Heritage Commerce Corp Reports Second Quarter and First Six Months of 2025 Financial Results

Core Viewpoint - Heritage Commerce Corp reported its financial results for the second quarter and first six months of 2025, highlighting a mixed performance with adjusted net income growth despite reported net income decline due to legal settlement charges [1][4]. Financial Performance - Reported net income for Q2 2025 was $6.4 million, or $0.10 per share, down 45% from $11.6 million and $0.19 per share in Q1 2025 [7][8]. - Adjusted net income for Q2 2025 was $13.0 million, or $0.21 per share, up 11% from Q1 2025 [3][7]. - Total revenue for Q2 2025 was $47.8 million, a 4% increase from Q1 2025 and a 15% increase from Q2 2024 [11][9]. - The efficiency ratio improved to 61.01% in Q2 2025 from 63.96% in Q1 2025, indicating better cost management [22]. Loan and Deposit Trends - Loans held-for-investment (HFI) increased by $47.4 million, or 1%, to $3.5 billion at June 30, 2025 [30]. - Total deposits decreased by $55.9 million, or 1%, to $4.6 billion, primarily due to seasonal outflows [33]. - The loan-to-deposit ratio increased to 76.38% at June 30, 2025, compared to 74.45% at March 31, 2025 [33]. Credit Quality - Nonperforming assets (NPAs) remained stable at 0.11% of total assets for both quarters [6]. - The provision for credit losses on loans was $516,000 for Q2 2025, up from $274,000 in Q1 2025 [39]. Capital and Liquidity - Total shareholders' equity was $694.7 million at June 30, 2025, a slight decrease from $696.2 million at March 31, 2025 [35]. - The company's total available liquidity and borrowing capacity was $3.1 billion at June 30, 2025 [34]. Investment Securities - Investment securities available-for-sale decreased to $307.0 million at June 30, 2025, from $371.0 million at March 31, 2025 [25]. - The unrealized loss on the available-for-sale portfolio was $448,000, which is less than 1% of total shareholders' equity [25].