Heritage Commerce Corp Reports Increased Average Loans and Average Deposits and Enhanced Credit Quality

Core Insights - The company reported a net income of $9.2 million for the second quarter of 2024, a decrease from $10.2 million in the first quarter of 2024 and $16.4 million in the second quarter of 2023 [3] - Net interest income decreased by 2% to $39.5 million for the second quarter of 2024 compared to $40.1 million in the first quarter of 2024 and decreased by 15% from $46.3 million in the second quarter of 2023 [9] - The average yield on the total loan portfolio increased to 5.49% for the second quarter of 2024, compared to 5.44% for the first quarter of 2024 [11] Operating Results - For the six months ended June 30, 2024, net income was $19.4 million, or $0.32 per average diluted common share, compared to $35.3 million, or $0.58 per average diluted common share for the same period in 2023 [3] - The loan portfolio, excluding loans held-for-sale, increased by $43.7 million from the preceding quarter and by $91.0 million year-over-year [3] - Total deposits remained steady at $4.4 billion at June 30, 2024 [3] Credit Quality - The company recorded a provision for credit losses on loans of $471,000 for the second quarter of 2024, compared to $184,000 for the first quarter of 2024 and $260,000 for the second quarter of 2023 [16] - Nonperforming assets were reported as zero for commercial real estate loans at June 30, 2024 [33] - Classified assets totaled $33.6 million, or 0.64% of total assets, at June 30, 2024, down from $35.4 million, or 0.67% of total assets, at March 31, 2024 [34] Liquidity Position - The company's total available liquidity and borrowing capacity was $3.0 billion at both June 30, 2024, and March 31, 2024 [17] - The loan to deposit ratio was 76.04% at June 30, 2024, compared to 75.06% at March 31, 2024 [18] - Available liquidity and borrowing capacity was 66% of total deposits at June 30, 2024 [42] Investment Securities - Investment securities totaled $894.2 million at June 30, 2024, with $273.0 million in the securities available-for-sale portfolio and $621.2 million in the securities held-to-maturity portfolio [44] - The pre-tax unrealized loss on the securities available-for-sale portfolio was ($8.4) million at June 30, 2024 [45] - The weighted average life of the securities held-to-maturity portfolio was 6.57 years at June 30, 2024 [22] Noninterest Income and Expense - Total noninterest income increased by 11% to $2.3 million for the second quarter of 2024 compared to $2.0 million for the first quarter of 2024 [16] - Total noninterest expense for the second quarter of 2024 increased to $28.2 million, compared to $27.5 million for the first quarter of 2024 [16] - The efficiency ratio increased to 67.55% for the second quarter of 2024, compared to 65.34% for the first quarter of 2024 [16]