Financial Performance - Fourth quarter 2024 net income was $10.6 million, compared to $13.3 million in Q4 2023, reflecting a decrease of 20.3% year-over-year[1] - For the year ended December 31, 2024, net interest income decreased by 11% to $163.6 million from $183.2 million in 2023[9] - Net income for the quarter was $10,621,000, a decrease of 37% compared to $40,528,000 for the previous year[49] - Net income for the year ended December 31, 2024, was $40,528,000, a significant decrease from $64,443,000 for the year ended December 31, 2023, representing a decline of approximately 37.1%[73] Deposits and Loans - Deposit balances grew 2% quarter-over-quarter and 10% year-over-year, driven by local community commercial deposit relationships[2] - Total deposits increased by $90.5 million, or 2%, to $4.8 billion at December 31, 2024, compared to $4.7 billion at September 30, 2024, and increased by $441.6 million, or 10% from $4.4 billion at December 31, 2023[40] - Loan growth increased by 2% from the prior quarter and 4% year-over-year, indicating solid demand for loans[2] - Total loans increased by $81.7 million, or 2%, to $3.5 billion at December 31, 2024, compared to $3.4 billion at September 30, 2024[30] Interest Income and Margin - The net interest margin expanded to 3.34% in Q4 2024, up from 3.17% in Q3 2024, primarily due to reduced funding costs[2] - Net interest income rose 11% to $44.2 million in Q4 2024 compared to $39.9 million in Q3 2024[9] - Interest income for the quarter was $64,633,000, reflecting a 5% increase from $61,438,000 in the previous quarter[49] - The average yield on the total loan portfolio increased to 5.53% in Q4 2024, compared to 5.39% in Q4 2023[10] Noninterest Income and Expenses - Total noninterest income for Q4 2024 remained flat at $2.2 million compared to Q3 2024, but increased 13% from $1.9 million in Q4 2023 due to higher gains on SBA loan sales[18] - Total noninterest expense for Q4 2024 increased to $30.3 million, compared to $27.6 million in Q3 2024, primarily due to one-time personnel-related expenses and legal fees[16] - Total noninterest income decreased by 3% to $2,185,000 compared to $2,240,000 in the previous quarter[49] - Total noninterest expense rose by 10% to $30,304,000 compared to $27,555,000 in the previous quarter[49] Asset Quality - Nonperforming assets and net charge-offs remained low, indicating positive credit trends[2] - Total nonperforming loans were $7.667 million at December 31, 2024, compared to $7.158 million at September 30, 2024[35] - The allowance for credit losses on loans (ACLL) increased to $48.953 million at December 31, 2024, from $47.819 million at September 30, 2024[35] - The provision for credit losses on loans during the fourth quarter of 2024 was $1.331 million[35] Capital and Equity - Tangible common equity was $515.7 million at December 31, 2024, compared to $510.8 million at September 30, 2024, and $496.6 million at December 31, 2023[42] - The Company’s total capital ratio was 15.6% at December 31, 2024, exceeding the well-capitalized regulatory guideline of 10.0%[41] - Tangible book value per share increased to $8.41 at December 31, 2024, from $8.33 at September 30, 2024, and $8.12 at December 31, 2023[42] Efficiency and Ratios - The efficiency ratio for Q4 2024 was 65.35%, slightly improved from 65.37% in Q3 2024, but increased from 57.62% in Q4 2023 due to higher noninterest expenses[23] - The annualized return on average tangible common equity was 65.35%, up 25% from 52.57% in the previous year[49] - The loan to deposit ratio was 72.45% at December 31, 2024, compared to 72.11% at September 30, 2024, and 76.52% at December 31, 2023[24] Securities and Investments - The weighted average life of the securities held-to-maturity portfolio was 6.35 years at December 31, 2024, reflecting longer maturities of certain mortgage-backed securities[27] - The pre-tax unrealized loss on the securities available-for-sale portfolio was ($5.1) million at December 31, 2024, which was less than 1% of total shareholders' equity[26] - Total investment securities projected paydowns and maturities for 2025 are expected to be $259.202 million[28]

Core Points - Heritage Commerce Corp reported a net income of $10.6 million for Q4 2024, slightly up from $10.5 million in Q3 2024, but down from $13.3 million in Q4 2023 [1] - For the full year 2024, net income was $40.5 million, a decrease from $64.4 million in 2023 [1] Group 1: Operating Results - Deposit balances grew by 2% quarter-over-quarter and 10% year-over-year, attributed to strong local community commercial deposit relationships [2] - Loan growth increased by 2% from the previous quarter and 4% year-over-year [2] - The net interest margin expanded to 3.34% in Q4 2024 from 3.17% in Q3 2024, primarily due to reduced costs of funds [2][4] Group 2: Financial Metrics - Return on average equity was 6.16% for Q4 2024, compared to 6.14% in Q3 2024 and 7.96% in Q4 2023 [4] - Return on average tangible common equity was 8.25% for Q4 2024, down from 10.84% in Q4 2023 [4] - Return on average assets was 0.75% for Q4 2024, compared to 1.00% in Q4 2023 [4] Group 3: Net Interest Income - Net interest income increased by 11% to $44.2 million in Q4 2024 from $39.9 million in Q3 2024 [7] - For the year ended December 31, 2024, net interest income decreased by 11% to $163.6 million compared to $183.2 million in 2023 [7] Group 4: Noninterest Income and Expense - Total noninterest income was flat at $2.2 million for both Q4 2024 and Q3 2024, but increased by 13% year-over-year [16] - Total noninterest expense rose to $30.3 million in Q4 2024, up from $27.6 million in Q3 2024, primarily due to one-time expenses [16] Group 5: Credit Quality - The provision for credit losses on loans was $1.3 million in Q4 2024, compared to $153,000 in Q3 2024 [16] - Nonperforming assets and net charge-offs remained low as of December 31, 2024 [2] Group 6: Liquidity and Capital Management - Total available liquidity and borrowing capacity was $3.3 billion at December 31, 2024, compared to $3.2 billion at September 30, 2024 [20] - The loan to deposit ratio was 72.45% at December 31, 2024, compared to 76.52% at December 31, 2023 [20] Group 7: Investment Securities - Investment securities totaled $846.3 million at December 31, 2024, with $256.3 million in available-for-sale and $590.0 million in held-to-maturity portfolios [20] - The pre-tax unrealized loss on the available-for-sale portfolio was ($5.1) million at December 31, 2024 [21]

Core Points - Heritage Commerce Corp announced the departure of Executive Vice President and Chief Financial Officer Lawrence D. McGovern, effective February 2025 [1] - Thomas A. Sa, currently the Chief Operating Officer, will serve as Interim CFO starting November 18, 2024, while the search for a permanent replacement is conducted [2] - CEO Robertson "Clay" Jones expressed gratitude for McGovern's 26 years of service and confidence in Sa's qualifications for the interim role [3] - The company confirmed that McGovern's departure is not related to any concerns regarding the integrity of its financial statements [3] Company Overview - Heritage Commerce Corp is a bank holding company established in October 1997, and it is the parent company of Heritage Bank of Commerce, founded in 1994 [4] - The bank is headquartered in San Jose, CA, and operates full-service branches in multiple locations across California [4] - Heritage Bank of Commerce is recognized as an SBA Preferred Lender, and its subsidiary, Bay View Funding, provides working capital financing to various industries throughout the U.S. [4]

Financial Performance - For the three months ended September 30, 2024, net income was $10.5 million, or $0.17 per average diluted common share, a decrease from $15.8 million, or $0.26 per average diluted common share for the same period in 2023[160]. - For the nine months ended September 30, 2024, net income was $29.9 million, or $0.49 per average diluted common share, down from $51.1 million, or $0.83 per average diluted common share for the same period in 2023[161]. - Net interest income decreased by 12% to $39.9 million for the third quarter of 2024, compared to $45.4 million for the third quarter of 2023[162]. - Total revenue for the three months ended September 30, 2024, was $42,155 thousand, down from $47,588 thousand in the same period of 2023[332]. - Net income for 2024 decreased to $29,907,000 from $51,115,000 in 2023, representing a decline of approximately 41.5%[337]. Interest Income and Margin - Net interest income for the third quarter of 2024 was $39.915 million, with a net interest margin of 3.17%[183]. - The non-GAAP FTE net interest margin contracted by 40 basis points to 3.17% for Q3 2024, down from 3.57% for Q3 2023[188]. - The average yield on the total loan portfolio decreased to 5.42% for the third quarter of 2024, down from 5.46% in the same quarter of 2023[192]. - The average yield on core loans increased, partially offsetting the decrease in net interest income[189]. - The company has increased deposit beta assumptions in rising rate scenarios and added deposit cost lag assumptions in 2023 to reflect current market conditions[322]. Noninterest Income and Expense - Total noninterest income decreased by 7% to $6.6 million for the first nine months of 2024, compared to $7.1 million for the same period in 2023[162]. - 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[162]. - Total noninterest expense for Q3 2024 increased to $27.6 million, up from $25.2 million in Q3 2023, primarily due to higher salaries and employee benefits, rent expense, and professional fees[207]. - Total noninterest income for the nine months ended September 30, 2024, decreased by 7% to $6,563 thousand, down from $7,056 thousand for the same period in 2023[202]. Asset and Deposit Growth - Total deposits increased by $154.1 million, or 3%, to $4.7 billion at September 30, 2024, compared to $4.6 billion at September 30, 2023[175]. - Total assets increased by 3% to $5.6 billion as of September 30, 2024, compared to $5.4 billion a year earlier, primarily due to growth in client deposits[213]. - Total interest-earning assets amounted to $5.011 billion, generating interest income of $61.497 million for the three months ended September 30, 2024[183]. - The 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 $921.2 million at September 30, 2023[175]. - Total deposits rose by $154.1 million, or 3%, to $4.7 billion at September 30, 2024, compared to $4.6 billion a year earlier[216]. Loan Performance - Loans, excluding loans held-for-sale, increased by $124.8 million, or 4%, to $3.4 billion at September 30, 2024, compared to $3.3 billion at the same date in 2023[171]. - Nonperforming assets totaled $7,158,000 at September 30, 2024, compared to $5,484,000 at September 30, 2023, reflecting an increase of 30.6%[262]. - The allowance for credit losses on loans was $47.8 million, or 1.40% of total loans, representing 668% of total nonperforming loans at September 30, 2024[174]. - The provision for credit losses on loans was $153,000 for the third quarter of 2024, compared to $168,000 for the same quarter in 2023, indicating a decrease of 8.9%[200]. - The loan to deposit ratio was 72.11% at September 30, 2024, compared to 71.81% at September 30, 2023[178]. Capital and Liquidity - Total capital ratio was 15.6% at September 30, 2024, exceeding the 10.0% regulatory guideline for well-capitalized financial institutions[179]. - The Company’s liquidity position is supported by a large base of core deposits, which have historically been a stable source of funds[293]. - The Company's total liquidity and borrowing capacity was $3.2 billion, representing 69% of total deposits and approximately 147% of estimated uninsured deposits at September 30, 2024[299]. - Total shareholders' equity was $685.3 million at September 30, 2024, up from $661.9 million at September 30, 2023, and $672.9 million at December 31, 2023[313]. - The Company met all capital adequacy guidelines as of September 30, 2024, and is categorized as well-capitalized[312]. Credit Quality and Risk Management - The company has established limits on industry and geographic credit concentrations to manage credit risk effectively[256]. - The company experienced net charge-offs of $947,000, with recoveries amounting to $395,000 during the same period[273]. - The loan portfolio can be adversely affected by weakening economic conditions, particularly in the San Francisco Bay Area and the technology industry, which may lead to increased nonperforming loans[272]. - The company has engaged an outside firm for independent credit reviews of its loan portfolio, which are subject to regulatory review[272]. - The allowance for credit losses is influenced by loan volumes, risk rating migration, and changes in historical loss experience[269].

Core Viewpoint - Heritage Commerce (HTBK) reported a revenue of $42.16 million for the quarter ended September 2024, reflecting an 11.4% year-over-year decline and an EPS of $0.17, down from $0.26 a year ago, with revenue falling short of the Zacks Consensus Estimate of $43.14 million by 2.28% [1] Financial Performance Metrics - Efficiency Ratio was reported at 65.4%, higher than the three-analyst average estimate of 63.5% [2] - Net Interest Margin was 3.2%, slightly below the three-analyst average estimate of 3.3% [2] - Total Non-Performing Loans amounted to $7.16 million, exceeding the average estimate of $5.87 million by two analysts [2] - Average Balances of Interest Earning Assets were $5.01 billion, surpassing the average estimate of $4.95 billion by two analysts [2] - Total Non-Performing Assets were reported at $7.16 million, higher than the average estimate of $6.12 million by two analysts [2] - Net Interest Income was $39.92 million, below the average estimate of $40.96 million by three analysts [2] - Total Non-Interest Income was $2.24 million, slightly above the three-analyst average estimate of $2.22 million [2] - Gain on Sale of SBA Loans was $0.09 million, compared to the average estimate of $0.12 million based on two analysts [2] - Net Interest Income (FTE) was $39.97 million, lower than the average estimate of $40.77 million based on two analysts [2] Stock Performance - Shares of Heritage Commerce have returned -0.2% over the past month, while the Zacks S&P 500 composite has changed by +1.5%, indicating underperformance relative to the broader market [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Company Performance - Heritage Commerce reported quarterly earnings of $0.17 per share, matching the Zacks Consensus Estimate, but down from $0.26 per share a year ago [1] - The company posted revenues of $42.16 million for the quarter ended September 2024, missing the Zacks Consensus Estimate by 2.28% and down from $47.59 million year-over-year [1] - Over the last four quarters, Heritage Commerce has not surpassed consensus EPS or revenue estimates [1] Stock Outlook - Heritage Commerce shares have declined approximately 2.1% since the beginning of the year, contrasting with the S&P 500's gain of 21.5% [2] - The current consensus EPS estimate for the upcoming quarter is $0.18 on revenues of $43.74 million, and for the current fiscal year, it is $0.65 on revenues of $170.67 million [4] Industry Context - The Zacks Industry Rank for Banks - West is in the bottom 39% of over 250 Zacks industries, indicating potential challenges for stocks in this sector [5] - Coastal Financial Corporation, a peer in the same industry, is expected to report quarterly earnings of $0.96 per share, reflecting a year-over-year increase of 28% [5]

Exhibit 99.1 Heritage Commerce Corp Reports Client Deposit Growth of 6% in the Third Quarter of 2024 San Jose, CA — October 24, 2024 — 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 ...

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 Sep ...

SAN JOSE, Calif., Oct. 02, 2024 (GLOBE NEWSWIRE) -- Heritage Commerce Corp (NASDAQ: HTBK) ("Company"), parent company of Heritage Bank of Commerce ("Bank"), today announced the appointment of Thomas A. Sa as the Chief Operating Officer ("COO") of the Company and the Bank. As COO, Mr. Sa will report directly to Chief Executive Officer ("CEO") Robertson "Clay" Jones and will have primary responsibility for banking operations, risk management, and information technology systems. Mr. Sa had previously served as ...

SAN JOSE, Calif., Aug. 15, 2024 (GLOBE NEWSWIRE) -- Heritage Commerce Corp (NASDAQ: HTBK) (the "Company"), the parent company of Heritage Bank of Commerce (the "Bank"), today announced the retirement of Ranson W. Webster from the Board of Directors, effective October 1, 2024. As one of the original founders, Webster joined the Board in 2004 and has served as Vice Chair of the Boards of Directors of the Company and the Bank. Director Julianne M. Biagini-Komas will assume the role of Vice Chair of both boards ...