SAN JOSE, Calif., July 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 second quarter 2024 net income
was $9.2 million, or $0.15 per average diluted common share,
compared to $10.2 million, or $0.17 per average diluted common
share, for the first quarter of 2024, and $16.4 million, or $0.27
per average diluted common share, for the second quarter of 2023.
For the six months ended June 30, 2024, net income was $19.4
million, or $0.32 per average diluted common share, compared to
$35.3 million, or $0.58 per average diluted common share, for the
six months ended June 30, 2023. All data are unaudited.
"In the first six months of 2024, we continued to invest in
people and technology to achieve our Company’s growth, security and
client service goals,” said Clay Jones, President and Chief
Executive Officer. “Our strong credit quality metrics further
improved, as nonperforming assets and classified assets were both
down at the end of the second quarter of 2024 from the linked
quarter. We continued to strengthen our allowance for credit losses
on loans during the second quarter of 2024, which was driven by
prudent credit risk management and the increase in loan
balances.”
“Our loan portfolio, excluding loans held-for-sale, increased by
$43.7 million at June 30, 2024, from the preceding quarter and
increased by $91.0 million year-over-year,” said Mr. Jones. “Our
total deposits remained steady at $4.4 billion at June 30, 2024,
while average deposits increased during the second quarter of 2024
from the linked quarter.”
“On behalf of the Board of Directors, I would like to thank our
dedicated bank team members for all they do to support our loyal
clients, communities and dedicated shareholders, and we look
forward to continued success in the second half of the year,” Mr.
Jones said. “It is because of them that we remain well-positioned
to execute on our growth objectives.”
Second Quarter Ended June 30,
2024
Operating Results, Liquidity Position, Financial Condition,
Credit Quality, and Capital Management
(as of, or for the periods ended June 30, 2024,
compared to March 31, 2024, and June 30, 2023, except as
noted):
Operating Results:
- The following table indicates the
ratios for the annualized return on average equity, average
tangible common equity, average assets and average tangible assets
for the periods indicated:
| |
|
For the Quarter Ended: |
|
For the Six Months Ended: |
| |
|
June 30, |
|
March 31, |
|
June 30, |
|
June 30, |
|
June 30, |
|
(unaudited) |
|
2024 |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
| Return on average equity |
|
5.50 |
% |
|
6.08 |
% |
|
10.12 |
% |
|
5.79 |
% |
|
11.06 |
% |
| Return on average tangible
common equity(1) |
|
7.43 |
% |
|
8.24 |
% |
|
13.93 |
% |
|
7.84 |
% |
|
15.29 |
% |
| Return on average assets |
|
0.71 |
% |
|
0.79 |
% |
|
1.25 |
% |
|
0.75 |
% |
|
1.35 |
% |
| Return on average tangible
assets(1) |
|
0.74 |
% |
|
0.82 |
% |
|
1.29 |
% |
|
0.78 |
% |
|
1.40 |
% |
|
|
|
|
(1) |
|
This is a
non-GAAP financial measure as defined and discussed under
“Non-GAAP Financial Measures” below. |
|
|
|
|
|
|
|
|
Net Interest Income:
- Net interest income decreased (2%)
to $39.5 million for the second quarter of 2024, compared to $40.1
million for the first quarter of 2024. The non-GAAP fully tax
equivalent (“FTE”) net interest margin contracted 8 basis points to
3.26% for the second quarter of 2024 from 3.34% for the first
quarter of 2024, primarily due to higher rates paid on client
deposits, partially offset by maturing securities invested in
higher yielding overnight funds and higher average yields on
loans.
- Net interest income decreased (15%)
to $39.5 million for the second quarter of 2024, compared to $46.3
million for the second quarter of 2023. The non-GAAP FTE net
interest margin contracted 50 basis points to 3.26% for the second
quarter of 2024, from 3.76% for the second quarter of 2023,
primarily due to higher rates paid on client deposits, a decrease
in the average balance of noninterest-bearing demand deposits, a
decrease in average interest earning assets, and a decrease in the
average balance of higher yielding Bay View Funding factored
receivables, partially offset by an increase in the rate on core
loans and overnight funds.
- For the first six months of 2024,
net interest income decreased (17%) to $79.5 million, compared to
$95.6 million for the first six months of 2023. The non-GAAP FTE
net interest margin decreased 62 basis points to 3.30% for the
first six months of 2024, from 3.92% for the first six months of
2023, primarily due to higher rates paid on client deposits, a
decrease in the average balance of noninterest-bearing demand
deposits, a decrease in average interest earning assets, and a
decrease in the average balances of higher yielding Bay View
Funding factored receivables, partially offset by an increase in
the rate on core loans and overnight funds.
- The following tables set forth the
estimated changes in the Company’s annual net interest income and
economic value of equity (a non-GAAP financial measure) that would
result from the designated instantaneous parallel shift in interest
rates noted, and assuming a flat balance sheet with consistent
product mix, as of June 30, 2024:
| |
|
Increase/(Decrease) in |
|
| |
|
Estimated Net |
|
| CHANGE IN INTEREST
RATES (basis points) |
|
Interest Income(1) |
|
|
(in $000's, unaudited) |
|
Amount |
|
Percent |
|
|
+400 |
|
$ |
15,815 |
|
|
8.5 |
|
% |
| +300 |
|
$ |
11,832 |
|
|
6.4 |
|
% |
| +200 |
|
$ |
7,879 |
|
|
4.2 |
|
% |
| +100 |
|
$ |
3,953 |
|
|
2.1 |
|
% |
|
0 |
|
|
— |
|
|
— |
|
|
| −100 |
|
$ |
(5,545 |
) |
|
(3.0 |
) |
% |
| −200 |
|
$ |
(12,865 |
) |
|
(6.9 |
) |
% |
| −300 |
|
$ |
(22,246 |
) |
|
(12.0 |
) |
% |
| −400 |
|
$ |
(36,316 |
) |
|
(19.6 |
) |
% |
| |
|
Increase/(Decrease) in |
|
| |
|
Estimated Economic |
|
| CHANGE IN INTEREST
RATES (basis points) |
|
Value of
Equity(1) |
|
|
(in $000's, unaudited) |
|
Amount |
|
Percent |
|
|
+400 |
|
$ |
108,119 |
|
|
9.1 |
|
% |
| +300 |
|
$ |
91,506 |
|
|
7.7 |
|
% |
| +200 |
|
$ |
68,864 |
|
|
5.8 |
|
% |
| +100 |
|
$ |
38,972 |
|
|
3.3 |
|
% |
|
0 |
|
|
— |
|
|
— |
|
|
| −100 |
|
$ |
(63,527 |
) |
|
(5.4 |
) |
% |
| −200 |
|
$ |
(154,537 |
) |
|
(13.0 |
) |
% |
| −300 |
|
$ |
(272,094 |
) |
|
(22.9 |
) |
% |
| −400 |
|
$ |
(410,354 |
) |
|
(34.6 |
) |
% |
|
|
|
|
(1) |
|
Computations
of prospective effects of hypothetical interest rate changes are
for illustrative purposes only, 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 affect 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 increased to 5.49%
for the second quarter of 2024, compared to 5.44% for the first
quarter of 2024, primarily due to higher loan yields on the core
bank. |
| |
|
For the Quarter Ended |
|
For the Quarter Ended |
|
| |
|
June 30, 2024 |
|
March 31, 2024 |
|
| |
|
Average |
|
Interest |
|
Average |
|
Average |
|
Interest |
|
Average |
|
|
(in $000’s, unaudited) |
|
Balance |
|
Income |
|
Yield |
|
Balance |
|
Income |
|
Yield |
|
|
Loans, core bank |
|
$ |
2,830,260 |
|
|
$ |
38,496 |
|
5.47 |
% |
$ |
2,795,351 |
|
|
$ |
37,721 |
|
5.43 |
% |
| Prepayment fees |
|
|
— |
|
|
|
54 |
|
0.01 |
% |
|
— |
|
|
|
24 |
|
0.00 |
% |
| Bay View Funding factored
receivables |
|
|
54,777 |
|
|
|
2,914 |
|
21.40 |
% |
|
53,511 |
|
|
|
2,838 |
|
21.33 |
% |
| Purchased residential
mortgages |
|
|
447,687 |
|
|
|
3,739 |
|
3.36 |
% |
|
454,240 |
|
|
|
3,788 |
|
3.35 |
% |
| Loan fair value mark /
accretion |
|
|
(2,863 |
) |
|
|
267 |
|
0.04 |
% |
|
(3,113 |
) |
|
|
229 |
|
0.03 |
% |
|
Total loans (includes loans held-for-sale) |
|
$ |
3,329,861 |
|
|
$ |
45,470 |
|
5.49 |
% |
$ |
3,299,989 |
|
|
$ |
44,600 |
|
5.44 |
% |
|
|
• |
The average yield on the total loan portfolio increased to 5.49%
for the second quarter of 2024, compared to 5.47% for the second
quarter of 2023, primarily due to increases in the prime rate,
partially offset by a lower average balance of higher yielding Bay
View Funding factored receivables for the second quarter of
2024. |
| |
|
For the Quarter Ended |
|
For the Quarter Ended |
|
| |
|
June 30, 2024 |
|
June 30, 2023 |
|
| |
|
Average |
|
Interest |
|
Average |
|
Average |
|
Interest |
|
Average |
|
|
(in $000’s, unaudited) |
|
Balance |
|
Income |
|
Yield |
|
Balance |
|
Income |
|
Yield |
|
|
Loans, core bank |
|
$ |
2,830,260 |
|
|
$ |
38,496 |
|
5.47 |
% |
$ |
2,688,370 |
|
|
$ |
35,996 |
|
5.37 |
% |
| Prepayment fees |
|
|
— |
|
|
|
54 |
|
0.01 |
% |
|
— |
|
|
|
73 |
|
0.01 |
% |
| Bay View Funding factored
receivables |
|
|
54,777 |
|
|
|
2,914 |
|
21.40 |
% |
|
68,680 |
|
|
|
3,847 |
|
22.47 |
% |
| Purchased residential
mortgages |
|
|
447,687 |
|
|
|
3,739 |
|
3.36 |
% |
|
478,220 |
|
|
|
3,829 |
|
3.21 |
% |
| Loan fair value mark /
accretion |
|
|
(2,863 |
) |
|
|
267 |
|
0.04 |
% |
|
(3,929 |
) |
|
|
283 |
|
0.04 |
% |
|
Total loans (includes loans held-for-sale) |
|
$ |
3,329,861 |
|
|
$ |
45,470 |
|
5.49 |
% |
$ |
3,231,341 |
|
|
$ |
44,028 |
|
5.47 |
% |
|
|
• |
The average yield on the total loan portfolio remained flat at
5.46% for both the first six months of 2024 and 2023, as a lower
average balance of higher yielding Bay View Funding factored
receivables, a decrease in the accretion of loan purchase discount
into interest income from acquired loans, and lower prepayment
fees, were offset by increases in the prime rate for the first six
months of 2024. |
| |
|
For the Six Months Ended |
|
For the Six Months Ended |
|
| |
|
June 30, 2024 |
|
June 30, 2023 |
|
| |
|
Average |
|
Interest |
|
Average |
|
Average |
|
Interest |
|
Average |
|
|
(in $000’s, unaudited) |
|
Balance |
|
Income |
|
Yield |
|
Balance |
|
Income |
|
Yield |
|
|
Loans, core bank |
|
$ |
2,812,805 |
|
|
$ |
76,217 |
|
5.45 |
% |
$ |
2,702,291 |
|
|
$ |
71,590 |
|
5.34 |
% |
| Prepayment fees |
|
|
— |
|
|
|
78 |
|
0.01 |
% |
|
— |
|
|
|
211 |
|
0.02 |
% |
| Bay View Funding factored
receivables |
|
|
54,144 |
|
|
|
5,752 |
|
21.36 |
% |
|
73,193 |
|
|
|
7,848 |
|
21.62 |
% |
| Purchased residential
mortgages |
|
|
450,964 |
|
|
|
7,527 |
|
3.36 |
% |
|
482,964 |
|
|
|
7,686 |
|
3.21 |
% |
| Loan fair value mark /
accretion |
|
|
(2,988 |
) |
|
|
496 |
|
0.04 |
% |
|
(4,143 |
) |
|
|
805 |
|
0.06 |
% |
|
Total loans (includes loans held-for-sale) |
|
$ |
3,314,925 |
|
|
$ |
90,070 |
|
5.46 |
% |
$ |
3,254,305 |
|
|
$ |
88,140 |
|
5.46 |
% |
|
|
• |
During the second quarter of 2024, the Asset-based Lending division
was reorganized into the core bank. |
|
|
|
|
|
|
• |
In aggregate, the unamortized net purchase discount on total loans
acquired was $2.7 million at June 30, 2024. |
|
|
|
|
- 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 |
|
| |
|
June 30, 2024 |
|
March 31, 2024 |
|
| |
|
Average |
|
Interest |
|
Average |
|
Average |
|
Interest |
|
Average |
|
|
(in $000’s, unaudited) |
|
Balance |
|
Expense |
|
Rate |
|
Balance |
|
Expense |
|
Rate |
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, noninterest-bearing |
|
$ |
1,127,145 |
|
|
|
|
|
|
$ |
1,177,078 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, interest-bearing |
|
|
932,100 |
|
$ |
1,719 |
|
0.74 |
% |
|
920,048 |
|
$ |
1,554 |
|
0.68 |
% |
|
Savings and money market |
|
|
1,104,589 |
|
|
7,867 |
|
2.86 |
% |
|
1,067,581 |
|
|
6,649 |
|
2.50 |
% |
|
Time deposits - under $100 |
|
|
10,980 |
|
|
46 |
|
1.68 |
% |
|
10,945 |
|
|
42 |
|
1.54 |
% |
|
Time deposits - $100 and over |
|
|
228,248 |
|
|
2,245 |
|
3.96 |
% |
|
221,211 |
|
|
2,064 |
|
3.75 |
% |
|
Insured Cash Sweep ("ICS")/Certificate of Deposit Registry |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service ("CDARS") - interest-bearing demand, money market |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and time deposits |
|
|
991,483 |
|
|
7,207 |
|
2.92 |
% |
|
963,287 |
|
|
6,611 |
|
2.76 |
% |
|
Total interest-bearing deposits |
|
|
3,267,400 |
|
|
19,084 |
|
2.35 |
% |
|
3,183,072 |
|
|
16,920 |
|
2.14 |
% |
|
Total deposits |
|
|
4,394,545 |
|
|
19,084 |
|
1.75 |
% |
|
4,360,150 |
|
|
16,920 |
|
1.56 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Short-term borrowings |
|
|
19 |
|
|
— |
|
0.00 |
% |
|
15 |
|
|
— |
|
0.00 |
% |
| Subordinated debt, net of
issuance costs |
|
|
39,553 |
|
|
538 |
|
5.47 |
% |
|
39,516 |
|
|
538 |
|
5.48 |
% |
|
Total interest-bearing liabilities |
|
|
3,306,972 |
|
|
19,622 |
|
2.39 |
% |
|
3,222,603 |
|
|
17,458 |
|
2.18 |
% |
|
Total interest-bearing liabilities and demand, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
noninterest-bearing / cost of funds |
|
$ |
4,434,117 |
|
$ |
19,622 |
|
1.78 |
% |
$ |
4,399,681 |
|
$ |
17,458 |
|
1.60 |
% |
|
|
• |
The average cost of total deposits increased to 1.75% for the
second quarter of 2024, compared to 1.56% for the first quarter of
2024. The average cost of funds increased to 1.78% for the second
quarter of 2024, compared to 1.60% for the first quarter of 2024.
The average cost of deposits was 0.97% and the average cost of
funds was 1.07% for the second quarter of 2023. |
|
|
|
|
|
|
|
|
|
|
• |
While the cost of deposits increased for the second quarter of
2024, the cost of deposits remained relatively flat during the
quarter. |
|
|
|
|
|
|
|
|
• |
The average cost of total deposits increased to 1.65% for the first
six months of 2024, compared to 0.76% for the first six months of
2023. The average cost of funds increased to 1.69% for the first
six months of 2024, compared to 0.85% for the first six months of
2023.
|
|
|
|
|
|
|
|
|
• |
The increase in the average cost of total deposits and the average
cost of funds for the second quarter and first six months of 2024
was primarily due to clients seeking higher yields and moving
noninterest-bearing deposits to the Bank’s interest-bearing
ICS/CDARS deposits and interest-bearing money market accounts and
increases in market rates. |
|
|
|
|
|
|
Provision for Credit Losses on
Loans:
- During the second quarter of 2024,
we recorded a provision for credit losses on loans of $471,000,
compared to a $184,000 provision for credit losses on loans for the
first quarter of 2024, and a provision for credit losses on loans
of $260,000 for the second quarter of 2023.
- There was a provision for credit
losses on loans of $655,000 for the six months ended June 30, 2024,
compared to a $292,000 provision for credit losses on loans for the
six months ended June 30, 2023.
Noninterest Income:
- Total noninterest income increased
11% to $2.3 million for the second quarter of 2024, compared to
$2.0 million for the first quarter of 2024, and increased 10% from
$2.1 million for the second quarter of 2023, primarily due to a
higher gain on proceeds from company-owned life insurance and
higher termination fees, partially offset by a lower gain on sales
of SBA loans during the second quarter of 2024.
- Total noninterest income decreased
(11%) to $4.3 million for the first six months of 2024, compared to
$4.8 million for the first six months of 2023, primarily due to
lower service charges and fees on deposit accounts, partially
offset by a higher gain on proceeds from company-owned life
insurance and higher termination fees for the first six months of
2024.
Noninterest Expense:
- Total noninterest expense for the
second quarter of 2024 increased to $28.2 million, compared to
$27.5 million for the first quarter of 2024, primarily due to
higher salaries and employee benefits as a result of annual merit
increases and staff additions, and higher information technology
related expenses, partially offset by lower professional fees and
marketing related expenses for the second quarter of 2024. Total
noninterest expense for the second quarter of 2024 increased to
$28.2 million, compared to $25.0 million for the second quarter of
2023, primarily due to higher salaries and employee benefits, rent
expense included in occupancy and equipment, and information
technology related expenses included in other noninterest
expense.
- Total noninterest expense for the
first six months of 2024 increased to $55.7 million, compared to
$50.4 million for the first six months of 2023, primarily due to
higher salaries and employee benefits, and information technology
related expenses, homeowner association vendor payments, regulatory
assessments, and ICS/CDARS fee expense included in other
noninterest expense.
- Full time equivalent employees were
353 at June 30, 2024, compared to 351 at March 31, 2024, and 347 at
June 30, 2023.
- The efficiency ratio increased to
67.55% for the second quarter of 2024, compared to 65.34% for the
first quarter of 2024, and 51.67% for the second quarter of 2023.
The efficiency ratio increased to 66.44% for the six months ended
June 30, 2024 compared to 50.20% for the six months ended June 30,
2023. The increase in the efficiency ratio for the second quarter
of 2024 and six months ended June 30, 2024 was due to both higher
noninterest expense and lower net revenue. The efficiency ratio is
a non-GAAP financial measure.
Income Tax Expense:
- Income tax expense was $3.8 million
for the second quarter of 2024, compared to $4.3 million for the
first quarter of 2024, and $6.7 million for the second quarter of
2023. The effective tax rate for the second quarter of 2024 was
29.4%, compared to 29.5% for the first quarter of 2024, and 29.0%
for the second quarter of 2023.
- Income tax expense for the six
months ended June 30, 2024 was $8.1 million, compared to $14.4
million for the six months ended June 30, 2023. The effective tax
rate for six months ended June 30, 2024 was 29.4%, compared to
28.9% for the six months ended June 30, 2023.
Liquidity Position, Financial Condition,
Credit Quality, and Capital Management:
Liquidity and Available Lines of
Credit:
- The following table shows our liquidity, available lines of
credit and the amounts outstanding at June 30, 2024:
| LIQUIDITY AND
AVAILABLE LINES OF CREDIT |
|
Total |
|
|
|
Remaining |
|
(in $000’s, unaudited) |
|
Available |
|
Outstanding |
|
Available |
|
Excess funds at the Federal Reserve Bank ("FRB") |
|
$ |
589,600 |
|
$ |
— |
|
$ |
589,600 |
| FRB discount window
collateralized line of credit |
|
|
1,404,998 |
|
|
— |
|
|
1,404,998 |
| Federal Home Loan Bank
collateralized borrowing capacity |
|
|
792,027 |
|
|
— |
|
|
792,027 |
| Unpledged investment
securities (at fair value) |
|
|
52,319 |
|
|
— |
|
|
52,319 |
| Federal funds purchase
arrangements |
|
|
90,000 |
|
|
— |
|
|
90,000 |
| Holding company line of
credit |
|
|
20,000 |
|
|
— |
|
|
20,000 |
|
Total |
|
$ |
2,948,944 |
|
$ |
— |
|
$ |
2,948,944 |
|
|
• |
The Company’s total available liquidity and borrowing capacity was
$3.0 billion at both June 30, 2024 and March 31, 2024, and $3.1
billion at June 30, 2023. |
|
|
|
|
|
|
• |
The available liquidity and borrowing capacity was 66% of the
Company’s total deposits and approximately 148% of the Bank’s
estimated uninsured deposits at June 30, 2024. The available
liquidity and borrowing capacity was 67% of the Company’s total
deposits and approximately 149% of the Bank’s estimated uninsured
deposits at March 31, 2024. The available liquidity and borrowing
capacity was 69% of the Company’s total deposits and approximately
145% of the Bank’s estimated uninsured deposits at June 30,
2023. |
|
|
|
|
|
|
• |
The loan to deposit ratio was 76.04% at June 30, 2024, compared to
75.06% at March 31, 2024, and 73.07% at June 30, 2023. |
|
|
|
|
- Total assets remained flat at $5.3 billion at June 30, 2024,
March 31, 2024, and June 30, 2023.
Investment Securities:
- Investment securities totaled $894.2
million at June 30, 2024, of which $273.0 million were in the
securities available-for-sale portfolio (at fair value), and $621.2
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 $527.4
million at June 30, 2024.
- The following table shows the
balances of securities available-for-sale, at fair value, and the
related pre-tax unrealized (loss) at the dates indicated:
| SECURITIES
AVAILABLE-FOR-SALE |
|
June 30, |
|
March 31, |
|
June 30, |
|
(in $000’s, unaudited) |
|
2024
|
|
2024
|
|
2023 |
| Balance (at fair value): |
|
|
|
|
|
|
|
|
|
|
U.S. Treasury |
|
$ |
218,682 |
|
|
$ |
347,453 |
|
|
$ |
421,146 |
|
|
Agency mortgage-backed securities |
|
|
54,361 |
|
|
|
57,021 |
|
|
|
64,912 |
|
|
Total |
|
$ |
273,043 |
|
|
$ |
404,474 |
|
|
$ |
486,058 |
|
|
|
|
|
|
|
|
|
|
|
|
| Pre-tax unrealized
(loss): |
|
|
|
|
|
|
|
|
|
|
U.S. Treasury |
|
$ |
(3,578 |
) |
|
$ |
(4,784 |
) |
|
$ |
(10,903 |
) |
|
Agency mortgage-backed securities |
|
|
(4,815 |
) |
|
|
(4,895 |
) |
|
|
(5,659 |
) |
|
Total |
|
$ |
(8,393 |
) |
|
$ |
(9,679 |
) |
|
$ |
(16,562 |
) |
|
|
|
|
|
|
|
|
|
|
|
| Weighted average life
(years) |
|
|
1.39 |
|
|
|
1.15 |
|
|
|
1.64 |
|
|
|
• |
The pre-tax unrealized loss on the securities available-for-sale
portfolio was ($8.4) million, or ($6.0) million net of taxes, which
equaled 1% of total shareholders’ equity at June 30, 2024. |
|
|
|
|
|
|
• |
The reduction in the securities available-for-sale portfolios was
due to maturities and not due to any securities sold since June 30,
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
at the dates indicated:
| SECURITIES
HELD-TO-MATURITY |
|
June 30, |
|
March 31, |
|
June 30, |
|
(in $000’s, unaudited) |
|
2024
|
|
2024
|
|
2023
|
| Balance (at amortized
cost): |
|
|
|
|
|
|
|
|
|
|
Agency mortgage-backed securities |
|
$ |
589,386 |
|
|
$ |
604,458 |
|
|
$ |
648,337 |
|
|
Municipals — exempt from Federal tax(1) |
|
|
31,804 |
|
|
|
31,803 |
|
|
|
33,771 |
|
|
Total(1) |
|
$ |
621,190 |
|
|
$ |
636,261 |
|
|
$ |
682,108 |
|
|
|
|
|
|
|
|
|
|
|
|
| Pre-tax unrecognized
(loss): |
|
|
|
|
|
|
|
|
|
|
Agency mortgage-backed securities |
|
$ |
(92,058 |
) |
|
$ |
(92,332 |
) |
|
$ |
(95,285 |
) |
|
Municipals — exempt from Federal tax |
|
|
(1,694 |
) |
|
|
(1,071 |
) |
|
|
(1,052 |
) |
|
Total |
|
$ |
(93,752 |
) |
|
$ |
(93,403 |
) |
|
$ |
(96,337 |
) |
| |
|
|
|
|
|
|
|
|
|
| Allowance for credit losses on
municipal securities |
|
$ |
(12 |
) |
|
$ |
(12 |
) |
|
$ |
(13 |
) |
| |
|
|
|
|
|
|
|
|
|
| Weighted average life
(years) |
|
|
6.57 |
|
|
|
6.59 |
|
|
|
7.12 |
|
|
|
|
|
|
| (1) |
|
Gross of the
allowance for credit losses of ($12,000) at both June 30, 2024, and
March 31, 2024, and ($13,000) at June 30, 2023. |
|
|
|
|
|
|
|
• |
The pre-tax unrecognized loss on the securities held-to-maturity
portfolio was ($93.8) million, or ($66.0) million net of taxes,
which equaled 10% of total shareholders’ equity at June 30,
2024. |
|
|
|
|
|
|
• |
The weighted average life of the securities held-to-maturity
portfolio was 6.57 years at June 30, 2024, which includes Community
Reinvestment Act 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 June 30, 2024
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 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- |
|
|
|
| PROJECTED INVESTMENT
SECURITIES |
|
|
|
backed and |
|
|
| PAYDOWNS &
MATURITIES |
|
U.S. |
|
Municipal |
|
|
|
(in $000’s, unaudited) |
|
Treasury |
|
Securities |
|
Total |
|
Third quarter of 2024 |
|
$ |
37,500 |
|
$ |
21,455 |
|
$ |
58,955 |
| Fourth quarter of 2024 |
|
|
9,000 |
|
|
19,436 |
|
|
28,436 |
| First quarter of 2025 |
|
|
35,000 |
|
|
18,847 |
|
|
53,847 |
| Second quarter of 2025 |
|
|
118,000 |
|
|
18,379 |
|
|
136,379 |
| Third quarter of 2025 |
|
|
25,500 |
|
|
19,585 |
|
|
45,085 |
| Fourth quarter of 2025 |
|
|
— |
|
|
18,039 |
|
|
18,039 |
| First quarter of 2026 |
|
|
— |
|
|
17,341 |
|
|
17,341 |
| Second quarter of 2026 |
|
|
— |
|
|
16,630 |
|
|
16,630 |
|
Total |
|
$ |
225,000 |
|
$ |
149,712 |
|
$ |
374,712 |
| |
|
|
|
|
|
|
|
|
|
|
|
• |
The weighted average life of the total investment securities
portfolio was 4.95 years at June 30, 2024, compared to 4.44 years
at March 31, 2024, and 4.79 years at June 30, 2023. |
|
|
|
|
|
|
• |
The increase in the weighted average life of the total investment
securities portfolio at June 30, 2024 was due to short-term
securities maturing. |
|
|
|
|
Loans:
- The following table summarizes the
distribution of loans, excluding loans held-for-sale, and the
percentage of distribution in each category at the dates
indicated:
| LOANS |
|
June 30, 2024 |
|
March 31, 2024 |
|
June 30, 2023 |
|
|
(in $000’s, unaudited) |
|
Balance |
|
% to Total |
|
Balance |
|
% to Total |
|
Balance |
|
% to Total |
|
|
Commercial |
|
$ |
477,929 |
|
|
14 |
% |
$ |
452,231 |
|
|
14 |
% |
$ |
466,354 |
|
|
14 |
% |
| Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CRE(1) - owner occupied |
|
|
594,504 |
|
|
18 |
% |
|
585,031 |
|
|
17 |
% |
|
608,031 |
|
|
18 |
% |
|
CRE(1) - non-owner occupied |
|
|
1,283,323 |
|
|
38 |
% |
|
1,271,184 |
|
|
38 |
% |
|
1,147,313 |
|
|
35 |
% |
|
Land and construction |
|
|
125,374 |
|
|
4 |
% |
|
129,712 |
|
|
4 |
% |
|
162,816 |
|
|
5 |
% |
|
Home equity |
|
|
126,562 |
|
|
4 |
% |
|
122,794 |
|
|
4 |
% |
|
128,009 |
|
|
4 |
% |
|
Multifamily |
|
|
268,968 |
|
|
8 |
% |
|
269,263 |
|
|
8 |
% |
|
244,959 |
|
|
7 |
% |
|
Residential mortgages |
|
|
484,809 |
|
|
14 |
% |
|
490,035 |
|
|
15 |
% |
|
514,064 |
|
|
16 |
% |
| Consumer and other |
|
|
18,758 |
|
|
< 1 |
% |
|
16,439 |
|
|
< 1 |
% |
|
17,635 |
|
|
1 |
% |
|
Total Loans |
|
|
3,380,227 |
|
|
100 |
% |
|
3,336,689 |
|
|
100 |
% |
|
3,289,181 |
|
|
100 |
% |
| Deferred loan costs (fees),
net |
|
|
(434 |
) |
|
— |
|
|
(587 |
) |
|
— |
|
|
(397 |
) |
|
— |
|
|
Loans, net of deferred costs and fees |
|
$ |
3,379,793 |
|
|
100 |
% |
$ |
3,336,102 |
|
|
100 |
% |
$ |
3,288,784 |
|
|
100 |
% |
|
|
(1) |
|
Commercial Real Estate |
|
|
|
• |
Loans, excluding loans held-for-sale, increased $43.7 million, or
1%, to $3.4 billion at June 30, 2024, compared to $3.3 billion at
March 31, 2024, and increased $91.0 million, or 3%, from $3.3
billion at June 30, 2023. Loans, excluding residential mortgages,
increased $48.9 million, or 2%, to $2.89 billion at June 30, 2024,
compared to $2.85 billion at March 31, 2024, and increased $120.3
million, or 4%, from $2.77 billion at June 30, 2023. |
|
|
|
|
|
|
|
|
• |
Commercial and industrial line utilization was 31% at June 30,
2024, compared to 28% at March 31, 2024, and 29% at June 30,
2023. |
|
|
|
|
|
|
|
|
• |
CRE loans totaled $1.9 billion at June 30, 2024, of which 32% were
owner occupied and 68% were investor CRE loans. There was also 32%
of the CRE loan portfolio secured by owner occupied real estate at
March 31, 2024, and 35% at June 30, 2023. |
|
|
|
|
|
|
|
|
|
|
• |
During the second quarter of 2024, there were 32 new owner occupied
and non-owner occupied CRE loans originated totaling $47 million
with a weighted average loan-to-value (“LTV”) of 39%; the weighted
average debt-service coverage ratio (“DSCR”) for the non-owner
occupied portfolio was 2.61 times. |
|
|
|
|
|
|
|
|
|
|
• |
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 92% of its CRE portfolio. A
substantial portion of the unguaranteed CRE loans were made to
credit-worthy non-profit organizations. |
|
|
|
|
|
|
|
|
|
|
• |
Total office exposure (excluding medical/dental offices) in the CRE
portfolio was $403 million, including 32 loans totaling
approximately $74 million in San Jose, 21 loans totaling
approximately $27 million in San Francisco, and eight loans
totaling approximately $16 million, in Oakland, at June 30, 2024.
Non-owner occupied CRE with office exposure totaled $312 million at
June 30, 2024. |
|
|
|
|
|
|
|
|
|
|
• |
At June 30, 2024, the weighted average LTV and DSCR for the entire
non-owner occupied office portfolio were 41.8% and 1.78 times,
respectively. |
|
|
|
|
|
|
|
|
|
|
• |
Total medical/dental office exposure in the non-owner occupied CRE
portfolio consisted of 15 loans totaling $12.6 million, with a
weighted average LTV and DSCR of 37.8% and 2.39 times,
respectively, at June 30, 2024. |
|
|
|
|
|
|
|
|
|
|
• |
The following table presents the weighted average LTV and DSCR by
collateral type for CRE loans at June 30, 2024: |
| |
|
CRE - Non-owner Occupied |
|
CRE - Owner Occupied |
|
Total CRE |
|
Collateral Type |
|
Outstanding |
|
LTV |
|
DSCR |
|
Outstanding |
|
LTV |
|
Outstanding |
|
LTV |
|
Retail |
|
|
25 |
% |
|
|
38.3 |
% |
|
|
1.93 |
|
|
|
16 |
% |
|
|
46.3 |
% |
|
|
23 |
% |
|
|
39.8 |
% |
| Industrial |
|
|
19 |
% |
|
|
40.0 |
% |
|
|
2.39 |
|
|
|
32 |
% |
|
|
42.7 |
% |
|
|
23 |
% |
|
|
41.0 |
% |
| Mixed-Use, Special |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Purpose and Other |
|
|
18 |
% |
|
|
41.7 |
% |
|
|
1.91 |
|
|
|
35 |
% |
|
|
40.6 |
% |
|
|
22 |
% |
|
|
41.2 |
% |
| Office |
|
|
20 |
% |
|
|
41.8 |
% |
|
|
1.78 |
|
|
|
17 |
% |
|
|
43.7 |
% |
|
|
19 |
% |
|
|
42.3 |
% |
| Multifamily |
|
|
17 |
% |
|
|
42.4 |
% |
|
|
1.94 |
|
|
|
0 |
% |
|
|
0.0 |
% |
|
|
13 |
% |
|
|
42.4 |
% |
| Hotel/Motel |
|
|
1 |
% |
|
|
16.5 |
% |
|
|
1.44 |
|
|
|
0 |
% |
|
|
0.0 |
% |
|
|
< 1 |
% |
|
|
16.5 |
% |
| Total |
|
|
100 |
% |
|
|
40.5 |
% |
|
|
1.99 |
|
|
|
100 |
% |
|
|
42.7 |
% |
|
|
100 |
% |
|
|
41.1 |
% |
|
|
• |
The following table presents the weighted average LTV and DSCR by
county for CRE loans at June 30, 2024: |
| |
|
CRE - Non-owner Occupied |
|
CRE - Owner Occupied |
|
Total CRE |
|
County |
|
Outstanding |
|
LTV |
|
DSCR |
|
Outstanding |
|
LTV |
|
Outstanding |
|
LTV |
|
Santa Clara |
|
|
24 |
% |
|
|
38.1 |
% |
|
|
2.24 |
|
|
|
34 |
% |
|
|
40.4 |
% |
|
|
27 |
% |
|
|
38.9 |
% |
| Alameda |
|
|
25 |
% |
|
|
44.4 |
% |
|
|
1.92 |
|
|
|
18 |
% |
|
|
44.0 |
% |
|
|
23 |
% |
|
|
44.3 |
% |
| San Mateo |
|
|
10 |
% |
|
|
36.9 |
% |
|
|
2.20 |
|
|
|
15 |
% |
|
|
39.8 |
% |
|
|
12 |
% |
|
|
38.0 |
% |
| Out of Area |
|
|
9 |
% |
|
|
42.6 |
% |
|
|
2.16 |
|
|
|
9 |
% |
|
|
50.6 |
% |
|
|
9 |
% |
|
|
44.9 |
% |
| San Francisco |
|
|
9 |
% |
|
|
37.4 |
% |
|
|
1.44 |
|
|
|
4 |
% |
|
|
38.8 |
% |
|
|
8 |
% |
|
|
37.6 |
% |
| Contra Costa |
|
|
7 |
% |
|
|
42.0 |
% |
|
|
1.73 |
|
|
|
8 |
% |
|
|
48.1 |
% |
|
|
7 |
% |
|
|
43.8 |
% |
| Marin |
|
|
7 |
% |
|
|
46.6 |
% |
|
|
1.94 |
|
|
|
2 |
% |
|
|
53.1 |
% |
|
|
5 |
% |
|
|
47.1 |
% |
| Sonoma |
|
|
2 |
% |
|
|
41.0 |
% |
|
|
2.22 |
|
|
|
2 |
% |
|
|
43.3 |
% |
|
|
2 |
% |
|
|
41.5 |
% |
| Santa Cruz |
|
|
2 |
% |
|
|
33.3 |
% |
|
|
1.74 |
|
|
|
1 |
% |
|
|
45.7 |
% |
|
|
2 |
% |
|
|
35.2 |
% |
| Monterey |
|
|
2 |
% |
|
|
44.2 |
% |
|
|
1.85 |
|
|
|
2 |
% |
|
|
39.9 |
% |
|
|
2 |
% |
|
|
42.8 |
% |
| San Benito |
|
|
1 |
% |
|
|
35.1 |
% |
|
|
2.14 |
|
|
|
3 |
% |
|
|
39.4 |
% |
|
|
2 |
% |
|
|
37.3 |
% |
| Solano |
|
|
1 |
% |
|
|
32.2 |
% |
|
|
1.98 |
|
|
|
1 |
% |
|
|
35.5 |
% |
|
|
1 |
% |
|
|
33.0 |
% |
| Napa |
|
|
1 |
% |
|
|
29.4 |
% |
|
|
2.24 |
|
|
|
1 |
% |
|
|
52.3 |
% |
|
|
< 1 |
% |
|
|
37.3 |
% |
| Total |
|
|
100 |
% |
|
|
40.5 |
% |
|
|
1.99 |
|
|
|
100 |
% |
|
|
42.7 |
% |
|
|
100 |
% |
|
|
41.1 |
% |
| |
- The following table presents the
maturity distribution of the Company’s loans, excluding loans
held-for-sale, as of June 30, 2024. 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 |
|
$ |
365,849 |
|
40 |
% |
|
$ |
270,487 |
|
30 |
% |
|
$ |
267,524 |
|
30 |
% |
|
$ |
903,860 |
| Loans with fixed interest
rates |
|
|
89,027 |
|
4 |
% |
|
|
693,576 |
|
28 |
% |
|
|
1,693,764 |
|
68 |
% |
|
|
2,476,367 |
|
Loans |
|
$ |
454,876 |
|
13 |
% |
|
$ |
964,063 |
|
29 |
% |
|
$ |
1,961,288 |
|
58 |
% |
|
$ |
3,380,227 |
|
|
• |
At June 30, 2024, approximately 27% of the Company’s loan portfolio
consisted of floating interest rate loans, compared to 26% at March
31, 2024, and 29% at June 30, 2023. |
|
|
|
|
Credit Quality:
- 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 Six Months Ended: |
|
| ALLOWANCE FOR CREDIT
LOSSES ON LOANS |
|
June 30, |
|
March 31, |
|
June 30, |
|
June 30, |
|
June 30, |
|
|
(in $000’s, unaudited) |
|
2024
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
|
Balance at beginning of period |
|
$ |
47,888 |
|
|
$ |
47,958 |
|
|
$ |
47,273 |
|
|
$ |
47,958 |
|
|
$ |
47,512 |
|
|
| Charge-offs during the
period |
|
|
(510 |
) |
|
|
(358 |
) |
|
|
(24 |
) |
|
|
(868 |
) |
|
|
(404 |
) |
|
| Recoveries during the
period |
|
|
105 |
|
|
|
104 |
|
|
|
294 |
|
|
|
209 |
|
|
|
403 |
|
|
|
Net (charge-offs) recoveries during the period |
|
|
(405 |
) |
|
|
(254 |
) |
|
|
270 |
|
|
|
(659 |
) |
|
|
(1 |
) |
|
| Provision for credit losses on
loans during the period |
|
|
471 |
|
|
|
184 |
|
|
|
260 |
|
|
|
655 |
|
|
|
292 |
|
|
|
Balance at end of period |
|
$ |
47,954 |
|
|
$ |
47,888 |
|
|
$ |
47,803 |
|
|
$ |
47,954 |
|
|
$ |
47,803 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total loans, net of deferred
fees |
|
$ |
3,379,793 |
|
|
$ |
3,336,102 |
|
|
$ |
3,288,784 |
|
|
$ |
3,379,793 |
|
|
$ |
3,288,784 |
|
|
| Total nonperforming loans |
|
$ |
6,030 |
|
|
$ |
7,871 |
|
|
$ |
5,537 |
|
|
$ |
6,030 |
|
|
$ |
5,537 |
|
|
| ACLL to total loans |
|
|
1.42 |
|
% |
|
1.44 |
|
% |
|
1.45 |
|
% |
|
1.42 |
|
% |
|
1.45 |
|
% |
| ACLL to total nonperforming
loans |
|
|
795.26 |
|
% |
|
608.41 |
|
% |
|
863.34 |
|
% |
|
795.26 |
|
% |
|
863.34 |
|
% |
|
|
• |
Net charge-offs of $405,000 for the second quarter of 2024
primarily consisted of $412,000 in advances associated with past
due factored receivables at Bay View Funding due from a
municipality. |
|
|
|
|
|
|
• |
The following table shows the drivers of change in ACLL for the
first and second quarters of 2024: |
| DRIVERS OF CHANGE IN
ACLL |
|
|
|
(in $000’s, unaudited) |
|
|
|
ACLL at December 31, 2023 |
|
$ |
47,958 |
|
| Portfolio changes during the
first quarter of 2024 |
|
|
(234 |
) |
| Qualitative and quantitative
changes during the first |
|
|
|
|
quarter of 2024 including changes in economic forecasts |
|
|
164 |
|
|
ACLL at March 31, 2024 |
|
|
47,888 |
|
| Portfolio changes during the
second quarter of 2024 |
|
|
616 |
|
| Qualitative and quantitative
changes during the second |
|
|
|
|
quarter of 2024 including changes in economic forecasts |
|
|
(550 |
) |
|
ACLL at June 30, 2024 |
|
$ |
47,954 |
|
|
|
- The following is a breakout of
nonperforming assets (“NPAs”) at the dates indicated:
| NONPERFORMING
ASSETS |
|
June 30, 2024 |
|
March 31, 2024 |
|
June 30, 2023 |
|
|
(in $000’s, unaudited) |
|
Balance |
|
% of Total |
|
Balance |
|
% of Total |
|
Balance |
|
% of Total |
|
|
Land and construction loans |
|
$ |
4,774 |
|
79 |
% |
$ |
4,673 |
|
59 |
% |
$ |
— |
|
0 |
% |
| Commercial loans |
|
|
900 |
|
15 |
% |
|
1,127 |
|
14 |
% |
|
1,306 |
|
23 |
% |
| Loans over 90 days past
due and still accruing |
|
|
248 |
|
4 |
% |
|
1,951 |
|
25 |
% |
|
2,262 |
|
41 |
% |
| Home equity and other
loans |
|
|
108 |
|
2 |
% |
|
120 |
|
2 |
% |
|
96 |
|
2 |
% |
| Residential mortgages |
|
|
— |
|
0 |
% |
|
— |
|
0 |
% |
|
1,873 |
|
34 |
% |
| CRE loans |
|
|
— |
|
0 |
% |
|
— |
|
0 |
% |
|
— |
|
0 |
% |
|
Total nonperforming assets |
|
$ |
6,030 |
|
100 |
% |
$ |
7,871 |
|
100 |
% |
$ |
5,537 |
|
100 |
% |
|
|
• |
There were 10 borrowers included in NPAs totaling $6.0 million, or
0.11% of total assets, at June 30, 2024, compared to 13 borrowers
totaling $7.9 million, or 0.15% of total assets at March 31, 2024,
and 13 borrowers totaling $5.5 million, or 0.10% of total assets,
at June 30, 2023. |
|
|
|
|
|
|
• |
There were no CRE loans included in NPAs at June 30, 2024, March
31, 2024, or June 30, 2023. |
|
|
|
|
|
|
• |
There were no foreclosed assets on the balance sheet at June 30,
2024, March 31, 2024, or June 30, 2023. |
|
|
|
|
|
|
• |
There were no Shared National Credits (“SNCs”) or material
purchased participations included in NPAs or total loans at June
30, 2024, March 31, 2024, or June 30, 2023. |
|
|
|
|
- Classified assets totaled $33.6
million, or 0.64% of total assets, at June 30, 2024, compared to
$35.4 million, or 0.67% of total assets, at March 31, 2024, and
$30.5 million, or 0.57% of total assets, at June 30, 2023.
Deposits:
- The following table summarizes the distribution of deposits and
the percentage of distribution in each category at the dates
indicated:
| DEPOSITS |
|
June 30, 2024 |
|
March 31, 2024 |
|
June 30, 2023 |
|
|
(in $000’s, unaudited) |
|
Balance |
|
% to Total |
|
Balance |
|
% to Total |
|
Balance |
|
% to Total |
|
|
Demand, noninterest-bearing |
|
$ |
1,187,320 |
|
27 |
% |
$ |
1,242,059 |
|
28 |
% |
$ |
1,319,844 |
|
29 |
% |
| Demand, interest-bearing |
|
|
928,246 |
|
21 |
% |
|
925,100 |
|
21 |
% |
|
1,064,638 |
|
24 |
% |
| Savings and money market |
|
|
1,126,520 |
|
25 |
% |
|
1,124,900 |
|
25 |
% |
|
1,075,835 |
|
24 |
% |
| Time deposits — under
$250 |
|
|
39,046 |
|
1 |
% |
|
38,105 |
|
1 |
% |
|
44,520 |
|
1 |
% |
| Time deposits — $250 and
over |
|
|
203,886 |
|
4 |
% |
|
200,739 |
|
4 |
% |
|
171,852 |
|
4 |
% |
| ICS/CDARS —
interest-bearing demand, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| money market and time
deposits |
|
|
959,592 |
|
22 |
% |
|
913,757 |
|
21 |
% |
|
824,083 |
|
18 |
% |
|
Total deposits |
|
$ |
4,444,610 |
|
100 |
% |
$ |
4,444,660 |
|
100 |
% |
$ |
4,500,772 |
|
100 |
% |
|
|
• |
Total deposits remained flat at $4.4 billion at both June 30, 2024
and March 31, 2024, and decreased ($56.2) million, or (1%) from
$4.5 billion at June 30, 2023. |
|
|
|
|
|
|
•
|
Average deposits increased to $4.39 billion for the second quarter
of 2024, compared to $4.36 billion for the first quarter of 2024,
and remained relatively flat compared to $4.42 billion for the
second quarter of 2023. |
|
|
|
|
|
|
• |
Migration of client deposits into interest-bearing accounts
resulted in an increase in ICS/CDARS deposits to $959.6 million at
June 30, 2024, compared to $913.8 million at March 31, 2024, and
$824.1 million at June 30, 2023. |
|
|
|
|
|
|
• |
Noninterest-bearing demand deposits decreased ($54.7) million, or
(4%), to $1.19 billion at June 30, 2024 from $1.24 billion at March
31, 2024, and decreased ($132.5) million, or (10%), from $1.32
billion at June 30, 2023, largely in response to the increasing
interest rate environment. |
|
|
|
|
|
|
• |
The Company had 25,033 deposit accounts at June 30, 2024, with an
average balance of $178,000. At March 31, 2024, the Company had
24,730 deposit accounts, with an average balance of $180,000. At
June 30, 2023, the Company had 24,404 deposit accounts, with an
average balance of $187,000. |
|
|
|
|
|
|
• |
Deposits from the Bank’s top 100 client relationships, representing
21% of the total number of accounts, totaled $2.1 billion,
representing 47% of total deposits, with an average account size of
$388,000 at June 30, 2024. At March 31, 2024, deposits from the
Bank’s top 100 client relationships, representing 22% of the total
number of accounts, totaled $2.1 billion, representing 46% of total
deposits, with an average account size of $384,000. At June 30,
2023, deposits from the Bank’s top 100 client relationships,
representing 22% of the total number of accounts, totaled $2.1
billion, representing 47% of total deposits, with an average
account size of $401,000. |
|
|
|
|
|
|
• |
The Bank’s uninsured deposits were approximately $1.99 billion, or
45% of the Company’s total deposits, at June 30, 2024, compared to
$2.02 billion, or 45% of the Company’s total deposits, at March 31,
2024, and $2.15 billion, or 48% of the Company’s total deposits, at
June 30, 2023. |
|
|
|
|
Capital Management:
- The Company’s
consolidated capital ratios exceeded regulatory guidelines and the
Bank’s capital ratios exceeded regulatory guidelines under the
prompt corrective action (“PCA”) regulatory guidelines for a
well-capitalized financial institution, and the Basel III minimum
regulatory requirements at June 30, 2024, as reflected in the
following table:
| |
|
|
|
|
|
|
|
Well-capitalized |
|
|
| |
|
|
|
|
|
|
|
Financial |
|
|
| |
|
|
|
|
|
|
|
Institution |
|
Basel III |
| |
|
Heritage |
|
Heritage |
|
PCA |
|
Minimum |
| |
|
Commerce |
|
Bank of |
|
Regulatory |
|
Regulatory |
|
CAPITAL RATIOS (unaudited) |
|
Corp |
|
Commerce |
|
Guidelines |
|
Requirements (1) |
|
Total Capital |
|
15.6 |
% |
|
15.1 |
% |
|
10.0 |
% |
|
10.5 |
% |
| Tier 1 Capital |
|
13.4 |
% |
|
13.9 |
% |
|
8.0 |
% |
|
8.5 |
% |
| Common Equity Tier 1
Capital |
|
13.4 |
% |
|
13.9 |
% |
|
6.5 |
% |
|
7.0 |
% |
| Tier 1 Leverage |
|
10.2 |
% |
|
10.6 |
% |
|
5.0 |
% |
|
4.0 |
% |
| Tangible common equity /
tangible assets (2) |
|
9.9 |
% |
|
10.3 |
% |
|
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
Tier 1 Leverage ratio. |
|
|
|
|
|
|
(2) |
|
This is a non-GAAP financial measure that 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,
at the dates indicated:
| ACCUMULATED OTHER
COMPREHENSIVE LOSS |
|
June 30, |
|
March 31, |
|
June 30, |
|
(in $000’s, unaudited) |
|
2024
|
|
2024
|
|
2023 |
|
Unrealized loss on securities available-for-sale |
|
$ |
(6,022 |
) |
|
$ |
(6,936 |
) |
|
$ |
(11,822 |
) |
| Split dollar insurance
contracts liability |
|
|
(2,913 |
) |
|
|
(2,861 |
) |
|
|
(3,187 |
) |
| Supplemental executive
retirement plan liability |
|
|
(2,856 |
) |
|
|
(2,874 |
) |
|
|
(2,352 |
) |
| Unrealized gain on
interest-only strip from SBA loans |
|
|
76 |
|
|
|
83 |
|
|
|
103 |
|
| Total accumulated other
comprehensive loss |
|
$ |
(11,715 |
) |
|
$ |
(12,588 |
) |
|
$ |
(17,258 |
) |
| |
|
|
|
|
|
|
|
|
|
- Tangible common equity was $504.0 million at June 30, 2024,
compared to $500.6 million at March 31, 2024, and $476.2 million at
June 30, 2023. Tangible book value per share was $8.22 at June 30,
2024, compared to $8.17 at March 31, 2024, and $7.80 at June 30,
2023. Tangible common equity and tangible book value per share are
non-GAAP financial measures.
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.
Non-GAAP Financial Measures
Financial results are presented in accordance with
accounting principles generally accepted in the United States of
America (“GAAP”) and prevailing practices in the banking industry.
However, certain non-GAAP performance measures and ratios are used
by management to evaluate and measure the Company’s
performance. Management believes these non-GAAP financial
measures are common in the banking industry, and may enhance
comparability for peer comparison purposes. These non-GAAP
financial measures should be supplemental to primary GAAP financial
measures and should not be read in isolation or relied upon as a
substitute for primary GAAP financial measures. A reconciliation of
GAAP to non-GAAP financial measures are presented in the tables at
the end of this earnings release under “Reconciliation of
Non-GAAP Financial Measures.”
Forward-Looking Statement
Disclaimer
Certain matters
discussed in this press release constitute forward-looking
statements within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended. 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. Any statements that reflect our
belief about, confidence in, or expectations for future events,
performance or condition should be considered forward-looking
statements. Readers should not construe these statements as
assurances of a given level of performance, nor as promises that we
will take actions that we currently expect to take. All statements
are subject to various risks and uncertainties, many of which are
outside our control and some of which may fall outside our ability
to predict or anticipate. Accordingly, our actual results may
differ materially from our projected results, and we may take
actions or experience events that we do not currently expect. 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, Item 1A of the Company’s Quarterly Report on
Form 10-Q for the quarter ended March 31, 2024, and the
following: (1) factors that affect our liquidity and our ability to
meet client demands for deposit withdrawals, including our cash on
hand and the availability of funds from our lines of credit; (2)
media items and consumer confidence as those factors affect
depositors’ confidence in the banking system generally and in our
bank specifically; (3) factors that affect the value and liquidity
of our investment portfolios, particularly the values of securities
available-for-sale; (4) market fluctuations that affect the costs
we pay for sources of funding, including the interest we pay on
deposits and loans; (5) 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; (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 clients; (8) factors that
affect the relative strength or weakness of loan guarantees and the
ability of the guarantors to fulfill the obligations of their
guaranty agreements; (9) geopolitical and domestic political
developments, including recent, current and potential future wars
and international and multinational conflicts, acts of terrorism,
insurrection, piracy and civil unrest, and events reflecting or
resulting from social instability, any of which can increase levels
of political and economic unpredictability, contribute to rising
energy and commodity prices, can affect the physical security of
our assets and the assets of our Clients, and which may increase
the volatility of financial markets; (10) 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; (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 Clients, 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 pandemics,
epidemics and other infectious illness outbreaks that may arise in
the future, on our Clients, 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) increased
capital requirements for our continual growth or as imposed by
banking regulators, which may require us to raise capital at a time
when capital is not available on favorable terms or at all; (20)
regulatory limits and practical factors that affect Heritage Bank
of Commerce’s ability to pay dividends to the Company; (21)
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;
(22) 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 Clients and
adversely affect our business, results of operations and growth
prospects; (23) possible adjustment of the valuation of our
deferred tax assets or of the goodwill associated with previous
acquisitions; (24) our ability to keep pace with technological
changes, including our ability to identify and address
cyber-security risks, including those posed by the increasing use
of artificial intelligence, such as data security breaches, “denial
of service” attacks, “hacking” and identity theft affecting us or
third party vendors or service providers; (25) inability of our
framework to manage risks associated with our business, including
operational risk and credit risk; (26) risks of loss of funding of
the Small Business Administration (“SBA”) or SBA loan programs, or
changes in those programs; (27) 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; (28) 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; (29) the expense and uncertain
resolution of litigation matters whether occurring in the ordinary
course of business or otherwise; (30) availability of and
competition for acquisition opportunities; (31) geographic and
sociopolitical factors that arise by virtue of the fact that we
operate primarily in the general San Francisco Bay Area of Northern
California; (32) risks of natural disasters (including earthquakes,
fires, and flooding) and other events beyond our control; (33)
actions taken, planned, or announced by federal, state, regional
and local governments in response to the occurrence or threat of
any of the foregoing; and (34) 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 Six Months Ended: |
| CONSOLIDATED INCOME
STATEMENTS |
|
June 30, |
|
|
March 31, |
|
|
June 30, |
|
|
March 31, |
|
June 30, |
|
|
June 30, |
|
|
June 30, |
|
|
Percent |
|
|
(in $000’s, unaudited) |
|
2024 |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
Change |
|
|
Interest income |
|
$ |
59,077 |
|
|
$ |
57,551 |
|
|
$ |
58,341 |
|
|
3 |
|
% |
1 |
|
% |
|
$ |
116,628 |
|
|
$ |
114,615 |
|
|
2 |
|
% |
| Interest expense |
|
|
19,622 |
|
|
|
17,458 |
|
|
|
12,048 |
|
|
12 |
|
% |
63 |
|
% |
|
|
37,080 |
|
|
|
19,064 |
|
|
95 |
|
% |
|
Net interest income before provision |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for credit losses on loans |
|
|
39,455 |
|
|
|
40,093 |
|
|
|
46,293 |
|
|
(2 |
) |
% |
(15 |
) |
% |
|
|
79,548 |
|
|
|
95,551 |
|
|
(17 |
) |
% |
| Provision for credit losses on
loans |
|
|
471 |
|
|
|
184 |
|
|
|
260 |
|
|
156 |
|
% |
81 |
|
% |
|
|
655 |
|
|
|
292 |
|
|
124 |
|
% |
|
Net interest income after provision |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for credit losses on loans |
|
|
38,984 |
|
|
|
39,909 |
|
|
|
46,033 |
|
|
(2 |
) |
% |
(15 |
) |
% |
|
|
78,893 |
|
|
|
95,259 |
|
|
(17 |
) |
% |
| Noninterest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service charges and fees on deposit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
accounts |
|
|
891 |
|
|
|
877 |
|
|
|
901 |
|
|
2 |
|
% |
(1 |
) |
% |
|
|
1,768 |
|
|
|
2,644 |
|
|
(33 |
) |
% |
|
Increase in cash surrender value of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
life insurance |
|
|
521 |
|
|
|
518 |
|
|
|
502 |
|
|
1 |
|
% |
4 |
|
% |
|
|
1,039 |
|
|
|
995 |
|
|
4 |
|
% |
|
Gain on proceeds from company-owned |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
life insurance |
|
|
219 |
|
|
|
— |
|
|
|
— |
|
|
N/A |
|
|
N/A |
|
|
|
|
219 |
|
|
|
— |
|
|
N/A |
|
|
|
Termination fees |
|
|
100 |
|
|
|
13 |
|
|
|
— |
|
|
669 |
|
% |
N/A |
|
|
|
|
113 |
|
|
|
11 |
|
|
927 |
|
% |
|
Servicing income |
|
|
90 |
|
|
|
90 |
|
|
|
104 |
|
|
0 |
|
% |
(13 |
) |
% |
|
|
180 |
|
|
|
235 |
|
|
(23 |
) |
% |
|
Gain on sales of SBA loans |
|
|
76 |
|
|
|
178 |
|
|
|
199 |
|
|
N/A |
|
|
(62 |
) |
% |
|
|
254 |
|
|
|
275 |
|
|
(8 |
) |
% |
|
Other |
|
|
379 |
|
|
|
371 |
|
|
|
368 |
|
|
2 |
|
% |
3 |
|
% |
|
|
750 |
|
|
|
680 |
|
|
10 |
|
% |
|
Total noninterest income |
|
|
2,276 |
|
|
|
2,047 |
|
|
|
2,074 |
|
|
11 |
|
% |
10 |
|
% |
|
|
4,323 |
|
|
|
4,840 |
|
|
(11 |
) |
% |
| Noninterest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
|
15,794 |
|
|
|
15,509 |
|
|
|
13,987 |
|
|
2 |
|
% |
13 |
|
% |
|
|
31,303 |
|
|
|
28,796 |
|
|
9 |
|
% |
|
Occupancy and equipment |
|
|
2,689 |
|
|
|
2,443 |
|
|
|
2,422 |
|
|
10 |
|
% |
11 |
|
% |
|
|
5,132 |
|
|
|
4,822 |
|
|
6 |
|
% |
|
Professional fees |
|
|
1,072 |
|
|
|
1,327 |
|
|
|
1,149 |
|
|
(19 |
) |
% |
(7 |
) |
% |
|
|
2,399 |
|
|
|
2,548 |
|
|
(6 |
) |
% |
|
Other |
|
|
8,633 |
|
|
|
8,257 |
|
|
|
7,433 |
|
|
5 |
|
% |
16 |
|
% |
|
|
16,890 |
|
|
|
14,226 |
|
|
19 |
|
% |
|
Total noninterest expense |
|
|
28,188 |
|
|
|
27,536 |
|
|
|
24,991 |
|
|
2 |
|
% |
13 |
|
% |
|
|
55,724 |
|
|
|
50,392 |
|
|
11 |
|
% |
| Income before income
taxes |
|
|
13,072 |
|
|
|
14,420 |
|
|
|
23,116 |
|
|
(9 |
) |
% |
(43 |
) |
% |
|
|
27,492 |
|
|
|
49,707 |
|
|
(45 |
) |
% |
| Income tax expense |
|
|
3,838 |
|
|
|
4,254 |
|
|
|
6,713 |
|
|
(10 |
) |
% |
(43 |
) |
% |
|
|
8,092 |
|
|
|
14,387 |
|
|
(44 |
) |
% |
|
Net income |
|
$ |
9,234 |
|
|
$ |
10,166 |
|
|
$ |
16,403 |
|
|
(9 |
) |
% |
(44 |
) |
% |
|
$ |
19,400 |
|
|
$ |
35,320 |
|
|
(45 |
) |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PER COMMON SHARE DATA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic earnings per share |
|
$ |
0.15 |
|
|
$ |
0.17 |
|
|
$ |
0.27 |
|
|
(12 |
) |
% |
(44 |
) |
% |
|
$ |
0.32 |
|
|
$ |
0.58 |
|
|
(45 |
) |
% |
| Diluted earnings per
share |
|
$ |
0.15 |
|
|
$ |
0.17 |
|
|
$ |
0.27 |
|
|
(12 |
) |
% |
(44 |
) |
% |
|
$ |
0.32 |
|
|
$ |
0.58 |
|
|
(45 |
) |
% |
| Weighted average shares
outstanding - basic |
|
|
61,279,914 |
|
|
|
61,186,623 |
|
|
|
61,035,435 |
|
|
0 |
|
% |
0 |
|
% |
|
|
61,233,269 |
|
|
|
60,971,828 |
|
|
0 |
|
% |
| Weighted average shares
outstanding - diluted |
|
|
61,438,088 |
|
|
|
61,470,552 |
|
|
|
61,266,059 |
|
|
0 |
|
% |
0 |
|
% |
|
|
61,446,484 |
|
|
|
61,242,177 |
|
|
0 |
|
% |
| Common shares outstanding at
period-end |
|
|
61,292,094 |
|
|
|
61,253,625 |
|
|
|
61,091,155 |
|
|
0 |
|
% |
0 |
|
% |
|
|
61,292,094 |
|
|
|
61,091,155 |
|
|
0 |
|
% |
| Dividend per share |
|
$ |
0.13 |
|
|
$ |
0.13 |
|
|
$ |
0.13 |
|
|
0 |
|
% |
0 |
|
% |
|
$ |
0.26 |
|
|
$ |
0.26 |
|
|
0 |
|
% |
| Book value per share |
|
$ |
11.08 |
|
|
$ |
11.04 |
|
|
$ |
10.70 |
|
|
0 |
|
% |
4 |
|
% |
|
$ |
11.08 |
|
|
$ |
10.70 |
|
|
4 |
|
% |
| Tangible book value per
share(1) |
|
$ |
8.22 |
|
|
$ |
8.17 |
|
|
$ |
7.80 |
|
|
1 |
|
% |
5 |
|
% |
|
$ |
8.22 |
|
|
$ |
7.80 |
|
|
5 |
|
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KEY FINANCIAL RATIOS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Annualized return on average
equity |
|
|
5.50 |
|
% |
|
6.08 |
|
% |
|
10.12 |
|
% |
(10 |
) |
% |
(46 |
) |
% |
|
|
5.79 |
|
% |
|
11.06 |
|
% |
(48 |
) |
% |
| Annualized return on average
tangible |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
common equity(1) |
|
|
7.43 |
|
% |
|
8.24 |
|
% |
|
13.93 |
|
% |
(10 |
) |
% |
(47 |
) |
% |
|
|
7.84 |
|
% |
|
15.29 |
|
% |
(49 |
) |
% |
| Annualized return on average
assets |
|
|
0.71 |
|
% |
|
0.79 |
|
% |
|
1.25 |
|
% |
(10 |
) |
% |
(43 |
) |
% |
|
|
0.75 |
|
% |
|
1.35 |
|
% |
(44 |
) |
% |
| Annualized return on average
tangible assets(1) |
|
|
0.74 |
|
% |
|
0.82 |
|
% |
|
1.29 |
|
% |
(10 |
) |
% |
(43 |
) |
% |
|
|
0.78 |
|
% |
|
1.40 |
|
% |
(44 |
) |
% |
| Net interest margin
(FTE)(1) |
|
|
3.26 |
|
% |
|
3.34 |
|
% |
|
3.76 |
|
% |
(2 |
) |
% |
(13 |
) |
% |
|
|
3.30 |
|
% |
|
3.92 |
|
% |
(16 |
) |
% |
| Efficiency
ratio(1) |
|
|
67.55 |
|
% |
|
65.34 |
|
% |
|
51.67 |
|
% |
3 |
|
% |
31 |
|
% |
|
|
66.44 |
|
% |
|
50.20 |
|
% |
32 |
|
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE BALANCES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in $000’s, unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average assets |
|
$ |
5,213,171 |
|
|
$ |
5,178,636 |
|
|
$ |
5,278,243 |
|
|
1 |
|
% |
(1 |
) |
% |
|
$ |
5,195,903 |
|
|
$ |
5,256,993 |
|
|
(1 |
) |
% |
| Average tangible
assets(1) |
|
$ |
5,037,673 |
|
|
$ |
5,002,597 |
|
|
$ |
5,100,399 |
|
|
1 |
|
% |
(1 |
) |
% |
|
$ |
5,020,134 |
|
|
$ |
5,078,851 |
|
|
(1 |
) |
% |
| Average earning assets |
|
$ |
4,872,449 |
|
|
$ |
4,842,279 |
|
|
$ |
4,948,397 |
|
|
1 |
|
% |
(2 |
) |
% |
|
$ |
4,857,364 |
|
|
$ |
4,921,850 |
|
|
(1 |
) |
% |
| Average loans
held-for-sale |
|
$ |
1,503 |
|
|
$ |
2,749 |
|
|
$ |
4,166 |
|
|
(45 |
) |
% |
(64 |
) |
% |
|
$ |
2,126 |
|
|
$ |
3,764 |
|
|
(44 |
) |
% |
| Average total loans |
|
$ |
3,328,358 |
|
|
$ |
3,297,240 |
|
|
$ |
3,227,175 |
|
|
1 |
|
% |
3 |
|
% |
|
$ |
3,312,799 |
|
|
$ |
3,250,541 |
|
|
2 |
|
% |
| Average deposits |
|
$ |
4,394,545 |
|
|
$ |
4,360,150 |
|
|
$ |
4,424,041 |
|
|
1 |
|
% |
(1 |
) |
% |
|
$ |
4,377,347 |
|
|
$ |
4,420,019 |
|
|
(1 |
) |
% |
| Average demand deposits -
noninterest-bearing |
|
$ |
1,127,145 |
|
|
$ |
1,177,078 |
|
|
$ |
1,368,373 |
|
|
(4 |
) |
% |
(18 |
) |
% |
|
$ |
1,152,111 |
|
|
$ |
1,516,991 |
|
|
(24 |
) |
% |
| Average interest-bearing
deposits |
|
$ |
3,267,400 |
|
|
$ |
3,183,072 |
|
|
$ |
3,055,668 |
|
|
3 |
|
% |
7 |
|
% |
|
$ |
3,225,236 |
|
|
$ |
2,903,028 |
|
|
11 |
|
% |
| Average interest-bearing
liabilities |
|
$ |
3,306,972 |
|
|
$ |
3,222,603 |
|
|
$ |
3,157,722 |
|
|
3 |
|
% |
5 |
|
% |
|
$ |
3,264,788 |
|
|
$ |
2,997,119 |
|
|
9 |
|
% |
| Average equity |
|
$ |
675,108 |
|
|
$ |
672,292 |
|
|
$ |
650,240 |
|
|
0 |
|
% |
4 |
|
% |
|
$ |
673,700 |
|
|
$ |
643,954 |
|
|
5 |
|
% |
| Average tangible common
equity(1) |
|
$ |
499,610 |
|
|
$ |
496,253 |
|
|
$ |
472,396 |
|
|
1 |
|
% |
6 |
|
% |
|
$ |
497,931 |
|
|
$ |
465,812 |
|
|
7 |
|
% |
| |
|
| (1) |
|
This is a non-GAAP
financial measure. |
|
|
|
|
|
| |
|
For the Quarter Ended: |
|
| CONSOLIDATED INCOME
STATEMENTS |
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
|
|
(in $000’s, unaudited) |
|
2024 |
|
2024 |
|
2023 |
|
2023 |
|
2023 |
|
|
Interest income |
|
$ |
59,077 |
|
$ |
57,551 |
|
$ |
58,892 |
|
$ |
60,791 |
|
$ |
58,341 |
|
| Interest expense |
|
|
19,622 |
|
|
17,458 |
|
|
16,591 |
|
|
15,419 |
|
|
12,048 |
|
|
Net interest income before provision |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for credit losses on loans |
|
|
39,455 |
|
|
40,093 |
|
|
42,301 |
|
|
45,372 |
|
|
46,293 |
|
| Provision for credit losses on
loans |
|
|
471 |
|
|
184 |
|
|
289 |
|
|
168 |
|
|
260 |
|
|
Net interest income after provision |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for credit losses on loans |
|
|
38,984 |
|
|
39,909 |
|
|
42,012 |
|
|
45,204 |
|
|
46,033 |
|
| Noninterest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service charges and fees on deposit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
accounts |
|
|
891 |
|
|
877 |
|
|
838 |
|
|
859 |
|
|
901 |
|
|
Increase in cash surrender value of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
life insurance |
|
|
521 |
|
|
518 |
|
|
519 |
|
|
517 |
|
|
502 |
|
|
Gain on proceeds from company-owned |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
life insurance |
|
|
219 |
|
|
— |
|
|
25 |
|
|
100 |
|
|
— |
|
|
Termination fees |
|
|
100 |
|
|
13 |
|
|
25 |
|
|
118 |
|
|
— |
|
|
Servicing income |
|
|
90 |
|
|
90 |
|
|
103 |
|
|
62 |
|
|
104 |
|
|
Gain on sales of SBA loans |
|
|
76 |
|
|
178 |
|
|
— |
|
|
207 |
|
|
199 |
|
|
Other |
|
|
379 |
|
|
371 |
|
|
432 |
|
|
353 |
|
|
368 |
|
|
Total noninterest income |
|
|
2,276 |
|
|
2,047 |
|
|
1,942 |
|
|
2,216 |
|
|
2,074 |
|
| Noninterest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
|
15,794 |
|
|
15,509 |
|
|
13,919 |
|
|
14,147 |
|
|
13,987 |
|
|
Occupancy and equipment |
|
|
2,689 |
|
|
2,443 |
|
|
2,367 |
|
|
2,301 |
|
|
2,422 |
|
|
Professional fees |
|
|
1,072 |
|
|
1,327 |
|
|
1,085 |
|
|
717 |
|
|
1,149 |
|
|
Other |
|
|
8,633 |
|
|
8,257 |
|
|
8,120 |
|
|
8,006 |
|
|
7,433 |
|
|
Total noninterest expense |
|
|
28,188 |
|
|
27,536 |
|
|
25,491 |
|
|
25,171 |
|
|
24,991 |
|
| Income before income
taxes |
|
|
13,072 |
|
|
14,420 |
|
|
18,463 |
|
|
22,249 |
|
|
23,116 |
|
| Income tax expense |
|
|
3,838 |
|
|
4,254 |
|
|
5,135 |
|
|
6,454 |
|
|
6,713 |
|
|
Net income |
|
$ |
9,234 |
|
$ |
10,166 |
|
$ |
13,328 |
|
$ |
15,795 |
|
$ |
16,403 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PER COMMON SHARE DATA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic earnings per share |
|
$ |
0.15 |
|
$ |
0.17 |
|
$ |
0.22 |
|
$ |
0.26 |
|
$ |
0.27 |
|
| Diluted earnings per
share |
|
$ |
0.15 |
|
$ |
0.17 |
|
$ |
0.22 |
|
$ |
0.26 |
|
$ |
0.27 |
|
| Weighted average shares
outstanding - basic |
|
|
61,279,914 |
|
|
61,186,623 |
|
|
61,118,485 |
|
|
61,093,289 |
|
|
61,035,435 |
|
| Weighted average shares
outstanding - diluted |
|
|
61,438,088 |
|
|
61,470,552 |
|
|
61,412,816 |
|
|
61,436,240 |
|
|
61,266,059 |
|
| Common shares outstanding at
period-end |
|
|
61,292,094 |
|
|
61,253,625 |
|
|
61,146,835 |
|
|
61,099,155 |
|
|
61,091,155 |
|
| Dividend per share |
|
$ |
0.13 |
|
$ |
0.13 |
|
$ |
0.13 |
|
$ |
0.13 |
|
$ |
0.13 |
|
| Book value per share |
|
$ |
11.08 |
|
$ |
11.04 |
|
$ |
11.00 |
|
$ |
10.83 |
|
$ |
10.70 |
|
| Tangible book value per
share(1) |
|
$ |
8.22 |
|
$ |
8.17 |
|
$ |
8.12 |
|
$ |
7.94 |
|
$ |
7.80 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KEY FINANCIAL RATIOS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Annualized return on average
equity |
|
|
5.50 |
% |
|
6.08 |
% |
|
7.96 |
% |
|
9.54 |
% |
|
10.12 |
% |
| Annualized return on average
tangible |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
common equity(1) |
|
|
7.43 |
% |
|
8.24 |
% |
|
10.84 |
% |
|
13.06 |
% |
|
13.93 |
% |
| Annualized return on average
assets |
|
|
0.71 |
% |
|
0.79 |
% |
|
1.00 |
% |
|
1.16 |
% |
|
1.25 |
% |
| Annualized return on average
tangible assets(1) |
|
|
0.74 |
% |
|
0.82 |
% |
|
1.04 |
% |
|
1.20 |
% |
|
1.29 |
% |
| Net interest margin
(FTE)(1) |
|
|
3.26 |
% |
|
3.34 |
% |
|
3.41 |
% |
|
3.57 |
% |
|
3.76 |
% |
| Efficiency
ratio(1) |
|
|
67.55 |
% |
|
65.34 |
% |
|
57.62 |
% |
|
52.89 |
% |
|
51.67 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE BALANCES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in $000’s, unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average assets |
|
$ |
5,213,171 |
|
$ |
5,178,636 |
|
$ |
5,264,905 |
|
$ |
5,399,930 |
|
$ |
5,278,243 |
|
| Average tangible
assets(1) |
|
$ |
5,037,673 |
|
$ |
5,002,597 |
|
$ |
5,088,264 |
|
$ |
5,222,692 |
|
$ |
5,100,399 |
|
| Average earning assets |
|
$ |
4,872,449 |
|
$ |
4,842,279 |
|
$ |
4,923,582 |
|
$ |
5,051,710 |
|
$ |
4,948,397 |
|
| Average loans
held-for-sale |
|
$ |
1,503 |
|
$ |
2,749 |
|
$ |
1,612 |
|
$ |
2,765 |
|
$ |
4,166 |
|
| Average total loans |
|
$ |
3,328,358 |
|
$ |
3,297,240 |
|
$ |
3,280,817 |
|
$ |
3,254,715 |
|
$ |
3,227,175 |
|
| Average deposits |
|
$ |
4,394,545 |
|
$ |
4,360,150 |
|
$ |
4,454,750 |
|
$ |
4,573,621 |
|
$ |
4,424,041 |
|
| Average demand deposits -
noninterest-bearing |
|
$ |
1,127,145 |
|
$ |
1,177,078 |
|
$ |
1,243,222 |
|
$ |
1,302,606 |
|
$ |
1,368,373 |
|
| Average interest-bearing
deposits |
|
$ |
3,267,400 |
|
$ |
3,183,072 |
|
$ |
3,211,528 |
|
$ |
3,271,015 |
|
$ |
3,055,668 |
|
| Average interest-bearing
liabilities |
|
$ |
3,306,972 |
|
$ |
3,222,603 |
|
$ |
3,251,034 |
|
$ |
3,310,485 |
|
$ |
3,157,722 |
|
| Average equity |
|
$ |
675,108 |
|
$ |
672,292 |
|
$ |
664,638 |
|
$ |
656,973 |
|
$ |
650,240 |
|
| Average tangible common
equity(1) |
|
$ |
499,610 |
|
$ |
496,253 |
|
$ |
487,997 |
|
$ |
479,735 |
|
$ |
472,396 |
|
| |
|
| (1) |
|
This is a non-GAAP
financial measure. |
|
|
|
|
|
| |
|
End of Period: |
|
Percent Change From: |
|
| CONSOLIDATED BALANCE
SHEETS |
|
June 30, |
|
March 31, |
|
June 30, |
|
March 31, |
|
June 30, |
|
|
(in $000’s, unaudited) |
|
2024
|
|
2024
|
|
2023
|
|
2024 |
|
2023 |
|
| ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
$ |
37,497 |
|
|
$ |
32,543 |
|
|
$ |
42,551 |
|
|
15 |
|
% |
(12 |
) |
% |
| Other investments and
interest-bearing deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in other financial institutions |
|
|
610,763 |
|
|
|
508,816 |
|
|
|
468,951 |
|
|
20 |
|
% |
30 |
|
% |
| Securities available-for-sale,
at fair value |
|
|
273,043 |
|
|
|
404,474 |
|
|
|
486,058 |
|
|
(32 |
) |
% |
(44 |
) |
% |
| Securities held-to-maturity,
at amortized cost |
|
|
621,178 |
|
|
|
636,249 |
|
|
|
682,095 |
|
|
(2 |
) |
% |
(9 |
) |
% |
| Loans held-for-sale - SBA,
including deferred costs |
|
|
1,899 |
|
|
|
1,946 |
|
|
|
3,136 |
|
|
(2 |
) |
% |
(39 |
) |
% |
| Loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
|
477,929 |
|
|
|
452,231 |
|
|
|
466,354 |
|
|
6 |
|
% |
2 |
|
% |
|
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CRE - owner occupied |
|
|
594,504 |
|
|
|
585,031 |
|
|
|
608,031 |
|
|
2 |
|
% |
(2 |
) |
% |
|
CRE - non-owner occupied |
|
|
1,283,323 |
|
|
|
1,271,184 |
|
|
|
1,147,313 |
|
|
1 |
|
% |
12 |
|
% |
|
Land and construction |
|
|
125,374 |
|
|
|
129,712 |
|
|
|
162,816 |
|
|
(3 |
) |
% |
(23 |
) |
% |
|
Home equity |
|
|
126,562 |
|
|
|
122,794 |
|
|
|
128,009 |
|
|
3 |
|
% |
(1 |
) |
% |
|
Multifamily |
|
|
268,968 |
|
|
|
269,263 |
|
|
|
244,959 |
|
|
0 |
|
% |
10 |
|
% |
|
Residential mortgages |
|
|
484,809 |
|
|
|
490,035 |
|
|
|
514,064 |
|
|
(1 |
) |
% |
(6 |
) |
% |
|
Consumer and other |
|
|
18,758 |
|
|
|
16,439 |
|
|
|
17,635 |
|
|
14 |
|
% |
6 |
|
% |
|
Loans |
|
|
3,380,227 |
|
|
|
3,336,689 |
|
|
|
3,289,181 |
|
|
1 |
|
% |
3 |
|
% |
|
Deferred loan fees, net |
|
|
(434 |
) |
|
|
(587 |
) |
|
|
(397 |
) |
|
(26 |
) |
% |
9 |
|
% |
|
Total loans, net of deferred costs and fees |
|
|
3,379,793 |
|
|
|
3,336,102 |
|
|
|
3,288,784 |
|
|
1 |
|
% |
3 |
|
% |
| Allowance for credit losses on
loans |
|
|
(47,954 |
) |
|
|
(47,888 |
) |
|
|
(47,803 |
) |
|
0 |
|
% |
0 |
|
% |
|
Loans, net |
|
|
3,331,839 |
|
|
|
3,288,214 |
|
|
|
3,240,981 |
|
|
1 |
|
% |
3 |
|
% |
| Company-owned life
insurance |
|
|
80,153 |
|
|
|
80,007 |
|
|
|
79,940 |
|
|
0 |
|
% |
0 |
|
% |
| Premises and equipment,
net |
|
|
10,310 |
|
|
|
9,986 |
|
|
|
9,197 |
|
|
3 |
|
% |
12 |
|
% |
| Goodwill |
|
|
167,631 |
|
|
|
167,631 |
|
|
|
167,631 |
|
|
0 |
|
% |
0 |
|
% |
| Other intangible assets |
|
|
7,521 |
|
|
|
8,074 |
|
|
|
9,830 |
|
|
(7 |
) |
% |
(23 |
) |
% |
| Accrued interest receivable
and other assets |
|
|
121,190 |
|
|
|
118,134 |
|
|
|
121,467 |
|
|
3 |
|
% |
0 |
|
% |
|
Total assets |
|
$ |
5,263,024 |
|
|
$ |
5,256,074 |
|
|
$ |
5,311,837 |
|
|
0 |
|
% |
(1 |
) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, noninterest-bearing |
|
$ |
1,187,320 |
|
|
$ |
1,242,059 |
|
|
$ |
1,319,844 |
|
|
(4 |
) |
% |
(10 |
) |
% |
|
Demand, interest-bearing |
|
|
928,246 |
|
|
|
925,100 |
|
|
|
1,064,638 |
|
|
0 |
|
% |
(13 |
) |
% |
|
Savings and money market |
|
|
1,126,520 |
|
|
|
1,124,900 |
|
|
|
1,075,835 |
|
|
0 |
|
% |
5 |
|
% |
|
Time deposits - under $250 |
|
|
39,046 |
|
|
|
38,105 |
|
|
|
44,520 |
|
|
2 |
|
% |
(12 |
) |
% |
|
Time deposits - $250 and over |
|
|
203,886 |
|
|
|
200,739 |
|
|
|
171,852 |
|
|
2 |
|
% |
19 |
|
% |
|
ICS/CDARS - interest-bearing demand, money market |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and time deposits |
|
|
959,592 |
|
|
|
913,757 |
|
|
|
824,083 |
|
|
5 |
|
% |
16 |
|
% |
|
Total deposits |
|
|
4,444,610 |
|
|
|
4,444,660 |
|
|
|
4,500,772 |
|
|
0 |
|
% |
(1 |
) |
% |
|
Subordinated debt, net of issuance costs |
|
|
39,577 |
|
|
|
39,539 |
|
|
|
39,425 |
|
|
0 |
|
% |
0 |
|
% |
|
Accrued interest payable and other liabilities |
|
|
99,638 |
|
|
|
95,579 |
|
|
|
117,970 |
|
|
4 |
|
% |
(16 |
) |
% |
|
Total liabilities |
|
|
4,583,825 |
|
|
|
4,579,778 |
|
|
|
4,658,167 |
|
|
0 |
|
% |
(2 |
) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Shareholders’
Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock |
|
|
508,343 |
|
|
|
507,578 |
|
|
|
505,075 |
|
|
0 |
|
% |
1 |
|
% |
|
Retained earnings |
|
|
182,571 |
|
|
|
181,306 |
|
|
|
165,853 |
|
|
1 |
|
% |
10 |
|
% |
|
Accumulated other comprehensive loss |
|
|
(11,715 |
) |
|
|
(12,588 |
) |
|
|
(17,258 |
) |
|
(7 |
) |
% |
(32 |
) |
% |
|
Total shareholders' equity |
|
|
679,199 |
|
|
|
676,296 |
|
|
|
653,670 |
|
|
0 |
|
% |
4 |
|
% |
|
Total liabilities and shareholders’ equity |
|
$ |
5,263,024 |
|
|
$ |
5,256,074 |
|
|
$ |
5,311,837 |
|
|
0 |
|
% |
(1 |
) |
% |
|
|
| |
|
End of Period: |
| CONSOLIDATED BALANCE
SHEETS |
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
|
(in $000’s, unaudited) |
|
2024 |
|
2024
|
|
2023
|
|
2023
|
|
2023
|
| ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
$ |
37,497 |
|
|
$ |
32,543 |
|
|
$ |
41,592 |
|
|
$ |
40,076 |
|
|
$ |
42,551 |
|
| Other investments and
interest-bearing deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| in other financial
institutions |
|
|
610,763 |
|
|
|
508,816 |
|
|
|
366,537 |
|
|
|
605,476 |
|
|
|
468,951 |
|
| Securities available-for-sale,
at fair value |
|
|
273,043 |
|
|
|
404,474 |
|
|
|
442,636 |
|
|
|
457,194 |
|
|
|
486,058 |
|
| Securities held-to-maturity,
at amortized cost |
|
|
621,178 |
|
|
|
636,249 |
|
|
|
650,565 |
|
|
|
664,681 |
|
|
|
682,095 |
|
| Loans held-for-sale - SBA,
including deferred costs |
|
|
1,899 |
|
|
|
1,946 |
|
|
|
2,205 |
|
|
|
841 |
|
|
|
3,136 |
|
| Loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
|
477,929 |
|
|
|
452,231 |
|
|
|
463,778 |
|
|
|
430,664 |
|
|
|
466,354 |
|
|
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CRE - owner occupied |
|
|
594,504 |
|
|
|
585,031 |
|
|
|
583,253 |
|
|
|
589,751 |
|
|
|
608,031 |
|
|
CRE - non-owner occupied |
|
|
1,283,323 |
|
|
|
1,271,184 |
|
|
|
1,256,590 |
|
|
|
1,208,324 |
|
|
|
1,147,313 |
|
|
Land and construction |
|
|
125,374 |
|
|
|
129,712 |
|
|
|
140,513 |
|
|
|
158,138 |
|
|
|
162,816 |
|
|
Home equity |
|
|
126,562 |
|
|
|
122,794 |
|
|
|
119,125 |
|
|
|
124,477 |
|
|
|
128,009 |
|
|
Multifamily |
|
|
268,968 |
|
|
|
269,263 |
|
|
|
269,734 |
|
|
|
253,129 |
|
|
|
244,959 |
|
|
Residential mortgages |
|
|
484,809 |
|
|
|
490,035 |
|
|
|
496,961 |
|
|
|
503,006 |
|
|
|
514,064 |
|
|
Consumer and other |
|
|
18,758 |
|
|
|
16,439 |
|
|
|
20,919 |
|
|
|
18,526 |
|
|
|
17,635 |
|
|
Loans |
|
|
3,380,227 |
|
|
|
3,336,689 |
|
|
|
3,350,873 |
|
|
|
3,286,015 |
|
|
|
3,289,181 |
|
|
Deferred loan fees, net |
|
|
(434 |
) |
|
|
(587 |
) |
|
|
(495 |
) |
|
|
(554 |
) |
|
|
(397 |
) |
|
Total loans, net of deferred fees |
|
|
3,379,793 |
|
|
|
3,336,102 |
|
|
|
3,350,378 |
|
|
|
3,285,461 |
|
|
|
3,288,784 |
|
| Allowance for credit losses on
loans |
|
|
(47,954 |
) |
|
|
(47,888 |
) |
|
|
(47,958 |
) |
|
|
(47,702 |
) |
|
|
(47,803 |
) |
|
Loans, net |
|
|
3,331,839 |
|
|
|
3,288,214 |
|
|
|
3,302,420 |
|
|
|
3,237,759 |
|
|
|
3,240,981 |
|
| Company-owned life
insurance |
|
|
80,153 |
|
|
|
80,007 |
|
|
|
79,489 |
|
|
|
79,607 |
|
|
|
79,940 |
|
| Premises and equipment,
net |
|
|
10,310 |
|
|
|
9,986 |
|
|
|
9,857 |
|
|
|
9,707 |
|
|
|
9,197 |
|
| Goodwill |
|
|
167,631 |
|
|
|
167,631 |
|
|
|
167,631 |
|
|
|
167,631 |
|
|
|
167,631 |
|
| Other intangible assets |
|
|
7,521 |
|
|
|
8,074 |
|
|
|
8,627 |
|
|
|
9,229 |
|
|
|
9,830 |
|
| Accrued interest receivable
and other assets |
|
|
121,190 |
|
|
|
118,134 |
|
|
|
122,536 |
|
|
|
131,106 |
|
|
|
121,467 |
|
|
Total assets |
|
$ |
5,263,024 |
|
|
$ |
5,256,074 |
|
|
$ |
5,194,095 |
|
|
$ |
5,403,307 |
|
|
$ |
5,311,837 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, noninterest-bearing |
|
$ |
1,187,320 |
|
|
$ |
1,242,059 |
|
|
$ |
1,292,486 |
|
|
$ |
1,243,501 |
|
|
$ |
1,319,844 |
|
|
Demand, interest-bearing |
|
|
928,246 |
|
|
|
925,100 |
|
|
|
914,066 |
|
|
|
1,004,185 |
|
|
|
1,064,638 |
|
|
Savings and money market |
|
|
1,126,520 |
|
|
|
1,124,900 |
|
|
|
1,087,518 |
|
|
|
1,110,640 |
|
|
|
1,075,835 |
|
|
Time deposits - under $250 |
|
|
39,046 |
|
|
|
38,105 |
|
|
|
38,055 |
|
|
|
43,906 |
|
|
|
44,520 |
|
|
Time deposits - $250 and over |
|
|
203,886 |
|
|
|
200,739 |
|
|
|
192,228 |
|
|
|
252,001 |
|
|
|
171,852 |
|
|
ICS/CDARS - interest-bearing demand, money market |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and time deposits |
|
|
959,592 |
|
|
|
913,757 |
|
|
|
854,105 |
|
|
|
921,224 |
|
|
|
824,083 |
|
|
Total deposits |
|
|
4,444,610 |
|
|
|
4,444,660 |
|
|
|
4,378,458 |
|
|
|
4,575,457 |
|
|
|
4,500,772 |
|
|
Other short-term borrowings |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Subordinated debt, net of issuance costs |
|
|
39,577 |
|
|
|
39,539 |
|
|
|
39,502 |
|
|
|
39,463 |
|
|
|
39,425 |
|
|
Accrued interest payable and other liabilities |
|
|
99,638 |
|
|
|
95,579 |
|
|
|
103,234 |
|
|
|
126,457 |
|
|
|
117,970 |
|
|
Total liabilities |
|
|
4,583,825 |
|
|
|
4,579,778 |
|
|
|
4,521,194 |
|
|
|
4,741,377 |
|
|
|
4,658,167 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Shareholders’
Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock |
|
|
508,343 |
|
|
|
507,578 |
|
|
|
506,539 |
|
|
|
505,692 |
|
|
|
505,075 |
|
|
Retained earnings |
|
|
182,571 |
|
|
|
181,306 |
|
|
|
179,092 |
|
|
|
173,707 |
|
|
|
165,853 |
|
|
Accumulated other comprehensive loss |
|
|
(11,715 |
) |
|
|
(12,588 |
) |
|
|
(12,730 |
) |
|
|
(17,469 |
) |
|
|
(17,258 |
) |
| Total shareholders'
equity |
|
|
679,199 |
|
|
|
676,296 |
|
|
|
672,901 |
|
|
|
661,930 |
|
|
|
653,670 |
|
|
Total liabilities and shareholders’ equity |
|
$ |
5,263,024 |
|
|
$ |
5,256,074 |
|
|
$ |
5,194,095 |
|
|
$ |
5,403,307 |
|
|
$ |
5,311,837 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
At or For the Quarter Ended: |
|
Percent Change From: |
|
| CREDIT QUALITY
DATA |
|
June 30, |
|
|
March 31, |
|
|
June 30, |
|
March 31, |
|
June 30, |
|
|
(in $000’s, unaudited) |
|
2024 |
|
|
2024 |
|
|
2023
|
|
2024 |
|
2023 |
|
|
Nonaccrual loans - held-for-investment |
|
$ |
5,782 |
|
|
$ |
5,920 |
|
|
$ |
3,275 |
|
|
(2 |
) |
% |
77 |
|
% |
| Loans over 90 days past
due |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and still accruing |
|
|
248 |
|
|
|
1,951 |
|
|
|
2,262 |
|
|
(87 |
) |
% |
(89 |
) |
% |
|
Total nonperforming loans |
|
|
6,030 |
|
|
|
7,871 |
|
|
|
5,537 |
|
|
(23 |
) |
% |
9 |
|
% |
| Foreclosed assets |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
N/A |
|
|
N/A |
|
|
|
Total nonperforming assets |
|
$ |
6,030 |
|
|
$ |
7,871 |
|
|
$ |
5,537 |
|
|
(23 |
) |
% |
9 |
|
% |
| Net charge-offs (recoveries)
during the quarter |
|
$ |
405 |
|
|
$ |
254 |
|
|
$ |
(270 |
) |
|
59 |
|
% |
250 |
|
% |
| Provision for credit losses on
loans during the quarter |
|
$ |
471 |
|
|
$ |
184 |
|
|
$ |
260 |
|
|
156 |
|
% |
81 |
|
% |
| Allowance for credit losses on
loans |
|
$ |
47,954 |
|
|
$ |
47,888 |
|
|
$ |
47,803 |
|
|
0 |
|
% |
0 |
|
% |
| Classified assets |
|
$ |
33,605 |
|
|
$ |
35,392 |
|
|
$ |
30,500 |
|
|
(5 |
) |
% |
10 |
|
% |
| Allowance for credit losses on
loans to total loans |
|
|
1.42 |
|
% |
|
1.44 |
|
% |
|
1.45 |
|
% |
(1 |
) |
% |
(2 |
) |
% |
| Allowance for credit losses on
loans to total nonperforming loans |
|
|
795.26 |
|
% |
|
608.41 |
|
% |
|
863.34 |
|
% |
31 |
|
% |
(8 |
) |
% |
| Nonperforming assets to total
assets |
|
|
0.11 |
|
% |
|
0.15 |
|
% |
|
0.10 |
|
% |
(27 |
) |
% |
10 |
|
% |
| Nonperforming loans to total
loans |
|
|
0.18 |
|
% |
|
0.24 |
|
% |
|
0.17 |
|
% |
(25 |
) |
% |
6 |
|
% |
| Classified assets to Heritage
Commerce Corp |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 capital plus allowance for credit losses on loans |
|
|
6 |
|
% |
|
6 |
|
% |
|
6 |
|
% |
0 |
|
% |
0 |
|
% |
| Classified assets to Heritage
Bank of Commerce |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 capital plus allowance for credit losses on loans |
|
|
6 |
|
% |
|
6 |
|
% |
|
5 |
|
% |
0 |
|
% |
20 |
|
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| OTHER PERIOD-END
STATISTICS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in $000’s, unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Heritage Commerce
Corp: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible common equity (1) |
|
$ |
504,047 |
|
|
$ |
500,591 |
|
|
$ |
476,209 |
|
|
1 |
|
% |
6 |
|
% |
|
Shareholders’ equity / total assets |
|
|
12.91 |
|
% |
|
12.87 |
|
% |
|
12.31 |
|
% |
0 |
|
% |
5 |
|
% |
|
Tangible common equity / tangible assets (2) |
|
|
9.91 |
|
% |
|
9.85 |
|
% |
|
9.27 |
|
% |
1 |
|
% |
7 |
|
% |
|
Loan to deposit ratio |
|
|
76.04 |
|
% |
|
75.06 |
|
% |
|
73.07 |
|
% |
1 |
|
% |
4 |
|
% |
|
Noninterest-bearing deposits / total deposits |
|
|
26.71 |
|
% |
|
27.94 |
|
% |
|
29.32 |
|
% |
(4 |
) |
% |
(9 |
) |
% |
|
Total capital ratio |
|
|
15.6 |
|
% |
|
15.6 |
|
% |
|
15.4 |
|
% |
0 |
|
% |
1 |
|
% |
|
Tier 1 capital ratio |
|
|
13.4 |
|
% |
|
13.4 |
|
% |
|
13.2 |
|
% |
0 |
|
% |
2 |
|
% |
|
Common Equity Tier 1 capital ratio |
|
|
13.4 |
|
% |
|
13.4 |
|
% |
|
13.2 |
|
% |
0 |
|
% |
2 |
|
% |
|
Tier 1 leverage ratio |
|
|
10.2 |
|
% |
|
10.2 |
|
% |
|
9.7 |
|
% |
0 |
|
% |
5 |
|
% |
| Heritage Bank of
Commerce: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible common equity / tangible assets (2) |
|
|
10.28 |
|
% |
|
10.22 |
|
% |
|
9.60 |
|
% |
1 |
|
% |
7 |
|
% |
|
Total capital ratio |
|
|
15.1 |
|
% |
|
15.1 |
|
% |
|
14.8 |
|
% |
0 |
|
% |
2 |
|
% |
|
Tier 1 capital ratio |
|
|
13.9 |
|
% |
|
13.9 |
|
% |
|
13.7 |
|
% |
0 |
|
% |
1 |
|
% |
|
Common Equity Tier 1 capital ratio |
|
|
13.9 |
|
% |
|
13.9 |
|
% |
|
13.7 |
|
% |
0 |
|
% |
1 |
|
% |
|
Tier 1 leverage ratio |
|
|
10.6 |
|
% |
|
10.6 |
|
% |
|
10.0 |
|
% |
0 |
|
% |
6 |
|
% |
| |
|
| (1) |
|
This is a non-GAAP
financial measure that represents shareholders' equity minus
goodwill and other intangible assets. |
| (2) |
|
This is a non-GAAP
financial measure that 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 |
|
June 30, |
|
|
March 31, |
|
|
December 31, |
|
|
September 30, |
|
|
June 30, |
|
|
(in $000’s, unaudited) |
|
2024 |
|
|
2024 |
|
|
2023 |
|
|
2023 |
|
|
2023
|
|
|
Nonaccrual loans - held-for-investment |
|
$ |
5,782 |
|
|
$ |
5,920 |
|
|
$ |
6,818 |
|
|
$ |
3,518 |
|
|
$ |
3,275 |
|
|
| Loans over 90 days past
due |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and still accruing |
|
|
248 |
|
|
|
1,951 |
|
|
|
889 |
|
|
|
1,966 |
|
|
|
2,262 |
|
|
|
Total nonperforming loans |
|
|
6,030 |
|
|
|
7,871 |
|
|
|
7,707 |
|
|
|
5,484 |
|
|
|
5,537 |
|
|
| Foreclosed assets |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
Total nonperforming assets |
|
$ |
6,030 |
|
|
$ |
7,871 |
|
|
$ |
7,707 |
|
|
$ |
5,484 |
|
|
$ |
5,537 |
|
|
| Net charge-offs (recoveries)
during the quarter |
|
$ |
405 |
|
|
$ |
254 |
|
|
$ |
33 |
|
|
$ |
269 |
|
|
$ |
(270 |
) |
|
| Provision for credit losses on
loans during the quarter |
|
$ |
471 |
|
|
$ |
184 |
|
|
$ |
289 |
|
|
$ |
168 |
|
|
$ |
260 |
|
|
| Allowance for credit losses on
loans |
|
$ |
47,954 |
|
|
$ |
47,888 |
|
|
$ |
47,958 |
|
|
$ |
47,702 |
|
|
$ |
47,803 |
|
|
| Classified assets |
|
$ |
33,605 |
|
|
$ |
35,392 |
|
|
$ |
31,763 |
|
|
$ |
31,062 |
|
|
$ |
30,500 |
|
|
| Allowance for credit losses on
loans to total loans |
|
|
1.42 |
|
% |
|
1.44 |
|
% |
|
1.43 |
|
% |
|
1.45 |
|
% |
|
1.45 |
|
% |
| Allowance for credit losses on
loans to total nonperforming loans |
|
|
795.26 |
|
% |
|
608.41 |
|
% |
|
622.27 |
|
% |
|
869.84 |
|
% |
|
863.34 |
|
% |
| Nonperforming assets to total
assets |
|
|
0.11 |
|
% |
|
0.15 |
|
% |
|
0.15 |
|
% |
|
0.10 |
|
% |
|
0.10 |
|
% |
| Nonperforming loans to total
loans |
|
|
0.18 |
|
% |
|
0.24 |
|
% |
|
0.23 |
|
% |
|
0.17 |
|
% |
|
0.17 |
|
% |
| Classified assets to Heritage
Commerce Corp |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 capital plus allowance for credit losses on loans |
|
|
6 |
|
% |
|
6 |
|
% |
|
6 |
|
% |
|
6 |
|
% |
|
6 |
|
% |
| Classified assets to Heritage
Bank of Commerce |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 capital plus allowance for credit losses on loans |
|
|
6 |
|
% |
|
6 |
|
% |
|
5 |
|
% |
|
5 |
|
% |
|
5 |
|
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| OTHER PERIOD-END
STATISTICS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in $000’s, unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Heritage Commerce
Corp: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible common equity (1) |
|
$ |
504,047 |
|
|
$ |
500,591 |
|
|
$ |
496,643 |
|
|
$ |
485,070 |
|
|
$ |
476,209 |
|
|
|
Shareholders’ equity / total assets |
|
|
12.91 |
|
% |
|
12.87 |
|
% |
|
12.96 |
|
% |
|
12.25 |
|
% |
|
12.31 |
|
% |
|
Tangible common equity / tangible assets (2) |
|
|
9.91 |
|
% |
|
9.85 |
|
% |
|
9.90 |
|
% |
|
9.28 |
|
% |
|
9.27 |
|
% |
|
Loan to deposit ratio |
|
|
76.04 |
|
% |
|
75.06 |
|
% |
|
76.52 |
|
% |
|
71.81 |
|
% |
|
73.07 |
|
% |
|
Noninterest-bearing deposits / total deposits |
|
|
26.71 |
|
% |
|
27.94 |
|
% |
|
29.52 |
|
% |
|
27.18 |
|
% |
|
29.32 |
|
% |
|
Total capital ratio |
|
|
15.6 |
|
% |
|
15.6 |
|
% |
|
15.5 |
|
% |
|
15.6 |
|
% |
|
15.4 |
|
% |
|
Tier 1 capital ratio |
|
|
13.4 |
|
% |
|
13.4 |
|
% |
|
13.3 |
|
% |
|
13.4 |
|
% |
|
13.2 |
|
% |
|
Common Equity Tier 1 capital ratio |
|
|
13.4 |
|
% |
|
13.4 |
|
% |
|
13.3 |
|
% |
|
13.4 |
|
% |
|
13.2 |
|
% |
|
Tier 1 leverage ratio |
|
|
10.2 |
|
% |
|
10.2 |
|
% |
|
10.0 |
|
% |
|
9.6 |
|
% |
|
9.7 |
|
% |
| Heritage Bank of
Commerce: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible common equity / tangible assets (2) |
|
|
10.28 |
|
% |
|
10.22 |
|
% |
|
10.26 |
|
% |
|
9.62 |
|
% |
|
9.60 |
|
% |
|
Total capital ratio |
|
|
15.1 |
|
% |
|
15.1 |
|
% |
|
14.9 |
|
% |
|
15.0 |
|
% |
|
14.8 |
|
% |
|
Tier 1 capital ratio |
|
|
13.9 |
|
% |
|
13.9 |
|
% |
|
13.8 |
|
% |
|
13.9 |
|
% |
|
13.7 |
|
% |
|
Common Equity Tier 1 capital ratio |
|
|
13.9 |
|
% |
|
13.9 |
|
% |
|
13.8 |
|
% |
|
13.9 |
|
% |
|
13.7 |
|
% |
|
Tier 1 leverage ratio |
|
|
10.6 |
|
% |
|
10.6 |
|
% |
|
10.4 |
|
% |
|
10.0 |
|
% |
|
10.0 |
|
% |
| |
|
| (1) |
|
This is a non-GAAP
financial measure that represents shareholders' equity minus
goodwill and other intangible assets. |
| (2) |
|
This is a non-GAAP
financial measure that 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 |
|
| |
|
June 30, 2024 |
|
March 31, 2024 |
|
|
|
|
|
|
|
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) |
|
$ |
3,329,861 |
|
$ |
45,470 |
|
|
5.49 |
% |
$ |
3,299,989 |
|
$ |
44,600 |
|
|
5.44 |
% |
| Securities - taxable |
|
|
942,532 |
|
|
5,483 |
|
|
2.34 |
% |
|
1,042,484 |
|
|
6,183 |
|
|
2.39 |
% |
| Securities - exempt from
Federal tax (3) |
|
|
31,803 |
|
|
285 |
|
|
3.60 |
% |
|
31,939 |
|
|
286 |
|
|
3.60 |
% |
| Other investments and
interest-bearing deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in other financial institutions |
|
|
568,253 |
|
|
7,899 |
|
|
5.59 |
% |
|
467,867 |
|
|
6,542 |
|
|
5.62 |
% |
|
Total interest earning assets (3) |
|
|
4,872,449 |
|
|
59,137 |
|
|
4.88 |
% |
|
4,842,279 |
|
|
57,611 |
|
|
4.79 |
% |
| Cash and due from banks |
|
|
33,419 |
|
|
|
|
|
|
|
33,214 |
|
|
|
|
|
|
| Premises and equipment,
net |
|
|
10,216 |
|
|
|
|
|
|
|
10,015 |
|
|
|
|
|
|
| Goodwill and other intangible
assets |
|
|
175,498 |
|
|
|
|
|
|
|
176,039 |
|
|
|
|
|
|
| Other assets |
|
|
121,589 |
|
|
|
|
|
|
|
117,089 |
|
|
|
|
|
|
|
Total assets |
|
$ |
5,213,171 |
|
|
|
|
|
|
$ |
5,178,636 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Liabilities and
shareholders’ equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, noninterest-bearing |
|
$ |
1,127,145 |
|
|
|
|
|
|
$ |
1,177,078 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, interest-bearing |
|
|
932,100 |
|
|
1,719 |
|
|
0.74 |
% |
|
920,048 |
|
|
1,554 |
|
|
0.68 |
% |
|
Savings and money market |
|
|
1,104,589 |
|
|
7,867 |
|
|
2.86 |
% |
|
1,067,581 |
|
|
6,649 |
|
|
2.50 |
% |
|
Time deposits - under $100 |
|
|
10,980 |
|
|
46 |
|
|
1.68 |
% |
|
10,945 |
|
|
42 |
|
|
1.54 |
% |
|
Time deposits - $100 and over |
|
|
228,248 |
|
|
2,245 |
|
|
3.96 |
% |
|
221,211 |
|
|
2,064 |
|
|
3.75 |
% |
|
ICS/CDARS - interest-bearing demand, money market |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and time deposits |
|
|
991,483 |
|
|
7,207 |
|
|
2.92 |
% |
|
963,287 |
|
|
6,611 |
|
|
2.76 |
% |
|
Total interest-bearing deposits |
|
|
3,267,400 |
|
|
19,084 |
|
|
2.35 |
% |
|
3,183,072 |
|
|
16,920 |
|
|
2.14 |
% |
|
Total deposits |
|
|
4,394,545 |
|
|
19,084 |
|
|
1.75 |
% |
|
4,360,150 |
|
|
16,920 |
|
|
1.56 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Short-term borrowings |
|
|
19 |
|
|
— |
|
|
0.00 |
% |
|
15 |
|
|
— |
|
|
0.00 |
% |
| Subordinated debt, net of
issuance costs |
|
|
39,553 |
|
|
538 |
|
|
5.47 |
% |
|
39,516 |
|
|
538 |
|
|
5.48 |
% |
|
Total interest-bearing liabilities |
|
|
3,306,972 |
|
|
19,622 |
|
|
2.39 |
% |
|
3,222,603 |
|
|
17,458 |
|
|
2.18 |
% |
|
Total interest-bearing liabilities and demand, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
noninterest-bearing / cost of funds |
|
|
4,434,117 |
|
|
19,622 |
|
|
1.78 |
% |
|
4,399,681 |
|
|
17,458 |
|
|
1.60 |
% |
| Other liabilities |
|
|
103,946 |
|
|
|
|
|
|
|
106,663 |
|
|
|
|
|
|
|
Total liabilities |
|
|
4,538,063 |
|
|
|
|
|
|
|
4,506,344 |
|
|
|
|
|
|
| Shareholders’ equity |
|
|
675,108 |
|
|
|
|
|
|
|
672,292 |
|
|
|
|
|
|
|
Total liabilities and shareholders’ equity |
|
$ |
5,213,171 |
|
|
|
|
|
|
$ |
5,178,636 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net interest income / margin
(3) |
|
|
|
|
|
39,515 |
|
|
3.26 |
% |
|
|
|
|
40,153 |
|
|
3.34 |
% |
| Less tax equivalent adjustment
(3) |
|
|
|
|
|
(60 |
) |
|
|
|
|
|
|
|
(60 |
) |
|
|
|
|
Net interest income |
|
|
|
|
$ |
39,455 |
|
|
3.26 |
% |
|
|
|
$ |
40,093 |
|
|
3.33 |
% |
| |
|
| (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 $117,000 for the second quarter
of 2024, compared to $160,000 for the first quarter of 2024.
Prepayment fees totaled $54,000 for the second quarter of 2024,
compared to $24,000 for the first quarter of 2024. |
|
(3) |
|
Reflects the
non-GAAP FTE adjustment for Federal tax-exempt income based on a
21% tax rate. |
|
|
|
|
|
| |
|
For the Quarter Ended |
|
For the Quarter Ended |
|
| |
|
June 30, 2024 |
|
June 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) |
|
$ |
3,329,861 |
|
$ |
45,470 |
|
|
5.49 |
% |
$ |
3,231,341 |
|
$ |
44,028 |
|
|
5.47 |
% |
| Securities - taxable |
|
|
942,532 |
|
|
5,483 |
|
|
2.34 |
% |
|
1,147,375 |
|
|
6,982 |
|
|
2.44 |
% |
| Securities - exempt from
Federal tax (3) |
|
|
31,803 |
|
|
285 |
|
|
3.60 |
% |
|
34,070 |
|
|
302 |
|
|
3.56 |
% |
| Other investments and
interest-bearing deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in other financial institutions |
|
|
568,253 |
|
|
7,899 |
|
|
5.59 |
% |
|
535,611 |
|
|
7,092 |
|
|
5.31 |
% |
|
Total interest earning assets (3) |
|
|
4,872,449 |
|
|
59,137 |
|
|
4.88 |
% |
|
4,948,397 |
|
|
58,404 |
|
|
4.73 |
% |
| Cash and due from banks |
|
|
33,419 |
|
|
|
|
|
|
|
35,159 |
|
|
|
|
|
|
| Premises and equipment,
net |
|
|
10,216 |
|
|
|
|
|
|
|
9,190 |
|
|
|
|
|
|
| Goodwill and other intangible
assets |
|
|
175,498 |
|
|
|
|
|
|
|
177,844 |
|
|
|
|
|
|
| Other assets |
|
|
121,589 |
|
|
|
|
|
|
|
107,653 |
|
|
|
|
|
|
|
Total assets |
|
$ |
5,213,171 |
|
|
|
|
|
|
$ |
5,278,243 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Liabilities and
shareholders’ equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, noninterest-bearing |
|
$ |
1,127,145 |
|
|
|
|
|
|
$ |
1,368,373 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, interest-bearing |
|
|
932,100 |
|
|
1,719 |
|
|
0.74 |
% |
|
1,118,200 |
|
|
1,788 |
|
|
0.64 |
% |
|
Savings and money market |
|
|
1,104,589 |
|
|
7,867 |
|
|
2.86 |
% |
|
1,109,347 |
|
|
4,638 |
|
|
1.68 |
% |
|
Time deposits - under $100 |
|
|
10,980 |
|
|
46 |
|
|
1.68 |
% |
|
11,610 |
|
|
20 |
|
|
0.69 |
% |
|
Time deposits - $100 and over |
|
|
228,248 |
|
|
2,245 |
|
|
3.96 |
% |
|
201,600 |
|
|
1,410 |
|
|
2.81 |
% |
|
ICS/CDARS - interest-bearing demand, money market |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and time deposits |
|
|
991,483 |
|
|
7,207 |
|
|
2.92 |
% |
|
614,911 |
|
|
2,867 |
|
|
1.87 |
% |
|
Total interest-bearing deposits |
|
|
3,267,400 |
|
|
19,084 |
|
|
2.35 |
% |
|
3,055,668 |
|
|
10,723 |
|
|
1.41 |
% |
|
Total deposits |
|
|
4,394,545 |
|
|
19,084 |
|
|
1.75 |
% |
|
4,424,041 |
|
|
10,723 |
|
|
0.97 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Short-term borrowings |
|
|
19 |
|
|
— |
|
|
0.00 |
% |
|
62,653 |
|
|
787 |
|
|
5.04 |
% |
| Subordinated debt, net of
issuance costs |
|
|
39,553 |
|
|
538 |
|
|
5.47 |
% |
|
39,401 |
|
|
538 |
|
|
5.48 |
% |
|
Total interest-bearing liabilities |
|
|
3,306,972 |
|
|
19,622 |
|
|
2.39 |
% |
|
3,157,722 |
|
|
12,048 |
|
|
1.53 |
% |
|
Total interest-bearing liabilities and demand, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
noninterest-bearing / cost of funds |
|
|
4,434,117 |
|
|
19,622 |
|
|
1.78 |
% |
|
4,526,095 |
|
|
12,048 |
|
|
1.07 |
% |
| Other liabilities |
|
|
103,946 |
|
|
|
|
|
|
|
101,908 |
|
|
|
|
|
|
|
Total liabilities |
|
|
4,538,063 |
|
|
|
|
|
|
|
4,628,003 |
|
|
|
|
|
|
| Shareholders’ equity |
|
|
675,108 |
|
|
|
|
|
|
|
650,240 |
|
|
|
|
|
|
|
Total liabilities and shareholders’ equity |
|
$ |
5,213,171 |
|
|
|
|
|
|
$ |
5,278,243 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net interest income /
margin (3) |
|
|
|
|
|
39,515 |
|
|
3.26 |
% |
|
|
|
|
46,356 |
|
|
3.76 |
% |
| Less tax equivalent adjustment
(3) |
|
|
|
|
|
(60 |
) |
|
|
|
|
|
|
|
(63 |
) |
|
|
|
|
Net interest income |
|
|
|
|
$ |
39,455 |
|
|
3.26 |
% |
|
|
|
$ |
46,293 |
|
|
3.75 |
% |
| |
|
| (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 $117,000 for the second quarter of 2024, compared to
$94,000 for the second quarter of 2023. Prepayment fees totaled
$54,000 for the second quarter of 2024, compared to $73,000 for the
second quarter of 2023. |
| (3) |
|
Reflects the non-GAAP FTE adjustment for Federal
tax-exempt income based on a 21% tax rate. |
| |
|
|
|
| |
|
For the Six Months Ended |
|
For the Six Months Ended |
|
| |
|
June 30, 2024 |
|
June 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) |
|
$ |
3,314,925 |
|
$ |
90,070 |
|
|
5.46 |
% |
$ |
3,254,305 |
|
$ |
88,140 |
|
|
5.46 |
% |
| Securities - taxable |
|
|
992,508 |
|
|
11,666 |
|
|
2.36 |
% |
|
1,154,160 |
|
|
14,038 |
|
|
2.45 |
% |
| Securities - exempt from
Federal tax (3) |
|
|
31,871 |
|
|
571 |
|
|
3.60 |
% |
|
35,036 |
|
|
615 |
|
|
3.54 |
% |
| Other investments,
interest-bearing deposits in other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
financial institutions and Federal funds sold |
|
|
518,060 |
|
|
14,441 |
|
|
5.61 |
% |
|
478,349 |
|
|
11,951 |
|
|
5.04 |
% |
|
Total interest earning assets (3) |
|
|
4,857,364 |
|
|
116,748 |
|
|
4.83 |
% |
|
4,921,850 |
|
|
114,744 |
|
|
4.70 |
% |
| Cash and due from banks |
|
|
33,316 |
|
|
|
|
|
|
|
36,354 |
|
|
|
|
|
|
| Premises and equipment,
net |
|
|
10,115 |
|
|
|
|
|
|
|
9,229 |
|
|
|
|
|
|
| Goodwill and other intangible
assets |
|
|
175,769 |
|
|
|
|
|
|
|
178,142 |
|
|
|
|
|
|
| Other assets |
|
|
119,339 |
|
|
|
|
|
|
|
111,418 |
|
|
|
|
|
|
|
Total assets |
|
$ |
5,195,903 |
|
|
|
|
|
|
$ |
5,256,993 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Liabilities and
shareholders’ equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, noninterest-bearing |
|
$ |
1,152,111 |
|
|
|
|
|
|
$ |
1,516,991 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, interest-bearing |
|
|
926,074 |
|
|
3,273 |
|
|
0.71 |
% |
|
1,167,690 |
|
|
3,264 |
|
|
0.56 |
% |
|
Savings and money market |
|
|
1,086,085 |
|
|
14,516 |
|
|
2.69 |
% |
|
1,196,774 |
|
|
8,127 |
|
|
1.37 |
% |
|
Time deposits - under $100 |
|
|
10,962 |
|
|
88 |
|
|
1.61 |
% |
|
11,943 |
|
|
30 |
|
|
0.51 |
% |
|
Time deposits - $100 and over |
|
|
224,730 |
|
|
4,309 |
|
|
3.86 |
% |
|
182,430 |
|
|
2,255 |
|
|
2.49 |
% |
|
ICS/CDARS - interest-bearing demand, money market |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and time deposits |
|
|
977,385 |
|
|
13,818 |
|
|
2.84 |
% |
|
344,191 |
|
|
2,948 |
|
|
1.73 |
% |
|
Total interest-bearing deposits |
|
|
3,225,236 |
|
|
36,004 |
|
|
2.24 |
% |
|
2,903,028 |
|
|
16,624 |
|
|
1.15 |
% |
|
Total deposits |
|
|
4,377,347 |
|
|
36,004 |
|
|
1.65 |
% |
|
4,420,019 |
|
|
16,624 |
|
|
0.76 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Short-term borrowings |
|
|
17 |
|
|
— |
|
|
0.00 |
% |
|
54,709 |
|
|
1,365 |
|
|
5.03 |
% |
| Subordinated debt, net of
issuance costs |
|
|
39,535 |
|
|
1,076 |
|
|
5.47 |
% |
|
39,382 |
|
|
1,075 |
|
|
5.50 |
% |
|
Total interest-bearing liabilities |
|
|
3,264,788 |
|
|
37,080 |
|
|
2.28 |
% |
|
2,997,119 |
|
|
19,064 |
|
|
1.28 |
% |
|
Total interest-bearing liabilities and demand, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
noninterest-bearing / cost of funds |
|
|
4,416,899 |
|
|
37,080 |
|
|
1.69 |
% |
|
4,514,110 |
|
|
19,064 |
|
|
0.85 |
% |
| Other liabilities |
|
|
105,304 |
|
|
|
|
|
|
|
98,929 |
|
|
|
|
|
|
|
Total liabilities |
|
|
4,522,203 |
|
|
|
|
|
|
|
4,613,039 |
|
|
|
|
|
|
| Shareholders’ equity |
|
|
673,700 |
|
|
|
|
|
|
|
643,954 |
|
|
|
|
|
|
|
Total liabilities and shareholders’ equity |
|
$ |
5,195,903 |
|
|
|
|
|
|
$ |
5,256,993 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net interest income /
margin (3) |
|
|
|
|
|
79,668 |
|
|
3.30 |
% |
|
|
|
|
95,680 |
|
|
3.92 |
% |
| Less tax equivalent adjustment
(3) |
|
|
|
|
|
(120 |
) |
|
|
|
|
|
|
|
(129 |
) |
|
|
|
|
Net interest income |
|
|
|
|
$ |
79,548 |
|
|
3.29 |
% |
|
|
|
$ |
95,551 |
|
|
3.91 |
% |
|
|
|
|
|
| (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 $277,000 for the first six
months of 2024, compared to $394,000 for the first six months of
2023. Prepayment fees totaled $78,000 for the first six months of
2024, compared to $211,000 for the first six months of 2023. |
| (3) |
|
Reflects the non-GAAP
FTE adjustment for Federal tax-exempt income based on a 21% tax
rate. |
| |
|
|
|
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
- Management considers
tangible book value per share as a useful measurement of the
Company’s equity. The Company references the return on average
tangible common equity and the return on average tangible assets as
measurements of profitability.
- The following table summarizes components of the tangible book
value per share at the dates indicated:
| TANGIBLE BOOK VALUE
PER SHARE |
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
|
(in $000’s, unaudited) |
|
2024 |
|
2024
|
|
2023 |
|
2023
|
|
2023
|
| Capital
components: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Equity (GAAP) |
|
$ |
679,199 |
|
|
$ |
676,296 |
|
|
$ |
672,901 |
|
|
$ |
661,930 |
|
|
$ |
653,670 |
|
|
Less: Preferred Stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Total Common Equity |
|
|
679,199 |
|
|
|
676,296 |
|
|
|
672,901 |
|
|
|
661,930 |
|
|
|
653,670 |
|
|
Less: Goodwill |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
Less: Other Intangible Assets |
|
|
(7,521 |
) |
|
|
(8,074 |
) |
|
|
(8,627 |
) |
|
|
(9,229 |
) |
|
|
(9,830 |
) |
|
Total Tangible Common Equity (non-GAAP) |
|
$ |
504,047 |
|
|
$ |
500,591 |
|
|
$ |
496,643 |
|
|
$ |
485,070 |
|
|
$ |
476,209 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common shares
outstanding at period-end |
|
|
61,292,094 |
|
|
|
61,253,625 |
|
|
|
61,146,835 |
|
|
|
61,099,155 |
|
|
|
61,091,155 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Tangible book value
per share (non-GAAP) |
|
$ |
8.22 |
|
|
$ |
8.17 |
|
|
$ |
8.12 |
|
|
$ |
7.94 |
|
|
$ |
7.80 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- The following tables
summarize components of the annualized return on average tangible
common equity and the annualized return on average tangible assets
for the periods indicated:
| RETURN ON AVERAGE
TANGIBLE COMMON |
|
For the Quarter Ended: |
|
|
EQUITY AND AVERAGE TANGIBLE COMMON ASSETS |
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
|
|
(in $000’s, unaudited) |
|
2024
|
|
2024
|
|
|
2023 |
|
2023
|
|
2023
|
|
|
Net income |
|
$ |
9,234 |
|
|
$ |
10,166 |
|
|
$ |
13,328 |
|
|
$ |
15,795 |
|
|
$ |
16,403 |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average tangible
common equity components: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Equity (GAAP) |
|
$ |
675,108 |
|
|
$ |
672,292 |
|
|
$ |
664,638 |
|
|
$ |
656,973 |
|
|
$ |
650,240 |
|
|
|
Less: Goodwill |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
Less: Other Intangible Assets |
|
|
(7,867 |
) |
|
|
(8,408 |
) |
|
|
(9,010 |
) |
|
|
(9,607 |
) |
|
|
(10,213 |
) |
|
|
Total Average Tangible Common Equity (non-GAAP) |
|
$ |
499,610 |
|
|
$ |
496,253 |
|
|
$ |
487,997 |
|
|
$ |
479,735 |
|
|
$ |
472,396 |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Annualized return on
average tangible common equity (non-GAAP) |
|
|
7.43 |
|
% |
|
8.24 |
|
% |
|
10.84 |
|
% |
|
13.06 |
|
% |
|
13.93 |
|
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average tangible
assets components: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Assets (GAAP) |
|
$ |
5,213,171 |
|
|
$ |
5,178,636 |
|
|
$ |
5,264,905 |
|
|
$ |
5,399,930 |
|
|
$ |
5,278,243 |
|
|
|
Less: Goodwill |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
Less: Other Intangible Assets |
|
|
(7,867 |
) |
|
|
(8,408 |
) |
|
|
(9,010 |
) |
|
|
(9,607 |
) |
|
|
(10,213 |
) |
|
|
Total Average Tangible Assets (non-GAAP) |
|
$ |
5,037,673 |
|
|
$ |
5,002,597 |
|
|
$ |
5,088,264 |
|
|
$ |
5,222,692 |
|
|
|
5,100,399 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Annualized return on
average tangible assets (non-GAAP) |
|
|
0.74 |
|
% |
|
0.82 |
|
% |
|
1.04 |
|
% |
|
1.20 |
|
% |
|
1.29 |
|
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| RETURN ON AVERAGE
TANGIBLE COMMON |
|
For the Six Months Ended: |
|
|
EQUITY AND AVERAGE TANGIBLE COMMON ASSETS |
|
June 30, |
|
June 30, |
|
|
(in $000’s, unaudited) |
|
2024
|
|
2023
|
|
|
Net income |
|
$ |
19,400 |
|
|
$ |
35,320 |
|
|
| |
|
|
|
|
|
|
|
| Average tangible
common equity components: |
|
|
|
|
|
|
|
|
Average Equity (GAAP) |
|
$ |
673,700 |
|
|
$ |
643,954 |
|
|
|
Less: Goodwill |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
Less: Other Intangible Assets |
|
|
(8,138 |
) |
|
|
(10,511 |
) |
|
|
Total Average Tangible Common Equity (non-GAAP) |
|
$ |
497,931 |
|
|
$ |
465,812 |
|
|
| |
|
|
|
|
|
|
|
| Annualized return on
average tangible common equity (non-GAAP) |
|
|
7.84 |
|
% |
|
15.29 |
|
% |
| |
|
|
|
|
|
|
|
| Average tangible
assets components: |
|
|
|
|
|
|
|
|
Average Assets (GAAP) |
|
$ |
5,195,903 |
|
|
$ |
5,256,993 |
|
|
|
Less: Goodwill |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
Less: Other Intangible Assets |
|
|
(8,138 |
) |
|
|
(10,511 |
) |
|
|
Total Average Tangible Assets (non-GAAP) |
|
$ |
5,020,134 |
|
|
|
5,078,851 |
|
|
|
|
|
|
|
|
|
|
|
| Annualized return on
average tangible assets (non-GAAP) |
|
|
0.78 |
|
% |
|
1.40 |
|
% |
| |
|
|
|
|
|
|
|
|
|
- Management reviews yields on
certain asset categories and the net interest margin of the Company
on an FTE basis. In this non-GAAP presentation, net interest income
is adjusted to reflect tax-exempt interest income on an equivalent
before-tax basis using tax rates effective as of the end of the
period. This measure ensures comparability of net interest income
arising from both taxable and tax-exempt sources. The following
tables summarize components of FTE net interest income of the
Company for the periods indicated:
| |
|
For the Quarter Ended: |
|
| |
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
|
|
(in $000’s, unaudited) |
|
2024 |
|
2024 |
|
2023 |
|
2023 |
|
2023 |
|
|
Net interest income before |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
credit losses on loans (GAAP) |
|
$ |
39,455 |
|
$ |
40,093 |
|
$ |
42,301 |
|
$ |
45,372 |
|
$ |
46,293 |
|
| Tax-equivalent adjustment on
securities - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
exempt from Federal tax |
|
|
60 |
|
|
60 |
|
|
61 |
|
|
61 |
|
|
63 |
|
|
Net interest income, FTE (non-GAAP) |
|
$ |
39,515 |
|
$ |
40,153 |
|
$ |
42,362 |
|
$ |
45,433 |
|
$ |
46,356 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average balance of total
interest earning assets |
|
$ |
4,872,449 |
|
$ |
4,842,279 |
|
$ |
4,923,582 |
|
$ |
5,051,710 |
|
$ |
4,948,397 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net interest margin
(annualized net interest income divided by the |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
average balance of total interest earnings assets) (GAAP) |
|
|
3.26 |
% |
|
3.33 |
% |
|
3.41 |
% |
|
3.56 |
% |
|
3.75 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net interest margin, FTE
(annualized net interest income, FTE, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
divided by the average balance of total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
earnings assets) (non-GAAP) |
|
|
3.26 |
% |
|
3.34 |
% |
|
3.41 |
% |
|
3.57 |
% |
|
3.76 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
For the Six Months Ended: |
|
| |
|
June 30, |
|
June 30, |
|
|
(in $000’s, unaudited) |
|
2024 |
|
2023 |
|
| Net interest income
before |
|
|
|
|
|
|
|
|
credit losses on loans (GAAP) |
|
$ |
79,548 |
|
$ |
95,551 |
|
| Tax-equivalent adjustment on
securities - exempt from Federal tax |
|
|
120 |
|
|
129 |
|
|
Net interest income, FTE (non-GAAP) |
|
$ |
79,668 |
|
$ |
95,680 |
|
| |
|
|
|
|
|
|
|
| Average balance of total
interest earning assets |
|
$ |
4,857,364 |
|
$ |
4,921,850 |
|
| |
|
|
|
|
|
|
|
| Net interest margin
(annualized net interest income divided by the |
|
|
|
|
|
|
|
|
average balance of total interest earnings assets) (GAAP) |
|
|
3.29 |
% |
|
3.91 |
% |
| |
|
|
|
|
|
|
|
| Net interest margin, FTE
(annualized net interest income, FTE, divided by the |
|
|
|
|
|
|
|
|
average balance of total interest earnings assets) (non-GAAP) |
|
|
3.30 |
% |
|
3.92 |
% |
|
|
|
|
|
|
|
|
|
- The efficiency ratio is a non-GAAP
financial measure, which is calculated by dividing noninterest
expense by total revenue (net interest income plus noninterest
income), and measures how much it costs to produce one dollar of
revenue. The following tables summarize components of the
efficiency ratio of the Company for the periods indicated:
| |
|
For the Quarter Ended: |
|
| |
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
|
|
(in $000’s, unaudited) |
|
2024 |
|
2024 |
|
2023 |
|
2023 |
|
2023 |
|
|
Noninterest expense |
|
$ |
28,188 |
|
$ |
27,536 |
|
$ |
25,491 |
|
$ |
25,171 |
|
$ |
24,991 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net interest income before
credit losses on loans |
|
$ |
39,455 |
|
$ |
40,093 |
|
$ |
42,301 |
|
$ |
45,372 |
|
$ |
46,293 |
|
| Noninterest income |
|
|
2,276 |
|
|
2,047 |
|
|
1,942 |
|
|
2,216 |
|
|
2,074 |
|
|
Total revenue |
|
$ |
41,731 |
|
$ |
42,140 |
|
$ |
44,243 |
|
$ |
47,588 |
|
$ |
48,367 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Efficiency ratio (noninterest
expense divided |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
by total revenue) (non-GAAP) |
|
|
67.55 |
% |
|
65.34 |
% |
|
57.62 |
% |
|
52.89 |
% |
|
51.67 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
For the Six Months Ended: |
|
| |
|
June 30, |
|
June 30, |
|
|
(in $000’s, unaudited) |
|
2024 |
|
2023 |
|
|
Noninterest expense |
|
$ |
55,724 |
|
$ |
50,392 |
|
| |
|
|
|
|
|
|
|
| Net interest income before
credit losses on loans |
|
$ |
79,548 |
|
$ |
95,551 |
|
| Noninterest income |
|
|
4,323 |
|
|
4,840 |
|
|
Total revenue |
|
$ |
83,871 |
|
$ |
100,391 |
|
| |
|
|
|
|
|
|
|
| Efficiency ratio (noninterest
expense divided |
|
|
|
|
|
|
|
|
by total revenue) (non-GAAP) |
|
|
66.44 |
% |
|
50.20 |
% |
|
|
|
|
|
|
|
|
|
- Management considers
the tangible common equity ratio as a useful measurement of the
Company’s and the Bank’s equity. The following table summarizes
components of the tangible common equity to tangible assets ratio
of the Company at the dates indicated:
| TANGIBLE COMMON EQUITY
TO TANGIBLE ASSETS |
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
|
|
(in $000’s, unaudited) |
|
2024
|
|
2024
|
|
2023
|
|
2023
|
|
2023
|
|
| Capital
components: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Equity (GAAP) |
|
$ |
679,199 |
|
|
$ |
676,296 |
|
|
$ |
672,901 |
|
|
$ |
661,930 |
|
|
$ |
653,670 |
|
|
|
Less: Preferred Stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
Total Common Equity |
|
|
679,199 |
|
|
|
676,296 |
|
|
|
672,901 |
|
|
|
661,930 |
|
|
|
653,670 |
|
|
|
Less: Goodwill |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
Less: Other Intangible Assets |
|
|
(7,521 |
) |
|
|
(8,074 |
) |
|
|
(8,627 |
) |
|
|
(9,229 |
) |
|
|
(9,830 |
) |
|
|
Total Tangible Common Equity (non-GAAP) |
|
$ |
504,047 |
|
|
$ |
500,591 |
|
|
$ |
496,643 |
|
|
$ |
485,070 |
|
|
$ |
476,209 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Asset
components: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets (GAAP) |
|
$ |
5,263,024 |
|
|
$ |
5,256,074 |
|
|
$ |
5,194,095 |
|
|
$ |
5,403,307 |
|
|
$ |
5,311,837 |
|
|
|
Less: Goodwill |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
Less: Other Intangible Assets |
|
|
(7,521 |
) |
|
|
(8,074 |
) |
|
|
(8,627 |
) |
|
|
(9,229 |
) |
|
|
(9,830 |
) |
|
|
Total Tangible Assets (non-GAAP) |
|
$ |
5,087,872 |
|
|
$ |
5,080,369 |
|
|
$ |
5,017,837 |
|
|
$ |
5,226,447 |
|
|
$ |
5,134,376 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Tangible common equity
/ tangible assets (non-GAAP) |
|
|
9.91 |
|
% |
|
9.85 |
|
% |
|
9.90 |
|
% |
|
9.28 |
|
% |
|
9.27 |
|
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- The following table summarizes components of the tangible
common equity to tangible assets ratio of the Bank at the dates
indicated:
| TANGIBLE COMMON EQUITY
TO TANGIBLE ASSETS |
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
|
|
(in $000’s, unaudited) |
|
2024 |
|
2024
|
|
2023 |
|
2023
|
|
2023
|
|
| Capital
components: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Equity (GAAP) |
|
$ |
697,964 |
|
|
$ |
694,543 |
|
|
$ |
690,918 |
|
|
$ |
679,644 |
|
|
$ |
670,836 |
|
|
|
Less: Preferred Stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
Total Common Equity |
|
|
697,964 |
|
|
|
694,543 |
|
|
|
690,918 |
|
|
|
679,644 |
|
|
|
670,836 |
|
|
|
Less: Goodwill |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
Less: Other Intangible Assets |
|
|
(7,521 |
) |
|
|
(8,074 |
) |
|
|
(8,627 |
) |
|
|
(9,229 |
) |
|
|
(9,830 |
) |
|
|
Total Tangible Common Equity (non-GAAP) |
|
$ |
522,812 |
|
|
$ |
518,838 |
|
|
$ |
514,660 |
|
|
$ |
502,784 |
|
|
$ |
493,375 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Asset
components: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets (GAAP) |
|
$ |
5,260,500 |
|
|
$ |
5,254,044 |
|
|
$ |
5,190,829 |
|
|
$ |
5,402,838 |
|
|
$ |
5,314,170 |
|
|
|
Less: Goodwill |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
Less: Other Intangible Assets |
|
|
(7,521 |
) |
|
|
(8,074 |
) |
|
|
(8,627 |
) |
|
|
(9,229 |
) |
|
|
(9,830 |
) |
|
|
Total Tangible Assets (non-GAAP) |
|
$ |
5,085,348 |
|
|
$ |
5,078,339 |
|
|
$ |
5,014,571 |
|
|
$ |
5,225,978 |
|
|
$ |
5,136,709 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Tangible common equity
/ tangible assets (non-GAAP) |
|
|
10.28 |
|
% |
|
10.22 |
|
% |
|
10.26 |
|
% |
|
9.62 |
|
% |
|
9.60 |
|
% |
Heritage Commerce (NASDAQ:HTBK)
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De Nov 2024 até Dez 2024
Heritage Commerce (NASDAQ:HTBK)
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De Dez 2023 até Dez 2024
