Financial Performance - Net income for Q1 2025 was $11.6 million, representing a 9% increase from $10.6 million in Q4 2024 and a 14% increase from $10.2 million in Q1 2024[4] - Earnings per share for Q1 2025 was $0.19, up 12% from $0.17 in both Q4 2024 and Q1 2024[4] - Total revenue for Q1 2025 was $46.1 million, a decrease of 1% from $46.4 million in Q4 2024, but an increase of 9% from $42.1 million in Q1 2024[8] - Income before income taxes rose by 11% to $16,326,000 compared to Q4 2024 and by 13% compared to Q1 2024[41] - Net income for Q1 2025 was $11,626,000, reflecting a 9% increase from Q4 2024 and a 14% increase from Q1 2024[41] - Basic and diluted earnings per share both increased by 12% to $0.19 compared to Q4 2024[41] - Annualized return on average equity increased to 6.81%, up 11% from Q4 2024[41] - Net income for the quarter ended March 31, 2025, was $11,626,000, an increase from $10,166,000 in the same quarter of 2024, marking a growth of 14.3%[54] Revenue and Income Sources - Interest income for Q1 2025 was $61,832,000, a decrease of 3% from Q4 2024 and an increase of 9% from Q1 2024[41] - Net interest income after provision for credit losses increased by 2% to $43,086,000 compared to Q4 2024 and by 10% compared to Q1 2024[41] - Total noninterest income decreased by 3% to $2,696,000 from Q4 2024, but increased by 2% from Q1 2024[41] - Total noninterest income for the quarter ended March 31, 2025, was $2,696,000, compared to $2,638,000 in the same quarter of 2024, reflecting a growth of 2.2%[55] Asset and Liability Management - Total deposits decreased by $136.8 million, or 3%, to $4.7 billion in Q1 2025 compared to Q4 2024, but increased by $238.6 million, or 5%, from $4.4 billion in Q1 2024[22] - Loans held-for-investment (HFI) remained flat at $3.5 billion compared to Q4 2024, but increased by $150.8 million, or 5%, from $3.3 billion in Q1 2024[20] - Total available liquidity and borrowing capacity was $3.2 billion at March 31, 2025, down from $3.3 billion at December 31, 2024[24] - Total assets decreased by 2% to $5,514,255,000 compared to $5,645,006,000 in the previous quarter[44] - Total liabilities decreased by 3% to $4,818,065,000 from $4,955,279,000 in the previous quarter[45] Credit Quality and Losses - The provision for credit losses on loans was $274,000 in Q1 2025, significantly lower than $1.3 million in Q4 2024[7] - Net charge-offs totaled $965,000 for the first quarter of 2025, significantly higher than $197,000 in the fourth quarter of 2024[29] - Nonperforming assets (NPAs) decreased to $6.3 million at March 31, 2025, from $7.7 million at December 31, 2024[31] - The allowance for credit losses on loans was $48.3 million, or 1.38% of total loans, at March 31, 2025, representing 765% of total nonperforming loans[30] Efficiency and Management Ratios - The efficiency ratio improved to 63.96% in Q1 2025 from 65.35% in Q4 2024, indicating better expense management[13] - The FTE net interest margin for Q1 2025 was 3.39%, an increase from 3.32% in Q4 2024 and 3.31% in Q1 2024[6] - Annualized return on average tangible common equity improved to 9.09% for the quarter ended March 31, 2025, compared to 8.24% a year earlier[54] Shareholder Equity and Capital - Total shareholders' equity increased by $6.5 million to $696 million in Q1 2025 compared to Q4 2024[4] - Total shareholders' equity rose to $696.2 million at March 31, 2025, from $689.7 million at December 31, 2024, primarily due to net income[25] - Tangible common equity increased to $522,573,000, a 1% increase from $515,657,000 in the previous quarter[46] - Total Common Equity (GAAP) increased to $696,190,000 as of March 31, 2025, up from $676,296,000 on March 31, 2024, reflecting a growth of approximately 2.5%[56] Deposits Composition - Total deposits as of March 31, 2025, were composed of 24% demand, noninterest-bearing; 20% demand, interest-bearing; 29% savings and money market; and 21% ICS/CDARS[23] - The loan to deposit ratio increased to 74.45% at March 31, 2025, compared to 72.45% at December 31, 2024[23] - Average deposits decreased by 1% to $4,717,517,000 compared to Q4 2024[41]

Core Viewpoint - Heritage Commerce Corp reported a solid financial performance for Q1 2025, with a 9% increase in profitability compared to the previous quarter, driven by improved net interest margins and strong expense control [3][4]. Financial Highlights - Net income for Q1 2025 was $11.6 million, or $0.19 per share, representing a 9% increase from $10.6 million and $0.17 per share in Q4 2024, and a 14% increase from $10.2 million and $0.17 per share in Q1 2024 [2][4][16]. - Total revenue was $46.1 million, a decrease of 1% from the previous quarter but an increase of 9% year-over-year [4][11]. - Pre-Provision Net Revenue (PPNR) was $16.6 million, up from $16.1 million in Q4 2024 and $14.6 million in Q1 2024 [4][17]. - The efficiency ratio improved to 63.96% from 65.35% in Q4 2024, indicating better cost management [4][18]. Financial Condition - Total assets decreased by 2% to $5.5 billion compared to $5.6 billion at the end of Q4 2024, but increased by 5% from $5.3 billion year-over-year [20]. - Loans held-for-investment remained flat at $3.5 billion, with a year-over-year increase of 5% [25]. - Total deposits decreased by 3% to $4.7 billion from $4.8 billion at the end of Q4 2024, but increased by 5% from $4.4 billion year-over-year [28]. - Total shareholders' equity increased to $696 million, up from $689.7 million at the end of Q4 2024 [30]. Credit Quality - The provision for credit losses on loans was $274,000, significantly lower than $1.3 million in Q4 2024 [10][34]. - Nonperforming assets (NPAs) decreased to $6.3 million, down from $7.7 million at the end of Q4 2024 [37]. - The allowance for credit losses on loans was $48.3 million, representing 1.38% of total loans [35]. Investment Activities - The company purchased $151.8 million in investment securities during Q1 2025, with a book yield of 4.86% [22]. - Investment securities available-for-sale totaled $371 million, compared to $256.3 million at the end of Q4 2024 [21]. Key Performance Metrics - The FTE net interest margin was 3.39%, an increase from 3.32% in Q4 2024 [9][13]. - Return on average tangible assets and on tangible common equity were 0.88% and 9.09%, respectively, compared to 0.78% and 8.25% in the previous quarter [13][14].

Financial Performance - For the year ended December 31, 2024, net income was $40.5 million, or $0.66 per average diluted common share, a decrease from $64.4 million, or $1.05 per average diluted common share in 2023[283]. - Net interest income decreased by 11% to $163.6 million for the year ended December 31, 2024, compared to $183.2 million in 2023[284]. - Total noninterest income decreased by 3% to $8.7 million for the year ended December 31, 2024, from $9.0 million in 2023[284]. - Total noninterest expense increased to $113.6 million for the year ended December 31, 2024, compared to $101.1 million in 2023[284]. - The efficiency ratio increased to 65.88% for the year ended December 31, 2024, compared to 52.57% in 2023[284]. - The effective income tax rate for 2024 was 28.5%, a slight decrease from 28.7% in 2023[318]. - Annualized return on average tangible common equity for 2024 was 8.05%, a decrease from 13.57% in 2023[441]. Deposits and Loans - Deposit balances grew by 10% year-over-year, while loan growth was steady at 4%[281]. - Total deposits increased by $441.6 million, or 10%, to $4.8 billion at December 31, 2024, compared to $4.4 billion at December 31, 2023[288]. - Loans increased by $141.6 million, or 4%, to $3.5 billion at December 31, 2024, compared to $3.4 billion at December 31, 2023[288]. - The loan to deposit ratio was 72.45% at December 31, 2024, compared to 76.52% at December 31, 2023[288]. - Noninterest-bearing demand deposits decreased by $78.3 million, or 6%, to $1.2 billion at December 31, 2024[288]. - The average balance of deposit accounts increased to $190,000 at December 31, 2024, from $177,000 at December 31, 2023[396]. Credit Quality - Provision for credit losses on loans was $2.1 million for the year ended December 31, 2024, compared to $749,000 in 2023[284]. - Nonperforming assets totaled $7.7 million, or 0.14% of total assets, at December 31, 2024, down from 0.15% at December 31, 2023[288]. - The allowance for credit losses (ACLL) was $49.0 million, or 1.40% of total loans, representing 638.49% of nonperforming loans at December 31, 2024[288]. - Total nonaccrual loans increased to $7,178,000 at December 31, 2024, from $6,818,000 at December 31, 2023[370]. - Loans 90 days past due and still accruing decreased to $489,000 at December 31, 2024, from $889,000 at December 31, 2023[370]. - The allowance for credit losses on loans increased by $995,000 for the year ended December 31, 2024, primarily due to a net increase of $632,000 in specific reserves for individually evaluated loans and a $363,000 increase in the reserve for pooled loans compared to December 31, 2023[386]. Capital and Liquidity - Liquidity totaled $3.3 billion, representing 69% of total deposits and approximately 155% of estimated uninsured deposits at December 31, 2024[286]. - The total capital ratio was 15.6% at December 31, 2024, exceeding the well-capitalized regulatory guideline of 10.0%[290]. - Common Equity Tier 1 capital increased to $524.2 million at December 31, 2024, from $511.8 million at December 31, 2023[414]. - Total shareholders' equity increased to $689.7 million in 2024, compared to $672.9 million in 2023, representing a growth of 2.5%[419]. - The Company announced a share repurchase program authorized for up to $15.0 million, expiring on July 31, 2025[411]. - The Company’s total liquidity and borrowing capacity at December 31, 2024, was $3.3 billion, representing 69% of total deposits[406]. Asset Management - Total assets increased by 9% to $5.6 billion at December 31, 2024, compared to $5.2 billion at December 31, 2023, primarily related to growth in client deposits[322]. - Securities available-for-sale decreased by 42% to $256.3 million at December 31, 2024, from $442.6 million at December 31, 2023[322]. - The net pre-tax unrealized loss on the available-for-sale securities portfolio was $5.1 million, which is less than 1% of total shareholders' equity at December 31, 2024[332]. - The net pre-tax unrecognized loss on the held-to-maturity securities portfolio was $93.0 million, representing 9.5% of total shareholders' equity at December 31, 2024[332]. Operational Efficiency - Noninterest expense for the year ended December 31, 2024 increased 12% to $113.6 million, compared to $101.1 million for 2023, primarily due to higher salaries and employee benefits, rent expense, and professional fees[314]. - Full-time equivalent employees increased to 355 at December 31, 2024, from 349 at December 31, 2023[316]. - Client services expenses rose by 56% to $3.9 million in 2024, compared to $2.5 million in 2023[314]. - Professional fees increased by 25% to $5.4 million in 2024, compared to $4.4 million in 2023[314]. Interest Rates and Projections - The estimated increase in annual net interest income for a +400 basis points change in interest rates is projected to be $27,272 thousand, a 14.0% increase[428]. - The estimated economic value of equity would increase by $124,156 thousand, or 9.0%, with a +400 basis points change in interest rates[430]. - The company did not use interest rate derivatives to hedge its interest rate risk as of December 31, 2024[443].

Core Viewpoint - Heritage Commerce Corp has appointed Janisha Sabnani as Executive Vice President and General Counsel, bringing over fifteen years of experience in financial services and private practice to the company [1][2]. Company Overview - Heritage Commerce Corp is a bank holding company established in October 1997, and it is the parent company of Heritage Bank of Commerce, which was founded in 1994 and is headquartered in San Jose, California [3]. - Heritage Bank of Commerce operates full-service branches in various locations including Danville, Fremont, Gilroy, and San Francisco, among others [3]. - The bank is recognized as an SBA Preferred Lender, and its subsidiary, Bay View Funding, provides working capital financing to various industries across the United States [3]. Leadership Appointment - Janisha Sabnani will report directly to CEO Robertson "Clay" Jones and will be responsible for advising on legal and regulatory matters [1]. - CEO Clay Jones expressed confidence in Sabnani's diverse experience, which includes public company reporting, capital markets, corporate governance, and compliance [2]. - Prior to her role at Heritage Bank of Commerce, Sabnani served as Senior Vice President, Deputy General Counsel & Assistant Secretary at First Republic Bank and worked as a corporate attorney at Skadden, Arps, Slate, Meagher & Flom, LLP [2].

Core Insights - Heritage Commerce (HTBK) reported revenue of $46.37 million for the quarter ended December 2024, reflecting a year-over-year increase of 4.8% and exceeding the Zacks Consensus Estimate of $43.56 million by 6.46% [1] - The company's EPS was $0.17, down from $0.22 in the same quarter last year, resulting in an EPS surprise of -5.56% compared to the consensus estimate of $0.18 [1] Financial Performance Metrics - Net Interest Margin was reported at 3.3%, surpassing the average estimate of 3.2% from three analysts [4] - The Efficiency Ratio stood at 65.4%, higher than the estimated 63.3% by three analysts [4] - Total Non-Performing Loans were $7.67 million, slightly above the estimated $7.40 million from two analysts [4] - Total Non-Performing Assets were also $7.67 million, in line with the average estimate of $7.65 million from two analysts [4] - Average Balances of Interest-Earning Assets were $5.27 billion, exceeding the estimate of $5.17 billion from two analysts [4] - Total Non-Interest Income was $2.19 million, below the estimated $2.24 million from three analysts [4] - Net Interest Income was reported at $44.19 million, above the estimated $41.32 million from three analysts [4] - Net Interest Income (FTE) was $44.24 million, compared to the average estimate of $42.11 million from two analysts [4] - Gain on Sale of SBA Loans was $0.13 million, exceeding the estimated $0.10 million from two analysts [4] Stock Performance - Heritage Commerce shares have returned -4.6% over the past month, contrasting with the Zacks S&P 500 composite's increase of +2.7% [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating potential for outperformance in the near term [3]

Group 1 - Heritage Commerce (HTBK) reported quarterly earnings of $0.17 per share, missing the Zacks Consensus Estimate of $0.18 per share, and down from $0.22 per share a year ago, representing an earnings surprise of -5.56% [1] - The company posted revenues of $46.37 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 6.46%, compared to year-ago revenues of $44.24 million [2] - Heritage Commerce shares have underperformed the market, losing about 2.8% since the beginning of the year, while the S&P 500 gained 3.5% [3] Group 2 - The current consensus EPS estimate for the coming quarter is $0.16 on revenues of $43.16 million, and for the current fiscal year, it is $0.72 on revenues of $180.02 million [7] - The Zacks Industry Rank for Banks - West is currently in the top 32% of over 250 Zacks industries, indicating that the industry outlook can significantly impact stock performance [8]

Financial Performance - Fourth quarter 2024 net income was $10.6 million, compared to $13.3 million in Q4 2023, reflecting a decrease of 20.3% year-over-year[1] - For the year ended December 31, 2024, net interest income decreased by 11% to $163.6 million from $183.2 million in 2023[9] - Net income for the quarter was $10,621,000, a decrease of 37% compared to $40,528,000 for the previous year[49] - Net income for the year ended December 31, 2024, was $40,528,000, a significant decrease from $64,443,000 for the year ended December 31, 2023, representing a decline of approximately 37.1%[73] Deposits and Loans - Deposit balances grew 2% quarter-over-quarter and 10% year-over-year, driven by local community commercial deposit relationships[2] - Total deposits increased by $90.5 million, or 2%, to $4.8 billion at December 31, 2024, compared to $4.7 billion at September 30, 2024, and increased by $441.6 million, or 10% from $4.4 billion at December 31, 2023[40] - Loan growth increased by 2% from the prior quarter and 4% year-over-year, indicating solid demand for loans[2] - Total loans increased by $81.7 million, or 2%, to $3.5 billion at December 31, 2024, compared to $3.4 billion at September 30, 2024[30] Interest Income and Margin - The net interest margin expanded to 3.34% in Q4 2024, up from 3.17% in Q3 2024, primarily due to reduced funding costs[2] - Net interest income rose 11% to $44.2 million in Q4 2024 compared to $39.9 million in Q3 2024[9] - Interest income for the quarter was $64,633,000, reflecting a 5% increase from $61,438,000 in the previous quarter[49] - The average yield on the total loan portfolio increased to 5.53% in Q4 2024, compared to 5.39% in Q4 2023[10] Noninterest Income and Expenses - Total noninterest income for Q4 2024 remained flat at $2.2 million compared to Q3 2024, but increased 13% from $1.9 million in Q4 2023 due to higher gains on SBA loan sales[18] - Total noninterest expense for Q4 2024 increased to $30.3 million, compared to $27.6 million in Q3 2024, primarily due to one-time personnel-related expenses and legal fees[16] - Total noninterest income decreased by 3% to $2,185,000 compared to $2,240,000 in the previous quarter[49] - Total noninterest expense rose by 10% to $30,304,000 compared to $27,555,000 in the previous quarter[49] Asset Quality - Nonperforming assets and net charge-offs remained low, indicating positive credit trends[2] - Total nonperforming loans were $7.667 million at December 31, 2024, compared to $7.158 million at September 30, 2024[35] - The allowance for credit losses on loans (ACLL) increased to $48.953 million at December 31, 2024, from $47.819 million at September 30, 2024[35] - The provision for credit losses on loans during the fourth quarter of 2024 was $1.331 million[35] Capital and Equity - Tangible common equity was $515.7 million at December 31, 2024, compared to $510.8 million at September 30, 2024, and $496.6 million at December 31, 2023[42] - The Company’s total capital ratio was 15.6% at December 31, 2024, exceeding the well-capitalized regulatory guideline of 10.0%[41] - Tangible book value per share increased to $8.41 at December 31, 2024, from $8.33 at September 30, 2024, and $8.12 at December 31, 2023[42] Efficiency and Ratios - The efficiency ratio for Q4 2024 was 65.35%, slightly improved from 65.37% in Q3 2024, but increased from 57.62% in Q4 2023 due to higher noninterest expenses[23] - The annualized return on average tangible common equity was 65.35%, up 25% from 52.57% in the previous year[49] - The loan to deposit ratio was 72.45% at December 31, 2024, compared to 72.11% at September 30, 2024, and 76.52% at December 31, 2023[24] Securities and Investments - The weighted average life of the securities held-to-maturity portfolio was 6.35 years at December 31, 2024, reflecting longer maturities of certain mortgage-backed securities[27] - The pre-tax unrealized loss on the securities available-for-sale portfolio was ($5.1) million at December 31, 2024, which was less than 1% of total shareholders' equity[26] - Total investment securities projected paydowns and maturities for 2025 are expected to be $259.202 million[28]

Core Points - Heritage Commerce Corp reported a net income of $10.6 million for Q4 2024, slightly up from $10.5 million in Q3 2024, but down from $13.3 million in Q4 2023 [1] - For the full year 2024, net income was $40.5 million, a decrease from $64.4 million in 2023 [1] Group 1: Operating Results - Deposit balances grew by 2% quarter-over-quarter and 10% year-over-year, attributed to strong local community commercial deposit relationships [2] - Loan growth increased by 2% from the previous quarter and 4% year-over-year [2] - The net interest margin expanded to 3.34% in Q4 2024 from 3.17% in Q3 2024, primarily due to reduced costs of funds [2][4] Group 2: Financial Metrics - Return on average equity was 6.16% for Q4 2024, compared to 6.14% in Q3 2024 and 7.96% in Q4 2023 [4] - Return on average tangible common equity was 8.25% for Q4 2024, down from 10.84% in Q4 2023 [4] - Return on average assets was 0.75% for Q4 2024, compared to 1.00% in Q4 2023 [4] Group 3: Net Interest Income - Net interest income increased by 11% to $44.2 million in Q4 2024 from $39.9 million in Q3 2024 [7] - For the year ended December 31, 2024, net interest income decreased by 11% to $163.6 million compared to $183.2 million in 2023 [7] Group 4: Noninterest Income and Expense - Total noninterest income was flat at $2.2 million for both Q4 2024 and Q3 2024, but increased by 13% year-over-year [16] - Total noninterest expense rose to $30.3 million in Q4 2024, up from $27.6 million in Q3 2024, primarily due to one-time expenses [16] Group 5: Credit Quality - The provision for credit losses on loans was $1.3 million in Q4 2024, compared to $153,000 in Q3 2024 [16] - Nonperforming assets and net charge-offs remained low as of December 31, 2024 [2] Group 6: Liquidity and Capital Management - Total available liquidity and borrowing capacity was $3.3 billion at December 31, 2024, compared to $3.2 billion at September 30, 2024 [20] - The loan to deposit ratio was 72.45% at December 31, 2024, compared to 76.52% at December 31, 2023 [20] Group 7: Investment Securities - Investment securities totaled $846.3 million at December 31, 2024, with $256.3 million in available-for-sale and $590.0 million in held-to-maturity portfolios [20] - The pre-tax unrealized loss on the available-for-sale portfolio was ($5.1) million at December 31, 2024 [21]

Core Points - Heritage Commerce Corp announced the departure of Executive Vice President and Chief Financial Officer Lawrence D. McGovern, effective February 2025 [1] - Thomas A. Sa, currently the Chief Operating Officer, will serve as Interim CFO starting November 18, 2024, while the search for a permanent replacement is conducted [2] - CEO Robertson "Clay" Jones expressed gratitude for McGovern's 26 years of service and confidence in Sa's qualifications for the interim role [3] - The company confirmed that McGovern's departure is not related to any concerns regarding the integrity of its financial statements [3] Company Overview - Heritage Commerce Corp is a bank holding company established in October 1997, and it is the parent company of Heritage Bank of Commerce, founded in 1994 [4] - The bank is headquartered in San Jose, CA, and operates full-service branches in multiple locations across California [4] - Heritage Bank of Commerce is recognized as an SBA Preferred Lender, and its subsidiary, Bay View Funding, provides working capital financing to various industries throughout the U.S. [4]

Financial Performance - For the three months ended September 30, 2024, net income was $10.5 million, or $0.17 per average diluted common share, a decrease from $15.8 million, or $0.26 per average diluted common share for the same period in 2023[160]. - For the nine months ended September 30, 2024, net income was $29.9 million, or $0.49 per average diluted common share, down from $51.1 million, or $0.83 per average diluted common share for the same period in 2023[161]. - Net interest income decreased by 12% to $39.9 million for the third quarter of 2024, compared to $45.4 million for the third quarter of 2023[162]. - Total revenue for the three months ended September 30, 2024, was $42,155 thousand, down from $47,588 thousand in the same period of 2023[332]. - Net income for 2024 decreased to $29,907,000 from $51,115,000 in 2023, representing a decline of approximately 41.5%[337]. Interest Income and Margin - Net interest income for the third quarter of 2024 was $39.915 million, with a net interest margin of 3.17%[183]. - The non-GAAP FTE net interest margin contracted by 40 basis points to 3.17% for Q3 2024, down from 3.57% for Q3 2023[188]. - The average yield on the total loan portfolio decreased to 5.42% for the third quarter of 2024, down from 5.46% in the same quarter of 2023[192]. - The average yield on core loans increased, partially offsetting the decrease in net interest income[189]. - The company has increased deposit beta assumptions in rising rate scenarios and added deposit cost lag assumptions in 2023 to reflect current market conditions[322]. Noninterest Income and Expense - Total noninterest income decreased by 7% to $6.6 million for the first nine months of 2024, compared to $7.1 million for the same period in 2023[162]. - Total noninterest expense for the third quarter of 2024 increased to $27.6 million, compared to $25.2 million for the third quarter of 2023, primarily due to higher salaries and employee benefits[162]. - Total noninterest expense for Q3 2024 increased to $27.6 million, up from $25.2 million in Q3 2023, primarily due to higher salaries and employee benefits, rent expense, and professional fees[207]. - Total noninterest income for the nine months ended September 30, 2024, decreased by 7% to $6,563 thousand, down from $7,056 thousand for the same period in 2023[202]. Asset and Deposit Growth - Total deposits increased by $154.1 million, or 3%, to $4.7 billion at September 30, 2024, compared to $4.6 billion at September 30, 2023[175]. - Total assets increased by 3% to $5.6 billion as of September 30, 2024, compared to $5.4 billion a year earlier, primarily due to growth in client deposits[213]. - Total interest-earning assets amounted to $5.011 billion, generating interest income of $61.497 million for the three months ended September 30, 2024[183]. - The migration of client deposits into interest-bearing accounts resulted in an increase in ICS/CDARS deposits to $997.8 million at September 30, 2024, compared to $921.2 million at September 30, 2023[175]. - Total deposits rose by $154.1 million, or 3%, to $4.7 billion at September 30, 2024, compared to $4.6 billion a year earlier[216]. Loan Performance - Loans, excluding loans held-for-sale, increased by $124.8 million, or 4%, to $3.4 billion at September 30, 2024, compared to $3.3 billion at the same date in 2023[171]. - Nonperforming assets totaled $7,158,000 at September 30, 2024, compared to $5,484,000 at September 30, 2023, reflecting an increase of 30.6%[262]. - The allowance for credit losses on loans was $47.8 million, or 1.40% of total loans, representing 668% of total nonperforming loans at September 30, 2024[174]. - The provision for credit losses on loans was $153,000 for the third quarter of 2024, compared to $168,000 for the same quarter in 2023, indicating a decrease of 8.9%[200]. - The loan to deposit ratio was 72.11% at September 30, 2024, compared to 71.81% at September 30, 2023[178]. Capital and Liquidity - Total capital ratio was 15.6% at September 30, 2024, exceeding the 10.0% regulatory guideline for well-capitalized financial institutions[179]. - The Company’s liquidity position is supported by a large base of core deposits, which have historically been a stable source of funds[293]. - The Company's total liquidity and borrowing capacity was $3.2 billion, representing 69% of total deposits and approximately 147% of estimated uninsured deposits at September 30, 2024[299]. - Total shareholders' equity was $685.3 million at September 30, 2024, up from $661.9 million at September 30, 2023, and $672.9 million at December 31, 2023[313]. - The Company met all capital adequacy guidelines as of September 30, 2024, and is categorized as well-capitalized[312]. Credit Quality and Risk Management - The company has established limits on industry and geographic credit concentrations to manage credit risk effectively[256]. - The company experienced net charge-offs of $947,000, with recoveries amounting to $395,000 during the same period[273]. - The loan portfolio can be adversely affected by weakening economic conditions, particularly in the San Francisco Bay Area and the technology industry, which may lead to increased nonperforming loans[272]. - The company has engaged an outside firm for independent credit reviews of its loan portfolio, which are subject to regulatory review[272]. - The allowance for credit losses is influenced by loan volumes, risk rating migration, and changes in historical loss experience[269].