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].

Core Viewpoint - Heritage Commerce (HTBK) reported a revenue of $42.16 million for the quarter ended September 2024, reflecting an 11.4% year-over-year decline and an EPS of $0.17, down from $0.26 a year ago, with revenue falling short of the Zacks Consensus Estimate of $43.14 million by 2.28% [1] Financial Performance Metrics - Efficiency Ratio was reported at 65.4%, higher than the three-analyst average estimate of 63.5% [2] - Net Interest Margin was 3.2%, slightly below the three-analyst average estimate of 3.3% [2] - Total Non-Performing Loans amounted to $7.16 million, exceeding the average estimate of $5.87 million by two analysts [2] - Average Balances of Interest Earning Assets were $5.01 billion, surpassing the average estimate of $4.95 billion by two analysts [2] - Total Non-Performing Assets were reported at $7.16 million, higher than the average estimate of $6.12 million by two analysts [2] - Net Interest Income was $39.92 million, below the average estimate of $40.96 million by three analysts [2] - Total Non-Interest Income was $2.24 million, slightly above the three-analyst average estimate of $2.22 million [2] - Gain on Sale of SBA Loans was $0.09 million, compared to the average estimate of $0.12 million based on two analysts [2] - Net Interest Income (FTE) was $39.97 million, lower than the average estimate of $40.77 million based on two analysts [2] Stock Performance - Shares of Heritage Commerce have returned -0.2% over the past month, while the Zacks S&P 500 composite has changed by +1.5%, indicating underperformance relative to the broader market [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Company Performance - Heritage Commerce reported quarterly earnings of $0.17 per share, matching the Zacks Consensus Estimate, but down from $0.26 per share a year ago [1] - The company posted revenues of $42.16 million for the quarter ended September 2024, missing the Zacks Consensus Estimate by 2.28% and down from $47.59 million year-over-year [1] - Over the last four quarters, Heritage Commerce has not surpassed consensus EPS or revenue estimates [1] Stock Outlook - Heritage Commerce shares have declined approximately 2.1% since the beginning of the year, contrasting with the S&P 500's gain of 21.5% [2] - The current consensus EPS estimate for the upcoming quarter is $0.18 on revenues of $43.74 million, and for the current fiscal year, it is $0.65 on revenues of $170.67 million [4] Industry Context - The Zacks Industry Rank for Banks - West is in the bottom 39% of over 250 Zacks industries, indicating potential challenges for stocks in this sector [5] - Coastal Financial Corporation, a peer in the same industry, is expected to report quarterly earnings of $0.96 per share, reflecting a year-over-year increase of 28% [5]

SAN JOSE, Calif., Oct. 24, 2024 (GLOBE NEWSWIRE) -- Heritage Commerce Corp (Nasdaq: HTBK), (the “Company”), the holding company for Heritage Bank of Commerce (the “Bank”), today announced that its third quarter 2024 net income was $10.5 million, or $0.17 per average diluted common share, compared to $9.2 million, or $0.15 per average diluted common share, for the second quarter of 2024, and $15.8 million, or $0.26 per average diluted common share, for the third quarter of 2023. For the nine months ended Sep ...

SAN JOSE, Calif., Oct. 02, 2024 (GLOBE NEWSWIRE) -- Heritage Commerce Corp (NASDAQ: HTBK) ("Company"), parent company of Heritage Bank of Commerce ("Bank"), today announced the appointment of Thomas A. Sa as the Chief Operating Officer ("COO") of the Company and the Bank. As COO, Mr. Sa will report directly to Chief Executive Officer ("CEO") Robertson "Clay" Jones and will have primary responsibility for banking operations, risk management, and information technology systems. Mr. Sa had previously served as ...

SAN JOSE, Calif., Aug. 15, 2024 (GLOBE NEWSWIRE) -- Heritage Commerce Corp (NASDAQ: HTBK) (the "Company"), the parent company of Heritage Bank of Commerce (the "Bank"), today announced the retirement of Ranson W. Webster from the Board of Directors, effective October 1, 2024. As one of the original founders, Webster joined the Board in 2004 and has served as Vice Chair of the Boards of Directors of the Company and the Bank. Director Julianne M. Biagini-Komas will assume the role of Vice Chair of both boards ...

Core Viewpoint - Heritage Commerce (HTBK) reported a decline in revenue and earnings for the quarter ended June 2024, indicating potential challenges in financial performance [1]. Financial Performance - Revenue for the quarter was $41.73 million, down 13.7% year-over-year, and below the Zacks Consensus Estimate of $43.35 million by 3.73% [1]. - Earnings per share (EPS) were $0.15, a decrease from $0.27 a year ago, and fell short of the consensus EPS estimate of $0.19 by 21.05% [1]. Key Financial Metrics - Efficiency Ratio was reported at 67.6%, higher than the average estimate of 61.4% based on three analysts [3]. - Net Interest Margin was 3.3%, slightly below the average estimate of 3.4% [3]. - Total Non-Performing Loans stood at $6.03 million, better than the average estimate of $8.24 million [3]. - Average Balances of Interest-Earning Assets were $4.87 billion, below the average estimate of $5.46 billion [3]. - Total Non-Performing Assets were also $6.03 million, again better than the average estimate of $8.24 million [3]. - Net Interest Income was $39.46 million, below the average estimate of $41.19 million [3]. - Total Non-Interest Income was $2.28 million, slightly above the average estimate of $2.16 million [3]. - Gain on Sale of SBA Loans was $0.08 million, below the average estimate of $0.19 million [3]. - Net Interest Income (FTE) was $39.52 million, below the average estimate of $41.11 million [3]. Stock Performance - Shares of Heritage Commerce have increased by 25.8% over the past month, contrasting with a -0.3% change in the Zacks S&P 500 composite [3]. - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3].

Heritage Commerce (HTBK) came out with quarterly earnings of $0.15 per share, missing the Zacks Consensus Estimate of $0.19 per share. This compares to earnings of $0.27 per share a year ago. These figures are adjusted for non-recurring items. Heritage Commerce, which belongs to the Zacks Banks - West industry, posted revenues of $41.73 million for the quarter ended June 2024, missing the Zacks Consensus Estimate by 3.73%. This compares to year-ago revenues of $48.37 million. The company has not been able t ...

SAN JOSE, Calif., July 25, 2024 (GLOBE NEWSWIRE) -- Heritage Commerce Corp (NASDAQ: HTBK) (the "Company") the holding company of Heritage Bank of Commerce (the "Bank") today announced that its Board of Directors (the "Board") adopted a share repurchase program (the "Repurchase Program") under which the Company is authorized to repurchase up to $15 million of the Company's shares of its issued and outstanding common stock. Under the Repurchase Program, the Company is authorized to purchase up to $15 million ...