SAN JOSE, Calif., Oct. 24, 2024 (GLOBE NEWSWIRE) --
Heritage Commerce Corp (Nasdaq: HTBK), (the
“Company”), the holding company for Heritage Bank of Commerce (the
“Bank”), today announced that its third quarter 2024 net income was
$10.5 million, or $0.17 per average diluted common share, compared
to $9.2 million, or $0.15 per average diluted common share, for the
second quarter of 2024, and $15.8 million, or $0.26 per average
diluted common share, for the third quarter of 2023. For the nine
months ended September 30, 2024, net income was $29.9 million, or
$0.49 per average diluted common share, compared to $51.1 million,
or $0.83 per average diluted common share, for the nine months
ended September 30, 2023. All data are unaudited.
“The highlight of the third quarter of 2024 was significant
deposit growth from our clients throughout our markets,” said Clay
Jones, President and Chief Executive Officer. “Total deposit
balances grew 6% at the end of the third quarter of 2024, compared
to the prior quarter and notably, noninterest-bearing demand
deposits grew 7% over the same period. Growth in deposits was a
result of the successful conversion of new relationships that were
impacted by the banking disruptions in our market. The loan
portfolio had orderly growth during the third quarter 2024, with
core loans increasing $148.3 million, or 5% over the last 12
months, while growing $35.7 million, or 1%, from the prior quarter.
We remain optimistic about the growth opportunities in our markets,
as loan and deposit pipelines and overall business activity remains
healthy.”
“The credit portfolio continues to perform very well, with
nonperforming assets and net charge-offs remaining low at September
30, 2024,” said Mr. Jones. “Additionally, our liquidity position
remains strong, supported by access to diverse alternative funding
sources.”
“Our commitment to achieving our growth and client service goals
while meeting performance targets remains the driving force behind
our success. I would like to express my appreciation for our bank
team members for their continued commitment to serving our clients,
communities and shareholders,” said Mr. Jones.
Third Quarter Ended September 30,
2024
Operating Results, Liquidity Position, Financial Condition,
Credit Quality, Capital Management and Recent Events
(as of, or for the periods ended September 30,
2024, compared to June 30, 2024, and September 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 Nine Months Ended: |
| |
|
September 30, |
|
June 30, |
|
September 30, |
|
September 30, |
|
September 30, |
|
(unaudited) |
|
2024 |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
| Return on average equity |
|
6.14 |
% |
|
5.50 |
% |
|
9.54 |
% |
|
5.91 |
% |
|
10.54 |
% |
| Return on average tangible
common equity(1) |
|
8.27 |
% |
|
7.43 |
% |
|
13.06 |
% |
|
7.98 |
% |
|
14.52 |
% |
| Return on average assets |
|
0.78 |
% |
|
0.71 |
% |
|
1.16 |
% |
|
0.76 |
% |
|
1.29 |
% |
| Return on average tangible
assets(1) |
|
0.81 |
% |
|
0.74 |
% |
|
1.20 |
% |
|
0.79 |
% |
|
1.33 |
% |
|
|
|
|
| (1) |
This is a non-GAAP
financial measure as defined and discussed under “Non-GAAP
Financial Measures” below.
|
| |
|
|
Net Interest Income:
- Net interest income increased 1% to
$39.9 million for the third quarter of 2024, compared to $39.5
million for the second quarter of 2024. The non-GAAP fully tax
equivalent (“FTE”) net interest margin contracted 9 basis points to
3.17% for the third quarter of 2024 from 3.26% for the second
quarter of 2024, primarily due to higher rates paid on client
deposits, partially offset by maturing securities invested in
higher yielding overnight funds, one additional day during the
third quarter of 2024, and a higher average yield on core
loans.
- Net interest income decreased (12%)
to $39.9 million for the third quarter of 2024, compared to $45.4
million for the third quarter of 2023. The non-GAAP FTE net
interest margin contracted 40 basis points to 3.17% for the third
quarter of 2024, from 3.57% for the third quarter of 2023,
primarily due to higher rates paid on client deposits, a decrease
in the average balance of noninterest-bearing demand deposits, and
a decrease in average interest earning assets, partially offset by
a higher average yield on core loans and a higher average balance
of loans.
- For the first nine months of 2024,
net interest income decreased (15%) to $119.5 million, compared to
$140.9 million for the first nine months of 2023. The non-GAAP FTE
net interest margin contracted 54 basis points to 3.26% for the
first nine months of 2024, from 3.80% for the first nine months of
2023, primarily due to higher rates paid on client deposits, a
decrease in the average balance of noninterest-bearing demand
deposits, and a decrease in average interest earning assets,
partially offset by an increase in the yield on core loans and
overnight funds and a higher average balance of loans.
- 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 September 30, 2024:
| |
|
|
|
|
|
|
| |
|
Increase/(Decrease) in |
|
| |
|
Estimated Net |
|
| CHANGE IN INTEREST
RATES (basis points) |
|
Interest Income(1) |
|
|
(in $000's, unaudited) |
|
Amount |
|
Percent |
|
|
+400 |
|
$ |
24,681 |
|
|
13.6 |
|
% |
| +300 |
|
$ |
18,438 |
|
|
10.2 |
|
% |
| +200 |
|
$ |
12,241 |
|
|
6.8 |
|
% |
| +100 |
|
$ |
6,082 |
|
|
3.4 |
|
% |
|
0 |
|
|
— |
|
|
— |
|
|
| −100 |
|
$ |
(8,242 |
) |
|
(4.5 |
) |
% |
| −200 |
|
$ |
(18,720 |
) |
|
(10.3 |
) |
% |
| −300 |
|
$ |
(31,428 |
) |
|
(17.3 |
) |
% |
| −400 |
|
$ |
(47,015 |
) |
|
(25.9 |
) |
% |
| |
|
Increase/(Decrease) in |
|
| |
|
Estimated Economic |
|
| CHANGE IN INTEREST
RATES (basis points) |
|
Value of
Equity(1) |
|
|
(in $000's, unaudited) |
|
Amount |
|
Percent |
|
|
+400 |
|
$ |
161,338 |
|
|
14.0 |
|
% |
| +300 |
|
$ |
133,760 |
|
|
11.6 |
|
% |
| +200 |
|
$ |
98,755 |
|
|
8.6 |
|
% |
| +100 |
|
$ |
55,024 |
|
|
4.8 |
|
% |
|
0 |
|
|
— |
|
|
— |
|
|
| −100 |
|
$ |
(86,037 |
) |
|
(7.5 |
) |
% |
| −200 |
|
$ |
(204,813 |
) |
|
(17.8 |
) |
% |
| −300 |
|
$ |
(345,418 |
) |
|
(30.1 |
) |
% |
| −400 |
|
$ |
(452,503 |
) |
|
(39.4 |
) |
% |
|
|
|
|
| (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 decreased to 5.42% for the third quarter of 2024,
compared to 5.49% for the second quarter of 2024.
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
For the Quarter Ended |
|
For the Quarter Ended |
|
| |
|
September 30, 2024 |
|
June 30, 2024 |
|
| |
|
Average |
|
Interest |
|
Average |
|
Average |
|
Interest |
|
Average |
|
|
(in $000’s, unaudited) |
|
Balance |
|
Income |
|
Yield |
|
Balance |
|
Income |
|
Yield |
|
|
Loans, core bank |
|
$ |
2,867,076 |
|
|
$ |
39,621 |
|
|
5.50 |
% |
$ |
2,830,260 |
|
|
$ |
38,496 |
|
|
5.47 |
% |
| Prepayment fees |
|
|
— |
|
|
|
4 |
|
|
0.00 |
% |
|
— |
|
|
|
54 |
|
|
0.01 |
% |
| Bay View Funding factored
receivables(1) |
|
|
55,391 |
|
|
|
2,144 |
|
|
15.40 |
% |
|
54,777 |
|
|
|
2,914 |
|
|
21.40 |
% |
| Purchased residential
mortgages |
|
|
441,294 |
|
|
|
3,779 |
|
|
3.41 |
% |
|
447,687 |
|
|
|
3,739 |
|
|
3.36 |
% |
| Loan fair value mark /
accretion |
|
|
(2,621 |
) |
|
|
233 |
|
|
0.03 |
% |
|
(2,863 |
) |
|
|
267 |
|
|
0.04 |
% |
|
Total loans (includes loans held-for-sale) |
|
$ |
3,361,140 |
|
|
$ |
45,781 |
|
|
5.42 |
% |
$ |
3,329,861 |
|
|
$ |
45,470 |
|
|
5.49 |
% |
|
|
|
|
| (1) |
Interest income for
the third quarter and first nine months of 2024 was reduced by an
immaterial out-of-period adjustment of ($804,000). |
| |
|
|
|
|
• |
The average yield on the total loan portfolio decreased to 5.42%
for the third quarter of 2024, compared to 5.46% for the third
quarter of 2023. |
| |
|
For the Quarter Ended |
|
For the Quarter Ended |
|
| |
|
September 30, 2024 |
|
September 30, 2023 |
|
| |
|
Average |
|
Interest |
|
Average |
|
Average |
|
Interest |
|
Average |
|
|
(in $000’s, unaudited) |
|
Balance |
|
Income |
|
Yield |
|
Balance |
|
Income |
|
Yield |
|
|
Loans, core bank |
|
$ |
2,867,076 |
|
|
$ |
39,621 |
|
|
5.50 |
% |
$ |
2,743,993 |
|
|
$ |
37,764 |
|
|
5.46 |
% |
| Prepayment fees |
|
|
— |
|
|
|
4 |
|
|
0.00 |
% |
|
— |
|
|
|
182 |
|
|
0.03 |
% |
| Bay View Funding factored
receivables(1) |
|
|
55,391 |
|
|
|
2,144 |
|
|
15.40 |
% |
|
51,664 |
|
|
|
2,775 |
|
|
21.31 |
% |
| Purchased residential
mortgages |
|
|
441,294 |
|
|
|
3,779 |
|
|
3.41 |
% |
|
465,471 |
|
|
|
3,811 |
|
|
3.25 |
% |
| Loan fair value mark /
accretion |
|
|
(2,621 |
) |
|
|
233 |
|
|
0.03 |
% |
|
(3,648 |
) |
|
|
321 |
|
|
0.05 |
% |
|
Total loans (includes loans held-for-sale) |
|
$ |
3,361,140 |
|
|
$ |
45,781 |
|
|
5.42 |
% |
$ |
3,257,480 |
|
|
$ |
44,853 |
|
|
5.46 |
% |
|
|
|
|
| (1) |
Interest income for
the third quarter and first nine months of 2024 was reduced by an
immaterial out-of-period adjustment of ($804,000). |
| |
|
|
|
|
• |
The average yield on the total loan portfolio decreased to 5.45%
for the first nine months of 2024, compared to 5.46% for the first
nine months of 2023, primarily due to a lower average balance of
Bay View Funding factored receivables, a decrease in the accretion
of loan purchase discount into interest income from acquired loans,
and lower prepayment fees, mostly offset by a higher yield on core
loans for the first nine months of 2024. |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
For the Nine Months Ended |
|
For the Nine Months Ended |
|
| |
|
September 30, 2024 |
|
September 30, 2023 |
|
| |
|
Average |
|
Interest |
|
Average |
|
Average |
|
Interest |
|
Average |
|
|
(in $000’s, unaudited) |
|
Balance |
|
Income |
|
Yield |
|
Balance |
|
Income |
|
Yield |
|
|
Loans, core bank |
|
$ |
2,831,035 |
|
|
$ |
115,838 |
|
|
5.47 |
% |
$ |
2,716,345 |
|
|
$ |
109,354 |
|
|
5.38 |
% |
| Prepayment fees |
|
|
— |
|
|
|
82 |
|
|
0.00 |
% |
|
— |
|
|
|
393 |
|
|
0.02 |
% |
| Bay View Funding factored
receivables(1) |
|
|
54,563 |
|
|
|
7,896 |
|
|
19.33 |
% |
|
65,938 |
|
|
|
10,623 |
|
|
21.54 |
% |
| Purchased residential
mortgages |
|
|
447,709 |
|
|
|
11,306 |
|
|
3.37 |
% |
|
477,068 |
|
|
|
11,497 |
|
|
3.22 |
% |
| Loan fair value mark /
accretion |
|
|
(2,865 |
) |
|
|
729 |
|
|
0.03 |
% |
|
(3,976 |
) |
|
|
1,126 |
|
|
0.06 |
% |
|
Total loans (includes loans held-for-sale) |
|
$ |
3,330,442 |
|
|
$ |
135,851 |
|
|
5.45 |
% |
$ |
3,255,375 |
|
|
$ |
132,993 |
|
|
5.46 |
% |
|
|
|
|
| (1) |
Interest income for
the third quarter and first nine months of 2024 was reduced by an
immaterial out-of-period adjustment of ($804,000). |
| |
|
|
|
|
• |
In
aggregate, the unamortized net purchase discount on total loans
acquired was $2.5 million at September 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 |
|
| |
|
September 30, 2024 |
|
June 30, 2024 |
|
| |
|
Average |
|
Interest |
|
Average |
|
Average |
|
Interest |
|
Average |
|
|
(in $000’s, unaudited) |
|
Balance |
|
Expense |
|
Rate |
|
Balance |
|
Expense |
|
Rate |
|
| Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, noninterest-bearing |
|
$ |
1,172,304 |
|
|
|
|
|
|
|
|
$ |
1,127,145 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, interest-bearing |
|
|
907,346 |
|
|
$ |
1,714 |
|
|
0.75 |
% |
|
932,100 |
|
|
$ |
1,719 |
|
|
0.74 |
% |
|
Savings and money market |
|
|
1,188,057 |
|
|
|
9,128 |
|
|
3.06 |
% |
|
1,104,589 |
|
|
|
7,867 |
|
|
2.86 |
% |
|
Time deposits - under $100 |
|
|
11,133 |
|
|
|
47 |
|
|
1.68 |
% |
|
10,980 |
|
|
|
46 |
|
|
1.68 |
% |
|
Time deposits - $100 and over |
|
|
229,565 |
|
|
|
2,349 |
|
|
4.07 |
% |
|
228,248 |
|
|
|
2,245 |
|
|
3.96 |
% |
|
Insured Cash Sweep ("ICS")/Certificate of Deposit Registry |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service ("CDARS") - interest-bearing demand, money market and time
deposits |
|
|
1,017,541 |
|
|
|
7,747 |
|
|
3.03 |
% |
|
991,483 |
|
|
|
7,207 |
|
|
2.92 |
% |
|
Total interest-bearing deposits |
|
|
3,353,642 |
|
|
|
20,985 |
|
|
2.49 |
% |
|
3,267,400 |
|
|
|
19,084 |
|
|
2.35 |
% |
|
Total deposits |
|
|
4,525,946 |
|
|
|
20,985 |
|
|
1.84 |
% |
|
4,394,545 |
|
|
|
19,084 |
|
|
1.75 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Short-term borrowings |
|
|
32 |
|
|
|
— |
|
|
0.00 |
% |
|
19 |
|
|
|
— |
|
|
0.00 |
% |
| Subordinated debt, net of
issuance costs |
|
|
39,590 |
|
|
|
538 |
|
|
5.41 |
% |
|
39,553 |
|
|
|
538 |
|
|
5.47 |
% |
|
Total interest-bearing liabilities |
|
|
3,393,264 |
|
|
|
21,523 |
|
|
2.52 |
% |
|
3,306,972 |
|
|
|
19,622 |
|
|
2.39 |
% |
|
Total interest-bearing liabilities and demand,
noninterest-bearing / cost of funds |
|
$ |
4,565,568 |
|
|
$ |
21,523 |
|
|
1.88 |
% |
$ |
4,434,117 |
|
|
$ |
19,622 |
|
|
1.78 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
• |
The average cost of total deposits increased to 1.72% for the first
nine months of 2024, compared to 0.94% for the first nine months of
2023. The average cost of funds increased to 1.75% for
the first nine months of 2024, compared to 1.01% for the first nine
months of 2023. |
|
|
• |
The Bank continues to carefully manage deposit costs and
implemented cost adjustments following the Federal Reserve Bank’s
interest rate reduction in September 2024, to align with the
changing interest rate environment. |
|
|
• |
The increase in the average cost of total deposits and the average
cost of funds for the third quarter and first nine 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 third quarter of 2024, we
recorded a provision for credit losses on loans of $153,000,
compared to a $471,000 provision for credit losses on loans for the
second quarter of 2024, and a provision for credit losses on loans
of $168,000 for the third quarter of 2023.
- There was a provision for credit
losses on loans of $808,000 for the nine months ended September 30,
2024, compared to a $460,000 provision for credit losses on loans
for the nine months ended September 30, 2023, primarily due to the
increase in the balance of total loans.
Noninterest Income:
- Total noninterest income decreased
(2%) to $2.2 million for the third quarter of 2024, compared to
$2.3 million for the second quarter of 2024, primarily due to a
gain on proceeds from company-owned life insurance and higher
termination fees during the second quarter of 2024. Total
noninterest income was relatively flat at $2.2 million for both the
third quarter of 2024 and the third quarter of 2023.
- Total noninterest income decreased
(7%) to $6.6 million for the first nine months of 2024, compared to
$7.1 million for the first nine 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 for the first nine months of 2024.
Noninterest Expense:
- Total noninterest expense for the
third quarter of 2024 decreased to $27.6 million, compared to $28.2
million for the second quarter of 2024, primarily due to lower
salaries and employee benefits and lower information technology
related expenses, partially offset by higher professional fees.
Total noninterest expense for the third quarter of 2024 increased
to $27.6 million, compared to $25.2 million for the third quarter
of 2023, primarily due to higher salaries and employee benefits,
rent expense included in occupancy and equipment, and professional
fees.
- Total noninterest expense for the
first nine months of 2024 increased to $83.3 million, compared to
$75.6 million for the first nine months of 2023, primarily due to
higher salaries and employee benefits, rent expense, and
information technology related expenses, marketing related
expenses, homeowner association vendor payments, regulatory
assessments, and ICS/CDARS fee expense.
- Full time equivalent employees were
353 at both September 30, 2024 and June 30, 2024, compared to 348
at September 30, 2023.
- The efficiency ratio was 65.37% for
the third quarter of 2024, compared to 67.55% for the second
quarter of 2024, and 52.89% for the third quarter of 2023. The
efficiency ratio increased to 66.08% for the nine months ended
September 30, 2024 compared to 51.06% for the nine months ended
September 30, 2023. The increase in the efficiency ratio for the
third quarter of 2024 and nine months ended September 30, 2024,
compared to the respective periods in 2023, 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 $3.9 million
for the third quarter of 2024, compared to $3.8 million for the
second quarter of 2024, and $6.5 million for the third quarter of
2023. The effective tax rate for the third quarter of 2024 was
27.3%, compared to 29.4% for the second quarter of 2024, and 29.0%
for the third quarter of 2023.
- Income tax expense for the nine
months ended September 30, 2024 was $12.0 million, compared to
$20.8 million for the nine months ended September 30, 2023. The
effective tax rate for nine months ended September 30, 2024 was
28.7%, compared to 29.0% for the nine months ended September 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 September 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") |
|
$ |
903,900 |
|
|
$ |
— |
|
|
$ |
903,900 |
|
| FRB discount window
collateralized line of credit |
|
|
1,397,326 |
|
|
|
— |
|
|
|
1,397,326 |
|
| Federal Home Loan Bank
collateralized borrowing capacity |
|
|
765,134 |
|
|
|
— |
|
|
|
765,134 |
|
| Unpledged investment
securities (at fair value) |
|
|
66,158 |
|
|
|
— |
|
|
|
66,158 |
|
| Federal funds purchase
arrangements |
|
|
90,000 |
|
|
|
— |
|
|
|
90,000 |
|
| Holding company line of
credit |
|
|
25,000 |
|
|
|
— |
|
|
|
25,000 |
|
|
Total |
|
$ |
3,247,518 |
|
|
$ |
— |
|
|
$ |
3,247,518 |
|
|
|
• |
The Company’s total available liquidity and borrowing capacity was
$3.2 billion at September 30, 2024, compared to $3.0 billion at
June 30, 2024, and $3.1 billion at September 30, 2023. |
|
|
• |
The available liquidity and borrowing capacity was 69% of the
Company’s total deposits and approximately 147% of the Bank’s
estimated uninsured deposits at September 30, 2024. 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 70% of the Company’s total deposits and approximately
150% of the Bank’s estimated uninsured deposits at September 30,
2023. |
|
|
• |
The loan to deposit ratio was 72.11% at September 30, 2024,
compared to 76.04% at June 30, 2024, and 71.81% at September 30,
2023. |
- Total assets increased 5% to $5.6 billion at September 30,
2024, compared to $5.3 billion at June 30, 2024, and increased 3%
from $5.4 billion at September 30, 2023, primarily related to
growth in client deposits and liquidity.
Investment Securities:
- Investment securities totaled $841.8
million at September 30, 2024, of which $237.6 million were in the
securities available-for-sale portfolio (at fair value), and $604.2
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 $531.5
million at September 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 |
|
September 30, |
|
June 30, |
|
September 30, |
|
(in $000’s, unaudited) |
|
|
2024 |
|
|
|
2024 |
|
|
|
2023 |
|
| Balance (at fair value): |
|
|
|
|
|
|
|
|
|
|
U.S. Treasury |
|
$ |
184,162 |
|
|
$ |
218,682 |
|
|
$ |
396,996 |
|
|
Agency mortgage-backed securities |
|
|
53,450 |
|
|
|
54,361 |
|
|
|
60,198 |
|
|
Total |
|
$ |
237,612 |
|
|
$ |
273,043 |
|
|
$ |
457,194 |
|
|
|
|
|
|
|
|
|
|
|
|
| Pre-tax unrealized
(loss): |
|
|
|
|
|
|
|
|
|
|
U.S. Treasury |
|
$ |
(1,440 |
) |
|
$ |
(3,578 |
) |
|
$ |
(9,606 |
) |
|
Agency mortgage-backed securities |
|
|
(2,923 |
) |
|
|
(4,815 |
) |
|
|
(7,185 |
) |
|
Total |
|
$ |
(4,363 |
) |
|
$ |
(8,393 |
) |
|
$ |
(16,791 |
) |
|
|
|
|
|
|
|
|
|
|
|
| Weighted average life
(years) |
|
|
1.32 |
|
|
|
1.39 |
|
|
|
1.49 |
|
|
|
• |
The pre-tax unrealized loss on the securities available-for-sale
portfolio was ($4.4) million, or ($3.2) million net of taxes, which
equaled less than 1% of total shareholders’ equity at September 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 |
|
September 30, |
|
June 30, |
|
September 30, |
|
(in $000’s, unaudited) |
|
2024
|
|
2024
|
|
2023
|
| Balance (at amortized
cost): |
|
|
|
|
|
|
|
|
|
|
Agency mortgage-backed securities |
|
$ |
573,621 |
|
|
$ |
589,386 |
|
|
$ |
632,241 |
|
|
Municipals — exempt from Federal tax(1) |
|
|
30,584 |
|
|
|
31,804 |
|
|
|
32,453 |
|
|
Total(1) |
|
$ |
604,205 |
|
|
$ |
621,190 |
|
|
$ |
664,694 |
|
|
|
|
|
|
|
|
|
|
|
|
| Pre-tax unrecognized
(loss): |
|
|
|
|
|
|
|
|
|
|
Agency mortgage-backed securities |
|
$ |
(71,996 |
) |
|
$ |
(92,058 |
) |
|
$ |
(119,932 |
) |
|
Municipals — exempt from Federal tax |
|
|
(676 |
) |
|
|
(1,694 |
) |
|
|
(2,753 |
) |
|
Total |
|
$ |
(72,672 |
) |
|
$ |
(93,752 |
) |
|
$ |
(122,685 |
) |
| |
|
|
|
|
|
|
|
|
|
| Allowance for credit losses on
municipal securities |
|
$ |
(12 |
) |
|
$ |
(12 |
) |
|
$ |
(13 |
) |
| |
|
|
|
|
|
|
|
|
|
| Weighted average life
(years) |
|
|
5.94 |
|
|
|
6.57 |
|
|
|
7.03 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) |
Gross of the
allowance for credit losses of ($12,000) at both September 30,
2024, and June 30, 2024, and ($13,000) at September 30, 2023. |
| |
|
|
|
|
• |
The pre-tax unrecognized loss on the securities held-to-maturity
portfolio was ($72.7) million, or ($51.2) million net of taxes,
which equaled 7.5% of total shareholders’ equity at September 30,
2024. |
|
|
• |
The weighted average life of the securities held-to-maturity
portfolio was 5.94 years at September 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 September 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 actual and/or
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 |
| Fourth quarter of 2024 |
|
$ |
9,000 |
|
|
$ |
26,727 |
|
|
$ |
35,727 |
|
| First quarter of 2025 |
|
|
35,000 |
|
|
|
21,336 |
|
|
|
56,336 |
|
| Second quarter of 2025 |
|
|
118,000 |
|
|
|
20,700 |
|
|
|
138,700 |
|
| Third quarter of 2025 |
|
|
25,200 |
|
|
|
21,885 |
|
|
|
47,085 |
|
| Fourth quarter of 2025 |
|
|
— |
|
|
|
19,486 |
|
|
|
19,486 |
|
| First quarter of 2026 |
|
|
— |
|
|
|
19,001 |
|
|
|
19,001 |
|
| Second quarter of 2026 |
|
|
— |
|
|
|
18,349 |
|
|
|
18,349 |
|
| Third quarter of 2026 |
|
|
— |
|
|
|
18,645 |
|
|
|
18,645 |
|
|
Total |
|
$ |
187,200 |
|
|
$ |
166,129 |
|
|
$ |
353,329 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
• |
The weighted average life of the total investment securities
portfolio was 4.62 years at September 30, 2024, compared to 4.95
years at June 30, 2024, and 4.72 years at September 30, 2023. |
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 |
|
September 30, 2024 |
|
June 30, 2024 |
|
September 30, 2023 |
|
|
(in $000’s, unaudited) |
|
Balance |
|
% to Total |
|
Balance |
|
% to Total |
|
Balance |
|
% to Total |
|
|
Commercial |
|
$ |
481,266 |
|
|
14 |
% |
$ |
477,929 |
|
|
14 |
% |
$ |
430,664 |
|
|
13 |
% |
| Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CRE(1) - owner occupied |
|
|
602,062 |
|
|
18 |
% |
|
594,504 |
|
|
18 |
% |
|
589,751 |
|
|
18 |
% |
|
CRE(1) - non-owner occupied |
|
|
1,310,578 |
|
|
38 |
% |
|
1,283,323 |
|
|
38 |
% |
|
1,208,324 |
|
|
37 |
% |
|
Land and construction |
|
|
125,761 |
|
|
4 |
% |
|
125,374 |
|
|
4 |
% |
|
158,138 |
|
|
5 |
% |
|
Home equity |
|
|
124,090 |
|
|
4 |
% |
|
126,562 |
|
|
4 |
% |
|
124,477 |
|
|
4 |
% |
|
Multifamily |
|
|
273,103 |
|
|
8 |
% |
|
268,968 |
|
|
8 |
% |
|
253,129 |
|
|
7 |
% |
|
Residential mortgages |
|
|
479,524 |
|
|
14 |
% |
|
484,809 |
|
|
14 |
% |
|
503,006 |
|
|
15 |
% |
| Consumer and other |
|
|
14,179 |
|
|
< 1 |
% |
|
18,758 |
|
|
< 1 |
% |
|
18,526 |
|
|
1 |
% |
|
Total Loans |
|
|
3,410,563 |
|
|
100 |
% |
|
3,380,227 |
|
|
100 |
% |
|
3,286,015 |
|
|
100 |
% |
| Deferred loan costs (fees),
net |
|
|
(327 |
) |
|
— |
|
|
(434 |
) |
|
— |
|
|
(554 |
) |
|
— |
|
|
Loans, net of deferred costs and fees |
|
$ |
3,410,236 |
|
|
100 |
% |
$ |
3,379,793 |
|
|
100 |
% |
$ |
3,285,461 |
|
|
100 |
% |
|
|
|
|
| (1) |
Commercial Real
Estate |
| |
|
|
|
|
• |
Loans, excluding loans held-for-sale, increased $30.4 million, or
1%, to $3.4 billion at September 30, 2024, from the prior quarter,
and increased $124.8 million, or 4%, from $3.3 billion at September
30, 2023. Loans, excluding residential mortgages,
increased $35.7 million, or 1%, to $2.9 billion at September 30,
2024 from June 30, 2024, and increased $148.3 million, or 5%, from
$2.8 billion at September 30, 2023. |
|
|
• |
Commercial and industrial line utilization was 31% at both
September 30, 2024 and June 30, 2024, compared to 27% at September
30, 2023. |
|
|
• |
CRE
loans totaled $1.9 billion at September 30, 2024, of which 31% were
owner occupied and 69% were investor CRE loans. There was 32% of
the CRE loan portfolio secured by owner occupied real estate at
June 30, 2024, and 33% at September 30, 2023. |
|
|
|
• |
During the third quarter of 2024, there were 41 new owner occupied
and non-owner occupied CRE loans originated totaling $67 million
with a weighted average loan-to-value (“LTV”) of 49%; the weighted
average debt-service coverage ratio (“DSCR”) for the non-owner
occupied portfolio was 1.92 times. |
|
|
|
• |
Loan Growth continued at an orderly organic rate as the Bank
continues to serve our clients in the community. |
|
|
|
• |
The average loan size for all CRE loans was $1.6 million, and the
average loan size for office CRE loans was $1.7 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 $419 million, including 32 loans totaling
approximately $73 million in San Jose, 19 loans totaling
approximately $26 million in San Francisco, and eight loans
totaling approximately $16 million, in Oakland, at September 30,
2024. Non-owner occupied CRE with office exposure totaled $329
million at September 30, 2024. |
|
|
|
• |
At
September 30, 2024, the weighted average LTV and DSCR for the
entire non-owner occupied office portfolio were 41.8% and 1.82
times, respectively. |
|
|
|
• |
Total medical/dental office exposure in the non-owner occupied CRE
portfolio consisted of 15 loans totaling $12 million, with a
weighted average LTV and DSCR of 37.4% and 2.41 times,
respectively, at September 30, 2024. |
|
|
|
|
|
|
|
|
• |
The following table presents the weighted average LTV and DSCR by
collateral type for CRE loans at September 30, 2024: |
| |
|
CRE - Non-owner Occupied |
|
CRE - Owner Occupied |
|
Total CRE |
|
COLLATERAL TYPE |
|
Outstanding |
|
LTV |
|
DSCR |
|
Outstanding |
|
LTV |
|
Outstanding |
|
LTV |
|
Retail |
|
|
26 |
% |
|
|
38.0 |
% |
|
|
1.89 |
|
|
|
16 |
% |
|
|
46.3 |
% |
|
|
23 |
% |
|
|
39.6 |
% |
| Industrial |
|
|
19 |
% |
|
|
39.1 |
% |
|
|
2.46 |
|
|
|
34 |
% |
|
|
43.7 |
% |
|
|
23 |
% |
|
|
40.9 |
% |
| Mixed-Use, Special |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purpose and Other |
|
|
18 |
% |
|
|
41.6 |
% |
|
|
1.91 |
|
|
|
34 |
% |
|
|
40.7 |
% |
|
|
22 |
% |
|
|
41.2 |
% |
| Office |
|
|
20 |
% |
|
|
41.8 |
% |
|
|
1.82 |
|
|
|
16 |
% |
|
|
44.3 |
% |
|
|
19 |
% |
|
|
42.5 |
% |
| Multifamily |
|
|
17 |
% |
|
|
42.6 |
% |
|
|
1.95 |
|
|
|
0 |
% |
|
|
0.0 |
% |
|
|
13 |
% |
|
|
42.6 |
% |
| Hotel/Motel |
|
|
< 1 |
% |
|
|
16.4 |
% |
|
|
1.32 |
|
|
|
0 |
% |
|
|
0.0 |
% |
|
|
< 1 |
% |
|
|
16.4 |
% |
|
Total |
|
|
100 |
% |
|
|
40.3 |
% |
|
|
1.99 |
|
|
|
100 |
% |
|
|
43.2 |
% |
|
|
100 |
% |
|
|
41.1 |
% |
|
|
|
• |
The following table presents the weighted average LTV and DSCR by
county for CRE loans at September 30, 2024: |
| |
|
CRE - Non-owner Occupied |
|
CRE - Owner Occupied |
|
Total CRE |
|
COUNTY |
|
Outstanding |
|
LTV |
|
DSCR |
|
Outstanding |
|
LTV |
|
Outstanding |
|
LTV |
|
Alameda |
|
|
25 |
% |
|
|
44.3 |
% |
|
|
1.93 |
|
|
|
18 |
% |
|
|
45.6 |
% |
|
|
23 |
% |
|
|
44.6 |
% |
| Contra Costa |
|
|
7 |
% |
|
|
41.8 |
% |
|
|
1.79 |
|
|
|
8 |
% |
|
|
47.8 |
% |
|
|
7 |
% |
|
|
43.5 |
% |
| Marin |
|
|
7 |
% |
|
|
46.3 |
% |
|
|
2.02 |
|
|
|
1 |
% |
|
|
52.4 |
% |
|
|
5 |
% |
|
|
46.8 |
% |
| Monterey |
|
|
2 |
% |
|
|
43.8 |
% |
|
|
1.85 |
|
|
|
2 |
% |
|
|
41.1 |
% |
|
|
2 |
% |
|
|
43.0 |
% |
| Napa |
|
|
< 1 |
% |
|
|
30.0 |
% |
|
|
1.73 |
|
|
|
1 |
% |
|
|
52.0 |
% |
|
|
1 |
% |
|
|
36.3 |
% |
| Out of Area |
|
|
8 |
% |
|
|
42.3 |
% |
|
|
2.06 |
|
|
|
9 |
% |
|
|
49.0 |
% |
|
|
9 |
% |
|
|
44.3 |
% |
| San Benito |
|
|
1 |
% |
|
|
35.1 |
% |
|
|
2.00 |
|
|
|
3 |
% |
|
|
39.7 |
% |
|
|
2 |
% |
|
|
37.5 |
% |
| San Francisco |
|
|
9 |
% |
|
|
37.5 |
% |
|
|
1.48 |
|
|
|
4 |
% |
|
|
39.8 |
% |
|
|
8 |
% |
|
|
37.8 |
% |
| San Mateo |
|
|
11 |
% |
|
|
37.5 |
% |
|
|
2.20 |
|
|
|
15 |
% |
|
|
40.0 |
% |
|
|
12 |
% |
|
|
38.3 |
% |
| Santa Clara |
|
|
24 |
% |
|
|
37.4 |
% |
|
|
2.25 |
|
|
|
34 |
% |
|
|
41.1 |
% |
|
|
26 |
% |
|
|
38.8 |
% |
| Santa Cruz |
|
|
2 |
% |
|
|
33.1 |
% |
|
|
1.74 |
|
|
|
1 |
% |
|
|
49.2 |
% |
|
|
2 |
% |
|
|
36.2 |
% |
| Solano |
|
|
1 |
% |
|
|
32.1 |
% |
|
|
1.95 |
|
|
|
2 |
% |
|
|
37.8 |
% |
|
|
1 |
% |
|
|
33.8 |
% |
| Sonoma |
|
|
3 |
% |
|
|
39.7 |
% |
|
|
2.22 |
|
|
|
2 |
% |
|
|
43.1 |
% |
|
|
2 |
% |
|
|
40.5 |
% |
|
Total |
|
|
100 |
% |
|
|
40.3 |
% |
|
|
1.99 |
|
|
|
100 |
% |
|
|
43.2 |
% |
|
|
100 |
% |
|
|
41.1 |
% |
- The following table presents the
maturity distribution of the Company’s loans, excluding loans
held-for-sale, as of September 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 |
|
$ |
375,424 |
|
|
44 |
% |
|
$ |
227,201 |
|
|
27 |
% |
|
$ |
247,622 |
|
|
29 |
% |
|
$ |
850,247 |
|
| Loans with fixed interest
rates |
|
|
141,906 |
|
|
6 |
% |
|
|
767,930 |
|
|
30 |
% |
|
|
1,650,480 |
|
|
64 |
% |
|
|
2,560,316 |
|
|
Loans |
|
$ |
517,330 |
|
|
15 |
% |
|
$ |
995,131 |
|
|
29 |
% |
|
$ |
1,898,102 |
|
|
56 |
% |
|
$ |
3,410,563 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
• |
At
September 30, 2024, approximately 25% of the Company’s loan
portfolio consisted of floating interest rate loans, compared to
27% at both June 30, 2024 and September 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 Nine Months Ended: |
|
| ALLOWANCE FOR CREDIT
LOSSES ON LOANS |
|
September 30, |
|
June 30, |
|
September 30, |
|
September 30, |
|
September 30, |
|
|
(in $000’s, unaudited) |
|
2024 |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
|
Balance at beginning of period |
|
$ |
47,954 |
|
|
$ |
47,888 |
|
|
$ |
47,803 |
|
|
$ |
47,958 |
|
|
$ |
47,512 |
|
|
| Charge-offs during the
period |
|
|
(474 |
) |
|
|
(510 |
) |
|
|
(447 |
) |
|
|
(1,342 |
) |
|
|
(851 |
) |
|
| Recoveries during the
period |
|
|
186 |
|
|
|
105 |
|
|
|
178 |
|
|
|
395 |
|
|
|
581 |
|
|
|
Net (charge-offs) recoveries during the period |
|
|
(288 |
) |
|
|
(405 |
) |
|
|
(269 |
) |
|
|
(947 |
) |
|
|
(270 |
) |
|
| Provision for credit losses on
loans during the period |
|
|
153 |
|
|
|
471 |
|
|
|
168 |
|
|
|
808 |
|
|
|
460 |
|
|
|
Balance at end of period |
|
$ |
47,819 |
|
|
$ |
47,954 |
|
|
$ |
47,702 |
|
|
$ |
47,819 |
|
|
$ |
47,702 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total loans, net of deferred
fees |
|
$ |
3,410,236 |
|
|
$ |
3,379,793 |
|
|
$ |
3,285,461 |
|
|
$ |
3,410,236 |
|
|
$ |
3,285,461 |
|
|
| Total nonperforming loans |
|
$ |
7,158 |
|
|
$ |
6,030 |
|
|
$ |
5,484 |
|
|
$ |
7,158 |
|
|
$ |
5,484 |
|
|
| ACLL to total loans |
|
|
1.40 |
|
% |
|
1.42 |
|
% |
|
1.45 |
|
% |
|
1.40 |
|
% |
|
1.45 |
|
% |
| ACLL to total nonperforming
loans |
|
|
668.05 |
|
% |
|
795.26 |
|
% |
|
869.84 |
|
% |
|
668.05 |
|
% |
|
869.84 |
|
% |
|
|
• |
The following table shows the drivers of change in ACLL for the
first, second, and third 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 |
|
| Portfolio changes during the
third quarter of 2024 |
|
|
599 |
|
| Qualitative and quantitative
changes during the third quarter of 2024 including changes in
economic forecasts |
|
|
(734 |
) |
|
ACLL at September 30, 2024 |
|
$ |
47,819 |
|
- The following is a breakout of
nonperforming assets (“NPAs”) at the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| NONPERFORMING
ASSETS |
|
September 30, 2024 |
|
June 30, 2024 |
|
September 30, 2023 |
|
|
(in $000’s, unaudited) |
|
Balance |
|
% of Total |
|
Balance |
|
% of Total |
|
Balance |
|
% of Total |
|
| Land and construction
loans |
|
$ |
5,862 |
|
|
82 |
% |
$ |
4,774 |
|
|
79 |
% |
$ |
— |
|
|
0 |
% |
| Commercial loans |
|
|
752 |
|
|
11 |
% |
|
900 |
|
|
15 |
% |
|
1,712 |
|
|
31 |
% |
| Loans over 90 days past
due and still accruing |
|
|
460 |
|
|
6 |
% |
|
248 |
|
|
4 |
% |
|
1,966 |
|
|
36 |
% |
| Home equity and other
loans |
|
|
84 |
|
|
1 |
% |
|
108 |
|
|
2 |
% |
|
90 |
|
|
2 |
% |
| Residential mortgages |
|
|
— |
|
|
0 |
% |
|
— |
|
|
0 |
% |
|
1,716 |
|
|
31 |
% |
| CRE loans |
|
|
— |
|
|
0 |
% |
|
— |
|
|
0 |
% |
|
— |
|
|
0 |
% |
|
Total nonperforming assets |
|
$ |
7,158 |
|
|
100 |
% |
$ |
6,030 |
|
|
100 |
% |
$ |
5,484 |
|
|
100 |
% |
There were 10 borrowers included in NPAs totaling $7.2 million, or
0.13% of total assets, at September 30, 2024, compared to 10
borrowers totaling $6.0 million, or 0.11% of total assets at June
30, 2024, and 11 borrowers totaling $5.5 million, or 0.10% of total
assets, at September 30, 2023. The increase in NPAs at September
30, 2024, was primarily due to the downgrade of a loan to one
customer totaling $1.1 million, which is well collateralized and
there were no specific reserves for the loan. This increase in NPAs
was partially offset by pay-offs of loan previously included in
NPAs.
|
|
• |
There were no CRE loans included in NPAs at September 30, 2024,
June 30, 2024, or September 30, 2023. |
|
|
• |
There were no foreclosed assets on the balance sheet at September
30, 2024, June 30, 2024, or September 30, 2023. |
|
|
• |
There were no Shared National Credits (“SNCs”) or material
purchased participations included in NPAs or total loans at
September 30, 2024, June 30, 2024, or September 30, 2023. |
- Classified assets totaled $32.6
million, or 0.59% of total assets, at September 30, 2024, compared
to $33.6 million, or 0.64% of total assets, at June 30, 2024, and
$31.1 million, or 0.57% of total assets, at September 30,
2023.
Deposits:
- The following table summarizes the distribution of deposits and
the percentage of distribution in each category at the dates
indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| DEPOSITS |
|
September 30, 2024 |
|
June 30, 2024 |
|
September 30, 2023 |
|
|
(in $000’s, unaudited) |
|
Balance |
|
% to Total |
|
Balance |
|
% to Total |
|
Balance |
|
% to Total |
|
| Demand, noninterest-bearing |
|
$ |
1,272,139 |
|
|
27 |
% |
$ |
1,187,320 |
|
|
27 |
% |
$ |
1,243,501 |
|
|
27 |
% |
| Demand, interest-bearing |
|
|
913,910 |
|
|
19 |
% |
|
928,246 |
|
|
21 |
% |
|
1,004,185 |
|
|
22 |
% |
| Savings and money market |
|
|
1,309,676 |
|
|
28 |
% |
|
1,126,520 |
|
|
25 |
% |
|
1,110,640 |
|
|
24 |
% |
| Time deposits — under
$250 |
|
|
39,060 |
|
|
1 |
% |
|
39,046 |
|
|
1 |
% |
|
43,906 |
|
|
1 |
% |
| Time deposits — $250 and
over |
|
|
196,945 |
|
|
4 |
% |
|
203,886 |
|
|
4 |
% |
|
252,001 |
|
|
6 |
% |
| ICS/CDARS — interest-bearing
demand, money market and time deposits |
|
|
997,803 |
|
|
21 |
% |
|
959,592 |
|
|
22 |
% |
|
921,224 |
|
|
20 |
% |
|
Total deposits |
|
$ |
4,729,533 |
|
|
100 |
% |
$ |
4,444,610 |
|
|
100 |
% |
$ |
4,575,457 |
|
|
100 |
% |
|
|
• |
Total deposits increased $284.9 million, or 6%, to $4.7 billion at
September 30, 2024 compared to $4.4 billion at June 30, 2024, and
increased $154.1 million, or 3% from $4.6 billion at September 30,
2023. |
|
|
• |
Migration of client deposits into interest-bearing accounts
resulted in an increase in ICS/CDARS deposits to $997.8 million at
September 30, 2024, compared to $959.6 million at June 30, 2024,
and $921.2 million at September 30, 2023. |
|
|
• |
The Company had 25,373 deposit accounts at September 30, 2024, with
an average balance of $186,000. At June 30, 2024, the Company had
25,033 deposit accounts, with an average balance of $178,000. At
September 30, 2023, the Company had 24,769 deposit accounts, with
an average balance of $186,000. |
|
|
• |
Deposits from the Bank’s top 100 client relationships, representing
22% of the total number of accounts, totaled $2.2 billion,
representing 47% of total deposits, with an average account size of
$394,000 at September 30, 2024. At June 30, 2024, 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 September
30, 2023, deposits from the Bank’s top 100 client relationships,
representing 22% of the total number of accounts, totaled $2.2
billion, representing 48% of total deposits, with an average
account size of $408,000. |
|
|
• |
The Bank’s uninsured deposits were approximately $2.2 billion, or
47% of the Company’s total deposits, at September 30, 2024,
compared to $2.0 billion, or 45% of the Company’s total deposits,
at June 30, 2024, and $2.1 billion, or 46% of the Company’s total
deposits, at September 30, 2023. |
Capital Management:
- In July 2024, the
Company announced that its Board of Directors adopted a share
repurchase program under which the Company is authorized to
repurchase up to $15 million of the Company’s shares of its issued
and outstanding common stock. The Company did not repurchase any of
its common stock during the third quarter of 2024.
- 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 September 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 |
|
10.0 |
% |
|
10.4 |
% |
|
5.0 |
% |
|
4.0 |
% |
| Tangible common equity /
tangible assets (2) |
|
9.5 |
% |
|
9.9 |
% |
|
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 |
|
September 30, |
|
June 30, |
|
September 30, |
|
(in $000’s, unaudited) |
|
2024
|
|
2024
|
|
2023
|
|
Unrealized loss on securities available-for-sale |
|
$ |
(3,161 |
) |
|
$ |
(6,022 |
) |
|
$ |
(11,985 |
) |
| Split dollar insurance contracts
liability |
|
|
(2,965 |
) |
|
|
(2,913 |
) |
|
|
(3,234 |
) |
| Supplemental executive retirement
plan liability |
|
|
(2,838 |
) |
|
|
(2,856 |
) |
|
|
(2,343 |
) |
| Unrealized gain on interest-only
strip from SBA loans |
|
|
72 |
|
|
|
76 |
|
|
|
93 |
|
|
Total accumulated other comprehensive loss |
|
$ |
(8,892 |
) |
|
$ |
(11,715 |
) |
|
$ |
(17,469 |
) |
- Tangible common equity was $510.8 million at September 30,
2024, compared to $504.0 million at June 30, 2024, and $485.1
million at September 30, 2023. Tangible book value per share was
$8.33 at September 30, 2024, compared to $8.22 at June 30, 2024,
and $7.94 at September 30, 2023. Tangible common equity and
tangible book value per share are non-GAAP financial measures.
Recent Events:
- On October 2, 2024, the Company announced the appointment of
Thomas A. Sa as the Chief Operating Officer (“COO”) of the Company
and the Bank. As COO, Mr. Sa will have primary responsibility for
banking operations, risk management, information technology
systems, audit administration, and will help shape strategic
decisioning of the Company. Mr. Sa has more than thirty years’
experience in a variety of increasingly responsible positions in
California-based community and regional banks, most recently
serving as President, Chief Operating Officer and Chief Financial
Officer of California BanCorp and its subsidiary, California Bank
of Commerce, which merged with Southern California Bancorp in July
2024.
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
form 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 is 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
June 30, 2024, and the following: (1) cybersecurity risks that may
affect us directly or may impact us indirectly by virtue of their
effects on our clients, markets or vendors, including our ability
to identify and address cybersecurity 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, our clients, and our third party
vendors and service providers; (2) 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; (3) factors
that affect our liquidity and our ability to meet client demands
for withdrawals from deposit accounts and undrawn lines of credit,
including our cash on hand and the availability of funds from our
own lines of credit; (4) market fluctuations that affect the costs
we pay for sources of funding, including the interest we pay on
deposits and on our borrowings; (5) media items and consumer
confidence as those factors affect our clients’ confidence in the
banking system generally and in our bank specifically; (6) factors
that affect the value and liquidity of our investment portfolios,
particularly the values of securities available-for-sale; (7)
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; (8) our ability to
estimate accurately, and to establish adequate reserves against,
the risk of loss associated with our loan and lease portfolio and
our factoring business; (9) events and circumstances that affect
our borrowers' and guarantors’ 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;
(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 fluctuations
in economic growth; (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) 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; (14) 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; (15) 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; (16) regulatory limits and
practical factors that affect Heritage Bank of Commerce’s ability
to pay dividends to the Company; (17) 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; (18) events that affect our ability
to attract, recruit, and retain qualified officers and other
personnel to implement our strategic plan, and that enable current
and future personnel to protect and develop our relationships with
clients, and to promote our business, results of operations and
growth prospects; (19) factors that affect the carrying value of
the goodwill associated with our previous acquisitions; (20) 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; (21) the expense and
uncertain resolution of litigation matters whether occurring in the
ordinary course of business or otherwise, particularly including
but not limited to the effects of recent and ongoing developments
in California labor and employment laws, regulations and court
decisions; (22) 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, including the particular
risks of natural disasters (including earthquakes, fires, and
flooding) and other events that disproportionately affect that
region; (23) 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 (24) 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 Nine Months Ended: |
| CONSOLIDATED INCOME
STATEMENTS |
|
September 30, |
|
June 30, |
|
September 30, |
|
June 30, |
|
September 30, |
|
|
September 30, |
|
September 30, |
|
Percent |
|
|
(in $000’s, unaudited) |
|
2024 |
|
2024 |
|
2023 |
|
2024 |
|
|
2023 |
|
|
|
2024 |
|
2023 |
|
Change |
|
|
Interest income |
|
$ |
61,438 |
|
|
$ |
59,077 |
|
|
$ |
60,791 |
|
|
4 |
|
% |
1 |
|
% |
|
$ |
178,066 |
|
|
$ |
175,406 |
|
|
2 |
|
% |
| Interest expense |
|
|
21,523 |
|
|
|
19,622 |
|
|
|
15,419 |
|
|
10 |
|
% |
40 |
|
% |
|
|
58,603 |
|
|
|
34,483 |
|
|
70 |
|
% |
|
Net interest income before provision for credit losses on
loans |
|
|
39,915 |
|
|
|
39,455 |
|
|
|
45,372 |
|
|
1 |
|
% |
(12 |
) |
% |
|
|
119,463 |
|
|
|
140,923 |
|
|
(15 |
) |
% |
| Provision for credit losses on
loans |
|
|
153 |
|
|
|
471 |
|
|
|
168 |
|
|
(68 |
) |
% |
(9 |
) |
% |
|
|
808 |
|
|
|
460 |
|
|
76 |
|
% |
|
Net interest income after provision for credit losses on
loans |
|
|
39,762 |
|
|
|
38,984 |
|
|
|
45,204 |
|
|
2 |
|
% |
(12 |
) |
% |
|
|
118,655 |
|
|
|
140,463 |
|
|
(16 |
) |
% |
| Noninterest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service charges and fees on deposit accounts |
|
|
908 |
|
|
|
891 |
|
|
|
859 |
|
|
2 |
|
% |
6 |
|
% |
|
|
2,676 |
|
|
|
3,503 |
|
|
(24 |
) |
% |
|
Increase in cash surrender value of life insurance |
|
|
530 |
|
|
|
521 |
|
|
|
517 |
|
|
2 |
|
% |
3 |
|
% |
|
|
1,569 |
|
|
|
1,512 |
|
|
4 |
|
% |
|
Servicing income |
|
|
108 |
|
|
|
90 |
|
|
|
62 |
|
|
20 |
|
% |
74 |
|
% |
|
|
288 |
|
|
|
297 |
|
|
(3 |
) |
% |
|
Gain on sales of SBA loans |
|
|
94 |
|
|
|
76 |
|
|
|
207 |
|
|
24 |
|
% |
(55 |
) |
% |
|
|
348 |
|
|
|
482 |
|
|
(28 |
) |
% |
|
Termination fees |
|
|
46 |
|
|
|
100 |
|
|
|
118 |
|
|
(54 |
) |
% |
(61 |
) |
% |
|
|
159 |
|
|
|
129 |
|
|
23 |
|
% |
|
Gain on proceeds from company-owned life insurance |
|
|
— |
|
|
|
219 |
|
|
|
100 |
|
|
(100 |
) |
% |
(100 |
) |
% |
|
|
219 |
|
|
|
100 |
|
|
119 |
|
% |
|
Other |
|
|
554 |
|
|
|
379 |
|
|
|
353 |
|
|
46 |
|
% |
57 |
|
% |
|
|
1,304 |
|
|
|
1,033 |
|
|
26 |
|
% |
|
Total noninterest income |
|
|
2,240 |
|
|
|
2,276 |
|
|
|
2,216 |
|
|
(2 |
) |
% |
1 |
|
% |
|
|
6,563 |
|
|
|
7,056 |
|
|
(7 |
) |
% |
| Noninterest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
|
15,673 |
|
|
|
15,794 |
|
|
|
14,147 |
|
|
(1 |
) |
% |
11 |
|
% |
|
|
46,976 |
|
|
|
42,943 |
|
|
9 |
|
% |
|
Occupancy and equipment |
|
|
2,599 |
|
|
|
2,689 |
|
|
|
2,301 |
|
|
(3 |
) |
% |
13 |
|
% |
|
|
7,731 |
|
|
|
7,123 |
|
|
9 |
|
% |
|
Professional fees |
|
|
1,306 |
|
|
|
1,072 |
|
|
|
717 |
|
|
22 |
|
% |
82 |
|
% |
|
|
3,705 |
|
|
|
3,265 |
|
|
13 |
|
% |
|
Other |
|
|
7,977 |
|
|
|
8,633 |
|
|
|
8,006 |
|
|
(8 |
) |
% |
0 |
|
% |
|
|
24,867 |
|
|
|
22,232 |
|
|
12 |
|
% |
|
Total noninterest expense |
|
|
27,555 |
|
|
|
28,188 |
|
|
|
25,171 |
|
|
(2 |
) |
% |
9 |
|
% |
|
|
83,279 |
|
|
|
75,563 |
|
|
10 |
|
% |
| Income before income
taxes |
|
|
14,447 |
|
|
|
13,072 |
|
|
|
22,249 |
|
|
11 |
|
% |
(35 |
) |
% |
|
|
41,939 |
|
|
|
71,956 |
|
|
(42 |
) |
% |
| Income tax expense |
|
|
3,940 |
|
|
|
3,838 |
|
|
|
6,454 |
|
|
3 |
|
% |
(39 |
) |
% |
|
|
12,032 |
|
|
|
20,841 |
|
|
(42 |
) |
% |
| Net
income |
|
$ |
10,507 |
|
|
$ |
9,234 |
|
|
$ |
15,795 |
|
|
14 |
|
% |
(33 |
) |
% |
|
$ |
29,907 |
|
|
$ |
51,115 |
|
|
(41 |
) |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PER COMMON SHARE DATA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic earnings per share |
|
$ |
0.17 |
|
|
$ |
0.15 |
|
|
$ |
0.26 |
|
|
13 |
|
% |
(35 |
) |
% |
|
$ |
0.49 |
|
|
$ |
0.84 |
|
|
(42 |
) |
% |
| Diluted earnings per
share |
|
$ |
0.17 |
|
|
$ |
0.15 |
|
|
$ |
0.26 |
|
|
13 |
|
% |
(35 |
) |
% |
|
$ |
0.49 |
|
|
$ |
0.83 |
|
|
(41 |
) |
% |
| Weighted average shares
outstanding - basic |
|
|
61,295,877 |
|
|
|
61,279,914 |
|
|
|
61,093,289 |
|
|
0 |
|
% |
0 |
|
% |
|
|
61,254,138 |
|
|
|
61,012,315 |
|
|
0 |
|
% |
| Weighted average shares
outstanding - diluted |
|
|
61,546,157 |
|
|
|
61,438,088 |
|
|
|
61,436,240 |
|
|
0 |
|
% |
0 |
|
% |
|
|
61,497,927 |
|
|
|
61,284,590 |
|
|
0 |
|
% |
| Common shares outstanding at
period-end |
|
|
61,297,344 |
|
|
|
61,292,094 |
|
|
|
61,099,155 |
|
|
0 |
|
% |
0 |
|
% |
|
|
61,297,344 |
|
|
|
61,099,155 |
|
|
0 |
|
% |
| Dividend per share |
|
$ |
0.13 |
|
|
$ |
0.13 |
|
|
$ |
0.13 |
|
|
0 |
|
% |
0 |
|
% |
|
$ |
0.39 |
|
|
$ |
0.39 |
|
|
0 |
|
% |
| Book value per share |
|
$ |
11.18 |
|
|
$ |
11.08 |
|
|
$ |
10.83 |
|
|
1 |
|
% |
3 |
|
% |
|
$ |
11.18 |
|
|
$ |
10.83 |
|
|
3 |
|
% |
| Tangible book value per
share(1) |
|
$ |
8.33 |
|
|
$ |
8.22 |
|
|
$ |
7.94 |
|
|
1 |
|
% |
5 |
|
% |
|
$ |
8.33 |
|
|
$ |
7.94 |
|
|
5 |
|
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KEY FINANCIAL RATIOS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Annualized return on average
equity |
|
|
6.14 |
|
% |
|
5.50 |
|
% |
|
9.54 |
|
% |
12 |
|
% |
(36 |
) |
% |
|
|
5.91 |
|
% |
|
10.54 |
|
% |
(44 |
) |
% |
| Annualized return on average
tangible common equity(1) |
|
|
8.27 |
|
% |
|
7.43 |
|
% |
|
13.06 |
|
% |
11 |
|
% |
(37 |
) |
% |
|
|
7.98 |
|
% |
|
14.52 |
|
% |
(45 |
) |
% |
| Annualized return on average
assets |
|
|
0.78 |
|
% |
|
0.71 |
|
% |
|
1.16 |
|
% |
10 |
|
% |
(33 |
) |
% |
|
|
0.76 |
|
% |
|
1.29 |
|
% |
(41 |
) |
% |
| Annualized return on average
tangible assets(1) |
|
|
0.81 |
|
% |
|
0.74 |
|
% |
|
1.20 |
|
% |
9 |
|
% |
(33 |
) |
% |
|
|
0.79 |
|
% |
|
1.33 |
|
% |
(41 |
) |
% |
| Net interest margin
(FTE)(1) |
|
|
3.17 |
|
% |
|
3.26 |
|
% |
|
3.57 |
|
% |
(3 |
) |
% |
(11 |
) |
% |
|
|
3.26 |
|
% |
|
3.80 |
|
% |
(14 |
) |
% |
| Efficiency
ratio(1) |
|
|
65.37 |
|
% |
|
67.55 |
|
% |
|
52.89 |
|
% |
(3 |
) |
% |
24 |
|
% |
|
|
66.08 |
|
% |
|
51.06 |
|
% |
29 |
|
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE BALANCES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in $000’s, unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average assets |
|
$ |
5,352,067 |
|
|
$ |
5,213,171 |
|
|
$ |
5,399,930 |
|
|
3 |
|
% |
(1 |
) |
% |
|
$ |
5,248,338 |
|
|
$ |
5,316,447 |
|
|
(1 |
) |
% |
| Average tangible
assets(1) |
|
$ |
5,177,114 |
|
|
$ |
5,037,673 |
|
|
$ |
5,222,692 |
|
|
3 |
|
% |
(1 |
) |
% |
|
$ |
5,072,843 |
|
|
$ |
5,138,610 |
|
|
(1 |
) |
% |
| Average earning assets |
|
$ |
5,011,865 |
|
|
$ |
4,872,449 |
|
|
$ |
5,051,710 |
|
|
3 |
|
% |
(1 |
) |
% |
|
$ |
4,909,240 |
|
|
$ |
4,965,613 |
|
|
(1 |
) |
% |
| Average loans
held-for-sale |
|
$ |
1,493 |
|
|
$ |
1,503 |
|
|
$ |
2,765 |
|
|
(1 |
) |
% |
(46 |
) |
% |
|
$ |
1,913 |
|
|
$ |
3,229 |
|
|
(41 |
) |
% |
| Average total loans |
|
$ |
3,359,647 |
|
|
$ |
3,328,358 |
|
|
$ |
3,254,715 |
|
|
1 |
|
% |
3 |
|
% |
|
$ |
3,328,529 |
|
|
$ |
3,252,146 |
|
|
2 |
|
% |
| Average deposits |
|
$ |
4,525,946 |
|
|
$ |
4,394,545 |
|
|
$ |
4,573,621 |
|
|
3 |
|
% |
(1 |
) |
% |
|
$ |
4,427,242 |
|
|
$ |
4,471,783 |
|
|
(1 |
) |
% |
| Average demand deposits -
noninterest-bearing |
|
$ |
1,172,304 |
|
|
$ |
1,127,145 |
|
|
$ |
1,302,606 |
|
|
4 |
|
% |
(10 |
) |
% |
|
$ |
1,158,891 |
|
|
$ |
1,444,744 |
|
|
(20 |
) |
% |
| Average interest-bearing
deposits |
|
$ |
3,353,642 |
|
|
$ |
3,267,400 |
|
|
$ |
3,271,015 |
|
|
3 |
|
% |
3 |
|
% |
|
$ |
3,268,351 |
|
|
$ |
3,027,039 |
|
|
8 |
|
% |
| Average interest-bearing
liabilities |
|
$ |
3,393,264 |
|
|
$ |
3,306,972 |
|
|
$ |
3,310,485 |
|
|
3 |
|
% |
3 |
|
% |
|
$ |
3,307,926 |
|
|
$ |
3,102,723 |
|
|
7 |
|
% |
| Average equity |
|
$ |
680,404 |
|
|
$ |
675,108 |
|
|
$ |
656,973 |
|
|
1 |
|
% |
4 |
|
% |
|
$ |
675,951 |
|
|
$ |
648,341 |
|
|
4 |
|
% |
| Average tangible common
equity(1) |
|
$ |
505,451 |
|
|
$ |
499,610 |
|
|
$ |
479,735 |
|
|
1 |
|
% |
5 |
|
% |
|
$ |
500,456 |
|
|
$ |
470,504 |
|
|
6 |
|
% |
|
|
|
|
| (1) |
This is a non-GAAP
financial measure. |
| |
|
For the Quarter Ended: |
|
| CONSOLIDATED INCOME
STATEMENTS |
|
September 30, |
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|
|
(in $000’s, unaudited) |
|
2024 |
|
2024 |
|
2024 |
|
2023 |
|
2023 |
|
|
Interest income |
|
$ |
61,438 |
|
|
$ |
59,077 |
|
|
$ |
57,551 |
|
|
$ |
58,892 |
|
|
$ |
60,791 |
|
|
| Interest expense |
|
|
21,523 |
|
|
|
19,622 |
|
|
|
17,458 |
|
|
|
16,591 |
|
|
|
15,419 |
|
|
|
Net interest income before provision for credit losses on
loans |
|
|
39,915 |
|
|
|
39,455 |
|
|
|
40,093 |
|
|
|
42,301 |
|
|
|
45,372 |
|
|
| Provision for credit losses on
loans |
|
|
153 |
|
|
|
471 |
|
|
|
184 |
|
|
|
289 |
|
|
|
168 |
|
|
|
Net interest income after provision for credit losses on
loans |
|
|
39,762 |
|
|
|
38,984 |
|
|
|
39,909 |
|
|
|
42,012 |
|
|
|
45,204 |
|
|
| Noninterest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service charges and fees on deposit accounts |
|
|
908 |
|
|
|
891 |
|
|
|
877 |
|
|
|
838 |
|
|
|
859 |
|
|
|
Increase in cash surrender value of life insurance |
|
|
530 |
|
|
|
521 |
|
|
|
518 |
|
|
|
519 |
|
|
|
517 |
|
|
|
Servicing income |
|
|
108 |
|
|
|
90 |
|
|
|
90 |
|
|
|
103 |
|
|
|
62 |
|
|
|
Gain on sales of SBA loans |
|
|
94 |
|
|
|
76 |
|
|
|
178 |
|
|
|
— |
|
|
|
207 |
|
|
|
Termination fees |
|
|
46 |
|
|
|
100 |
|
|
|
13 |
|
|
|
25 |
|
|
|
118 |
|
|
|
Gain on proceeds from company-owned life insurance |
|
|
— |
|
|
|
219 |
|
|
|
— |
|
|
|
25 |
|
|
|
100 |
|
|
|
Other |
|
|
554 |
|
|
|
379 |
|
|
|
371 |
|
|
|
432 |
|
|
|
353 |
|
|
|
Total noninterest income |
|
|
2,240 |
|
|
|
2,276 |
|
|
|
2,047 |
|
|
|
1,942 |
|
|
|
2,216 |
|
|
| Noninterest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
|
15,673 |
|
|
|
15,794 |
|
|
|
15,509 |
|
|
|
13,919 |
|
|
|
14,147 |
|
|
|
Occupancy and equipment |
|
|
2,599 |
|
|
|
2,689 |
|
|
|
2,443 |
|
|
|
2,367 |
|
|
|
2,301 |
|
|
|
Professional fees |
|
|
1,306 |
|
|
|
1,072 |
|
|
|
1,327 |
|
|
|
1,085 |
|
|
|
717 |
|
|
|
Other |
|
|
7,977 |
|
|
|
8,633 |
|
|
|
8,257 |
|
|
|
8,120 |
|
|
|
8,006 |
|
|
|
Total noninterest expense |
|
|
27,555 |
|
|
|
28,188 |
|
|
|
27,536 |
|
|
|
25,491 |
|
|
|
25,171 |
|
|
| Income before income
taxes |
|
|
14,447 |
|
|
|
13,072 |
|
|
|
14,420 |
|
|
|
18,463 |
|
|
|
22,249 |
|
|
| Income tax expense |
|
|
3,940 |
|
|
|
3,838 |
|
|
|
4,254 |
|
|
|
5,135 |
|
|
|
6,454 |
|
|
| Net
income |
|
$ |
10,507 |
|
|
$ |
9,234 |
|
|
$ |
10,166 |
|
|
$ |
13,328 |
|
|
$ |
15,795 |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PER COMMON SHARE DATA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic earnings per share |
|
$ |
0.17 |
|
|
$ |
0.15 |
|
|
$ |
0.17 |
|
|
$ |
0.22 |
|
|
$ |
0.26 |
|
|
| Diluted earnings per
share |
|
$ |
0.17 |
|
|
$ |
0.15 |
|
|
$ |
0.17 |
|
|
$ |
0.22 |
|
|
$ |
0.26 |
|
|
| Weighted average shares
outstanding - basic |
|
|
61,295,877 |
|
|
|
61,279,914 |
|
|
|
61,186,623 |
|
|
|
61,118,485 |
|
|
|
61,093,289 |
|
|
| Weighted average shares
outstanding - diluted |
|
|
61,546,157 |
|
|
|
61,438,088 |
|
|
|
61,470,552 |
|
|
|
61,412,816 |
|
|
|
61,436,240 |
|
|
| Common shares outstanding at
period-end |
|
|
61,297,344 |
|
|
|
61,292,094 |
|
|
|
61,253,625 |
|
|
|
61,146,835 |
|
|
|
61,099,155 |
|
|
| Dividend per share |
|
$ |
0.13 |
|
|
$ |
0.13 |
|
|
$ |
0.13 |
|
|
$ |
0.13 |
|
|
$ |
0.13 |
|
|
| Book value per share |
|
$ |
11.18 |
|
|
$ |
11.08 |
|
|
$ |
11.04 |
|
|
$ |
11.00 |
|
|
$ |
10.83 |
|
|
| Tangible book value per
share(1) |
|
$ |
8.33 |
|
|
$ |
8.22 |
|
|
$ |
8.17 |
|
|
$ |
8.12 |
|
|
$ |
7.94 |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KEY FINANCIAL RATIOS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Annualized return on average
equity |
|
|
6.14 |
|
% |
|
5.50 |
|
% |
|
6.08 |
|
% |
|
7.96 |
|
% |
|
9.54 |
|
% |
| Annualized return on average
tangible common equity(1) |
|
|
8.27 |
|
% |
|
7.43 |
|
% |
|
8.24 |
|
% |
|
10.84 |
|
% |
|
13.06 |
|
% |
| Annualized return on average
assets |
|
|
0.78 |
|
% |
|
0.71 |
|
% |
|
0.79 |
|
% |
|
1.00 |
|
% |
|
1.16 |
|
% |
| Annualized return on average
tangible assets(1) |
|
|
0.81 |
|
% |
|
0.74 |
|
% |
|
0.82 |
|
% |
|
1.04 |
|
% |
|
1.20 |
|
% |
| Net interest margin
(FTE)(1) |
|
|
3.17 |
|
% |
|
3.26 |
|
% |
|
3.34 |
|
% |
|
3.41 |
|
% |
|
3.57 |
|
% |
| Efficiency
ratio(1) |
|
|
65.37 |
|
% |
|
67.55 |
|
% |
|
65.34 |
|
% |
|
57.62 |
|
% |
|
52.89 |
|
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE BALANCES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in $000’s, unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average assets |
|
$ |
5,352,067 |
|
|
$ |
5,213,171 |
|
|
$ |
5,178,636 |
|
|
$ |
5,264,905 |
|
|
$ |
5,399,930 |
|
|
| Average tangible
assets(1) |
|
$ |
5,177,114 |
|
|
$ |
5,037,673 |
|
|
$ |
5,002,597 |
|
|
$ |
5,088,264 |
|
|
$ |
5,222,692 |
|
|
| Average earning assets |
|
$ |
5,011,865 |
|
|
$ |
4,872,449 |
|
|
$ |
4,842,279 |
|
|
$ |
4,923,582 |
|
|
$ |
5,051,710 |
|
|
| Average loans
held-for-sale |
|
$ |
1,493 |
|
|
$ |
1,503 |
|
|
$ |
2,749 |
|
|
$ |
1,612 |
|
|
$ |
2,765 |
|
|
| Average total loans |
|
$ |
3,359,647 |
|
|
$ |
3,328,358 |
|
|
$ |
3,297,240 |
|
|
$ |
3,280,817 |
|
|
$ |
3,254,715 |
|
|
| Average deposits |
|
$ |
4,525,946 |
|
|
$ |
4,394,545 |
|
|
$ |
4,360,150 |
|
|
$ |
4,454,750 |
|
|
$ |
4,573,621 |
|
|
| Average demand deposits -
noninterest-bearing |
|
$ |
1,172,304 |
|
|
$ |
1,127,145 |
|
|
$ |
1,177,078 |
|
|
$ |
1,243,222 |
|
|
$ |
1,302,606 |
|
|
| Average interest-bearing
deposits |
|
$ |
3,353,642 |
|
|
$ |
3,267,400 |
|
|
$ |
3,183,072 |
|
|
$ |
3,211,528 |
|
|
$ |
3,271,015 |
|
|
| Average interest-bearing
liabilities |
|
$ |
3,393,264 |
|
|
$ |
3,306,972 |
|
|
$ |
3,222,603 |
|
|
$ |
3,251,034 |
|
|
$ |
3,310,485 |
|
|
| Average equity |
|
$ |
680,404 |
|
|
$ |
675,108 |
|
|
$ |
672,292 |
|
|
$ |
664,638 |
|
|
$ |
656,973 |
|
|
| Average tangible common
equity(1) |
|
$ |
505,451 |
|
|
$ |
499,610 |
|
|
$ |
496,253 |
|
|
$ |
487,997 |
|
|
$ |
479,735 |
|
|
|
|
|
|
| (1) |
This is a non-GAAP
financial measure. |
| |
|
End of Period: |
|
Percent Change From: |
|
| CONSOLIDATED BALANCE
SHEETS |
|
September 30, |
|
June 30, |
|
September 30, |
|
June 30, |
|
September 30, |
|
|
(in $000’s, unaudited) |
|
2024
|
|
2024
|
|
2023
|
|
2024 |
|
2023 |
|
| ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
$ |
49,722 |
|
|
$ |
37,497 |
|
|
$ |
40,076 |
|
|
33 |
|
% |
24 |
|
% |
| Other investments and
interest-bearing deposits in other financial institutions |
|
|
906,588 |
|
|
|
610,763 |
|
|
|
605,476 |
|
|
48 |
|
% |
50 |
|
% |
| Securities available-for-sale,
at fair value |
|
|
237,612 |
|
|
|
273,043 |
|
|
|
457,194 |
|
|
(13 |
) |
% |
(48 |
) |
% |
| Securities held-to-maturity,
at amortized cost |
|
|
604,193 |
|
|
|
621,178 |
|
|
|
664,681 |
|
|
(3 |
) |
% |
(9 |
) |
% |
| Loans held-for-sale - SBA,
including deferred costs |
|
|
1,649 |
|
|
|
1,899 |
|
|
|
841 |
|
|
(13 |
) |
% |
96 |
|
% |
| Loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
|
481,266 |
|
|
|
477,929 |
|
|
|
430,664 |
|
|
1 |
|
% |
12 |
|
% |
|
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CRE - owner occupied |
|
|
602,062 |
|
|
|
594,504 |
|
|
|
589,751 |
|
|
1 |
|
% |
2 |
|
% |
|
CRE - non-owner occupied |
|
|
1,310,578 |
|
|
|
1,283,323 |
|
|
|
1,208,324 |
|
|
2 |
|
% |
8 |
|
% |
|
Land and construction |
|
|
125,761 |
|
|
|
125,374 |
|
|
|
158,138 |
|
|
0 |
|
% |
(20 |
) |
% |
|
Home equity |
|
|
124,090 |
|
|
|
126,562 |
|
|
|
124,477 |
|
|
(2 |
) |
% |
0 |
|
% |
|
Multifamily |
|
|
273,103 |
|
|
|
268,968 |
|
|
|
253,129 |
|
|
2 |
|
% |
8 |
|
% |
|
Residential mortgages |
|
|
479,524 |
|
|
|
484,809 |
|
|
|
503,006 |
|
|
(1 |
) |
% |
(5 |
) |
% |
|
Consumer and other |
|
|
14,179 |
|
|
|
18,758 |
|
|
|
18,526 |
|
|
(24 |
) |
% |
(23 |
) |
% |
|
Loans |
|
|
3,410,563 |
|
|
|
3,380,227 |
|
|
|
3,286,015 |
|
|
1 |
|
% |
4 |
|
% |
|
Deferred loan fees, net |
|
|
(327 |
) |
|
|
(434 |
) |
|
|
(554 |
) |
|
(25 |
) |
% |
(41 |
) |
% |
|
Total loans, net of deferred costs and fees |
|
|
3,410,236 |
|
|
|
3,379,793 |
|
|
|
3,285,461 |
|
|
1 |
|
% |
4 |
|
% |
| Allowance for credit losses on
loans |
|
|
(47,819 |
) |
|
|
(47,954 |
) |
|
|
(47,702 |
) |
|
0 |
|
% |
0 |
|
% |
|
Loans, net |
|
|
3,362,417 |
|
|
|
3,331,839 |
|
|
|
3,237,759 |
|
|
1 |
|
% |
4 |
|
% |
| Company-owned life
insurance |
|
|
80,682 |
|
|
|
80,153 |
|
|
|
79,607 |
|
|
1 |
|
% |
1 |
|
% |
| Premises and equipment,
net |
|
|
10,398 |
|
|
|
10,310 |
|
|
|
9,707 |
|
|
1 |
|
% |
7 |
|
% |
| Goodwill |
|
|
167,631 |
|
|
|
167,631 |
|
|
|
167,631 |
|
|
0 |
|
% |
0 |
|
% |
| Other intangible assets |
|
|
6,966 |
|
|
|
7,521 |
|
|
|
9,229 |
|
|
(7 |
) |
% |
(25 |
) |
% |
| Accrued interest receivable
and other assets |
|
|
123,738 |
|
|
|
121,190 |
|
|
|
131,106 |
|
|
2 |
|
% |
(6 |
) |
% |
|
Total assets |
|
$ |
5,551,596 |
|
|
$ |
5,263,024 |
|
|
$ |
5,403,307 |
|
|
5 |
|
% |
3 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, noninterest-bearing |
|
$ |
1,272,139 |
|
|
$ |
1,187,320 |
|
|
$ |
1,243,501 |
|
|
7 |
|
% |
2 |
|
% |
|
Demand, interest-bearing |
|
|
913,910 |
|
|
|
928,246 |
|
|
|
1,004,185 |
|
|
(2 |
) |
% |
(9 |
) |
% |
|
Savings and money market |
|
|
1,309,676 |
|
|
|
1,126,520 |
|
|
|
1,110,640 |
|
|
16 |
|
% |
18 |
|
% |
|
Time deposits - under $250 |
|
|
39,060 |
|
|
|
39,046 |
|
|
|
43,906 |
|
|
0 |
|
% |
(11 |
) |
% |
|
Time deposits - $250 and over |
|
|
196,945 |
|
|
|
203,886 |
|
|
|
252,001 |
|
|
(3 |
) |
% |
(22 |
) |
% |
|
ICS/CDARS - interest-bearing demand, money market and time
deposits |
|
|
997,803 |
|
|
|
959,592 |
|
|
|
921,224 |
|
|
4 |
|
% |
8 |
|
% |
|
Total deposits |
|
|
4,729,533 |
|
|
|
4,444,610 |
|
|
|
4,575,457 |
|
|
6 |
|
% |
3 |
|
% |
|
Subordinated debt, net of issuance costs |
|
|
39,615 |
|
|
|
39,577 |
|
|
|
39,463 |
|
|
0 |
|
% |
0 |
|
% |
|
Accrued interest payable and other liabilities |
|
|
97,096 |
|
|
|
99,638 |
|
|
|
126,457 |
|
|
(3 |
) |
% |
(23 |
) |
% |
|
Total liabilities |
|
|
4,866,244 |
|
|
|
4,583,825 |
|
|
|
4,741,377 |
|
|
6 |
|
% |
3 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Shareholders’
Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock |
|
|
509,134 |
|
|
|
508,343 |
|
|
|
505,692 |
|
|
0 |
|
% |
1 |
|
% |
|
Retained earnings |
|
|
185,110 |
|
|
|
182,571 |
|
|
|
173,707 |
|
|
1 |
|
% |
7 |
|
% |
|
Accumulated other comprehensive loss |
|
|
(8,892 |
) |
|
|
(11,715 |
) |
|
|
(17,469 |
) |
|
(24 |
) |
% |
(49 |
) |
% |
|
Total shareholders' equity |
|
|
685,352 |
|
|
|
679,199 |
|
|
|
661,930 |
|
|
1 |
|
% |
4 |
|
% |
|
Total liabilities and shareholders’ equity |
|
$ |
5,551,596 |
|
|
$ |
5,263,024 |
|
|
$ |
5,403,307 |
|
|
5 |
|
% |
3 |
|
% |
| |
|
End of Period: |
| CONSOLIDATED BALANCE
SHEETS |
|
September 30, |
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|
(in $000’s, unaudited) |
|
2024
|
|
2024
|
|
2024
|
|
2023
|
|
2023
|
| ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
$ |
49,722 |
|
|
$ |
37,497 |
|
|
$ |
32,543 |
|
|
$ |
41,592 |
|
|
$ |
40,076 |
|
| Other investments and
interest-bearing deposits in other financial institutions |
|
|
906,588 |
|
|
|
610,763 |
|
|
|
508,816 |
|
|
|
366,537 |
|
|
|
605,476 |
|
| Securities available-for-sale,
at fair value |
|
|
237,612 |
|
|
|
273,043 |
|
|
|
404,474 |
|
|
|
442,636 |
|
|
|
457,194 |
|
| Securities held-to-maturity,
at amortized cost |
|
|
604,193 |
|
|
|
621,178 |
|
|
|
636,249 |
|
|
|
650,565 |
|
|
|
664,681 |
|
| Loans held-for-sale - SBA,
including deferred costs |
|
|
1,649 |
|
|
|
1,899 |
|
|
|
1,946 |
|
|
|
2,205 |
|
|
|
841 |
|
| Loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
|
481,266 |
|
|
|
477,929 |
|
|
|
452,231 |
|
|
|
463,778 |
|
|
|
430,664 |
|
|
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CRE - owner occupied |
|
|
602,062 |
|
|
|
594,504 |
|
|
|
585,031 |
|
|
|
583,253 |
|
|
|
589,751 |
|
|
CRE - non-owner occupied |
|
|
1,310,578 |
|
|
|
1,283,323 |
|
|
|
1,271,184 |
|
|
|
1,256,590 |
|
|
|
1,208,324 |
|
|
Land and construction |
|
|
125,761 |
|
|
|
125,374 |
|
|
|
129,712 |
|
|
|
140,513 |
|
|
|
158,138 |
|
|
Home equity |
|
|
124,090 |
|
|
|
126,562 |
|
|
|
122,794 |
|
|
|
119,125 |
|
|
|
124,477 |
|
|
Multifamily |
|
|
273,103 |
|
|
|
268,968 |
|
|
|
269,263 |
|
|
|
269,734 |
|
|
|
253,129 |
|
|
Residential mortgages |
|
|
479,524 |
|
|
|
484,809 |
|
|
|
490,035 |
|
|
|
496,961 |
|
|
|
503,006 |
|
|
Consumer and other |
|
|
14,179 |
|
|
|
18,758 |
|
|
|
16,439 |
|
|
|
20,919 |
|
|
|
18,526 |
|
|
Loans |
|
|
3,410,563 |
|
|
|
3,380,227 |
|
|
|
3,336,689 |
|
|
|
3,350,873 |
|
|
|
3,286,015 |
|
|
Deferred loan fees, net |
|
|
(327 |
) |
|
|
(434 |
) |
|
|
(587 |
) |
|
|
(495 |
) |
|
|
(554 |
) |
|
Total loans, net of deferred fees |
|
|
3,410,236 |
|
|
|
3,379,793 |
|
|
|
3,336,102 |
|
|
|
3,350,378 |
|
|
|
3,285,461 |
|
| Allowance for credit losses on
loans |
|
|
(47,819 |
) |
|
|
(47,954 |
) |
|
|
(47,888 |
) |
|
|
(47,958 |
) |
|
|
(47,702 |
) |
|
Loans, net |
|
|
3,362,417 |
|
|
|
3,331,839 |
|
|
|
3,288,214 |
|
|
|
3,302,420 |
|
|
|
3,237,759 |
|
| Company-owned life
insurance |
|
|
80,682 |
|
|
|
80,153 |
|
|
|
80,007 |
|
|
|
79,489 |
|
|
|
79,607 |
|
| Premises and equipment,
net |
|
|
10,398 |
|
|
|
10,310 |
|
|
|
9,986 |
|
|
|
9,857 |
|
|
|
9,707 |
|
| Goodwill |
|
|
167,631 |
|
|
|
167,631 |
|
|
|
167,631 |
|
|
|
167,631 |
|
|
|
167,631 |
|
| Other intangible assets |
|
|
6,966 |
|
|
|
7,521 |
|
|
|
8,074 |
|
|
|
8,627 |
|
|
|
9,229 |
|
| Accrued interest receivable
and other assets |
|
|
123,738 |
|
|
|
121,190 |
|
|
|
118,134 |
|
|
|
122,536 |
|
|
|
131,106 |
|
|
Total assets |
|
$ |
5,551,596 |
|
|
$ |
5,263,024 |
|
|
$ |
5,256,074 |
|
|
$ |
5,194,095 |
|
|
$ |
5,403,307 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, noninterest-bearing |
|
$ |
1,272,139 |
|
|
$ |
1,187,320 |
|
|
$ |
1,242,059 |
|
|
$ |
1,292,486 |
|
|
$ |
1,243,501 |
|
|
Demand, interest-bearing |
|
|
913,910 |
|
|
|
928,246 |
|
|
|
925,100 |
|
|
|
914,066 |
|
|
|
1,004,185 |
|
|
Savings and money market |
|
|
1,309,676 |
|
|
|
1,126,520 |
|
|
|
1,124,900 |
|
|
|
1,087,518 |
|
|
|
1,110,640 |
|
|
Time deposits - under $250 |
|
|
39,060 |
|
|
|
39,046 |
|
|
|
38,105 |
|
|
|
38,055 |
|
|
|
43,906 |
|
|
Time deposits - $250 and over |
|
|
196,945 |
|
|
|
203,886 |
|
|
|
200,739 |
|
|
|
192,228 |
|
|
|
252,001 |
|
|
ICS/CDARS - interest-bearing demand, money market and time
deposits |
|
|
997,803 |
|
|
|
959,592 |
|
|
|
913,757 |
|
|
|
854,105 |
|
|
|
921,224 |
|
|
Total deposits |
|
|
4,729,533 |
|
|
|
4,444,610 |
|
|
|
4,444,660 |
|
|
|
4,378,458 |
|
|
|
4,575,457 |
|
|
Other short-term borrowings |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Subordinated debt, net of issuance costs |
|
|
39,615 |
|
|
|
39,577 |
|
|
|
39,539 |
|
|
|
39,502 |
|
|
|
39,463 |
|
|
Accrued interest payable and other liabilities |
|
|
97,096 |
|
|
|
99,638 |
|
|
|
95,579 |
|
|
|
103,234 |
|
|
|
126,457 |
|
|
Total liabilities |
|
|
4,866,244 |
|
|
|
4,583,825 |
|
|
|
4,579,778 |
|
|
|
4,521,194 |
|
|
|
4,741,377 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Shareholders’
Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock |
|
|
509,134 |
|
|
|
508,343 |
|
|
|
507,578 |
|
|
|
506,539 |
|
|
|
505,692 |
|
|
Retained earnings |
|
|
185,110 |
|
|
|
182,571 |
|
|
|
181,306 |
|
|
|
179,092 |
|
|
|
173,707 |
|
|
Accumulated other comprehensive loss |
|
|
(8,892 |
) |
|
|
(11,715 |
) |
|
|
(12,588 |
) |
|
|
(12,730 |
) |
|
|
(17,469 |
) |
|
Total shareholders' equity |
|
|
685,352 |
|
|
|
679,199 |
|
|
|
676,296 |
|
|
|
672,901 |
|
|
|
661,930 |
|
|
Total liabilities and shareholders’ equity |
|
$ |
5,551,596 |
|
|
$ |
5,263,024 |
|
|
$ |
5,256,074 |
|
|
$ |
5,194,095 |
|
|
$ |
5,403,307 |
|
| |
|
At or For the Quarter Ended: |
|
Percent Change From: |
|
| CREDIT QUALITY
DATA |
|
September 30, |
|
June 30, |
|
September 30, |
|
June 30, |
|
September 30, |
|
|
(in $000’s, unaudited) |
|
2024 |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
|
Nonaccrual loans - held-for-investment |
|
$ |
6,698 |
|
|
$ |
5,782 |
|
|
$ |
3,518 |
|
|
16 |
|
% |
90 |
|
% |
| Loans over 90 days past due
and still accruing |
|
|
460 |
|
|
|
248 |
|
|
|
1,966 |
|
|
85 |
|
% |
(77 |
) |
% |
|
Total nonperforming loans |
|
|
7,158 |
|
|
|
6,030 |
|
|
|
5,484 |
|
|
19 |
|
% |
31 |
|
% |
| Foreclosed assets |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
N/A |
|
N/A |
|
|
Total nonperforming assets |
|
$ |
7,158 |
|
|
$ |
6,030 |
|
|
$ |
5,484 |
|
|
19 |
|
% |
31 |
|
% |
| Net charge-offs (recoveries)
during the quarter |
|
$ |
288 |
|
|
$ |
405 |
|
|
$ |
269 |
|
|
(29 |
) |
% |
7 |
|
% |
| Provision for credit losses on
loans during the quarter |
|
$ |
153 |
|
|
$ |
471 |
|
|
$ |
168 |
|
|
(68 |
) |
% |
(9 |
) |
% |
| Allowance for credit losses on
loans |
|
$ |
47,819 |
|
|
$ |
47,954 |
|
|
$ |
47,702 |
|
|
0 |
|
% |
0 |
|
% |
| Classified assets |
|
$ |
32,609 |
|
|
$ |
33,605 |
|
|
$ |
31,062 |
|
|
(3 |
) |
% |
5 |
|
% |
| Allowance for credit losses on
loans to total loans |
|
|
1.40 |
|
% |
|
1.42 |
|
% |
|
1.45 |
|
% |
(1 |
) |
% |
(3 |
) |
% |
| Allowance for credit losses on
loans to total nonperforming loans |
|
|
668.05 |
|
% |
|
795.26 |
|
% |
|
869.84 |
|
% |
(16 |
) |
% |
(23 |
) |
% |
| Nonperforming assets to total
assets |
|
|
0.13 |
|
% |
|
0.11 |
|
% |
|
0.10 |
|
% |
18 |
|
% |
30 |
|
% |
| Nonperforming loans to total
loans |
|
|
0.21 |
|
% |
|
0.18 |
|
% |
|
0.17 |
|
% |
17 |
|
% |
24 |
|
% |
| 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) |
|
$ |
510,755 |
|
|
$ |
504,047 |
|
|
$ |
485,070 |
|
|
1 |
|
% |
5 |
|
% |
|
Shareholders’ equity / total assets |
|
|
12.35 |
|
% |
|
12.91 |
|
% |
|
12.25 |
|
% |
(4 |
) |
% |
1 |
|
% |
|
Tangible common equity / tangible assets (2) |
|
|
9.50 |
|
% |
|
9.91 |
|
% |
|
9.28 |
|
% |
(4 |
) |
% |
2 |
|
% |
|
Loan to deposit ratio |
|
|
72.11 |
|
% |
|
76.04 |
|
% |
|
71.81 |
|
% |
(5 |
) |
% |
0 |
|
% |
|
Noninterest-bearing deposits / total deposits |
|
|
26.90 |
|
% |
|
26.71 |
|
% |
|
27.18 |
|
% |
1 |
|
% |
(1 |
) |
% |
|
Total capital ratio |
|
|
15.6 |
|
% |
|
15.6 |
|
% |
|
15.6 |
|
% |
0 |
|
% |
0 |
|
% |
|
Tier 1 capital ratio |
|
|
13.4 |
|
% |
|
13.4 |
|
% |
|
13.4 |
|
% |
0 |
|
% |
0 |
|
% |
|
Common Equity Tier 1 capital ratio |
|
|
13.4 |
|
% |
|
13.4 |
|
% |
|
13.4 |
|
% |
0 |
|
% |
0 |
|
% |
|
Tier 1 leverage ratio |
|
|
10.0 |
|
% |
|
10.2 |
|
% |
|
9.6 |
|
% |
(2 |
) |
% |
4 |
|
% |
| Heritage Bank of
Commerce: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible common equity / tangible assets (2) |
|
|
9.86 |
|
% |
|
10.28 |
|
% |
|
9.62 |
|
% |
(4 |
) |
% |
2 |
|
% |
|
Total capital ratio |
|
|
15.1 |
|
% |
|
15.1 |
|
% |
|
15.0 |
|
% |
0 |
|
% |
1 |
|
% |
|
Tier 1 capital ratio |
|
|
13.9 |
|
% |
|
13.9 |
|
% |
|
13.9 |
|
% |
0 |
|
% |
0 |
|
% |
|
Common Equity Tier 1 capital ratio |
|
|
13.9 |
|
% |
|
13.9 |
|
% |
|
13.9 |
|
% |
0 |
|
% |
0 |
|
% |
|
Tier 1 leverage ratio |
|
|
10.4 |
|
% |
|
10.6 |
|
% |
|
10.0 |
|
% |
(2 |
) |
% |
4 |
|
% |
|
|
|
|
| (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 |
|
September 30, |
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|
|
(in $000’s, unaudited) |
|
2024 |
|
2024 |
|
2024 |
|
2023 |
|
2023 |
|
|
Nonaccrual loans - held-for-investment |
|
$ |
6,698 |
|
|
$ |
5,782 |
|
|
$ |
5,920 |
|
|
$ |
6,818 |
|
|
$ |
3,518 |
|
|
| Loans over 90 days past due
and still accruing |
|
|
460 |
|
|
|
248 |
|
|
|
1,951 |
|
|
|
889 |
|
|
|
1,966 |
|
|
|
Total nonperforming loans |
|
|
7,158 |
|
|
|
6,030 |
|
|
|
7,871 |
|
|
|
7,707 |
|
|
|
5,484 |
|
|
| Foreclosed assets |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
Total nonperforming assets |
|
$ |
7,158 |
|
|
$ |
6,030 |
|
|
$ |
7,871 |
|
|
$ |
7,707 |
|
|
$ |
5,484 |
|
|
| Net charge-offs (recoveries)
during the quarter |
|
$ |
288 |
|
|
$ |
405 |
|
|
$ |
254 |
|
|
$ |
33 |
|
|
$ |
269 |
|
|
| Provision for credit losses on
loans during the quarter |
|
$ |
153 |
|
|
$ |
471 |
|
|
$ |
184 |
|
|
$ |
289 |
|
|
$ |
168 |
|
|
| Allowance for credit losses on
loans |
|
$ |
47,819 |
|
|
$ |
47,954 |
|
|
$ |
47,888 |
|
|
$ |
47,958 |
|
|
$ |
47,702 |
|
|
| Classified assets |
|
$ |
32,609 |
|
|
$ |
33,605 |
|
|
$ |
35,392 |
|
|
$ |
31,763 |
|
|
$ |
31,062 |
|
|
| Allowance for credit losses on
loans to total loans |
|
|
1.40 |
|
% |
|
1.42 |
|
% |
|
1.44 |
|
% |
|
1.43 |
|
% |
|
1.45 |
|
% |
| Allowance for credit losses on
loans to total nonperforming loans |
|
|
668.05 |
|
% |
|
795.26 |
|
% |
|
608.41 |
|
% |
|
622.27 |
|
% |
|
869.84 |
|
% |
| Nonperforming assets to total
assets |
|
|
0.13 |
|
% |
|
0.11 |
|
% |
|
0.15 |
|
% |
|
0.15 |
|
% |
|
0.10 |
|
% |
| Nonperforming loans to total
loans |
|
|
0.21 |
|
% |
|
0.18 |
|
% |
|
0.24 |
|
% |
|
0.23 |
|
% |
|
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 |
|
% |
|
6 |
|
% |
|
5 |
|
% |
|
5 |
|
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| OTHER PERIOD-END
STATISTICS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in $000’s, unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Heritage Commerce
Corp: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible common equity (1) |
|
$ |
510,755 |
|
|
$ |
504,047 |
|
|
$ |
500,591 |
|
|
$ |
496,643 |
|
|
$ |
485,070 |
|
|
|
Shareholders’ equity / total assets |
|
|
12.35 |
|
% |
|
12.91 |
|
% |
|
12.87 |
|
% |
|
12.96 |
|
% |
|
12.25 |
|
% |
|
Tangible common equity / tangible assets (2) |
|
|
9.50 |
|
% |
|
9.91 |
|
% |
|
9.85 |
|
% |
|
9.90 |
|
% |
|
9.28 |
|
% |
|
Loan to deposit ratio |
|
|
72.11 |
|
% |
|
76.04 |
|
% |
|
75.06 |
|
% |
|
76.52 |
|
% |
|
71.81 |
|
% |
|
Noninterest-bearing deposits / total deposits |
|
|
26.90 |
|
% |
|
26.71 |
|
% |
|
27.94 |
|
% |
|
29.52 |
|
% |
|
27.18 |
|
% |
|
Total capital ratio |
|
|
15.6 |
|
% |
|
15.6 |
|
% |
|
15.6 |
|
% |
|
15.5 |
|
% |
|
15.6 |
|
% |
|
Tier 1 capital ratio |
|
|
13.4 |
|
% |
|
13.4 |
|
% |
|
13.4 |
|
% |
|
13.3 |
|
% |
|
13.4 |
|
% |
|
Common Equity Tier 1 capital ratio |
|
|
13.4 |
|
% |
|
13.4 |
|
% |
|
13.4 |
|
% |
|
13.3 |
|
% |
|
13.4 |
|
% |
|
Tier 1 leverage ratio |
|
|
10.0 |
|
% |
|
10.2 |
|
% |
|
10.2 |
|
% |
|
10.0 |
|
% |
|
9.6 |
|
% |
| Heritage Bank of
Commerce: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible common equity / tangible assets (2) |
|
|
9.86 |
|
% |
|
10.28 |
|
% |
|
10.22 |
|
% |
|
10.26 |
|
% |
|
9.62 |
|
% |
|
Total capital ratio |
|
|
15.1 |
|
% |
|
15.1 |
|
% |
|
15.1 |
|
% |
|
14.9 |
|
% |
|
15.0 |
|
% |
|
Tier 1 capital ratio |
|
|
13.9 |
|
% |
|
13.9 |
|
% |
|
13.9 |
|
% |
|
13.8 |
|
% |
|
13.9 |
|
% |
|
Common Equity Tier 1 capital ratio |
|
|
13.9 |
|
% |
|
13.9 |
|
% |
|
13.9 |
|
% |
|
13.8 |
|
% |
|
13.9 |
|
% |
|
Tier 1 leverage ratio |
|
|
10.4 |
|
% |
|
10.6 |
|
% |
|
10.6 |
|
% |
|
10.4 |
|
% |
|
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 |
|
| |
|
September 30, 2024 |
|
June 30, 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) |
|
$ |
3,361,140 |
|
|
$ |
45,781 |
|
|
5.42 |
% |
$ |
3,329,861 |
|
|
$ |
45,470 |
|
|
5.49 |
% |
| Securities - taxable |
|
|
838,375 |
|
|
|
4,676 |
|
|
2.22 |
% |
|
942,532 |
|
|
|
5,483 |
|
|
2.34 |
% |
| Securities - exempt from
Federal tax (3) |
|
|
31,311 |
|
|
|
282 |
|
|
3.58 |
% |
|
31,803 |
|
|
|
285 |
|
|
3.60 |
% |
| Other investments and
interest-bearing deposits in other financial institutions |
|
|
781,039 |
|
|
|
10,758 |
|
|
5.48 |
% |
|
568,253 |
|
|
|
7,899 |
|
|
5.59 |
% |
|
Total interest earning assets (3) |
|
|
5,011,865 |
|
|
|
61,497 |
|
|
4.88 |
% |
|
4,872,449 |
|
|
|
59,137 |
|
|
4.88 |
% |
| Cash and due from banks |
|
|
33,425 |
|
|
|
|
|
|
|
|
33,419 |
|
|
|
|
|
|
|
| Premises and equipment,
net |
|
|
10,471 |
|
|
|
|
|
|
|
|
10,216 |
|
|
|
|
|
|
|
| Goodwill and other intangible
assets |
|
|
174,953 |
|
|
|
|
|
|
|
|
175,498 |
|
|
|
|
|
|
|
| Other assets |
|
|
121,353 |
|
|
|
|
|
|
|
|
121,589 |
|
|
|
|
|
|
|
|
Total assets |
|
$ |
5,352,067 |
|
|
|
|
|
|
|
$ |
5,213,171 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Liabilities and
shareholders’ equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, noninterest-bearing |
|
$ |
1,172,304 |
|
|
|
|
|
|
|
$ |
1,127,145 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, interest-bearing |
|
|
907,346 |
|
|
|
1,714 |
|
|
0.75 |
% |
|
932,100 |
|
|
|
1,719 |
|
|
0.74 |
% |
|
Savings and money market |
|
|
1,188,057 |
|
|
|
9,128 |
|
|
3.06 |
% |
|
1,104,589 |
|
|
|
7,867 |
|
|
2.86 |
% |
|
Time deposits - under $100 |
|
|
11,133 |
|
|
|
47 |
|
|
1.68 |
% |
|
10,980 |
|
|
|
46 |
|
|
1.68 |
% |
|
Time deposits - $100 and over |
|
|
229,565 |
|
|
|
2,349 |
|
|
4.07 |
% |
|
228,248 |
|
|
|
2,245 |
|
|
3.96 |
% |
|
ICS/CDARS - interest-bearing demand, money market and time
deposits |
|
|
1,017,541 |
|
|
|
7,747 |
|
|
3.03 |
% |
|
991,483 |
|
|
|
7,207 |
|
|
2.92 |
% |
|
Total interest-bearing deposits |
|
|
3,353,642 |
|
|
|
20,985 |
|
|
2.49 |
% |
|
3,267,400 |
|
|
|
19,084 |
|
|
2.35 |
% |
|
Total deposits |
|
|
4,525,946 |
|
|
|
20,985 |
|
|
1.84 |
% |
|
4,394,545 |
|
|
|
19,084 |
|
|
1.75 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Short-term borrowings |
|
|
32 |
|
|
|
— |
|
|
0.00 |
% |
|
19 |
|
|
|
— |
|
|
0.00 |
% |
| Subordinated debt, net of
issuance costs |
|
|
39,590 |
|
|
|
538 |
|
|
5.41 |
% |
|
39,553 |
|
|
|
538 |
|
|
5.47 |
% |
|
Total interest-bearing liabilities |
|
|
3,393,264 |
|
|
|
21,523 |
|
|
2.52 |
% |
|
3,306,972 |
|
|
|
19,622 |
|
|
2.39 |
% |
|
Total interest-bearing liabilities and demand,
noninterest-bearing / cost of funds |
|
|
4,565,568 |
|
|
|
21,523 |
|
|
1.88 |
% |
|
4,434,117 |
|
|
|
19,622 |
|
|
1.78 |
% |
| Other liabilities |
|
|
106,095 |
|
|
|
|
|
|
|
|
103,946 |
|
|
|
|
|
|
|
|
Total liabilities |
|
|
4,671,663 |
|
|
|
|
|
|
|
|
4,538,063 |
|
|
|
|
|
|
|
| Shareholders’ equity |
|
|
680,404 |
|
|
|
|
|
|
|
|
675,108 |
|
|
|
|
|
|
|
|
Total liabilities and shareholders’ equity |
|
$ |
5,352,067 |
|
|
|
|
|
|
|
$ |
5,213,171 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net interest income / margin
(3) |
|
|
|
|
|
|
39,974 |
|
|
3.17 |
% |
|
|
|
|
|
39,515 |
|
|
3.26 |
% |
| Less tax equivalent adjustment
(3) |
|
|
|
|
|
|
(59 |
) |
|
|
|
|
|
|
|
|
(60 |
) |
|
|
|
|
Net interest income |
|
|
|
|
|
$ |
39,915 |
|
|
3.17 |
% |
|
|
|
|
$ |
39,455 |
|
|
3.26 |
% |
|
|
|
|
| (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 $184,000 for the third quarter
of 2024, compared to $117,000 for the second quarter of 2024.
Prepayment fees totaled $4,000 for the third quarter of 2024,
compared to $54,000 for the second 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 |
|
| |
|
September 30, 2024 |
|
September 30, 2023 |
|
|
|
|
|
|
|
|
Interest |
|
Average |
|
|
|
|
|
Interest |
|
Average |
|
| NET INTEREST INCOME
AND NET INTEREST MARGIN |
|
Average |
|
Income/ |
|
Yield/ |
|
Average |
|
Income/ |
|
Yield/ |
|
|
(in $000’s, unaudited) |
|
Balance |
|
Expense |
|
Rate |
|
Balance |
|
Expense |
|
Rate |
|
| Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, gross (1)(2) |
|
$ |
3,361,140 |
|
|
$ |
45,781 |
|
|
5.42 |
% |
$ |
3,257,480 |
|
|
$ |
44,853 |
|
|
5.46 |
% |
| Securities - taxable |
|
|
838,375 |
|
|
|
4,676 |
|
|
2.22 |
% |
|
1,114,782 |
|
|
|
6,797 |
|
|
2.42 |
% |
| Securities - exempt from
Federal tax (3) |
|
|
31,311 |
|
|
|
282 |
|
|
3.58 |
% |
|
32,947 |
|
|
|
293 |
|
|
3.53 |
% |
| Other investments and
interest-bearing deposits in other financial institutions |
|
|
781,039 |
|
|
|
10,758 |
|
|
5.48 |
% |
|
646,501 |
|
|
|
8,909 |
|
|
5.47 |
% |
|
Total interest earning assets (3) |
|
|
5,011,865 |
|
|
|
61,497 |
|
|
4.88 |
% |
|
5,051,710 |
|
|
|
60,852 |
|
|
4.78 |
% |
| Cash and due from banks |
|
|
33,425 |
|
|
|
|
|
|
|
|
35,911 |
|
|
|
|
|
|
|
| Premises and equipment,
net |
|
|
10,471 |
|
|
|
|
|
|
|
|
9,374 |
|
|
|
|
|
|
|
| Goodwill and other intangible
assets |
|
|
174,953 |
|
|
|
|
|
|
|
|
177,238 |
|
|
|
|
|
|
|
| Other assets |
|
|
121,353 |
|
|
|
|
|
|
|
|
125,697 |
|
|
|
|
|
|
|
|
Total assets |
|
$ |
5,352,067 |
|
|
|
|
|
|
|
$ |
5,399,930 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Liabilities and
shareholders’ equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, noninterest-bearing |
|
$ |
1,172,304 |
|
|
|
|
|
|
|
$ |
1,302,606 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, interest-bearing |
|
|
907,346 |
|
|
|
1,714 |
|
|
0.75 |
% |
|
1,017,686 |
|
|
|
1,730 |
|
|
0.67 |
% |
|
Savings and money market |
|
|
1,188,057 |
|
|
|
9,128 |
|
|
3.06 |
% |
|
1,087,336 |
|
|
|
5,514 |
|
|
2.01 |
% |
|
Time deposits - under $100 |
|
|
11,133 |
|
|
|
47 |
|
|
1.68 |
% |
|
11,966 |
|
|
|
30 |
|
|
0.99 |
% |
|
Time deposits - $100 and over |
|
|
229,565 |
|
|
|
2,349 |
|
|
4.07 |
% |
|
272,362 |
|
|
|
2,489 |
|
|
3.63 |
% |
|
ICS/CDARS - interest-bearing demand, money market and time
deposits |
|
|
1,017,541 |
|
|
|
7,747 |
|
|
3.03 |
% |
|
881,665 |
|
|
|
5,117 |
|
|
2.30 |
% |
|
Total interest-bearing deposits |
|
|
3,353,642 |
|
|
|
20,985 |
|
|
2.49 |
% |
|
3,271,015 |
|
|
|
14,880 |
|
|
1.80 |
% |
|
Total deposits |
|
|
4,525,946 |
|
|
|
20,985 |
|
|
1.84 |
% |
|
4,573,621 |
|
|
|
14,880 |
|
|
1.29 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Short-term borrowings |
|
|
32 |
|
|
|
— |
|
|
0.00 |
% |
|
31 |
|
|
|
— |
|
|
0.00 |
% |
| Subordinated debt, net of
issuance costs |
|
|
39,590 |
|
|
|
538 |
|
|
5.41 |
% |
|
39,439 |
|
|
|
539 |
|
|
5.42 |
% |
|
Total interest-bearing liabilities |
|
|
3,393,264 |
|
|
|
21,523 |
|
|
2.52 |
% |
|
3,310,485 |
|
|
|
15,419 |
|
|
1.85 |
% |
|
Total interest-bearing liabilities and demand,
noninterest-bearing / cost of funds |
|
|
4,565,568 |
|
|
|
21,523 |
|
|
1.88 |
% |
|
4,613,091 |
|
|
|
15,419 |
|
|
1.33 |
% |
| Other liabilities |
|
|
106,095 |
|
|
|
|
|
|
|
|
129,866 |
|
|
|
|
|
|
|
|
Total liabilities |
|
|
4,671,663 |
|
|
|
|
|
|
|
|
4,742,957 |
|
|
|
|
|
|
|
| Shareholders’ equity |
|
|
680,404 |
|
|
|
|
|
|
|
|
656,973 |
|
|
|
|
|
|
|
|
Total liabilities and shareholders’ equity |
|
$ |
5,352,067 |
|
|
|
|
|
|
|
$ |
5,399,930 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net interest income /
margin (3) |
|
|
|
|
|
|
39,974 |
|
|
3.17 |
% |
|
|
|
|
|
45,433 |
|
|
3.57 |
% |
| Less tax equivalent adjustment
(3) |
|
|
|
|
|
|
(59 |
) |
|
|
|
|
|
|
|
|
(61 |
) |
|
|
|
|
Net interest income |
|
|
|
|
|
$ |
39,915 |
|
|
3.17 |
% |
|
|
|
|
$ |
45,372 |
|
|
3.56 |
% |
|
|
|
|
| (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 $184,000 for the third quarter
of 2024, compared to $201,000 for the third quarter of 2023.
Prepayment fees totaled $4,000 for the third quarter of 2024,
compared to $182,000 for the third quarter of 2023. |
| (3) |
Reflects the non-GAAP
FTE adjustment for Federal tax-exempt income based on a 21% tax
rate. |
| |
|
For the Nine Months Ended |
|
For the Nine Months Ended |
|
| |
|
September 30, 2024 |
|
September 30, 2023 |
|
|
|
|
|
|
|
|
Interest |
|
Average |
|
|
|
|
|
Interest |
|
Average |
|
| NET INTEREST INCOME
AND NET INTEREST MARGIN |
|
Average |
|
Income/ |
|
Yield/ |
|
Average |
|
Income/ |
|
Yield/ |
|
|
(in $000’s, unaudited) |
|
Balance |
|
Expense |
|
Rate |
|
Balance |
|
Expense |
|
Rate |
|
| Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, gross (1)(2) |
|
$ |
3,330,442 |
|
|
$ |
135,851 |
|
|
5.45 |
% |
$ |
3,255,375 |
|
|
$ |
132,993 |
|
|
5.46 |
% |
| Securities - taxable |
|
|
940,755 |
|
|
|
16,342 |
|
|
2.32 |
% |
|
1,140,890 |
|
|
|
20,835 |
|
|
2.44 |
% |
| Securities - exempt from
Federal tax (3) |
|
|
31,683 |
|
|
|
853 |
|
|
3.60 |
% |
|
34,332 |
|
|
|
908 |
|
|
3.54 |
% |
| Other investments,
interest-bearing deposits in other financial institutions and
Federal funds sold |
|
|
606,360 |
|
|
|
25,199 |
|
|
5.55 |
% |
|
535,016 |
|
|
|
20,860 |
|
|
5.21 |
% |
|
Total interest earning assets (3) |
|
|
4,909,240 |
|
|
|
178,245 |
|
|
4.85 |
% |
|
4,965,613 |
|
|
|
175,596 |
|
|
4.73 |
% |
| Cash and due from banks |
|
|
33,353 |
|
|
|
|
|
|
|
|
36,205 |
|
|
|
|
|
|
|
| Premises and equipment,
net |
|
|
10,235 |
|
|
|
|
|
|
|
|
9,278 |
|
|
|
|
|
|
|
| Goodwill and other intangible
assets |
|
|
175,495 |
|
|
|
|
|
|
|
|
177,837 |
|
|
|
|
|
|
|
| Other assets |
|
|
120,015 |
|
|
|
|
|
|
|
|
127,514 |
|
|
|
|
|
|
|
|
Total assets |
|
$ |
5,248,338 |
|
|
|
|
|
|
|
$ |
5,316,447 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Liabilities and
shareholders’ equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, noninterest-bearing |
|
$ |
1,158,891 |
|
|
|
|
|
|
|
$ |
1,444,744 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand, interest-bearing |
|
|
919,786 |
|
|
|
4,987 |
|
|
0.72 |
% |
|
1,117,140 |
|
|
|
4,994 |
|
|
0.60 |
% |
|
Savings and money market |
|
|
1,120,324 |
|
|
|
23,644 |
|
|
2.82 |
% |
|
1,159,894 |
|
|
|
13,641 |
|
|
1.57 |
% |
|
Time deposits - under $100 |
|
|
11,020 |
|
|
|
135 |
|
|
1.64 |
% |
|
11,951 |
|
|
|
60 |
|
|
0.67 |
% |
|
Time deposits - $100 and over |
|
|
226,353 |
|
|
|
6,658 |
|
|
3.93 |
% |
|
212,736 |
|
|
|
4,744 |
|
|
2.98 |
% |
|
ICS/CDARS - interest-bearing demand, money market and time
deposits |
|
|
990,868 |
|
|
|
21,565 |
|
|
2.91 |
% |
|
525,318 |
|
|
|
8,065 |
|
|
2.05 |
% |
|
Total interest-bearing deposits |
|
|
3,268,351 |
|
|
|
56,989 |
|
|
2.33 |
% |
|
3,027,039 |
|
|
|
31,504 |
|
|
1.39 |
% |
|
Total deposits |
|
|
4,427,242 |
|
|
|
56,989 |
|
|
1.72 |
% |
|
4,471,783 |
|
|
|
31,504 |
|
|
0.94 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Short-term borrowings |
|
|
22 |
|
|
|
— |
|
|
0.00 |
% |
|
36,283 |
|
|
|
1,365 |
|
|
5.03 |
% |
| Subordinated debt, net of
issuance costs |
|
|
39,553 |
|
|
|
1,614 |
|
|
5.45 |
% |
|
39,401 |
|
|
|
1,614 |
|
|
5.48 |
% |
|
Total interest-bearing liabilities |
|
|
3,307,926 |
|
|
|
58,603 |
|
|
2.37 |
% |
|
3,102,723 |
|
|
|
34,483 |
|
|
1.49 |
% |
|
Total interest-bearing liabilities and demand,
noninterest-bearing / cost of funds |
|
|
4,466,817 |
|
|
|
58,603 |
|
|
1.75 |
% |
|
4,547,467 |
|
|
|
34,483 |
|
|
1.01 |
% |
| Other liabilities |
|
|
105,570 |
|
|
|
|
|
|
|
|
120,639 |
|
|
|
|
|
|
|
|
Total liabilities |
|
|
4,572,387 |
|
|
|
|
|
|
|
|
4,668,106 |
|
|
|
|
|
|
|
| Shareholders’ equity |
|
|
675,951 |
|
|
|
|
|
|
|
|
648,341 |
|
|
|
|
|
|
|
|
Total liabilities and shareholders’ equity |
|
$ |
5,248,338 |
|
|
|
|
|
|
|
$ |
5,316,447 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net interest income /
margin (3) |
|
|
|
|
|
|
119,642 |
|
|
3.26 |
% |
|
|
|
|
|
141,113 |
|
|
3.80 |
% |
| Less tax equivalent adjustment
(3) |
|
|
|
|
|
|
(179 |
) |
|
|
|
|
|
|
|
|
(190 |
) |
|
|
|
|
Net interest income |
|
|
|
|
|
$ |
119,463 |
|
|
3.25 |
% |
|
|
|
|
$ |
140,923 |
|
|
3.79 |
% |
|
|
|
|
| (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 $461,000 for the first nine
months of 2024, compared to $595,000 for the first nine months of
2023. Prepayment fees totaled $82,000 for the first nine months of
2024, compared to $393,000 for the first nine 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 |
|
September 30, |
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|
(in $000’s, unaudited) |
|
2024
|
|
2024
|
|
2024
|
|
2023
|
|
2023
|
| Capital
components: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Equity (GAAP) |
|
$ |
685,352 |
|
|
$ |
679,199 |
|
|
$ |
676,296 |
|
|
$ |
672,901 |
|
|
$ |
661,930 |
|
|
Less: Preferred Stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Total Common Equity |
|
|
685,352 |
|
|
|
679,199 |
|
|
|
676,296 |
|
|
|
672,901 |
|
|
|
661,930 |
|
|
Less: Goodwill |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
Less: Other Intangible Assets |
|
|
(6,966 |
) |
|
|
(7,521 |
) |
|
|
(8,074 |
) |
|
|
(8,627 |
) |
|
|
(9,229 |
) |
|
Total Tangible Common Equity (non-GAAP) |
|
$ |
510,755 |
|
|
$ |
504,047 |
|
|
$ |
500,591 |
|
|
$ |
496,643 |
|
|
$ |
485,070 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common shares
outstanding at period-end |
|
|
61,297,344 |
|
|
|
61,292,094 |
|
|
|
61,253,625 |
|
|
|
61,146,835 |
|
|
|
61,099,155 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Tangible book value
per share (non-GAAP) |
|
$ |
8.33 |
|
|
$ |
8.22 |
|
|
$ |
8.17 |
|
|
$ |
8.12 |
|
|
$ |
7.94 |
|
- 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 |
|
September 30, |
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|
|
(in $000’s, unaudited) |
|
2024
|
|
2024
|
|
|
2024 |
|
2023
|
|
2023
|
|
|
Net income |
|
$ |
10,507 |
|
|
$ |
9,234 |
|
|
$ |
10,166 |
|
|
$ |
13,328 |
|
|
$ |
15,795 |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average tangible
common equity components: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Equity (GAAP) |
|
$ |
680,404 |
|
|
$ |
675,108 |
|
|
$ |
672,292 |
|
|
$ |
664,638 |
|
|
$ |
656,973 |
|
|
|
Less: Goodwill |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
Less: Other Intangible Assets |
|
|
(7,322 |
) |
|
|
(7,867 |
) |
|
|
(8,408 |
) |
|
|
(9,010 |
) |
|
|
(9,607 |
) |
|
|
Total Average Tangible Common Equity (non-GAAP) |
|
$ |
505,451 |
|
|
$ |
499,610 |
|
|
$ |
496,253 |
|
|
$ |
487,997 |
|
|
$ |
479,735 |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Annualized return on
average tangible common equity (non-GAAP) |
|
|
8.27 |
|
% |
|
7.43 |
|
% |
|
8.24 |
|
% |
|
10.84 |
|
% |
|
13.06 |
|
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average tangible
assets components: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Assets (GAAP) |
|
$ |
5,352,067 |
|
|
$ |
5,213,171 |
|
|
$ |
5,178,636 |
|
|
$ |
5,264,905 |
|
|
$ |
5,399,930 |
|
|
|
Less: Goodwill |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
Less: Other Intangible Assets |
|
|
(7,322 |
) |
|
|
(7,867 |
) |
|
|
(8,408 |
) |
|
|
(9,010 |
) |
|
|
(9,607 |
) |
|
|
Total Average Tangible Assets (non-GAAP) |
|
$ |
5,177,114 |
|
|
$ |
5,037,673 |
|
|
$ |
5,002,597 |
|
|
$ |
5,088,264 |
|
|
$ |
5,222,692 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Annualized return on
average tangible assets (non-GAAP) |
|
|
0.81 |
|
% |
|
0.74 |
|
% |
|
0.82 |
|
% |
|
1.04 |
|
% |
|
1.20 |
|
% |
| RETURN ON AVERAGE
TANGIBLE COMMON |
|
For the Nine Months Ended: |
|
| EQUITY AND AVERAGE
TANGIBLE COMMON ASSETS |
|
September 30, |
|
September 30, |
|
|
(in $000’s, unaudited) |
|
2024
|
|
2023
|
|
|
Net income |
|
$ |
29,907 |
|
|
$ |
51,115 |
|
|
| |
|
|
|
|
|
|
|
| Average tangible
common equity components: |
|
|
|
|
|
|
|
|
Average Equity (GAAP) |
|
$ |
675,951 |
|
|
$ |
648,341 |
|
|
|
Less: Goodwill |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
Less: Other Intangible Assets |
|
|
(7,864 |
) |
|
|
(10,206 |
) |
|
|
Total Average Tangible Common Equity (non-GAAP) |
|
$ |
500,456 |
|
|
$ |
470,504 |
|
|
| |
|
|
|
|
|
|
|
| Annualized return on
average tangible common equity (non-GAAP) |
|
|
7.98 |
|
% |
|
14.52 |
|
% |
| |
|
|
|
|
|
|
|
| Average tangible
assets components: |
|
|
|
|
|
|
|
|
Average Assets (GAAP) |
|
$ |
5,248,338 |
|
|
$ |
5,316,447 |
|
|
|
Less: Goodwill |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
Less: Other Intangible Assets |
|
|
(7,864 |
) |
|
|
(10,206 |
) |
|
|
Total Average Tangible Assets (non-GAAP) |
|
$ |
5,072,843 |
|
|
|
5,138,610 |
|
|
|
|
|
|
|
|
|
|
|
| Annualized return on
average tangible assets (non-GAAP) |
|
|
0.79 |
|
% |
|
1.33 |
|
% |
- 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: |
|
| |
|
September 30, |
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|
|
(in $000’s, unaudited) |
|
2024 |
|
2024 |
|
2024 |
|
2023 |
|
2023 |
|
| Net interest income before
credit losses on loans (GAAP) |
|
$ |
39,915 |
|
|
$ |
39,455 |
|
|
$ |
40,093 |
|
|
$ |
42,301 |
|
|
$ |
45,372 |
|
|
| Tax-equivalent adjustment on
securities - exempt from Federal tax |
|
|
59 |
|
|
|
60 |
|
|
|
60 |
|
|
|
61 |
|
|
|
61 |
|
|
|
Net interest income, FTE (non-GAAP) |
|
$ |
39,974 |
|
|
$ |
39,515 |
|
|
$ |
40,153 |
|
|
$ |
42,362 |
|
|
$ |
45,433 |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average balance of total
interest earning assets |
|
$ |
5,011,865 |
|
|
$ |
4,872,449 |
|
|
$ |
4,842,279 |
|
|
$ |
4,923,582 |
|
|
$ |
5,051,710 |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net interest margin
(annualized net interest income divided by the average balance of
total interest earnings assets) (GAAP) |
|
|
3.17 |
|
% |
|
3.26 |
|
% |
|
3.33 |
|
% |
|
3.41 |
|
% |
|
3.56 |
|
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net interest margin, FTE
(annualized net interest income, FTE, divided by the average
balance of total earnings assets) (non-GAAP) |
|
|
3.17 |
|
% |
|
3.26 |
|
% |
|
3.34 |
|
% |
|
3.41 |
|
% |
|
3.57 |
|
% |
| |
|
For the Nine Months Ended: |
|
| |
|
September 30, |
|
September 30, |
|
|
(in $000’s, unaudited) |
|
2024 |
|
2023 |
|
|
Net interest income before credit losses on loans (GAAP) |
|
$ |
119,463 |
|
|
$ |
140,923 |
|
|
| Tax-equivalent adjustment on
securities - exempt from Federal tax |
|
|
179 |
|
|
|
190 |
|
|
|
Net interest income, FTE (non-GAAP) |
|
$ |
119,642 |
|
|
$ |
141,113 |
|
|
| |
|
|
|
|
|
|
|
|
|
| Average balance of total
interest earning assets |
|
$ |
4,909,240 |
|
|
$ |
4,965,613 |
|
|
| |
|
|
|
|
|
|
|
|
|
| Net interest margin
(annualized net interest income divided by the average balance of
total interest earnings assets) (GAAP) |
|
|
3.25 |
|
% |
|
3.79 |
|
% |
| |
|
|
|
|
|
|
|
|
|
| Net interest margin, FTE
(annualized net interest income, FTE, divided by the average
balance of total interest earnings assets) (non-GAAP) |
|
|
3.26 |
|
% |
|
3.80 |
|
% |
- 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: |
|
| |
|
September 30, |
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|
|
(in $000’s, unaudited) |
|
2024 |
|
2024 |
|
2023 |
|
2023 |
|
2023 |
|
| Noninterest expense |
|
$ |
27,555 |
|
|
$ |
28,188 |
|
|
$ |
27,536 |
|
|
$ |
25,491 |
|
|
$ |
25,171 |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net interest income before
credit losses on loans |
|
$ |
39,915 |
|
|
$ |
39,455 |
|
|
$ |
40,093 |
|
|
$ |
42,301 |
|
|
$ |
45,372 |
|
|
| Noninterest income |
|
|
2,240 |
|
|
|
2,276 |
|
|
|
2,047 |
|
|
|
1,942 |
|
|
|
2,216 |
|
|
|
Total revenue |
|
$ |
42,155 |
|
|
$ |
41,731 |
|
|
$ |
42,140 |
|
|
$ |
44,243 |
|
|
$ |
47,588 |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Efficiency ratio (noninterest
expense divided by total revenue) (non-GAAP) |
|
|
65.37 |
|
% |
|
67.55 |
|
% |
|
65.34 |
|
% |
|
57.62 |
|
% |
|
52.89 |
|
% |
| |
|
For the Nine Months Ended: |
|
| |
|
September 30, |
|
September 30, |
|
|
(in $000’s, unaudited) |
|
2024 |
|
2023 |
|
|
Noninterest expense |
|
$ |
83,279 |
|
|
$ |
75,563 |
|
|
| |
|
|
|
|
|
|
|
|
|
| Net interest income before
credit losses on loans |
|
$ |
119,463 |
|
|
$ |
140,923 |
|
|
| Noninterest income |
|
|
6,563 |
|
|
|
7,056 |
|
|
|
Total revenue |
|
$ |
126,026 |
|
|
$ |
147,979 |
|
|
| |
|
|
|
|
|
|
|
|
|
| Efficiency ratio (noninterest
expense divided by total revenue) (non-GAAP) |
|
|
66.08 |
|
% |
|
51.06 |
|
% |
- 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 |
|
September 30, |
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|
|
(in $000’s, unaudited) |
|
2024
|
|
2024
|
|
2024
|
|
2023
|
|
2023
|
|
| Capital
components: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Equity (GAAP) |
|
$ |
685,352 |
|
|
$ |
679,199 |
|
|
$ |
676,296 |
|
|
$ |
672,901 |
|
|
$ |
661,930 |
|
|
|
Less: Preferred Stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
Total Common Equity |
|
|
685,352 |
|
|
|
679,199 |
|
|
|
676,296 |
|
|
|
672,901 |
|
|
|
661,930 |
|
|
|
Less: Goodwill |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
Less: Other Intangible Assets |
|
|
(6,966 |
) |
|
|
(7,521 |
) |
|
|
(8,074 |
) |
|
|
(8,627 |
) |
|
|
(9,229 |
) |
|
|
Total Tangible Common Equity (non-GAAP) |
|
$ |
510,755 |
|
|
$ |
504,047 |
|
|
$ |
500,591 |
|
|
$ |
496,643 |
|
|
$ |
485,070 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Asset
components: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets (GAAP) |
|
$ |
5,551,596 |
|
|
$ |
5,263,024 |
|
|
$ |
5,256,074 |
|
|
$ |
5,194,095 |
|
|
$ |
5,403,307 |
|
|
|
Less: Goodwill |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
Less: Other Intangible Assets |
|
|
(6,966 |
) |
|
|
(7,521 |
) |
|
|
(8,074 |
) |
|
|
(8,627 |
) |
|
|
(9,229 |
) |
|
|
Total Tangible Assets (non-GAAP) |
|
$ |
5,376,999 |
|
|
$ |
5,087,872 |
|
|
$ |
5,080,369 |
|
|
$ |
5,017,837 |
|
|
$ |
5,226,447 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Tangible common equity
/ tangible assets (non-GAAP) |
|
|
9.50 |
|
% |
|
9.91 |
|
% |
|
9.85 |
|
% |
|
9.90 |
|
% |
|
9.28 |
|
% |
- 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 |
|
September 30, |
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|
|
(in $000’s, unaudited) |
|
2024
|
|
2024
|
|
2024
|
|
2023
|
|
2023
|
|
| Capital
components: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Equity (GAAP) |
|
$ |
704,585 |
|
|
$ |
697,964 |
|
|
$ |
694,543 |
|
|
$ |
690,918 |
|
|
$ |
679,644 |
|
|
|
Less: Preferred Stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
Total Common Equity |
|
|
704,585 |
|
|
|
697,964 |
|
|
|
694,543 |
|
|
|
690,918 |
|
|
|
679,644 |
|
|
|
Less: Goodwill |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
Less: Other Intangible Assets |
|
|
(6,966 |
) |
|
|
(7,521 |
) |
|
|
(8,074 |
) |
|
|
(8,627 |
) |
|
|
(9,229 |
) |
|
|
Total Tangible Common Equity (non-GAAP) |
|
$ |
529,988 |
|
|
$ |
522,812 |
|
|
$ |
518,838 |
|
|
$ |
514,660 |
|
|
$ |
502,784 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Asset
components: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets (GAAP) |
|
$ |
5,548,576 |
|
|
$ |
5,260,500 |
|
|
$ |
5,254,044 |
|
|
$ |
5,190,829 |
|
|
$ |
5,402,838 |
|
|
|
Less: Goodwill |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
(167,631 |
) |
|
|
Less: Other Intangible Assets |
|
|
(6,966 |
) |
|
|
(7,521 |
) |
|
|
(8,074 |
) |
|
|
(8,627 |
) |
|
|
(9,229 |
) |
|
|
Total Tangible Assets (non-GAAP) |
|
$ |
5,373,979 |
|
|
$ |
5,085,348 |
|
|
$ |
5,078,339 |
|
|
$ |
5,014,571 |
|
|
$ |
5,225,978 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Tangible common equity
/ tangible assets (non-GAAP) |
|
|
9.86 |
|
% |
|
10.28 |
|
% |
|
10.22 |
|
% |
|
10.26 |
|
% |
|
9.62 |
|
% |
Heritage Commerce (NASDAQ:HTBK)
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