
| Home equity and other loans | 728 | 927 | 290 | 84 | 108 | |||||||||||
| Residential mortgages | 607 | - | - | - | - | |||||||||||
| Commercial loans | 491 | 324 | 1,014 | 752 | 900 | |||||||||||
| CRE loans | 31 | - | - | - | - | |||||||||||
| Total nonaccrual loans - held-for-investment: | 6,055 | 6,044 | 7,178 | 6,698 | 5,782 | |||||||||||
| Loans over 90 days past due | ||||||||||||||||
| and still accruing | 123 | 268 | 489 | 460 | 248 | |||||||||||
| Total nonperforming loans | 6,178 | 6,312 | 7,667 | 7,158 | 6,030 | |||||||||||
| Foreclosed assets | - | - | - | - | - | |||||||||||
| Total nonperforming assets | $ | 6,178 | $ | 6,312 | $ | 7,667 | $ | 7,158 | $ | 6,030 | ||||||
| Net charge-offs during the quarter | $ | 145 | $ | 965 | $ | 197 | $ | 288 | $ | 405 | ||||||
| Provision for credit losses on loans during the quarter | $ | 516 | $ | 274 | $ | 1,331 | $ | 153 | $ | 471 | ||||||
| Allowance for credit losses on loans | $ | 48,633 | $ | 48,262 | $ | 48,953 | $ | 47,819 | $ | 47,954 | ||||||
| Classified assets | $ | 37,525 | $ | 40,034 | $ | 41,661 | $ | 32,609 | $ | 33,605 | ||||||
| Allowance for credit losses on loans to total loans | 1.38 | % | 1.38 | % | 1.40 | % | 1.40 | % | 1.42 | % | ||||||
| Allowance for credit losses on loans to total nonperforming loans | 787.20 | % | 764.61 | % | 638.49 | % | 668.05 | % | 795.26 | % | ||||||
| Nonperforming assets to total assets | 0.11 | % | 0.11 | % | 0.14 | % | 0.13 | % | 0.11 | % | ||||||
| Nonperforming loans to total loans | 0.17 | % | 0.18 | % | 0.22 | % | 0.21 | % | 0.18 | % | ||||||
| Classified assets to Heritage Commerce Corp | ||||||||||||||||
| Tier 1 capital plus allowance for credit losses on loans | 7 | % | 7 | % | 7 | % | 6 | % | 6 | % | ||||||
| Classified assets to Heritage Bank of Commerce | ||||||||||||||||
| Tier 1 capital plus allowance for credit losses on loans | 6 | % | 7 | % | 7 | % | 6 | % | 6 | % | ||||||
| OTHER PERIOD-END STATISTICS | ||||||||||||||||
| (in $000's, unaudited) | ||||||||||||||||
| Heritage Commerce Corp: | ||||||||||||||||
| Tangible common equity (1) | $ | 521,541 | $ | 522,573 | $ | 515,657 | $ | 510,755 | $ | 504,047 | ||||||
| Shareholders' equity / total assets | 12.71 | % | 12.63 | % | 12.22 | % | 12.35 | % | 12.91 | % | ||||||
| Tangible common equity / tangible assets (1) | 9.85 | % | 9.78 | % | 9.43 | % | 9.50 | % | 9.91 | % | ||||||
| Loan to deposit ratio | 76.38 | % | 74.45 | % | 72.45 | % | 72.11 | % | 76.04 | % | ||||||
| Noninterest-bearing deposits / total deposits | 24.88 | % | 24.10 | % | 25.19 | % | 26.90 | % | 26.71 | % | ||||||
| Total capital ratio | 15.5 | % | 15.9 | % | 15.6 | % | 15.6 | % | 15.6 | % | ||||||
| Tier 1 capital ratio | 13.3 | % | 13.6 | % | 13.4 | % | 13.4 | % | 13.4 | % | ||||||
| Common Equity Tier 1 capital ratio | 13.3 | % | 13.6 | % | 13.4 | % | 13.4 | % | 13.4 | % | ||||||
| Tier 1 leverage ratio | 9.9 | % | 9.8 | % | 9.6 | % | 10.0 | % | 10.2 | % | ||||||
| Heritage Bank of Commerce: | ||||||||||||||||
| Tangible common equity / tangible assets (1) | 10.28 | % | 10.15 | % | 9.79 | % | 9.86 | % | 10.28 | % | ||||||
| Total capital ratio | 15.1 | % | 15.4 | % | 15.1 | % | 15.1 | % | 15.1 | % | ||||||
| Tier 1 capital ratio | 13.8 | % | 14.1 | % | 13.9 | % | 13.9 | % | 13.9 | % | ||||||
| Common Equity Tier 1 capital ratio | 13.8 | % | 14.1 | % | 13.9 | % | 13.9 | % | 13.9 | % | ||||||
| Tier 1 leverage ratio | 10.4 | % | 10.2 | % | 10.0 | % | 10.4 | % | 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 | ||||||||||||||||||||
| June 30, 2025 | March 31, 2025 | ||||||||||||||||||||
| 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 | $ | 3,020,534 | 41,738 | 5.54 | % | $ | 2,945,072 | $ | 39,758 | 5.47 | % | ||||||||||
| Prepayment fees | - | 473 | 0.06 | % | - | 224 | 0.03 | % | |||||||||||||
| Bay View Funding factored receivables | 67,756 | 3,347 | 19.81 | % | 60,250 | 2,942 | 19.80 | % | |||||||||||||
| Purchased residential mortgages | 420,280 | 3,548 | 3.39 | % | 427,963 | 3,597 | 3.41 | % | |||||||||||||
| Loan fair value mark / accretion | (1,802 | ) | 172 | 0.02 | % | (1,981 | ) | 181 | 0.02 | % | |||||||||||
| Loans, gross (1)(2) | 3,506,768 | 49,278 | 5.64 | % | 3,431,304 | 46,702 | 5.52 | % | |||||||||||||
| Securities - taxable | 902,642 | 6,346 | 2.82 | % | 876,092 | 5,559 | 2.57 | % | |||||||||||||
| Securities - exempt from Federal tax (3) | 30,259 | 272 | 3.61 | % | 30,480 | 275 | 3.66 | % | |||||||||||||
| Other investments and interest-bearing deposits | |||||||||||||||||||||
| in other financial institutions | 647,420 | 7,186 | 4.45 | % | 850,441 | 9,354 | 4.46 | % | |||||||||||||
| Total interest earning assets (3) | 5,087,089 | 63,082 | 4.97 | % | 5,188,317 | 61,890 | 4.84 | % | |||||||||||||
| Cash and due from banks | 31,044 | 31,869 | |||||||||||||||||||
| Premises and equipment, net | 9,958 | 10,007 | |||||||||||||||||||
| Goodwill and other intangible assets | 173,448 | 173,895 | |||||||||||||||||||
| Other assets | 156,881 | 155,808 | |||||||||||||||||||
| Total assets | $ | 5,458,420 | $ | 5,559,896 | |||||||||||||||||
| Liabilities and shareholders' equity: | |||||||||||||||||||||
| Deposits: | |||||||||||||||||||||
| Demand, noninterest-bearing | $ | 1,146,494 | $ | 1,167,330 | |||||||||||||||||
| Demand, interest-bearing | 949,867 | 1,484 | 0.63 | % | 944,375 | 1,438 | 0.62 | % | |||||||||||||
| Savings and money market | 1,313,054 | 8,205 | 2.51 | % | 1,323,038 | 8,073 | 2.47 | % | |||||||||||||
| Time deposits - under $100 | 11,456 | 49 | 1.72 | % | 11,383 | 47 | 1.67 | % | |||||||||||||
| Time deposits - $100 and over | 231,644 | 1,995 | 3.45 | % | 234,421 | 2,129 | 3.68 | % | |||||||||||||
| ICS/CDARS - interest-bearing demand, money market | |||||||||||||||||||||
| and time deposits | 965,492 | 5,949 | 2.47 | % | 1,036,970 | 6,248 | 2.44 | % | |||||||||||||
| Total interest-bearing deposits | 3,471,513 | 17,682 | 2.04 | % | 3,550,187 | 17,935 | 2.05 | % | |||||||||||||
| Total deposits | 4,618,007 | 17,682 | 1.54 | % | 4,717,517 | 17,935 | 1.54 | % | |||||||||||||
| Short-term borrowings | 19 | - | 0.00 | % | 18 | - | 0.00 | % | |||||||||||||
| Subordinated debt, net of issuance costs | 39,705 | 538 | 5.43 | % | 39,667 | 537 | 5.49 | % | |||||||||||||
| Total interest-bearing liabilities | 3,511,237 | 18,220 | 2.08 | % | 3,589,872 | 18,472 | 2.09 | % | |||||||||||||
| Total interest-bearing liabilities and demand, | |||||||||||||||||||||
| noninterest-bearing / cost of funds | 4,657,731 | 18,220 | 1.57 | % | 4,757,202 | 18,472 | 1.57 | % | |||||||||||||
| Other liabilities | 103,673 | 109,961 | |||||||||||||||||||
| Total liabilities | 4,761,404 | 4,867,163 | |||||||||||||||||||
| Shareholders' equity | 697,016 | 692,733 | |||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 5,458,420 | $ | 5,559,896 | |||||||||||||||||
| Net interest income / margin (3) | 44,862 | 3.54 | % | 43,418 | 3.39 | % | |||||||||||||||
| Less tax equivalent adjustment (3) | (57 | ) | (58 | ) | |||||||||||||||||
| Net interest income | $ | 44,805 | 3.53 | % | $ | 43,360 | 3.39 | % | |||||||||||||
(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 $253,000 for the second quarter of 2025, compared to $214,000 for the first quarter of 2025. Prepayment fees totaled $473,000 for the second quarter of 2025, compared to $224,000 for the first quarter of 2025.
(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 | ||||||||||||||||||||
| June 30, 2025 | June 30, 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 | $ | 3,020,534 | $ | 41,738 | 5.54 | % | $ | 2,830,260 | $ | 38,496 | 5.47 | % | |||||||||
| Prepayment fees | - | 473 | 0.06 | % | - | 54 | 0.01 | % | |||||||||||||
| Bay View Funding factored receivables | 67,756 | 3,347 | 19.81 | % | 54,777 | 2,914 | 21.40 | % | |||||||||||||
| Purchased residential mortgages | 420,280 | 3,548 | 3.39 | % | 447,687 | 3,739 | 3.36 | % | |||||||||||||
| Loan fair value mark / accretion | (1,802 | ) | 172 | 0.02 | % | (2,863 | ) | 267 | 0.04 | % | |||||||||||
| Loans, gross (1)(2) | 3,506,768 | 49,278 | 5.64 | % | 3,329,861 | 45,470 | 5.49 | % | |||||||||||||
| Securities - taxable | 902,642 | 6,346 | 2.82 | % | 942,532 | 5,483 | 2.34 | % | |||||||||||||
| Securities - exempt from Federal tax (3) | 30,259 | 272 | 3.61 | % | 31,803 | 285 | 3.60 | % | |||||||||||||
| Other investments and interest-bearing deposits | |||||||||||||||||||||
| in other financial institutions | 647,420 | 7,186 | 4.45 | % | 536,474 | 7,311 | 5.48 | % | |||||||||||||
| Total interest earning assets (3) | 5,087,089 | 63,082 | 4.97 | % | 4,840,670 | 58,549 | 4.86 | % | |||||||||||||
| Cash and due from banks | 31,044 | 33,419 | |||||||||||||||||||
| Premises and equipment, net | 9,958 | 10,216 | |||||||||||||||||||
| Goodwill and other intangible assets | 173,448 | 175,498 | |||||||||||||||||||
| Other assets | 156,881 | 153,368 | |||||||||||||||||||
| Total assets | $ | 5,458,420 | $ | 5,213,171 | |||||||||||||||||
| Liabilities and shareholders' equity: | |||||||||||||||||||||
| Deposits: | |||||||||||||||||||||
| Demand, noninterest-bearing | $ | 1,146,494 | $ | 1,127,145 | |||||||||||||||||
| Demand, interest-bearing | 949,867 | 1,484 | 0.63 | % | 932,100 | 1,719 | 0.74 | % | |||||||||||||
| Savings and money market | 1,313,054 | 8,205 | 2.51 | % | 1,104,589 | 7,867 | 2.86 | % | |||||||||||||
| Time deposits - under $100 | 11,456 | 49 | 1.72 | % | 10,980 | 46 | 1.68 | % | |||||||||||||
| Time deposits - $100 and over | 231,644 | 1,995 | 3.45 | % | 228,248 | 2,245 | 3.96 | % | |||||||||||||
| ICS/CDARS - interest-bearing demand, money market | |||||||||||||||||||||
| and time deposits | 965,492 | 5,949 | 2.47 | % | 991,483 | 7,207 | 2.92 | % | |||||||||||||
| Total interest-bearing deposits | 3,471,513 | 17,682 | 2.04 | % | 3,267,400 | 19,084 | 2.35 | % | |||||||||||||
| Total deposits | 4,618,007 | 17,682 | 1.54 | % | 4,394,545 | 19,084 | 1.75 | % | |||||||||||||
| Short-term borrowings | 19 | - | 0.00 | % | 19 | - | 0.00 | % | |||||||||||||
| Subordinated debt, net of issuance costs | 39,705 | 538 | 5.43 | % | 39,553 | 538 | 5.47 | % | |||||||||||||
| Total interest-bearing liabilities | 3,511,237 | 18,220 | 2.08 | % | 3,306,972 | 19,622 | 2.39 | % | |||||||||||||
| Total interest-bearing liabilities and demand, | |||||||||||||||||||||
| noninterest-bearing / cost of funds | 4,657,731 | 18,220 | 1.57 | % | 4,434,117 | 19,622 | 1.78 | % | |||||||||||||
| Other liabilities | 103,673 | 103,946 | |||||||||||||||||||
| Total liabilities | 4,761,404 | 4,538,063 | |||||||||||||||||||
| Shareholders' equity | 697,016 | 675,108 | |||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 5,458,420 | $ | 5,213,171 | |||||||||||||||||
| Net interest income / margin (3) | 44,862 | 3.54 | % | 38,927 | 3.23 | % | |||||||||||||||
| Less tax equivalent adjustment (3) | (57 | ) | (60 | ) | |||||||||||||||||
| Net interest income | $ | 44,805 | 3.53 | % | $ | 38,867 | 3.23 | % | |||||||||||||
(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 $253,000 for the second quarter of 2025, compared to $117,000 for the second quarter of 2024. Prepayment fees totaled $473,000 for the second quarter of 2025, compared to $54,000 for the second 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 Six Months Ended | For the Six Months Ended | ||||||||||||||||||||
| June 30, 2025 | June 30, 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 | $ | 2,983,011 | $ | 81,496 | 5.51 | % | $ | 2,812,805 | $ | 76,217 | 5.45 | % | |||||||||
| Prepayment fees | - | 697 | 0.05 | % | - | 78 | 0.01 | % | |||||||||||||
| Bay View Funding factored receivables | 64,024 | 6,289 | 19.81 | % | 54,144 | 5,752 | 21.36 | % | |||||||||||||
| Purchased residential mortgages | 424,101 | 7,145 | 3.40 | % | 450,964 | 7,527 | 3.36 | % | |||||||||||||
| Loan fair value mark / accretion | (1,891 | ) | 353 | 0.02 | % | (2,988 | ) | 496 | 0.04 | % | |||||||||||
| Loans, gross (1)(2) | 3,469,245 | 95,980 | 5.58 | % | 3,314,925 | 90,070 | 5.46 | % | |||||||||||||
| Securities - taxable | 889,440 | 11,905 | 2.70 | % | 992,508 | 11,666 | 2.36 | % | |||||||||||||
| Securities - exempt from Federal tax (3) | 30,369 | 547 | 3.63 | % | 31,871 | 571 | 3.60 | % | |||||||||||||
| Other investments, interest-bearing deposits in other | |||||||||||||||||||||
| financial institutions and Federal funds sold | 748,370 | 16,540 | 4.46 | % | 486,283 | 13,263 | 5.48 | % | |||||||||||||
| Total interest earning assets (3) | 5,137,424 | 124,972 | 4.91 | % | 4,825,587 | 115,570 | 4.82 | % | |||||||||||||
| Cash and due from banks | 31,454 | 33,316 | |||||||||||||||||||
| Premises and equipment, net | 9,982 | 10,115 | |||||||||||||||||||
| Goodwill and other intangible assets | 173,671 | 175,769 | |||||||||||||||||||
| Other assets | 156,347 | 151,116 | |||||||||||||||||||
| Total assets | $ | 5,508,878 | $ | 5,195,903 | |||||||||||||||||
| Liabilities and shareholders' equity: | |||||||||||||||||||||
| Deposits: | |||||||||||||||||||||
| Demand, noninterest-bearing | $ | 1,156,854 | $ | 1,152,111 | |||||||||||||||||
| Demand, interest-bearing | 947,137 | 2,922 | 0.62 | % | 926,074 | 3,273 | 0.71 | % | |||||||||||||
| Savings and money market | 1,318,018 | 16,278 | 2.49 | % | 1,086,085 | 14,516 | 2.69 | % | |||||||||||||
| Time deposits - under $100 | 11,420 | 96 | 1.70 | % | 10,962 | 88 | 1.61 | % | |||||||||||||
| Time deposits - $100 and over | 233,025 | 4,124 | 3.57 | % | 224,730 | 4,309 | 3.86 | % | |||||||||||||
| ICS/CDARS - interest-bearing demand, money market | |||||||||||||||||||||
| and time deposits | 1,001,033 | 12,197 | 2.46 | % | 977,385 | 13,818 | 2.84 | % | |||||||||||||
| Total interest-bearing deposits | 3,510,633 | 35,617 | 2.05 | % | 3,225,236 | 36,004 | 2.24 | % | |||||||||||||
| Total deposits | 4,667,487 | 35,617 | 1.54 | % | 4,377,347 | 36,004 | 1.65 | % | |||||||||||||
| Short-term borrowings | 19 | - | 0.00 | % | 17 | - | 0.00 | % | |||||||||||||
| Subordinated debt, net of issuance costs | 39,686 | 1,075 | 5.46 | % | 39,535 | 1,076 | 5.47 | % | |||||||||||||
| Total interest-bearing liabilities | 3,550,338 | 36,692 | 2.08 | % | 3,264,788 | 37,080 | 2.28 | % | |||||||||||||
| Total interest-bearing liabilities and demand, | |||||||||||||||||||||
| noninterest-bearing / cost of funds | 4,707,192 | 36,692 | 1.57 | % | 4,416,899 | 37,080 | 1.69 | % | |||||||||||||
| Other liabilities | 106,800 | 105,304 | |||||||||||||||||||
| Total liabilities | 4,813,992 | 4,522,203 | |||||||||||||||||||
| Shareholders' equity | 694,886 | 673,700 | |||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 5,508,878 | $ | 5,195,903 | |||||||||||||||||
| Net interest income / margin (3) | 88,280 | 3.47 | % | 78,490 | 3.27 | % | |||||||||||||||
| Less tax equivalent adjustment (3) | (115 | ) | (120 | ) | |||||||||||||||||
| Net interest income | $ | 88,165 | 3.46 | % | $ | 78,370 | 3.27 | % | |||||||||||||
(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 $467,000 for the first six months of 2025, compared to $277,000 for the six months of 2024. Prepayment fees totaled $697,000 for the first six months of 2025, compared to $78,000 for the first six months 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 net income and earnings per share adjusted to exclude the $9.2 million of charges primarily related to a legal settlement in the second quarter and first six months of 2025 as a useful measurement of the Company's profitability compared to prior periods.
The following table summarizes components of net income and diluted earnings per share for the periods indicated:
| NET INCOME AND | For the Quarter Ended: | |||||||||||||||
| DILUTED EARNINGS PER SHARE | June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||
| (in $000's, except per share amounts, unaudited) | 2025 | 2025 | 2024 | 2024 | 2024 | |||||||||||
| Reported net income (GAAP) | $ | 6,389 | $ | 11,626 | $ | 10,621 | $ | 10,507 | $ | 9,234 | ||||||
| Add: pre-tax legal settlement and other charges | 9,184 | - | - | - | - | |||||||||||
| Less: related income taxes | (2,618 | ) | - | - | - | - | ||||||||||
| Adjusted net income (non-GAAP) | $ | 12,955 | $ | 11,626 | $ | 10,621 | $ | 10,507 | $ | 9,234 | ||||||
| Weighted average shares outstanding - diluted | 61,624,600 | 61,708,361 | 61,679,735 | 61,546,157 | 61,438,088 | |||||||||||
| Reported diluted earnings per share | $ | 0.10 | $ | 0.19 | $ | 0.17 | $ | 0.17 | $ | 0.15 | ||||||
| Adjusted diluted earnings per share | $ | 0.21 | $ | 0.19 | $ | 0.17 | $ | 0.17 | $ | 0.15 | ||||||
| NET INCOME AND | For the Six Months Ended: | ||||||
| DILUTED EARNINGS PER SHARE | June 30, | June 30, | |||||
| (in $000's, except per share amounts, unaudited) | 2025 | 2024 | |||||
| Reported net income (GAAP) | $ | 18,015 | $ | 19,400 | |||
| Add: pre-tax legal settlement and other charges | 9,184 | - | |||||
| Less: related income taxes | (2,618 | ) | - | ||||
| Adjusted net income (non-GAAP) | $ | 24,581 | $ | 19,400 | |||
| Weighted average shares outstanding - diluted | 61,664,942 | 61,446,484 | |||||
| Reported diluted earnings per share | $ | 0.29 | $ | 0.32 | |||
| Adjusted diluted earnings per share | $ | 0.40 | $ | 0.32 | |||
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 | June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||
| (in $000's, unaudited) | 2025 | 2025 | 2025 | 2024 | 2024 | ||||||||||||||||
| Capital components: | |||||||||||||||||||||
| Total equity (GAAP) | $ | 694,704 | $ | 696,190 | $ | 689,727 | $ | 685,352 | $ | 679,199 | |||||||||||
| Less: preferred stock | - | - | - | - | - | ||||||||||||||||
| Total common equity | 694,704 | 696,190 | 689,727 | 685,352 | 679,199 | ||||||||||||||||
| Less: goodwill | (167,631 | ) | (167,631 | ) | (167,631 | ) | (167,631 | ) | (167,631 | ) | |||||||||||
| Less: other intangible assets | (5,532 | ) | (5,986 | ) | (6,439 | ) | (6,966 | ) | (7,521 | ) | |||||||||||
| Reported tangible common equity (non-GAAP) | 521,541 | 522,573 | 515,657 | 510,755 | 504,047 | ||||||||||||||||
| Add: pre-tax legal settlement and other charges | 9,184 | - | - | - | - | ||||||||||||||||
| Less: related income taxes | (2,618 | ) | - | - | - | - | |||||||||||||||
| Adjusted tangible common equity (non-GAAP) | $ | 528,107 | $ | 522,573 | $ | 515,657 | $ | 510,755 | $ | 504,047 | |||||||||||
| Common shares outstanding at period-end | 61,446,763 | 61,611,121 | 61,348,095 | 61,297,344 | 61,292,094 | ||||||||||||||||
| Reported tangible book value per share (non-GAAP) | $ | 8.49 | $ | 8.48 | $ | 8.41 | $ | 8.33 | $ | 8.22 | |||||||||||
| Adjusted tangible book value per share (non-GAAP) | $ | 8.59 | $ | 8.48 | $ | 8.41 | $ | 8.33 | $ | 8.22 | |||||||||||
The following tables summarize components of the annualized return on average equity, annualized return on average tangible common equity and the annualized return on average assets for the periods indicated:
| RETURN ON AVERAGE TANGIBLE COMMON | For the Quarter Ended: | ||||||||||||||||||||
| EQUITY AND AVERAGE ASSETS | June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||
| (in $000's, unaudited) | 2025 | 2025 | 2024 | 2024 | 2024 | ||||||||||||||||
| Reported net income (GAAP) | $ | 6,389 | $ | 11,626 | $ | 10,621 | $ | 10,507 | $ | 9,234 | |||||||||||
| Add: pre-tax legal settlement and other charges | 9,184 | - | - | - | - | ||||||||||||||||
| Less: related income taxes | (2,618 | ) | - | - | - | - | |||||||||||||||
| Adjusted net income (non-GAAP) | $ | 12,955 | $ | 11,626 | $ | 10,621 | $ | 10,507 | $ | 9,234 | |||||||||||
| Average tangible common equity components: | |||||||||||||||||||||
| Average equity (GAAP) | $ | 697,016 | $ | 692,733 | $ | 686,263 | $ | 680,404 | $ | 675,108 | |||||||||||
| Less: goodwill | (167,631 | ) | (167,631 | ) | (167,631 | ) | (167,631 | ) | (167,631 | ) | |||||||||||
| Less: other intangible assets | (5,817 | ) | (6,264 | ) | (6,770 | ) | (7,322 | ) | (7,867 | ) | |||||||||||
| Total average tangible common equity (non-GAAP) | $ | 523,568 | $ | 518,838 | $ | 511,862 | $ | 505,451 | $ | 499,610 | |||||||||||
| Annualized return on average equity (GAAP) | 3.68 | % | 6.81 | % | 6.16 | % | 6.14 | % | 5.50 | % | |||||||||||
| Reported annualized return on average | |||||||||||||||||||||
| tangible common equity (non-GAAP) | 4.89 | % | 9.09 | % | 8.25 | % | 8.27 | % | 7.43 | % | |||||||||||
| Adjusted annualized return on average | |||||||||||||||||||||
| tangible common equity (non-GAAP) | 9.92 | % | 9.09 | % | 8.25 | % | 8.27 | % | 7.43 | % | |||||||||||
| Average assets (GAAP) | $ | 5,458,420 | $ | 5,559,896 | $ | 5,607,840 | $ | 5,352,067 | $ | 5,213,171 | |||||||||||
| Reported annualized return on average assets (GAAP) | 0.47 | % | 0.85 | % | 0.75 | % | 0.78 | % | 0.71 | % | |||||||||||
| Adjusted annualized return on average assets (non-GAAP) | 0.95 | % | 0.85 | % | 0.75 | % | 0.78 | % | 0.71 | % | |||||||||||
| RETURN ON AVERAGE TANGIBLE COMMON | For the Six Months Ended: | ||||||||
| EQUITY AND AVERAGE ASSETS | June 30, | June 30, | |||||||
| (in $000's, unaudited) | 2025 | 2024 | |||||||
| Reported net income (GAAP) | $ | 18,015 | $ | 19,400 | |||||
| Add: pre-tax legal settlement and other charges | 9,184 | - | |||||||
| Less: related income taxes | (2,618 | ) | - | ||||||
| Adjusted net income (non-GAAP) | $ | 24,581 | $ | 19,400 | |||||
| Average tangible common equity components: | |||||||||
| Average equity (GAAP) | $ | 694,886 | $ | 673,700 | |||||
| Less: goodwill | (167,631 | ) | (167,631 | ) | |||||
| Less: other intangible assets | (6,040 | ) | (8,138 | ) | |||||
| Total average tangible common equity (non-GAAP) | $ | 521,215 | $ | 497,931 | |||||
| Annualized return on average equity (GAAP) | 5.23 | % | 5.79 | % | |||||
| Reported annualized return on average | |||||||||
| tangible common equity (non-GAAP) | 6.97 | % | 7.84 | % | |||||
| Adjusted annualized return on average | |||||||||
| tangible common equity (non-GAAP) | 9.51 | % | 7.84 | % | |||||
| Average assets (GAAP) | $ | 5,508,878 | $ | 5,195,903 | |||||
| Reported annualized return on average assets (GAAP) | 0.66 | % | 0.75 | % | |||||
| Adjusted annualized return on average assets (non-GAAP) | 0.90 | % | 0.75 | % | |||||
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: | ||||||||||||||||
| NET INTEREST INCOME AND NET INTEREST MARGIN | June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||
| (in $000's, unaudited) | 2025 | 2025 | 2024 | 2024 | 2024 | |||||||||||
| Net interest income before | ||||||||||||||||
| credit losses on loans (GAAP) | $ | 44,805 | $ | 43,360 | $ | 43,595 | $ | 39,329 | $ | 38,867 | ||||||
| Tax-equivalent adjustment on securities - | ||||||||||||||||
| exempt from Federal tax | 57 | 58 | 58 | 59 | 60 | |||||||||||
| Net interest income, FTE (non-GAAP) | $ | 44,862 | $ | 43,418 | $ | 43,653 | $ | 39,388 | $ | 38,927 | ||||||
| Average balance of total interest earning assets | $ | 5,087,089 | $ | 5,188,317 | $ | 5,235,986 | $ | 4,980,082 | $ | 4,840,670 | ||||||
| Net interest margin (annualized net interest income divided by the | ||||||||||||||||
| average balance of total interest earnings assets) (GAAP) | 3.53 | % | 3.39 | % | 3.31 | % | 3.14 | % | 3.23 | % | ||||||
| Net interest margin, FTE (annualized net interest income, FTE, | ||||||||||||||||
| divided by the average balance of total | ||||||||||||||||
| earnings assets) (non-GAAP) | 3.54 | % | 3.39 | % | 3.32 | % | 3.15 | % | 3.23 | % | ||||||
| For the Six Months Ended: | |||||||
| NET INTEREST INCOME AND NET INTEREST MARGIN | June 30, | June 30, | |||||
| (in $000's, unaudited) | 2025 | 2024 | |||||
| Net interest income before | |||||||
| credit losses on loans (GAAP) | $ | 88,165 | $ | 78,370 | |||
| Tax-equivalent adjustment on securities - exempt from Federal tax | 115 | 120 | |||||
| Net interest income, FTE (non-GAAP) | $ | 88,280 | $ | 78,490 | |||
| Average balance of total interest earning assets | $ | 5,137,424 | $ | 4,825,587 | |||
| Net interest margin (annualized net interest income divided by the | |||||||
| average balance of total interest earnings assets) (GAAP) | 3.46 | % | 3.27 | % | |||
| Net interest margin, FTE (annualized net interest income, FTE, divided by the | |||||||
| average balance of total interest earnings assets) (non-GAAP) | 3.47 | % | 3.27 | % | |||
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: | ||||||||||||||||||||
| PRE-PROVISION NET REVENUE | June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||||||
| (in $000's, unaudited) | 2025 | 2025 | 2024 | 2025 | 2024 | |||||||||||||||
| Net interest income before credit losses on loans | $ | 44,805 | $ | 43,360 | $ | 43,595 | $ | 39,329 | $ | 38,867 | ||||||||||
| Noninterest income | 2,977 | 2,696 | 2,775 | 2,826 | 2,864 | |||||||||||||||
| Total revenue | 47,782 | 46,056 | 46,370 | $ | 42,155 | $ | 41,731 | |||||||||||||
| Less: Noninterest expense | (38,335 | ) | (29,456 | ) | (30,304 | ) | (27,555 | ) | (28,188 | ) | ||||||||||
| Reported PPNR (non-GAAP) | 9,447 | 16,600 | 16,066 | $ | 14,600 | $ | 13,543 | |||||||||||||
| Add: pre-tax legal settlement and other charges | 9,184 | - | - | - | - | |||||||||||||||
| Adjusted PPNR (non-GAAP) | $ | 18,631 | $ | 16,600 | $ | 16,066 | $ | 14,600 | $ | 13,543 | ||||||||||
| For the Six Months Ended: | ||||||||
| PRE-PROVISION NET REVENUE | June 30, | June 30, | ||||||
| (in $000's, unaudited) | 2025 | 2024 | ||||||
| Net interest income before credit losses on loans | $ | 88,165 | $ | 78,370 | ||||
| Noninterest income | 5,673 | 5,501 | ||||||
| Total revenue | 93,838 | 83,871 | ||||||
| Less: Noninterest expense | (67,791 | ) | (55,724 | ) | ||||
| Reported PPNR (non-GAAP) | 26,047 | 28,147 | ||||||
| Add: pre-tax legal settlement and other charges | 9,184 | - | ||||||
| Adjusted PPNR (non-GAAP) | $ | 35,231 | $ | 28,147 | ||||
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 noninterest expense and the efficiency ratio of the Company for the periods indicated:
| For the Quarter Ended: | |||||||||||||||||
| NONINTEREST EXPENSE AND EFFICIENCY RATIO | June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||
| (in $000's, unaudited) | 2025 | 2025 | 2024 | 2024 | 2024 | ||||||||||||
| Reported noninterest expense (GAAP) | $ | 38,335 | $ | 29,456 | $ | 30,304 | $ | 27,555 | $ | 28,188 | |||||||
| Less: pre-tax legal settlement and other charges | (9,184 | ) | - | - | - | - | |||||||||||
| Adjusted noninterest expense (non-GAAP) | $ | 29,151 | $ | 29,456 | $ | 30,304 | $ | 27,555 | $ | 28,188 | |||||||
| Net interest income before credit losses on loans | $ | 44,805 | $ | 43,360 | $ | 43,595 | $ | 39,329 | $ | 38,867 | |||||||
| Noninterest income | 2,977 | 2,696 | 2,775 | 2,826 | 2,864 | ||||||||||||
| Total revenue | $ | 47,782 | $ | 46,056 | $ | 46,370 | $ | 42,155 | $ | 41,731 | |||||||
| Reported efficiency ratio (noninterest expense divided | |||||||||||||||||
| by total revenue) (non-GAAP) | 80.23 | % | 63.96 | % | 65.35 | % | 65.37 | % | 67.55 | % | |||||||
| Adjusted efficiency ratio (adjusted noninterest expense | |||||||||||||||||
| divided by total revenue) (non-GAAP) | 61.01 | % | 63.96 | % | 65.35 | % | 65.37 | % | 67.55 | % | |||||||
| For the Six Months Ended: | ||||||||
| NONINTEREST EXPENSE AND EFFICIENCY RATIO | June 30, | June 30, | ||||||
| (in $000's, unaudited) | 2025 | 2024 | ||||||
| Reported noninterest expense (GAAP) | $ | 67,791 | $ | 55,724 | ||||
| Less: pre-tax legal settlement and other charges | (9,184 | ) | - | |||||
| Adjusted noninterest expense (non-GAAP) | $ | 58,607 | $ | 55,724 | ||||
| Net interest income before credit losses on loans | $ | 88,165 | $ | 79,548 | ||||
| Noninterest income | 5,673 | 4,323 | ||||||
| Total revenue | $ | 93,838 | $ | 83,871 | ||||
| Reported efficiency ratio (noninterest expense divided | ||||||||
| by total revenue) (non-GAAP) | 72.24 | % | 66.44 | % | ||||
| Adjusted efficiency ratio (adjusted noninterest expense | ||||||||
| divided by total revenue) (non-GAAP) | 62.46 | % | 66.44 | % | ||||
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 | June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||
| (in $000's, unaudited) | 2025 | 2025 | 2024 | 2024 | 2024 | ||||||||||||||||
| Capital components: | |||||||||||||||||||||
| Total equity (GAAP) | $ | 694,704 | $ | 696,190 | $ | 689,727 | $ | 685,352 | $ | 679,199 | |||||||||||
| Less: preferred stock | - | - | - | - | - | ||||||||||||||||
| Total common equity | 694,704 | 696,190 | 689,727 | 685,352 | 679,199 | ||||||||||||||||
| Less: goodwill | (167,631 | ) | (167,631 | ) | (167,631 | ) | (167,631 | ) | (167,631 | ) | |||||||||||
| Less: other intangible assets | (5,532 | ) | (5,986 | ) | (6,439 | ) | (6,966 | ) | (7,521 | ) | |||||||||||
| Total tangible common equity (non-GAAP) | $ | 521,541 | $ | 522,573 | $ | 515,657 | $ | 510,755 | $ | 504,047 | |||||||||||
| Asset components: | |||||||||||||||||||||
| Total assets (GAAP) | $ | 5,467,237 | $ | 5,514,255 | $ | 5,645,006 | $ | 5,551,596 | $ | 5,263,024 | |||||||||||
| Less: goodwill | (167,631 | ) | (167,631 | ) | (167,631 | ) | (167,631 | ) | (167,631 | ) | |||||||||||
| Less: other intangible assets | (5,532 | ) | (5,986 | ) | (6,439 | ) | (6,966 | ) | (7,521 | ) | |||||||||||
| Total tangible assets (non-GAAP) | $ | 5,294,074 | $ | 5,340,638 | $ | 5,470,936 | $ | 5,376,999 | $ | 5,087,872 | |||||||||||
| Tangible common equity / tangible assets (non-GAAP) | 9.85 | % | 9.78 | % | 9.43 | % | 9.50 | % | 9.91 | % | |||||||||||
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 | June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||
| (in $000's, unaudited) | 2025 | 2025 | 2024 | 2024 | 2024 | ||||||||||||||||
| Capital components: | |||||||||||||||||||||
| Total equity (GAAP) | $ | 717,103 | $ | 715,605 | $ | 709,379 | $ | 704,585 | $ | 697,964 | |||||||||||
| Less: preferred stock | - | - | - | - | - | ||||||||||||||||
| Total common equity | 717,103 | 715,605 | 709,379 | 704,585 | 697,964 | ||||||||||||||||
| Less: goodwill | (167,631 | ) | (167,631 | ) | (167,631 | ) | (167,631 | ) | (167,631 | ) | |||||||||||
| Less: other intangible assets | (5,532 | ) | (5,986 | ) | (6,439 | ) | (6,966 | ) | (7,521 | ) | |||||||||||
| Total tangible common equity (non-GAAP) | $ | 543,940 | $ | 541,988 | $ | 535,309 | $ | 529,988 | $ | 522,812 | |||||||||||
| Asset components: | |||||||||||||||||||||
| Total assets (GAAP) | $ | 5,464,618 | $ | 5,512,160 | $ | 5,641,646 | $ | 5,548,576 | $ | 5,260,500 | |||||||||||
| Less: goodwill | (167,631 | ) | (167,631 | ) | (167,631 | ) | (167,631 | ) | (167,631 | ) | |||||||||||
| Less: other intangible assets | (5,532 | ) | (5,986 | ) | (6,439 | ) | (6,966 | ) | (7,521 | ) | |||||||||||
| Total tangible assets (non-GAAP) | $ | 5,291,455 | $ | 5,338,543 | $ | 5,467,576 | $ | 5,373,979 | $ | 5,085,348 | |||||||||||
| Tangible common equity / tangible assets (non-GAAP) | 10.28 | % | 10.15 | % | 9.79 | % | 9.86 | % | 10.28 | % | |||||||||||
