SAN JOSE, Calif., Jan. 25, 2024 (GLOBE NEWSWIRE) --
Heritage Commerce Corp (Nasdaq: HTBK), (the
“Company”), the holding company for Heritage Bank of Commerce (the
“Bank”), today announced that its fourth quarter 2023 net income
was $13.3 million, or $0.22 per average diluted common share,
compared to $20.8 million, or $0.34 per average diluted common
share, for the fourth quarter of 2022, and $15.8 million, or $0.26
per average diluted common share, for the third quarter of 2023.
For the year ended December 31, 2023, net income was $64.4 million,
or $1.05 per average diluted common share, compared to $66.6
million, or $1.09 per average diluted common share, for the year
ended December 31, 2022. All results are unaudited.
"In 2023, despite challenges faced by many banks, the Company
had a successful year with stable client deposits and 9% growth in
year-over-year tangible book value. The fourth quarter showed solid
performance, contributing to our second-best year in net income,
surpassed only by the record profits of 2022," said Clay Jones,
President and Chief Executive Officer. "Our loan growth resulted in
an increase of 2% for both year-over-year and from the prior
quarter. This loan growth, coupled with stable client deposits,
showcases our resilience in an increasing interest rate
environment. Although net interest income was impacted, as
expected, we anticipate stabilization in our cost of funds
following the recent Fed guidance on expected rate reductions in
2024."
Mr. Jones added, "Our focus remains on orderly organic growth,
while avoiding borrowed funds and brokered deposits. Our local
community retail and commercial deposit relationships serve as a
stable and lower-cost funding source, reflecting our disciplined
management approach. We have a strong balance sheet, evidenced by
robust capital, ample liquidity, and a diversified loan
portfolio. We continue to add to loan reserves reflecting our
solid loan growth while credit costs are modest. I extend my
gratitude to our dedicated team members for their talent and
commitment in serving our community and clients, and driving our
company forward."
Current Financial Condition and Liquidity
Position
The following are important factors in understanding our current
financial condition and liquidity position:
Liquidity and Available Lines of Credit:
- The following table shows our liquidity and available lines of
credit at December 31, 2023:
|
|
|
|
LIQUIDITY AND
AVAILABLE LINES OF CREDIT |
|
Total |
(in $000’s, unaudited) |
|
Available |
Excess funds at the Federal
Reserve Bank ("FRB") |
|
$ |
365,500 |
FRB discount window
collateralized line of credit |
|
|
1,235,573 |
Federal Home Loan Bank
("FHLB") collateralized borrowing capacity |
|
|
1,100,931 |
Unpledged investment
securities (at fair value) |
|
|
58,120 |
Federal funds purchase
arrangements |
|
|
90,000 |
Holding company line of
credit |
|
|
20,000 |
Total |
|
$ |
2,870,124 |
|
|
|
|
- The Company’s total liquidity and borrowing capacity was $2.87
billion, all of which remained available at December 31, 2023.
- The available liquidity and borrowing capacity was 66% of the
Company’s total deposits and approximately 142% of the Bank’s
estimated uninsured deposits at December 31, 2023.
- The Bank increased its credit line availability from the FRB
and the FHLB by $1.50 billion to $2.34 billion at December 31,
2023, from $839.5 million at December 31, 2022.
- The loan to deposit ratio was 76.52% at December 31, 2023,
compared to 75.14% at December 31, 2022, and 71.81% at September
30, 2023, providing the Bank with ample liquidity and capacity to
provide future credit to the community.
Deposits:
- Total deposits were relatively flat at $4.38 billion at
December 31, 2023, compared to $4.39 billion at December 31, 2022.
Total deposits decreased ($197.0) million, or (4%) from $4.58
billion at September 30, 2023, as a result of deposit outflows from
clients operating expenses, tax payments, one-time capital events,
profit distributions, and to a lesser extent clients moving
deposits to outside investment alternatives.
- Migration of client deposits into interest-bearing accounts
resulted in an increase in Insured Cash Sweep (“ICS”)/Certificate
of Deposit Account Registry Service (“CDARS”) deposits to $854.1
million at December 31, 2023, compared to $30.4 million at December
31, 2022, and decreased ($67.1) million from $921.2 million at
September 30, 2023.
- Noninterest-bearing demand deposits decreased ($444.2) million,
or (26%), to $1.29 billion at December 31, 2023 from $1.74 billion
at December 31, 2022, largely in response to the increasing
interest rate environment. Noninterest-bearing demand deposits
increased $49.0 million, or 4%, from $1.24 billion at September 30,
2023, evidencing stabilization in deposit mix and partially helped
by a single customer temporarily moving significant deposits into
this category at year-end.
- The Bank had 24,737 deposit accounts at December 31, 2023, with
an average balance of $177,000, compared to 24,769 deposit accounts
at September 30, 2023, with an average balance of $185,000. At
December 31, 2022, the Company had 23,833 deposit accounts, with an
average balance of $184,000.
- Deposits from the Bank’s top 100 client relationships,
representing 22% of the total number of accounts, totaled $1.96
billion, representing 45% of total deposits, with an average
account size of $368,000, at December 31, 2023. At December 31,
2022, deposits from the Bank's top 100 client relationships,
representing 18% of the total number of accounts, totaled $2.03
billion, representing 46% of total deposits, with an average
account size of $469,000. At September 30, 2023, deposits from the
Bank’s top 100 client relationships, representing 22% of the total
number of accounts, totaled $2.19 billion, representing 48% of
total deposits, with an average account size of $408,000.
Investment Securities:
- Investment securities totaled $1.09 billion at December 31,
2023, of which $442.6 million were in the securities
available-for-sale portfolio (at fair value), and $650.6 million
were in the securities held-to-maturity portfolio (at amortized
cost, net of allowance for credit losses of $12,000). The fair
value of the securities held-to-maturity portfolio was $564.1
million at December 31, 2023.
- The weighted average life of the total investment securities
portfolio was 4.40 years at December 31, 2023.
- The following are the projected cash flows from paydowns and
maturities in the investment securities portfolio for the periods
indicated based on the current interest rate environment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agency |
|
|
|
|
|
|
|
|
Mortgage- |
|
|
|
|
|
|
|
backed and |
|
|
PROJECTED INVESTMENT
SECURITIES PAYDOWNS & MATURITIES |
|
U.S. |
|
Municipal |
|
|
(in $000’s, unaudited) |
|
Treasury |
|
Securities |
|
Total |
First quarter of 2024 |
|
$ |
37,000 |
|
$ |
28,977 |
|
$ |
65,977 |
Second quarter of 2024 |
|
|
131,000 |
|
|
20,338 |
|
|
151,338 |
Third quarter of 2024 |
|
|
37,500 |
|
|
20,441 |
|
|
57,941 |
Fourth quarter of 2024 |
|
|
9,000 |
|
|
19,320 |
|
|
28,320 |
First quarter of 2025 |
|
|
35,000 |
|
|
18,835 |
|
|
53,835 |
Second quarter of 2025 |
|
|
118,000 |
|
|
18,366 |
|
|
136,366 |
Third quarter of 2025 |
|
|
25,500 |
|
|
19,209 |
|
|
44,709 |
Fourth quarter of 2025 |
|
|
— |
|
|
17,460 |
|
|
17,460 |
Total |
|
$ |
393,000 |
|
$ |
162,946 |
|
$ |
555,946 |
|
|
|
|
|
|
|
|
|
|
Loans:
- Loans, excluding loans held-for-sale, increased $51.8 million,
or 2%, to $3.35 billion at December 31, 2023 from $3.30 billion at
December 31, 2022, and increased $64.9 million, or 2%, from $3.29
billion at September 30, 2023. Core loans, excluding residential
mortgages, increased $92.8 million, or 3%, to $2.85 billion at
December 31, 2023, compared to $2.76 billion at December 31, 2022,
and increased $71.0 million, or 3%, from $2.78 billion at September
30, 2023.
- Commercial real estate (“CRE”) loans totaled $1.84 billion at
December 31, 2023, of which 32% were owner occupied and 68% were
investor CRE loans.
- During the fourth quarter of 2023, there were 28 new CRE loans
originated totaling $57 million with a weighted average
loan-to-value and debt-service coverage for the non-owner occupied
portfolio of 35% and 2.31 times, respectively.
- The average loan size for all CRE loans was $1.6 million, and
the average loan size for office CRE loans was also $1.6
million.
- The Company has personal guarantees on 91% of its CRE
portfolio. A substantial portion of the unguaranteed CRE loans were
made to credit-worthy non-profit organizations.
- Total office exposure in the CRE portfolio was $399 million,
including 29 loans totaling approximately $75 million in San Jose,
17 loans totaling approximately $26 million in San Francisco, and
eight loans totaling approximately $16 million in Oakland, at
December 31, 2023. Non-owner occupied CRE with office
exposure totaled $312 million at December 31, 2023.
- Of the $399 million of CRE loans with office exposure,
approximately $36 million, or 9%, are situated in the Bay Area
downtown business districts of San Jose and San Francisco, with an
average loan balance of $2.1 million.
- At December 31, 2023, the weighted average loan-to-value and
debt-service coverage ratio for the entire non-owner occupied
office portfolio were 42.9% and 1.82 times, respectively. For the
nine non-owner occupied office loans in San Francisco at December
31, 2023, the weighted average loan-to-value and debt-service
coverage ratio were 35% and 1.48 times, respectively.
Fourth Quarter Ended December 31,
2023
Operating Results, Balance Sheet Review, Capital
Management, and Credit Quality
(as of, or for the periods ended December 31,
2023, compared to December 31, 2022, and September 30, 2023, except
as noted):
Operating Results:
- Diluted earnings per share were $0.22 for the fourth quarter of
2023, compared to $0.34 for the fourth quarter of 2022, and $0.26
for the third quarter of 2023. Diluted earnings per share were
$1.05 for the year ended December 31, 2023, compared to $1.09 for
the year ended December 31, 2022.
- The following table indicates the
ratios for the return on average tangible assets and the return on
average tangible common equity for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarter Ended: |
|
For the Year Ended: |
|
|
December 31, |
|
September 30, |
|
December 31, |
|
December 31, |
|
December 31, |
(unaudited) |
|
2023 |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Return on average tangible
assets |
|
1.03 |
% |
|
|
1.20 |
% |
|
|
1.59 |
% |
|
|
1.26 |
% |
|
|
1.27 |
% |
|
Return on average tangible
common equity |
|
10.84 |
% |
|
|
13.06 |
% |
|
|
18.89 |
% |
|
|
13.57 |
% |
|
|
15.57 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Net interest income decreased (18%) to $42.3 million for the
fourth quarter of 2023, compared to $51.7 million for the fourth
quarter of 2022. The fully tax equivalent (“FTE”) net interest
margin decreased (69) basis points to 3.41% for the fourth quarter
of 2023, from 4.10% for the fourth quarter of 2022, primarily due
to higher rates paid on customer deposits, and a decrease in the
average balances of noninterest-bearing demand deposits, partially
offset by increases in the prime rate and the rate on overnight
funds.
- Net interest income decreased (7%) to $42.3 million for the
fourth quarter of 2023, compared to $45.4 million for the third
quarter of 2023. The FTE net interest margin decreased (16) basis
points to 3.41% for the fourth quarter of 2023 from 3.57% for the
third quarter of 2023, primarily due to higher rates paid on
customer deposits, and a decrease in the average balances of
noninterest bearing demand deposits, partially offset by higher
average yields on overnight funds, and an increase in the average
balance of loans.
- For the year ended December 31, 2023, the net interest income
increased 2% to $183.2 million, compared to $179.9 million for the
year ended December 31, 2022. The FTE net interest margin increased
13 basis points to 3.70% for the year ended December 31, 2023, from
3.57% for the year ended December 31, 2022, primarily due to
increases in the prime rate and the rate on overnight funds, and a
shift in the mix of earning assets as the Company invested its
excess liquidity into higher yielding loans, partially offset by a
higher rates paid on customer deposits, a decrease in the average
balances of noninterest-bearing demand deposits, and an increase in
the average balances of short-term borrowings.
- The following table, as of December
31, 2023, sets forth the estimated changes in the Company’s annual
net interest income that would result from an instantaneous shift
in interest rates from the base rate:
|
|
|
|
|
|
|
|
|
|
|
|
Increase/(Decrease) in |
|
|
|
|
|
Estimated Net |
|
|
|
|
|
Interest Income(1) |
|
|
|
CHANGE IN INTEREST
RATES (basis points) |
|
Amount |
|
Percent |
|
|
|
(in $000's, unaudited) |
|
|
|
|
|
|
|
|
+400 |
|
$ |
10,703 |
|
|
5.6 |
% |
|
|
+300 |
|
$ |
7,997 |
|
|
4.2 |
% |
|
|
+200 |
|
$ |
5,311 |
|
|
2.8 |
% |
|
|
+100 |
|
$ |
2,648 |
|
|
1.4 |
% |
|
|
0 |
|
|
— |
|
|
— |
|
|
|
−100 |
|
$ |
(3,197 |
) |
|
(1.7 |
)% |
|
|
−200 |
|
$ |
(10,513 |
) |
|
(5.5 |
)% |
|
|
−300 |
|
$ |
(22,609 |
) |
|
(11.8 |
)% |
|
|
−400 |
|
$ |
(37,896 |
) |
|
(19.8 |
)% |
|
|
|
|
(1 |
) |
Computations of prospective
effects of hypothetical interest rate changes are based on numerous
assumptions including relative levels of market interest rates,
loan prepayments and deposit decay, and should not be relied upon
as indicative of actual results. These projections are
forward-looking and should be considered in light of the
Forward-Looking Statement Disclaimer below. Actual rates
paid on deposits may differ from the hypothetical interest rates
modeled due to competitive or market factors, which could reduce
any actual impact on net interest income. |
|
|
|
- The following tables present the
average balance of loans outstanding, interest income, and the
average yield for the periods indicated:
- The average yield on the total loan
portfolio decreased to 5.39% for the fourth quarter of 2023,
compared to 5.46% for the third quarter of 2023, primarily due to
lower loan yields on the core bank, lower average balances of
asset-based lending loans, a decrease in the accretion of loan
purchase discount into interest income from acquired loans, and
lower prepayment fees.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarter Ended |
|
For the Quarter Ended |
|
|
|
December 31, 2023 |
|
September 30, 2023 |
|
|
|
Average |
|
Interest |
|
Average |
|
Average |
|
Interest |
|
Average |
|
(in $000’s, unaudited) |
|
Balance |
|
Income |
|
Yield |
|
Balance |
|
Income |
|
Yield |
|
Loans, core bank |
|
$ |
2,758,935 |
|
|
$ |
37,303 |
|
5.36 |
% |
$ |
2,720,010 |
|
|
$ |
37,171 |
|
5.42 |
% |
Prepayment fees |
|
|
— |
|
|
|
91 |
|
0.01 |
% |
|
— |
|
|
|
182 |
|
0.03 |
% |
Asset-based lending |
|
|
14,717 |
|
|
|
371 |
|
10.00 |
% |
|
23,983 |
|
|
|
593 |
|
9.81 |
% |
Bay View Funding factored
receivables |
|
|
52,861 |
|
|
|
2,803 |
|
21.04 |
% |
|
51,664 |
|
|
|
2,775 |
|
21.31 |
% |
Purchased residential
mortgages |
|
|
459,268 |
|
|
|
3,812 |
|
3.29 |
% |
|
465,471 |
|
|
|
3,811 |
|
3.25 |
% |
Loan fair value mark /
accretion |
|
|
(3,352 |
) |
|
|
255 |
|
0.04 |
% |
|
(3,648 |
) |
|
|
321 |
|
0.05 |
% |
Total loans (includes loans held-for-sale) |
|
$ |
3,282,429 |
|
|
$ |
44,635 |
|
5.39 |
% |
$ |
3,257,480 |
|
|
$ |
44,853 |
|
5.46 |
% |
- The average yield on the total loan
portfolio increased to 5.39% for the fourth quarter of 2023,
compared to 5.19% for the fourth quarter of 2022, primarily due to
increases in the prime rate.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarter Ended |
|
For the Quarter Ended |
|
|
|
December 31, 2023 |
|
December 31, 2022 |
|
|
|
Average |
|
Interest |
|
Average |
|
Average |
|
Interest |
|
Average |
|
(in $000’s, unaudited) |
|
Balance |
|
Income |
|
Yield |
|
Balance |
|
Income |
|
Yield |
|
Loans, core bank |
|
$ |
2,758,935 |
|
|
$ |
37,303 |
|
5.36 |
% |
$ |
2,662,873 |
|
|
$ |
33,702 |
|
5.02 |
% |
Prepayment fees |
|
|
— |
|
|
|
91 |
|
0.01 |
% |
|
— |
|
|
|
123 |
|
0.02 |
% |
Asset-based lending |
|
|
14,717 |
|
|
|
371 |
|
10.00 |
% |
|
35,519 |
|
|
|
756 |
|
8.44 |
% |
Bay View Funding factored
receivables |
|
|
52,861 |
|
|
|
2,803 |
|
21.04 |
% |
|
71,789 |
|
|
|
3,696 |
|
20.43 |
% |
Purchased residential
mortgages |
|
|
459,268 |
|
|
|
3,812 |
|
3.29 |
% |
|
485,149 |
|
|
|
3,842 |
|
3.14 |
% |
Loan fair value mark /
accretion |
|
|
(3,352 |
) |
|
|
255 |
|
0.04 |
% |
|
(4,774 |
) |
|
|
382 |
|
0.06 |
% |
Total loans (includes loans held-for-sale) |
|
$ |
3,282,429 |
|
|
$ |
44,635 |
|
5.39 |
% |
$ |
3,250,556 |
|
|
$ |
42,501 |
|
5.19 |
% |
|
• |
The average yield on the total loan portfolio increased to 5.45%
for the year ended December 31, 2023, compared to 4.91% for the
year ended December 31, 2022, primarily due to increases in the
prime rate, partially offset by a decrease in the accretion of the
loan purchase discount into interest income from acquired loans,
lower prepayment fees, and higher average balances of lower
yielding purchased residential mortgages. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended |
|
For the Year Ended |
|
|
|
December 31, 2023 |
|
December 31, 2022 |
|
|
|
Average |
|
Interest |
|
Average |
|
Average |
|
Interest |
|
Average |
|
(in $000’s, unaudited) |
|
Balance |
|
Income |
|
Yield |
|
Balance |
|
Income |
|
Yield |
|
Loans, core bank |
|
$ |
2,707,198 |
|
|
$ |
144,751 |
|
5.35 |
% |
$ |
2,591,027 |
|
|
$ |
120,166 |
|
4.64 |
% |
Prepayment fees |
|
|
— |
|
|
|
484 |
|
0.02 |
% |
|
— |
|
|
|
1,278 |
|
0.05 |
% |
Asset-based lending |
|
|
23,591 |
|
|
|
2,277 |
|
9.65 |
% |
|
51,990 |
|
|
|
3,613 |
|
6.95 |
% |
Bay View Funding factored
receivables |
|
|
62,642 |
|
|
|
13,426 |
|
21.43 |
% |
|
64,099 |
|
|
|
12,819 |
|
20.00 |
% |
Purchased residential
mortgages |
|
|
472,582 |
|
|
|
15,309 |
|
3.24 |
% |
|
417,672 |
|
|
|
12,395 |
|
2.97 |
% |
Loan fair value mark /
accretion |
|
|
(3,819 |
) |
|
|
1,381 |
|
0.05 |
% |
|
(5,782 |
) |
|
|
2,739 |
|
0.11 |
% |
Total loans (includes loans held-for-sale) |
|
$ |
3,262,194 |
|
|
$ |
177,628 |
|
5.45 |
% |
$ |
3,119,006 |
|
|
$ |
153,010 |
|
4.91 |
% |
|
• |
In
aggregate, the remaining net purchase discount on total loans
acquired was $3.2 million at December 31, 2023.
|
- The following table presents the
average balance of deposits and interest-bearing liabilities,
interest expense, and the average rate for the periods
indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarter Ended |
|
For the Quarter Ended |
|
|
|
December 31, 2023 |
|
September 30, 2023 |
|
|
|
Average |
|
Interest |
|
Average |
|
Average |
|
Interest |
|
Average |
|
(in $000’s, unaudited) |
|
Balance |
|
Expense |
|
Rate |
|
Balance |
|
Expense |
|
Rate |
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, noninterest-bearing |
|
$ |
1,243,222 |
|
|
|
|
|
|
$ |
1,302,606 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, interest-bearing |
|
|
948,061 |
|
$ |
1,661 |
|
0.70 |
% |
|
1,017,686 |
|
$ |
1,730 |
|
0.67 |
% |
Savings and money market |
|
|
1,096,962 |
|
|
6,216 |
|
2.25 |
% |
|
1,087,336 |
|
|
5,514 |
|
2.01 |
% |
Time deposits - under $100 |
|
|
11,389 |
|
|
37 |
|
1.29 |
% |
|
11,966 |
|
|
30 |
|
0.99 |
% |
Time deposits - $100 and over |
|
|
234,140 |
|
|
2,130 |
|
3.61 |
% |
|
272,362 |
|
|
2,489 |
|
3.63 |
% |
ICS/CDARS - interest-bearing demand, money market |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and time deposits |
|
|
920,976 |
|
|
6,009 |
|
2.59 |
% |
|
881,665 |
|
|
5,117 |
|
2.30 |
% |
Total interest-bearing deposits |
|
|
3,211,528 |
|
|
16,053 |
|
1.98 |
% |
|
3,271,015 |
|
|
14,880 |
|
1.80 |
% |
Total deposits |
|
|
4,454,750 |
|
|
16,053 |
|
1.43 |
% |
|
4,573,621 |
|
|
14,880 |
|
1.29 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term borrowings |
|
|
29 |
|
|
— |
|
0.00 |
% |
|
31 |
|
|
— |
|
0.00 |
% |
Subordinated debt, net of
issuance costs |
|
|
39,477 |
|
|
538 |
|
5.41 |
% |
|
39,439 |
|
|
539 |
|
5.42 |
% |
Total interest-bearing liabilities |
|
|
3,251,034 |
|
|
16,591 |
|
2.02 |
% |
|
3,310,485 |
|
|
15,419 |
|
1.85 |
% |
Total interest-bearing liabilities and demand, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
noninterest-bearing / cost of funds |
|
$ |
4,494,256 |
|
$ |
16,591 |
|
1.46 |
% |
$ |
4,613,091 |
|
$ |
15,419 |
|
1.33 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
• |
The average cost of total deposits increased to 1.43% for the
fourth quarter of 2023, compared to 1.29% for the third quarter of
2023. The average cost of funds increased to 1.46% for the fourth
quarter of 2023, compared to 1.33% for the third quarter of 2023.
The average cost of deposits was 0.25% and the average cost of
funds was 0.30% for the fourth quarter of 2022. |
|
|
|
|
• |
The average cost of total deposits increased to 1.06% for the year
ended December 31, 2023, compared to 0.15% for the year ended
December 31, 2022. The average cost of funds increased to 1.13% for
the year ended December 31, 2023, compared to 0.19% for the year
ended December 31, 2022. |
|
|
|
|
• |
The increase in the average cost of total deposits and the average
cost of funds for the fourth quarter of 2023 and the year ended
December 31, 2023 was primarily due to clients seeking higher
yields and moving noninterest-bearing deposits to the Bank’s
interest-bearing and ICS deposits and an increase in market
interest rates. |
|
|
|
- During the fourth quarter of 2023,
we recorded a provision for credit losses on loans of $289,000,
compared to a $508,000 provision for credit losses on loans for the
fourth quarter of 2022, and a provision for credit losses on loans
of $168,000 for the third quarter of 2023. There was a provision
for credit losses on loans of $749,000 for the year ended December
31, 2023, compared to a $766,000 provision for credit losses on
loans for the year ended December 31, 2022.
- Total noninterest income decreased
(30%) to $1.9 million for the fourth quarter of 2023, compared to
$2.8 million for the fourth quarter of 2022, primarily due to lower
service charges and fees on deposit accounts during the fourth
quarter of 2023. Total noninterest income decreased (12%) to $1.9
million for the fourth quarter of 2023, compared to $2.2 million
for the third quarter of 2023, primarily due to no gain on sales of
SBA loans, lower termination fees at Bay View Funding, and a lower
gain on proceeds from company-owned life insurance during the
fourth quarter of 2023.
- For the year ended December 31,
2023, total noninterest income decreased (11%) to $9.0 million,
compared to $10.1 million for the year ended December 31, 2022,
primarily due to a $669,000 gain on warrants during the year ended
December 31, 2022, and lower service charges and fees on deposit
accounts, servicing income, and interchange fee income on credit
cards, during the year ended December 31, 2023.
- Total noninterest expense for the
fourth quarter of 2023 increased to $25.5 million, compared to
$24.5 million for the fourth quarter of 2022, primarily due to
higher insurance costs, regulatory assessments, and information
technology related expenses included in other noninterest expense,
partially offset by lower professional fees and occupancy and
equipment expense during the fourth quarter of 2023. Total
noninterest expense for the fourth quarter of 2023 increased to
$25.5 million, compared to $25.2 million for the third quarter of
2023, primarily due to higher professional fees.
- Total noninterest expense for the year ended December 31, 2023
increased to $101.1 million, compared to $94.9 million for the year
ended December 31, 2022, primarily due to higher salaries and
employee benefits, and higher insurance costs, regulatory
assessments, improvements in information technology, and ICS/CDARS
fee expenses included in other noninterest expense, partially
offset by lower professional fees and occupancy and equipment
expense during the year ended December 31, 2023.
- Full time equivalent employees were 349 at December 31, 2023,
and 340 at December 31, 2022, and 348 at September 30,
2023.
- The efficiency ratio was 57.62% for the fourth quarter of 2023,
compared to 44.98% for the fourth quarter of 2022, and 52.89% for
the third quarter of 2023. The efficiency ratio was 52.57% for the
year ended December 31, 2023, compared to 49.93% for the year ended
December 31, 2022.
- Income tax expense was $5.1 million for the fourth quarter of
2023, compared to $8.7 million for the fourth quarter of 2022, and
$6.5 million for the third quarter of 2023. The effective tax rate
for the fourth quarter of 2023 was 27.8%, compared to 29.5% for the
fourth quarter of 2022, and 29.0% for the third quarter of 2023.
Income tax expense for the year ended December 31, 2023 was $26.0
million, compared to $27.8 million for the year ended December 31,
2022. The effective tax rate for the year ended December 31, 2023
was 28.7%, compared to 29.5% for the year ended December 31,
2022.
Balance Sheet Review, Capital Management and Credit
Quality:
- Total assets increased 1% to $5.19 billion at December 31,
2023, compared to $5.16 billion at December 31, 2022, and decreased
(4%) from $5.40 billion at September 30, 2023.
- The following table shows the balances of securities
available-for-sale, at fair value, and the related pre-tax
unrealized (loss) for the periods indicated:
|
|
|
|
|
|
|
|
|
|
SECURITIES
AVAILABLE-FOR-SALE |
|
December 31, |
|
September 30, |
|
December 31, |
(in $000’s, unaudited) |
|
2023 |
|
2023 |
|
2022 |
Balance (at fair value): |
|
|
|
|
|
|
|
|
|
U.S. Treasury |
|
$ |
382,369 |
|
|
$ |
396,996 |
|
|
$ |
418,474 |
|
Agency mortgage-backed securities |
|
|
60,267 |
|
|
|
60,198 |
|
|
|
71,122 |
|
Total |
|
$ |
442,636 |
|
|
$ |
457,194 |
|
|
$ |
489,596 |
|
|
|
|
|
|
|
|
|
|
|
Pre-tax unrealized
(loss): |
|
|
|
|
|
|
|
|
|
U.S. Treasury |
|
$ |
(5,621 |
) |
|
$ |
(9,606 |
) |
|
$ |
(10,323 |
) |
Agency mortgage-backed securities |
|
|
(4,313 |
) |
|
|
(7,185 |
) |
|
|
(5,794 |
) |
Total |
|
$ |
(9,934 |
) |
|
$ |
(16,791 |
) |
|
$ |
(16,117 |
) |
|
|
|
|
|
|
|
|
|
|
|
• |
The pre-tax unrealized loss on the securities available-for-sale
portfolio was ($9.9) million, or ($7.1) million net of taxes, which
was 1.1% of total shareholders’ equity at December 31, 2023, down
from ($16.8) million, or ($12.0) million net of taxes, at September
30, 2023, due to lower interest rates. |
|
|
|
|
• |
The weighted average life of the securities available-for-sale
portfolio was 1.29 years at December 31, 2023. |
|
|
|
- The following table shows the
balances of securities held-to-maturity, at amortized cost, and the
related pre-tax unrecognized (loss) and allowance for credit losses
for the periods indicated:
|
|
|
|
|
|
|
|
|
|
SECURITIES
HELD-TO-MATURITY |
|
December 31, |
|
September 30, |
|
December 31, |
(in $000’s, unaudited) |
|
2023 |
|
2023 |
|
2022 |
Balance (at amortized
cost): |
|
|
|
|
|
|
|
|
|
Agency mortgage-backed securities |
|
$ |
618,374 |
|
|
$ |
632,241 |
|
|
$ |
677,381 |
|
Municipals — exempt from Federal tax (1) |
|
|
32,203 |
|
|
|
32,453 |
|
|
|
37,623 |
|
Total (1) |
|
$ |
650,577 |
|
|
$ |
664,694 |
|
|
$ |
715,004 |
|
|
|
|
|
|
|
|
|
|
|
Pre-tax unrecognized
(loss): |
|
|
|
|
|
|
|
|
|
Agency mortgage-backed securities |
|
$ |
(85,729 |
) |
|
$ |
(119,932 |
) |
|
$ |
(99,742 |
) |
Municipals — exempt from Federal tax |
|
|
(721 |
) |
|
|
(2,753 |
) |
|
|
(810 |
) |
Total |
|
$ |
(86,450 |
) |
|
$ |
(122,685 |
) |
|
$ |
(100,552 |
) |
|
|
|
|
|
|
|
|
|
|
Allowance for credit losses on
municipal securities |
|
$ |
(12 |
) |
|
$ |
(13 |
) |
|
$ |
(14 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1 |
) |
Gross of the allowance for credit
losses of $12,000 at December, 2023, $13,000 at September 30, 2023,
and $14,000 at December 31, 2022. |
|
|
|
|
• |
The pre-tax unrecognized loss on the securities held-to-maturity
portfolio was ($86.5) million, or ($60.9) million net of taxes,
which was 9.0% of total shareholders’ equity at December 31, 2023,
down from ($122.7) million, or ($86.4) million net of taxes, at
September 30, 2023, due to lower interest rates. |
|
|
|
|
• |
The weighted average life of the securities held-to-maturity
portfolio was 6.57 years at December 31, 2023, which includes
Community Reinvestment Act ("CRA") mortgage-backed securities with
longer maturities. |
|
|
|
- The unrealized and unrecognized losses in both the
available-for-sale and held-to-maturity portfolios were due to
higher interest rates at December 31, 2023 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.
- The following table summarizes the
distribution of loans, excluding loans held-for-sale, and the
percentage of distribution in each category for the periods
indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOANS |
|
December 31, 2023 |
|
September 30, 2023 |
|
December 31, 2022 |
|
(in $000’s, unaudited) |
|
Balance |
|
% to Total |
|
Balance |
|
% to Total |
|
Balance |
|
% to Total |
|
Commercial |
|
$ |
463,778 |
|
|
14 |
% |
$ |
430,664 |
|
|
13 |
% |
$ |
533,915 |
|
|
16 |
% |
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CRE - owner occupied |
|
|
583,253 |
|
|
17 |
% |
|
589,751 |
|
|
18 |
% |
|
614,663 |
|
|
19 |
% |
CRE - non-owner occupied |
|
|
1,256,590 |
|
|
37 |
% |
|
1,208,324 |
|
|
37 |
% |
|
1,066,368 |
|
|
32 |
% |
Land and construction |
|
|
140,513 |
|
|
4 |
% |
|
158,138 |
|
|
5 |
% |
|
163,577 |
|
|
5 |
% |
Home equity |
|
|
119,125 |
|
|
4 |
% |
|
124,477 |
|
|
4 |
% |
|
120,724 |
|
|
4 |
% |
Multifamily |
|
|
269,734 |
|
|
8 |
% |
|
253,129 |
|
|
7 |
% |
|
244,882 |
|
|
7 |
% |
Residential mortgages |
|
|
496,961 |
|
|
15 |
% |
|
503,006 |
|
|
15 |
% |
|
537,905 |
|
|
16 |
% |
Consumer and other |
|
|
20,919 |
|
|
1 |
% |
|
18,526 |
|
|
1 |
% |
|
17,033 |
|
|
1 |
% |
Total Loans |
|
|
3,350,873 |
|
|
100 |
% |
|
3,286,015 |
|
|
100 |
% |
|
3,299,067 |
|
|
100 |
% |
Deferred loan costs (fees),
net |
|
|
(495 |
) |
|
— |
|
|
(554 |
) |
|
— |
|
|
(517 |
) |
|
— |
|
Loans, net of deferred costs and fees |
|
$ |
3,350,378 |
|
|
100 |
% |
$ |
3,285,461 |
|
|
100 |
% |
$ |
3,298,550 |
|
|
100 |
% |
|
• |
Loans, excluding loans held-for-sale, increased $51.8 million, or
2%, to $3.35 billion at December 31, 2023, compared to $3.30
billion at December 31, 2022, and increased $64.9 million, or 2%,
from $3.29 billion at September 30, 2023. Core loans,
excluding residential mortgages, increased $92.8 million, or 3%, to
$2.85 billion at December, 2023, compared to $2.76 billion at
December 31, 2022, and increased $71.0 million from $2.78 billion
at September 30, 2023. |
|
|
|
|
• |
Commercial and industrial (“C&I”) line utilization was 29% at
both December 31, 2023 and December 31, 2022, compared to 27% at
September 30, 2023. |
|
|
|
|
• |
At
December 31, 2023, there was 32% of the CRE loan portfolio secured
by owner occupied real estate, compared to 37% at December 31,
2022, and 33% at September 30, 2023. |
|
|
|
- The following table presents the maturity distribution of the
Company’s loans, excluding loans held-for-sale, as of December 31,
2023. The table shows the distribution of such loans between those
loans with predetermined (fixed) interest rates and those with
variable (floating) interest rates. Floating rates generally
fluctuate with changes in the prime rate as reflected in the
Western Edition of The Wall Street Journal, and contractual
repricing dates.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due in |
|
Over One Year But |
|
|
|
|
|
|
|
|
|
LOAN
MATURITIES |
|
One Year or Less |
|
Less than Five Years |
|
Over Five Years |
|
|
|
(in $000’s, unaudited) |
|
Balance |
|
% to Total |
|
Balance |
|
% to Total |
|
Balance |
|
% to Total |
|
Total |
Loans with variable interest
rates |
|
$ |
359,013 |
|
40 |
% |
|
$ |
269,586 |
|
30 |
% |
|
$ |
274,829 |
|
30 |
% |
|
$ |
903,428 |
Loans with fixed interest
rates |
|
|
74,940 |
|
3 |
% |
|
|
621,480 |
|
25 |
% |
|
|
1,751,025 |
|
72 |
% |
|
|
2,447,445 |
Loans |
|
$ |
433,953 |
|
13 |
% |
|
$ |
891,066 |
|
27 |
% |
|
$ |
2,025,854 |
|
60 |
% |
|
$ |
3,350,873 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
• |
At
December 31, 2023, approximately 27% of the Company’s loan
portfolio consisted of floating interest rate loans, compared to
33% at December 31, 2022, and 27% at September 30, 2023. |
|
|
|
- The following table summarizes the allowance for credit losses
on loans (“ACLL”) for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At or For the Quarter Ended: |
|
At or For the Year Ended: |
|
ALLOWANCE FOR CREDIT
LOSSES ON LOANS |
|
December 31, |
|
September 30, |
|
December 31, |
|
December 31, |
|
December 31, |
|
(in $000’s, unaudited) |
|
2023 |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
Balance at beginning of
period |
|
$ |
47,702 |
|
|
$ |
47,803 |
|
|
$ |
46,921 |
|
|
$ |
47,512 |
|
|
$ |
43,290 |
|
|
Charge-offs during the
period |
|
|
(160 |
) |
|
|
(447 |
) |
|
|
(56 |
) |
|
|
(1,011 |
) |
|
|
(434 |
) |
|
Recoveries during the
period |
|
|
127 |
|
|
|
178 |
|
|
|
139 |
|
|
|
708 |
|
|
|
3,890 |
|
|
Net recoveries (charge-offs) during the period |
|
|
(33 |
) |
|
|
(269 |
) |
|
|
83 |
|
|
|
(303 |
) |
|
|
3,456 |
|
|
Provision for credit losses on
loans during the period |
|
|
289 |
|
|
|
168 |
|
|
|
508 |
|
|
|
749 |
|
|
|
766 |
|
|
Balance at end of period |
|
$ |
47,958 |
|
|
$ |
47,702 |
|
|
$ |
47,512 |
|
|
$ |
47,958 |
|
|
$ |
47,512 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans, net of deferred
fees |
|
$ |
3,350,378 |
|
|
$ |
3,285,461 |
|
|
$ |
3,298,550 |
|
|
$ |
3,350,378 |
|
|
$ |
3,298,550 |
|
|
Total nonperforming loans |
|
$ |
7,707 |
|
|
$ |
5,484 |
|
|
$ |
2,425 |
|
|
$ |
7,707 |
|
|
$ |
2,425 |
|
|
ACLL to total loans |
|
|
1.43 |
% |
|
|
1.45 |
% |
|
|
1.44 |
% |
|
|
1.43 |
% |
|
|
1.44 |
% |
|
ACLL to total nonperforming
loans |
|
|
622.27 |
% |
|
|
869.84 |
% |
|
|
1,959.26 |
% |
|
|
622.27 |
% |
|
|
1,959.26 |
% |
|
|
• |
The following table shows the drivers of change in ACLL for each of
the four quarters of 2023: |
DRIVERS OF CHANGE IN
ACLL |
|
|
(in $000’s, unaudited) |
|
|
ACLL at December 31, 2022 |
|
$ |
47,512 |
|
Portfolio changes during the
first quarter of 2023 |
|
|
(160 |
) |
Qualitative and quantitative
changes during the first |
|
|
|
quarter of 2023 including changes in economic forecasts |
|
|
(79 |
) |
ACLL at March 31, 2023 |
|
|
47,273 |
|
Portfolio changes during the
second quarter of 2023 |
|
|
1,652 |
|
Qualitative and quantitative
changes during the second |
|
|
|
quarter of 2023 including changes in economic forecasts |
|
|
(1,122 |
) |
ACLL at June 30, 2023 |
|
|
47,803 |
|
Portfolio changes during the
third quarter of 2023 |
|
|
(117 |
) |
Qualitative and quantitative
changes during the third |
|
|
|
quarter of 2023 including changes in economic forecasts |
|
|
16 |
|
ACLL at September 30, 2023 |
|
|
47,702 |
|
Portfolio changes during the
fourth quarter of 2023 |
|
|
1,216 |
|
Qualitative and quantitative
changes during the fourth |
|
|
|
quarter of 2023 including changes in economic forecasts |
|
|
(960 |
) |
ACLL at December 31, 2023 |
|
$ |
47,958 |
|
|
- The following is a breakout of
nonperforming assets (“NPAs”) at the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NONPERFORMING
ASSETS |
|
December 31, 2023 |
|
September 30, 2023 |
|
December 31, 2022 |
|
(in $000’s, unaudited) |
|
Balance |
|
% of Total |
|
Balance |
|
% of Total |
|
Balance |
|
% of Total |
|
Land and construction
loans |
|
$ |
4,661 |
|
60 |
% |
$ |
— |
|
0 |
% |
$ |
— |
|
0 |
% |
Commercial loans |
|
|
1,236 |
|
16 |
% |
|
1,712 |
|
31 |
% |
|
642 |
|
26 |
% |
Restructured and loans over
90 days past due |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and still accruing |
|
|
889 |
|
12 |
% |
|
1,966 |
|
36 |
% |
|
1,685 |
|
70 |
% |
Residential mortgages |
|
|
779 |
|
10 |
% |
|
1,716 |
|
31 |
% |
|
— |
|
0 |
% |
Home equity loans |
|
|
142 |
|
2 |
% |
|
90 |
|
2 |
% |
|
98 |
|
4 |
% |
CRE loans |
|
|
— |
|
0 |
% |
|
— |
|
0 |
% |
|
— |
|
0 |
% |
Total nonperforming assets |
|
$ |
7,707 |
|
100 |
% |
$ |
5,484 |
|
100 |
% |
$ |
2,425 |
|
100 |
% |
|
• |
There were 12 borrowers included in NPAs totaling $7.7 million, or
0.15% of total assets, at December 31, 2023, compared to 9
borrowers totaling $2.4 million, or 0.05% of total assets, at
December 31, 2022, and 11 borrowers totaling $5.5 million, or 0.10%
of total assets at September 30, 2023. The increase in NPAs at
December 31, 2023, was primarily due to the downgrade of loans to
one customer totaling $4.6 million, which are well collateralized
and there are no specific reserves for these loans. This increase
in NPAs was partially offset by pay-offs of loans previously
included in NPAs. |
|
|
|
|
• |
There were no CRE loans included in NPAs at December 31, 2023,
December 31, 2022, or September 30, 2023. |
|
|
|
|
• |
There were no foreclosed assets on the balance sheet at December
31, 2023, December 31, 2022, or September 30, 2023. |
|
|
|
|
• |
There were no Shared National Credits (“SNCs”) or material
purchased participations included in NPAs or total loans at
December 31, 2023, December 31, 2022, or September 30, 2023. |
|
|
|
|
• |
Classified assets totaled $31.8 million, or 0.61% of total assets,
at December 31, 2023, compared to $14.5 million, or 0.28% of total
assets, at December 31, 2022, and $31.1 million, or 0.57% of total
assets, at September 30, 2023. |
|
|
|
- The following table summarizes the distribution of deposits and
the percentage of distribution in each category for the periods
indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DEPOSITS |
|
December 31, 2023 |
|
September 30, 2023 |
|
December 31, 2022 |
|
(in $000’s, unaudited) |
|
Balance |
|
% to Total |
|
Balance |
|
% to Total |
|
Balance |
|
% to Total |
|
Demand, noninterest-bearing |
|
$ |
1,292,486 |
|
30 |
% |
$ |
1,243,501 |
|
27 |
% |
$ |
1,736,722 |
|
40 |
% |
Demand, interest-bearing |
|
|
914,066 |
|
21 |
% |
|
1,004,185 |
|
22 |
% |
|
1,196,427 |
|
27 |
% |
Savings and money market |
|
|
1,087,518 |
|
25 |
% |
|
1,110,640 |
|
24 |
% |
|
1,285,444 |
|
29 |
% |
Time deposits — under
$250 |
|
|
38,055 |
|
1 |
% |
|
43,906 |
|
1 |
% |
|
32,445 |
|
1 |
% |
Time deposits — $250 and
over |
|
|
192,228 |
|
4 |
% |
|
252,001 |
|
6 |
% |
|
108,192 |
|
2 |
% |
ICS/CDARS — interest-bearing
demand, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
money market and time deposits |
|
|
854,105 |
|
19 |
% |
|
921,224 |
|
20 |
% |
|
30,374 |
|
1 |
% |
Total deposits |
|
$ |
4,378,458 |
|
100 |
% |
$ |
4,575,457 |
|
100 |
% |
$ |
4,389,604 |
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
• |
The Bank’s uninsured deposits were approximately $2.01 billion, or
46% of total deposits, at December 31, 2023, compared to $2.12
billion, or 46% of total deposits, at September 30, 2023, and $2.15
billion, or 48% of total deposits, at June 30, 2023, and $2.56
billion, or 58% of total deposits, at March 31, 2023, and $2.79
billion, or 64% of total deposits, at December 31, 2022. |
|
|
|
- The Company’s
consolidated capital ratios exceeded regulatory guidelines and the
Bank’s capital ratios exceeded regulatory guidelines under the
Basel III prompt corrective action (“PCA”) regulatory guidelines
for a well-capitalized financial institution, and the Basel III
minimum regulatory requirements at December 31, 2023, as reflected
in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Well-capitalized |
|
|
|
|
|
|
|
|
|
|
Financial |
|
|
|
|
|
|
|
|
|
|
Institution |
|
Basel III |
|
|
Heritage |
|
Heritage |
|
Basel III PCA |
|
Minimum |
|
|
Commerce |
|
Bank of |
|
Regulatory |
|
Regulatory |
CAPITAL RATIOS (unaudited) |
|
Corp |
|
Commerce |
|
Guidelines |
|
Requirement (1) |
Total Capital |
|
15.4 |
% |
|
14.8 |
% |
|
10.0 |
% |
|
10.5 |
% |
Tier 1 Capital |
|
13.2 |
% |
|
13.7 |
% |
|
8.0 |
% |
|
8.5 |
% |
Common Equity Tier 1
Capital |
|
13.2 |
% |
|
13.7 |
% |
|
6.5 |
% |
|
7.0 |
% |
Tier 1 Leverage |
|
10.0 |
% |
|
10.3 |
% |
|
5.0 |
% |
|
4.0 |
% |
Tangible common equity /
tangible assets (2) |
|
9.8 |
% |
|
10.2 |
% |
|
N/A |
|
|
N/A |
|
|
|
|
(1 |
) |
Basel III minimum regulatory
requirements for both the Company and the Bank include a 2.5%
capital conservation buffer, except the leverage ratio. |
(2 |
) |
Represents shareholders’ equity
minus goodwill and other intangible assets divided by total assets
minus goodwill and other intangible assets. |
|
|
|
- The following table reflects the
components of accumulated other comprehensive loss, net of taxes,
for the periods indicated:
|
|
|
|
|
|
|
|
|
|
ACCUMULATED OTHER
COMPREHENSIVE LOSS |
|
December 31, |
|
September 30, |
|
December 31, |
(in $000’s, unaudited) |
|
2023 |
|
2023 |
|
2022 |
Unrealized loss on securities
available-for-sale |
|
$ |
(7,116 |
) |
|
$ |
(11,985 |
) |
|
$ |
(11,506 |
) |
Split dollar insurance contracts
liability |
|
|
(2,809 |
) |
|
|
(3,234 |
) |
|
|
(3,091 |
) |
Supplemental executive retirement
plan liability |
|
|
(2,892 |
) |
|
|
(2,343 |
) |
|
|
(2,371 |
) |
Unrealized gain on interest-only
strip from SBA loans |
|
|
87 |
|
|
|
93 |
|
|
|
112 |
|
Total accumulated other
comprehensive loss |
|
$ |
(12,730 |
) |
|
$ |
(17,469 |
) |
|
$ |
(16,856 |
) |
|
|
|
|
|
|
|
|
|
|
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
perform a part of, this release or of our filings with the
Securities and Exchange Commission.
Forward-Looking Statement
Disclaimer
Certain matters discussed in this press release constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking
statements may be deemed to include, among other things, statements
relating to the Company’s future financial performance, projected
cash flows of our investment securities portfolio, the performance
of our loan portfolio, 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. These
forward-looking statements are subject to various risks and
uncertainties that may be outside our control and our actual
results could differ materially from our projected results. 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 (“SEC”), Item 1A of the Company’s Annual Report on
Form 10-K for the year ended December 31, 2022, and the
following: (1) factors that affect our liquidity and our ability to
meet customer demands for deposit withdrawals, including our cash
on hand and the availability of funds from our lines of credit; (2)
factors that affect the collectability of our loans, including
fluctuations in interest rates as those changes affect our
borrowers’ ability to pay and perform on all other terms of our
loans; (3) media items and consumer confidence as those factors
affect depositors’ confidence in the banking system generally and
our bank in particular; (4) factors that affect the value and
liquidity of our investment portfolios, particularly the values of
securities available-for-sale; (5) the effect of our measures to
assure adequate liquidity of deposits as those measures affect
profitability, including increasing interest rates on deposits as a
component of our interest expense; (6) our ability to estimate
accurately, and to establish adequate reserves against, the risk of
loss associated with our loan and lease portfolio; (7) events and
circumstances that affect our borrowers’ financial condition,
results of operations and cash flows, which may, during periods of
economic uncertainty or decline, adversely affect those borrowers’
ability to repay our loans timely and in full, or to comply with
their other obligations under our loan agreements with those
customers; (8) geopolitical and domestic political developments,
including ongoing conflicts in Ukraine and the Middle East, as well
as other regions that are experiencing or that may in the future
experience political or economic upheaval, that can increase levels
of political and economic unpredictability, contribute to rising
energy and commodity prices, and increase the volatility of
financial markets; (9) current and future economic and market
conditions in the United States generally or in the communities we
serve, including the effects of declines in property values and
overall slowdowns in economic growth should these events occur;
(10) effects of and changes in trade, monetary and fiscal policies
and laws, including the interest rate policies of the Federal Open
Market Committee of the Federal Reserve Board and other factors
that affect market interest rates generally; (11) 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 customers, whether held in the
portfolio or in the secondary market; (12) changes in the level of
nonperforming assets and charge offs and other credit quality
measures, and their impact on the adequacy of our allowance for
credit losses and our provision for credit losses; (13) volatility
in credit and equity markets and its effect on the global economy;
(14) conditions relating to the impact of recent and potential
future pandemic response measures on our customers, employees,
businesses, liquidity, financial results and overall condition
including severity and duration of the associated uncertainties in
U.S. and global markets; (15) our ability to compete effectively
with other banks and financial services companies and the effects
of competition in the financial services industry on our business;
(16) our ability to achieve loan growth and attract deposits in our
market area; (17) risks associated with concentrations in real
estate related loans; (18) the relative strength or weakness of the
commercial and real estate markets where our borrowers are located,
including related vacancy rates, and asset and market prices; (19)
regulatory limits on the Bank’s ability to pay dividends to the
Company; (20) 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; (21) our inability to attract, recruit, and retain
qualified officers and other personnel could harm our ability to
implement our strategic plan, impair our relationships with
customers and adversely affect our business, results of operations
and growth prospects; (22) possible adjustment of the valuation of
our deferred tax assets or of the goodwill associated with previous
acquisitions; (23) our ability to keep pace with technological
changes, including our ability to identify and address
cyber-security risks such as data security breaches, “denial of
service” attacks, “hacking” and identity theft; (24) inability of
our framework to manage risks associated with our business,
including operational risk and credit risk; (25) risks of loss of
funding of the Small Business Administration (“SBA”) or SBA loan
programs, or changes in those programs; (26) compliance with
applicable laws and governmental and regulatory requirements,
including the Dodd-Frank Act and others relating to banking,
consumer protection, securities, accounting and tax matters; (27)
effect of changes in accounting policies and practices, as may be
adopted by the regulatory agencies, as well as the Public Company
Accounting Oversight Board, the Financial Accounting Standards
Board and other accounting standard setters; (28) the expense and
uncertain resolution of litigation matters whether occurring in the
ordinary course of business or otherwise; (29) availability of and
competition for acquisition opportunities; (30) risks resulting
from domestic or international terrorism, riots, widespread mayhem,
and similar events or circumstances; (31) risks of natural
disasters (including earthquakes, fires, and flooding) and other
events beyond our control; and (32) our success in managing the
risks involved in the foregoing factors.
Member FDIC
For additional information,
contact:
Debbie Reuter
EVP, Corporate Secretary
Direct: (408) 494-4542
Debbie.Reuter@herbank.com
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarter Ended: |
|
Percent Change From: |
|
|
For the Year Ended: |
CONSOLIDATED INCOME
STATEMENTS |
|
December 31, |
|
September 30, |
|
December 31, |
|
September 30, |
|
December 31, |
|
|
December 31, |
|
December 31, |
|
Percent |
|
(in $000’s, unaudited) |
|
2023 |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
2023 |
|
2022 |
|
Change |
|
Interest income |
|
$ |
58,892 |
|
$ |
60,791 |
|
$ |
55,192 |
|
(3 |
) |
% |
7 |
|
% |
|
$ |
234,298 |
|
$ |
188,828 |
|
24 |
|
% |
Interest expense |
|
|
16,591 |
|
|
15,419 |
|
|
3,453 |
|
8 |
|
% |
380 |
|
% |
|
|
51,074 |
|
|
8,948 |
|
471 |
|
% |
Net interest income before provision |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for credit losses on loans |
|
|
42,301 |
|
|
45,372 |
|
|
51,739 |
|
(7 |
) |
% |
(18 |
) |
% |
|
|
183,224 |
|
|
179,880 |
|
2 |
|
% |
Provision for credit losses on
loans |
|
|
289 |
|
|
168 |
|
|
508 |
|
72 |
|
% |
(43 |
) |
% |
|
|
749 |
|
|
766 |
|
(2 |
) |
% |
Net interest income after provision |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for credit losses on loans |
|
|
42,012 |
|
|
45,204 |
|
|
51,231 |
|
(7 |
) |
% |
(18 |
) |
% |
|
|
182,475 |
|
|
179,114 |
|
2 |
|
% |
Noninterest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service charges and fees on deposit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
accounts |
|
|
838 |
|
|
859 |
|
|
1,801 |
|
(2 |
) |
% |
(53 |
) |
% |
|
|
4,341 |
|
|
4,640 |
|
(6 |
) |
% |
Increase in cash surrender value of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
life insurance |
|
|
519 |
|
|
517 |
|
|
481 |
|
0 |
|
% |
8 |
|
% |
|
|
2,031 |
|
|
1,925 |
|
6 |
|
% |
Servicing income |
|
|
103 |
|
|
62 |
|
|
138 |
|
66 |
|
% |
(25 |
) |
% |
|
|
400 |
|
|
508 |
|
(21 |
) |
% |
Termination fees |
|
|
25 |
|
|
118 |
|
|
— |
|
(79 |
) |
% |
N/A |
|
|
|
154 |
|
|
61 |
|
152 |
|
% |
Gain on proceeds from company-owned |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
life insurance |
|
|
25 |
|
|
100 |
|
|
— |
|
(75 |
) |
% |
N/A |
|
|
|
125 |
|
|
27 |
|
363 |
|
% |
Gain on sales of SBA loans |
|
|
— |
|
|
207 |
|
|
— |
|
(100 |
) |
% |
N/A |
|
|
|
482 |
|
|
491 |
|
(2 |
) |
% |
Gain on warrants |
|
|
— |
|
|
— |
|
|
— |
|
N/A |
|
N/A |
|
|
|
— |
|
|
669 |
|
(100 |
) |
% |
Other |
|
|
432 |
|
|
353 |
|
|
352 |
|
22 |
|
% |
23 |
|
% |
|
|
1,465 |
|
|
1,790 |
|
(18 |
) |
% |
Total noninterest income |
|
|
1,942 |
|
|
2,216 |
|
|
2,772 |
|
(12 |
) |
% |
(30 |
) |
% |
|
|
8,998 |
|
|
10,111 |
|
(11 |
) |
% |
Noninterest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
|
13,919 |
|
|
14,147 |
|
|
13,915 |
|
(2 |
) |
% |
0 |
|
% |
|
|
56,862 |
|
|
55,331 |
|
3 |
|
% |
Occupancy and equipment |
|
|
2,367 |
|
|
2,301 |
|
|
2,510 |
|
3 |
|
% |
(6 |
) |
% |
|
|
9,490 |
|
|
9,639 |
|
(2 |
) |
% |
Professional fees |
|
|
1,085 |
|
|
717 |
|
|
1,414 |
|
51 |
|
% |
(23 |
) |
% |
|
|
4,350 |
|
|
5,015 |
|
(13 |
) |
% |
Other |
|
|
8,120 |
|
|
8,006 |
|
|
6,679 |
|
1 |
|
% |
22 |
|
% |
|
|
30,352 |
|
|
24,874 |
|
22 |
|
% |
Total noninterest expense |
|
|
25,491 |
|
|
25,171 |
|
|
24,518 |
|
1 |
|
% |
4 |
|
% |
|
|
101,054 |
|
|
94,859 |
|
7 |
|
% |
Income before income
taxes |
|
|
18,463 |
|
|
22,249 |
|
|
29,485 |
|
(17 |
) |
% |
(37 |
) |
% |
|
|
90,419 |
|
|
94,366 |
|
(4 |
) |
% |
Income tax expense |
|
|
5,135 |
|
|
6,454 |
|
|
8,686 |
|
(20 |
) |
% |
(41 |
) |
% |
|
|
25,976 |
|
|
27,811 |
|
(7 |
) |
% |
Net
income |
|
$ |
13,328 |
|
$ |
15,795 |
|
$ |
20,799 |
|
(16 |
) |
% |
(36 |
) |
% |
|
$ |
64,443 |
|
$ |
66,555 |
|
(3 |
) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PER COMMON SHARE DATA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
|
$ |
0.22 |
|
$ |
0.26 |
|
$ |
0.34 |
|
(15 |
) |
% |
(35 |
) |
% |
|
$ |
1.06 |
|
$ |
1.10 |
|
(4 |
) |
% |
Diluted earnings per
share |
|
$ |
0.22 |
|
$ |
0.26 |
|
$ |
0.34 |
|
(15 |
) |
% |
(35 |
) |
% |
|
$ |
1.05 |
|
$ |
1.09 |
|
(4 |
) |
% |
Weighted average shares
outstanding - basic |
|
|
61,118,485 |
|
|
61,093,289 |
|
|
60,788,803 |
|
0 |
|
% |
1 |
|
% |
|
|
61,038,857 |
|
|
60,602,962 |
|
1 |
|
% |
Weighted average shares
outstanding - diluted |
|
|
61,412,816 |
|
|
61,436,240 |
|
|
61,357,023 |
|
0 |
|
% |
0 |
|
% |
|
|
61,311,318 |
|
|
61,090,290 |
|
0 |
|
% |
Common shares outstanding at
period-end |
|
|
61,146,835 |
|
|
61,099,155 |
|
|
60,852,723 |
|
0 |
|
% |
0 |
|
% |
|
|
61,146,835 |
|
|
60,852,723 |
|
0 |
|
% |
Dividend per share |
|
$ |
0.13 |
|
$ |
0.13 |
|
$ |
0.13 |
|
0 |
|
% |
0 |
|
% |
|
$ |
0.52 |
|
$ |
0.52 |
|
0 |
|
% |
Book value per share |
|
$ |
11.00 |
|
$ |
10.83 |
|
$ |
10.39 |
|
2 |
|
% |
6 |
|
% |
|
$ |
11.00 |
|
$ |
10.39 |
|
6 |
|
% |
Tangible book value per
share |
|
$ |
8.12 |
|
$ |
7.94 |
|
$ |
7.46 |
|
2 |
|
% |
9 |
|
% |
|
$ |
8.12 |
|
$ |
7.46 |
|
9 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KEY FINANCIAL RATIOS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized return on average
equity |
|
|
7.96 |
% |
|
9.54 |
% |
|
13.40 |
% |
(17 |
) |
% |
(41 |
) |
% |
|
|
9.88 |
% |
|
10.95 |
% |
(10 |
) |
% |
Annualized return on average
tangible |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
common equity |
|
|
10.84 |
% |
|
13.06 |
% |
|
18.89 |
% |
(17 |
) |
% |
(43 |
) |
% |
|
|
13.57 |
% |
|
15.57 |
% |
(13 |
) |
% |
Annualized return on average
assets |
|
|
1.00 |
% |
|
1.16 |
% |
|
1.54 |
% |
(14 |
) |
% |
(35 |
) |
% |
|
|
1.21 |
% |
|
1.23 |
% |
(2 |
) |
% |
Annualized return on average
tangible assets |
|
|
1.03 |
% |
|
1.20 |
% |
|
1.59 |
% |
(14 |
) |
% |
(35 |
) |
% |
|
|
1.26 |
% |
|
1.27 |
% |
(1 |
) |
% |
Net interest margin (FTE) |
|
|
3.41 |
% |
|
3.57 |
% |
|
4.10 |
% |
(4 |
) |
% |
(17 |
) |
% |
|
|
3.70 |
% |
|
3.57 |
% |
4 |
|
% |
Efficiency ratio |
|
|
57.62 |
% |
|
52.89 |
% |
|
44.98 |
% |
9 |
|
% |
28 |
|
% |
|
|
52.57 |
% |
|
49.93 |
% |
5 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE BALANCES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in $000’s, unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets |
|
$ |
5,291,962 |
|
$ |
5,399,930 |
|
$ |
5,360,867 |
|
(2 |
) |
% |
(1 |
) |
% |
|
$ |
5,310,277 |
|
$ |
5,401,220 |
|
(2 |
) |
% |
Average tangible assets |
|
$ |
5,115,321 |
|
$ |
5,222,692 |
|
$ |
5,181,793 |
|
(2 |
) |
% |
(1 |
) |
% |
|
$ |
5,132,741 |
|
$ |
5,221,159 |
|
(2 |
) |
% |
Average earning assets |
|
$ |
4,923,582 |
|
$ |
5,051,710 |
|
$ |
5,009,578 |
|
(3 |
) |
% |
(2 |
) |
% |
|
$ |
4,955,018 |
|
$ |
5,051,552 |
|
(2 |
) |
% |
Average loans
held-for-sale |
|
$ |
1,612 |
|
$ |
2,765 |
|
$ |
2,346 |
|
(42 |
) |
% |
(31 |
) |
% |
|
$ |
2,821 |
|
$ |
2,238 |
|
26 |
|
% |
Average total loans |
|
$ |
3,280,817 |
|
$ |
3,254,715 |
|
$ |
3,248,210 |
|
1 |
|
% |
1 |
|
% |
|
$ |
3,259,373 |
|
$ |
3,116,768 |
|
5 |
|
% |
Average deposits |
|
$ |
4,454,750 |
|
$ |
4,573,621 |
|
$ |
4,600,533 |
|
(3 |
) |
% |
(3 |
) |
% |
|
$ |
4,467,489 |
|
$ |
4,647,200 |
|
(4 |
) |
% |
Average demand deposits -
noninterest-bearing |
|
$ |
1,243,222 |
|
$ |
1,302,606 |
|
$ |
1,851,003 |
|
(5 |
) |
% |
(33 |
) |
% |
|
$ |
1,393,949 |
|
$ |
1,863,928 |
|
(25 |
) |
% |
Average interest-bearing
deposits |
|
$ |
3,211,528 |
|
$ |
3,271,015 |
|
$ |
2,749,530 |
|
(2 |
) |
% |
17 |
|
% |
|
$ |
3,073,540 |
|
$ |
2,783,272 |
|
10 |
|
% |
Average interest-bearing
liabilities |
|
$ |
3,251,034 |
|
$ |
3,310,485 |
|
$ |
2,788,880 |
|
(2 |
) |
% |
17 |
|
% |
|
$ |
3,140,105 |
|
$ |
2,825,035 |
|
11 |
|
% |
Average equity |
|
$ |
664,638 |
|
$ |
656,973 |
|
$ |
615,941 |
|
1 |
|
% |
8 |
|
% |
|
$ |
652,449 |
|
$ |
607,603 |
|
7 |
|
% |
Average tangible common
equity |
|
$ |
487,997 |
|
$ |
479,735 |
|
$ |
436,867 |
|
2 |
|
% |
12 |
|
% |
|
$ |
474,913 |
|
$ |
427,542 |
|
11 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarter Ended: |
|
CONSOLIDATED INCOME
STATEMENTS |
|
December 31, |
|
September 30, |
|
June 30, |
|
March 31, |
|
December 31, |
|
(in $000’s, unaudited) |
|
2023 |
|
2023 |
|
2023 |
|
2023 |
|
2022 |
|
Interest income |
|
$ |
58,892 |
|
$ |
60,791 |
|
$ |
58,341 |
|
$ |
56,274 |
|
$ |
55,192 |
|
Interest expense |
|
|
16,591 |
|
|
15,419 |
|
|
12,048 |
|
|
7,016 |
|
|
3,453 |
|
Net interest income before provision |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for credit losses on loans |
|
|
42,301 |
|
|
45,372 |
|
|
46,293 |
|
|
49,258 |
|
|
51,739 |
|
Provision for credit losses on
loans |
|
|
289 |
|
|
168 |
|
|
260 |
|
|
32 |
|
|
508 |
|
Net interest income after provision |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for credit losses on loans |
|
|
42,012 |
|
|
45,204 |
|
|
46,033 |
|
|
49,226 |
|
|
51,231 |
|
Noninterest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service charges and fees on deposit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
accounts |
|
|
838 |
|
|
859 |
|
|
901 |
|
|
1,743 |
|
|
1,801 |
|
Increase in cash surrender value of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
life insurance |
|
|
519 |
|
|
517 |
|
|
502 |
|
|
493 |
|
|
481 |
|
Servicing income |
|
|
103 |
|
|
62 |
|
|
104 |
|
|
131 |
|
|
138 |
|
Termination fees |
|
|
25 |
|
|
118 |
|
|
— |
|
|
11 |
|
|
— |
|
Gain on proceeds from company-owned |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
life insurance |
|
|
25 |
|
|
100 |
|
|
— |
|
|
— |
|
|
— |
|
Gain on sales of SBA loans |
|
|
— |
|
|
207 |
|
|
199 |
|
|
76 |
|
|
— |
|
Gain on warrants |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Other |
|
|
432 |
|
|
353 |
|
|
368 |
|
|
312 |
|
|
352 |
|
Total noninterest income |
|
|
1,942 |
|
|
2,216 |
|
|
2,074 |
|
|
2,766 |
|
|
2,772 |
|
Noninterest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
|
13,919 |
|
|
14,147 |
|
|
13,987 |
|
|
14,809 |
|
|
13,915 |
|
Occupancy and equipment |
|
|
2,367 |
|
|
2,301 |
|
|
2,422 |
|
|
2,400 |
|
|
2,510 |
|
Professional fees |
|
|
1,085 |
|
|
717 |
|
|
1,149 |
|
|
1,399 |
|
|
1,414 |
|
Other |
|
|
8,120 |
|
|
8,006 |
|
|
7,433 |
|
|
6,793 |
|
|
6,679 |
|
Total noninterest expense |
|
|
25,491 |
|
|
25,171 |
|
|
24,991 |
|
|
25,401 |
|
|
24,518 |
|
Income before income
taxes |
|
|
18,463 |
|
|
22,249 |
|
|
23,116 |
|
|
26,591 |
|
|
29,485 |
|
Income tax expense |
|
|
5,135 |
|
|
6,454 |
|
|
6,713 |
|
|
7,674 |
|
|
8,686 |
|
Net
income |
|
$ |
13,328 |
|
$ |
15,795 |
|
$ |
16,403 |
|
$ |
18,917 |
|
$ |
20,799 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PER COMMON SHARE DATA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
|
$ |
0.22 |
|
$ |
0.26 |
|
$ |
0.27 |
|
$ |
0.31 |
|
$ |
0.34 |
|
Diluted earnings per
share |
|
$ |
0.22 |
|
$ |
0.26 |
|
$ |
0.27 |
|
$ |
0.31 |
|
$ |
0.34 |
|
Weighted average shares
outstanding - basic |
|
|
61,118,485 |
|
|
61,093,289 |
|
|
61,035,435 |
|
|
60,908,221 |
|
|
60,788,803 |
|
Weighted average shares
outstanding - diluted |
|
|
61,412,816 |
|
|
61,436,240 |
|
|
61,266,059 |
|
|
61,268,072 |
|
|
61,357,023 |
|
Common shares outstanding at
period-end |
|
|
61,146,835 |
|
|
61,099,155 |
|
|
61,091,155 |
|
|
60,948,607 |
|
|
60,852,723 |
|
Dividend per share |
|
$ |
0.13 |
|
$ |
0.13 |
|
$ |
0.13 |
|
$ |
0.13 |
|
$ |
0.13 |
|
Book value per share |
|
$ |
11.00 |
|
$ |
10.83 |
|
$ |
10.70 |
|
$ |
10.62 |
|
$ |
10.39 |
|
Tangible book value per
share |
|
$ |
8.12 |
|
$ |
7.94 |
|
$ |
7.80 |
|
$ |
7.70 |
|
$ |
7.46 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KEY FINANCIAL RATIOS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized return on average
equity |
|
|
7.96 |
% |
|
9.54 |
% |
|
10.12 |
% |
|
12.03 |
% |
|
13.40 |
% |
Annualized return on average
tangible |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
common equity |
|
|
10.84 |
% |
|
13.06 |
% |
|
13.93 |
% |
|
16.71 |
% |
|
18.89 |
% |
Annualized return on average
assets |
|
|
1.00 |
% |
|
1.16 |
% |
|
1.25 |
% |
|
1.47 |
% |
|
1.54 |
% |
Annualized return on average
tangible assets |
|
|
1.03 |
% |
|
1.20 |
% |
|
1.29 |
% |
|
1.52 |
% |
|
1.59 |
% |
Net interest margin (FTE) |
|
|
3.41 |
% |
|
3.57 |
% |
|
3.76 |
% |
|
4.09 |
% |
|
4.10 |
% |
Efficiency ratio |
|
|
57.62 |
% |
|
52.89 |
% |
|
51.67 |
% |
|
48.83 |
% |
|
44.98 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE BALANCES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in $000’s, unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets |
|
$ |
5,291,962 |
|
$ |
5,399,930 |
|
$ |
5,278,243 |
|
$ |
5,235,506 |
|
$ |
5,360,867 |
|
Average tangible assets |
|
$ |
5,115,321 |
|
$ |
5,222,692 |
|
$ |
5,100,399 |
|
$ |
5,057,063 |
|
$ |
5,181,793 |
|
Average earning assets |
|
$ |
4,923,582 |
|
$ |
5,051,710 |
|
$ |
4,948,397 |
|
$ |
4,895,009 |
|
$ |
5,009,578 |
|
Average loans
held-for-sale |
|
$ |
1,612 |
|
$ |
2,765 |
|
$ |
4,166 |
|
$ |
2,755 |
|
$ |
2,346 |
|
Average total loans |
|
$ |
3,280,817 |
|
$ |
3,254,715 |
|
$ |
3,227,175 |
|
$ |
3,274,770 |
|
$ |
3,248,210 |
|
Average deposits |
|
$ |
4,454,750 |
|
$ |
4,573,621 |
|
$ |
4,424,041 |
|
$ |
4,415,952 |
|
$ |
4,600,533 |
|
Average demand deposits -
noninterest-bearing |
|
$ |
1,243,222 |
|
$ |
1,302,606 |
|
$ |
1,368,373 |
|
$ |
1,667,260 |
|
$ |
1,851,003 |
|
Average interest-bearing
deposits |
|
$ |
3,211,528 |
|
$ |
3,271,015 |
|
$ |
3,055,668 |
|
$ |
2,748,692 |
|
$ |
2,749,530 |
|
Average interest-bearing
liabilities |
|
$ |
3,251,034 |
|
$ |
3,310,485 |
|
$ |
3,157,722 |
|
$ |
2,834,732 |
|
$ |
2,788,880 |
|
Average equity |
|
$ |
664,638 |
|
$ |
656,973 |
|
$ |
650,240 |
|
$ |
637,597 |
|
$ |
615,941 |
|
Average tangible common
equity |
|
$ |
487,997 |
|
$ |
479,735 |
|
$ |
472,396 |
|
$ |
459,154 |
|
$ |
436,867 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
End of Period: |
|
Percent Change From: |
|
CONSOLIDATED BALANCE
SHEETS |
|
December 31, |
|
September 30, |
|
December 31, |
|
September 30, |
|
December 31, |
|
(in $000’s, unaudited) |
|
2023 |
|
2023 |
|
2022 |
|
2023 |
|
2022
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
$ |
41,592 |
|
|
$ |
40,076 |
|
|
$ |
27,595 |
|
|
4 |
|
% |
51 |
|
% |
Other investments and
interest-bearing deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in other financial institutions |
|
|
366,537 |
|
|
|
605,476 |
|
|
|
279,008 |
|
|
(39 |
) |
% |
31 |
|
% |
Securities available-for-sale,
at fair value |
|
|
442,636 |
|
|
|
457,194 |
|
|
|
489,596 |
|
|
(3 |
) |
% |
(10 |
) |
% |
Securities held-to-maturity,
at amortized cost |
|
|
650,565 |
|
|
|
664,681 |
|
|
|
714,990 |
|
|
(2 |
) |
% |
(9 |
) |
% |
Loans held-for-sale - SBA,
including deferred costs |
|
|
2,205 |
|
|
|
841 |
|
|
|
2,456 |
|
|
162 |
|
% |
(10 |
) |
% |
Loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
|
463,778 |
|
|
|
430,664 |
|
|
|
533,915 |
|
|
8 |
|
% |
(13 |
) |
% |
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CRE - owner occupied |
|
|
583,253 |
|
|
|
589,751 |
|
|
|
614,663 |
|
|
(1 |
) |
% |
(5 |
) |
% |
CRE - non-owner occupied |
|
|
1,256,590 |
|
|
|
1,208,324 |
|
|
|
1,066,368 |
|
|
4 |
|
% |
18 |
|
% |
Land and construction |
|
|
140,513 |
|
|
|
158,138 |
|
|
|
163,577 |
|
|
(11 |
) |
% |
(14 |
) |
% |
Home equity |
|
|
119,125 |
|
|
|
124,477 |
|
|
|
120,724 |
|
|
(4 |
) |
% |
(1 |
) |
% |
Multifamily |
|
|
269,734 |
|
|
|
253,129 |
|
|
|
244,882 |
|
|
7 |
|
% |
10 |
|
% |
Residential mortgages |
|
|
496,961 |
|
|
|
503,006 |
|
|
|
537,905 |
|
|
(1 |
) |
% |
(8 |
) |
% |
Consumer and other |
|
|
20,919 |
|
|
|
18,526 |
|
|
|
17,033 |
|
|
13 |
|
% |
23 |
|
% |
Loans |
|
|
3,350,873 |
|
|
|
3,286,015 |
|
|
|
3,299,067 |
|
|
2 |
|
% |
2 |
|
% |
Deferred loan fees, net |
|
|
(495 |
) |
|
|
(554 |
) |
|
|
(517 |
) |
|
(11 |
) |
% |
(4 |
) |
% |
Total loans, net of deferred costs and fees |
|
|
3,350,378 |
|
|
|
3,285,461 |
|
|
|
3,298,550 |
|
|
2 |
|
% |
2 |
|
% |
Allowance for credit losses on
loans |
|
|
(47,958 |
) |
|
|
(47,702 |
) |
|
|
(47,512 |
) |
|
1 |
|
% |
1 |
|
% |
Loans, net |
|
|
3,302,420 |
|
|
|
3,237,759 |
|
|
|
3,251,038 |
|
|
2 |
|
% |
2 |
|
% |
Company-owned life
insurance |
|
|
79,489 |
|
|
|
79,607 |
|
|
|
78,945 |
|
|
0 |
|
% |
1 |
|
% |
Premises and equipment,
net |
|
|
9,857 |
|
|
|
9,707 |
|
|
|
9,301 |
|
|
2 |
|
% |
6 |
|
% |
Goodwill |
|
|
167,631 |
|
|
|
167,631 |
|
|
|
167,631 |
|
|
0 |
|
% |
0 |
|
% |
Other intangible assets |
|
|
8,627 |
|
|
|
9,229 |
|
|
|
11,033 |
|
|
(7 |
) |
% |
(22 |
) |
% |
Accrued interest receivable
and other assets |
|
|
122,536 |
|
|
|
131,106 |
|
|
|
125,987 |
|
|
(7 |
) |
% |
3 |
|
% |
Total assets |
|
$ |
5,194,095 |
|
|
$ |
5,403,307 |
|
|
$ |
5,157,580 |
|
|
(4 |
) |
% |
1 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, noninterest-bearing |
|
$ |
1,292,486 |
|
|
$ |
1,243,501 |
|
|
$ |
1,736,722 |
|
|
4 |
|
% |
(26 |
) |
% |
Demand, interest-bearing |
|
|
914,066 |
|
|
|
1,004,185 |
|
|
|
1,196,427 |
|
|
(9 |
) |
% |
(24 |
) |
% |
Savings and money market |
|
|
1,087,518 |
|
|
|
1,110,640 |
|
|
|
1,285,444 |
|
|
(2 |
) |
% |
(15 |
) |
% |
Time deposits - under $250 |
|
|
38,055 |
|
|
|
43,906 |
|
|
|
32,445 |
|
|
(13 |
) |
% |
17 |
|
% |
Time deposits - $250 and over |
|
|
192,228 |
|
|
|
252,001 |
|
|
|
108,192 |
|
|
(24 |
) |
% |
78 |
|
% |
ICS/CDARS - interest-bearing demand, money market |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and time deposits |
|
|
854,105 |
|
|
|
921,224 |
|
|
|
30,374 |
|
|
(7 |
) |
% |
2712 |
|
% |
Total deposits |
|
|
4,378,458 |
|
|
|
4,575,457 |
|
|
|
4,389,604 |
|
|
(4 |
) |
% |
0 |
|
% |
Subordinated debt, net of issuance costs |
|
|
39,502 |
|
|
|
39,463 |
|
|
|
39,350 |
|
|
0 |
|
% |
0 |
|
% |
Accrued interest payable and other liabilities |
|
|
103,234 |
|
|
|
126,457 |
|
|
|
96,170 |
|
|
(18 |
) |
% |
7 |
|
% |
Total liabilities |
|
|
4,521,194 |
|
|
|
4,741,377 |
|
|
|
4,525,124 |
|
|
(5 |
) |
% |
0 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’
Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock |
|
|
506,539 |
|
|
|
505,692 |
|
|
|
502,923 |
|
|
0 |
|
% |
1 |
|
% |
Retained earnings |
|
|
179,092 |
|
|
|
173,707 |
|
|
|
146,389 |
|
|
3 |
|
% |
22 |
|
% |
Accumulated other comprehensive loss |
|
|
(12,730 |
) |
|
|
(17,469 |
) |
|
|
(16,856 |
) |
|
(27 |
) |
% |
(24 |
) |
% |
Total shareholders' equity |
|
|
672,901 |
|
|
|
661,930 |
|
|
|
632,456 |
|
|
2 |
|
% |
6 |
|
% |
Total liabilities and shareholders’ equity |
|
$ |
5,194,095 |
|
|
$ |
5,403,307 |
|
|
$ |
5,157,580 |
|
|
(4 |
) |
% |
1 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
End of Period: |
CONSOLIDATED BALANCE
SHEETS |
|
December 31, |
|
September 30, |
|
June 30, |
|
March 31, |
|
December 31, |
(in $000’s, unaudited) |
|
2023 |
|
2023 |
|
2023 |
|
2023 |
|
2022 |
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
$ |
41,592 |
|
|
$ |
40,076 |
|
|
$ |
42,551 |
|
|
$ |
41,318 |
|
|
$ |
27,595 |
|
Other investments and
interest-bearing deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in other financial
institutions |
|
|
366,537 |
|
|
|
605,476 |
|
|
|
468,951 |
|
|
|
698,690 |
|
|
|
279,008 |
|
Securities available-for-sale,
at fair value |
|
|
442,636 |
|
|
|
457,194 |
|
|
|
486,058 |
|
|
|
491,751 |
|
|
|
489,596 |
|
Securities held-to-maturity,
at amortized cost |
|
|
650,565 |
|
|
|
664,681 |
|
|
|
682,095 |
|
|
|
698,231 |
|
|
|
714,990 |
|
Loans held-for-sale - SBA,
including deferred costs |
|
|
2,205 |
|
|
|
841 |
|
|
|
3,136 |
|
|
|
2,792 |
|
|
|
2,456 |
|
Loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
|
463,778 |
|
|
|
430,664 |
|
|
|
466,354 |
|
|
|
506,602 |
|
|
|
533,915 |
|
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CRE - owner occupied |
|
|
583,253 |
|
|
|
589,751 |
|
|
|
608,031 |
|
|
|
603,298 |
|
|
|
614,663 |
|
CRE - non-owner occupied |
|
|
1,256,590 |
|
|
|
1,208,324 |
|
|
|
1,147,313 |
|
|
|
1,083,852 |
|
|
|
1,066,368 |
|
Land and construction |
|
|
140,513 |
|
|
|
158,138 |
|
|
|
162,816 |
|
|
|
166,408 |
|
|
|
163,577 |
|
Home equity |
|
|
119,125 |
|
|
|
124,477 |
|
|
|
128,009 |
|
|
|
124,481 |
|
|
|
120,724 |
|
Multifamily |
|
|
269,734 |
|
|
|
253,129 |
|
|
|
244,959 |
|
|
|
231,242 |
|
|
|
244,882 |
|
Residential mortgages |
|
|
496,961 |
|
|
|
503,006 |
|
|
|
514,064 |
|
|
|
528,639 |
|
|
|
537,905 |
|
Consumer and other |
|
|
20,919 |
|
|
|
18,526 |
|
|
|
17,635 |
|
|
|
17,905 |
|
|
|
17,033 |
|
Loans |
|
|
3,350,873 |
|
|
|
3,286,015 |
|
|
|
3,289,181 |
|
|
|
3,262,427 |
|
|
|
3,299,067 |
|
Deferred loan fees, net |
|
|
(495 |
) |
|
|
(554 |
) |
|
|
(397 |
) |
|
|
(512 |
) |
|
|
(517 |
) |
Total loans, net of deferred fees |
|
|
3,350,378 |
|
|
|
3,285,461 |
|
|
|
3,288,784 |
|
|
|
3,261,915 |
|
|
|
3,298,550 |
|
Allowance for credit losses on
loans |
|
|
(47,958 |
) |
|
|
(47,702 |
) |
|
|
(47,803 |
) |
|
|
(47,273 |
) |
|
|
(47,512 |
) |
Loans, net |
|
|
3,302,420 |
|
|
|
3,237,759 |
|
|
|
3,240,981 |
|
|
|
3,214,642 |
|
|
|
3,251,038 |
|
Company-owned life
insurance |
|
|
79,489 |
|
|
|
79,607 |
|
|
|
79,940 |
|
|
|
79,438 |
|
|
|
78,945 |
|
Premises and equipment,
net |
|
|
9,857 |
|
|
|
9,707 |
|
|
|
9,197 |
|
|
|
9,142 |
|
|
|
9,301 |
|
Goodwill |
|
|
167,631 |
|
|
|
167,631 |
|
|
|
167,631 |
|
|
|
167,631 |
|
|
|
167,631 |
|
Other intangible assets |
|
|
8,627 |
|
|
|
9,229 |
|
|
|
9,830 |
|
|
|
10,431 |
|
|
|
11,033 |
|
Accrued interest receivable
and other assets |
|
|
122,536 |
|
|
|
131,106 |
|
|
|
121,467 |
|
|
|
122,474 |
|
|
|
125,987 |
|
Total assets |
|
$ |
5,194,095 |
|
|
$ |
5,403,307 |
|
|
$ |
5,311,837 |
|
|
$ |
5,536,540 |
|
|
$ |
5,157,580 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, noninterest-bearing |
|
$ |
1,292,486 |
|
|
$ |
1,243,501 |
|
|
$ |
1,319,844 |
|
|
$ |
1,469,081 |
|
|
$ |
1,736,722 |
|
Demand, interest-bearing |
|
|
914,066 |
|
|
|
1,004,185 |
|
|
|
1,064,638 |
|
|
|
1,196,789 |
|
|
|
1,196,427 |
|
Savings and money market |
|
|
1,087,518 |
|
|
|
1,110,640 |
|
|
|
1,075,835 |
|
|
|
1,264,567 |
|
|
|
1,285,444 |
|
Time deposits - under $250 |
|
|
38,055 |
|
|
|
43,906 |
|
|
|
44,520 |
|
|
|
37,884 |
|
|
|
32,445 |
|
Time deposits - $250 and over |
|
|
192,228 |
|
|
|
252,001 |
|
|
|
171,852 |
|
|
|
172,070 |
|
|
|
108,192 |
|
ICS/CDARS - interest-bearing demand, money market |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and time deposits |
|
|
854,105 |
|
|
|
921,224 |
|
|
|
824,083 |
|
|
|
304,147 |
|
|
|
30,374 |
|
Total deposits |
|
|
4,378,458 |
|
|
|
4,575,457 |
|
|
|
4,500,772 |
|
|
|
4,444,538 |
|
|
|
4,389,604 |
|
Other short-term borrowings |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
300,000 |
|
|
|
— |
|
Subordinated debt, net of issuance costs |
|
|
39,502 |
|
|
|
39,463 |
|
|
|
39,425 |
|
|
|
39,387 |
|
|
|
39,350 |
|
Accrued interest payable and other liabilities |
|
|
103,234 |
|
|
|
126,457 |
|
|
|
117,970 |
|
|
|
105,407 |
|
|
|
96,170 |
|
Total liabilities |
|
|
4,521,194 |
|
|
|
4,741,377 |
|
|
|
4,658,167 |
|
|
|
4,889,332 |
|
|
|
4,525,124 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’
Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock |
|
|
506,539 |
|
|
|
505,692 |
|
|
|
505,075 |
|
|
|
504,135 |
|
|
|
502,923 |
|
Retained earnings |
|
|
179,092 |
|
|
|
173,707 |
|
|
|
165,853 |
|
|
|
157,390 |
|
|
|
146,389 |
|
Accumulated other comprehensive loss |
|
|
(12,730 |
) |
|
|
(17,469 |
) |
|
|
(17,258 |
) |
|
|
(14,317 |
) |
|
|
(16,856 |
) |
Total shareholders' equity |
|
|
672,901 |
|
|
|
661,930 |
|
|
|
653,670 |
|
|
|
647,208 |
|
|
|
632,456 |
|
Total liabilities and shareholders’ equity |
|
$ |
5,194,095 |
|
|
$ |
5,403,307 |
|
|
$ |
5,311,837 |
|
|
$ |
5,536,540 |
|
|
$ |
5,157,580 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At or For the Quarter Ended: |
|
Percent Change From: |
|
CREDIT QUALITY
DATA |
|
December 31, |
|
September 30, |
|
December 31, |
|
September 30, |
|
December 31, |
|
(in $000’s, unaudited) |
|
2023 |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
Nonaccrual loans - held-for-investment |
|
$ |
6,818 |
|
$ |
3,518 |
|
$ |
740 |
|
|
94 |
|
% |
821 |
|
% |
Restructured and loans over 90
days past due |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and still accruing |
|
|
889 |
|
|
1,966 |
|
|
1,685 |
|
|
(55 |
) |
% |
(47 |
) |
% |
Total nonperforming loans |
|
|
7,707 |
|
|
5,484 |
|
|
2,425 |
|
|
41 |
|
% |
218 |
|
% |
Foreclosed assets |
|
|
— |
|
|
— |
|
|
— |
|
|
N/A |
|
|
N/A |
|
|
Total nonperforming assets |
|
$ |
7,707 |
|
$ |
5,484 |
|
$ |
2,425 |
|
|
41 |
|
% |
218 |
|
% |
Other restructured loans still
accruing |
|
$ |
— |
|
$ |
— |
|
$ |
171 |
|
|
N/A |
|
|
(100 |
) |
% |
Net charge-offs (recoveries)
during the quarter |
|
$ |
33 |
|
$ |
269 |
|
$ |
(83 |
) |
|
(88 |
) |
% |
140 |
|
% |
Provision for credit losses on
loans during the quarter |
|
$ |
289 |
|
$ |
168 |
|
$ |
508 |
|
|
72 |
|
% |
(43 |
) |
% |
Allowance for credit losses on
loans |
|
$ |
47,958 |
|
$ |
47,702 |
|
$ |
47,512 |
|
|
1 |
|
% |
1 |
|
% |
Classified assets |
|
$ |
31,763 |
|
$ |
31,062 |
|
$ |
14,544 |
|
|
2 |
|
% |
118 |
|
% |
Allowance for credit losses on
loans to total loans |
|
|
1.43 |
% |
|
1.45 |
% |
|
1.44 |
|
% |
(1 |
) |
% |
(1 |
) |
% |
Allowance for credit losses on
loans to total nonperforming loans |
|
|
622.27 |
% |
|
869.84 |
% |
|
1,959.26 |
|
% |
(28 |
) |
% |
(68 |
) |
% |
Nonperforming assets to total
assets |
|
|
0.15 |
% |
|
0.10 |
% |
|
0.05 |
|
% |
50 |
|
% |
200 |
|
% |
Nonperforming loans to total
loans |
|
|
0.23 |
% |
|
0.17 |
% |
|
0.07 |
|
% |
35 |
|
% |
229 |
|
% |
Classified assets to Heritage
Commerce Corp |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 capital plus allowance for credit losses on loans |
|
|
6 |
% |
|
6 |
% |
|
3 |
|
% |
0 |
|
% |
100 |
|
% |
Classified assets to Heritage
Bank of Commerce |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 capital plus allowance for credit losses on loans |
|
|
5 |
% |
|
5 |
% |
|
3 |
|
% |
0 |
|
% |
67 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER PERIOD-END
STATISTICS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in $000’s, unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Heritage Commerce
Corp: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible common equity (1) |
|
$ |
496,643 |
|
$ |
485,070 |
|
$ |
453,792 |
|
|
2 |
|
% |
9 |
|
% |
Shareholders’ equity / total assets |
|
|
12.88 |
% |
|
12.25 |
% |
|
12.26 |
|
% |
5 |
|
% |
5 |
|
% |
Tangible common equity / tangible assets (2) |
|
|
9.84 |
% |
|
9.28 |
% |
|
9.11 |
|
% |
6 |
|
% |
8 |
|
% |
Loan to deposit ratio |
|
|
76.52 |
% |
|
71.81 |
% |
|
75.14 |
|
% |
7 |
|
% |
2 |
|
% |
Noninterest-bearing deposits / total deposits |
|
|
29.52 |
% |
|
27.18 |
% |
|
39.56 |
|
% |
9 |
|
% |
(25 |
) |
% |
Total capital ratio |
|
|
15.4 |
% |
|
15.6 |
% |
|
14.8 |
|
% |
(1 |
) |
% |
4 |
|
% |
Tier 1 capital ratio |
|
|
13.2 |
% |
|
13.4 |
% |
|
12.7 |
|
% |
(1 |
) |
% |
4 |
|
% |
Common Equity Tier 1 capital ratio |
|
|
13.2 |
% |
|
13.4 |
% |
|
12.7 |
|
% |
(1 |
) |
% |
4 |
|
% |
Tier 1 leverage ratio |
|
|
10.0 |
% |
|
9.6 |
% |
|
9.2 |
|
% |
4 |
|
% |
9 |
|
% |
Heritage Bank of
Commerce: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capital ratio |
|
|
14.8 |
% |
|
15.0 |
% |
|
14.2 |
|
% |
(1 |
) |
% |
4 |
|
% |
Tier 1 capital ratio |
|
|
13.7 |
% |
|
13.9 |
% |
|
13.2 |
|
% |
(1 |
) |
% |
4 |
|
% |
Common Equity Tier 1 capital ratio |
|
|
13.7 |
% |
|
13.9 |
% |
|
13.2 |
|
% |
(1 |
) |
% |
4 |
|
% |
Tier 1 leverage ratio |
|
|
10.3 |
% |
|
10.0 |
% |
|
9.5 |
|
% |
3 |
|
% |
8 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1 |
) |
Represents
shareholders' equity minus goodwill and other intangible
assets. |
(2 |
) |
Represents shareholders' equity minus goodwill and other
intangible assets divided by total assets minus goodwill and other
intangible assets. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At or For the Quarter Ended: |
|
CREDIT QUALITY
DATA |
|
December 31, |
|
September 30, |
|
June 30, |
|
March 31, |
|
December 31, |
|
(in $000’s, unaudited) |
|
2023 |
|
2023 |
|
2023 |
|
2023 |
|
2022 |
|
Nonaccrual loans - held-for-investment |
|
$ |
6,818 |
|
$ |
3,518 |
|
$ |
3,275 |
|
|
$ |
781 |
|
$ |
740 |
|
|
Restructured and loans over 90
days past due |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and still accruing |
|
|
889 |
|
|
1,966 |
|
|
2,262 |
|
|
|
1,459 |
|
|
1,685 |
|
|
Total nonperforming loans |
|
|
7,707 |
|
|
5,484 |
|
|
5,537 |
|
|
|
2,240 |
|
|
2,425 |
|
|
Foreclosed assets |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
— |
|
|
Total nonperforming assets |
|
$ |
7,707 |
|
$ |
5,484 |
|
$ |
5,537 |
|
|
$ |
2,240 |
|
$ |
2,425 |
|
|
Other restructured loans still
accruing |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
|
$ |
— |
|
$ |
171 |
|
|
Net charge-offs (recoveries)
during the quarter |
|
$ |
33 |
|
$ |
269 |
|
$ |
(270 |
) |
|
$ |
271 |
|
$ |
(83 |
) |
|
Provision for credit losses on
loans during the quarter |
|
$ |
289 |
|
$ |
168 |
|
$ |
260 |
|
|
$ |
32 |
|
$ |
508 |
|
|
Allowance for credit losses on
loans |
|
$ |
47,958 |
|
$ |
47,702 |
|
$ |
47,803 |
|
|
$ |
47,273 |
|
$ |
47,512 |
|
|
Classified assets |
|
$ |
31,763 |
|
$ |
31,062 |
|
$ |
30,500 |
|
|
$ |
26,800 |
|
$ |
14,544 |
|
|
Allowance for credit losses on
loans to total loans |
|
|
1.43 |
% |
|
1.45 |
% |
|
1.45 |
|
% |
|
1.45 |
% |
|
1.44 |
|
% |
Allowance for credit losses on
loans to total nonperforming loans |
|
|
622.27 |
% |
|
869.84 |
% |
|
863.34 |
|
% |
|
2,110.40 |
% |
|
1,959.26 |
|
% |
Nonperforming assets to total
assets |
|
|
0.15 |
% |
|
0.10 |
% |
|
0.10 |
|
% |
|
0.04 |
% |
|
0.05 |
|
% |
Nonperforming loans to total
loans |
|
|
0.23 |
% |
|
0.17 |
% |
|
0.17 |
|
% |
|
0.07 |
% |
|
0.07 |
|
% |
Classified assets to Heritage
Commerce Corp |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 capital plus allowance for credit losses on loans |
|
|
6 |
% |
|
6 |
% |
|
6 |
|
% |
|
5 |
% |
|
3 |
|
% |
Classified assets to Heritage
Bank of Commerce |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 capital plus allowance for credit losses on loans |
|
|
5 |
% |
|
5 |
% |
|
5 |
|
% |
|
5 |
% |
|
3 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER PERIOD-END
STATISTICS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in $000’s, unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Heritage Commerce
Corp: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible common equity (1) |
|
$ |
496,643 |
|
$ |
485,070 |
|
$ |
476,209 |
|
|
$ |
469,146 |
|
$ |
453,792 |
|
|
Shareholders’ equity / total assets |
|
|
12.88 |
% |
|
12.25 |
% |
|
12.31 |
|
% |
|
11.69 |
% |
|
12.26 |
|
% |
Tangible common equity / tangible assets (2) |
|
|
9.84 |
% |
|
9.28 |
% |
|
9.27 |
|
% |
|
8.76 |
% |
|
9.11 |
|
% |
Loan to deposit ratio |
|
|
76.52 |
% |
|
71.81 |
% |
|
73.07 |
|
% |
|
73.39 |
% |
|
75.14 |
|
% |
Noninterest-bearing deposits / total deposits |
|
|
29.52 |
% |
|
27.18 |
% |
|
29.32 |
|
% |
|
33.05 |
% |
|
39.56 |
|
% |
Total capital ratio |
|
|
15.4 |
% |
|
15.6 |
% |
|
15.4 |
|
% |
|
15.3 |
% |
|
14.8 |
|
% |
Tier 1 capital ratio |
|
|
13.2 |
% |
|
13.4 |
% |
|
13.2 |
|
% |
|
13.1 |
% |
|
12.7 |
|
% |
Common Equity Tier 1 capital ratio |
|
|
13.2 |
% |
|
13.4 |
% |
|
13.2 |
|
% |
|
13.1 |
% |
|
12.7 |
|
% |
Tier 1 leverage ratio |
|
|
10.0 |
% |
|
9.6 |
% |
|
9.7 |
|
% |
|
9.6 |
% |
|
9.2 |
|
% |
Heritage Bank of
Commerce: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capital ratio |
|
|
14.8 |
% |
|
15.0 |
% |
|
14.8 |
|
% |
|
14.7 |
% |
|
14.2 |
|
% |
Tier 1 capital ratio |
|
|
13.7 |
% |
|
13.9 |
% |
|
13.7 |
|
% |
|
13.5 |
% |
|
13.2 |
|
% |
Common Equity Tier 1 capital ratio |
|
|
13.7 |
% |
|
13.9 |
% |
|
13.7 |
|
% |
|
13.5 |
% |
|
13.2 |
|
% |
Tier 1 leverage ratio |
|
|
10.3 |
% |
|
10.0 |
% |
|
10.0 |
|
% |
|
9.9 |
% |
|
9.5 |
|
% |
|
|
|
(1 |
) |
Represents
shareholders' equity minus goodwill and other intangible
assets. |
(2 |
) |
Represents shareholders' equity minus goodwill and other
intangible assets divided by total assets minus goodwill and other
intangible assets. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarter Ended |
|
For the Quarter Ended |
|
|
|
December 31, 2023 |
|
December 31, 2022 |
|
|
|
|
|
|
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, gross (1)(2) |
|
$ |
3,282,429 |
|
$ |
44,635 |
|
|
5.39 |
% |
$ |
3,250,556 |
|
$ |
42,501 |
|
|
5.19 |
% |
Securities - taxable |
|
|
1,074,638 |
|
|
6,516 |
|
|
2.41 |
% |
|
1,156,563 |
|
|
6,941 |
|
|
2.38 |
% |
Securities - exempt from
Federal tax (3) |
|
|
32,244 |
|
|
288 |
|
|
3.54 |
% |
|
37,958 |
|
|
324 |
|
|
3.39 |
% |
Other investments and
interest-bearing deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in other financial institutions |
|
|
534,271 |
|
|
7,514 |
|
|
5.58 |
% |
|
564,501 |
|
|
5,494 |
|
|
3.86 |
% |
Total interest earning assets (3) |
|
|
4,923,582 |
|
|
58,953 |
|
|
4.75 |
% |
|
5,009,578 |
|
|
55,260 |
|
|
4.38 |
% |
Cash and due from banks |
|
|
35,214 |
|
|
|
|
|
|
|
36,392 |
|
|
|
|
|
|
Premises and equipment,
net |
|
|
9,843 |
|
|
|
|
|
|
|
9,436 |
|
|
|
|
|
|
Goodwill and other intangible
assets |
|
|
176,641 |
|
|
|
|
|
|
|
179,074 |
|
|
|
|
|
|
Other assets |
|
|
146,682 |
|
|
|
|
|
|
|
126,387 |
|
|
|
|
|
|
Total assets |
|
$ |
5,291,962 |
|
|
|
|
|
|
$ |
5,360,867 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
shareholders’ equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, noninterest-bearing |
|
$ |
1,243,222 |
|
|
|
|
|
|
$ |
1,851,003 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, interest-bearing |
|
|
948,061 |
|
|
1,661 |
|
|
0.70 |
% |
|
1,164,378 |
|
|
945 |
|
|
0.32 |
% |
Savings and money market |
|
|
1,096,962 |
|
|
6,216 |
|
|
2.25 |
% |
|
1,424,964 |
|
|
1,694 |
|
|
0.47 |
% |
Time deposits - under $100 |
|
|
11,389 |
|
|
37 |
|
|
1.29 |
% |
|
12,157 |
|
|
7 |
|
|
0.23 |
% |
Time deposits - $100 and over |
|
|
234,140 |
|
|
2,130 |
|
|
3.61 |
% |
|
120,246 |
|
|
268 |
|
|
0.88 |
% |
ICS/CDARS - interest-bearing demand, money market |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and time deposits |
|
|
920,976 |
|
|
6,009 |
|
|
2.59 |
% |
|
27,785 |
|
|
1 |
|
|
0.01 |
% |
Total interest-bearing deposits |
|
|
3,211,528 |
|
|
16,053 |
|
|
1.98 |
% |
|
2,749,530 |
|
|
2,915 |
|
|
0.42 |
% |
Total deposits |
|
|
4,454,750 |
|
|
16,053 |
|
|
1.43 |
% |
|
4,600,533 |
|
|
2,915 |
|
|
0.25 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term borrowings |
|
|
29 |
|
|
— |
|
|
0.00 |
% |
|
24 |
|
|
— |
|
|
0.00 |
% |
Subordinated debt, net of
issuance costs |
|
|
39,477 |
|
|
538 |
|
|
5.41 |
% |
|
39,326 |
|
|
538 |
|
|
5.43 |
% |
Total interest-bearing liabilities |
|
|
3,251,034 |
|
|
16,591 |
|
|
2.02 |
% |
|
2,788,880 |
|
|
3,453 |
|
|
0.49 |
% |
Total interest-bearing liabilities and demand, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
noninterest-bearing / cost of funds |
|
|
4,494,256 |
|
|
16,591 |
|
|
1.46 |
% |
|
4,639,883 |
|
|
3,453 |
|
|
0.30 |
% |
Other liabilities |
|
|
133,068 |
|
|
|
|
|
|
|
105,043 |
|
|
|
|
|
|
Total liabilities |
|
|
4,627,324 |
|
|
|
|
|
|
|
4,744,926 |
|
|
|
|
|
|
Shareholders’ equity |
|
|
664,638 |
|
|
|
|
|
|
|
615,941 |
|
|
|
|
|
|
Total liabilities and shareholders’ equity |
|
$ |
5,291,962 |
|
|
|
|
|
|
$ |
5,360,867 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
(3) / margin |
|
|
|
|
|
42,362 |
|
|
3.41 |
% |
|
|
|
|
51,807 |
|
|
4.10 |
% |
Less tax equivalent adjustment
(3) |
|
|
|
|
|
(61 |
) |
|
|
|
|
|
|
|
(68 |
) |
|
|
|
Net interest income |
|
|
|
|
$ |
42,301 |
|
|
|
|
|
|
|
$ |
51,739 |
|
|
|
|
|
|
|
(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 $147,000 for the fourth quarter of
2023, compared to $326,000 for the fourth quarter of 2022.
Prepayment fees totaled $91,000 for the fourth quarter of 2023,
compared to $123,000 for the fourth quarter of 2022. |
(3 |
) |
Reflects the FTE adjustment for
Federal tax-exempt income based on a 21% tax rate. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarter Ended |
|
For the Quarter Ended |
|
|
|
December 31, 2023 |
|
September 30, 2023 |
|
|
|
|
|
|
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, gross (1)(2) |
|
$ |
3,282,429 |
|
$ |
44,635 |
|
|
5.39 |
% |
$ |
3,257,480 |
|
$ |
44,853 |
|
|
5.46 |
% |
Securities - taxable |
|
|
1,074,638 |
|
|
6,516 |
|
|
2.41 |
% |
|
1,114,782 |
|
|
6,797 |
|
|
2.42 |
% |
Securities - exempt from
Federal tax (3) |
|
|
32,244 |
|
|
288 |
|
|
3.54 |
% |
|
32,947 |
|
|
293 |
|
|
3.53 |
% |
Other investments and
interest-bearing deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in other financial institutions |
|
|
534,271 |
|
|
7,514 |
|
|
5.58 |
% |
|
646,501 |
|
|
8,909 |
|
|
5.47 |
% |
Total interest earning assets (3) |
|
|
4,923,582 |
|
|
58,953 |
|
|
4.75 |
% |
|
5,051,710 |
|
|
60,852 |
|
|
4.78 |
% |
Cash and due from banks |
|
|
35,214 |
|
|
|
|
|
|
|
35,911 |
|
|
|
|
|
|
Premises and equipment,
net |
|
|
9,843 |
|
|
|
|
|
|
|
9,374 |
|
|
|
|
|
|
Goodwill and other intangible
assets |
|
|
176,641 |
|
|
|
|
|
|
|
177,238 |
|
|
|
|
|
|
Other assets |
|
|
146,682 |
|
|
|
|
|
|
|
125,697 |
|
|
|
|
|
|
Total assets |
|
$ |
5,291,962 |
|
|
|
|
|
|
$ |
5,399,930 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
shareholders’ equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, noninterest-bearing |
|
$ |
1,243,222 |
|
|
|
|
|
|
$ |
1,302,606 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, interest-bearing |
|
|
948,061 |
|
|
1,661 |
|
|
0.70 |
% |
|
1,017,686 |
|
|
1,730 |
|
|
0.67 |
% |
Savings and money market |
|
|
1,096,962 |
|
|
6,216 |
|
|
2.25 |
% |
|
1,087,336 |
|
|
5,514 |
|
|
2.01 |
% |
Time deposits - under $100 |
|
|
11,389 |
|
|
37 |
|
|
1.29 |
% |
|
11,966 |
|
|
30 |
|
|
0.99 |
% |
Time deposits - $100 and over |
|
|
234,140 |
|
|
2,130 |
|
|
3.61 |
% |
|
272,362 |
|
|
2,489 |
|
|
3.63 |
% |
ICS/CDARS - interest-bearing demand, money market |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and time deposits |
|
|
920,976 |
|
|
6,009 |
|
|
2.59 |
% |
|
881,665 |
|
|
5,117 |
|
|
2.30 |
% |
Total interest-bearing deposits |
|
|
3,211,528 |
|
|
16,053 |
|
|
1.98 |
% |
|
3,271,015 |
|
|
14,880 |
|
|
1.80 |
% |
Total deposits |
|
|
4,454,750 |
|
|
16,053 |
|
|
1.43 |
% |
|
4,573,621 |
|
|
14,880 |
|
|
1.29 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term borrowings |
|
|
29 |
|
|
— |
|
|
0.00 |
% |
|
31 |
|
|
— |
|
|
0.00 |
% |
Subordinated debt, net of
issuance costs |
|
|
39,477 |
|
|
538 |
|
|
5.41 |
% |
|
39,439 |
|
|
539 |
|
|
5.42 |
% |
Total interest-bearing liabilities |
|
|
3,251,034 |
|
|
16,591 |
|
|
2.02 |
% |
|
3,310,485 |
|
|
15,419 |
|
|
1.85 |
% |
Total interest-bearing liabilities and demand, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
noninterest-bearing / cost of funds |
|
|
4,494,256 |
|
|
16,591 |
|
|
1.46 |
% |
|
4,613,091 |
|
|
15,419 |
|
|
1.33 |
% |
Other liabilities |
|
|
133,068 |
|
|
|
|
|
|
|
129,866 |
|
|
|
|
|
|
Total liabilities |
|
|
4,627,324 |
|
|
|
|
|
|
|
4,742,957 |
|
|
|
|
|
|
Shareholders’ equity |
|
|
664,638 |
|
|
|
|
|
|
|
656,973 |
|
|
|
|
|
|
Total liabilities and shareholders’ equity |
|
$ |
5,291,962 |
|
|
|
|
|
|
$ |
5,399,930 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
(3) / margin |
|
|
|
|
|
42,362 |
|
|
3.41 |
% |
|
|
|
|
45,433 |
|
|
3.57 |
% |
Less tax equivalent adjustment
(3) |
|
|
|
|
|
(61 |
) |
|
|
|
|
|
|
|
(61 |
) |
|
|
|
Net interest income |
|
|
|
|
$ |
42,301 |
|
|
|
|
|
|
|
$ |
45,372 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 $147,000 for the fourth quarter of
2023, compared to $201,000 for the third quarter of 2023.
Prepayment fees totaled $91,000 for the fourth quarter of 2023,
compared to $182,000 for the third quarter of 2023. |
(3 |
) |
Reflects the FTE adjustment for
Federal tax-exempt income based on a 21% tax rate. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended |
|
For the Year Ended |
|
|
|
December 31, 2023 |
|
December 31, 2022 |
|
|
|
|
|
|
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, gross
(1)(2) |
|
$ |
3,262,194 |
|
$ |
177,628 |
|
|
5.45 |
% |
$ |
3,119,006 |
|
$ |
153,010 |
|
|
4.91 |
% |
Securities - taxable |
|
|
1,124,190 |
|
|
27,351 |
|
|
2.43 |
% |
|
983,137 |
|
|
20,666 |
|
|
2.10 |
% |
Securities - exempt from
Federal tax (3) |
|
|
33,806 |
|
|
1,196 |
|
|
3.54 |
% |
|
40,478 |
|
|
1,372 |
|
|
3.39 |
% |
Other investments,
interest-bearing deposits in other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
financial institutions and Federal funds sold |
|
|
534,828 |
|
|
28,374 |
|
|
5.31 |
% |
|
908,931 |
|
|
14,068 |
|
|
1.55 |
% |
Total interest earning assets (3) |
|
|
4,955,018 |
|
|
234,549 |
|
|
4.73 |
% |
|
5,051,552 |
|
|
189,116 |
|
|
3.74 |
% |
Cash and due from banks |
|
|
35,955 |
|
|
|
|
|
|
|
37,287 |
|
|
|
|
|
|
Premises and equipment,
net |
|
|
9,421 |
|
|
|
|
|
|
|
9,574 |
|
|
|
|
|
|
Goodwill and other intangible
assets |
|
|
177,536 |
|
|
|
|
|
|
|
180,061 |
|
|
|
|
|
|
Other assets |
|
|
132,347 |
|
|
|
|
|
|
|
122,746 |
|
|
|
|
|
|
Total assets |
|
$ |
5,310,277 |
|
|
|
|
|
|
$ |
5,401,220 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
shareholders’ equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, noninterest-bearing |
|
$ |
1,393,949 |
|
|
|
|
|
|
$ |
1,863,928 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, interest-bearing |
|
|
1,074,523 |
|
|
6,655 |
|
|
0.62 |
% |
|
1,224,676 |
|
|
2,415 |
|
|
0.20 |
% |
Savings and money market |
|
|
1,144,032 |
|
|
19,857 |
|
|
1.74 |
% |
|
1,394,283 |
|
|
3,720 |
|
|
0.27 |
% |
Time deposits - under $100 |
|
|
11,809 |
|
|
97 |
|
|
0.82 |
% |
|
12,587 |
|
|
21 |
|
|
0.17 |
% |
Time deposits - $100 and over |
|
|
218,131 |
|
|
6,874 |
|
|
3.15 |
% |
|
122,018 |
|
|
609 |
|
|
0.50 |
% |
ICS/CDARS - interest-bearing demand, money market |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and time deposits |
|
|
625,045 |
|
|
14,074 |
|
|
2.25 |
% |
|
29,708 |
|
|
5 |
|
|
0.02 |
% |
Total interest-bearing deposits |
|
|
3,073,540 |
|
|
47,557 |
|
|
1.55 |
% |
|
2,783,272 |
|
|
6,770 |
|
|
0.24 |
% |
Total deposits |
|
|
4,467,489 |
|
|
47,557 |
|
|
1.06 |
% |
|
4,647,200 |
|
|
6,770 |
|
|
0.15 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term borrowings |
|
|
27,145 |
|
|
1,365 |
|
|
5.03 |
% |
|
24 |
|
|
— |
|
|
0.00 |
% |
Subordinated debt, net of
issuance costs |
|
|
39,420 |
|
|
2,152 |
|
|
5.46 |
% |
|
41,739 |
|
|
2,178 |
|
|
5.22 |
% |
Total interest-bearing liabilities |
|
|
3,140,105 |
|
|
51,074 |
|
|
1.63 |
% |
|
2,825,035 |
|
|
8,948 |
|
|
0.32 |
% |
Total interest-bearing liabilities and demand, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
noninterest-bearing / cost of funds |
|
|
4,534,054 |
|
|
51,074 |
|
|
1.13 |
% |
|
4,688,963 |
|
|
8,948 |
|
|
0.19 |
% |
Other liabilities |
|
|
123,774 |
|
|
|
|
|
|
|
104,654 |
|
|
|
|
|
|
Total liabilities |
|
|
4,657,828 |
|
|
|
|
|
|
|
4,793,617 |
|
|
|
|
|
|
Shareholders’ equity |
|
|
652,449 |
|
|
|
|
|
|
|
607,603 |
|
|
|
|
|
|
Total liabilities and shareholders’ equity |
|
$ |
5,310,277 |
|
|
|
|
|
|
$ |
5,401,220 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
(3) / margin |
|
|
|
|
|
183,475 |
|
|
3.70 |
% |
|
|
|
|
180,168 |
|
|
3.57 |
% |
Less tax equivalent adjustment
(3) |
|
|
|
|
|
(251 |
) |
|
|
|
|
|
|
|
(288 |
) |
|
|
|
Net interest income |
|
|
|
|
$ |
183,224 |
|
|
|
|
|
|
|
$ |
179,880 |
|
|
|
|
|
|
|
(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 $742,000 for the year ended December
31 2023, compared to $3,437,000 for the year ended December 31,
2022. Prepayment fees totaled $484,000 for the year ended December
31, 2023, compared to $1,278,000 for the year ended December 31,
2022. |
(3 |
) |
Reflects the FTE adjustment for
Federal tax-exempt income based on a 21% tax rate. |
|
|
|
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